ADDENDUM NO. 1
This ADDENDUM NO. 1 (this "Addendum") is made in connection with and is a
part of that certain Lease, dated as of August 19, 1998, by and between GOLDEN
PACIFIC, LLC, a Delaware limited liability company, as Landlord, and ADAC
LABORATORIES, as Tenant, (the "Lease").
1. DEFINITIONS AND CONFLICT. All capitalized terms referred to in this
Addendum shall have the same meaning as provided in the Lease, except as
expressly provided to the contrary in this Addendum. In case of any conflict
between any term or provision of the Lease and any exhibits attached thereto and
this Addendum, this Addendum shall control.
2. ACCEPTANCE OF PREMISES. Landlord represents and warrants that as of
the Effective Date (a) the roof, all structural portions of the Premises,
plumbing, electrical, sprinklers and heating and air conditioning system for the
Premises are in good working order and repair. If there is a breach of the
foregoing representation and warranty within sixty (60) days after the
Commencement Date and Tenant provides written notice to Landlord within said
sixty (60) day period specifying the nature of the breach, then Landlord, at its
expense, shall promptly rectify such breach in a manner reasonably determined by
Landlord. The failure of Tenant to provide written notice of such breach of the
warranties set forth above within the specified time periods shall be
conclusively deemed that no such breach occurred. Tenant's acceptance of the
Premises shall not be deemed a waiver of Tenant's right to have latent defects
in the roof structure, foundation, footings, floor slab and exterior and load
bearing walls repaired at Landlord's expense; provided that Tenant shall give
notice to Landlord promptly after Tenant has knowledge of such defect or such
defect becomes reasonably apparent. Landlord agrees to assign to Tenant during
the Lease Term any warranty from any vendor with respect to the Premises which
is applicable to the Premises and will reduce Tenant's maintenance obligations
under this Lease, subject to Landlord's right to retain an interest in such
warranty if Tenant does not enforce such warranty. Such assignment is made
without representation or warranty as to the assignability, existence or
validity of any such warranty.
3. COMPLIANCE WITH REGULATIONS. Landlord represents and warrants to its
knowledge that as of the Effective Date: (a) the Private Restrictions do not
prohibit the permitted uses set forth in Section N of the Summary of Basic Lease
Terms, and (b) Landlord is not in receipt of notice of a violation of any Law
pertaining to the Premises (provided that Landlord has informed Tenant that due
to the age of the Building there may be work required to comply with existing
Laws in connection with the construction of the Tenant Improvements).
4. PARKING. The parties hereby acknowledge and agree that Tenant's
parking rights described in Section H of the Summary and Section 4.5 of this
Lease are included in the Base Monthly Rent, and under no circumstances,
including, without limitation, Landlord's institution of a validation or
assessment program, shall Tenant be required to pay Landlord or Landlord's
Agents any additional amount for said parking rights.
5. TRADE FIXTURES. All Tenant's Trade Fixtures and personal property
installed in the Premises at Tenant's expense ("Tenant's Property") shall at all
times remain Tenant's property and Tenant shall be entitled to all depreciation,
amortization and other tax benefits with respect thereto. At any time Tenant
may remove Tenant's Property from the Premises, provided Tenant repairs all
damage caused by such removal. Landlord shall have no lien or other interest
whatsoever in any item of Tenant's Property, or any portion thereof or interest
therein located in the Premises or elsewhere, and Landlord hereby waives all
such liens and interests. Within twenty (20) days following Tenant's request,
Landlord shall execute documents in a form reasonably acceptable to Landlord and
Tenant to evidence Landlord's waiver of any right, title, lien or interest in
Tenant's Property located in the Premises.
6. REPAIRS AND MAINTENANCE. Notwithstanding anything to the contrary in
this Lease, Landlord shall perform and construct, and Tenant shall have no
responsibility to perform or construct, any repair, maintenance, restoration,
replacement, renewal or improvement (i) necessitated by the gross negligence or
willful misconduct of Landlord or Landlord's Agents, or
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(ii) to the structural portions of the Project (which for purposes hereof shall
mean the roof structure, foundation, floor slab, footings, exterior and load
bearing walls of any building).
7. COMMON AREAS. Notwithstanding anything to the contrary in Section 6.3
of the Lease, Tenant shall at all times during the Term of this Lease have
reasonable access to and from the Premises and the parking lot outlined on
EXHIBIT A attached to this Lease.
8. HAZARDOUS MATERIALS.
(a) LIMITATION. Under no circumstance shall Tenant be liable for any
liabilities, losses, claims, damages, lost profits, consequential damages,
interest, penalties, fines, monetary sanctions, attorneys' fees, experts' fees,
court costs, remediation costs, investigation costs, and other expenses of every
type and nature, directly or indirectly arising out of or in connection with (i)
any pre-existing condition at the Project that may be in violation of the
Hazardous Materials Laws, or (ii) any use of Hazardous Materials by any other
tenant in the Project or any third party other than Tenant or Tenant's Agents,
or (iii) any migration of any Hazardous Materials from neighboring property in,
to, under or about the Building or Project.
(b) LANDLORD'S REPRESENTATION. Landlord represents and warrants to
the best of its actual knowledge, without independent investigation or the
imputation of knowledge from any other party, that as of the Effective Date,
Landlord (i) is not in receipt of notice of a violation nor is Landlord aware of
any violation of any applicable Hazardous Materials Laws as of the date hereof
with respect to the Premises or Building, (ii) no Hazardous Material is present
on the Premises, Building or Project in violation of any applicable Hazardous
Materials Laws, (iii) no underground storage tanks or asbestos-containing
building materials are present in the Premises or Building in violation of any
Hazardous Materials Laws, and (iv) no action, proceeding or claim is pending or
threatened regarding the Premises, Building or Project concerning the presence
of any Hazardous Materials. Landlord covenants and agrees that it shall not
deposit or dispose of any Hazardous Materials in the Building or Project in
violation of the applicable Hazardous Materials Laws. Under no circumstances
shall Landlord be liable to Tenant for any Hazardous Use by any tenant in the
Project or any third party or as a result of any migration of any Hazardous
Materials from adjacent property in, to, under or about the Building or Project.
The foregoing representation and warranty is made by Landlord, but shall not be
applicable to any lender under any mortgage or deed of trust now or hereafter
encumbering the Building or Project or any such lender that acquires the
Building or Project through foreclosure, trustee sale or deed in lieu thereof or
by person acquiring the Building or Project from such lender.
9. COMMON OPERATING EXPENSES.
(a) EXCLUSIONS. Notwithstanding anything contained in the Lease,
Common Operating Expenses shall not include and in no event shall Tenant have
any obligation to perform or to pay directly, or to reimburse Landlord for, all
or any portion of the following costs and expenses:
(1) Costs occasioned by the violation of any Law by Landlord or
Landlord's Agents or by the gross negligence or willful misconduct of Landlord
or Landlord's Agents;
(2) Costs occasioned by fire, acts of God, or other casualties
or by the exercise of the power of eminent domain;
(3) Costs to correct any construction defect in the structural
portions of the Building or Project, which for purposes hereof shall mean the
foundation, footings, floor slab, exterior and load bearing walls and roof
structure (as opposed to the roof covering or membrane), or the costs to comply
with any Private Restrictions or Laws relating to the Building or Project for
work or improvements required under the Private Restrictions or Laws prior to
the Effective Date;
(4) Depreciation, amortization (except as permitted above) or
other
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expense reserves;
(5) Interest, charges and fees incurred on debt, payments on
mortgages and rent under ground leases;
(6) The amount of the deductible under any insurance policy;
provided, however, that if Tenant or any Tenant's Agents causes the damage, loss
or claim, then Tenant shall be solely responsible for payment of the applicable
deductible to Landlord; provided further, however, that in no event shall Tenant
be required to pay any deductibles for earthquake or flood insurance maintained
in connection with the Project, Building or Premises;
(7) Costs incurred in connection with the presence of any
Hazardous Material, except to the extent caused by the storage, use or disposal
of the Hazardous Material in question by Tenant or Tenant's Agents;
(8) Costs to the extent for which Landlord has a right of
reimbursement from another tenant at the Project, another source or a vendor
under any warranty, except for warranty claims that Landlord determines in its
commercially reasonable discretion not to pursue or does not collect;
(9) Costs for which Tenant reimburses Landlord directly or which
Tenant pays directly to a third person;
(10) Costs relating to improvements and equipment that should be
capitalized under generally accepted accounting principles, except for Tenant's
Share of the amortized cost (with interest) of such improvement or equipment to
the extent provided in this Lease; and
(11) Costs relating to the repair, maintenance and replacement of
the structural elements of the Premises, Building, Common Areas or Project.
(b) ALLOCATIONS. Since the Project consists of three (3) separate
buildings including the Building, certain Common Operating Costs may pertain to
a particular building and other Common Operating Costs to the Project as a
whole. Common Operating Costs applicable to any particular building within the
Project shall be allocated and charged to the building in question whose tenants
shall be responsible for payment of their respective proportionate shares in the
pertinent building and other Common Operating Costs applicable to the Project
shall be allocated and charged to each building in the Project based on the
ratio that each building's gross leasable area bears to the total gross leasable
area of all buildings in the Project, with the tenants in each building in the
Project being responsible for paying their respective proportionate shares of
such costs. Landlord shall in good faith attempt to allocate such Common
Operating Costs to the buildings (including the Building) or Project, as the
case may be.
10. TENANT DEFAULT. Any reference in the Lease to the term "default" used
in the context of whether or not Tenant is in default, shall be deemed to refer
to an Event of Tenant's Default as defined in Article 13 of the Lease, so that
Tenant is given the required notice and opportunity to cure as set forth
therein.
11. LANDLORD'S DEFAULT. If Landlord fails to perform any of its
obligations under the Lease within a reasonable time but in no event later than
thirty (30) days after Landlord's receipt of written notice from Tenant (or such
longer period of time if such default cannot reasonably be cured within said
thirty (30) day period, provided, Landlord commences such cure within said
thirty (30) day period and thereafter diligently prosecutes such cure to
completion), Tenant may cure any default of Landlord, at Landlord's cost, and
Landlord shall pay to Tenant the cost of such cure, plus interest at the Agreed
Interest Rate, within fifteen (15) days after receipt of written demand.
12. LANDLORD'S ENTRY OF PREMISES. Any entry by Landlord and Landlord's
Agents under section 15.1 of the Lease shall not impair Tenant's operations more
than reasonably
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necessary. During any such entry, Landlord and Landlord's Agents shall comply
with Tenant's reasonable security measures, shall not impair Tenant's operations
more than reasonable necessary, and shall, at Tenant's election, be accompanied
by a representative Tenant if one is available at the time.
13. SUBORDINATION, RECOGNITION AND ATTORNMENT. At no cost or expense to
Landlord, Landlord shall request that the holder of a Security Instrument
provide its written agreement providing for the recognition of Tenant's rights,
interests and options under the Lease in the event of a foreclosure or
termination of the holder's Security Instrument (the "NDA"). Tenant shall
execute reasonable documents subordinating its interest in the Lease in
accordance with Section 15.4 provided any such Lender agrees to recognize all of
Tenant's rights, interests and options under this Lease in writing. Tenant
shall also attorn to a purchaser of the Premises at any foreclosure or private
sale or to any grantee or transferee, in the event such party agrees to
recognize Tenant's rights, interests and options under this Lease in writing.
Landlord's sole obligation under this section is to request such NDA. Tenant is
responsible for paying all costs and expenses for such NDA, including, without
limitation, the lender attorneys' fees and disbursements. Obtaining the NDA is
not a condition precedent to the Lease. The failure of such lender to issue its
NDA shall not relieve Tenant of any of its obligations under the Lease.
14. RULES AND REGULATIONS. Tenant shall not be required to comply with
any rule or regulation if the rule or regulation unreasonably interferes with
Tenant's use of or access to the Premises or Tenant's parking rights or if such
rule or regulation materially increases Tenant's obligations or materially
decreases Tenant's rights under the Lease.
15. UTILITIES. Landlord represents and warrants to its best knowledge
without independent investigation that the Premises are separately metered for
electricity and gas; however, the electricity for the Premises also provides
electricity for the exterior lighting of the Building.
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LEASE
BY AND BETWEEN
GOLDEN PACIFIC PROPERTIES, LLC,
a Delaware limited liability company,
as Landlord
and
ADAC LABORATORIES
a California corporation,
as Tenant
AFFECTING PREMISES COMMONLY KNOWN AS
0000 Xxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxx
TABLE OF CONTENTS
PAGE
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ARTICLE 1 - DEFINITIONS 1
ARTICLE 2 - DEMISE, CONSTRUCTION, AND ACCEPTANCE 2
ARTICLE 3 - RENT 3
ARTICLE 4 - USE OF PREMISES 3
ARTICLE 5 - TRADE FIXTURES AND ALTERATIONS 5
ARTICLE 6 - REPAIR AND MAINTENANCE 6
ARTICLE 7 - WASTE DISPOSAL AND UTILITIES 7
ARTICLE 8 - COMMON OPERATING EXPENSES 8
ARTICLE 9 - INSURANCE 10
ARTICLE 10 - LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY 11
ARTICLE 11 - DAMAGE TO PREMISES 12
ARTICLE 12 - CONDEMNATION 13
ARTICLE 13 - DEFAULT AND REMEDIES 14
ARTICLE 14 - ASSIGNMENT AND SUBLETTING 15
ARTICLE 15 - GENERAL PROVISIONS 18
EXHIBITS
Exhibit A - Site plan of the Project and Outline of the Premises
Exhibit B - Work Letter for Tenant Improvements
ADDENDUM NO. 1
ii
SUMMARY OF BASIC LEASE TERMS
SECTION TERMS
(LEASE REFERENCE)
A. LEASE REFERENCE DATE: August 19, 1998
(Introduction)
B. LANDLORD: GOLDEN PACIFIC PROPERTIES, LLC,
(Introduction) a Delaware limited liability company
C. TENANT: ADAC LABORATORIES
(Introduction) a California corporation
D. PREMISES: All of the space in the Building which contains approximately
(Section 1.21) 27,293 square feet of gross leasable area, as outlined in
EXHIBIT A attached hereto.
E. PROJECT: The Building, a commercial building located at 0000 XxXxxxxx Xxxxxxxxx, Milpitas,
(Section 1.22) CA containing approximately 41,263 square feet of space, another commercial building
located at 0000 XxXxxxxx Xxxxxxxxx, Xxxxxxxx, XX containing approximately 39,428
square feet of space, together with the Common Areas and the land on which such
improvements are located, as outlined in EXHIBIT A attached hereto.
F. BUILDING: The building in which the Premises are located, having an
(Section 1.7) address of 0000 Xxxxxx Xxxx, Xxxxxxxx, XX 00000, and containing 27,293 square feet of gross
leasable area.
G. TENANT'S SHARE: 100% of the Building, and
(Section 1.29) 25.28% of the Project (i.e., 27,293/107,984)
H. TENANT'S ALLOCATED PARKING STALLS: 109 parking stalls based on a ration of 4
(Section 4.5) parking stalls per 1,000 square feet in the Premises.
I. SCHEDULED COMMENCEMENT DATE: September 15, 1998
(Section 1.26)
J. LEASE TERM: Sixty (60) calendar months (plus the partial month following the Commencement Date if
(Section 1.18) such date is not the first day of a month), commencing on September 15, 1998 (the
"Commencement Date" and expiring September 30, 2003. If the Commencement Date is other
than the first day of a calendar month, the first month shall include the remainder of the
calendar month in which the Commencement Date occurs plus the first full calendar month
thereafter, and Base Monthly Rent for such first month shall include the full monthly rent
for the first full calendar month plus monthly rent for the partial month in which the
Commencement Date occurs prorated on a daily basis at the monthly rent provided for the
first calendar month.
K. BASE MONTHLY RENT:
(Section 3.1) MONTHS MONTHLY BASE RENT
1-12 $44,214.66
13-24 $45,541.10
25-36 $46,907.33
37-48 $48,314.55
49-60 $49,763.99
L. PREPAID RENT: $44,214.66 plus $6,548.44 for Tenant's Share of Common
(Section 3.3) Operating Expenses.
M. SECURITY DEPOSIT: $49,763.99
(Section 3.5)
N. PERMITTED USE: general administrative offices, sales, research and
(Section 4.1) development, light manufacturing (of non-Hazardous
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Materials hereinafter defined), warehouse and such other uses as are approved in writing by
Landlord, which approval shall not be unreasonably withheld.
O. PERMITTED TENANT'S ALTERATIONS LIMIT: $10,000.00
(Section 5.2)
P. TENANT'S LIABILITY INSURANCE MINIMUM: $3,000,000.00
(Section 9.1)
Q. LANDLORD'S ADDRESS:
(Section 1.3) c/x Xxxxxx Xxxxx Properties
0000 Xxxxx Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxxx Xxxxx, XX 00000
` Attn.: Xxxx Xxxxxxxxxxx
With a copy to:
Divco West Group, LLC
000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Attn.: Xxxxxxx Xxxxxxxx
R. TENANT'S ADDRESS:
(Section 1.3) ADAC Laboratories
000 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn.: Xxxxx Xxxxxxxxx, General Counsel
S. RETAINED REAL ESTATE BROKERS:
(Section 15.13) Xxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxxx of Colliers Xxxxxxx International, Inc., representing the Landlord and
Xxxx Xxxxxxxx of the Staubach Company representing the Tenant.
T. LEASE: This Lease includes the summary of the Basic Lease
(Section 1.17) Terms, the Lease, and the following exhibits and addenda (if any):
EXHIBIT A - Project Site Plan and Outline of the Premises
EXHIBIT B - Work Letter for Tenant Improvements
EXHIBIT C - Hazardous Materials Questionnaire
ADDENDUM NO. 1
The foregoing Summary is hereby incorporated into and made a part of this Lease. Each reference in this Lease to any term of the
Summary shall mean the respective information set forth above and shall be construed to incorporate all of the terms provided under
the particular paragraph pertaining to such information. In the event of any conflict between the Summary and the Lease, the
Summary shall control.
LANDLORD: TENANT:
GOLDEN PACIFIC PROPERTIES, LLC, ADAC LABORATORIES
a Delaware limited liability company a California corporation
By: Divco West Group, LLC, By: ______________________________
a Delaware limited liability company Name: _____________________________
Its Authorized Agent
Title: ____________________________
By: __________________________
Name: Xxxxx Xxxxxxxx
Its: President Dated: August __, 1998
Dated: August __, 1998
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LEASE
This Lease is dated as of the lease reference date specified in SECTION
A of the Summary and is made by and between the party identified as Landlord in
SECTION B of the Summary and the party identified as Tenant in SECTION C of the
Summary.
