EXHIBIT 10.8
NET LEASE AGREEMENT
BETWEEN
REALTEC PROPERTIES I, L.P.,
a California limited partnership
("Landlord")
and
SYMPHONIX DEVICES, INC.,
a California corporation
("Tenant")
TABLE OF CONTENTS
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Page
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1. Summary of Lease Provisions................................................................. 1
2. Property Leased............................................................................. 2
2.1 Premises.............................................................................. 2
2.2 Improvements.......................................................................... 3
2.3 Acceptance of Premises................................................................ 3
3. Term........................................................................................ 4
3.1 Commencement Date..................................................................... 4
3.2 Delay of Commencement Date............................................................ 5
3.3 Early Occupancy....................................................................... 5
3.4 Tenant to Physically Occupy Premises.................................................. 5
4. Rent........................................................................................ 6
4.1 Rent................................................................................... 6
4.2 Late Charge............................................................................ 6
4.3 Additional Rent........................................................................ 6
5. Security Deposit............................................................................ 7
6. Use of Premises............................................................................. 7
6.1 Permitted Uses.......................................................................... 7
6.2 Tenant to Comply with Legal Requirements................................................ 8
6.3 Prohibited Uses......................................................................... 9
6.4 Hazardous Materials..................................................................... 9
7. Taxes....................................................................................... 11
7.1 Personal Property Taxes................................................................. 11
7.2 Other Taxes Payable Separately by Tenant................................................ 11
7.3 Common Taxes............................................................................ 12
8. Insurance; Indemnity; Waiver................................................................ 13
8.1 Insurance by Landlord.................................................................. 13
8.2 Insurance by Tenant.................................................................... 14
8.3 Failure by Tenant to Obtain Insurance.................................................. 15
8.4 Indemnification........................................................................ 16
8.5 Claims by Tenant....................................................................... 16
8.6 Mutual Waiver of Subrogation........................................................... 17
9. Utilities................................................................................... 17
10. Repairs and Maintenance..................................................................... 18
10.1 Landlord's Responsibilities............................................................ 18
10.2 Tenant's Responsibilities.............................................................. 18
11. Common Area................................................................................. 19
11.1 In General............................................................................. 19
11.2 Parking Areas.......................................................................... 20
11.3 Maintenance by Landlord................................................................ 20
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12. Common Area Charges......................................................................... 21
12.1 Definition............................................................................ 21
12.2 Payment of Common Area Charges by Tenant.............................................. 22
12.3 Exclusions From Common Area Charges................................................... 23
13.1 In General I.......................................................................... 24
13.2 Removal Upon Lease Termination........................................................ 25
13.3 Landlord's Improvements............................................................... 25
14. Default and Remedies........................................................................ 26
14.1 Events of Default...................................................................... 26
14.2 Remedies............................................................................... 26
15. Damage or Destruction....................................................................... 28
15.1 Definition of Terms................................................................... 28
15.2 Insured Casualty...................................................................... 29
15.3 Uninsured Casualty.................................................................... 29
15.4 Tenant's Election..................................................................... 30
15.5 Damage or Destruction Near End of Lease Term.......................................... 30
15.6 Termination of Lease.................................................................. 31
15.7 Abatement of Rentals.................................................................. 31
15.8 Liability for Personal Property....................................................... 31
15.9 Waiver of Civil Code Remedies......................................................... 31
15.10 Damage or Destruction to the Building................................................. 31
16. Condemnation................................................................................ 32
16.1 Definition of Terms.................................................................... 32
16.2 Rights................................................................................. 32
16.3 Total Taking........................................................................... 32
16.4 Partial Taking......................................................................... 32
17. Liens....................................................................................... 33
17.1 Premises to Be Free of Liens........................................................... 33
17.2 Notice of Lien; Bond................................................................... 33
18. Landlord's Right of Access to Premises...................................................... 34
19. Landlord's Right to Perform Tenant's Covenants.............................................. 34
20. Lender Requirements......................................................................... 35
20.1 Subordination.......................................................................... 35
20.2 Subordination Agreements............................................................... 35
20.3 Approval by Lenders.................................................................... 35
20.4 Attornment............................................................................. 35
20.5 Estoppel Certificates and Financial Statements......................................... 36
21. Holding Over................................................................................ 37
22. Notices..................................................................................... 37
23. Attorneys' Fees............................................................................. 38
24. Assignment, Subletting and Hypothecation.................................................... 38
24.1 In General............................................................................. 38
24.2 Voluntary Assignment and Subletting.................................................... 38
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24.3 Collection of Rent...................................................................... 41
24.4 No Bonus Value.......................................................................... 41
24.5 Corporations and Partnerships........................................................... 42
24.6 Reasonable Provisions................................................................... 42
24.7 Attorneys' Fees......................................................................... 42
24.8 Involuntary Transfer.................................................................... 43
24.9 Hypothecation........................................................................... 43
24.10 Binding on Successors.................................................................. 43
25. Successors................................................................................... 43
26. Landlord Default; Mortgagee Protection....................................................... 44
27. Exhibits..................................................................................... 44
28. Surrender of Lease Not Merger................................................................ 44
29. Waiver....................................................................................... 44
30. General...................................................................................... 45
30.1 Captions and Headings................................................................... 45
30.2 Definitions............................................................................. 45
30.3 Copies.................................................................................. 46
30.4 Time of Essence......................................................................... 46
30.5 Severability............................................................................ 46
30.6 Governing Law........................................................................... 46
30.7 Joint and Several Liability............................................................. 46
30.8 Construction of Lease Provisions........................................................ 46
30.9 Tenant's Financial Statements........................................................... 46
30.10 Withholding of Landlord's Consent...................................................... 46
31. Signs........................................................................................ 47
32. Landlord as Party Defendant.................................................................. 47
33. Landlord Not a Trustee....................................................................... 47
34. Interest..................................................................................... 47
35. Surrender of Premises........................................................................ 48
36. No Partnership or Joint Venture.............................................................. 48
37. Entire Agreement............................................................................. 48
38. Submission of Lease.......................................................................... 49
39. Quiet Enjoyment.............................................................................. 49
40. Building Plans............................................................................... 49
41. Authority.................................................................................... 49
42. Addendum..................................................................................... 50
44. Option to Extend Lease Term.................................................................. 51
45. Rent During the Extended Term................................................................ 51
46. Right of Notice.............................................................................. 53
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NET LEASE AGREEMENT
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(MultiTenant)
For and in consideration of the rentals, covenants, and conditions hereinafter
set forth, Landlord hereby leases to Tenant, and Tenant hereby rents from
Landlord, the following described Premises for the term, at the rental and
subject to and upon all of the terms, covenants and agreements set forth in this
Net Lease Agreement, including Landlord's right to recover the Premises pursuant
to Paragraph 24 below ("Lease"):
1 Summary of Lease Provisions.
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1.1 Tenant: SYMPHONIX DEVICES, INC., a California
corporation, ("Tenant").
1.2 Landlord: REALTEC PROPERTIES I, L.P., a
California limited partnership
("Landlord").
1.3 Date of Lease, for reference purposes only:
July 28, 1994.
1.4 Premises: That certain space hereinafter more particularly
described, situated in that certain building shown crosshatched
on the site plan attached hereto as Exhibit "A" and commonly
referred to as 0000 Xxxxxxx Xxxxxxx and located in the City of
San Xxxx, County of Santa Xxxxx, State of California.
(Paragraph 2.1)
1.5 Term: Three (3) Years (Paragraph 3)
1.6 Commencement Date: August 1, 1994, subject to the provisions of
Paragraph 3 below. (Paragraph 3)
1.7 Ending Date: July 31, 1997, subject to the provisions of
Paragraph 3 below, unless sooner terminated pursuant to the
terms of this Lease. (Paragraph 3)
1.8 Rent: August 1, 1994 to July 31, 1997 - Seven Thousand Seven
Hundred Twenty Dollars ($7,720.00) per month (Paragraph 4)
Receipt of the first month's Rent is hereby acknowledged by
Landlord.
1.9 Use of Premises: Office, marketing, research and development,
light manufacturing, distribution
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and warehousing of medical devices, and all legal related uses.
(Paragraph 6)
1.10 Tenant's percentage share of Common Area Charges: 33.40%
percent. (Paragraph 12)
1.11 Security Deposit: Seven Thousand Seven Hundred Twenty Dollars
($7,720.00). (Paragraph 5)
1.12 Addresses for Notices:
To Landlord: Realtec Properties I, L. P.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0
Xxx Xxxxx, XX 00000
To Tenant: To the Premises, with a courtesy copy to:
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1.13 Nonexclusive Right to Use No More Than: Forty-five (45)
parking spaces within the Common Area. (Paragraph 11.2)
1.14 Summary Provisions in General. Parenthetical
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references in this Paragraph 1 to other paragraphs in this Lease are for
convenience of reference, and designate some of the other Lease paragraphs where
applicable provisions are set forth. All of the terms and conditions of each
such referenced paragraph shall be construed to be incorporated within and made
a part of each of the above referring Summary of Lease Provisions. In the event
of any conflict between any Summary of Lease provision as set forth above and
the balance of the Lease, the latter shall control.
2. Property Leased.
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2.1 Premises. Landlord hereby leases to Tenant and Tenant
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hereby leases from Landlord upon the terms and conditions herein set forth,
those certain premises ("Premises") referred to in Paragraph 1.4 above and shown
on the floor plan attached hereto as Exhibit "B." In addition, Tenant shall have
such rights in and to the Common Area (defined in Paragraph 11.1 below) as are
more fully described in Paragraph 11.1 below.
The building in which the Premises are located is referred to herein as
the "Building." The "Land" shall mean and refer to all of the real property
outlined in red on Exhibit "A," and shall not be limited to the parcel of real
property on which the Building is located (if the same is a separate legal
parcel). Any reference in this Lease to the "Parcel" shall be deemed a reference
to the Land. The Land, Building and any other building(s) or improvement(s) now
or hereafter located on the Land are referred
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to herein collectively as the "Project."
Landlord reserves the right to grant to tenants of the Project or of
the buildings or improvements which now exist or may hereafter be constructed
upon real property owned by Landlord adjacent to the Land, and to the agents,
employees, servants, invitees, contractors, guests, customers and
representatives of such tenants or to any other user authorized by Landlord, the
nonexclusive right to use the Land for pedestrian and vehicular ingress and
egress and vehicular parking (excluding only that portion of the Land designated
herein for Tenant's exclusive use for vehicular parking, if any).
2.2 Improvements. The improvements to be constructed by Landlord
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for the Tenant's use in the Premises are set forth in detail on the attached
Exhibits "C-l" and "C-2". The improvements identified on Exhibit "C-1" shall be
constructed by Landlord at Landlord's sole cost. Tenant shall pay to Landlord
the sum of Thirty-one Thousand Twenty-nine Dollars ($31,029) for the
construction of the improvements identified on Exhibit "C-2", with one-half of
said amount payable on execution of the Lease, and one-half of said amount
payable on the Commencement Date. Tenant hereby agrees that Tenant has prepared
the plans and specifications for the improvements identified on Exhibit "C-l"
and that is shall be the responsibility of Tenant to assure that said
improvements are in compliance with Title 24 and Title III of the Americans with
Disabilities Act of 1990, 42 U.S.C. section 12101 et. seq., and the regulations
promulgated thereunder (the "ADA"). In addition, Tenant shall be responsible
for the cost of any alterations to the Premises, the Building and/or the Common
Area that may be required as a result of the construction of said improvements.
Since any construction work on the Premises by Tenant prior to
substantial completion of the work required of Landlord pursuant to this
Paragraph 2.2 may interfere with the work required of Landlord or with
Landlord's ability to obtain a Certificate of Completion therefor, any such work
by Tenant shall be subject to the provisions of Paragraph 13.1 hereof, and
Landlord may in its reasonable discretion withhold its consent to any such work
by Tenant.
2.3 Acceptance of Premises. By taking possession of the Premises,
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Tenant shall be deemed to have accepted the Premises as being in good and
sanitary order, condition and repair and to have accepted the Premises in their
condition existing as of the date Tenant takes possession of the Premises,
subject to all applicable laws, covenants, conditions, restrictions, easements
and other matters of public record and the rules and regulations from time to
time promulgated by Landlord governing the use of any portion of the Project and
further, to have accepted tenant improvements to be constructed by Landlord (if
any) as being completed in accordance with the plans and specifications for such
improvements subject only to completion of items on Landlord's punch list.
Tenant acknowledges that neither Landlord nor
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Landlord's agents have made any representation or warranty as to the suitability
of the Premises for the conduct of Tenant's business, the condition of the
Building or Premises, or the use or occupancy which may be made thereof, and
Tenant has independently investigated and is satisfied that the Premises are
suitable for Tenant's intended use and that the Building and Premises meet all
governmental requirements for such intended use. In addition, Landlord makes no
representation or warranty as to the compliance of the Premises, the Building or
the Project with the requirements of the ADA.
Notwithstanding anything to the contrary contained in this Lease,
Tenant's acceptance of the Premises or submission of a "punchlist" shall not be
deemed a waiver of Tenant's right to have defects in the improvements
constructed by Landlord pursuant to Paragraph 2.2 or the Premises repaired at no
cost to Tenant. Tenant shall give notice to Landlord whenever any such defect
becomes reasonably apparent, and Landlord shall repair the defect as soon as
practicable. Landlord also hereby assigns to Tenant all warranties with respect
to the Premises, including warranties that would reduce Tenant's maintenance
obligations under this Lease, and shall cooperate with Tenant to enforce such
warranties. Finally, notwithstanding anything to the contrary contained in this
Lease, as of the Commencement Date, the roof (including roof screens and
membrane), plumbing, electrical (including all outlets), heating and air
conditioning systems in the Premises shall be in good working order and repair.
3. Term.
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3.1 Commencement Date. The term of this Lease (the "Lease
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Term") shall be for the period specified in Paragraph 1.5 above, commencing on
the date set forth in Paragraph 1.6 ("Commencement Date"); provided, however, in
the event any improvements to be constructed by Landlord, as set forth on
Exhibits "C-1" and "C-2", are not completed by the aforesaid Commencement Date,
then the Commencement Date shall be deemed to be the date on which the
improvements to be constructed by Landlord are substantially completed. Such
improvements shall be deemed to be substantially completed upon the occurrence
of the earlier of the following:
(a) The date on which all improvements to be constructed by
Landlord have been substantially completed except for: (i) punch list items
which do not prevent Tenant from using the Premises for its intended use;
(ii) such work as Landlord is required to perform but which is delayed
because of fault or neglect of Tenant, acts of Tenant or Tenant's agents
(including without limitation, delays caused by work done on the Premises
by Tenant or Tenant's agents or by acts of Tenant's contractors or
subcontractors) or delays caused by change orders requested by Tenant or
required because of any errors or omissions in plans submitted by Tenant;
and (iii) such work as Landlord is required to perform but cannot complete
until Tenant performs necessary
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portions of construction work it has elected or is required to do; or
(b) The issuance of appropriate governmental approvals for
occupancy of the Premises; or
(c) The date Tenant opens for business in the Premises.
If the Commencement Date is a date other than the date set forth in Paragraph
1.6, then the Ending Date set forth in paragraph 1.7, and any other certain
dates specified herein shall be adjusted accordingly. When the Commencement
Date, Ending Date and such other dates become ascertainable, Landlord and Tenant
shall specify the same in writing, in the form of the attached Exhibit "D,"
which writing shall be deemed incorporated herein. Tenant's failure to execute
and deliver the letter attached hereto as Exhibit "D" (subject to any
legitimate disagreement by Tenant with the terms thereof, which both parties
shall use reasonable efforts to resolve) shall be a Default by Tenant hereunder.
The expiration of the Lease Term or sooner termination of this Lease is referred
to herein as the "Lease Termination."
3.2 Delay of Commencement Date. Landlord shall not be liable for
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any damage or loss incurred by Tenant for Landlord's failure for whatever cause
to deliver possession of the Premises by a particular date (including the
Commencement Date), nor shall this Lease be void or voidable on account of such
failure to deliver possession of the Premises; provided that if Landlord does
not deliver possession of the Premises to Tenant by the date which is sixty (60)
days from the date this Lease is executed by both parties, Tenant shall have the
right to terminate this Lease by written notice delivered to Landlord within
five (5) days thereafter, and Landlord and Tenant shall be relieved of their
respective obligations hereunder; provided further that said sixty (60) day
period shall be extended by the number of days work on the Premises is delayed
due to fault or neglect of Tenant, acts of Tenant or Tenant's agents, or due to
acts of God, labor disputes, strikes, fires, rainy or stormy weather, acts or
failures to act of public agencies, inability to obtain labor or materials,
earthquake, war, insurrection, riots and other causes beyond Landlord's
reasonable control, excluding, however, delays caused solely by Landlord, its
agents, employees, contractors or invitees.
3.3 Early Occupancy. If Tenant takes possession of the Premises
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prior to the Commencement Date, Tenant shall do so subject to all of the terms
and conditions hereof and shall pay the Rentals provided for herein.
3.4 Tenant to Physically Occupy Premises. Tenant shall, no later
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than thirty (30) days after the Commencement Date, go into actual physical
occupancy of the Premises and open the Premises for business in accordance with
the uses specified in Paragraph 6 below; provided, however, the date of Tenant's
physical
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occupancy of the Premises shall in no event extend the Commencement Date, the
Lease Termination date or the date the payment of Rentals hereunder commences.
Time is of the essence.
