Exhibit 10.34
OFFICE BUILDING LEASE
BETWEEN
BALBOA BOULEVARD BUILDING, G.P.,
LANDLORD
AND
XXXXXXX TECHNOLOGIES, INC.,
TENANT
TABLE OF CONTENTS
PAGE
1. BASIC LEASE TERMS......................................................................................1
2. PREMISES...............................................................................................3
3. TERM...................................................................................................3
4. POSSESSION.............................................................................................3
5. RENT...................................................................................................3
6. OPERATING EXPENSES.....................................................................................4
7. INTENTIONALLY OMITTED..................................................................................5
8. USE....................................................................................................5
9. NOTICES................................................................................................6
10. BROKERS................................................................................................6
11. SURRENDER; HOLDING OVER................................................................................6
12. TAXES ON TENANT'S PROPERTY.............................................................................7
13. ALTERATIONS............................................................................................7
14. REPAIRS................................................................................................9
15. LIENS.................................................................................................10
16. ENTRY BY LANDLORD.....................................................................................10
17. UTILITIES AND SERVICES................................................................................10
18. ASSUMPTION OF RISK AND INDEMNIFICATION................................................................11
19. INSURANCE.............................................................................................11
20. DAMAGE OR DESTRUCTION.................................................................................13
21. EMINENT DOMAIN........................................................................................14
22. DEFAULTS AND REMEDIES.................................................................................15
23. LANDLORD'S DEFAULT....................................................................................17
24. ASSIGNMENT AND SUBLETTING.............................................................................17
25. SUBORDINATION .......................................................................................19
26. ESTOPPEL CERTIFICATE..................................................................................19
27. INTENTIONALLY OMITTED.................................................................................19
28. RULES AND REGULATIONS.................................................................................19
29. MODIFICATION AND CURE RIGHTS OF LANDLORD'S MORTGAGEES AND LESSORS.....................................19
30. DEFINITION OF LANDLORD................................................................................20
31. WAIVER................................................................................................20
32. PARKING...............................................................................................20
33. FORCE MAJEURE.........................................................................................20
34. SIGNS.................................................................................................20
35. LIMITATION ON LIABILITY...............................................................................21
36. FINANCIAL STATEMENTS..................................................................................21
37. QUIET ENJOYMENT.......................................................................................21
38. MISCELLANEOUS.........................................................................................21
39. EXECUTION OF LEASE....................................................................................22
EXHIBITS:
A-I Site Plan of Premises
A-II Legal Description
B Intentionally Omitted
C Work Letter Agreement
D Notice of Lease Term Dates
E Definition of Operating Expenses
F Intentionally Omitted
G Estoppel Certificate
H Rules and Regulations
OFFICE BUILDING LEASE
This OFFICE BUILDING LEASE ("Lease") is entered into as of this 28th day of
March, 2000, by and between BALBOA BOULEVARD BUILDING, G.P., a general
partnership ("Landlord"), and XXXXXXX TECHNOLOGIES, INC., a Delaware corporation
("Tenant").
1. BASIC LEASE TERMS. For purposes of this Lease, the following terms have the
following definitions and meanings:
(a) LANDLORD: BALBOA BOULEVARD BUILDING, G.P., a general partnership.
(b) LANDLORD'S ADDRESS (FOR NOTICES):
c/o The Xxxxxx XxxXxxxxx Company
0000 Xxxxxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx XxxXxxxxx
or such other place as Landlord may from time to time designate by notice to
Tenant.
(c) TENANT: XXXXXXX TECHNOLOGIES, INC., a Delaware corporation.
(d) TENANT'S ADDRESS (FOR NOTICES):
Xxxxxxx Technologies, Inc.
0000 Xxx Xxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxxxxxx
or such other place as Tenant may from time to time designate by notice to
Landlord.
(e) BUILDING: A one (1) story building located at 0000 Xxxxxx Xxxxxx in the City
of San Diego (the "City"), County of San Diego (the "County"), State of
California (the "State"), which Building for all purposes of this Lease the
parties agree contains 45,530 total Rentable Square Feet as shown on the site
plan attached hereto as EXHIBIT "A-I". The parties hereto stipulate and agree as
to the "Rentable Square Footage" of the Premises and there shall be no remeasure
of the Premises for purposes of adjusting any payments from time to time due
under this Lease.
(f) PREMISES: The Building, the legal parcel of land upon which the Building is
located (the "Land"), and all other improvements thereon including, without
limitation, all parking areas, landscaping and signs, as generally shown on the
site plan attached hereto as EXHIBIT "A-I". The legal description of the Land is
described in EXHIBIT "A-II" attached hereto.
(g) TERM: Seven (7) Lease Years (as defined in Paragraph 3 hereof).
(h) INTENTIONALLY OMITTED.
(i) COMMENCEMENT DATE: The date on which the Term of this Lease will commence as
determined in accordance with the provisions of EXHIBIT "C" and as stated on
EXHIBIT "D".
(j) INITIAL MONTHLY BASE RENT: $54,636.00 ($1.20/RSF/mo.), subject to adjustment
as provided in Subparagraph 1(k) below and as otherwise provided in this Lease.
(k) ADJUSTMENT TO MONTHLY BASE RENT: Monthly Base Rent will be adjusted in
accordance with the following:
Effective on the first (1st) anniversary of the Commencement Date and
annually thereafter (the "CPI Adjustment Date(s)"), the Monthly Base Rent in
effect immediately before each CPI Adjustment Date shall be increased in
accordance with a percentage increase, if any, in the Index (as hereinafter
defined), to an amount which is equal to the product of (i) the Index for the
fourth (4th) month preceding the month in which the applicable CPI Adjustment
Date occurs, multiplied by (ii) the Monthly Base Rent which was in effect
immediately prior to the applicable CPI Adjustment Date, divided by (iii) the
Basic Index (as hereinafter defined); provided, however, in no event shall the
Monthly Base Rent in effect after any CPI Adjustment Date be less than the
Monthly Base Rent in effect immediately preceding the CPI Adjustment Date. The
parties intend that the foregoing equation result in a compounding of
adjustments to Monthly Base Rent. The "Index" shall mean the Consumer Price
Index, All Items, 1982-1984 = 100, All Urban Consumers, for the Los
Angeles/Anaheim/Riverside, California Area, as published by the United States
Department of Labor, Bureau of Labor Statistics, or its successor index, and the
"Basic Index" shall mean the Index published for the fourth (4th) month
preceding the month in which the Commencement Date occurs for the first
adjustment to the Monthly Base Rent, and for each succeeding adjustment, the
Basic Index will be the Index for the fourth (4th) month preceding the month in
which the most recent CPI Adjustment Date occurred. In the event the compilation
or publication of the Index shall be transferred to any other governmental
department, bureau or agency or shall be discontinued, the index most nearly the
same as the Index shall be used to make such calculation. Notwithstanding the
foregoing, in no event shall Monthly Base Rent increase annually by more than
five percent (5%) of the Monthly Base Rent in effect immediately prior to any
such increase.
(l) BASE YEAR OPERATING EXPENSES: Base Year Operating Expenses means that
portion of Operating Expenses as described in Paragraph 6 below which Landlord
has included in Monthly Base Rent, which, for purposes of this Lease, will be an
amount equal to Operating Expenses for the base year which is first Lease Year;
provided, however, the base year for Real Property Taxes and Assessments (as
defined in EXHIBIT "E" attached hereto) shall be the actual Real Property Taxes
and Assessments applicable to the Premises for the 2000/2001 fiscal tax year.
(m) TENANT IMPROVEMENTS: All tenant improvements installed or to be installed by
Tenant within the Premises to prepare the Premises for occupancy pursuant to the
terms of the Work Letter Agreement attached hereto as EXHIBIT "C".
(n) TENANT IMPROVEMENT ALLOWANCE: $1,365,900 ($30.00 per Rentable Square Foot of
the Building), to be applied as provided in the Work Letter Agreement attached
hereto as EXHIBIT "C".
(o) PERMITTED USE: General office use, research and development, light
manufacturing and associated functions to the extent permitted under the
existing M-1B zoning.
(p) BROKER(S): CB Xxxxxxx Xxxxx representing both Tenant and Landlord.
(q) INTEREST RATE: For any event giving rise the imposition of interest pursuant
to this Lease, the interest rate will be ten percent (10%) per annum.
(r) EXHIBITS: "A-I" through "H", inclusive, exclusive of EXHIBITS "B" and "F,"
which Exhibits are attached to this Lease and incorporated herein by this
reference. As provided in Paragraph 3 below, a completed version of EXHIBIT "D"
will be delivered to Tenant after the Commencement Date. 2.
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PREMISES.
(a) PREMISES. Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord the Premises, as defined in Subparagraph 1(f), which includes but is
not limited to the Building as improved or to be improved with the Tenant
Improvements described in the Work Letter Agreement, a copy of which is attached
hereto as EXHIBIT "C".
(b) MUTUAL COVENANTS. Landlord and Tenant agree that the letting and hiring of
the Premises is upon and subject to the terms, covenants and conditions
contained in this Lease and each party covenants as a material part of the
consideration for this Lease to keep and perform their respective obligations
under this Lease.
3. TERM. The term of this Lease ("Term") will be for the period designated in
Subparagraph 1(g), commencing on the Commencement Date. Each consecutive twelve
(12) month period of the Term of this Lease, commencing on the Commencement
Date, will be referred to herein as a "Lease Year". Landlord's Notice of Lease
Term Dates ("Notice"), in the form of EXHIBIT "D" attached hereto, will set
forth the Commencement Date and the date upon which the Term of this Lease shall
end, and will be delivered to Tenant after Landlord delivers possession of the
Premises to Tenant. The Notice will be binding upon Tenant unless Tenant objects
to the Notice in writing within thirty (30) days of Tenant's receipt of the
Notice.
4. POSSESSION.
(a) DELIVERY OF POSSESSION. Landlord agrees to deliver to Tenant possession of
the Premises in accordance with the terms of the Work Letter Agreement attached
hereto as EXHIBIT "C". Notwithstanding the foregoing, Landlord will not be
obligated to deliver possession of the Premises to Tenant (but Tenant will be
liable for rent if Landlord can otherwise deliver the Premises to Tenant) until
Landlord has received from Tenant all of the following: (i) the first
installment of Monthly Base Rent; (ii) executed copies of policies of insurance
or certificates thereof as required under Paragraph 19 of this Lease; and (iii)
if Tenant is a corporation or partnership, such evidence of due formation, valid
existence and authority as Landlord may reasonably require, which may include,
without limitation, a certificate of good standing, certificate of secretary,
articles of incorporation, statement of partnership, or other similar
documentation.
(b) CONDITION OF PREMISES. Except for any express representations or warranties
of Landlord contained in this Lease, Tenant will be deemed to have accepted the
Premises in its condition on the date of delivery of possession and to have
acknowledged that there are no items needing work or repair, latent defects of
which Landlord is notified within one (1) year of the Commencement Date
excepted. Tenant acknowledges that, except as expressly contained in this Lease,
neither Landlord nor any agent of Landlord has made any representation or
warranty with respect to the Premises or any portions thereof or with respect to
the suitability of same for the conduct of Tenant's business and Tenant further
acknowledges that Landlord will have no obligation to construct or complete any
additional buildings or improvements within the Premises. As of the Commencement
Date, Landlord, at its sole cost and expense, shall be responsible for causing
the exterior of the Building and parking/drive areas located on the Land
(collectively, the "Exterior Areas") to comply with the requirements of the
Americans With Disabilities Act of 1990, as same has been and may be
subsequently amended, and all rules and regulations promulgated pursuant thereto
(the "ADA") which are in effect as of the Commencement Date. Except as provided
herein, Landlord agrees to comply with the modifications or amendments to the
ADA as to the Exterior Areas, as and when required under any amendments to the
ADA at Landlord's sole expense; provided, however, that Tenant shall be
responsible, at its sole cost and expense, for compliance with the ADA to the
extent such compliance is mandated as a result of Tenant's use, alteration or
occupancy of the Premises.
5. RENT.
(a) MONTHLY BASE RENT. Tenant agrees to pay Landlord the Monthly Base Rent for
the Premises (subject to adjustment as hereinafter provided) in advance on the
first day of each calendar month during the Term without prior notice or demand,
except that Tenant agrees to pay the Monthly Base Rent for the first month of
the Term directly to Landlord concurrently with Tenant's delivery of the
executed Lease to Landlord. If the Term of this Lease commences or ends on a day
other than the first day of a calendar month, then the rent for such period will
be prorated in the proportion that the number of days this Lease is in effect
during such period bears to the number of days in such month. All rent must be
paid to Landlord, without any deduction or offset except as set forth in this
Paragraph 5, in lawful money of the United States of America, at the address
designated by Landlord or to such other person or at such other place as
Landlord may from time to time designate in writing. Monthly Base Rent will be
adjusted during the Term of this Lease as provided in Subparagraph l(k).
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(b) ADDITIONAL RENT. All amounts and charges to be paid by Tenant hereunder,
including, without limitation, payments for Operating Expenses (as defined in
Paragraph 6 below), insurance and repairs will be considered additional rent for
purposes of this Lease, and the word "rent" as used in this Lease will include
all such additional rent unless the context specifically or clearly implies that
only Monthly Base Rent is intended.
(c) LATE PAYMENTS. Late payments of Monthly Base Rent and/or any item of
additional rent will be subject to interest and a late charge as provided in
Subparagraph 22(f) below. Notwithstanding anything to the contrary contained in
this Lease, wherever it is stipulated that interest is to accrue on an unpaid
amount, such accrual shall not commence until thirty (30) days after the amount
in question is due and payable.
6. OPERATING EXPENSES.
(a) OPERATING EXPENSES. In addition to Monthly Base Rent, throughout the Term of
this Lease, Tenant agrees to pay Landlord as additional rent in accordance with
the terms of this Paragraph 6, all Operating Expenses as defined in EXHIBIT "E"
attached hereto to the extent Operating Expenses exceed Base Year Operating
Expenses.
(b) DECLINE IN EXPENSES. In the event Operating Expenses for any year are less
than Base Year Operating Expenses, Tenant will not be entitled to a credit
against any rent, additional rent or Operating Expenses payable hereunder.
(c) ACTUAL STATEMENT. By the date which is 90 days after the end of each Lease
Year during the Term of this Lease, Landlord will deliver to Tenant a statement
("Actual Statement") which states the actual Operating Expenses for the
preceding year determined in accordance with generally accepted accounting
principles, consistently applied. If the Actual Statement reveals that the
actual Operating Expenses are more than the total Base Year Operating Expenses,
Tenant agrees to pay Landlord the difference in a lump sum within thirty (30)
days of receipt of the Actual Statement.
(d) MISCELLANEOUS. Any delay of less than one (1) year by Landlord in delivering
any Actual Statement pursuant to this Paragraph 6 will not constitute a waiver
of its right to require an increase in rent nor will it relieve Tenant of its
obligations pursuant to this Paragraph 6, except that (i) the foregoing time
limit shall not apply to supplemental tax bills (so long as Tenant is promptly
notified thereof), and (ii) Tenant will not be obligated to make any payments
based on such Actual Statement until thirty (30) days after receipt of such
Actual Statement. Even though the Term has expired and Tenant has vacated the
Premises, when the final determination is made of the actual Operating Expenses
for the year in which this Lease terminates, Tenant agrees to promptly pay any
excess Operating Expenses over the Base Year Operating Expenses. Such obligation
will be a continuing one which will survive the expiration or earlier
termination of this Lease.
(e) AUDIT. In the event of any dispute as to the amount of Operating Expenses,
Tenant or a "Big 6" accounting firm selected by Tenant will have the right, by
prior written notice ("Audit Notice") given within ninety (90) days ("Audit
Period") following receipt of an Actual Statement and at reasonable times during
normal business hours, to audit Landlord's accounting records with respect to
Operating Expenses relative to the year to which such Actual Statement relates
at the offices of Landlord's property manager. Tenant will be supplied with
copies of any existing records reasonably required by Tenant to perform this
audit. Tenant must pay Operating Expenses when due pursuant to the terms of this
Lease and may not withhold payment of Operating Expenses or any other rent
pending results of the audit or during a dispute regarding Operating Expenses.
The audit must be completed within sixty (60) days of the date of Tenant's Audit
Notice and the results of such audit shall be delivered to Landlord within
seventy-five (75) days of the date of Tenant's Audit Notice. If Tenant does not
comply with any of the aforementioned time frames, then such Actual Statement
will be conclusively binding on Tenant. If such audit or review correctly
reveals that Landlord has overcharged Tenant, then within thirty (30) days after
the results of such audit are made available to Landlord, Landlord agrees to
reimburse Tenant the amount of such overcharge. If Landlord disagrees with the
results of such audit, the dispute shall be resolved by arbitration in
accordance with Paragraph 45 below. If the audit reveals that Tenant was
undercharged, then within thirty (30) days after the results of the audit are
made available to Tenant, Tenant agrees to reimburse Landlord the amount of such
undercharge, less the actual, third-party costs incurred by Tenant in performing
such audit. Tenant agrees to pay the cost of such audit, provided that if the
audit reveals that Landlord's determination of Operating Expenses as set forth
in the relevant Actual Statement was in error in Landlord's favor by more than
eight percent (8%) of the amount charged by Landlord to Tenant pursuant to such
Actual Statement, then Landlord agrees to pay the reasonable, third-party costs
of such audit incurred by Tenant. To the extent Landlord must pay the cost of
such audit, such costs shall not exceed a reasonable hourly charge for a
reasonable amount of hours spent by such third party in connection with the
audit, and no event will exceed the actual amount of the error (that is, without
accounting for the 8% factor described above).
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7. INTENTIONALLY OMITTED.
8. USE.
(a) TENANT'S USE OF THE PREMISES. The Premises may be used for the use or uses
set forth in Subparagraph 1(o) only, and Tenant will not use or permit the
Premises to be used for any other purpose without the prior written consent of
Landlord, which consent Landlord may withhold in its sole and absolute
discretion.
(b) COMPLIANCE. At Tenant's sole cost and expense, Tenant agrees to procure,
maintain and hold available for Landlord's inspection, all governmental licenses
and permits required for the proper and lawful conduct of Tenant's business from
the Premises, if any. Tenant agrees not to use, alter or occupy the Premises or
allow the Premises to be used, altered or occupied in violation of, and Tenant,
at its sole cost and expense, agrees to use and occupy the Premises and cause
the Premises to be used and occupied in compliance with: (i) any and all laws,
statutes, zoning restrictions, ordinances, rules, regulations, orders and
rulings now or hereafter in force and any reasonable requirements of the insurer
of the Premises, or duly constituted public authority having jurisdiction over
the Premises or the Building now or hereafter in force, including, without
limitation, the requirements of the ADA, (ii) the requirements of the Board of
Fire Underwriters and any other similar body, (iii) the Certificate of Occupancy
issued for the Building, and (iv) any recorded covenants, conditions and
restrictions and similar regulatory agreements, if any, which affect the use,
occupation or alteration of the Premises and/or the Building. Tenant agrees to
comply with the Rules and Regulations referenced in Paragraph 28 below. Tenant
agrees not to cause, maintain or permit any nuisance or waste in, on, under or
about the Premises. Notwithstanding anything contained in this Lease to the
contrary, all transferable development rights related in any way to the Premises
are and will remain vested in Landlord, and Tenant hereby waives any rights
thereto.