ARTICLE 1
DEFINITIONS
1.1 GENERAL: Any initially capitalized term that is given a special
meaning by this Article 1, the Summary, or by any other provision of this Lease
(including the exhibits attached hereto) shall have such meaning when used in
this Lease or any addendum or amendment hereto unless otherwise clearly
indicated by the context.
1.2 ADDITIONAL RENT: The term "Additional Rent" is defined in
PARA 3.2.
1.3 ADDRESS FOR NOTICES: The term "Address for Notices" shall mean
the addresses set forth in SECTIONS Q AND R of the Summary.
1.4 AGENTS: The term "Agents" shall mean the following: (i) with
respect to Landlord or Tenant, the agents, employees, contractors, and invitees
of such party; and (ii) in addition with respect to Tenant, Tenant's subtenants
and their respective agents, employees, contractors, and invitees.
1.5 AGREED INTEREST RATE: The term "Agreed Interest Rate" shall
mean that interest rate determined as of the time it is to be applied that is
equal to the lesser of (i) 5% in excess of the discount rate established by the
Federal Reserve Bank of San Francisco as it may be adjusted from time to time,
or (ii) the maximum interest rate permitted by Law.
1.6 BASE MONTHLY RENT: The term "Base Monthly Rent" shall mean the
fixed monthly rent payable by Tenant pursuant to PARA 3.1 which is specified in
SECTION K of the Summary.
1.7 BUILDING: The term "Building" shall mean the building in which
the Premises are located which Building is identified in SECTION F of the
Summary, the gross leasable area of which is referred to herein as the "Building
Gross Leasable Area."
1.8 COMMENCEMENT DATE: The term "Commencement Date" is the date the
Lease Term commences, which term is defined in SECTION J of the Summary.
1.9 COMMON AREA: The term "Common Area" shall mean all areas and
facilities within the Project that are not designated by Landlord for the
exclusive use of Tenant or any other lessee or other occupant of the Project,
including the parking areas, access and perimeter roads, pedestrian sidewalks,
landscaped areas, trash enclosures, recreation areas and the like.
1.10 COMMON OPERATING EXPENSES: The term "Common Operating Expenses"
is defined in PARA 8.2.
1.11 EFFECTIVE DATE: The term "Effective Date" shall mean the date
the last signatory to this Lease whose execution is required to make it binding
on the parties hereto shall have executed this Lease.
1.12 EVENT OF TENANT'S DEFAULT: The term "Event of Tenant's Default"
is defined in PARA 13.1.
1.13 HAZARDOUS MATERIALS: The terms "Hazardous Materials" and
"Hazardous Materials Laws" are defined in PARA 7.2E.
1.14 INSURED AND UNINSURED PERIL: The terms "Insured Peril" and
"Uninsured Peril" are defined in PARA 11.2E.
1.15 LAW: The term "Law" shall mean any judicial decision,
statute, constitution, ordinance, resolution, regulation, rule,
administrative order, or other requirement of any municipal, county, state,
federal or other government agency or authority having jurisdiction over the
parties to this Lease or the Premises, or both, in effect either at the
Effective Date or any time during the Lease Term, including, without
limitation, any Hazardous Material Law (as defined in PARA 7.2E) and the
Americans with Disabilities Act, 42 U.S.C. Sections 12101 ET. SEQ. and any
rules, regulations, restrictions, guidelines, requirements or publications
promulgated or published pursuant thereto.
1.16 LEASE: The term "Lease" shall mean the Summary and all elements
of this Lease identified in SECTION T of the Summary, all of which are attached
hereto and incorporated herein by this reference.
1.17 LEASE TERM: The term "Lease Term" shall mean the term of this
Lease which shall commence on the Commencement Date and continue for the period
specified in SECTION J of the Summary.
1.18 LENDER: The term "Lender" shall mean any beneficiary,
mortgagee, secured party, lessor, or other holder of any Security Instrument.
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1.19 PERMITTED USE: The term "Permitted Use" shall mean the use
specified in SECTION N of the Summary.
1.20 PREMISES: The term "Premises" shall mean that building area
described in SECTION D of the Summary that is within the Building.
1.21 PROJECT: The term "Project" shall mean that real property and
the improvements thereon which are specified in SECTION E of the Summary, the
aggregate gross leasable area of which is referred to herein as the "Project
Gross Leasable Area."
1.22 PRIVATE RESTRICTIONS: The term "Private Restrictions" shall
mean all recorded covenants, conditions and restrictions, private agreements,
reciprocal easement agreements, and any other recorded instruments affecting the
use of the Premises which (i) exist as of the Effective Date, or (ii) are
recorded after the Effective Date and are approved by Tenant.
1.23 REAL PROPERTY TAXES: The term "Real Property Taxes" is defined
in PARA 8.3.
1.24 SCHEDULED COMMENCEMENT DATE: The term "Scheduled Commencement
Date" shall mean the date specified in SECTION I of the Summary.
1.25 SECURITY INSTRUMENT: The term "Security Instrument" shall mean
any underlying lease, mortgage or deed of trust which now or hereafter affects
the Project, and any renewal, modification, consolidation, replacement or
extension thereof.
1.26 SUMMARY: The term "Summary" shall mean the Summary of Basic
Lease Terms executed by Landlord and Tenant that is part of this Lease.
1.27 TENANT'S ALTERATIONS: The term "Tenant's Alterations" shall
mean all improvements, additions, alterations, and fixtures installed in the
Premises by Tenant at its expense which are not Trade Fixtures.
1.28 TENANT'S SHARE: The term "Tenant's Share" shall mean the
percentage obtained by dividing Tenant's Gross Leasable Area by the Building
Gross Leasable Area for Tenant's Share of the Building and by the Project Gross
Leasable Area for Tenant's Share of the Project, which as of the Effective Date
is the percentage identified in SECTION G of the Summary.
1.29 TRADE FIXTURES: The term "Trade Fixtures" shall mean (i)
Tenant's inventory, furniture, signs, and business equipment, and (ii) anything
affixed to the Premises by Tenant at its expense for purposes of trade,
manufacture, ornament or domestic use (except replacement of similar work or
material originally installed by Landlord) which can be removed without material
injury to the Premises.
ARTICLE 2
DEMISE, CONSTRUCTION, AND ACCEPTANCE
2.1 DEMISE OF PREMISES: Landlord hereby leases to Tenant, and
Tenant leases from Landlord, for the Lease Term upon the terms and conditions of
this Lease, the Premises together with (i) the non-exclusive right to use the
number of Tenant's Allocated Parking Stalls within the Common Area (subject to
the limitations set forth in PARA 4.5), and (ii) the non-exclusive right to use
the Common Area for ingress to and egress from the Premises. Landlord reserves
the use of the exterior walls, the roof and the area beneath and above the
Premises, together with the right to install, maintain, use, and replace ducts,
wires, conduits and pipes leading through the Premises in a manner and in
locations which will not materially interfere with Tenant's use of the Premises.
2.2 COMMENCEMENT DATE: The term of this Lease shall commence on the
Commencement Date; however, Tenant may enter upon the Premises prior to the
Effective Date for the purpose of constructing the Tenant Improvements in
accordance with Exhibit B attached hereto.
2.3 CONSTRUCTION OF IMPROVEMENTS: Prior to the Commencement Date,
Tenant may construct certain improvements that shall constitute or become part
of the Premises if required by, and then in accordance with, the terms of
EXHIBIT B.
2.4 DELIVERY AND ACCEPTANCE OF POSSESSION: If Landlord is unable to
deliver possession of the Premises to Tenant by the Effective Date for any
reason whatsoever, this Lease shall not be void or voidable for a period of 30
days thereafter, and Landlord shall not be liable to Tenant for any loss or
damage resulting therefrom. In such event, the Commencement Date shall be
delayed one day for each day after the Effective Date that Landlord is unable to
deliver possession of the Premises to Tenant. Tenant agrees to accept
possession of the Premises in its then existing condition, "as-is", including
all patent defects; however, the Premises shall be in broom clean condition with
all debris, furniture and personal property removed.
2.5 PRE-TERM POSSESSION. Prior to the Commencement Date, Tenant may
thereupon enter the Premises to construct the Tenant Improvements at its own
risk. During the course of any pre-term possession, all terms and conditions of
this Lease shall apply, except for the payment of Base Monthly Rent and Tenant's
Share of Operating Expenses. During such pre-term possession, Tenant shall pay
for its utilities.
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ARTICLE 3
RENT
3.1 BASE MONTHLY RENT: Commencing on the Commencement Date and
continuing throughout the Lease Term, Tenant shall pay to Landlord the Base
Monthly Rent set forth in SECTION K of the Summary.
3.2 ADDITIONAL RENT: Commencing on the Commencement Date and
continuing throughout the Lease Term, Tenant shall pay the following as
additional rent (the "Additional Rent"): (i) any late charges or interest due
Landlord pursuant to PARA 3.4; (ii) Tenant's Share of Common Operating
Expenses as provided in PARA 8.1; (iii) Landlord's share of any Subrent
received by Tenant upon certain assignments and sublettings as required by
PARA14.1; (iv) any legal fees and costs due Landlord pursuant to PARA15.9;
and (v) any other charges due Landlord pursuant to this Lease.
3.3 PAYMENT OF RENT: Concurrently with the execution of this Lease
by both parties, Tenant shall pay to Landlord the amount set forth in SECTION L
of the Summary as prepayment of rent for credit against the first installment(s)
of Base Monthly Rent. All rent required to be paid in monthly installments
shall be paid in advance on the first day of each calendar month during the
Lease Term. If SECTION K of the Summary provides that the Base Monthly Rent is
to be increased during the Lease Term and if the date of such increase does not
fall on the first day of a calendar month, such increase shall become effective
on the first day of the next calendar month. All rent shall be paid in lawful
money of the United States, without any abatement, deduction or offset
whatsoever (except as specifically provided in PARA 11.4 and PARA 12.3), and
without any prior demand therefor. Rent shall be paid to Landlord at its
address set forth in SECTION Q of the Summary, or at such other place as
Landlord may designate from time to time. Tenant's obligation to pay Base
Monthly Rent and Tenant's Share of Common Operating Expenses shall be prorated
at the commencement and expiration of the Lease Term.
3.4 LATE CHARGE, INTEREST AND QUARTERLY PAYMENTS:
(a) LATE CHARGE. Tenant acknowledges that the late payment
by Tenant of any installment of rent, or any other sum of money required to be
paid by Tenant under this Lease, will cause Landlord to incur certain costs and
expenses not contemplated under this Lease, the exact amount of such costs being
extremely difficult and impractical to fix. Such costs and expenses will
include, without limitation, attorneys' fees, administrative and collection
costs, and processing and accounting expenses and other costs and expenses
necessary and incidental thereto. If any Base Monthly Rent or Additional Rent
is not received by Landlord from Tenant within five (5) days after receipt of
written notice, then Tenant shall immediately pay to Landlord a late charge
equal to 5% of such delinquent rent as liquidated damages for Tenant's failure
to make timely payment; provided, however, that if Landlord has provided two
notices of a late payment or default during any calendar year, Landlord shall
not be obligated to provide any notice during the remainder of the calendar year
in order for Tenant to be obligated to pay such late charge. 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 rent or prevent Landlord from
exercising any right or remedy available to Landlord upon Tenant's failure to
pay any rent due under this Lease in a timely fashion, including any right to
terminate this Lease pursuant to PARA 13.2B.
(b) INTEREST. If any rent remains delinquent for a period
in excess of five (5) days then, in addition to such late charge, Tenant shall
pay to Landlord interest on any rent that is not paid when due at the Agreed
Interest Rate following the date such amount became due until paid.
(c) QUARTERLY PAYMENTS. If Tenant during any six (6) month
period shall be more than five (5) days delinquent in the payment of any rent or
other amount payable by Tenant hereunder on three (3) or more occasions, then,
notwithstanding anything herein to the contrary, Landlord may, by written notice
to Tenant, elect to require Tenant to pay all Base Monthly Rent and Additional
Rent quarterly in advance. Such right shall be in addition to and not in lieu
of any other right or remedy available to Landlord hereunder or at law on
account of Tenant's default hereunder
3.5 SECURITY DEPOSIT: On the Effective Date, Tenant shall deposit
with Landlord the amount set forth in SECTION M of the Summary as security for
the performance by Tenant of its obligations under this Lease, and not as
prepayment of rent (the "Security Deposit"). Landlord may from time to time
apply such portion of the Security Deposit as is reasonably necessary for the
following purposes: (i) to remedy any default by Tenant in the payment of rent;
(ii) to repair damage to the Premises caused by Tenant and clean the Premises
upon termination of the Lease; and (iii) to remedy any other default of Tenant
to the extent permitted by Law. In the event the Security Deposit or any
portion thereof is so used, Tenant agrees to pay to Landlord promptly upon
demand an amount in cash sufficient to restore the Security Deposit to the full
original amount. Landlord shall not be deemed a trustee of the Security
Deposit, may use the Security Deposit in business, and shall not be required to
segregate it from its general accounts. Tenant shall not be entitled to any
interest on the Security Deposit. If Landlord transfers the Premises during the
Lease Term, Landlord shall pay the Security Deposit to any transferee of
Landlord's interest in conformity with the provisions of California Civil Code
Section 1950.7 and/or any successor statute, in which event the transferring
Landlord will be released from all liability for the return of the Security
Deposit.
ARTICLE 4
USE OF PREMISES
4.1 LIMITATION ON USE: Tenant shall use the Premises solely for the
Permitted Use specified in SECTION N of the Summary, without the prior written
consent of Landlord which will not be unreasonably withheld. Tenant shall not
do anything in or about the Premises which will (i) cause structural injury to
the Building, or (ii) cause
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damage to any part of the Building except to the extent reasonably necessary for
the installation of Tenant's Trade Fixtures and Tenant's Alterations, and then
only in a manner which has been first approved by Landlord in writing. Tenant
shall not operate any equipment within the Premises which will (i) materially
damage the Building or the Common Area, (ii) overload existing electrical
systems or other mechanical equipment servicing the Building, (iii) impair the
efficient operation of the sprinkler system or the heating, ventilating or air
conditioning ("HVAC") equipment within or servicing the Building, or (iv)
damage, overload or corrode the sanitary sewer system. Tenant shall not attach,
hang or suspend anything from the ceiling, roof, walls or columns of the
Building or set any load on the floor in excess of the load limits for which
such items are designed nor operate hard wheel forklifts within the Premises.
Any dust, fumes, or waste products generated by Tenant's use of the Premises
shall be contained and disposed so that they do not (i) create an unreasonable
fire or health hazard, (ii) damage the Premises, or (iii) result in the
violation of any Law. Except as approved by Landlord, Tenant shall not change
the exterior of the Building or install any equipment or antennas on or make any
penetrations of the exterior or roof of the Building. Tenant shall not commit
any waste in or about the Premises, and Tenant shall keep the Premises in a
neat, clean, attractive and orderly condition, free of any nuisances. If
Landlord designates a standard window covering for use throughout the Building,
Tenant shall use this standard window covering to cover all windows in the
Premises. Tenant shall not conduct on any portion of the Premises or the
Project any sale of any kind, including any public or private auction, fire
sale, going-out-of-business sale, distress sale or other liquidation sale.
4.2 COMPLIANCE WITH REGULATIONS: Tenant shall not use the Premises
in any manner which violates any Laws or Private Restrictions which affect the
Premises. Tenant shall abide by and promptly observe and comply with all Laws
and Private Restrictions. Tenant shall not use the Premises in any manner which
will cause a cancellation of any insurance policy covering Tenant's Alternations
or any improvements installed by Landlord at its expense or which poses an
unreasonable risk of damage or injury to the Premises. Tenant shall not sell,
or permit to be kept, used, or sold in or about the Premises any article which
may be prohibited by the standard form of fire insurance policy. Tenant shall
comply with all reasonable requirements of any insurance company, insurance
underwriter, or Board of Fire Underwriters which are necessary to maintain the
insurance coverage carried by either Landlord or Tenant pursuant to this Lease;
provided, however, that if any such requirement involves the construction of any
capital improvement to the Premises, then Tenant shall not be required to comply
with or pay the cost of complying with such requirement, unless such compliance
is necessitated by Tenant's particular use of the Premises or any alteration or
improvement made to the Premises made by or on behalf of Tenant.
4.3 OUTSIDE AREAS: No materials, supplies, tanks or containers,
equipment, finished products or semi-finished products, raw materials,
inoperable vehicles or articles of any nature shall be stored upon or permitted
to remain outside of the Premises except in fully fenced and screened areas
outside the Building which have been designed for such purpose and have been
approved in writing by Landlord for such use by Tenant.
4.4 SIGNS: Tenant shall not place on any portion of the Premises
any sign, placard, lettering in or on windows, banner, displays or other
advertising or communicative material which is visible from the exterior of the
Building without the prior written approval of Landlord in its sole and absolute
discretion. Tenant may have its name placed on the existing monument sign
located on the grass burn on Xxxxxx Xxxx, subject to the prior approval by
Landlord in its sole and absolute discretion concerning the design and quality
of the sign. All such approved signs shall strictly conform to all Laws,
Private Restrictions, and Landlord's sign criteria then in effect, and shall be
installed at the expense of Tenant. Tenant shall maintain such signs in good
condition and repair. At the expiration or earlier termination of this Lease,
Tenant shall remove all of its signs and repair and damage caused as a result.
4.5 PARKING: Tenant is allocated and shall have the non-exclusive
right, free of charge, to use not more than the number of Tenant's Allocated
Parking Stalls contained within the Project described in SECTION H of the
Summary for its use and the use of Tenant's Agents, the location of which may be
designated from time to time by Landlord. Tenant shall not at any time use more
parking spaces than the number so allocated to Tenant or park its vehicles or
the vehicles of others in any portion of the Project not designated by Landlord
as a non-exclusive parking area. Tenant shall not have the exclusive right to
use any specific parking space. If Landlord grants to any other tenant the
exclusive right to use any particular parking space(s), Tenant shall not use
such spaces. Landlord reserves the right, after having given Tenant reasonable
notice, to have any vehicles owned by Tenant or Tenant's Agents utilizing
parking spaces in excess of the parking spaces allowed for Tenant's use to be
towed away at Tenant's cost. All trucks and delivery vehicles shall be (i)
parked at the rear of the Building, (ii) loaded and unloaded in a manner which
does not interfere with the businesses of other occupants of the Project, and
(iii) permitted to remain on the Project only so long as is reasonably necessary
to complete loading and unloading. In the event Landlord elects or is required
by any Law to limit or control parking in the Project, whether by validation of
parking tickets or any other method of assessment, Tenant agrees to participate
in such validation or assessment program under such reasonable rules and
regulations as are from time to time established by Landlord.
