MULTI-TENANT OFFICE TRIPLE NET LEASE
XXXXX CREEK BUSINESS XXXX
XXXXX CREEK THREE TRUST,
a Maryland real estate investment trust,
as Landlord,
and
AEHR TEST SYSTEMS,
a California corporation,
as Tenant.
XXXXX CREEK BUSINESS PARK
INDEX
ARTICLE SUBJECT MATTER PAGE
ARTICLE 1 PREMISES, BUILDING, PROJECT, AND COMMON AREAS 1
ARTICLE 2 LEASE TERM 4
ARTICLE 3 BASE RENT 5
ARTICLE 4 ADDITIONAL RENT 5
ARTICLE 5 USE OF PREMISES 12
ARTICLE 6 SERVICES AND UTILITIES 13
ARTICLE 7 REPAIRS 13
ARTICLE 8 ADDITIONS AND ALTERATIONS 14
ARTICLE 9 COVENANT AGAINST LIENS 16
ARTICLE 10 INSURANCE 17
ARTICLE 11 DAMAGE AND DESTRUCTION 20
ARTICLE 12 NONWAIVER 22
ARTICLE 13 CONDEMNATION 22
ARTICLE 14 ASSIGNMENT AND SUBLETTING 23
ARTICLE 15 SURRENDER OF PREMISES; OWNERSHIP AND
REMOVAL OF TRADE FIXTURES 27
ARTICLE 16 HOLDING OVER 28
ARTICLE 17 ESTOPPEL CERTIFICATES 28
ARTICLE 18 SUBORDINATION 29
ARTICLE 19 DEFAULTS; REMEDIES 30
ARTICLE 20 COVENANT OF QUIET ENJOYMENT 32
ARTICLE 21 SECURITY DEPOSIT 32
ARTICLE 22 INTENTIONALLY DELETED 34
ARTICLE 23 SIGNS 34
ARTICLE 24 COMPLIANCE WITH LAW 34
ARTICLE 25 LATE CHARGES 35
ARTICLE 26 LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT 35
ARTICLE 27 ENTRY BY LANDLORD 36
ARTICLE 28 TENANT PARKING 37
ARTICLE 29 MISCELLANEOUS PROVISIONS 37
ARTICLE 30 OPTION TO EXTEND 45
EXHIBITS
A-1 OUTLINE OF PREMISES
A-2 OUTLINE OF EXPANSION SPACE
B TENANT WORK LETTER
C FORM OF NOTICE OF LEASE TERM DATES
D RULES AND REGULATIONS
E FORM OF TENANT'S ESTOPPEL CERTIFICATE
F DIRECT EXPENSE ALLOCATION TABLE
XXXXX CREEK BUSINESS PARK
OFFICE LEASE
This Multi-Tenant Office Triple Net Lease (the "Lease"), dated as of the
date set forth in Section 1 of the Summary of Basic Lease Information (the
"Summary"), below, is made by and between XXXXX CREEK THREE TRUST, a
Maryland real estate investment trust ("Landlord"), and AEHR TEST SYSTEMS, a
California corporation ("Tenant").
SUMMARY OF BASIC LEASE INFORMATION
TERMS OF LEASE DESCRIPTION
1. Date: July __, 1999
2. Premises
(Article 1).
2.1 Building: Building C
000 Xxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx
2.2 Premises: Approximately 51,289 rentable square
feet of space located in the Building
and commonly known as Suite __, as
further set forth in Exhibit A to the
Office Lease.
3. Lease Term
(Article 2).
3.1 Length of Term: One hundred twenty (120) months.
3.2 Lease Commencement
Date: The earlier to occur of (i) the date
upon which Xxxxxx first commences to
conduct business in the Premises and
(ii) January 1, 2000.
3.3 Lease Expiration Date: If the Lease Commencement Date shall
be the first day of a calendar month,
then the day immediately preceding
the one hundred twenty (120) month
anniversary of the Lease Commencement
Date; or, if the Lease Commencement
Date shall be other than the first
day of a calendar month, then the
last day of the month in which the
one hundred twenty (120) month
anniversary of the Lease Commencement
Date occurs.
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3.3 Lease Expiration Date: If the Lease Commencement Date shall
be the first day of a calendar month,
then the day immediately preceding
the one hundred twenty (120) month
anniversary of the Lease Commencement
Date; or, if the Lease Commencement
Date shall be other than the first
day of a calendar month, then the
last day of the month in which the
one hundred twenty (120) month
anniversary of the Lease Commencement
Date occurs.
4. Base Rent (Article 3):
Monthly
Monthly Rental Rate
Months in Annual Installment per Rentable
Lease Term Base Rent of Base Rent Square Foot
---------- --------- ------------ -----------
1-12 $633,932.04 $52,827.67 $1.030
13-24 $656,088.88 $54,674.07 $1.066
25-36 $678,861.20 $56,571.77 $1.103
37-48 $702,864.46 $58,572.04 $1.142
49-60 $727,483.18 $60,623.60 $1.182
61-72 $752,717.36 $62,726.45 $1.223
73-84 $779,182.48 $64,931.87 $1.266
85-96 $806,263.08 $67,188.59 $1.310
97-108 $834,574.61 $69,547.88 $1.356
109-120 $864,117.07 $72,009.76 $1.404
5. Intentionally Deleted.
6. Tenant's Share
(Article 4): Approximately 63.36%, calculated on a
dripline-to-dripline basis.
7. Permitted Use
(Article 5): General office, research and
development, light manufacturing and
warehouse use consistent with a
first-class office "flex" building.
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8. Letter of Credit
(Article 21): Tenant shall be required to post a
letter of credit as security for this
Lease pursuant to the terms of
Article 21.
9. Parking Space Ratio
(Article 28): Four (4) unreserved parking spaces
for every 1,000 rentable square feet
of the Premises.
10. Address of Tenant
(Section 29.18): Aehr Test Systems
0000 Xxxxxxxx Xx.
Xxxxxxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (650) __________
(Prior to Lease Commencement Date)
and
Aehr Test Systems
000 Xxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telephone: ()
Fax: ( ) __________
(After Lease Commencement Date)
11. Address of Landlord
(Section 29.18): See Section 29.18 of the Lease.
12. Broker(s)
(Section 29.24): CB Xxxxxxx Xxxxx, Inc. for Landlord
Xxxxxxx & Xxxxxxxxx for Tenant
13. Guarantor (Section 29.35): None.
14. Tenant Improvement Allowance
(Exhibit B): $1,282,225.00 (i.e. $25.00 per
rentable square foot of the Premises)
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ARTICLE 1
PREMISES, BUILDING, PROJECT, AND COMMON AREAS
1.1 Premises, Building, Project and Common Areas.
1.1.1 The Premises. Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord the premises set forth in Section 2.2 of the
Summary (the "Premises"). The outline of the Premises is set forth in
Exhibit A-1 attached hereto and each floor or floors of the Premises has the
number of rentable square feet as set forth in Section 2.2 of the Summary.
The parties hereto agree that the lease of the Premises is upon and subject
to the terms, covenants and conditions herein set forth, and Tenant
covenants as a material part of the consideration for this Lease to keep and
perform each and all of such terms, covenants and conditions by it to be
kept and performed and that this Lease is made upon the condition of such
performance. The parties hereto hereby acknowledge that the purpose of
Exhibits A-1 and A-2 is to show the approximate location of the Premises and
the Expansion Space, if any, leased by Tenant in the "Building," as that
term is defined in Section 1.1.2, below, only, and such Exhibit is not meant
to constitute an agreement, representation or warranty as to the
construction of the Premises, the precise area thereof or the specific
location of the "Common Areas," as that term is defined in Section 1.1.3,
below, or the elements thereof or of the accessways to the Premises or the
"Project," as that term is defined in Section 1.1.2, below. Except as
specifically set forth in this Lease and in the Tenant Work Letter attached
hereto as Exhibit B (the "Tenant Work Letter"), Landlord shall not be
obligated to provide or pay for any improvement work or services related to
the improvement of the Premises. Xxxxxx also acknowledges that neither
Landlord nor any agent of Landlord has made any representation or warranty
regarding the condition of the Premises, the Building or the Project or with
respect to the suitability of any of the foregoing for the conduct of
Xxxxxx's business, except as specifically set forth in this Lease and the
Tenant Work Letter. The taking of possession of the Premises by Tenant
shall conclusively establish that the Premises and the Building were at such
time in good and sanitary order, condition and repair.
1.1.2 The Building and The Project. The Premises are a part of
the building set forth in Section 2.1 of the Summary (the "Building"). The
Building is part of an office "flex" project known as "Xxxxx Creek Business
Park" The term "Project," as used in this Lease, shall mean (i) the
Building and the Common Areas, (ii) the land (which is improved with
landscaping, and other improvements) upon which the Building and the Common
Areas are located, and (iii) at Landlord's discretion, any additional real
property, areas, land, buildings or other improvements added thereto inside
or outside of the Project.
1.1.3 Common Areas. Tenant shall have the non-exclusive right to
use in common with other tenants in the Project, and subject to the rules
and regulations referred to in Article 5 of this Lease, those portions of
the Project which are provided, from time to time, for use in common by
Landlord, Tenant and any other tenants of the Project (such areas, together
with such other portions of the Project designated by Landlord, in its
discretion, including certain areas designated for the exclusive use of
certain tenants, or to be shared by Landlord and certain tenants, are
collectively referred to herein as the "Common Areas"). The Common Areas
shall consist of the "Project Common Areas" and the "Building Common Areas."
The term "Project Common Areas," as used in this Lease, shall mean the
portion of the Project designated as such by Landlord. The term "Building
Common Areas," as used in this Lease, shall mean the portions of the Common
Areas located within the Building designated as such by Landlord. The
manner in which the Common Areas are maintained and operated shall be at the
sole discretion of Landlord, provided that Landlord shall maintain and
operate the same in a manner consistent with that of other first-class,
office "flex" buildings in the vicinity of the Project, which buildings have
a rental area of greater than 50,000 rentable square feet, and are
comparable in quality of appearance, services and amenities to the Building
(the "Comparable Buildings"), and the use thereof shall be subject to such
rules, regulations and restrictions as Landlord may make from time to time.
Landlord reserves the right to close temporarily, make alterations or
additions to, or change the location of elements of the Project and the
Common Areas.
1.2 Expansion Space. From the Effective Date until September 1, 2000
(the "Expansion Window"), Tenant shall, subject to availability, have the
right to lease the remaining portion of the Building consisting of
approximately 29,659 rentable square feet of space as more particularly
shown on Exhibit A-2 attached hereto (the "Expansion Space"), at the times
and in the manner set forth below in this Section 1.2 (the "Expansion
Option").
1.2.1 Method of Exercise. During the Expansion Window, Tenant
may inquire in writing (the "Request Notice") of Landlord from time to time
as to the availability of the Expansion Space for lease. Within ten (10)
business days following Xxxxxxxx's receipt of the Request Notice, Landlord
shall inform Tenant in writing ("Landlord's Availability Notice") (i)
whether the Expansion Space is or is not available for lease, and (ii) if
the Expansion Space is available for lease by Tenant, the anticipated
delivery date of the Expansion Space to Tenant for the commencement of
construction of tenant improvements therein. In the event Landlord notifies
Tenant that the Expansion Space is available for lease, Tenant shall
exercise its Expansion Option by delivering written notice of such exercise
to Landlord within ten (10) days of receipt of Landlord's Availability
Notice. Tenant's failure to exercise its Expansion Option within such ten
(10) day period shall be deemed as Tenant's decision not to lease the
Expansion Space and Tenant shall have no further rights under this Section
1.2 for the remainder of the Lease Term.
1.2.2 Expansion Rent. From and after the Expansion Commencement
Date (as that term is defined in Section 1.2.4 below), Tenant shall pay base
rent for the Expansion Space (the "Expansion Rent") in accordance with
Section 3 of this Lease pursuant to the following schedule:
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Monthly Monthly Rental Rate
Months in Annual Installment per Rentable
Lease Term Base Rent of Base Rent Square Foot
---------- --------- ------------ -----------
1-9 N/A $20,761.30 $0.700
10-12 N/A $30,904.68 $1.042
13-24 $383,668.82 $31,972.40 $1.078
25-36 $397,193.32 $33,099.44 $1.116
37-48 $411,073.74 $34,256.15 $1.155
49-60 $427,089.60 $35,590.80 $1.200
61-72 $442,037.73 $36,836.48 $1.242
73-84 $457,341.78 $38,111.82 $1.285
85-96 $476,560.81 $39,713.40 $1.339
97-108 $493,288.48 $41,107.37 $1.386
109-120 $510,727.98 $42,560.67 $1.435
1.2.3 Construction in Expansion Space. Tenant shall take the
Expansion Space in its "as is" condition as of the date of delivery of such
space, and the construction of improvements in the Expansion Space shall be
Tenant's sole responsibility, with any such construction to comply with the
terms the Tenant Work Letter, attached hereto as Exhibit B, except that (i)
the term "Premises" shall mean the Expansion Space, and (ii) Tenant shall
not be entitled to any "Additional Allowance" for the Expansion Space;
provided, however, that upon Tenant's request, Landlord shall provide Tenant
with (y) a tenant improvement allowance for the Expansion Space (the
"Expansion Space Improvement Allowance") in an amount of up to, but not
exceeding twenty-five and no/100 dollars ($25.00) for each rentable square
foot of the Expansion Space. In addition, Landlord shall provide Tenant
with an additional tenant improvement allowance for the Expansion Space
("Expansion Space Additional Allowance") in an amount of up to, but not
exceeding twelve and no/100 dollars ($12.00) for each rentable square foot
of the Expansion Space, which Expansion Space Additional Allowance shall be
amortized and paid by Tenant in accordance with the terms and conditions of
Section 2.1.2 of the Tenant Work Letter attached hereto (the Expansion Space
Improvement Allowance and the Expansion Space Additional Allowance shall
sometimes herein be collectively referred to as the "Expansion Space
Allowances"). The Expansion Space Allowances shall be disbursed by Landlord
to Tenant pursuant to the terms and conditions of the Tenant Work Letter.
1.2.4 Amendment to Lease. If Tenant timely exercises Tenant's
right to lease the Expansion Space as set forth herein, Landlord and Tenant
shall within fifteen (15) days thereafter execute an amendment to this Lease
memorializing Tenant's lease for such Expansion
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Space upon the terms and conditions set forth in this Section 1.2. Tenant
shall commence payment of Rent for the Expansion Space, and the term of the
Expansion Space shall commence upon the date which the Expansion Space is
delivered to Tenant by Landlord (the "Expansion Commencement Date") and
terminate coterminous with the termination of the Lease Term, as such may be
extended pursuant to Section 2.2 of this Lease. Upon the Expansion
Commencement Date, Xxxxxx's Share shall be increased to take into account
the addition of the Expansion Space to the Premises and the "Premises" shall
mean the Premises and the Expansion Space, unless otherwise specified
herein. Notwithstanding the foregoing, in no event shall the Expansion
Space Commencement Date occur before the Lease Commencement Date.
1.2.5 Termination of Expansion Rights. Notwithstanding anything
to the contrary contained in this Section 1.2, the rights to lease the
Expansion Space contained in this Section 1.2 shall be personal to the
original Tenant named in the Lease Summary (the "Original Tenant") and any
assignee (including any Permitted Affiliate) to which Xxxxxx's entire
interest in this Lease has been assigned pursuant to Article 14 below, and
may only be exercised by the Original Tenant or such assignee, as the case
may be (but not by any sublessee or other transferee of Tenant's interest in
this Lease or the Premises) if the Original Tenant or such assignee, as the
case may be, occupies at least ninety percent (90%) of the Premises as of
the date Tenant purports to exercise the right to lease the Expansion Space.
In addition, Tenant shall not have the right to lease the Expansion Space,
as provided in this Section 1.2, if, as of the date of the attempted
exercise of the expansion right by Xxxxxx, or as of the scheduled date of
delivery of such Expansion Space to Tenant, Tenant is in default under this
Lease beyond any applicable notice and cure periods.
1.3 Condition of Building Systems. As of the Lease Commencement Date
the electrical, mechanical, plumbing, and elevator (collectively the
"Building Systems") servicing the Premises shall be in good working order.
ARTICLE 2
LEASE TERM
The terms and provisions of this Lease shall be effective as of the date
of this Lease. The term of this Lease (the "Lease Term") shall be as set
forth in Section 3.1 of the Summary, shall commence on the date set forth in
Section 3.2 of the Summary (the "Lease Commencement Date"), and shall
terminate on the date set forth in Section 3.3 of the Summary (the "Lease
Expiration Date") unless this Lease is sooner terminated as hereinafter
provided. For purposes of this Lease, the term "Lease Year" shall mean each
consecutive twelve (12) month period during the Lease Term. At any time
during the Lease Term, Landlord may deliver to Tenant a notice in the form
as set forth in Exhibit C, attached hereto, as a confirmation only of the
information set forth therein, which Tenant shall execute and return to
Landlord within five (5) days of receipt thereof.
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ARTICLE 3
BASE RENT
Tenant shall pay, without prior notice or demand, to Landlord or
Landlord's agent in c/o CB Xxxxxxx Xxxxx, 0000X Xxxxxxxxx Xxxxx, Xxxxxxxxxx,
Xxxxxxxxxx 00000, or, at Landlord's option, at such other place as Landlord
may from time to time designate in writing, by a check for currency which,
at the time of payment, is legal tender for private or public debts in the
United States of America, base rent ("Base Rent") as set forth in
Section 4 of the Summary, payable in equal monthly installments as set forth
in Section 4 of the Summary in advance on or before the first day of each
and every calendar month during the Lease Term, without any setoff or
deduction whatsoever. The Base Rent for the first full month of the Lease
Term which occurs after the expiration of any free rent period shall be paid
at the time of Tenant's execution of this Lease. If any Rent payment date
(including the Lease Commencement Date) falls on a day of the month other
than the first day of such month or if any payment of Rent is for a period
which is shorter than one month, the Rent for any fractional month shall
accrue on a daily basis for the period from the date such payment is due to
the end of such calendar month or to the end of the Lease Term at a rate per
day which is equal to 1/365 of the applicable annual Rent. All other
payments or adjustments required to be made under the terms of this Lease
that require proration on a time basis shall be prorated on the same basis.
ARTICLE 4
ADDITIONAL RENT
4.1 General Terms. In addition to paying the Base Rent specified in
Article 3 of this Lease, Tenant shall pay "Tenant's Share" of the annual
"Building Direct Expenses," as those terms are defined in Sections 4.2.8 and
4.2.1 of this Lease. Such payments by Xxxxxx, together with any and all
other amounts payable by Tenant to Landlord pursuant to the terms of this
Lease, are hereinafter collectively referred to as the "Additional
Rent", and the Base Rent and the Additional Rent are herein collectively
referred to as "Rent" All amounts due under this Article 4 as Additional
Rent shall be payable for the same periods and in the same manner as the
Base Rent. Without limitation on other obligations of Tenant which survive
the expiration of the Lease Term, the obligations of Tenant to pay the
Additional Rent provided for in this Article 4 shall survive the expiration
of the Lease Term.
4.2 Definitions of Key Terms Relating to Additional Rent. As used in
this Article 4, the following terms shall have the meanings hereinafter set
forth:
4.2.1 "Building Direct Expenses" shall mean "Building Operating
Expenses" and "Building Tax Expenses", as those terms are defined in
Sections 4.2.2 and 4.2.3, below, respectively.
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4.2.2 "Building Operating Expenses" shall mean the portion of
"Operating Expenses," as that term is defined in Section 4.2.6 below,
allocated to the tenants of the Building pursuant to the terms of Section
4.3.1 below.
4.2.3 "Building Tax Expenses" shall mean that portion of "Tax
Expenses", as that term is defined in Section 4.2.7 below, allocated to the
tenants of the Building pursuant to the terms of Section 4.3.1 below.
4.2.4 "Direct Expenses" shall mean "Operating Expenses" and "Tax
Expenses."
4.2.5 "Expense Year" shall mean each calendar year in which any
portion of the Lease Term falls, through and including the calendar year in
which the Lease Term expires, provided that Landlord, upon notice to Tenant,
may change the Expense Year from time to time to any other twelve (12)
consecutive month period, and, in the event of any such change, Xxxxxx's
Share of Building Direct Expenses shall be equitably adjusted for any
Expense Year involved in any such change.
