Exhibit 10.11
1. PARTIES. THIS LEASE, is entered into on this 14th day of May, 1991,
between The Xxxx X. & Xxxxx X. Xxxxxxx 1979 Revocable Trust and Aehr Test
Systems, Inc., a California Corporation, hereinafter called, respectively,
"Landlord" and "Tenant".
2. PREMISES. Landlord hereby leases to Tenant, and Tenant leases from
Landlord, those certain Premises with the appurtenances, situated in the City of
Mountain View, County of Santa Xxxxx, State of California, and more particularly
described as follows, to-wit:
That certain real property commonly known and designated as 0000
Xxxxxxxx Xxxxxx (XXX 000-00-00, 000-00-00 AND 000-00-00)
containing a building (the "Building") consisting of 61,364
square feet as outlined in red on EXHIBIT "A" attached hereto and
incorporated herein by reference.
3. USE. Tenant shall use the Premises only for legally permitted uses.
4. TERM AND RENTAL. The term (the "Lease Term") shall be for
ninety-six (96) months, commencing on the "Commencement Date" as defined in
subparagraph 7.T of this Lease and ending ninety-six months thereafter (the
"Expiration Date"), unless sooner terminated pursuant to the terms hereof.
Tenant shall pay as monthly rent for the Premises the following amounts:
PERIOD MONTHLY RENT
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Commencement Date - lst Anniversary $0 per month
of Commencement Date (12 months)
1st Anniversary of Commencement Date through 5th $79,773.20 per month
Anniversary of Commencement Date (48 Months)
5th Anniversary of Commencement Date through $85,909.60 per month
Expiration Date (36 months)
Monthly rent shall be due on or before the first day of each calendar month
during the Lease Term. Said rental shall be paid in lawful money of the United
States of America, without offset or deduction except as set forth in this
Lease, and shall be paid to Landlord at such place or places as may be
designated from time to time in writing by Landlord. Rent for any period less
than a calendar month shall be prorated based on a thirty (30) day month.
5. A. SECURITY DEPOSIT. Within three (3) business days after both
parties' execution of this Lease, Tenant shall deposit with Landlord the sum of
Sixty Seven Thousand Four Hundred Eighty-Five Dollars ($67,485) as a security
deposit. If Tenant defaults with respect to any provisions of this Lease,
including, but not limited to, the provisions relating to payment of rent or
other charges, Landlord may, to the extent reasonably necessary to remedy
Tenant's default, use all or any part of said deposit for the payment of rent or
other charges in default or the payment of any other amount which Landlord may
spend or become obligated to spend by reason of Tenant's default
or to compensate Landlord for any other loss or damage which Landlord may suffer
by reason of Tenant's default. If any portion of said deposit is so used or
applied, Tenant shall, within ten (10) days after written demand therefor,
deposit cash with Landlord in an amount sufficient to restore said deposit to
the full amount hereinabove stated. Said deposit shall be returned to Tenant
within thirty (30) days after the expiration or earlier termination of the Lease
Term, less any amount deducted in accordance with this paragraph, together with
Landlord's written notice itemizing the amounts and purposes for such retention.
In the event of termination of Landlord's interest in this Lease, Landlord shall
transfer said deposit to Landlord's successor in interest.
B. LETTER OF CREDIT: Notwithstanding the provisions of
xxxxxxxxx 0.X, Xxxxxxxx agrees that in lieu of a cash security deposit, Tenant
may deposit a letter of credit in a form reasonably acceptable to Landlord.
Landlord shall be entitled to draw against the letter of credit at any time that
Tenant has committed a default under this Lease as defined in paragraph 22,
provided that Landlord certifies to the issuer of the letter of credit under
penalty of perjury that Tenant is in default under the Lease. Tenant shall keep
the letter of credit in effect during the entire Lease Term, as the same may be
extended, plus a period of four (4) weeks thereafter. At least sixty (60) days
prior to expiration of any letter of credit, the term thereof shall be renewed
or extended. Subject to Tenant's cure rights under Paragraph 22, Tenant's
failure to so renew or extend the letter of credit shall be a material default
of this Lease by Tenant. If Landlord draws against the letter of credit, Tenant
shall replenish the existing letter of credit or cause a new letter of credit to
be issued such that the aggregate amount of letters of credit available to
Landlord at all times during the Lease Term is the amount of the security
deposit originally required.
6. LATE CHARGES. Tenant hereby acknowledges that late payment by Tenant
to Landlord of rent and other sums due hereunder will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
administrative, processing, accounting charges, and late charges, which may be
imposed on Landlord by the terms of any contract, revolving credit, mortgage or
trust deed covering the Premises. Accordingly, if any installment of rent or
any other sum due from Tenant shall not be received by Landlord or Landlord's
designee within five (5) days after receipt by Tenant of written notice
specifying that Landlord has failed to receive the amount in question, Tenant
shall pay to Landlord a late charge equal to five percent (5%) of such overdue
amount, which shall be due and payable with the payment then delinquent. The
parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Landlord will incur by reason of late payment by Tenant.
Acceptance of such late charge by Landlord shall in no event constitute a waiver
of Tenant's default with respect to such overdue amount, nor prevent Landlord
from exercising any of the other rights and remedies granted hereunder. In the
event that a late charge is payable hereunder, whether or not collected, for
three (3) consecutive installments of rent, then rent shall automatically become
due and payable quarterly in advance, rather than monthly, notwithstanding any
provision of this Lease to the contrary.
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7. CONSTRUCTION AND POSSESSION.
A. DEFINITIONS: As used in this paragraph 7, the following terms
shall have the following meanings:
1. ARCHITECT: The term "Architect" shall mean Xxxxxx Xxxxx &
Associates.
2. BUILDING SHELL: The term "Building Shell" shall mean
(i) the one story Building containing 61,364 square feet of floor space as shown
on those certain plans and specifications prepared by the Architect (the
"Building Shell Plans"); (ii) all parking areas, driveways, sidewalks, site
utility installations, exterior lighting, irrigation systems, landscaping, and
other outside area improvements specified on the Building Shell Plans; (iii) all
other on-site and off-site improvements required by any governmental agency as a
condition of its issuance of any approval for construction of the Building
Shell; and (iv) those modifications set forth in Exhibit "B" hereto and
incorporated herein by reference.
3. FINAL TENANT IMPROVEMENT PLANS: The term "Final Tenant
Improvement Plans" shall mean those plans, specifications, and working drawings
for the Tenant Improvements prepared and approved by the parties in accordance
with this paragraph 7.
4. PRELIMINARY TENANT IMPROVEMENT PLANS: The term "Preliminary
Tenant Improvement Plans" shall mean those plans and specifications for the
Tenant Improvements prepared and approved by the parties in accordance with this
paragraph 7.
5. TENANT IMPROVEMENTS: The term "Tenants Improvements" shall
mean all partitions, windows, walls, wall coverings, HVAC equipment, lighting,
ceilings, utility fixtures and other improvements and fixtures, installed in the
Building Shell to the extent that such improvements and fixtures are specified
on the Final Tenant Improvement Plans and to the extent such improvements are
not shown on the Building Shell Plans. Without limiting the generality of the
foregoing, the Tenant Improvements shall also include the following: (i) water
drains for water cooled systems to be used by Tenant, (ii) the cement pad for
Tenant's generator, (iii) cement trash compactor pad, and (iv) exterior security
fencing.
6. TENANT IMPROVEMENT ALLOWANCE/MOVING ALLOWANCE: The term
"Tenant Improvement Allowance" shall mean One Million Five Hundred Thirty Four
Thousand Dollars ($1,534,000), which Landlord must contribute for construction
of Tenant Improvements. The term "Moving Allowance" shall mean Sixty-One
Thousand Three Hundred Sixty-Four Dollars ($61,364). Tenant may use the Moving
Allowance for all of Tenant's moving and relocation expenses including without
limitation the following: (i) the purchase of new furniture, (ii) transportation
costs, (iii) the costs of installing telephone systems and computer cabling.
The Tenant Improvement Allowance shall be reduced by the amount of the Moving
Allowance used by Tenant.
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7. TENANT IMPROVEMENT COSTS: The term "Tenant Improvement
Costs" shall mean the lesser of (a) the Tenant Improvement Cost Estimate, or
(b) the sum of the following: (i) payments to third party contractors,
subcontractors and materialman for the construction of the Tenant Improvements;
(ii) reasonable fees paid to architects, engineers and other construction
professionals (other than employees of Landlord or of entities in any way
affiliated with Landlord) for services required in connection with the design
and construction of the Tenant Improvements; (iii) fees paid to architects,
space planners, designers, inspectors and other construction professionals in
connection with the design of the Tenant Improvements; (iv) utility connection
charges incurred by Tenant; (v) permit and license fees paid for use and
occupancy permits required for Tenant to occupy the Premises; (vi) the amounts
paid to governmental authorities or agencies for inspections and issuance of
building permits and approvals for the Improvements (but not that portion of
such amounts applicable to, or based on the value of, the Building Shell);
(vii) a development fee (in lieu of any general conditions, overhead, profit or
other fee) equal to eight percent (8%) of Tenant Improvement Costs. In no event
shall Tenant Improvement Costs include (herein "Excluded Costs"): (i) charges
and expenses for changes to either the Building Shell Plans or the Final Tenant
Improvement Plans which have not been approved by Tenant in writing; (ii) wages,
labor and overhead for overtime and premium time unless approved by Tenant in
writing in Tenant's discretion; (iii) additional costs and expenses incurred by
Landlord on account of any contractor's or subcontractor's default or
construction defects; (iv) interest and fees for construction financing;
(v) off-site management or other general overhead costs incurred by Landlord;
(vi) bond premiums; (vii) costs for which Landlord has a right of reimbursement
from others (including, without limitation, insurers and warrantors); (viii) the
cost of bringing the Building Shell and surrounding lot into compliance with
applicable building codes, environmental laws, or other statutes, laws, rules
and regulations; (ix) costs of management, design and all other services
provided by employees or affiliates of Landlord and the cost of any
administration, profit and overhead for Landlord or any of its employees or
affiliates in excess of the developer's fee mentioned above; (x) costs incurred
as a result of delays caused by the acts or omissions of Landlord or its
employees, agents, contractors or subcontractors; (xi) any expense or cost which
is not required to be incurred in order to complete construction of the Tenant
Improvements; (xii) any costs associated with the design or construction of the
Building Shell; (xiii) any cost associated with a casualty or Act of God; and
(xiv) any costs associated with the removal of Hazardous Materials (as defined
in paragraph 18) or asbestos from the Building or Premises. All of the
foregoing "Excluded Costs" shall be the sole obligation of Landlord.
8. TENANT IMPROVEMENT COST ESTIMATE: The term "Tenant Improvement Cost
Estimate" shall mean the total estimated cost of constructing the Tenant
Improvements prepared and approved by Landlord and Tenant in accordance with
this paragraph 7, as modified by change orders approved by Tenant in accordance
with this paragraph 7. The Tenant Improvement Cost Estimate may contain a
contingency reserve of one and one-half percent (1 1/2%) of the Tenant
Improvement Costs. If such contingency reserve is not used by Landlord due to
unforeseen conditions related to the construction of the Tenant Improvements,
such contingency reserve shall not be a part of the Tenant Improvement Costs.