4.6 RULES AND REGULATIONS: Landlord may from time to time
promulgate reasonable and nondiscriminatory rules and regulations applicable to
all occupants of the Project for the care and orderly management of the Project
and the safety of its tenants and invitees. Such rules and regulations shall be
binding upon Tenant upon delivery of a copy thereof to Tenant, and Tenant agrees
to abide by such rules and regulations. If there is a conflict between the
rules and regulations and any of the provisions of this Lease, the provisions of
this Lease shall prevail. Landlord shall not be responsible for the violation
by any other tenant of the Project of any such rules and regulations.
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ARTICLE 5
TRADE FIXTURES AND ALTERATIONS
5.1 TRADE FIXTURES: Throughout the Lease Term, Tenant may provide
and install, and shall maintain in good condition, any Trade Fixtures required
in the conduct of its business in the Premises. All Trade Fixtures shall remain
Tenant's property.
5.2 TENANT'S ALTERATIONS: Construction by Tenant of Tenant's
Alterations shall be governed by the following:
A. Tenant shall not construct any Tenant's Alterations or
otherwise alter the Premises without Landlord's prior written approval. Tenant
shall be entitled, without Landlord's prior approval, to make Tenant's
Alterations (i) which do not affect the structural or exterior parts or water
tight character of the Building, and (ii) the reasonably estimated cost of
which, including the cost of demolition of any part of the Premises removed or
materially altered in connection with such Tenant's Alterations, together do not
exceed the Permitted Tenant Alterations Limit specified in SECTION O of the
Summary per work of improvement. In the event Landlord's approval for any
Tenant's Alterations is required, Tenant shall not construct any Tenant
Alteration until Landlord has approved in writing the plans and specifications
therefor, and such Tenant's Alterations shall be constructed substantially in
compliance with such approved plans and specifications by a licensed contractor
first approved by Landlord. All Tenant's Alterations constructed by Tenant
shall be constructed by a licensed contractor in accordance with all Laws using
new materials of good quality.
B. Tenant shall not commence construction of any Tenant's
Alterations until (i) all required governmental approvals and permits have been
obtained, (ii) all requirements regarding insurance imposed by this Lease have
been satisfied, (iii) Tenant has given Landlord at least five days' prior
written notice of its intention to commence such construction, and (iv) if
reasonably requested by Landlord, Tenant has obtained contingent liability and
broad form builders' risk insurance in an amount reasonably satisfactory to
Landlord if there are any perils relating to the proposed construction not
covered by insurance carried pursuant to Article 9.
C. All Tenant's Alterations shall remain the property of
Tenant; provided, however, that if Landlord requires Tenant to remove any
Tenant's Alterations, Tenant shall so remove such Tenant's Alterations prior to
the expiration or sooner termination of the Lease Term. Notwithstanding the
foregoing, Tenant shall not be obligated to remove any Tenant's Alterations with
respect to which the following is true: (i) Tenant was required, or elected, to
obtain the approval of Landlord to the installation of Tenant's Alteration in
question; (ii) at the time Tenant requested Landlord's approval, Tenant
requested of Landlord in writing that Landlord inform Tenant of whether or not
Landlord would require Tenant to remove such Tenant's Alteration at the
expiration of the Lease Term; and (iii) at the time Landlord granted its
approval, it did not inform Tenant that it would require Tenant to remove such
Tenant's Alteration at the expiration of the Lease Term.
5.3 ALTERATIONS REQUIRED BY LAW: Tenant shall make any
alteration, addition or change of any sort to the Premises that is required
by any Law because of (i) Tenant's particular use or change of use of the
Premises; (ii) Tenant's application for any permit or governmental approval;
or (iii) Tenant's construction or installation of any Tenant's Alterations or
Trade Fixtures. Any other alteration, addition, or change required by Law
which is not the responsibility of Tenant pursuant to the foregoing shall be
made by Landlord (subject to Landlord's right to reimbursement from Tenant
specified in PARA 5.4).
5.4 AMORTIZATION OF CERTAIN CAPITAL IMPROVEMENTS: Tenant shall pay
Additional Rent in the event Landlord reasonably elects or is required to make
any of the following kinds of capital improvements to the Project and the cost
thereof is not reimbursable as a Common Operating Expense: (i) capital
improvements required to be constructed in order to comply with any Law
(excluding any Hazardous Materials Law) not in effect or applicable to the
Project as of the Effective Date; (ii) modification of existing or construction
of additional capital improvements or building service equipment for the purpose
of reducing the consumption of utility services or Common Operating Expenses of
the Project; and (iii) replacement of capital improvements or building service
equipment existing as of the Effective Date when required because of normal wear
and tear. The amount of Additional Rent Tenant is to pay with respect to each
such capital improvement shall be determined as follows:
A. All costs paid by Landlord to construct such
improvements (including financing costs) shall be amortized over the useful life
of such improvement (as reasonably determined by Landlord in accordance with
generally accepted accounting principles) with interest on the unamortized
balance at the then prevailing market rate Landlord would pay if it borrowed
funds to construct such improvements from an institutional lender, and Landlord
shall inform Tenant of the monthly amortization payment required to so amortize
such costs, and shall also provide Tenant with the information upon which such
determination is made.
B. As Additional Rent, Tenant shall pay at the same time
the Base Monthly Rent is due an amount equal to Tenant's Share of that portion
of such monthly amortization payment fairly allocable to the Building (as
reasonably determined by Landlord) for each month after such improvements are
completed until the first to occur of (i) the expiration of the Lease Term (as
it may be extended), or (ii) the end of the term over which such costs were
amortized.
5.5 MECHANIC'S LIENS: Tenant shall keep the Project free from any
liens and shall pay when due all bills arising out of any work performed,
materials furnished, or obligations incurred by Tenant or Tenant's Agents
relating to the Project. If any claim of lien is recorded (except those caused
by Landlord or Landlord's Agents),
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Tenant shall bond against or discharge the same within 10 days after Tenant has
received notice that the same has been recorded against the Project. Should any
lien be filed against the Project or any action be commenced affecting title to
the Project, the party receiving notice of such lien or action shall immediately
give the other party written notice thereof.
5.6 TAXES ON TENANT'S PROPERTY: Tenant shall pay before delinquency
any and all taxes, assessments, license fees and public charges levied, assessed
or imposed against Tenant or Tenant's estate in this Lease or the property of
Tenant situated within the Premises which become due during the Lease Term. If
any tax or other charge is assessed by any governmental agency because of the
execution of this Lease, such tax shall be paid by Tenant. On demand by
Landlord, Tenant shall furnish Landlord with satisfactory evidence of these
payments.
ARTICLE 6
REPAIR AND MAINTENANCE
6.1 TENANT'S OBLIGATION TO MAINTAIN: Except as otherwise
provided in PARA 6.2, PARA 11.1, and PARA 12.3, Tenant shall be responsible
for the following during the Lease Term:
A. Tenant shall clean and maintain in good order,
condition, and repair and replace when necessary the Premises and every part
thereof, through regular inspections and servicing, including, but not limited
to: (i) all plumbing and sewage facilities (including all sinks, toilets,
faucets and drains), and all ducts, pipes, vents or other parts of the HVAC or
plumbing system; (ii) all fixtures, interior walls, floors, carpets and
ceilings; (iii) all windows, doors, entrances, plate glass, showcases and
skylights (including cleaning both interior and exterior surfaces); (iv) all
electrical facilities and all equipment (including all lighting fixtures, lamps,
bulbs, tubes, fans, vents, exhaust equipment and systems); and (v) any automatic
fire extinguisher equipment in the Premises.
B. With respect to utility facilities serving the Premises
(including electrical wiring and conduits, gas lines, water pipes, and plumbing
and sewage fixtures and pipes), Tenant shall be responsible for the maintenance
and repair of any such facilities which serve only the Premises, including all
such facilities that are within the walls or floor, or on the roof of the
Premises, and any part of such facility that is not within the Premises, but
only up to the point where such facilities join a main or other junction (e.g.,
sewer main or electrical transformer) from which such utility services are
distributed to other parts of the Project as well as to the Premises. Tenant
shall replace any damaged or broken glass in the Premises (including all
interior and exterior doors and windows) with glass of the same kind, size and
quality. Tenant shall repair any damage to the Premises (including exterior
doors and windows) caused by vandalism or any unauthorized entry.
C. Tenant shall (i) maintain, repair and replace when
necessary all HVAC equipment which services only the Premises, and shall keep
the same in good condition through regular inspection and servicing, and (ii)
maintain continuously throughout the Lease Term a service contract for the
maintenance of all such HVAC equipment with a licensed HVAC repair and
maintenance contractor approved by Landlord, which contract provides for the
periodic inspection and servicing of the HVAC equipment at least once every 60
days during the Lease Term. Notwithstanding the foregoing, Landlord may elect
at any time to assume responsibility for the maintenance, repair and replacement
of such HVAC equipment which serves only the Premises. Tenant shall maintain
continuously throughout the Lease Term a service contract for the washing of all
windows (both interior and exterior surfaces) in the Premises with a contractor
approved by Landlord, which contract provides for the periodic washing of all
such windows at least once every 60 days during the Lease Term. Tenant shall
furnish Landlord with copies of all such service contracts, which shall provide
that they may not be canceled or changed without at least 30 days' prior written
notice to Landlord.
D. All repairs and replacements required of Tenant shall be
promptly made with new materials of like kind and quality. If the work affects
the structural parts of the Building or if the estimated cost of any item of
repair or replacement is in excess of the Permitted Tenant's Alterations Limit,
then Tenant shall first obtain Landlord's written approval of the scope of the
work, plans therefor, materials to be used, and the contractor.
E. Notwithstanding anything to the contrary in section 6.1
and its subsections, Landlord agrees to perform any repair or maintenance
required of Tenant under sections 6.1 A, B, C or D above that constitutes a
capital improvement under generally accepted accounting principles as determined
by Landlord in its reasonable discretion, if the cost of such work is estimated
to be more than $10,000.00 during any Lease Year and such work is not due to any
negligence or willful misconduct of Tenant or any of Tenant's Agents for which
the waiver of subrogation provisions of section 9.4 are not applicable or due to
any alterations by Tenant; provided, however that Tenant shall pay to Landlord
the amortized portion of the cost for any such repair or replacement in
accordance with Sections 5.4A and B of this Lease. Tenant shall not be
responsible for any repairs or maintenance due to the active negligence or
willful misconduct of Landlord or its Agents.
6.2 LANDLORD'S OBLIGATION TO MAINTAIN: Landlord shall repair,
maintain and operate the Common Area and repair and maintain the roof, exterior
and structural parts of the building(s) located on the Project so that the same
are kept in good order and repair. If there is central HVAC or other building
service equipment and/or utility facilities serving portions of the Common Area
and/or both the Premises and other parts of the Building, Landlord shall
maintain and operate (and replace when necessary) such equipment. Landlord
shall not be responsible for repairs required by an accident, fire or other
peril or for damage caused to any part of the Project by any act or omission of
Tenant or Tenant's Agents except as otherwise required by Article 11. Landlord
may engage contractors of its choice to perform the obligations required of it
by this Article, and the necessity of any expenditure to perform such
obligations shall be at the sole discretion of Landlord.
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6.3 CONTROL OF COMMON AREA: Landlord shall at all times have
exclusive control of the Common Area. Landlord shall have the right, without
the same constituting an actual or constructive eviction and without entitling
Tenant to any abatement of rent, to: (i) close any part of the Common Area to
whatever extent required in the opinion of Landlord's counsel to prevent a
dedication thereof or the accrual of any prescriptive rights therein; (ii)
temporarily close the Common Area to perform maintenance or for any other reason
deemed sufficient by Landlord; (iii) change the shape, size, location and extent
of the Common Area; (iv) eliminate from or add to the Project any land or
improvement, including multi-deck parking structures; (v) make changes to the
Common Area including, without limitation, changes in the location of driveways,
entrances, passageways, doors and doorways, elevators, stairs, restrooms, exits,
parking spaces, parking areas, sidewalks or the direction of the flow of traffic
and the site of the Common Area; (vi) remove unauthorized persons from the
Project; and/or (vii) change the name or address of the Building or Project.
Tenant shall keep the Common Area clear of all obstructions created or permitted
by Tenant. If in the opinion of Landlord unauthorized persons are using any of
the Common Area by reason of the presence of Tenant in the Building, Tenant,
upon demand of Landlord, shall restrain such unauthorized use by appropriate
proceedings. In exercising any such rights regarding the Common Area, (i)
Landlord shall make a reasonable effort to minimize any disruption to Tenant's
business, and (ii) Landlord shall not exercise its rights to control the Common
Area in a manner that would materially interfere with Tenant's use of the
Premises without first obtaining Tenant's consent. Landlord shall have no
obligation to provide guard services or other security measures for the benefit
of the Project. Tenant assumes all responsibility for the protection of Tenant
and Tenant's Agents from acts of third parties; provided, however, that nothing
contained herein shall prevent Landlord, at its sole option, from providing
security measures for the Project.
ARTICLE 7
WASTE DISPOSAL AND UTILITIES
7.1 WASTE DISPOSAL: Tenant shall store its waste either inside the
Premises or within outside trash enclosures that are fully fenced and screened
in compliance with all Private Restrictions, and designed for such purpose. All
entrances to such outside trash enclosures shall be kept closed, and waste shall
be stored in such manner as not to be visible from the exterior of such outside
enclosures. Tenant shall cause all of its waste to be regularly removed from
the Premises at Tenant's sole cost. Tenant shall keep all fire corridors and
mechanical equipment rooms in the Premises free and clear of all obstructions at
all times.
7.2 HAZARDOUS MATERIALS: Landlord and Tenant agree as follows with
respect to the existence or use of Hazardous Materials on the Project:
A. Any handling, transportation, storage, treatment,
disposal or use of Hazardous Materials by Tenant and Tenant's Agents after the
Effective Date in or about the Project shall strictly comply with all applicable
Hazardous Materials Laws. Tenant shall indemnify, defend upon demand with
counsel reasonably acceptable to Landlord, and hold harmless Landlord from and
against any liabilities, losses, claims, damages, lost profits, consequential
damages, interest, penalties, fines, monetary sanctions, attorneys' fees,
experts' fees, court costs, remediation costs, investigation costs, and other
expenses which result from or arise in any manner whatsoever out of the use,
storage, treatment, transportation, release, or disposal of Hazardous Materials
on or about the Project by Tenant or Tenant's Agents after the Effective Date.
B. If the use, storage, treatment, transportation, release
or disposal of any Hazardous Material by Tenant or any of Tenant's Agents after
the Effective Date results in contamination or deterioration of water or soil
resulting in a level of contamination greater than the levels established as
acceptable by any governmental agency having jurisdiction over such
contamination, then Tenant shall promptly take any and all action necessary to
investigate and remediate such contamination if required by Law or as a
condition to the issuance or continuing effectiveness of any governmental
approval which relates to the use of the Project or any part thereof. Tenant
shall further be solely responsible for, and shall defend, indemnify and hold
Landlord and its agents harmless from and against, all claims, costs and
liabilities, including attorneys' fees and costs, arising out of or in
connection with any investigation and remediation required hereunder to return
the Project to its condition existing prior to the appearance of such Hazardous
Materials.
C. Landlord and Tenant shall each give written notice to
the other as soon as reasonably practicable of (i) any communication received
from any governmental authority concerning Hazardous Materials which relates to
the Project, and (ii) any contamination of the Project by Hazardous Materials
which constitutes a violation of any Hazardous Materials Law. Tenant may use
(a) small quantities of household chemicals such as adhesives, lubricants, and
cleaning fluids in order to conduct its business at the Premises and (b) such
other Hazardous Materials as are necessary and used in the management and
operation of the business of the original party signing this Lease as tenant as
of the Commencement Date as disclosed in the Hazardous Material Questionnaire
attached hereto as EXHIBIT C, which materials in either case were or are used in
the manner for which they were designed and in such amounts as may be necessary
for the operation of such business at the Property. If Tenant assigns this
Lease or sublets any space, then any such assignee's or sublessee's use of
Hazardous Materials in the normal and customary operation of its business shall
be subject to the prior written approval of Landlord. At any time during the
Lease Term, Tenant shall, within fifteen (15) days after written request
therefor received from Landlord, disclose in writing all Hazardous Materials
that are being used by Tenant on the Project, the nature of such use, and the
manner of storage and disposal.
D. Landlord may cause testing xxxxx to be installed on the
Project, and may cause the ground water to be tested to detect the presence of
Hazardous Material by the use of such tests as are then
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customarily used for such purposes. If Tenant so requests, Landlord shall
supply Tenant with copies of such test results. The cost of such tests and
of the installation, maintenance, repair and replacement of such xxxxx shall
be paid by Tenant if such tests disclose the existence of facts which give
rise to liability of Tenant pursuant to its indemnity given in PARA 7.2A
and/or PARA 7.2B.
E. As used herein, the term "Hazardous Material," means any
hazardous or toxic substance, material or waste which is or becomes regulated by
any local governmental authority, the State of California or the United States
Government. The term "Hazardous Material," includes, without limitation,
petroleum products, asbestos, PCB's, and any material or substance which is (i)
listed under Article 9 or defined as hazardous or extremely hazardous pursuant
to Article 11 of Title 22 of the California Administrative Code, Division 4,
Chapter 20, (ii) defined as a "hazardous waste" pursuant to Section 1004 of the
Federal Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq. (42
U.S.C. 6903), or (iii) defined as a "hazardous substance" pursuant to Section
101 of the Comprehensive Environmental Response; Compensation and Liability Act,
42 U.S.C. 9601 et seq. (42 U.S.C. 9601). As used herein, the term "Hazardous
Material Law" shall mean any statute, law, ordinance, or regulation of any
governmental body or agency (including the U.S. Environmental Protection Agency,
the California Regional Water Quality Control Board, and the California
Department of Health Services) which regulates the use, storage, release or
disposal of any Hazardous Material.