4.2.6 "Operating Expenses" shall mean all expenses, costs and
amounts of every kind and nature which Landlord pays or accrues during any
Expense Year because of or in connection with the ownership, management,
maintenance, security, repair, replacement, restoration or operation of the
Project, or any portion thereof. Without limiting the generality of the
foregoing, Operating Expenses shall specifically include any and all of the
following: (i) the cost of supplying all utilities, the cost of operating,
repairing, maintaining, and renovating the utility, telephone, mechanical,
sanitary, storm drainage, and the cost of maintenance and service
contracts in connection therewith (to the extent not separately metered and
paid directly by Tenant or another tenant of the Building pursuant to
Article 6 below); (ii) the cost of licenses, certificates, permits and
inspections and the cost of contesting any governmental enactments which may
affect Operating Expenses, and the costs incurred in connection with a
governmentally mandated transportation system management program or similar
program; (iii) the cost of all insurance carried by Landlord in connection
with the Project as reasonably determined by Landlord; (iv) the cost of
landscaping, relamping, and all supplies, tools, equipment and materials
used in the operation, repair and maintenance of the Project, or any portion
thereof; (v) the cost of parking area repair, restoration, and maintenance;
(vi) fees and other costs, including reasonable management fees, consulting
fees, legal fees and accounting fees, of all contractors and consultants in
connection with the management, operation, maintenance and repair of the
Project; (vii) payments under any equipment rental agreements and the fair
rental value of any management office space; (viii) subject to item (f),
below, wages, salaries and other compensation and benefits, including taxes
levied thereon, of all persons engaged in the operation, maintenance and
security of the Project; (ix) costs under any instrument pertaining to the
sharing of costs by the Project; (x) operation, repair, maintenance and
replacement of all systems and equipment and components thereof of the
Project; (xi) the cost of, alarm, security and other services, ceiling tiles
and fixtures in the Common Areas, maintenance and replacement of curbs and
walkways, repair to roofs and re-roofing; (xii) amortization (including
interest on the unamortized cost) over the useful life as Landlord
6
shall reasonably determine, of the cost of acquiring or the rental expense
of personal property used in the maintenance, operation and repair of the
Project, or any portion thereof; (xiii) the cost of capital improvements or
other costs incurred in connection with the Project (A) which are intended
to effect economies in the operation or maintenance of the Project, or any
portion thereof, (B) that are required to comply with present or anticipated
conservation programs, (C) which are replacements or modifications of
nonstructural items located in the Common Areas required to keep the Common
Areas in good order or condition, or (D) that are required under any
governmental law or regulation; provided, however, that any capital
expenditure shall be amortized (including interest on the amortized cost)
over its useful life as Landlord shall reasonably determine; and (xiv)
costs, fees, charges or assessments imposed by, or resulting from any
mandate imposed on Landlord by, any federal, state or local government for
fire and police protection, trash removal, community services, or other
services which do not constitute "Tax Expenses" as that term is defined in
Section 4.2.7, below and (xv) payments under any easement, license,
operating agreement, declaration, restrictive covenant, or instrument
pertaining to the sharing of costs by the Building. Notwithstanding the
foregoing, for purposes of this Lease, Operating Expenses shall not,
however, include (a) repairs to the extent covered by insurance proceeds, or
paid by Tenant or other third parties; (b) alterations solely attributable
to tenants of the Project other than Tenant; or (c) any utilities separately
metered or directly paid by any tenant of the Project; (c) fees payable by
Landlord for management of the Project in excess of the management fee
charged be professional management service companies in the vicinity of the
Project; (d) the cost of any service sold to any tenant (including Tenant)
or other occupant of the Building for which Landlord is entitled to
reimbursed as an additional charge or rental over and above the basic rent
and operating expenses payable under the lease with such tenant; (e) costs
of a capital nature, including but not limited to capital improvements and
alterations, capital repairs, capital equipment, and capital tools as
determined in accordance with GAAP, except as otherwise permitted by Section
4.2.6(xiii) above; (f) any depreciation on any building in the Project; (g)
expenses in connection with services or other benefits of a type that are
not provided to Tenant but which are provided another tenant or occupant of
the Building or Project; (h) overhead profit increments paid to Landlord's
subsidiaries or affiliates for management or other services on or to the
Project or for supplies or other materials to the extent that the cost of
the services, supplies, or materials exceeds the cost that would have been
paid had the services, supplies, or materials been provided by unaffiliated
parties on a competitive basis; (i) all interest, loan fees, and other
carrying costs related to any mortgage or deed of trust or related to any
capital item, and all rental and other payments due under any ground or
underlying lease; (j) any compensation paid to clerks, attendants, or other
persons in commercial concessions operated by Landlord; (k) advertising and
promotional expenditures; (l) except for any deductibles payable under
Landlord's insurance, costs of repairs and other work occasioned by fire,
windstorm, or other casualty of an insurable nature; (m) any costs, fines,
or penalties incurred due to violations by Landlord of any governmental rule
or authority, this Lease or any other lease in the Building or Project, or
due to Landlord's gross negligence or willful misconduct; (n) costs for
sculpture, paintings, or other objects of art (nor insurance thereon or
extraordinary security in connection therewith); and (o) costs incurred to
remove, remedy, contain, or treat hazardous materials, which (i) were in
existence in the Building prior to the Lease Commencement Date, or (ii) are
7
brought into the Building prior to or after the Lease Commencement Date by
Landlord or Landlord's employees, agents, contractors or other tenants and
which are of such a nature, at the time of such introduction, that a
federal, state or municipal governmental authority, if it had then had
knowledge of such hazardous materials would have then required the removal
of such hazardous materials or other remedial or containment action with
respect thereto.
If Landlord is not furnishing any particular work or service (the
cost of which, if performed by Landlord, would be included in Operating
Expenses) to a tenant who has undertaken to perform such work or service in
lieu of the performance thereof by Landlord, Operating Expenses shall be
deemed to be increased by an amount equal to the additional Operating
Expenses which would reasonably have been incurred during such period by
Landlord if it had at its own expense furnished such work or service to such
tenant. If the Project is not at least ninety-five percent (95%) occupied
during all or a portion of any Expense Year, Landlord shall make an
appropriate adjustment to the components of Operating Expenses for such year
to determine the amount of Operating Expenses that would have been incurred
had the Project been ninety-five percent (95%) occupied; and the amount so
determined shall be deemed to have been the amount of Operating Expenses for
such year. A summary of the allocations of some of the Direct Expense
payments between Landlord and Tenant is attached hereto as Exhibit E.
Notwithstanding anything to the contrary set forth in this Section
4.2, the amount of Direct Expenses payable by Tenant for the first (1st)
Expense Year following the Lease Commencement Date, shall not exceed One
Hundred Twenty Nine Thousand Two Hundred Forty-Eight and 28/100 Dollars
($129,248.28).
4.2.7 Taxes.
4.2.7.1 "Tax Expenses" shall mean all federal, state, county,
or local governmental or municipal taxes, fees, charges or other impositions
of every kind and nature, whether general, special, ordinary or
extraordinary, (including, without limitation, real estate taxes, general
and special assessments, transit taxes, leasehold taxes or taxes based upon
the receipt of rent, including gross receipts or sales taxes applicable to
the receipt of rent, unless required to be paid by Tenant, personal property
taxes imposed upon the fixtures, machinery, equipment, apparatus, systems
and equipment, appurtenances, furniture and other personal property used in
connection with the Project, or any portion thereof), which shall be paid or
accrued during any Expense Year (without regard to any different fiscal year
used by such governmental or municipal authority) because of or in
connection with the ownership, leasing and operation of the Project, or any
portion thereof.
4.2.7.2 Tax Expenses shall include, without limitation:
(i) Any tax on the rent, right to rent or other income from the Project, or
any portion thereof, or as against the business of leasing the Project, or
any portion thereof; (ii) Any assessment, tax, fee, levy or charge in
addition to, or in substitution, partially or totally, of any assessment,
tax, fee, levy or charge previously included within the definition of real
property tax, it being acknowledged by Tenant and Landlord that Proposition
13 was adopted by the voters of the State of California in
8
the June 1978 election ("Proposition 13") and that assessments, taxes, fees,
levies and charges may be imposed by governmental agencies for such services
as fire protection, street, sidewalk and road maintenance, refuse removal
and for other governmental services formerly provided without charge to
property owners or occupants, and, in further recognition of the decrease in
the level and quality of governmental services and amenities as a result of
Proposition 13, Tax Expenses shall also include any governmental or private
assessments or the Project's contribution towards a governmental or private
cost-sharing agreement for the purpose of augmenting or improving the
quality of services and amenities normally provided by governmental
agencies; (iii) Any assessment, tax, fee, levy, or charge allocable to or
measured by the area of the Premises or the Rent payable hereunder,
including, without limitation, any business or gross income tax or excise
tax with respect to the receipt of such rent, or upon or with respect to the
possession, leasing, operating, management, maintenance, alteration, repair,
use or occupancy by Tenant of the Premises, or any portion thereof; (iv) Any
assessment, tax, fee, levy or charge, upon this transaction or any document
to which Tenant is a party, creating or transferring an interest or an
estate in the Premises; and (v) All of the real estate taxes and assessments
imposed upon or with respect to the Building and all of the real estate
taxes and assessments imposed on the land and improvements comprising the
Project.
4.2.7.3 Any costs and expenses (including, without
limitation, reasonable attorneys' and consultants' fees) incurred in
attempting to protest, reduce or minimize Tax Expenses shall be included in
Tax Expenses in the Expense Year such expenses are incurred. If Tax
Expenses for any period during the Lease Term or any extension thereof are
increased after payment thereof for any reason, including, without
limitation, error or reassessment by applicable governmental or municipal
authorities, Tenant shall pay Landlord upon demand Tenant's Share of any
such increased Tax Expenses included by Landlord as Building Tax Expenses
pursuant to the terms of this Lease or Landlord shall apply a credit to
Tenant's next payment of such Tenant's Share, as the case may be.
Notwithstanding anything to the contrary contained in this Section 4.2.7,
there shall be excluded from Tax Expenses (i) all profits taxes, franchise
taxes, gift taxes, capital stock taxes, inheritance and succession taxes,
estate taxes, federal and state income taxes, and other taxes to the extent
applicable to Landlord's general or net income (as opposed to rents,
receipts or income attributable to operations at the Project), (ii) any
items included as Operating Expenses, and (iii) any items paid by Tenant
under Section 4.5 of this Lease.
4.2.8 "Tenant's Share" shall mean the percentage set forth in
Section 6 of the Summary. Tenant's Share was calculated by dividing the
number of rentable square feet of the Premises, as set forth in Section 2.2
of the Summary, by the total number of rentable square feet in the Building.
The rentable square feet in the Premises and Building is measured on a
dripline-to-dripline basis, provided that the rentable square footage of the
Building shall include all of, and the rentable square footage of the
Premises therefore shall include a portion of, the square footage of the
common area and occupied space of the portion of the Building or Project,
dedicated to the service of the Building. In the event either the rentable
square feet of the Premises and/or the total rentable square feet of the
Building is remeasured, Tenant's Share shall
9
be appropriately adjusted, and, as to the Expense Year in which such change
occurs, Xxxxxx's Share for such Expense Year shall be determined on the
basis of the number of days during such Expense Year that each such Tenant's
Share was in effect.
4.3 Allocation of Direct Expenses.
4.3.1 Method of Allocation. Landlord and Tenant acknowledge that
the Building is a part of a multi-building project and that the costs and
expenses incurred in connection with the Project (the "Direct Expenses")
should be shared between the tenants of the Building and the tenants of the
other buildings in the Project; provided, however, Landlord may, at its
election, require that Tenant pay any increase in the assessed value of the
Project based upon the value of the Tenant Improvements (as defined in the
Work Letter), if any, relative to the value of the other improvements on or
to the other buildings in the Project, as reasonably determined by Landlord.
Accordingly, as set forth in Section 4.2 above, Direct Expenses (which
consists of Operating Expenses and Tax Expenses) are determined annually for
the Project as a whole, and a portion of the Direct Expenses, which portion
shall be determined by Landlord on an equitable basis, shall be allocated to
the tenants of the Building (as opposed to the tenants of any other
buildings in the Project) and such portion shall be the Building Direct
Expenses for purposes of this Lease. Such portion of Direct Expenses
allocated to the tenants of the Building shall include all Direct Expenses
attributable solely to the Building and an equitable portion of the Direct
Expenses attributable to the Project as a whole. Notwithstanding the
foregoing, all costs Landlord incurs that are solely attributable to the
Premises shall be borne by Tenant, such that Tenant shall reimburse Landlord
for one hundred percent (100%) of same as Additional Rent.
4.3.2 Cost Pools. Landlord shall have the right, from time to
time, to equitably allocate some or all of the Direct Expenses for the
Project among different portions or occupants of the Project (the "Cost
Pools"), in Landlord's reasonable discretion. Such Cost Pools may include,
but shall not be limited to, the office space tenants of a building of the
Project or of the Project, and the retail space tenants of a building of the
Project or of the Project. The Direct Expenses within each such Cost Pool
shall be allocated and charged to the tenants within such Cost Pool in an
equitable manner.
4.4 Calculation and Payment of Additional Rent. Tenant shall pay to
Landlord, in the manner set forth in Section 4.4.1, below, and as Additional
Rent, an amount equal to Tenant's Share of Building Direct Expenses for each
Expense Year (the "Tenant's Expenses").
4.4.1 Statement of Actual Building Direct Expenses and Payment by
Xxxxxx. Landlord shall give to Tenant following the end of each Expense
Year, a statement (the "Statement") which shall state the Building
Direct Expenses incurred or accrued for such preceding Expense Year, and
which shall indicate the amount of Tenant's Expenses. Upon receipt of the
Statement for each Expense Year commencing or ending during the Lease Term,
Tenant shall pay, with its next installment of Base Rent due, the full
amount of Tenant's Expenses for such Expense Year, less the amounts, if any,
paid during such Expense Year as
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"Estimated Expenses," as that term is defined in Section 4.4.2, below, and
if Tenant paid more as Estimated Expenses than the actual Tenant's Expenses
as set forth on the Statement, Tenant shall receive a credit in the amount
of Tenant's overpayment against Additional Rent next due under this Lease.
The failure of Landlord to timely furnish the Statement for any Expense Year
shall not prejudice Landlord or Tenant from enforcing its rights under this
Article 4. Even though the Lease Term has expired and Tenant has vacated
the Premises, when the final determination is made of Tenant's Share of
Building Direct Expenses for the Expense Year in which this Lease
terminates, if any Tenant Expenses are present, Tenant shall immediately
pay to Landlord such amount, and if Tenant paid more as Estimated Expenses
than the actual Tenant Expenses shown on the Statement for such Expense
Year, Landlord shall, within thirty (30) days, deliver a check payable to
Tenant in the amount of the overpayment. The provisions of this Section
4.4.1 shall survive the expiration or earlier termination of the Lease Term.
4.4.2 Statement of Estimated Building Direct Expenses. In
addition, Landlord shall give Tenant a yearly expense estimate statement
(the "Estimate Statement") which shall set forth Landlord's reasonable
estimate (the "Estimate") of what the total amount of Building Direct
Expenses for the then-current Expense Year shall be and the estimated amount
of Tenant's Share of such Building Direct Expenses (the "Estimated
Expenses"). The failure of Landlord to timely furnish the Estimate
Statement for any Expense Year shall not preclude Landlord from enforcing
its rights to collect any Estimated Expenses under this Article 4, nor shall
Landlord be prohibited from revising any Estimate Statement or Estimated
Expenses theretofore delivered to the extent necessary. Thereafter, Tenant
shall pay, with its next installment of Base Rent due, a fraction of the
Estimated Expenses for the then-current Expense Year (reduced by any amounts
paid pursuant to the last sentence of this Section 4.4.2). Such fraction
shall have as its numerator the number of months which have elapsed in such
current Expense Year, including the month of such payment, and twelve (12)
as its denominator. Until a new Estimate Statement is furnished (which
Landlord shall have the right to deliver to Tenant at any time), Tenant
shall pay monthly, with the monthly Base Rent installments, an amount equal
to one-twelfth (1/12) of the total Estimated Expenses set forth in the
previous Estimate Statement delivered by Landlord to Tenant.
4.5 Taxes and Other Charges for Which Tenant Is Directly Responsible.
4.5.1 Tenant shall be liable for and shall pay ten (10) days
before delinquency, taxes levied against Tenant's equipment, furniture,
fixtures and any other personal property located in or about the Premises.
If any such taxes on Tenant's equipment, furniture, fixtures and any other
personal property are levied against Landlord or Landlord's property or if
the assessed value of Landlord's property is increased by the inclusion
therein of a value placed upon such equipment, furniture, fixtures or any
other personal property and if Landlord pays the taxes based upon such
increased assessment, which Landlord shall have the right to do regardless
of the validity thereof but only under proper protest if requested by
Tenant, Tenant shall upon demand repay to Landlord the taxes so levied
against Landlord or the proportion of such taxes resulting from such
increase in the assessment, as the case may be.
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4.5.2 If the tenant improvements in the Premises, whether
installed and/or paid for by Landlord or Tenant and whether or not affixed
to the real property so as to become a part thereof, are assessed for real
property tax purposes at a valuation higher than the valuation at which
tenant improvements conforming to Landlord's "building standard" in other
space in the Building are assessed, then the Tax Expenses levied against
Landlord or the property by reason of such excess assessed valuation shall
be deemed to be taxes levied against personal property of Tenant and shall
be governed by the provisions of Section 4.5.1, above.
4.5.3 Notwithstanding any contrary provision herein, Tenant shall
pay prior to delinquency any (i) rent tax or sales tax, service tax,
transfer tax or value added tax, or any other applicable tax on the rent or
services herein or otherwise respecting this Lease, (ii) taxes assessed upon
or with respect to the possession, leasing, operation, management,
maintenance, alteration, repair, use or occupancy by Tenant of the Premises
or any portion of the Project, including the Project parking facility; or
(iii) taxes assessed upon this transaction or any document to which Tenant
is a party creating or transferring an interest or an estate in the
Premises.
ARTICLE 5
USE OF PREMISES
5.1 Permitted Use. Tenant shall use the Premises solely for the
Permitted Use set forth in Section 7 of the Summary and Tenant shall not use
or permit the Premises or the Project to be used for any other purpose or
purposes whatsoever without the prior written consent of Landlord, which may
be withheld in Landlord's sole discretion.
5.2 Prohibited Uses. Tenant further covenants and agrees that Tenant
shall not use, or suffer or permit any person or persons to use, the
Premises or any part thereof for any use or purpose contrary to the
provisions of the Rules and Regulations set forth in Exhibit D, attached
hereto, or in violation of the laws of the United States of America, the
State of California, or the ordinances, regulations or requirements of the
local municipal or county governing body or other lawful authorities having
jurisdiction over the Project, including, without limitation, any such laws,
ordinances, regulations or requirements relating to hazardous materials or
substances, as those terms are defined by applicable laws now or hereafter
in effect. Tenant shall not do or permit anything to be done in or about
the Premises which will in any way damage the reputation of the Project or
obstruct or interfere with the rights of other tenants or occupants of the
Building, or injure or annoy them or use or allow the Premises to be used
for any improper, unlawful or objectionable purpose, nor shall Tenant cause,
maintain or permit any nuisance in, on or about the Premises. Tenant shall
comply with, and Xxxxxx's rights and obligations under the Lease and
Xxxxxx's use of the Premises shall be subject and subordinate to, all
recorded easements, covenants, conditions, and restrictions now or hereafter
affecting the Project.
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ARTICLE 6
SERVICES AND UTILITIES
Landlord shall provide the utility service connections into the Premises
as required in the Construction Drawings as part of the construction of the
Tenant Improvements]. Tenant shall pay all charges for heat, water, gas,
electricity, telephone and any other utilities used on or provided to the
Premises. Landlord shall not be liable to Tenant for interruption in or
curtailment of any utility service, nor shall any such interruption or
curtailment constitute constructive eviction or grounds for rental
abatement. In the event the Premises are not separately metered, Tenant
shall have the option, subject to Landlord's prior written consent and the
terms of this Lease, to cause the Premises to be separately metered at
Tenant's cost and expense. If Tenant does not elect to cause the Premises
to be separately metered, Tenant shall pay a reasonable proration of
utilities, as determined by Landlord.
ARTICLE 7
REPAIRS
7.1 Landlord's Repairs. Landlord shall maintain and repair (i) the
structural portions of the Building, including the foundation, floor/ceiling
slabs, roof, curtain wall and mullions, columns, beams, shafts (including
elevator shafts), stairwells, elevator cabs, and Building mechanical,
electrical and telephone closets (collectively, "Building Structure"), (ii)
the Common Areas. Notwithstanding anything in this Lease to the contrary,
Tenant shall be required to pay for the cost of repairs to the Building
Structure, and/or the Common Areas to the extent required because of (1)
Tenant's use of the Premises for other than normal and customary business
office operations, and/or (2) Tenant's Alterations (as defined in Section
8.1 below). Tenant hereby waives and releases its right to make repairs at
Landlord's expense under Sections 1941 and 1942 of the California Civil Code
or under any similar law, statute, or ordinance now or hereafter in effect.
7.2 Tenant's Repairs. Subject to Landlord's repair obligations pursuant
to Section 7.1 above, Tenant shall, at Tenant's own expense, keep the
Premises (interior and exterior), including all improvements, fixtures,
equipment and furnishings therein, the subfloors and floors, loading docks,
doors and ramps, floor coverings, walls and wall coverings, doors, windows,
glass, plate glass, ceilings, skylights, lighting systems, interior
plumbing, electrical and mechanical systems and wiring appliances and
devices using or containing refrigerants in good order, repair and condition
and replace and/or repair any and all of the foregoing in a clean and safe
manner at all times during the Lease Term. In addition, Tenant shall, at
Xxxxxx's own expense, but under the supervision and subject to the prior
approval of Landlord and Section 10.5 herein, and within any reasonable
period of time specified by Landlord, promptly and adequately repair all
damage to the Premises and replace or repair all damaged, broken, or worn
fixtures and appurtenances, except for damage caused by ordinary wear and
tear or beyond the reasonable control of Tenant; provided however, that, at
Landlord's option, or if Tenant fails
13
to make such repairs, Landlord may, but need not, make such repairs and
replacements, and Tenant shall pay Landlord the cost thereof, including a
percentage of the cost thereof (to be uniformly established for the Building
and/or the Project) sufficient to reimburse Landlord for all overhead,
general conditions, fees and other costs or expenses arising from Landlord's
involvement with such repairs and replacements forthwith upon being billed
for same. Notwithstanding the foregoing, Landlord shall be responsible for
repairs to the structural portions of the exterior walls (excluding wall
coverings, paintings, glass and doors), foundation and roof of the Building,
except to the extent that such repairs are required due to the negligence or
willful misconduct of Tenant; provided, however, that if such repairs are
due to the negligence or willful misconduct of Tenant, Landlord shall
nevertheless make such repairs at Tenant's expense. Landlord may, but shall
not be required to, enter the Premises at all reasonable times to make such
repairs, alterations, improvements or additions to the Premises or to the
Project or to any equipment located in the Project as Landlord shall desire
or deem necessary or as Landlord may be required to do by governmental or
quasi-governmental authority or court order or decree. Tenant hereby waives
any and all rights under and benefits of subsection 1 of Section 1932 and
Sections 1941 and 1942 of the California Civil Code or under any similar
law, statute, or ordinance now or hereafter in effect.