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9. SUBSTANTIAL COMPLETION: The term "Substantial Completion" shall mean
that (i) all necessary governmental approvals for occupancy of the Building have
been obtained (including, if applicable, a certificate of occupancy); (ii) the
Premises fully meet the Final Tenant Improvement Plans and the Building Shell
Plans approved by Tenant; (iii) the Premises are in a "broom clean" finished
condition; (iv) all utilities be supplied to the Premises are hooked up and
available for use by Tenant; (v) Tenant has had fourteen (14) days to install
its trade fixtures in the Building pursuant to subparagraph 7.N below;
(vi) Landlord has completed the Building Shell, including any modifications
thereto described in EXHIBIT "B"; (vii) the Architect has certified that the
Premises have been completed in accordance with the Final Tenant Improvement
Plans; (viii) all incomplete or defective construction which interferes with
Tenant's use of the Premises has been remedied and repaired, subject only to the
completion of minor "punch list" items not interfering with Tenant's use of the
Premises; and (ix) Landlord has offered to deliver possession of the Premises to
Tenant.
B. PRELIMINARY PLANS FOR INTERIOR IMPROVEMENTS: Landlord and Tenant
have agreed upon preliminary space plans for the Tenant Improvements which are
attached hereto as EXHIBIT "C" (the "Preliminary Tenant Improvement Plans").
Landlord has provided Tenant with a preliminary cost estimate based upon the
Preliminary Tenant Improvement Plans.
C. FINAL TENANT IMPROVEMENT PLANS AND COST ESTIMATE: Tenant shall
cooperate with the Architect to that the Architect may prepare and deliver to
Landlord proposed final plans, specifications and working drawings for the
Tenant Improvements by May 20, 1991. Landlord shall submit any reasonable
objections to the proposed final plans, specifications and working drawings to
Tenant in writing within fourteen (14) days after Landlord's receipt of same and
shall submit a proposed tenant improvement cost estimate for the Tenant
Improvements shown on the proposed final plans, specifications and working
drawings, as amended by the changes reasonably made by Landlord. If Tenant
disapproves the cost estimate or the proposed final plans with Landlord's
modifications in any respect, then within seven (7) days following receipt of
the proposed final plans and cost estimate, Tenant may deliver to Landlord its
written proposal for the changes necessary, in Tenant's opinion, to satisfy
Tenant's objections or to reduce costs. If Tenant proposes changes to the
proposed final plans for the Tenant Improvements, Landlord shall not
unreasonably withhold its approval of such change and the parties shall confer
and negotiate in good faith to reach agreement on specific required
modifications to the proposed final plans and costs estimate as a consequence of
such change. If Tenant believes that the cost estimate is incorrect, it may
require that all or any portion of the work be submitted for competitive bids.
The final plans, modified for changes proposed by Tenant and approved by
Landlord pursuant to this paragraph, shall be the approved Final Tenant
Improvement Plans and the cost estimate approved by Tenant shall be the Tenant
Improvement Cost Estimate for the purposes of this Addendum.
D. TERMINATION: Tenant shall have the right in Tenant's discretion
to terminate this Lease by delivery of written notice within five (5) days of
Tenant's receipt of the final plans to Landlord if both (i) the final cost
estimate for the final plans exceeds twenty-five dollars and fifty cents
($25.50) per square foot, and (ii) the final plans are consistent in scope with
the Preliminary Tenant Improvement Plans.
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E. APPLICATION FOR APPROVALS: As soon as the Final Tenant
Improvement Plans are approved by Landlord and Tenant, Landlord shall submit the
approved Final Tenant Improvement Plans to all appropriate governmental agencies
for their approval and issuance of all required permits. Landlord shall use its
best efforts to obtain all governmental approvals and permits necessary for
construction of the Premises in accordance with the Final Tenant Improvement
Plans on or before July 15, 1991. Landlord and Tenant shall initial the Final
Tenant Improvement Plans immediately after all governmental approvals and
permits have been obtained and shall append the approved Final Tenant
Improvement Plans and Tenant Improvement Cost Estimate to this Lease.
F. CHANGES TO PLANS: After the Final Tenant Improvement Plans have
been approved by Landlord and Tenant as provided above, neither party shall have
the right to require extra work or make any modifications with respect to the
construction of the Tenant Improvements, without the prior written consent of
the other party as to (i) the change, (ii) any estimated delay in the scheduled
completion date of the Premises caused by the change, and (iii) any modification
to the Tenant Improvement Cost Estimate as a consequence of the change.
Landlord shall not unreasonably withhold or delay its consent to changes or
extra work proposed by Tenant with respect to the Tenant Improvements and, if
the change will not materially modify the exterior appearance of the Building
Shell, then Landlord also shall not unreasonably withhold its consent to change
in the Building Shell. Tenant may withhold its consent, in its discretion, to
any change in the Final Tenant Improvement Plans or the Tenant Improvement Cost
Estimate.
G. GENERAL CONTRACTOR: Landlord shall serve as the general
contractor for construction of the Tenant Improvements. Landlord shall cause
each subcontract to be competitively bid by three contractors for construction
of the Tenant Improvements. The contractors to whom such work shall be
competitively bid shall be selected by Landlord and approved by Tenant, which
approval shall not be unreasonably withheld. All bids shall be opened
simultaneously. All work shall be awarded based upon the lowest bid submitted
unless agreed in writing by Tenant. Notwithstanding Tenant's right to approve
the subcontractors, each subcontractor is a contractor only of Landlord and
Tenant shall have no liability to the subcontractor under any subcontract or
otherwise with respect to the Building.
H. LANDLORD'S OBLIGATION TO CONSTRUCT: As soon as the Final Tenant
Improvement Plans have been approved, all necessary governmental approvals and
permits have been obtained, and the bids have been accepted, Landlord shall
cause construction of the Tenant Improvements to be commenced and diligently
prosecuted to completion, so that the Premises will be Substantially Complete as
soon as possible.
I. SCHEDULE OF CRITICAL DATES: Set forth in this paragraph is a
schedule of certain critical dates relating to Landlord's and Tenant's
respective obligations regarding the construction of the Building Shell and the
Interior Improvements (the "Schedule of Performance"). Landlord and Tenant
shall each be obligated to use reasonable efforts to perform their respective
obligations within the time periods set forth in this Schedule of Performance
and elsewhere in this Construction Addendum. The Schedule of Performance is as
follows:
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DATE
(Days After
ACTION Another Event
-------------------------------------------------- -------------------------
1. Tenant Submits Proposed Final Interior Plans On or before May 20, 1991
2. Landlord Submits Reasonable Objections to 14 days after Item 1
Proposed Final Tenant Improvement Plans and
Submits Proposed Tenant Improvement Cost
Estimate Based On Bids
3. Tenant Modifies Plans To Reduce Tenant 7 days after Item 2
Improvement Cost Estimate, or to Resolve
Tenant's Objections if required or Tenant
so elects
4. Landlord Rebids Tenant Improvement Cost, if 7 days after Item 3
appropriate, and Submits Revised Tenant
Improvement Cost Estimate To Tenant
5. Parties Finally Approve Final Tenant June 15, 1991
Improvement Plans
6. Issuance Of All Construction Permits For July 15, 1991
Landlord's
7. Last Date For Issuance Of All Construction October 1, 1991
Permits (or Tenant may terminate this Lease
in accordance with this paragraph 7)
8. Scheduled Substantial Completion Date September 30, 1991
9. Last Date For Delivery of Premises March 15, 1992
Substantially Complete (or Tenant may
terminate as set forth in this paragraph 7)
J. DELIVERY OF POSSESSION: When the Premises are Substantially Complete,
Landlord shall deliver possession of the Premises to Tenant. However, Tenant
shall have no obligation to accept possession of the Premises or commence
payment of rent until the Commencement Date as defined in subparagraph 7.T.
K. FAILURE TO DELIVER: Landlord hereby acknowledges that its failure to
deliver to Tenant Premises that are Substantially Complete on or before
September 30, 1991 will cause Tenant to incur costs not contemplated by the
Lease, the exact amount of which will be extremely difficult to ascertain.
Consequently, if the Commencement Date has not occurred on or before
September 30, 1991, then in addition to Tenant's other rights and remedies, the
date Tenant is otherwise obligated to commence paying monthly and additional
rent shall be delayed two days for each day that the Commencement Date is
delayed beyond September 30, 1991.
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L. TENANT'S CONTRIBUTION TO INTERIOR IMPROVEMENT COSTS: Tenant's
obligation to pay the cost of constructing the Premises shall be limited to the
positive difference, if any, between (i) the lesser of the Tenant Improvement
Costs or the Tenant Improvement Cost Estimate approved by Tenant in writing; and
(ii) the Tenant Improvement Allowance. The parties acknowledge that Tenant
shall have no obligation to pay any cost of constructing any portion of the
Tenant Improvements in excess of such amount. If the Tenant Improvement Cost
Estimate is more than the Tenant Improvement Allowance, Tenant shall pay to
Landlord the difference (described in the first sentence of this subparagraph)
on the later to occur of the following (i) fifteen (15) days after the
Commencement Date; or (ii) within fifteen (15) days after receipt of a statement
and reasonable documentation of such costs from Landlord. If Tenant pays any
such excess Tenant Improvement Costs, as soon as possible after commencement of
the Lease, Landlord and Tenant shall designate as Tenant's property, Tenant
Improvements having a cost approximately equal to the excess paid by Tenant.
Property designated as Tenant's property under the terms of this paragraph may
be removed from the Premises at any time by Tenant and Tenant shall be entitled
to all investment tax credit, depreciation, and other tax attributes relating to
such property. In determining which Tenant Improvements will be designated as
Tenant's property, the parties shall confer in good faith and shall give
preference to those Tenant Improvements which are most readily removable from
the Building and which shall have the greatest utility for Tenant outside of the
Building but which are not required for the basic operation of the tenant. At
the expiration or sooner termination of the Lease Term, all Tenant Improvements
not designated as Tenant's property under this paragraph shall be surrendered to
Landlord in accordance with the terms of the Lease. If the Tenant Improvement
Cost Estimate exceeds the Tenant Improvement Allowance, Tenant shall deposit a
letter of credit in a form reasonably acceptable to Landlord to secure the
amount by which Tenant is required to contribute to the cost of the Tenant
Improvements pursuant to this subparagraph. Landlord shall be entitled to draw
against the letter of credit in an amount equal to the amount by which Tenant
fails to make its required contribution to the cost of the Tenant Improvements,
provided that Landlord certifies to the issuer of the letter of credit under
penalty of perjury that (i) the Commencement Date under the Lease has occurred,
(ii) The draw against the letter of credit represents an amount which Tenant has
failed to make its required contribute to Landlord for the construction of the
Tenant Improvements under the Lease within the time period permitted by the
Lease.
M. RIGHTS IF ALLOWANCE UNUSED: If the amount of the Tenant
Improvement Costs (and any amount designated by Tenant for future alterations to
the Premises) is less than the Tenant Improvement Allowance, then beginning on
the first anniversary of the Commencement Date, the monthly rental under the
Lease shall be reduced at the rate of Fifteen Dollars ($15.00) per month for
each One Thousand Dollars ($1,000) of the Tenant Improvement Allowance not used.
N. TENANT'S RIGHT TO ENTER: Tenant and its authorized
representatives shall have the right to enter the Building at all reasonable
times for the purpose of inspecting the progress of the construction of the
Tenant Improvements. Landlord shall give Tenant at least fifteen (15) days
prior written notice of its estimated date for Substantial Completion of the
Premises, so that Tenant may cause its fixtures and equipment to be ordered.