F. The obligations of Landlord and Tenant under this
PARA 7.2 shall survive the expiration or earlier termination of the Lease
Term. The rights and obligations of Landlord and Tenant with respect to
issues relating to Hazardous Materials are exclusively established by this
PARA 7.2. In the event of any inconsistency between any other part of this
Lease and this PARA 7.2, the terms of this PARA 7.2 shall control.
7.3 UTILITIES: Tenant shall promptly pay, as the same become due,
all charges for water, gas, electricity, telephone, sewer service, waste pick-up
and any other utilities, materials or services furnished directly to or used by
Tenant on or about the Premises during the Lease Term, including, without
limitation, (i) meter, use and/or connection fees, hook-up fees, or standby fee
(excluding any connection fees or hook-up fees which relate to making the
existing electrical, gas, and water service available to the Premises as of the
Commencement Date), and (ii) penalties for discontinued or interrupted service.
If any utility service is not separately metered to the Premises, then Tenant
shall pay its pro rata share of the cost of such utility service with all others
served by the service not separately metered. However, if Landlord determines
that Tenant is using a disproportionate amount of any utility service not
separately metered, then Landlord at its election may (i) periodically charge
Tenant, as Additional Rent, a sum equal to Landlord's reasonable estimate of the
cost of Tenant's excess use of such utility service, or (ii) install a separate
meter (at Tenant's expense) to measure the utility service supplied to the
Premises.
7.4 COMPLIANCE WITH GOVERNMENTAL REGULATIONS: Landlord and Tenant
shall comply with all rules, regulations and requirements promulgated by
national, state or local governmental agencies or utility suppliers concerning
the use of utility services, including any rationing, limitation or other
control. Tenant shall not be entitled to terminate this Lease nor to any
abatement in rent by reason of such compliance.
ARTICLE 8
COMMON OPERATING EXPENSES
8.1 TENANT'S OBLIGATION TO REIMBURSE: As Additional Rent, Tenant
shall pay Tenant's Share (specified in SECTION G of the Summary) of all Common
Operating Expenses with respect to the maintenance, repair, replacement and use
of the Building, Common Areas and Project. Tenant shall pay such share of the
actual Common Operating Expenses incurred or paid by Landlord but not
theretofore billed to Tenant within 30 days after receipt of a written xxxx
therefor from Landlord, on such periodic basis as Landlord shall designate, but
in no event more frequently than once a month. Alternatively, Landlord may from
time to time require that Tenant pay Tenant's Share of Common Operating Expenses
in advance in estimated monthly installments, in accordance with the following:
(I) Landlord shall deliver to Tenant Landlord's reasonable estimate of the
Common Operating expenses it anticipates will be paid or incurred for the
Landlord's fiscal year in question; (ii) during such Landlord's fiscal year
Tenant shall pay such share of the estimated Common Operating Expenses in
advance in monthly installments as required by Landlord due with the
installments of Base Monthly Rent; and (iii) within 90 days after the end of
each Landlord's fiscal year, Landlord shall furnish to Tenant a statement in
reasonable detail of the actual Common Operating Expenses paid or incurred by
Landlord during the just ended Landlord's fiscal year and thereupon there shall
be an adjustment between Landlord and Tenant, with payment to Landlord or credit
by Landlord against the next installment of Base Monthly Rent, as the case may
require, within 10 days after delivery by Landlord to Tenant of said statement,
so that Landlord shall receive the entire amount of Tenant's Share of all Common
Operating Expenses for such Landlord's fiscal year and no more. Tenant shall
have the right at its expense, exercisable upon reasonable prior written notice
to Landlord, to inspect at Landlord's office during normal business hours
Landlord's books and records as they relate to Common Operating Expenses. Such
inspection must be within 90 days of Tenant's receipt of Landlord's annual
sttement for the same, and shall be limited to verification of the charges
contained in such statement. Tenant may not withhold payment of such xxxx
pending completion of such inspection.
8.2 COMMON OPERATING EXPENSES DEFINED: The term "Common Operating
Expenses" shall mean the following:
A. All costs and expenses paid or incurred by Landlord in
doing the following (including payments to independent contractors providing
services related to the performance of the following): (i) maintaining,
cleaning, repairing and resurfacing the roof (including repair of leaks) and the
exterior surfaces (including painting) of the Building and all other structures
and improvements at the Project; (ii) maintenance of the
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liability, fire and property damage, earthquake and other insurance covering the
Project carried by Landlord pursuant to PARA 9.2 (including the prepayment of
premiums for coverage of up to one year); (iii) maintaining, repairing,
operating and replacing when necessary HVAC equipment, utility facilities and
other building service equipment; (iv) providing utilities to the Common Area
(including lighting, trash removal and water for landscaping irrigation); (v)
complying with all applicable Laws and Private Restrictions to the extent that
such requirements are not applicable to or required at the Building, Common
Areas or Project as of the Effective Date (but noncompliance with any Law in
effect as of the Effective Date which is permitted or not required to be
rectified or corrected under applicable Law because such improvements were in
compliance with applicable Law as of the date they were constructed shall not be
considered a violation of Law applicable to the Building, Common Areas or
Project under this section and therefore shall be included in the Common
Operating Expenses); (vi) operating, maintaining, repairing, cleaning, painting,
restriping and resurfacing the Common Area; (vii) replacement or installation of
lighting fixtures, directional or other signs and signals, irrigation systems,
trees, shrubs, ground cover and other plant materials, and all landscaping in
the Common Area; (viii) providing security (provided, however, that Landlord
shall not be obligated to provide security and if it does, Landlord may
discontinue such service at any time and in any event Landlord shall not be
responsible for any act or omission of any security personnel); and (ix) capital
improvements as provided in PARA 5.4 hereof;
B. The following costs: (i) Real Property Taxes as
defined in PARA 8.3; (ii) the amount of any "deductible" paid by Landlord
with respect to damage caused by any Insured Peril not to exceed $25,000.00;
(iii) the cost to repair damage caused by an Uninsured Peril up to a maximum
amount in any 12 month period equal to $25,000.00; and (iv) that portion of
all compensation (including benefits and premiums for workers' compensation
and other insurance) paid to or on behalf of employees of Landlord but only
to the extent they are involved in the performance of the work described by
PARA 8.2A that is fairly allocable to the Project;
C. Fees for management services rendered by either Landlord
or a third party manager engaged by Landlord (which may be a party affiliated
with Landlord), except that the total amount charged for management services and
included in Tenant's Share of Common Operating Expenses shall not exceed the
monthly rate of three percent (3%) of the Base Monthly Rent.
D. All additional costs and expenses incurred by Landlord
with respect to the operation, protection, maintenance, repair and replacement
of the Project which would be considered a current expense (and not a capital
expenditure) pursuant to generally accepted accounting principles; provided,
however, that Common Operating Expenses shall not include any of the following:
(i) payments on any loans or ground leases affecting the Project; (ii)
depreciation of the Building and all other structures and improvements at the
Project or any major systems of building service equipment within the Project;
(iii) leasing commissions; (iv) the cost of tenant improvements installed for
the exclusive use of other tenants of the Project; and (v) any cost incurred in
complying with Hazardous Materials Laws, which subject is governed exclusively
by PARA 7.2.
(E) BUILDING ALLOCATION. Since the Project consists of
multiple buildings including the Building, certain Common Operating Expenses may
pertain to a particular building(s) and other Common Operating Expenses to the
Project as a whole. Common Operating Expenses applicable to any particular
building within the Project shall be allocated and charged to the building in
question whose tenants shall be responsible for payment of their respective
proportionate shares in the pertinent building and other Common Operating
Expenses applicable to the Project shall be allocated and charged to each
building in the Project based on the ratio that each building's gross leasable
area bears to the total gross leasable area of all buildings in the Project,
with the tenants in each building in the Project being responsible for paying
their respective proportionate shares of such costs. Landlord shall in good
faith attempt to allocate such Common Operating Expenses to the buildings
(including the Building) or Project, as the case may be, and such allocation
shall be binding on Tenant.
8.3 REAL PROPERTY TAXES DEFINED: The term "Real Property Taxes"
shall mean all taxes, assessments, levies, and other charges of any kind or
nature whatsoever, general and special, foreseen and unforeseen (including all
installments of principal and interest required to pay any existing or future
general or special assessments for public improvements, services or benefits,
and any increases resulting from reassessments resulting from a change in
ownership, new construction, or any other cause), now or hereafter imposed by
any governmental or quasi-governmental authority or special district having the
direct or indirect power to tax or levy assessments, which are levied or
assessed against, or with respect to the value, occupancy or use of all or any
portion of the Project (as now constructed or as may at any time hereafter be
constructed, altered, or otherwise changed) or Landlord's interest therein, the
fixtures, equipment and other property of Landlord, real or personal, that are
an integral part of and located on the Project, the gross receipts, income, or
rentals from the Project, or the use of parking areas, public utilities, or
energy within the Project, or Landlord's business of leasing the Project. If
at any time during the Lease Term the method of taxation or assessment of the
Project prevailing as of the Effective Date shall be altered so that in lieu of
or in addition to any Real Property Tax described above there shall be levied,
assessed or imposed (whether by reason of a change in the method of taxation or
assessment, creation of a new tax or charge, or any other cause) an alternate or
additional tax or charge (i) on the value, use or occupancy of the Project or
Landlord's interest therein, or (ii) on or measured by the gross receipts,
income or rentals from the Project, on Landlord's business of leasing the
Project, or computed in any manner with respect to the operation of the Project,
then any such tax or charge, however designated, shall be included within the
meaning of the term "Real Property Taxes" for purposes of this Lease. If any
Real Property Tax is based upon property or rents unrelated to the Project, then
only that part of such Real Property Tax that is fairly allocable to the Project
shall be included within the meaning of the term "Real Property Taxes".
Notwithstanding the foregoing, the term "Real Property Taxes" shall not include
estate, inheritance, transfer, gift or franchise taxes of Landlord or the
federal or state net income tax imposed on Landlord's income from all sources.
With respect to any special assessments which may be levied as part of the
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Real Property Taxes and which may be payable in installments over a period of
time, only the amount of the installments due each year shall be included in the
Real Property Taxes charged to Tenant, whether or not Landlord elects to pay in
installments, provided that Landlord has the option of paying said assessment in
installments over a period of time.
ARTICLE 9
INSURANCE
9.1 TENANT'S INSURANCE: Tenant shall maintain insurance complying
with all of the following:
A. Tenant shall procure, pay for and keep in full force and
effect the following:
(1) Commercial general liability insurance, including
property damage, against liability for personal injury, bodily injury, death and
damage to property occurring in or about, or resulting from an occurrence in or
about, the Premises with combined single limit coverage of not less than the
amount of Tenant's Liability Insurance Minimum specified in SECTION P of the
Summary, which insurance shall contain a "contractual liability" endorsement
insuring Tenant's performance of Tenant's obligation to indemnify Landlord
contained in PARA 10.3;
(2) Fire and property damage insurance in so-called
"all risk" form insuring Tenant's Trade Fixtures and Tenant's Alterations for
the full actual replacement cost thereof;
(3) Business interruption insurance with limits of
liability representing at least approximately six months of income, business
auto liability covering owned, non-owned and hired vehicles with a limit of not
less than $1,000,000 per accident, insurance protecting against liability under
workers' compensation laws with limits at least as required by statute,
insurance for all plate glass in the Premises, and such other insurance that is
reasonably required by Landlord and customarily carried by tenants of similar
property in similar businesses.
B. Where applicable and required by Landlord, each policy
of insurance required to be carried by Tenant pursuant to this PARA 9.1: (i)
shall name Landlord and such other parties in interest as Landlord reasonably
designates as additional insured; (ii) shall be primary insurance which provides
that the insurer shall be liable for the full amount of the loss up to and
including the total amount of liability set forth in the declarations without
the right of contribution from any other insurance coverage of Landlord; (iii)
shall be in a form satisfactory to Landlord; (iv) shall be carried with
companies reasonably acceptable to Landlord; (v) shall provide that such policy
shall not be subject to cancellation or reduction in coverage except after at
least 30 days prior written notice to Landlord so long as such provision of 30
days notice is reasonably obtainable, but in any event not less than 10 days
prior written notice; (vi) shall not have a "deductible" in excess of such
amount as is reasonably approved by Landlord and which is then customary in the
marketplace; (vii) shall contain a cross liability endorsement; and (viii) shall
contain a "severability" clause. If Tenant has in full force and effect a
blanket policy of liability insurance with the same coverage for the Premises as
described above, as well as other coverage of other premises and properties of
Tenant, or in which Tenant has some interest, such blanket insurance shall
satisfy the requirements of this PARA 9.1.
C. A copy of each paid-up policy evidencing the insurance
required to be carried by Tenant pursuant to this PARA 9.1 (appropriately
authenticated by the insurer) or a certificate of the insurer, certifying that
such policy has been issued, providing the coverage required by this PARA 9.1,
and containing the provisions specified herein, shall be delivered to Landlord
prior to the time Tenant or any of its Agents enters the Premises and upon
renewal of such policies, but not less than 5 days prior to the expiration of
the term of such coverage. Landlord may, at any time, and from time to time,
inspect and/or copy any and all insurance policies required to be procured by
Tenant pursuant to this PARA 9.1 if a claim is filed or threatened against
Landlord. If the original five year Lease Term is extended by the parties and
any Lender or any insurance advisor reasonably determines at any time that the
amount of coverage required for any policy of insurance Tenant is to obtain
pursuant to this PARA 9.1 is not adequate, then Tenant shall increase such
coverage for such insurance to such amount as such Lender or insurance advisor
reasonably deems adequate, not to exceed the level of coverage for such
insurance commonly carried by comparable businesses similarly situated.
9.2 LANDLORD'S INSURANCE: Landlord shall have the following
obligations and options regarding insurance:
A. Landlord shall maintain a policy or policies of fire and
property damage insurance in so-called "all risk" form insuring Landlord (and
such others as Landlord may designate) against loss of rents for a period of not
less than 12 months and from physical damage to the Project with coverage of not
less than the full replacement cost thereof. Landlord may so insure the Project
separately, or may insure the Project with other property owned by Landlord
which Landlord elects to insure together under the same policy or policies.
Landlord shall have the right, but not the obligation, in its sole and absolute
discretion, to obtain insurance for such additional perils at Landlord deems
appropriate, including, without limitation, coverage for damage by earthquake
and/or flood. All such coverage shall contain "deductibles" which Landlord
deems appropriate, which in the case of earthquake and flood insurance, may be
up to 10% of the replacement value of the property insured or such higher amount
as is then commercially reasonable. Landlord shall not be required to cause
such insurance to cover any Trade Fixtures or Tenant's Alterations of Tenant.
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B. Landlord may maintain a policy or policies of commercial
general liability insurance insuring Landlord (and such others as are designated
by Landlord) against liability for personal injury, bodily injury, death and
damage to property occurring or resulting from an occurrence in, on or about the
Project, with combined single limit coverage in such amount as Landlord from
time to time determines is reasonably necessary for its protection.
C. TENANT'S OBLIGATION TO REIMBURSE: If Landlord's
insurance rates for the Building are increased at any time during the Lease Term
as a result of the nature of Tenant's particular use of the Premises, Tenant
shall reimburse Landlord for the full amount of such increase immediately upon
receipt of a xxxx from Landlord therefor.
9.4 RELEASE AND WAIVER OF SUBROGATION: Notwithstanding anything
to the contrary in this Lease, the parties hereto release each other, and
their respective agents and employees, successors, assigns and subtenants,
from any liability for injury to any person or damage to property that is
caused by or results from any risk insured against under any valid and
collectible insurance policy carried by either of the parties which contains
a waiver of subrogation by the insurer and is in force at the time of such
injury or damage or any insurance policy which is required to be maintained
by the parties under this Lease without regard to the negligence or willful
misconduct of the party or entity so released, subject to the following
limitations: (i) the foregoing provision shall not apply to the commercial
general liability insurance described by subparagraphs PARA 9.1A and PARA
9.2B; (ii) such release shall apply to liability resulting from any risk
insured against or covered by self-insurance maintained or provided by Tenant
to satisfy the requirements of PARA 9.1A.2 to the extent permitted by this
Lease; and (iii) Landlord or Tenant, as the case may be, shall not be
released from any such liability to the extent any damages resulting from
such injury or damage are not covered by the recovery obtained by Landlord or
Tenant for such insurance, as applicable (or for such insurance required to
be carried by each party under this Lease), but only to the extent of the
applicable deductible and to the extent such damage or claim is caused by
Landlord or Landlord's Agents or Tenant or any of Tenant's Agents,
respectively. Each party shall use reasonable efforts to cause each
insurance policy obtained by it to provide that the insurer waives all right
of recovery by way of subrogation against the other party and its Agents in
connection with any injury or damage covered by such policy. However, if any
insurance policy cannot be obtained with such a waiver of subrogation, or if
such waiver of subrogation is only available at additional cost and the party
for whose benefit the waiver is to be obtained does not pay such additional
cost, then the party obtaining such insurance shall notify the other party of
that fact and thereupon shall be relieved of the obligation to obtain such
waiver of subrogation rights from the insurer with respect to the particular
insurance involved.
ARTICLE 10
LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY
10.1 LIMITATION ON LANDLORD'S LIABILITY: Landlord shall not be
liable to Tenant, nor shall Tenant be entitled to terminate this Lease or to any
abatement of rent (except as expressly provided otherwise herein), for any
injury to Tenant or Tenant's Agents, damage to the property of Tenant or
Tenant's Agents, or loss to Tenant's business resulting from any cause,
including without limitation any: (i) failure, interruption or installation of
any HVAC or other utility system or service; (ii) failure to furnish or delay in
furnishing any utilities or services when such failure or delay is caused by
fire or other peril, the elements, labor disturbances of any character, or any
other accidents or other conditions beyond the reasonable control of Landlord;
(iii) limitation, curtailment, rationing or restriction on the use of water or
electricity, gas or any other form of energy or any services or utility serving
the Project; (iv) vandalism or forcible entry by unauthorized persons or the
criminal act of any person; or (v) penetration of water into or onto any portion
of the Premises or the Building through roof leaks or otherwise.
