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EXHIBIT 10.31
LEASE
THIS LEASE ("Lease") is made as of July 24, 1998, by and between MISSION
PLAZA LLC, a California limited liability company ("Landlord"), and GLOBIX
CORPORATION, a Delaware corporation, doing business as The California Globix
Corporation ("Tenant").
1. LEASE PREMISES.
1.1 Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord those certain premises ("Premises") consisting of (i) a leasehold
interest in that certain real property ("Real Property") described as Parcel 1
shown on that Parcel Map filed for record in the Office of the Recorder of the
County of Santa Xxxxx, State of California, on May 15, 1998, in Book 702 of
Maps, pages 29, 30, and 31; (ii) the entirety of the building to be constructed
on the Real Property; (iii) all landscaping, drainage, irrigation, lighting,
parking facilities, walkways, driveways and other improvements and appurtenances
related thereto; and (iv) the nonexclusive use of all easements appurtenant to
the Real Property and subject to any easements which burden the Real Property.
2. BASIC LEASE PROVISIONS.
2.1 For convenience of the parties, certain basic provisions of this
Lease are set forth herein. The provisions set forth herein are subject to the
remaining terms and conditions of this Lease and are to be interpreted in light
of such remaining terms and conditions.
2.1.1 Rentable Area of Premises: 61,547 square feet, subject
to adjustment as provided in Section 8.2
2.1.2 Initial Basic Annual Rent: $1,277,715 ($20.76 per square
foot of Rentable Area per year), subject to adjustment
as provided in Sections 6.1 and 8.2
2.1.3 Monthly Installment of Basic Annual Rent: $106,476
($1.73 per square foot of Rentable Area per month),
subject to adjustment as provided in Sections 6.1 and
8.2
2.1.4 (a) Estimated Term Commencement Date: January 15, 1999,
subject to adjustment as provided in Section 4.5
(b) Term Expiration Date: Fifteen (15) years from Term
Commencement Date
2.1.5 Permitted Use: Uses permitted in Sections 10.1
2.1.6 Security Deposit: $400,000 in accordance with Article 9
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2.1.7 Address for Rent Payment and Notices to Landlord:
Mission Plaza LLC
c/o Nexus Properties, Inc.
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxx, Xxxxxxxxxx 00000
Address for Notices to Tenant
Globix Corporation
Attn: Xxxx Xxxx
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
With Copies of all Notices to Tenant to:
Xxxxxx Xxxxxxxx, Esq.
Xxxxxxx Xxxxx Bershad Xxxxx & Lerach LLP
Xxx Xxxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
2.2 Defined terms indicated with an initial capital letter not
otherwise defined herein shall have the meaning ascribed to them in Article 42
of this Lease.
2.3 The following exhibits are delivered simultaneously herewith and
incorporated herein by this reference (in the event of any inconsistency between
Exhibit AA-5" and the other drawings, Exhibit AA-5" shall control):
Exhibit "A" Plans and Specifications
"A-1" Site Plan
"A-2" List of Permitted Shell Drawings
"A-3" Schematic Showing Shell Upgrades
"A-4" Specifications of Selected Shell Items
"A-5" Floor Plan Showing Tenant's Data Center
Exhibit "B" Acknowledgment of Term Commencement Date
Exhibit "C" Memorandum of Lease
Exhibit "D" Nondisturbance and Attornment Agreements
"X-0" Xxxxxxxx
"X-0" Ground Lessor
"D-3" Sub Ground Lessor
Exhibit "E" Landlords' Estoppel Certificates
"X-0" Xxxxxxxx
"E-2" Ground Lessor
"E-3" Sub Ground Lessor
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Exhibit "F" Completion Guaranty
Exhibit "G" Lead Items
3. TERM.
3.1 This Lease shall take effect upon the later of the date of
execution by each of the parties hereto or the date of approval by Tenant's
board of directors, and each of the provisions hereof shall be binding upon and
inure to the benefit of Landlord and Tenant from such date.
3.2 The term of this Lease will be that period from the Term
Commencement Date described in Sections 2.1.4(a) and 4.5 through the Term
Expiration Date as set forth in Section 2.1.4(b), subject to earlier termination
of this Lease or extension of the term of this Lease as provided herein.
3.3 Landlord shall use its best efforts to obtain nondisturbance
agreements in the forms attached hereto as Exhibit D@, and estoppel certificates
in the forms attached hereto as Exhibit "D", from the ground lessors under the
underlying leases by which Landlord holds its interest in the Premises,
including (i) the West Valley-Mission Community College District (the
"District"), pursuant to that certain Master Ground Lease Parcel 12 dated as of
October 2, 1997, as amended by that certain undated First Amendment to Master
Ground Lease Parcel 12 (the "Master Ground Lease"), (ii) the Mission-West Valley
Land Corporation ("Ground Lessor"), pursuant to that certain Ground Lease dated
as of October 2, 1997, as amended by that certain First Amendment to Ground
Lease dated April __, 1998 (the "Ground Lease"), and (iii) Nexus Properties,
Inc., Kinetic Systems, Inc., Xxxxxxx X. Xxxxx both individually and as trustee
of the Xxxxxx Xxxxxxxxx Irrevocable Trust, and R. Xxxxxxx Xxxx (collectively,
"Ground Tenant"), each pursuant to that certain Sub Ground Lease dated as of
June 1, 1998 (the "Sub Ground Lease").
3.4 Notwithstanding anything in this Lease to the contrary, Tenant
may terminate this Lease if:
(a) Landlord has not on or before August 21, 1998, obtained
and delivered to Tenant a current ALTA survey of the Real Property and satisfied
any other conditions imposed by Tenant or a title company selected by Tenant to
the issuance of a title policy in form and substance satisfactory to Tenant
insuring Tenant's interest in this Lease (including without limitation
guarantees or indemnifications to the title company to enable the title company
to issue a mechanic's lien endorsement acceptable to Tenant), and the title
company has issued such a title policy to Tenant; or
(b) Landlord has not Substantially Completed the Project Work
within one hundred eighty (180) days after the Estimated Term Commencement Date
for any reason other than Tenant-Caused Delays.
In the event any of the foregoing contingencies are not timely
satisfied, Tenant may exercise its termination right by delivering written
notice to Landlord within fifteen (15) days after the expiration date of any
such contingency, whereupon the Lease shall terminate and Landlord shall
promptly return to Tenant all prepaid rent and security deposits made under this
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Lease by Tenant. Tenant's termination rights may be exercised in Tenant's sole
discretion and notwithstanding any work that may have been performed or sums
that may have been spent by Landlord at the time of termination.
4. CONSTRUCTION, POSSESSION AND COMMENCEMENT DATE.
4.1 Landlord shall construct the Site Improvements and Building
Shell in accordance with the Site Plans and Building Shell Plans, as such plans
and specifications may be revised and supplemented from time to time with the
mutual consent of Landlord and Tenant. Tenant shall pay $387,908 as Tenant's
sole contribution towards the design, permitting and construction of the Site
Improvements and Building Shell, and Landlord shall pay for the balance thereof.
Tenant shall pay fifty percent (50%) of its contribution upon completion of
fifty percent (50%) of the Site Improvements and Building Shell, as certified by
the Project Architect, and the balance upon Substantial Completion of the Site
Improvements and Building Shell and delivery of same to Tenant. In no event,
however, shall Tenant be required to pay any costs before Landlord obtains the
nondisturbance agreements and estoppel certificates described in Section 3.3, or
before the satisfaction of the conditions described in Section 3.4(a) or the
expiration of Tenant's termination right thereunder; furthermore, Landlord shall
continue the design, permitting and construction of the Site Improvements and
Building Shell, and shall pay or advance all costs thereof, during any such
period. Tenant shall repay Landlord for any advances of its contribution to the
Site Improvements and Building Shell at such time as Landlord obtains the
nondisturbance agreements and estoppel certificates described in Section 3.3 and
either the conditions described in Section 3.4(a) have been satisfied or
Tenant's termination right thereunder has expired.
4.2 Landlord shall construct the Tenant Improvements in accordance
with the Tenant Improvement Plans, as such plans and specifications may be
revised and supplemented from time to time with the mutual consent of Landlord
and Tenant. Tenant shall be responsible for the entire cost of design,
permitting and construction of the Tenant Improvements, the cost of which Tenant
estimates will not be less than not less than $2,500,000, which shall be
disbursed by Tenant in progress payments based upon the percentage of completion
of the Tenant Improvements in a manner reasonably satisfactory to Landlord's
construction lender. In no event, however, shall Tenant be required to pay any
costs of Tenant Improvements before Landlord obtains the nondisturbance
agreements and estoppel certificates described in Section 3.3, or before the
satisfaction of the conditions described in Section 3.4(a) or the expiration of
Tenant's termination right thereunder (except that Tenant shall order and pay
the vendors for Tenant's Removable Property); furthermore, Landlord shall
continue the design, permitting and construction of the Tenant Improvements, and
shall advance all costs thereof during any such period, except for costs owed to
the vendors for Tenant's Removable Property, which Tenant shall continue to pay.
Tenant shall repay Landlord for any agreed advances of the cost of design,
permitting and construction of the Tenant Improvements at such time as Landlord
obtains the nondisturbance agreements and estoppel certificates described in
Section 3.3, and either the conditions described in Section 3.4(a) have been
satisfied or Tenant's termination right thereunder has expired.
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4.3 Landlord shall endeavor to tender possession of the Premises
with the Project Work Substantially Completed to Tenant on the Estimated Term
Commencement Date. Tenant agrees that in the event Landlord fails to tender
possession of the Premises with the Project Work Substantially Completed on or
before the Estimated Term Commencement Date, this Lease shall not be void or
voidable, Landlord shall not be liable to Tenant for any loss or damage
resulting therefrom except as set forth in this Section 4.3, and Tenant
expressly waives any right to terminate this Lease because of delays in
completion of construction of the Project Work and Building Shell except as set
forth in Section 3.4. In the event Landlord fails to tender possession of the
Premises with the Project Work Substantially Completed within thirty (30) days
following the Estimated Term Commencement Date, as such date is extended by
Tenant-Caused Delays, Landlord and Tenant agree that Tenant will suffer damages
which would be difficult to ascertain but a reasonable estimate of which would
be $1,000 per day. Therefore, in the event of such delay, Landlord agrees to pay
Tenant liquidated damages of $1,000 per day commencing thirty (30) days after
the Estimated Term Commencement Date, as such date is extended by Tenant-Caused
Delays, until possession of the Premises with the Project Work Substantially
Completed is tendered to Tenant. Landlord shall pay such liquidated damages due
to Tenant for any calendar month by the fifth (5th) day of the following
calendar month.
4.4 Landlord shall deliver to Tenant early possession of that
portion of the Building to be used for the Data Center described on Exhibit
"AA-5" Substantially Completed on or before November 30, 1998, as such date is
extended by Tenant-Caused Delays and Force-Majeure Delays, in a condition
suitable for the installation of Tenant's fixtures and equipment and for the use
and occupancy by Tenant. Tenant agrees that in the event Landlord fails to do
so, this Lease shall not be void or voidable, Landlord shall not be liable to
Tenant for any loss or damage resulting therefrom except as set forth in this
Section 4.4, and Tenant expressly waives any right to terminate this Lease
because of such delay. In the event Landlord fails to tender possession of that
portion of the Building to be used for the Data Center Substantially Completed
on or before November 30, 1998, as such date is extended by Tenant-Caused Delays
and Force-Majeure Delays, and in a conditions suitable for the installation of
Tenant's fixtures and equipment and for the use and occupancy by Tenant,
Landlord and Tenant agree that Tenant will suffer damages which would be
difficult to ascertain but a reasonable estimate of which would be $3,000 per
day. Therefore, in the event of such delay, Landlord agrees to pay Tenant
liquidated damages of $3,000 per day commencing November 30, 1998, as such date
is extended by Tenant-Caused Delays and Force-Majeure Delays, until possession
of the Data Center is so delivered, which liquidated damages are in addition to
those described in the preceding Section 4.3. Landlord shall pay such liquidated
damages due to Tenant for any calendar month by the fifth (5th) day of the
following calendar month.
4.5 The Term Commencement Date shall be the date Landlord tenders
possession of the Premises to Tenant with the Project Work Substantially
Completed. Landlord and Tenant shall execute a written acknowledgment of the
Term Commencement Date and the Term Expiration Date when such are established in
substantially the form attached hereto as Exhibit "B" and attach it to this
Lease as Exhibit "B-1"; however, failure to execute and deliver such
acknowledgment shall not affect Tenant's or Landlord's liability hereunder.
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4.6 Tenant shall have the right to enter onto the Premises before
the Term Commencement Date for the purposes of installing fixtures and
equipment, using and occupying the Data Center, and for any other purpose,
provided that Tenant shall first furnish to Landlord evidence satisfactory to
Landlord that insurance coverages required of Tenant under the provisions of
Article 21 are in effect. Entry by Tenant onto the Premises prior to the Term
Commencement Date for such purposes shall be subject to all of the terms and
conditions of this Lease other than the payment of Basic Annual Rent and
Operating Expenses (other than electricity and any other utilities used by
Tenant for the operation of the Data Center and any other equipment), and shall
not materially interfere with the construction of the Project Work. In the event
of entry by Tenant or its agents onto the Premises prior to the Term
Commencement Date, Tenant agrees to indemnify, protect, defend and hold Landlord
harmless from any and all loss or damage to property, completed work, fixtures,
equipment, materials or merchandise, or from liability for death of or injury to
any person arising from Tenant's entry onto the Premises, except to the extent
any such loss or damage is caused by the negligence or willful misconduct of
Landlord or Landlord's Agents (as such term is defined in Section 20.1).
4.7 Landlord and Tenant shall diligently and in good faith cooperate
with one another, and with the Project Architect and Project Contractor, to
insure timely and cost effective design, permitting and construction of the
Project Work, including timely cooperation with regard to preparation of the
Plans and Specifications and shop drawings, and obtaining bids for the Tenant
Improvements, to the end that the Data Center shall be completed and fully
operational no later than November 30, 1998, and the Premises shall be completed
and Tenant shall be fully operational within the Premises no later than January
15, 1999. Landlord shall cooperate with Tenant in securing any additional
easements required by Tenant for its use of the Premises. Landlord shall
immediately cause to be ordered all materials having a lead time of more than
eight (8) weeks, and shall cause all other materials to be ordered in a timely
manner. Tenant shall order in a timely manner that portion of the Tenant
Improvements included within Tenant's Removable Property described in Section
30.3, and shall deliver such property to Landlord or the Project Contractor for
installation. Tenant shall have the right to approve all contracts and other
matters which would affect the cost or design of the Tenant Improvements.
5. RENT.
5.1 Tenant agrees to pay Landlord as Basic Annual Rent for the
Premises the sum set forth in Section 2.1.2, subject to the rental adjustments
provided in Sections 6.1 and 8.2. Basic Annual Rent shall be paid in the equal
monthly installments set forth in Section 2.1.3, subject to the rental
adjustments provided in Sections 6.1 and 8.2, each in advance on the first day
of each and every calendar month during the term of this Lease, except that the
estimated first full monthly installment of Basic Annual Rent in the amount of
$106,476 shall be paid at the earlier of (i) such time as Landlord obtains and
delivers to Tenant the nondisturbance agreements and estoppel certificates
described in Section 3.3, and Landlord has satisfied the conditions described in
Sections 3.4(a) or Tenant's termination right has expired thereunder, or (ii)
the Term Commencement Date. On the Term Commencement Date, the deposit of the
estimated first full monthly installment of Basic Annual Rent shall be credited
to the actual Basic Annual Rent due for the calendar month in which rental
commences and any balance, if any, will be a credit
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against the next rental to become due. Prior to the Term Commencement Date, the
deposit of the estimated first monthly installment of Basic Annual Rent shall
constitute additional security for Tenant's obligations hereunder and be treated
in like manner as the Security Deposit described in Section 9.1.
5.2 In addition to Basic Annual Rent, Tenant agrees to pay to
Landlord as additional rent ("Additional Rent"), at the times hereinafter
specified in this Lease, Operating Expenses as provided in Article 7, and all
other amounts that Tenant agrees to pay under the provisions of this Lease,
including without limitation any and all other sums that may become due by
reason of any default of Tenant.
5.3 Basic Annual Rent and Additional Rent shall together be
denominated "Rent". Rent shall be paid to Landlord in lawful money of the United
States of America, at the office of Landlord as set forth in Section 2.1.7 or to
such other person or at such other place as Landlord may from time to time
designate in writing, without notice, demand, abatement, suspension, deduction,
setoff, counterclaim, or defense, except as otherwise provided in this Lease.
5.4 In the event the term of this Lease commences or ends on a day
other than the first day of a calendar month, then the Rent for such fraction of
a month shall be prorated for such period on the basis of a thirty (30) day
month and shall be paid at the then current rate for such fractional month prior
to the commencement of the partial month.
6. RENTAL ADJUSTMENTS.
6.1 Basic Annual Rent then in effect (as increased by previous
adjustments under this Section 6.1) shall be increased on each of the first
through the twelfth annual anniversaries of the Term Commencement Date by three
percent (3%).