When the construction of the Tenant Improvements has proceeded to the point
where Tenant's work of installing its fixtures and equipment in the
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Building can be commenced in accordance with good construction practice,
Landlord also shall notify Tenant to that effect and shall permit Tenant and its
authorized representatives and contractors to have access to the Building for a
period of not less than fifteen (15) days for the purpose of installing Tenant's
trade fixtures and equipment.
O. CONSTRUCTION WARRANTY FOR THE BUILDING: Notwithstanding anything
to the contrary in the Lease, effective upon delivery of the Premises to Tenant,
Landlord does hereby warrant (i) that the Building Shell, Tenant Improvements
and Premises fully comply with all applicable covenants, conditions or
restrictions and the rules, regulations, codes, statutes, ordinances, and laws
of all governmental and quasi-governmental authorities having jurisdiction over
the Premises; (ii) that the Tenant Improvements are constructed in accordance
with the Final Tenant Improvement Plans and in a good and workmanlike manner;
and (iii) that all material and equipment installed at the Premises conform to
the Final Tenant Improvement Plans and are new and otherwise of good quality.
Notwithstanding anything to the contrary contained in the Lease, Tenant's
acceptance of the Premises shall not be deemed a waiver of the foregoing
warranty or any other warranty of Landlord under the Lease, and Landlord shall
promptly repair all violations of the warranty set forth in this paragraph at
its sole cost and expense.
P. RISK OF LOSS: Risk of loss of the Premises prior to the
Commencement Date of the Lease shall be borne by Landlord. At all times prior
to the Commencement Date, Landlord at its sole cost and expense shall maintain
so-called contingent liability and broad form "builder's risk" insurance with
coverage in an amount equal to the replacement cost of the Building Shell plus
the Tenant Improvement Cost Estimate. The insurance policy (i) shall be in a
form reasonably satisfactory to Tenant, (ii) shall be carried with a company
reasonably acceptable to Tenant, (iii) shall provide that such policy shall not
be subject to cancellation or change except after at least ten (10) days prior
written notice to Tenant, and (iv) shall contain a "cross liability" provision
insuring Landlord and Tenant against any loss caused by the negligence of the
other party. If the Building is damaged or destroyed prior to the Commencement
Date, Tenant shall have the right to terminate the Lease, if the Premises, in
the reasonable opinion of the Architect, cannot be Substantially Complete prior
to March 15, 1992. If the Lease is so terminated, Tenant shall be entitled to
that amount of the builder's risk insurance proceeds equal to the amount, if
any, paid by Tenant for construction of the Tenant Improvements prior to the
termination date. If the Premises are damaged or destroyed and the Lease is not
terminated pursuant to the terms of the Lease, Landlord shall promptly and
diligently complete construction of the Building in accordance with this Lease
and all insurance proceeds with respect to the loss shall be paid to an
independent depository, reasonably acceptable to Landlord and Tenant, for
disbursement to the contractors completing the Building as the work progresses
in accordance with customary institutional lending practices.
Q. RIGHTS UPON TERMINATION: If the Lease is terminated pursuant to
any provision of this paragraph 7, then in addition to all other amounts due
Tenant hereunder, all security deposits, letters of credit, prepaid rent, shall
be returned to Tenant promptly upon demand.
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R. ACCOUNTING: Landlord shall submit to Tenant on a monthly basis
an accounting of all Tenant Improvement Costs, certified as true and correct by
Landlord. Tenant shall have the right to audit the books, records and
supporting documents of Landlord during normal business hours, after giving
Landlord at least twenty-four (24) hours prior notice to the extent reasonably
necessary to determine the accuracy of any accounting. Within thirty (30) days
after Substantial Completion, Landlord shall render to Tenant a final and
detailed accounting of all Tenant Improvement Costs paid by Landlord and Tenant,
certified as true and correct by Landlord. Tenant shall have the same audit
rights as set forth above with respect to the monthly accounting. If such audit
discloses that an overpayment was made by Tenant, there shall be an adjustment
between Landlord and Tenant as soon as reasonably practicable such that each
shall only be required to contribute to the payment of costs to the extent
provided for in this paragraph 7.
S. TENANT DELAYS: For purposes of this Lease, the foregoing shall
be deemed "Tenant Delays": (i) Tenant's failure to submit plans and information
or review and approve information including the Tenant Improvement Cost Estimate
by the dates set forth in this paragraph 7; or (ii) as a result of written
change orders made by Tenant pursuant to the terms of this paragraph 7 after
final approval of the Final Tenant Improvement Plans, to the extent specified in
any written change order approved by Tenant in writing. In the event of such
Tenant Delays, then the dates on which Tenant is entitled to free rent and to
terminate this Lease on account of Landlord's failure to Substantially Complete
the Premises shall be postponed one day for each day of the actual delay in
Substantial Completion caused by such Tenant Delay. Furthermore, the date
Tenant is otherwise obligated to begin paying rent shall occur one day earlier
than the Commencement Date for each day that the Commencement Date is actually
delayed as a result of a Tenant Delay; provided, however, that for purposes of
this paragraph, the Commencement Date shall in no event be deemed to occur any
date earlier than September 30, 1991 regardless of any Tenant Delay.
T. COMMENCEMENT DATE: If Landlord, for any reason whatsoever,
cannot Substantially Complete the Premises on the estimated completion date of
September 30, 1991, this Lease shall not be void or voidable, nor shall Landlord
be liable to Tenant for any loss or damage resulting therefrom if due to
circumstances beyond Landlord's control; but in such event the commencement and
termination dates of the Lease and all other dates affected thereby shall be
revised to conform to the date of Landlord's delivery of possession. The term
of the Lease shall not commence (the "Commencement Date") until the later of
September 30, 1991 or the date on which the Premises are Substantially Complete
as defined herein.
8. ACCEPTANCE OF PREMISES AND COVENANTS TO SURRENDER.
A. PUNCH LIST: As soon as Landlord reasonably believes that the
Premises are Substantially Complete, as defined in paragraph 7.A.8 hereof,
Landlord and Tenant shall together walk through and inspect the work and prepare
a written "punch list" of incomplete or defective construction. Landlord shall
use its best efforts to complete and/or repair any items on the "punch list"
within thirty (30) days after the parties have prepared the "punch list" or as
soon thereafter as practicable in the exercise of due diligence.
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B. CORRECTION OF DEFECTS: Notwithstanding anything contrary in the
Lease, Tenant's acceptance of the Premises or submission of a "punch list" shall
not be deemed a waiver of Tenant's right to have defects in the Tenant
Improvements and the Premises repaired at Landlord's sole expense. Tenant shall
give notice to Landlord whenever any such defect becomes reasonably apparent,
and Landlord shall repair such defect as soon as practicable. Landlord also
hereby assigns to Tenant all warranties with respect to the Premises which would
reduce Tenant's maintenance obligations hereunder and shall cooperate with
Tenant to enforce all such warranties. Without limiting any other obligation of
Landlord hereunder, Landlord shall correct any defect or problem in the roof
membrane (except for routine maintenance items as set forth in
subparagraph 11.A) for a period of one (1) year after the Commencement Date.
Further, without limiting any obligation of Landlord under this Lease, Landlord
warrants that it will obtain an express one (1) year warranty from its
contractors and suppliers on all other items and will not waive the protection
of any statute or case law providing for a longer period to assert a claim for
defects in the Premises or any item therein.
C. SURRENDER: Tenant agrees on the last day of the Lease Term, or
promptly following any sooner termination, to surrender the Premises to Landlord
in the condition received by Tenant, reasonable wear and tear, acts of God,
casualties, condemnation, Hazardous Materials as defined in paragraph 18 hereof
(other than those stored, used, or disposed of by Tenant in or about the
Premises in violation of "Law" as defined in subparagraph 11.B.1), and
Alterations as defined in subparagraph 10.A made by Tenant which Landlord has
indicated that Tenant shall not be required to remove, excepted. Tenant shall
ascertain from Landlord within thirty (30) days before the end of the Lease Term
whether Landlord will require Tenant to remove any Alterations made by Tenant at
the Premises; provided that Landlord shall not require Tenant to remove any
Alteration which Landlord has previously indicated may remain at the Premises.
If Landlord shall so require, then Tenant shall remove such Alterations as
Landlord may designate and shall repair any damage to the Premises occasioned by
the removal before the expiration of the Lease Term or promptly following any
sooner termination at Tenant's sole cost and expense. On or before the end of
the Lease Term or promptly following any sooner termination, Tenant shall remove
all of its personal property and trade fixtures from the Premises, and all
property not so removed shall be deemed to be abandoned by Tenant.
9. USES PROHIBITED. Tenant shall not commit, or suffer to be committed,
any waste or nuisance upon the Premises, or allow any sale by auction upon the
Premises, or allow the Premises to be used for any unlawful purpose, or place
any loads upon the floor, walls, or ceiling which endanger the structure, or use
any machinery or apparatus which will vibrate or shake the Premises or the
Building so as to damage the Premises other than ordinary wear and tear or
otherwise in violation of applicable Law, or place any harmful liquids, waste
materials, or Hazardous Materials in the drainage system of, or upon or in the
soils surrounding, the Building in violation of applicable Law. No materials,
supplies, equipment, finished products or semi-finished products, raw materials
or articles of any nature or any waste materials, refuse, scrap or debris shall
be stored upon or permitted to remain on any portion of the Premises outside of
the Building except for trash
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compactors, chemical storage cabinets, a screened, equipment enclosure and
accumulated pallets consolidated for disposal.
10. ALTERATIONS AND ADDITIONS.
A. CONSTRUCTION OF ALTERATIONS: Tenant may construct non-structural
alterations, additions and improvements ("Alterations") in the Premises without
Landlord's prior approval, if the cost of the item in question does not exceed
Twenty-Five Thousand Dollars ($25,000). If Tenant desires to make Alterations
costing more than Twenty-Five Thousand Dollars ($25,000) or structural
Alterations, Landlord's consent shall not be unreasonably withheld, and, if
Landlord does not notify Tenant in writing of its reasonable disapproval of such
Alteration within fourteen (14) days following Tenant's written request for
approval and delivery to Landlord of the proposed plans, then Landlord shall be
deemed to have approved the proposed Alteration. Upon the request of Tenant,
Landlord shall within the above-stated fourteen (14) day period advise Tenant in
writing as to whether Landlord shall require removal of any Alteration in
question upon the expiration or earlier termination of the Lease Term. After
having obtained Landlord's consent, Tenant agrees that it will not proceed to
make such Alterations until three (3) days from the receipt (or deemed receipt)
of Landlord's consent, in order that Landlord may post appropriate notices to
avoid any liability to contractors or material suppliers for payment for
Tenant's improvements. Tenant will at all times permit such notices to be
posted and to remain posted until the completion of work.
B. OWNERSHIP OF ALTERATIONS: All Alterations, 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. Except for Alterations which cannot be removed without structural
injury to the Premises, Tenant may remove Tenant's Property from the Premises at
any time, provided Tenant repairs any damage caused by such removal. Landlord
shall have no lien or other interest whatsoever in any item of Tenant's Property
located in the Premises or elsewhere, and Landlord hereby waives all such liens
and interests. Within ten (10) days following Tenant's request, Landlord shall
execute documents in reasonable form to evidence Landlord's waiver of any right,
title, lien or interest in Tenant's Property located in the Premises.