ARTICLE 8
ADDITIONS AND ALTERATIONS
8.1 Landlord's Consent to Alterations. Tenant may not make any
improvements, alterations, additions or changes to the Premises or any
mechanical, plumbing or HVAC facilities or systems pertaining to the
Premises (collectively, the "Alterations") without first procuring the prior
written consent of Landlord to such Alterations, which consent shall be
requested by Tenant not less than thirty (30) days prior to the commencement
thereof, and which consent shall not be unreasonably withheld by Landlord,
provided it shall be deemed reasonable for Landlord to withhold its consent
to any Alteration which adversely affects the structural portions or the
systems or equipment of the Building or is visible from the exterior of the
Building. The construction of the initial improvements to the Premises
shall be governed by the terms of the Tenant Work Letter and not the terms
of this Article 8. Notwithstanding the foregoing, Tenant may make non-
structural changes to the Premises (such non-structural changes to be
referred to hereafter collectively as the "Acceptable Changes") without
Landlord's prior consent provided (i) Tenant delivers to Landlord written
notice of such Acceptable Changes at least fifteen (15) days prior to the
commencement thereof, (ii) such Acceptable Changes will not involve the
expenditure of more than $20,000.00 in the aggregate during any consecutive
12-month period, (iii) such Acceptable Changes do not affect the exterior
appearance of the Building or Common Areas, the structural aspects of the
Building, or the Building systems and equipment of the Premises or Building,
and (iv) Tenant obtains and delivers to Landlord prior to commencement of
construction of such Acceptable Changes, all permits and approvals required
by any local, state or federal authorities for such Acceptable Changes.
14
8.2 Manner of Construction. Landlord may impose, as a condition of its
consent to any and all Alterations or repairs of the Premises or about the
Premises, such requirements as Landlord in its discretion may deem
desirable, including, but not limited to, the requirement that Tenant
utilize for such purposes only contractors, subcontractors, materials,
mechanics and materialmen approved by Landlord, the requirement that upon
Landlord's request, Tenant shall, at Tenant's expense, remove such
Alterations upon the expiration or any early termination of the Lease Term.
Tenant shall construct such Alterations and perform such repairs in a good
and workmanlike manner, in conformance with any and all applicable federal,
state, county or municipal laws, rules and regulations and pursuant to a
valid building permit, issued by the city in which the Project is located,
all in conformance with Landlord's construction rules and regulations;
provided, however, that prior to commencing to construct any Alteration,
Tenant shall meet with Landlord to discuss Landlord's design parameters and
code compliance issues. In the event Tenant performs any Alterations in the
Premises which require or give rise to governmentally required changes to
the "Base and Shell," as that term is defined below, then Landlord shall, at
Tenant's expense, make such changes to the Base and Shell. The "Base and
Shell" shall include the structural portions of the Building, and the public
restrooms, exit stairwells and the systems and equipment located in the
internal core of the Building on the floor or floors on which the Premises
are located. In performing the work of any such Alterations, Tenant shall
have the work performed in such manner so as not to obstruct access to the
Project or any portion thereof, by any other tenant of the Project, and so
as not to obstruct the business of Landlord or other tenants in the
Project. In addition to Tenant's obligations under Article 9 of this Lease,
upon completion of any Alterations, Xxxxxx agrees to cause a Notice of
Completion to be recorded in the office of the Recorder of the County in
which the Project is located in accordance with Section 3093 of the Civil
Code of the State of California or any successor statute, and Tenant shall
deliver to the Project construction manager a reproducible copy of the "as
built" drawings of the Alterations as well as all permits, approvals and
other documents issued by any governmental agency in connection with the
Alterations.
8.3 Payment for Improvements. If payment is made directly to
contractors, Tenant shall (i) comply with Landlord's requirements for final
lien releases and waivers in connection with Tenant's payment for work to
contractors, and (ii) sign Landlord's standard contractor's rules and
regulations. If Tenant orders any work directly from Landlord and Landlord
hires a third party to supervise such work, Tenant shall pay to Landlord an
amount not to exceed five percent of the cost of such work to compensate
Landlord (and any third party hired by Landlord) for all overhead, general
conditions, fees and other costs and expenses arising from Landlord's
involvement with such work. If Tenant does not order any work directly from
Landlord, Tenant shall reimburse Landlord for Landlord's reasonable, actual,
out-of-pocket costs and expenses actually incurred in connection with
Xxxxxxxx's review of such work.
8.4 Construction Insurance. In addition to the requirements of
Article 10 of this Lease, in the event that Tenant makes any Alterations,
prior to the commencement of such Alterations, Tenant shall provide Landlord
with evidence that Tenant carries "Builder's All Risk" insurance in an
amount approved by Landlord covering the construction of such Alterations,
and
15
such other insurance as Landlord may reasonably require, it being understood
and agreed that all of such Alterations shall be insured by Tenant pursuant
to Article 10 of this Lease immediately upon completion thereof. In
addition, Landlord may, in its discretion, require Tenant to obtain a lien
and completion bond or some alternate form of security satisfactory to
Landlord in an amount sufficient to ensure the lien-free completion of such
Alterations and naming Landlord as a co-obligee.
8.5 Landlord's Property. All Alterations, improvements, fixtures,
equipment and/or appurtenances (but not including Tenant's personal property
or trade fixtures) which may be installed or placed in or about the
Premises, from time to time, shall be at the sole cost of Tenant and shall
be and become the property of Landlord, except that Tenant may remove any
Alterations, improvements, fixtures and/or equipment which Tenant can
substantiate to Landlord have not been paid for with any Tenant improvement
allowance funds provided to Tenant by Landlord, provided Tenant repairs any
damage to the Premises and Building caused by such removal and returns the
affected portion of the Premises to a building standard tenant improved
condition as determined by Landlord. Furthermore, Landlord may, by written
notice to Tenant given at the time Tenant requests Xxxxxxxx's consent to
any Alteration, require Tenant, at Tenant's expense, upon the expiration or
earlier termination of the Lease term, to remove any Alterations or
improvements and to repair any damage to the Premises and Building caused by
such removal and return the affected portion of the Premises to a building
standard tenant improved condition as determined by Landlord. If Tenant
fails to complete such removal and/or to repair any damage caused by the
removal of any Alterations or improvements in the Premises and return the
affected portion of the Premises to a building standard tenant improved
condition as reasonably determined by Landlord, Landlord may do so and may
charge the cost thereof to Tenant. Tenant hereby protects, defends,
indemnifies and holds Landlord harmless from any liability, cost,
obligation, expense or claim of lien in any manner relating to the
installation, placement, removal or financing of any such Alterations,
improvements, fixtures and/or equipment in, on or about the Premises, which
obligations of Tenant shall survive the expiration or earlier termination of
this Lease.
ARTICLE 9
COVENANT AGAINST LIENS
Tenant shall keep the Project and Premises free from any liens or
encumbrances arising out of the work performed, materials furnished or
obligations incurred by or on behalf of Tenant, and shall protect, defend,
indemnify and hold Landlord harmless from and against any claims,
liabilities, judgments or costs (including, without limitation, reasonable
attorneys' fees and costs) arising out of same or in connection therewith.
Tenant shall give Landlord notice at least twenty (20) days prior to the
commencement of any such work on the Premises (or such additional time as
may be necessary under applicable laws) to afford Landlord the opportunity
of posting and recording appropriate notices of non-responsibility. Tenant
shall remove any such lien or encumbrance by bond or otherwise within ten
(10) business days after notice by Xxxxxxxx, and if
16
Tenant shall fail to do so, Landlord may pay the amount necessary to remove
such lien or encumbrance, without being responsible for investigating the
validity thereof. The amount so paid shall be deemed Additional Rent under
this Lease payable upon demand, without limitation as to other remedies
available to Landlord under this Lease. Nothing contained in this Lease
shall authorize Tenant to do any act which shall subject Landlord's title to
the Building or Premises to any liens or encumbrances whether claimed by
operation of law or express or implied contract. Any claim to a lien or
encumbrance upon the Building or Premises arising in connection with any
such work or respecting the Premises not performed by or at the request of
Landlord shall be null and void, or at Landlord's option shall attach only
against Xxxxxx's interest in the Premises and shall in all respects be
subordinate to Landlord's title to the Project, Building and Premises.
ARTICLE 10
INSURANCE
10.1 Indemnification and Waiver. Tenant hereby assumes all risk of
damage to property or injury to persons in, upon or about the Premises from
any cause whatsoever (including, but not limited to, any personal injuries
resulting from a slip and fall in, upon or about the Premises) and agrees
that Landlord, its partners, subpartners and their respective officers,
agents, servants, employees, and independent contractors (collectively,
"Landlord Parties") shall not be liable for, and are hereby released from
any responsibility for, any damage either to person or property or resulting
from the loss of use thereof, which damage is sustained by Tenant or by
other persons claiming through Tenant. Tenant shall indemnify, defend,
protect, and hold harmless the Landlord Parties from any and all loss, cost,
damage, expense and liability (including without limitation court costs and
reasonable attorneys' fees) incurred in connection with or arising from any
cause in, on or about the Premises (including, but not limited to, a slip
and fall), any acts, omissions or negligence of Tenant or of any person
claiming by, through or under Tenant, or of the contractors, agents,
servants, employees, invitees, guests or licensees of Tenant or any such
person, in, on or about the Project or any breach of the terms of this
Lease, either prior to, during, or after the expiration of the Lease Term,
provided that the terms of the foregoing indemnity shall not apply to the
negligence or willful misconduct of Landlord. Should Landlord be named as a
defendant in any suit brought against Tenant in connection with or arising
out of Tenant's occupancy of the Premises, Tenant shall pay to Landlord its
costs and expenses incurred in such suit, including without limitation, its
actual professional fees such as reasonable appraisers', accountants' and
attorneys' fees. The provisions of this Section 10.1 shall survive the
expiration or sooner termination of this Lease with respect to any claims or
liability arising in connection with any event occurring prior to such
expiration or termination. Notwithstanding anything to the contrary
contained in this Lease, nothing in this Lease shall impose any obligations
on Tenant or Landlord to be responsible or liable for, and each hereby
releases the other from all liability for, consequential damages other than
those consequential damages incurred by Landlord in connection with a
holdover of the Premises by Tenant after the expiration or earlier
termination of this Lease or incurred by Landlord in connection with any
17
repair, physical construction or improvement work performed by or on behalf
of Tenant in the Project, but Tenant shall not be responsible for any direct
or consequential damages resulting from Landlord's or contractor's acts in
connection with the completion by Landlord of the tenant improvements in the
Premises pursuant to the Tenant Work Letter).
10.2 Landlord's Insurance.
10.2.1 Property and Liability Insurance. Landlord shall procure
and maintain during the term of this Lease, physical damage insurance
covering the base Building and common areas (excluding at Landlord's option,
any items Tenant is required to insure pursuant to Section 10.3) and general
liability insurance, with the cost of such insurance to be passed through to
the tenants of the Project as Direct Expenses. Such coverages shall be in
such amounts, from such companies, and on such other terms and conditions as
Landlord may from time to time reasonably determine; provided, however, the
amounts of insurance carried by Landlord in connection with the Building
shall at a minimum be comparable to the coverage and amounts of insurance
that are carried by reasonably prudent institutional owners of comparable
buildings located in the vicinity of the Building and Workers' Compensation
coverage as required by applicable law (except that Landlord shall have the
right, but not the obligation, to carry earthquake and/or flood insurance).
10.2.2 Tenant's Compliance With Landlord's Fire and Casualty
Insurance. Tenant shall, at Tenant's expense, comply with all insurance
company requirements pertaining to the use of the Premises. If Tenant's
conduct or use of the Premises causes any increase in the premium for such
insurance policies then Tenant shall reimburse Landlord for any such
increase. Tenant, at Tenant's expense, shall comply with all rules, orders,
regulations or requirements of the American Insurance Association (formerly
the National Board of Fire Underwriters) and with any similar body.
10.3 Tenant's Insurance. Tenant shall maintain the following coverages
in the following amounts.
10.3.1 Comprehensive General Liability Insurance covering the
insured against claims of bodily injury, personal injury and property damage
(including loss of use thereof) arising out of Tenant's operations, and
contractual liabilities (covering the performance by Tenant of its indemnity
agreements) including coverage for the performance by Tenant of the
indemnity agreements set forth in Section 10.1 of this Lease, for limits of
liability not less than:
Bodily Injury and $3,000,000 each occurrence
Property Damage Liability $3,000,000 annual aggregate
Personal Injury Liability $3,000,000 each occurrence
$3,000,000 annual aggregate
0% Insured's participation
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10.3.2 Special Form Insurance covering (i) all office furniture,
business and trade fixtures, office equipment, free-standing cabinet work,
movable partitions, merchandise and all other items of Tenant's property on
the Premises installed by, for, or at the expense of Tenant, (ii) the
"Tenant Improvements," as that term is defined in the Tenant Work Letter,
and (iii) all other improvements, alterations and additions to the Premises.
Such insurance shall be written on an "all risks" of physical loss or damage
basis, for the full replacement cost value (subject to reasonable deductible
amounts) new without deduction for depreciation of the covered items and in
amounts that meet any co-insurance clauses of the policies of insurance and
shall include coverage for damage or other loss caused by fire or other
peril including, but not limited to, vandalism and malicious mischief,
theft, water damage of any type, including sprinkler leakage, bursting or
stoppage of pipes, and explosion, and providing business interruption
coverage for a period of one year.
10.3.3 Worker's Compensation and Employer's Liability or other
similar insurance pursuant to all applicable state and local statutes and
regulations.
10.4 Form of Policies. The minimum limits of policies of insurance
required of Tenant under this Lease shall in no event limit the liability of
Tenant under this Lease. Such insurance shall (i) name Landlord, and any
other party the Landlord so specifies, as an additional insured, including
Landlord's managing agent, if any; (ii) specifically cover the liability
assumed by Tenant under this Lease, including, but not limited to, Tenant's
obligations under Section 10.1 of this Lease; (iii) be issued by an
insurance company having a rating of not less than A-X in Best's Insurance
Guide or which is otherwise acceptable to Landlord and licensed to do
business in the State of California; (iv) be primary insurance as to all
claims thereunder and provide that any insurance carried by Landlord is
excess and is non-contributing with any insurance requirement of Tenant;
(v) be in form and content reasonably acceptable to Landlord; and
(vi) provide that said insurance shall not be canceled or coverage changed
unless thirty (30) days' prior written notice shall have been given to
Landlord and any mortgagee of Landlord. Tenant shall deliver said policy or
policies or certificates thereof to Landlord on or before the Lease
Commencement Date and at least thirty (30) days before the expiration dates
thereof. In the event Tenant shall fail to procure such insurance, or to
deliver such policies or certificate, Landlord may, at its option, procure
such policies for the account of Tenant, and the cost thereof shall be paid
to Landlord within five (5) days after delivery to Tenant of bills therefor.
10.5 Subrogation. Notwithstanding anything the contrary herein,
Landlord and Xxxxxx intend that their respective property loss risks shall
be borne by reasonable insurance carriers to the extent above provided, and
Landlord and Tenant hereby agree to look solely to, and seek recovery only
from, their respective insurance carriers in the event of a property loss to
the extent that such coverage is agreed to be provided hereunder and
actually insured against. The parties each hereby waive all rights and
claims against each other for such losses, and waive all rights of
subrogation of their respective insurers, provided such waiver of
subrogation shall not affect the right to the insured to recover thereunder.
The parties agree that their respective insurance policies are now, or shall
be, endorsed such that the waiver of subrogation shall not
19
affect the right of the insured to recover thereunder, so long as no
material additional premium is charged therefor.
ARTICLE 11
DAMAGE AND DESTRUCTION
11.1 Repair of Damage to Premises by Landlord. Tenant shall promptly
notify Landlord of any damage to the Premises resulting from fire or any
other casualty. If the Premises or any Common Areas serving or providing
access to the Premises shall be damaged by fire or other casualty, Landlord
shall promptly and diligently, subject to reasonable delays for insurance
adjustment or other matters beyond Landlord's reasonable control, and
subject to all other terms of this Article 11, restore the Base Building and
such Common Areas. Such restoration shall be to substantially the same
condition of the Base Building and the Common Areas prior to the casualty,
except for modifications required by zoning and building codes and other
laws or by the holder of a mortgage on the Building or Project or any other
modifications to the Common Areas deemed desirable by Landlord, which are
consistent with the character of the Project, provided that access to the
Premises and any common restrooms serving the Premises shall not be
materially impaired. Upon the occurrence of any damage to the Premises,
upon notice (the "Landlord Repair Notice") to Tenant from Landlord, Tenant
shall assign to Landlord (or to any party designated by Landlord) all
insurance proceeds payable to Tenant under Tenant's insurance required under
Section 10.3 of this Lease, and Landlord shall repair any injury or damage
to the Tenant Improvements and the Original Improvements installed in the
Premises and shall return such Tenant Improvements and Original Improvements
to their original condition; provided that if the cost of such repair by
Landlord exceeds the amount of insurance proceeds received by Landlord from
Tenant's insurance carrier, as assigned by Xxxxxx, the cost of such repairs
shall be paid by Tenant to Landlord prior to Landlord's commencement of
repair of the damage. In the event that Landlord does not deliver the
Landlord Repair Notice within sixty (60) days following the date the
casualty becomes known to Landlord, Tenant shall, at its sole cost and
expense, repair any injury or damage to the Tenant Improvements installed in
the Premises and shall return such Tenant Improvements to their original
condition. Whether or not Landlord delivers a Landlord Repair Notice, prior
to the commencement of construction, Tenant shall submit to Landlord, for
Landlord's review and approval, all plans, specifications and working
drawings relating thereto, and Landlord shall select the contractors to
perform such improvement work. Landlord shall not be liable for any
inconvenience or annoyance to Tenant or its visitors, or injury to Tenant's
business resulting in any way from such damage or the repair thereof;
provided however, that if such fire or other casualty shall have damaged the
Premises or Common Areas necessary to Tenant's occupancy, and the Premises
are not occupied by Tenant as a result thereof, then during the time and to
the extent the Premises are unfit for occupancy, the Rent shall be abated in
proportion to the ratio that the amount of rentable square feet of the
Premises which is unfit for occupancy for the purposes permitted under this
Lease bears to the total rentable square feet of the Premises. In the event
that Landlord shall not deliver the Landlord Repair Notice, Xxxxxx's right
to rent abatement pursuant to the preceding sentence shall
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terminate as of the date which is reasonably determined by Landlord to be
the date Tenant should have completed repairs to the Premises assuming
Tenant used reasonable due diligence in connection therewith.
11.2 Landlord's Option to Repair. Notwithstanding the terms of
Section 11.1 of this Lease, Landlord may elect not to rebuild and/or restore
the Premises, Building and/or Project, and instead terminate this Lease, by
notifying Tenant in writing of such termination within sixty (60) days after
the date of discovery of the damage, such notice to include a termination
date giving Tenant sixty (60) days to vacate the Premises, but Landlord may
so elect only if the Building or Project shall be damaged by fire or other
casualty or cause, whether or not the Premises are affected, and one or more
of the following conditions is present: (i) in Landlord's reasonable
judgment, repairs cannot reasonably be completed within one hundred eighty
(180) days after the date of discovery of the damage (when such repairs are
made without the payment of overtime or other premiums); (ii) the holder of
any mortgage on the Building or Project or ground lessor with respect to the
Building or Project shall require that the insurance proceeds or any portion
thereof be used to retire the mortgage debt, or shall terminate the ground
lease, as the case may be; (iii) the damage is not fully covered by
Xxxxxxxx's insurance policies; (iv) Landlord decides to rebuild the Building
or Common Areas so that they will be substantially different structurally or
architecturally; (v) the damage occurs during the last twelve (12) months of
the Lease Term; or (vi) any owner of any other portion of the Project, other
than Landlord, does not intend to repair the damage to such portion of the
Project Notwithstanding the provisions of this Section 11.2, Tenant shall
have the right to terminate this Lease under this Section 11.2 only if each
of the following conditions is satisfied: (a) the damage to the Project by
fire or other casualty was not caused by the gross negligence or intentional
act of Tenant or its partners or subpartners and their respective officers,
agents, servants, employees, and independent contractors; (b) Tenant is not
then in default under this Lease; (c) as a result of the damage, Tenant
cannot reasonably conduct business from the Premises; and, (d) as a result
of the damage to the Project, Tenant does not occupy or use the Premises at
all.
11.3 Waiver of Statutory Provisions. The provisions of this Lease,
including this Article 11, constitute an express agreement between Landlord
and Tenant with respect to any and all damage to, or destruction of, all or
any part of the Premises, the Building or the Project, and any statute or
regulation of the State of California, including, without limitation,
Sections 1932(2) and 1933(4) of the California Civil Code, with respect to
any rights or obligations concerning damage or destruction in the absence of
an express agreement between the parties, and any other statute or
regulation, now or hereafter in effect, shall have no application to this
Lease or any damage or destruction to all or any part of the Premises, the
Building or the Project.
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ARTICLE 12
NONWAIVER
No provision of this Lease shall be deemed waived by either party hereto
unless expressly waived in a writing signed thereby. 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
same or any other term, covenant or condition herein contained. The
subsequent acceptance of Rent hereunder by Landlord shall not be deemed to
be a waiver of any preceding breach by Tenant of any term, covenant or
condition of this Lease, other than the failure of Tenant to pay the
particular Rent so accepted, regardless of Landlord's knowledge of such
preceding breach at the time of acceptance of such Rent. No acceptance of a
lesser amount than the Rent herein stipulated shall be deemed a waiver of
Landlord's right to receive the full amount due, nor shall any endorsement
or statement on any check or payment or any letter accompanying such check
or payment be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
full amount due. No receipt of monies by Landlord from Tenant after the
termination of this Lease shall in any way alter the length of the Lease
Term or of Tenant's right of possession hereunder, or after the giving of
any notice shall reinstate, continue or extend the Lease Term or affect any
notice given Tenant prior to the receipt of such monies, it being agreed
that after the service of notice or the commencement of a suit, or after
final judgment for possession of the Premises, Landlord may receive and
collect any Rent due, and the payment of said Rent shall not waive or affect
said notice, suit or judgment.