7. ADDITIONAL RENT AND EXPENSES.
7.1 As used herein, the term "Operating Expenses" shall include:
(a) Government impositions (collectively, "Taxes") including,
without limitation, property tax costs with respect to the Premises consisting
of real and personal property taxes and assessments including amounts due under
any improvement bond upon the Premises or any part thereof or assessments levied
in lieu thereof imposed by any governmental authority or agency; any tax on or
measured by gross rentals received from the rental of space in the Building or
tax based on the square footage of the Building or the entire Premises as well
as any parking charges, utilities surcharges, or any other costs levied,
assessed or imposed by, or at the direction of, or resulting from statutes or
regulations, or interpretations thereof, promulgated by any federal, state,
regional, municipal or local government authority in connection with the use or
occupancy of the Building or the parking facilities serving the Building; any
tax on this transaction or any document to which Tenant is a party creating or
transferring an interest in the Premises; any fee for a business license to
operate the Building; and any expenses, including the
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cost of attorneys or experts, reasonably incurred by Landlord in seeking
reduction by the taxing authority of the applicable taxes (in an amount not to
exceed the amount of the reduction), less tax refunds obtained as a result of an
application for review thereof. Notwithstanding the foregoing, Operating
Expenses shall not include any net income, franchise, capital stock, estate,
inheritance, sales or excise taxes due from Landlord, taxes which are the
personal obligation of or are paid by Tenant, any tax on rental income unless
levied in lieu of a tax customarily considered a real property tax, tax
penalties as a result of Landlord's failure to make payments or file
informational returns when due, any tax occasioned by or relating to Hazardous
Materials on the Premises (except to the extent caused by Tenant's storage, use
or disposal of Hazardous Materials), or any tax or assessment expense or any
increase therein in excess of the amount which would be payable if such tax or
assessment expense were paid in installments over the longest possible term.
(b) All other costs of any kind incurred by Landlord in
connection with the operation, maintenance, repairs, and management of the
Premises, including, by way of examples and not as a limitation upon the
generality of the foregoing, (i) costs of maintenance and repairs to
improvements, fixtures and personal property on the Premises as appropriate to
maintain the Premises in commercially reasonable condition (but excluding costs
incurred for the replacement of the roof and other capital items which are part
of the Site Improvements or Building Shell, for the repair, maintenance and
replacement of the structural components of the roof, footings, foundation,
ground floor slab, and load bearing walls of the Premises [but including
painting and ordinary maintenance and repair of surfaces], and for the
replacement of the roof membrane [unless caused by traffic of Tenant or its
invitees or penetrations made by Tenant])(ii) costs of maintenance and repairs
of equipment utilized for operation and maintenance of the Premises if dedicated
for use solely at the Premises; (iii) costs of exterior trash collection; (iv)
costs of maintenance, repairs and replacements of heating, ventilation, air
conditioning, plumbing, electrical and other systems (but excluding replacements
of components of any such system which are part of the Site Improvements and
Building Shell); (v) costs of maintenance of landscape, grounds, drives and
parking areas, including periodic resurfacing and re-striping; (vi) insurance
premiums; (vii) portions of insured losses attributable to the Tenant
Improvements (but not to the Site Improvements and Building Shell) paid by
Landlord as part of the deductible portion of earthquake and other insurance by
reason of insurance policy terms; (viii) costs of building supplies; (ix) costs
of service contracts and services of independent contractors retained to do work
of a nature before referenced; and (x) costs of compliance with applicable
governmental laws, ordinances, regulations and requirements which become
effective after Substantial Completion (but not those which are effective prior
to Substantial Completion) not required by any act, omission or wrongdoing of
Landlord or its agents or representatives.
(c) Costs of property management services payable monthly in
an amount equal to three percent (3%) of the monthly installment of Basic Annual
Rent then due from Tenant, whether such services are provided by Landlord, or an
affiliate of Landlord, or an independent property management firm, and without
regard to the actual costs incurred by Landlord for such services (in no event,
however, shall any fees for management services payable to a third party be
included in Operating Expenses in addition to the amount set forth in this
subsection 7.1(c)).
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(d) Costs payable by Landlord under the Sub Ground Lease
solely to the extent of (i) real property taxes and assessments applicable to
the Premises which would otherwise be payable under Section 7.1(a) (other than
governmental impositions imposed or levied by the District or Ground Lessor),
and (ii) Landlord's pro rata share of the maintenance costs applicable to
Perimeter Road, but in no event to include any traffic mitigation applicable to
Perimeter Road or other costs which may be required of Landlord under the Sub
Ground Lease.
7.2 Notwithstanding the foregoing, Operating Expenses shall not
include, and Tenant shall not be responsible for the payment of, the following
costs and expenses:
(a) costs incurred for the initial construction of the Site
Improvements and Building Shell, except as set forth in Section 4.1;
(b) costs incurred for capital improvements and replacements
to the Site Improvements or Building Shell; for the repair, maintenance and
replacement of the structural components of the roof, footings, foundation,
ground floor slab, and load bearing walls of the Premises (but including in
Operating Expenses painting and ordinary maintenance and repair of surfaces);
and for the replacement of the roof membrane (unless caused by traffic of Tenant
or its invitees or penetrations made by Tenant);
(c) costs incurred to correct any defects in design, materials
or construction of the Project Work to the extent of Landlord's warranties set
forth in Section 14.2;
(d) costs, expenses and penalties (including without
limitation attorneys fees) incurred as a result of the use, storage, removal or
remediation of any toxic or hazardous substances or other environmental
contamination not caused by Tenant or its employees, contractors, agents,
representatives, or invitees;
(e) interest, principal, points and other fees on debt or
amortization of any debt;
(f) costs incurred in connection with the financing,
re-financing, acquisition, sale or disposition of the Premises or any portion
thereof;
(g) costs, expenses, and penalties (including without
limitation attorneys' fees) incurred due to the violation by Landlord or any
other person or entity of any underlying ground lease, deed of trust or mortgage
affecting the Premises or any portion thereof, or to comply with requirements of
applicable covenants, conditions and restrictions, underwriter requirements, or
laws applicable to the Premises;
(h) depreciation, amortization or other expense reserves for
the Premises or any portion thereof, or any equipment or machinery owned by
Landlord;
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(i) any costs incurred as a result of the violation or alleged
violation by Landlord or any other person or entity other than Tenant of any
statute, ordinance or other source of applicable law, or breach of contract or
tort liability to any other party, including without limitation, any unrelated
third party, or Landlord's employees, contractors, agents or representatives;
(j) leasing commissions, attorneys' fees and other costs and
expenses incurred in connection with the leasing of the Premises;
(k) advertising, marketing, media and promotional expenditures
regarding the Premises and costs of signs in or on the Building identifying the
owner, lender or any contractor thereof;
(l) any fees or salaries of the principals of Landlord;
(m) costs for which Landlord receives reimbursement from third
parties, and costs reimbursable from third parties but for which Landlord does
not use commercially reasonable efforts to obtain such reimbursement;
(n) rent and any other costs under the Sub Ground Lease,
Ground Lease, Master Lease, and any other recorded document except as provided
in Section 7.1(d);
(o) portions of insured losses paid by Landlord as part of the
deductible portion of earthquake and other insurance attributable to the Site
Improvements and Building Shell by reason of insurance policy terms;
(p) costs of Landlord's employees, costs of bookkeeping,
accounting, administrative, and secretarial services, and all other internal
costs incurred by Landlord, which the parties acknowledge are being compensated
in full by the management fee described in Section 7.1(c);
(q) costs of security services and devices; and
(r) costs of janitorial and other interior cleaning and
maintenance services.
7.3 Tenant shall pay to Landlord on the first day of each calendar
month of the term of this lease, as Additional Rent, Landlord's estimate of
Operating Expenses with respect to the Premises for such month (including
monthly impounds of taxes and insurance premiums), which estimates shall be
contained in an annual operating budget prepared by Landlord and delivered to
Tenant prior to the commencement of each calendar year. Within thirty (30) days
after the conclusion of each calendar year, Landlord shall furnish to Tenant a
statement showing in reasonable detail the actual Operating Expenses for the
previous calendar year. Any additional sum due from Tenant to Landlord shall be
paid by Tenant to Landlord within thirty (30) days after notice from Landlord.
If the amounts paid by Tenant exceeds the Operating Expenses for
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the previous calendar year, the difference shall be credited by Landlord against
the Rent next due and owing from Tenant; provided that, if the Lease term has
expired, Landlord shall accompany said statement with payment for the amount of
such difference. Any amount due for any period which is less than a full month
shall be prorated (based on a 30-day month) for such fractional month.
Landlord's estimate of Operating Expenses for the first twelve (12) months
following the Term Commencement Date is $174,842. The estimated Operating
Expenses shall be adjusted from time to time to reflect increases and decreases
in the services provided by Landlord.
7.4 Tenant shall have the right, at Tenant's expense, upon
reasonable notice during reasonable business hours, to inspect the portion of
Landlord's books and records that are relevant to preparation of the statement
delivered pursuant to Section 7.3 provided any request for such review shall be
furnished within one hundred twenty (120) days of Tenant's receipt of such
statement as to the prior year's Operating Expenses.
7.5 Tenant shall not be responsible for Operating Expenses
attributable to the time period prior to the Term Commencement Date. The
responsibility of Tenant for Operating Expenses attributable to the Premises
shall continue to the latest of (i) the date of termination of the Lease, or
(ii) the date Tenant has fully vacated the Premises.
7.6 Operating Expenses for the calendar year in which Tenant's
obligation to pay them commences and in the calendar year in which such
obligation ceases shall be prorated. Expenses such as taxes, assessments and
insurance premiums which are incurred for an extended time period shall be
prorated based upon time periods to which applicable so that the amounts
attributed to the Premises relate in a reasonable manner to the time period
wherein Tenant has an obligation to pay Operating Expenses.
8. RENTABLE AREA.
8.1 The Rentable Area of the Premises as set forth in Section 2.1.1
and as may otherwise be referenced within this Lease, is determined by making
separate calculations of the Rentable Area of each floor within the Building and
totalling the Rentable Area of all floors within the Building (excluding any
parking areas). The Rentable Area of a floor is calculated by measuring to the
outside finished surface of each permanent outer Building wall where it
intersects the floor (or where it would have intersected the floor but for the
inclusion of a second-floor atrium or similar feature). The full area calculated
as set forth above is included as Rentable Area of the Premises without
deduction for (i) columns or projections, (ii) vertical penetrations such as
stairs, elevator shafts, flues, pipe shafts, vertical ducts, and the like, and
their enclosing walls, (iii) corridors, equipment rooms, rest rooms, entrance
ways, elevator lobbies, and the like, and their enclosing walls, or (iv) any
other unusable area of any nature.
8.2 The Rentable Area as set forth in Section 2.1.1 is an estimate
of the area which will upon completion of development of the Building constitute
the Rentable Area of the Premises, which shall be adjusted upon Substantial
Completion of the Building in accordance with a certification of the Rentable
Area from the Project Architect, or, if either Landlord or Tenant elects, in
accordance with field measurements conducted by a mutually agreeable
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architect or civil engineer, which measurements shall be conclusive and binding
on Landlord and Tenant. If the Rentable Area as determined hereunder is greater
or less than the Rentable Area set forth in Section 2.1.1, Basic Annual Rent and
monthly installments of Basic Annual Rent shall be adjusted upward or downward,
as the case may be, based on the actual Rentable Area of the Premises. In no
event, however, shall any adjustment be made for an increase in the Rentable
Area in excess of 62,000 square feet.
9. SECURITY DEPOSIT
9.1 At such time as Landlord obtains and delivers to Tenant the
nondisturbance agreements and estoppel certificates described in Section 3.3,
and either Landlord has satisfied the conditions described in Sections 3.4(a) or
Tenant's termination right has expired thereunder, Tenant shall deposit with the
escrow holder described in Section 9.2, in cash, the amount of $400,000
("Security Deposit"), which sum shall be held by Landlord as security for the
faithful performance by Tenant of all of the terms, covenants, and conditions of
this Lease to be kept and performed by Tenant during the term and any extension
term hereof. If Tenant defaults with respect to any provision of this Lease,
including but not limited to any provision relating to the payment of Rent, and
subject to any notice requirements and cure periods for Tenant's benefit set
forth in Article 24, Landlord may (but shall not be required to) use, apply or
retain all or any part of the Security Deposit for the payment of any Rent or
any other sum in default, or to compensate Landlord for any other loss or damage
which Landlord may suffer by reason of Tenant's default. If any portion of the
Security Deposit is so used or applied, Tenant shall, upon demand therefor of
not less than fifteen (15) days, deposit cash with Landlord in an amount
sufficient to restore the Security Deposit to its original amount and Tenant's
failure to do so shall be a material default of this Lease. Landlord shall not
be required to keep the Security Deposit separate from its general fund except
as set forth in Section 9.2.
9.2 Within the time required by Section 9.1, Tenant shall deposit
the Security Deposit in a separate, segregated account with an independent
escrow agent approved by Landlord and Tenant, together with irrevocable
instructions to (i) return fifty percent (50%) of the Security Deposit to
Landlord upon completion of fifty percent (50%) of the Project Work, as
certified by the Project Architect, (ii) return the balance of the Security
Deposit to Landlord upon Substantial Completion of the Project Work and delivery
of the Premises to Tenant, (iii) in any event return that portion of the
Security Deposit required to cure Tenant's default under this Lease to Landlord
in the event of an earlier default by Tenant, and (iv) deliver the Security
Deposit or the balance thereof to Tenant in the event the Lease is terminated
pursuant to Section 3.4. Commencing with the return of any portion of the
Security Deposit to Landlord, Landlord shall pay interest on the portion
returned at the rate of seven percent (7%) per annum from the date of return
until it is (i) used, applied or retained pursuant to the preceding Section 9.1,
or (ii) returned to Tenant at the expiration of the Lease pursuant to Section
9.6, whichever first occurs. Interest shall be payable monthly in arrears at the
same time Basic Annual Rent is payable by Tenant.
9.3 If Tenant is not then in default of any provision of this Lease
to be performed by Tenant, the amount of the Security Deposit shall be reduced
to the amount of
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$200,000 (and Landlord shall return to Tenant that portion of the Security
Deposit above such amount) at such time as Tenant has achieved a minimum net
worth of $20,000,000 as reflected on a Form 10Q filed by Tenant with the
Securities and Exchange Commission.
9.4 In the event of bankruptcy or other debtor/creditor proceedings
against Tenant, the Security Deposit shall be deemed to be applied first to the
payment of Rent and other charges due Landlord for all periods prior to the
filing of such proceedings.
9.5 Landlord shall deliver the Security Deposit to any purchaser of
Landlord's interest in the Premises, and thereupon, upon notice to Tenant,
Landlord shall be discharged from any further liability with respect thereto
provided that such purchaser has agreed to assume in writing the obligations of
Landlord hereunder. This provision shall also apply to any subsequent transfers.
9.6 The Security Deposit shall be returned to Tenant within thirty
(30) days following the expiration of this Lease, except for amounts which are
needed by Landlord to cure any default by Tenant.
10. USE.
10.1 Tenant may use the Premises for any lawful purpose consistent
with (i) CP zoning existing as of the Commencement Date under the Ground Lease
or which would be permitted under MP zoning regulations as modified by Exhibit
"I" to the Ground Lease, except for residential or heavy industrial use, or for
use primarily for manufacturing, laboratories, cocktail lounges or outdoor
storage or for use as a service station or warehouse, except that warehouse use
incidental to any other use permitted hereunder shall not violate this Section
10.1; (ii) any other applicable laws, regulations, ordinances, permits and
approvals applicable to the Premises; and (iii) all covenants, conditions and
restrictions recorded against the Real Property as of the date this Lease is
executed, and shall not use the Premises, or permit or suffer the Premises to be
used, for any other purpose without the prior written consent of Landlord.
Landlord warrants that, as of the date this Lease is executed and as of the Term
Commencement Date, Tenant's intended use of the Premises as an internet service
provider and diversified computer sales, services and training company,
including office, administrative, marketing, software development, research
development and other activities related thereto, are permitted uses under the
zoning regulations mentioned above and, to the best of Landlord's knowledge,
under other applicable laws, regulations, ordinances, permits and approvals
applicable to the Premises. Landlord represents and warrants that there are no
covenants, conditions and restrictions on the Real Property which will interfere
with Tenant's intended use of the Premises.
10.2 Tenant shall use the Premises in compliance with all federal,
state, and local laws, regulations, ordinances, requirements, permits and
approvals applicable to the Premises. Tenant shall not use or occupy the
Premises in violation of any law or regulation, or the certificate of occupancy
issued for the Building, and shall, upon five (5) days' written notice from
Landlord, discontinue any such use.
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10.3 Tenant shall comply at its expense with any direction of any
governmental authority having jurisdiction which shall, by reason of the nature
of Tenant's use or occupancy of the Premises, impose any duty upon Tenant or
Landlord with respect to the Premises or with respect to the use or occupation
thereof, including any duty to make structural or capital improvements,
alterations, repairs and replacements to the Premises.
10.4 Landlord warrants that the Project Work shall be completed in
compliance with the Americans with Disabilities Act of 1990 ("ADA") at the time
possession is tendered to Tenant with the Project Work Substantially Complete.
