EXHIBIT 10.10
MIRA MESA BUSINESS PARK
STANDARD SINGLE-TENANT CENTER LEASE
ARTICLE ONE
BASIC TERMS
This Article One contains the Basic Terms of this lease between the
Landlord and Tenant named below. Other Articles, Sections and Paragraphs of
this Lease referred to in this Article One explain and define the Basic Terms
and are to be read in conjunction with the Basic Terms.
Section 1.01 - Date of Lease. April 8, 1992
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Section 1.02 - Landlord. MIRA MESA BUSINESS PARK JOINT VENTURE NO. 326162,
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a Joint Venture
Address of Landlord: 0000, Xxxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx, XX
00000
Section 1.03 - Tenant. APPLIED MICRO CIRCUITS CORPORATION, a California
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Corporation.
Address of Tenant: 0000 Xxxxxxx Xxxxx, Xxx Xxxxx, XX 00000
Section 1.04 - Premises. 0000 Xxxxxxx Xxxxx / Lots 12 & 13 of Xxxx
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Industrial Park, Unit I, in the City of San Diego, San Diego California,
consisting Of 20,771 square feet of office and industrial space, shown on the
Site Plan attached hereto as Exhibit "A".
Section 1.05 - Lease Term. - Six (6) years beginning on April 1, 1992 or
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such other date as specified in this Lease, and ending on March 31, 1998
Section 1.06 - Permitted Uses. (See Section 5.01) General offices, the
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Production, assembly and warehousing of semiconductor products and related
activities, general manufacturing, and research and development.
Section 1.07 - Tenant's Guarantor (If none, So State) None.
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Section 1.08 - Initial Security Deposit. (See Section 3.03 and Paragraph
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13.03(c)) Seventeen Thousand Four Hundred Fifty and no/100 Dollars
($ 17,450 00 * ),* on account.
Section 1.09 - Vehicle Parking Space Allocated to Tenant. N/A
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Section 1.10 - Rent and Other Charges Payable by Tenant.
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(a) Base Rent. Twelve Thousand Four Hundred Sixty Two & 60/100
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Dollars ($12,462.60 ) per month for the first 24 months, as provided in Section
3.01, and shall be increased on the twenty fifth (25th) lease month to
$13,501.15 per month for the next 24 months of the Lease Term; and on the forty-
ninth lease month to $14,539.70 per month for the remainder of the Lease Term
months (the "Adjustment Months") after the Commencement Date.
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(b) Other Periodic Payments - (i) Real Property Taxes. (See Section
4.02); (ii) Utilities (See Section 4.03); (iii) Insurance Premiums (See Section
4.04); (iv) Common Area Expense (See Section 4.05). The initial monthly common
area charge is to be based upon estimates by Landlord of monthly operating costs
under paragraph (4.05d); and (v) Repairs and Alterations (See Article Six).
Section 1.11 - Riders. The following Riders are attached to and made
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a part of this Lease: (If none, so state.) None.
ARTICLE 2
LEASE TERM
Section 2.01 - Lease of Premises For Lease Term. Landlord leases the
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Premises to Tenant and Tenant leases the Premises from Landlord for the Lease
Term. The Lease Term is for the period stated in Section 1.05 above and shall
begin and end on the dates specified in Section 1.05 above, unless the beginning
or end of the lease Term is changed under any provision of this lease. The
"Commencement Date" shall be the date specified in Section 1.05 above for the
beginning of the Lease Term, unless advanced or delayed under any provision of
this Lease.
Section 2.02 -DELETED
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Section 2.03 - Early Occupancy. If Tenant occupies the Premises prior to
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the Commencement Date, tenant's occupancy of the Premises shall be subject to
all of the provisions of this Lease. Early occupancy of the premises, shall not
advance the expiration date of this Lease. Tenant shall pay Base Rent and all
other charges specified in this Lease for the early occupancy period.
Section 2.04 - Holding Over. Tenant shall vacate the Premises upon the
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expiration or earlier termination of this lease. Tenant shall reimburse
Landlord for and indemnify Landlord against usual and customary damages
recognized by law and incurred by Landlord from any delay by Tenant in vacating
the Premises. If Tenant does not vacate the Premises upon the expiration or
earlier termination of this Lease and Landlord thereafter accepts rent from
Tenant, Xxxxxx's occupancy of the Premises shall be a "month-to-month" tenancy,
subject to all the terms of this Lease applicable to a month-to-month tenancy,
except that the Base Rent then in effect shall be increased by twenty-five
percent (25%).
ARTICLE THREE
BASE RENT
Section 3.01 - Time and Manner of Payment. Upon execution of this Lease,
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Tenant shall pay Landlord the Base Rent in the amount stated in Paragraph
1.10(a) above for the first month of the Lease Term. On the first day of each
month thereafter, Tenant shall pay Landlord the Base Rent, in advance, without
offset, deduction or prior demand. The Base Rent shall be payable at Landlord's
address or at such other place as Landlord may designate in writing. Xxxxxxxx
does hereby grant to Tenant the right to xxxxx the payment of $6,231.30 per
month of the Rent which would otherwise be due under the Lease, for the period
of six (6) months commencing on April 1, 1992 and ending on September 30, 1992,
amounting to the total sun of Thirty-seven Thousand Three Hundred Eighty-seven
and 80/100 Dollars ($37,387.80).
Section 3.02 - Cost of Living Increases. The Base Rent for any option
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period adjusted by way of increase every twenty-four (24) months commencing on
the first day of the twenty-fifth (25th) month of the
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option period, shall be in proportion to the increase in the Index which has
occurred between the first month of the option period and the first Adjustment
Month in which the Base Rent is to be increased, and in the second and
succeeding Adjustment Months. in proportion to the increase in the Index which
has occurred between the immediately preceding Adjustment Month and the
Adjustment Month for which the Base Rent increase is being calculated. Landlord
shall notify Tenant of each increase by delivering a written statement setting
forth (i) the Index for the first month of the option period, with respect to
the first Adjustment Month Base Rent increase, or the Index for the immediately
preceding Adjustment Month, with respect to the second and succeeding rental
adjustments; (ii) the Index for the Adjustment Month in which the Base Rent is
to be increased; (iii) the percentage increase between those two Indices; and
(iv) the new Base Rent amount. The Base Rent shall not be reduced from the last
previous adjusted Base Rent by reason of any decrease in the Index Tenant shall
pay the new Base Rent from its effective date until the next Adjustment Month.
Landlord's notice may be given after the effective date of the increase since
the Index for the appropriate month may be unavailable on the effective date. In
such event, Tenant shall pay Landlord the necessary rental adjustment for the
months elapsed between the effective date of the increase and Landlord's notice
of such increase within ten (10) days after Xxxxxxxx's notice. If the format or
components of the Index are materially changed after the Date of Lease, Landlord
shall substitute an index which is published by the Bureau of Labor Statistics
or similar agency and which is most nearly equivalent to the Index in effect on
the Date of Lease. Landlord shall notify Tenant of the substituted index, which
shall be used to calculate the increase In the Base Rent unless Tenant objects
in writing within fifteen (15) days after receipt of Landlord's notice. If
Tenant objects, the substitute index shall be determined in accordance with the
rules and regulations of the American Arbitration Association. The cost of such
arbitration shall be borne equally by Landlord and Tenant.
Section 3.03 -DELETED
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Section 3.04 - Termination: Advance Payments. Upon termination of this
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Lease under Article Seven (Damage or Destruction), Article Eight (Condemnation)
or any other termination not resulting from Tenant's default, and after Tenant
has vacated the Premises in the manner required by this Lease, an equitable
adjustment shall be made concerning advance rent and any other advance payments
made by Tenant to Landlord, and Landlord shall refund the unused portion of the
Security Deposit to Tenant or Tenant's Successor. Notwithstanding the terms
contained in this Section 3.04, the Security Deposit shall be applied pursuant
to California Civil Code Section 1950.7.
ARTICLE FOUR
OTHER CHARGES PAYABLE BY TENANT
Section 4.01 - Additional Rent. All charges payable by Tenant other than
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Base Rent are called "Additional Rent." Unless this Lease provides otherwise,
all Additional Rent shall be paid with the next monthly installment of Base
Rent. The term "rent" shall mean Base Rent and Additional Rent.
Section 4.02 - Real Property Taxes.
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(a) Payment of Taxes. Tenant shall pay to Landlord the real property
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tax on the Premises during the Lease Term. Such tax for any partial year of the
Lease Term shall be prorated on a time basis. Landlord shall notify Xxxxxx in
writing of the real property taxes and immediately upon receipt of the tax xxxx
xxxxxxx Tenant with a copy of the tax bill. Tenant shall pay the real property
taxes semi-annually to Landlord not later than thirty (30) days before the
taxing authority's delinquency date. Landlord shall
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reimburse or credit the account of Tenant for any real property taxes by Tenant
covering any period of time prior to or after the Lease Term. If Tenant fails to
pay any such taxes, Landlord may pay the same, in which case Tenant shall repay
such amount to Landlord with Xxxxxx's next monthly payment of rent, together
with interest at the rate set forth in Section 4.07 of the Lease. Further, if
Tenant fails to pay any such taxes, Landlord may declare that the collection of
real property taxes as a portion of the Operating Expenses is to be reinstated
pursuant to Paragraphs 4.05(d) and 4.05(e) of the Lease, by delivering to Tenant
a revised estimate and bill for Operating Expenses which reflects monthly real
property tax installments. Tenant shall retain the right, at its sole cost, to
challenge any real property tax on the Premises upon compliance with challenge
procedures of the taxing authority imposing the tax, and Landlord shall execute
any documents it deems necessary for Tenant to maintain such a challenge.