ARTICLE 13
CONDEMNATION
If the whole or any part of the Premises, Building or Project shall be
taken by power of eminent domain or condemned by any competent authority for
any public or quasi-public use or purpose, or if any adjacent property or
street shall be so taken or condemned, or reconfigured or vacated by such
authority in such manner as to require the use, reconstruction or remodeling
of any part of the Premises, Building or Project, or if Landlord shall grant
a deed or other instrument in lieu of such taking by eminent domain or
condemnation, Landlord shall have the option to terminate this Lease
effective as of the date possession is required to be surrendered to the
authority. If more than twenty-five percent (25%) of the rentable square
feet of the Premises is taken, or if access to the Premises is substantially
impaired, in each case for a period in excess of one hundred eighty (180)
days, Tenant shall have the option to terminate this Lease effective as of
the date possession is required to be surrendered to the authority. Tenant
shall not because of such taking assert any claim against Landlord or the
authority for any compensation because of such taking and Landlord shall be
entitled to the entire award or payment in connection therewith, except that
Tenant shall have the right to file any separate claim available to Tenant
for any taking of Tenant's personal property and fixtures belonging to
Tenant and removable by
22
Tenant upon expiration of the Lease Term pursuant to the terms of this
Lease, and for moving expenses, so long as such claims do not diminish the
award available to Landlord, its ground lessor with respect to the Building
or Project or its mortgagee, and such claim is payable separately to Tenant.
All Rent shall be apportioned as of the date of such termination. If any
part of the Premises shall be taken, and this Lease shall not be so
terminated, the Rent shall be proportionately abated. Tenant hereby waives
any and all rights it might otherwise have pursuant to Section 1265.130 of
The California Code of Civil Procedure. Notwithstanding anything to the
contrary contained in this Article 13, in the event of a temporary taking of
all or any portion of the Premises for a period of one hundred and eighty
(180) days or less, then this Lease shall not terminate but the Base Rent
and the Additional Rent shall be abated for the period of such taking in
proportion to the ratio that the amount of rentable square feet of the
Premises taken bears to the total rentable square feet of the Premises.
Landlord shall be entitled to receive the entire award made in connection
with any such temporary taking.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 Transfers. Tenant shall not, without the prior written consent of
Landlord, which consent shall not be unreasonably withheld or delayed,
assign, mortgage, pledge, hypothecate, encumber, or permit any lien to
attach to, or otherwise transfer, this Lease or any interest hereunder,
permit any assignment, or other transfer of this Lease or any interest
hereunder by operation of law, sublet the Premises or any part thereof, or
enter into any license or concession agreements or otherwise permit the
occupancy or use of the Premises or any part thereof by any persons other
than Tenant and its employees and contractors (all of the foregoing are
hereinafter sometimes referred to collectively as "Transfers" and any person
to whom any Transfer is made or sought to be made is hereinafter sometimes
referred to as a "Transferee"). If Tenant desires Landlord's consent to any
Transfer, Tenant shall notify Landlord in writing, which notice (the
"Transfer Notice") shall include (i) the proposed effective date of the
Transfer, which shall not be less than thirty (30) days nor more than one
hundred eighty (180) days after the date of delivery of the Transfer Notice,
(ii) a description of the portion of the Premises to be transferred (the
"Subject Space"), (iii) all of the terms of the proposed Transfer and the
consideration therefor, including calculation of the "Transfer Premium", as
that term is defined in Section 14.3 below, in connection with such
Transfer, the name and address of the proposed Transferee, and a copy of all
existing executed and/or proposed documentation pertaining to the proposed
Transfer, including all existing operative documents to be executed to
evidence such Transfer or the agreements incidental or related to such
Transfer, and (iv) current financial statements of the proposed Transferee
certified by an officer, partner or owner thereof, business credit and
personal references and history of the proposed Transferee and any other
information reasonably required by Landlord which will enable Landlord to
determine the financial responsibility, character, and reputation of the
proposed Transferee, nature of such Transferee's business and proposed use
of the Subject Space. Any Transfer made without Landlord's prior written
consent shall, at Landlord's option, be null, void and of no effect, and
shall, at Landlord's option,
23
constitute a default by Tenant under this Lease. Whether or not Landlord
consents to any proposed Transfer, Tenant shall pay Landlord's reasonable
review and processing fees, not to exceed $2,500.00 for any one Transfer, as
well as any reasonable professional fees (including, without limitation,
attorneys', accountants', architects', engineers' and consultants' fees)
incurred by Landlord, within thirty (30) days after written request by
Landlord.
14.2 Landlord's Consent. Landlord shall not unreasonably withhold or
delay its consent to any proposed Transfer of the Subject Space to the
Transferee on the terms specified in the Transfer Notice. Without
limitation as to other reasonable grounds for withholding consent, the
parties hereby agree that it shall be reasonable under this Lease and under
any applicable law for Landlord to withhold consent to any proposed Transfer
where one or more of the following apply:
14.2.1 The Transferee is of a character or reputation or engaged
in a business which is not consistent with the quality of the Building or
the Project;
14.2.2 The Transferee intends to use the Subject Space for
purposes which are not permitted under this Lease;
14.2.3 The Transferee is either a governmental agency or
instrumentality thereof;
14.2.4 The Transferee is not a party of reasonable financial
worth and/or financial stability in light of the responsibilities to be
undertaken in connection with the Transfer on the date consent is requested;
14.2.5 The proposed Transfer would cause a violation of another
lease for space in the Project, or would give an occupant of the Project a
right to cancel its lease; or
14.2.6 Either the proposed Transferee, or any person or entity
which directly or indirectly, controls, is controlled by, or is under common
control with, the proposed Transferee, (i) occupies space in the Project at
the time of the request for consent, or (ii) is negotiating with Landlord or
has negotiated with Landlord during the six (6) month period immediately
preceding the date Landlord receives the Transfer Notice, to lease space in
the Project.
If Landlord consents to any Transfer pursuant to the terms of this
Section 14.2 (and does not exercise any recapture rights Landlord may have
under Section 14.4 of this Lease), Tenant may within six (6) months after
Xxxxxxxx's consent, but not later than the expiration of said six-month
period, enter into such Transfer of the Premises or portion thereof, upon
substantially the same terms and conditions as are set forth in the Transfer
Notice furnished by Tenant to Landlord pursuant to Section 14.1 of this
Lease, provided that if there are any changes in the terms and conditions
from those specified in the Transfer Notice (i) such that Landlord would
initially have been entitled to refuse its consent to such Transfer under
this Section 14.2, or (ii) which would cause the proposed Transfer to be
more favorable to the Transferee than the terms set forth in Tenant's
original Transfer Notice, Tenant shall again submit the Transfer to
24
Landlord for its approval and other action under this Article 14 (including
Landlord's right of recapture, if any, under Section 14.4 of this Lease).
Notwithstanding anything to the contrary in this Lease, if Tenant or any
proposed Transferee claims that Landlord has unreasonably withheld or
delayed its consent under Section 14.2 or otherwise has breached or acted
unreasonably under this Article 14, their sole remedies shall be a
declaratory judgment and an injunction for the relief sought, and Tenant
hereby waives all other remedies, including, without limitation, any right
at law or equity to terminate this Lease, on its own behalf and, to the
extent permitted under all applicable laws, on behalf of the proposed
Transferee.
14.3 Transfer Premium. If Landlord consents to a Transfer, as a
condition thereto which the parties hereby agree is reasonable, Tenant shall
pay to Landlord fifty percent (50%) of any "Transfer Premium," as that term
is defined in this Section 14.3, received by Tenant from such Transferee.
"Transfer Premium" shall mean all rent, additional rent or other
consideration payable by such Transferee in connection with the Transfer in
excess of the Rent and Additional Rent payable by Tenant under this Lease
during the term of the Transfer on a per rentable square foot basis if less
than all of the Premises is transferred, after deducting the reasonable
expenses incurred by Tenant for (i) any changes, alterations and
improvements to the Premises in connection with the Transfer, (ii) any free
base rent reasonably provided to the Transferee in connection with the
Transfer, and (iii) any brokerage commissions and reasonable legal fees in
connection with the Transfer (collectively, "Tenant's Transfer Costs").
"Transfer Premium" shall also include, but not be limited to, key money,
bonus money or other cash consideration paid by Transferee to Tenant in
connection with such Transfer, and any payment in excess of fair market
value for services rendered by Tenant to Transferee or for assets, fixtures,
inventory, equipment, or furniture transferred by Tenant to Transferee in
connection with such Transfer. The determination of the amount of
Landlord's applicable share of the Transfer Premium shall be made on a
monthly basis as rent or other consideration is received by Tenant under the
Transfer. For purposes of calculating the Transfer Premium on a monthly
basis, (i) Tenant's Transfer Costs shall be deemed to be expended by Tenant
in equal monthly amounts over the entire term of the Transfer and (ii) the
Rent paid for the Subject Space by Tenant shall be computed after adjusting
such rent to the actual effective rent to be paid, taking into consideration
any and all leasehold concessions granted in connection therewith,
including, but not limited to, any rent credit and tenant improvement
allowance. For purposes of calculating any such effective rent all such
concessions shall be amortized on a straight-line basis over the relevant
term.
14.4 Landlord's Option as to Subject Space. Notwithstanding anything
to the contrary contained in this Article 14, Landlord shall have the
option, by giving written notice to Tenant within thirty (30) days after
receipt of any Transfer Notice involving greater than fifty percent (50%) or
more of the Premises or Xxxxxx's interest in the Lease, to recapture the
Subject Space. Such recapture shall cancel and terminate this Lease with
respect to the Subject Space until the last day of the term of the Transfer
as set forth in the Transfer Notice. In the event of a recapture by
Landlord, if this Lease shall be canceled with respect to less than the
entire Premises, the Rent reserved herein shall be prorated on the basis of
the number of rentable square feet retained by Tenant in proportion to the
number of rentable square feet contained in
25
the Premises, and this Lease as so amended shall continue thereafter in full
force and effect, and upon request of either party, the parties shall
execute written confirmation of the same. If Landlord declines, or fails to
elect in a timely manner, to recapture the Subject Space under this
Section 14.4, then,
14.5 Effect of Transfer. If Landlord consents to a Transfer, (i) the
terms and conditions of this Lease shall in no way be deemed to have been
waived or modified, (ii) such consent shall not be deemed consent to any
further Transfer by either Tenant or a Transferee, (iii) Tenant shall
deliver to Landlord, promptly after execution, an original executed copy of
all documentation pertaining to the Transfer in form reasonably acceptable
to Landlord, (iv) Tenant shall furnish upon Xxxxxxxx's request a complete
statement, certified by an independent certified public accountant, or
Xxxxxx's chief financial officer, setting forth in detail the computation of
any Transfer Premium Tenant has derived and shall derive from such Transfer,
and (v) no Transfer relating to this Lease or agreement entered into with
respect thereto, whether with or without Landlord's consent, shall relieve
Tenant or any guarantor of the Lease from any liability under this Lease,
including, without limitation, in connection with the Subject Space.
Landlord or its authorized representatives shall have the right at all
reasonable times to audit the books, records and papers of Tenant relating
to any Transfer, and shall have the right to make copies thereof. If the
Transfer Premium respecting any Transfer shall be found understated, Tenant
shall, within thirty (30) days after demand, pay the deficiency, and if
understated by more than two percent (2%), Tenant shall pay Landlord's costs
of such audit.
14.6 Occurrence of Default. Any Transfer hereunder shall be
subordinate and subject to the provisions of this Lease, and if this Lease
shall be terminated during the term of any Transfer, Landlord shall have the
right to: (i) treat such Transfer as canceled and repossess the Subject
Space by any lawful means, or (ii) require that such Transferee attorn to
and recognize Landlord as its landlord under any such Transfer. If Tenant
shall be in default under this Lease, Landlord is hereby irrevocably
authorized, as Xxxxxx's agent and attorney-in-fact, to direct any Transferee
to make all payments under or in connection with the Transfer directly to
Landlord (which Landlord shall apply towards Tenant's obligations under this
Lease) until such default is cured. Such Transferee shall rely on any
representation by Landlord that Tenant is in default hereunder, without any
need for confirmation thereof by Xxxxxx. Upon any assignment, the assignee
shall assume in writing all obligations and covenants of Tenant thereafter
to be performed or observed under this Lease. No collection or acceptance
of rent by Landlord from any Transferee shall be deemed a waiver of any
provision of this Article 14 or the approval of any Transferee or a release
of Tenant from any obligation under this Lease, whether theretofore or
thereafter accruing. In no event shall Landlord's enforcement of any
provision of this Lease against any Transferee be deemed a waiver of
Landlord's right to enforce any term of this Lease against Tenant or any
other person. If Xxxxxx's obligations hereunder have been guaranteed,
Xxxxxxxx's consent to any Transfer shall not be effective unless the
guarantor also consents to such Transfer.
26
14.7 Non-Transfers. Notwithstanding anything to the contrary contained
in Article 14 of this Lease, an assignment or subletting by Tenant of all or
a portion of the Premises or this Lease to (i) a parent or subsidiary of
Tenant, or (ii) any person or entity which controls, is controlled by or
under common control with Tenant, or (iii) any entity which purchases all or
substantially all of the stock or assets of Tenant, (iv) any entity into
which Tenant is merged or consolidated (all such persons or entities
described in (i), (ii), (iii) and (iv) being sometimes hereinafter referred
to as "Affiliates"), shall not require Landlord's consent and shall not be
deemed a Transfer under Article 14 of this Lease, provided that (a) any such
Affiliate was not formed as a subterfuge to avoid the obligations of
Article 14 of this Lease; (b) Tenant gives Landlord at least ten (10) days'
prior notice of any such assignment or sublease to an Affiliate; (c) such
Affiliate shall have, as of the effective date of any such assignment or
sublease, a tangible net worth, computed in accordance with generally
accepted accounting principles (but excluding goodwill as an asset), which
is sufficient to meet the obligations of Tenant under this Lease and is
equal to or greater than the net worth of Tenant as of the date of the
Transfer; (d) any such assignment or sublease shall be subject and
subordinate to all of the terms and provisions of this Lease, and such
Affiliate shall assume, in a written document reasonably satisfactory to
Landlord and delivered to Landlord upon or prior to the effective date of
such assignment or sublease, all the obligations of Tenant under this Lease
with respect to the portion of the Premises which is the subject of such
assignment or sublease (other than the amount of Base Rent payable by Tenant
with respect to a sublease); and (e) Tenant and any guarantor shall remain
fully liable for all obligations to be performed by Tenant under this Lease.
ARTICLE 15
SURRENDER OF PREMISES; OWNERSHIP AND
REMOVAL OF TRADE FIXTURES
15.1 Surrender of Premises. No act or thing done by Landlord or any
agent or employee of Landlord during the Lease Term shall be deemed to
constitute an acceptance by Landlord of a surrender of the Premises unless
such intent is specifically acknowledged in writing by Landlord. The
delivery of keys to the Premises to Landlord or any agent or employee of
Landlord shall not constitute a surrender of the Premises or effect a
termination of this Lease, whether or not the keys are thereafter retained
by Landlord, and notwithstanding such delivery Tenant shall be entitled to
the return of such keys at any reasonable time upon request until this Lease
shall have been properly terminated. The voluntary or other surrender of
this Lease by Xxxxxx, whether accepted by Landlord or not, or a mutual
termination hereof, shall not work a merger, and at the option of Landlord
shall operate as an assignment to Landlord of all subleases or subtenancies
affecting the Premises or terminate any or all such sublessees or
subtenancies.
15.2 Removal of Tenant Property by Xxxxxx. Upon the expiration of the
Lease Term, or upon any earlier termination of this Lease, Tenant shall,
subject to the provisions of this Article 15, quit and surrender possession
of the Premises to Landlord in as good order and
27
condition as when Xxxxxx took possession and as thereafter improved by
Xxxxxxxx and/or Tenant, reasonable wear and tear, casualty and condemnation
and repairs which are specifically made the responsibility of Landlord
hereunder excepted. Upon such expiration or termination, Tenant shall,
without expense to Landlord, remove or cause to be removed from the Premises
all debris and rubbish, and such items of furniture, equipment, business and
trade fixtures, free-standing cabinet work, movable partitions and other
articles of personal property owned by Tenant or installed or placed by
Tenant at its expense in the Premises, and such similar articles of any
other persons claiming under Tenant, as Landlord may, in its sole
discretion, require to be removed, and Tenant shall repair at its own
expense all damage to the Premises and Building resulting from such removal.
ARTICLE 16
HOLDING OVER
If Tenant holds over after the expiration of the Lease Term or earlier
termination thereof, with or without the express or implied consent of
Landlord, such tenancy shall be from month-to-month only, and shall not
constitute a renewal hereof or an extension for any further term, and in
such case Rent shall be payable at a monthly rate equal to one hundred fifty
percent (150%) of the Rent applicable during the last rental period of the
Lease Term under this Lease. Such month-to-month tenancy shall be subject
to every other applicable term, covenant and agreement contained herein.
Nothing contained in this Article 16 shall be construed as consent by
Landlord to any holding over by Xxxxxx, and Landlord expressly reserves the
right to require Tenant to surrender possession of the Premises to Landlord
as provided in this Lease upon the expiration or other termination of this
Lease. The provisions of this Article 16 shall not be deemed to limit or
constitute a waiver of any other rights or remedies of Landlord provided
herein or at law. If Xxxxxx fails to surrender the Premises upon the
termination or expiration of this Lease, in addition to any other
liabilities to Landlord accruing therefrom, Tenant shall protect, defend,
indemnify and hold Landlord harmless from all loss, costs (including
reasonable attorneys' fees) and liability resulting from such failure,
including, without limiting the generality of the foregoing, any claims made
by any succeeding tenant founded upon such failure to surrender and any lost
profits to Landlord resulting therefrom.
ARTICLE 17
ESTOPPEL CERTIFICATES
Within ten (10) days following a request in writing by Landlord, Tenant
shall execute, acknowledge and deliver to Landlord an estoppel certificate,
which, as submitted by Landlord, shall be substantially in the form of
Exhibit E, attached hereto (or such other form as may be required by any
prospective mortgagee or purchaser of the Project, or any portion thereof),
indicating therein any exceptions thereto that may exist at that time, and
shall also contain any other information reasonably requested by Landlord or
Landlord's mortgagee or prospective mortgagee. Any such certificate may be
relied upon by any prospective mortgagee or purchaser
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of all or any portion of the Project. Tenant shall execute and deliver
whatever other instruments may be reasonably required for such purposes. At
any time during the Lease Term, Landlord may require Tenant to provide
Landlord with a current financial statement and financial statements of the
two (2) years prior to the current financial statement year. Such
statements shall be prepared in accordance with generally accepted
accounting principles and, if such is the normal practice of Tenant, shall
be audited by an independent certified public accountant. Failure of Tenant
to timely execute, acknowledge and deliver such estoppel certificate or
other instruments shall constitute an acceptance of the Premises and an
acknowledgment by Tenant that statements included in the estoppel
certificate are true and correct, without exception.
ARTICLE 18
SUBORDINATION
18.1 Subordination. This Lease shall be subject and subordinate to all
present and future ground or underlying leases of the Building or Project
and to the lien of any mortgage, trust deed or other encumbrances now or
hereafter in force against the Building or Project or any part thereof, if
any, and to all renewals, extensions, modifications, consolidations and
replacements thereof, and to all advances made or hereafter to be made upon
the security of such mortgages or trust deeds, unless the holders of such
mortgages, trust deeds or other encumbrances, or the lessors under such
ground lease or underlying leases, require in writing that this Lease be
superior thereto. Tenant covenants and agrees in the event any proceedings
are brought for the foreclosure of any such mortgage or deed in lieu thereof
(or if any ground lease is terminated), to attorn, without any deductions or
set-offs whatsoever, to the lienholder or purchaser or any successors
thereto upon any such foreclosure sale or deed in lieu thereof (or to the
ground lessor), if so requested to do so by such purchaser or lienholder or
ground lessor, and to recognize such purchaser or lienholder or ground
lessor as the lessor under this Lease, provided such lienholder or purchaser
or ground lessor shall agree to accept this Lease and not disturb Tenant's
occupancy, so long as Tenant timely pays the rent and observes and performs
the terms, covenants and conditions of this Lease to be observed and
performed by Xxxxxx. Xxxxxxxx's interest herein may be assigned as security
at any time to any lienholder. Tenant shall, within ten (10) days of
request by Xxxxxxxx, execute such further instruments or assurances as
Landlord may reasonably deem necessary to evidence or confirm the
subordination or superiority of this Lease to any such mortgages, trust
deeds, ground leases or underlying leases. Tenant waives the provisions of
any current or future statute, rule or law which may give or purport to give
Tenant any right or election to terminate or otherwise adversely affect this
Lease and the obligations of the Tenant hereunder in the event of any
foreclosure proceeding or sale.
18.2 Non-Disturbance Agreement From Existing Lender. In the event that
as of the date of execution of this Lease, there exists any deed of trust
encumbering the Project which is not terminated, released or reconveyed
within sixty (60) days thereafter, then Landlord shall use commercially
reasonable efforts obtain and deliver to Tenant a commercially reasonable
non-disturbance agreement from the beneficiary under such deed of trust.
Tenant shall execute and
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return such non-disturbance agreement to Landlord within thirty (30) days
after Xxxxxx's receipt thereof.
ARTICLE 19
DEFAULTS; REMEDIES
19.1 Events of Default. The occurrence of any of the following shall
constitute a default of this Lease by Tenant:
19.1.1 Any failure by Tenant to pay any Rent or any other charge
required to be paid under this Lease, or any part thereof, when due unless
such failure is cured within three (3) days after written notice; or
19.1.2 Except where a specific time period is otherwise set forth
for Tenant's performance in this Lease, in which event the failure to
perform by Tenant within such time period shall be a default by Tenant under
this Section 19.1.2, any failure by Tenant to observe or perform any other
provision, covenant or condition of this Lease to be observed or performed
by Tenant where such failure continues for thirty (30) days after written
notice thereof from Landlord to Tenant; provided that if the nature of such
default is such that the same cannot reasonably be cured within a thirty
(30) day period, Tenant shall not be deemed to be in default if it
diligently commences such cure within such period and thereafter diligently
proceeds to rectify and cure such default; or
19.1.3 Abandonment of the Premises by Tenant; or
19.1.4 The failure by Xxxxxx to observe or perform according to
the provisions of Articles 5, 14, 17 or 18 of this Lease where such failure
continues for more than two (2) business days after notice from Landlord.