(c) HAZARDOUS MATERIALS. Except for the Hazardous Materials which the original
Tenant under this Lease must use in order to operate its business in the
Premises (all of which Hazardous Materials still being subject to the remaining
terms of this Paragraph 8(c)), Tenant agrees not to cause or knowingly permit
any Hazardous Materials to be brought upon, stored, used, handled, generated,
released or disposed of on, in, under or about the Premises by Tenant, its
agents, employees, subtenants, assignees, licensees, contractors or invitees
(collectively, "Tenant's Parties"), without the prior written consent of
Landlord, which consent Landlord may withhold in its sole and absolute
discretion. In furtherance of the foregoing, (i) within one hundred twenty (120)
days following the Commencement Date, Tenant shall in writing identify to
Landlord the Hazardous Materials and quantities planned for use by Tenant in the
Premises during the then-current Lease Year, and (ii) from time to time (but not
more often than annually), upon Landlord's request, Tenant shall furnish to
Landlord a written description of the Hazardous Materials and quantities used at
the Premises during the most recent past calendar year. Upon the expiration or
earlier termination of this Lease, Tenant agrees to promptly remove from the
Premises, at its sole cost and expense, any and all Hazardous Materials,
including any equipment or systems containing Hazardous Materials which are
installed, brought upon, stored, used, generated or released upon, in, under or
about the Premises or any portion thereof by Tenant or any of Tenant's Parties,
up to the clean up standards imposed by law or governmental regulators having
jurisdiction. To the fullest extent permitted by law, Tenant agrees to promptly
indemnify, protect, defend and hold harmless Landlord and Landlord's partners,
officers, directors, employees, agents, successors and assigns (collectively,
"Landlord Indemnified Parties") from and against any and all claims, damages,
judgments, suits, causes of action, losses, liabilities, penalties, fines,
expenses and costs (including, without limitation, clean-up, removal,
remediation and restoration costs, sums paid in settlement of claims, attorneys'
fees, consultant fees and expert fees and court costs) which arise or result
from the presence of Hazardous Materials on, in, under or about the Premises and
which are caused or knowingly permitted by Tenant or any of Tenant's Parties.
Tenant agrees to promptly notify Landlord of any release of Hazardous Materials
at the Premises which Tenant becomes aware of during the Term of this Lease,
whether caused by Tenant or any other persons or entities. In the event of any
release of Hazardous Materials caused or knowingly permitted by Tenant or any of
Tenant's Parties, Landlord shall have the right, but not the obligation, to
cause Tenant to immediately take all steps Landlord deems necessary or
appropriate to remediate such release and prevent any similar future release to
the clean up standards imposed by law or governmental regulators. As used in
this Lease, the term "Hazardous Materials" shall mean and include any hazardous
or toxic materials, substances or wastes as now or hereafter designated under
any law, statute, ordinance, rule, regulation, order or ruling of any agency of
the State, the United States Government or any local governmental authority,
including, without limitation, asbestos, petroleum, petroleum hydrocarbons and
petroleum based products, urea formaldehyde foam insulation, polychlorinated
biphenyls ("PCBs"), and freon and other chlorofluorocarbons. None of the
foregoing is intended to reduce or expand Landlord's or Tenant's rights and
obligations under any prior agreements to which Landlord and Tenant are parties
concerning environmental remediation relating to Tenant's prior occupancy of the
Premises. The provisions of this Subparagraph 8(c) will survive the expiration
or earlier termination of this Lease.
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9. NOTICES. Any notice required or permitted to be given hereunder must be in
writing and may be given by personal delivery (including delivery by overnight
courier or an express mailing service) or by mail, if sent by registered or
certified mail. Notices to Tenant shall be sufficient if delivered to Tenant at
the address designated in Subparagraph 1(d) and notices to Landlord shall be
sufficient if delivered to Landlord at the address designated in Subparagraph
1(b). Either party may specify a different address for notice purposes by
written notice to the other.
10. BROKERS. The parties acknowledge that the broker(s) who negotiated this
Lease are stated in Subparagraph 1(p), who Landlord shall pay in accordance with
Landlord's separate agreements with said brokers. Each party represents and
warrants to the other, that, to its knowledge, no other broker, agent or finder
(a) negotiated or was instrumental in negotiating or consummating this Lease on
its behalf, and (b) is or might be entitled to a commission or compensation in
connection with this Lease. Landlord and Tenant each agree to promptly
indemnify, protect, defend and hold harmless the other from and against any and
all claims, damages, judgments, suits, causes of action, losses, liabilities,
penalties, fines, expenses and costs (including attorneys' fees and court costs)
resulting from any breach by the indemnifying party of the foregoing
representation, including, without limitation, any claims that may be asserted
by any broker, agent or finder undisclosed by the indemnifying party. The
foregoing mutual indemnity shall survive the expiration or earlier termination
of this Lease.
11. SURRENDER; HOLDING OVER.
(a) SURRENDER. The voluntary or other surrender of this Lease by Tenant, or a
mutual cancellation thereof, shall not constitute a merger, and shall, at the
option of Landlord, operate as an assignment to Landlord of any or all subleases
or subtenancies. Upon the expiration or earlier termination of this Lease,
Tenant agrees to peaceably surrender the Premises to Landlord broom clean and in
a state of good repair and condition, ordinary wear and tear and casualty damage
(if this Lease is terminated as a result thereof pursuant to Paragraph 20)
excepted, with all of Tenant's personal property and Alterations (as defined in
Paragraph 13) removed from the Premises to the extent required under Paragraph
13 and all damage caused by such removal repaired as required by Paragraph 13.
Prior to the date Tenant is to actually surrender the Premises to Landlord,
Tenant agrees to give Landlord reasonable prior notice of the exact date Tenant
will surrender the Premises so that Landlord and Tenant can schedule an
inspection of the Premises to review the condition of the Premises and identify
any Alterations and personal property which are to remain upon the Premises and
which items Tenant is to remove, as well as any repairs Tenant is to make upon
surrender of the Premises.
(b) HOLDING OVER. Tenant will not be permitted to hold over possession of the
Premises after the expiration or earlier termination of the Term without the
express written consent of Landlord, which consent Landlord may withhold in its
sole and absolute discretion. If Tenant holds over after the expiration or
earlier termination of the Term, Landlord may, at its option, treat Tenant as a
tenant at sufferance only, and such continued occupancy by Tenant shall be
subject to all of the terms, covenants and conditions of this Lease, so far as
applicable, except that the Monthly Base Rent for any such holdover period shall
be equal to one hundred twenty-five percent (125%) of the Monthly Base Rent in
effect under this Lease immediately prior to such holdover, prorated on a daily
basis. Notwithstanding the foregoing, by not less than one hundred (180) days
prior written notice to Landlord, Tenant, provided it is not in default under
this Lease, shall have the right to hold over for two (2) consecutive one
hundred eighty (180) day terms at one hundred five percent (105%) of the
prevailing market rate for the Premises as determined by Landlord (said 105%
figure being referred to herein as the "Prevailing Rate"). Within ten (10) days
following Landlord's receipt of Tenant's holdover notice, Landlord will advise
Tenant of Landlord's determination of the Prevailing Rate ("Landlord's
Prevailing Rate"). Tenant will then have a period of ten (10) days following
receipt of Landlord's Prevailing Rate in which to either (x) demand appraisal in
accordance with the procedures set forth below, (y) accept Landlord's Prevailing
Rate, or (z) rescind such holdover notice. Tenant's failure to timely take any
of the actions set forth in clauses (x), (y) or (z) immediately preceding shall
constitute Tenant's acceptance of Landlord's Prevailing Rate and commitment to
pay the holdover rate based thereon for the one hundred (180) day holdover term
in accordance with the foregoing. If Tenant timely demands appraisal pursuant to
the foregoing ("Tenant's Demand for Appraisal"), then the following shall apply:
(i) For a period of ten (10) days following Landlord's receipt of Tenant's
Demand for Appraisal, Landlord and Tenant will attempt in good faith to agree
upon the Prevailing Rate using their best good faith efforts. If Landlord and
Tenant fail to reach agreement on such Prevailing Rate within such ten (10) day
period of time (the "Outside Date"), then each party's determination will be
submitted to appraisal in accordance with the provisions below.
(ii) Landlord and Tenant shall each appoint one (1) independent, unaffiliated
real estate broker who has been active over the five (5) year period ending on
the date of such appointment in the leasing of comparable properties in the
Comparison Area (as defined in Paragraph 40(c) hereof). Each such broker will be
appointed within ten (10) days after the Outside Date.
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(iii) The two (2) brokers so appointed will, within ten (10) days of the date of
the appointment of the last appointed broker, agree upon and appoint a third
broker who shall be qualified under the same criteria set forth hereinabove for
qualification of the initial two (2) brokers.
(iv) The determination of the brokers shall be limited solely to the issue of
whether Landlord's or Tenant's last proposed (as of the Outside Date) Prevailing
Rate is the closest to the actual Prevailing Rate as determined by the brokers,
taking into account the meaning of "fair market rental rate" as defined in
Paragraph 40(c) hereof.
(v) The three (3) brokers shall, within ten (10) days of the appointment of the
third broker, reach a decision as to whether the parties shall use Landlord's or
Tenant's last submitted (on the Outside Date) Prevailing Rate, and shall notify
Landlord and Tenant thereof.
(vi) The decision of the majority of the three (3) brokers shall be binding upon
Landlord and Tenant and neither party will have the right to undo Tenant's
exercise of the right to remain for one hundred (180) extra days or reject the
brokers' determination. The cost of each party's broker shall be the
responsibility of the party selecting such broker, and the cost of the third
broker shall be shared equally by Landlord and Tenant.
(vii) If either Landlord or Tenant fails to appoint a broker within the time
period specified in clause (ii) above, the broker appointed by one of them shall
reach a decision, notify Landlord and Tenant thereof, and such broker's decision
shall be binding upon Landlord and Tenant and neither party will have the right
to undo Tenant's exercise of its right to stay one hundred eighty (180) extra
days or reject the broker's determination.
(viii) If the two (2) brokers fail to agree upon and appoint a third broker,
then the parties' last submitted (on the Outside Date) Prevailing Rates shall be
averaged and such figure shall be binding upon Landlord and Tenant and neither
party will have the right to undo Tenant's exercise of its right to stay one
hundred eighty (180) extra days or reject such average figure.
(ix) In the event that the Prevailing Rate is not established prior to the end
of the then-current Term, Landlord's Prevailing Rate will be used until a
determination is made in accordance with the foregoing, at which time the
parties shall settle any overpayment by Tenant on the next Monthly Base Rent
payment date following not less than thirty (30) days after such determination.
Acceptance by Landlord of rent after such expiration or earlier termination will
not result in a renewal of this Lease. The foregoing provisions of this
Paragraph 11 are in addition to and do not affect Landlord's right of re-entry
or any rights of Landlord under this Lease or as otherwise provided by law. If
Tenant fails to surrender the Premises upon the expiration of this Lease in
accordance with the terms of this Paragraph 11 despite demand to do so by
Landlord, Tenant agrees to promptly indemnify, protect, defend and hold Landlord
harmless from all claims, damages, judgments, suits, causes of action, losses,
liabilities, penalties, fines, expenses and costs (including attorneys' fees and
costs), including, without limitation, costs and expenses incurred by Landlord
in returning the Premises to the condition in which Tenant was to surrender it
and claims made by any succeeding tenant founded on or resulting from Tenant's
failure to surrender the Premises. The provisions of this Subparagraph 11(b)
will survive the expiration or earlier termination of this Lease.
12. TAXES ON TENANT'S PROPERTY. Tenant agrees to pay before delinquency, all
taxes and assessments (real and personal) levied against any personal property
or trade fixtures placed by Tenant in or about the Premises (including any
increase in the assessed value of the Premises based upon the value of any such
personal property or trade fixtures). If any such taxes or assessments are
levied against Landlord or Landlord's property, Landlord may, after written
notice to Tenant (and under proper protest if requested by Tenant) pay such
taxes and assessments, in which event Tenant agrees to reimburse Landlord all
amounts paid by Landlord within ten (10) business days after demand by Landlord;
provided, however, Tenant, at its sole cost and expense, will have the right,
with Landlord's cooperation, to bring suit in any court of competent
jurisdiction to recover the amount of any such taxes and assessments so paid to
Landlord and/or the applicable taxing authority under protest.
13. ALTERATIONS. After installation of the initial Tenant Improvements for the
Building pursuant to EXHIBIT "C", Tenant may, at its sole cost and expense, make
alterations, additions, improvements and decorations to the Building and/or the
Premises (collectively, "Alterations") subject to and upon the following terms
and conditions:
(a) PROHIBITED ALTERATIONS. Tenant may not make any Alterations which: (i)
affect any area outside the Premises; (ii) have a materially adverse affect on
the Building's structure, equipment, services or systems, or the proper
functioning thereof, or Landlord's access thereto; (iii) affect the outside
appearance, character or use of the Building; (iv) in the reasonable opinion of
Landlord, lessen the value
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of the Premises; or (v) will violate or require a change in any occupancy
certificate applicable to the Premises.
(b) LANDLORD'S APPROVAL. Before proceeding with any Alterations which are not
prohibited in Subparagraph 13(a) above, Tenant must first obtain Landlord's
written approval of the plans, specifications and working drawings for such
Alterations, which approval Landlord will not unreasonably withhold or delay;
provided, however, Landlord's prior approval will not be required for any such
Alterations which are not prohibited by Subparagraph 13(a) above and which cost
less than Twenty-Five Thousand Dollars ($25,000) as long as (i) Tenant delivers
to Landlord notice and a copy of any final plans, specifications and working
drawings for any such Alterations at least ten (10) days prior to commencement
of the work thereof, and (ii) the other conditions of this Paragraph 13 are
satisfied, including, without limitation, conforming to Landlord's rules,
regulations and insurance requirements which govern contractors. Landlord's
approval of plans, specifications and/or working drawings for Alterations will
not create any responsibility or liability on the part of Landlord for their
completeness, design sufficiency, or compliance with applicable permits, laws,
rules and regulations of governmental agencies or authorities.
(c) CONTRACTORS. Alterations may be made or installed only by contractors and
subcontractors which have been approved by Landlord, which approval Landlord
will not unreasonably withhold or delay. Before proceeding with any Alterations,
Tenant agrees to provide Landlord with ten (10) days prior written notice and
Tenant's contractors must obtain and maintain, on behalf of Tenant and at
Tenant's sole cost and expense: (i) all necessary governmental permits and
approvals for the commencement and completion of such Alterations; and (ii) if
requested by Landlord, a completion and lien indemnity bond, or other surety,
reasonably satisfactory to Landlord for such Alterations. Throughout the
performance of any Alterations, Tenant agrees to obtain, or cause its
contractors to obtain, workers compensation insurance and general liability
insurance in compliance with the provisions of Paragraph 19 of this Lease.
(d) MANNER OF PERFORMANCE. All Alterations must be performed: (i) in accordance
with the approved plans, specifications and working drawings; (ii) in a
lien-free and first-class and workmanlike manner; (iii) in compliance with all
applicable permits, laws, statutes, ordinances, rules, regulations, orders and
rulings now or hereafter in effect and imposed by any governmental agencies and
authorities which assert jurisdiction; and (iv) at such times, in such manner,
and subject to such rules and regulations as Landlord may from time to time
reasonably designate.
(e) OWNERSHIP. The Tenant Improvements, including, without limitation, all
affixed sinks, dishwashers, microwave ovens and other fixtures, and all
Alterations will become the property of Landlord and will remain upon and be
surrendered with the Premises at the end of the Term of this Lease; provided,
however, Landlord shall, by written notice delivered to Tenant concurrently with
Landlord's approval of the final working drawings for any Alterations (which
approval Landlord will not unreasonably withhold), identify those Alterations
which Landlord will require Tenant to remove at the end of the Term of this
Lease. Landlord may also require Tenant to remove Alterations which Landlord did
not have the opportunity to approve as provided in this Paragraph 13. If
Landlord requires Tenant to remove any Alterations, Tenant, at its sole cost and
expense, agrees to remove the identified Alterations on or before the expiration
or earlier termination of this Lease and repair any damage to the Premises
caused by such removal.
(f) PLAN REVIEW. Tenant agrees to pay Landlord, as additional rent, the
reasonable costs of professional services and costs for general conditions of
Landlord's third party consultants if utilized by Landlord (but not Landlord's
"in-house" personnel) for review of all plans, specifications and working
drawings for any Alterations, within thirty (30) days after Tenant's receipt of
invoices either from Landlord or such consultants. In addition, Tenant agrees to
pay Landlord, within thirty (30) days after completion of any Alterations, a fee
to cover Landlord's costs of supervising and administering the installation of
such Alterations, in the amount of five percent (5%) of the cost of such
Alterations, but in no event less than Two Hundred Fifty Dollars ($250.00) or
more than One Thousand Dollars ($1,000.00).
(g) PERSONAL PROPERTY. All articles of personal property owned by Tenant or
installed by Tenant at its expense in the Premises (including Tenant's business
and trade fixtures, furniture, movable partitions and equipment [such as
telephones, copy machines, computer terminals, refrigerators and facsimile
machines]) will be and remain the property of Tenant, and must be removed by
Tenant from the Premises, at Tenant's sole cost and expense, on or before the
expiration or earlier termination of this Lease. Tenant agrees to repair any
damage caused by such removal at its cost on or before the expiration or earlier
termination of this Lease.
(h) REMOVAL OF ALTERATIONS. If Tenant fails to remove by the expiration or
earlier termination of this Lease all of its personal property, or any
Alterations identified by Landlord for removal, Landlord may, at its option, (i)
if the failure to remove such property or Alterations materially impairs
Landlord's ability to promptly relet the Premises, treat such failure as a
hold-over pursuant to Subparagraph 11(b) above, and/or (ii) Landlord may
(without liability to Tenant for loss thereof) treat such personal property
and/or
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Alterations as abandoned and, at Tenant's sole cost and expense, and in addition
to Landlord's other rights and remedies under this Lease, at law or in equity:
(a) remove and store such items; and/or (b) upon ten (10) days prior notice to
Tenant, sell, discard or otherwise dispose of all or any such items at private
or public sale for such price as Landlord may obtain or by other commercially
reasonable means. Tenant shall be liable for all costs of disposition of
Tenant's abandoned property and Landlord shall have no liability to Tenant with
respect to any such abandoned property. Landlord agrees to apply the proceeds of
any sale of any such property to any amounts due to Landlord under this Lease
from Tenant (including Landlord's attorneys' fees and other costs incurred in
the removal, storage and/or sale of such items), with any remainder to be paid
to Tenant.
14. REPAIRS.
(a) LANDLORD'S OBLIGATIONS. Landlord agrees to repair and maintain (i) at
Landlord's sole cost, the structural portions of the Building which shall
include all structural walls, foundations, concrete subflooring, roof
replacement and major repair, the plumbing and electrical wiring in or below
structural walls and subflooring (except as may have been installed by Tenant),
and replacement of substantial portions of the asphalt within the parking/drive
areas (except to the extent such replacement is required as a result of Tenant's
abuse of such areas), and (ii) as Operating Expenses, the exterior of the
Building, landscaping, cleaning, resealing and restriping parking/drive areas,
repair of roof leaks, the sprinkler and fire life safety systems, exterior
painting, exterior window washing, and exterior lighting and fixtures; unless
such maintenance and repairs are caused in part or in whole by the negligence or
willful misconduct of Tenant, its agents, servants, employees or invitees, in
which case Tenant will pay to Landlord, as additional rent, the reasonable cost
of such maintenance and repairs. All repairs and maintenance will be performed
in an expeditious and good and workmanlike manner. Landlord will not be liable
for any failure to make any such repairs or to perform any maintenance unless
such failure shall persist for an unreasonable time after written notice of the
need of such repairs or maintenance is given to Landlord by Tenant. In the event
Tenant is unable to conduct business from the Premises during customary business
hours as a result of damage to the Premises for which Landlord has the
responsibility to repair pursuant to this Paragraph 14(a), then Landlord hereby
agrees to use its commercially reasonable efforts to promptly and diligently
perform such repairs after receiving written notice of the need of such repairs
from Tenant. Tenant waives the right to make repairs at Landlord's expense under
any law, statute, ordinance, rule, regulation, order or ruling (including,
without limitation, to the extent the Premises are located in California, the
provisions of California Civil Code Sections 1941 and 1942 and any successor
statutes or laws of a similar nature). Notwithstanding anything to the contrary
contained in this Paragraph 14(a), if the performing of repairs, alterations or
improvements in or to any portion of the Premises by Landlord unreasonably
interferes with Tenant's ability to conduct business on the Premises or any
substantial portion thereof during customary business hours, such that by reason
of such repairs, alterations or improvements, Tenant does not conduct business
in the Premises or any substantial portion thereof for more than one (1)
business day following written notice to Landlord, then Tenant's rent shall
thereafter be abated until the Premises are again usable by Tenant in proportion
to the extent to which Tenant's use of the Premises is impeded. This provision
shall not apply in case of damage to, or destruction of, the Premises, which
situation shall be governed by a separate provision of this Lease.