(b) Definition of "Real Property Tax". "Real property tax" means:
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(i) any fee, license fee, license tax, business license fee, commercial rental
tax, levy, charge, assessment, penalty or tax imposed by any taxing authority
against the Premises; (ii) any tax on the Landlord's right to receive, or the
receipt of rent or income from the Premises or against Landlord's business of
leasing the Premises; (iii) any tax or charge for fire protection, streets,
sidewalks, road maintenance, refuse or other services provided by any
governmental agency; (iv) any tax imposed upon this transaction, or based upon a
re-assessment due to a change in ownership or transfer of all or part of
Landlord's interest in the Premises; and (v) any charge or fee replacing any tax
previously included within the definition of real property tax. "Real Property
tax" does not, however, include Landlord's federal or state income, franchise,
inheritance or estate taxes. Real Property Tax shall not include the increased
amount of any tax based upon reassessment of the Premises due to a change in
ownership or transfer of all or part of Landlord's interest in the Premises
occurring during the first sixty (60) months of the Lease Term. Commencing in
the 61st month of the Lease Term and continuing until the end of the Lease Term,
excluding any extension period, "Real Property Tax" shall include the increased
amount of any tax based upon a reassessment of the Premises due to a single
change in ownership of transfer of Landlord's interest. Subsequent increases in
the amount of the tax due to any additional change in ownership or transfer of
interest, occurring from the 61st month through the end of the Lease Term, shall
not be included within the meaning of "Real Property Tax"
(c) Personal Property Taxes
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(i) Tenant shall pay all taxes charged against trade
fixtures, furnishings, equipment or any other personal
property belonging to Xxxxxx. Tenant shall exercise its best
efforts to have personal property taxed separately from the
Premises.
(ii) If any of Tenant's personal property is taxed with the
Premises, Tenant shall pay Landlord the taxes for the
personal property in the same manner as provided for the
payment of real property taxes in Paragraph 4.02(a), above.
Tenant shall retain the right, at its sole cost, to
challenge any real property tax on the Premises upon
compliance with challenge procedures of the taxing authority
imposing the tax, and Landlord shall execute any documents
it deems reasonably necessary for Tenant to maintain such a
challenge.
Section 4.03 - Utilities. Tenant shall pay, directly to the appropriate
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supplier, the cost of all natural gas, heat, light, power, sewer service,
telephone, water, refuse disposal and other utilities and services supplied to
the Premises.
Section 4.04 - Insurance Premiums.
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(a) Liability Insurance. During the Lease Term, Tenant shall
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maintain apolicy of comprehensive public liability insurance, at Tenant's
expense, insuring Landlord and Tenant against liability arising out of the
ownership, use, occupancy or maintenance of the Premises and all common areas.
The Initial amount of such insurance shall be at least $3,000,000 combined
single limit bodily injury, personal Injury, death and property damage liability
per occurrence, and shall be subject to periodic increase based upon inflation,
increased liability awards, recommendation of professional insurance advisers,
and other relevant factors. However, the amount of such insurance shall not
limit Tenant's liability nor relieve Tenant of any obligation hereunder. The
policy shall contain cross-liability endorsements if applicable, and shall
insure Tenant's performance of the provisions of Section 5.04 with respect to
indemnification for bodily Injury or property damage. Such policy shall contain
a provision which prohibits cancellation or modification of the policy except
upon thirty (30) days' prior written notice to Landlord. Tenant may discharge
its obligations under this Paragraph by naming Landlord as an additional insured
under a policy of comprehensive liability insurance maintained by Tenant and
containing the coverage and provisions described in this Paragraph. Tenant shall
deliver a copy of such policy or certificate (or a renewal thereof) to Landlord
prior to the Commencement Date and prior to the expiration of any such policy
during the Lease Term. If Tenant fails to maintain such policy, Landlord may
elect to maintain such insurance at Tenant's expense. Landlord may also elect to
maintain, at Xxxxxxxx's expense, a Landlord's protective liability endorsement
with respect to the Premises. Tenant shall, at Tenant's expense, maintain such
other liability insurance as Tenant deems necessary to protect Tenant.
Notwithstanding the terms contained in this Paragraph, the requirement that the
policy of comprehensive public liability insurance insure Tenant's performance
of the indemnity provisions of Sections 5.04(c) and (d) of the Lease, shall not
include any obligation on the part of Tenant to maintain a policy insuring
Tenant's actual performance of the Lease, including the payment of rent. The
coverage requirements of Section 5.04 with respect to the acts and omissions of
Tenant shall extend only to such costs, claims and liability as are generally
considered to be within the broadest scope of comprehensive public liability
insurance.
(b) Property Insurance. During the Lease Term, Landlord shall
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maintain at Tenant's expense, as provided in Section 4.04(c), policies of
property liability insurance covering loss of or damage to the Premises and all
common areas, in an amount not less than eighty percent (80%) of the replacement
value of the Premises, to include the building shell (general office and
warehouse improvements), landscaping, irrigation, and all other interior and
exterior improvements constructed by Landlord. Said Tenant expense shall
represent Landlord's cost of maintaining such insurance. Tenant shall have the
right to maintain, at its own cost, a separate policy or policies of property
damage liability insurance in the amount of the replacement value of all
improvements in and to the Premises constructed by Tenant. If Tenant maintains
such a separate policy of insurance, Tenant shall be required to name Landlord
as an additional insured and to deliver to Landlord a certificate evidencing the
existence, amounts and named insureds of such policy or policies. Such policies
shall provide standard "all risk" protection as that term is used in the
insurance industry, and any other perils which Landlord deems necessary
excluding flood and earthquake, unless same are required by the beneficiary of a
first trust deed encumbering the Premises. Tenant shall, at Tenant's expense,
maintain such primary or additional insurance on its fixtures, equipment and
building improvements as Tenant deems necessary to protect its interest. Tenant
shall not do or permit to be done anything which invalidates any such insurance
policies. If Tenant maintains a separate policy of insurance, Tenant shall name
Landlord, as an additional insured and deliver to Landlord a certificate
evidencing the existence, amounts and named insured of such policy or policies.
Landlord and Xxxxxx each hereby agree to release and relieve the other, and
waive their entire right of recovery against the other for loss or damage
arising out of or incident to the perils to be insured against under this
Paragraph 4.04(b), and occurring in or about the Premises. Landlord and Tenant
shall give notice to the respective insurance carriers that the foregoing mutual
waiver of subrogation is contained in this Lease.
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(c) Payment of Premiums: Insurance Policies: Tenant shall pay
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Landlord the amount of the insurance premiums for all policies maintained by
Landlord under Paragraph 4.04(b), including the full amount, if any, by which
such insurance premiums may increase over the Lease Term, whether such
increases result from the nature of Tenant's occupancy, any act or omission of
Tenant, the requirement of any lender referred to in Article Eleven
(Protection of Lenders), the increased value of the Premises, general rate
increases or increases in the amount of insurance carried or the percentage of
insured value. Tenant shall pay Landlord the amount of such premium in
accordance with Paragraphs 4.05(d) and 4.05(e). If the Lease Term expires
before the expiration of the insurance period, Tenant's liability shall be
prorated on an annual basis.
Section 4.05 - Common Area operation. Use and Expenses.
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(a) Common Area Defined. All areas within the exterior boundaries
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of the Premises, including without limiting the generality of the foregoing,
parking areas, driveways, truckways, delivery passages, loading docks,
sidewalks. ramps, landscaped and planted areas, exterior stairways, retaining
walls, fences, signs and other areas and improvements provided by Landlord for
the use of Tenant and Tenant's employees and invitees, shall be deemed "common
areas". Landlord may make changes at any time and from time to time in the size,
shape, location, number and extent of the common areas or any of them, so far as
necessary for the maintenance and repair of the common, areas or other property
owned by Landlord, and without the consent of Tenant so long as such changes do
not interfere with Xxxxxx's permitted use of the Premises. No such change shall
entitle Tenant to any abatement of rent.
(b) Operation and Maintenance of Common Area.
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(i) Landlord's Obligation. Landlord agrees to operate,
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maintain and repair during the Lease Term all landscaping
and landscape irrigation systems within the common areas.