Tenant shall comply with the ADA, and the regulations promulgated thereunder, as
amended from time to time. All responsibility for compliance with the ADA
relating to the use of the Premises and the activities conducted by Tenant
within the Premises shall be exclusively that of Tenant and not of Landlord,
including any duty to make structural or capital improvements, alterations,
repairs and replacements to the Premises; however, Landlord shall have the duty
to make such structural or capital improvements, alterations, repairs and
replacements to the Site Improvements and the Building Shell if the duty to do
so under ADA is triggered by something other than a change in Tenant's use or
occupancy of the Premises. Any alterations to the Premises made by Tenant for
the purpose of complying with the ADA or which otherwise require compliance with
the ADA shall be done in accordance with Article 17 of this Lease; provided,
that Landlord's consent to such alterations shall not constitute either
Landlord's assumption, in whole or in part, of Tenant's responsibility for
compliance with the ADA, or representation or confirmation by Landlord that such
alterations comply with the provisions of the ADA. Upon and after occupancy of
the Premises by Tenant, nothing in this Lease shall be construed to require
either Landlord or Tenant to make structural or capital improvements,
alterations, repairs or replacements to comply with ADA unless and until
required to do so by order of any government entity or court of law exercising
proper jurisdiction with regard thereto, subject to any right to appeal or
otherwise contest any such order.
10.5 Tenant may install signage on the Building, and signage on
monument(s) provided by Landlord, to the extent permitted by, and in conformity
with, applicable provisions of any City of Santa Xxxxx sign ordinance, any other
applicable governmental sign regulation, and any covenants, conditions and
restrictions recorded against the Real Property as of the date this Lease is
executed. Tenant acknowledges it is not relying on any representations or
warranty of Landlord regarding the number, size or location of any signage. No
other sign, advertisement, or notice shall be exhibited, painted or affixed by
Tenant on any part of the Premises which is visible from outside the Building,
or any part of the exterior of the Building or elsewhere in the Premises,
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld. The expense of design, permits, purchase and installation
of any signs shall be the responsibility of Tenant and the cost thereof shall be
borne by Tenant. At the termination of the Lease, all signs shall be the
property of Tenant and may be removed from the Premises by Tenant, subject to
the provisions of Article 30.
10.6 No equipment shall be placed at a location within the Building
other than a location designed to carry the load of the equipment. Equipment
weighing in excess of floor loading capacity shall not be placed in the
Building. Landlord represents and warrants to Tenant
15
that the first floor of the Building will have a minimum live load capacity of
200 lbs per square foot, and that the second floor of the Building will have a
minimum live load capacity of 100 lbs per square foot.
10.7 Tenant shall not use or allow the Premises to be used for any
unlawful purpose.
11. BROKERS.
11.1 Landlord and Tenant represent and warrant one to the other that
there have been no dealings with any real estate broker or agent in connection
with the negotiation of this Lease other than The Commercial Property Services
Company, the fees of which shall be paid by Landlord, and that to the best of
their knowledge, no other real estate broker or agent is or might be entitled to
a commission in connection with this Lease. Each shall indemnify, defend,
protect, and hold harmless the other from any claim of any other broker as a
result of any act or agreement of the indemnitor.
11.2 Landlord and Tenant each represent and warrant to the other
that no broker or agent has made any representation or warranty relied upon by
such party in its decision to enter into this Lease other than as contained in
this Lease.
11.3 The employment of brokers by Landlord is for the purpose of
solicitation of offers of lease from prospective tenants and no authority is
granted to any broker to furnish any representation (written or oral) or
warranty from Landlord unless placed within this Lease. Landlord and Tenant in
executing this Lease do so in reliance upon the other's representations and
warranties contained within Sections 11.1 and 11.2.
12. HOLDING OVER.
12.1 If, with Landlord's consent, Tenant holds possession of all or
any part of the Premises after the expiration or earlier termination of this
Lease, Tenant shall become a tenant from month to month upon the date of such
expiration or earlier termination, and in such case Tenant shall continue to pay
in accordance with Article 5 the Basic Annual Rent as adjusted from the Term
Commencement Date, together with Operating Expenses in accordance with Article 7
and other Additional Rent as may be payable by Tenant, and such month-to-month
tenancy shall be subject to every other term, covenant and condition contained
herein.
12.2 If Tenant remains in possession of all or any portion of the
Premises after the expiration or earlier termination of the term hereof without
the express written consent of Landlord, Tenant shall become a tenant at
sufferance upon the terms of this Lease except that monthly rental shall be
equal to one hundred twenty five percent (125%) of the monthly installment of
Basic Annual Rent in effect during the last twelve (12) months of the Lease
term.
12.3 Acceptance by Landlord of Rent after such expiration or earlier
termination shall not result in a renewal or reinstatement of this Lease.
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12.4 The foregoing provisions of this Article 12 are in addition to
and do not affect Landlord's right to re-entry or any other rights of Landlord
under Article 24 or elsewhere in this Lease or as otherwise provided by law.
13. TAXES AND ASSESSMENTS.
13.1 Landlord shall pay and discharge all Taxes (as defined in
Section 7.1(a)) as they become due, promptly and before delinquency, subject to
reimbursement by Tenant as Operating Expenses to the extent required by Article
7. Landlord shall provide to Tenant copies of all tax bills and notices from
taxing authorities relating to the Premises.
13.2 If the right is given to pay either in one sum or in
installments, Landlord shall elect to pay in installments. If by making such
election to pay in installments, any of the installments shall be payable after
the termination of this Lease or any extended term thereof, the unpaid
installments shall be prorated as of the date of termination, and amounts
payable after said date shall be paid by Landlord. All other taxes and charges
payable under this Article 13 shall be prorated as of and payable at the
commencement and expiration of the term of this Lease, as the case may be.
Landlord shall not during the term of this Lease undertake any action to place
any special assessments, levies or charges on the Premises without first
obtaining the prior written approval of Tenant, other than those due to new
construction and those imposed by the City of Santa Xxxxx or other government
entity over which Landlord has no control. If Landlord does undertake such
action without Tenant's approval, Landlord, and not Tenant, shall pay any
special assessments, levies or charges sought by such action.
13.3 Any and all rebates on account of taxes, rates, levies, charges
or assessments required to be paid and paid by Landlord and reimbursed as
Operating Expenses by Tenant under the provisions of this Lease shall belong to
Tenant, and Landlord will, on the request of Tenant, execute any receipts,
assignments, or other acquittances that may be necessary in order to secure the
recovery of the rebates, and will pay over to Tenant any rebates that may be
received by Landlord.
13.4 Tenant shall pay not less than ten (10) days before delinquency
taxes levied against any improvements, fixtures, equipment and personal property
of Tenant in or about the Premises.
13.5 If Tenant shall in good faith desire to contest the validity or
amount of any tax, assessment, levy, or other governmental charge herein agreed
to be paid by Tenant, Tenant shall be permitted to do so, and Landlord shall
defer the payment of said tax or charge, the validity or amount of which Tenant
is so contesting, until final determination of the contest, upon Tenant giving
to Landlord written notice thereof prior to the commencement of any contest,
which shall be at least fifteen (15) days prior to delinquency, and by
protecting Landlord on demand by a good and sufficient surety bond against any
tax, levy, assessment, rate or governmental charge, and from any costs,
penalties, interest, liability, or damage arising out of a contest. Landlord
shall not be required to join in any proceeding or contest brought by Tenant
17
unless the provisions of any law require that the proceeding or contest be
brought by or in the name of Landlord. In that case, Landlord shall join in the
contest or permit it to be brought in Landlord's name so long as Landlord is not
required to bear more than nominal costs. Landlord will otherwise cooperate with
Tenant in the prosecution of such contest, and shall furnish to Tenant
information and documentation related to the contest reasonably requested by
Tenant. Tenant, on final determination of the contest, shall immediately pay or
discharge any decision or judgment rendered relating to Taxes payable by Tenant
pursuant to Section 7.1, together with all costs, charges, interest and
penalties incidental to the decision or judgment.
13.6 Landlord may from time to time, and at Tenant's request shall,
apply for a re-determination of the assessed value of the Premises for property
tax purposes, in which event Landlord shall engage the services of a commercial
firm in the business of seeking re-determinations of assessed values, and shall
agree to compensate such firm for its services contingent upon the success
achieved. If after prosecuting any such application the resulting property tax
is less than it otherwise would have been, Tenant shall reimburse Landlord for
all customary and reasonable expenses incurred in such protest, including
reasonable attorney's fees and experts' fees, up to an amount equal to but not
to exceed the property tax savings during the remainder of the Lease term.
Tenant agrees to pay all such sums to Landlord within ten (10) days following
notice to Tenant from Landlord stating the amount due.
13.7 Tenant shall pay before delinquency, without reimbursement or
contribution from Landlord, taxes levied against any fixtures, equipment and
personal property in or about the Premises, including any and all personal
property installed as part of the Tenant Improvements.
14. CONDITION OF PREMISES.
14.1 Tenant acknowledges that neither Landlord nor any agent of
Landlord has made any representation or warranty, express or implied, with
respect to the Project Work, or the suitability of the Premises for the conduct
of Tenant's business, except as set forth in this Lease.
14.2 Landlord warrants to Tenant that the Project Work will, upon
Substantial Completion, be in a good and workmanlike manner and in compliance
with the Plans and Specifications and all applicable building code requirements,
laws, rules, orders, ordinances, directions, regulations, permits, approvals,
and requirements of all governmental agencies, offices, departments, bureaus and
boards having jurisdiction, and with the rules, orders, directions, regulations,
and requirements of any applicable fire rating bureau, and shall be free of
patent and latent defects in design, materials and construction. Furthermore,
Landlord warrants to Tenant that all materials and equipment shall be new and of
good quality, and shall have been installed in accordance with vendor and
manufacturer specifications, instructions and requirements. The warranty given
by Landlord in this Section 14.2 shall terminate one (1) year after the Term
Commencement Date, except for any breach claimed by Tenant as long as Tenant has
notified Landlord in writing of such claim of breach (identifying the breach in
reasonable
18
detail) within such one (1) year period. The warranty given by Landlord shall be
extended to the extent of any warranty given by a design professional,
contractor, materialman, manufacturer, or other responsible party which exceeds
one (1) year after the Term Commencement Date. Promptly after Substantial
Completion, Landlord shall deliver to Tenant copies of all warranties and
related construction documents.
15. PARKING FACILITIES.
15.1 Landlord shall provide as a part of the Site Improvements no
less than 199 parking spaces, all of which shall be located on the Real Property
in the locations designated on the Site Plan referred to in Exhibit "A-1".
15.2 Tenant acknowledges that any exterior areas used for Tenant's
equipment, equipment enclosures, trash enclosures, mechanical systems, and the
like will reduce available parking.
15.3 Tenant shall not place (other than on a temporary basis) any
equipment, storage containers or any other property on the surface parking area
except in accordance with the Plans and Specifications or as otherwise approved
by Landlord, which approval shall not be unreasonably withheld or delayed.
Tenant shall have the right to place standby electrical generation equipment,
air conditioning, satellite and similar equipment on or about the Premises in
accordance with applicable laws.
15.4 Landlord shall not grant rights to any person or entity, or
take any action of any kind, nature or description which will permit any
non-tenant of the Premises, to use any parking spaces on a temporary or
permanent basis, or construct any facilities which will increase the demand on
parking spaces. Landlord and Tenant shall cooperate with one another in an
effort to prevent any unauthorized use of the parking spaces. Tenant shall have
the right to restrict access to all or any portion of the parking spaces.
16. UTILITIES AND SERVICES.
16.1 Tenant shall pay directly to the provider, prior to
delinquency, for all water, gas, electricity, telephone, sewer, and other
utilities which may be furnished to the Premises during the term of this Lease,
together with any taxes thereon. Landlord shall notify Tenant that the Premises
are ready for installation of utilities not less than ten (10) days before the
Premises will be available for such installation. The cost of installing all
utility meters shall be paid by Tenant.
16.2 Landlord shall not be liable for, nor shall any eviction of
Tenant result from, any failure of any such utility or service, except as set
forth in this Section 16.2. In the event of any such failure Tenant shall not be
entitled to any abatement or reduction of Rent, nor be relieved from the
operation of any covenant or agreement of this Lease, and Tenant waives any
right to terminate this Lease on account thereof; however, Landlord shall be
liable to Tenant
19
for any damages on account thereof to the extent caused by Landlord's negligence
or willful misconduct.
17. ALTERATIONS.
17.1 After the Term Commencement Date, Tenant shall make no
alterations, additions or improvements (hereinafter in this article,
"improvements") in or to the Premises, other than interior non-structural
improvements the cost of which does not exceed $75,000 in any one instance,
without Landlord's prior written consent, which shall not be unreasonably
withheld or delayed. Tenant shall deliver to Landlord final plans and
specifications and working drawings (or other appropriate documentation) for the
improvements to Landlord, and Landlord shall have fifteen (15) days thereafter
to grant or withhold its consent. If Landlord does not notify Tenant of its
decision within the fifteen (15) days, Landlord shall be deemed to have given
its approval. If Landlord withholds its consent, it shall specify the reasons
therefore in a detailed writing to Tenant.
17.2 If a permit is required to construct the improvements, Tenant
shall promptly deliver a completed, signed-off inspection card to Landlord, and
shall promptly thereafter obtain and record a notice of completion and deliver a
copy thereof to Landlord.
17.3 The improvements shall be constructed only by employees of
Tenant or licensed contractors approved by Landlord, which approval shall not be
unreasonably withheld. Any such contractor must have in force a general
liability insurance policy with commercially reasonable limits, which policy of
insurance shall name Landlord as an additional insured. Tenant shall provide
Landlord with a copy of the contract with the contractor prior to the
commencement of construction.
17.4 Tenant agrees that any work by Tenant shall be accomplished in
such a manner as to permit any fire sprinkler system and fire water supply lines
to remain fully operable at all times except when minimally necessary for
building reconfiguration work.
17.5 Tenant covenants and agrees that all work done by Tenant shall
be performed in compliance with all laws, rules, orders, ordinances, directions,
regulations, permits, approvals, and requirements of all governmental agencies,
offices, departments, bureaus and boards having jurisdiction, and in full
compliance with the rules, orders, directions, regulations, and requirements of
any applicable fire rating bureau. For work for which a permit was required,
Tenant shall provide Landlord with "as-built" plans showing any change in the
Premises within thirty (30) days after completion.
17.6 Landlord shall make no improvements in or to the Premises
without Tenant's prior written consent, and the provisions of this article shall
apply to improvements undertaken by Landlord to the same extent as they apply to
improvements undertaken by Tenant.
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18. REPAIRS AND MAINTENANCE.
18.1 Landlord shall, at its own cost and expense, and without any
cost or expense to Tenant, promptly (i) repair any defects in the design,
materials or construction of the Project Work pursuant to the extent of its
warranties set forth in Section 14.3, and (ii) make any necessary improvements
to the Premises to comply with requirements of applicable covenants and
restrictions, underwriter requirements, or laws applicable to the Premises as of
the Term Commencement Date.
18.2 Landlord shall, throughout the term of this Lease, subject to
reimbursement from Tenant as Operating Expenses to the extent set forth in
Article 7, keep and maintain in good, sanitary and neat order, condition, and
repair, the Premises and every part thereof other than Tenant's property which
is removable by Tenant at the termination of the Lease pursuant to Section 30.3
("Tenant's Removable Property") (subject to wear and tear consistent with
commercially reasonable maintenance and repair standards applicable to
comparable buildings), and any portion of Tenant's Removable Property as Tenant
may from time to time request. Without in any way limiting the foregoing,
Landlord shall maintain the lines designating the parking spaces in good
condition and paint the same as often as may be necessary, so that they are
easily discernible at all times; resurface the parking areas as necessary to
maintain it in good condition; paint any exterior portions of the Building as
necessary to maintain them in good condition; and maintain the roof in good
condition. The parties hereto contemplate that Landlord's maintenance
responsibilities will for the most part be fulfilled through the use of
third-party service contracts, including service contracts for elevator
maintenance, HVAC maintenance, commercial sweeping, landscape maintenance, pest
control, exterior trash removal, exterior window washing, and certain fire, life
and safety servicing. Tenant reserves the right to require Landlord to change
service providers from time to time if Tenant is dissatisfied with cost or
performance, and Tenant reserves the right to assume any such duties itself.
18.3 Except as otherwise set forth in Section 18.2, Tenant shall,
throughout the term of this Lease, at its own cost and expense and without any
cost or expense to Landlord, keep and maintain that portion of the Tenant
Improvements constituting Tenant's Removable Property in good, sanitary and neat
order, condition, and repair (subject to wear and tear consistent with
commercially reasonable maintenance and repair standards applicable to
comparable buildings), and shall provide its own janitorial and security
services.
18.4 Tenant hereby waives Civil Code Sections 1941 and 1942 relating
to a landlord's duty to maintain the Premises in a tenantable condition, and
under said sections or under any law, statute or ordinance now or hereafter in
effect to make repairs at Landlord's expense.