11. MAINTENANCE OF PREMISES.
A. TENANT MAINTENANCE: Subject to Landlord's obligations as set
forth in this Lease and to the amortization of capital items as set forth in
subparagraph 11.B, Tenant shall, at its sole cost, keep and maintain, repair and
replace, the Premises and appurtenances and every part hereof, including but not
limited to, the interior non-load bearing walls, the roof membrane, the
sidewalks, the parking areas, the plumbing, electrical and HVAC systems, and the
Tenant Improvements in good and sanitary order, condition, and repair.
Notwithstanding the foregoing, Landlord shall repair and maintain in good
condition, at Landlord's sole cost, the structural portions of the Premises at
all times during the Lease Term, including the foundation, exterior walls, load-
bearing walls, and the roof structure. Tenant shall provide Landlord with a
copy of a service contract between Tenant
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and a licensed air-conditioning and heating contractor which contract shall
provide for maintenance of all air conditioning and heating equipment at the
Premises at such intervals as may be reasonably required by the manufacturer of
such equipment. Subject to the obligations of Landlord hereunder and the
amortization of capital items as set forth in subparagraph 11.B, Tenant shall
pay the cost of all air-conditioning and heating equipment repairs or
replacements which are either excluded from such service contract or any
existing equipment warranties. Tenant shall be responsible for the preventive
maintenance of the roof membrane, which responsibility shall be deemed properly
discharged if (i) Tenant contracts with a licensed roof contractor who is
reasonably satisfactory to both Tenant and Landlord, at Tenant's sole cost, to
inspect the roof membrane at least every six months with the first inspection
due six (6) months after the Commencement Date and (ii) Tenant performs, at
Tenant's sole cost, all routine preventive maintenance recommendations made by
such contractor within a reasonable time after such recommendations are made.
Such preventive maintenance might include acts such as clearing storm gutters
and drains, removing debris from the roof membrane, trimming trees overhanging
the roof membrane, applying coating materials to seal roof penetrations,
repairing blisters, and other routine measures. Upon Landlord's advance written
request, Tenant shall provide to Landlord a copy of such preventive maintenance
contract and paid invoices for the recommended work for which Tenant is
responsible. Subject to Landlord's obligations hereunder and to the
amortization of capital items set forth below, Tenant agrees to water, maintain
and replace, when necessary, any shrubbery and landscaping.
B. EXCLUDED COSTS: Notwithstanding anything to the contrary in this
Lease, 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
repairs, maintenance, improvements, replacements, premiums, claims, losses,
fees, charges, costs and expenses (collectively "Costs") nor shall any portion
of the Tenant Improvement Costs (as defined in paragraph 7) consist of the
following items, all of which shall be the responsibility of Landlord:
1. LOSSES CAUSED BY OTHERS: Costs occasioned by the act,
omission or violation of covenants, statutes, laws, orders, rules, underwriter's
requirements, regulations, private restrictions, building codes or ordinances
(collectively, "Laws"), a misrepresentation, or breach of this Lease, by
Landlord or its agents, employees, contractors, subcontractors, tenants, or
invitees.
2. CASUALTIES AND CONDEMNATIONS: Costs occasioned by fire,
acts of God, or other casualties or by the exercise of the power of eminent
domain, provided that Tenant will pay insurance deductibles but only to the
extent approved by Tenant in writing in accordance with subparagraph 12.D of
this Lease.
3. REIMBURSABLE EXPENSES: Costs for which Landlord has a right
of reimbursement from others or for which Landlord actually receives
reimbursement.
4. CONSTRUCTION DEFECTS AND COMPLIANCE WITH LAW: Costs
(i) relating to a failure of the Premises to conform to all CC&Rs, underwriter's
requirements or Laws as of the
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Commencement Date; or (ii) relating to construction defects; or (iii) required
to conform the Premises to the Final Tenant Improvement Plans.
5. HAZARDOUS MATERIALS: Except to the extent caused by the
disposal, release, emission or storage of the Hazardous Material in question by
Tenant, its agents, employees, invitees or contractors in violation of Law,
Costs incurred to investigate the presence of any Hazardous Materials, Costs to
respond to any claim of Hazardous Material contamination or damage, Costs to
remove any Hazardous Material from the Premises, judgments or other Costs
incurred in connection with any Hazardous Materials exposure or releases, or any
other Cost associated with a Hazardous Material.
6. CAPITAL IMPROVEMENTS: If Tenant's maintenance or repair
obligations as set forth in this Lease would require Tenant to perform or pay
for any item which would be properly be capitalized under generally accepted
accounting principles and which costs in excess of Ten Thousand Dollars
($10,000), then Landlord shall perform such repair or make such replacement
promptly after notification by Tenant and the cost of such item or improvement
shall be allocated as follows. Landlord and Tenant shall establish the useful
life of the item in question based upon generally accepted accounting
principles. Tenant shall pay a proportion of the cost equal to the actual cost
of such improvement or item paid by Landlord to the third party contractor
performing the maintenance or furnishing the replacement times a fraction, the
numerator of which is the number of months remaining in the initial Lease Term,
and the denominator of which is the useful life of the improvement in months.
Tenant shall make such payment to Landlord within five (5) days after written
demand by Landlord. Nothing contained in this paragraph 11.B.6 shall require
Landlord to remodel, refurbish or reconfigure the Premises except as may be
incidental to Landlord's performance of the maintenance and repair obligations
Landlord is required to perform hereunder.
7. PARKING LOT: Costs relating to the repaving or resurfacing
of the parking area if such repaving or resurfacing is required more frequently
than once every five (5) years.
12. INSURANCE.
A. TENANT'S USE: Tenant shall not use, or permit the Premises, or
any part thereof, to be used for any unlawful purpose and no use shall be made
or permitted to be made of the Premises, nor acts done, which will cause an
increase in premiums for the insurance to be maintained by Landlord (unless
Tenant agrees to pay for the cost of such increase) or a cancellation of any
insurance policy covering the Building. Tenant shall, at its sole cost and
expense, comply with any and all reasonable requirements pertaining to said
Premises of any insurance organization or company necessary for the maintenance
of reasonable fire and public liability insurance covering the Building,
excluding structural improvements or alterations not related to Tenant's
specific and particular use.
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B. LANDLORD'S INSURANCE: Landlord agrees to purchase and keep in
force fire and extended coverage insurance in so-called "all risk" form covering
the Premises and all of the Tenant Improvements paid for by Landlord in the
amount of their full replacement value. Tenant agrees to pay to the Landlord as
additional rent, on demand, the cost of such insurance as evidenced by insurance
xxxxxxxx to Landlord. Payment shall be due to Landlord on the later of:
(i) fifteen (15) days after written invoice to Tenant; or (ii) twenty (20) days
prior to the due date of such premiums. Tenant's obligation under this
paragraph will be prorated to reflect the commencement and termination dates of
this Lease. With respect to earthquake insurance, Landlord agrees to purchase
earthquake coverage and Tenant agrees to reimburse Landlord for the additional
cost of such insurance provided: (i) Tenant requests such coverage and in such
case the premium for such earthquake coverage shall be shared equally between
Landlord and Tenant and Tenant's share of such cost shall be payable in the
manner set forth above for casualty insurance; or (ii) such insurance is
required by Landlord's lender and is customarily required by institutional
lenders on comparable buildings in Santa Xxxxx County, and in such case the
premium for such earthquake coverage shall be shared equally between Landlord
and Tenant and Tenant's share of such cost shall be payable in the manner set
forth above for casualty insurance. If the Project is located in a flood zone,
Landlord shall also maintain flood insurance insuring the Building and Tenant
Improvements paid for by Landlord for their full replacement value, and Tenant
shall pay for flood insurance premiums in the manner set forth herein.
C. TENANT'S INSURANCE: Tenant agrees to insure its personal
property and Alterations. Tenant shall name Landlord as an additional insured
under such commercial general liability policy, and shall deliver a copy of such
policy to Landlord within thirty (30) days after the Commencement Date and upon
any renewal of such policy. Tenant's commercial general liability policy shall
provide for thirty (30) days' prior written notice to Landlord of any
cancellation or termination.
D. INSURANCE DEDUCTIBLES: Tenant shall have the right to specify
the deductible of any insurance policy to be carried by Landlord under this
Lease and shall reimburse Landlord, in the manner set forth in
subparagraph 12.B, for the premiums payable with respect to insurance policies
for which Tenant is responsible under subparagraph 12.B containing the
deductible so specified by Tenant or on insurance policies for which Tenant
fails to specify a deductible amount within thirty (30) days following
Landlord's written demand for such deductible specification. In the event of
damage to the Premises covered by Landlord's "all risk" casualty policy (and not
caused by the negligence or willful misconduct of Landlord or Landlord's
employees, agents, contractors, subcontractors, or invitees), Tenant shall pay
the amount of any deductible under such policy if this Lease is not terminated
in connection with such casualty as provided in paragraph 27 hereof, provided
Tenant has approved in writing in advance the amount of such deductible. Tenant
shall in no event be required to pay for any flood or earthquake insurance
deductibles.
E. WAIVER: Notwithstanding anything to the contrary in this Lease,
Landlord and Tenant hereby waive any rights each may have against the other on
account of any loss or damage that is caused or results from a risk which is
actually insured
-15-
against, which is required to be insured against under this Lease, or which
would normally be covered by a standard form of full replacement value "all risk
extended coverage" policy of casualty insurance, regardless of whether such loss
or damage is due to the negligence of Landlord or Tenant or of their respective
agents, employees, subtenants, contractors, assignees, invitees or any other
cause. Each party shall use its best efforts to obtain from their respective
insurance companies a waiver of any right of subrogation which said insurance
company may have against the Landlord or the Tenant, as the case may be. If
such insurance policy cannot be obtained with such waiver of subrogation, or if
such waiver of subrogation is only available at additional cost and the party
for whose benefit the waiver is not obtained does not pay such additional cost,
then the party obtaining such insurance shall immediately notify the other party
of that fact.
13. TAXES. Tenant shall be liable for all taxes levied against Tenant's
personal property and trade or business fixtures, and agrees to pay, as
additional rental, all real estate taxes and special assessment installments
levied with respect to the Premises. It is understood and agreed that Tenant's
obligation under this paragraph will be prorated to reflect the commencement and
termination dates of this Lease. Tenant shall pay such taxes on the later of:
(i) fifteen (15) days after written notice from Landlord (which notice shall
contain a copy of the tax xxxx in question); or (ii) ten (10) days before the
tax delinquency date. In any time during the term of this Lease a tax, excise
on rents, business license tax, or any other tax, however described, is levied
or assessed against Landlord, as a substitute or addition in whole or in part
for real estate taxes assessed or imposed on land or Buildings, Tenant shall pay
and discharge its share of such tax or excise on rents or other tax before it
becomes delinquent. In the event that a tax is placed, levied, or assessed
against Landlord and the taxing authority takes the position that the Tenant
cannot pay and discharge its prorata share of such tax on behalf of the
Landlord, then at the sole election of the Landlord, the Landlord may increase
the rental charged hereunder by the exact amount of such tax. Notwithstanding
the above, if property taxes increase during the lease term as a result of a
reassessment due to voluntary change of ownership, Tenant shall be responsible
for payment of the resulting property tax increase as follows: during the first
twelve months following change of ownership, Tenant shall be responsible for
payment of one third (1/3) of the tax increase; during the second twelve months,
Tenant shall be responsible for payment of two thirds (2/3) of the tax increase.