Notwithstanding the foregoing but subject to PARA 9.4, Landlord shall be liable
for any such injury, damage or loss which is proximately caused by Landlord's
willful misconduct or active negligence, but such limitation of liability shall
not relieve Landlord from its obligations under this Lease.
10.2 LIMITATION ON TENANT'S RECOURSE: If Landlord is a corporation,
limited liability company, trust, partnership, joint venture, unincorporated
association or other form of business entity: (i) the obligations of Landlord
shall not constitute personal obligations of the officers, directors, trustees,
partners, members, managers, joint venturers, members, owners, stockholders, or
other principals or representatives of such business entity; and (ii) Tenant
shall not have recourse to the assets of such officers, directors, trustees,
partners, members, managers, joint venturers, members, owners, stockholders,
principals or representatives except to the extent of their interest in the
Project (including any net sale proceeds from the sale of the Project or
Building). Tenant shall have recourse only to the interest of Landlord in the
Project and shall not have recourse to any other assets of Landlord.
10.3 INDEMNIFICATION OF LANDLORD: Tenant shall hold harmless,
indemnify and defend Landlord, and its employees, agents and contractors, with
competent counsel reasonably satisfactory to Landlord (and Landlord agrees to
accept counsel that any insurer requires be used), from all liability,
penalties, losses, damages, costs, expenses, causes of action, claims and/or
judgments arising by reason of any death, bodily injury, personal injury or
property damage resulting from (i) any cause or causes whatsoever (other than to
the extent caused by the willful misconduct or negligence of Landlord or breach
of Landlord's obligations under this Lease) occurring in or about or resulting
from an occurrence in or about the Premises during the Lease Term, (ii) the
negligence or willful misconduct of Tenant or its agents, employees and
contractors, wherever the same may occur, or (iii) an Event of Tenant's Default.
The provisions of this PARA 10.3 shall survive the expiration or sooner
termination of this Lease.
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ARTICLE 11
DAMAGE TO PREMISES
11.1 LANDLORD'S DUTY TO RESTORE: If the Premises are damaged by any
peril after the Effective Date, Landlord shall restore the Premises unless the
Lease is terminated by Landlord pursuant to PARA 11.2 or by Tenant pursuant to
PARA11.3. All insurance proceeds available from the fire and property damage
insurance carried by Landlord pursuant to PARA 9.2 shall be paid to and become
the property of Landlord. If this Lease is terminated pursuant to either
PARA 11.2 or PARA 11.3, then all insurance proceeds available from insurance
carried by Tenant shall be paid to and become the property of Tenant. If this
Lease is not so terminated, then upon receipt of the insurance proceeds (if the
loss is covered by insurance) and the issuance of all necessary governmental
permits, Landlord shall commence and diligently prosecute to completion the
restoration of the Premises, to the extent then allowed by Law, to substantially
the same condition in which the Premises were immediately prior to such damage.
Landlord's obligation to restore shall be limited to the Premises and interior
improvements constructed by Landlord as they existed as of the Commencement
Date, excluding any Tenant's Alterations, Trade Fixtures and/or personal
property constructed or installed by Tenant in the Premises. Tenant shall
forthwith replace or fully repair all Tenant's Alterations and Trade Fixtures
installed by Tenant and existing at the time of such damage or destruction, and
all insurance proceeds received by Tenant from the insurance carried by it
pursuant to PARA 9.1A(2) shall be used for such purpose.
Tenant shall forthwith replace or fully repair all Tenant's
Alterations and Trade Fixtures installed by Tenant and existing at the time of
such damage or destruction, and all insurance proceeds received by Tenant from
the insurance carried by it pursuant to PARA 9.1A(2) shall be used for such
purpose. Tenant's obligations to repair or replace Tenant's Alterations and
Tenant's Trade Fixtures pursuant to this Section shall be limited to the extent
of the insurance proceeds actually received by Tenant and subject to Tenant's
right to terminate the Lease as set forth in Section 11.3 below. Tenant shall
be entitled to retain all insurance proceeds and settlements it receives in
connection with the damage or destruction of Tenant's Trade Fixtures and any
other property insurance maintained by Tenant.
11.2 LANDLORD'S RIGHT TO TERMINATE: Landlord shall have the right to
terminate this Lease in the event any of the following occurs, which right may
be exercised only by delivery to Tenant of a written notice of election to
terminate within 30 days after the date of such damage:
A. Either the Project (other than the Building) or the
Building is damaged by an Insured Peril to such an extent that the estimated
cost to restore the Project (other than the Building) exceeds 33% of the then
actual replacement cost thereof, or the estimated cost to restore the Building
exceeds 50% of the actual replacement cost thereof;
B. Either the Project or the Building is damaged by an
Uninsured Peril to such an extent that the estimated cost to restore exceeds 2%
of the then actual replacement cost thereof; provided, however, that Landlord
may not terminate this Lease pursuant to this PARA 11.2B if one or more tenants
of the Building agree in writing to pay the amount by which the cost to restore
the damage exceeds such amount and subsequently deposit such amount with
Landlord within 30 days after Landlord has notified Tenant of its election to
terminate this Lease;
C. The Premises are damaged by any peril within 12 months
of the last day of the Lease Term to such an extent that the estimated cost to
restore equals or exceeds an amount equal to six times the Base Monthly Rent
then due; provided, however, that Landlord may not terminate this Lease pursuant
to this PARA 11.2C if Tenant, at the time of such damage, has a then valid
express written option to extend the Lease Term and Tenant exercises such option
to extend the Lease Term within 15 days following the date of such damage; or
D. Either the Project or the Building is damaged by any
peril and, because of the Laws then in force, (i) cannot be restored at
reasonable cost to substantially the same condition in which it was prior to
such damage, or (ii) cannot be used for the same use being made thereof before
such damage if restored as required by this Article.
E. As used herein, the following terms shall have the
following meanings: (i) the term "Insured Peril" shall mean a peril actually
insured against for which the insurance proceeds actually received by Landlord
are sufficient (except for any "deductible" amount specified by such insurance)
to restore the Project under then existing building codes to the condition
existing immediately prior to the damage; and (ii) the term "Uninsured Peril"
shall mean any peril which is not an Insured Peril. Notwithstanding the
foregoing, if the "deductible" for earthquake or flood insurance exceeds 5% of
the replacement cost of the improvements insured, such peril shall be deemed an
"Uninsured Peril".
11.3 TENANT'S RIGHT TO TERMINATE: If the Premises are damaged by any
peril and Landlord does not elect to terminate this Lease or is not entitled to
terminate this Lease pursuant to PARA 11.2, then as soon as reasonably
practicable, Landlord shall furnish Tenant with the written opinion of
Landlord's architect or construction consultant as to when the restoration work
required of Landlord may be completed. Tenant shall have the right to terminate
this Lease in the event any of the following occurs, which right may be
exercised only by delivery to Landlord of a written notice of election to
terminate within 10 days after Tenant receives notice from Landlord that the
estimated time needed to complete such restoration is more than the applicable
period set for in paragraphs A or B below.
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A. The Premises are damaged by any peril and, in the
reasonable opinion of Landlord's architect or construction consultant, the
restoration of the Premises cannot be substantially completed within 180 days
after the date of such damage; or
B. The Premises are damaged by any peril within 12 months
of the last day of the Lease Term and, in the reasonable opinion of Landlord's
architect or construction consultant, the restoration of the Premises cannot be
substantially completed within 120 days after the date of such damage.
In addition, if Landlord provides notice that the restoration
can be completed within said 180 or 120 days, as provided in paragraphs B or C
above, and Landlord fails to substantially complete the restoration work within
the applicable time period, as the same may be extended for any delay caused by
Tenant or any of Tenant's Agents or a Force Majeure Delay (as such term is
defined in Exhibit B attached), then Tenant may terminate this Lease by
providing written notice of such election to terminate within 10 days after the
earlier of (i) the end of said 180 or 120 day time period, as the case may be,
as such time period may be extended for any delay caused by Tenant or any of
Tenant's Agents, or (ii) after receipt of written notice from Landlord of the
delay. Landlord agrees to provide written notice of any delay caused by Tenant
or its Agents or by any Force Majeure Delay within a reasonable period of time
not to exceed thirty (30) days after Landlord knows of an event constituting and
causing such a delay.
11.4 ABATEMENT OF RENT: In the event of damage to the Premises which
does not result in the termination of this Lease, the Base Monthly Rent and the
Additional Rent shall be temporarily abated during the period of restoration in
proportion to the degree to which Tenant's use of the Premises is impaired by
such damage. Tenant shall not be entitled to any compensation or damages from
Landlord for loss of Tenant's business or property or for any inconvenience or
annoyance caused by such damage or restoration. Tenant hereby waives the
provisions of California Civil Code Sections 1932(2) and 1933(4) and the
provisions of any similar law hereinafter enacted.
ARTICLE 12
CONDEMNATION
12.1 LANDLORD'S TERMINATION RIGHT: Landlord shall have the right to
terminate this Lease if, as a result of a taking by means of the exercise of the
power of eminent domain (including a voluntary sale or transfer by Landlord to a
condemnor under threat of condemnation), (i) more than one-third of the Building
Leasable Area is so taken, or (ii) more than 50% of the Common Area is so taken.
Any such right to terminate by Landlord must be exercised within a reasonable
period of time, to be effective as of the date possession is taken by the
condemnor.
12.2 TENANT'S TERMINATION RIGHT: Tenant shall have the right to
terminate this Lease if, as a result of any taking by means of the exercise of
the power of eminent domain (including any voluntary sale or transfer by
Landlord to any condemnor under threat of condemnation), (i) 10% or more of the
Premises is so taken and that part of the Premises that remains cannot be
restored within a reasonable period of time and thereby made reasonably suitable
for the continued operation of the Tenant's business, or (ii) there is a taking
affecting the Common Area and, as a result of such taking, Landlord cannot
provide parking spaces within reasonable walking distance of the Premises equal
in number to at least 90% of the number of spaces allocated to Tenant by
PARA 2.1, whether by rearrangement of the remaining parking areas in the Common
Area (including construction of multi-deck parking structures or restriping for
compact cars where permitted by Law) or by alternative parking facilities on
other land. Tenant must exercise such right within a reasonable period of time,
to be effective on the date that possession of that portion of the Premises or
Common Area that is condemned is taken by the condemnor.
12.3 RESTORATION AND ABATEMENT OF RENT: If any part of the Premises
or the Common Area is taken by condemnation and this Lease is not terminated,
then Landlord shall restore the remaining portion of the Premises and Common
Area and interior improvements constructed by Landlord as they existed as of the
Commencement Date, excluding any Tenant's Alterations, Trade Fixtures and/or
personal property constructed or installed by Tenant. Thereafter, as of the
date possession is taken the Base Monthly Rent shall be reduced in the same
proportion that the floor area of that part of the Premises so taken (less any
addition thereto by reason of any reconstruction) bears to the original floor
area of the Premises.
12.4 TEMPORARY TAKING: If any portion of the Premises is temporarily
taken for one year or less, this Lease shall remain in effect. If any portion
of the Premises is temporarily taken by condemnation for a period which exceeds
one year or which extends beyond the natural expiration of the Lease Term, and
such taking materially and adversely affects Tenant's ability to use the
Premises for the Permitted Use, then Tenant shall have the right to terminate
this Lease, effective on the date possession is taken by the condemnor.
12.5 DIVISION OF CONDEMNATION AWARD: Any award made as a result of
any condemnation of the Premises or the Common Area shall belong to and be paid
to Landlord, and Tenant hereby assigns to Landlord all of its right, title and
interest in any such award; provided, however, that Tenant shall be entitled to
make a direct claim against the condemning authority for the following: (i) for
the taking of personal property or Trade Fixtures belonging to Tenant, (ii) for
the interruption of Tenant's business or its moving costs, (iii) for loss of
Tenant's goodwill; or (iv) for any temporary taking where this Lease is not
terminated as a result of such taking. The rights of Landlord and Tenant
regarding any condemnation shall be determined as provided in this Article, and
each party hereby waives the provisions of California Code of Civil Procedure
Section 1265.130 and the provisions of any similar law hereinafter enacted
allowing either party to petition the Superior Court to terminate this Lease in
the event of a partial taking of the Premises.
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ARTICLE 13
DEFAULT AND REMEDIES
13.1 EVENTS OF TENANT'S DEFAULT: Tenant shall be in default of its
obligations under this Lease if any of the following events occurs (an "Event of
Tenant's Default"):
A. Tenant shall have failed to pay Base Monthly Rent or
Additional Rent when due, and such failure is not cured within 3 days after
delivery of written notice from Landlord specifying such failure to pay; or
B. Tenant shall have failed to perform any term, covenant,
or condition of this Lease except those requiring the payment of Base Monthly
Rent or Additional Rent, and Tenant shall have failed to cure such breach within
30 days after written notice from Landlord specifying the nature of such breach
where such breach could reasonably be cured within said 30 day period, or if
such breach could not be reasonably cured within said 30 day period, Tenant
shall have failed to commence such cure within said 30 day period and thereafter
continue with due diligence to prosecute such cure to completion; or
C. Tenant shall have sublet the Premises or assigned its
interest in the Lease in violation of the provisions contained in Article 14; or
D. Tenant shall have abandoned the Premises; or
E. The occurrence of the following: (i) the making by
Tenant of any general arrangements or assignments for the benefit of creditors;
(ii) Tenant becomes a "debtor" as defined in 11 USC Section 101 or any successor
statute thereto (unless, in the case of a petition filed against Tenant, the
same is dismissed within 60 days); (iii) the appointment of a trustee or
receiver to take possession of substantially all of Tenant's assets located at
the Premises or of Tenant's interest in this Lease, where possession is not
restored to Tenant within 30 days; or (iv) the attachment, execution or other
judicial seizure of substantially all of Tenant's assets located at the Premises
or of Tenant's interest in this Lease, where such seizure is not discharged
within 30 days; provided, however, in the event that any provision of this
Section 13.1E is contrary to any applicable Law, such provision shall be of no
force or effect; or
F. Tenant shall have failed to deliver documents required
of it pursuant to PARA 15.4 or PARA 15.6 within the time periods specified
therein; or
13.2 LANDLORD'S REMEDIES: If an Event of Tenant's Default occurs,
Landlord shall have the following remedies, in addition to all other rights and
remedies provided by any Law or otherwise provided in this Lease, to which
Landlord may resort cumulatively or in the alternative:
A. Landlord may keep this Lease in effect and enforce by an
action at law or in equity all of its rights and remedies under this Lease,
including (i) the right to recover the rent and other sums as they become due by
appropriate legal action, (ii) the right to make payments required of Tenant or
perform Tenant's obligations and be reimbursed by Tenant for the cost thereof
with interest at the Agreed Interest Rate from the date the sum is paid by
Landlord until Landlord is reimbursed by Tenant, and (iii) the remedies of
injunctive relief and specific performance to compel Tenant to perform its
obligations under this Lease. Notwithstanding anything contained in this Lease,
in the event of a breach of an obligation by Tenant which results in a condition
which poses an imminent danger to safety of persons or damage to property, or a
threat to insurance coverage, then if Tenant does not cure such breach within 3
days after delivery to it of written notice from Landlord identifying the
breach, Landlord may cure the breach of Tenant and be reimbursed by Tenant for
the cost thereof with interest at the Agreed Interest Rate from the date the sum
is paid by Landlord until Landlord is reimbursed by Tenant.
B. In accordance with applicable law, Landlord may enter
the Premises and re-lease them to third parties for Tenant's account for any
period, whether shorter or longer than the remaining Lease Term. Tenant shall
be liable immediately to Landlord for all costs Landlord incurs in releasing the
Premises, including brokers' commissions, expenses of altering and preparing the
Premises required by the releasing. Tenant shall pay to Landlord the rent and
other sums due under this Lease on the date the rent is due, less the rent and
other sums Landlord received from any releasing. No act by Landlord allowed by
this subparagraph shall terminate this Lease unless Landlord notifies Tenant in
writing that Landlord elects to terminate this Lease. Notwithstanding any
releasing without termination, Landlord may later elect to terminate this Lease
because of the default by Tenant.
C. In accordance with applicable law, Landlord may
terminate this Lease by giving Tenant written notice of termination, in which
event this Lease shall terminate on the date set forth for termination in such
notice. Any termination under this PARA 13.2C shall not relieve Tenant from its
obligation to pay sums then due Landlord or from any claim against Tenant for
damages or rent previously accrued or then accruing. In no event shall any one
or more of the following actions by Landlord, in the absence of a written
election by Landlord to terminate this Lease, constitute a termination of this
Lease: (i) appointment of a receiver or keeper in order to protect Landlord's
interest hereunder; (ii) consent to any subletting of the Premises or assignment
of this Lease by Tenant, whether pursuant to the provisions hereof or otherwise;
or (iii) any other action by Landlord or Landlord's Agents intended to mitigate
the adverse effects of any breach of this Lease by Tenant, including without
limitation any action taken to maintain and preserve the Premises or any action
taken to relet the Premises or any portions thereof to the extent such actions
do not affect a termination of Tenant's right to possession of the Premises.
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D. In the event Tenant breaches this Lease and abandons the
Premises, this Lease shall not terminate unless Landlord gives Tenant written
notice of its election to so terminate this Lease. No act by or on behalf of
Landlord intended to mitigate the adverse effect of such breach, including those
described by PARA 13.C, shall constitute a termination of Tenant's right to
possession unless Landlord gives Tenant written notice of termination. Should
Landlord not terminate this Lease by giving Tenant written notice, Landlord may
enforce all its rights and remedies under this Lease, including the right to
recover the rent as it becomes due under the Lease as provided in California
Civil Code Section 1951.4.
E. In the event Landlord terminates this Lease, Landlord
shall be entitled, at Landlord's election, to damages in an amount as set forth
in California Civil Code Section 1951.2 as in effect on the Effective Date. For
purposes of computing damages pursuant to California Civil Code Section 1951.2,
(i) an interest rate equal to the Agreed Interest Rate shall be used where
permitted, and (ii) the term "rent" includes Base Monthly Rent and Additional
Rent. Such damages shall include:
(1) The worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that Tenant proves could be reasonably
avoided, computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1%); and
(2) Any other amount necessary to compensate
Landlord for all detriment proximately caused by Tenant's failure to perform
Tenant's obligations under this Lease, or which in the ordinary course of things
would be likely to result therefrom, including the following: (i) expenses for
cleaning, repairing or restoring the Premises; (ii) expenses for altering,
remodeling or otherwise improving the Premises for the purpose of reletting,
including installation of leasehold improvements (whether such installation be
funded by a reduction of rent, direct payment or allowance to a new tenant, or
otherwise); (iii) broker's fees, advertising costs and other expenses of
reletting the Premises; (iv) costs of carrying the Premises, such as taxes,
insurance premiums, utilities and security precautions; (v) expenses in retaking
possession of the Premises; and (vi) attorneys' fees and court costs incurred by
Landlord in retaking possession of the Premises and in releasing the Premises or
otherwise incurred as a result of Tenant's default.