The notice periods provided herein are in lieu of, and not in addition
to, any notice periods provided by law.
19.2 Remedies Upon Default. Upon the occurrence of any event of
default by Tenant, Landlord shall have, in addition to any other remedies
available to Landlord at law or in equity (all of which remedies shall be
distinct, separate and cumulative), the option to pursue any one or more of
the following remedies, each and all of which shall be cumulative and
nonexclusive, without any notice or demand whatsoever.
19.2.1 Terminate this Lease, in which event Tenant shall
immediately surrender the Premises to Landlord, and if Tenant fails to do
so, Landlord may, without prejudice to any other remedy which it may have
for possession or arrearages in rent, enter upon and take possession of the
Premises and expel or remove Xxxxxx and any other person who may be
occupying the Premises or any part thereof, without being liable for
prosecution or any claim or damages therefor; and Landlord may recover from
Tenant the following:
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(i) The worth at the time of award of any unpaid rent which
has been earned at the time of such termination; plus
(ii) The worth at the time of award of the amount by which
the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided; plus
(iii) The worth at the time of award of the amount by which
the unpaid rent for the balance of the Lease Term after the time of award
exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; plus
(iv) Any other amount necessary to compensate Landlord for
all the detriment proximately caused by Xxxxxx's failure to perform its
obligations under this Lease or which in the ordinary course of things would
be likely to result therefrom, specifically including but not limited to,
brokerage commissions and advertising expenses incurred, expenses of
remodeling the Premises or any portion thereof for a new tenant, whether for
the same or a different use, and any special concessions made to obtain a
new tenant; and
(v) 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.
The term "rent" as used in this Section 19.2 shall be deemed to be and
to mean all sums of every nature required to be paid by Tenant pursuant to
the terms of this Lease, whether to Landlord or to others. As used in
Sections 19.2.1(i) and (ii), above, the "worth at the time of award" shall
be computed by allowing interest at the rate set forth in Article 25 of this
Lease, but in no case greater than the maximum amount of such interest
permitted by law. As used in Section 19.2.1(iii) above, the "worth at the
time of award" shall be computed by discounting such amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of award plus
one percent (1%).
19.2.2 Landlord shall have the remedy described in California
Civil Code Section 1951.4 (lessor may continue lease in effect after
xxxxxx's breach and abandonment and recover rent as it becomes due, if
xxxxxx has the right to sublet or assign, subject only to reasonable
limitations). Accordingly, if Landlord does not elect to terminate this
Lease on account of any default by Tenant, Landlord may, from time to time,
without terminating this Lease, enforce all of its rights and remedies under
this Lease, including the right to recover all rent as it becomes due.
19.2.3 Landlord shall at all times have the rights and remedies
(which shall be cumulative with each other and cumulative and in addition to
those rights and remedies available under Sections 19.2.1 and 19.2.2, above,
or any law or other provision of this Lease), without prior demand or notice
except as required by applicable law, to seek any declaratory, injunctive
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or other equitable relief, and specifically enforce this Lease, or restrain
or enjoin a violation or breach of any provision hereof.
19.3 Subleases of Tenant. Whether or not Landlord elects to terminate
this Lease on account of any default by Xxxxxx, as set forth in this
Article 19, Landlord shall have the right to terminate any and all
subleases, licenses, concessions or other consensual arrangements for
possession entered into by Tenant and affecting the Premises or may, in
Xxxxxxxx's sole discretion, succeed to Xxxxxx's interest in such subleases,
licenses, concessions or arrangements. In the event of Xxxxxxxx's election
to succeed to Xxxxxx's interest in any such subleases, licenses, concessions
or arrangements following Xxxxxx's defaults, Tenant shall, as of the date of
notice by Landlord of such election, have no further right to or interest in
the rent or other consideration receivable thereunder.
19.4 Efforts to Relet. No re-entry or repossession, repairs,
maintenance, changes, alterations and additions, reletting, appointment of a
receiver to protect Landlord's interests hereunder, or any other action or
omission by Landlord shall be construed as an election by Landlord to
terminate this Lease or Tenant's right to possession, or to accept a
surrender of the Premises, nor shall same operate to release Tenant in whole
or in part from any of Tenant's obligations hereunder, unless express
written notice of such intention is sent by Landlord to Tenant. Tenant
hereby irrevocably waives any right otherwise available under any law to
redeem or reinstate this Lease.
ARTICLE 20
COVENANT OF QUIET ENJOYMENT
Landlord covenants that Tenant, on paying the Rent, charges for services
and other payments herein reserved and on keeping, observing and performing
all the other terms, covenants, conditions, provisions and agreements herein
contained on the part of Tenant to be kept, observed and performed, shall,
during the Lease Term, peaceably and quietly have, hold and enjoy the
Premises subject to the terms, covenants, conditions, provisions and
agreements hereof without interference by any persons lawfully claiming by
or through Landlord. The foregoing covenant is in lieu of any other
covenant express or implied.
ARTICLE 21
SECURITY DEPOSIT
21. Letter of Credit. Concurrently with Xxxxxx's execution of this
Lease, Tenant shall deliver to Landlord an irrevocable standby letter of
credit in the amount of $50,000 ("Letter of Credit") as additional security
for the faithful performance by Tenant of its obligations under this Lease.
The Letter of Credit shall be upon the terms and subject to the following
provisions of this Section 21.1.
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21.1 Application of Letter of Credit. If Tenant defaults with respect
to any provision of this Lease during the Lease Term, in addition to any
other rights held by Landlord, Landlord may draw upon and apply all or any
part of the Letter of Credit to the payment of any Rent or other sum in
default, the repair of any damage to the Premises which has been identified
in this Lease as Tenant's obligation to maintain, the payment of any other
amount which Landlord may spend or become obligated to spend by reason of
Tenant's default, and/or to compensate Landlord for any other loss or damage
which Landlord may suffer by reason of Tenant's default, to the full extent
permitted by law and contemplated by this Lease. If any portion of the
Letter of Credit is so applied, Tenant shall, within ten (10) business days
after written demand therefor, deposit cash with Landlord in an amount
sufficient to restore the Letter of Credit to its then required amount or
provide a replacement letter of credit to bring the face amount of the then
available letter of credit to its then required amount, and Xxxxxx's failure
to do so shall be a non-curable default under this Lease.
21.2 Terms of Letter of Credit. The Letter of Credit shall have a term
commencing upon the date of execution of this Lease, and continuing until
the expiration of the initial Lease Term. The Letter of Credit shall be (i)
issued by Silicon Valley Bank ("Bank") and "callable" by Landlord through a
branch office of the Bank located in Santa Xxxxx County, and (ii) in a form
containing the required provisions set forth in Sections 21.2.1 through
21.2.4 below. The premium or purchase price of, or any other Bank fees
associated with, such Letter of Credit shall be paid by Tenant. The Letter
of Credit shall, without limiting the foregoing, provide that:
21.2.1 Such Letter of Credit shall be transferable, irrevocable
and unconditional, so that Landlord, or its successor(s) in interest, may at
any time "call" for any portion of the then uncalled upon amount thereof
without regard to and without the Bank inquiring as to the right or lack of
right of the holder of said letter of credit to effect such calls or the
existence or lack of existence of any defenses by Tenant with respect
thereto;
21.2.2 Landlord agrees not to draw upon the Letter of Credit
unless Landlord claims default by Tenant under the Lease after giving notice
thereof to Tenant in accordance with the terms of this Lease and the
expiration of any applicable cure period set forth in this Lease, but if
Landlord does effect such a "draw," such "draw" amount may, at Landlord's
option, be in the full amount of the Letter of Credit or a partial draw as
necessary to compensate Landlord for such default.
21.2.3 Any failure or delay of Landlord to "draw" any portion of
the Letter of Credit shall not act as a waiver of Landlord's right to do so
at any time thereafter or constitute a waiver of any default with respect to
the Lease.
21.2.4 Xxxxxx agrees not to interfere in any way with payment to
Landlord of the proceeds of the Letter of Credit, either prior to or
following a "draw" by Landlord of any portion of the Letter of Credit,
regardless of whether any dispute exists between Xxxxxx and Landlord as to
Landlord's right to "draw" from the Letter of Credit. No condition or
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term of this Lease shall be deemed to render the Letter of Credit
conditional upon this Lease or to justify the issuer of the Letter of Credit
in failing to honor a draw upon such Letter of Credit in a timely manner.
In the event Landlord is determined through any dispute resolution procedure
agreed upon by the parties or by a court of competent jurisdiction to have
improperly drawn on the Letter of Credit, then Tenant shall be entitled to
receive a prompt refund of such amount from Landlord. Tenant hereby waives
the provisions of Section 1950.7 of the California Civil Code, and all other
provisions of law, now or hereafter in force, which provide that Landlord
may claim from a security deposit (including the Letter of Credit) only
those sums reasonably necessary to remedy defaults in the payment of rent,
to repair damage caused by Tenant or to clean the Premises, it being agreed
that Landlord may, in addition, claim those sums reasonably necessary to
compensate Landlord for any other loss or damage, foreseeable or
unforeseeable, caused by the act or omission of Tenant or any officer,
employee, agent or invitee of Tenant.
22.1.5 Tenant shall be solely responsible for any costs and
expenses charged by the Bank in connection with the transfer of the letter
of credit from Landlord to any successor or assign of Landlord.
ARTICLE 22
INTENTIONALLY DELETED
ARTICLE 23
SIGNS
All signs and graphics of every kind visible in or from public view or
corridors, the Common Areas or the exterior of the Premises shall be subject
to Landlord's prior written approval and shall be subject to any applicable
governmental laws, ordinances, and regulations and in compliance with
Landlord's signage program. Tenant shall remove all such signs and graphics
prior to the termination of this Lease. Such installations and removals
shall be made in such manner as to avoid injury or defacement of the
Premises; and Tenant shall repair any injury or defacement, including
without limitation, discoloration caused by such installation or removal.
Any signs, notices, logos, pictures, names or advertisements which are
installed and that have not been separately approved by Landlord may be
removed without notice by Landlord at the sole expense of Tenant.
ARTICLE 24
COMPLIANCE WITH LAW
Tenant shall not do anything or suffer anything to be done in or about
the Premises or the Project which will in any way conflict with any law,
statute, ordinance or other governmental rule, regulation or requirement now
in force or which may hereafter be enacted or promulgated. At its sole cost
and expense, Tenant shall promptly comply with all such governmental
measures.
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Should any standard or regulation now or hereafter be imposed on Landlord or
Tenant by a state, federal or local governmental body charged with the
establishment, regulation and enforcement of occupational, health or safety
standards for employers, employees, landlords or tenants, then Tenant
agrees, at its sole cost and expense, to comply promptly with such standards
or regulations. Tenant shall be responsible, at its sole cost and expense,
to make all alterations to the Premises as are required to comply with the
governmental rules, regulations, requirements or standards described in this
Article 24; provided that Landlord shall comply with any standards or
regulations which relate to the Common Areas, Building Structure and those
portion of the Building Systems located outside the Premises, unless such
compliance obligations are directly related to and result from Tenant's
particular manner of use of the Premises or the tenant improvements
(including the initial Tenant Improvements constructed pursuant to the
Tenant Work Letter) or the Alterations installed in or to the Premises after
the date hereof, in which event such compliance obligations shall be at
Tenant's sole cost and expense.. The judgment of any court of competent
jurisdiction or the admission of Tenant in any judicial action, regardless
of whether Landlord is a party thereto, that Xxxxxx has violated any of said
governmental measures, shall be conclusive of that fact as between Landlord
and Tenant.
ARTICLE 25
LATE CHARGES
If any installment of Rent or any other sum due from Tenant shall not be
received by Landlord or Landlord's designee within five (5) days after said
amount is due (provided Tenant shall be entitled to one (1) late payment
each Lease Year without incurring a late charge), then Tenant shall pay to
Landlord a late charge equal to five percent (5%) of the overdue amount plus
any reasonable attorneys' fees incurred by Landlord by reason of Tenant's
failure to pay Rent and/or other charges when due hereunder. The late
charge shall be deemed Additional Rent and the right to require it shall be
in addition to all of Landlord's other rights and remedies hereunder or at
law and shall not be construed as liquidated damages or as limiting
Landlord's remedies in any manner. In addition to the late charge described
above, any Rent or other amounts owing hereunder which are not paid within
fifteen (15) days after the date they are due shall bear interest from the
date when due until paid at a rate per annum equal to the lesser of (i) the
annual "Bank Prime Loan" rate cited in the Federal Reserve Statistical
Release Publication G.13(415), published on the first Tuesday of each
calendar month (or such other comparable index as Landlord and Tenant shall
reasonably agree upon if such rate ceases to be published) plus two (2)
percentage points, and (ii) the highest rate permitted by applicable law
(the "Interest Rate").
ARTICLE 26
LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT
26.1 Landlord's Cure. All covenants and agreements to be kept or
performed by Tenant under this Lease shall be performed by Tenant at
Tenant's sole cost and expense and without any reduction of Rent, except to
the extent, if any, otherwise expressly provided herein.
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If Tenant shall fail to perform any obligation under this Lease, and such
failure shall continue in excess of the time allowed under Section 19.1.2,
above, unless a specific time period is otherwise stated in this Lease,
Landlord may, but shall not be obligated to, make any such payment or
perform any such act on Tenant's part without waiving its rights based upon
any default of Tenant and without releasing Tenant from any obligations
hereunder.
26.2 Tenant's Reimbursement. Except as may be specifically provided to
the contrary in this Lease, Tenant shall pay to Landlord, upon delivery by
Landlord to Tenant of statements therefor: (i) sums equal to expenditures
reasonably made and obligations incurred by Landlord in connection with the
remedying by Landlord of Tenant's defaults pursuant to the provisions of
Section 26.1; (ii) sums equal to all losses, costs, liabilities, damages and
expenses referred to in Article 10 of this Lease; and (iii) sums equal to
all expenditures made and obligations incurred by Landlord in collecting or
attempting to collect the Rent or in enforcing or attempting to enforce any
rights of Landlord under this Lease or pursuant to law, including, without
limitation, all reasonable legal fees and other amounts so expended.
Tenant's obligations under this Section 26.2 shall survive the expiration or
sooner termination of the Lease Term.
ARTICLE 27
ENTRY BY LANDLORD
Landlord reserves the right at all reasonable times and upon at least 24
hours prior notice to or verbal authorization by Xxxxxx (except in the case
of an emergency) to enter the Premises to (i) inspect them; (ii) show the
Premises to (x) prospective purchasers, (y) prospective tenants during the
last six (6) months of the Lease Term, or (z) current or prospective
mortgagees, ground or underlying lessors or insurers; (iii) post notices of
nonresponsibility; or (iv) alter, improve or repair the Premises or the
Building, or for structural alterations, repairs or improvements to the
Building or the Building's systems and equipment. Notwithstanding anything
to the contrary contained in this Article 27, Landlord may enter the
Premises at any time to (A) perform services required of Landlord, including
janitorial service; (B) take possession due to any breach of this Lease in
the manner provided herein; and (C) perform any covenants of Tenant which
Xxxxxx fails to perform. Landlord may make any such entries without the
abatement of Rent, except as otherwise provided in this Lease, and may take
such reasonable steps as required to accomplish the stated purposes. Tenant
hereby waives any claims for damages or for any injuries or inconvenience to
or interference with Xxxxxx's business, lost profits, any loss of occupancy
or quiet enjoyment of the Premises, and any other loss occasioned thereby.
For each of the above purposes, Landlord shall at all times have a key with
which to unlock all the doors in the Premises, excluding Tenant's vaults,
safes and special security areas designated in advance by Tenant. In an
emergency, Landlord shall have the right to use any means that Landlord may
deem proper to open the doors in and to the Premises. Any entry into the
Premises by Landlord in the manner hereinbefore described shall not be
deemed to be a forcible or unlawful entry into, or a detainer of, the
Premises, or an actual or constructive eviction of Tenant from any portion
of the Premises. No provision of this Lease shall be
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construed as obligating Landlord to perform any repairs, alterations or
decorations except as otherwise expressly agreed to be performed by Landlord
herein.
ARTICLE 28
TENANT PARKING
Landlord shall provide, for the initial term of the Lease, a minimum of
four (4) parking spaces per each one thousand (1,000) rentable square feet
of the Premises, which, based upon the initial rentable square feet of the
Premises, is equal to two hundred (200) parking spaces. There shall be no
charge for parking during the initial Lease Term. Tenant's continued right
to use the parking spaces is conditioned upon Tenant abiding by all rules
and regulations which are prescribed from time to time for the orderly
operation and use of the parking facility where the parking spaces are
located, including any sticker or other identification system established by
Landlord, Xxxxxx's cooperation in seeing that Tenant's employees and
visitors also comply with such rules and regulations and Tenant not being in
default under this Lease. Landlord specifically reserves the right to
change the size, configuration, design, layout and all other aspects of the
Project parking facility at any time and Tenant acknowledges and agrees that
Landlord may, without incurring any liability to Tenant and without any
abatement of Rent under this Lease, from time to time, close-off or restrict
access to the Project parking facility for purposes of permitting or
facilitating any such construction, alteration or improvements. Landlord
may delegate its responsibilities hereunder to a parking operator in which
case such parking operator shall have all the rights of control attributed
hereby to the Landlord. The parking spaces available to Tenant pursuant to
this Article 28 are provided to Tenant solely for use by Xxxxxx's own
personnel and such right to such spaces may not be transferred, assigned,
subleased or otherwise alienated by Tenant without Xxxxxxxx's prior
approval.
ARTICLE 29
MISCELLANEOUS PROVISIONS
29.1 Terms; Captions. The words "Landlord" and "Tenant" as used herein
shall include the plural as well as the singular. The necessary grammatical
changes required to make the provisions hereof apply either to corporations
or partnerships or individuals, men or women, as the case may require, shall
in all cases be assumed as though in each case fully expressed. The
captions of Articles and Sections are for convenience only and shall not be
deemed to limit, construe, affect or alter the meaning of such Articles and
Sections.
29.2 Binding Effect. Subject to all other provisions of this Lease,
each of the covenants, conditions and provisions of this Lease shall extend
to and shall, as the case may require, bind or inure to the benefit not only
of Landlord and of Tenant, but also of their respective heirs, personal
representatives, successors or assigns, provided this clause shall not
permit any assignment by Tenant contrary to the provisions of Article 14 of
this Lease.
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29.3 No Air Rights. No rights to any view or to light or air over any
property, whether belonging to Landlord or any other person, are granted to
Tenant by this Lease. If at any time any windows of the Premises are
temporarily darkened or the light or view therefrom is obstructed by reason
of any repairs, improvements, maintenance or cleaning in or about the
Project, the same shall be without liability to Landlord and without any
reduction or diminution of Tenant's obligations under this Lease.
29.4 Modification of Lease. Should any current or prospective
mortgagee or ground lessor for the Building or Project require a
modification of this Lease, which modification will not cause an increased
cost or expense to Tenant or in any other way materially and adversely
change the rights and obligations of Tenant hereunder, then and in such
event, Xxxxxx agrees that this Lease may be so modified and agrees to
execute whatever documents are reasonably required therefor and to deliver
the same to Landlord within ten (10) business days following a request
therefor. At the request of Landlord or any mortgagee or ground lessor,
Xxxxxx agrees to execute a short form of Lease and deliver the same to
Landlord within ten (10) business days following the request therefor.
29.5 Transfer of Landlord's Interest. Tenant acknowledges that
Landlord has the right to transfer all or any portion of its interest in the
Project or Building and in this Lease, and Xxxxxx agrees that in the event
of any such transfer, Landlord shall automatically be released from all
liability under this Lease and Xxxxxx agrees to look solely to such
transferee for the performance of Landlord's obligations hereunder after the
date of transfer and such transferee shall be deemed to have fully assumed
and be liable for all obligations of this Lease to be performed by Landlord,
including the return of any Security Deposit to the extent actually
transferred or credited to such transferee, and Tenant shall attorn to such
transferee.
29.6 Prohibition Against Recording. Except as provided in Section 29.4
of this Lease, neither this Lease, nor any memorandum, affidavit or other
writing with respect thereto, shall be recorded by Tenant or by anyone
acting through, under or on behalf of Xxxxxx.
29.7 Landlord's Title. Xxxxxxxx's title is and always shall be
paramount to the title of Tenant. Nothing herein contained shall empower
Tenant to do any act which can, shall or may encumber the title of Landlord.
29.8 Relationship of Parties. Nothing contained in this Lease shall be
deemed or construed by the parties hereto or by any third party to create
the relationship of principal and agent, partnership, joint venturer or any
association between Landlord and Tenant.
29.9 Application of Payments. Landlord shall have the right to apply
payments received from Tenant pursuant to this Lease, regardless of Tenant's
designation of such payments, to satisfy any obligations of Tenant
hereunder, in such order and amounts as Landlord, in its sole discretion,
subject to the terms of this Lease, may elect.
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29.10 Time of Essence. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is
a factor.
29.11 Partial Invalidity. If any term, provision or condition
contained in this Lease shall, to any extent, be invalid or unenforceable,
the remainder of this Lease, or the application of such term, provision or
condition to persons or circumstances other than those with respect to which
it is invalid or unenforceable, shall not be affected thereby, and each and
every other term, provision and condition of this Lease shall be valid and
enforceable to the fullest extent possible permitted by law.
29.12 No Warranty. In executing and delivering this Lease, Tenant has
not relied on any representations, including, but not limited to, any
representation as to the amount of any item comprising Additional Rent or
the amount of the Additional Rent in the aggregate or that Landlord is
furnishing the same services to other tenants, at all, on the same level or
on the same basis, or any warranty or any statement of Landlord which is not
set forth herein or in one or more of the exhibits attached hereto.