If the reassessment occurs as of a date other than the commencement of the tax
year, Tenant's liability for payment of the property tax increase described
herein shall be pro rated on the basis of a 365 day year for the purpose of
calculating the amounts payable by Tenant during the two years following the
reassessment. After the end of the second twelve month period, Tenant shall be
fully responsible for payment of the property tax increase. Notwithstanding
anything to the contrary herein, Tenant shall not be required to pay any portion
of any tax or assessment: (i) levied on Landlord's rental income, unless such
tax or assessment is imposed in lieu of real property taxes; (ii) in excess of
the amount which would be payable if such tax or assessment were paid in
installments over the longest possible term; (iii) imposed on land and
improvements other than the Premises; or (iv) attributable to Landlord's net
income, inheritance, gift, transfer, franchise or estate taxes. Tenant may in
good faith contest any real property taxes provided that Tenant indemnifies
Landlord from any loss or liability in connection therewith.
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14. UTILITIES. Tenant shall pay directly to the providing utility all
water, gas, heat, light, power, telephone and other utilities supplied to the
Premises. Landlord shall not be liable for a loss of or injury to property,
however occurring, through or in connection with or incidental to furnishing or
failure to furnish any of utilities to the Premises and Tenant shall not be
entitled to abatement or reduction of any portion of the rent so long as any
failure to provide and furnish the utilities to the Premises due to any cause
beyond the Landlord's reasonable control. Notwithstanding the foregoing, if
utilities are not available to the Premises for a period of fifteen (15) days or
more and such failure does not result from Tenant's failure to make the payments
required herein, Tenant shall be entitled to an abatement of rent to the extent
of the interference with Tenant's use of the Premises occasioned thereby. If
such interference is not corrected within one hundred eighty (180) days
following the interference or interruption, then Tenant shall be entitled to
terminate this Lease.
15. ABANDONMENT. Tenant shall not abandon the Premises at any time during
the Lease Term; and if Tenant shall abandon or surrender the Premises, or be
dispossessed by process of law, or otherwise, any personal property belonging to
Tenant and left on the Premises shall be deemed to be abandoned, at the option
of Landlord.
16. FREE FROM LIENS. Tenant shall keep the Premises free from any liens
arising out of any work performed, materials furnished, or obligations incurred
by Tenant; provided, however, that if Tenant, in good faith, elects to contest
such lien, Tenant shall furnish a bond or other security reasonably acceptable
to Landlord and Tenant shall not then be deemed in default under this Lease.
17. COMPLIANCE WITH GOVERNMENTAL REGULATIONS. Tenant shall, at its sole
cost and expense, comply with the requirements of all municipal, state and
federal authorities now in force, or which may hereafter be in force, pertaining
to Tenant's specific and particular use of the Premises, and shall faithfully
observe in the use of the Premises all municipal ordinances and state and
federal statutes now in force or which may hereafter be in force. The judgement
of any court of competent jurisdiction, or the admission of Tenant in any action
or proceeding against Tenant, whether Landlord be a party thereto or not, that
Tenant has violated any such ordinance or statute in Tenant's use of the
Premises, shall be conclusive of that fact as between Landlord and Tenant. At
the Commencement Date, the Premises shall conform to all requirements of
covenants, conditions, restrictions and encumbrances ("CC&Rs"), all
underwriters' requirements, and all Laws applicable thereto. Tenant shall not
be required to construct or pay the cost of complying with any CC&Rs,
underwriters' requirements or Laws requiring construction of improvements in the
Premises which are properly capitalized under generally accepted accounting
principles, unless such compliance is necessitated solely because of Tenant's
particular and specific use of the Premises or Alterations to the Premises other
than the Tenant Improvements. Any structural requirements or Costs necessitated
by CC&R's, underwriters' requirements or Laws which are imposed on buildings or
real estate generally (as opposed to the Premises because of Tenant's specific
and particular use or Alteration to the Premises other than the Tenant
Improvements) shall be performed or paid by Landlord without reimbursement by
Tenant.
18. TOXIC WASTE AND ENVIRONMENTAL DAMAGE.
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A. TENANT'S RESPONSIBILITY: Tenant shall not bring, allow, or use
upon the Premises, or generate or create at or emit or dispose from the Premises
any chemicals, toxic or hazardous gaseous, liquid or solid materials or waste,
including without limitation, material or substance having characteristics of
ignitability, corrosivity, reactivity, or extraction procedure toxicity or
substances or materials which are listed on any of the Environmental Protection
Agency's lists of hazardous wastes or which are identified in Sections 66680
through 66685 of Title 22 of the California Administrative Code as the same may
be amended from time to time (which are referred to in this Lease as "Hazardous
Materials") in violation of Law. Tenant shall comply, at its sole cost, with
all laws pertaining to, and shall indemnify and hold Landlord harmless from any
claims, liabilities, costs or expenses incurred or suffered by Landlord arising
from such bringing, allowing, using, generating, creating, emitting or disposing
of any such Hazardous Materials by Tenant. Tenant's indemnification and hold
harmless obligations as hereinbefore specified include, without limitation,
(i) claims, liability, costs or expenses resulting from or based upon
administrative, judicial (civil or criminal) or other action, legal or
equitable, brought by any private or public person under common law or under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), the Resource Conservation and Recovery Act of 1980 ("RCRA") or any
other federal, state, county or municipal law, ordinance or regulation,
(ii) claims, liabilities, costs or expenses pertaining to the cleanup or
containment of wastes, the identification of the pollutants in the waste, the
identification of scope of any environmental contamination, the removal of
pollutants from soils, riverbeds or aquifers, the provision of an alternative
public drinking water source, or the long term monitoring of ground water and
surface waters, all to the extent required by applicable law, and (iii) all
costs of defending such claims. Tenant further agrees to properly close the
facility with regard to Hazardous Materials and obtain a Closure Certificate
from the local administering agency for any Hazardous Material used, generated,
emitted or disposed of by Tenant in or about the Premises if so required by Law
upon the expiration or earlier termination of the Lease.
B. NO RESPONSIBILITY: Notwithstanding the foregoing or anything in
this Lease, Tenant shall have no responsibility to Landlord, Landlord's
employees, contractors, officers, agents or partners or to any third party for
any Hazardous Material which was not released, stored, disposed of, emitted, or
discharged by Tenant, its agents, invitees, employees and contractors in or
about the Premises and which is or comes to be, present on or about the
Premises, or the soil or groundwater thereof, at any time. Landlord, at its
sole expense, shall promptly comply with all Laws, orders, injunctions,
judgments, mandates and directives of any applicable governmental authority
concerning the investigation, removal, monitoring or remediation of any
Hazardous Materials present on the Premises or the groundwater thereof, except
to the extent that the Hazardous Material in question was released, stored,
disposed of, emitted or discharged by Tenant or its employees, invitees, agents,
or contractors in or about the Premises. Landlord hereby waives all claims,
liabilities, costs, expenses or obligations, known or unknown, against Tenant
with respect to Hazardous Materials present on the Premises as of the
Commencement Date or which come to be present on the Premises after the
Commencement Date, except to the extent that the Hazardous Materials in question
were released, emitted, or discharged onto the Premises or Project by Tenant or
its employees, agents, contractors, subcontractors or invitees. In this regard,
Landlord acknowledges
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that it is aware of and hereby waives the provisions of California Civil Code
Section 1542 (or any similar or successor Law) which provides as follows:
"A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor, at the time of executing the
release, which if known by him must have materially affected the settlement
with the debtor."
C. LANDLORD'S REPRESENTATION AND INDEMNITY: Landlord hereby
represents and warrants to Tenant, that except as outlined in the Xxxxxx Xxxxxx
report dated April 20, 1987, that to the best of Landlord's knowledge: (i) the
Premises and all operations conducted thereon prior to the Commencement Date are
in compliance with all Laws regarding Hazardous Materials ("Hazardous Material
Laws"), (ii) any handling, transportation, storage, treatment, disposal, release
or use of Hazardous Materials that has occurred on or about the Premises prior
to the Commencement Date has been in compliance with all Hazardous Materials
Laws, and (iii) no litigation has been brought or threatened, nor any
settlements reached with any governmental or private party, concerning the
actual or alleged presence of Hazardous Materials on or about the Premises, nor
has Landlord received any notice of any violation, or any alleged violation of
any Hazardous Materials Laws, pending claims or pending investigations with
respect to the presence of Hazardous Materials on or about the Premises. Except
to the extent that the Hazardous Material in question was released, emitted,
used, stored, manufactured, transported or discharged by Tenant, or its agents,
employees and contractors, Landlord shall indemnify, protect, defend and hold
harmless Tenant and its employees, officers, directors, successors and assigns
arising from or in connection with any claim, remediation obligation,
investigation obligation, liability, cause of action, penalty, attorneys' fee,
cost, expense or damage owing or alleged to be owing by Tenant to any third
party which relates to the removal investigation, monitoring or remediation of
any Hazardous Material present on or about the Premises or the soil, groundwater
or surface water thereof, in any of the foregoing cases without regard to
whether the Hazardous Materials were present on the Premises as of the
Commencement Date or whether the presence of the Hazardous Materials was caused
by Landlord. The foregoing indemnity shall not extend to any claim to the
extent such claim is based upon an interference with Tenant's business
activities resulting from the presence of such Hazardous Materials.
D. NOTIFICATION: Landlord and Tenant shall notify the other of the
existence of any reports, recommendations or studies prepared in connection with
any investigation for the presence of Hazardous Materials on or about the
Premises and shall give written notice to the other as soon as reasonably
practicable of (i) any communication received from any governmental authority
concerning any Hazardous Materials which relates to the Premises; and (ii) any
contamination of the Premises by Hazardous Materials which constitutes a
violation of any Hazardous Materials Laws.
E. ENVIRONMENTAL STUDIES: Tenant shall have the right, at Tenant's
expense, to conduct a baseline environmental study at the Project, including the
right to bore holes and take soils samples, if Tenant so elects, provided Tenant
obtains Landlord's advance written consent, which consent shall not be
unreasonably withheld.
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19. INDEMNITY. As a material part of the consideration to be rendered to
Landlord, Tenant hereby waives all claims against Landlord for damages to goods,
wares and merchandise, and all other personal property in, upon or about said
Premises and for injuries to persons in or about said Premises, from any cause
arising at any time, and Tenant will hold Landlord exempt and harmless from any
damage or injury to any person, or to the goods, wares and merchandise and all
other personal property of any person, arising from the use of the Premises by
Tenant, or from the failure of Tenant to keep the Premises in good condition and
repair, as herein provided. Further, in the event Landlord is made party to any
litigation due to the acts or omission of Tenant, Tenant will indemnify and hold
Landlord harmless from any such claim or liability including Landlord's costs
and expenses and reasonable attorney's fees incurred in defending such claims
except to the extent of the negligence or willful misconduct of Landlord or its
agents, employees, tenants, or contractors, subcontractors, or a breach of this
Lease by Landlord. Notwithstanding anything to the contrary in this Lease,
Tenant shall neither release Landlord from, nor indemnify or defend Landlord
with respect to: (i) the negligence or willful misconduct of Landlord, or its
agents, tenants, employees, contractors, subcontractors or invitees; (ii) a
breach of Landlord's obligations or representations under this Lease, or
(iii) any Hazardous Material which was not released, emitted, or discharged by
Tenant, its agents, employees and contractors and which is or comes to be,
present on or about the Premises, or the soil or groundwater thereof, at any
time. Landlord shall indemnify, defend and hold harmless Tenant from all
damages, costs, liabilities, judgments, actions, attorneys' fees, consultants'
fees, investigative cost, remediation expense, and all other costs and expenses
arising from (i) the negligence or willful misconduct of Landlord or its
employees, agents, contractors or invitees; or (ii) the breach of Landlord's
obligations or representations under this Lease.