4. Rent.
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4.1 Rent. Tenant shall pay to Landlord as rent for the Premises
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("Rent"), in advance, on the first day of each calendar month, commencing on the
date specified in Paragraph 1.6 and continuing throughout the Lease Term (until
adjusted pursuant to Paragraph 4.4 below) the Rent set forth in Paragraph 1.8
above. Rent shall be prorated, based on thirty (30) days per month, for any
partial month during the Lease Term. Rent shall be payable without deduction,
offset, prior notice or demand in lawful money of the United States to Landlord
at the address herein specified for purposes of notice or to such other persons
or such other places as Landlord may designate in writing.
4.2 Late Charge. Tenant hereby acknowledges that late payment by
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Tenant to Landlord of Rent will cause Landlord to incur costs not contemplated
by this Lease, the exact amount of which will be extremely difficult to
ascertain. Such costs include, but are not limited to, processing and accounting
charges, and late charges which may be imposed on Landlord by the terms of any
mortgage or deed of trust covering the Premises. Accordingly, Tenant shall pay
to Landlord, as Additional Rent, without the necessity of prior notice or
demand, a late charge equal to five percent (5%) of any installment of Rent
which is not received by Landlord within ten (10) days after the due date for
such installment. The parties hereby agree that such late charge represents a
fair and reasonable estimate of the costs Landlord will incur by reason of late
payment by Tenant. In no event shall this provision for a late charge be deemed
to grant to Tenant a grace period or extension of time within which to pay any
installment of Rent or prevent Landlord from exercising any right or remedy
available to Landlord upon Tenant's failure to pay such installment of Rent when
due, including without limitation the right to terminate this Lease. In the
event any installment of Rent is not received by Landlord by the thirtieth
(30th) day after the due date for such installment, such installment shall bear
interest at the annual rate set forth in Paragraph 34 below, commencing on the
thirty-first (31st) day after the due date for such installment and continuing
until such installment is paid in full.
4.3 Additional Rent. All taxes, charges, costs and expenses and
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other sums which Tenant is required to pay hereunder (together with all interest
and charges that may accrue thereon in the event of Tenant's failure to pay the
same), and all damages, costs and expenses which Landlord may incur by reason of
any Default by Tenant shall be deemed to be additional rent hereunder
("Additional Rent"). Additional Rent shall accrue commencing on the,
Commencement Date. In the event of nonpayment by Tenant of any Additional Rent,
Landlord shall have all the rights and remedies
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with respect thereto as Landlord has for the nonpayment of Rent. The term
"Rentals" as used in this Lease shall mean Rent and Additional Rent:
5. Security Deposit. Concurrently with Tenant's execution of this Lease,
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Tenant shall deposit with Landlord a security deposit ("Security Deposit") in
the amount set forth in Paragraph 1.11 above. The Security Deposit shall be held
by Landlord as security for the faithful performance by Tenant of each and every
term, covenant, or condition of this Lease applicable to Tenant, and not as
prepayment of Rent. If Tenant shall at any time fail to keep or perform any
term, covenant or condition of this Lease applicable to Tenant, including
without limitation, the payment of Rentals or those provisions requiring Tenant
to repair damage to the Premises caused by Tenant or to surrender the Premises
in the condition required pursuant to Paragraph 35 below, Landlord may, but
shall not be obligated to, and without waiving or releasing Tenant from any
obligation under this Lease, use, apply or retain the whole or any part of the
Security Deposit reasonably necessary for the payment of any amount which
Landlord may spend by reason of Tenant's default or as necessary to compensate
Landlord for any loss or damage which Landlord may suffer by reason of Tenant's
default. In the event Landlord uses or applies any portion of the Security
Deposit, Tenant shall, within five (5) business days after written demand by
Landlord, remit to Landlord sufficient funds to restore any Security Deposit to
its original sum. Failure by Tenant to so remit funds shall be a Default by
Tenant. Should Tenant comply with all of the terms, covenants and conditions of
this Lease applicable to Tenant, the balance of the Security Deposit shall be
returned to Tenant within fourteen (14) days after Lease Termination and
surrender of the Premises by Tenant; provided, however, if any portion of the
Security Deposit is to be applied to repair damages to the Premises caused by
Tenant or Tenant's agents, to clean the Premises, or to remove alterations and
restore the Premises pursuant to Paragraph 13.2 below, then the balance of the
Security Deposit shall be returned to Tenant no later than thirty (30) days
after the date Landlord receives possession of the Premises.
6. Use of Premises.
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6.1 Permitted Uses. Tenant shall use the Premises and the Common
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Area only in conformance with applicable governmental or quasi-governmental
laws, statutes, orders, regulations, rules, ordinances and other requirements
now or hereafter in effect (collectively, "Laws") for the purposes set forth in
Paragraph 1.9 above, and for no other purpose without the prior written consent
of Landlord, which consent Landlord may withhold in its sole discretion. Tenant
acknowledges and agrees that Landlord has selected or will be selecting tenants
for the Building in order to produce a mix of tenant uses compatible and
consistent with the design integrity of the Building and with other uses of the
Building; provided, however, the selection of Building tenants shall be in
Landlord's reasonable discretion and Landlord
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in making such selection shall not be deemed to be warranting that any use of
the Building made by any such tenant is compatible or consistent with the design
integrity of the Building or other uses of the Building. Any change in use of
the Premises or the Common Area without the prior written consent of Landlord
shall be a Default by Tenant. Tenant and Tenant's agents shall comply with the
provision of any Declaration of Covenants, Conditions, and Restrictions
affecting the Premises and the Common Area.
6.2 Tenant to Comply with Legal Requirements. Tenant shall, at
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its sole cost, promptly comply with all Laws relating to or affecting Tenant's
particular use or occupancy of the Premises, including without limitation those
relating to utility usage and load or number of permissible occupants or users
of the Premises, whether or not the same are now contemplated by the parties;
with the provisions of all recorded documents affecting the Premises or the
Common Area insofar as the same relate to or affect Tenant's particular use or
occupancy of the Premises or use of the Common Area; and with the requirements
of any board of fire underwriters (or similar body now or hereafter constituted)
relating to or affecting the use, occupational safety, occupancy, or condition
of the Premises or the Common Area. Tenant's obligations pursuant to this
paragraph shall include, without limitation, maintaining or restoring the
Premises and making structural and nonstructural alterations and additions in
compliance and conformity with all laws and recorded documents (including,
without limitation, alterations or additions to the Premises, Building or Common
Area that are required pursuant to the ADA), each relating to Tenant's
particular use or occupancy of the Premises during the Lease Term or alterations
made to the Premises by Tenant. At Landlord's option, Landlord may make the
required alteration, addition or change, and Tenant shall pay the cost thereof
as Additional Rent. The foregoing notwithstanding, Landlord shall make any
alteration or addition required to bring the Premises or the Common Area into
compliance with legal requirements in effect at the time the Premises, any
improvements installed therein by Landlord (excluding the improvements
identified on Exhibit "C-2"), or the Common Area, respectively, were originally
constructed. With respect to any structural alterations or additions as may be
hereafter required due to a change in laws and unrelated to Tenant's specific
use of the Premises or the Common Area or Tenant's alterations to the Premises,
Tenant shall not be responsible for the cost thereof. Tenant shall obtain prior
to taking possession of the Promises any permits, licenses or other
authorizations required for the lawful operation of its business at the
Premises. The judgment of any court of competent jurisdiction or the admission
of Tenant in any action or proceeding against Tenant, regardless of whether
Landlord is a party thereto or not, that Tenant has violated such Law or
recorded document relating to Tenant's particular use or occupancy of the
Premises shall be conclusive of the fact of such violation by Tenant. Any
alterations or additions undertaken by Tenant pursuant to this Paragraph 6.2
shall be subject to the requirements of Paragraph 13.1 below.
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6.3 Prohibited Uses. Tenant and Tenant's agents shall not commit or
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suffer to be committed any waste upon the Premises. Tenant and Tenant's agents
shall not do or permit anything to be done in or about the Premises or Common
Area which will in any way obstruct or interfere with the rights of any other
tenants of the Building, other authorized users of the Common Area, or occupants
of neighboring property, or injure or annoy them. Tenant and Tenant's agents
shall not use or allow the Premises to be used for any unlawful, immoral or
hazardous purpose or any purpose not permitted by this Lease, nor shall Tenant
or Tenant's agents cause, maintain, or permit any nuisance in, on or about the
Premises. Tenant and Tenant's agents shall not do or permit anything to be done
in or about the Premises nor bring or keep anything in the Premises which will
in any way increase the rate of any insurance upon any portion of the Project or
any of its contents, or cause a cancellation of any insurance policy covering
any portion of the Project or any of its contents, nor shall Tenant or Tenant's
agents keep, use or sell or permit to be kept, used or sold in or about the
Premises any articles which may be prohibited by a standard form policy of fire
insurance. In the event the rate of any insurance upon any portion of the
Project or any of its contents is increased because of Tenant's particular use
of the Premises or that of Tenant's agents, Tenant shall pay, as Additional
Rent, the full cost of such increase; provided, however this provision shall in
no event be deemed to constitute a waiver of Landlord's right to declare a
default hereunder by reason of the act or conduct of Tenant causing such
increase or of any other rights or remedies of Landlord in connection therewith.
Tenant and Tenant's agents shall not place any loads upon the floor, walls or
ceiling of the Premises which would endanger the Building or the structural
elements thereof or of the Premises, nor place any harmful liquids in the
drainage system of the Building or Common Area. No waste materials or refuse
shall be dumped upon or permitted to remain upon any part of the Project except
in enclosed trash containers designated for that purpose by Landlord. No
materials, supplies, equipment, finished products (or semifinished products),
raw materials, or other articles of any nature shall be stored upon, or be
permitted to remain on, any portion of the Project outside the Premises.
6.4 Hazardous Materials. Neither Tenant nor Tenant's agents shall
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permit the introduction, placement, use, storage, manufacture, transportation,
release or disposition (collectively "Release") of any Hazardous Material(s)
(defined below) on or about any portion of the Premises, Building or Project
without the prior written consent of Landlord, which consent may be withheld in
the sole and absolute discretion of Landlord without any requirement of
reasonableness in the exercise of that discretion. Notwithstanding the
immediately preceding sentence to the contrary, Tenant may use de minimis
quantities of the types of materials which are technically classified as
Hazardous Materials but commonly used in domestic or office use to the extent
not in an amount, which, either individually or cumulatively, would be a
"reportable quantity" under any applicable Law. Tenant covenants
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that, at its sole cost and expense, Tenant will comply with all applicable Laws
with respect to the Release by Tenant, its agents, employees, contractors or
invitees of such permitted Hazardous Materials. Any Release beyond the scope
allowed in this paragraph shall be subject to Landlord's prior consent, which
may be withheld in Landlord's sole and absolute discretion, and shall require an
amendment to the Lease in the event Landlord does consent which shall set forth
the materials, scope of use, indemnification and any other matter required by
Landlord in Landlord's sole and absolute discretion. Tenant shall indemnify,
defend and hold Landlord and Landlord's agents harmless from and against any and
all claims, losses, damages, liabilities, or expenses arising in connection with
the Release of Hazardous Materials in violation of Hazardous Materials Laws by
Tenant, Tenant's agents or any other person using the Premises with Tenant's
knowledge and consent or authorization. Tenant's obligation to defend, hold
harmless and indemnify pursuant to this Paragraph 6.4 shall survive Lease
Termination.
The foregoing indemnity shall not apply to, and Tenant shall not be
responsible for, the presence of Hazardous Materials on, under, or about the
Premises, Building, or Project to the extent caused by any third parties or by
Landlord or Landlord's employees, agents, contractors or invitees.
Notwithstanding anything to the contrary contained in this Lease,
Landlord hereby represents and warrants to Tenant that, to the best of
Landlord's knowledge, (i) the Premises, the Building, and Project are in
compliance with all laws regarding Hazardous Materials ("Hazardous Materials
Laws"); (ii) no asbestos-containing materials exist in or on the Premises, the
Building, or Project; and (iii) any handling, transportation, storage or use of
Hazardous Materials that occurred in the Premises, the Building, or Project
prior to the Commencement Date is now in compliance with all Hazardous
Materials Laws. Landlord further represents and warrants that, to the best of
Landlord's knowledge, no litigation has been brought or threatened, nor any
settlements reached with any governmental or private party, concerning the
actual or alleged presence of Hazardous Materials on or about the Premises,
Building, or Project, nor has Landlord received any notice of any violation, or
alleged violation, of any Hazardous Materials Laws, pending claims or pending
investigations with respect to the presence of Hazardous Materials on or about
the Premises, Building, or Project. Landlord's representations and warranties
set forth in this paragraph shall survive termination of this Lease.
As used in this Lease, the term "Hazardous Materials" means any
chemical, substance, waste or material which has been or is hereafter determined
by any federal, state or local governmental authority to be capable of posing
risk of injury to health or safety, including without limitation, those
substances included within the definitions of "hazardous substances," "hazardous
materials," "toxic substances," or "solid waste" under the Comprehensive
Environmental Response, Compensation, and Liability
-10-
Act of 1980, the Resource Conservation and Recovery Act of 1976, and the
Hazardous Materials Transportation Act, as amended, and in the regulations
promulgated pursuant to said laws; those substances defined as "hazardous
wastes" in section 25117 of the California Health & Safety Code, or as
"hazardous substances" in section 25316 of the California Health & Safety Code,
as amended, and in the regulations promulgated pursuant to said laws; those
substances listed in the United States Department of Transportation Table (49
CFR 172.101 and amendments thereto) or designated by the Environmental
Protection Agency (or any successor agency) as hazardous substances (see, e.g.,
--- ----
40 CFR Part 302 and amendments thereto); such other substances, materials and
wastes which are or become regulated or become classified as hazardous or toxic
under any Laws, including without limitation the California Health & Safety
Code, Division 20, and Title 26 of the California Code of Regulations; and any
material, waste or substance which is (i) petroleum, (ii) asbestos, (iii)
polychlorinated biphenyls, (iv) designated as a "hazardous substance" pursuant
to section 311 of the Clean Water Act of 1977, 33 U.S.C. sections 1251 et seq.
-- ---
(33 U.S.C. (S)1321) or listed pursuant to section 307 of the Clean Water Act of
1977 (33 U.S.C. (S)1317), as amended; (v) flammable explosives; (vi) radioactive
materials; or (vii) radon gas.
7. Taxes.
-----
7.1 Personal Property Taxes. Tenant shall cause Tenant's trade
-----------------------
fixtures, equipment, furnishings, furniture, merchandise, inventory, machinery,
appliances and other personal property installed or located on the Premises
(collectively the "personal property") to be assessed and billed separately from
the Land and the Building. Tenant shall pay before delinquency any and all
taxes, assessments and public charges levied, assessed or imposed upon or
against Tenant's personal property. If any of Tenant's personal property shall
be assessed with the Land or the Building, Tenant shall pay to Landlord, as
Additional Rent, the amounts attributable to Tenant's personal property within
twenty (20) days after receipt of a written statement from Landlord setting
forth the amount of such taxes, assessments and public charges attributable to
Tenant's personal property. Tenant shall comply with the provisions of any Law
which requires Tenant to file a report of Tenant's personal property located on
the Premises.
7.2 Other Taxes Payable Separately by Tenant. Tenant shall pay (or
----------------------------------------
reimburse Landlord, as Additional Rent, if Landlord is assessed), prior to
delinquency or within thirty (30) days after receipt of Landlord's statement
thereof, any and all taxes, levies, assessments or surcharges payable by
Landlord or Tenant and relating to this Lease or the Premises (other than
Landlord's net income, succession, transfer, gift, franchise, estate or
inheritance taxes, and Taxes, as that term is defined in Paragraph 7.3(a) below,
payable as a Common Area Charge), whether or not now customary or within the
contemplation of the parties hereto, whether or not now in force or which may
hereafter become effective, including but not limited to taxes:
-11-
(a) Upon, allocable to, or measured by the area of the Premises
or the Rentals payable hereunder, including without limitation any gross
rental receipts, excise, or other tax levied by the state, any political
subdivision thereof, city or federal government with respect to the receipt
of such Rentals;
(b) Upon or with respect to the use, possession occupancy,
leasing, operation and management of the Premises or any portion thereof;
(c) Upon this transaction or any document to which Tenant is a
party creating or transferring an interest or an estate in the Premises; or
(d) Imposed as a means of controlling or abating environmental
pollution or the use of energy or any natural resource (including without
limitation gas, electricity or water), including, without limitation, any
parking taxes, levies or charges or vehicular regulations imposed by any
governmental agency. Tenant shall also pay, prior to delinquency, all
privilege, sales, excise, use, business, occupation, or other taxes,
assessments, license fees, or charges levied, assessed or imposed upon
Tenant's business operations conducted at the Premises.