Notwithstanding the foregoing, Tenant may not xxxxx rent if Landlord disputes
Tenant's right to xxxxx or the amount thereof until and only to the extent the
arbitrator provides that Tenant may do so in accordance with and pursuant to the
terms of Paragraph 45 hereof.
(b) TENANT'S OBLIGATIONS. Subject to Landlord's obligations under subparagraph
(a) above, Tenant agrees to keep, maintain and preserve the Premises (including,
without limitation, the plumbing, HVAC, electrical, sprinkler and fire/life
safety systems) in good condition and repair and, when and if needed, at
Tenant's sole cost and expense, to make all repairs to the Premises and every
part thereof; provided, however, during the first (1st) year of the Term of this
Lease, Tenant will not be responsible for repairs to HVAC, plumbing, electrical
and mechanical systems of the Building to the extent the costs of such repairs
are covered by warranty. Tenant agrees to cause any mechanics' liens or other
liens arising as a result of work performed by Tenant or at Tenant's direction
to be eliminated as provided in Paragraph 15 below. Except as provided in
EXHIBIT "C" and Subparagraph 14(a) above, Landlord has no obligation to alter,
remodel, improve, repair, decorate or paint the Premises or any part thereof.
(c) TENANT'S FAILURE TO REPAIR. If Tenant refuses or neglects to repair and
maintain the Premises properly as required hereunder to the reasonable
satisfaction of Landlord, Landlord, at any time following thirty (30) days from
the date on which Landlord makes a written demand on Tenant to effect such
repair and maintenance, may enter upon the Premises and make such repairs and/or
maintenance, and upon completion thereof, Tenant agrees to pay to Landlord as
additional rent, Landlord's costs for making such repairs, within thirty (30)
days of receipt from Landlord of a written itemized xxxx therefor. Any amounts
not reimbursed by Tenant within such thirty (30) day period will bear interest
at the Interest Rate until paid by Tenant.
(d) SELF-HELP. Notwithstanding anything to the contrary contained in Paragraph
14(a) of this Lease, if Landlord fails to perform any obligation under this
Lease which it is obligated to perform within the
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time periods set forth in Paragraph 23 of this Lease following receipt of
written notice from Tenant, and if Landlord does not in good faith dispute that
it is supposed to be performing such obligation but fails to diligently attempt
to do so, then Tenant shall be permitted to perform such obligations on
Landlord's behalf on the Premises, provided Tenant first delivers to Landlord an
additional two (2) business days prior written notice that Tenant will be
performing such obligations, and provided Landlord fails to commence to perform
such obligations within such additional two (2) business day period. Any work
performed by or on behalf of Tenant shall be performed in accordance with
provisions of clauses (ii), (iii) and (iv) of Paragraph 13(d) of this Lease.
Landlord agrees to promptly reimburse Tenant following the receipt of a written
statement of all reasonable and actual costs incurred by Tenant in performing
such obligations on behalf of Landlord ("Costs"). If Landlord disputes Tenant's
entitlement to some or all of the Costs and fails or refuses to reimburse such
Costs to Tenant within thirty (30) days after Tenant's written demand therefor,
then Tenant may deduct the Costs from rent due under this Lease after and only
to the extent Tenant has been authorized to do so by the arbitrator pursuant to
and in accordance with the terms of Paragraph 45 hereof.
15. LIENS. Tenant agrees not to permit any mechanic's, materialmen's or other
liens to be filed against all or any part of the Building or the Premises, nor
against Tenant's leasehold interest in the Premises, by reason of or in
connection with any repairs, alterations, improvements or other work contracted
for or undertaken by Tenant or any other act or omission of Tenant or Tenant's
agents, employees, contractors, licensees or invitees. At Landlord's request,
Tenant agrees to provide Landlord with enforceable, conditional and final lien
releases (or other evidence reasonably requested by Landlord to demonstrate
protection from liens) from all persons furnishing labor and/or materials at the
Premises. Landlord will have the right at all reasonable times to post on the
Premises and record any notices of non-responsibility which it deems necessary
for protection from such liens. If any such liens are filed, Tenant will, at its
sole cost, promptly cause such liens to be released of record or bonded so that
it no longer affects title to the Building or the Premises. If Tenant fails to
cause any such liens to be so released or bonded within fifteen (15) days after
receiving notice of the filing thereof, such failure will be deemed a material
breach by Tenant under this Lease without the benefit of any additional notice
or cure period described in Paragraph 22 below, and Landlord may, without
waiving its rights and remedies based on such breach, and without releasing
Tenant from any of its obligations, cause such liens to be released by any means
it shall deem proper, including payment in satisfaction of the claims giving
rise to such liens. Tenant agrees to pay to Landlord within ten (10) days after
receipt of invoice from Landlord, any sum paid by Landlord to remove such liens,
together with interest at the Interest Rate from the date of such payment by
Landlord.
16. ENTRY BY LANDLORD. Landlord and its employees and agents will at all
reasonable times during normal business hours (except in emergencies) have the
right to enter the Premises to inspect the same, to supply any service to be
provided by Landlord to Tenant hereunder, to show the Premises to prospective
purchasers or, during the last six (6) months of the Term, to tenants, to post
notices of nonresponsibility, and/or to repair the Premises as permitted or
required by this Lease. In exercising such entry rights, Landlord will endeavor
to minimize, as reasonably practicable, the interference with Tenant's business,
and will provide Tenant with reasonable advance notice (not less than 24 hours)
of any such entry (except in emergency situations). Landlord may, in order to
carry out such purposes, erect scaffolding and other necessary structures where
reasonably required by the character of the work to be performed. Landlord will
at all times have and retain a key with which to unlock all doors in the
Premises, excluding Tenant's vaults and safes. Landlord will have the right to
use any and all means which Landlord may reasonably deem proper to open said
doors in an emergency in order to obtain entry to the Premises. Any entry to the
Premises obtained by Landlord by any of said means, or otherwise, will not be
construed or deemed to be a forcible or unlawful entry into the Premises, or an
eviction of Tenant from the Premises.
17. UTILITIES AND SERVICES. Tenant shall pay for all water (except for
irrigation water which shall be separately metered and an Operating Expense),
gas, heat, light, power, telephone, trash disposal, janitorial service and other
utilities and services supplied to the Premises, together with any taxes
thereon. Landlord will not be liable to Tenant for any failure of Tenant to
obtain any of the foregoing utilities and services. In addition, in the event of
any stoppage or interruption of services or utilities, Tenant shall not be
entitled to any abatement or reduction of rent (except as expressly provided in
Subparagraphs 20(f) or 21(b) if such failure results from a damage or taking
described therein), no eviction of Tenant will result from such failure and
Tenant will not be relieved from the performance of any covenant or agreement in
this Lease because of such failure. Notwithstanding anything in this Lease to
the contrary, if, as a result of the negligent acts or omissions of Landlord or
its agents, contractors or employees, for more than one (1) business day
following written notice to Landlord, there is no HVAC or electricity to the
Premises, or such an interruption of other essential utilities and Building
services, such as fire protection or water, so that any portion of the Premises
cannot be and is not used by Tenant, in Tenant's judgment reasonably exercised,
then Tenant's rent shall thereafter be abated until the Premises are again
usable by Tenant in proportion to the extent to which Tenant's use of the
Premises is interfered with; provided, however, that if Landlord is diligently
pursuing the repair of such utilities or services and Landlord provides
substitute services reasonably suitable for Tenant's purposes, as for example,
bringing in portable air-conditioning
-10-
equipment, then there shall not be an abatement of rent. This paragraph shall
not apply in case of damage to, or destruction of, the Building, which shall be
governed by a separate provision of this Lease. Notwithstanding the foregoing,
Tenant may not xxxxx rent if Landlord disputes Tenant's right to xxxxx or the
amount thereof until and only to the extent the arbitrator provides that Tenant
may do so in accordance with and pursuant to the terms of Paragraph 45 hereof.
18. ASSUMPTION OF RISK AND INDEMNIFICATION.
(a) ASSUMPTION OF RISK. Tenant, as a material part of the consideration to
Landlord, hereby agrees that neither Landlord nor any Landlord Indemnified
Parties (as defined in Subparagraph 8(c) above) will be liable to Tenant for,
and Tenant expressly assumes the risk of and waives any and all claims it may
have against Landlord or any Landlord Indemnified Parties with respect to, (i)
any and all damage to property in, upon or about the Building or the Premises
resulting from any act or omission (except for the negligent or intentionally
wrongful act or omission) of Landlord, (ii) any such damage caused by other
tenants or persons in or about the Building or the Premises, or caused by
quasi-public work, including, without limitation, work performed by utility
companies, (iii) any damage to property entrusted to employees of the Building,
(iv) any loss of or damage to property by theft or otherwise, or (v) any injury
or damage to persons or property resulting from any casualty, explosion, falling
plaster or other masonry or glass, steam, gas, electricity, water or rain which
may leak from any part of the Building or any other portion of the Premises or
from the pipes, appliances or plumbing works therein or from the roof, street or
subsurface or from any other place, or resulting from dampness. Notwithstanding
anything to the contrary contained in this Lease, neither Landlord nor any
Landlord Indemnified Parties will be liable for consequential damages arising
out of any loss of the use of the Premises or any equipment or facilities
therein by Tenant or any Tenant Parties or for interference with light or other
incorporeal hereditaments. Tenant agrees to give prompt notice to Landlord in
case of fire or accidents in the Premises or the Building, or of defects therein
or in the fixtures or equipment.
(b) INDEMNIFICATION. Subject to Paragraph 19(f) hereof, Tenant will be liable
for, and agrees, to promptly indemnify, protect, defend and hold harmless
Landlord and all Landlord Indemnified Parties, from and against, any and all
claims, damages, judgments, suits, causes of action, losses, liabilities,
penalties, fines, expenses and costs, including attorneys' fees and court costs
(collectively, "Indemnified Claims"), arising or resulting from (i) any
negligent act or omission of Tenant or any Tenant Parties (as defined in
Subparagraph 8(c) above); (ii) the use of the Premises and conduct of Tenant's
business by Tenant or any Tenant Parties, or any other activity, work or thing
done, permitted or suffered by Tenant or any Tenant Parties, in or about the
Building or elsewhere within the Premises; and/or (iii) any default by Tenant of
any obligations on Tenant's part to be performed under the terms of this Lease.
In case any action or proceeding is brought against Landlord or any Landlord
Indemnified Parties by reason of any such Indemnified Claims, Tenant, upon
notice from Landlord, agrees to promptly defend the same at Tenant's sole cost
and expense by counsel approved in writing by Landlord, which approval Landlord
will not unreasonably withhold.
(c) SURVIVAL; NO RELEASE OF INSURERS. Tenant's indemnification obligations under
Subparagraph 18(b) will survive the expiration or earlier termination of this
Lease. Tenant's covenants, agreements and indemnification obligation in
Subparagraphs 18(a) and 18(b) above, are not intended to and will not relieve
any insurance carrier of its obligations under policies required to be carried
by Tenant pursuant to the provisions of this Lease.
(d) LANDLORD INDEMNITY. Notwithstanding anything to the contrary contained in
Paragraph 18 of, or elsewhere in, this Lease, Tenant shall not be required to
indemnify and hold Landlord harmless from any Indemnified Claims resulting from
the negligence or willful misconduct of Landlord or Landlord's agents, employees
or contractors and, subject to Paragraph 19(f) hereof and the limitations
contained in (i) the second to the last sentence of Paragraph 18(a) of this
Lease, and (ii) Paragraph 35 of this Lease, Landlord agrees to indemnify and
hold Tenant harmless from and against any and all such Indemnified Claims.
Landlord's indemnification obligations under this paragraph will survive the
expiration or earlier termination of this Lease and are not intended to and will
not relieve any insurance carrier of its obligations under policies required to
be carried by Landlord and/or by Tenant pursuant to the provisions of this
Lease.
19. INSURANCE.
(a) TENANT'S INSURANCE. On or before the earlier to occur of (i) the
Commencement Date, or (ii) the date Tenant commences any work of any type in the
Premises pursuant to this Lease (which may be prior to the Commencement Date),
and continuing throughout the entire Term hereof and any other period of
occupancy, Tenant agrees to keep in full force and effect, at its sole cost and
expense, the following insurance:
(i) "All Risks" property insurance including at least the following perils: fire
and extended coverage, smoke damage, vandalism, malicious mischief, sprinkler
leakage (including earthquake
-11-
sprinkler leakage). This insurance policy must be upon all property owned by
Tenant, for which Tenant is legally liable, or which is installed at Tenant's
expense, and which is located in the Building including, without limitation, any
Alterations, and all furniture, fittings, installations, fixtures and any other
personal property of Tenant, in an amount not less than the full replacement
cost thereof.
(ii) One (1) year insurance coverage for business interruption and loss of
income and extra expense insuring the same perils described in Subparagraph
19(a)(i) above, in such amounts as will reimburse Tenant for any direct or
indirect loss of earnings attributable to any such perils including prevention
of access to the Premises as a result of any such perils.
(iii) Commercial General Liability Insurance or Comprehensive General Liability
Insurance (on an occurrence form) insuring bodily injury, personal injury and
property damage including the following divisions and extensions of coverage:
Premises and Operations; Owners and Contractors protective; blanket contractual
liability (including coverage for Tenant's indemnity obligations under this
Lease); products and completed operations; and liquor liability (if Tenant
serves alcohol on the Premises). Such insurance must have the following minimum
limits of liability: bodily injury, personal injury and property damage -
$2,000,000 each occurrence, $5,000,000 in the aggregate.
(iv) Comprehensive Automobile Liability insuring bodily injury and property
damage arising from all owned, non-owned and hired vehicles, if any, with
minimum limits of liability of $1,000,000 per accident.
(v) Worker's Compensation as required by the laws of the State.
(vi) Landlord makes no representation that the limits of liability required to
be carried by Tenant under the terms of this Lease are adequate to protect
Tenant's interests and Tenant should obtain such additional insurance or
increased liability limits as Tenant deems appropriate.
(b) SUPPLEMENTAL TENANT INSURANCE REQUIREMENTS.
(i) All policies must be in a form reasonably satisfactory to Landlord and
issued by an insurer admitted to do business in the State.
(ii) All policies must be issued by insurers with a policyholder rating of "A-"
and a financial rating of "VII" in the most recent version of Best's Key Rating
Guide.
(iii) All policies must contain a requirement to notify Landlord (and Landlord's
mortgagees who are named as additional insureds, if any) in writing not less
than thirty (30) days prior to any material change, reduction in coverage,
cancellation or other termination thereof. Tenant agrees to deliver to Landlord,
as soon as practicable after placing the required insurance, but in any event
within the time frame specified in Subparagraph 19(a) above, certificate(s) of
insurance evidencing the existence of such insurance and Tenant's compliance
with the provisions of this Paragraph 19. Tenant agrees to cause replacement
certificates to be delivered to Landlord not less than thirty (30) days prior to
the expiration of any such policy or policies. If any such initial or
replacement certificates are not furnished within the time(s) specified herein,
Tenant will be deemed to be in material default under this Lease without the
benefit of any additional notice or cure period provided in Subparagraph
22(a)(iii) below, and Landlord will have the right, but not the obligation, to
procure such insurance as Landlord deems necessary to protect Landlord's
interests at Tenant's expense. If Landlord obtains any insurance that is the
responsibility of Tenant under this Xxxxxxxxx 00, Xxxxxxxx agrees to deliver to
Tenant a written statement setting forth the cost of any such insurance and
showing in reasonable detail the manner in which it has been computed and Tenant
agrees to promptly reimburse Landlord for such costs as additional rent.
(iv) General Liability and Automobile Liability policies under Subparagraphs
19(a)(iii) and (iv) must name Landlord and Landlord's mortgagees of which Tenant
has been informed in writing) as additional insureds and must also contain a
provision that the insurance afforded by such policy is primary insurance and
any insurance carried by Landlord and Landlord's mortgagees, if any, will be
excess over and non-contributing with Tenant's insurance.
(c) TENANT'S USE. Tenant will not keep, use, sell or offer for sale in or upon
the Premises any article which may be prohibited by any insurance policy
periodically in force covering the Premises. If Tenant's occupancy or business
in, or on, the Premises, whether or not Landlord has consented to the same,
results in any increase in premiums for the insurance periodically carried by
Landlord with respect to the Premises or results in the need for Landlord to
maintain special or additional insurance, Tenant agrees to pay Landlord the cost
of any such increase in premiums or special or additional coverage as additional
rent within thirty (30) days after being billed therefor by Landlord. In
determining whether increased premiums are a result of Tenant's use of the
Premises, a schedule issued by the organization computing the insurance rate on
the Premises, the Building or the Tenant Improvements showing the various
components of such rate, will be conclusive evidence of the several items and
charges which make up
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such rate. Tenant agrees to promptly comply with all reasonable requirements of
the insurance authority or any present or future insurer relating to the
Premises.
(d) LANDLORD INSURANCE. Landlord agrees to carry with insurance companies having
a Best's rating of A/VII or better "all risk" coverage insurance for the
Building in an amount of $3,000,000.00, including coverage for rental income
loss in the amount of one (1) year's worth of Monthly Base Rent. Landlord also
agrees to carry commercial general liability insurance with limits of not less
than $3,000,000.00 per occurrence of bodily injury/property damage with an
annual aggregate of $3,000,000.00. Landlord reserves the right to carry such
insurance under an "umbrella" or "blanket" policy or policies of insurance. The
costs for such insurance as applicable to the Building and the Premises shall
constitute an Operating Expense.
(e) CANCELLATION OF LANDLORD'S POLICIES. If any of Landlord's insurance policies
are canceled or cancellation is threatened or the coverage reduced or threatened
to be reduced in any way because of the use of the Premises or any part thereof
by Tenant or any assignee or subtenant of Tenant or by anyone Tenant permits on
the Premises and, if Tenant fails to remedy the condition giving rise to such
cancellation, threatened cancellation, reduction of coverage, threatened
reduction of coverage, increase in premiums, or threatened increase in premiums,
within ten (10) days after notice thereof, Tenant will be deemed to be in
material default of this Lease and Landlord may, at its option, either terminate
this Lease or enter upon the Premises and attempt to remedy such condition, and
Tenant shall promptly pay Landlord the reasonable costs of such remedy as
additional rent. If Landlord is unable, or elects not to remedy such condition,
then Landlord will have all of the remedies provided for in this Lease in the
event of a default by Tenant.
(f) WAIVER OF CLAIMS. Notwithstanding any provision of this Lease to the
contrary, whenever (a) any loss, cost, damage or expense (collectively,
"damage") resulting from fire, explosion or any other casualty is incurred by
either Landlord or by Tenant or by anyone claiming by, through or under Landlord
or Tenant in connection with the Premises and its contents and (b) such party is
covered in whole or in part by insurance with respect to such damage or is
required under this Lease to be so insured, then the party so insured (or so
required) hereby waives (on its own behalf and on behalf of its insurer) any
claims against and releases the other party from any liability said other party
may have on account of such damage. The foregoing is not intended to release
Tenant from liability for damage caused by Tenant or any of Tenant's Parties in
connection with any such casualty up to the amount of a commercially reasonable
insurance deductible considering the relevant marketplace.
20. DAMAGE OR DESTRUCTION.
(a) PARTIAL DESTRUCTION. If any portion of the Building is damaged by fire or
other casualty to an extent not exceeding twenty-five percent (25%) of the full
replacement cost thereof, and Landlord's contractor reasonably estimates in a
writing delivered to Landlord and Tenant that the damage thereto may be
repaired, reconstructed or restored to substantially its condition immediately
prior to such damage within ninety (90) days from the date of such casualty, and
Landlord will receive (or would have received if Landlord carried the insurance
required of Landlord under this Lease) insurance proceeds sufficient to cover
the costs of such repairs, reconstruction and restoration (including proceeds
from Tenant and/or Tenant's insurance which Tenant is required to deliver to
Landlord pursuant to Subparagraph 20(e) below to cover Tenant's obligation for
the costs of repair, reconstruction and restoration of any portion of any
Alterations for which Tenant is responsible under this Lease), then Landlord
agrees to commence and proceed diligently with the work of repair,
reconstruction and restoration and this Lease will continue in full force and
effect.