(ii) Tenant's Obligation. Tenant shall operate, maintain
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and repair during the Lease Term all common areas excluding
landscaping and landscape irrigation systems. Tenant's
obligation shall include general maintenance, repair and
replacement, cleaning, lighting, repaving, resurfacing,
painting, trash removal, security, fire protection,
compliance with the requirements of any federal, state or
local government agency regulating the Premises, and
contributions to necessary reserves for repair and
replacement of portions of the common area which Tenant is
required to maintain and repair. Tenant shall perform its
obligation to repair and maintain the common area in
conformance with (i) the Covenants, Conditions and
Restrictions for the Xxxx/Mira Mesa Industrial Park,
recorded in the Office of the San Diego County Recorder,
California, (ii) the Architectural Standards/Association
Rules of the Xxxx/Mira Mesa Industrial Park Association, a
California nonprofit corporation, and (iii) rules and
regulations for repair and maintenance of common areas as
may be prescribed from time to time by Landlord. In the
event that Tenant fails, refuses or neglects to maintain and
repair promptly and adequately its obligation as herein
specified, Landlord may, but shall not be required to do so,
undertake or complete such acts of maintenance, repair and
replacement of the common area as Landlord deems necessary,
without prior notice and at Tenant's sole cost and expense.
At Landlord's option, Tenant shall reimburse Landlord for
all costs and expenses of Landlord thereby incurred in
either of the following manners: (i) Payment within twenty
(20) days after receipt by Tenant from Landlord of a
statement setting forth such costs and expenses, or (ii) the
estimated monthly cost to Landlord for providing
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such maintenance and repair services shall be included as a
portion of the Operating Expenses, defined in Paragraph
4.05(d)(i) below, and paid by Tenant pursuant to Paragraph
4.05(e) below. Such costs and expenses shall be deemed to be
Additional Rent.
(a) Use of Common Areas. The use and occupancy by Tenant of
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the Premises shall include the use of common areas.
(b) Operating Expenses. Tenant shall pay to Landlord all
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costs and expenses (the "Operating Expenses") incurred by Landlord in the
performance of its obligation for the operation, management , repair and
maintenance of the Premises (including the common areas) during the Lease Term.
Such expenses shall include, without limitation, the following: (i) expenses
incurred by Landlord pursuant to Articles Four and Six of this Lease; (ii)
expenses incurred by Landlord in connection with the Premises for general
landscaping, gardening and irrigation maintenance and repair; (iii)
contributions toward any reasonable reserves for repairs and replacements of
those portions of the Premises which Landlord is required to maintain and repair
under this Lease and the actual, cost of any repair or replacement in excess of
the amount of any such reserve therefor; (iv) all charges, surcharges and other
levies imposed by, and all costs (whether or not capital in nature) of
compliance with the requirements of any federal, state or local government
agency regulating the Premises; (v) regular and special assessments levied by
the Xxxx/Mira Mesa Industrial Park Association against the Premises.
Notwithstanding the terms contained in this Paragraph, in no event shall the
Common Area expenses increase by more than four percent (4%) per annum, on a
cumulative basis, during the Lease Term, as defined in Section 4.05. Landlord
shall notify Tenant annually in writing of the collection and application of
funds for such reserves described in subparagraph (iii) above.
(c) Billing and Payment of Operating Expenses Tenant shall retain
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the right, at its sole cost, to challenge any real property tax on the Premises
upon compliance with challenge procedures of the taxing authority imposing the
tax, and Landlord shall execute any documents it deems reasonably necessary for
Tenant to maintain such a challenge.
(i) Notice. Landlord shall notify Tenant at least annually of the
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Operating Expenses. The notice shall include a written estimate of
Operating Expenses for the coming period, which period shall be for a
number of full calendar months not to exceed twelve (12) in number,
and shall also include the estimated Operating Expenses for the coming
period divided by the number of calendar months in the period, which
shall be the amount of each installment which Tenant shall thereafter
be required to pay on account of Operating Expenses until Tenant is
notified of a different amount.
(ii) Time of Payment. Tenant shall pay to Landlord (without
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demand), on or before the first (1st) day of each calendar month of
the Lease Term, Tenant's monthly installment of Operating Expenses as
shown on the notice which Xxxxxx has most recently received from
Landlord pursuant to subparagraph (i) above or at Landlord's option as
actually incurred and billed by Landlord, either in advance or in
arrears, from time to time, but not more often than monthly. These
item shall be deemed to be Additional Rent and the failure of Tenant
to pay any such installment on or before such due date, and without
any deduction or offset, shall carry with it the same consequences as
Tenant's failure to pay rent under this Lease.
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(iii) Estimated Operating Expenses. Until Tenant has received its
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first notification from Landlord pursuant to subparagraph (i) above,
Tenant shall pay its monthly installments of the initial Common area
charge set forth in Article One of this lease.
(iv) Annual Adjustment. Subsequent to the end of each calendar year,
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Landlord shall furnish Tenant with a statement of the actual amount of
Operating Expenses for the preceding calendar year. If the total
amount paid by Xxxxxx is less than the actual amount due from Tenant,
Tenant shall pay to Landlord the difference within twenty (20) days
after the date of the statement. Any excess of the amount paid by
Tenant aver the actual due from Tenant shall be credited against
installments of Operating Expenses thereafter due from Tenant.
(v) Revised Estimates. Nothing contained in this Section shall be
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construed to limit the right of Landlord from time to time during any
calendar year to revise its estimates of the Operating Expenses and to
(i) submit a revised bill to Tenant containing increased monthly
installments to be payable by Tenant for the remainder of such period
pursuant to this Section; and/or (ii) to bill Tenant for the
difference between the aggregate amount of the monthly installments
for the preceding months of the period which would have been payable
by Tenant hereunder if based upon the revised estimates and the
aggregate amount of the monthly installments for the preceding months
payable by Tenant on the due date for each such installment. If
Landlord elects to proceed pursuant to clause (ii) of the preceding
sentence, Tenant shall pay to Landlord the amount shown on any such
bill within ten (10) days of Tenant's receipt thereof.
(vi) Taxes. The taxes payable by Tenant to Landlord under this
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Section and Section 4.02 of this Lease which are levied or assessed
for the fiscal tax year in which the Lease Term commenced, or which
are levied or assessed for the fiscal tax year in which the lease Term
expires, shall be prorated. Landlord shall have the right to notify
Tenant of any amount payable by Tenant to Landlord for taxes payable
to Landlord in accordance with this Section. Landlord may notify
Tenant prior to Landlord's receipt of assessment notices and/or tax
statements or bills covering any and all taxes. In the event that the
amount of any tax for any fiscal tax year is not known to Landlord at
the time of any of Landlord's notices to Tenant, Landlord may estimate
the amount and base the notice upon the estimated amount. Landlord and
Tenant shall adjust the estimated amount in accordance with the
provisions of subparagraph (v) above when the actual amount of the tax
is known to Landlord.
Section 4.06 - Late Charges. Tenant's failure to pay rent promptly may
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cause Landlord to incur unanticipated costs. The exact amount of such costs are
impractical or extremely difficult to ascertain. Such costs may include, but
are not limited to, processing and accounting charges and late charges which may
be imposed on Landlord by any ground lease, mortgage or trust deed encumbering
the Premises. Therefore, if Landlord does not receive any rent payment within
ten (10) days after it becomes due, Tenant shall pay Landlord a late charge
equal to six percent, (6%) of the overdue amount. The parties agree that such
late charge represents a fair and reasonable estimate of the costs Landlord will
incur by reason of such late payment.
Section 4.07 - Interest on Past Due Obligations. Any amount owed by Tenant
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to Landlord which is not paid when due shall bear interest at the maximum rate
allowed by law, not to exceed the discount rate of the Federal Reserve Bank of
San Francisco, plus five percent (5%), from the due date of such amount.
However, interest shall not be payable on late charges to be paid by Tenant
under this Lease. The payment of interest on such amounts shall not excuse or
cure any default by Tenant under this Lease.
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ARTICLE FIVE
USE OF PREMISES
Section 5.01 - Permitted Uses. Tenant may use the Premises only for the
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Permitted Uses set forth in Section 1.06 above.
Section 5.02 - Manner of Use. The Covenants, Conditions and Restrictions
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of Xxxx Industrial Park are attached to, and made a part of, this lease. Tenant
shall not cause or permit the Premises to be used in any way which constitutes a
violation of any law, ordinance, governmental regulation or order, or any
Covenants, Conditions and Restrictions, or any amendment, supplement or
restatement thereof, recorded against the real property of which the Premises
are a part, which interferes with the rights of tenants of the development of
which the Premises are a part, or which constitutes a nuisance or waste. Tenant
shall obtain and pay for all permits, including a Certificate of Occupancy,
required for Tenant's occupancy of the Premises and shall promptly take all
substantial and non-substantial actions necessary to comply with all applicable
statutes, ordinances, rules, regulations, orders, covenants, conditions and
restrictions of record, and requirements regulating the use by Tenant of the
Premises, including the Occupational Safety and Health Act.
Section 5.03 - Signs and Auctions. Tenant shall not place any signs on or
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about the Premises or common areas without Landlord's prior written consent,
which consent shall not be unreasonably withheld. Tenant shall not conduct or
permit any auctions or sales at the Premises.