7.3 Common Taxes.
------------
(a) Definition of Taxes. The term "Taxes" as used in this Lease
-------------------
shall collectively mean (to the extent any of the following are not paid by
Tenant pursuant to Paragraphs 7.1 and 7.2 above) all real estate taxes and
general and special assessments (including, but not limited to, assessments
for public improvements or benefit); personal property taxes; taxes based
on vehicles utilizing parking areas on the Land; taxes computed or based on
rental income or on the square footage of the Premises or the Building
(including without limitation any municipal business tax but excluding
federal, state and municipal net income taxes); environmental surcharges;
excise taxes; gross rental receipts taxes; sales and/or use taxes; employee
taxes; water and sewer taxes, levies, assessments and other charges in the
nature of taxes or assessments (including, but not limited to, assessments
for public improvements or benefit); and all other governmental,
quasi-governmental or special district impositions of any kind and nature
whatsoever; regardless of whether any of the foregoing are now customary or
within the contemplation of the parties hereto and regardless of whether
resulting from increased rate and/or valuation, or whether extraordinary or
ordinary, general or special, unforeseen or foreseen, or similar or
dissimilar to any of the foregoing and which during the Lease Term are
laid, levied, assessed or imposed upon Landlord and/or become a lien upon
or chargeable against any portion of the Project under or by virtue of any
present or future laws, statutes, ordinances, regulations, or other
requirements of any governmental, quasi-governmental or special district
authority whatsoever. The term "environmental
-12-
surcharges" shall include any and all expenses, taxes, charges or penalties
imposed by the Federal Department of Energy, Federal Environmental Protection
Agency, the Federal Clean Air Act, or any regulations promulgated thereunder, or
imposed by any other local, state or federal governmental agency or entity now
or hereafter vested with the power to impose taxes, assessments or other types
of surcharges as a means of controlling or abating environmental pollution or
the use of energy or any natural resource in regard to the use, operation or
occupancy of the Project. The term "Taxes" shall include (to the extent the same
are not paid by Tenant pursuant to Paragraphs 7.1 and 7.2 above), without
limitation, all taxes, assessments, levies, fees, impositions or charges levied,
imposed, assessed, measured, or based in any manner whatsoever upon or with
respect to the use, possession, occupancy, leasing, operation or management of
the Project or in lieu of or equivalent to any Taxes set forth in this Paragraph
7.3(a). Notwithstanding anything to the contrary contained in this Lease, Tenant
shall not be required to pay any portion of any tax or assessment (i) in excess
of the amount which would be payable if the tax or assessment were paid in
installments over the longest possible term; (ii) imposed on land and
improvements other than the Project; and (iii) any increases in such tax or
assessment occasioned by or relating to a voluntary or involuntary change of
ownership or other conveyance of the Premises.
(b) Common Area Charge. All Taxes which are levied or assessed
------------------
or which become a lien upon any portion of the Project or which become due
or accrue during the Lease Term shall be a Common Area Charge, and Tenant
shall pay as Additional Rent each month during the Lease, Term 1/12th of
Tenant's percentage share of such Taxes, based on Landlord's estimate
thereof, pursuant to Paragraph 12 below. Tenant's share of Taxes during any
partial tax fiscal year(s) within the Lease Term shall be prorated
according to the ratio which the number of days during the Lease Term or of
actual occupancy of the Premises by Tenant, whichever is greater, during
such year bears to 365.
8. Insurance; Indemnity; Waiver.
----------------------------
8.1 Insurance by Landlord.
---------------------
(a) Landlord shall, during the Lease Term, procure and keep in
force the following insurance, the cost of which shall be a Common Area
Charge, payable by Tenant pursuant to Paragraph 12 below:
(i) Property Insurance. "All risk" property
------------------
insurance, including, without limitation, coverage for earthquake and
flood; boiler and machinery (if applicable); sprinkler damage; vandalism;
malicious mischief; full coverage plate glass insurance; and demolition,
increased cost of construction and contingent liability from change in
building laws on the Building and the Land, including any improvements or
fixtures constructed or installed in the Building and on the Land
-13-
by Landlord. The annual insurance cost (including earthquake insurance premium
costs) shall not increase more than ten percent (10%) per annum from the 4-1-94
to 3-31-95 insurance premium of $13,672.00. Such insurance shall be in the full
amount of the replacement cost of the foregoing, with reasonable deductible
amounts, which deductible amounts shall be a Common Area Charge, payable by
Tenant pursuant to Paragraph 12, but the amount of such deductible shall not
exceed two (2) times the deductible for Landlord's "all-risk" property
insurance. Such insurance shall also include rental income insurance, insuring
that one hundred percent (100%) of the Rentals (as the same may be adjusted
hereunder) will be paid to Landlord for a period of up to twelve (12) months if
the Premises are destroyed or damaged, or such longer period as may be required
by any beneficiary of a deed of trust or any mortgagee of any mortgage affecting
the Premises. Such insurance shall not cover any leasehold improvements
installed in the Premises by Tenant at its expense, or Tenant's equipment, trade
fixtures, inventory, fixtures or personal property located on or in the
Premises;
(ii) Liability Insurance. Comprehensive general
-------------------
liability (lessor's risk) insurance against any and all claims for personal
injury, death or property damage occurring in or about the Building or the Land.
Such insurance shall have a combined single limit of not less than Three Million
Dollars ($3,000,000) per occurrence and Five Million Dollars ($5,000,000)
aggregate; and
(iii) Other. Such other insurance as Landlord deems
-----
necessary and prudent.
8.2 Insurance by Tenant. Tenant shall, during the Lease Term, at
-------------------
Tenant's sole cost and expense, procure and keep in force the following
insurance:
(a) Personal Property Insurance. "All risk" property insurance,
---------------------------
including, without limitation, coverage for boiler and machinery (if
applicable); sprinkler damage; vandalism; malicious mischief; and demolition,
increased cost of construction and contingent liability from changes in
building laws on all leasehold improvements installed in the Premises by Tenant
at its expense (if any), and on all equipment, trade fixtures, inventory,
fixtures and personal property located on or in the Premises, including
improvements or fixtures hereinafter constructed or installed on the Premises.
Such insurance shall be in an amount equal to the full replacement cost of the
aggregate of the foregoing and shall provide coverage comparable to the coverage
in the standard ISO all risk form, when such form is supplemented with the
coverages required above.
(b) Liability Insurance. Comprehensive general liability
-------------------
insurance for the mutual benefit of Landlord and Tenant, against any and all
claims for personal injury, death or property damage occurring in or about the
Premises and Common Area or
-14-
arising out of Tenant's or Tenant's agents' use of the Common Area, use or
occupancy of the Premises or Tenant's operations on the Premises. Such
insurance shall have a combined single limit of not less than One Million
Dollars ($1,000,000) per occurrence and One Million Dollars ($1,000,000)
aggregate. Such insurance shall contain a cross-liability (severability of
interests) clause and an extended ("broad form") liability endorsement,
including blanket contractual coverage. Such liability insurance shall be
primary and not contributing to any insurance available to Landlord, and
Landlord's insurance (if any) shall be in excess thereto. Such insurance shall
specifically insure Tenant's performance of the indemnity, defense and hold
harmless agreements contained in Paragraph 8.4, although Tenant's obligations
pursuant to Paragraph 8.4 shall not be limited to the amount of any insurance
required of or carried by Tenant under this Paragraph 8.2(b). Tenant shall
be responsible for insuring that the amount of insurance maintained by Tenant is
sufficient for Tenant's purposes.
(c) Other. Such other insurance as required by law, including,
-----
without limitation, workers' compensation insurance.
(d) Form of the Policies. The policies required to be maintained
--------------------
by Tenant pursuant to Paragraphs 8.2(a), (b), and (c) above shall be with
companies, on forms, with deductible amounts (if any), and loss payable
clauses reasonably satisfactory to Landlord, shall include Landlord and the
beneficiary or mortgagee of any deed of trust or mortgage encumbering the
Premises and/or the Land as additional insureds, and shall provide that
such parties may, although additional insureds, recover for any loss
suffered by Tenant's negligence. Certified copies of policies or
certificates of insurance shall be delivered to Landlord prior to the
Commencement Date; a new policy or certificate shall be delivered to
Landlord at least ten (10) business days prior to the expiration date of
the old policy. Tenant shall have the right to provide insurance coverage
which it is obligated to carry pursuant to the terms hereof in a blanket
policy, provided such blanket policy expressly affords coverage to the
Premises and Common Area and to Tenant as required by this Lease. Tenant
shall obtain a written obligation on the part of Tenant's insurer(s) to
notify Landlord and any beneficiary or mortgagee of a deed of trust or
mortgage encumbering the Premises and/or the Land in writing of any
delinquency in premium payments and at least thirty (30) days prior to any
cancellation or modification of any policy. Tenant's policies shall provide
coverage on an occurrence basis and not on a claims made basis. In no event
shall the limits of any policies maintained by Tenant be considered as
limiting the liability of Tenant under this Lease.
8.3 Failure by Tenant to Obtain Insurance. If Tenant does not take
-------------------------------------
out the insurance required pursuant to Paragraph 8.2 or keep the same in full
force and effect, Landlord may, but shall not be obligated to, take out the
necessary insurance and pay the premium therefor, and Tenant shall repay to
Landlord, as Additional
-15-
Rent, the amount so paid promptly upon demand. In addition, Landlord may recover
from Tenant and Tenant agrees to pay, as Additional Rent, any and all reasonable
expenses (including attorneys' fees) and damages which Landlord may sustain by
reason of the failure of Tenant to obtain and maintain such insurance, it being
expressly declared that the expenses and damages of Landlord shall not be
limited to the amount of the premiums thereon.
8.4 Indemnification. Tenant shall indemnify, hold harmless, and
---------------
defend Landlord with competent counsel reasonably satisfactory to Landlord
(except for Landlord's negligence or willful misconduct, or that of its agents,
employees, contractors or invitees) against all claims, losses, damages,
expenses or liabilities for injury or death to any person or for damage to or
loss of use of any property arising out of any occurrence in, on or about the
Building, Common Area or Land, if caused or contributed to by Tenant or Tenant's
agents, or arising out of any occurrence in, upon or at the Premises or on
account of the use, condition, occupational safety or occupancy of the Premises.
Tenant's indemnification, defense and hold harmless obligations under this Lease
shall include and apply to reasonable attorneys' fees, investigation costs, and
other costs actually incurred by Landlord. Tenant shall further indemnify,
defend and hold harmless Landlord from and against any and all claims, losses,
damages, liabilities or expenses arising from any breach or default in the
performance of any obligation on Tenant's part to be performed under the terms
of this Lease. The provisions of this Paragraph 8.4 shall survive Lease
Termination with respect to any damage, injury, death, breach or default
occurring prior to such termination. This Lease is made on the express condition
that Landlord shall not be liable for, or suffer loss by reason of, injury to
person or property, from whatever cause, in any way connected with the
condition, use, occupational safety or occupancy of the Premises specifically
including, without limitation, any liability for injury to the person or
property of Tenant or Tenant's agents, except to the extent caused by the
negligence or willful misconduct of Landlord, its agents, employees, contractors
or invitees. Notwithstanding anything to the contrary contained in this Lease,
Landlord shall not be released from, and shall indemnify, hold harmless and
defend Tenant for and against, any and all claims, losses, damages, expenses, or
liabilities for bodily injury or death to any person or for damage to any
property to the extent arising out of the negligence or wilful misconduct of
Landlord or its agents or employees; provided, however, such indemnification
obligation of Landlord shall not extend to or cover any claim by Tenant for lost
profits or loss of business.
8.5 Claims by Tenant. Landlord shall not be liable to Tenant, and
----------------
Tenant waives all claims against Landlord, for injury or death to any person,
damage to any property, or loss of use of any property in any portion of the
Project by and from all causes, including without limitation, any defect in any
portion of the Project and/or any damage or injury resulting from fire, steam,
electricity, gas, water or rain, which may leak or flow from or
-16-
into any part of the Premises, or from breakage, leakage, obstruction or other
defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or
lighting fixtures, whether the damage or injury results from conditions arising
upon the Premises or upon other portions of the Project or from other sources.
Neither Landlord nor Tenant shall be liable for any damages arising from any act
or negligence of any other tenant or user of the Project. Tenant or Tenant's
agents shall immediately notify Landlord in writing of any known defect in the
Project. The provisions of this Paragraph 8.5 shall not apply to any damage or
injury caused by Landlord's willful misconduct or negligence, or that of its
agents, employees, contractors or invitees.
8.6 Mutual Waiver of Subrogation. Landlord hereby releases Tenant,
----------------------------
and Tenant hereby releases Landlord, and their respective officers, agents,
employees and servants, from any and all claims or demands of damages, loss,
expense or injury to the Project, or to the furnishings, fixtures, equipment,
inventory or other property of either Landlord or Tenant in, about or upon the
Project, which is caused by or results from perils, events or happenings which
are the subject of insurance carried by the respective parties pursuant to this
Paragraph 8 and in force at the time of any such loss, whether due to the
negligence of the other party or its agents and regardless of cause or origin;
provided, however, that such waiver shall be effective only to the extent
permitted by the insurance covering such loss, to the extent such insurance is
not prejudiced thereby, and to the extent insured against.
9. Utilities. Tenant shall pay during the Lease Term and prior to
---------
delinquency all charges for water, gas, light, heat, power, electricity,
telephone or other communication service, janitorial service, trash pickup,
sewer and all other services supplied to or consumed on the Premises
(collectively the "Services") and all taxes, levies, fees or surcharges
therefor. Tenant shall arrange for Services to be supplied to the Premises and
shall contract for all of the Services in Tenant's name prior to the
Commencement Date. The Commencement Date shall not be delayed by reason of any
failure by Tenant to so contract for Services. In the event that any of the
Services are not separately billed or metered to the Premises, or if any of the
Services are not separately metered as of the Commencement Date, the cost of
such Services shall be a common Area Charge and Tenant shall pay, as Additional
Rent, Tenant's proportionate share of such cost to Landlord as provided in
Paragraph 12 below, except that if any meter services less than the entire
Building, Tenant's proportionate share of the costs measured by such meter shall
be based upon the square footage of the gross leasable area in the Premises as a
percentage of the total square footage of the gross leasable area of the portion
of the Building serviced by such meter. If Landlord determines that Tenant is
using a disproportionate amount of any commonly metered Services or an amount in
excess of the customary amount of any Services ordinarily furnished for use of
the Premises in accordance with the uses set
-17-
forth in Paragraph 6 above, then Landlord may elect to periodically charge
Tenant, as Additional Rent, a sum equal to Landlord's estimate of the cost of
Tenant's excess use of any or all such Services. The lack or shortage of any
Services due to any cause whatsoever shall not affect any obligation of Tenant
hereunder, and Tenant shall faithfully keep and observe all the terms,
conditions and covenants of this Lease and pay all Rentals due hereunder, all
without diminution, credit or deduction.
10. Repairs and Maintenance.
-----------------------
10.1 Landlord's Responsibilities. Subject to the provisions of
---------------------------
Paragraph 15 below, Landlord shall maintain in reasonably good order and repair
the structural roof, roof membrane and roof surface, structural and exterior
walls (including painting thereof) and foundations of the Building. In addition,
Landlord shall maintain the service contract (covering periodic inspection and
servicing) for the heating and air conditioning systems of the Premises. Tenant
shall give prompt written notice to Landlord of any known maintenance work
required to be made by Landlord pursuant to this Paragraph 10.1. The costs of
(i) repairs and maintenance of the roof surface and roof membrane, (ii) regular
servicing of the heating and air conditioning systems of the Premises, and (iii)
painting the exterior of the Premises, which are the obligation of Landlord
hereunder shall be a Common Area Charge and Tenant shall pay such costs to
Landlord as Additional Rent, as provided in Paragraph 12 below. The costs of
maintenance, repair and replacement of the structural parts of the Premises
(including foundations, floor slab, load bearing walls and roof structure),
which are the obligation of Landlord hereunder shall be at the cost and expense
of Landlord and shall not be a Common Area Charge, except for any repairs
required because of the wrongful act of Tenant or Tenant's agents, which repairs
shall be made at the expense of Tenant and as Additional Rent.
10.2 Tenant's Responsibilities. Except as expressly provided in
-------------------------
Paragraph 10.1 above, and subject to the provisions of Paragraph 2.3 hereof,
Tenant shall, at its sole' cost, maintain the entire Premises and every part
thereof, including without limitation, the windows, skylights, window frames,
plate glass, freight docks, doors and related hardware, interior walls and
partitions, and the electrical, plumbing, lighting, heating and air conditioning
systems in good order, condition and repair. Tenant's obligations with respect
to the heating and air conditioning systems of the Premises shall include the
replacement of components thereof. If Tenant fails to make repairs or perform
maintenance work required of Tenant hereunder within fourteen (14) days after
notice from Landlord specifying the need for such repairs or maintenance work,
Landlord or Landlord's agents may, in addition to all other rights and remedies
available hereunder or by law and without waiving any alternative remedies,
enter into the Premises and make such repairs and/or perform such maintenance
work. If Landlord makes such repairs and/or performs such maintenance work,
Tenant shall reimburse Landlord upon demand and as Additional Rent,
-18-
for the cost of such repairs and/or maintenance work. Landlord shall have no
liability to Tenant for any damage, inconvenience or interference with the use
of the Premises by Tenant or Tenant's agents as a result of Landlord performing
any such repairs or maintenance. Tenant shall reimburse Landlord, on demand and
as Additional Rent, for the cost of damage to the Project caused by Tenant or
Tenant's agents. Tenant expressly waives the benefits of any statute now or
hereafter in effect (including without limitation the provisions of subsection 1
of Section 1932, Section 1941 and Section 1942 of the California Civil Code and
any similar law, statute or ordinance now or hereafter in effect) which would
otherwise afford Tenant the right to make repairs at Landlord's expense (or to
deduct the cost of such repairs from Rentals due hereunder) or to terminate this
Lease because of Landlord's failure to keep the Premises in good and sanitary
order.