(b) SUBSTANTIAL DESTRUCTION. Any damage or destruction to the Building which
Landlord is not obligated to repair pursuant to Subparagraph 20(a) above will be
deemed a substantial destruction. In the event of a substantial destruction,
Landlord may elect to either (i) repair, reconstruct and restore the portion of
the Building damaged by such casualty, in which case this Lease will continue in
full force and effect, subject to Tenant's termination right contained in
Subparagraph 20(d) below; or (ii) terminate this Lease effective as of the date
which is thirty (30) days after Tenant's receipt of Landlord's election to so
terminate.
(c) NOTICE. Under any of the conditions of Subparagraph 20(a) or (b) above,
Landlord agrees to give written notice to Tenant of its intention to repair or
terminate, as permitted in such paragraphs, within forty-five (45) days after
the occurrence of such casualty.
(d) TENANT'S TERMINATION RIGHTS. If Landlord elects to repair, reconstruct and
restore pursuant to Subparagraph 20(b)(i) hereinabove, and if Landlord's
contractor estimates that as a result of such damage, Tenant cannot be given
reasonable use of and access to the Building within one hundred eighty (180)
days after the date of such damage, then Tenant may terminate this Lease
effective upon delivery of written notice to Landlord within ten (10) days after
Landlord delivers notice to Tenant of its election to so repair, reconstruct or
restore.
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(e) TENANT'S COSTS AND INSURANCE PROCEEDS. In the event of any damage or
destruction of all or any part of the Building, Tenant agrees to immediately (i)
notify Landlord thereof, and (ii), if this Lease is not terminated, deliver to
Landlord all property insurance proceeds received by Tenant with respect to any
Alterations, but excluding proceeds for Tenant's furniture, fixtures, equipment
and other personal property, whether or not this Lease is terminated as
permitted in this Paragraph 20, and Tenant hereby assigns to Landlord all rights
to receive such insurance proceeds. If Tenant fails to carry insurance on its
Alterations as required under this Lease, Tenant will be deemed to have
self-insured the replacement cost of such items, and, if this Lease is not
terminated, upon any damage or destruction thereto, Tenant agrees to immediately
pay to Landlord the full replacement cost of such items, less any insurance
proceeds actually received by Landlord from Landlord's or Tenant's insurance
with respect to such items.
(f) ABATEMENT OF RENT. In the event of any damage, repair, reconstruction and/or
restoration described in this Paragraph 20, rent will be abated or reduced, as
the case may be, from the date of such casualty, in proportion to the degree to
which Tenant's use of the Premises is impaired during such period of repair
until such use is restored, not to exceed the amount of Landlord's loss of
rental income insurance proceeds under Paragraph 19(d) above.
(g) INABILITY TO COMPLETE. Notwithstanding anything to the contrary contained in
this Paragraph 20, if Landlord is obligated or elects to repair, reconstruct
and/or restore the damaged portion of the Building pursuant to Subparagraph
20(a) or 20(b)(i) above, but is delayed from completing such repair,
reconstruction and/or restoration beyond the date which is sixty (60) days after
the date estimated by Landlord's contractor for completion thereof by reason of
any causes (other than delays caused by Tenant, its subtenants, employees,
agents or contractors or delays which are beyond the reasonable control of
Landlord as described in Paragraph 33), then either Landlord or Tenant may elect
to terminate this Lease upon ten (10) days prior written notice given to the
other after the expiration of such sixty (60) day period.
(h) DAMAGE NEAR END OF TERM. Landlord and Tenant shall each have the right to
terminate this Lease if any Material damage to the Building occurs during the
last twelve (12) months of the Term (as extended) where the repair,
reconstruction or restoration of such damage cannot be completed within sixty
(60) days after the date of such casualty. If either party desires to terminate
this Lease under this Subparagraph (h), it shall provide written notice to the
other party of such election within ten (10) days after becoming aware of the
damage to the Building.
(i) WAIVER OF TERMINATION RIGHT. Landlord and Tenant agree that the foregoing
provisions of this Paragraph 20 are to govern their respective rights and
obligations in the event of any damage or destruction and supersede and are in
lieu of the provisions of any applicable law, statute, ordinance, rule,
regulation, order or ruling now or hereafter in force which provide remedies for
damage or destruction of leased premises (including, without limitation, to the
extent the Premises are located in California, the provisions of California
Civil Code Section 1932, Subsection 2, and Section 1933, Subsection 4 and any
successor statute or laws of a similar nature).
(j) TERMINATION. Upon any termination of this Lease under any of the provisions
of this Paragraph 20, the parties will be released without further obligation to
the other from the date possession of the Premises is surrendered to Landlord
except for items which have accrued and are unpaid as of the date of termination
and matters which are to survive any termination of this Lease as provided in
this Lease.
21. EMINENT DOMAIN.
(a) SUBSTANTIAL TAKING. If the whole of the Premises, or such part thereof as
shall substantially interfere with Tenant's use and occupancy of the Premises as
contemplated by this Lease, is taken for any public or quasi-public purpose by
any lawful power or authority by exercise of the right of appropriation,
condemnation or eminent domain, or sold to prevent such taking, either party
will have the right to terminate this Lease effective as of the date possession
is required to be surrendered to such authority.
(b) PARTIAL TAKING; ABATEMENT OF RENT. In the event of a taking of a portion of
the Premises which does not substantially interfere with Tenant's use and
occupancy of the Premises, then, neither party will have the right to terminate
this Lease and Landlord will thereafter proceed to make a functional unit of the
remaining portion of the Premises and rent will be abated with respect to the
part of the Premises which Tenant is deprived of on account of such taking.
(c) CONDEMNATION AWARD. In connection with any taking of the Premises, Landlord
will be entitled to receive the entire amount of any award which may be made or
given in such taking or condemnation, without deduction or apportionment for any
estate or interest of Tenant, it being expressly understood and agreed by Tenant
that no portion of any such award will be allowed or paid to Tenant for any
so-called bonus or excess value of this Lease, and such bonus or excess value
will be the sole property of Landlord. Tenant agrees not to assert any claim
against Landlord or the taking authority for any compensation because of such
taking (including any claim for in excess one-half (1/2) of any bonus or excess
value of
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this Lease); provided, however, if any portion of the Premises is taken, Tenant
will have the right to recover from the condemning authority any compensation as
may be separately awarded or recoverable by Tenant for the taking of Tenant's
furniture, fixtures, equipment and other personal property within the Premises,
for Tenant's relocation expenses, and for any loss of goodwill or other damage
to Tenant's business by reason of such taking.
(d) TEMPORARY TAKING. In the event of taking of the Premises or any part thereof
for temporary use, (i) this Lease will remain unaffected thereby and rent will
xxxxx for the duration of the taking in proportion to the extent Tenant's use of
the Premises is interfered with, and (ii) Landlord will be entitled to receive
such portion or portions of any award made for such use provided that if such
taking remains in force at the expiration or earlier termination of this Lease,
Tenant will then pay to Landlord a sum equal to the reasonable cost of
performing Tenant's obligations under Paragraph 11 with respect to surrender of
the Premises and upon such payment Tenant will be excused from such obligations.
For purpose of this Subparagraph 21(d), a temporary taking shall be defined as a
taking for a period of ninety (90) days or less.
22. DEFAULTS AND REMEDIES.
(a) DEFAULTS. The occurrence of any one or more of the following events will be
deemed a default by Tenant:
(i) Intentionally omitted.
(ii) The failure by Tenant to make any payment of rent or additional rent or any
other payment required to be made by Tenant hereunder, as and when due, where
such failure continues for a period of five (5) days after written notice
thereof from Landlord to Tenant; provided, however, that any such notice will be
in lieu of, and not in addition to, any notice required under applicable law
(including, without limitation, to the extent the Premises are located in
California, the provisions of California Code of Civil Procedure Section 1161
regarding unlawful detainer actions or any successor statute or law of a similar
nature).
(iii) The failure by Tenant to observe or perform any of the covenants or
provisions of this Lease to be observed or performed by Tenant, other than as
specified in Subparagraph 22(a)(i) or (ii) above, where such failure continues
(where no other period of time is expressly provided) for a period of fifteen
(15) days after written notice thereof from Landlord to Tenant. The provisions
of any such notice will be in lieu of, and not in addition to, any notice
required under applicable law (including, without limitation, to the extent the
Premises are located in California, California Code of Civil Procedure Section
1161 regarding unlawful detainer actions and any successor statute or similar
law). If the nature of Tenant's default is such that more than fifteen (15) days
are reasonably required for its cure, then Tenant will not be deemed to be in
default if Tenant, with Landlord's concurrence, commences such cure within such
fifteen (15) day period and thereafter diligently prosecutes such cure to
completion.
(iv) (a) The making by Tenant of any general assignment for the benefit of
creditors; (b) the filing by or against Tenant of a petition to have Tenant
adjudged a bankrupt or 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); (c) 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 thirty (30) days; or (d) 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 thirty (30) days.
(b) LANDLORD'S REMEDIES; TERMINATION. In the event of any default by Tenant, in
addition to any other remedies available to Landlord at law or in equity under
applicable law (including, without limitation, to the extent the Premises are
located in California, the remedies of Civil Code Section 1951.4 and any
successor statute or similar law providing that Landlord may continue this Lease
in effect after Tenant's breach and abandonment and collect rent as it becomes
due, provided Tenant has the right to sublet or assign, subject only to
reasonable limitations), Landlord will have the immediate right and option to
terminate this Lease and all rights of Tenant hereunder. If Landlord elects to
terminate this Lease then, to the extent permitted under applicable law,
Landlord may recover from Tenant (i) The worth at the time of award of any
unpaid rent which had been earned at the time of such termination; plus (ii) the
worth at the time of award of the amount by which the unpaid rent which would
have been earned after termination until the time of award exceeds the amount of
such rent loss that Tenant proves could have been reasonably avoided; plus (iii)
the worth at the time of award of the amount by which the unpaid rent for the
balance of the Term after the time of award exceeds the amount of such rent loss
that Tenant proves could be reasonably avoided; plus (iv) any other amount
reasonably 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, results therefrom including, but not limited
to: attorneys' fees and costs; brokers' commissions; the costs of refurbishment,
alterations, renovation and repair of the
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Premises, and removal (including the repair of any damage caused by such
removal) and storage (or disposal) of Tenant's personal property, equipment,
fixtures, Alterations, the Tenant Improvements and any other items which Tenant
is required under this Lease to remove but does not remove, as well as the
unamortized value of $400,000 of the Tenant Improvement Allowance as well as the
full unamortized value of the Used Excess Allowance described in the Work Letter
Agreement. The unamortized value of such allowance(s) shall be determined by
taking the total value of such amount(s) and multiplying such amount(s) by a
fraction, the numerator of which is the number of months of the Lease Term not
yet elapsed as of the date on which the Lease is terminated, and the denominator
of which is the total number of months of the Lease Term. As used in
Subparagraphs 22(b)(i) and (ii) above, the "worth at the time of award" is
computed by allowing interest at the Interest Rate. As used in Subparagraph
22(b)(iii) 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%).
(c) LANDLORD'S REMEDIES; RE-ENTRY RIGHTS. In the event of any default by Tenant,
in addition to any other remedies available to Landlord under this Lease, at law
or in equity, Landlord will also have the right, with or without terminating
this Lease, 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 and/or disposed of at the sole cost and expense of and for the account
of Tenant in accordance with the provisions of Subparagraph 13(h) of this Lease
or any other procedures permitted by applicable law. No re-entry or taking
possession of the Premises by Landlord pursuant to this Subparagraph 22(c) will
be construed as an election to terminate this Lease unless a written notice of
such intention is given to Tenant or unless the termination thereof is decreed
by a court of competent jurisdiction.
(d) LANDLORD'S REMEDIES; RE-LETTING. In the event of the abandonment of the
Premises by Tenant or in the event that Landlord elects to re-enter the Premises
or takes 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, Landlord may from time to time, without terminating this Lease, either
recover all rent as it becomes due or relet the Premises or any part thereof on
terms and conditions as Landlord in its sole and absolute discretion may deem
advisable with the right to make alterations and repairs to the Premises in
connection with such reletting. If Landlord elects to relet the Premises, then
rents received by Landlord from such reletting will be applied: first, to the
payment of any indebtedness other than rent due hereunder from Tenant to
Landlord; second, to the payment of any cost of such reletting; third, to the
payment of the cost of any alterations and repairs to the Premises incurred in
connection with such reletting; fourth, to the payment of rent due and unpaid
hereunder and the residue, if any, will be held by Landlord and applied to
payment of future rent as the same may become due and payable hereunder. Should
that portion of such rents received from such reletting during any month, which
is applied to the payment of rent hereunder, be less than the rent payable
during that month by Tenant hereunder, then Tenant agrees to pay such deficiency
to Landlord immediately upon demand therefor by Landlord. Such deficiency will
be calculated and paid monthly.
(e) LANDLORD'S REMEDIES; PERFORMANCE FOR TENANT. All covenants and agreements to
be performed by Tenant under any of the terms of this Lease are to be performed
by Tenant at Tenant's sole cost and expense and without any abatement of rent.
If Tenant fails to pay any sum of money owed to any party other than Landlord,
for which it is liable under this Lease, or if Tenant fails to perform any other
act on its part to be performed hereunder, and such failure continues for
fifteen (15) days after notice thereof by Landlord, Landlord may, without
waiving or releasing Tenant from its obligations, but shall not be obligated to,
make any such payment or perform any such other act to be made or performed by
Tenant; provided, however if the nature of such failure is such that more than
fifteen (15) days are reasonably required for its cure, then Tenant will not be
deemed in default if Tenant commences such cure within such fifteen (15) day
period of time and thereafter diligently prosecutes such cure to completion.
Tenant agrees to reimburse Landlord upon demand for all sums so paid by Landlord
and all necessary incidental costs, together with interest thereon at the
Interest Rate, from the date of such payment by Landlord until reimbursed by
Tenant. This remedy shall be in addition to any other right or remedy of
Landlord set forth in this Paragraph 22.
(f) LATE PAYMENT. If Tenant fails to pay any installment of rent within thirty
(30) days of when due or if Tenant fails to make any other payment for which
Tenant is obligated under this Lease within thirty (30) days of when due, such
late amount will accrue interest at the Interest Rate and Tenant agrees to pay
Landlord as additional rent such interest on such amount from the date such
amount becomes due until such amount is paid. In addition, if Tenant fails to
pay any installment of rent within ten (10) days of when due, Tenant agrees to
pay to Landlord concurrently with such late payment amount, as additional rent,
a late charge equal to five percent (5%) of the amount due to compensate
Landlord for the extra costs Landlord will incur as a result of such late
payment; provided, however, Landlord hereby agrees to waive the late charge
payable by Tenant with respect to the first two (2) late payments made by Tenant
during the Term of this Lease and any extension thereof, provided that such late
payment is received by Landlord within twenty (20) days after such payment
becomes due. The parties agree that (i) it would be impractical and extremely
difficult to fix the actual damage Landlord will suffer in the event of Tenant's
late payment, (ii) such interest and late charge represents a fair and
reasonable estimate of the detriment
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that Landlord will suffer by reason of late payment by Tenant, and (iii) the
payment of interest and late charges are distinct and separate in that the
payment of interest is to compensate Landlord for the use of Landlord's money by
Tenant, while the payment of late charges is to compensate Landlord for
Landlord's processing, administrative and other costs incurred by Landlord as a
result of Tenant's delinquent payments. Acceptance of any such interest and late
charge will not constitute a waiver of the Tenant's default with respect to the
overdue amount, or prevent Landlord from exercising any of the other rights and
remedies available to Landlord.
(g) RIGHTS AND REMEDIES CUMULATIVE. All rights, options and remedies of Landlord
contained in this Lease will be construed and held to be cumulative, and no one
of them will be exclusive of the other, and Landlord shall have the right to
pursue any one or all of such remedies or any other remedy or relief which may
be provided by law or in equity, whether or not stated in this Lease. Nothing in
this Paragraph 22 will be deemed to limit or otherwise affect Tenant's
indemnification of Landlord pursuant to any provision of this Lease.
23. LANDLORD'S DEFAULT. Landlord will not be in default in the performance of
any obligation required to be performed by Landlord under this Lease unless
Landlord fails to perform such obligation within fifteen (15) days after the
receipt of written notice from Tenant specifying in detail Landlord's failure to
perform; provided however, that if the nature of Landlord's obligation is such
that more than fifteen (15) days are required for performance, then Landlord
will not be deemed in default if it commences such performance within such
fifteen (15) day period and thereafter diligently pursues the same to
completion. Upon any default by Landlord, Tenant may exercise any of its rights
provided at law or in equity, subject to the limitations on liability set forth
in Paragraph 35 of this Lease.
24. ASSIGNMENT AND SUBLETTING.
(a) RESTRICTION ON TRANSFER. Except as expressly provided in this Paragraph 24,
Tenant will not, either voluntarily or by operation of law, assign or encumber
this Lease or any interest herein or sublet the Premises or any part thereof, or
permit the use or occupancy of the Premises by any party other than Tenant (any
such assignment, encumbrance, sublease or the like will sometimes be referred to
as a "Transfer"), without the prior written consent of Landlord, which consent
Landlord will not unreasonably withhold.
(b) CORPORATE AND PARTNERSHIP TRANSFERS. For purposes of this Paragraph 24, if
Tenant is a corporation, partnership or other entity, any transfer, assignment,
encumbrance or hypothecation of fifty percent (50%) or more (individually or in
the aggregate) of any stock or other ownership interest in such entity, and/or
any transfer, assignment, hypothecation or encumbrance of any controlling
ownership or voting interest in such entity, will be deemed a Transfer and will
be subject to all of the restrictions and provisions contained in this Paragraph
24. Notwithstanding the foregoing, the immediately preceding sentence will not
apply to any transfers of stock of Tenant if Tenant is a publicly-held
corporation and such stock is transferred publicly over a recognized security
exchange or over-the-counter market.
(c) PERMITTED CONTROLLED TRANSFERS. Notwithstanding the provisions of this
Paragraph 24 to the contrary, Tenant may assign this Lease or sublet the
Premises or any portion thereof ("Permitted Transfer"), without Landlord's
consent and without extending any sublease termination option to Landlord, to
any parent, subsidiary or affiliate corporation which controls, is controlled by
or is under common control with Tenant, or to any corporation resulting from a
merger or consolidation with Tenant, or to any person or entity which acquires
all the assets of Tenant's business as a going concern, provided that: (i) at
least ten (10) days prior to such assignment or sublease, Tenant delivers to
Landlord the financial statements and other financial and background information
of the assignee or sublessee described in Subparagraph 24(d) below; (ii) if an
assignment, the assignee assumes, in full, the obligations of Tenant under this
Lease (or if a sublease, the sublessee of a portion of the Premises or Term
assumes, in full, the obligations of Tenant with respect to such portion); (iii)
the financial net worth of the assignee or sublessee as of the time of the
proposed assignment or sublease equals or exceeds that of Tenant as of the date
of execution of this Lease; (iv) Tenant remains fully liable under this Lease;
and (v) the use of the Premises under Paragraph 8 remains unchanged.
(d) TRANSFER NOTICE. If Tenant desires to effect a Transfer, then at least
twenty (20) days prior to the date when Tenant desires the Transfer to be
effective (the "Transfer Date"), Tenant agrees to give Landlord a notice (the
"Transfer Notice"), stating the name, address and business of the proposed
assignee, sublessee or other transferee (sometimes referred to hereinafter as
"Transferee"), reasonable information (including references) concerning the
character, ownership, and financial condition of the proposed Transferee, the
Transfer Date, any ownership or commercial relationship between Tenant and the
proposed Transferee, and the consideration and all other material terms and
conditions of the proposed Transfer, all in such detail as Landlord may
reasonably require. If Landlord reasonably requests additional detail, the
Transfer Notice will not be deemed to have been received until Landlord receives
such additional detail, and Landlord may withhold consent to any Transfer until
such information is provided to it.