Section 5.04 - Indemnity. Tenant shall indemnify Landlord against and hold
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Landlord harmless from any and all costs, claim or liability arising from: (a)
Tenant's use of the Premises; (b) the conduct of Xxxxxx's business or anything
else done or permitted by Tenant to be done in or about the Premises; (c) any
breach or default in the performance of Tenant's obligations under this lease;
(d) any misrepresentation or breach of warranty by Tenant under this lease; or
(e) other acts or omissions of Tenant. Tenant shall defend Landlord against any
such cost, claim or liability at Tenant's expense with counsel reasonably
acceptable to Landlord or, at Landlord's election, Tenant shall reimburse
Landlord for any reasonable legal fees or costs incurred by Landlord in
connection with any such claim. As a material part of the consideration to
Landlord, Tenant hereby assumes all risk of damage to property or injury to
persons in or about the Premises arising from any cause, except for any damage
to property or injury to persons arising from acts or omissions of Landlord, and
Tenant hereby waives all claims in respect thereof against Landlord, except for
any claim arising out of Landlord's gross negligence or willful misconduct, to
the extent not covered by insurance provided under the term of this lease.
Landlord shall indemnify Tenant against and hold Tenant harmless from any and
all costs, claims or liability arising form the negligent acts or intentional
misconduct of Landlord, to the extent not covered by insurance provided under
the terms of the Lease. Landlord shall indemnify Tenant against and hold Tenant
harmless from any and all costs, claims or liability arising from the negligent
acts or intentional misconduct of Landlord, to the extent not covered by
insurance provided under the terms of the lease. Billing and Payment of
----------------------
Operating Expenses. Tenant shall retain the right, at its sole cost to
-----------------------------------------------------------------------
challenge any real property tax on the Premises upon compliance with challenge
------------------------------------------------------------------------------
procedures of reasonably necessary for Tenant to maintain such a challenge.
---------------------------------------------------------------------------
Section 5.05 - Landlord's Access. Landlord or its agents may enter the
--------------------------------
Premises at all reasonable times to show the Premises to potential buyers,
investors or tenants or other parties, or for any other purpose Landlord deems
necessary, provided that, Tenant has given its consent to such entry, after
being given reasonable notice, except in the case of an emergency. Tenant shall
not unreasonably withhold its consent. Tenant may refuse entry where such entry
would disrupt essential operations. Landlord may also place
9
customary "For Sale" or "For Lease" signs on the Premises which do not
unreasonably interfere with Xxxxxx's permitted use of the Premises, upon written
approval from Tenant which shall not be unreasonably withheld.
Section 5.06 - Quiet Possession. If Tenant pays the rent and complies with
-------------------------------
all other terms of this lease, Tenant may occupy and enjoy the Premises for the
full lease Term, subject to the provisions of this Lease.
ARTICLE SIX
CONDITION OF PREMISES: MAINTENANCE, REPAIRS AND ALTERATIONS
Section 6. 01 - Existing Conditions. Tenant accepts the Premises in their
-----------------------------------
condition as of the execution of this Lease, subject to all recorded matters,
laws, ordinances, and governmental regulations and orders. Tenant acknowledges
that neither Xxxxxxxx nor any agent of Landlord has made any representation, as
to the condition of the Premises or the suitability of the Premises for Tenant's
intended use.
Section 6.02 - Exemption Of Landlord from Liability. Landlord shall not be
---------------------------------------------------
liable for any damage or injury to any person, business (or any loss of income
therefrom), goods, wares, merchandise or other property of Tenant, Tenant's
employees, invitees, customers or any other person, in or about the Premises,
whether such damage or injury is caused by or results from: (a) fire, steam,
electricity, water, gas or rain; (b) the breakage, leakage, obstruction or other
defects of pipes, sprinklers, wires. appliances, plumbing, air conditioning or
lighting fixtures or any other cause; or (c) conditions arising in or about the
Premises, or from other sources or places. Landlord shall not be liable for any
such damage or injury even though the cause of or the means of repairing such
damage or injury are not accessible to Tenant. The provisions of this Section
6.02 shall not, however, exempt Landlord from liability for Landlord's
negligence or willful misconduct, to the extent not covered by insurance that is
provided under the terms of this Lease.
Section 6.03 - Tenant's Obligations.
------------------------------------
(a) Except for the obligations of Landlord under Paragraph
4.05(b), Tenant shall keep in good order, condition and repair the Premises and
every part, structural and nonstructural (whether or not such portion of the
Premises requiring repair, or the means of repairing the same are reasonably or
readily accessible to Tenant, and whether or not the need for such repairs
occurs as a result of Tenant's use, any prior use, the elements or the age of
such portion) including, without limiting the generality of the foregoing, all
plumbing, heating, air conditioning, ventilating, electrical, lighting
facilities and equipment within the Premises, fixtures, walls (interior and
exterior), floors, windows, doors, plate glass and skylights located within the
Premises, and all common areas, driveways, parking areas, truck ways, delivery
passages, loading docks, sidewalks, ramps, exterior stairways, retaining walls,
fences, signs and other areas and improvements of the Premises.
(b) If Tenant fails, refuses or neglects to perform its
obligations under this Section 6.03, Landlord may, but shall not be required to
do so, perform such obligations on Tenant's behalf as Landlord deems necessary
to put the Premises in good order, condition and repair, without prior notice
and at Tenant's sole cost and expense. At Landlord's option, Tenant shall
reimburse Landlord all costs and expenses of landlord thereby incurred in either
of the following manners: (i) payment within 20 days after receipt by Tenant
from Landlord of a statement setting forth such costs and expenses, or (ii) the
estimated monthly cost to Landlord for performing such obligation of Tenant
shall be included as a portion of the Operating
10
Expenses, defined in Paragraph 4.05(d)(i) above, and paid by Tenant pursuant to
Paragraph 4.05(e) above. Such costs and expenses shall be deemed to be
Additional Rent.
Section 6.04 - Landlord's Obligations. Except for the obligations of
-------------------------------------
Landlord under Paragraph 4.05(b), Article Seven (Damage or Destruction) and
Article Eight (Condemnation), it is intended by the parties hereto that Landlord
have no obligation, in any manner whatsoever, to repair and maintain the
Premises and the common areas nor the equipment therein, whether structural or
nonstructural, all of which obligations are intended to be that of the Tenant
under Section 6.03 hereof. Tenant, expressly waives the benefit of any statute
now or hereinafter in effect which would otherwise afford Tenant the right to
make repairs at Landlord's expense or to terminate this Lease because of
landlord's failure to keep the Premises and the common areas in good order,
condition and repair.
Section 6.05 - Alterations, Additions, Improvements and Repairs.
----------------------------------------------------------------
(a) Tenant shall not make any alterations, additions,
improvements or repairs to the Premises without Landlord's prior written
consent, except for nonstructural alterations which do not exceed Three Hundred
Thousand Dollars ($300,000.00) cumulative total cost over the Lease Term, and
which are not visible from the outside of the Premises. Landlord may require
Tenant to provide demolition and/or lien and completion bonds in form and amount
satisfactory to Landlord. Tenant shall promptly remove any alterations,
additions, improvements or repairs constructed in violation of this Paragraph
6.05(a) upon Landlord's written request. All alterations, additions,
improvements and repairs will be accomplished in a good and workmanlike manner,
in conformity with all applicable laws and regulations, and by a contractor
approved by Landlord. Upon completion of any such work, including any
improvements undertaken by Tenant prior to the Commencement Date, Tenant shall
provide Landlord with "as-built" plans, copies of all construction contracts,
and proof of payment for all labor and materials. The parties recognize that
substantial interior alterations and improvements will be made from time to time
by Tenant during the course of the Lease Term. Landlord shall not unreasonably
withhold its consent to such alterations and improvements.
(b) Tenant shall pay when due all claims for labor and material
furnished to the Premises. Tenant shall give Landlord at least ten (10) days'
prior written notice of the commencement of any work on the Premises. Landlord
may elect to record and post notices of non-responsibility on the Premises.
Section 6.06 - Condition upon Termination. Upon the termination of this
-----------------------------------------
Lease, Tenant shall surrender the Premises to Landlord, broom clean and in the
same condition as received except for ordinary wear and tear which Tenant was
not otherwise obligated to remedy under any provision of this Lease. However,
Tenant shall not be obligated to repair any damage which Landlord is required to
repair under Article Seven (Damage or Destruction). In addition, Landlord may
require Tenant to remove any alterations, additions or improvements or any
portion thereof, other than the original Tenant improvements constructed and to
restore the Premises to their prior condition, all at Tenant's expense.
Landlord shall exercise this right to require removal by Tenant upon the earlier
of: (a) Landlord's issuance of written consent to make alteration, additional
improvements or repairs; (b) if Landlord's consent is not required, thirty (30)
days after Xxxxxx's delivery of "as-built" plans to Landlord; or (c) if
Landlord's consent is not requested and Tenant fails to provided Landlord with
"as-built" plans at any time prior to the termination of the Lease. All
alterations, additions and improvements which Landlord has not required Tenant
to remove shall become landlord's property and shall be surrendered to Landlord
upon the termination of this Lease, except that Tenant may remove any of
Tenant's trade fixtures, personal property, machinery or equipment which can be
removed without material damage to the Premises. Tenant shall repair, at
Tenant's expense, any damage to the Premises caused by the removal of any such
trade fixtures, personal property, machinery or equipment.