11. Common Area.
-----------
11.1 In General. Subject to the terms and conditions of this Lease
----------
and such rules and regulations as Landlord may from time to time prescribe,
Tenant and Tenant's agents shall have, in common with other tenants of the
Building and other permitted users, the nonexclusive right to use during the
Lease Term the access roads, parking areas, sidewalks, landscaped areas and
other facilities on the Land or in the Building designated by Landlord for the
general use and convenience of the occupants of the Building and other
authorized users, which areas and facilities are referred to herein as the
"Common Area." This right to use the Common Area shall terminate upon Lease
Termination. Landlord reserves the right from time to time to make changes in
the shape, size, location, amount and extent of the Common Area, Notwithstanding
anything to the contrary contained in this Lease, if Landlord, whether
voluntarily of by mandate of public agency with jurisdiction over the Project,
makes any alteration, addition or change to the exterior of the Building or the
Common Areas (unless such alteration or addition is required due to an
alteration or addition made by Tenant to the Premises), Landlord will make the
alteration, addition or change at its sole cost and expense, and Tenant shall
not be obligated to reimburse Landlord for any part of such expense. Landlord
further reserves the right to promulgate such reasonable rules and regulations
relating to the use of all or any portion of the Common Area and to amend such
rules and regulations from time to time with or without advance notice, as
Landlord may deem appropriate for the best interests of the occupants of the
Building and other authorized users. Any amendments to the rules and regulations
shall be effective as to Tenant, and binding on Tenant, upon delivery of a copy
of such rules and regulations to Tenant. Tenant and Tenant's agents shall
observe such rules and regulations and any failure by Tenant or Tenant's agents
to observe and comply with the rules and regulations shall be a Default by
Tenant. Landlord shall not be responsible for the nonperformance of the rules
and regulations by any tenants or occupants of the Building or other authorized
users, nor shall Landlord be liable to Tenant by reason of the
-19-
noncompliance with or violation of the rules and regulations by any other tenant
or user. Notwithstanding anything to the contrary contained in this Lease,
Tenant shall not be required to comply with any rule or regulation unless the
same applies nondiscriminatorily to all occupants of the Project, and does not
unreasonably interfere with Tenant's use of the Premises or Tenant's parking
rights.
11.2 Parking Areas. Tenant is allocated and Tenant and Tenant's
-------------
employees and invitees shall have the nonexclusive right to use not more than
the number of parking spaces set forth in Paragraph 1.13, the location of which
may be designated from time to time by Landlord. Neither Tenant nor Tenant's
agents shall at any time use more parking spaces than the number so allocated to
Tenant or park or permit the parking of their vehicles in any portion of the
Land not designated by Landlord as a nonexclusive parking use. Tenant and
Tenant's agents shall not have the exclusive right to use any specific parking
space. Notwithstanding the number of parking spaces designated for Tenant's
nonexclusive use, in the event by reason of any Law relating to or affecting
parking on the Land, or any other cause beyond Landlord's reasonable control,
Landlord is required to reduce the number of parking spaces on the Land,
Landlord shall have the right to proportionately reduce the number of Tenant's
parking spaces and the nonexclusive parking spaces of other tenants in the
Building. Landlord reserves the right to promulgate such reasonable rules and
regulations relating to the use of such parking areas on the Land as Landlord
may deem appropriate. Landlord furthermore reserves the right, after having
given Tenant reasonable notice, to have any vehicles owned by Tenant or Tenant's
agents which are parked in violation of the provisions of this Paragraph 11.2 or
in violation of Landlord's rules and regulations relating to parking, to be
towed away at Tenant's cost. In the event Landlord elects or is required by any
law to limit or control parking on the Land, by validation of parking tickets or
any other method, Tenant agrees to participate in such validation or other
program under such reasonable rules and regulations as are from time to time
established by Landlord. Landlord shall have the right to close, at reasonable
times, all or any portion of the parking areas for any reasonable purpose,
including without limitation, the prevention of a dedication thereof, or the
accrual of rights of any person or public therein. Tenant and Tenant's agents
shall not at any time park or permit the parking of (i) trucks or other vehicles
(whether owned by Tenant or other persons) adjacent to any loading areas so as
to interfere in any manner with the use of such areas, (ii) Tenant's or Tenant's
agents' vehicles or trucks, or the vehicles or trucks of Tenant's suppliers or
others, in any portion of the Common Area not designated by Landlord for such
use by Tenant, or (iii) any inoperative vehicles or equipment on any portion of
the Common Area.
11.3 Maintenance by Landlord. Landlord shall operate, manage and
-----------------------
maintain the Common Area. The manner in which the Common Area shall be
maintained and the expenditures for such
-20-
maintenance shall be at the reasonable discretion of Landlord. The cost of such
maintenance, operation and management shall be a "Common Area Charge," and
Tenant shall pay to Landlord, as Additional Rent, Tenant's share of such costs
as provided in Paragraph 12 below.
12. Common Area Charges.
-------------------
12.1 Definition. "Common Area Charge" or "Common Area Charges" as
----------
used in this Lease shall mean and include all items identified in other
paragraphs of this Lease as a Common Area Charge and the total cost paid or
incurred by Landlord for the operation, maintenance, repair, and management of
the Project which costs shall include, without limitation: the cost of Services
and utilities supplied to the Project (to the extent the same are not separately
charged or metered to tenants of the Building); water; sewage; trash removal;
fuel; electricity; heat; lighting systems; fire protection systems; storm
drainage and sanitary sewer systems; HVAC including air conditioning (to the
extent the heating and air conditioning systems in the Building are not
maintained by tenants of the Building at such tenants' sole cost and expense);
repairing or replacing the roof membrane and roof surface (including repair of
leaks and resurfacing); property and liability insurance covering the Building
and the Land and any other insurance carried by Landlord pursuant to Paragraph 8
above; window cleaning; cleaning, sweeping, striping, resurfacing of parking and
driveway areas; cleaning the Common Area following storms or other severe
weather; cleaning and repairing of sidewalks, curbs, stairways; costs related to
irrigation systems and Project signs; fees for licenses and permits required for
the operation of the Project; the cost of complying with Laws, including,
without limitation, maintenance, alterations and repairs required in connection
therewith (subject to the provisions of Paragraph 12.3 hereof); costs related to
landscape maintenance; and the cost of contesting the Validity or applicability
of any governmental enactments which may affect Common Area Charges. If the
Project contains more than one (1) building at any time during the Lease Term,
then the term "Common Area Charges" shall mean and include all of the Common
Area Charges allocable to the Building and a proportionate share (based on the
square footage of gross leasable area in the Building as a percentage of the
total of square footage of gross leasable area of the buildings in the Project
at the time in question) of all Common Area Charges which are related to the
Project in general and are not allocated to any one building in the Project.
Common Area Charges shall also include a management fee to Landlord in an amount
equal to ten percent (10%) of the total Common Area Charges. The cost of (i)
capital repair items (i.e., items which Landlord is required to capitalize and
not expense in the current year for federal income tax purposes), (ii)
replacement of the roof membrane or roof surface, (iii) resurfacing the parking
lot, (iv) repainting the exterior of the Building, and (v) structural
alterations or additions required due to a change in laws and unrelated to
Tenant's specific use of the Premises or the Common Area, shall be amortized at
ten percent (10%) over the useful life of the repair
-21-
or item, and be paid monthly by Tenant from the date of installation or repair
through Lease Termination. The specific examples of Common Area Charges stated
in this Paragraph 12.1 are in no way intended to and shall not limit the costs
comprising Common Area Charges, nor shall such examples be deemed to obligate
Landlord to incur such costs or to provide such services or to take such actions
except as Landlord may be expressly required in other portions of this Lease, or
except as Landlord, in its reasonable discretion, may elect. All costs incurred
by Landlord in good faith for the operation, maintenance, repair and management
of the Project shall be deemed conclusively binding on Tenant. Notwithstanding
anything to the contrary contained in this Lease, within thirty (30) days after
receipt by Tenant of Landlord's statement of Common Area Charges prepared
pursuant to Paragraph 12.2 hereof for any prior calendar year during the Term,
Tenant or its authorized representative shall have the right to inspect the
books of Landlord during the business hours of Landlord at Landlord's office in
the Building or, at Landlord's option, such other location as Landlord
reasonably may specify, for the purpose of verifying the information contained
in the statement. Unless Tenant asserts specific errors within thirty (30) days
after receipt of the statement, the statement shall be deemed correct as between
Landlord and Tenant, except as to individual components subsequently determined
to be in error by future audit.
12.2 Payment of Common Area Charges by Tenant. Tenant shall pay to
----------------------------------------
Landlord, as Additional Rent and without deduction or offset, an amount equal to
Tenant's percentage share (stated in Paragraph 1.10 above) of the Common Area
Charges. Payment of Common Area Charges by Tenant shall be made by whichever of
the following methods is from time to time designated by Landlord, and Landlord
reasonably may change the method of payment at any time. Tenant's share of
Common Area Charges actually incurred or paid by Landlord but not theretofore
billed to Tenant, as invoiced by Landlord shall be payable by Tenant within ten
(10) days after receipt of Landlord's invoice, but not more often than once each
calendar month. Alternatively, Tenant's share of Common Area Charges shall be
based upon Landlord's estimate of Common Area Charges and Tenant's share shall
be payable in equal monthly installments in advance on the first day of each
calendar month commencing with the month following receipt of Landlord's
estimate (and subject to Landlord's right to change the method of payment)
Within ninety (90) days after the end of each calendar year (or at Lease
Termination) Landlord shall furnish Tenant a statement showing the actual Common
Area Charges for the period to which Landlord's estimate pertains and shall
concurrently either xxxx Tenant for the balance due (payable upon demand by
Landlord) or credit Tenant's account for the excess previously paid.
Notwithstanding the foregoing provisions of this Paragraph 12, Landlord and
Tenant agree that if Landlord incurs any costs for insurance, Services, repairs
or maintenance exclusively for or to the Premises or for less than all the
tenants of the Building and such costs are Common Area Charges, or if any
improvements installed in the Premises by Tenant or Landlord are valued by the
-22-
assessor disproportionately higher than those of any other tenants in the
Building, then Tenant's share of such Common Area Charges shall be equitably
increased by Landlord to reflect the portion of any such costs or taxes incurred
by Landlord in regard to the Premises, and Tenant shall pay the same to Landlord
as Additional Rent.
12.3 Exclusions From Common Area Charges. Notwithstanding anything to
-----------------------------------
the contrary contained in this Lease, in no event shall Tenant have any
obligation to perform, to pay directly, or to reimburse Landlord for, all or any
portion of the following repairs, maintenance, improvements, replacements,
premiums, claims, losses, fees, commissions, charges, disbursements, attorneys'
fees, experts' fees, costs and expenses (collectively, "Costs").
(a) Losses Caused by Others and Construction Defects. Costs
------------------------------------------------
occasioned by the act, omission or violation of Law by Landlord, any other
occupant of the Project, or their respective agents, employees or
contractors, or Costs to correct any construction defect in the Premises
(other than alterations constructed by Tenant), Building or Project, or
costs arising out of the failure to construct the Building, Premises,
tenant improvements (other than the improvements identified on Exhibit "C-
2") or Common Areas in accordance with Laws and private restrictions
applicable at the time of construction thereof.
(b) Condemnation and Insurance Costs. Costs occasioned by the
--------------------------------
exercise of the power of eminent domain, or increases in insurance Costs
caused by the activities of other occupant(s) of the Project.
(c) Reimbursable Expenses. Costs for which Landlord has a right of
---------------------
reimbursement from others, or Costs which Tenant pays directly to a third
person.
(d) Utilities or Services. Costs (i) arising from the
---------------------
disproportionate use of any utility or service supplied by Landlord to any
other occupant of the Project; or (ii) associated with utilities and
services of a type not provided to Tenant.
(e) Leasing Expenses. Costs incurred in connection with negotiations
----------------
or disputes with other occupant(s) of the Project, and Costs arising from
the violation by Landlord or any occupant of the Project (other than
Tenant) of the terms and conditions of any lease or other agreement.
(f) Reserves. Depreciation, amortization or other expense reserves.
--------
(g) Mortgages. Interest, charges and fees incurred on debt, payments
---------
or mortgages and rent under ground leases.
-23-
(h) Hazardous Materials. Costs incurred to investigate the presence
-------------------
of any Hazardous Material, Costs to respond to any claim of Hazardous
Material contamination or damage, Costs to remove any Hazardous Material
from the Premises, Building or Project or to remediate any Hazardous
Material contamination, and any judgments or other Costs incurred in
connection with any Hazardous Material exposure or release, except to the
extent such Costs are caused by or incurred by reason of the storage, use
or disposal of the Hazardous Material in question by Tenant, its agents,
employees, contractors or invitees.
(i) Management. Wages, salaries, compensation and labor burden for
----------
any employee not stationed on the Project on a full-time basis, or any fee,
profit or compensation retained by Landlord or its affiliates for
management and administration of the Project in excess of ten percent (10%)
of Common Area Charges.
(j) Amortization of Capital Improvements Required by Law. Costs for
----------------------------------------------------
capital improvements required by Law that do not relate solely to Tenant's
particular use or occupancy of the Premises, and Costs of retrofitting any
part of the Project, other than the Premises, in order to comply with the
ADA in connection with the leasing or alteration of portions of the Project
other than the Premises.
13. Alterations and Improvements.
----------------------------
13.1 In General. Tenant shall not make, or permit to be made,
----------
any alterations, changes, enlargements, improvements or additions (collectively
"Alterations") in excess of Five Thousand Dollars ($5,000) in, on, about or to
the Premises, or any part thereof, without the prior written consent of
Landlord (which shall not be unreasonably withheld or delayed) and without
acquiring and complying with the conditions of all permits required for such
Alterations by any governmental authority having jurisdiction thereof. The term
"Alterations" as used in this Paragraph 13 shall also include all heating,
lighting, electrical (including all wiring, conduit outlets, drops, xxxx ducts,
main and subpanels), air conditioning and partitioning in the Premises made by
Tenant regardless of how affixed to the Premises. As a condition to the giving
of its consent, Landlord may impose such reasonable requirements as Landlord
reasonably may deem necessary in its sole discretion, including without
limitation, the manner in which the work is done; a right of approval of the
contractor by whom the work is to be performed; the times during which the work
is to be accomplished; the requirement that Tenant post a completion bond in an
amount and form reasonably satisfactory to Landlord; and the requirement that
Tenant reimburse Landlord, as Additional Rent, for Landlord's actual costs
incurred in reviewing any proposed Alteration, whether or not Landlord's consent
is granted. In the event Landlord consents to the making of any Alterations by
Tenant, the same shall be made by Tenant at Tenant's sole cost and expense, in
accordance with the plans and specifications approved by Landlord and in a
manner causing Landlord and Landlord's agents and
-24-
other tenants of the Building the least interference and inconvenience
practicable under the circumstances. Tenant shall give written notice to
Landlord five days prior to employing any laborer or contractor to perform
services related to, or receiving materials for use upon the Premises, and prior
to the commencement of any work of improvement on the Premises. Any Alterations
to the Premises made by Tenant shall be made in accordance with applicable Laws
and in a first-class workmanlike manner. In making any such Alterations, Tenant
shall, at Tenant's sole cost and expense, file for and secure and comply with
any and all permits or approvals required by any governmental departments or
authorities having jurisdiction thereof and any utility company having an
interest therein. In no event shall Tenant make any structural changes to the
Premises or make any changes to the Premises which would weaken or impair the
structural integrity of the Building.
13.2 Removal Upon Lease Termination. At the time Tenant requests
------------------------------
Landlord's consent, Tenant shall request a decision from Landlord in writing as
to whether Landlord will require Tenant, at Tenant's expense, to remove any such
Alterations and restore the Premises to their prior condition at Lease
Termination. In the event Tenant fails to earlier obtain Landlord's written
decision as to whether Tenant will be required to remove any Alteration, or in
the event Landlord elects to defer such decision, then no less than ninety (90)
nor more than one hundred twenty (120) days prior to the expiration of the Lease
Term, Tenant by written notice to Landlord shall request Landlord to inform
Tenant whether or not Landlord desires to have any Alterations made to the
Premises by Tenant removed at Lease Termination. Following receipt of such
notice, Landlord may elect to have all or a portion of Tenant's Alterations
removed from the Premises at Lease Termination, and Tenant shall, at its sole
cost and expense, remove at Lease Termination such Alterations designated by
Landlord for removal and repair all damage to the Project arising from such
removal. In the event Tenant fails to so request Landlord's decision or fails to
remove any Alterations designated by Landlord for removal, Landlord may remove
any Alterations made to the Premises by Tenant and repair all damage to the
Premises and Common Area arising from such removal, and may recover from Tenant
all reasonable costs and expenses incurred thereby. Tenant's obligation to pay
such costs and expenses to Landlord shall survive Lease Termination. Unless
Landlord elects to have Tenant remove any such Alterations, all such
Alterations, except for moveable furniture and trade fixtures of Tenant not
affixed to the Premises, shall become the property of Landlord upon Lease
Termination (without any payment therefor) and remain upon and be surrendered
with the Premises at Lease Termination.
13.3 Landlord's Improvements. All fixtures, improvements or
-----------------------
equipment which are installed, constructed on or attached to the Premises,
Building or Common Area by Landlord shall be a part of the realty and belong to
Landlord.
-25-
14. Default and Remedies.
--------------------
14.1 Events of Default. The term "Default by Tenant" as used
-----------------
in this Lease shall mean the occurrence of any of the following events:
(a) Tenant's failure to pay when due any Rentals;
(b) Commencement and continuation for at least sixty
(60) days of any case, action or proceeding by, against or concerning
Tenant under any federal or state bankruptcy, insolvency or other debtor's
relief law, including without limitation, (i) a case under Title 11 of the
United States Code concerning Tenant, whether under Chapter 7, 11, or 13 of
such Title or under any other Chapter, or (ii) a case, action or proceeding
seeking Tenant's financial reorganization or an arrangement with any of
Tenant's creditors;
(c) Voluntary or involuntary appointment of a receiver,
trustee, keeper or other person who takes possession for more than sixty
(60) days of substantially all of Tenant's assets or of any asset used in
Tenant's business on the Premises, regardless of whether such appointment
is as a result of insolvency or any other cause;
(d) Execution of an assignment for the benefit of
creditors of substantially all assets of Tenant available by law for the
satisfaction of judgment creditors;
(e) Commencement of proceedings for winding up or
dissolving (whether voluntary or involuntary) the entity of Tenant, if
Tenant is a corporation or a partnership;
(f) Levy of a writ of attachment or execution on
Tenant's interest under this Lease, if such writ continues for a period of
thirty (30) days;
(g) Transfer or attempted Transfer of this Lease or the
Premises by Tenant contrary to the provisions of Paragraph 24 below; or
(h) Breach by Tenant of any term, covenant, condition,
warranty, or other provision contained in this Lease or of any other
obligation owing or due to Landlord.