F. Nothing in this PARA 13.2 shall limit Landlord's
right to indemnification from Tenant as provided in PARA 7.2 and PARA 10.3.
Any notice given by Landlord in order to satisfy the requirements of PARA
13.1A or PARA 13.1B above shall also satisfy the notice requirements of
California Code of Civil Procedure Section 1161 regarding unlawful detainer
proceedings.
13.3 WAIVER: One party's consent to or approval of any act by the
other party requiring the first party's consent or approval shall not be deemed
to waive or render unnecessary the first party's consent to or approval of any
subsequent similar act by the other party. The receipt by Landlord of any rent
or payment with or without knowledge of the breach of any other provision hereof
shall not be deemed a waiver of any such breach unless such waiver is in writing
and signed by Landlord. No delay or omission in the exercise of any right or
remedy accruing to either party upon any breach by the other party under this
Lease shall impair such right or remedy or be construed as a waiver of any such
breach theretofore or thereafter occurring. The waiver by either party of any
breach of any provision of this Lease shall not be deemed to be a waiver of any
subsequent breach of the same or of any other provisions herein contained.
13.4 LIMITATION ON EXERCISE OF RIGHTS: At any time that an Event of
Tenant's Default has occurred and remains uncured, (i) it shall not be
unreasonable for Landlord to deny or withhold any consent or approval requested
of it by Tenant which Landlord would otherwise be obligated to give, and (ii)
Tenant may not exercise any option to extend.
13.5 WAIVER BY TENANT OF CERTAIN REMEDIES: Tenant waives the
provisions of Sections 1932(1), 1941 and 1942 of the California Civil Code and
any similar or successor law regarding Tenant's right to terminate this Lease or
to make repairs and deduct the expenses of such repairs from the rent due under
this Lease. Tenant hereby waives any right of redemption or relief from
forfeiture under the laws of the State of California, or under any other present
or future law, including the provisions of Sections 473, 1174 and 1179 of the
California Code of Civil Procedure and Civil Code Section 3275.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 TRANSFER BY TENANT: The following provisions shall apply to any
assignment, subletting or other transfer by Tenant or any subtenant or assignee
or other successor in interest of the original Tenant (collectively referred to
in this PARA 14.1 as "Tenant"):
A. Tenant shall not do any of the following (collectively
referred to herein as a "Transfer"), whether voluntarily, involuntarily or by
operation of law, without the prior written consent of Landlord, which consent
shall not be unreasonably withheld: (i) sublet all or any part of the Premises
or allow it to be sublet, occupied or used by any person or entity other than
Tenant; (ii) assign its interest in this Lease; (iii) mortgage or encumber the
Lease (or otherwise use the Lease as a security device) in any manner; or (iv)
materially amend or modify an assignment, sublease or other transfer that has
been previously approved by Landlord. Tenant shall reimburse Landlord for all
reasonable costs and attorneys' fees incurred by Landlord in connection with the
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evaluation, processing, and/or documentation of any requested Transfer, whether
or not Landlord's consent is granted, not to exceed $1,500.00 for each request.
Landlord's reasonable costs shall include the cost of any review or
investigation performed by Landlord or consultant acting on Landlord's behalf of
(i) Hazardous Materials (as defined in Section 7.2E of this Lease) used, stored,
released, or disposed of by the potential Subtenant or Assignee, and/or (ii)
violations of Hazardous Materials Law (as defined in Section 7.2E of this lease)
by the Tenant or the proposed Subtenant or Assignee, provided such costs in
addition to the cost set forth in the preceding sentence do not exceed in the
aggregate $1,500.00 for each request for consent to a Transfer. Any Transfer so
approved by Landlord shall not be effective until Tenant has delivered to
Landlord an executed counterpart of the document evidencing the Transfer which
(i) is in a form reasonably approved by Landlord, (ii) contains the same terms
and conditions as stated in Tenant's notice given to Landlord pursuant to
PARA 14.1B, and (iii) in the case of an assignment of the Lease, contains the
agreement of the proposed transferee to assume all obligations of Tenant under
this Lease arising after the effective date of such Transfer and to remain
jointly and severally liable therefor with Tenant. Any attempted Transfer
without Landlord's consent shall constitute an Event of Tenant's Default and
shall be voidable at Landlord's option. Landlord's consent to any one Transfer
shall not constitute a waiver of the provisions of this PARA 14.1 as to any
subsequent Transfer or a consent to any subsequent Transfer. No Transfer, even
with the consent of Landlord, shall relieve Tenant of its personal and primary
obligation to pay the rent and to perform all of the other obligations to be
performed by Tenant hereunder. The acceptance of rent by Landlord from any
person shall not be deemed to be a waiver by Landlord of any provision of this
Lease nor to be a consent to any Transfer.
B. At least 20 days before a proposed Transfer is to become
effective, Tenant shall give Landlord written notice of the proposed terms of
such Transfer and request Landlord's approval, which notice shall include the
following: (i) the name and legal composition of the proposed transferee; (ii) a
current financial statement of the transferee, financial statements of the
transferee covering the preceding three years if the same exist, and (if
available) an audited financial statement of the transferee for a period ending
not more than one year prior to the proposed effective date of the Transfer, all
of which statements are prepared in accordance with generally accepted
accounting principles; (iii) the nature of the proposed transferee's business to
be carried on in the Premises; (iv) all consideration to be given on account of
the Transfer; (v) a current financial statement of Tenant; and (vi) an
accurately filled out response to Landlord's standard hazardous materials
questionnaire. Tenant shall provide to Landlord such other information as may
be reasonably requested by Landlord within seven days after Tenant's receipt of
such notice from Landlord. Landlord shall respond in writing to Tenant's
request for Landlord's consent to a Transfer within the later of (i) 20 days of
receipt of such request together with the required accompanying documentation,
or (ii) 10 days after Landlord's receipt of all information which Landlord
reasonably requests within seven days after it receives Tenant's first notice
regarding the Transfer in question. If Landlord fails to respond in writing
within said period, then Tenant shall provide a second written notice to Tenant
requesting such consent and if Landlord fails to respond within 5 days after
receipt of such second notice, then Landlord will be deemed to have consented to
such Transfer. Tenant shall immediately notify Landlord of any modification to
the proposed terms of such Transfer, which shall also be subject Landlord's
consent in accordance with the same process for obtaining Landlord's initial
consent to such Transfer.
C. In the event that Tenant seeks to make any Transfer,
Landlord shall have the right to terminate this Lease or, in the case of a
sublease of less than all of the Premises, terminate this Lease as to that part
of the Premises proposed to be sublet so that Landlord is thereafter free to
lease the Premises (or, in the case of a partial sublease, the portion proposed
to be so sublet) to whomever it pleases on whatever terms are acceptable to
Landlord, including, without limitation to the transferee under the proposed
Transfer. Tenant shall have the right to rescind its request for consent to the
Transfer (and thereby rescind Landlord's election to terminate) upon written
notice to Landlord within ten (10) days after receipt of Landlord's notice to
terminate. In the event Landlord elects to so terminate this Lease, then the
Lease shall so terminate in its entirety (or as to the space to be so sublet)
fifteen (15) days after Landlord has notified Tenant in writing of such
election. Upon such termination, Tenant shall be released from any further
obligation under this Lease if it is terminated in its entirety, or shall be
released from any further obligation under the Lease with respect to the space
proposed to be sublet in the case of a proposed partial sublease. In the case
of a partial termination of the Lease, the Base Monthly Rent and Tenant's Share
shall be reduced to an amount which bears the same relationship to the original
amount thereof as the area of that part of the Premises which remains subject to
the Lease bears to the original area of the Premises. Landlord and Tenant shall
execute a cancellation and release with respect to the Lease to effect such
termination.
D. If Landlord consents to a Transfer proposed by Tenant,
Tenant may enter into such Transfer, and if Tenant does so, the following shall
apply:
(1) Tenant shall not be released of its liability
for the performance of all of its obligations under the Lease.
(2) If Tenant assigns its interest in this Lease,
then Tenant shall pay to Landlord 80% of all Subrent (as defined in
PARA 14.1D(5)) received by Tenant over and above (i) the assignee's agreement to
assume the obligations of Tenant under this Lease, and (ii) the amortized amount
of all Permitted Transfer Costs related to such assignment. In the case of
assignment, the amount of Subrent owed to Landlord shall be paid to Landlord on
the same basis, whether periodic or in lump sum, that such Subrent is paid to
Tenant by the assignee. All Permitted Transfer Costs shall be amortized on a
straight line basis over the term of such sublease (including any extension
options) for purposes of calculating the amount due Landlord hereunder.
(3) If Tenant sublets any part of the Premises, then
with respect to the space so subleased, Tenant shall pay to Landlord 80% of the
positive difference, if any, between (i) all Subrent paid by the subtenant to
Tenant, less (ii) the sum of all Base Monthly Rent and Additional Rent allocable
to the space sublet and
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all Permitted Transfer Costs related to such sublease. Such amount shall be
paid to Landlord on the same basis, whether periodic or in lump sum, that such
Subrent is paid to Tenant by its subtenant. All Permitted Transfer Costs shall
be amortized on a straight line basis over the term of such sublease (including
any extension options) for purposes of calculating the amount due Landlord
hereunder.
(4) Tenant's obligations under this PARA 14.1D
shall survive any Transfer, and Tenant's failure to perform its obligations
hereunder shall be an Event of Tenant's Default (subject to the applicable
notice and cure periods). At the time Tenant makes any payment to Landlord
required by this PARA 14.1D, Tenant shall deliver an itemized statement of
the method by which the amount to which Landlord is entitled was calculated,
certified by Tenant as true and correct. Landlord shall have the right at
reasonable intervals to inspect Tenant's books and records relating to the
payments due hereunder. Upon request therefor, Tenant shall deliver to
Landlord copies of all bills, invoices or other documents upon which its
calculations are based. Landlord may condition its approval of any Transfer
upon obtaining a certification from both Tenant and the proposed transferee
of all Subrent and other amounts that are to be paid to Tenant in connection
with such Transfer.
(5) As used in this PARA 41.1D, the term "Subrent"
shall mean any consideration of any kind received by Tenant as a result of the
Transfer, if such sums are related to Tenant's interest in this Lease or in the
Premises, including payments from or on behalf of the transferee (in excess of
the book value thereof) for Tenant's leasehold improvements, but shall not
include any payments or other consideration received by Tenant in connection
with Tenant's assets, Tenant's Trade Fixtures, or any inventory, accounts,
goodwill, equipment, furniture, furnishings or general intangibles of Tenant,
whatsoever. As used in this PARA 14.1D, the term "Permitted Transfer Costs"
shall mean (i) all reasonable leasing commissions paid to third parties not
affiliated with Tenant in order to obtain the Transfer in question, (ii) the
actual cost of standard improvements made to the Premises for such Transfer, and
(iii) all reasonable attorneys' fees incurred by Tenant with respect to the
Transfer in question.
E. Except as provided in section 14.1F, if Tenant is a
corporation, the following shall be deemed a voluntary assignment of Tenant's
interest in this Lease: (i) any dissolution, merger, consolidation, or other
reorganization of or affecting Tenant, whether or not Tenant is the surviving
corporation; and (ii) if the capital stock of Tenant is not publicly traded, the
sale or transfer to one person or entity (or to any group of related persons or
entities) stock possessing more than 50% of the total combined voting power of
all classes of Tenant's capital stock issued, outstanding and entitled to vote
for the election of directors. If Tenant is a partnership, limited liability
company or other entity 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, member or other party owning 25% or more
(cumulatively) of any interest in the capital or profits of the partnership,
limited liability company or other entity or the dissolution of the partnership,
limited liability company or other entity, shall be deemed a voluntary
assignment of Tenant's interest in this Lease.
F. Notwithstanding anything contained in PARA 14.1, so long
as Tenant otherwise complies with the provisions of PARA 14.1 Tenant may enter
into any of the following transfers (a "Permitted Transfer") without Landlord's
prior written consent, and Landlord shall not be entitled to terminate the Lease
pursuant to PARA 14.1C or to receive any part of any Subrent resulting therefrom
that would otherwise be due it pursuant to PARA 14.1D:
(1) Tenant may sublease all or part of the Premises
or assign its interest in this Lease to any corporation which controls, is
controlled by, or is under common control with the original Tenant to this
Lease;
(2) Tenant may assign its interest in the Lease to a
corporation which results from a merger, consolidation or other reorganization
in which Tenant is not the surviving corporation, so long as the surviving
corporation has a net worth at the time of such assignment that is equal to or
greater than the net worth of Tenant immediately prior to such transaction; and
(3) Tenant may assign this Lease to a corporation
which purchases or otherwise acquires all or substantially all of the assets of
Tenant at the Premises, so long as such acquiring corporation has a net worth at
the time of such assignment that is equal to or greater than the net worth of
Tenant immediately prior to such transaction.
Notwithstanding the foregoing, the term "corporation" as used in Section
14.1.F of the Lease shall be deemed to include any subsidiary, affiliate,
franchisee, division or other entity and the reference to sale of Tenant's
assets refers to those assets located within the Premises. For the purpose of
this Lease, any sale or transfer of Tenant's capital stock, including without
limitation, a transfer in connection with the merger, consolidation or
non-bankruptcy reorganization of Tenant and any sale through any national market
system or public exchange, or any re-incorporation by Tenant in another state,
shall not be deemed an assignment, subletting, or any other transfer of the
Lease or the Premises.
14.2 TRANSFER BY LANDLORD: Landlord and its successors in interest
shall have the right to transfer their interest in this Lease and the Project at
any time and to any person or entity. In the event of any such transfer, the
Landlord originally named herein (and, in the case of any subsequent transfer,
the transferor) from the date of such transfer, shall be automatically relieved,
without any further act by any person or entity, of all liability for the
performance of the obligations of the Landlord hereunder which may accrue after
the date of such transfer, provided such assignee or successor assumes such
obligations. After the date of any such transfer, the term "Landlord" as used
herein shall mean the transferee of such interest in the Premises.
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ARTICLE 15
GENERAL PROVISIONS
15.1 LANDLORD'S RIGHT TO ENTER: Landlord and its agents may enter
the Premises at any reasonable time after giving at least 24 hours' prior notice
to Tenant (and immediately in the case of emergency) for the purpose of: (i)
inspecting the same; (ii) posting notices of non-responsibility; (iii) supplying
any service to be provided by Landlord to Tenant; (iv) showing the Premises to
prospective purchasers, mortgagees or tenants; (v) making necessary alterations,
additions or repairs; (vi) performing Tenant's obligations when Tenant has
failed to do so after written notice from Landlord; (vii) placing upon the
Premises ordinary "for lease" signs or "for sale" signs; and (viii) responding
to an emergency. Landlord shall have the right to use any and all means
Landlord may deem necessary and proper to enter the Premises in an emergency.
Any entry into the Premises obtained by Landlord in accordance with this
PARA 15.1 shall not be a forcible or unlawful entry into, or a detainer of, the
Premises, or an eviction, actual or constructive, of Tenant from the Premises.
15.2 SURRENDER OF THE PREMISES: Upon the expiration or sooner
termination of this Lease, Tenant shall vacate and surrender the Premises to
Landlord in the same condition as existed at the Commencement Date, except for
(i) reasonable wear and tear, (ii) damage caused by any peril or condemnation,
and (iii) contamination by Hazardous Materials for which Tenant is not
responsible pursuant to PARA 7.2A or PARA 7.2B. In this regard, reasonable wear
and tear shall be construed to mean wear and tear caused to the Premises by the
natural aging process which occurs in spite of prudent application of the best
standards for maintenance, repair and janitorial practices, and does not include
items of neglected or deferred maintenance. In any event, Tenant shall cause
the following to be done prior to the expiration or the sooner termination of
this Lease in order to return the Premises to the same condition when the Lease
commenced subject to reasonable wear and tear: (i) all interior walls shall be
painted or cleaned so that they appear in good condition; (ii) all tiled floors
shall be cleaned and waxed; (iii) all carpets shall be cleaned and shampooed;
(iv) all broken, marred, stained or nonconforming acoustical ceiling tiles shall
be replaced; (v) all windows shall be washed; (vi) the HVAC system shall be
serviced by a reputable and licensed service firm and left in good operating
condition and repair as so certified by such firm; and (vii) the plumbing and
electrical systems and lighting shall be placed in good order and repair
(including replacement of any burned out, discolored or broken light bulbs,
ballasts, or lenses).
If Landlord so requests, Tenant shall, prior to the expiration
or sooner termination of this Lease, (i) remove any Tenant Improvements that
Landlord notified Tenant at the time Landlord approved of the Final Plans (as
defined in Exhibit B attached hereto would have to be removed at the expiration
or earlier termination of this Lease, unless Landlord subsequently notifies
Tenant at least thirty (30) days prior to the expiration of the Lease that all
or any portion of the Tenant Improvements must remain, and repair all damage
caused by such removal, (ii) remove any Tenant's Alterations which Tenant is
required to remove pursuant to PARA 5.2 and repair all damage caused by such
removal, and (iii) return the Premises or any part thereof to its original
configuration existing as of the time the Premises were delivered to Tenant. If
the Premises are not so surrendered at the termination of this Lease, Tenant
shall be liable to Landlord for all costs incurred by Landlord in returning the
Premises to the required condition, plus interest on all costs incurred at the
Agreed Interest Rate. Tenant shall indemnify Landlord against loss 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.
15.3 HOLDING OVER: This Lease shall terminate without further notice
at the expiration of the Lease Term. Any holding over by Tenant after
expiration of the Lease Term shall not constitute a renewal or extension of the
Lease or give Tenant any rights in or to the Premises except as expressly
provided in this Lease. Any holding over after such expiration with the written
consent of Landlord shall be construed to be a tenancy from month to month on
the same terms and conditions herein specified insofar as applicable except that
Base Monthly Rent shall be increased to an amount equal to 150% of the greater
of (a) the Base Monthly Rent payable during the last full calendar month of the
Lease Term, or (b) the then prevailing fair market rent.