18.5 There shall be no abatement of Rent and no liability of
Landlord by reason of any injury to or interference with Tenant's business
arising from the making of any repairs, alterations or improvements in or to any
portion of the Premises, or in or to improvements, fixtures, equipment and
personal property therein, provided that (i) such repairs, alterations or
21
improvements are not occasioned by the negligence or willful and wanton
misconduct of Landlord, and (ii) Landlord makes commercially reasonable efforts
to comply with its repair and replacement obligations under this Article 18 at
such times and in such manner as do not unreasonably interfere with Tenant's use
or occupancy of the Premises. If repairs or replacements become necessary which
by the terms of this Lease are the responsibility of Tenant and Tenant fails to
make the repairs or replacements, Landlord may do so pursuant to the provisions
of Section 24.3 of this Lease.
18.6 Because of security and operational concerns, access to the
interior of the Building by service providers shall be allowed only upon
reasonable advance notice to Tenant, and upon such reasonable conditions as may
be imposed by Tenant.
19. LIENS.
19.1 Tenant shall keep the Premises and every part thereof free from
any liens arising out of work performed, materials furnished or obligations
incurred by Tenant. Tenant further covenants and agrees that any mechanic's lien
filed against the Premises for work claimed to have been done directly for, or
materials claimed to have been furnished to, Tenant, will be discharged by
Tenant, by bond or otherwise, within thirty (30) days after the receipt of
notice of the filing thereof (or within ten (10) days after notice to Tenant of
the filing thereof if requested by Landlord as necessary to facilitate a pending
sale or refinancing), at the cost and expense of Tenant.
19.2 Should Tenant fail to discharge any lien of the nature
described in Section 19.1, Landlord may at Landlord's election pay such claim or
post a bond or otherwise provide security to eliminate the lien as a claim
against title and the cost thereof shall be immediately due from Tenant as
Additional Rent.
19.3 In the event Tenant shall lease or finance the acquisition of
office equipment, furnishings, or other personal property utilized by Tenant in
the operation of Tenant's business, should any holder of a security agreement
executed by Tenant record or place of record a financing statement which appears
to constitute a lien against any interest of Landlord, Tenant shall upon request
of Landlord (i) cause copies of the security agreement or other documents to
which the financing statement pertains to be furnished to Landlord to facilitate
Landlord's being in a position to show such lien is not applicable to any
interest of Landlord, and (ii) cause the holder of the security interest to
amend documents of record so as to clarify that such lien is not applicable to
any interest of Landlord in the Premises. Nothing herein shall be deemed to
imply any security interest in favor of Landlord in any fixtures or personal
property owned by Tenant, or that Tenant may not grant security interests in its
property to others. Upon request of Tenant, Landlord shall execute documents in
form and substance reasonably acceptable to Tenant to evidence Landlord's waiver
of any right, title, lien or interest in any fixtures or personal property owned
by Tenant which Tenant has the right to remove.
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20. INDEMNIFICATION AND EXCULPATION.
20.1 Except to the extent of Landlord's indemnity obligations set
forth in this Lease, Tenant agrees to indemnify Landlord, and its partners and
affiliates, and their respective shareholders, directors, officers, agents,
contractors (and their subcontractors) and employees (collectively, "Landlord's
Agents") against, and to protect, defend, and save them harmless from, all
demands, claims, causes of action, liabilities, losses and judgments, and all
reasonable expenses incurred in investigating or resisting the same (including
reasonable attorneys' fees), for death of or injury to person or damage to
property arising out of (i) any occurrence in, upon or about the Premises during
the term of this Lease to the extent of proceeds of insurance required to be
maintained by Tenant under this Lease and applicable deductibles, (ii) Tenant's
use, occupancy, repairs, maintenance, and improvements of the Premises and all
improvements, fixtures, equipment and personal property thereon, and (iii) any
act or omission of Tenant, its shareholders, directors, officers, agents,
employees, servants, contractors (and their subcontractors), invitees and
subtenants. Tenant's obligation under this Section 20.1 shall survive the
expiration or earlier termination of the term of this Lease for a period of one
(1) year.
20.2 Landlord agrees to indemnify Tenant, and its partners and
affiliates, and their respective shareholders, directors, officers, agents,
contractors (and their subcontractors) and employees (collectively, "Tenant's
Agents") against, and to protect, defend, and save them harmless from, all
demands, claims, causes of action, liabilities, losses and judgments, and all
reasonable expenses incurred in investigating or resisting the same (including
reasonable attorneys' fees), for death of or injury to person or damage to
property arising out of (i) any occurrence in, upon or about the Premises during
the term of this Lease to the extent caused by the negligence or willful
misconduct of Landlord or Landlord's Agents, (ii) Landlord's repairs,
maintenance, and improvements of the Premises, and (iii) any act or omission of
Landlord or Landlord's Agents (including servants, contractors and their
subcontractors and invitees). Landlord's obligation under this Section 20.2
shall survive the expiration or earlier termination of the term of this Lease
for a period of one (1) year.
20.3 Notwithstanding any provision of Sections 20.1 and 20.2 to the
contrary, Landlord shall not be liable to Tenant and Tenant assumes all risk of
damage to any fixtures, goods, inventory, merchandise, equipment, records,
research, experiments, computer hardware and software, leasehold improvements,
and other personal property of any nature whatsoever (including any personal
property installed as part of the Tenant Improvements), and Landlord shall not
be liable for injury to Tenant's business or any loss of income therefrom
relative to such damage, unless and to the extent caused by Landlord's or
Landlord's Agents' willful misconduct or active or gross negligence.
20.4 The indemnity obligations of both Landlord and Tenant under
this Section 20 shall be satisfied to the extent of proceeds of applicable
insurance maintained by Tenant to the extent thereof, and thereafter to proceeds
of any applicable insurance maintained by Landlord; Landlord and Tenant shall be
required to satisfy any such obligation only to the extent it is not satisfied
by proceeds of applicable insurance as set forth above.
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20.5 Security devices and services, if any, while intended to deter
crime may not in given instances prevent theft or other criminal acts and it is
agreed that Landlord shall not be liable for injuries or losses caused by
criminal acts of third parties and the risk that any security device or service
may malfunction or otherwise be circumvented by a criminal is assumed by Tenant.
Tenant shall at Tenant's cost obtain insurance coverage to the extent Tenant
desires protection against such criminal acts.
21. INSURANCE - WAIVER OF SUBROGATION.
21.1 Commencing prior to Tenant's first entry onto the Premises for
purposes of installing any improvements, fixtures or personal property, but no
later than the Term Commencement Date, and continuing at all times during the
term of this Lease, Tenant shall maintain, at Tenant's expense, commercial
general liability insurance insuring Tenant and Tenant's agents and employees
against all bodily injury, property damage, personal injury and other covered
loss arising out of the use, occupancy, improvement and maintenance of the
Premises and the business operated by Tenant, or any other occupant, on the
Premises. Such insurance shall have a minimum combined single limit of liability
per occurrence of not less than $1,000,000 and a general aggregate limit of
$2,000,000. Such insurance shall: (i) name Landlord, Landlord's lenders (if
required by such lenders), Ground Lessor, Ground Tenant, the District, and any
management company retained to manage the Premises (if requested by Landlord),
as additional insureds; (ii) provide that it is primary coverage and
noncontributing with any insurance maintained by Landlord, Landlord's lenders,
Ground Lessor, Ground Tenant, or the District, which shall be excess insurance
with respect only to losses arising out of Tenant's negligence; (iv) not include
a cross-liability exclusion, so that an act or omission of an insured shall not
reduce or avoid coverage of other insureds; and (v) provide for a deductible of
not more than $25,000 per claim.
21.2 At all times during the term of this Lease, Landlord shall
maintain, subject to reimbursement by Tenant as Operating Expenses under Section
7.1, "all risk" insurance, including, but not limited to, coverage against loss
or damage by earthquake, flood, fire, vandalism, and malicious mischief covering
the Site Improvements, Building Shell (exclusive of excavations, foundations and
footings), and Tenant Improvements (other than Tenant's Removable Property) in
an amount equal to one hundred percent (100%) of the full replacement value
thereof, and including rental income insurance for a period of not less than
twelve (12) months in an amount not less than Basic Annual Rent payable by
Tenant at the time of the loss. Landlord shall also maintain in full force and
effect during the term of this Lease demolition and debris removal insurance. If
any boilers or other pressure vessels or systems are installed on the Premises,
Landlord shall maintain, subject to reimbursement by Tenant as an Operating
Expense, boiler and machinery insurance in an amount equal to one hundred
percent (100%) of the full replacement value thereof. After Substantial
Completion, at all times during the course of any major demolition or
construction permitted hereunder, or any restoration pursuant to Articles 22 or
23, Landlord shall maintain, subject to reimbursement by Tenant as Operating
Expenses, "all risk" builder's risk insurance, including, but not limited to,
coverage against loss or damage by fire, vandalism and malicious mischief,
covering improvements in place and all material and equipment at the job site
furnished under contract, in an amount equal to one hundred percent
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(100%) of the full replacement value thereof. The insurance described in this
Section 21.2 shall: (i) insure Landlord, Landlord's lenders (if required by such
lenders), Ground Lessor, Ground Tenant, the District, and Tenant as their
interests may appear; (ii) contain a Lender's Loss Payable Form (Form 438 BFU or
equivalent) in favor of Landlord's lenders and name Landlord, or Landlord's
lender if required by such lender, as the loss payee; (iii) not include a
cross-liability exclusion, so that an act or omission of an insured shall not
reduce or avoid coverage of other insureds; (iv) include a building ordinance
endorsement; (v) provide that it is primary coverage and noncontributing with
any other insurance maintained by Landlord, Landlord's lenders, Ground Lessor,
Ground Tenant, or the District, which shall be excess insurance; (vi) provide
for deductibles of not more than $25,000 per claim without Tenant's consent
(except for earthquake and flood insurance, the deductibles for which may be
higher than $25,000); and (vii) provide that all insurance proceeds attributable
to the Site Improvements and Building Shell shall be adjusted by Ground Lessor
and Ground Tenant. The full replacement value of the Premises and any other
improvements and fixtures insured thereunder shall, for the purpose of
establishing insurance limits and premiums only, be reasonably determined by the
company issuing the insurance policy and shall be reasonably redetermined by
said company within six (6) months after completion of any material alterations
or improvements to the Premises and otherwise at intervals of not more than
three (3) years. The amount of insurance carried pursuant to this Section 21.2
shall be promptly increased to the amount so redetermined. Landlord warrants
that the proceeds of the insurance described in this Section shall be used for
the repair, replacement and restoration of the Premises, including the Site
Improvements, Building Shell, Tenant Improvements and other improvements and
fixtures insured thereunder, as further provided in Article 22; provided,
however, if this Lease is terminated after damage or destruction, the insurance
policy or policies, all rights thereunder and all insurance proceeds shall be
assigned to Landlord, except for that portion attributable to Tenant's Removable
Property, which shall be assigned to Tenant. Landlord and Tenant agree to
cooperate with one another to insure full insurance coverage hereunder without
duplicating coverage or otherwise incurring avoidable premium costs.
21.3 At all times during the term of this Lease, Tenant shall
maintain, at Tenant's expense, "all risk" insurance against Tenant's Removable
Property and all other personal property, including trade fixtures, equipment
and merchandise, of Tenant in an amount equal to the full replacement value
thereof. Any subtenant of Tenant that may be occupying the Premises, or any
portion thereof, from time to time, shall be required to maintain similar
insurance in an amount equal to the full replacement value thereof.
21.4 At all times during the term of this Lease, Tenant shall
maintain workers' compensation insurance in accordance with California law, and
employers' liability insurance with limits typical for companies similar to
Tenant.
21.5 All of the policies of insurance referred to in this Article 21
shall be written by companies rated A, VIII or better in Best's Insurance Guide.
Each insurer referred to in this Article 21 shall agree, by endorsement on the
applicable policy or by independent instrument furnished to Landlord, that it
will give Landlord, and Landlord's lenders if required
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by such lenders, at least ten (10) days' prior written notice by registered mail
before the applicable policy shall be cancelled for non-payment of premium.
21.6 Landlord and Tenant may provide the property insurance required
to be carried by each of them under this Article 21 pursuant to a so-called
blanket policy or policies of property insurance; provided, however, that the
amount and type of coverage shall not be reduced or adversely affected from that
which would exist under a separate policy or policies meeting all of the
requirements of this Lease by reason of the use of a blanket policy of property
insurance, and provided further that the requirements of this Article 21 are
otherwise satisfied.
21.7 Landlord and Tenant each hereby waive any and all rights of
recovery against the other or against the officers, directors, partners,
employees, agents, subtenants and representatives of the other, on account of
loss or damage to such waiving party's property or the property of others under
its control, to the extent that such loss or damage is caused by or results from
risks insured against under any insurance policy which insures such waiving
party's property at the time of such loss or damage, which waiver shall continue
in effect as long as the parties' respective insurers permit such waiver under
the terms of their respective insurance policies or otherwise in writing. Any
termination of such waiver shall be by written notice as hereinafter set forth.
Prior to obtaining policies of insurance required or permitted under this Lease,
Landlord and Tenant shall give notice to the insurers that the foregoing mutual
waiver is contained in this Lease, and each party shall use its best efforts to
cause such insurer to approve such waiver in writing and to cause each insurance
policy obtained by it to provide that the insurer waives all right of recovery
by way of subrogation against the other party. If such written approval of such
waiver of subrogation cannot be obtained from any insurer or is obtainable only
upon payment of an additional premium which the party seeking to obtain the
policy reasonably determines to be commercially unreasonable, the party seeking
to obtain such policy shall notify the other thereof, and the latter shall have
twenty (20) days thereafter to either: (i) identify other insurance companies
reasonably satisfactory to the other party that will provide the written
approval and waiver of subrogation; or (ii) agree to pay such additional
premium. If neither (i) nor (ii) are done, the mutual waiver set forth above
shall not be operative as to any policy for which the insurer's waiver cannot be
obtained, and the party seeking to obtain the policy shall be relieved of the
obligation to obtain the insurer's written approval and waiver of subrogation
with respect to such policy during such time as such policy is not obtainable or
is obtainable only upon payment of a commercially unreasonable additional
premium as described above. If such policies shall at any subsequent time be
obtainable or obtainable upon payment of a commercially reasonable additional
premium, neither party shall be subsequently liable for failure to obtain such
insurance until a reasonable time after notification thereof by the other party.
22. DAMAGE OR DESTRUCTION.
22.1 In the event of damage to or destruction of all or any portion
of the Premises or the improvements and fixtures thereon (collectively in this
Article 22, "improvements") arising from a risk covered by the insurance
described in Section 21.2, Landlord and Tenant shall each use commercially
reasonable efforts to obtain the maximum
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possible recovery of insurance proceeds from its insurer. Landlord shall, with
the use of proceeds of insurance required to be maintained hereunder, and the
deductibles payable by Tenant pursuant to Article 7, and within a reasonable
time, commence and proceed to diligently to repair, reconstruct and restore
(collectively in this Article 22, "restore" or "restoration") the Premises
(other than Tenant's Removable Property), and Tenant shall commence and
diligently proceed to restore the portion of the Tenant Improvements
constituting Tenant's Removable Property to the extent needed by Tenant to
conduct its business in the Premises, to substantially the same condition as
they were in immediately prior to the casualty, whether or not the insurance
proceeds and deductibles are sufficient to cover the actual cost of restoration,
and this Lease shall continue in full force and effect notwithstanding such
damage or destruction. Landlord shall contribute any amounts necessary to
restore the Site Improvements and Building Shell in excess of the proceeds of
insurance attributable thereto, and Tenant shall contribute any amounts
necessary to restore the Tenant Improvements in excess of the proceeds of
insurance attributable thereto.
22.2 In the event of damage to or destruction of all or any portion
of the improvements arising from a risk which is not covered by the insurance
described in Section 21.2, Landlord shall restore the improvements at its own
expense if the cost thereof is no greater than $250,000, and this Lease shall
continue in full force and effect. In the event of damage to or destruction of
all or any portion of the improvements arising from a risk which is not covered
by the insurance described in Section 21.2, the cost of restoration of which is
greater than $250,000, Landlord may elect to restore the improvements, and this
Lease shall continue in full force and effect. Landlord shall give Tenant
written notice of its election to restore the improvements within sixty (60)
days after the damage or destruction occurs, and shall, at its expense and
within a reasonable period of time thereafter, commence and proceed diligently
to restore the improvements to substantially the same condition as they were in
immediately prior to the casualty. If Landlord does not elect to restore the
improvements within such 60-day period, then this Lease shall terminate unless
Tenant delivers to Landlord written notice of its election to continue this
Lease within thirty (30) days thereafter. If Tenant elects to continue this
Lease, Tenant shall, at its expense and within a reasonable period of time,
commence and proceed diligently to restore the improvements to substantially the
same condition as they were in immediately prior to the casualty, and this Lease
shall continue in full force and effect notwithstanding such damage or
destruction.
22.3 Notwithstanding anything in Section 22.1 or 22.2 to the
contrary, if, in the opinion of an independent architect selected by Landlord
and Tenant within ten (10) days following the damage or destruction (which
opinion is to be rendered within thirty (30) days of selection), the damage or
destruction is so substantial that it cannot be corrected within three (3)
months of the date of damage, Tenant may elect to terminate this Lease by
delivering to Landlord written notice of its election to terminate within thirty
(30) days after the opinion of the architect is so given. Furthermore, if the
damage or destruction is not corrected within five (5) months of the date of
damage, Tenant may elect to terminate this Lease by delivering to Landlord
written notice of its election to terminate within thirty (30) days after the
expiration of such five (5) month period.