14.2 Remedies. Upon any Default by Tenant, Landlord shall
--------
have the following remedies, in addition to all other rights and remedies
provided by law, to which Landlord may resort cumulatively, or in the
alternative:
14.2.1 Termination. Upon any Default by Tenant,
-----------
Landlord shall give written notice to Tenant of such default and shall have the
right (but not the obligation) to
-26-
terminate this Lease and Tenant's right to possession of the Premises if (i)
such default is in the payment of Rentals and is not cured within five (5) days
after any such notice, or, (ii) with respect to the defaults referred to in
subparagraphs 14.1(d), (e), (g) and (h), and such default is not cured within
thirty (30) days after any such notice (or if a default under subparagraph
14.1(h) cannot be reasonably cured within thirty (30) days, if Tenant does not
commence to cure the default within the thirty (30) day period or does not
diligently and in good faith prosecute the cure to completion), or, (iii) with
respect to the defaults specified in subparagraphs 14.1(b), (c) and (f) such
default is not cured within the respective time periods specified in those
subparagraphs. The parties agree that any notice given by Landlord to Tenant
pursuant to this Paragraph 14.2.1 shall be sufficient notice for purposes of
California Code of Civil Procedure Section 1161 and Landlord shall not be
required to give any additional notice in order to be entitled to commence an
unlawful detainer proceeding. Upon termination of this Lease, Landlord shall
have the right to recover from Tenant:
(a) The worth at the time of award of the unpaid
Rentals which had been earned at the time of termination;
(b) The worth at the time of award of the amount by
which the Rentals 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;
(c) The worth at the time of award (computed by
discounting at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent) of the amount by which the
Rentals for the balance of the Lease Term after the time of award exceed
the amount of such rental loss that Tenant proves could be reasonably
avoided;
(d) Any other amounts necessary to compensate Landlord
for all detriment proximately caused by the Default by Tenant or which in
the ordinary course of events would likely result, including without
limitation the following:
(i) Expenses in retaking possession of the
Premises;
(ii) Expenses for cleaning, repairing or restoring
the Premises;
(iii) Any unamortized real estate brokerage
commission paid in connection with this Lease;
(iv) Expenses for removing, transporting, and
storing any of Tenant's property left at the Premises (although Landlord shall
have no obligation to remove,
-27-
transport, or store any such property);
(v) Expenses of reletting the Premises,
including without limitation, brokerage commissions and attorneys' fees;
(vi) Attorneys' fees and court costs; and
(vii) Costs of carrying the Premises such as
repairs, maintenance, taxes and insurance premiums, utilities and security
precautions (if any).
(e) The "worth at the time of award" of the amounts
referred to in subparagraphs (a) and (b) of this Paragraph 14.2.1 is
computed by allowing interest at an annual rate equal to the greater of:
ten percent (10%); or five percent (5%) plus the rate established by the
Federal Reserve Bank of San Francisco, as of the twenty-fifth (25th) day of
the month immediately preceding the Default by Tenant, on advances to
member banks under Sections 13 and 13(a) of the Federal Reserve Act, as now
in effect or hereafter from time to time amended, not to exceed the maximum
rate allowable by law.
14.2.2 Continuance of Lease. Upon any Default by Tenant and
--------------------
unless and until Landlord elects to terminate this Lease pursuant to Paragraph
14.2.1 above, this Lease shall continue in effect after the Default by Tenant
and Landlord may enforce all its rights and remedies under this Lease, including
without limitation, the right to recover payment of Rentals as they become due.
Neither efforts by Landlord to mitigate damages caused by a Default by Tenant
nor the acceptance of any Rentals shall constitute a waiver by Landlord of any
of Landlord's rights or remedies, including the rights and remedies specified in
Paragraph 14.2.1 above.
15. Damage or Destruction.
---------------------
15.1 Definition of Terms. For the purposes of this Lease, the
-------------------
term: (a) "Insured Casualty" means damage to or destruction of the Premises from
a cause actually insured against, or required by this Lease to be insured
against, for which the insurance proceeds paid or made available to Landlord are
sufficient to rebuild or restore the Premises under then existing building codes
to the condition existing immediately prior to the damage or destruction; and
(b) "Uninsured Casualty" means damage to or destruction of the Premises from a
cause not actually insured against, or not required to be insured against, or
from a cause actually insured against but for which the insurance proceeds paid
or made available to Landlord are for any reason insufficient to rebuild or
restore the Premises under then existing building codes to the condition
existing immediately prior to the damage or destruction, or from a cause
actually insured against but for which the insurance proceeds are not paid or
made available to Landlord
-28-
within ninety (90) days of the event of damage or destruction.
15.2 Insured Casualty.
----------------
15.2.1 Rebuilding Required. In the event of an Insured Casualty
-------------------
where the extent of damage or destruction is less than twenty-five percent (25%)
of the then full replacement cost of the Premises, Landlord shall rebuild or
restore the Premises to the condition existing immediately prior to the damage
or destruction, provided the damage or destruction was not a result of a
negligent or willful act of Tenant, and that there exist no governmental codes
or regulations that would interfere with Landlord's ability to so rebuild or
restore.
15.2.2 Landlord's Election. In the event of an Insured Casualty
-------------------
where the extent of damage or destruction is equal to or greater than twenty-
five percent (25%) of the then full replacement cost of the Premises, Landlord
may, at its option and at its sole discretion, rebuild or restore the Premises
to the condition existing immediately prior to the damage or destruction, or
terminate this Lease. Landlord shall notify Tenant in writing within sixty (60)
days after the event of damage or destruction of Landlord's election to either
rebuild or restore the Premises or terminate this Lease.
15.2.3 Continuance of Lease. If Landlord is required to rebuild
--------------------
or restore the Premises pursuant to Paragraph 15.2.1 or if Landlord elects to
rebuild or restore the Premises pursuant to Paragraph 15.2.2, this Lease shall
remain in effect and Tenant shall have no claim against Landlord for
compensation for inconvenience or loss of business during any period of repair
or restoration.
15.3 Uninsured Casualty.
------------------
15.3.1 Landlord's Election. In the event of an Uninsured
-------------------
Casualty, Landlord may, at its option and at its sole discretion (i) rebuild or
restore the Premises as soon as reasonably possible at Landlord's expense
(unless the damage or destruction was caused by a negligent or willful act of
Tenant, in which event Tenant shall pay all costs of rebuilding or restoring),
in which event this Lease shall continue in full force and effect or (ii)
terminate this Lease, in which event Landlord shall give written notice to
Tenant within sixty (60) days after the event of damage or destruction of
Landlord's election to terminate this Lease as of the date of the event of
damage or destruction, and if the damage or destruction was caused by a
negligent or willful act of Tenant, Tenant shall be liable therefor to Landlord.
15.3.2 Tenant's Ability to Continue Lease. If Landlord elects
----------------------------------
to terminate this Lease and the extent of damage or destruction is less than
twenty-five percent (25%) of the then full replacement cost of the Premises or
the proceeds paid or made available to Landlord are for any reason insufficient
to rebuild
-29-
or restore the Premises under then existing building codes to the condition
existing immediately prior to the damage or destruction, and if there exist no
governmental codes or regulations that would interfere with Landlord's ability
to so repair or restore, then Tenant may nevertheless cause the Lease to
continue in effect by (i) notifying Landlord in writing within ten (10) days
after Landlord's notice of termination of Tenant's agreement to pay all costs of
rebuilding or restoring not covered by insurance, and (ii) providing Landlord
with reasonable security for or assurance of such payment. Tenant shall pay to
Landlord in cash no later than thirty (30) days prior to the date of
commencement of construction the reasonable estimated cost of rebuilding or
restoring. In the event Tenant fails to pay such cost to Landlord by the date
specified, Landlord may immediately terminate the Lease and recover from Tenant
all reasonable costs incurred by Landlord in preparation for construction. If
the actual cost of rebuilding or restoring exceeds the estimated cost of such
work, Tenant shall pay the difference to Landlord in cash upon notification by
Landlord of the final cost. If the cost of rebuilding or restoring is less than
the estimated cost of such work, Tenant shall be entitled to a refund of the
difference upon completion of the rebuilding or restoring and determination of
final cost.
15.4 Tenant's Election. Notwithstanding anything to the contrary
-----------------
contained in this Paragraph 15, Tenant may elect to terminate this Lease in the
event the Premises are damaged or destroyed and, in the reasonable opinion of
Landlord's architect or construction consultants, the restoration of the
Premises cannot be substantially completed within one hundred eighty (180) days
after the event of damage or destruction. Tenant's election shall be made by
written notice to Landlord within ten (10) days after Tenant receives from
Landlord the estimate of the time needed to complete repair or restoration of
the Premises. If Tenant does not deliver said notice within said ten (10) day
period, Tenant may not later terminate this Lease even if substantial completion
of the rebuilding or restoration occurs subsequent to said one hundred eighty
(180) day period, provided that Landlord is proceeding with diligence to rebuild
or restore the Premises. If Tenant delivers said notice within said ten (10) day
period, this Lease shall terminate as of the date of the event of damage or
destruction.
15.5 Damage or Destruction Near End of Lease Term. Notwithstanding
--------------------------------------------
anything to the contrary contained in this Paragraph 15, in the event the
Premises are damaged or destroyed in whole or in part (regardless of the extent
of damage) from any cause during the last twelve (12) months of the Lease Term,
Landlord or Tenant may, at its option, terminate this Lease as of the date of
the event of damage or destruction by giving written notice to the other of its
election to do so within thirty (30) days after the event of such damage or
destruction. For purposes of this Paragraph 15.5, if Tenant has been granted an
option to extend or renew the Lease Term pursuant to another provision of this
Lease, then the damage or destruction shall be deemed to have occurred during
the last twelve (12) months of the Lease Term if
-30-
Tenant fails to exercise its option to extend or renew within twenty (20) days
after the event of damage or destruction.
15.6 Termination of Lease. If the Lease is terminated pursuant to
--------------------
this Paragraph 15, the unused balance of the Security Deposit shall be refunded
to Tenant. The current Rent shall be proportionately reduced during the period
following the event of damage or destruction until the date on which Tenant
surrenders the Premises, based upon the extent to which the damage or
destruction interferes with Tenant's business conducted in the Premises, as
reasonably determined by Landlord, to the extent such loss is covered as an
insured peril by the insurance carried by Landlord pursuant to Paragraph 8.1.
All other Rentals due hereunder shall continue unaffected during such period.
The proceeds of insurance carried Tenant pursuant to Paragraph 8.2 shall be
paid to Landlord and Tenant, as their interests appear.
15.7 Abatement of Rentals. If the Premises are to be rebuilt or
--------------------
restored pursuant to this Paragraph 15, the then current Rentals shall be
proportionately reduced during the period of repair or restoration, based upon
the extent to which the making of repairs interferes with Tenant's business
conducted in the Premises, as reasonably determined by Tenant and Landlord, to
the extent such loss is covered as an insured peril by the insurance carried, or
required to be carried hereunder, by Landlord pursuant to Paragraph 8.1.
15.8 Liability for Personal Property. In no event shall Landlord have
-------------------------------
any liability for, nor shall it be required to repair or restore, any injury or
damage to any Alterations to the Premises made by Tenant, trade fixtures,
equipment, merchandise, furniture, or any other property installed by Tenant or
at the expense of Tenant. If Landlord or Tenant do not elect to terminate this
Lease pursuant to this Paragraph 15, Tenant shall be obligated to promptly
rebuild or restore the same to the condition existing immediately prior to the
damage or destruction in accordance with the provisions of Paragraph 13.1.
15.9 Waiver of Civil Code Remedies. Landlord and Tenant acknowledge
-----------------------------
that the rights and obligations of the parties upon damage or destruction of the
Premises are as set forth herein; therefore Tenant hereby expressly waives any
rights to terminate this Lease upon damage or destruction of the Premises,
except as specifically provided by this Lease, including without limitation any
rights pursuant to the provisions of Subdivision 2 of Section 1932 and
Subdivision 4 of Section 1933 of the California Civil Code, as amended from time
to time, and the provisions of any similar law hereinafter enacted, which
provisions relate to the termination of the hiring of a thing upon its
substantial damage or destruction.
15.10 Damage or Destruction to the Building. The foregoing
-------------------------------------
notwithstanding, in the event the Building is damaged or destroyed to the extent
of more than thirty-three and one-third
-31-
percent (33 1/3%) of the then replacement cost thereof, Landlord may elect to
terminate this Lease, whether or not the Premises are injured.
16. Condemnation.
------------
16.1 Definition of Terms. For the purposes of this Lease, the
-------------------
term: (a) "Taking" means a taking of the Premises, Common Area or Building or
damage related to the exercise of the power of eminent domain and includes,
without limitation, a voluntary conveyance, in lieu of court proceedings, to any
agency, authority, public utility, person or corporate entity empowered to
condemn property; (b) "Total Taking" means the Taking of the entire Premises or
so much of the Premises, Building or Common Area as to prevent or substantially
impair the use thereof by Tenant for the uses herein specified; provided,
however, that in no event shall the Taking of less than twenty percent (20%) of
the Premises or fifty percent (50%) of the Building and Common Area be
considered a Total Taking; (c) "Partial Taking" means the Taking of only a
portion of the Premises, Building or Common Area which does not constitute a
Total Taking; (d) "Date of Taking" means the date upon which the title to the
Premises, Building or Common Area or a portion thereof, passes to and vests in
the condemnor or the effective date of any order for possession if issued prior
to the date title vests in the condemnor; and (e) "Award" means the amount of
any award made, consideration paid, or damages ordered as a result of a Taking.
16.2 Rights. The parties agree that in the event of a Taking
------
all rights between them or in and to an Award shall be as set forth herein.
16.3 Total Taking. In the event of a Total Taking during the
------------
Lease Term: (a) the rights of Tenant under this Lease and the leasehold estate
of Tenant in and to the Premises shall cease and terminate as of the Date of
Taking; (b) Landlord shall refund to Tenant any prepaid Rent and the unused
balance of the Security Deposit; (c) Tenant shall pay Landlord any Rentals due
Landlord under the Lease, prorated as of the Date of Taking; (d) to the extent
the Award is not payable to the beneficiary or mortgagee of a deed of trust or
mortgage affecting the Premises, Tenant shall receive from the Award those
portions of the Award attributable to trade fixtures of Tenant; and (e) the
remainder of the Award shall be paid to and be the property of Landlord. Nothing
in this Paragraph 16.3 shall be deemed to deny Tenant its right to recover all
awards made by the condemning authority for moving costs, relocation costs and
costs attributable to goodwill and leasehold improvements installed by Tenant.
16.4 Partial Taking. In the event of a Partial Taking during
--------------
the Lease Term: (a) the rights of Tenant under the Lease and the leasehold
estate of Tenant in and to the portion of the Premises taken shall cease and
terminate as of the Date of Taking; (b) from and after the Date of Taking the
Rent shall be an amount
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equal to the proportion that the gross square footage of the Premises, as
reduced, bears to the gross square footage of the Building, as reduced; (c) to
the extent the Award is not payable to the beneficiary or mortgagee of a deed of
trust or mortgage affecting the Premises, Tenant shall receive from the Award
the portions of the Award attributable to trade fixtures of Tenant; and (d) the
remainder of the Award shall be paid to and be the property of Landlord. Each
party waives the provisions of California Code of Civil Procedure Section
1265.130 allowing either party to petition the Superior Court to terminate this
Lease in the event of a Partial Taking. Nothing contained in this Paragraph
16.4 shall be deemed to deny Tenant its right to recover awards made by the
condemning authority for moving cots, relocation costs, and costs attributable
to goodwill and leasehold improvements installed by Tenant.
17. Liens.
-----
17.1 Premises to Be Free of Liens. Tenant shall pay for all
----------------------------
labor and services performed for, and all materials used by or furnished to
Tenant, Tenant's agents, or any contractor employed by Tenant with respect to
the Premises. Tenant shall indemnify, defend and hold Landlord harmless from and
keep the Project free from any liens, claims, demands, encumbrances, or
judgments, including all costs, liabilities and attorneys' fees with respect
thereto, created or suffered by reason of any labor or services performed for,
or materials used by or furnished to Tenant or Tenant's agents or any contractor
employed by Tenant with respect to the Premises. Landlord shall have the right,
at all times, to post and keep posted on the Premises any notices permitted or
required by law, or which Landlord shall deem proper for the protection of
Landlord and the Premises, Building, Common Area and Land, and any other party
having an interest therein, from mechanics' and materialmen's liens, including
without limitation a notice of nonresponsibility. In the event Tenant is
required to post an improvement bond with a public agency in connection with any
work performed by Tenant on or to the Premises, Tenant shall include Landlord as
an additional obligee.
17.2 Notice of Lien; Bond. Should any claims of lien be filed
--------------------
against, or any action be commenced affecting the Premises, Tenant's interest in
the Premises or any other portion of the Project, Tenant shall give Landlord
notice of such lien or action within three (3) days after Tenant receives notice
of the filing of the lien or the commencement of the action. In the event that
Tenant shall not, within twenty (20) days following the imposition of any such
lien, cause such lien to be released of record by payment or posting of a proper
bond, Landlord shall have, in addition to all other remedies provided herein and
by law, the right, but not the obligation, to cause the same to be released by
such means as Landlord shall deem proper, including payment of the claim giving
rise to such lien or posting of a proper bond. All such sums paid by Landlord
and all expenses incurred by Landlord in connection therewith, including
attorneys' fees and costs, shall
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be payable to Landlord by Tenant as Additional Rent on demand.