29.13 Landlord Exculpation. The liability of Landlord or the Landlord
Parties to Tenant for any default by Landlord under this Lease or arising in
connection herewith or with Landlord's operation, management, leasing,
repair, renovation, alteration or any other matter relating to the Project
or the Premises shall be limited solely and exclusively to an amount which
is equal to the lesser of (a) the interest of Landlord in the Building or
(b) the equity interest Landlord would have in the Building if the Building
were encumbered by third-party debt in an amount equal to eighty percent
(80%) of the value of the Building (as such value is determined by
Landlord), provided that in no event shall such liability extend to any
sales or insurance proceeds received by Landlord or the Landlord Parties in
connection with the Project, Building or Premises. Neither Landlord, nor
any of the Landlord Parties shall have any personal liability therefor, and
Tenant hereby expressly waives and releases such personal liability on
behalf of itself and all persons claiming by, through or under Tenant. The
limitations of liability contained in this Section 29.13 shall inure to the
benefit of Landlord's and the Landlord Parties' present and future partners,
beneficiaries, officers, directors, trustees, shareholders, agents and
employees, and their respective partners, heirs, successors and assigns.
Under no circumstances shall any present or future partner of Landlord (if
Landlord is a partnership), or trustee or beneficiary (if Landlord or any
partner of Landlord is a trust), have any liability for the performance of
Xxxxxxxx's obligations under this Lease. Notwithstanding any contrary
provision herein, neither Landlord nor the Landlord Parties shall be liable
under any circumstances for injury or damage to, or interference with,
Xxxxxx's business, including but not limited to, loss of profits, loss of
rents or other revenues, loss of business opportunity, loss of goodwill or
loss of use, in each case, however occurring.
29.14 Entire Agreement. It is understood and acknowledged that there
are no oral agreements between the parties hereto affecting this Lease and
this Lease constitutes the parties' entire agreement with respect to the
leasing of the Premises and supersedes and cancels any and all previous
negotiations, arrangements, brochures, agreements and understandings, if
any,
39
between the parties hereto or displayed by Landlord to Tenant with respect
to the subject matter thereof, and none thereof shall be used to interpret
or construe this Lease. None of the terms, covenants, conditions or
provisions of this Lease can be modified, deleted or added to except in
writing signed by the parties hereto.
29.15 Right to Lease. Landlord reserves the absolute right to effect
such other tenancies in the Project as Landlord in the exercise of its sole
business judgment shall determine to best promote the interests of the
Building or Project. Tenant does not rely on the fact, nor does Landlord
represent, that any specific tenant or type or number of tenants shall,
during the Lease Term, occupy any space in the Building or Project.
29.16 Force Majeure. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, inability to obtain services, labor,
or materials or reasonable substitutes therefor, governmental actions, civil
commotions, fire or other casualty, and other causes beyond the reasonable
control of the party obligated to perform, except with respect to the
obligations imposed with regard to Rent and other charges to be paid by
Tenant pursuant to this Lease, as modified by Article 11 hereof
(collectively, a "Force Majeure"), notwithstanding anything to the contrary
contained in this Lease, shall excuse the performance of such party for a
period equal to any such prevention, delay or stoppage and, therefore, if
this Lease specifies a time period for performance of an obligation of
either party, that time period shall be extended by the period of any delay
in such party's performance caused by a Force Majeure.
29.17 Waiver of Redemption by Xxxxxx. Tenant hereby waives, for Tenant
and for all those claiming under Tenant, any and all rights now or hereafter
existing to redeem by order or judgment of any court or by any legal process
or writ, Xxxxxx's right of occupancy of the Premises after any termination
of this Lease.
29.18 Notices. All notices, demands, statements, designations,
approvals or other communications (collectively, "Notices") given or
required to be given by either party to the other hereunder or by law shall
be in writing, shall be (A) sent by United States certified or registered
mail, postage prepaid, return receipt requested ("Mail"), (B) transmitted by
telecopy, if such telecopy is promptly followed by a Notice sent by Mail,
(C) delivered by a nationally recognized overnight courier, or (D) delivered
personally. Any Notice shall be sent, transmitted, or delivered, as the
case may be, to Tenant at the appropriate address set forth in Section 10 of
the Summary, or to such other place as Tenant may from time to time
designate in a Notice to Landlord, or to Landlord at the addresses set forth
below, or to such other places as Landlord may from time to time designate
in a Notice to Tenant. Any Notice will be deemed given (i) three (3) days
after the date it is posted if sent by Mail, (ii) the date the telecopy is
transmitted, (iii) the date the overnight courier delivery is made, or
(iv) the date personal delivery is made. As of the date of this Lease, any
Notices to Landlord must be sent, transmitted, or delivered, as the case may
be, to the following addresses:
Carlyle Realty
0000 XxxXxxxxx Xxxxx
40
Newport Beach, California 94660
Attention: Xxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
and
ZKS Real Estate Partners
3697 Mt. Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
and
Xxxxx, Matkins, Xxxx, Xxxxxx & Xxxxxxx
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
29.19 Joint and Several. If there is more than one Tenant, the
obligations imposed upon Tenant under this Lease shall be joint and several.
29.20 Authority. If Tenant is a corporation, trust or partnership,
each individual executing this Lease on behalf of Tenant hereby represents
and warrants that Tenant is a duly formed and existing entity qualified to
do business in California and that Xxxxxx has full right and authority to
execute and deliver this Lease and that each person signing on behalf of
Tenant is authorized to do so. In such event, Tenant shall, within ten (10)
days after execution of this Lease, deliver to Landlord satisfactory
evidence of such authority and, if a corporation, upon demand by Landlord,
also deliver to Landlord satisfactory evidence of (i) good standing in
Tenant's state of incorporation and (ii) qualification to do business in
California.
29.21 Attorneys' Fees. In the event that either Landlord or Tenant
should bring suit for the possession of the Premises, for the recovery of
any sum due under this Lease, or because of the breach of any provision of
this Lease or for any other relief against the other, then all costs and
expenses, including reasonable attorneys' fees, incurred by the prevailing
party therein shall be paid by the other party, which obligation on the part
of the other party shall be deemed to have accrued on the date of the
commencement of such action and shall be enforceable whether or not the
action is prosecuted to judgment.
41
29.22 Governing Law; WAIVER OF TRIAL BY JURY. This Lease shall be
construed and enforced in accordance with the laws of the State of
California. IN ANY ACTION OR PROCEEDING ARISING HEREFROM, LANDLORD AND
TENANT HEREBY CONSENT TO (I) THE JURISDICTION OF ANY COMPETENT COURT WITHIN
THE STATE OF CALIFORNIA, COUNTY OF ALAMEDA (II) SERVICE OF PROCESS BY ANY
MEANS AUTHORIZED BY CALIFORNIA LAW, AND (III) IN THE INTEREST OF SAVING TIME
AND EXPENSE, TRIAL WITHOUT A JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR THEIR
SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH
THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OR
OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY
EMERGENCY OR STATUTORY REMEDY. IN THE EVENT LANDLORD COMMENCES ANY SUMMARY
PROCEEDINGS OR ACTION FOR NONPAYMENT OF BASE RENT OR ADDITIONAL RENT, TENANT
SHALL NOT INTERPOSE ANY COUNTERCLAIM OF ANY NATURE OR DESCRIPTION (UNLESS
SUCH COUNTERCLAIM SHALL BE MANDATORY) IN ANY SUCH PROCEEDING OR ACTION, BUT
SHALL BE RELEGATED TO AN INDEPENDENT ACTION AT LAW.
29.23 Submission of Lease. Submission of this instrument for
examination or signature by Xxxxxx does not constitute a reservation of,
option for or option to lease, and it is not effective as a lease or
otherwise until execution and delivery by both Landlord and Tenant.
29.24 Brokers. Landlord and Tenant hereby warrant to each other that
they have had no dealings with any real estate broker or agent in connection
with the negotiation of this Lease, excepting only the real estate brokers
or agents specified in Section 12 of the Summary (the "Brokers"), and that
they know of no other real estate broker or agent who is entitled to a
commission in connection with this Lease. Each party agrees to indemnify
and defend the other party against and hold the other party harmless from
any and all claims, demands, losses, liabilities, lawsuits, judgments, costs
and expenses (including without limitation reasonable attorneys' fees) with
respect to any leasing commission or equivalent compensation alleged to be
owing on account of any dealings with any real estate broker or agent, other
than the Brokers, occurring by, through, or under the indemnifying party.
29.25 Independent Covenants. This Lease shall be construed as though
the covenants herein between Landlord and Tenant are independent and not
dependent and Tenant hereby expressly waives the benefit of any statute to
the contrary and agrees that if Landlord fails to perform its obligations
set forth herein, Tenant shall not be entitled to make any repairs or
perform any acts hereunder at Landlord's expense or to any setoff of the
Rent or other amounts owing hereunder against Landlord.
29.26 Project or Building Name and Signage. Landlord shall have the
right at any time to change the name of the Project or Building and to
install, affix and maintain any and all signs on the exterior and on the
interior of the Project or Building as Landlord may, in Landlord's
42
sole discretion, desire. Tenant shall not use the words "Xxxxx Creek
Business Park" or the name of the Project or Building or use pictures or
illustrations of the Project or Building in advertising or other publicity
or for any purpose other than as the address of the business to be conducted
by Xxxxxx in the Premises, without the prior written consent of Landlord.
29.27 Counterparts. This Lease may be executed in counterparts with
the same effect as if both parties hereto had executed the same document.
Both counterparts shall be construed together and shall constitute a single
lease.
29.28 Confidentiality. Each party hereto acknowledges that the content
of this Lease and any related documents are confidential information.
Landlord and Tenant shall keep such confidential information strictly
confidential and shall not disclose such confidential information to any
person or entity other than their respective financial, legal, and space
planning consultants except as otherwise required by law.
29.29 Development of the Project.
29.29.1 Subdivision. Landlord reserves the right to further
subdivide all or a portion of the Project. Xxxxxx agrees to execute and
deliver, upon demand by Landlord and in the form requested by Landlord, any
additional documents needed to conform this Lease to the circumstances
resulting from such subdivision.
29.29.2 The Other Improvements. If portions of the Project or
property adjacent to the Project (collectively, the "Other Improvements")
are owned by an entity other than Landlord, Landlord, at its option, may
enter into an agreement with the owner or owners of any or all of the Other
Improvements to provide (i) for reciprocal rights of access and/or use of
the Project and the Other Improvements, (ii) for the common management,
operation, maintenance, improvement and/or repair of all or any portion of
the Project and the Other Improvements, (iii) for the allocation of a
portion of the Direct Expenses to the Other Improvements and the operating
expenses and taxes for the Other Improvements to the Project, and (iv) for
the use or improvement of the Other Improvements and/or the Project in
connection with the improvement, construction, and/or excavation of the
Other Improvements and/or the Project. Nothing contained herein shall be
deemed or construed to limit or otherwise affect Landlord's right to convey
all or any portion of the Project or any other of Landlord's rights
described in this Lease.
29.29.3 Construction of Project and Other Improvements. Tenant
acknowledges that portions of the Project and/or the Other Improvements may
be under construction following Tenant's occupancy of the Premises, and that
such construction may result in levels of noise, dust, obstruction of
access, etc. which are in excess of that present in a fully constructed
project. Tenant hereby waives any and all rent offsets or claims of
constructive eviction which may arise in connection with such construction;
provided that Landlord shall use commercially reasonable efforts to minimize
any unreasonable interference or disturbance such construction causes to
Tenant's use and occupancy of the Premises.
43
29.30 Building Renovations. It is specifically understood and agreed
that Landlord has no obligation and has made no promises to alter, remodel,
improve, renovate, repair or decorate the Premises, Building, or any part
thereof and that no representations respecting the condition of the Premises
or the Building have been made by Landlord to Tenant except as specifically
set forth herein or in the Tenant Work Letter. However, Tenant hereby
acknowledges that Landlord is currently renovating or may during the Lease
Term renovate, improve, alter, or modify (collectively, the "Renovations")
the Project, the Building and/or the Premises. Tenant hereby agrees that
such Renovations shall in no way constitute a constructive eviction of
Tenant nor entitle Tenant to any abatement of Rent. Landlord shall have no
responsibility and shall not be liable to Tenant for any injury to or
interference with Xxxxxx's business arising from the Renovations, nor shall
Tenant be entitled to any compensation or damages from Landlord for loss of
the use of the whole or any part of the Premises or of Tenant's personal
property or improvements resulting from the Renovations, or for any
inconvenience or annoyance occasioned by such Renovations.
29.31 No Violation. Tenant hereby warrants and represents that neither
its execution of nor performance under this Lease shall cause Tenant to be
in violation of any agreement, instrument, contract, law, rule or regulation
by which Tenant is bound, and Tenant shall protect, defend, indemnify and
hold Landlord harmless against any claims, demands, losses, damages,
liabilities, costs and expenses, including, without limitation, reasonable
attorneys' fees and costs, arising from Tenant's breach of this warranty and
representation.
29.32 Communications and Computer Lines. Tenant may install, maintain,
replace, remove or use any communications or computer wires and cables
(collectively, the "Lines") at the Project in or serving the Premises,
provided that (i) Tenant shall obtain Landlord's prior written consent, use
an experienced and qualified contractor approved in writing by Landlord, and
comply with all of the other provisions of Articles 7 and 8 of this Lease,
(ii) an acceptable number of spare Lines and space for additional Lines
shall be maintained for existing and future occupants of the Project, as
determined in Landlord's reasonable opinion, (iii) the Lines therefor
(including riser cables) shall be appropriately insulated to prevent
excessive electromagnetic fields or radiation, and shall be surrounded by a
protective conduit reasonably acceptable to Landlord, (iv) any new or
existing Lines servicing the Premises shall comply with all applicable
governmental laws and regulations, (v) as a condition to permitting the
installation of new Lines, Landlord may require that Tenant remove existing
Lines located in or serving the Premises and repair any damage in connection
with such removal, and (vi) Tenant shall pay all costs in connection
therewith. Landlord reserves the right to require that Tenant remove any
Lines located in or serving the Premises which are installed in violation of
these provisions, or which are at any time in violation of any laws or
represent a dangerous or potentially dangerous condition.
29.33 No Discrimination. There shall be no discrimination against, or
segregation of, any person or persons on account of sex, marital status,
race, color, religion, creed, national origin or ancestry in the Transfer of
the Premises, or any portion thereof, nor shall the Tenant
44
itself, or any person claiming under or through it, establish or permit any
such practice or practices of discrimination or segregation with reference
to the selection, location, number, use or occupancy of tenants, lessees,
subtenants, sublessees, or vendees of the Premises, or any portion thereof.
29.34 Security Measures. Tenant hereby acknowledges that Landlord
shall have no obligation to provide a guard service or other security
measures whatsoever. Tenant assumes all responsibility for the protection
of the Premises, Tenant, its agents and invitees and their property from the
acts of third parties.
ARTICLE 30
OPTION TO EXTEND
30.1 Option Right. Landlord hereby grants Tenant one (1) option to
extend the initial Lease Term for the entire Premises for a period of five
(5) years (the "Option Term"), which option shall be exercisable only by
written Exercise Notice (as defined below) delivered by Tenant to Landlord
as provided below, provided that, as of the date of delivery of such
Exercise Notice, Tenant is not in a state of uncured monetary or other
default following the expiration of the applicable cure periods under the
Lease and Tenant has not been in default beyond the expiration of any
applicable notice and cure period more than twice in any one Lease Year.
Upon the proper exercise of such option to extend, and provided that, as of
the end of the initial Lease Term, Tenant is not in default, as described
above, under the Lease, the initial Lease Term shall be extended for the
Option Term. The rights contained in this Article 30 shall be personal to
the original Tenant executing the Lease and any Affiliate and may only be
exercised by the original Tenant or Affiliate, as the case may be, (and not
any other assignee, sublessee or other transferee of Tenant's interest in
the Lease) if the original Tenant or Affiliate, as the case may be, occupies
the entire Premises as of the date of the Exercise Notice.
30.2 Option Rent. The annual base rent payable by Tenant during the
Option Term (the "Option Rent") shall be equal to the greater of (i) the
Base Rent being paid by Tenant immediately prior to the Option Term, and
(ii) ninety-five percent (95%) of the "Fair Market Rent" which for purposes
hereof means the annual basic rent, taking into account whether the then
current market is using leases based on a base year, an expense stop, or a
triple net, at which tenants, as of the commencement of the Option Term, are
leasing non-sublease space comparable in size, location and quality to the
Premises (and including comparable tenant improvements therein) for a
comparable term, located in comparable first-class office "flex" buildings
with prudent ownership (with management practices comparable with
institutional ownership), in the vicinity of the Project (the "Project
Area"), taking into consideration all concessions and inducements generally
being granted at such time. All other terms and conditions of the Lease
shall apply throughout the Option Term; however, any obligation of Landlord
to construct tenant improvements or provide an allowance shall not apply
during the Option Term, except to the extent such provisions are included in
the definition of Fair Market Rent, and Tenant shall, in no
45
event, have the option to extend the initial Lease Term beyond the Option
Term described in Section 30.1 above.
30.3 Exercise of Options. The option contained in this Article 30
shall be exercised by Xxxxxx, if at all, on or before the date (the
"Exercise Date") which is at least nine (9) months prior to the expiration
of the initial Lease Term by delivering written notice ("Exercise Notice")
thereof to Landlord. Tenant may notify Landlord earlier than the Exercise
Date of its intent to exercise its option and Landlord will work with Tenant
to establish the Fair Market Rent at that time. After the Exercise Date,
the parties shall follow the procedure and the Fair Market Rent shall be
determined as set forth in Section 30.4 below. Tenant's failure to deliver
the Exercise Notice on or before the Exercise Date shall be deemed to
constitute Tenant's waiver of its extension right hereunder.
30.4 Determination of Option Rent. Landlord and Xxxxxx shall attempt
to agree upon the Fair Market Rent, using their best good-faith efforts. If
Landlord and Tenant fail to reach agreement upon Fair Market Rent within
fifteen (15) business days following Xxxxxx's delivery of the Exercise
Notice (the "Outside Agreement Date"), then each party shall submit to the
other party a separate written determination of the Fair Market Rent within
fifteen (15) business days after the Outside Agreement Date, and such
determinations shall be submitted to arbitration in accordance with
Sections 30.4.1 through 30.4.7 below. Failure of Tenant or Landlord to
submit a written determination of the Fair Market Rent within such fifteen
(15) business day period shall conclusively be deemed to be the non-
determining party's approval of the Fair Market Rent submitted within such
fifteen (15) business day period by the other party.
30.4.1 Landlord and Tenant shall each appoint one arbitrator who
shall by profession be an independent real estate broker who shall
individually have no ongoing business relationship with Tenant or Landlord
and who shall have been active over the eight (8) year period ending on the
date of such appointment in the leasing of first-class office "flex"
buildings in the Project Area. The determination of the arbitrators shall
be limited solely to the issue of whether Landlord's or Tenant's submitted
Fair Market Rent is the closest to the actual Fair Market Rent as determined
by the arbitrators, taking into account the requirements of Section 30.2.
Each such arbitrator shall be appointed within thirty (30) days after the
Outside Agreement Date.
30.4.2 The two (2) arbitrators so appointed shall within ten (10)
business days of the date of the appointment of the last appointed
arbitrator agree upon and appoint a third arbitrator who shall be qualified
under the same criteria as set forth hereinabove for qualification of the
initial two (2) arbitrators.
30.4.3 The three (3) arbitrators shall within thirty (30) days
after the appointment of the third arbitrator reach a decision as to whether
Landlord's or Tenant's submitted Fair Market Rent is the closest to the
actual Fair Market Rent, and shall use the closest of Landlord's or Tenant's
submitted Fair Market Rent as the Fair Market Rent for purposes of
calculating the Option Rent, and shall notify Landlord and Tenant thereof.
46
30.4.4 The decision of the majority of the three (3) arbitrators
shall be binding upon Landlord and Tenant.
30.4.5 If either Landlord or Tenant fails to appoint an
arbitrator within thirty (30) days after the Outside Agreement Date, the
arbitrator appointed by one of them shall reach a decision, notify Landlord
and Tenant thereof, and such arbitrator's decision shall be binding upon
Landlord and Tenant.
30.4.6 If the two (2) arbitrators fail to agree upon and appoint
a third arbitrator within the time period provided in Section 30.2 above,
then the parties shall mutually select the third arbitrator, who shall be
qualified under the same criteria as set forth in Section 30.4.1 above. If
Landlord and Tenant are unable to agree upon the third arbitrator within ten
(10) days, then either party may, upon at least five (5) days' prior written
notice to the other party, request the Presiding Judge of the Alameda County
Superior Court, acting in his private and nonjudicial capacity, to appoint
the third arbitrator who shall be qualified under the same criteria as set
forth in Section 30.4.1. Following the appointment of the third arbitrator,
the panel of arbitrators shall within thirty (30) days thereafter reach a
decision as to whether Landlord's or Tenant's submitted Fair Market Rent
shall be used and shall notify Landlord and Tenant thereof.
30.4.7 The cost of the arbitrators and the arbitration proceeding
shall be paid by the non-prevailing party.
47
IN WITNESS WHEREOF, Landlord and Xxxxxx have caused this Lease to be
executed the day and date first above written.
"Landlord":
XXXXX CREEK THREE TRUST,
a Maryland real estate investment trust
By: /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Its: Vice President
"Tenant":
AEHR TEST SYSTEMS,
a California corporation,
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Its: VP of Operations
Date: 8/3/99
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Its: CEO & President
Date: 8/3/99
48
EXHIBIT A-1
XXXXX CREEK BUSINESS PARK
OUTLINE OF PREMISES
[ DIAGRAM SHOWING AREA OF PREMISE LEASED BY TENANT ]
EXHIBIT A-2
XXXXX CREEK BUSINESS PARK
[ DIAGRAM SHOWING XXXXX CREEK BUSINESS PARK ]
EXHIBIT B
XXXXX CREEK BUSINESS PARK
TENANT WORK LETTER
This Tenant Work Letter shall set forth the terms and conditions
relating to the construction of the Premises. This Tenant Work Letter is
essentially organized chronologically and addresses the issues of the
construction of the Premises, in sequence, as such issues will arise during
the actual construction of the Premises. All references in this Tenant Work
Letter to Articles or Sections of "this Lease" shall mean the relevant
portions of the Multi-Tenant Office Triple Net Lease between XXXXX CREEK
THREE TRUST, a Maryland real estate investment trust, as Landlord, and AEHR
TEST SYSTEMS, a California corporation, as Tenant, dated August ___, 1999 to
which this Tenant Work Letter is attached as Exhibit B, and all references
in this Tenant Work Letter to Sections of "this Tenant Work Letter" shall
mean the relevant portions of Sections 1 through 5 of this Tenant Work
Letter.