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22.4 In the event the Lease is terminated in accordance with the
forgoing provisions, (i) Tenant shall surrender possession of the Premises
within a reasonable period of time, (ii) this Lease shall terminate as of the
date possession of the Premises is surrendered, (iii) insurance proceeds shall
be distributed in accordance with the provisions of Section 21.2, (iv) Tenant
shall not be required to pay portion of insurance deductibles attributable to
any insured loss, and (v) the parties shall be released from all obligations
arising under this Lease after such termination date.
22.5 In satisfying any restoration obligations under this Article
22, neither party shall be required to restore improvements with improvements
identical to those which were damaged or destroyed; rather, with the consent of
the other party, which consent will not be unreasonably withheld, the restoring
party may restore the damage or destruction with improvements substantially the
same as those damaged or destroyed, unless commercially unavailable, in which
case the improvements may be reasonably equivalent to those damaged or
destroyed. In no event shall Tenant be required to restore its own trade
fixtures or equipment.
22.6 In the event of damage, destruction and/or restoration as
herein provided, Tenant shall not be entitled to any compensation or damages
occasioned by any such damage, destruction or restoration, except that Rent will
be abated for a period not to exceed twelve (12) months to the extent such
damage, destruction and/or restoration materially interferes with Tenant's
ability to conduct its business from the Premises.
22.7 Notwithstanding anything to the contrary contained in this
Lease, if the damage or destruction occurs during the last six (6) months of the
initial term of this Lease and Tenant has not exercised its option to extend the
term, or occurs during the last year of the extended term, and the cost to
repair such damage will exceed the sum of two (2) monthly installments of Basic
Annual Rent or take longer than two (2) months to complete, then Tenant shall
have the right to terminate this Lease by written notice to Landlord, in which
event this Lease shall terminate on the date Tenant vacates the Premises
following such damage or destruction.
22.8 The provisions of Article 17 shall apply to any restoration
work under this Article as if the restoration was an alteration, addition or
improvement thereunder.
22.9 Tenant waives the provisions of Civil Code Section 1932(2) and
1933(4) or any similar statute now existing or hereafter adopted governing
destruction of the Premises, so that the parties' rights and obligations in the
event of damage or destruction shall be governed by the provisions of this
Lease.
23. EMINENT DOMAIN.
23.1 In the event the whole of the Premises shall be taken for any
public or quasi-public purpose by any lawful power or authority by exercise of
the right of appropriation, condemnation or eminent domain, or sold to prevent
such taking, Tenant or Landlord may terminate this Lease effective as of the
date possession is required to be surrendered to said
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authority. The condemnation proceeds allocable to the Real Property, Site
Improvements and Building Shell shall be allocated to Landlord, the proceeds
allocable to the Tenant Improvements shall be allocated to Tenant, and any other
proceeds shall be allocated between Landlord and Tenant as their interests may
appear.
23.2 In the event of a partial taking of the Premises for any public
or quasi-public purpose by any lawful power or authority by exercise of right of
appropriation, condemnation, or eminent domain, or sold to prevent such taking,
then Tenant may elect to terminate this Lease if such taking is of material
detriment to, and substantially interferes with, Tenant's use and occupancy of,
and conduct of its business from, the Premises, including but not limited to
materially affecting Tenant's parking or Tenant's ingress and egress from the
Premises, unless Landlord provides reasonable alternatives thereto acceptable to
Tenant. In no event shall this Lease be terminated when such a partial taking
does not have a material adverse effect upon Landlord or Tenant or both.
Termination pursuant to this section shall be effective as of the date
possession is required to be surrendered to said authority. In the event of a
partial taking and whether or not Tenant terminates this Lease, Tenant and
Landlord shall be entitled to those condemnation proceeds attributable to those
items for which they are entitled to compensation pursuant to Section 23.1.
23.3 If upon any taking of the nature described in this Article 23
this Lease continues in effect, then Landlord shall promptly proceed to restore
the remaining portion of the Premises, and all improvements and fixtures located
thereon, to substantially their same condition prior to such partial taking.
Landlord shall contribute any amount necessary for restoration of the Site
Improvements and Building Shell in excess of the condemnation proceeds awarded
for such purpose, and Tenant shall contribute any amount necessary for
restoration of the Tenant Improvements (other than Tenant's Removable Property)
in excess of the condemnation proceeds awarded for such purposes. As of the date
possession is taken, monthly Rent shall (i) be reduced in the same proportion
that the floor area of that part of the Building so taken (less any addition
thereto by reason of any reconstruction) bears to the original floor area of the
Building, and (ii) be equitably reduced if any parking spaces or other outside
areas are taken to account for the value of the parking spaces or outside areas
so taken.
23.4 The provisions of Article 17 shall apply to any restoration
work under this Article as if the restoration was an alteration, addition or
improvement thereunder.
24. DEFAULTS AND REMEDIES.
24.1 Late payment by Tenant to Landlord of Rent and other sums due
will cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which will be extremely difficult and impracticable to ascertain. Such
costs include, but are not limited to, processing and accounting charges and
late charges which may be imposed on Landlord by the terms of any mortgage or
trust deed covering the Premises. Therefore, if any installment of Rent due from
Tenant is not received by Landlord within five (5) business days of the later of
the date such payment is due or written notice (including faxed notice) of late
payment is given by Landlord to Tenant, Tenant shall pay to Landlord an
additional sum of five percent (5%) of the
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overdue rent 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. In addition to the late charge, Rent not
paid within thirty (30) days of the date such payment is due shall bear interest
from thirty (30) days after the date due until paid at the lesser of (i) twelve
and one half percent (12.5%) per annum or (ii) the maximum rate permitted by
law.
24.2 No payment by Tenant or receipt by Landlord of a lesser amount
than the rent payment herein stipulated shall be deemed to be other than on
account of the rent, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as rent be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such rent or pursue any other remedy
provided. If at any time a dispute shall arise as to any amount or sum of money
to be paid by Tenant to Landlord, Tenant shall have the right to make payment
"under protest" and such payment shall not be regarded as a voluntary payment,
and there shall survive the right on the part of Tenant to institute suit for
recovery of the payment paid under protest.
24.3 If Tenant is in default of any of its obligations hereunder to
pay any sum of money (other than Basic Annual Rent) or to perform any other act
on its part to be performed hereunder, Landlord may, without waiving or
releasing Tenant from any obligations of Tenant, but shall not be obligated to,
make such payment or perform such act; provided, that such failure by Tenant
continued for fifteen (15) days after written notice from Landlord demanding
performance by Tenant was delivered to Tenant (or forty five (45) days after
such notice if the performance is such that it cannot reasonably be cured within
such 15-day period, and Tenant commenced performance within such 15-day period),
or that such failure by Tenant unreasonably interfered with the use or efficient
operation of the Premises, or resulted or could have resulted in a violation of
law or the cancellation of an insurance policy maintained by Landlord. All sums
so paid or incurred by Landlord, together with interest thereon, from the date
such sums were paid or incurred, at the annual rate equal to twelve and one half
percent (12.5%) per annum or the highest rate permitted by law, whichever is
less, shall be payable to Landlord on demand as Additional Rent.
24.4 The occurrence of any one or more of the following events shall
constitute a "default" hereunder by Tenant:
(a) The failure by Tenant to make any payment of Rent, as and
when due, where such failure shall continue for a period of ten (10) business
days after written notice thereof from Landlord to Tenant. Such notice shall be
in lieu of, and not in addition to, any notice required under California Code of
Civil Procedure Section 1161, so long as the notice complies with the
requirements of said statute;
(b) The material failure by Tenant to observe or perform any
material obligation other than described in Section 24.4(a) to be performed by
Tenant, where such failure shall continue for a period of thirty (30) days after
written notice thereof from Landlord to Tenant; provided, however, that if the
nature of Tenant's default is such that more than thirty (30) days are
reasonably required to cure the default, then Tenant shall not be deemed to be
in
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default if Tenant shall commence such cure within said thirty (30) day period
and thereafter diligently prosecute the same to completion. Such notice shall be
in lieu of, and not in addition to, any notice required under California Code of
Civil Procedure Section 1161, so long as the notice complies with the
requirements of said statute;
(c) A receiver, trustee or custodian is appointed to, or does,
take title, possession or control of all, or substantially all, of Tenant's
assets, and is not discharged within ninety (90) days thereafter;
(d) An order for relief is entered against Tenant pursuant to
a voluntary or involuntary proceeding commenced under any chapter of the
Bankruptcy Code which is not dismissed within ninety (90) days after the
commencement thereof;
(e) Any involuntary petition is filed against the Tenant under
any chapter of the Bankruptcy Code and is not dismissed within ninety (90) days;
or
(f) Tenant's interest in this Lease is attached, executed
upon, or otherwise judicially seized and such action is not released within
ninety (90) days of the action.
Notices given under this Section shall specify the alleged default
and shall demand that Tenant perform the provisions of this Lease or pay the
Rent that is in arrears, as the case may be, within the applicable period of
time, or quit the Premises. No such notice shall be deemed a forfeiture or a
termination of this Lease unless Landlord elects otherwise in such notice, and
in no event shall a forfeiture or termination occur without such written notice.
24.5 In the event of a default by Tenant, and at any time thereafter
while such default is continuing, and without limiting Landlord in the exercise
of any right or remedy which Landlord may have, Landlord shall be entitled to
terminate Tenant's right to possession of the Premises by any lawful means, in
which case this Lease shall terminate and Tenant shall immediately surrender
possession of the Premises to Landlord. In such event Landlord shall have the
immediate right to re-enter and remove all persons and property by any lawful
means, and such property may be removed and stored in a public warehouse or
elsewhere at the cost of, and for the account of Tenant, all without service of
notice and without being deemed guilty of trespass, or becoming liable for any
loss or damage which may be occasioned thereby, subject to the rights of
personal property lessors or secured parties with validly granted and duly
perfected ownership or security interests in any such property. In the event
that Landlord shall elect to so terminate this Lease, then Landlord shall be
entitled to recover from Tenant all damages incurred by Landlord by reason of
Tenant's default, including:
(a) The worth at the time of award of any unpaid Rent which
had been earned at the time of such termination; plus
(b) 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 which Tenant proves could have been
reasonably avoided; plus
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(c) The worth at the time of award of the amount by which the
unpaid Rent for the balance of the term after the time of award exceeds the
amount of such rental loss which Tenant proves could have been reasonably
avoided; plus
(d) Any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its obligation
under this Lease or which in the ordinary course of things would be likely to
result therefrom; plus
(e) At Landlord's election, such other amounts in addition to
or in lieu of the foregoing as may be permitted from time to time by applicable
law.
As used in Subsections (a), (b) and (c), the "time of award"
shall mean the date upon which the judgment in any action brought by Landlord
against Tenant by reason of such default is entered or such earlier date as the
court may determined. As used in Subsections (a) and (b), the "worth at the time
of award" shall be computed by allowing interest at the rate specified in
Section 24.1. As used in Subsection (c) above, the "worth at the time of award"
shall be computed by taking the present value of such amount using the discount
rate of the Federal Reserve Bank of San Francisco at the time of award plus one
percentage point.
Nothing in this Section 24.5 is intended to increase or
enlarge the damages recoverable by Landlord under Section 1951.2 of the Civil
Code, as same may be amended from time to time.
24.6 If Landlord does not elect to terminate this Lease as provided
in Section 24.5 or otherwise terminate Tenant's right to possession of the
Premises, Landlord shall have the remedy described in Section 1951.4 of the
Civil Code. Landlord may continue the lease in effect for so long as Landlord
does not terminate Tenant's right to possession of the Premises, and may enforce
all of its rights and remedies under the Lease, including the right from time to
time to recover Rent as it becomes due under the Lease. At any time thereafter,
Landlord may elect to terminate this Lease and to recover damages to which
Landlord is entitled.
24.7 Notwithstanding anything herein to the contrary, Landlord's
reentry to perform acts of maintenance or preservation of, or in connection with
efforts to relet, the Premises, or any portion thereof, or the appointment of a
receiver upon Landlord's initiative to protect Landlord's interest under this
Lease, shall not terminate Tenant's right to possession of the Premises or any
portion thereof and, until Landlord does elect to terminate this Lease or
terminates Tenant's right to possession of the Premises, this Lease shall
continue in full force and Landlord may pursue all its remedies hereunder,
including, without limitation, the right to recover from Tenant as they become
due hereunder all Rent and other charges required to be paid by Tenant under the
terms of this Lease.
24.8 All rights, options, and remedies of Landlord contained in this
Lease shall be construed and held to be nonexclusive and cumulative. Landlord
shall have the right to pursue any one or all of such remedies or any other
remedy or relief which may be provided by
32
law, whether or not stated in this Lease. No waiver of any default of Tenant
hereunder shall be implied from any acceptance by Landlord of any rent or other
payments due hereunder or by any omission by Landlord to take any action on
account of such default if such default persists or is repeated, and no express
waiver shall affect defaults other than as specified in said waiver.
24.9 Termination of this Lease or Tenant's right to possession by
Landlord as a result of a default by Tenant shall not relieve Tenant from any
liability to Landlord which has theretofore accrued or shall arise based upon
events which occurred prior to the last to occur of (i) the date of Lease
termination or (ii) the date possession of Premises is surrendered or taken by
Landlord.
24.10 Landlord shall not be in default unless Landlord fails to
perform obligations required of Landlord within a reasonable time, but in no
event later than ten (10) days for any monetary obligation and thirty (30) days
for any other obligation after written notice by Tenant specifying wherein
Landlord has failed to perform such obligation; provided, however, that if the
nature of Landlord's non-monetary obligation is such that more than thirty (30)
days are required for performance, then Landlord shall not be in default if
Landlord commences performance of such non-monetary obligation within such
thirty (30) day period and thereafter diligently prosecutes the same to
completion. If Landlord is in default hereunder, Tenant may cure such default
and offset the expense thereof against Rent except to the extent the expense
would otherwise be an Operating Expense under Article 7. All sums due to Tenant
from Landlord or expended by Tenant to cure Landlord's default shall bear
interest from the date due from Landlord or expended by Tenant, as applicable,
until paid to Tenant in full, at the annual rate equal to twelve and one half
percent (12.5%) per annum or the highest rate permitted by law, whichever is
less.
24.11 In the event of any default on the part of Landlord, Tenant
will give notice by registered or certified mail to any beneficiary of a deed of
trust or mortgagee of a mortgage covering the Premises whose address shall have
been furnished and shall offer such beneficiary and/or mortgagee a reasonable
opportunity to cure the default.
25. ASSIGNMENT OR SUBLETTING.
25.1 Except as hereinafter provided, Tenant shall not, either
voluntarily or by operation of law, sell, hypothecate or transfer this Lease, or
sublet the Premises or any part thereof, without the prior written consent of
Landlord in each instance, which consent shall not be unreasonably withheld or
delayed.
25.2 If Tenant desires to sublet all or any part of the Premises, or
to assign this Lease, to any entity into which Tenant is merged, with which
Tenant is consolidated, or which acquires all or substantially all of the assets
or shares of Tenant, or to a parent, subsidiary, or other affiliate of Tenant,
provided that the subtenant or assignee first executes, acknowledges and
delivers to Landlord an agreement whereby the subtenant or assignee agrees to be
bound by all of the covenants and agreements in this Lease to the extent
relating to the unexpired term of the
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Lease and, in the event of a sublease, the portion of the Premises so sublet,
then the consent of Landlord to the sublease or assignment will not be required.
25.3 In the event Tenant desires to assign, sublease, hypothecate or
otherwise transfer this Lease or sublet the Premises to an assignee or sublessee
other than one set forth in Section 25.2, then at least fifteen (15) days, but
not more than ninety (90) days, prior to the date when Tenant desires the
assignment or sublease to be effective (the "Assignment Date"), Tenant shall
give Landlord a notice (the "Assignment Notice") which shall set forth the name,
address and business of the proposed assignee or sublessee, information
(including references and financial statements) concerning the reputation and
financial ability of the proposed assignee or sublessee, the Assignment Date,
any ownership or commercial relationship between Tenant and the proposed
assignee or sublessee, and the consideration and all other material terms and
conditions of the proposed assignment or sublease.
25.4 Landlord in making its determination as to whether consent
should be given to a proposed assignment or sublease, may give consideration to
the reputation of a proposed successor, the financial strength of such successor
(notwithstanding the assignor remaining liable for Tenant's performance), and
any use which such successor proposes to make of the Premises which would
involve the generation, storage, use, treatment or disposal of Hazardous
Materials. If Landlord fails to deliver written notice of its determination to
Tenant within fifteen (15) days following receipt of the Assignment Notice and
the information required under Section 25.3, Landlord shall be deemed to have
approved the request. In no event shall Landlord be deemed to be unreasonable
for declining to consent to a transfer to a successor of poor reputation,
lacking financial qualification, seeking a change in use which would involve the
generation, storage, use, treatment or disposal of Hazardous Materials in any
manner for a purpose prohibited by any applicable Law, so long as Landlord is
reasonable in making its determination based on such factors. Any refusal to
consent to such assignment or sublease shall be in writing and shall state in
detail the reason for Landlord's failure to approve the assignment or sublease.