18. Landlord's Right of Access to Premises. Landlord reserves and
--------------------------------------
shall have the right and Tenant and Tenant's agents shall permit Landlord and
Landlord's agents to enter the Premises at any reasonable time for the purpose
of (i) inspecting the Premises, (ii) performing Landlord's maintenance and
repair responsibilities set forth herein, (iii) posting notices of
nonresponsibility, (iv) placing upon the Premises at any time "For Sale" signs,
(v) placing on the Premises ordinary "For Lease" signs at any time within ninety
(90) days prior to Lease Termination, or at any time Tenant is in uncured
default hereunder, or at such other times as agreed to by Landlord and Tenant,
(vi) protecting the Premises in the event of an emergency and (vii) exhibiting
the Premises to prospective purchasers, lenders or tenants. In the event of an
emergency, Landlord shall have the right to use any and all means which
Landlord reasonably may deem proper to gain access to the Premises. Any entry to
the Premises by Landlord or Landlord's agents in accordance with this Paragraph
18 or any other provision of this Lease shall not under any circumstances be
construed or deemed to be a forcible or unlawful entry into, or a detainer of
the Premises, or an eviction of Tenant from the Premises or any portion thereof
nor give Tenant the right to xxxxx the Rentals payable under this Lease. Except
to the extent caused by the negligence or willful misconduct of Landlord, its
agents, employees, contractors or invitees, Tenant hereby waives any claims for
damages for any injury or inconvenience to or interference with Tenant's
business, any loss of occupancy or quiet enjoyment of the Premises, and any
other loss occasioned by Landlord's or Landlord's agents' entry into the
Premises as permitted by this Paragraph 18 or any other provision of this Lease.
Notwithstanding anything to the contrary contained in this Lease, Landlord and
Landlord's agents, except in the case of emergency, shall provide Tenant with
twenty-four (24) hours' notice prior to entry of the Premises. Any entry by
Landlord and Landlord's agents shall not impair Tenant's operations more than
reasonably necessary, and Tenant shall have the right to have an employee
accompany Landlord at all times that Landlord is present on the Premises.
19. Landlord's Right to Perform Tenant's Covenants. Except as
----------------------------------------------
otherwise expressly provided herein, if Tenant shall at any time fail to make
any payment or perform any other act required to be made or performed by Tenant
under this Lease, Landlord may upon ten (10) days written notice to Tenant, but
shall not be obligated to and without waiving or releasing Tenant from any
obligation under this Lease, make such payment or perform such other act to the
extent that Landlord may deem desirable, and in connection therewith, pay
expenses and employ counsel. All reasonable sums so paid by Landlord and all
penalties, interest and reasonable costs in connection therewith shall be due
and payable by Tenant as Additional Rent upon demand.
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20. Lender Requirements.
-------------------
20.1 Subordination. This Lease, at Landlord's option, shall
-------------
be subject and subordinate to the lien of any mortgages or deeds of trust
(including all advances thereunder, renewals, replacements, modifications,
supplements, consolidations, and extensions thereof) in any amount(s) whatsoever
now or hereafter placed on or against or affecting the Premises, Building or
Land, or Landlord's interest or estate therein without the necessity of the
execution and delivery of any further instruments on the part of Tenant to
effectuate such subordination. If any mortgagee or beneficiary shall elect to
have this Lease prior to the lien of its mortgage or deed of trust, and shall
give written notice thereof to Tenant, this Lease shall be deemed prior to such
mortgage or deed of trust, whether this Lease is dated prior or subsequent to
the date of such mortgage or deed of trust or the date of the recording thereof.
20.2 Subordination Agreements. Tenant shall execute and
------------------------
deliver, without charge therefor, such further instruments evidencing
subordination of this Lease to the lien of any mortgages or deeds of trust
affecting the Premises, Building or Land as may be required by Landlord within
ten (10) days following Landlord's request therefor; provided that such
mortgagee or beneficiary under such mortgage or deed of trust agrees in writing
that this Lease shall not be terminated or modified in any material way in the
event of any foreclosure if Tenant is not in default under this Lease. Failure
of Tenant to execute such instruments evidencing subordination of this Lease
shall constitute a Default by Tenant hereunder.
20.3 Approval by Lenders. Tenant recognizes that the
-------------------
provisions of this Lease may be subject to the approval of any financial
institution that may make a loan secured by a new or subsequent deed of trust or
mortgage affecting the Premises, Building or Land. If the financial institution
should require, as a condition to such financing, any modifications of this
Lease in order to protect its security interest in the Premises including
without limitation, modification of the provisions relating to damage to and/or
condemnation of the Premises, Tenant agrees to execute the appropriate
amendments; provided, however, that no modification shall substantially change
the size, location or dimension of the Premises, or increase the Rentals payable
by Tenant hereunder, or reduce or materially change Tenant's other rights
hereunder. If Tenant refuses to execute any such amendment, Landlord may, in
Landlord's reasonable discretion, terminate this Lease.
20.4 Attornment. In the event of foreclosure or the exercise
----------
of the power of sale under any mortgage or deed of trust made by Landlord and
covering the Premises, Building or Land, Tenant shall attorn to the purchaser
upon any such foreclosure or sale and recognize such purchaser as the Landlord
under this Lease, provided such purchaser expressly agrees in writing to be
bound by
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the terms of the Lease, including, but not limited to, the quiet enjoyment
provisions of Paragraph 40.
20.5 Estoppel Certificates and Financial Statements.
-----------------------------------------------
(a) Delivery by Tenant. Tenant shall, within ten (10)
------------------
business days following request by Landlord therefor and without charge, execute
and deliver to Landlord any and all documents, estoppel certificates, and
current financial statements of Tenant reasonably requested by Landlord in
connection with the sale or financing of the Premises, Building or Land, or
reasonably requested by any lender making a loan affecting the Premises,
Building or Land. Landlord may require that Tenant in any estoppel certificate
shall (i) certify that this Lease is unmodified and in full force and effect
(or, if modified, state the nature of such modification and certify that this
Lease, as so modified, is in full force and effect) and has not been assigned,
(ii) certify the date to which Rentals are paid in advance, if any, (iii)
acknowledge that there are not, to Tenant's knowledge, any uncured defaults on
the part of Landlord hereunder, or specify such defaults if claimed, (iv)
evidence the status of this Lease as may be required either by a lender making a
loan to Landlord to be secured by a deed of trust or mortgage covering the
Premises, Building or Land or a purchaser of the Premises, Building or Land from
Landlord, (v) warrant that in the event any beneficiary of any security
instrument encumbering the Premises, Building or Land forecloses on the security
instrument or sells the Premises, Building or Land pursuant to any power of sale
contained in such security instrument, such beneficiary shall not be liable for
the Security Deposit, unless the Security Deposit actually has been received by
the beneficiary from Landlord; (vi) certify the date Tenant entered into
occupancy of the Premises and that Tenant is conducting business at the
Premises, (vii) certify that all improvements to be constructed on the Premises
by Landlord have been substantially completed except for punch list items which
do not prevent Tenant from using the Premises for its intended use, and (viii)
certify such other matters relating to the Lease and/or Premises as may
reasonably be requested by a lender making a loan to Landlord or a purchaser of
the Premises, Building or Land from Landlord. Any such estoppel certificate may
be conclusively relied upon by any prospective purchaser or encumbrancer of the
Premises, Building or Land. Any financial statements of Tenant shall include an
opinion of a certified public accountant (if available) and a balance sheet and
profit and loss statement for the most recent fiscal year, or a reasonable
substitute for the form of such financial information, all prepared in
accordance with generally accepted accounting principles consistently applied.
(b) Nondelivery by Tenant. Tenant's failure to deliver an
---------------------
estoppel certificate as required pursuant to Paragraph 20.5(a) above shall be
conclusive upon Tenant that (i) this Lease is in full force and effect, without
modification except as may be represented by Landlord and has not been assigned,
(ii) there are now no uncured defaults in Landlord's performance, (iii)
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no Rentals have been paid in advance except those that are set forth in this
Lease, (iv) no beneficiary of any security instrument encumbering the Premises,
Building or Land shall be liable for the Security Deposit in the event of a
foreclosure or sale under such security instrument, unless the Security Deposit
actually has been received by the beneficiary from Landlord; (v) the
improvements to be constructed on the Premises by Landlord have been
substantially completed except for punch list items which do not prevent Tenant
from using the Premises for its intended use, and (vi) Tenant has entered into
occupancy of the Premises on such date as may be represented by Landlord and is
open and conducting business at the Premises. Tenant's failure to deliver any
financial statements, estoppel certificates or other documents as required
pursuant to Paragraph 20.5(a) above shall be a Default by Tenant.
21. Holding Over. This Lease shall terminate without further notice at
------------
the expiration of the Lease Term. It is the desire of Landlord either to enter
into a new lease with Tenant for the Premises prior to the termination hereof or
to have Tenant vacate the Premises upon expiration of the Lease Term pursuant to
Paragraph 35 below. Therefore, any holding over by Tenant after Lease
Termination shall not constitute a renewal or extension of the Lease Term, nor
give Tenant any rights in or to the Premises except as expressly provided in
this Lease. Any holding over after Lease Termination with the consent of
Landlord, shall be construed to be a tenancy from month to month, at one hundred
twenty-five percent (125%) of the monthly Rent for the month preceding Lease
Termination in addition to all Additional Rent payable hereunder, and shall
otherwise be on the terms and conditions herein specified insofar as applicable.
If Tenant remains in possession of the Premises after Lease Termination without
Landlord's consent, Tenant shall indemnify, defend and hold Landlord harmless
from and against any loss, damage, expense, claim or liability resulting from
Tenant's failure to surrender the Premises, including without limitation, any
claims made by any succeeding tenant based on delay in the availability of the
Premises.
22. Notices. Any notice required or desired to be given under this Lease
-------
shall be in writing, and all notices shall be given by personal delivery or
mailing. All notices personally given on Tenant may be delivered to any person
apparently in charge at the Premises, on any corporate officer or agent of
Tenant if Tenant is a corporation, or on any one signatory party if more than
one party signs this Lease on behalf of Tenant; any notice so given shall be
binding upon all signatory parties as if served upon each such party personally.
Any notice given pursuant to this Paragraph 22 shall be deemed to have been
given when personally delivered, or if mailed, when seventy-two (72) hours have
elapsed from the time when such notice was deposited in the United States mail,
certified or registered mail and postage prepaid, addressed to the party at the
last address given for purposes of notice pursuant to the provisions of this
Paragraph 22. At the date of execution of this Lease, the addresses of Landlord
and Tenant are set forth in Paragraph 1.12 above.
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23. Attorneys' Fees. In the event either party hereto shall bring any
----------------
action or legal proceeding for damages for an alleged breach of any provision of
this Lease, to recover Rentals, to enforce an indemnity, defense or hold
harmless obligation, to terminate the tenancy of the Premises, or to enforce,
protect, interpret, or establish any term, condition, or covenant of this Lease
or right or remedy of either party, the prevailing party shall be entitled to
recover, as a part of such action or proceeding, reasonable attorneys' fees and
court costs, including reasonable attorneys' fees and costs for appeal, as may
be fixed by the court or jury. Notwithstanding anything to the contrary
contained in this Lease, "prevailing party" as used in this paragraph shall
include the party who dismisses an action for recovery hereunder in exchange for
sums allegedly due, performance of covenants allegedly breached or
considerations substantially equal to the relief sought in the action.
24. Assignment, Subletting and Hypothecation.
----------------------------------------
24.1 In General. Tenant shall not voluntarily sell, assign or
----------
transfer all or any part of Tenant's interest in this Lease or in the Premises
or any part thereof, sublease all or any part of the Premises, or permit all or
any part of the Premises to be used by any person or entity other than Tenant or
Tenant's employees, except as specifically provided in this Paragraph 24.
24.2 Voluntary Assignment and Subletting.
-----------------------------------
(a) Notice to Landlord. Tenant shall, by written notice,
------------------
advise Landlord of Tenant's desire on a stated date (which date shall not be
less than thirty (30) days nor more than ninety (90) days after the date of
Tenant's notice) to assign this Lease or to sublet all or any part of the
Premises for any part of the Lease Term. Said notice shall state that the
notice constitutes an offer to terminate the Lease or Tenant's interest in the
portion of the Premises specified pursuant to Paragraph 24.2(b) if the notice
applies to a proposed assignment of the Lease or Tenant's interest therein, a
proposed sublease of all or any part of the Premises for more than fifty percent
(50%) of the remainder of the Lease Term, or a proposed sublease of more than
fifty percent (50%) of the Premises for any period. Tenant's notice shall state
the name, legal composition and address of the proposed assignee or subtenant,
and Tenant shall provide the following information to Landlord with said
notice: a true and complete copy of the proposed assignment agreement or
sublease; an audited financial statement of the proposed assignee or subtenant
prepared in accordance with generally accepted accounting principles within one
year prior to the proposed effective date of the assignment or sublease; the
nature of the proposed assignee's or subtenant's business to be carried on in
the Premises; the payments to be made or other consideration to be given on
account of the assignment or sublease; a current financial statement of Tenant;
and such other pertinent information as may be requested
-38-
by Landlord, all in sufficient detail to enable Landlord to evaluate the
proposed assignment or sublease and the prospective assignee or subtenant.
Tenant's notice shall not be deemed to have been served or given until such time
as Tenant has provided Landlord with all information reasonably requested by
Landlord pursuant to this Paragraph 24.2. Tenant shall immediately notify
Landlord of any modification to the proposed terms of such assignment or
sublease. Tenant may withdraw its notice at any time prior to or after exercise
by Landlord of Landlord's right to terminate as described in Paragraph 24.2(b).
(b) Offer to Terminate. If Tenant notifies Landlord of
------------------
its desire to assign this Lease or any interest herein, to sublet all or any
part of the Premises for more than fifty percent (50%) of the remainder of the
Lease Term, or to sublet more than fifty percent (50%) of the Premises for any
period, Tenant's notice shall constitute an offer to terminate this Lease or
Tenant's interest in the portion of the Premises specified and Landlord shall
have the right, to be exercised by giving written notice to Tenant within thirty
(30) days after receipt of Tenant's notice, to terminate the Lease (i) entirely,
in the event of a proposed assignment or a sublease of the entire Premises for
the remainder of the Lease Term, (ii) as to the portion of the Premises which is
the subject of a proposed sublease for more than fifty percent (50%) of the
remainder of the Lease Term, or (iii) as to the portion of the Premises which is
the subject of a proposed sublease of more than fifty percent (50%) of the
Premises for any period, as specified in Tenant's notice. For purposes of this
Paragraph 24.2(b), (i) the term of a proposed sublease shall include all options
to extend or renew, and (ii) a proposed sublease shall be deemed to be for the
remainder of the Lease Term if the term of the proposed sublease will expire
within one year prior to the end of the Lease Term. If Tenant's notice specifies
all of the Premises and Landlord elects to terminate within ten (10) days after
receipt of Landlord's election, Tenant shall have the right to rescind its
request to assign or sublet, and this Lease shall continue in full force and
effect. If Tenant does not rescind its request, this Lease shall terminate on
the date stated in the notice (given by Tenant pursuant to Paragraph 24.2(a),
subject to any obligations which have accrued and are unfulfilled as of such
date. If Tenant's notice specifies less than all of the Premises and Landlord
elects to terminate, within ten (10) days after receipt of Landlord's election,
Tenant shall have the right to rescind its request to assign or sublet, and this
Lease shall continue in full force and effect. If Tenant does not rescind its
request, this Lease shall terminate on the date stated with respect to that
portion of the Premises, and Rent and Tenant's percentage share of Common Area
Charges shall be adjusted, based upon the number of gross square feet retained
by Tenant after the termination, compared to the total number of gross square
feet in the entire Premises excluding any areas of the Premises designated in
the proposed sublease for ingress and egress and common areas, if any. The Lease
as so amended shall continue thereafter in full force and effect. Landlord and
Tenant shall execute an amendment
-39-
to this Lease specifying the new Premises, the adjusted Rent, and Tenant's
adjusted percentage share of Common Area Charges; provided, however, that
failure by either party to execute such an amendment shall not affect the
validity of this Lease.
(c) Landlord's Consent. If Landlord does not exercise its Right
------------------
to terminate pursuant to Paragraph 24.2(b) within thirty (30) days after
receipt of Tenant's notice or if a proposed sublease is not subject to the
provisions of Paragraph 24.2(b), Landlord shall not unreasonably withhold or
delay its consent to the proposed assignment or subletting, on the terms and
conditions specified in said notice. If Tenant's notice fails to state that it
constitutes an offer to terminate the Lease as may be required pursuant to
Paragraph 24.2(a), such notice shall be deemed insufficient for the purposes
of this Paragraph 24.2, and Landlord may withhold its consent to the proposed
assignment or subletting in Landlord's absolute discretion. Without otherwise
limiting the criteria upon which Landlord may withhold its consent to any
proposed assignment or sublease, if Landlord withholds its consent where Tenant
is in default at the time of the giving of Tenant's notice or at any time
thereafter, or where the net worth of the proposed assignee or subtenant
(according to generally accepted accounting principles) is less than the greater
of (i) the net worth of Tenant immediately prior to the assignment or sublease
(ii) or the net worth of Tenant at the time this Lease is executed, such
withholding of consent shall be presumptively reasonable. Fifty percent (50%) of
any and all rent paid by an assignee or subtenant in excess of the Rentals to be
paid under this Lease (prorated in the event of a sublease of less than the
entire Premises), after Tenant's deduction therefrom of all reasonable costs to
effect the assignment or subletting, including without limitation, brokerage
commissions, attorneys' fees, and the cost of leasehold improvements or
alterations installed or redecorating performed by Tenant for the sublessee,
shall be paid directly to Landlord, as Additional Rent, at the time and place
specified in this Lease. For the purposes of this Paragraph 24, the term "rent"
shall include any consideration of any kind received, or to be received, by
Tenant from an assignee or subtenant, if such sums are related to Tenant's
interest in this Lease or in the Premises, including, but not limited to key
money, bonus money, and payments (in excess of the fair market value thereof)
for Tenant's assets, fixtures, trade fixtures, inventory, accounts, goodwill,
equipment, furniture, general intangibles, and any capital stock or other
equity ownership interest of Tenant. Any assignment or subletting without
Landlord's consent shall be voidable at Landlord's option, and shall constitute
a Default by Tenant. Landlord's consent to any one assignment or sublease shall
not constitute a waiver of the provisions of this Paragraph 24 as to any
subsequent assignment or sublease nor a consent to any subsequent assignment or
sublease; further, Landlord's consent to an assignment or sublease shall not
release Tenant from Tenant's obligations under this Lease, and Tenant shall
remain jointly and severally liable with the assignee or subtenant.