11
In no event, however, shall Tenant remove any of the following materials or
equipment without Landlord's prior written consent: any power wiring or power
panels; lighting or lighting fixtures; wall coverings; drapes, blinds or other
window coverings; carpets or other floor coverings; heaters, air conditioners or
any other heating or air conditioning equipment; fencing or security gates; or
other similar building operating equipment and decorations.
ARTICLE SEVEN
DAMAGE OR DESTRUCTION
Section 7.01 - Partial Damage to Property. Tenant shall notify Landlord in
-----------------------------------------
writing immediately upon the occurrence of any damage to the Premises. For
purposes of this Lease, partial damage shall be defined to include destruction
of or damage to the Premises, the repair of which would cost 33-1/3% or less of
the replacement cost. If the Premises are only partially damaged and if the
proceeds received by Landlord from the insurance policies described in Paragraph
4.04(b) are sufficient to pay for the necessary repairs, this Lease shall remain
in effect and Landlord shall repair the damage as soon as reasonably possible.
Landlord may elect to repair any damage to Tenant's fixtures, equipment, or
improvements. If the insurance proceeds received by Landlord are not sufficient
to pay the entire cost of repair, or if the damage was due to a cause not
covered by the insurance policies which Landlord maintains under Paragraph
4.04(b), Landlord may elect to (a) repair the damage as soon as reasonably
possible in which case this Lease shall remain in full force and effect, or (b)
terminate this Lease as of the date the damage occurred. Landlord shall notify
Tenant within thirty (30) days after receipt of notice of the occurrence of the
damage, whether Landlord elects to repair the damage or terminate this Lease.
If Landlord elects to repair the damage and if the damage was due to an act or
omission of Tenant, Tenant shall pay Landlord upon demand the difference between
the actual cost of repair and any insurance proceeds received by Landlord. If
Landlord elects to terminate this lease, Tenant way elect to continue this Lease
in full force and effect, in which case Tenant shall repair any damage to the
Premises and any building in which the Premises are located. Tenant shall pay
the cost of such repairs, except that, Landlord shall deliver to Tenant
insurance proceeds received by Landlord for the damage repaired by Tenant.
Disbursement of insurance proceeds shall be according to the same terms and
procedures provided under Section 7.02. Tenant shall give landlord written
notice of such election within ten (10) days after receiving Landlord's
termination notice. If the damage to the Premises occurs during the last six
(6) months of the Lease Term, Landlord may elect to terminate this Lease as of
the date the damage occurred regardless of the sufficiency of any insurance
proceeds. In such event, Landlord shall not be obligated to repair or restore
the Premises and Tenant shall have no right to continue this Lease. Landlord
shall notify Tenant of its election, within thirty (30) days after receipt of
notice of the occurrence of the damage.
Section 7.02 - Total or Substantial Destruction. For purposes of this
-----------------------------------------------
Lease, total or substantial destruction shall be defined to include destruction
of or damage to the Premises, the repair of which would cost in excess of 33-
1/3% of the replacement cost. If the Premises are totally or substantially
destroyed by any cause whatsoever, or if the Premises are in a building which is
substantially destroyed (even though the Premises are not totally or
substantially destroyed), this Lease shall terminate as of the date the
destruction occurred regardless of whether Landlord receives any insurance
proceeds. However, if the Premises can be rebuilt within one (1) year after the
date of destruction, Landlord may elect to rebuild the Premises at Landlord's
own expense, in which case, this Lease shall remain in full force and effect.
Landlord shall notify Tenant of such election within thirty (30) days after the
occurrence of total or substantial destruction. If the Premises are totally or
substantially destroyed, and Landlord does not elect to rebuild within thirty
(30) days of the occurrence of the destruction and Tenant may elect to continue
to Lease in full force and effect, in which case Tenant shall repair any damage
to the Premises at Tenant's expense. Tenant shall make its
12
election within thirty (30) days after the date of Landlord's notice. Provided
that Landlord gives timely notice to Tenant, as required, of its election not to
rebuild, Tenant shall have one (1) year from the date of destruction to complete
the rebuilding of the Premises. Disbursement of any insurance proceeds shall be
made to Tenant in stages during the course of rebuilding, or in accordance with
such other procedure as may be the policy of the insurer, and shall be subject
to Landlord's right to demand customary assurances that the work to date has
been completed according to plans and specifications, and lien free. If the
destruction was caused by an act or omission of Tenant, Tenant shall pay
Landlord the difference between the actual cost of rebuilding and any insurance
proceeds received by Landlord.
Section 7.03 - Temporary Reduction of Rent. If the Premises are partially
------------------------------------------
destroyed or damaged and Landlord or Tenant repairs or restores the Premises
pursuant to the provisions of this Article Seven, the Base Rent payable during
the period of such damage, repair and/or restoration shall be reduced according
to the degree, if any, to which Tenant's use of the Premises is impaired.
However, the reduction shall not exceed the sum of one year's payment of Base
Rent. Except for such possible reduction in Base Rent, Tenant shall not be
entitled to any compensation, reduction, or reimbursement from Landlord as a
result of any damage, destruction, repair, or restoration of or to the Premises.
If the Premises are totally destroyed and Landlord or Tenant rebuilds pursuant
to the provisions of Article 7, the Base Rent payable during the period of
destruction of rebuilding shall be reduced according to the degree to which
Xxxxxx's use of the Premises is impaired. However, the reduction shall neither
exceed the sum of the (1) year's payment of Base Rent nor continue for a period
in excess of one (1) year after the date of destruction.
Section 7.04 - Waiver. Tenant waives the protection of any statute, code
---------------------
or judicial decision which grants a tenant the right to terminate a lease in the
event of the substantial destruction of the leased property. Tenant agrees that
the provisions of Section 7.02 above shall govern the rights and obligations of
Landlord and Tenant in the event of any substantial or total destruction to the
Premises.
ARTICLE EIGHT
CONDEMNATION
If all or any portion of the Premises are taken under the power of eminent
domain or sold under the threat of that power (all of which are called
"Condemnation"), this Lease shall terminate as to the part taken or sold on the
date the condemning authority takes title or possession, whichever occurs first.
If more than twenty percent (20%) of the floor area of the building in which the
Premises are located, or which is located on the Premises, is taken, either
Landlord or Tenant may terminate this Lease as of the date the authority takes
title or possession, by delivering written notice to the other within ten (10)
days after receipt of written notice of such taking (or in the absence of such
written notice to the other within ten (10) days after the condemning authority
takes possession). If neither Landlord nor Tenant terminates this Lease, this
lease shall remain in effect as to the portion of the Premises not taken, except
that the Base Rent shall be reduced in proportion to the reduction in the floor
area of the Premises. Any Condemnation award or payment shall be distributed in
the following order: (a) first, to any ground lessor, mortgagee or, under a deed
of trust encumbering the Premises, the amount of its interest in the Premises;
and (b) second, to Landlord, the remainder of such award, whether as
compensation for reduction in the value of the leasehold, the taking of the fee,
or otherwise. If this Lease is not terminated, Landlord shall repair any damage
to the Premises caused by the Condemnation, except that Landlord shall not be
obligated to repair any damage for which Tenant has been reimbursed by the
condemning authority. If the severance damages received by Landlord are not
sufficient to pay for such repair, Landlord shall have the right to either
terminate this lease or make such repair at Landlord's expense. Tenant shall be
entitled to the amount of any award specifically designated
13
by the condemning authority as compensation for loss or damage to (i) the value
of Tenant's right of occupancy of the Premises under the Lease; (ii) Tenant's
unamortized leasehold improvements and (iii) depreciation to, and the cost of
removal of, Xxxxxx's personal property and fixtures.
ARTICLE NINE
ASSIGNMENT AND SUBLETTING
Section 9.01 - Landlord's Consent Required. No portion, of the Premises or
------------------------------------------
of Tenant's interest in this Lease may be acquired by any other person or
entity, whether by assignment, mortgage, sublease, transfer, operation of law,
or act of Tenant, without Landlord's prior written consent, except as provided
in Section 9.02 below. Landlord shall grant or withhold its consent as provided
in Section 9.04 below. Any attempted transfer without consent shall be void and
shall constitute a non-curable breach of this Lease. If Tenant is a
partnership, any cumulative transfer of more than twenty percent (20%) of the
partnership interests shall require Landlord's consent.
Section 9.02 Tenant's Affiliate. Tenant may assign this lease or sublease
-------------------------------
the Premises, without Landlord's consent, to any corporation which controls, is
controlled by or is under common control with Tenant, or to any corporation
resulting from the merger of or consolidation with Tenant ("Tenant's
Affiliate"). In such case, any Tenant's Affiliate shall assume in writing all
of Tenant's obligations under this lease.
Section 9.03 - No Release of Tenant. No transfer permitted by this Article
-----------------------------------
Nine, whether with or without Landlord's consent, shall release Tenant or change
Tenant's primary liability to pay the rent and to perform all other obligations
of Tenant under this Lease. Xxxxxxxx's acceptance of rent from any other person
is not a waiver of any provision of this Article Nine. Consent to one transfer
is not a consent to any subsequent transfer. If Xxxxxx's transferee defaults
under this lease, Landlord may proceed directly against the transferee.