As a condition to any assignment or sublease to which Landlord has given
consent, any such assignee or sublessee must execute, acknowledge and deliver to
Landlord an agreement whereby the assignee or sublessee agrees to be bound by
all of the covenants and agreements in this Lease to the extent relating to the
unexpired term of the Lease and, in the event of a sublease, the portion of the
Premises so sublet.
25.5 Notwithstanding the foregoing, Tenant shall have the right to
enter into license or other usage agreements for the use of the Premises by
third parties without Landlord's consent, provided such agreements do not entail
the creation of a separate common corridor for the licensee.
25.6 Any sale, assignment, hypothecation or transfer of this Lease
or subletting of Premises that is not in compliance with the provisions of this
Article 25 shall be void.
25.7 The consent by Landlord to an assignment or subletting shall
not relieve Tenant or any assignee of this Lease or sublessee of the Premises
from obtaining the consent of
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Landlord to any further assignment or subletting or as releasing Tenant or any
assignee or sublessee of Tenant from full and primary liability.
25.8 If Tenant shall sublet the Premises or any part thereof Tenant
hereby immediately and irrevocably assigns to Landlord, as security for Tenant's
obligations under this Lease, all rent from any subletting of all or a part of
the Premises and Landlord as assignee, or a receiver for Tenant appointed on
Landlord's application, may collect such rent and apply it toward Tenant's
obligations under this Lease; except that, before the occurrence and after the
subsequent cure of a default in the payment of Basic Annual Rent by Tenant,
Tenant shall have the right to collect such rent.
25.9 Notwithstanding any subletting or assignment, Tenant shall
remain fully and primarily liable for the payment of all Rent and other sums
due, or to become due hereunder, and for the full performance of all other
terms, conditions, and covenants to be kept and performed by Tenant. The
acceptance of rent or any other sum due hereunder, or the acceptance of
performance of any other term, covenant, or condition hereof, from any other
person or entity shall not be deemed to be a waiver of any of the provisions of
this Lease or a consent to any subletting or assignment of the Premises.
Landlord shall not withhold consent to an assignment back to the original Tenant
hereunder from a subsequent assignee.
25.10 Any sublease of the Premises shall be subject and subordinate
to the provisions of this Lease, shall not extend beyond the term of this Lease,
and shall provide that the sublessee shall attorn to Landlord, at Landlord's
sole option, in the event of the termination of this Lease. Landlord and any
lender shall upon Tenant's request provide any subtenant of the entirety of the
Premises with a recognition and nondisturbance agreement in the form set forth
in Article 35 hereof on the condition that the sublessee agrees to attorn to
Landlord on exactly the same terms and conditions as this Lease.
26. ATTORNEY'S FEES.
26.1 If either party commences an arbitration, action or proceeding
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 other party
reasonable attorney's fees, expert witness fees and costs of suit or
arbitration.
27. BANKRUPTCY.
27.1 In the event a debtor or trustee under the Bankruptcy Code, or
other person with similar rights, duties and powers under any other law,
proposes to cure any default under this Lease or to assume or assign this Lease,
and is obliged to provide adequate assurance to Landlord that (i) a default will
be cured, (ii) Landlord will be compensated for its damages arising from any
breach of this Lease, or (iii) future performance under this Lease will occur,
then adequate assurance shall include any or all of the following, as determined
by the Bankruptcy Court:
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(a) Those acts specified in the Bankruptcy Code or other law
as included within the meaning of adequate assurance;
(b) A cash payment to compensate Landlord for any monetary
defaults or damages arising from a breach of this Lease;
(c) The credit worthiness and desirability, as a tenant, of
the person assuming this Lease or receiving an assignment of this Lease, at
least equal to Landlord's customary and usual credit worthiness requirements and
desirability standards in effect at the time of the assumption or assignment, as
determined by the Bankruptcy Court; and
(d) The assumption or assignment of all of Tenant's interest
and obligations under this Lease.
28. DEFINITION OF LANDLORD.
28.1 The term "Landlord" as used in this Lease, so far as covenants
or obligations on the part of Landlord are concerned, shall be limited to mean
and include only Landlord or the successor-in-interest of Landlord under this
Lease at the time in question. In the event of any transfer, assignment or
conveyance of Landlord's title or leasehold, the Landlord herein named (and in
case of any subsequent transfers or conveyances, the then grantor and any prior
grantors) shall be automatically freed and relieved from and after the date of
such transfer, assignment or conveyance of all liability for the performance of
any covenants or obligations contained in this Lease thereafter to be performed
by Landlord and, without further agreement, the transferee of such title or
leasehold shall be deemed to have assumed and agreed to observe and perform any
and all obligations of Landlord hereunder, during its ownership of the Premises.
Landlord may transfer its interest in the Premises or this Lease without the
consent of Tenant and such transfer or subsequent transfer shall not be deemed a
violation on the part of Landlord or the then grantor of any of the terms or
conditions of this Lease.
29. ESTOPPEL CERTIFICATE.
29.1 Each party shall, within fifteen (15) days of written notice
from the other party, execute, acknowledge and deliver to the other party a
statement in writing on a form reasonably requested by a proposed lender,
purchaser, assignee or subtenant (i) certifying that this Lease is unmodified
and in full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease as so modified is in full force and
effect) and the dates to which the rental and other charges are paid in advance,
if any, (ii) acknowledging that there are not, to such party's knowledge, any
uncured defaults on the part of Landlord or Tenant hereunder (or specifying such
defaults if any are claimed) and (iii) setting forth such further information
with respect to this Lease or the Premises as may be reasonably requested
thereon.
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30. REMOVAL OF PROPERTY.
30.1 All fixtures and personal property paid for by Tenant,
including telephone switch equipment and the movable office partitions and
systems, shall be and remain the property of Tenant, and, except as otherwise
provided in Sections 30.3 and 30.4, may be removed by Tenant at the expiration
of the term of this Lease, or at any earlier time provided Tenant is not then in
material default hereunder. Landlord agrees to execute within ten (10) days
after request such landlord lien waivers as may reasonably be requested from
time to time for Tenant's Removable Property for the benefit of Tenant's
lenders.
30.2 The Site Improvements and the Building Shell shall be and
remain the property of Landlord, and shall remain upon and be surrendered with
the Premises.
30.3 The Tenant Improvements shall be and remain the property
of Tenant throughout the term of the Lease, but shall become the property of
Landlord upon the expiration or earlier termination of the Lease, and shall
remain upon and be surrendered with the Premises, except for the UPS equipment,
generators and Liebert air conditioning system, the dry fire suppressant system
(FM 200), and the computer floors, all of which shall remain Tenant's property
and may be removed by Tenant upon the expiration or earlier termination of this
Lease. All fixtures, personal property and Tenant Improvements which may be
removed by Tenant at Lease termination are referred to in this Lease as
"Tenant's Removable Property". In any event, all other improvements, additions,
alterations, and decorations constructed or installed in the Premises by Tenant
that are of general utility to the operation of the Building, except for
Tenant's Removable Property, shall become the property of Landlord upon the
expiration or earlier termination of this Lease, and shall remain upon and be
surrendered with the Premises, including, without limiting the generality of the
foregoing, walls, partitions and related coverings; non-computer flooring and
floor coverings; ceilings; insulation; doors, frames and related hardware;
built-in cabinet work and paneling; lighting fixtures; built-in security
systems; "wet" fire sprinkler system; lobbies; rest rooms; mechanical (HVAC)
system, including central plant and controls, and including equipment, screens
and enclosures; environmental control and monitoring systems; telephone,
electrical and other wires and cabling; elevator and related components;
plumbing system and fixtures; and electrical and other utility systems and
components thereof and appurtenances thereto. Tenant shall also have the right
to remove any improvement, addition, alteration, decoration and/or trade fixture
installed or constructed in the Premises by Tenant that are not part of the
Building Shell or Tenant Improvements and are not of general utility to the
operation of the Building and/or that are used in the operation of Tenant's
business so long as any damage caused by such removal is repaired.
30.4 Notwithstanding Sections 30.1 and 30.3 hereof, Tenant may
not remove any property if such removal would cause material damage to the
Premises, unless such damages can be and is repaired by Tenant. Furthermore,
Tenant shall repair any damage to the Premises caused by Tenant's removal of any
such property, and shall, prior to the expiration or earlier termination of this
Lease, restore and return the Premises to the condition they were in when first
occupied by Tenant, excepting reasonable wear and tear, damages caused by
casualty or condemnation, and damages caused by release or emission of Hazardous
Materials (as described
37
in Article 39) by a person or entity other than Tenant. At a minimum, Tenant
shall leave in place and repair any damage to the interior floors, walls and
ceilings of the Premises. The provisions of Article 17 shall apply to any
restoration work under this Article as if the restoration was an alteration,
addition or improvement thereunder. Should Tenant require any period beyond the
expiration or earlier termination of the Lease to complete such restoration,
Tenant shall be a tenant at sufferance subject to the provisions of Section 12.2
hereof.
30.5 If Tenant shall fail to remove any fixtures or personal
property which it is entitled to remove under this Article 30 from the Premises
prior to termination of this Lease, then Landlord may dispose of the property
under the provisions of Section 1980 et seq. of the California Civil Code, as
such provisions may be modified from time to time, or under any other applicable
provisions of California law.
31. LIMITATION OF LANDLORD'S LIABILITY.
31.1 Except as set forth in Section 31.2, 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 Premises, and out of insurance proceeds, rent or
other income from the Premises 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 Premises.
31.2 Neither Landlord nor Landlord's Agents shall be
personally liable for any deficiency except to the extent liability is based
upon willful and intentional misconduct. If Landlord is a limited liability
company, the members and manager of such limited liability company shall not be
personally liable and no member or manager of Landlord shall be sued or named as
a party in any suit or action, or service of process be made against any member
or manager of Landlord, except as may be necessary to secure jurisdiction of the
limited liability company or to the extent liability is caused by willful and
intentional misconduct. If Landlord is a partnership or joint venture, the
partners of such partnership shall not be personally liable and no partner of
Landlord shall be sued or named as a party in any suit or action, or service of
process be made against any partner of Landlord, except as may be necessary to
secure jurisdiction of the partnership or joint venture or to the extent
liability is caused by willful and intentional misconduct. If Landlord is a
corporation, the shareholders, directors, officers, employees, and/or agents of
such corporation shall not be personally liable and no shareholder, director,
officer, employee, or agent of Landlord shall be sued or named as a party in any
suit or action, or service of process be made against any shareholder, director,
officer, employee, or agent of Landlord, except as may be necessary to secure
jurisdiction of the corporation or to the extent liability is caused by willful
and intentional misconduct. No partner, shareholder, director, employee, or
agent of Landlord shall be required to answer or otherwise plead to any service
of process and no judgment will be taken or writ of execution levied against any
partner, shareholder, director, employee, or agent of Landlord.
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31.3 No officer, director, or shareholder of Tenant shall be
personally liable for any deficiency, and no officer, director, or shareholder
of Tenant shall be sued or named as a party in any suit or action, or service of
process be made against any officer, director or shareholder of Tenant, except
as may be necessary to secure jurisdiction of the corporation.
31.4 Each of the covenants and agreements of this Article 31
shall be applicable to any covenant or agreement either expressly contained in
this Lease or imposed by statute or by common law.
32. [INTENTIONALLY LEFT BLANK]
33. QUIET ENJOYMENT.
33.1 So long as Tenant is not in default, Tenant may peaceably
and quietly have, hold, use, occupy and enjoy the Premises during the term and
any extended term of this Lease.
33.2 Landlord shall keep and perform all obligations required
of it under the Sub Ground Lease, and shall cause the lessees under the Ground
Lease and Master Lease to keep and perform all obligations required of the
lessees under the Ground Lease and Master Lease, in order to protect and
preserve Tenant's estate hereunder.
34. QUITCLAIM DEED.
34.1 Tenant shall execute and deliver to Landlord on the
expiration or termination of this Lease, immediately on Landlord's request, a
quitclaim deed to the Premises or other document in recordable form suitable to
evidence of record termination of this Lease.
35. SUBORDINATION AND ATTORNMENT.
35.1 Unless the mortgagee or beneficiary elects otherwise at
any time prior to or following a default by Tenant, this Lease shall be subject
to and subordinate to the lien of any mortgage or deed of trust now or hereafter
in force against the Premises or any portion thereof, and to all advances made
or hereafter to be made upon the security thereof without the necessity of the
execution and delivery of any further instruments on the part of Tenant to
effectuate such subordination, provided that the lienholder, beneficiary, or
mortgagee executes and delivers to Tenant a nondisturbance, attornment, and
subordination agreement in recordable form in the form the lienholder,
beneficiary, mortgagee or ground lessor may reasonably request, the form and
substance of which is subject to the approval of Tenant, which approval will not
be unreasonably withheld, setting forth that so long as Tenant is not materially
in default of a material provision of this Lease, Landlord's and Tenant's rights
and obligations hereunder (including the use of insurance and condemnation
proceeds as set forth herein) shall remain in force and Tenant's right to
possession shall be upheld. Each nondisturbance agreement shall provide for use
of insurance and condemnation proceeds as set forth in Articles 22 and 23 of
this Lease.
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35.2 Notwithstanding the foregoing, Tenant shall within ten
(10) days of request of Landlord promptly execute and deliver such further
instrument or instruments reasonably required by Landlord and reasonably
acceptable to Tenant evidencing such subordination of this Lease to the lien of
any such mortgage or deed of trust as may be required by Landlord, provided that
the lienholder, beneficiary, or mortgagee has previously executed and delivered
to Tenant for recordation a nondisturbance agreement in form and substance
approved by Tenant, which approval shall not be unreasonably withheld. However,
if any such lienholder, beneficiary or mortgagee so elects at any time prior to
or following a default by Tenant, this Lease shall be deemed prior in lien to
any such mortgage or deed of trust regardless of date and Tenant will execute a
statement in writing to such effect at Landlord's request.
35.3 In the event any proceedings are brought for foreclosure,
or in the event of the exercise of the power of sale under any mortgage or deed
of trust made by the Landlord covering the Premises, the Tenant shall at the
election of the purchaser at such foreclosure or sale attorn to the purchaser
upon any such foreclosure or sale and recognize such purchaser as the Landlord
under this Lease in accordance with the terms of the nondisturbance Agreement.
35.4 The rights of Landlord hereunder shall also accrue to the
landlords under the Master Lease, Ground Lease and Sub Ground Lease, and Tenant
shall enter into subordination, nondisturbance and attornment agreements and
shall execute estoppel certificates from time to time in form, scope and
substance reasonably satisfactory to Tenant and to such landlords and their
lenders and assignees.
36. SURRENDER.
36.1 Except as otherwise provided herein, no surrender of
possession of any part of the Premises shall release Tenant from any of its
obligations hereunder unless accepted by Landlord.
36.2 The voluntary or other surrender of this Lease by Tenant
shall not work a merger, unless Landlord consents, and shall, at the option of
Landlord, operate as an assignment to it of any or all subleases or
subtenancies.
37. WAIVER AND MODIFICATION.
37.1 No provision of this Lease may be waived, modified,
amended or added to except by an agreement in writing. The waiver by either
party hereto of any breach of any term, covenant or condition herein contained
shall not be deemed to be a waiver of any subsequent breach of the same or any
other term, covenant or condition herein contained.
38. [INTENTIONALLY LEFT BLANK]
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39. HAZARDOUS MATERIAL.
39.1 Tenant shall have the right to use and store Hazardous
Materials in or about the Premises provided that such Hazardous Materials are
reasonably necessary or useful to the business of Tenant and are used, kept and
stored in a manner consistent with and permitted by the zoning and other
governmental restrictions applicable to the Premises, and provided that such use
would be allowed in connection with "Group B Occupancy" under the provisions of
Chapter 7 of the 1991 Uniform Building Code commencing with Section 701. Tenant,
at its sole cost, shall comply with all federal, state and local laws, statutes,
ordinances, codes, regulations and orders relating to Tenant's receiving,
handling, use, storage, accumulation, transportation, generation, spillage,
migration, discharge, release and disposal of Hazardous Material (as hereinafter
defined in Section 39.12 hereof) in or about the Premises. Tenant shall not
cause or permit any Hazardous Material to be brought upon, kept or used in or
about the Premises by Tenant, its agents, employees, contractors, invitees or
subtenants, in a manner or for a purpose prohibited by any federal, state or
local agency or authority. The accumulation of Hazardous Material shall be in
approved containers and removed from the Premises by duly licensed carriers.
39.2 Tenant shall promptly provide Landlord with telephonic
notice, which shall promptly be confirmed by written notice, of any and all
release and emission of Hazardous Material onto or within the Premises of which
Tenant is aware, including the soils and subsurface waters thereof, which by law
must be reported to any federal, state or local agency, and any injuries or
damages resulting directly or indirectly therefrom. Further, Tenant shall
deliver to Landlord each and every notice or order, when said order or notice
identifies a violation which may have the potential to adversely impact the
Premises, received from any federal, state or local agency concerning Hazardous
Material and the possession, use and/or accumulation thereof promptly upon
receipt of each such notice or order by Tenant. Landlord shall have the right,
upon reasonable notice, to inspect and copy each and every notice or order
received from any federal, state or local agency concerning Hazardous Material
and the possession, use and/or accumulation thereof.