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(e) LANDLORD'S OPTIONS. Within fifteen (15) days of Landlord's receipt of any
Transfer Notice, and any additional information requested by Landlord concerning
the proposed Transferee's financial responsibility, Landlord will elect to do
one of the following (i) consent to the proposed Transfer; or (ii) refuse such
consent, which refusal shall be on reasonable grounds including, without
limitation, those set forth in Subparagraph 24(f) below. If Tenant's Transfer
Notice states in bold and all capital letters that Landlord's failure to respond
within such fifteen (15) day period of time will constitute Landlord's approval
of the Transfer (with an appropriate reference to this Subparagraph 24(e)), then
Landlord's failure to respond within such fifteen (15) day period of time shall
constitute Landlord's approval of the applicable Transfer.
(f) REASONABLE DISAPPROVAL. Landlord and Tenant hereby acknowledge that
Landlord's disapproval of any proposed Transfer pursuant to Subparagraph 24(e)
will be deemed reasonably withheld if based upon any reasonable factor,
including, without limitation, any or all of the following factors: (i) the
proposed Transferee is a governmental entity; (ii) the portion of the Premises
to be sublet or assigned violates any laws, rules, regulations or ordinances
with respect to shape with inadequate means of ingress and egress; (iii) the use
of the Premises by the Transferee is not permitted by the use provisions in
Paragraph 8 hereof; and (iv) the Transferee does not have the financial
capability to fulfill the obligations imposed by the Transfer and this Lease.
(g) ADDITIONAL CONDITIONS. A condition to Landlord's consent to any Transfer of
this Lease will be the delivery to Landlord of a true copy of the fully executed
instrument of assignment, sublease, transfer or hypothecation, and, in the case
of an assignment, the delivery to Landlord of an agreement executed by the
Transferee in form and substance reasonably satisfactory to Landlord, whereby
the Transferee assumes and agrees to be bound by all of the terms and provisions
of this Lease and to perform all of the obligations of Tenant hereunder. As a
condition for granting its consent to any assignment or sublease, Landlord may
require that, while Tenant is in default under this Lease, the assignee or
sublessee remit directly to Landlord on a monthly basis, all monies due to
Tenant by said assignee or sublessee. As a condition to Landlord's consent to
any sublease, such sublease must provide that it is subject and subordinate to
this Lease and to all mortgages; that Landlord may enforce the provisions of the
sublease, including collection of rent; that in the event of termination of this
Lease for any reason, including without limitation a voluntary surrender by
Tenant, or in the event of any reentry or repossession of the Premises by
Landlord, Landlord may, at its option, either (i) terminate the sublease, or
(ii) take over all of the right, title and interest of Tenant, as sublessor,
under such sublease, in which case such sublessee will attorn to Landlord, but
that nevertheless Landlord will not (1) be liable for any previous act or
omission of Tenant under such sublease, (2) be subject to any defense or offset
previously accrued in favor of the sublessee against Tenant, or (3) be bound by
any previous modification of any sublease made without Landlord's written
consent, or by any previous prepayment by sublessee of more than one month's
rent.
(h) EXCESS RENT. If Landlord consents to any assignment of this Lease, Tenant
agrees to pay to Landlord, as additional rent, fifty percent (50%) of all sums
and other consideration payable to and for the benefit of Tenant by the assignee
on account of the assignment, as and when such sums and other consideration are
due and payable by the assignee to or for the benefit of Tenant (or, if Landlord
so requires, and without any release of Tenant's liability for the same, Tenant
agrees to instruct the assignee to pay such sums and other consideration
directly to Landlord). If for any sublease, Tenant receives rent or other
consideration, either initially or over the term of the sublease, in excess of
the rent fairly allocable to the portion of the Premises which is subleased
based on square footage, Tenant agrees to pay to Landlord as additional rent
fifty percent (50%) of the excess of each such payment of rent or other
consideration received by Tenant promptly after its receipt. In calculating
excess rent or other consideration which may be payable to Landlord under this
paragraph, Tenant will be entitled to deduct commercially reasonable third party
brokerage commissions and attorneys' fees and other amounts reasonably and
actually expended by Tenant in connection with such assignment or subletting if
acceptable written evidence of such expenditures is provided to Landlord.
(i) NO RELEASE. No Transfer will release Tenant of Tenant's obligations under
this Lease or alter the primary liability of Tenant to pay the rent and to
perform all other obligations to be performed by Tenant hereunder. The
acceptance of rent by Landlord from any other person will not be deemed to be a
waiver by Landlord of any provision hereof. Consent by Landlord to one Transfer
will not be deemed consent to any subsequent Transfer. In the event of default
by any Transferee of Tenant or any successor of Tenant in the performance of any
of the terms hereof, Landlord may proceed directly against Tenant without the
necessity of exhausting remedies against such Transferee or successor. Landlord
may consent to subsequent assignments of this Lease or sublettings or amendments
or modifications to this Lease with assignees of Tenant, without notifying
Tenant, or any successor of Tenant, and without obtaining its or their consent
thereto and any such actions will not relieve Tenant of liability under this
Lease. Notwithstanding the immediately preceding sentence, no subsequent
assignments, sublettings, amendments or modifications made without Tenant's
consent will serve to increase Tenant's liability under this Lease or to extend
the period of time during which Tenant's obligations under this Lease are to be
discharged.
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(j) ADMINISTRATIVE AND ATTORNEYS' FEES. If Tenant effects a Transfer or requests
the consent of Landlord to any Transfer (whether or not such Transfer is
consummated), then, upon demand, Tenant agrees to pay Landlord a non-refundable
administrative fee of Two Hundred Fifty Dollars ($250.00), plus any reasonable
attorneys' and paralegal fees incurred by Landlord in connection with such
Transfer or request for consent. Acceptance of the Two Hundred Fifty Dollar
($250.00) administrative fee and/or reimbursement of Landlord's attorneys' and
paralegal fees will in no event obligate Landlord to consent to any proposed
Transfer.
25. SUBORDINATION. Without the necessity of any additional document being
executed by Tenant for the purpose of effecting a subordination, and at the
election of Landlord or any mortgagee or beneficiary with a deed of trust
encumbering the Premises, or any lessor of a ground or underlying lease with
respect to the Building, this Lease will be subject and subordinate at all times
to: (i) all ground leases or underlying leases which may now exist or hereafter
be executed affecting the Premises; and (ii) the lien of any mortgage or deed of
trust which may now exist or hereafter be executed for which Premises or any
leases thereof, or Landlord's interest and estate in any of said items, is
specified as security. Notwithstanding the foregoing, Landlord reserves the
right to subordinate any such ground leases or underlying leases or any such
liens to this Lease. If any such ground lease or underlying lease terminates for
any reason or any such mortgage or deed of trust is foreclosed or a conveyance
in lieu of foreclosure is made for any reason, at the election of Landlord's
successor in interest, Tenant agrees to attorn to and become the tenant of such
successor in which event Tenant's right to possession of the Premises will not
be disturbed as long as Tenant is not in default under this Lease. Tenant
covenants and agrees to execute and deliver, upon demand by Landlord and in the
form reasonably required by Landlord, any additional documents evidencing the
priority or subordination of this Lease and Tenant's attornment agreement with
respect to any such ground lease or underlying leases or the lien of any such
mortgage or deed of trust. If Tenant fails to sign and return any such documents
within ten (10) days of receipt, Tenant will be in default hereunder. Landlord
shall use reasonable efforts to cause (i) any current deed of trust
beneficiaries of the Building to execute a subordination, attornment and
non-disturbance agreement ("SNDA") on such beneficiaries' standard form within
sixty (60) days after the date of this Lease, and (ii) any future deed of trust
beneficiaries of the Building who later provide a loan secured by the Premises
to execute a SNDA on such beneficiaries' standard form; provided, however, any
failure by Landlord to obtain such SNDA shall not constitute any default by
Landlord under this Lease nor entitle Tenant to terminate this Lease or result
in any liability of Landlord to Tenant for any loss or damage resulting
therefrom.
26. ESTOPPEL CERTIFICATE.
(a) TENANT'S OBLIGATIONS. Within fifteen (15) days following any written request
which Landlord may make from time to time, Tenant agrees to execute and deliver
to Landlord a statement, in a form substantially similar to the form of EXHIBIT
"G" attached hereto or another reasonable form, certifying: (i) the date of
commencement of this Lease; (ii) the fact that this Lease is unmodified and in
full force and effect (or, if there have been modifications, that this Lease is
in full force and effect, and stating the date and nature of such
modifications); (iii) the date to which the rent and other sums payable under
this Lease have been paid; (iv) that there are no current defaults under this
Lease by either Landlord or Tenant except as specified in Tenant's statement;
and (v) such other matters reasonably requested by Landlord. Landlord and Tenant
intend that any statement delivered pursuant to this Paragraph 26 may be relied
upon by any mortgagee, beneficiary, purchaser or prospective purchaser of the
Building or any interest therein.
(b) TENANT'S FAILURE TO DELIVER. Tenant's failure to deliver such statement
within such time will be conclusive upon Tenant (i) that this Lease is in full
force and effect, without modification except as may be represented by Landlord,
(ii) that there are no uncured defaults in Landlord's performance, and (iii)
that not more than one (1) month's rent has been paid in advance. Without
limiting the foregoing, if Tenant fails to deliver any such statement within
such fifteen (15) day period, Landlord may deliver to Tenant an additional
request for such statement and Tenant's failure to deliver such statement to
Landlord within ten (10) days after delivery of such additional request will
constitute a default under this Lease. Tenant agrees to indemnify and protect
Landlord from and against any and all claims, damages, losses, liabilities and
expenses (including attorneys' fees and costs) attributable to any failure by
Tenant to timely deliver any such estoppel certificate to Landlord as required
by this Paragraph 26.
27. INTENTIONALLY OMITTED.
28. RULES AND REGULATIONS. Tenant agrees to faithfully observe and comply with
the "Rules and Regulations," a copy of which is attached hereto and incorporated
herein by this reference as EXHIBIT "H", and all reasonable and
nondiscriminatory modifications thereof and additions thereto from time to time
put into effect by Landlord.
29. MODIFICATION AND CURE RIGHTS OF LANDLORD'S MORTGAGEES AND LESSORS.
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(a) MODIFICATIONS. If, in connection with Landlord's
obtaining or entering into any financing or ground lease for any portion of the
Premises, the lender or ground lessor requests modifications to this Lease,
Tenant, within ten (10) days after request therefor, agrees to execute an
amendment to this Lease incorporating such modifications, provided such
modifications are reasonable and do not increase the obligations of Tenant under
this Lease or adversely affect the leasehold estate created by this Lease.
(b) CURE RIGHTS. In the event of any default on the part of Landlord, Tenant
will give notice by registered or certified mail to any beneficiary of a deed of
trust or mortgage covering the Premises or ground lessor of Landlord whose
address has been furnished to Tenant, and Tenant agrees to offer such
beneficiary, mortgagee or ground lessor a reasonable opportunity to cure the
default (including with respect to any such beneficiary or mortgagee, time to
obtain possession of the Premises, subject to this Lease and Tenant's rights
hereunder, by power of sale or a judicial foreclosure, if such should prove
necessary to effect a cure).
30. DEFINITION OF LANDLORD. The term "Landlord," as used in this Lease, so far
as covenants or obligations on the part of Landlord are concerned, means and
includes only the owner or owners, at the time in question, of the fee title of
the Premises or the lessees under any ground lease, if any. In the event of any
transfer, assignment or other conveyance or transfers of any such title (other
than a transfer for security purposes only), Landlord herein named (and in case
of any subsequent transfers or conveyances, the then grantor) will be
automatically relieved from and after the date of such transfer, assignment or
conveyance of all liability as respects the performance of any covenants or
obligations on the part of Landlord contained in this Lease thereafter to be
performed, so long as the transferee assumes in writing all such covenants and
obligations of Landlord arising after the date of such transfer. Landlord and
Landlord's transferees and assignees have the absolute right to transfer all or
any portion of their respective title and interest in the Premises and/or this
Lease without the consent of Tenant, and such transfer or subsequent transfer
will not be deemed a violation on Landlord's part of any of the terms and
conditions of this Lease.
31. WAIVER. The waiver by either party of any breach of any term, covenant or
condition herein contained will not be deemed to be a waiver of any subsequent
breach of the same or any other term, covenant or condition herein contained,
nor will any custom or practice which may develop between the parties in the
administration of the terms hereof be deemed a waiver of or in any way affect
the right of either party to insist upon performance in strict accordance with
said terms. The subsequent acceptance of rent or any other payment hereunder by
Landlord will not be deemed to be a waiver of any preceding breach by Tenant of
any term, covenant or condition of this Lease, other than the failure of Tenant
to pay the particular rent so accepted, regardless of Landlord's knowledge of
such preceding breach at the time of acceptance of such rent. No acceptance by
Landlord of a lesser sum than the basic rent and additional rent or other sum
then due will be deemed to be other than on account of the earliest installment
of such rent or other amount due, nor will any endorsement or statement on any
check or any letter accompanying any check be deemed an accord and satisfaction,
and Landlord may accept such check or payment without prejudice to Landlord's
right to recover the balance of such installment or other amount or pursue any
other remedy provided in this Lease. The consent or approval of Landlord to or
of any act by Tenant requiring Landlord's consent or approval will not be deemed
to waive or render unnecessary Landlord's consent or approval to or of any
subsequent similar acts by Tenant.
32. PARKING. So long as this Lease is in effect, Tenant shall be allotted all
parking spaces located on the Premises. In addition, subject to compliance with
any applicable codes, Tenant may designate that certain of such parking spaces
be identified as "visitor parking" which shall be used exclusively for visitors
and guests of Tenant, and marked accordingly.
33. FORCE MAJEURE. If either Landlord or Tenant is delayed, hindered in or
prevented from the performance of any act required under this Lease by reason of
strikes, lock-outs, labor troubles, inability to procure standard materials,
failure of power, restrictive governmental laws, regulations or orders or
governmental action or inaction (including failure, refusal or delay in issuing
permits, approvals and/or authorizations which is not the result of the action
or inaction of the party claiming such delay), riots, civil unrest or
insurrection, war, fire, earthquake, flood or other natural disaster, unusual
and unforeseeable delay which results from an interruption of any public
utilities (e.g., electricity, gas, water, telephone) or other unusual and
unforeseeable delay not within the reasonable control of the party delayed in
performing work or doing acts required under the provisions of this Lease, then
performance of such act will be excused for the period of the delay and the
period for the performance of any such act will be extended for a period
equivalent to the period of such delay. The provisions of this Paragraph 33 will
not operate to excuse Tenant from prompt payment of rent or any other payments
required under the provisions of this Lease.
34. SIGNS. Tenant shall be allowed to install one (1) or more building signs on
the main fascia of the exterior of the Building (the "Tenant Identification
Signs"). Landlord and Tenant shall mutually agree to designate the precise
location for said signs. Tenant agrees to install and maintain the Tenant
Identification Signs in such designated locations in accordance with this
Paragraph 34 at Tenant's sole
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cost and expense. Tenant will not display any other signs that are visible from
the exterior of the Building without Landlord's prior written consent. The right
to, size, design, color and other physical aspects of any and all permitted
sign(s) will be subject to (i) Landlord's written approval prior to
installation, which approval will not be unreasonably withheld, (ii) any
covenants, conditions or restrictions governing the Premises, and (iii) any
applicable municipal or governmental permits and approvals from the City of San
Diego. Tenant will be solely responsible for all costs for installation,
maintenance, repair and removal of the Tenant Identification Signs. If Tenant
fails to remove Tenant's sign(s) upon termination of this Lease and repair any
damage caused by such removal, Landlord may do so at Tenant's sole cost and
expense. Tenant agrees to reimburse Landlord for all costs incurred by Landlord
to effect any installation, maintenance or removal on Tenant's account, which
amount will be deemed additional rent, and may include, without limitation, all
sums disbursed, incurred or deposited by Landlord including Landlord's costs,
expenses and actual attorneys' fees with interest thereon at the Interest Rate
from the date of Landlord's demand until paid by Tenant.
35. LIMITATION ON LIABILITY. In consideration of the benefits accruing
hereunder, Tenant on behalf of itself and all successors and assigns of Tenant
covenants and agrees that, in the event of any actual or alleged failure, breach
or default hereunder by Landlord: (a) Tenant's recourse against Landlord for
monetary damages will be limited to Landlord's interest in the Building
including, subject to the prior rights of any Mortgagee, Landlord's interest in
the rents of the Building and any insurance proceeds payable to Landlord; (b)
Except as may be necessary to secure jurisdiction of the partnership or company,
no partner or member of Landlord shall be sued or named as a party in any suit
or action and no service of process shall be made against any partner or member
of Landlord; (c) No partner or member of Landlord shall be required to answer or
otherwise plead to any service of process; (d) No judgment will be taken against
any partner or member of Landlord and any judgment taken against any partner or
member of Landlord may be vacated and set aside at any time after the fact; (e)
No writ of execution will be levied against the assets of any partner or member
of Landlord; (f) The obligations under this Lease do not constitute personal
obligations of the individual members, partners, directors, officers or
shareholders of Landlord, and Tenant shall not seek recourse against the
individual members, partners, directors, officers or shareholders of Landlord or
any of their personal assets for satisfaction of any liability in respect to
this Lease; and (g) These covenants and agreements are enforceable both by
Landlord and also by any partner or member of Landlord.
36. FINANCIAL STATEMENTS. Prior to the execution of this Lease by Landlord and
at any time during the Term of this Lease upon ten (10) days prior written
notice from Landlord, Tenant agrees to provide Landlord with a current financial
statement for Tenant and financial statements for the two (2) years prior to the
current financial statement year for Tenant. Such statements are to be prepared
in accordance with generally accepted accounting principles and, if such is the
normal practice of Tenant, audited by an independent certified public
accountant. Notwithstanding the foregoing, to the extent Tenant is a publicly
traded company, Tenant may satisfy the foregoing obligations by delivering the
most recently published annual and quarterly reports of Tenant.
37. QUIET ENJOYMENT. Landlord covenants and agrees with Tenant that upon Tenant
paying the rent required under this Lease and paying all other charges and
performing all of the covenants and provisions on Tenant's part to be observed
and performed under this Lease, Tenant may peaceably and quietly have, hold and
enjoy the Premises in accordance with this Lease without hindrance or
molestation by Landlord or its employees or agents.
38. MISCELLANEOUS.
(a) CONFLICT OF LAWS. This Lease shall be governed by and construed solely
pursuant to the laws of the State of California, without giving effect to choice
of law principles thereunder.
(b) SUCCESSORS AND ASSIGNS. Except as otherwise provided in this Lease, all of
the covenants, conditions and provisions of this Lease shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors and assigns.
(c) PROFESSIONAL FEES AND COSTS. If either Landlord or Tenant should bring suit
against the other with respect to this Lease, then all costs and expenses,
including without limitation, actual professional fees and costs such as
appraisers', accountants' and attorneys' fees and costs, incurred by the party
which prevails in such action, whether by final judgment or out of court
settlement, shall be paid by the other party, which obligation on the part of
the other party shall be deemed to have accrued on the date of the commencement
of such action and shall be enforceable whether or not the action is prosecuted
to judgment. As used herein, attorneys' fees and costs shall include, without
limitation, attorneys' fees, costs and expenses incurred in connection with any
(i) postjudgment motions; (ii) contempt proceedings; (iii) garnishment, levy,
and debtor and third party examination; (iv) discovery; and (v) bankruptcy
litigation.
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(d) TERMS AND HEADINGS. The words "Landlord" and "Tenant" as used
herein shall include the plural as well as the singular. Words used in any
gender include other genders. The paragraph headings of this Lease are not a
part of this Lease and shall have no effect upon the construction or
interpretation of any part hereof.