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(d) Assumption of Obligations. In the event Landlord consents to
-------------------------
any assignment, such consent shall be conditioned upon the assignee expressly
assuming and agreeing to be bound by each of Tenant's covenants, agreements and
obligations contained in this Lease, pursuant to a written assignment and
assumption agreement in a form reasonably approved by Landlord. Landlord's
consent to any assignment or sublease shall be evidenced by Landlord's signature
on said assignment and assumption agreement or on said sublease or by a separate
written consent. In the event Landlord consents to a proposed assignment or
sublease, such assignment or sublease shall be valid and the assignee or
subtenant shall have the right to take possession of the Premises only if an
executed original of the assignment or sublease is delivered to Landlord, and
such document contains the same terms and conditions as stated in Tenant's
notice to Landlord given pursuant to Paragraph 24.2(a) above, except for any
such modifications to which Landlord has consented in writing.
24.3 Collection of Rent. Tenant hereby irrevocably gives to and
------------------
confers upon Landlord, as security for Tenant's obligations under this Lease,
the right, power and authority to collect all rents from any assignee or
subtenant of all or any part of the Premises as permitted by this Paragraph 24,
or otherwise, and Landlord, as assignee of Tenant, or a receiver for Tenant
appointed on Landlord's application, may collect such rent and apply it toward
Tenant's obligations under this Lease; provided, however, that until the
occurrence of any Default, subject to applicable cure periods, by Tenant or
except as provided by the provisions of Paragraph 24.2(c) above, Tenant shall
have the right to collect such rent. Upon the occurrence of any Default by
Tenant, Landlord may at any time without notice in Landlord's own name xxx for
or otherwise collect such rent, including rent past due and unpaid, and apply
the same, less costs and expenses of operation and collection, including
reasonable attorneys' fees, toward Tenant's obligations under this Lease.
Landlord's collection of such rents shall not constitute an acceptance by
Landlord of attornment by such subtenants; in the event of a Default by Tenant,
Landlord shall have all rights provided by this Lease and by law, and Landlord
may, upon reentry and taking possession of the Premises, eject all parties in
possession or eject some and not others, or eject none, as Landlord shall
determine in Landlord's sole discretion.
24.4 No Bonus Value. It is the intent of the parties hereto that this
--------------
Lease shall confer upon Tenant only the right to use and occupy the Premises,
and to exercise such other rights as are conferred upon Tenant by this Lease.
The parties agree that this Lease is not intended to have a bonus value, nor to
serve as a vehicle whereby Tenant may profit by a future assignment or sublease
of this Lease or the right to use or occupy the Premises as a result of any
favorable terms contained herein or any future changes in the market for leased
space. It is the intent of the parties that any such bonus value that may attach
to this Lease shall be and remain the exclusive property of Landlord.
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24.5 Corporations and Partnerships. If Tenant is a partnership,
-----------------------------
any withdrawal or substitution (whether voluntary, involuntary, or by operation
of law and whether occurring at one time or over a period of time) of any
partner(s) owning fifty percent (50%) or more (cumulatively) of the partnership,
any assignment(s) of fifty percent (50%) or more (cumulatively) of any interest
in the capital or profits of the partnership, or the dissolution of the
partnership shall be deemed an assignment of this Lease requiring the prior
written consent of Landlord. If Tenant is a corporation, any dissolution,
merger, consolidation or other reorganization of Tenant, any sale or transfer
(or cumulative sales or transfers) of the capital stock of Tenant in excess of
fifty percent (50%), or any sale (or cumulative sales) of all of the assets of
Tenant shall be deemed an assignment of this Lease requiring the prior written
consent of Landlord. Any such withdrawal or substitution of partners or
assignment of any interest in or dissolution of a partnership tenant, and any
such sale of stock or assets of a corporate tenant without the prior written
consent of Landlord shall be a Default by Tenant hereunder. The foregoing
notwithstanding, the sale or transfer of any or all of the capital stock of a
corporation, the capital stock of which is now or hereafter becomes publicly
traded, shall not be deemed an assignment of this Lease.
Notwithstanding anything to the contrary contained in this Lease,
Tenant, without Landlord's prior written consent (but with notice to Landlord),
may sublet the Premises or assign this Lease to (i) a subsidiary, affiliate,
division or corporation controlled by or under common control with Tenant; (ii)
a successor corporation related to Tenant by merger, consolidation,
nonbankruptcy reorganization or government action; or (iii) a purchaser of
substantially all of Tenant's assets located at the Premises, provided that in
either of the latter two instances the successor or purchaser has a net worth
not less than the net worth of Tenant at the time that Tenant executes this
Lease (each, a "Permitted Assignee"). Notwithstanding that a Transfer is made
to a Permitted Assignee, Tenant shall not be released from any of its
obligations under this Lease and such Permitted Assignee shall be required to
assume all of Tenant's obligations hereunder as a condition to such transfer
being permitted without Landlord's prior written consent.
24.6 Reasonable Provisions. Tenant expressly agrees that the
---------------------
provisions of this Paragraph 24 are not unreasonable standards or conditions for
purposes of Section 1951.4(b)(2) of the California Civil Code, as amended from
time to time, under bankruptcy laws, or for any other purpose.
24.7 Attorneys' Fees. Tenant shall pay, as Additional Rent,
---------------
Landlord's reasonable attorneys' fees for reviewing, investigating, processing
and/or documenting any requested assignment or sublease, whether or not
Landlord's consent is granted.
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24.8 Involuntary Transfer. No interest of Tenant in this Lease
--------------------
shall be assignable involuntarily or by operation of law, including, without
limitation, the transfer of this Lease by testacy or intestacy. Each of the
following acts shall be considered an involuntary assignment:
(a) If Tenant is or becomes bankrupt or insolvent, makes
an assignment for the benefit of creditors, or a proceeding under any bankruptcy
law is instituted in which Tenant is the bankrupt; or, if Tenant is a
Partnership or consists of more than one person or entity, if any partner of the
partnership or other person or entity is or becomes bankrupt or insolvent, or
makes an assignment for the benefit of creditors;
(b) Levy of a writ of attachment or execution on this
Lease;
(c) Appointment of a receiver with authority to take
possession of the Premises in any proceeding or action to which Tenant is a
party; or
(d) Foreclosure of any lien affecting Tenant's interest
in the Premises, which lien was not consented to by Landlord pursuant to
Paragraph 24.9.
An involuntary assignment shall constitute a Default by Tenant and Landlord
shall have the right to terminate this Lease, in which case this Lease shall not
be treated as an asset of Tenant. In the event the Lease it not terminated, the
provisions of Paragraph 24.2(c) regarding rents paid by an assignee or subtenant
and Paragraph 24.4 shall apply. If a writ of attachment or execution is levied
on this Lease, or if any involuntary proceeding in bankruptcy is brought against
Tenant or a receiver is appointed, Tenant shall have sixty (60) days in which to
cause the attachment or execution to be removed, the involuntary proceeding
dismissed, or the receiver removed.
24.9 Hypothecation. Tenant shall not hypothecate, mortgage or
-------------
encumber Tenant's interest in this Lease or in the Premises or otherwise use
this Lease as a security device in any manner without the consent of Landlord,
which consent Landlord may withhold in its sole and absolute discretion. Consent
by Landlord to any such hypothecation or creation of a lien or mortgage shall
not constitute consent to an assignment or other transfer of this Lease
following foreclosure of any permitted lien or mortgage.
24.10 Binding on Successors. The provisions of this Paragraph
---------------------
24 expressly apply to all heirs, successors, sublessees, assignees and
transferees of Tenant.
25. Successors. Subject to the provisions of Paragraph 24
----------
above and Paragraph 30.2(a) below, the covenants, conditions, and agreements
contained in this Lease shall be binding on the parties
-43-
hereto and on their respective heirs, successors and assigns.
26. Landlord Default; Mortgagee Protection. Landlord shall not be in
--------------------------------------
default under this Lease unless Tenant shall have given Landlord written notice
of the breach and, within thirty (30) days after notice, Landlord has not cured
the breach or, if the breach is such that it cannot reasonably be cured under
the circumstances within thirty (30) days, has not commenced diligently to
prosecute the cure to completion. Any money judgment obtained by Tenant based
upon Landlord's breach of this Lease shall be satisfied only out of the proceeds
of the sale or disposition of Landlord's interest in the Premises (whether by
Landlord or by execution of judgment). In the event of any default on the part
of Landlord under this Lease, Tenant shall give notice by registered or
certified mail to any beneficiary of a deed of trust or any mortgagee of a
mortgage affecting the Premises, Building or Land whose address shall have been
furnished to Tenant, and shall offer such beneficiary or mortgagee a reasonable
opportunity to cure the default, including time to obtain possession of the
Premises by power of sale or judicial foreclosure, if such should prove
necessary to effect a cure.
27. Exhibits. All exhibits attached to this Lease shall be deemed to be
--------
incorporated herein by the individual reference to each such exhibit, and all
such exhibits shall be deemed to be a part of this Lease as though set forth in
full in the body of the Lease.
28. Surrender of Lease Not Merger. The voluntary or other surrender
-----------------------------
of this Lease by Tenant, or a mutual cancellation thereof, shall not work a
merger and shall, at the option of Landlord, terminate all or any existing
subleases or subtenants, or may, at the option of Landlord, operate as an
assignment to Landlord of any or all such subleases or subtenants.
29. Waiver. The waiver by Landlord of any breach of any term,
------
covenant or condition herein contained (or the acceptance by Landlord of any
performance by Tenant after the time the same shall become due) shall not be
deemed to be a waiver of such term, covenant or condition or any subsequent
breach thereof or of any other term, covenant or condition herein contained,
unless otherwise expressly agreed to by Landlord in writing. The acceptance by
Landlord of any sum less than that which is required to be paid by Tenant shall
be deemed to have been received only on account of the obligation for which it
is paid (or for which it is allocated by Landlord, in Landlord's reasonable
discretion, if Tenant does not designate the obligation as to which the payment
should be credited), and shall not be deemed an accord and satisfaction
notwithstanding any provisions to the contrary written on any check or contained
in any letter of transmittal. The acceptance by Landlord of any sum tendered by
a purported assignee or transferee of Tenant shall not be deemed a consent by
Landlord to any assignment or transfer of Tenant's interest herein. No custom or
practice which may arise between the parties hereto in
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the administration of the terms of this Lease shall be construed as a waiver or
diminution of Landlord's right to demand performance by Tenant in strict
accordance with the terms of this Lease.
30. General.
-------
30.1 Captions and Headings. The captions and paragraph
---------------------
headings used in this Lease are for convenience of reference only. They shall
not be construed to limit or extend the meaning of any part of this Lease, and
shall not be deemed relevant in resolving any question of interpretation or
construction of any paragraph of this Lease.
30.2 Definitions.
-----------
(a) Landlord, The term Landlord as used in this Lease,
--------
so far as the covenants or obligations on the part of Landlord are concerned,
shall be limited to mean and include only the owner at the time in question of
the fee title to the Premises. In the event of any transfer(s) of such interest,
the Landlord herein named (and in case of any subsequent transfers or
conveyances, the then grantor) shall have no further liability under this Lease
to Tenant except as to matters of liability which have accrued and are
unsatisfied as of the date of such transfer, it being intended the covenants and
obligations contained in this Lease on the part of Landlord shall be binding on
Landlord and its successors and assigns only during and in respect of their
respective period of ownership of the fee; provided that any funds in the
possession of Landlord or the then grantor and as to which Tenant has an
interest, less any deductions permitted by law or this Lease, shall be turned
over to the grantee. The covenants and obligations contained in this Lease on
the part of Landlord shall, subject to the provisions of this Paragraph 30.2(a),
be binding upon each Landlord and such Landlord's heirs, personal
representatives, successors and assigns only during its respective period of
ownership. Except as provided in this Paragraph 30.2(a), this Lease shall
riot be affected by any transfer of Landlord's interest in the Premises, and
Tenant shall attorn to any transferee of Landlord provided that all of
Landlord's obligations hereunder are assumed in writing by such transferee.
(b) Agents. For purposes of this Lease and without
------
otherwise affecting the definition of the word "agent" or the meaning of an
"agency," the term "agents" shall be deemed to include the agents, employees,
officers, directors, servants, invitees, contractors, successors,
representatives, subcontractors, guests, customers, suppliers or partners, of
the respective party, Tenant or Landlord.
(C) Interpretation of Terms. The words "Landlord" and
-----------------------
"Tenant" as used herein shall include the plural as well as the singular. Words
in the neuter gender include the masculine and feminine and words in the
masculine or feminine gender include the neuter.
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30.3 Copies. Any executed copy of this Lease shall be deemed an
------
original for all purposes.
30.4 Time of Essence. Time is of the essence as to each and every
---------------
provision in this Lease requiring performance within a specified time.
30.5 Severability. In case any one or more of the provisions
------------
contained herein shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Lease, but this Lease shall be
construed as if such invalid, illegal or unenforceable provision had not been
contained herein. However, if Tenant's obligation to pay the Rentals is
determined to be invalid or unenforceable, this Lease at the option of Landlord
shall terminate.
30.6 Governing Law. This Lease shall be construed and enforced in
-------------
accordance with the laws of the State of California.
30.7 Joint and Several Liability. If Tenant is more than one person
---------------------------
or entity, each such person or entity shall be jointly and severally liable for
the obligations of Tenant hereunder, If Tenant is a husband and wife, the
obligations hereunder shall extend to their sole and separate property as well
as community property.
30.8 Construction of Lease Provisions. Although printed provisions of
--------------------------------
this Lease were prepared by Landlord, this Lease shall not be construed either
for or against Tenant or Landlord, but shall be construed in accordance with the
general tenor of the language to reach a fair and equitable result.
30.9 Tenant's Financial Statements. Tenant hereby warrants that all
-----------------------------
financial statements delivered by Tenant to Landlord are true, correct, and
complete, and prepared in accordance with generally accepted accounting
principles. Tenant acknowledges and agrees that Landlord is relying on such
financial statements in accepting this Lease, and that a breach of Tenant's
warranty as to such financial statements shall constitute a Default by Tenant.
Notwithstanding anything to the contrary contained in this Lease, Landlord shall
keep confidential all such financial information received from Tenant, except
that Landlord may provide such financial information to Landlord's lenders or
prospective lenders with respect to the Project.
30.10 Withholding of Landlord's Consent. Notwithstanding any other
---------------------------------
provision of this Lease where Tenant is required to obtain the consent (whether
written or oral) of Landlord to do any act, or to refrain from the performance
of any act, Tenant agrees that if Tenant is in default with respect to any term,
condition, covenant or provision of this Lease, then Landlord
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shall be deemed to have acted reasonably in withholding its consent if said
consent is, in fact, withheld.
31. Signs. Tenant shall not place or permit to be placed any sign or
-----
decoration on the Land or the exterior of the Building or that would be visible
from the exterior of the Building or Premises, without the prior written consent
of Landlord, which consent shall not be unreasonably withheld or delayed. In no
event shall any such sign revolve, rotate, move or create the illusion of
revolving, rotating or moving or be internally illuminated and there shall be no
exterior spotlighting or other illumination on any such sign. Tenant, upon
written notice by Landlord, shall immediately remove any of Tenant's signs or
decorations that are visible from the exterior of the Building or Premises or
that Tenant has placed or permitted to be placed on the Land or the exterior of
the Building without the prior written consent of Landlord. If Tenant fails to
so remove such sign or decoration within five (5) days after Landlord's written
notice, Landlord may enter the Premises and remove such sign or decoration and
Tenant shall pay Landlord, as Additional Rent upon demand, the cost of such
removal. All signs placed on the Premises, Building or Land by Tenant shall
comply with all recorded documents affecting the Premises, including but not
limited to any Declaration of Conditions, Covenants and Restrictions; the sign
criteria attached hereto as Exhibit "E" if applicable (as the same may be
amended from time to time); and applicable statutes, ordinances, rules and
regulations of governmental agencies having jurisdiction thereof. At Landlord's
option, Tenant shall at Lease Termination remove any sign which it has placed on
the Premises, Land or the Building, and shall, at its sole cost, repair any
damage caused by the installation or removal of such sign. Notwithstanding the
foregoing, Landlord hereby grants to Tenant all signage rights currently enjoyed
by other tenants of the Project.
32. Landlord as Party Defendant. If, by reason of any act or
---------------------------
omission by Tenant or Tenant's agents, Landlord is made a party defendant
concerning this Lease, or any portion of the Project, Tenant shall indemnify
Landlord against all liability actually incurred by Landlord as a party
defendant, including all damages, costs and reasonable attorneys' fees.