15.4 SUBORDINATION: The following provisions shall govern the
relationship of this Lease to any Security Instrument:
A. The Lease is subject and subordinate to all Security
Instruments existing as of the Effective Date. However, if any Lender so
requires, this Lease shall become prior and superior to any such Security
Instrument.
B. At Landlord's election, this Lease shall become subject
and subordinate to any Security Instrument created after the Effective Date.
Notwithstanding such subordination, Tenant's right to quiet possession of the
Premises shall not be disturbed so long as Tenant is not in default and performs
all of its obligations under this Lease, unless this Lease is otherwise
terminated pursuant to its terms.
C. Tenant shall upon request execute any document or
instrument required by any Lender to make this Lease either prior or subordinate
to a Security Instrument, which may include such other matters as the Lender
customarily and reasonably requires in connection with such agreements,
including provisions that the Lender not be liable for (i) the return of any
security deposit unless the Lender receives it from Landlord, and (ii) any
defaults on the part of Landlord occurring prior to the time the Lender obtains
possession of the Project in connection with the enforcement of its Security
Instrument. Tenant's failure to execute any such document or instrument within
10 days after written demand therefor shall constitute an Event of Tenant's
Default.
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15.5 MORTGAGEE PROTECTION AND ATTORNMENT: In the event of any
default on the part of the Landlord, Tenant will use reasonable efforts to give
notice by registered mail to any Lender whose name has been provided to Tenant
and shall offer such Lender a reasonable opportunity to cure the default,
including time to obtain possession of the Premises by power of sale or judicial
foreclosure or other appropriate legal proceedings, if such should prove
necessary to effect a cure, but in no event longer than 60 days. Tenant shall
attorn to any purchaser of the Premises at any foreclosure sale or private sale
conducted pursuant to any Security Instrument encumbering the Premises, or to
any grantee or transferee designated in any deed given in lieu of foreclosure.
15.6 ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS: At all times
during the Lease Term, each party agrees, following any request by the other
party, promptly to execute and deliver to the requesting party within 15 days
following delivery of such request an estoppel certificate: (i) certifying that
this Lease is unmodified and in full force and effect or, if modified, stating
the nature of such modification and certifying that this Lease, as so modified,
is in full force and effect, (ii) stating the date to which the rent and other
charges are paid in advance, if any, (iii) acknowledging that there are not, to
the certifying party's knowledge, any uncured defaults on the part of any party
hereunder or, if there are uncured defaults, specifying the nature of such
defaults, and (iv) certifying such other information about the Lease as may be
reasonably required by the requesting party. A failure to deliver an estoppel
certificate within 15 days after delivery of a request therefor shall be a
conclusive admission that, as of the date of the request for such statement: (i)
this Lease is unmodified except as may be represented by the requesting party in
said request and is in full force and effect, (ii) there are no uncured defaults
in the requesting party's performance, and (iii) no rent has been paid more than
30 days in advance. At any time during the Lease Term Tenant shall, upon 15
days' prior written notice from Landlord, provide Tenant's most recent financial
statement and financial statements covering the 24 month period prior to the
date of such most recent financial statement to any existing Lender or to any
potential Lender or buyer of the Premises. Such statements shall be prepared in
accordance with generally accepted accounting principles and, if such is the
normal practice of Tenant, shall be audited by an independent certified public
accountant.
15.7 CONSENT: Whenever Landlord's approval or consent is required by
this Lease, such approval or consent may be exercised in Landlord's sole and
absolute discretion, unless a different standard has been expressly provided in
this Lease for the particular matter requiring Landlord's consent or approval.
15.8 NOTICES: Any notice required or desired to be given regarding
this Lease shall be in writing and may be given by personal delivery, by
facsimile (with a copy sent by mail), by courier service, or by mail. A notice
shall be deemed to have been given (i) on the third business day after mailing
if such notice was deposited in the United States mail, certified or registered,
postage prepaid, addressed to the party to be served at its Address for Notices
specified in SECTION Q or SECTION R of the Summary (as applicable), (ii) when
delivered if given by personal delivery, and (iii) in all other cases when
actually received at the party's Address for Notices. Either party may change
its address by giving notice of the same in accordance with this PARA 15.8,
provided, however, that any address to which notices may be sent must be a
California address.
15.9 ATTORNEYS' FEES: In the event either Landlord or Tenant shall
bring any action or legal proceeding for an alleged breach of any provision of
this Lease, to recover rent, to terminate this Lease or otherwise to enforce,
protect or establish any term or covenant of this Lease, the prevailing party
shall be entitled to recover as a part of such action or proceeding, or in a
separate action brought for that purpose, reasonable attorneys' fees, court
costs, and experts' fees as may be fixed by the court.
15.10 CORPORATE AUTHORITY: If Tenant is a corporation (or
partnership), each individual executing this Lease on behalf of Tenant
represents and warrants that he is duly authorized to execute and deliver this
Lease on behalf of such corporation in accordance with the by-laws of such
corporation (or partnership in accordance with the partnership agreement of such
partnership) and that this Lease is binding upon such corporation (or
partnership) in accordance with its terms. Each of the persons executing this
Lease on behalf of a corporation or limited liability company does hereby
covenant and warrant that the party for whom it is executing this Lease is a
duly authorized and existing corporation, that it is qualified to do business in
California, and that the corporation has full right and authority to enter into
this Lease.
15.11 MISCELLANEOUS: Should any provision of this Lease prove to be
invalid or illegal, such invalidity or illegality shall in no way affect, impair
or invalidate any other provision hereof, and such remaining provisions shall
remain in full force and effect. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor. The captions used in this Lease are for convenience only and shall not
be considered in the construction or interpretation of any provision hereof.
Any executed copy of this Lease shall be deemed an original for all purposes.
This Lease shall, subject to the provisions regarding assignment, apply to and
bind the respective heirs, successors, executors, administrators and assigns of
Landlord and Tenant. "Party" shall mean Landlord or Tenant, as the context
implies. If Tenant consists of more than one person or entity, then all members
of Tenant shall be jointly and severally liable hereunder. This Lease shall be
construed and enforced in accordance with the laws of the State of California.
The language in all parts of this Lease shall in all cases be construed as a
whole according to its fair meaning, and not strictly for or against either
Landlord or Tenant. When the context of this Lease requires, the neuter gender
includes the masculine, the feminine, a partnership or corporation or joint
venture, and the singular includes the plural. The terms "shall", "will" and
"agree" are mandatory. The term "may" is permissive. When a party is required
to do something by this Lease, it shall do so at its sole cost and expense
without right of reimbursement from the other party unless a provision of this
Lease expressly requires reimbursement. Landlord and Tenant agree that (i) the
gross leasable area of the Premises includes any atriums, depressed loading
docks, covered entrances or egresses, and covered loading areas, (ii) each has
had an opportunity to determine to its satisfaction the actual area of the
Project and the Premises, (iii) all
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measurements of area contained in this Lease are conclusively agreed to be
correct and binding upon the parties, even if a subsequent measurement of any
one of these areas determines that it is more or less than the amount of area
reflected in this Lease, and (iv) any such subsequent determination that the
area is more or less than shown in this Lease shall not result in a change in
any of the computations of rent, improvement allowances, or other matters
described in this Lease where area is a factor. Where a party hereto is
obligated not to perform any act, such party is also obligated to restrain any
others within its control from performing said act, including the Agents of such
party. Landlord shall not become or be deemed a partner or a joint venturer
with Tenant by reason of the provisions of this Lease.
15.12 TERMINATION BY EXERCISE OF RIGHT: If this Lease is terminated
pursuant to its terms by the proper exercise of a right to terminate
specifically granted to Landlord or Tenant by this Lease, then this Lease shall
terminate 30 days after the date the right to terminate is properly exercised
(unless another date is specified in that part of the Lease creating the right,
in which event the date so specified for termination shall prevail), the rent
and all other charges due hereunder shall be prorated as of the date of
termination, and neither Landlord nor Tenant shall have any further rights or
obligations under this Lease except for those that have accrued prior to the
date of termination or those obligations which this Lease specifically provides
are to survive termination. This PARA 15.12 does not apply to a termination of
this Lease by Landlord as a result of an Event of Tenant's Default.
15.13 BROKERAGE COMMISSIONS: Each party hereto (i) represents and
warrants to the other that it has not had any dealings with any real estate
brokers, leasing agents or salesmen, or incurred any obligations for the payment
of real estate brokerage commissions or finder's fees which would be earned or
due and payable by reason of the execution of this Lease, other than to the
Retained Real Estate Brokers described in SECTION S of the Summary, and (ii)
agrees to indemnify, defend, and hold harmless the other party from any claim
for any such commission or fees which result from the actions of the
indemnifying party. Landlord shall be responsible for the payment of any
commission owed to the Retained Real Estate Brokers pursuant to a separate
written commission agreement between Landlord and the Retained Real Estate
Brokers for the payment of a commission as a result of the execution of this
Lease.
15.14 FORCE MAJEURE: Any prevention, delay or stoppage due to
strikes, lock-outs, inclement weather, labor disputes, inability to obtain
labor, materials, fuels or reasonable substitutes therefor, governmental
restrictions, regulations, controls, action or inaction, civil commotion, fire
or other acts of God, and other causes beyond the reasonable control of a party
hereto (except financial inability) shall excuse the performance by that party,
for a period equal to the period of any said prevention, delay or stoppage, of
any obligation hereunder; provided, however that the foregoing shall not be
deemed to extend the time by which Tenant shall be entitled to terminate this
Lease or to an abatement of rent. A party claiming such a force majeure delay
under this section shall notify the other party within a reasonable period of
time after an event constituting such a force majeure delay occurs and of such
party's good faith estimate of the length of such delay.
15.15 ENTIRE AGREEMENT: This Lease constitutes the entire agreement
between the parties, and there are no binding agreements or representations
between the parties except as expressed herein. Tenant acknowledges that
neither Landlord nor Landlord's Agents has made any legally binding
representation or warranty as to any matter except those expressly set forth
herein, including any warranty as to (i) whether the Premises may be used for
Tenant's intended use under existing Law, (ii) the suitability of the Premises
or the Project for the conduct of Tenant's business, or (iii) the condition of
any improvements. There are no oral agreements between Landlord and Tenant
affecting this Lease, and this Lease supersedes and cancels any and all previous
negotiations, arrangements, brochures, agreements and understandings, if any,
between Landlord and Tenant or displayed by Landlord to Tenant with respect to
the subject matter of this Lease. This instrument shall not be legally binding
until it is executed by both Landlord and Tenant. No subsequent change or
addition to this Lease shall be binding unless in writing and signed by Landlord
and Tenant.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease with
the intent to be legally bound thereby, to be effective as of the Effective
Date.
LANDLORD: TENANT:
GOLDEN PACIFIC PROPERTIES, LLC, ADAC LABORATORIES
a Delaware limited liability company a California corporation
By: Divco West Group, LLC, By: ____________________________
a Delaware limited liability Name: ____________________________
company Title: ____________________________
Its Authorized Agent
Dated: August __, 1998
By: ________________________
Name: Xxxxx Xxxxxxxx
Its: President
Dated: August __, 1998
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EXHIBIT B
WORK LETTER
This Exhibit B forms a part of that certain Lease (the "Lease") by and
between Golden Pacific Properties, as Landlord, and ADAC Laboratories, as
Tenant, to which this Exhibit is attached. If there is any conflict between
this Exhibit B and the Lease, this Exhibit B shall govern. All capitalized
terms referred to in this Exhibit B shall have the same meaning provided in the
Lease, except where expressly provided to the contrary in this Exhibit B.
ARTICLE 1 DEFINITIONS
1. ADDITIONAL DEFINITIONS. Each of the following terms shall have the
following meaning:
ARCHITECT: WHL Architects and Planners, Inc. in Sunnyvale, California
or any other architectural firm selected by Tenant and approved by Landlord in
its reasonable discretion to prepare the "Final Plans" (as hereinafter defined).
CONTRACTOR: L & S Hallmark Construction in Sunnyvale, California or
any other general contractor selected by Tenant and approved by Landlord in its
reasonable discretion to construct the Tenant Improvements.
CONSTRUCTION CONTRACT: The construction contract to be entered into
by Tenant and its Contractor in form, scope and substance satisfactory to Tenant
and approved by Landlord in its reasonable discretion.
DESIGN PROBLEM: A Design Problem shall mean when the Working Drawings
(or any revision to any) for the Tenant Improvements that have been submitted to
Landlord for its approval are reasonably determined by Landlord's architect (i)
to have a material adverse effect on the structure of the Building or to the
Building's electrical, plumbing, life safety, mechanical, heating,
air-conditioning and ventilation systems; (ii) not be in compliance with any
applicable federal, state and local laws, ordinances, rules, regulations and
building codes (collectively, the "Applicable Laws"); (iii) to have an adverse
effect on the exterior appearance of the Building; or (iv) not to be consistent
with the Space Plan (each, a "Design Problem").
GOVERNMENTAL APPROVALS: All building permits and other approvals from
the governmental authorities to construct the Tenant Improvements.
LANDLORD'S ALLOWANCE: An amount equal to $163,758.00. Any unused
portion of Landlord's Allowance for the Tenant Improvements shall remain the
property of Landlord, and Tenant shall have no interest in said funds.
LANDLORD DELAY: A Landlord Delay shall mean a delay incurred by
Tenant in Substantially Completing the Tenant Improvements due to a delay by
Landlord or its architect in providing written notice of approval or disapproval
of the Working Drawings within the time periods and as provided in section 2.1
of this Exhibit. Tenant shall notify Lessor within five (5) days after Tenant
knows of an event constituting such a Landlord Delay and of the length of the
delay as reasonably determined by the Architect.
SUBSTANTIAL COMPLETION, SUBSTANTIALLY COMPLETE, AND SUBSTANTIALLY
COMPLETED (OR SIMILAR PHRASE): The foregoing shall mean when the following have
occurred or would have occurred but for any delay cause by Tenant:
(a) the Tenant has delivered to Landlord a certificate from the
Architect, in a form reasonably approved by Landlord, that the Tenant
Improvements have been Substantially Completed substantially in accordance with
the Final Plans; and
(b) Tenant has obtained from the appropriate governmental
authority a certificate of occupancy (or all building permits with all
inspections approved or the equivalent) and all other approvals and permits for
the Premises permitting occupancy and use of the Premises for its permitted use
under the Lease.
TENANT IMPROVEMENTS: The improvements to be constructed in accordance
with the Final Plans, including, without limitation, Tenant's identification
sign on the monument located on the grass burn on Xxxxxx Xxxx. Said work shall
include architectural, mechanical and electrical work and life safety systems,
and shall be in accordance with the criteria, procedures and schedules referred
to in this Exhibit. The Tenant Improvements shall comply in all respects with
all applicable laws, statutes, ordinances, building codes and regulations
(collectively, "Applicable Laws").
CONSTRUCTION COSTS: All costs, expenses, fees, taxes and charges to
construct the Tenant Improvements, including, without limitation, the following:
(1) architects, engineers and consultants in the preparation of
the Preliminary Plans and the Final Plans, including mechanical, electrical,
plumbing and structural drawings and of all other aspects of
1
such plans for the Tenant Improvements, and for processing governmental
applications and applications for payment, observing construction of the work,
and other customary engineering, architectural, interior design and space
planning services;
(2) surveys, reports, environmental and other tests and
investigations of the site and any improvements thereon;
(3) labor, materials, equipment and fixtures supplied by the
Contractor, its subcontractors and/or materialmen, including, without
limitation, charges for a job superintendent and project representative;
(4) the furnishing and installation of all heating, ventilation
and air conditioning duct work, terminal boxes, distributing defusers and
accessories required for completing the heating, ventilation and
air-conditioning system in the Premises, including costs of meter and key
control for after-hour usage, if required by Landlord;
(5) all electrical circuits, wiring, lighting fixtures, and tube
outlets furnished and installed throughout the Premises, including costs of
meter;
(6) all window and floor coverings in the Premises, including,
without limitation, all treatment and preparatory work required for the
installation of floor coverings over the concrete or other structural floor;
(7) all fire and life safety control systems , such as fire
walls, wiring and accessories installed within the Building;
(8) all plumbing, fixtures, pipes and accessories installed
within the Building;
(9) fees charged by the city and/or county where the Building is
located (including, without limitation, fees for building permits and approvals
and plan checks) required for the work in the Building;
(10) all taxes, fees, charges and levies by governmental and
quasi-governmental agencies for authorization, approvals, licenses and permits;
and all sales, use and excise taxes for the materials supplied and services
rendered in connection with the installation and construction of the Tenant
Improvements; and
(11) all costs and expenses incurred to comply with all
Applicable Laws of any governmental authority for any work at the Project in
order to construct the Tenant Improvements.
The term Construction Costs under this Exhibit shall not include
(i) any fees, costs, expenses, compensation or other consideration payable to
Tenant, or any of its officers, directors, employees or affiliates, or (ii) the
cost any of Tenant's furniture, artifacts, trade fixtures, telephone and
computer systems and related facilities, or equipment. Any fees or costs
referred to in clauses (i) or (ii) above shall be paid by Tenant without resort
to Landlord's Allowance.
ARTICLE 2 CONSTRUCTION OF TENANT IMPROVEMENTS
2.1 PREPARATION OF PLANS.
(a) SPACE PLAN. Tenant has caused to be prepared a space plan for
the Tenant Improvements a copy of which is attached hereto as Exhibit B-1, which
space plan has been approved by the parties (the "Space Plan").