39.3 Tenant shall be responsible for and shall indemnify,
protect, defend and hold harmless Landlord and Landlord's Agents from any and
all liability, damages, injuries, causes of action, claims, judgments, costs,
penalties, fines, losses, and expenses which arise during or after the term of
this Lease and which result from Tenant's (or from Tenant's Agents, assignees,
subtenants, employees, agents, contractors, licensees, or invitees) release or
emission of Hazardous Material in, upon or about the Premises, including without
limitation (i) damages for the loss or restriction on use of any portion or
amenity of the Premises, (ii) damages arising from any adverse impact on
marketing of space in the Building, and (iii) reasonable consultant fees, expert
fees, and attorneys' fees. Landlord shall be responsible for and shall
indemnify, protect, defend and hold harmless Tenant on the same basis and to the
same extent as set forth in the preceding sentence for all other claims which
arise from the release, emission or migration of Hazardous Material in, upon, to
or about the Premises.
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39.4 The indemnification pursuant to the preceding Section
39.3 includes, without limiting the generality of Section 39.3, reasonable costs
incurred in connection with any investigation of site conditions or any cleanup,
remedial, removal or restoration work required by any federal, state or local
governmental agency or political subdivision because of Hazardous Material
present in the soil, subsoil, ground water, or elsewhere on, under or about the
Premises. Without limiting the foregoing, if the presence of any Hazardous
Material on the Premises results in any contamination of the Premises, or
underlying soil or groundwater, the party responsible therefore under Section
39.3 shall promptly take all actions at its sole expense as are necessary to
return the Premises to the condition existing prior to the introduction of any
such Hazardous Material, provided that the other party's approval of such action
shall first be obtained, which approval shall not be unreasonably withheld so
long as such actions would not potentially have any material adverse long-term
or short-term effect on the Premises, except that the responsible party shall
not be required to obtain the other party's prior approval of any action of an
emergency nature reasonably required or any action mandated by a governmental
authority.
39.5 Landlord acknowledges that it is not the intent of this
Article 39 to prohibit Tenant from operating its business as described in
Article 10 or to unreasonably interfere with the operation of Tenant's business.
Tenant may operate its business according to the custom of the industry so long
as the use or presence of Hazardous Material is strictly and properly monitored
according to all applicable governmental requirements. At Landlord's request,
and at reasonable times, Tenant shall make available to Landlord true and
correct copies of the following documents (hereinafter referred to as the
"Hazardous Material Documents") relating to the handling, storage, disposal,
release and emission of Hazardous Material: permits; approvals; reports and
correspondence; storage and management plans; notice of violations of any laws;
plans relating to the installation of any storage tanks to be installed in or
under the Premises (provided said installation of tanks shall be permitted only
after Landlord has given Tenant its written consent to do so, which consent may
not be unreasonably withheld); and all closure plans or any other documents
required by any and all federal, state and local governmental agencies and
authorities for any storage tanks installed in, on or about the Premises for the
closure of any such tanks. Tenant shall not be required, however, to provide
Landlord with that portion of any document which contains information of a
proprietary nature and which, in and of itself, does not contain a reference to
any Hazardous Material which are not otherwise identified to Landlord in such
documentation, unless any such Hazardous Material Document names Landlord as an
"owner" or "operator" of the facility in which Tenant is conducting its
business. It is not the intent of this subsection to provide Landlord with
information which could be detrimental to Tenant's business should such
information become possessed by Tenant's competitors. Landlord shall treat all
information furnished by Tenant to Landlord pursuant to this Section 39.5 as
confidential and shall not disclose such information to any person or entity
without Tenant's prior written consent, which consent shall not be unreasonably
withheld or delayed, except as required by law.
39.6 Notwithstanding other provisions of this Article 39, it
shall be a default under this Lease, and Landlord shall have the right to
terminate the Lease under Article 24, and/or pursue its other remedies under
Article 24, in the event that (i) Tenant's use of the Premises for the
generation, storage, use, treatment or disposal of Hazardous Material is in a
42
manner or for a purpose prohibited by applicable law unless Tenant is diligently
pursuing compliance with such law, (ii) Tenant has been required by any
governmental authority to take remedial action in connection with Hazardous
Material contaminating the Premises if the contamination resulted from Tenant's
action or use of the Premises, unless Tenant is diligently pursuing compliance
with such requirement, or (iii) Tenant is subject to an enforcement order issued
by any governmental authority in connection with the use, disposal or storage of
a Hazardous Material on the Premises, unless Tenant is diligently seeking
compliance with such enforcement order.
39.7 Notwithstanding the provisions of Article 25, if any
anticipated use of the Premises by a proposed assignee or subtenant involves the
generation or storage, use, treatment or disposal of Hazardous Material in any
manner or for a purpose prohibited by any applicable law, it shall not be
unreasonable for Landlord to withhold its consent to an assignment or subletting
to such proposed assignee or sublessee.
39.8 Landlord represents that, to the best of its knowledge,
as of the date of this Lease and as of the Term Commencement Date, there is no
Hazardous Material on the Premises, and will deliver to Tenant a certification
to that effect promptly upon the Term Commencement Date. Landlord shall at its
expense provide Tenant with a Phase I Environmental Site Assessment at the time
this Lease is executed and as of the Term Commencement Date. In addition,
Landlord shall at its expense also provide Tenant with a Phase II Environmental
Site Assessment as of the Term Commencement Date if reasonably recommended by
the Phase I Environmental Site Assessment. Should either assessment disclose the
presence of Hazardous Material, Landlord shall remedy the problems to Tenant's
reasonable satisfaction, and shall cause a further update of the Phase I and any
Phase II Environmental Site Assessment to be issued reflecting the remedy
therein. The Phase I and any Phase II Environmental Site Assessments and all
updates thereto are hereinafter referred to as the "Base Line Report."
39.9 At any time prior to the expiration or earlier
termination of the term of the Lease, Landlord shall have the right to enter
upon the Premises at all reasonable times and at reasonable intervals upon not
less than forty-eight (48) hours notice to Tenant (except in the case of
emergency) in order to conduct appropriate tests regarding the presence, use and
storage of Hazardous Material, and to inspect Tenant's records with regard
thereto. Any such entry by Landlord shall comply with all reasonable measures of
Tenant and shall not impair Tenant's operations more than reasonably necessary.
Tenant will pay the reasonable costs of any such test which demonstrates that
contamination in excess of permissible levels has occurred and such
contamination is the responsibility of Tenant under Section 39.3. Tenant shall
correct any deficiencies identified in any such tests in accordance with its
obligations under this Article 39.
39.10 Tenant shall at Landlord's expense cause a Phase I
environmental site assessment of the Premises to be conducted, and a Phase II
environmental site assessment if recommended in the Phase I environmental site
assessment, and reports thereof delivered to Landlord upon the expiration or
earlier termination of the Lease, such reports to be as complete and broad in
scope as the Base Line Report as is necessary to identify any impact on the
Premises Tenant's operations might have had. Should the assessments disclose the
presence of
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Hazardous Material, Tenant shall, prior to the expiration of this Lease, remedy
the problems for which it is responsible under Section 39.3 to the extent
required by applicable law, and shall cause a further update of the
environmental site assessments to be issued reflecting the remedy therein. The
assessment and all updates thereto are hereinafter referred to as the "Exit
Report." This Article 39 is the exclusive provision in this Lease regarding
clean-up, repairs or maintenance arising from receiving, handling, use, storage,
accumulation, transportation, generation, spillage, migration, discharge,
release or disposal of Hazardous Material in, upon or about the Premises, and
the provisions of Article 18 (Repairs and Maintenance) shall not apply thereto.
39.11 Landlord's and Tenant's obligations under this Article
39 shall survive the termination of the Lease.
39.12 As used herein, the term "Hazardous Material" means any
hazardous or toxic substance, material or waste which is or becomes regulated by
any local governmental authority, the State of California or the United States
Government. The term "Hazardous Material" includes, without limitation, any
material or substance which is (i) defined as a "hazardous waste," "extremely
hazardous waste" or "restricted hazardous waste" under Sections 25515, 25117 or
25122.7, or listed pursuant to Section 25140, of the California Health and
Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii)
defined as a "hazardous substance" under Section 25316 of the California Health
and Safety Code, Division 2, Chapter 6.8 (Xxxxxxxxx-Xxxxxx-Xxxxxx Hazardous
Substance Account Act), (iii) defined as a "hazardous material," hazardous
substance" or "hazardous waste" under Section 25501 of the California Health and
Safety Code, Division 20, Chapter 6.95 (Hazardous Substances), (v) petroleum,
(vi) asbestos, (vii) listed under Article 9 and defined as hazardous or
extremely hazardous pursuant to Article 11 of Title 22 of the California
Administrative Code, Division 4, Chapter 20, (viii) designated as a "hazardous
substance" pursuant to Section 311 of the Federal Water Pollution Control Act
(33 U.S.C. Section 1317), (ix) defined as a "hazardous waste" pursuant to
Section 1004 of the Federal Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901, et. seq. (42 U.S.C. Section 6903), or (x) defined as a "hazardous
substance" pursuant to Section 101 of the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. Section 9601 et. seq. (42 U.S.C.
Section 9601).
40. OPTION TO EXTEND.
40.1 Landlord grants to Tenant one (1) option to extend the
term of this Lease for (5) years under the same terms and conditions existing in
the original Lease except as set forth in this Article 40. Basic Annual Rent
shall be adjusted on the first day of the extension term to an amount equal to
the fair market rental value of the Premises as of the commencement of the
extension term, but in no event less than the Basic Annual Rent payable during
the last year of the initial term. Tenant shall exercise such right to extend
the term of this Lease by written notice to Landlord no later than eight (8)
months prior to the end of the original term.
40.2 If Landlord and Tenant after the use of reasonable, good
faith efforts are unable to agree on the fair market rental value of the
Premises, Landlord shall within sixty (60)
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days after the option is exercised obtain at its expense and deliver to Tenant
an independent appraisal of the fair market rental value of the Premises as of
the commencement of the extension term. Tenant may also elect to obtain at its
expense and deliver to Landlord not later than thirty (30) days after receipt of
Landlord's appraisal a second independent appraisal of the fair market rental
value of the Premises as of the commencement of the extension term. If Tenant
elects not to obtain a second appraisal, Landlord's appraisal shall be
conclusive. If Tenant's appraisal is no more than five percent (5%) less than
Landlord's appraisal, the fair market rental value of the Premises shall be the
arithmetic average of the two appraisals. If Tenant's appraisal is more than
five percent (5%) less than Landlord's appraisal, the two appraisers shall
appoint a third appraiser to appraise the fair market rental value of the
Premises as of the commencement of the extension term, and the fair market
rental value of the Premises shall be the arithmetic average of the two
appraisals closest in their determination of fair market rental value. Landlord
and Tenant shall bear equally the expense of the third appraiser. In no event
shall the Basic Annual Rent for the first year of the extension term be less
than that payable during the last year of the initial term. As used herein, the
term "fair market rental value of the Premises" shall be defined to mean the
fair market rental value of the Premises as of the commencement of the extension
term in its then existing condition "as-is" (without allowance from Landlord for
new tenant improvements or refurbishment) but excluding the value of any Tenant
Improvements paid for by Tenant as part of the initial construction or installed
and paid for by Tenant after the Term Commencement Date, taking into
consideration all relevant factors, including length of term, the uses permitted
under the Lease, the quality, size, design, condition, and age of the Premises,
the absence of a tenant improvement allowance, the location of the Premises, the
monthly base rent for premises comparable to the Premises located in the same
general area as the Premises, and the rental adjustments set forth in Section
40.5.
40.3 All appraisers appointed hereunder shall have at least
ten (10) years experience in the appraisal of commercial/industrial real
property in the Santa Xxxxx area and shall be members of professional
organizations such as the American Appraisal Institute with a designation of MAI
or equivalent.
40.4 Any increase or decrease in Basic Annual Rent under this
Article 40 which is not determined until after the effective date of the
increase shall nevertheless be retroactive to the effective date; Tenant shall
pay any such retroactive increase with the installment of Rent next due, and
Landlord shall promptly reimburse Tenant an amount equal to any such retroactive
decrease.
40.5 Basic Annual Rent as of the commencement of the extension
term as determined under this Article 40 (and as increased pursuant to this
Section 40.5) shall be increased on each annual anniversary of the first day of
the extension term (each an "Adjustment Date") by three percent (3%).
40.6 Tenant shall not have the right to exercise this option
to extend, notwithstanding anything set forth above to the contrary:
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(a) During the period of time commencing on the date Landlord
gives to Tenant a written notice that Tenant is in material default under any
monetary or material non-monetary obligation of this Lease and continuing until
the default alleged in said notice is cured;
(b) At any time after Landlord has given to Tenant three (3)
or more monthly notices of a default in the payment of Basic Annual Rent during
the last two years of the initial term, whether or not such defaults are cured;
or
(c) After the expiration or earlier termination of this Lease.
The period of time within which the option to extend the term
may be exercised shall not be extended or enlarged by reason of the Tenant's
inability to exercise the option to extend because of the foregoing provisions.
At the election of Landlord, all rights of Tenant under the provisions of this
Article 40 shall terminate and be of no further force or effect even after
Tenant's due and timely exercise of the option to extend, if, after such
exercise, but prior to the commencement of the extended term, (1) Tenant is in
default of a monetary obligation of Tenant for a period of thirty (30) days
after such obligation becomes due, (2) Tenant fails to commence to cure a
non-monetary default within thirty (30) days after the date Landlord gives
notice to Tenant of such default, or (3) Landlord properly give gives to Tenant
three (3) or more notices of a default in the payment of Basic Annual Rent,
whether or not such defaults are cured.
41. AUTOMATIC AMENDMENT OF LEASE.
41.1 AMENDMENTS TO LEASE. Landlord and Tenant agree that, in
the event that either Ground Lease or the Master Lease is terminated, and the
Ground Lessor or the District, as the case may be, recognizes Tenant under the
terms and conditions of this Lease and Tenant attorns to the Ground Lessor or
the District pursuant to a nondisturbance and attornment agreement between
Tenant and either Ground Lessor or the District, the foregoing provisions of
this Lease are amended as follows:
(a) CONSTRUCTION OF IMPROVEMENTS (ARTICLE 4). Neither Ground
Lessor nor the District shall have any obligation to construct or pay for
improvements to the Premises as required by Article 4 of this Lease.
(b) OPERATING EXPENSES (ARTICLE 7). Neither Ground Lessor nor
the District shall have any obligation to pay any costs or expenses under
Article 7 of this Lease; rather, Tenant shall operate, maintain, repair and
manage the Premises, and shall pay all Operating Expenses directly to the
provider of services or other person or entity entitled thereto. Tenant shall be
relieved of any obligation to pay costs of property management services pursuant
to Section 7.1(c) of this Lease.
(c) ADA (SECTION 10.4). Neither Ground Lessor nor the District
shall have any liability for the warranties set forth in Section 10.4 of this
Lease, nor shall either have any obligation to make or pay for any improvements,
alterations, repairs or replacements as set forth therein.
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(d) BROKERS (ARTICLE 11). Neither Ground Lessor nor the
District shall have any obligation for the payment of broker commissions under
Article 11 of this Lease, and such obligation shall remain the personal
obligation of the initial Landlord named hereunder.
(e) TAXES AND ASSESSMENTS (ARTICLE 13). Neither Ground Lessor
nor the District shall have any obligation to pay Taxes under Article 13 of this
Lease.
(f) CONDITION OF PREMISES (ARTICLE 14). Neither Ground Lessor
nor the District shall have any liability for or obligations related to the
warranties set forth in Section 14.2 of this Lease, nor any other liability or
obligations under Article 14 of this Lease.
(g) REPAIRS AND MAINTENANCE (ARTICLE 18). Neither Ground
Lessor nor the District shall have any obligation for repairs or maintenance of
the Premises under Article 18 of this Lease.
(h) INSURANCE (ARTICLE 21). Neither Ground Lessor nor the
District shall have any obligation to provide or pay for the insurance required
by Article 21 of this Lease; rather, all such insurance shall be procured and
maintained by Tenant.
(i) DAMAGE OR DESTRUCTION (ARTICLE 22). Neither Ground Lessor
nor the District shall have any obligation to "restore" the Premises or any part
thereof as required by Article 22 of this Lease. If Tenant elects to assume
Landlord's obligations under Article 22 to restore the Premises, all proceeds of
insurance which would otherwise be payable to Landlord shall be paid to Tenant.
If Tenant does not elect to restore the Premises, Tenant may terminate this
Lease.
(j) EMINENT DOMAIN (ARTICLE 23). Neither Ground Lessor nor the
District shall have any obligation to "restore" the Premises or any part thereof
as required by Article 23 of this Lease. If Tenant elects to assume Landlord's
obligations under Article 23 to restore the Premises, all condemnation proceeds
which would otherwise be payable to Landlord shall be paid to Tenant. If Tenant
does not elect to restore the Premises, Tenant may terminate this Lease.