(e) TIME. Time is of the essence with respect
to the performance of every provision of this Lease in which time of performance
is a factor.
(f) PRIOR AGREEMENT; AMENDMENTS. This Lease constitutes and is intended by the
parties to be a final, complete and exclusive statement of their entire
agreement with respect to the subject matter of this Lease. This Lease
supersedes any and all prior and contemporaneous agreements and understandings
of any kind relating to the subject matter of this Lease excepting the prior
written agreement(s) of the parties pertaining to resolution of environmental
issues. There are no other agreements, understandings, representations,
warranties, or statements, either oral or in written form, concerning the
subject matter of this Lease. No alteration, modification, amendment or
interpretation of this Lease shall be binding on the parties unless contained in
a writing which is signed by both parties.
(g) SEPARABILITY. The provisions of this Lease shall be considered separable
such that if any provision or part of this Lease is ever held to be invalid,
void or illegal under any law or ruling, all remaining provisions of this Lease
shall remain in full force and effect to the maximum extent permitted by law.
(h) RECORDING. Neither Landlord nor Tenant shall record this Lease nor a short
form memorandum thereof without the consent of the other.
(i) COUNTERPARTS. This Lease may be executed in one or more counterparts, each
of which shall constitute an original and all of which shall be one and the same
agreement.
39. EXECUTION OF LEASE.
(a) TENANT AS CORPORATION OR PARTNERSHIP. If Tenant executes this Lease as a
corporation or partnership, then Tenant and the persons executing this Lease on
behalf of Tenant represent and warrant that such entity is duly qualified and in
good standing to do business in California and that the individuals executing
this Lease on Tenant's behalf are duly authorized to execute and deliver this
Lease on its behalf, and in the case of a corporation, in accordance with a duly
adopted resolution of the board of directors of Tenant, a copy of which is to be
delivered to Landlord on execution hereof, if requested by Landlord, and in
accordance with the by-laws of Tenant, and, in the case of a partnership, in
accordance with the partnership agreement and the most current amendments
thereto, if any, copies of which are to be delivered to Landlord on execution
hereof, if requested by Landlord, and that this Lease is binding upon Tenant in
accordance with its terms.
(b) EXAMINATION OF LEASE. Submission of this instrument by Landlord to Tenant
for examination or signature by Tenant does not constitute a reservation of or
option for lease, and it is not effective as a lease or otherwise until
execution by and delivery to both Landlord and Tenant.
[SEE ADDENDUM FOR ADDITIONAL NUMBERED SECTIONS 40 THROUGH 45]
IN WITNESS WHEREOF, the parties have caused this Lease to be duly executed by
their duly authorized representatives as of the date first above written.
TENANT: LANDLORD:
XXXXXXX TECHNOLOGIES, INC., BALBOA BOULEVARD BUILDING, G.P.,
a Delaware corporation a general partnership
By: By:
-------------------------------------- -----------------------------
Print Name: Xxxxxx XxxXxxxxx
--------------------------- Its: Managing General Partner
Print Title:
--------------------------
By:
--------------------------------------
Print Name:
---------------------------
Print Title:
--------------------------
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ADDENDUM
This Addendum is attached to, made a part of, incorporated into, and amends and
supplements, that certain Office Building Lease dated March 28, 2000 (the
"Lease"), by and between BALBOA BOULEVARD BUILDING, G.P., a general partnership
("Landlord"), and XXXXXXX TECHNOLOGIES, INC., a Delaware corporation ("Tenant").
Landlord and Tenant agree that, notwithstanding anything contained in the Lease
to the contrary, the provisions set forth in this Addendum will be deemed to be
a part of the Lease and will supersede any contrary provisions in the Lease and
shall prevail and control for all purposes. All references in the Lease and in
this Addendum to the defined term "Lease" are to be construed to mean the Lease
as amended and supplemented by this Addendum. Capitalized terms which are not
defined in this Addendum have the meanings given to them in the Lease. The
paragraphs below are numbered consecutively with those of the Lease.
40. OPTIONS TO EXTEND.
(a) Subject to the terms of this Paragraph 40 and Paragraph 42, entitled
"Options," Landlord hereby grants to Tenant two (2) consecutive options (the
"Extension Options") to extend the Term of this Lease with respect to only the
entire Premises for additional periods of three (3) years each (the "Option
Terms"), on the same terms, covenants and conditions as provided for in this
Lease during the initial Lease Term, except that Tenant shall have no further
extension options and Monthly Base Rent and all other economic terms shall be
based on the "fair market rental rate" for the Premises for each Option Term as
defined and determined in accordance with the provisions of this Paragraph 40
below. Notwithstanding the foregoing, Monthly Base Rent at the beginning of each
Option Term will be ninety-five percent (95%) of the fair market rental rate,
but in no event shall the Monthly Base Rent at the beginning of the Option Term
be less than the Monthly Base Rent for the final Lease Year of the immediately
preceding Term.
(b) Each Extension Option must be exercised, if at all, by written notice
("Extension Notice") delivered by Tenant to Landlord no later than the date
which is nine (9) months, and no earlier than the date which is one (1) year,
prior to the expiration of the then current Term of this Lease.
(c) The term "fair market rental rate" as used in this Addendum shall mean the
annual amount per rentable square foot, projected during the relevant period,
that a willing, financially comparable, non-equity, tenant (excluding sublease
and assignment transactions) would pay, and a willing, institutional landlord of
a comparable quality building project, located in the San Diego-Kearny Mesa area
("Comparison Area") would accept, at arm's length, for space comparable in size
and quality as the leased area at issue taking into account the age, quality and
layout of the existing improvements (excluding those paid for solely by Tenant)
in the leased area at issue and taking into account items that professional real
estate brokers customarily consider, including, but not limited to, rental
rates, space availability, tenant size and financial strength, tenant
improvement allowances, operating expenses and allowance, parking charges and
any other charges then being levied by Landlord or the lessors of such similar
buildings.
(d) Landlord's determination of fair market rental rate shall be delivered to
Tenant in writing not later than thirty (30) days following Landlord's receipt
of Tenant's Extension Notice. Tenant will have thirty (30) days ("Tenant's
Review Period") after receipt of Landlord's notice of the fair market rental
rate within which to accept such fair market rental rate or to object thereto in
writing. Tenant's failure to accept the fair market rental rate submitted by
Landlord in writing within Tenant's Review Period will conclusively be deemed
Tenant's rejection thereof. If Tenant objects (or is deemed to have rejected) to
the fair market rental rate submitted by Landlord within Tenant's Review Period,
then Landlord and Tenant will attempt in good faith to agree upon such fair
market rental rate using their best good faith efforts. If Landlord and Tenant
fail to reach agreement on such fair market rental rate within fifteen (15) days
following the expiration of Tenant's Review Period (the "Outside Agreement
Date"), then each party's determination will be submitted to appraisal in
accordance with the provisions below.
(e) (i) Landlord and Tenant shall each appoint one independent, unaffiliated
appraiser who shall by profession be a real estate broker who has been active
over the five (5) year period ending on the date of such appointment in the
leasing of comparable properties in the Comparison Area. Each such appraiser
will be appointed within thirty (30) days after the Outside Agreement Date.
(ii) The two (2) appraisers so appointed will within fifteen (15) days of the
date of the appointment of the last appointed appraiser agree upon and appoint a
third appraiser who shall be qualified under the same criteria set forth herein
above for qualification of the initial two (2) appraisers.
(iii) The determination of the appraisers shall be limited solely to the issue
of whether Landlord's or Tenant's last proposed (as of the Outside Agreement
Date) new Monthly Base Rent for the Premises is the
ADDENDUM
Page 1
closest to the actual new Monthly Base Rent for the Premises as determined by
the appraisers, taking into account the requirements of Paragraph (c) and this
Paragraph (e) regarding same.
(iv) The three (3) appraisers shall within thirty (30) days of the appointment
of the third appraiser reach a decision as to whether the parties shall use
Landlord's or Tenant's submitted new Monthly Base Rent, and shall notify
Landlord and Tenant thereof.
(v) The decision of the majority of the three (3) appraisers shall be binding
upon Landlord and Tenant and neither party will have the right to undo the
exercise of the Extension Option or reject the appraisers' determination. The
cost of each party's appraiser shall be the responsibility of the party
selecting such appraiser, and the cost of the third appraiser (or arbitration,
if necessary) shall be shared equally by Landlord and Tenant.
(vi) If either Landlord or Tenant fails to appoint an appraiser within the time
period in Paragraph (e)(i) herein above, the appraiser appointed by one of them
shall reach a decision, notify Landlord and Tenant thereof and such appraiser's
decision shall be binding upon Landlord and Tenant and neither party will have
the right to undo the exercise of the Extension Option or reject the appraiser's
determination.
(vii) If the two (2) appraisers fail to agree upon and appoint a third
appraiser, both appraisers shall be dismissed and the matter to be decided shall
be forthwith submitted to arbitration under the provisions of the American
Arbitration Association.
(viii) In the event that the new Monthly Base Rent is not established prior to
end of the then current Term of the Lease, the Monthly Base Rent immediately
payable at the commencement of the Option Term shall be the Monthly Base Rent
determined by Landlord under subparagraph (d) above. Notwithstanding the above,
once the fair market rental is determined in accordance with this section, the
parties shall settle any overpayment on the next Monthly Base Rent payment date
falling not less than thirty (30) days after such determination.
(f) Effective as of each anniversary of the commencement of each Option Term,
the Monthly Base Rent shall be increased by the percentage increase in the Index
(as defined and described in Paragraph 1(k) of this Lease), not to exceed five
percent (5%) per year nor be less than three percent (3%) per year of the
Monthly Base Rent in effect immediately preceding such increase.
41. SATELLITE DISH. Subject to Tenant's compliance with the terms of Paragraph
13 of this Lease, Tenant shall have the right to place one (1) satellite dish,
one (1) microwave dish and one (1) antenna (collectively, the "Transmission
Devices") on the roof of the Building for Tenant's use only provided that: (a)
Tenant is not in default under this Lease beyond any applicable notice and cure
period and this Lease has not been terminated; (b) Landlord approves the size,
location, configuration and plans and specifications of the Transmission
Devices; (c) Tenant shall install such Transmission Devices in accordance with
such approved plans and specifications and all applicable laws; (d) Tenant shall
bear all expenses in connection therewith; (e) Tenant shall be responsible for
all roof problems attributable or related to or connected with the Transmission
Devices; (f) all utilities consumed in connection therewith shall be the sole
responsible of Tenant; and (g) Tenant acknowledges that Landlord has made no
warranty or representation that the Transmission Devices are permissible and
Tenant assumes all liability and risk in obtaining all permits and approvals
necessary for the installation and use of the Transmission Devices. Tenant shall
maintain and repair the Transmission Devices (and all related facilities) in
good condition and shall cause the same to be removed on or before the
expiration of the Term of this Lease and shall repair all damage resulting
therefrom at Tenant's sole cost and expense.
42. OPTIONS.
(a) As used in this Paragraph, the word "Option" means the Extension Options
pursuant to Paragraph 40 herein.
(b) Tenant shall have no right to exercise any Option, notwithstanding any
provision of the grant of Option to the contrary, and Tenant's exercise of any
Option may be nullified by Landlord and deemed of no further force or effect, if
Tenant shall be in default of any monetary obligation or material non-monetary
obligation under the terms of this Lease as of Tenant's exercise of the Option
in question or at any time after the exercise of such Option and prior to the
commencement of the Option event.
43. EARLY ENTRY. Notwithstanding the fact that the Lease Term has not commenced,
Landlord agrees to allow Tenant to enter the Premises prior to the anticipated
Commencement Date in order to install the Tenant Improvements and furniture,
fixtures and equipment or for any purpose related to (but not for the conduct
of) Tenant's business or occupancy of the Premises. Such entry shall be subject
to all of the conditions set forth in this Paragraph 43 below. Tenant agrees
that any such early entry is subject to all of the terms and conditions of this
Lease, except for those relating to the payment of rent and other recurring
monetary obligations which have a specific commencement time, which provisions
will become
ADDENDUM
Page 2
applicable in accordance with the terms of this Lease. Without
limiting the generality of the foregoing, such early occupancy shall be
conditioned upon Tenant first delivering to Landlord the items described in
Paragraph 4(a) of this Lease and Tenant shall be specifically bound by the
provisions of Paragraphs 8 (Use), 18 (Assumption of Risk and Indemnification)
and 19 (Insurance) of this Lease during such early entry period.
44. TENANT'S PAYMENT OF CERTAIN TAX EXPENSES. Notwithstanding anything to the
contrary contained in this Lease, in the event that during the first forty-eight
(48) months of the original Lease Term, the Building is sold, and as a result
thereof, and to the extent that in connection therewith, the Building is
reassessed (the "Reassessment") for real estate tax purposes by the appropriate
governmental authority pursuant to the terms of Proposition 13 (as adopted by
the voters of the State of California in the June, 1978 election), then the
terms of this Paragraph 44 shall apply.
(a) For purposes of this Paragraph 44, the term "Tax Increase" shall mean that
portion of the Real Property Taxes and Assessments, as calculated immediately
following the Reassessment, which is attributable solely to the Reassessment.
Accordingly, the term Tax Increase shall not include any portion of the Real
Property Taxes and Assessments, as calculated immediately following the
Reassessment, which (i) is attributable to the assessment of the value of the
Building immediately prior to the Reassessment, or (ii) is attributable to the
annual inflationary increase to real estate taxes of approximately two percent
(2%).
(b) During the first forty-eight (48) months of the original Lease Term, Tenant
shall not be obligated to pay any portion of the Tax Increase relating to a
Reassessment.
(c) During months 49 through 72 of the original Lease Term, Tenant shall be
obligated to pay the entire Tax Increase relating to a Reassessment, except to
the extent the assessed value of the Building as a result of such Reassessment
exceeds $5,500,000.
45. ARBITRATION. If any claim, controversy or dispute related to or arising out
of this Lease arises ("Dispute"), and if no other specific procedure is included
in this Lease to resolve such Dispute, then such Dispute, if either party timely
demands arbitration pursuant to Subparagraph (a) below, shall be resolved and
adjudicated by binding arbitration in accordance with Title 9 of the California
Code of Civil Procedure, Section 1280, et seq., except to the extent otherwise
specified herein (neither party being obligated to arbitrate if neither party
desires to do so). The arbitrator shall be a neutral, disinterested retired
judge selected by the parties from a panel of retired judges available through
the Judicial Arbitration and Mediation Service ("JAMS") or, if JAMS or its
successor does not then exist, by any other arbitrator or retired judge
affiliated with a private, disinterested association providing arbitration
services. Should the parties fail to agree on the selection of a disinterested,
neutral arbitrator within twenty (20) days of written demand accompanied by
written notice of the Dispute by either party, either party may petition a
California court of competent jurisdiction and proper venue to appoint an
arbitrator pursuant to Code of Civil Procedure Section 1281.6. The arbitration
shall be held within sixty (60) days after the selection of the arbitrator. The
provisions of Code of Civil Procedure Section 1283.05, allowing for the taking
of depositions for discovery purposes in arbitration proceedings, are hereby
expressly adopted and agreed to by the parties. Any hearings required for
purposes of the arbitration shall be in San Diego County, California, at the
offices of the arbitrator or such other place designated by the arbitrator. The
arbitration procedure shall be subject to the following:
(a) Any demand for arbitration shall be in writing and must be made and served
on the other party within a reasonable time after the Dispute has arisen and in
no event shall the demand for arbitration be made after the earlier of the date
which is (i) thirty (30) days after service by either party of summons and
complaint, the subject matter of which is essentially identical with the subject
matter of the demand for arbitration, or (ii) the date that institution of legal
or equitable proceedings based on such Dispute would be barred by the applicable
statute of limitations.
(b) The provisions of this Paragraph 45 are not intended to require Landlord to
arbitrate any matters relating to a default by Tenant under this Lease, which
matters shall, at the election of Landlord, be governed by the applicable
provisions of this Lease and/or applicable law.
(c) All proceedings involving the parties shall be reported by a certified
shorthand court reporter and written transcripts of the proceedings shall be
prepared and made available to the parties.
(d) The arbitrator shall prepare and deliver to the parties factual findings in
writing which shall include the reasons on which the decision of the arbitrator
is based. The arbitrator shall be bound by the provisions of this Lease, and
shall not add to, subtract from or otherwise modify such provisions.
(e) Final decision by the arbitrator must be provided to the parties within
thirty (30) days from the date on which the matter is submitted to the
arbitrator.
ADDENDUM
Page 3
(f) The prevailing party (as defined below) shall be awarded interest on the
amount awarded (at the Interest Rate), reasonable attorneys' fees, expert and
nonexpert witness costs and expenses (including without limitation the fees and
costs of the court reporter described in Subparagraph (c) above), and other
costs and expenses incurred in connection with the arbitration, unless the
arbitrator for good cause determines otherwise.
(g) As used herein, the term "prevailing party" shall mean the party, if any,
that the arbitrator determines is "clearly the prevailing party."
(h) Costs and fees of the arbitrator shall be borne by the nonprevailing party,
unless the arbitrator for good cause determines otherwise. If there is no
prevailing party, the parties shall bear their own fees and costs and split the
fees and costs of the arbitrator and court reporter.
(i) The award or decision of the arbitrator, which may include equitable relief,
shall be final and judgment may be entered on it in accordance with applicable
law in any court having jurisdiction over the matter. The provisions of this
Paragraph 45 are not intended to alter the applicable provisions of law which
provide the grounds on which a court may vacate an arbitration award.
TENANT: LANDLORD:
XXXXXXX TECHNOLOGIES, INC., BALBOA BOULEVARD BUILDING, G.P.,
a Delaware corporation a general partnership
By: By:
------------------------------ ------------------------------
Print Name: Xxxxxx XxxXxxxxx
------------------- Its: Managing General Partner
Print Title:
------------------
By:
------------------------------
Print Name:
-------------------
Print Title:
------------------
ADDENDUM
Page 4
SITE PLAN OF PREMISES
[To be supplied]
EXHIBIT A-I
LEGAL DESCRIPTION OF LAND
Tax Assessor Parcel No. 000-000-00 Xxxxx 000000 except the westerly 175' of Lot
12.
EXHIBIT A-II
WORK LETTER
This WORK LETTER ("Work Letter") is entered into as of the 28th day of
March, 2000, by and between BALBOA BOULEVARD BUILDING, G.P., a general
partnership ("Landlord"), and XXXXXXX TECHNOLOGIES, INC., a Delaware corporation
("Tenant").
R E C I T A L S :
- - - - - - - -
A. Concurrently with the execution of this Work Letter, Landlord and Tenant have
entered into a lease (the "Lease") covering certain premises (the "Premises")
more particularly described in EXHIBIT "A-I" attached to the Lease. All terms
not defined herein have the same meaning as set forth in the Lease. To the
extent applicable, the provisions of the Lease are incorporated herein by this
reference.
B. In order to induce Tenant to enter into the Lease and in consideration of the
mutual covenants hereinafter contained, Landlord and Tenant agree as follows:
1. TENANT IMPROVEMENTS. As used in the Lease and this Work Letter, the term
"Tenant Improvements" or "Tenant's Work" means those items of general tenant
improvement construction shown on the Final Plans (described in Paragraph 4
below), more particularly described in Paragraph 5 below.
2. LANDLORD WORK. On the Commencement Date, Landlord warrants that (a) to the
extent furnished by Landlord, all Building systems (including the fire sprinkler
system), power and the roof shall be in good condition, except to the extent any
of the same are not in good condition due to the acts or omissions of Tenant or
anyone for whose acts or omissions Tenant is responsible, and (b) the Exterior
Areas (as such term is defined in Subparagraph 4(b) of the Lease) shall be in
compliance with all laws, including ADA and Title 24.
3. CONSTRUCTION REPRESENTATIVES. Landlord hereby appoints the following
person(s) as Landlord's representative ("Landlord's Representative") to act for
Landlord in all matters covered by this Work Letter: Xxxxxx XxxXxxxxx
(Telephone: 714/000-0000).