(b) FINAL PLANS. Tenant shall cause the Architect to prepare final
working drawings, which shall be consistent with the Space Plan, compatible with
the design, construction and equipment of the Building, comply with all
Applicable Laws, capable of logical measurement and construction, and contain
all such information as may be required for obtaining all permits and other
governmental approvals for the construction of the Tenant Improvements (the
"Working Drawings"). Within thirty (30) days after approval of the Effective
Date, Tenant shall submit two copies of the Working Drawings to Landlord for its
review and approval in its reasonable discretion. Within ten (10) days after
receipt of the Working Drawings, Landlord shall notify Tenant in writing that
(i) Landlord approves of such Working Drawings, or (ii) Landlord disapproves of
such Working Drawings, the basis for disapproval and the changes requested by
Landlord. Tenant shall cause the Working Drawings to be revised and shall
submit the revised Working Drawings to Landlord for its review and approval as
provided in this section. If Landlord disapproves of the Working Drawings in
any respect, the parties shall confer and negotiate in good faith to reach
written agreement on the Working Drawings within five (5) business days
thereafter for the first (1st) disapproval and three (3) business days
thereafter. Upon such agreement, Tenant shall cause the Working Drawings to be
revised and shall submit the revised Working Drawings to Landlord for its review
and approval as provided in this section. Landlord shall approve or reasonably
disapprove of such revised Working Drawings
2
within three (3) business days after delivery of such Working Drawings to
Landlord. If Landlord disapproves the revised Working Drawings, the parties
shall again meet and confer in accordance with this paragraph until the parties
agree on the Working Drawings. If Landlord disapproves of the second set of
Working Drawings within said three (3) business day time period and such
disapproval or failure to agree is not based on a Design Problem, then each day
after the end of said three (3) business day time period shall constitute a
Landlord Delay and if Tenant is unable to conduct its business in all of the
Premises as a result, Tenant shall be entitled to a partial abatement in rent
for each day of such Landlord Delay. Such abatement in rent shall be limited to
the square footage of the Premises in which Tenant is constructing the Tenant
Improvements and is unable to construct the Tenant Improvements pending approval
of such Working Drawings. The Working Drawings approved in writing by the
parties shall be referred to as the "Final Plans."
(c) GENERAL. It is the responsibility of Tenant to assure that the
Final Plans and the Tenant Improvements constructed thereunder conform to all of
the Applicable Laws. Tenant shall submit to Landlord one (1) reproducible and
four (4) prints of the Final Plans.
2.2 SELECTION AND APPROVAL OF CONTRACTOR. The Contractor shall be
familiar with all Applicable Laws. In addition, any subcontractor performing
any work on the life safety or alarm systems or work affecting the roof shall be
subject to Landlord's prior written approval in its reasonable discretion and
Landlord may require the Tenant use Landlord's contractor or a specific
subcontractor for any such work. Landlord shall provide written notice of
approval or disapproval within five (5) business days after Tenant's request for
such approval. Tenant may request that Landlord approve three (3) or more
Contractors prior to competitive bidding, in which case Tenant may select any
one of the Contractors approved by Landlord. The construction contract shall be
subject to the prior written approval of Landlord in its reasonable discretion
and shall require, among other things, that the Contractor (a) obtain and
deliver to Landlord evidence of insurance required by Landlord, and (b) execute,
obtain and deliver to Tenant lien waivers in the form required under Applicable
Law from the Contractor and all of its subcontractors and suppliers, and (c)
monthly progress payments, with a ten percent (10%) retention. The failure of
Landlord to provide its written notice of approval or disapproval (which shall
include the basis for such disapproval) of such contract within five (5) days
after Landlord's receipt of such request shall be deemed an approval by Landlord
of such contract.
2.3 INFORMATION PROVIDED BY LANDLORD. Acceptance or approval of any plan,
drawing or specification, including, without limitation, the Preliminary Plans
and the Final Plans, by Landlord shall not constitute the assumption of any
responsibility by Landlord for the accuracy or sufficiency of such plans and
material, and Tenant shall be solely responsible therefor. Tenant agrees and
understands that the review of all plans pursuant to the Lease or this Exhibit
by Landlord is to protect the interests of Landlord in the Building, and
Landlord shall not be the guarantor of, nor responsible for, the correctness,
completeness or accuracy of any such plans or compliance of such plans with
Applicable Laws. Landlord shall promptly furnish to Tenant upon request all
information regarding the Premises and Building within Landlord's possession and
which is reasonably requested by Tenant Architect or Contractor, including,
without limitation, any "as built" drawings, plumbing, mechanical, electrical,
and any other engineering reports that are necessary to prepare the plans to
construct the Tenant Improvements. Any information that may have been
furnished to Tenant by Landlord or others about the mechanical, electrical,
structural, plumbing or geological (including soil and sub-soil) characteristics
of the Building or Project (hereinafter referred to as the "Site
Characteristics") are for Tenant's convenience only, and Landlord does not
represent or warrant that the Site Characteristics are accurate, complete or
correct or that the Site Characteristics are as indicated. Any information that
has been furnished by Landlord to Tenant has been delivered on the expressed
condition and understanding that Tenant will independently verify whether such
information is accurate, complete or correct and not rely on such information
provided by Landlord.
2.4 NO RESPONSIBILITY OF LANDLORD. Landlord's approval of any plans,
including, without limitation, the Preliminary Plans or the Final Plans, shall
not: (i) constitute an opinion or agreement by Landlord that such plans and
Tenant Improvements are in compliance with all Applicable Laws, (ii) impose any
present or future liability on Landlord; (iii) constitute a waiver of Landlord's
rights hereunder or under the Lease or this Exhibit; (iv) impose on Landlord any
responsibility for a design and/or construction defect or fault in the Tenant
Improvements, or (v) constitute a representation or warranty regarding the
accuracy, completeness or correctness thereof.
2.5 ACTUAL REVIEW COSTS. Tenant shall pay to Landlord its actual costs
incurred for Landlord's architect to review the Working Drawings and Final Plans
to the extent Landlord determines it reasonably necessary to engage an outside
architectural firm to assist in the review of such drawings and plans. All such
reimbursements shall be made within ten (10) days after receipt of written
invoice for same.
2.6 CHANGES. After approval of the Preliminary Plans or Final Plans by
Landlord and Tenant, any changes in the Preliminary Plans or Final Plans shall
require the prior written consent of Landlord and the parties shall follow the
same process as was required under sections 3.2 for approval of plans. Any
change requested by Tenant that is approved in writing by Landlord shall be
prepared by the Architect and shall be subject to the review and approval of
Landlord's architect in its reasonable discretion. The cost of such changes,
including the cost to revise such plans, obtain any additional permits and
construct any additional improvements required as a result thereof, and the cost
for materials and labor, and all other additional costs incurred by Tenant from
resulting delays in completing the Tenant Improvements, shall be included as
part of the Construction Costs for the Tenant
3
Improvements. Notwithstanding the foregoing, Tenant may order minor field
changes which do not affect the Building structure, Building systems or the
exterior appearance of the Premises or Building without Landlord's prior
approval; provided, however, that Tenant shall promptly notify Landlord of any
such change.
2.7 CONSTRUCTION BUDGET FOR TENANT IMPROVEMENTS. After approval of the
Final Plans by Landlord and Tenant as provided above, Tenant shall prepare a
detailed estimate of the Construction Costs for the Tenant Improvements (the
"Construction Budget"). Tenant shall not make any changes in the Construction
Budget that (a) will result in a change in the Tenant Improvements that is not
comparable in structure, design or quality of the Tenant Improvements approved
by Landlord in the Final Plans, or (b) result in any change in the exterior of
the Premises or a change visible from the exterior of the Premises. Landlord
shall provide its approval or disapproval for any change in the Construction
Budget within five (5) business days after receipt of such request by Tenant.
The failure of Landlord to provide such approval or disapproval shall be deemed
an approval. Landlord's approval of the Construction Budget, and any changes
thereto, shall not under any circumstances constitute an agreement by Landlord
to pay any costs or expenses in excess of Landlord's Allowance.
2.8 BUILDING PERMITS AND APPROVALS. Not later than after approval by
Landlord and Tenant of the Final Plans as provided above, Tenant or its
Contractor shall submit the Final Plans to the appropriate governmental body for
plan checking and all building permits and other governmental and
quasi-governmental approvals.
2.9 CONDUCT OF WORK. Tenant shall confine the construction activity to
within the Premises as much as possible and shall work in an orderly manner
removing trash and debris from the project on a regular basis. All such work
shall be undertaken in compliance with all Applicable Laws and the Lease. If
Tenant fails to comply with these requirements, Landlord shall have the right,
but not the obligation, to cause remedial action (at Tenant's cost) as deemed
necessary by Landlord to protect the public. Tenant shall complete construction
of the Tenant Improvements free and clear of all liens, security interests and
encumbrances of any kind.
(a) PRE-CONSTRUCTION SUBMITTALS TO LANDLORD. A minimum of five (5)
days prior to the commencement of construction, Tenant shall submit the
following items to Landlord:
(1) A certificate setting forth the proposed commencement date
of construction and the estimated completion dates of construction work,
fixturing work and projected opening date;
(2) Certificates of all insurance required under the Lease and
this Exhibit;
(3) Copies of all building permits, and all other permits and
approvals required by governmental agencies to construct the Tenant
Improvements; and
(4) Copies of all the construction contract with Tenant's
Contractor.
(b) DELAYS. Tenant shall with reasonable diligence prosecute
construction of the Tenant Improvements to complete all work by the Commencement
Date. Any delay in completing such work, including any delay as a result of
governmental delays, acts of God and other events beyond the control of Tenant,
shall not extend or delay the time for the commencement of payment Rent or any
other sum under the Lease; provided, however, that Tenant may be entitled to a
partial abatement in rent for a Landlord Delay to the extent provided in section
2.1(b) hereof.
(c) CORRECTION OF WORK. Landlord may reject any portion of the
Tenant Improvements which is defective or not in conformity with the Final
Plans. Landlord shall not be responsible for correcting the portions of the
Tenant Improvements which were defective or not in compliance with the Final
Plans; all such work shall be the responsibility of Tenant at its sole cost and
expense.
2.10 NOTICE OF COMPLETION; COPY OF RECORD SET OF PLANS. Within ten (10)
days after final completion of construction of the Tenant Improvements, Tenant
shall cause a notice of completion (or the equivalent notice required under
local law to provide notice to all contractors, subcontractors and materialmen
that the work is completed and the time for filing any mechanic's lien is
running) to be recorded in the Official Records of the County where the Building
is located, and shall furnish a copy thereof to Landlord upon such recordation.
If Tenant fails to do so, Landlord may execute and file the same on behalf of
Tenant as Tenant's agent for such purpose, at Tenant's sole cost and expense.
At the conclusion of construction: (i) Tenant shall cause the Architect or
Contractor (A) to update the Final Plans as necessary to reflect all changes
made to the Final Plans during the course of construction, (B) to certify to the
best of their knowledge that the "record-set" of as-built drawings are true and
correct, which certification shall survive the expiration or termination of this
Lease, and (C) to deliver to Landlord two (2) sets of copies of such record set
of drawings within ninety (90) days following issuance of a certificate of
occupancy for the Premises; and (ii) Tenant shall deliver to Landlord a copy of
all signed building permits and certificates of occupancy, and all warranties,
guaranties, and operating manuals and information relating to the improvements,
equipment and systems in the Premises.
2.11 TENANT'S PARTIES AND INSURANCE. The Contractor and all
subcontractors, laborers, materialmen, and suppliers used by Tenant collectively
shall be referred to as "Tenant's Parties".
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(a) INDEMNITY. Tenant's indemnity of Landlord as set forth in the
Lease shall also apply with respect to any and all costs, losses, damages,
injuries and liabilities related in any way to any act or omission of Tenant or
Tenant's Parties, or any one directly or indirectly employed by any of them, or
in connection with Tenant's non-payment of any amount arising out of the Tenant
Improvements and/or Tenant's disapproval of all or any portion of any request
for payment.
(b) REQUIREMENTS OF TENANT'S PARTIES. Each of Tenant's Parties shall
guarantee to Tenant and Landlord that the portion of the Tenant Improvements for
which it is responsible shall be free from any defects in workmanship and
materials for a period of not less than one (1) year from the date of completion
thereof. Each of Tenant's Parties shall be responsible for the replacement or
repair, without additional charge, of all work done or furnished in accordance
with its contract that shall become defective within one (1) year after the
later to occur of (i) completion of the work performed by such contractor or
subcontractors, and (ii) the date when the Tenant Improvements have been
Substantially Completed. All such warranties or guarantees as to material or
workmanship of or with respect to the Tenant Improvements shall be contained in
the construction contract or subcontract and shall be written such that such
guarantees or warranties shall inure to the benefit of both Landlord and Tenant,
as their respective interests may appear, and can be directly enforced by
either. Tenant covenants to give to Landlord any assignment or other assurances
which may be necessary to effect such right of direct enforcement.
(c) INSURANCE REQUIREMENTS. In addition to the insurance
requirements set forth in the Lease, Tenant shall comply with the following
requirements:
(1) GENERAL COVERAGES. Ensure that the Contractor carries
worker's compensation insurance covering all of their respective employees, and
shall also carry not less than $1,000,000 of commercial liability insurance,
including property damage, in form and with companies as are required to be
carried by Tenant as set forth in the Lease.
(2) SPECIAL COVERAGE. Tenant shall carry or cause the
Contractor to carry "Builder's All Risk" insurance in an amount approved by
Landlord covering the construction of the Tenant Improvements. Such insurance
shall be in amounts and shall include such extended coverage endorsements as may
be reasonably required by Landlord including, but not limited to, the
requirement that all of Tenant's Parties shall carry excess liability and
Products and Completed Operation Coverage insurance, each in amounts not less
than $1,000,000 per incident, $1,000,000 in aggregate, and in form and with
companies as are required to be carried by Tenant as set forth in the Lease.
(3) GENERAL TERMS. Certificates for all insurance carried
pursuant to the foregoing sections shall be delivered to Landlord before the
commencement of construction of the Tenant Improvements and before the
Contractor's equipment is moved onto the site. All such policies of insurance
must contain a provision that the company writing said policy will give Landlord
thirty (30) days' prior written notice of any cancellation or lapse of the
effective date or any reduction in the amounts of such insurance. Tenant's
Parties shall maintain all of the foregoing insurance coverage in force until
the Tenant Improvements are fully completed and accepted by Landlord, except for
any Products and Completed Operation Coverage insurance required by Landlord,
which is to be maintained for three (3) years following completion of the work
and acceptance by Landlord and Tenant. All policies carried under this section
except for Workers' Compensation shall insure Landlord and Tenant, as their
interests may appear, as well as Contractor and Tenant's Parties. All
insurance, except Workers' Compensation, maintained by Tenant's Parties shall
preclude or waive subrogation claims by the insurer against anyone insured
thereunder. Such insurance shall provide that it is primary insurance as
respects Landlord and Tenant and that any other insurance maintained by Landlord
or Tenant is excess and noncontributing with the insurance required hereunder.
The requirements for the foregoing insurance shall not derogate from the
provisions for indemnification of Landlord by Tenant under the Lease or this
Exhibit.
2.12 LABOR MATTERS. Tenant shall use reasonable efforts to perform or
cause Tenant's contractor to perform all work in the making and/or installation
of any repairs, alterations or improvements in a manner so as to avoid any labor
dispute which causes or is likely to cause stoppage or impairment of work or
delivery service or any other services in the Project. In the event there shall
be any such stoppage or impairment as the result of any such labor dispute or
potential labor dispute, Tenant shall promptly undertake such actions as may be
reasonably necessary to eliminate such dispute or potential dispute.
2.13 TEMPORARY FACILITIES DURING CONSTRUCTION. Tenant shall obtain in its
name and pay for all temporary utility facilities, and the removal of debris, as
necessary and required in connection with the construction of the Premises.
Storage of Tenant's contractors' construction material, tools, equipment and
debris shall be confined to the Premises and any other areas designated for such
purposes by Landlord. Landlord shall not be responsible for any loss or damage
to Tenant's and/or Tenant's contractors' equipment. In no event shall any
materials or debris be stored in the malls or service or exit corridors of the
Project.
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2.14 MISCELLANEOUS. The Tenant Improvements shall be subject to the
reasonable inspection and approval of Landlord and its supervisory personnel.
All contractors engaged by Tenant shall be bondable, licensed contractors,
possessing good labor relations, capable of performing quality workmanship.
ARTICLE 3 PAYMENT OF CONSTRUCTIONS COSTS
3.1 PAYMENT OF COSTS. Tenant shall pay for the Tenant Improvements,
except for the Landlord's Allowance which Landlord shall advance as hereinafter
provided. Landlord shall only be responsible for payment of up to the amount of
Landlord's Allowance for the Tenant Improvements. If the Tenant Improvement
Costs for the Tenant Improvements is greater than the amount of the Landlord's
Allowance, Tenant shall be solely responsible for such additional costs.
3.2 PAYMENT BY LANDLORD. Landlord shall make one payment of the
Landlord's Allowance within thirty (30) days after receipt by Landlord of (i)
copies of all applicable building permits reflecting final sign-off by the local
governmental authority, (ii) a copy of the as-built Final Plans for the Tenant
Improvements, and (iii) unconditional lien waivers from the general contractor
and all subcontractors and suppliers (iv) receipt and approval by Landlord of
the Architect's certificate referred to in the definition of Substantial
Completion in this Exhibit, which approval shall not be unreasonably withheld.
ARTICLE 4 GENERAL PROVISIONS
4.1 TENANT'S REPRESENTATIVE. Tenant hereby authorizes Xxxx X. Xxxx,
Director of Facilities for Tenant, located at 000 Xxxxx Xxxxx, Xxxxxxxx,
Xxxxxxxxxx 00000, as Tenant's representative to act on its behalf and represents
its interests with respect to all matters which pertain to the construction of
Tenant Improvements, and to make decisions binding upon Tenant with respect to
such matters.
4.2 LANDLORD'S REPRESENTATIVE. Landlord hereby authorizes Xxxx X.
Cornthwiate, Portfolio Manager, of Xxxxxx Xxxxx Management Co., located at 0000
X. Xxx Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxxxx, as Landlord's
representative to act on its behalf and represents its interests with respect to
all matters which pertain to the construction of Tenant Improvements, and to
make decisions binding upon Landlord with respect to such matters.
4.3 REMOVAL OF TENANT IMPROVEMENTS. At the time when Landlord approves of
the Final Plans, Landlord shall advise Tenant if all or any portion of the
Tenant Improvements will have to be removed by Tenant at its expense at or prior
to the expiration or earlier termination of the Lease as part of Tenant's
surrender obligations under section 15.2 of the Lease. As provided in section
15.2 of the Lease, if Landlord advises Tenant at the time Landlord approves of
the Final Plans that all or any portion of the Tenant Improvements must be
removed at the expiration or earlier termination of the Lease, Landlord shall
also have the right, but not the obligation, to notify Tenant at least thirty
(30) days prior to the expiration of the Lease that all or part of such Tenant
Improvements must remain at the Premises.
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EXHIBIT B-1
SPACE PLAN
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