20. ADVERTISEMENTS AND SIGNS. Tenant will not place or permit to be
placed, in, upon or about the said Premises any signs not approved by the city
or other governing authority. Any sign so placed on the Premises shall be so
placed upon the understanding and agreement that Tenant will remove the same
before the expiration or promptly following any earlier termination of the Lease
Term, and repair any damage or injury to the Premises caused thereby, and if not
so removed by Tenant then Landlord may have same so removed at Tenant's expense.
Landlord shall cooperate with and assist Tenant in acquiring permits for the
signage desired by Tenant; provided, however, that Landlord shall not be
required to incur additional out-of-pocket costs in connection therewith.
21. ATTORNEYS' FEES. In case suit should be brought for the possession of
the Premises, for the recovery of any sum due hereunder, or because of the
breach of any other covenant herein, the losing party shall pay to the
prevailing party a reasonable attorneys fee as part of its costs which shall be
deemed to have accrued on the commencement of such action and shall be
enforceable whether or not such action is prosecuted to judgement.
22. TENANT'S DEFAULT. The occurrence of any of the following shall
constitute a material default and breach of this Lease by Tenant: (a) Any
failure by Tenant to pay the rental or to make any other payment required to be
made by Tenant hereunder, where such failure continues for five (5) days after
receipt by Tenant of written notice of Landlord's failure to receive the payment
in question; (b) The abandonment of the Premises by Tenant; (c) A failure by
Tenant to observe and
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perform any other provision of this Lease to be observed or performed by Tenant,
where such failure continues for thirty (30) days after written notice thereof
by Landlord to Tenant; provided, however, that if the nature of such default is
such that the same cannot reasonably be cured within such thirty (30) day period
Tenant shall not be deemed to be in default if Tenant shall within such period
commence such cure and thereafter diligently prosecute the same to completion;
(d) The making by Tenant of any general assignment for the benefit of creditors;
the filing by or against Tenant of a petition to have Tenant adjudged a bankrupt
or of a petition for reorganization or arrangement under any law relating to
bankruptcy (unless, in the case of a petition filed against Tenant, the same is
dismissed within sixty (60) days after the filing); 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 sixty (60) days; or 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 sixty (60) days. The notice requirements set forth herein are in lieu of
and not in addition to the notices required by California Code of Civil
Procedure Section 1161, provided that such notices are given in the manner
required by such statute.
A. REMEDIES. In the event of any such default by Tenant, then in
addition to any other remedies available to Landlord at law or in equity,
Landlord shall have the immediate option to terminate this Lease and all rights
of Tenant hereunder by giving written notice of such intention to terminate. In
the event that Landlord shall elect to so terminate this Lease then Landlord may
recover from Tenant: (a) the worth at the time of award of any unpaid rent
which had been earned at the time of such termination; plus (b) the worth at the
time of award of the amount by which the unpaid rent which would have been
earned after termination until the time of award exceeds the amount of such
rental loss Tenant proves could have been reasonably avoided; plus (c) the worth
at the time of award of the amount by which the unpaid rent for the balance of
the term after the time of award exceeds the amount of such rental loss that
Tenant proves could be reasonably avoided; plus (d) any other amount necessary
to compensate Landlord for all the detriment proximately caused by Tenant's
failure to perform its obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom. The term "rent", as used
herein, shall be deemed to be and to mean the minimum monthly installments of
rent and all other sums required to be paid by Tenant pursuant to the terms of
this Lease, all other such sums being deemed to be additional rent due
hereunder. As used in (a) and (b) above, the "worth at the time of award" is
computed by allowing interest at the rate of the discount rate of the Federal
Reserve Bank of San Francisco plus five (5%) percent per annum. As used in (c)
above, the "worth at the time of award" is 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%).
B. RIGHT TO RE-ENTER. In the event of any such default by Tenant,
that results in the termination of the Lease, Landlord shall also have the right
to re-enter the Premises and remove all persons and property from the Premises;
such property may be removed and stored in a public warehouse or elsewhere at
the cost of and for the account of Tenant.
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C. ABANDONMENT. In the event of the abandonment of the Premises by
Tenant or in the event that Landlord shall elect to re-enter as provided in
paragraph 22.B above or shall take possession of the Premises pursuant to legal
proceeding or pursuant to any notice provided by law, then if Landlord does not
elect to terminate this Lease as provided in paragraph 22.A above, then the
provisions of California Civil Code Section 1951.4, as amended from time to
time, shall apply and Landlord may from time to time, recover all rental as it
becomes due.
D. NO TERMINATION. No re-entry or taking possession of the Premises
by Landlord pursuant to 22.B or 22.C of this Article 22 shall be construed as an
election to terminate this Lease unless a written notice of such intention be
given to Tenant or unless the termination thereof be decreed by a court of
competent jurisdiction.
23. SURRENDER OF LEASE. The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, shall not automatically effect a
merger of the Lease with Landlord's ownership of the Premises. Instead, at the
option of Landlord, Tenant's surrender may terminate all or any existing
sublease or subtenancies, or may operate as an assignment to Landlord of any or
all such subleases or subtenancies, thereby creating a direct relationship
between Landlord and any subtenants.
24. LANDLORD'S DEFAULT. In the event of Landlord's failure to perform any
of its covenants or agreements under this Lease, Tenant shall give Landlord
written notice of such failure and shall give thirty (30) days or such longer
time as may be reasonably required by Landlord to cure said failure in the
exercise of reasonable diligence provided Landlord commences the cure within
said thirty (30) day period and thereafter diligently prosecutes such cure to
completion prior to terminating this Lease on account of such default. If
Landlord so fails to perform its obligations under this Lease, then, in addition
to its other rights and remedies, Tenant shall have the right to cure Landlord's
default and to recover from Landlord the cost of the cure together with interest
thereon at the prime rate charged by Union Bank, main San Xxxxxxxxx xxxxxx, plus
two percent (2%) per annum from the date of the expenditure until the date of
the repayment.
25. NOTICES. All notices required or permitted to be given under this
Lease shall be personally delivered or delivered by reputable commercial
overnight courier to the parties at the following addresses, or such other
addresses as the parties shall designate by three (3) days' prior written notice
to the other party:
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If to Tenant before the Commencement Date:
Aehr Test Systems, Inc.
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attn: President
If to Tenant after the Commencement Date:
Aehr Test Systems, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Attn: President
If to Landlord:
The Xxxx X. & Xxxxx Xxxxxxx 1979 Revocable Trust
c/o Sobrato Development Company
00000 X. Xx Xxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx, Xx.
Notices given by personal delivery shall be deemed effective upon signed
acknowledgment of receipt or, if delivered by courier, one (1) day after deposit
with the courier.
26. ENTRY BY LANDLORD. Upon forty-eight (48) hours advance written notice
to Tenant (except in the event of an emergency where no such prior notice shall
be required) and provided that Landlord does not unreasonably interfere with
Tenant's use of the Premises, Tenant shall permit Landlord and his agents to
enter upon the Premises at all reasonable times subject to any safety and/or
security regulations of Tenant for the purpose of inspecting the same,
maintaining the Premises, or making repairs or alterations as may be required to
fulfill Landlord's obligations hereunder without any rebate of rent or without
any liability to Tenant for any loss of occupation or quiet enjoyment of the
Premises thereby occasioned; and Tenant shall permit Landlord and his agents, at
any time within ninety (90) days prior to the expiration of this Lease, to place
upon said Premises any "For Sale" or "For Lease" signs and exhibit the Premises
to prospective tenants at reasonable hours upon reasonable prior notice.
27. DESTRUCTION OF PREMISES.
A. OBLIGATION TO RESTORE: In the event of damage or destruction to
the Building or Premises or any portion thereof by any casualty during the Lease
Term, Landlord shall forthwith repair the same to the condition the Building or
Premises were in immediately before the destruction, provided such casualty is
of a type required to be insured against by Landlord under the terms of this
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Lease or actually insured against by Landlord (herein collectively referred to
as an "Insured Casualty"). In the event of damage or destruction of the
Premises by a casualty of a type which is not required to be insured against by
Landlord under this Lease, and which is not actually insured against by Landlord
(herein referred to as an "Uninsured Casualty"), Landlord shall restore the
Premises to the same condition as they were in immediately before such
destruction and this Lease shall not terminate; provided, that if in the case of
such Uninsured Casualty the cost of restoration exceeds five percent (5%) of the
then replacement cost of the Building, Landlord may elect to terminate this
Lease by giving written notice to Tenant within fifteen (15) days after
determining the replacement cost and furnishing reasonable evidence thereof to
Tenant. If Landlord so elects to terminate this Lease, Tenant, within fifteen
(15) days after receiving Landlord's notice to terminate, can elect to pay to
Landlord at the time Tenant notifies Landlord of its election, the difference
between five percent (5%) of the replacement cost of the Building and the actual
cost of restoration, in which case Landlord shall restore the Premises and this
Lease shall not terminate. If Landlord so elects to terminate this Lease and
Tenant does not elect to contribute the cost of restoration as provided herein,
this Lease shall terminate. In all events Landlord shall not be required to
restore Tenant's Alterations or replace Tenant's fixtures or personal property
or Tenant Improvements which have become Tenant's property. Tenant shall be
entitled to a proportionate reduction of rent during the period of damage and
restoration, such proportionate reduction to be based upon the extent to which
the damage and making of repairs shall interfere with Tenant's use of the
Premises.
B. TENANT'S RIGHT TO TERMINATE: In the event of damage or
destruction to the Premises, Landlord shall furnish to Tenant a good faith
written estimate from Landlord's architect or construction consultant of the
time period needed to restore the Premises, within thirty (30) days after the
date of the damage or destruction in question. If such estimate indicates that
the repair or restoration of the Premises cannot be made within one hundred
eighty (180) days after the date of the damage or destruction, Tenant may, at
its option, terminate this Lease by giving written notice to Landlord of such
election within thirty (30) days after receipt of Landlord's estimate. Tenant
shall also have the right to terminate this Lease if the actual restoration of
the Premises or Other Space, as the case may be, is not effectuated within one
hundred eighty (180) days after the date of the casualty. Further, Tenant shall
have the right to terminate this Lease if the Building is damaged by any peril
within twelve (12) months of the last day of the Lease Term to such an extent
that more than thirty percent (30%) of the floor area of the Building is
rendered unusable by Tenant for a period of more than sixty (60) days. The
provision of Section 1932, Subdivision 2, and of Section 1933, Subdivision 4, of
the Civil Code of the State of California are waived by Tenant to the extent
inconsistent with the provisions of this Lease.
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28. ASSIGNMENT OR SUBLEASE.
A. PERMITTED TRANSFERS: Tenant may, without Landlord's prior
written consent and without any participation by Landlord in assignment or
subletting proceeds, sublet the Premises or assign the Lease to the following
(herein called "Permitted Transferees"): (i) a subsidiary, affiliate, division
or corporation controlled by or under common control with Tenant; (ii) a
successor corporation related to Tenant by merger, consolidation, or non-
bankruptcy reorganization; or (iii) a purchaser of substantially all of Tenant's
assets located in the Premises. For the purpose of this Lease, sale of Tenant's
capital stock shall not be deemed an assignment, subletting, or any other
transfer of the Lease or the Premises.