Landlord, shall obtain Xxxxxx's consent to subsequent assignments of
modifications of this lease by Xxxxxx's transferee which consent shall not be
unreasonably withheld.
Section 9.04 Landlord's Election. Tenant's request for consent to any
--------------------------------
transfer described in Section 9.01 above shall be accompanied by a written
statement setting forth the details of the proposed transfer, including the
name, business and financial condition of the prospective transferee, financial
details of the proposed transfer (e.g., the term of and rent and security
deposit payable under any assignment or sublease), and any other information
Landlord deems relevant. Landlord shall have the right (a) to withhold consent,
if reasonable; (b) to grant consent; or (c) if the transfer is a sublease of the
Premises or an assignment of this Lease, to condition its consent on the written
agreement of all parties that Landlord shall receive a one-half share of any
rent to be paid by the assignee or sub-tenant which is in excess of the rent
paid by Tenant under the terms of the Lease. Such one-half share shall be
deemed Additional Rent for purposes of the Lease.
Section 9.05 - No Merger. No merger shall result from Tenant's sublease of
------------------------
the Premises under this Article Nine, Xxxxxx's surrender of this Lease or the
termination of this lease in any other manner. In any such event, Landlord may
terminate any or all subtenancies or succeed to the interest of Xxxxxx as
sublandlord thereunder.
14
ARTICLE TEN
DEFAULTS: REMEDIES
Section 10.01 - Covenants and Conditions. Tenant's performance of each of
----------------------------------------
Tenant's obligations under this Lease is a option as wall as a covenant.
Xxxxxx's right to continue in possession of the Premises is conditioned upon
such performance. Time is of the essence in the performance of all covenants
and conditions.
Section 10.02 - Defaults. Tenant shall be in material default under this
------------------------
Lease:
(a) If Tenant abandons the Premises or if Xxxxxx's vacation of the
Premises results in the cancellation of any insurance described in Section 4.04.
(b) If Tenant fails to pay rent or any other charges required to be paid
by Xxxxxx, as and when due, and such failure continues for a period of three (3)
days after receipt of written notice from Landlord to Tenant.
(c) If Tenant fails to perform any of Xxxxxx's non-monetary obligations
under this Lease for a period of thirty (30) days after written notice from
Landlord; provided that if more than thirty (30) days are required to complete
such performance, Tenant shall not be in default if Tenant commences such
performance within the thirty (30) day period and thereafter diligently pursues
its completion.
(d) (i) If Tenant makes a general assignment or general arrangement for
the benefit of creditors; (ii) if a petition for adjudication of bankruptcy or
for reorganization or rearrangement is filed by or against Tenant and is not
dismissed within ninety (90) days; (iii) if a trustee or receiver is appointed
to take possession of substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this Lease and possession is not restored to
Tenant within forty-five (45) days; or (iv) if substantially all of Tenant's
assets located at the Premises or of Tenant's interest in this Lease is
subjected to attachment, execution or other judicial seizure which is not
discharged within forty-five (45) days. If a court of competent jurisdiction
determines that any of the acts described in this subparagraph (d) is not a
default under this Lease, and a trustee is appointed to take possession (or if
Tenant remains a debtor in possession) and such trustee or Tenant transfers
Xxxxxx's interest hereunder, then Landlord shall receive, as Additional Rent,
the difference between the rent (or any other consideration) paid in connection
with such assignment or sublease and the rent payable by Tenant hereunder.
Section 10.03 - Remedies. On the occurrence of any material default by
------------------------
Tenant, Landlord may, at any time thereafter, with or without notice or demand
and without limiting Landlord in the exercise of any right or remedy which
Landlord may have:
(a) Terminate Xxxxxx'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
be entitled to recover from Tenant all damages incurred by Landlord by reason of
Tenant's default, including (i) the worth at the time of the award of the unpaid
Base Rent, Additional Rent and other charges which had been earned at the time
of the termination; (ii) the worth at the time of the award of the amount by
which the unpaid Base Rent, Additional Rent and other charges which would have
been earned after termination until the time of the award exceeds the amount of
such rental loss that Tenant proves could have been reasonably avoided; (iii)
the worth at the time of the award of the amount by which the unpaid Base Rent,
Additional Rent and other charges which would have been paid for the balance of
the term after the time of
15
award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; and (iv) any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including, but not limited to, any costs or expenses
incurred by Landlord in maintaining or preserving the Premises after such
default, the cost of recovering possession of the Premises, expenses of
reletting, including necessary renovation or alteration of the Premises,
Landlord's reasonable attorneys' fees incurred in connection therewith, and any
real estate commission paid or payable. As used in subparts (i) and (ii) above,
the "worth at the time of the award" is computed by allowing interest on unpaid
amounts at the maximum lawful rate. As used in subpart (iii) above, the "worth
at the time of the award" is computed by discounting such amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of the award, plus
1%. If Tenant shall have abandoned the Premises, Landlord shall have the option
of (i) retaking possession of the Premises and recovering from Tenant the amount
specified in this Paragraph 10.03(a), or (ii) proceeding under Paragraph
10.03(b);
(b) Maintain Tenant's right to possession, in which case this lease
shall continue in effect whether or not Tenant shall have abandoned the
Premises. In such event, Landlord shall be entitled to enforce all of Landlord's
rights and remedies under this Lease, including the right to recover the rent as
it becomes due hereunder;
(c) Pursue any other remedy now or hereafter available to Landlord
under the laws or judicial decisions of the state in which the Premises are
located.
Section 10.04 - Cumulative Remedies. Landlord's exercise of any right or
-----------------------------------
remedy shall not prevent it from exercising any other right or remedy.
ARTICLE ELEVEN
PROTECTION OF LENDERS
Section 11.01 - Subordination. Landlord shall not have the right to
-----------------------------
subordinate this Lease to any ground lease, deed of trust or mortgage
encumbering the Premises, any advances made on the security thereof and any
renewals, modifications, consolidations, replacements or extensions thereof,
whenever made or recorded subsequent to the date hereof, unless the ground
lessor, beneficiary of the Deed of Trust or mortgage agrees that Xxxxxx's right
to quiet possession of the Premises during the Lease Term shall not be disturbed
if Tenant pays the rent and performs all of Tenant's obligations under this
lease and is not otherwise in default. If any ground lessor, beneficiary or
mortgagee elects to have this Lease prior to the lien of its ground lease, deed
of trust or mortgage and gives written notice thereof to Tenant, this Lease
shall be deemed prior to such ground lease, deed of trust or mortgage whether
this Lease is dated prior or subsequent to the date of said ground lease, deed
of trust or mortgage or the date of recording thereof. The Lease shall be
subordinate to the lien of the permanent loan Deed of Trust in favor of the
Northwestern Life Insurance Company, Beneficiary, to be recorded against the
Premises prior to the Commencement Date of the Lease, and Xxxxxx agrees to
execute such customary documents as may be necessary to effect said
subordination.
Section 11.02 - Attornment. If Xxxxxxxx's interest in the Premises are
--------------------------
acquired by any ground lessor, beneficiary under a deed of trust, mortgagee, or
purchaser at a foreclosure sale, Tenant shall attorn to the transferee of or
successor to Xxxxxxxx's interest in the premises and recognize such transferee
or successor as Landlord under this Lease provided that such transferee agrees
that Xxxxxx's right to quiet possession of the
16
Premises during the Lease Term shall not be disturbed if Tenant pays rent and
performs all of Tenant's obligations under the Lease and is not otherwise in
default.
Section 11.03 - Signing of Documents. Tenant shall sign and deliver any
------------------------------------
instrument or documents necessary or appropriate to evidence any such attornment
or subordination or agreement to do so. If Tenant fails to do so within fifteen
(15) business days after written request, Xxxxxx hereby makes, constitutes and
irrevocably appoints Landlord or any transferee or successor of Landlord, the
attorney-in-fact of Tenant to execute and deliver any such instrument or
document.
Section 11.04 - Estoppel Certificates.
--------------------------------------
(a) Upon Landlord's written request, Tenant shall execute,
acknowledge and deliver to Landlord a written statement certifying: (i) that
none of the terms or provisions of this Lease have been changed (or if they have
been changed, stating how they have been changed); ii) that this lease has not
been, canceled or terminated; (iii) the last date of payment of the Base Rent
and other charges and the time period covered by such payment; and (iv) that
Landlord is not in default under this Lease (or, if Landlord is claimed to be in
default, stating why). Tenant's certification that Landlord is not in default
under the Lease shall be limited to defaults which are known, to the best of
Tenant's knowledge, and shall not constitute a waiver of any default by Landlord
not known to Tenant. Tenant shall deliver such statement to Landlord within
fifteen (15) days after Xxxxxxxx's request. Any such statement by Tenant may be
given by Landlord to any prospective purchaser or encumbrancer of the Premises.
Such purchaser or encumbrancer may rely conclusively on such statement as true
and correct.