Tenant hereby appoints the following person(s) as Tenant's representative
("Tenant's Representative") to act for Tenant in all matters covered by this
Work Letter: Xxxx Xxxxxx.
All communications with respect to the matters covered by this Work Letter are
to made to Landlord's Representative or Tenant's Representative, as the case may
be, in writing in compliance with the notice provisions of the Lease. Either
party may change its representative under this Work Letter at any time by
written notice to the other party in compliance with the notice provisions of
the Lease.
4. TENANT IMPROVEMENT PLANS.
(a) PREPARATION OF SPACE PLANS. Tenant shall cause its architect ("Tenant's
Architect") to promptly prepare preliminary space plans for the layout of
Premises ("Space Plans"). The Space Plans are to be sufficient to convey the
architectural design of the Premises and layout of the Tenant Improvements
therein and are to be submitted to Landlord for Landlord's approval. If Landlord
reasonably disapproves any aspect of the Space Plans, Landlord will advise
Tenant in writing of such disapproval and the reasons therefor within ten (10)
days after receipt by Landlord. Tenant will then submit to Landlord for
Landlord's approval a redesign of the Space Plans incorporating the revisions
reasonably required by Landlord.
(b) PREPARATION OF FINAL PLANS. Based on the approved Space Plans, Tenant's
Architect will prepare complete architectural plans, drawings and specifications
and complete engineered mechanical, structural and electrical working drawings
for all of the Tenant Improvements for the Premises (collectively, the "Final
Plans"). The Final Plans will show: (a) the subdivision (including partitions
and walls), layout, lighting, finish and decoration work (including carpeting
and other floor coverings) for the Premises; (b) all internal and external
communications and utility facilities which will require conduiting or other
improvements from the base Building shell work and/or within common areas; and
(c) all other specifications for the Tenant Improvements. The Final Plans will
be submitted to Landlord for approval. If Landlord reasonably disapproves any
aspect of the Final Plans, Landlord shall advise Tenant in writing of such
disapproval and the reasons therefor within ten (10) days after receipt by
Landlord. Tenant will then cause Tenant's Architect to redesign the Final Plans
incorporating the revisions reasonably requested by Landlord.
EXHIBIT "C"
Page 1
(c) REQUIREMENTS OF TENANT'S FINAL PLANS. Tenant's Final Plans will include
locations and complete dimensions, and the Tenant Improvements, as shown on the
Final Plans, will: (i) be compatible with the Building shell and with the
design, construction and equipment of the Building; (ii) comply with all
applicable laws, ordinances, rules and regulations of all governmental
authorities having jurisdiction; and (iii) not overload the Building floors.
(d) SUBMITTAL OF FINAL PLANS. Once approved by Landlord and Tenant, Tenant's
Architect will submit the Final Plans to the appropriate governmental agencies
for plan checking and the issuance of a building permit. Tenant's Architect,
subject to Landlord's approval, will make any changes to the Final Plans which
are requested by the applicable governmental authorities to obtain the building
permit. After approval of the Final Plans no further changes may be made without
the prior written approval of both Landlord and Tenant, and then only after
agreement by Tenant to pay any excess costs resulting from the design and/or
construction of such changes.
(e) WORK COST ESTIMATE AND STATEMENT. Prior to the commencement of construction
of any of the Tenant Improvements shown on the Final Plans, Tenant will obtain a
written estimate of the cost to complete the Tenant Improvement Work, which
written estimate will be based on competitive bidding of the Final Plans (by at
least 3 subcontractors on trades exceeding $25,000 in contract value) taking
into account any modifications which may be required to reflect changes in the
Final Plans required by the City or County in which the Premises are located
(the "Work Cost Estimate"). Landlord and Tenant will either approve the Work
Cost Estimate or disapprove specific items in which event Tenant will cause its
Architect to revise the Final Plans to reflect deletions of and/or substitutions
for such disapproved items. Upon approval of the Work Cost Estimate by Landlord
and Tenant (such approved Work Cost Estimate to be hereinafter known as the
"Work Cost Statement"), Tenant shall cause its contractor to commence the
construction of the items included in the Work Cost Statement pursuant to
Paragraph 6 hereof. If the total costs reflected in the Work Cost Statement
exceed the Allowance described in Paragraph 5 below, such excess shall be paid
by Tenant on a pro-rata basis concurrently with Landlord's disbursement of the
Allowance. Throughout the course of construction, any differences between the
estimated Work Cost in the Work Cost Statement and the actual Work Cost will be
reasonably determined by Landlord and Tenant and appropriate adjustments and
payments by Landlord or Tenant, as the case may be, will be made promptly
thereafter.
5. PAYMENT FOR THE TENANT IMPROVEMENTS.
(a) ALLOWANCE. Landlord hereby grants to Tenant a tenant improvement allowance
of $1,365,900 (the "Allowance"). The Allowance is to be used only for:
(i) Payment of the cost of preparing the Space Plans and the Final Plans,
including mechanical, electrical, plumbing and structural drawings and of all
other aspects necessary to complete the Final Plans.
(ii) The payment of plan check, permit and license fees relating to construction
of the Tenant Improvements.
(iii) Construction of the Tenant Improvements occurring after execution of the
Lease, including, without limitation, the following:
(aa) Installation within the Premises of all partitioning, doors, floor
coverings, ceilings, wall coverings and painting, millwork and similar items;
(bb) All electrical wiring, lighting fixtures, outlets and switches, and other
electrical work necessary for the Premises;
(cc) The furnishing and installation of all duct work, terminal boxes, diffusers
and accessories necessary for the heating, ventilation and air conditioning
systems within the Premises;
(dd) Any additional improvements to the Premises required for Tenant's use of
the Premises including, but not limited to, odor control, special heating,
ventilation and air conditioning, noise or vibration control or other special
systems or improvements;
(ee) All fire and life safety control systems such as fire walls, sprinklers,
halon, fire alarms, including piping, wiring and accessories, necessary for the
Premises which are not Landlord's responsibility under the Lease;
(ff) All plumbing, fixtures, pipes and accessories necessary for the Premises
which are not Landlord's responsibility under the Lease;
(gg) Testing and inspection costs; and
EXHIBIT "C"
Page 2
(hh) Fees for the contractor including, but not limited to, fees and costs
attributable to general conditions associated with the construction of the
Tenant Improvements.
(iv) Certain improvements to be shown on the Final Plans specific to Tenant's
operations but not necessarily typical, reusable improvements, such as a clean
room and a raised floor manufacturing test area (the "Tenant Specific Items").
Tenant may not expend more than $365,000 of the Allowance on the Tenant Specific
Items. If Tenant desires to spend more than $365,000 on the Tenant Specific
Items, then Tenant may either directly pay to Landlord the excess or amortize
the additional amount as rent as provided in Paragraph 5(b) below.
(b) EXCESS COSTS. The cost of each item referenced in Paragraph 5(a) above shall
be charged against the Allowance. If the Work Cost exceeds the Allowance, Tenant
agrees to pay to Landlord such excess upon completion of construction (less any
sums previously paid by Tenant for such excess pursuant to the Work Cost
Estimate). In no event will the Allowance be used to pay for Tenant's furniture,
artifacts, equipment, telephone systems or any other item of personal property
which is not affixed to the Premises. Notwithstanding the foregoing, Tenant may
amortize over the original Lease Term up to $5.00 per Rentable Square Foot of
excess costs as additional Monthly Base Rent, with interest at the rate of
eleven percent (11%) per annum (the "Used Excess Allowance").
(c) DISBURSEMENT OF CONSTRUCTION ALLOWANCE. Provided Tenant is not in default
under the Lease or this Work Letter, Landlord shall disburse the Allowance to
Tenant to reimburse Tenant for the actual construction costs which Tenant incurs
in connection with the construction of the Tenant Improvements in accordance
with the following:
(i) Tenant shall cause its contractor to deliver to Landlord, by the fifth (5th)
day of each month (the "Current Month"), an application for payment in the form
of a typed, itemized, reasonably detailed AIA G701 statement (the "Statement").
The Statement shall be applicable to the period commencing on the first (1st)
day of the month preceding the Current Month and ending on the last day of such
month (the "Payment Request Period"). Delivered with the Statement shall be (a)
conditional lien releases applicable to all work performed during the Payment
Request Period and unconditional lien releases applicable to all work performed
prior to the Payment Request Period, and (b) invoices, receipts and bills
evidencing the costs which are the subject of the Statement (collectively, the
"Supporting Items"). The Statement shall constitute a representation by Tenant
that the work identified therein as having been performed has been approved by
Tenant and performed in a good and workmanlike manner and in accordance with the
requirements of the Lease and this Work Letter.
(ii) Landlord will review the Statement for each Payment Request Period and
will, within ten (10) days after receipt of said Statement and the Supporting
Items, pay to Tenant, who shall pay to Tenant's contractor, ninety percent (90%)
of the amount Landlord reasonably approves; in the event Landlord does not
approve a Statement for reasons related to defective or unsatisfactory work,
Landlord will only be obligated to pay ninety percent (90%) of the portion it
approves. Within fifteen (15) days after receipt of a Statement, Landlord shall
notify Tenant in writing of the reason for withholding any portion of the amount
set forth in such Statement. Any single payment, or series of payments, by
Landlord in excess of said ninety percent (90%) sum shall not constitute a
waiver of Landlord's right to pay only ninety percent (90%) in the future.
Except for sums withheld for defective or unsatisfactory work that is later
remedied to Landlord's reasonable satisfaction, no portion of the sums retained
by Landlord pursuant to this subparagraph shall be payable until the final
payment by Landlord is made pursuant to this Work Letter.
(iii) Final payment, including the retainer, shall be due and payable
thirty-five (35) days after recordation of a valid Notice of Completion with
respect to the Tenant Improvement Work, provided Tenant's contractor has timely
delivered to Landlord the last Statement and Supporting Items.
(iv) Each Statement shall only include amounts for work authorized under this
Work Letter and actually performed.
(v) Notwithstanding anything to the contrary set forth above, Landlord shall not
be required to make final payment until (a) Tenant's Architect has certified to
Landlord that the Tenant Improvements have been substantially completed in
accordance with the Final Plans, (b) Tenant has delivered to Landlord one (1)
set of reproducible "as-built" plans for the Tenant Improvements as prepared by
Tenant's Architect, and (c) Tenant has accepted possession of the Premises and
opened for business therein in accordance with the Lease.
(d) BOOKS AND RECORDS. Tenant shall cause its contractor to maintain complete
and accurate books and records in accordance with generally accepted accounting
principles of these expenditures for at least two (2) years. Tenant shall cause
its contractor to make available to Landlord within fifteen (15) business days
following Landlord's notice requiring the audit, all books and records
maintained by Tenant's contractor pertaining to the construction and completion
of the Tenant Improvements.
EXHIBIT "C"
Page 3
(e) CHANGES. If, after the Final Plans have been prepared and the Work Cost
Statement has been established, Tenant requires any changes or substitutions to
the Final Plans, any additional costs related thereto which cause the aggregate
cost of the Tenant Improvements to exceed the Allowance shall be paid by Tenant
as provided above. Any changes to the Final Plans will be approved by Landlord
and Tenant in the manner set forth in Paragraph 4 above and will, if necessary,
require the Work Cost Statement to be revised and agreed upon between Landlord
and Tenant in the manner set forth in Subparagraph 4(e) above. Landlord will
have the right to decline Tenant's request for a change to the Final Plans if
such changes are inconsistent with the provisions of Paragraph 4 above.
(f) UNUSED ALLOWANCE AMOUNTS. Any unused portion of the Allowance upon
completion of the Tenant Improvements will, at Tenant's option, either be
amortized over the initial Lease Term in the form of reduced Monthly Base Rent
or be available to Tenant as a credit against Tenant's rental obligations first
accruing under the Lease.
6. CONSTRUCTION OF TENANT IMPROVEMENTS. Tenant shall enter into a construction
contract (the "Construction Contract") with a contractor reasonably acceptable
to Landlord, on a form and in substance reasonably acceptable to Landlord and
Tenant, for the installation of the Tenant Improvements in accordance with the
Final Plans. Tenant shall supervise the completion of such work and shall use
diligent efforts to secure completion of the Tenant Improvements in a good and
workmanlike manner in accordance with the Final Plans and the Construction
Contract. Landlord shall have the right to approve all material changes;
provided Landlord responds to a change order request within three (3) business
days of request. Tenant agrees to use diligent efforts to cause construction of
the Tenant Improvements to commence promptly following the issuance of a
building permit for the Tenant Improvements.
7. COMMENCEMENT DATE AND SUBSTANTIAL COMPLETION.
(a) COMMENCEMENT DATE. The Term of the Lease will commence on the date (the
"Commencement Date") which is the earlier of: (i) the date Tenant moves into the
Premises to commence operation of its business in all or any portion of the
Premises; (ii) the date the Tenant Improvements have been "substantially
completed" (as defined below); or (iii) August 1, 2000, subject to Landlord
Delays (as defined in Paragraph 9 below).
(b) SUBSTANTIAL COMPLETION; PUNCH-LIST. For purposes of Subparagraph 7(a)(ii)
above, the Tenant Improvements will be deemed to be "substantially completed"
when Tenant's Architect certifies in writing to Landlord and Tenant that: (a)
all of the Tenant Improvement Work to be performed under this Work Letter has
been completed, other than decoration and minor "punch-list" type items and
adjustments which do not materially interfere with Tenant's access to or use of
the Premises; and (b) has obtained a temporary certificate of occupancy or other
required equivalent approval from the local governmental authority permitting
occupancy of the Premises.
8. MISCELLANEOUS CONSTRUCTION COVENANTS.
(a) NO LIENS. At no time shall Tenant do or permit anything to be done whereby
the Tenant Improvements or the Premises may be subjected to any mechanic's,
materialmen's or other liens or encumbrances arising out of the construction of
the Tenant Improvements, and if any mechanic or materialmen liens are filed
against the Tenant Improvements or the Premises as a result of or in connection
with the construction of the Tenant Improvements, Tenant shall immediately cause
such liens to be removed of record by either paying off the lien or procuring
and recording a release bond in accordance with California Civil Code Section
3143 and Section 3171. If Tenant fails to remove such lien, and such failure
continues for ten (10) days after written demand by Landlord to do so, Landlord
shall have the right, but not the obligation, in addition to all other rights
and remedies available to Landlord under the Lease and this Work Letter, to
procure and cause to be recorded a statutory lien release bond and to deduct
from the Allowance all costs incurred in procuring such bond. Landlord shall
have the right at any time and from time to time to post and maintain on the
Premises such notices as may be necessary to protect the Tenant Improvements and
the Premises and Landlord from mechanic's liens, materialmen's liens or liens of
a similar nature. Tenant shall give notice to Landlord not later than ten (10)
days prior to the commencement of any work of any nature contemplated by the
Lease.
(b) DILIGENT CONSTRUCTION. Tenant will promptly, diligently and continuously
pursue construction of the Tenant Improvements to successful completion in full
compliance with the Final Plans, the Construction Contract, and this Work
Letter. Landlord and Tenant shall cooperate with one another during the
performance of Tenant's Work to effectuate such work in a timely and compatible
manner.
(c) COMPLIANCE WITH LAWS. Tenant will construct the Tenant Improvements in a
safe and lawful manner. Tenant shall, at its sole cost and expense, subject to
proper application of the Allowance as provided herein, comply with all
applicable laws and all regulations and requirements of, and all licenses and
permits issued by, all municipal or other governmental bodies with jurisdiction.
Copies of all filed
EXHIBIT "C"
Page 4
documents and all permits and licenses shall be provided to Landlord. Any
portion of the Tenant Improvements which is not acceptable to any applicable
governmental body, agency or department, or not reasonably satisfactory to
Landlord, shall be promptly repaired or replaced by Tenant at Tenant's expense.
Notwithstanding any failure by Landlord to object to any such Tenant
Improvements, Landlord shall have no responsibility therefor. Tenant shall
notify Landlord in writing not less than ten (10) days prior to the commencement
of the construction of any portion of the Tenant Improvements as to name,
telephone number and responsible party for each and every contractor and/or
subcontractor who is about to commence work at the Premises.
(d) INDEMNIFICATION. Tenant hereby indemnifies and agrees to defend and hold
Landlord and the Premises harmless from and against any and all suits, claims,
actions, losses, costs or expenses (including, without limitation, claims for
workers' compensation) of any nature whatsoever, together with reasonable
attorneys' fees for counsel of Landlord's choice, arising out of or in
connection with the Tenant Improvements or the performance of Tenant's Work
(including, but not limited to, claims for breach of warranty, personal injury
or property damage), except for claims arising out of any breach by Landlord of
its obligations under this Work Letter or any negligent act or omission of
Landlord or its agents or employees.
(e) INSURANCE. Construction of the Tenant Improvements shall not proceed without
Tenant causing its contractor to first acquire workers' compensation and
comprehensive general public liability insurance and property damage insurance
as well as "All Risks" builders' risk insurance, with minimum coverage of
$3,000,000 or such other amount as may be approved by Landlord in writing and
issued by an insurance company reasonably satisfactory to Landlord. Not less
than thirty (30) days before commencing the construction of the Tenant
Improvements, certificates of such insurance shall be furnished to Landlord or,
if requested, the original policies thereof shall be submitted for Landlord's
approval. All such policies shall provide that thirty (30) days prior notice
must be given to Landlord before modification, termination or cancellation. All
insurance policies maintained pursuant to this Work Letter shall name Landlord
and any lender with an interest in the Premises as additional insureds and
comply with all of the applicable terms and provisions of the Lease relating to
insurance.
(f) CONSTRUCTION DEFECTS. Landlord shall have no responsibility for the Tenant
Improvements and Tenant will remedy, at Tenant's own expense, and be responsible
for any and all defects in the Tenant Improvements that may appear during or
after the completion thereof. Tenant shall reimburse Landlord for any costs or
expenses incurred by Landlord during the Term of the Lease by reason of any
defect in any portion of the Tenant Improvements constructed by Tenant or the
contractor or subcontractors, or by reason of inadequate cleanup following
completion of the Tenant Improvements.
(g) OMITTED.
(h) OMITTED.
(i) SYSTEMS. Tenant agrees to be entirely responsible for the balancing of all
heating, ventilating or air conditioning in the Premises and/or the balancing
and maintenance of all independent heating, ventilating or air conditioning in
the Premises and/or the maintenance of the electrical or plumbing work installed
by Tenant or its contractor and/or the maintenance of lighting fixtures,
partitions, doors, hardware or any other installations made by Tenant or its
contractor.
(j) COORDINATION WITH LEASE. Nothing herein contained shall be construed as (i)
constituting Tenant as Landlord's agent for any purpose whatsoever, or (ii) a
waiver by Landlord of any of the terms or provisions of the Lease. Any default
by Tenant or Landlord with respect to any portion of this Work Letter shall be
deemed a breach of the Lease for which the non-defaulting party shall have all
the rights and remedies as in the case of a breach of said Lease.
(k) APPROVAL OF PLANS. Landlord will not check Tenant drawings for building code
compliance. Approval of the Final Plans by Landlord is not a representation that
the drawings are in compliance with the requirements of governing authorities,
and it shall be Tenant's responsibility to meet and comply with all Federal,
state, and local code requirements. Approval of the Final Plans does not
constitute assumption of responsibility by Landlord or its architect for their
accuracy, sufficiency or efficiency.
(l) TENANT'S DELIVERIES. Tenant shall deliver to Landlord, at least five (5)
days prior to the commencement of construction of Tenant's Work, the following
information:
(i) The names and addresses of the general, mechanical and electrical
contractors Tenant intends to engage in the performance of Tenant's Work;
(ii) The date on which Tenant's Work will commence, together with the estimated
dates of completion of Tenant's construction and fixturing work, and the date on
which Tenant expects to be ready to open for business in the Building;
EXHIBIT "C"
Page 5
(iii) A copy of the fully executed Construction Contract; and
(iv) An itemized statement of estimated construction costs, including
architectural, engineering and contractors' fees.
(m) QUALIFICATION OF CONTRACTORS. All contractors engaged by Tenant shall be
bondable, licensed contractors, capable of performing quality workmanship.