B. CONSENT BY LANDLORD: In the event Tenant desires to assign this
Lease or any interest therein including, without limitation, a pledge, mortgage
or other hypothecation, or sublet the Premises or any part thereof except as set
forth above with respect to "Permitted Transferees," Tenant shall deliver to
Landlord copies of the proposed agreement, the financial statements of the
assignee or subtenant, and any additional information as reasonably required by
Landlord. Landlord shall then have a period of ten (10) days following receipt
of such notice within which to notify Tenant in writing that Landlord elects
(i) to permit Tenant to assign or sublet such space to the named assignee/
subtenant, or (ii) to refuse consent, provided Landlord shall not unreasonably
refuse such consent. If Landlord should fail to notify Tenant in writing of
such election within said 10-day period, Landlord shall be deemed to have
elected to permit the assignment or sublease in question. No assignment or
subletting by Tenant shall relieve Tenant of any obligation under this Lease.
Landlord's consent to the proposed assignment or sublease shall not be
unreasonably withheld or delayed, provided and upon condition that:
C. The proposed uses will not violate Laws;
D. The proposed assignee or subtenant has sufficient financial worth
to undertake the responsibility involved, and Landlord has been furnished with
reasonable proof thereof; and
E. The proposed assignment shall be in a form reasonably
satisfactory to Landlord.
F. ASSIGNMENT OR SUBLETTING CONSIDERATION: Any rent actually
received by Tenant under any sublease or assignment in excess of the rent
payable hereunder, after deducting the unamortized cost of the Tenant
Improvements paid by Tenant and Alterations installed at Tenant's expense, and
subletting and assignment costs incurred by Tenant in connection with the
assignment or sublease (including, without limitation, attorneys' fees,
brokerage commissions, and remodeling costs), any vacancy costs incurred by
Tenant, and Tenant's costs in performing under such assignment or sublease,
shall be paid by Tenant fifty percent (50%) to Landlord. Tenant's obligation to
pay such consideration shall constitute an obligation for additional rent
hereunder.
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G. NO RELEASE: Any assignment except to a Permitted Transferee
shall be made only if, and shall not be effective until, the assignee shall
execute, acknowledge and deliver to Landlord an agreement, in form and substance
reasonably satisfactory to Landlord, whereby the assignee shall assume all of
the obligations of this Lease on the part of Tenant to be performed or observed
and shall be subject to all of the covenants, agreements, terms, provisions and
conditions contained in this Lease. Notwithstanding any sublease or assignment
and the acceptance of rent or additional rent by Landlord from any subtenant or
assignee, Tenant shall and will remain fully liable for the payment of the rent
and additional rent due, and to become due hereunder, for the performance of all
of the covenants, agreements, terms, provisions and conditions contained in this
Lease on the part of Tenant to be performed and for all acts and omissions of
any licensee, subtenant, assignee or any other person claiming under or through
any subtenant that shall be in violation of any of the obligations of this
Lease, and any such violation shall be deemed to be a violation by Tenant.
Tenant shall further indemnify, defend and hold Landlord harmless from and
against any and all losses, liabilities, damages, costs and expenses (including
reasonable attorney fees) resulting from any claims that may be made against
Landlord by any real estate brokers or other persons claiming a commission or
similar compensation in connection with the proposed assignment or sublease.
H. EFFECT OF DEFAULT: In the event of Tenant's default, Tenant
hereby assigns all rents due from any assignment or subletting to Landlord as
security for performance of its obligations under this Lease and Landlord may
collect such rents as Tenant's attorney-in-fact, except that Tenant may collect
such rents unless a default occurs as described in paragraph 22 above. The
termination of this Lease due to Tenant's default shall not automatically
terminate any assignment or sublease then in existence. At the election of
Landlord, the assignee or subtenant shall attorn to Landlord and Landlord shall
undertake the obligations of the Tenant under the sublease or assignment;
provided the Landlord shall not be liable for prepaid rent, security deposits or
other defaults of the Tenant to the subtenant or assignee.
29. CONDEMNATION. If any part of the Premises shall be taken for any
public or quasi-public use, under any statute or by right of eminent domain or
private purchase in lieu thereof, and a part thereof remains which is
susceptible of occupation hereunder, this Lease shall as to the part so taken,
terminate as of the date title shall vest in the condemnor or purchaser, and the
rent payable hereunder shall be adjusted so that Tenant shall be required to pay
for the remainder of the Lease Term only such portion of the rent as the value
of the part remaining after such taking bears to the value of the entire
Premises prior to such taking; but in such event Tenant shall have the option to
terminate this Lease as of the date when title to the part taken vests in the
condemnor or purchaser if the taking or condemnation of the Premises is such
that the remaining space unaffected by the taking or condemnation is not
reasonably suitable for Tenant's use or the conduct of Tenant's business. If a
part or all of the Premises be taken, all compensation awarded upon such taking
shall go to Landlord and the Tenant shall have no claim thereto; provided,
however, that nothing contained herein shall be deemed to waive or release
Tenant's interest in any separate award for (i) loss of or damage to Tenant's
trade fixtures, Alterations, or personal property; (ii) interruption of Tenant's
business; (iii) Tenant's loss of goodwill; (iv) Tenant's moving cost;
(v) Tenant's interest in any Tenant
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Improvements; (vi) or any separate award made to Tenant for whatever purpose.
In the event that this Lease is not terminated by reason of the condemnation,
Landlord at its expense shall repair any damage to the Premises caused by such
condemnation. Tenant hereby waives the provisions of California Code of Civil
Procedures Section 1265.130.
30. EFFECTS OF CONVEYANCE. The term "Landlord" as used in this Lease,
means only the owner for the time being of the Premises, so that, in the event
of any sale of the Premises Landlord shall be and hereby is entirely freed and
relieved of all covenants and obligations of the Landlord hereunder accruing
after the date of the conveyance. Notwithstanding the foregoing, Landlord shall
not be relieved of its obligations under this Lease, unless and until Landlord
transfers the cash security deposit or original letter of credit to its
successor and the successor assumes in writing the obligations of Landlord
accruing on and after the effective date of the transfer.
31. SUBORDINATION.
A. SUBORDINATION TO FUTURE OBLIGATIONS: In the event Landlord
notifies Tenant in writing, this Lease shall be subordinate to any ground lease,
deed of trust, or other hypothecation for security now or hereafter placed upon
the Premises and to any and all advances made on the security thereof and to
renewals, modifications, replacements and extensions thereof. Tenant agrees to
promptly execute any reasonable documents which may be required to effectuate
such subordination. Notwithstanding such subordination, Tenant's right to quiet
possession of the Premises shall not be disturbed if Tenant is not in default.
Notwithstanding anything to the contrary in the Lease, subordination of Tenant's
leasehold interest to a mortgage, deed of trust, ground lease or instrument of
security, and Tenant's attornment to any party is conditioned upon (i) Tenant's
concurrent receipt from the lender or ground lessor in question of an express
written agreement in form reasonably satisfactory to Tenant providing for
recognition of all of the terms and conditions of this Lease and providing for
continuation of this Lease upon foreclosure of the deed of trust, mortgage or
security interest or termination of the ground lease; and (ii) the written
agreement by such successor to perform all of the obligations to be performed by
Landlord under the Lease on and after the date of the foreclosure or termination
of the ground lease.
B. EXISTING OBLIGATIONS: Landlord represents and warrants that the
Premises are not encumbered by a mortgage, loan, deed of trust or ground lease
as of the date of both parties' execution of this Lease, except for a deed of
trust in favor of Principal Mutual Life Insurance Company ("Lender"). Landlord
shall use its best efforts to furnish to Tenant, within fourteen (14) days of
the date of both parties' execution of this Lease, with a written agreement in
form satisfactory to Tenant providing for: (i) recognition by Lender of all of
the terms and conditions of this Lease and any Other Lease; and
(ii) continuation of this Lease upon foreclosure of Lender's security interest
in the Premises.
32. WAIVER. The waiver by Landlord or Tenant of any breach of any term,
covenant or condition herein contained shall not be deemed to be a waiver of
such term, covenant or condition or any subsequent breach of the same or any
other term, covenant or condition herein contained. The
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subsequent acceptance of rent hereunder by Landlord (or the payment thereof by
Tenant) shall not be deemed to be a waiver of any preceding breach by Landlord
or Tenant of any term, covenant or condition of this Lease, other than the
failure of Tenant to pay the particular rental accepted by Landlord, regardless
of the party's knowledge of such preceding breach at the time of acceptance of
such preceding breach at the time of acceptance of such rent.
33. HOLDING OVER. Any holding over after the termination or expiration of
the Lease Term shall be construed to be a tenancy from day-to-day and Tenant
shall pay rent to Landlord at a rate equal to one thirtieth (1/30th) of the
greater of (i) one hundred fifty percent (150%) of the monthly rental
installment due in the month preceding the termination or expiration of the
Lease Term or (ii) the Fair Market Rental (as defined in paragraph 37). Any
holding over shall otherwise be on the terms and conditions herein specified,
except those provisions relating to the term and any options to extend or renew,
which terms are expressly waived during any hold over. Furthermore, no holding
over shall be deemed or construed to exercise any option to extend or renew this
Lease in lieu of full and timely exercise of any such option as required
hereunder.
34. SUCCESSORS AND ASSIGNS. The covenants and conditions herein contained
shall, subject to the provisions as to assignment, apply to and bind the heirs,
successors, executors, administrators and assigns of all the parties hereto.
35. ESTOPPEL CERTIFICATES. Each party shall at any time during the Lease
Term, upon not less than ten (10) business days prior written notice from the
other party, execute and deliver a statement in writing certifying that this
Lease is unmodified and in full force and effect (or, if modified, stating the
nature of such modification) and the date to which any rent and other charges
have been paid in advance, and acknowledging that there are not, to the party's
knowledge, any uncured defaults on the part of the other party hereunder or
specifying such defaults if they are claimed. Any such statement may be
conclusively relied upon by any prospective purchaser or encumbrancer of the
Premises or a purchaser of Tenant's assets or leasehold interest. Landlord's or
Tenant's failure to deliver such statement within such time shall be conclusive
upon the party not providing the statement that: (a) this Lease is in full
force and effect, without modification except as may be represented by the
requesting party; (b) there are not uncured defaults in the requesting party's
performance. Upon the advance written request of Landlord, Tenant shall furnish
Landlord with Tenant's most recent available financial statement, subject to the
following: (i) Landlord shall only require such statement in connection with
Landlord's proposed sale or refinance of the Premises; and (ii) Landlord and any
person or entity to whom such financial statements are provided shall agree in
writing to hold such statements in the strictest confidence.
36. OPTION TO EXTEND THE TERM. Landlord hereby grants to Tenant, upon
and subject to the terms and conditions set forth in this paragraph, the option
(the "Option") to extend the term of this Lease for an additional term (the
"Option Term"), which Option Term shall be a period of sixty (60) months. The
Option Term shall be exercised, if at all, by written notice to Landlord on or
before the date that is six (6) months prior to the expiration date of the
initial Lease Term. If Tenant exercises the Option, each of the terms,
covenants and conditions of this Lease except this paragraph
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shall apply during the Option Term be, except that the rent payable by Tenant
during the Option Period shall be ninety-five percent (95%) of the fair market
monthly rent for the Premises (the "Fair Market Rent") as of the commencement of
the Option Period. The parties acknowledge that they have agreed to so set the
rent at ninety-five percent (95%) of the then Fair Market Rent in recognition of
and in consideration for the fact that Landlord shall not incur brokerage
commissions, vacancy costs, and costs for the installation of new tenant
improvements (including recarpeting and repainting), along with other savings,
if Tenant elects to extend the term of this Lease, and that such discount of the
full Fair Market Rent is a reasonable estimate of the savings to be so realized
by Landlord.