(b) If Tenant does not deliver such statement to Landlord within such
fifteen day period, Landlord, and any prospective purchaser or encumbrancer may
conclusively presume and rely upon, the following facts: (i) that the term and
provisions of this lease have not been changed except as otherwise represented
by Landlord; (ii) that this Lease has not been canceled or terminated except as
otherwise represented by Landlord; (iii) that not more than one (1) month's Base
Rent or other charges have been paid in advance; and (iv) that landlord is not
in default under this lease. In such event, Tenant shall be estopped from
denying the truth of such facts. The presumption and reliance of a prospective
purchaser or encumbrancer that Landlord is not in default under the Lease shall
be limited to defaults which are known to the best of Tenant's knowledge.
(c) Upon Xxxxxx's written request, Landlord shall execute,
acknowledge and deliver to Tenant written statement certifying: (i) that none of
the terms of the Lease have been changed (or if they have been changed stating
how they have been changed); (ii) that the Lease has not been canceled or
terminated; (iii) the last date of payment of the Base Rent and other charges in
the time period covered by such payment; and (iv) that, to the best of
Landlord's knowledge and without waiving any default not known to Landlord,
Tenant is not in default under the Lease (or, if Tenant is claimed to be in
default, stating why). Landlord shall deliver such statement to Tenant within
fifteen (15) business days after Xxxxxx's request. Tenant may use such statement
for whatever purpose it deems appropriate.
(d) If Landlord does not deliver the statement described above to
Tenant within such fifteen-business-day following facts: (i) that the terms and
conditions of this Lease have not changed except as otherwise represented by
Tenant; (ii) that this Lease has not been canceled or terminated except as
otherwise represented by Tenant; and (iii) that, to the best of Landlord's
knowledge, Tenant is not in default under the Lease.
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Section 11.05 - Tenant's Financial Condition. Within fifteen (15) business
--------------------------------------------
days after written request from Landlord, Tenant shall deliver to Landlord
Xxxxxx's most recent fiscal year and financial statement or the current annual
financial statement of any assignee or subtenant. Tenant shall deliver to any
lender designated by Landlord any financial statement required by such lender to
facilitate the financing or refinancing of the Premises. Tenant represents and
warrants to Landlord that (a) each such financial statement is a true and
accurate statement as of the date of such statement. Within fifteen (15)
business days from the date hereof, Tenant shall deliver to Landlord a copy of
Tenant's most recent quarterly financial report.
ARTICLE TWELVE
LEGAL COSTS
Section 12.01 - Legal Proceedings. Tenant shall reimburse Landlord, upon
---------------------------------
demand for any reasonable attorney fees and costs incurred by Landlord from any
claim or litigation for which Landlord is required to retain legal counsel in
order to protect its rights as owner of the Premises. Furthermore, if any action
for breach or to enforce the provisions of this Lease is commenced, the court in
such action shall award to the party in whose favor a judgment is entered, a
reasonable sum as attorneys' fees and costs. Such attorneys' fees and costs
shall be paid by the losing party in such action. Tenant shall also indemnify
Landlord against and hold Landlord harmless from all costs, expenses, demands
and liability incurred by Landlord if Landlord becomes or is made a party to any
claim or action (a) instituted by Xxxxxx, or by any third party against Tenant;
(b) for foreclosure of any lien for labor or material furnished to or for Tenant
or such other person; (c) otherwise arising out of or resulting from any act or
transaction of Tenant or such other person; or (d) necessary to protect
Landlord's interest under this Lease in a bankruptcy proceeding, or other
proceeding under Title 11 of the United States Code, as amended. Tenant shall
defend Landlord against any such claim or action at Tenant's expense with
counsel reasonably acceptable to Landlord or, at Landlord's election, Tenant
shall reimburse landlord for any legal fees or costs incurred by landlord in any
such claim or action.
Section 12.02 - Landlord's Consent Tenant shall pay Landlord's reasonable
----------------------------------
out of pocket attorney's fees incurred in connection with Xxxxxx's request for
Xxxxxxxx's consent under Article Nine (Assignment and Subletting), or in
connection with any other act which Tenant proposes to do and which requires
Landlord's consent.
ARTICLE THIRTEEN
MISCELLANEOUS PROVISIONS
Section 13.01 - Non-Discrimination. Tenant promises, and it is a
-----------------------------------
condition to the continuance of this lease, that there will be no discrimination
against, or segregation of, any person or group of persons on the basis of race,
color, sex, creed, national origin or ancestry in the leasing, subleasing,
transferring, occupancy, tenure or use of the Premises or any portion thereof.
Tenant shall not be held in default under the Lease for violation of this
Section 13.01 unless a court of competent jurisdiction finds that Xxxxxx has
engaged in discrimination and, in addition, Tenant fails to provide reasonable
means to remedy past discrimination and to assure that the past discrimination
will not continue.
Section 13.02 - Waiver of Subrogation. Landlord and Tenant each hereby
-------------------------------------
waive any and all rights of recovery against the other, or against the officers,
employees, agents or representatives of the other, for loss
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of or damage to its property or the property of others under its control, if
such loss or damage is covered by any insurance policy in force (whether or not
described in this Lease) at the time of such loss or damage. Upon obtaining the
policies of insurance described herein, Landlord and Tenant shall give notice to
the insurance carrier or carriers of the foregoing mutual waiver of subrogation.
Section 13.03 - Landlord's Liability: Certain Duties.
----------------------------------------------------
(a) As used in this Lease, the term Landlord means only the current
owner or owners of the fee title to the Premises or the leasehold estate under a
ground lease of the Premises at the time in question. Each Landlord is obligated
to perform the obligations of Landlord under this lease only during the time
such Landlord owns such interest or title. Any Landlord who transfers its title
or interest is relieved of all liability with respect to the obligations of
Landlord under this Lease to be performed on or after the date of transfer.
However, each Landlord shall deliver to its transferee all funds previously paid
by Tenant if such funds have not yet been applied under the term of this lease.
Any Landlord who obtains title or interest from a transferor subject to the
obligations of the Lease shall take such title or interest subject to all
obligations upon Landlord established under the Lease and shall recognize and
fully credit funds prior to any predecessor Landlord or Tenant.
(b) Tenant shall give written notice of any failure by Landlord to
perform any of its obligations under this Lease to Landlord and to any ground
lessor, mortgagee or beneficiary under any deed of trust encumbering the
Premises whose name and address have been furnished to Tenant in writing.
Landlord shall not be in default under this Lease unless Landlord (or such
ground lessor, mortgagee or beneficiary) fails to cure such non-performance
within thirty (30) days after receipt of Tenant's notice. However, if such
nonperformance reasonably requires more than thirty (30) days to cure, Landlord
shall not be in default if such cure is commenced within such thirty (30) day
period and thereafter diligently pursued to completion.
(c) Upon the execution of this Lease, Tenant shall deposit with
Landlord a cash Security Deposit in the amount set forth in Section 1.08 above.
Landlord may apply all or part of the Security Deposit to any unpaid rent or
other charges due from Tenant or to cure any other defaults of Tenant. if
Landlord uses any part of the Security Deposit, Tenant shall restore the
Security Deposit to its full amount within ten (10) days after Xxxxxxxx's
written request. Tenant's failure to do so shall be a material default under
this Lease. No interest shall be paid on the Security Deposit. Landlord shall
not be required to keep the Security Deposit separate from its other amounts and
no trust relationship is created with respect to the Security Deposit.
Section 13.04 - Severability. A determination by a court of competent
----------------------------
jurisdiction that any provision of this Lease or any part thereof is illegal or
unenforceable shall not cancel or invalidate the remainder of such provision or
this lease, which shall remain in full force and effect.
Section 13.05 - Interpretation. The captions of the Articles or Sections
------------------------------
of this Lease are to assist the parties in reading this Lease and are not a part
of the term or provisions of this Lease. Whenever required by the context of
this Lease, the singular shall include the plural and the plural shall include
the singular. The masculine, feminine and neuter genders shall each include the
other. In any provision relating to the conduct, acts or omissions of Tenant,
the term "Tenant" shall include Tenant's agents, employees, contractors,
invitees, successors or others using the Premises with Xxxxxx's expressed or
implied permission.
Section 13.06 - Incorporation of Prior Agreements: Modifications. This
----------------------------------------------------------------
Lease is the only agreement between the parties pertaining to the lease of the
Premises and no other agreements are effective. All
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amendments to this Lease shall be in writing and signed by all parties. Any
other attempted amendment shall be void.
Section 13.07 - Notices. All notices required or permitted under this
-----------------------
Lease shall be in writing and shall be personally delivered or sent by certified
mail, return-receipt-requested, postage prepaid. Notices to Tenant shall be
delivered to the address specified in Section 1.03 above, except that upon
Xxxxxx's taking possession of the Premises, the Premises shall be Tenant's
address for notice purposes. Notices to Landlord shall be delivered to the
address specified in Section 1.02 above. All notices shall be effective upon
delivery. Either party may change its notice address upon written notice to the
other party.