(n) WARRANTIES. Tenant shall cause its contractor to provide warranties for not
less than one (1) year against defects in workmanship, materials and equipment,
which warranties shall run to the benefit of Landlord or shall be assignable to
Landlord.
(o) AS-BUILT DRAWINGS. Tenant shall cause "As-Built Drawings" (excluding
furniture, fixtures and equipment) to be delivered to Landlord by the date set
forth in Paragraph 5(c)(v) above. In the event these drawings are not received
by such date, Landlord may, at its election, cause said drawings to be obtained
and Tenant shall pay to Landlord, as additional rent, the cost of producing
these drawings.
9. LANDLORD DELAYS. For purposes of this Work Letter Agreement, "Landlord
Delays" means any delay in the completion of the Tenant Improvements resulting
from any or all of the following: (a) Landlord's failure to timely perform any
of its obligations pursuant to the Lease or this Work Letter Agreement; or (b)
Landlord's changes to Space Plans or Final Plans after Landlord's approval
thereof; or (c) Landlord's failure to make the Premises available to Tenant for
construction of the Tenant Improvements. If substantial completion of the Tenant
Improvements is delayed as a result of any Landlord Delays as described in this
Paragraph 9, then the Commencement Date as would otherwise have been established
pursuant to Subparagraph 7(a) above will be postponed by the number of days of
such Landlord Delays. No Landlord Delays shall be deemed to occur unless Tenant
has provided Landlord notice, in compliance with the notice provisions of the
Lease, specifying (i) that a Landlord Delay will be deemed to have occurred
because of a specified action or inaction on the part of Landlord, and, (ii) to
the extent reasonably ascertainable, the anticipated amount of such delay if
such action or inaction is not promptly cured. If such action or inaction is not
cured by Landlord within one (1) business day of receipt of such notice (a
"Count Day") and if such action or inaction actually causes a delay, then the
delay actually caused by such action or inaction shall be deemed to have
occurred commencing as of the Count Day and continuing for the number of days
the action or inaction claimed by Tenant in such notice actually and directly
causes a delay.
IN WITNESS WHEREOF, the undersigned Landlord and Tenant have caused this Work
Letter to be duly executed by their duly authorized representatives as of the
date of the Lease.
TENANT: LANDLORD:
XXXXXXX TECHNOLOGIES, INC., BALBOA BOULEVARD BUILDING, G.P.,
a Delaware corporation a general partnership
By: By:
------------------------------ ------------------------------
Print Name: Xxxxxx XxxXxxxxx
------------------- Its: Managing General Partner
Print Title:
------------------
By:
------------------------------
Print Name:
-------------------
Print Title:
------------------
EXHIBIT "C"
Page 6
NOTICE OF LEASE TERM DATES
To: _____________________________________________
_____________________________________________
Date: _____________________________________________
Re: Lease dated _____________ (the "Lease"), between Balboa Boulevard Building,
G.P., Landlord, and __________________________, Tenant, concerning the
building and the legal parcel and all improvements thereon located at 0000
Xxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx (the "Premises").
To Whom It May Concern:
In accordance with the subject Lease, we wish to advise and/or confirm as
follows:
1. That Tenant has substantially completed construction of the Tenant
Improvements in accordance with the subject Lease.
2. That Tenant acknowledges that under the provisions of the Lease, the
Commencement Date is _________________, and the Term of the Lease will expire
on _________________.
3. That in accordance with the Lease, rent commenced to accrue on
_________________________.
4. If the Commencement Date of the Lease is other than the first day of the
month, the first billing will contain a pro rata adjustment. Each billing
thereafter will be for the full amount of the monthly installment as provided
for in the Lease.
5. Rent is due and payable in advance on the first day of each and every month
during the Term of the Lease. Your rent checks should be made payable to
___________________________________________________________________________
at _______________________________________________________________________.
LANDLORD:
BALBOA BOULEVARD BUILDING, G.P.,
a general partnership
By:___________________________________
Xxxxxx XxxXxxxxx
Its: Managing General Partner
SAMPLE ONLY
[NOT FOR EXECUTION]
EXHIBIT "D"
DEFINITION OF OPERATING EXPENSES
1. ITEMS INCLUDED IN OPERATING EXPENSES. The term "Operating Expenses" as used
in the Lease to which this EXHIBIT "E" is attached means: all costs and expenses
incurred by Landlord in the operation and maintenance of the exterior of the
Building, landscaping and parking/drive areas, as determined by standard
accounting practices, including the following costs by way of illustration but
not limitation, but excluding those items specifically set forth in Paragraph 3
below:
(a) Real Property Taxes and Assessments (as defined in Paragraph 2 below) and
any taxes or assessments imposed in lieu thereof;
(b) premiums for insurance obtained by Landlord as required by Paragraph 19(d)
of this Lease;
(c) costs incurred in the management of the Building, including, without
limitation: (i) supplies, (ii) wages and salaries (and payroll taxes and similar
governmental charges related thereto) of employees used in the management,
operation and maintenance of the Premises, and (iii) a management fee determined
as a percentage of the Monthly Base Rent of the Building, not to exceed 3% of
annual Monthly Base Rent;
(d) supplies, materials, equipment and tools including rental of personal
property used for maintenance;
(e) maintenance, costs and upkeep of all parking;
(f) amortization on a straight line basis over the useful life [together with
interest at the Interest Rate on the unamortized balance] of all capitalized
expenditures which are: (i) reasonably intended to produce a reduction in
operating charges or energy consumption; or (ii) required under any governmental
law or regulation that was not applicable to the Building on the Commencement
Date; or (iii) for replacement of any equipment needed to operate the areas to
be maintained by Landlord hereunder at the same quality levels as prior to the
replacement;
(g) costs and expenses of gardening and landscaping;
(h) personal property taxes levied on or attributable to personal property used
by Landlord exclusively on the Premises in connection with its duties hereunder;
(i) reasonable accounting fees; and
(j) costs and expenses of repairs, resurfacing, repairing, maintenance,
painting, lighting, cleaning, refuse removal (other than as required of Tenant
under the Lease), but excluding those costs listed as Landlord's sole cost in
Paragraph 14(a) of the Lease.
When calculating Base Year Operating Expenses, Base Year Operating Expenses
shall not include Real Property Taxes and Assessments attributable to special
assessments, charges, costs, or fees or due to modifications or changes in
governmental laws or regulations, and shall exclude market-wide labor-rate
increases due to extraordinary circumstances including, but not limited to,
boycotts and strikes and utility increases due to extraordinary circumstances
including, but not limited to, conservation surcharges, boycotts, embargoes or
other shortages.
2. REAL PROPERTY TAXES AND ASSESSMENTS. The term "Real Property Taxes and
Assessments", as used in this EXHIBIT "E", means: any form of assessment,
business license fee, commercial rental tax, levy, charge, tax or similar
imposition imposed by any authority having the direct power to tax, including
the city, county, state or federal government, or any school, agricultural,
lighting, drainage or other improvement or special assessment district thereof,
as against any legal interest of Landlord in the Premises, Building, adjusted to
reflect an assumption that the Building is fully assessed for real property tax
purposes as a completed building ready for occupancy, including the following by
way of illustration but not limitation:
(a) any tax on Landlord's "right" to rent or "right" to other income from the
Premises or as against Landlord's business of leasing the Premises;
(b) except as provided in Paragraph 44 of this Lease, all taxes resulting from a
sale, refinancing, or change in ownership of the Building pursuant to the terms
of Proposition 13 (as adopted by the voters of the State of California in the
June, 1978 election);
(c) any assessment, tax, fee, levy or charge allocable to or measured by the
area of the Premises the rent payable by Tenant hereunder, including, without
limitation, any gross receipts tax or excise tax levied
EXHIBIT "E"
Page 1
by state, city or federal government, or any political subdivision thereof, with
respect to the receipt of such rent, or upon or with respect to the possession,
leasing, operation, management, maintenance, alteration, repair, use or
occupancy by Tenant of the Premises, or any portion thereof but not on
Landlord's other operations;
(d) any assessment, tax, fee, levy or charge upon this transaction or any
document to which Tenant is a party, creating or transferring an interest or an
estate in the Premises; and/or
(e) any assessment, tax, fee, levy or charge by any governmental agency related
to any transportation plan, fund or system (including assessment districts)
instituted within the geographic area of which the Building is a part.
Notwithstanding the foregoing, if at any time after the Commencement Date, the
amount of Real Property Taxes and Assessments decreases, then for purposes of
all subsequent years, including the year in which such decrease in Real Property
Taxes and Assessments occurs, the Base Year Operating Expenses shall be
decreased by an amount equal to such decrease in Real Property Taxes and
Assessments.
3. ITEMS EXCLUDED FROM OPERATING EXPENSES. Notwithstanding the provisions of
Paragraphs 1 and 2 above to the contrary, "Operating Expenses" will not include:
(a) Landlord's federal or state income, franchise, inheritance or estate taxes;
(b) any ground lease rental;
(c) costs incurred by Landlord for the repair of damage to the Premises to the
extent that Landlord is reimbursed by insurance or condemnation proceeds or by
tenants, warrantors or other third persons;
(d) depreciation, amortization and interest payments, except as specifically
provided herein, and except on materials, tools, supplies and vendor-type
equipment purchased by Landlord to enable Landlord to supply services Landlord
might otherwise contract for with a third party, where such depreciation,
amortization and interest payments would otherwise have been included in the
charge for such third party's services, all as determined in accordance with
standard accounting practices;
(e) brokerage commissions, finders' fees, attorneys' fees, space planning costs
and other costs incurred by Landlord in leasing or attempting to lease space in
the Premises;
(f) costs of a capital nature, including, without limitation, capital
improvements, capital replacements, capital repairs, capital equipment and
capital tools, all as determined in accordance with standard accounting
practices; provided, however, the capital expenditures set forth in Subparagraph
1(f) above will in any event be included in the definition of Operating
Expenses;
(g) interest, principal, points and fees on debt or amortization on any
mortgage, deed of trust or other debt encumbering the Premises;
(h) costs, including permit, license and inspection costs, incurred with respect
to the installation of tenant improvements for tenants in the Building
(including the original Tenant Improvements for the Premises), including space
planning and interior design costs and fees;
(i) attorneys' fees and other costs and expenses incurred in connection with
negotiations or disputes with present or prospective tenants or other occupants
of the Building;
(j) except for the management fees described in Subparagraph 1(c) above, costs
of Landlord's general corporate overhead;
(k) all items and services for which Tenant is required to reimburse Landlord
pursuant to the Lease or for which Tenant is otherwise responsible pursuant to
the Lease;
(l) costs arising from Landlord's charitable or political contributions;
(m) Costs of repairs or other work occasioned by fire, windstorm or other
casualty, condemnation or eminent domain (other than the commercially reasonable
deductible for applicable insurance), to the extent Landlord is reimbursed
therefor;
(n) Costs of constructing the Premises;
(o) Any costs representing an amount paid to any person, firm, corporation or
other entity as a result of a non-competitive selection process, which is in
excess of the fair market value of such materials or services if said material
or services had been rendered by an unrelated comparably qualified third party
on a competitive basis;
EXHIBIT "E"
Page 2
(p) Any expenses for repairs or maintenance which are reimbursed through
warranties or service contracts;
(q) Any bad debt loss or expense, rent loss, or reserves for bad debt or rent
loss;
(r) Fines, penalties, late payment charges and interest, except to the extent
such costs are attributable to Tenant's breach under this Lease;
(s) Fees or dues payable to trade associations, industry associations, or
similar organizations;
(t) The cost of acquiring, leasing, installing or moving sculptures, paintings
and other objects of art;
(u) Costs necessitated by or resulting from the gross negligence or misconduct
of Landlord, its agents, employees, vendors and/or contractors;
(v) Any entertainment, dining or travel expenses for any purpose and the costs
of any flowers, gifts, balloons, etc., provided to any entity whatsoever, to
include, but not limited to, Tenant, other tenants, employees, vendors,
contractors, prospective tenants and agents;
(w) Any compensation paid to clerks, attendants or other persons in commercial
concessions operated by Landlord or whenever Tenant is granted its parking
privileges and/or all fees paid to any parking facility operator (on or offsite)
(provided, however, if Landlord provides such parking free of charge to Tenant,
these expenses may be included as a part of Operating Expenses); and
(x) Costs attributable to any new or significantly modified items or categories
of maintenance, operation or repair to the extent such new or modified items are
not included in the Base Year Operating Expenses. Any new or significantly
modified items incurred in the introductory year (grossed up to a full twelve
(12) month period) shall be included in the Base Year Operating Expenses
(grossed up) for the purpose of calculating increased Operating Expenses in
subsequent years; provided, however, the capital expenditures set forth in
Subparagraph 1(f) above will in any event be included in the definition of
Operating Expenses.
EXHIBIT "E"
Page 3
ESTOPPEL CERTIFICATE
The undersigned, _____________________ ("Tenant"), hereby certifies to
________________________________________________________________________ , as
follows:
1. Attached hereto is a true, correct and complete copy of that certain lease
dated __________________, 2000, between
_____________________________________, a ("Landlord") and Tenant (the
"Lease"), regarding the premises located at
__________________________________ (the "Premises"). The Lease is now in full
force and effect and has not been amended, modified or supplemented, except
as set forth in Paragraph 4 below.
2. The Term of the Lease commenced on ___________________, 20 _____.
3. The Term of the Lease will expire on _________________, 20 _____.
4. The Lease has: (Initial one)
(__________________________) not been amended, modified, supplemented,
extended, renewed or assigned.
(__________________________) been amended, modified, supplemented,
extended, renewed or assigned by the following described terms or
agreements, copies of which are attached hereto:
_______________________________________________________________________________
_______________________________________________________________________________
5. Tenant has accepted and is now in possession of the Premises.
6. Tenant and Landlord acknowledge that Landlord's interest in the Lease will be
assigned to __________________________________________________ and that no
modification, adjustment, revision or cancellation of the Lease or amendments
thereto shall be effective unless written consent of is obtained, and that until
further notice, payments under the Lease _____________________________________
may continue as heretofore.
7. The amount of Monthly Base Rent is $ __________________________________.
8. The amount of Security Deposit (if any) is $ _____________________. No
other security deposits have been made except as follows:
_________________________________________________________.
9. Tenant is paying the full lease rental which has been paid in full as of the
date hereof. No rent or other charges under the Lease have been paid for more
than thirty (30) days in advance of its due date except as follows:
___________________________________.
10. All work required to be performed by Landlord under the Lease has been
completed except as follows:
____________________________.
11. There are no defaults on the part of the Landlord or Tenant under the Lease
except as follows:
____________________________.
12. Neither Landlord nor Tenant has any defense as to its obligations
under the Lease and claims no set-off or counterclaim against the other
party except as follows: ____________________________.
13. Tenant has no right to any concession (rental or otherwise) or similar
compensation in connection with renting the space it occupies other than as
provided in the Lease except as follows:
____________________________.
Exhibit "G"
Page 1
All provisions of the Lease and the amendments thereto (if any) referred to
above are hereby ratified.
The foregoing certification is made with the knowledge that ________________ is
relying upon the representations herein made in funding a loan to Landlord in
purchasing the Premises.
IN WITNESS WHEREOF, this certificate has been duly executed and delivered by the
authorized officers of the undersigned as of __________________________________,
20 ____.
TENANT:
_______________________________________________________________
a ____________________________________________________________.
By:___________________________________________________________
Print Name:_____________________________________________
Title:__________________________________________________
By:___________________________________________________________
Print Name:_____________________________________________
Title:__________________________________________________
SAMPLE ONLY
[NOT FOR EXECUTION]
Exhibit "G"
Page 2
RULES AND REGULATIONS
A. GENERAL RULES AND REGULATIONS. The following rules and regulations govern the
use of the Building and the Premises. Tenant will be bound by such rules and
regulations and agrees to cause Tenant's Authorized Users, its employees,
subtenants, assignees, contractors, suppliers, customers and invitees to observe
the same.
1. Except as specifically provided in the Lease to which these Rules and
Regulations are attached, no sign, placard, picture, advertisement, name or
notice may be installed or displayed on any part of the outside of the Building
or the Premises without the prior written consent of Landlord, which consent
will not be unreasonably withheld. Landlord will have the right to remove, at
Tenant's expense and without notice, any sign installed or displayed in
violation of this rule. All approved signs or lettering on doors and walls are
to be printed, painted, affixed or inscribed at the expense of Tenant.
2. If Landlord objects in writing to any curtains, blinds, shades, screens or
hanging plants or other similar objects attached to or used in connection with
any window or door of the Premises, or placed on any windowsill, which is
visible from the exterior of the Premises, Tenant will immediately discontinue
such use. Tenant agrees not to place anything against or near glass partitions
or doors or windows which may appear unsightly from outside the Premises.
3. Landlord will in all cases retain the right to control and prevent access
thereto of all persons whose presence in the reasonable judgment of Landlord
would be prejudicial to the safety, character, reputation and interest of the
Premises and its tenants, provided that nothing herein contained will be
construed to prevent such access to persons with whom any tenant normally deals
in the ordinary course of its business, unless such persons are engaged in
illegal or unlawful activities.
4. Landlord expressly reserves the right to absolutely prohibit solicitation,
canvassing, distribution of handbills or any other written material, peddling,
sales and displays of products, goods and wares in all portions of the Premises
except as may be expressly permitted under the Lease.
5. Omitted.
6. Landlord will not be liable for damages for any error with regard to the
admission to or exclusion from the Building of any person. Landlord reserves the
right to prevent access to the Building in case of invasion, mob, riot, public
excitement or other commotion by closing the doors or by other appropriate
action.
7. Tenant will not place a load upon any floor of the Premises which exceeds the
load per square foot which such floor was designed to carry and which is allowed
by law. Tenant will be responsible for all structural engineering required to
determine structural load, as well as the expense thereof. Landlord will not be
responsible for loss of, or damage to, any equipment or other property from any
cause, and all damage done to the Building by maintaining or moving such
equipment or other property will be repaired at the expense of Tenant.
8. Omitted.
9. Omitted.
10. The toilet rooms, toilets, urinals, wash bowls and other apparatus will not
be used for any purpose other than that for which they were constructed and no
foreign substance of any kind whatsoever shall be thrown therein. The expense of
any breakage, stoppage or damage resulting from any violation of this rule will
be borne by the tenant who, or whose employees or invitees, break this rule.
11. Tenant may install an antenna, satellite dish, microwave dish or other
device on the roof of the Building in accordance with the provisions of the
Lease.
12. Tenant will store all its trash and garbage within its Premises or in other
facilities provided by Landlord. Landlord shall provide a dumpster for Tenant's
use during the Term of the Lease. Tenant will not place in any trash box or
receptacle any material which cannot be disposed of in the ordinary and
customary manner of trash and garbage disposal. All garbage and refuse disposal
is to be made in accordance with directions issued from time to time by
Landlord.
13. Neither Tenant nor any of its employees, agents, customers and invitees may
use in any space or in the public halls of the Building or the Premises any hand
truck except those equipped with rubber tires and side guards or such other
material-handling equipment as may be appropriate to avoid damage to the
Building.
EXHIBIT "H"
Page 1
14. Tenant agrees to comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.
15. Tenant assumes any and all responsibility for protecting its Premises from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed.
16. Omitted.
17. These Rules and Regulations are in addition to, and will not be construed to
in any way modify or amend, in whole or in part, the terms, covenants,
agreements and conditions of the Lease. Landlord may waive any one or more of
these Rules and Regulations for the benefit of Tenant, but no such waiver by
Landlord will be construed as a waiver of such Rules and Regulations in favor of
Tenant, nor prevent Landlord from thereafter enforcing any such Rules and
Regulations against Tenant.
18. Landlord reserves the right to make such other and reasonable and
non-discriminatory Rules and Regulations as, in its judgment, may from time to
time be needed for safety and security, for care and cleanliness of the Premises
and for the preservation of good order therein. Tenant agrees to abide by all
such Rules and Regulations herein above stated. Tenant is responsible for the
observance of all of the foregoing rules by Tenant's employees, agents, clients,
customers, invitees and guests.