37. APPRAISAL. If the parties are unable to agree upon the Fair Market
Rent for the Premises for the Option Term at least ninety (90) days prior to the
commencement of such Option Term, then the Fair Market Rent shall be determined
by appraisal conducted pursuant to this paragraph 38. If it becomes necessary
to determine by appraisal the Fair Market Rent for the Premises for the purpose
of establishing the monthly rent pursuant to paragraph 37 or for purposes of any
other provision of this Lease, then such Fair Market Rent shall be determined by
three (3) real estate appraisers, all of whom shall be members of the American
Institute of Real Estate Appraisers with not less than five (5) years experience
appraising commercial and industrial real property located in Santa Xxxxx
County, California, in accordance with the following procedures:
A. The party demanding an appraisal (the "Notifying Party") shall
notify the other party (the "Non-Notifying Party") thereof by delivering a
written demand for appraisal, which demand, to be effective, must give the name,
address and qualifications of an appraiser selected by the Notifying Party.
Within ten (10) days of receipt of said demand, the Non-Notifying Party shall
select its appraiser and notify the Notifying Party, in writing, of the name,
address and qualifications of an appraiser selected by it. Failure by the Non-
Notifying Party to select a qualified appraiser within said ten (10) day period
shall be deemed a waiver of its right to select a second appraiser on its own
behalf and the Notifying Party shall select a second appraiser on behalf of the
Non-Notifying Party within five (5) days after the expiration of said ten (10)
day period. Within ten (10) days from the date the second appraiser shall have
been appointed, the two (2) appraisers so selected shall appoint a third
appraiser. In the event the two appraisers fail to select a third qualified
appraiser, the third appraiser shall be appointed by the then Presiding Judge of
the Superior Court of the State of California for the County of Santa Xxxxx or
the head of the most local chapter of the American Institute of Real Estate
Appraisers.
B. The three (3) appraisers so selected shall meet in Santa Xxxxx
County, California, not later than twenty (20) days following the selection of
the third appraiser. At said meeting the appraisers so selected shall attempt
to determine the Fair Market Rent for the Premises for the Option Term in
question.
C. If the appraisers so selected are unable to complete their
determinations in one meeting, they may continue to consult at such times as
they deem necessary for a fifteen (15) day period from the date of the first
meeting, in an attempt to have at least two (2) of them agree. If at
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the initial meeting or at any time during said fifteen (15) day period two (2)
or more of the appraisers so selected agree on the Fair Market Rent for the
Premises, such agreement shall be determinative and binding on the parties
hereto, and the agreeing appraisers shall forthwith notify both Landlord and
Tenant of the amount set by such agreement.
D. In the event two (2) or more appraisers do not so agree within
said fifteen (15) day period, then each appraiser shall, within five (5) days
after the expiration of said fifteen (15) day period, submit his or her
independent appraisal in simple letter form to Landlord and Tenant stating his
or her determination of the fair market rent for the Premises for the Option
Term. The parties shall then determine the Fair Market Rent for the Premises by
determining the average of the Fair Market Rent set by each of the appraisers;
provided, however, that (i) if the lowest appraisal is less than eighty-five
percent (85%) of the middle appraisal, then such lowest appraisal shall be
disregarded; and/or (ii) if the highest appraisal is greater than one hundred
fifteen percent (115%) of the middle appraisal, then such highest appraisal
shall be disregarded. If any appraisal is so disregarded, then the average
shall be determined by computing the average set by the other appraisals that
have not been disregarded.
E. Each party shall bear the fees and expenses of the appraiser
selected by or for it, and the fees and expenses of the third appraiser (or the
joint appraiser if one joint appraiser is used) shall be borne fifty percent
(50%) by Landlord and fifty percent (50%) by Tenant.
F. Any determination of Fair Market Rent of the Premises made
pursuant to any provision of this Lease, whether by agreement of the parties or
by appraisal pursuant to this paragraph, shall be based upon the following:
(i) that the Premises would be leased for sixty (60) months on the same terms as
contained in this Lease, particularly with regard to Tenant's obligation to pay
additional rent and its obligation to repair and maintain; (ii) the condition,
size, age and location of the Premises; and (iii) the Fair Market Rent for the
Premises shall not include any part of the rental value added to the Premises as
a consequence of construction of Alterations or improvements made by Tenant or
at Tenant's expense.
G. Tenant shall have the right to rescind its exercise of the Option
if it does not approve in writing the fair market rent determined by appraisal,
but in such case, Tenant shall pay the costs of the appraisals. In the event
Tenant rescinds its exercise of the Option, the Lease shall be automatically
extended for a period of one hundred twenty (120) days from the date of Tenant's
written rescission at the rent then payable under this Lease until the
expiration of the Lease Term, and thereafter at the rate established by
appraisal until the end of the one hundred twenty (120) day period.
38. QUIET ENJOYMENT. Tenant shall quietly have and hold the Premises for
the term and any extensions thereof without interference by Landlord or any
party claiming by or through Landlord.
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39. BROKERS. Tenant represents it has not utilized or contacted a real
estate broker or finder with respect to this Lease other than Xxxxxx Xxxxx of
Coldwell Banker ("Broker"), Tenant and Landlord each agree to indemnify and hold
the other harmless against any claim, cost, liability or cause of action
asserted by any other broker or finder claiming through the acts or conduct of
the indemnifying party. Landlord shall pay any commission or fee owing to
Broker without contribution by Tenant.
40. AUTHORITY OF PARTIES.
A. CORPORATE AUTHORITY. If Tenant is a corporation, each individual
executing this Lease on behalf of said corporation represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of said
corporation, in accordance with a duly adopted resolution of the Board of
Directors of said corporation or in accordance with the bylaws of said
corporation, and that this Lease is binding upon said corporation in accordance
with its terms.
B. LANDLORD'S AUTHORITY: The individual(s) executing this Lease on
Landlord's behalf represent and warrant that they have the requisite authority
to sign this Lease and that this Lease is binding on Landlord. Landlord
represents that it owns the Premises and is duly empowered to sign this Lease,
and that the consent of no other party is required to make this Lease binding on
Landlord.
41. MISCELLANEOUS PROVISIONS.
A. RIGHTS AND REMEDIES: All rights and remedies hereunder are
cumulative and not alternative to the extent permitted by law and are in
addition to all other rights and remedies in law and in equity.
B. SEVERABILITY: If any term or provision of this Lease is held
unenforceable or invalid by a court of competent jurisdiction, the remainder of
the Lease shall not be invalidated thereby but shall be enforceable in
accordance with its terms, omitting the invalid or unenforceable term.
C. CHOICE OF LAW: This Lease shall be governed by and construed in
accordance with California law.
D. INTEREST: All sums due hereunder, including rent and additional
rent, if not paid within five (5) days after Tenant's receipt of written notice
from Landlord indicating that Landlord has failed to receive the payment in
question, shall bear interest at the prime rate charged by Union Bank, main San
Xxxxxxxxx xxxxxx, plus two percent (2%) per annum from time to time or, if
lower, at the maximum rate permitted under California law accruing from the date
due until the date paid.
E. TIME: Time is of the essence hereunder.
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F. HEADINGS: The headings or titles to the paragraphs of this Lease
are not a part of this Lease and shall have no effect upon the construction or
interpretation of any part thereof.
G. ENTIRE AGREEMENT: This instrument contains all of the agreements
made between the parties hereto and may not be modified orally or in any other
manner than by an agreement in writing signed by all of the parties hereto or
their respective successors in interest.
H. PERFORMANCE BY LANDLORD: If Tenant defaults in its performance
of any obligation required under this Lease after expiration of the applicable
cure period, Landlord may, in its sole discretion, without further notice
perform such obligation, in which event Tenant shall pay Landlord as additional
rent all reasonable sums paid by Landlord in connection with such substitute
performance within ten (10) days following Landlord's written notice for such
payment.
I. REPRESENTATIONS: Tenant acknowledges that except as set forth
herein neither Landlord or its affiliates or agents have made any agreements,
representations, warranties or promises with respect to the Premises or the
Building.
J. RENT: All monetary sums due from Tenant to Landlord under this
Lease shall be deemed to be rent.
K. INTERFERENCE: If the Premises should become unsuitable for
Tenant's use as a consequence of the presence of any Hazardous Material which
does not result from Tenant's use, storage or disposal of such material in
violation of applicable Law ("Interfering Event"), which, in the case of the
foregoing Interfering Events persists for thirty (30) continuous business days,
then Tenant shall be entitled to an abatement of rent to the extent of the
interference with Tenant's use of the Premises occasioned thereby from the date
of the Interfering Event, and, if such interference cannot be corrected or the
damage resulting therefrom repaired so that the Premises or any Other Space
leased by Tenant from Landlord will be reasonably suitable for Tenant's intended
use within one hundred eighty (180) days following the occurrence of the
Interfering Event, then Tenant shall be entitled to terminate this Lease by
delivery of written notice to Landlord at any time after occurrence of the
Interfering Event.
L. APPROVALS: Whenever the Lease requires an approval, consent,
designation, determination or judgment by either Landlord or Tenant, such
approval, consent, designation, determination or judgment (including, without
limiting the generality of the foregoing, those required in connection with
assignment and subletting) shall not be unreasonably withheld or delayed and in
exercising any right or remedy hereunder, each party shall at all times act
reasonably and in good faith.
M. REASONABLE EXPENDITURES: Any expenditure by a party permitted or
required under the Lease, for which such party is entitled to demand and does
demand reimbursement from the other party, shall be limited to the fair market
value of the goods and services involved, shall be
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reasonably incurred, and shall be substantiated by documentary evidence
available for inspection and review by the other party or its representative
during normal business hours.
N. EXHIBITS: All exhibits are incorporated herein by reference.
O. LIGHT AND VIEW: Landlord shall not construct any structure or
improvement or do any other act that will impede Tenant's light, air or view.
P. MEMORANDUM OF LEASE: At Tenant's option, a memorandum of this
Lease shall be recorded in a form acceptable to Tenant in the Official Records
of Santa Xxxxx County, California. Landlord agrees to duly execute and
acknowledge such Memorandum.
IN WITNESS WHEREOF, Landlord and Tenant have executed these presents, the
day and year first above written.
LANDLORD: The XXXX X. & XXXXX X. TENANT: AEHR TEST SYSTEMS, INC.
SOBRATO 1979 REVOCABLE TRUST a California Corporation
BY: /s/ Xxxx X. Xxxxxxx BY: /s/ Xxxx X. Xxxxxxx
--------------------------- --------------------------------
ITS: Trustee ITS: President
--------------------------- --------------------------------
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EXHIBIT "A"
Site Plan
EXHIBIT "B"
Site Modifications
The parties agree that the following modifications shall be made to the
Premises, at the sole cost and expense of Landlord (and not as a part of the
Tenant Improvement Allowance):
1. Landlord shall extend the telephone conduit termination to the
interior of the Building.
2. Landlord shall install fire sprinklers in the Building as required by
law.
3. Landlord shall provide a water line to the Building.
4. Landlord shall provide a main electrical conduit to the Building.