33. Landlord Not a Trustee. Landlord shall not be deemed to be a
----------------------
trustee of any funds paid to Landlord by Tenant (or held by Landlord for Tenant)
pursuant to this Lease, including without limitation the Security Deposit.
Landlord shall not be required to keep any such funds separate from Landlord's
general funds or segregated from any funds paid to Landlord by (or held by
Landlord for) other tenants of the Building. Any funds held by Landlord pursuant
to this Lease shall not bear interest.
34. Interest. Any payment due from Tenant to Landlord, except for
--------
Rent received by Landlord within thirty (30) days after the same is due, shall
bear interest from the date due until paid, at an annual rate equal to the
greater of: ten percent (10%); or
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five percent (5%) plus the rate established by the Federal Reserve Bank of San
Francisco, as of the twenty-fifth (25th) day of the month immediately preceding
the due date, on advances to member banks under Sections 13 and 13(a) of the
Federal Reserve Act, as now in effect or hereafter from time to time amended. In
addition, Tenant shall pay all costs and reasonable attorneys' fees incurred by
Landlord in the collection of such amounts.
35. Surrender of Premises. On the last day of the Lease Term or upon
---------------------
the sooner termination of this Lease, Tenant shall, to the reasonable
satisfaction of Landlord, surrender the Premises to Landlord in good condition
(reasonable wear and tear, acts of God, casualty, condemnation, Hazardous
Materials other than those stored, used or disposed of by Tenant, its agents,
employees, contractors or invitees, and alterations concerning which Landlord
has not reserved the right to require removal excepted) with all originally
painted interior walls washed, or repainted if marked or damaged and other
interior walls cleaned and repaired or replaced, all carpets cleaned and in good
condition, the air conditioning, ventilating and heating equipment inspected,
serviced and repaired by a reputable and licensed service firm (unless Landlord
has elected to maintain heating and air conditioning systems pursuant to
Paragraph 10.1 above), and all floors cleaned and waxed. Tenant shall remove all
of Tenant's personal property and trade fixtures from the Premises, and all
property not so removed shall be deemed abandoned by Tenant. Furthermore, Tenant
shall immediately repair all damage to the Project caused by any such removal.
If the Premises are not so surrendered at Lease Termination Tenant shall
indemnify, defend and hold Landlord harmless from and against any loss, damage,
expense, claim or liability resulting from delay by Tenant in so surrendering
the Premises including, without limitation, any claims made by any succeeding
tenant or losses to Landlord due to lost opportunities to lease to succeeding
tenants.
36. No Partnership or Joint Venture. Nothing in this Lease shall be
-------------------------------
construed as creating a partnership or joint venture between Landlord, Tenant,
or any other party, or cause Landlord to be responsible for the debts or
obligations of Tenant or any other party.
37. Entire Agreement. Any agreements, warranties, or representations
----------------
not expressly contained herein, or in the Addendum hereto, shall in no way bind
either Landlord or Tenant, and Landlord and Tenant expressly waive all claims
for damages by reason of any statement, representation, warranty, promise or
agreement, if any, not contained in this Lease, This Lease supersedes and
cancels any and all previous negotiations, arrangements, brochures, agreements
and understandings, whether written or oral, between Landlord and its agents and
Tenant and its agents with respect to the Project or this Lease. This Lease
constitutes the entire agreement between the parties hereto and no addition to,
or modification of, any term or provision of this Lease shall be effective until
and unless set forth in a written
-48-
instrument signed by both Landlord and Tenant.
38. Submission of Lease. Submission of this instrument for Tenant's
-------------------
examination or execution does not constitute a reservation of space nor an
option to lease. This instrument shall not be effective until executed by both
Landlord and Tenant, Execution of this Lease by Tenant shall constitute an
offer by Tenant to lease the Premises, which offer shall be deemed accepted by
Landlord when this Lease is executed by Landlord and delivered to Tenant.
39. Quiet Enjoyment. Landlord covenants and agrees with Tenant that
---------------
upon Tenant paying Rentals and performing its covenants and conditions under the
Lease, Tenant shall and may peaceably and quietly have, hold and enjoy the
Premises for the Lease Term, subject, however, to the terms of this Lease and of
any mortgages or deeds of trust affecting the Premises, and the rights reserved
by Landlord hereunder. Any purchaser upon any foreclosure or exercise of the
power of sale under any mortgage or deed of trust made by Landlord and covering
the Premises, Building or Land to whom Tenant attorns pursuant to Paragraph 20.4
above shall be bound by the terms of this Paragraph 40.
40. Building Plans. Tenant acknowledges that any plan of the Project
--------------
which may have been displayed or furnished to Tenant or which may be a part of
Exhibit "A" or Exhibit "B" is tentative; Landlord may change the exterior of the
Project buildings and the shape, size, location, number, and extent of Project
buildings or improvements shown on any such plan and eliminate or add any
ovements to the Project in Landlord's sole discretion and at Landlord's
sole cost without right of reimbursement of Tenant.
41. Authority. The undersigned parties hereby warrant that they have
---------
proper authority and are empowered to execute this Lease on behalf of the
Landlord and Tenant, respectively. If Tenant is a corporation (or partnership),
each individual (executing this Lease on behalf of said corporation (or
partnership) represents and warrants that he is duly authorized to execute and
deliver this Lease on behalf of said corporation in accordance with a duly
adopted resolution of the Board of Directors of said corporation or in
accordance with the bylaws of said corporation (or on behalf of said partnership
in accordance with the partnership agreement of such partnership), and that this
Lease is binding upon said corporation (or partnership) in accordance with its
terms. if Tenant is a corporation, Tenant shall, upon execution of this Lease,
deliver to Landlord a certified copy of the resolution of the Board of Directors
of said corporation authorizing or ratifying the execution of this Lease. In the
event Tenant should fail to deliver such resolution to Landlord upon execution
of this Lease, Landlord shall not be deemed to have waived its right to require
delivery of such resolution, and at any time during the Lease Term Landlord may
request Tenant to deliver the same, and Tenant agrees it shall thereafter
promptly deliver such resolution to Landlord. If Tenant is a corporation, Tenant
warrants that:
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(a) Tenant is a valid and existing corporation;
(b) Tenant is qualified to do business in California;
(c) All fees and all franchise and corporate taxes
are paid to date, and will be paid when due;
(d) All required forms and reports will be filed when
due; and
(e) The signers of this Lease are properly authorized to
execute this Lease.
42. Addendum, Paragraphs 44 through 46 are added hereto and made a
--------
part of this Lease.
IN WITNESS WHEREOF, the parties have executed this Lease effective as of
the date set forth below.
LANDLORD: TENANT
REALTEC PROPERTIES I, L.P., SYMPHONIX DEVICES, INC., a
a California limited partnership California corporation
By /s/ Xxxxxx Xxxxxxx By /s/ Xxxxx X. Xxxxxxx
-------------------------------- ---------------------------------
Xxxxxx Xxxxxxx Xxxxx X. Xxxxxxx
Title General Partner Title President/CEO
----------------------------- ------------------------------
Date 7/28/94 Date 7/28/94
------------------------------ -------------------------------
-50-
ADDENDUM to that certain Lease Agreement dated July 28, 1994, by and between
REALTEC PROPERTIES I, L.P., a California limited partnership, as Landlord, and
SYMPHONIX DEVICES, INC, a California corporation, as Tenant, for the premises
commonly known as 0000 Xxxxxxx Xxxxx, Xxx Xxxx, XX 00000.
44. Option to Extend Lease Term. In consideration for Tenant not
---------------------------
having been in material default under this Lease more than twice within any one
(1) year period during the Lease Term, Landlord hereby grants to Tenant two (2)
options to extend the Lease Term for a period of one (1) year each ("Extended
Term"), on the following terms and conditions:
(a) Tenant must give Landlord notice in writing of its exercise
of the option to extend the Lease Term no earlier than six (6) months nor
later than four (4) months before the date the Lease Term would end but for
said exercise. Time is of the essence.
(b) Tenant may not extend the Lease Term pursuant to the option
granted by this Paragraph 44 if Tenant has been in default in the
performance of any of the material terms and conditions of the Lease more
than twice within any one (1) year period during the Lease Term, or if
Tenant shall have assigned or otherwise transferred its interest in this
Lease and/or the Premises (other than to a "Permitted Assignee" pursuant to
Paragraph 24.5 hereof) whether or not Landlord's consent to such assignment
or transfer has been given. If Tenant is in default under this Lease on the
date that the Extended Term is to commence, then Landlord may elect to
terminate this Lease, notwithstanding any notice given by Tenant of an
exercise of its option to extend.
(c) All terms and conditions of this Lease shall apply during
the Extended Term, except that the Rent for the Extended Terms shall be
determined in accordance with Xxxxxxxxx 00 xxxxx.
(x) Once Tenant delivers notice of its exercise of the option
to extend the Lease Term, Tenant may not withdraw such exercise and,
subject to the provisions of this Paragraph 44, such notice shall operate
to extend the Lease Term. Upon the extension of the Lease Term pursuant to
this Paragraph 44, the term, "Lease Term" as used in this Lease shall
thereafter include the Extended Term and the Lease Termination date shall
be the expiration date of the Extended Term.
45. Rent During the Extended Term. If Tenant elects to extend the
-----------------------------
Lease Term pursuant to Paragraph 44 above, the annual Rent for the Extended Term
shall be an amount equal to the fair market value of the Premises (together with
any applicable cost of living or other rental adjustments) in relation to market
conditions at the time of the extension (including, but not limited to, rental
rates for comparable space with comparable tenant improvements and taking into
consideration any adjustments to rent
-51-
based upon direct costs (operating expenses) and taxes, load factors, financing
charges, and/or cost of living or other rental adjustments; the relative
strength of the tenants, the size of the space; and any other factors which
affect market rental values at the time of extension, and provided further, that
the annual Rent for the Extended Term shall in no event be lower than the Rent
for the last Lease Year of the original term. Tenant acknowledges that Landlord
shall not be obligated or requested to pay any leasing commissions during or for
the Extended Term. The Rent for the Extended Term shall be determined as
follows:
(a) Mutual Agreement. After timely receipt by Landlord of
----------------
Tenant's notice of exercise of the option to extend the Lease Term,
Landlord and Tenant shall have a period of thirty (30) days in which to
agree on the Rent for the Extended Term. If Landlord and Tenant agree on
said Rent during that period, they shall immediately execute an amendment
to this Lease stating the Rent for the Extended Term. If Landlord and
Tenant are unable to agree on the Rent for the Extended Term as aforesaid,
the provisions of paragraph 45(b) below shall apply.
(b) Appraisal. Within five (5) days after the expiration of the
---------
thirty (30) day period described in Paragraph 45(a) above, each party, at
its cost and by giving notice to the other party, shall appoint an M.A.l.
real estate appraiser, with at least five (5) years' full-time commercial
appraisal experience in the area in which the Premises are located to
appraise and set the fair market rental value of the Premises. If a party
does not appoint an appraiser within five (5) days after the other party
has given notice of the name of its appraiser, the single appraiser
appointed shall be the sole appraiser and shall set the fair market rental
value. The cost of such appraiser shall be borne equally by the parties. If
two appraisers are appointed by the parties as provided in this paragraph,
the two appraisers shall meet promptly and attempt to set the fair market
value rental value. If they are unable to agree with twenty (20) days after
the last appraiser has been appointed, then the two appraisers shall
attempt to select a third appraiser meeting the qualifications stated in
Paragraph 45(b) above within ten (10) working days after the last day the
two appraisers are given to set the fair market rental value. If they are
unable to agree on the third appraiser, either of the parties to this
Lease, by giving ten (10) days notice to the other party, may apply to the
presiding judge of the Superior Court of Santa Xxxxx County for selection
of a third appraiser who meets the qualifications stated above. Each of the
parties shall bear one-half (1/2) of the cost of appointing the third
appraiser's fees. The third appraiser, however selected, shall be a person
who has not previously acted in any capacity for either party. Within
twenty (20) days after the selection of the third appraiser, the majority
of the appraisers shall set the fair market rental value. If the majority
of the appraisers are unable to set the fair market rental value within
said twenty (20) day period, the three appraisals shall be added together
and the total divided by three; the resulting quotient shall be the fair
market rental value and shall
-52-
be deemed incorporated herein, provided, however, that if any appraisal differs
from the median appraisal by an amount equal to more than ten percent (10%) of
such median appraisal, that appraisal shall be disregarded, and the average of
the remaining appraisals (or the remaining appraisal) shall be the fair market
rental value. In establishing the fair market rental value, the appraiser or
appraisers shall consider the reasonable market rental value for the current use
of the Premises (including, but not limited to, renal rates for comparable space
with comparable tenant improvements and any adjustments to rent based upon
direct costs (operating expenses) and taxes, load factors, financing charges,
and/or cost of living or other rental adjustments; the relative strength of the
tenants; and of size of the space); without regard to the existence of this
Lease but taking into consideration the absolute nature of this Lease.
46. Right of Notice. Subject to any prior rights of other tenants of
---------------
the Project, if at any time during the Lease Term, as the same may be extended,
any space in the Project becomes available, Landlord shall notify Tenant of the
availability of such space in the same manner and at the same time that Landlord
notifies (or would notify) other tenants of the Project of the availability of
such space.
53
EXHIBIT "A"
Site Plan
[ILLUSTRATION OF SITE PLAN]
-54-
EXHIBIT "B"
Floor Plan
[ILLUSTRATION OF FLOOR PLAN]
-55-
[LETTERHEAD OF REALTEC APPEARS HERE]
July 28, 1994
Xx. Xxxxx Xxxxxxx
SYMPHONIX DEVICES, INC.
0000 Xxxxxxx Xxxxxxx
Xxx Xxxx, XX 00000
Dear Xxxxx:
Notwithstanding Paragraph 2.2 of the Lease between Symphonix Devices, Inc.
("Tenant") and Realtec Properties I, L.P. ("Landlord") for 0000 Xxxxxxx Xxxxxxx,
Xxx Xxxx, Xxxxxxxxxx ("Premises") dated July 28, 1994, or any other pertinent
paragraph of said Lease, in the event that construction of the tenant
improvements by Landlord identified in Exhibit C-1 and C-2 of said Lease
triggers compliance with Title 24 of the Americans with Disabilities Act of
1990, all costs associated with said compliance shall be borne solely by the
Landlord.
The tenant improvements shown on Exhibit C-2 shall not be required to be
restored to their original condition by Tenant upon termination of the Lease
term or option to extend terms.
Landlord warrants that all Heating Ventilating Air Conditioning (HVAC) equipment
shall be in working order upon Lease commencement.
LANDLORD:
Realtec Properties I.L.P
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxx
Title: General Partner
Date: July 28, 1994
TENANT:
Symphonix Devices, Inc.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxx
Title Pres/CEO
---------------------------------
Date July 28, 1994
-56-
[LETTERHEAD OF REALTEC APPEARS HERE]
August 17, 1994
Xx. Xxxxx Xxxxxxx
SYMPHONIX DEVICES, INC.
0000 Xxxxxxx Xxxxxxx
Xxx Xxxx, XX 00000
RE: Lease Commencement
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Dear Xx. Xxxxxxx:
In regard to that certain Lease dated July 28, 1994, by and between REALTEC
PROPERTIES I, a California limited partnership, as Landlord ("Landlord"), and
SYMPHONIX DEVICES INC., a California corporation, as Tenant ("Tenant"), this
letter will confirm our understanding and agreements relative to the Lease
commencement date.
Notwithstanding anything to the contrary contained in the Lease, it is agreed
that the Lease commenced on August 18, 1994 and shall end on August 17, 1997.
Please acknowledge receipt of this letter and your Agreement of Approval of the
foregoing, by signing the enclosed copy of this letter and returning the same to
us.
Very truly yours,
REALTEC PROPERTIES I,
a California limited partnership
/s/ Xxxxxxx Xxxxxxxxx
Xxxxxxx Xxxxxxxxx
Property Manager
ACCEPTED AND AGREED:
SYMPHONIX DEVICES, INC.,
a California corporation
By: /s/ Xxxxx Xxxxxxx Dated: 8/17/94
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-57-
FIRST AMENDMENT to that lease dated July 28, 1994 by and between REALTEC
PROPERTIES I, L.P., a California limited partnership ("Landlord") and SYMPHONIX
DEVICES, INC., a California corporation ("Tenant") for the Premises known as
0000 Xxxxxxx Xxxxxxx, Xxx Xxxx, Xxxxxxxxxx.
Pursuant to Addendum paragraph 44, "Option to Extend Lease Term" Tenant has, in
writing, opted to extend the lease term for a period of one year.
LANDLORD AND TENANT AGREE TO THE FOLLOWING:
1. The extended term shall commence August 18, 1997 and terminate August
17, 1998.
2. Rent during the extended term shall be Sixteen Thousand Seven Hundred
Seventy-six and no/100 ($16,776.00) Dollars.
3. Tenant hereby surrenders its second Option to Extend Lease Term for one
year, which is contained in Addendum paragraph 44. Tenant shall have no
options to extend beyond August 17, 1998.
4. Except as amended by the terms of this Amendment, the Lease shall remain
unmodified and in full force and effect on the terms, covenants and
conditions set forth therein.
IN WITNESS WHEREOF, the parties have executed this First Amendment to Lease
effective as of the date set forth below.
LANDLORD: TENANT:
REALTEC PROPERTIES I, L.P. SYMPHONIX DEVICES, INC., a
A California limited partnership California corporation
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx Xxxxx X. Xxxxxxx
Title: General Partner Title: President and CEO
Date: 4/17/97 Date: 4/14/97
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