SECTION 1
DELIVERY OF THE PREMISES AND BASE BUILDING
1.1 Base Building as Constructed by Landlord. Upon the full execution
and delivery of this Lease by Landlord and Tenant, Landlord shall deliver
the Premises and "Base Building," as that term is defined below, to Tenant,
and Tenant shall accept the Premises and Base Building from Landlord in
their presently existing, "as-is" condition. Tenant shall accept the Base
Building in its presently existing, as is condition, which Base Building
shall include only the following items:
1.1.1 Concrete tilt-up.
1.1.2 Slab on grade.
1.1.3 Building standard heating, ventilating and air conditioning
in its "AS-IS" condition) and air-conditioning service ["HVAC"]).
1.1.4 Building, closed and weathered-proof.
1.1.5 Utilities, stubbed at the meters.
1.1.6 Ceiling tiles in their "AS-IS" condition.
1.1.7 Building standard lighting in its "AS-IS" condition
EXHIBIT B
Page 1
SECTION 2
TENANT IMPROVEMENTS
2.1 Improvement Allowances.
2.1.1 Tenant Improvement Allowance. Tenant shall be entitled to
a one-time tenant improvement allowance (the "Tenant Improvement Allowance")
in the amount of in the amount of One Million Two Hundred Eighty Two
Thousand Two Hundred Twenty Five Dollars ($1,282,225.00) (which is equal to
Twenty-Five Dollars ($25.00) per rentable square foot of the Premises) for
the costs relating to the initial design and construction of Tenant's
improvements, which are permanently affixed to the Premises (the "Tenant
Improvements"). In no event shall Landlord be obligated to make
disbursements pursuant to this Tenant Work Letter in a total amount which
exceeds the Tenant Improvement Allowance (except as provided in
Section 2.1.2 below regarding the Additional Allowance). The Tenant
Improvement Allowance and any such Additional Allowance provided by Landlord
to Tenant shall be sometimes collectively referred to herein as the
"Allowances."
2.1.2 Additional Allowance. If the cost of the Tenant
Improvement Allowance Items exceeds the Tenant Improvement Allowance, then
Landlord shall make available to Tenant, at Tenant's sole option, an
"Additional Allowance" in the amount of up to, but not exceeding Six Hundred
Fifteen Thousand Four Hundred Sixty Eight and No/100 Dollars ($615,468.00)
(which is Twelve Dollars ($12.00) per rentable square foot of the Premises)
(the "Additional Allowance"). Tenant shall notify Landlord of Tenant's
election to receive the Additional Allowance on or before the date Tenant
commences construction of the Tenant Improvements. If Tenant elects to
receive all or any portion of the Additional Allowance, then Tenant shall,
during the initial Lease Term, pay to Landlord the "Amortization Rent",
which shall be that amount which will fully amortize, over the initial Lease
Term, together with interest at the rate of ten percent (10%) per annum, the
portion of the Additional Allowance utilized by Tenant to pay for the cost
of the Tenant Improvement Allowance Items which exceeds the Tenant
Improvement Allowance. Each such monthly payment of the Amortization Rent
shall be paid by Tenant to Landlord or Landlord's agent at the management
office of the Building or such other place as Landlord may from time to time
designate in writing, in lawful money of the United States of America,
without notice or demand, on the first day of each month during the
Amortization Period. In the event that the Lease shall terminate for any
reason prior to the expiration of the initial Lease Term including, without
limitation, as a result of a default by Tenant under the Lease, Tenant shall
pay to Landlord (which payment shall be part of the damages which Landlord
is entitled to recover as a result of any default by Tenant under the Lease)
the unamortized balanced of the Amortization Rent (i.e., the unamortized
balance of the Additional Allowance provided to Tenant set forth
hereinabove) which has not been paid by Tenant to Landlord as of the date of
such termination pursuant to the foregoing provisions of this Section 2.1.2.
In addition, notwithstanding any of the provisions of the Lease to the
contrary, in no event shall the Amortization Rent be abated or offset for
any reason whatsoever.
EXHIBIT B
Page 2
2.2 Disbursement of the Allowances.
2.2.1 Tenant Improvement Allowance Items. Except as otherwise
set forth in this Tenant Work Letter, the Allowances shall be disbursed by
Landlord only for the following items and costs (collectively the "Tenant
Improvement Allowance Items"):
2.2.1.1 Payment of the fees of the "Architect", and the
"Engineers," as those terms are defined in Section 3.1 of this Tenant Work
Letter and the "Project Manager" (as defined in Section 4.2.2.1 below),
which fees shall, notwithstanding anything to the contrary contained in this
Tenant Work Letter, not exceed an aggregate amount equal to $3.50 per usable
square foot of the Premises, and payment of the fees incurred by, and the
cost of documents and materials supplied by, Landlord and Landlord's
consultants in connection with the preparation and review of the
"Construction Drawings," as that term is defined in Section 3.1 of this
Tenant Work Letter;
2.2.1.2 The payment of plan check, permit and license fees
relating to construction of the Tenant Improvements;
2.2.1.3 The cost of construction of the Tenant Improvements,
including, without limitation, testing and inspection costs, freight
elevator usage, hoisting and trash removal costs, and contractors' fees and
general conditions;
2.2.1.4 The cost of any changes in the Base Building when
such changes are required by the Construction Drawings (including if such
changes are due to the fact that such work is prepared on an unoccupied
basis), such cost to include all direct architectural and/or engineering
fees and expenses incurred in connection therewith;
2.2.1.5 The cost of any changes to the Construction Drawings
or Tenant Improvements required by all applicable building codes (the
"Code");
2.2.1.6 The cost of the "Coordination Fee," as that term is
defined in Section 4.2.2 of this Tenant Work Letter;
2.2.1.7 Sales and use taxes and Title 24 fees; and
2.2.1.8 All other costs to be expended by Landlord in
connection with the construction of the Tenant Improvements.
2.2.2 Disbursement of the Allowances. During the construction of
the Tenant Improvements, Landlord shall make monthly disbursements of the
Allowances for Tenant Improvement Allowance Items for the benefit of Tenant
and shall authorize the release of monies for the benefit of Tenant as
follows.
2.2.2.1 Monthly Disbursements. On or before the fifth (5th)
day of each calendar month during the construction of the Tenant
Improvements (or such other date as
EXHIBIT B
Page 3
Landlord may designate), Tenant shall deliver to Landlord: (i) a request
for payment of the "Contractor," as that term is defined in Section 4.1 of
this Tenant Work Letter, approved by Tenant, in a form to be provided by
Landlord, showing the schedule, by trade, of percentage of completion of the
Tenant Improvements in the Premises, detailing the portion of the work
completed and the portion not completed; (ii) invoices from all of "Tenant's
Agents," as that term is defined in Section 4.1.2 of this Tenant Work
Letter, for labor rendered and materials delivered to the Premises; (iii)
executed mechanic's lien releases from all of Tenant's Agents which shall
comply with the appropriate provisions, as reasonably determined by
Landlord, of California Civil Code Section 3262(d); and (iv) all other
information reasonably requested by Landlord. Tenant's request for payment
shall be deemed Xxxxxx's acceptance and approval of the work furnished
and/or the materials supplied as set forth in Tenant's payment request.
Thereafter, Landlord shall deliver a check to Tenant made jointly payable to
Contractor and Tenant in payment of the lesser of: (A) the amounts so
requested by Tenant, as set forth in this Section 2.2.2.1, above, less a ten
percent (10%) retention (the aggregate amount of such retentions to be known
as the "Final Retention"), and (B) the balance of any remaining available
portion of the Allowances (not including the Final Retention), provided that
Landlord does not dispute any request for payment based on non-compliance of
any work with the "Approved Working Drawings," as that term is defined in
Section 3.4 of this Tenant Work Letter, below, or due to any substandard
work, or for any other reason. Landlord's payment of such amounts shall not
be deemed Landlord's approval or acceptance of the work furnished or
materials supplied as set forth in Tenant's payment request.
2.2.2.2 Final Retention. Subject to the provisions of this
Tenant Work Letter, a check for the Final Retention payable jointly to
Tenant and Contractor shall be delivered by Landlord to Tenant following the
completion of construction of the Premises, provided that (i) Tenant
delivers to Landlord properly executed mechanics lien releases in compliance
with both California Civil Code Section 3262(d)(2) and either
Section 3262(d)(3) or Section 3262(d)(4), (ii) Landlord has determined that
no substandard work exists which adversely affects the mechanical,
electrical, plumbing, heating, ventilating and air conditioning, life-safety
or other systems of the Building, the curtain wall of the Building, the
structure or exterior appearance of the Building, or any other tenant's use
of such other tenant's leased premises in the Building and (iii) Architect
delivers to Landlord a certificate, in a form reasonably acceptable to
Landlord, certifying that the construction of the Tenant Improvements in the
Premises has been substantially completed.
2.2.2.3 Other Terms. Landlord shall only be obligated to
make disbursements from the Allowances to the extent costs are incurred by
Tenant for Tenant Improvement Allowance Items. All Tenant Improvement
Allowance Items for which the Allowances has been made available shall be
deemed Landlord's property under the terms of this Lease.
2.3 Standard Tenant Improvement Package. Landlord has established
specifications (the "Specifications") for the Building standard components
to be used in the construction of the
EXHIBIT B
Page 4
Tenant Improvements in the Premises (collectively, the "Standard Improvement
Package"), which Specifications are attached hereto as Schedule "1". Unless
otherwise approved in writing by Landlord, the quality of Tenant
Improvements shall be equal to or of greater quality than the quality of the
Specifications, provided that the Tenant Improvements shall comply with
certain Specifications as designated by Landlord. Landlord may make changes
to the Specifications for the Standard Improvement Package from time to
time.
SECTION 3
CONSTRUCTION DRAWINGS
3.1 Selection of Architect/Construction Drawings. Tenant shall retain
the architect/space planner as reasonably approved by Landlord (the
"Architect") to prepare the "Construction Drawings," as that term is defined
in this Section 3.1. Tenant shall retain an engineering consultant
reasonably approved by Landlord (provided Tenant shall use the engineering
firm of C Plus D Engineers for all structural work on the Building) (the
"Engineers") to prepare all plans and engineering working drawings relating
to the structural, mechanical, electrical, plumbing, HVAC, lifesafety, and
sprinkler work in the Premises, which work is not part of the Base Building.
The plans and drawings to be prepared by Architect and the Engineers
hereunder shall be known collectively as the "Construction Drawings." All
Construction Drawings shall comply with the drawing format and
specifications determined by Landlord, and shall be subject to Landlord's
approval. Tenant and Architect shall verify, in the field, the dimensions
and conditions as shown on the relevant portions of the base building plans,
and Tenant and Architect shall be solely responsible for the same, and
Landlord shall have no responsibility in connection therewith. Landlord's
review of the Construction Drawings as set forth in this Section 3, shall be
for its sole purpose and shall not imply Landlord's review of the same, or
obligate Landlord to review the same, for quality, design, Code compliance
or other like matters. Accordingly, notwithstanding that any Construction
Drawings are reviewed by Landlord or its space planner, architect, engineers
and consultants, and notwithstanding any advice or assistance which may be
rendered to Tenant by Landlord or Landlord's space planner, architect,
engineers, and consultants, Landlord shall have no liability whatsoever in
connection therewith and shall not be responsible for any omissions or
errors contained in the Construction Drawings, and Tenant's waiver and
indemnity set forth in this Lease shall specifically apply to the
Construction Drawings.
3.2 Final Space Plan. Tenant shall supply Landlord with four (4)
copies signed by Tenant of its final space plan for the Premises before any
architectural working drawings or engineering drawings have been commenced.
The final space plan (the "Final Space Plan") shall include a layout and
designation of all offices, rooms and other partitioning, their intended
use, and equipment to be contained therein. Landlord may request
clarification or more specific drawings for special use items not included
in the Final Space Plan. Landlord shall advise Tenant within five (5)
business days after Xxxxxxxx's receipt of the Final Space Plan for the
Premises if the same is unsatisfactory or incomplete in any respect. If
Tenant is so advised,
EXHIBIT B
Page 5
Tenant shall promptly cause the Final Space Plan to be revised to correct
any deficiencies or other matters Landlord may reasonably require.
3.3 Final Working Drawings. After the Final Space Plan has been
approved by Landlord, Tenant shall supply the Engineers with a complete
listing of standard and non-standard equipment and specifications,
including, without limitation, B.T.U. calculations, electrical requirements
and special electrical receptacle requirements for the Premises, to enable
the Engineers and the Architect to complete the "Final Working Drawings" (as
that term is defined below) in the manner as set forth below. Upon the
approval of the Final Space Plan by Landlord and Tenant, Tenant shall
promptly cause the Architect and the Engineers to complete the architectural
and engineering drawings for the Premises, and Architect shall compile a
fully coordinated set of architectural, structural, mechanical, electrical
and plumbing working drawings in a form which is complete to allow
subcontractors to bid on the work and to obtain all applicable permits
(collectively, the "Final Working Drawings") and shall submit the same to
Landlord for Landlord's approval. Tenant shall supply Landlord with four
(4) copies signed by Tenant of such Final Working Drawings. Landlord shall
advise Tenant within five (5) business days after Xxxxxxxx's receipt of the
Final Working Drawings for the Premises if the same is unsatisfactory or
incomplete in any respect. If Tenant is so advised, Xxxxxx shall
immediately revise the Final Working Drawings in accordance with such review
and any disapproval of Landlord in connection therewith.
3.4 Approved Working Drawings. The Final Working Drawings shall be
approved by Landlord (the "Approved Working Drawings") prior to the
commencement of construction of the Premises by Tenant. After approval by
Landlord of the Final Working Drawings, Tenant may submit the same to the
appropriate municipal authorities for all applicable building permits.
Tenant hereby agrees that neither Landlord nor Landlord's consultants shall
be responsible for obtaining any building permit or certificate of occupancy
for the Premises and that obtaining the same shall be Tenant's
responsibility; provided, however, that Landlord shall cooperate with Tenant
in executing permit applications and performing other ministerial acts
reasonably necessary to enable Tenant to obtain any such permit or
certificate of occupancy. No changes, modifications or alterations in the
Approved Working Drawings may be made without the prior written consent of
Landlord, which consent may not be unreasonably withheld.
SECTION 4
CONSTRUCTION OF THE TENANT IMPROVEMENTS
4.1 Tenant's Selection of Contractors.
4.1.1 The Contractor. A general contractor shall be retained by
Tenant to construct the Tenant Improvements. Such general contractor
("Contractor") shall be selected by Xxxxxx from a list of general
contractors supplied by Xxxxxxxx, and Tenant shall deliver to Landlord
notice of its selection of the Contractor upon such selection.
EXHIBIT B
Page 6
4.1.2 Tenant's Agents. All subcontractors, laborers,
materialmen, and suppliers used by Tenant (such subcontractors, laborers,
materialmen, and suppliers, and the Contractor to be known collectively as
"Tenant's Agents") must be approved in writing by Landlord, which approval
shall not be unreasonably withheld or delayed. If Landlord does not approve
any of Tenant's proposed subcontractors, laborers, materialmen or suppliers,
Tenant shall submit other proposed subcontractors, laborers, materialmen or
suppliers for Landlord's written approval.
4.2 Construction of Tenant Improvements by Xxxxxx's Agents.
4.2.1 Construction Contract; Cost Budget. Prior to Xxxxxx's
execution of the construction contract and general conditions with
Contractor (the "Contract"), Tenant shall submit the Contract to Landlord
for its approval, which approval shall not be unreasonably withheld or
delayed. Prior to the commencement of the construction of the Tenant
Improvements, and after Xxxxxx has accepted all bids for the Tenant
Improvements, Tenant shall provide Landlord with a detailed breakdown, by
trade, of the final costs to be incurred or which have been incurred, as set
forth more particularly in Sections 2.2.1.1 through 2.2.1.8 of this Tenant
Work Letter, above, in connection with the design and construction of the
Tenant Improvements to be performed by or at the direction of Tenant or the
Contractor, which costs form a basis for the amount of the Contract (the
"Final Costs"). Prior to the commencement of construction of the Tenant
Improvements, Tenant shall supply Landlord with cash in an amount (the
"Over-Allowance Amount") equal to the difference between the Final Costs
exceed the sum of (i) the Tenant Improvement Allowance, plus (ii) any
Additional Allowance elected to be received by Tenant pursuant to
Section 2.1.2 above). The Over-Allowance Amount shall be disbursed by
Landlord prior to the disbursement of any of the then remaining portion of
the Allowances, and such disbursement shall be pursuant to the same
procedure as the Allowances. In the event that, after the Final Costs have
been delivered by Tenant to Landlord, the costs relating to the design and
construction of the Tenant Improvements shall change, any additional costs
necessary to such design and construction in excess of the Final Costs,
shall be paid by Tenant to Landlord immediately as an addition to the Over-
Allowance Amount or at Landlord's option, Tenant shall make payments for
such additional costs out of its own funds, but Tenant shall continue to
provide Landlord with the documents described in Sections 2.2.2.1 (i), (ii),
(iii) and (iv) of this Tenant Work Letter, above, for Landlord's approval,
prior to Tenant paying such costs.
4.2.2 Tenant's Agents.
4.2.2.1 Xxxxxxxx's General Conditions for Xxxxxx's Agents and
Tenant Improvement Work. Tenant's and Xxxxxx's Agent's construction of the
Tenant Improvements shall comply with the following: (i) the Tenant
Improvements shall be constructed in strict accordance with the Approved
Working Drawings; (ii) Tenant's Agents shall submit schedules of all work
relating to the Tenant's Improvements to Contractor and Contractor shall,
within five (5) business days of receipt thereof, inform Xxxxxx's Agents of
any changes which are necessary thereto, and Xxxxxx's Agents shall adhere to
such corrected schedule; and (iii) Tenant shall abide
EXHIBIT B
Page 7
by all rules made by Xxxxxxxx's Building manager with respect to the use of
freight, loading dock and service elevators, storage of materials,
coordination of work with the contractors of other tenants, and any other
matter in connection with this Tenant Work Letter, including, without
limitation, the construction of the Tenant Improvements. Tenant shall pay a
logistical coordination fee (the "Coordination Fee") to Landlord or
Landlord's designated Project Manager (the "Project Manager") in an amount
equal to the product of (i) two percent (2%) and (ii) the sum of the Tenant
Improvement Allowance, any Additional Allowance drawn by Tenant pursuant to
Section 2.2.1 above, the Over-Allowance Amount, as such amount may be
increased hereunder, and any other amounts expended by Tenant in connection
with the design and construction of the Tenant Improvements, which
Coordination Fee shall be for services relating to the coordination of the
construction of the Tenant Improvements.
4.2.2.2 Indemnity. Tenant's indemnity of Landlord as set
forth in this Lease shall also apply with respect to any and all costs,
losses, damages, injuries and liabilities related in any way to any act or
omission of Tenant or Tenant's Agents, or anyone directly or indirectly
employed by any of them, or in connection with Xxxxxx's non-payment of any
amount arising out of the Tenant Improvements and/or Tenant's disapproval of
all or any portion of any request for payment. Such indemnity by Xxxxxx, as
set forth in this Lease, shall also apply with respect to any and all costs,
losses, damages, injuries and liabilities related in any way to Landlord's
performance of any ministerial acts reasonably necessary (i) to permit
Tenant to complete the Tenant Improvements, and (ii) to enable Tenant to
obtain any building permit or certificate of occupancy for the Premises.
4.2.2.3 Requirements of Xxxxxx's Agents. Each of Tenant's
Agents shall guarantee to Tenant and for the benefit of Landlord that the
portion of the Tenant Improvements for which it is responsible shall be free
from any defects in workmanship and materials for a period of not less than
one (1) year from the date of completion thereof. Each of Tenant's Agents
shall be responsible for the replacement or repair, without additional
charge, of all work done or furnished in accordance with its contract that
shall become defective within one (1) year after the later to occur of (i)
completion of the work performed by such contractor or subcontractors and
(ii) the Lease Commencement Date. The correction of such work shall
include, without additional charge, all additional expenses and damages
incurred in connection with such removal or replacement of all or any part
of the Tenant Improvements, and/or the Building and/or common areas that may
be damaged or disturbed thereby. All such warranties or guarantees as to
materials or workmanship of or with respect to the Tenant Improvements shall
be contained in the Contract or subcontract and shall be written such that
such guarantees or warranties shall inure to the benefit of both Landlord
and Tenant, as their respective interests may appear, and can be directly
enforced by either. Tenant covenants to give to Landlord any assignment or
other assurances which may be necessary to effect such right of direct
enforcement.
4.2.2.4 Insurance Requirements.
EXHIBIT B
Page 8
4.2.2.4.1 General Coverages. All of Tenant's Agents
shall carry worker's compensation insurance covering all of their respective
employees, and shall also carry public liability insurance, including
property damage, all with limits, in form and with companies as are required
to be carried by Tenant as set forth in this Lease.
4.2.2.4.2 Special Coverages. Tenant shall carry or cause
to be carried "Builder's All Risk" insurance in an amount approved by
Landlord covering the construction of the Tenant Improvements, and such
other insurance as Landlord may require, it being understood and agreed that
the Tenant Improvements shall be insured by Tenant pursuant to this Lease
immediately upon completion thereof. Such insurance shall be in amounts and
shall include such extended coverage endorsements as may be reasonably
required by Landlord including, but not limited to, the requirement that all
of Tenant's Agents shall carry excess liability and Products and Completed
Operation Coverage insurance, each in amounts not less than $500,000 per
incident, $1,000,000 in aggregate, and in form and with companies as are
required to be carried by Tenant as set forth in this Lease.