Section 13.08 - Waivers. All waivers must be in writing and signed by the
-----------------------
waiving party. Landlord's failure to enforce any provision of this lease or its
acceptance of rent shall not be a waiver and shall not prevent Landlord from
enforcing that provision or any other provision of this lease in the future. No
statement on a payment check from Tenant or in a letter accompanying a payment
check shall be binding on Landlord. Landlord may, with or without notice to
Tenant, negotiate such check without being bound to the conditions of such
statement.
Section 13.09 - No Recordation. Tenant shall not record this Lease without
------------------------------
prior written consent from landlord. However, Landlord and Xxxxxx agree that
concurrent with the execution of the Lease, the parties shall execute a "short
form" memorandum of this Lease to be recorded within ten (10) days of its
execution. The short form memorandum of this lease shall be prepared by the
party requesting the recordation, and approved by both parties, which approval
shall not be unreasonably withheld.
Section 13.10 - Binding Effect: Choice of Law. This Lease binds any party
---------------------------------------------
who legally acquires any rights or interest in this Lease from Landlord or
Tenant. However, Landlord shall have no obligation to Xxxxxx's successor unless
the rights or interest of Xxxxxx's successor are acquired in accordance with the
terms of this Lease. The laws of the State of California shall govern this
Lease.
Section 13.11 - Corporate Authority: Partnership Authority. If Tenant is a
----------------------------------------------------------
corporation, each person signing this Lease on behalf of Tenant represents and
warrants that he has full authority to do so and that this Lease binds the
corporation. Within thirty (30) days after this Lease is signed, Tenant shall
deliver to Landlord a certified copy of a resolution of Tenant's Board of
Directors authorizing the execution of this Lease or other evidence of such
authority reasonably acceptable to Landlord. If Xxxxxx is a partnership, each
person signing this Lease for Tenant represents and warrants that he is a
general partner of the partnership, that he has full authority to sign for the
partnership and that this Lease binds the partnership and all general partners
of the partnership. Tenant shall give written notice to Landlord of any general
partner's withdrawal or addition. Within thirty (30) days after this Lease is
signed, Xxxxxx shall deliver to Landlord a copy of Xxxxxx's recorded statement
of partnership or certificate of limited partnership.
Section 13.12 - Joint and Several Liability. All parties signing this
-------------------------------------------
lease as Tenant shall be jointly and severally liable for all obligations of
Tenant.
Section 13.13 Force Majeure If either party to the Lease cannot for a
-----------------------------
period of up to six (6)months perform any of its obligations due to events
beyond its control, the time provided for performing such obligations shall be
extended by a period of time equal to the duration of such events, not to exceed
six (6) months for such delay. Events beyond the party's control include, but
are not limited to. acts of God, war, civil commotion, labor disputes, strikes,
fire, flood, or other casualty, shortage of labor or material, government
regulation or restriction and weather conditions. The provisions of this
paragraph shall not operate to excuse Tenant from prompt payment of rent as
required under the terms of the Lease. If such
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delay shall continue for a period in excess of six (6) months, then Tenant may
terminate the Lease if such delay shall constitute a substantial interference
with Xxxxxx's right to quiet possession of the Premises, and Landlord may
terminate the Lease if such delay prevents the performance of Tenant's
obligations under the Lease.
Section 13.14 - Title Insurance. Tenant shall have the right to request
-------------------------------
and receive, at Tenant's sole cost, a leasehold policy of title insurance from
Title Insurance and Trust Company, insuring Xxxxxx's leasehold as of the
Commencement Date in a manner approved by Tenant. If requested by Xxxxxx at the
time of the execution of the Lease, and at Tenant's sole cost, Landlord shall
request that a preliminary title report on the Premises be immediately delivered
to Tenant by Title Insurance and Trust Company.
ARTICLE FOURTEEN
HAZARDOUS SUBSTANCES
Section 14.01 - Hazardous Substances The term "Hazardous Substance(s)" as
------------------------------------
used in the Lease, is defined as follows: Any element, compound, mixture,
solution, particle or substance, which presents danger or potential danger for
damage or injury to health, welfare or to the environment including, but not
limited to:
(a) Those substances which are inherently or potentially radioactive,
explosive, ignitable, corrosive, reactive, carcinogenic or toxic; and
(b) Those substances which have been recognized as dangerous or
potentially dangerous to health, welfare or to the Environment by any federal,
municipal, state, county or other governmental or quasi-governmental authority
and/or any department or agency thereof.
Section 14.02 - Tenant's Indemnity Obligations. Tenant represents and
----------------------------------------------
warrants to Landlord that at all times during the term of the Lease and any
extensions or renewals thereof, Tenant shall:
(a) Promptly comply, at Tenant's own cost and expense, with all laws,
orders, rules, regulations, certificates of occupancy, or other requirements, as
the same now exist or may hereafter be enacted, amended or promulgated, of any
federal, municipal, state, county or other governmental or quasi-governmental
authorities and/or any department or agency thereof relating to the
manufacturing, processing, distributing, using, producing, treating, storing
(above or below ground level), disposing of Hazardous Substance(s) by Tenant or
its agents and employees on or about the Premises;
(b) Indemnify and hold landlord, its agents and employees, harmless
from any and all demands, claims, causes of action, penalties, liabilities,
judgments, damages (including consequential damages) and expenses including,
without limitation, court costs and reasonable attorneys' fees incurred by
Landlord as a result of (i) Tenant's failure or unreasonable delay in properly
complying with such law, order, rule, regulation, certificate of occupancy or
other requirement referred to in Section 14.02(a) above, or (ii) any adverse
effect which results from the presence of any Hazardous Substance(s) in or about
the Premises, where Tenant or Tenant's agents, employees, contractors,
subtenants or lease assignees, with or without Tenant's consent has caused,
either intentionally or unintentionally, Hazardous Substance(s) to be released,
discharged, emitted, or disposed of on or about the Premises in violation of
applicable law. If any action or proceeding is brought against Landlord,
Landlord's agents or employees by reason of any such claim, Tenant, upon notice
from Landlord, will defend such claim at Tenant's expense with counsel
reasonably
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satisfactory to Landlord. This indemnification by Tenant of Landlord shall
survive the termination of the lease;
(c) Promptly disclose to Landlord by delivering, in the manner
prescribed for delivery of notice in the Lease, a copy of any forms,
submissions, notices, reports, or other written documentation ("Communications")
alleging that the Premises are contaminated by a Hazardous Substance(s) in or
about the Premises, whether such communications are delivered to Tenant or are
requested of Tenant by any federal, municipal, state, county or other government
or quasi-governmental authority and/or any department or agency thereof; and
(d) Notwithstanding any other provisions of the Lease, (i) allow
Landlord, and Landlord's agents, access and the right to enter and inspect the
Premises for the presence of any Hazardous Substance(s), at any reasonable time
and in a reasonable manner so as not to distract Xxxxxx's enjoyment of the
premises and after reasonable notice to Tenant; and (ii) in the event a release
of Hazardous Substance(s) occurs on or affects the Premises, Tenant shall Permit
Landlord or Landlord's agents to enter the Premises at a reasonable time and in
a reasonable manner so as not to distract Xxxxxx's enjoyment of the premises and
after reasonable notice to Tenant, to inspect, monitor, take emergency or long
term remedial action, discharge Xxxxxx's obligations hereunder if Xxxxxx has
failed to do so, or take any other action to restore the Premises to its
original condition.
(e) If all or any portion of the Premises should become unsuitable
for Tenant's use as a consequence of the presence of any Hazardous Substance not
released, emitted or discharged to the Premises by Tenant or its agents,
employees or contractors, then Tenant shall be entitled to an abatement of all
Rent and additional Rent payable hereunder to the extent of the interference
with Xxxxxx's use of the Premises occasioned thereby and, if such interference
cannot be corrected or the damage resulting therefrom repaired so that the
Premises will be reasonably suitable for Tenant's intended use within (one
hundred twenty (120) days following the occurrence of such event, then Tenant
also shall be entitled to terminate this Lease by delivery of written notice of
termination to Landlord within thirty (30) days following the date on which the
Premises becomes unsuitable for Tenant's use as provided above.
Compliance by Tenant with any provision of this Section 14.02 shall not be
deemed a waiver of any other provision hereof. Without limiting the foregoing,
Xxxxxxxx's consent to the Presence of any Hazardous Substance(s) shall not
relieve Tenant of its indemnity obligations under the term of this Section
14.02.
ARTICLE 15
FIRST OPTION TO EXTEND
Tenant shall have the right to extend the Lease immediately upon the
expiration of the Lease Term as set forth herein, provided that Tenant has not
at any time during the Lease Term been in default of any obligation for the
payment of rent under the Lease or committed any act or omission to act
constituting a material breach of the Lease. The extension shall be for a
period of five (5) years, and hereinafter referred to as the "First Option
Period." Tenant shall give written notice of exercise of the option ("Option
Notice") to Landlord no earlier than one hundred and twenty (120) days and no
later than ninety (90) days prior to the expiration of the Lease Term ("Notice
Period"). If Tenant fails to exercise this option to extend during the Notice
Period, Tenant's option to extend shall be deemed to be extinguished upon the
expiration of the Notice Period.
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