41.2 GROUND LEASE AND MASTER LEASE GOVERN. Notwithstanding the
provisions of this Article 41, neither the District nor Ground Lessor shall be
relieved of any of the obligations described in this Article 41 to the extent
such party has such obligations as lessor pursuant to the Master Ground Lease or
the Ground Lease, as the case may be.
41.3 NO ASSUMPTION OF LANDLORD'S OBLIGATIONS. Notwithstanding
anything expressed or implied to the contrary in this Article 41, Tenant does
not hereby assume any obligations of Landlord under this Lease for which Tenant
would not be responsible for payment as an Operating Expenses. Tenant may elect
to undertake other of Landlord's obligations from time to time, such as repairs
and maintenance for which Landlord is responsible for payment under Article 18
(Repairs and Maintenance), and restoration of the Premises under Article 22
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(Damages and Destruction) and Article 23 (Eminent Domain), but if Tenant does
not elect to do so, Tenant may terminate this Lease.
41.4 COMPLETION GUARANTY. In consideration for Tenant's
consent to this Article 41, Landlord shall cause to be executed and delivered to
Tenant concurrently herewith a completion guaranty in the form attached hereto
as Exhibit "F" whereby Nexus Properties, Inc., R. Xxxxxxx Xxxx, and Xxxxxxx X.
Xxxxx guarantee completion of the Premises pursuant to Article 4 and other
provisions of this Lease without any expense or obligation of Tenant except as
set forth in Article 4.
41.5 OFFSET OF EXPENSES AGAINST RENT. As additional
consideration for Tenant's consent to this Article 41, in the event that this
Article 41 becomes effective upon the termination of the Ground Lease or the
Master Lease, as the case may be, and the recognition of and attornment by
Tenant as set forth in Section 41.1, notwithstanding anything to the contrary
set forth in Section 5.3 or elsewhere in this Lease, Tenant may offset against
the Rent next due under this Lease any and all costs or expenses which would
otherwise have been the obligation of Landlord under this Lease.
41.6 OFFSET FOR SECURITY DEPOSIT AGAINST RENT. As additional
consideration for Tenant's consent to this Article 41, in the event that this
Article 41 becomes effective upon the termination of the Ground Lease or the
Master Lease, as the case may be, and the recognition of and attornment by
Tenant as set forth in Section 41.1, notwithstanding anything to the contrary
set forth in Section 5.3 or elsewhere in this Lease, Tenant may offset against
the Rent next due under this Lease the amount of the Security Deposit on deposit
with Landlord immediately prior to the effectiveness of this Article 41, and the
obligation of Landlord to return the Security Deposit to Tenant shall be
forgiven in the amount so offset.
42. DEFINITIONS. Capitalized terms not defined elsewhere in this Lease
shall have the meaning set forth below:
42.1 "PREMISES" shall have the meaning ascribed to it in
Section 1.1.
42.2 "REAL PROPERTY" shall have the meaning ascribed to it in
Section 1.1.
42.3 "SITE IMPROVEMENTS". The exterior improvements, to
include surface parking areas, landscaping, drainage, irrigation, gutters,
sidewalks, exterior lighting, walkways, driveways and other improvements and
appurtenances relating to ingress and egress described on the Site Plan, and any
other improvements shown thereon.
42.4 "SITE PLAN". The site plan attached hereto as Exhibit
"A-1".
42.5 "BUILDING". The Building Shell and the Tenant
Improvements.
42.6 "BUILDING SHELL". The shell of the Building, as described
on the plans and specifications attached hereto as Exhibits "A-2" and "A-3",
consisting of a two story concrete
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tilt-up structure, footings, foundations, floors, exterior walls, roof, exit
stairs, elevator, rest rooms, fire sprinkler riser and trunk lines, and central
electrical room, with building electrical service, natural gas, telephone,
water, plumbing, and other utilities necessary for the Tenant Improvements
extended from the street and stubbed to the Building, and any other improvements
shown thereon.
42.7 "TENANT IMPROVEMENTS". The initial improvements within
the Building Shell desired by Tenant for initial occupancy and use of the entire
Premises by Tenant (including Tenant's Removable Property).
42.8 "DATA CENTER" shall have the meaning ascribed to it in
Section 4.3.
42.9 "BUILDING SHELL PLANS". The plans and specifications for
the Building Shell.
42.10 "TENANT IMPROVEMENT PLANS". The plans and specification
for the Tenant Improvements, as prepared by Landlord and approved by Tenant.
42.11 "PLANS AND SPECIFICATIONS". The Site Improvement Plans,
Building Shell Plans and Tenant Improvement Plans.
42.12 "PROJECT". The Site Improvements, the Building Shell,
and the Tenant Improvements.
42.13 "PROJECT ARCHITECT". Xxxxxx Xxxxx Associates, the
architect retained by Landlord for the design of the Site Improvements, Building
Shell and Tenant Improvements.
42.14 "PROJECT CONTRACTOR". Devcon Construction, Inc., the
general contractor retained by Landlord for the construction of the Project
Work.
42.15 "PROJECT SCHEDULE". The time and responsibility schedule
for the design and construction of the Site Improvements, Building Shell, and
Tenant Improvements as approved from time to time by mutual agreement of
Landlord and Tenant; provided, however, that the Project Schedule shall in all
cases be consistent with the delivery dates described in Sections 4.3 and 4.4.
42.16 "PROJECT WORK". Construction of the Site Improvements,
Building Shell, and Tenant Improvements.
42.17 "SUBSTANTIALLY COMPLETE," "SUBSTANTIALLY COMPLETED," and
"SUBSTANTIAL COMPLETION" shall mean the date all of the following shall have
occurred:
(a) Construction of the Project Work (or the Data Center, as
the case may be) is substantially complete in accordance with the Plans and
Specifications, as certified by the Project Architect;
49
(b) Tenant has received an interim or final right to occupy
(or, in the case of the Data Center, a temporary certificate of occupancy) from
the City of Santa Xxxxx (or check-off of the "approved to occupy" or comparable
line of the inspection card), or such later date as the conditions to the
issuance of a final certificate of occupancy have been satisfied and the only
steps which must be taken by the appropriate governmental agency to issue the
final certificate of occupancy are purely ministerial in nature. "Substantial
Completion" is not dependent upon receipt of a formal certificate of occupancy,
so long as Tenant has the right to occupy and use the Premises without the
issuance of such certificate of occupancy, and provided Landlord obtains a
certificate of occupancy in a timely manner;
(c) The Premises (or the Data Center, as the case may be) are
broom clean and in operating condition, subject to typical punch-list items
which do not materially interfere with Tenant's use or occupancy of the Premises
(or the Data Center, as the case may be) for the purposes for which they are
intended to be used. The term "broom clean and operating condition" shall
include the following: (i) tile floors are wet mopped, waxed and buffed, and
carpets are vacuumed; (ii) walls and partitions are cleaned and major holes are
filled and touched up; (iii) glass is cleaned on both sides; (iv) trash, dirt
and left-over materials are removed from the Premises (or the Data Center, as
the case may be); (v) the air-conditioning, heating and ventilating system is in
operating condition and approximately regulated; (vi) plumbing, electrical and
elevator systems are in operating condition; (vii) all interior walls are
finished and taped, speckled and painted; and (viii) computer floors are
installed and ready for installation of Tenant's equipment; and
(d) All utilities are extended to the Building (and the Data
Center, as the case may be), all utility systems are completed, and all
utilities are available from the provider.
In no event shall "Substantial Completion" be later than the
date Tenant actually commences to fully utilize the Premises (or the Data
Center, as the case may be) for the conduct of its business. Early entry upon
the Premises for the installation by Tenant of its furniture, fixtures,
equipment and systems shall not constitute conduct of its business. In no event
shall Substantial Completion, and subsequent use and occupancy by Tenant, of the
Data Center constitute Substantial Completion of the Premises.
42.18 "TENANT-CAUSED DELAY". Any delay caused solely by
(i) the failure of Tenant or its contractors, agents or employees, to act within
the time limits set forth in the Project Schedule and this Lease; (ii) Tenant's
request for equipment, materials, finishes or installations which are
unavailable or nonstandard and which cannot be obtained by Landlord within a
reasonable period of time because of limited availability; (iii) the untimely
delivery or installation of any of Tenant's equipment through no fault of
Landlord or any of its employees, agents or contractors, including the Project
Architect or Project Contractor; or (iv) physical interference with or damage to
Landlord's construction of the Project Work by Tenant or its contractors, agents
or employees.
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42.19 "FORCE-MAJEURE DELAYS". Any delay beyond the control of
Landlord which is attributable to (i) an industry-wide strike or lockout of a
trade in Santa Xxxxx County, (ii) lightning, earthquake, rain, storm, hurricane,
tornado, flood, or similar act of God, and (iii) inability to secure in a timely
manner "lead item" components and equipment which are ordered in a timely manner
pursuant to Exhibit "G".
42.20 "ESTIMATED TERM COMMENCEMENT DATE." The date set forth
in Section 2.1.4(a).
42.21 "TERM COMMENCEMENT DATE" shall have the meaning ascribed
to it in Sections 2.1.4(a) and 4.5.
42.22 "TERM EXPIRATION DATE" shall have the meaning ascribed
to it in Section 2.1.4(b).
42.23 "TENANT'S REMOVABLE PROPERTY" shall have the meaning
ascribed to it in Section 30.3.
43. MISCELLANEOUS.
43.1 TERMS AND HEADINGS. Where applicable in this Lease, the
singular includes the plural and the masculine or neuter includes the masculine,
feminine and neuter. The section headings of this Lease are not a part of this
Lease and shall have no effect upon the construction or interpretation of any
part hereof.
43.2 EXAMINATION OF LEASE. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of or
option for lease, and it is not effective as a lease or otherwise until
execution by and delivery to both Landlord and Tenant.
43.3 TIME. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor.
43.4 CONSENTS. Whenever consent or approval of either party is
required, that party shall not unreasonably withhold or delay such consent or
approval, except as may be expressly set forth to the contrary.
43.5 ENTIRE AGREEMENT. The terms of this Lease are intended by
the parties as a final expression of their agreement with respect to the terms
as are included herein, and may not be contradicted by evidence of any prior or
contemporaneous agreement.
43.6 SEVERABILITY. Any provision of this Lease which shall
prove to be invalid, void, or illegal in no way affects, impairs or invalidates
any other provision hereof, and such other provisions shall remain in full force
and effect.
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43.7 RECORDING. Upon the execution of this Lease, Landlord and
Tenant shall record a short form memorandum hereof in the form attached hereto
as Exhibit "C", subject to the requirement to execute and deliver a quitclaim
deed pursuant to the provisions of Section 34.1 hereof.
43.8 IMPARTIAL CONSTRUCTION. The language in all parts of this
Lease shall be in all cases construed as a whole according to its fair meaning
and not strictly for or against either Landlord or Tenant.
43.9 INUREMENT. Each of the covenants, conditions, and
agreements herein contained shall inure to the benefit of and shall apply to and
be binding upon the parties hereto and their respective heirs, legatees,
devisees, executors, administrators, successors, assigns, sublessees, or any
person who may come into possession of said Premises or any part thereof in any
manner whatsoever. Nothing in this section shall in any way alter the provisions
against assignment or subletting in this Lease provided.
43.10 NOTICES. Any notice, consent, demand, xxxx, statement,
or other communication required or permitted to be given hereunder must be in
writing and given by personal delivery or by certified mail, return receipt
requested, and if given by personal delivery shall be deemed given on the date
of delivery, and if given by mail shall be deemed given on the date of delivery
or refusal of delivery, to Landlord or Tenant at the addresses shown in Section
2.1.7 hereof, or to such other address as either party may specify by notice to
the other given pursuant to this Section. Notwithstanding the foregoing, notices
by facsimile transmission shall be effective as set forth in Section 24.1.
43.11 AUTHORITY TO EXECUTE LEASE. Landlord and Tenant each
acknowledge that it has all necessary right, title and authority to enter into
and perform its obligations under this Lease, that this Lease is a binding
obligation of such party and has been authorized by all requisite action under
the party's governing instruments, that the individuals executing this Lease on
behalf of such party are duly authorized and designated to do so, and that no
other signatories are required to bind such party, except that Tenant's
representations under this Section shall be effective only upon approval of
Tenant's board of directors following Lease execution.
43.12 EDUCATIONAL ENHANCEMENT. Pursuant to the Sub Ground
Lease, Landlord has agreed to cooperate with Ground Lessor to implement and
coordinate a program desired by Ground Lessor pursuant to which Landlord and its
tenants are encouraged to provide job training, seminars and research
opportunities for students of Mission Community College (the "College"). Tenant
acknowledges the existence and purpose of such program and the mutual benefit
which could arise from the successful implementation of such program. Tenant
further acknowledges that (i) the College is a source of education and training
for employees of Tenant; (ii) the College is a source of in-service training and
joint training programs; (iii) the College is a source of trained employees;
(iv) the College is a source of cultural activities; (v) the College is a
potential partner in joint seminars, conferences and research, and (vi) the
College is a source of part-time employees.
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43.13 LANDLORD'S COVENANTS.
(a) To the extent that the Sub Ground Lease gives Landlord any
right to terminate the Sub Ground Lease, Landlord shall not cancel or terminate
the Sub Ground Lease without the prior written consent of Tenant, which may be
withheld in Tenant's sole discretion, nor shall Landlord or the Ground Tenants
amend or modify the Sub Ground Lease in any way without the prior written
consent of Tenant, which may not be unreasonably withheld or delayed, provided
such amendments or modifications do not increase Tenant's obligations or
decrease Tenant's rights under this Lease.
(b) If the Ground Tenants seek to terminate the Sub Ground
Lease because of a default or alleged default by Landlord under the Sub Ground
Lease, Landlord shall use its best efforts to maintain the Sub Ground Lease in
full force and effect for the benefit of Tenant and Landlord, and Landlord shall
take all action required to reinstate the Sub Ground Lease and/or to claim and
pursue any right of redemption or relief from forfeiture of the Sub Ground Lease
(and as a consequence thereof any forfeiture of this Lease) to which Landlord
may be entitled at law or in equity (including, without limitation, any such
rights under California Code of Civil Procedure Sections 1174 and 1179).
Additionally, Landlord shall immediately provide Tenant with a copy of any
notice of default given by Ground Tenants to Landlord under the Sub Ground
Lease.
43.15 LANDLORD'S REPRESENTATIONS AND WARRANTIES. To the best
of Landlord's knowledge, and in addition to Landlord's other representations and
warranties set forth in this Lease, Landlord represents and warrants with
respect to the Premises that:
(a) The Master Lease, Ground Lease and Sub Ground Lease are
each in full force and effect, and there exists under the Master Lease, Ground
Lease and Sub Ground Lease no default or event of default by any party thereto,
nor has there occurred any event which, with the giving of notice or the passage
of time or both, could constitute such a default or event of default.
(b) There are no pending or threatened actions, suits or
proceedings before any court or administrative agency against Landlord or
against any party to either the Master Lease, Ground Lease or Sub Ground Lease
or third parties which could, in the aggregate, adversely affect the Premises or
any part thereof or the ability of the Ground Tenants or Landlord to perform
their respective obligations under the Sub Ground Lease or of Landlord to
perform its obligations under this Lease, and Landlord is not aware of any facts
which might result in any such actions, suits or proceedings.
(c) There is not pending or threatened condemnation or similar
proceedings affecting the Premises or any portion thereof, and Landlord has no
knowledge that any such action currently is contemplated.
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43.16 ASSIGNMENT OF RENT.
TENANT ACKNOWLEDGES THAT LANDLORD HAS ASSIGNED ITS RIGHTS TO
RENT HEREUNDER TO THE LANDLORD UNDER THE SUB GROUND LEASE, AND
THAT THE LANDLORD UNDER THE SUB GROUND LEASE HAS ASSIGNED ITS
RIGHTS TO RENT HEREUNDER TO THE LANDLORD UNDER THE GROUND
LEASE, AND THAT, EXCEPT TO THE EXTENT SUCH RENTAL PAYMENTS ARE
FROM TIME TO TIME BEING MADE TO A LEASEHOLD MORTGAGEE OF
LANDLORD OR THE LANDLORD UNDER THE SUB GROUND LEASE, TENANT
SHALL MAKE RENTAL PAYMENTS DIRECTLY TO THE LANDLORD UNDER THE
GROUND LEASE UPON RECEIVING ANY REQUEST THEREFOR FROM THE
LANDLORD UNDER THE GROUND LEASE.
There shall be no prejudice to Tenant, nor liability incurred
by Tenant, on account of Tenant making rental payments directly to a party
purporting to be the landlord under the Ground Lease as set forth above, and
Landlord shall release Tenant of any such obligation to Landlord to the extent
Rent is so paid.
IN WITNESS WHEREOF, the parties hereto have executed this
Lease as of the date first above written.
LANDLORD:
MISSION PLAZA LLC
a California limited liability company
By Nexus Properties, Inc.
A California Corporation
Its Manager
By: /s/ R. Xxxxxxx Xxxx
---------------------
R. Xxxxxxx Xxxx
President
TENANT:
GLOBIX CORPORATION
a Delaware corporation
By: /s/ Xxxxxx Xxxx
---------------------
Xxxxxx Xxxx
Executive Vice President and Chief Financial Officer