4.2.2.4.3 General Terms. Certificates for all insurance
carried pursuant to this Section 4.2.2.4 shall be delivered to Landlord
before the commencement of construction of the Tenant Improvements and
before the Contractor's equipment is moved onto the site. All such policies
of insurance must contain a provision that the company writing said policy
will give Landlord thirty (30) days prior written notice of any cancellation
or lapse of the effective date or any reduction in the amounts of such
insurance. In the event that the Tenant Improvements are damaged by any
cause during the course of the construction thereof, Tenant shall
immediately repair the same at Tenant's sole cost and expense. Tenant's
Agents shall maintain all of the foregoing insurance coverage in force until
the Tenant Improvements are fully completed and accepted by Landlord, except
for any Products and Completed Operation Coverage insurance required by
Landlord, which is to be maintained for ten (10) years following completion
of the work and acceptance by Landlord and Tenant. All policies carried
under this Section 4.2.2.4 shall insure Landlord and Tenant, as their
interests may appear, as well as Contractor and Tenant's Agents. All
insurance, except Workers' Compensation, maintained by Tenant's Agents shall
preclude subrogation claims by the insurer against anyone insured
thereunder. Such insurance shall provide that it is primary insurance as
respects the owner and that any other insurance maintained by owner is
excess and noncontributing with the insurance required hereunder. The
requirements for the foregoing insurance shall not derogate from the
provisions for indemnification of Landlord by Tenant under Section 4.2.2.2
of this Tenant Work Letter. Landlord may, in its discretion, require Tenant
to obtain a lien and completion bond or some alternate form of security
satisfactory to Landlord in an amount sufficient to ensure the lien-free
completion of the Tenant Improvements and naming Landlord as a co-obligee.
4.2.3 Governmental Compliance. The Tenant Improvements shall
comply in all respects with the following: (i) the Code and other state,
federal, city or quasi-governmental laws, codes, ordinances and regulations,
as each may apply according to the rulings of the controlling public
official, agent or other person; (ii) applicable standards of the American
EXHIBIT B
Page 9
Insurance Association (formerly, the National Board of Fire Underwriters)
and the National Electrical Code; and (iii) building material manufacturer's
specifications.
4.2.4 Inspection by Landlord. Landlord shall have the right to
inspect the Tenant Improvements at all times, provided however, that
Xxxxxxxx's failure to inspect the Tenant Improvements shall in no event
constitute a waiver of any of Landlord's rights hereunder nor shall
Landlord's inspection of the Tenant Improvements constitute Landlord's
approval of the same. Should Landlord disapprove any portion of the Tenant
Improvements, Landlord shall notify Tenant in writing of such disapproval
and shall specify the items disapproved. Any defects or deviations in,
and/or disapproval by Landlord of, the Tenant Improvements shall be
rectified by Tenant at no expense to Landlord, provided however, that in the
event Landlord determines that a defect or deviation exists or disapproves
of any matter in connection with any portion of the Tenant Improvements and
such defect, deviation or matter might adversely affect the mechanical,
electrical, plumbing, heating, ventilating and air conditioning or life-
safety systems of the Building, the structure or exterior appearance of the
Building or any other tenant's use of such other tenant's leased premises,
Landlord may, take such action as Landlord deems necessary, at Tenant's
expense and without incurring any liability on Landlord's part, to correct
any such defect, deviation and/or matter, including, without limitation,
causing the cessation of performance of the construction of the Tenant
Improvements until such time as the defect, deviation and/or matter is
corrected to Landlord's satisfaction.
4.2.5 Meetings. Commencing upon the execution of this Lease,
Tenant shall hold weekly meetings at a reasonable time, with the Architect
and the Contractor regarding the progress of the preparation of Construction
Drawings and the construction of the Tenant Improvements, which meetings
shall be held at a location designated by Landlord, and Landlord and/or its
agents shall receive prior notice of, and shall have the right to attend,
all such meetings, and, upon Xxxxxxxx's request, certain of Tenant's Agents
shall attend such meetings. In addition, minutes shall be taken at all such
meetings, a copy of which minutes shall be promptly delivered to Landlord.
One such meeting each month shall include the review of Contractor's current
request for payment.
4.3 Notice of Completion; Copy of Record Set of Plans. Within ten (10)
days after completion of construction of the Tenant Improvements, Tenant
shall cause a Notice of Completion to be recorded in the office of the
Recorder of the county in which the Building is located in accordance with
Section 3093 of the Civil Code of the State of California or any successor
statute, and shall furnish a copy thereof to Landlord upon such recordation.
If Tenant fails to do so, Xxxxxxxx may execute and file the same on behalf
of Xxxxxx as Xxxxxx's agent for such purpose, at Xxxxxx's sole cost and
expense. At the conclusion of construction, (i) Tenant shall cause the
Architect and Contractor (A) to update the Approved Working Drawings as
necessary to reflect all changes made to the Approved Working Drawings
during the course of construction, (B) to certify to the best of their
knowledge that the "record-set" of as-built drawings are true and correct,
which certification shall survive the expiration or termination of this
Lease, and (C) to deliver to Landlord two (2) sets of copies of such record
set of drawings
EXHIBIT B
Page 10
within ninety (90) days following issuance of a certificate of occupancy for
the Premises, and (ii) Tenant shall deliver to Landlord a copy of all
warranties, guaranties, and operating manuals and information relating to
the improvements, equipment, and systems in the Premises.
SECTION 5
MISCELLANEOUS
5.1 Tenant's Representative. Tenant has designated Xxxxx Xxxxxxxxx
Xxxxxxx & Xxxxxxxxx as its sole representative with respect to the matters
set forth in this Tenant Work Letter, who shall have full authority and
responsibility to act on behalf of the Tenant as required in this Tenant
Work Letter.
5.2 Landlord's Representative. Xxxxxxxx has designated Xxxxx Xxxx as
its sole representatives with respect to the matters set forth in this
Tenant Work Letter, who, until further notice to Tenant, shall have full
authority and responsibility to act on behalf of the Landlord as required in
this Tenant Work Letter.
5.3 Time of the Essence in This Tenant Work Letter. Unless otherwise
indicated, all references herein to a "number of days" shall mean and refer
to calendar days. If any item requiring approval is timely disapproved by
Landlord, the procedure for preparation of the document and approval thereof
shall be repeated until the document is approved by Landlord.
5.4 Tenant's Lease Default. Notwithstanding any provision to the
contrary contained in this Lease, if an event of default as described in the
Lease or this Tenant Work Letter has occurred at any time on or before the
Substantial Completion of the Premises, then (i) in addition to all other
rights and remedies granted to Landlord pursuant to this Lease, Landlord
shall have the right to withhold payment of all or any portion of the
Allowances and/or Landlord may cause Contractor to cease the construction of
the Premises (in which case, Tenant shall be responsible for any delay in
the substantial completion of the Premises caused by such work stoppage),
and (ii) all other obligations of Landlord under the terms of this Tenant
Work Letter shall be forgiven until such time as such default is cured
pursuant to the terms of this Lease (in which case, Tenant shall be
responsible for any delay in the substantial completion of the Premises
caused by such inaction by Landlord).
EXHIBIT B
Page 11
EXHIBIT C
XXXXX CREEK BUSINESS PARK
NOTICE OF LEASE TERM DATES
To: _______________________
_______________________
_______________________
_______________________
Re: Multi-Tenant Office Triple Net Lease dated August ___, 1999
between XXXXX CREEK THREE TRUST, a Maryland real estate investment trust
("Landlord"), and AEHR TEST SYSTEMS, a California corporation ("Tenant")
concerning Suite __ in the building located at 000 Xxxx Xxxxxxx, Xxxxxxx,
Xxxxxxxxxx.
Ladies and Gentlemen:
In accordance with the Office Lease (the "Lease"), we wish to advise
you and/or confirm as follows:
1. The Lease Term shall commence on or has commenced on __________ for a
term of _____________ ending on _______________.
2. Rent commenced to accrue on ___________, in the amount of __________.
3. If the Lease Commencement Date is other than the first day of the
month, the first billing will contain a pro rata adjustment. Each billing
thereafter, with the exception of the final billing, shall be for the full
amount of the monthly installment as provided for in the Lease.
4. Your rent checks should be made payable to ____________ at __________.
5. The exact number of rentable square feet within the Premises is
__________ square feet.
6. Tenant's Share as adjusted based upon the exact number of usable
square feet within the Premises is _____________%.
EXHIBIT C
Page 1
"Landlord":
XXXXX CREEK THREE TRUST,
a Maryland real estate investment trust
By: ________________________
Its: ____________________
Agreed to and Accepted as
of _____________, 19__.
"Tenant":
AEHR TEST SYSTEMS,
a California corporation
By: ______________________
Its: ___________________
EXHIBIT C
Page 2
EXHIBIT D
SCOTT CREEK BUSINESS PARK
RULES AND REGULATIONS
Tenant shall faithfully observe and comply with the following Rules and
Regulations. Landlord shall not be responsible to Tenant for the
nonperformance of any of said Rules and Regulations by or otherwise with
respect to the acts or omissions of any other tenants or occupants of the
Project. In the event of any conflict between the Rules and Regulations and
the other provisions of this Lease, the latter shall control.
1. Tenant shall not alter any lock or install any new or additional
locks or bolts on any doors or windows of the Premises without obtaining
Landlord's prior written consent. Tenant shall bear the cost of any lock
changes or repairs required by Tenant. Two keys will be furnished by
Landlord for the Premises, and any additional keys required by Tenant must
be obtained from Landlord at a reasonable cost to be established by
Landlord. Upon the termination of this Lease, Tenant shall restore to
Landlord all keys of stores, offices, and toilet rooms, either furnished to,
or otherwise procured by, Tenant and in the event of the loss of keys so
furnished, Tenant shall pay to Landlord the cost of replacing same or of
changing the lock or locks opened by such lost key if Landlord shall deem it
necessary to make such changes.
2. Tenant, its employees and agents must be sure that the doors to the
Building are securely closed and locked when leaving the Premises if it is
after the normal hours of business for the Building. In case of invasion,
mob, riot, public excitement, or other commotion, Landlord reserves the
right to prevent access to the Building or the Project during the
continuance thereof by any means it deems appropriate for the safety and
protection of life and property.
3. The requirements of Tenant will be attended to only upon application
at the management office for the Project or at such office location
designated by Landlord. Employees of Landlord shall not perform any work or
do anything outside their regular duties unless under special instructions
from Landlord.
4. No sign, advertisement, notice or handbill shall be exhibited,
distributed, painted or affixed by Tenant on any part of the Premises or the
Building without the prior written consent of the Landlord. Tenant shall
not disturb, solicit, peddle, or canvass any occupant of the Project and
shall cooperate with Landlord and its agents of Landlord to prevent same.
5. The toilet rooms, urinals, wash bowls and other apparatus shall not
be used for any purpose other than that for which they were constructed, and
no foreign substance of any kind whatsoever shall be thrown therein. The
expense of any breakage, stoppage or damage
EXHIBIT D
Page 1
resulting from the violation of this rule shall be borne by the tenant who,
or whose servants, employees, agents, visitors or licensees shall have
caused same.
6. Except for vending machines intended for the sole use of Tenant's
employees and invitees, no vending machine or machines other than fractional
horsepower office machines shall be installed, maintained or operated upon
the Premises without the written consent of Landlord.
7. Tenant shall not use or keep in or on the Premises, the Building, or
the Project any kerosene, gasoline or other inflammable or combustible
fluid, chemical, substance or material.
8. Tenant shall not use, keep or permit to be used or kept, any foul or
noxious gas or substance in or on the Premises, or permit or allow the
Premises to be occupied or used in a manner offensive or objectionable to
Landlord or other occupants of the Project by reason of noise, odors, or
vibrations, or interfere with other tenants or those having business
therein, whether by the use of any musical instrument, radio, phonograph, or
in any other way. Tenant shall not throw anything out of doors, windows or
skylights or down passageways.
9. Tenant shall not bring into or keep within the Project, the Building
or the Premises any animals, birds, aquariums, or, except in areas
designated by Landlord, bicycles or other vehicles.
10. No cooking shall be done or permitted on the Premises, nor shall
the Premises shall not be used for the storage of merchandise, for lodging
or for any improper, objectionable or immoral purposes. Notwithstanding the
foregoing, Underwriters' laboratory-approved equipment, a residential type
stove, and microwave ovens may be used in the Premises for preparing lunch
hot meals, heating food and brewing coffee, tea, hot chocolate and similar
beverages for employees and visitors, provided that such use is in
accordance with all applicable federal, state, county and city laws, codes,
ordinances, rules and regulations.
11. Tenant shall not occupy or permit any portion of the Premises to be
occupied as an office for a messenger-type operation or dispatch office,
public stenographer or typist, or for the manufacture or sale of liquor,
narcotics, or tobacco in any form, or as a medical office, or as a xxxxxx or
manicure shop, or as an employment bureau without the express prior written
consent of Landlord. Tenant shall not engage or pay any employees on the
Premises except those actually working for such tenant on the Premises nor
advertise for laborers giving an address at the Premises.
12. Landlord reserves the right to exclude or expel from the Project
any person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in
violation of any of these Rules and Regulations.
13. Tenant, its employees and agents shall not loiter in or on the
entrances, corridors, halls, vestibules or any interior Common Areas for the
purpose of smoking tobacco products
EXHIBIT D
Page 2
or for any other purpose, nor in any way obstruct such areas, and shall use
them only as a means of ingress and egress for the Premises.
14. Tenant shall not waste electricity, water or air conditioning and
agrees to cooperate fully with Landlord to ensure the most effective
operation of the Building's heating and air conditioning system, and shall
refrain from attempting to adjust any controls.
15. Tenant shall store all its trash and garbage within the interior of
the Premises or in trash enclosures. No material shall be placed in the
trash boxes or receptacles if such material is of such nature that it may
not be disposed of in the ordinary and customary manner of removing and
disposing of trash and garbage in the city in which the Project is located
without violation of any law or ordinance governing such disposal. All
trash, garbage and refuse disposal shall be made only through entry-ways
provided for such purposes at such times as Landlord shall designate.
16. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental
agency.
17. No awnings or other projection shall be attached to the outside
walls of the Building without the prior written consent of Landlord, and no
curtains, blinds, shades or screens shall be attached to or hung in, or used
in connection with, any window or door of the Premises other than Landlord
standard drapes. All electrical ceiling fixtures hung in the Premises or
spaces along the perimeter of the Building must be fluorescent and/or of a
quality, type, design and a warm white bulb color approved in advance in
writing by Landlord. Neither the interior nor exterior of any windows shall
be coated or otherwise sunscreened without the prior written consent of
Landlord. Tenant shall abide by Xxxxxxxx's regulations concerning the
opening and closing of window coverings which are attached to the windows in
the Premises, if any, which have a view of any interior portion of the
Building or Building Common Areas.
18. The sashes, sash doors, skylights, windows, and doors that reflect
or admit light and air into the halls, passageways or other public places in
the Building shall not be covered or obstructed by Tenant, nor shall any
bottles, parcels or other articles be placed on the windowsills.
19. Tenant must comply with requests by the Landlord concerning the
informing of their employees of items of importance to the Landlord.
20. Tenant must comply with any non-smoking ordinance adopted by any
applicable governmental authority.
21. Tenant hereby acknowledges that Landlord shall have no obligation
to provide guard service or other security measures for the benefit of the
Premises, the Building or the Project. Tenant hereby assumes all
responsibility for the protection of Tenant and its agents, employees,
contractors, invitees and guests, and the property thereof, from acts of
third parties, including keeping doors locked and other means of entry to
the Premises closed, whether or not
EXHIBIT D
Page 3
Landlord, at its option, elects to provide security protection for the
Project or any portion thereof. Tenant further assumes the risk that any
safety and security devices, services and programs which Landlord elects, in
its sole discretion, to provide may not be effective, or may malfunction or
be circumvented by an unauthorized third party, and Tenant shall, in
addition to its other insurance obligations under this Lease, obtain its own
insurance coverage to the extent Tenant desires protection against losses
related to such occurrences. Tenant shall cooperate in any reasonable
safety or security program developed by Landlord or required by law.
22. Tenant shall not use in any space or in the public halls of the
Building, any hand trucks except those equipped with rubber tires and rubber
side guards.
23. No auction, liquidation, fire sale, going-out-of-business or
bankruptcy sale shall be conducted in the Premises without the prior written
consent of Landlord.
24. No tenant shall use or permit the use of any portion of the
Premises for living quarters, sleeping apartments or lodging rooms.
Landlord reserves the right at any time to change or rescind any one or
more of these Rules and Regulations, or to make such other and further
reasonable Rules and Regulations as in Landlord's judgment may from time to
time be necessary for the management, safety, care and cleanliness of the
Premises, Building, the Common Areas and the Project, and for the
preservation of good order therein, as well as for the convenience of other
occupants and tenants therein. Landlord may waive any one or more of these
Rules and Regulations for the benefit of any particular tenants, but no such
waiver by Landlord shall be construed as a waiver of such Rules and
Regulations in favor of any other tenant, nor prevent Landlord from
thereafter enforcing any such Rules or Regulations against any or all
tenants of the Project. Tenant shall be deemed to have read these Rules
and Regulations and to have agreed to abide by them as a condition of its
occupancy of the Premises.
EXHIBIT D
Page 4
EXHIBIT E
XXXXX CREEK BUSINESS PARK
FORM OF TENANT'S ESTOPPEL CERTIFICATE
The undersigned, as Tenant under that certain Multi-Tenant Office Triple
Net Lease (the "Lease") made and entered into as of August __, 1999 by and
between XXXXX CREEK THREE TRUST, a Maryland real estate investment trust, as
Landlord, and the undersigned as Tenant, for Premises in the building
located at 000 Xxxx Xxxxxxx, Xxxxxxx, Xxxxxxxxxx, certifies as follows:
1. Attached hereto as Exhibit A is a true and correct copy of the Lease
and all amendments and modifications thereto. The documents contained in
Exhibit A represent the entire agreement between the parties as to the
Premises.
2. The undersigned currently occupies the Premises described in the
Lease, the Lease Term commenced on __________, and the Lease Term expires on
___________, and the undersigned has no option to terminate or cancel the
Lease or to purchase all or any part of the Premises, the Building and/or
the Project.
3. Base Rent became payable on ____________.
4. The Lease is in full force and effect and has not been modified,
supplemented or amended in any way except as provided in Exhibit A.
5. Tenant has not transferred, assigned, or sublet any portion of the
Premises nor entered into any license or concession agreements with respect
thereto except as follows:
6. Tenant shall not modify the documents contained in Exhibit A without
the prior written consent of Xxxxxxxx's mortgagee.
7. All monthly installments of Base Rent, all Additional Rent and all
monthly installments of estimated Additional Rent have been paid when due
through ___________. The current monthly installment of Base Rent is
$_____________________.
8. All conditions of the Lease to be performed by Landlord necessary to
the enforceability of the Lease have been satisfied and Landlord is not in
default thereunder, except for ____________________. In addition, the
undersigned has not delivered any notice to Landlord regarding a default by
Landlord thereunder, except for ____________________.
9. No rental has been paid more than thirty (30) days in advance and no
security has been deposited with Landlord except as provided in the Lease.
EXHIBIT E
Page 1
10. As of the date hereof, there are no existing defenses or offsets,
or, to the undersigned's knowledge, claims or any basis for a claim, that
the undersigned has against Landlord except for ___________________.
11. If Tenant is a corporation or partnership, each individual
executing this Estoppel Certificate on behalf of Tenant hereby represents
and warrants that Tenant is a duly formed and existing entity qualified to
do business in California and that Tenant has full right and authority to
execute and deliver this Estoppel Certificate and that each person signing
on behalf of Tenant is authorized to do so.
12. There are no actions pending against the undersigned under the
bankruptcy or similar laws of the United States or any state.
13. Other than in compliance with all applicable laws and incidental to
the ordinary course of the use of the Premises, the undersigned has not used
or stored any hazardous substances in the Premises.
14. To the undersigned's knowledge, except for ____________________,
all tenant improvement work to be performed by Landlord under the Lease has
been completed in accordance with the Lease and has been accepted by the
undersigned and all reimbursements and allowances due to the undersigned
under the Lease in connection with any tenant improvement work have been
paid in full.
EXHIBIT E
Page 2
The undersigned acknowledges that this Estoppel Certificate may be
delivered to Landlord or to a prospective mortgagee or prospective
purchaser, and acknowledges that said prospective mortgagee or prospective
purchaser will be relying upon the statements contained herein in making the
loan or acquiring the property of which the Premises are a part and that
receipt by it of this certificate is a condition of making such loan or
acquiring such property.
Executed at ______________ on the ____ day of ___________, 19 .
"Tenant":
AEHR TEST SYSTEMS,
a California corporation,
By: ___________________
Its: _________________
By: ___________________
Its: _________________
EXHIBIT E
Page 3
EXHIBIT F
DIRECT EXPENSE ALLOCATION SCHEDULE
ITEM HOW MEASURED RESPONSIBILITY WHO PAYS?
---- ------------ -------------- ---------
1. Electricity Separate Meter Tenant Tenant
2. Water Separate Meter Tenant Tenant
3. Gas Separate Meter Tenant Tenant
4. Security System Tenant Tenant
5. Phone System Tenant Tenant
6. Cleaning and
Maintenance of Tenant Tenant
Interior Rented
Space
7. Maintenance of Based on (Rented Landlord Tenant
Basic Structural Space/Total Building
Elements, Exterior Space)%
Walls, Roof, Roof
Drainage System,
etc.
8. Liability For the Rented Space Tenant Tenant
Insurance Adjacent Sidewalks
and Parking Area
9. Liability For the Basic Landlord Landlord
Insurance Structure, Roof
and Exterior
10. Landscaping Based on (Rented Landlord Tenant
Maintenance Space/Total Building
Space)%
EXHIBIT F - Page 1
11. Property Taxes Based on (Rented Landlord Tenant
Space/Total Building
Space) %
12. Equipment and Tenant Tenant
Personal Property
Taxes
13. Common Area Based on (Rented Landlord Tenant
Parking Lot,
Lighting
Maintenance With
Tenant's Prior
Approval
14. Maintenance of Tenant Tenant
Landlord Approved
ATS Signs
EXHIBIT F
Page 2
