EXHIBIT 10.9
STANDARD FORM LEASE
PARTIES. This Lease, executed in duplicate at Cupertino, California, on
April 11, 1996, by and between Xxxx & Xxxx Developers, a California General
Partnership, and Sherpa Corporation, a California Corporation, hereinafter
called respectively Lessor and Lessee, without regard to number or gender.
Use: WITNESSETH: That Lessor hereby leases to Lessee, and Lessee hires
from Lessor, for the purpose of conducting therein office, research and
development, light manufacturing, and warehouse activities, and any other
legal activity, and for no other purpose without obtaining the prior
written consent of Lessor.
PREMISES: The real property with appurtenances as shown on Exhibit A. 1 (the
"Premises") situated in the City of Milpitas, County of Santa Xxxxx, State
of California, and more particularly described as follows:
Lessees portion of the Premises is 49,954 square feet of building,
including all improvements thereto, as shown on Exhibit A.2 including
the right to use up to 184 unreserved parking spaces. The address for
the leased portion of the Premises is 0000 XxXxxxxxxx Xxxxx, Xxxxxxxx,
Xxxxxxxxxx. The pro-rata share of the building is 63.4%. Lessee's
portion of the Premises and pro-rata share shall be adjusted per the
Commencement Date Memorandum Section below.
TERM: The term shall be for eighty-four (84) months and 15 days unless
extended pursuant to Section 35 of this Lease (the "Lease Term"), commencing
on the 15th day of November, 1996, and ending on the 30th day of November,
2003.
Rent: Base rent shall be payable in monthly installments as follows:
Base rent Estimated CAC Total
--------- ------------- ------
Months 1 through 12 $46,957 $10,560* $57,517
Monthly base rent to increase by 3% on the annual anniversary of the
Commencement Date each year during the Lease Term over the prior year's rent.
CAC charges to be adjusted per Common Area Charges Section below.
Base rent as scheduled above shall be payable in advance on or before the
first day of each calendar month during the Lease Term. The term "Rent," as
used herein, shall be deemed to be and to mean the base monthly rent and all
other sums required to be paid by Lessee pursuant to the terms of this Lease.
Rent shall be paid in lawful money of the United States of America, without
offset or deduction, and shall be paid to Lessor at such place or places as
may be designated from time to time by Lessor. Rent for any period less than
a calendar month shall be a pro rata portion of the monthly installment. Upon
execution of this Lease, Lessee shall deposit with Lessor the first month's
rent.
COMMON AREA CHARGES: Lessee shall pay to Lessor, as additional Rent, an
amount equal to Lessee's prorata share of the total common area charges of
the Project and sixty-three and one-half percent (63.4%) of the total common
area charges for the Premises as defined below (the common area charges for
the Project and the common area charges for the Premises collectively
referred to herein as ("CAC")). Lessee shall pay to Lessor as Rent, on or
before the first day of each calendar month during the Lease Term, subject to
adjustment and reconciliation as provided hereinbelow, the sum of Ten
Thousand Five Hundred Sixty Dollars ($10,560), said sum representing Lessee's
estimated monthly payment of Lessee's percentage share of CAC. It is
understood and agreed that Lessee's obligation under this paragraph shall be
prorated to reflect the Commencement Date and the end of the Lease Term. Upon
execution of this Lease, Lessee shall deposit with Lessor the first monthly
estimated CAC.
Lessee's estimated monthly payment of CAC payable by Lessee during the
calendar year in which the Lease commences is set forth above. At or prior to
the commencement of each succeeding calendar year term (or as soon as
practical thereafter), Lessor shall provide Lessee with Lessee's estimated
monthly payment for CAC which Lessee shall pay as Rent. Within 120 days of
the end of the calendar year and of the end of the Lease Term or earlier
termination of this Lease, Lessor shall provide Lessee a statement of actual
CAC incurred for the preceding year including capital reserves or other
applicable period in the case of a termination year. If such statement shows
that Lessee has paid less than its actual percentage, then Lessee shall on
demand pay to Lessor the amount of such deficiency limited to 10% over the
estimated CAC on an annual basis. Provided however, the limitation set forth
above in this paragraph shall not apply to changes in the amount of property
taxes versus Lessor's estimate for property taxes included in the CAC. If
such statement shows that Lessee has paid more than its actual percentage,
then Lessor shall, at its option, promptly refund such excess to Lessee or
credit die amount thereof to the Rent next becoming due from Lessee. Lessor
reserves the right to revise any estimate of CAC if the actual or projected
CAC show an increase or decrease in excess of 10% from an earlier estimate
for the same period. In such event, Lessor shall provide a revised estimate
to Lessee, together with an explanation of the reasons therefor, and Lessee
shall revise its monthly payments accordingly. Lessor's and Lessee's
obligation with respect to adjustments at the end of the Lease Term or
earlier expiration of this Lease shall survive the Lease Term or earlier
termination.
As used in this Lease, CAC shall include but are not limited to, (i) all
items-identified in Paragraphs 5(b), 6, 9, 16 and 3 1; (ii) utility costs
related to the common areas of die XxXxxxxxxx Technology Park (the "Project"
as shown on Exhibit A.2) (iii) all costs and expenses including but not
limited to supplies, materials, equipment and tools used or required in
connection with the operation and maintenance of the Project-, (iv) licenses,
permits and inspection fees; (v) all other costs incurred by Lessor in
maintaining and operating the Project; (vi) all reserves for capital
replacements; and (vii) an amount equal to five percent (5%) of the actual
expenditures for the aggregate of all CAC, as compensation for Lessor's
accounting and processing services. Lessee shall have the right to review the
CAC applicable to this Lease annually upon reasonable notice.
SECURITY DEPOSIT: Lessee shall deposit with Lessor the sum of Fifty-Seven
Thousand Five Hundred Seventeen Dollars (S57,517) (the "Security Deposit").
The Security Deposit shall be held by Lessor as security for the faithful
performance by Lessee of all of the terms, covenants, and conditions of this
Lease applicable to Lessee. If Lessee commits a default as provided for
herein, including but not limited to a default with respect to the provisions
contained herein relating to the condition of the Premises, Lessor may (but
shall not be required to) use, apply or retain all or any part of the
Security Deposit for the payment of any amount which Lessor may spend by
reason of default by Lessee. If any portion of the Security Deposit is so
used or applied, Lessee shall, within ten days after written demand therefor,
deposit cash with Lessor in an amount sufficient to restore the Security
Deposit to its original amount. Lessees failure to do so shall be a default
by Lessee. Any attempt by Lessee to transfer or encumber its interest in- the
Security Deposit shall be mill and void. Upon execution of this Lease, Lessee
shall deposit with Lessor the Security Deposit. Subject to the conditions
herein, the Security Deposit shall be returned to Lessee at the end of the
Lease Term or earlier expiration of this Lease.
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LATE CHARGES: Lessee hereby acknowledges that a late payment made by Lessee
to Lessor of Rent and other sums due hereunder will cause Lesser to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges, which may be imposed on
Lessor according to the terms or any mortgage or trust deed covering the
Premises. Accordingly, if any installment of Rent or any other sum due from
Lessee is not received by Lessor or Lessee's designee within ten (10) days
after such amount is due, Lessee shall pay to Lessor a late charge equal to
five (5%) percent of such overdue amount. The parties hereby agree that such
late charge represents a fair and reasonable estimate of the costs Lessor
will incur by reason of late payments made by Lessee. Acceptance of such late
charges by Lessor shall in no event constitute a waiver of Lessee's default
with respect to such overdue amount, nor shall it prevent Lessor from
exercising any of the other rights and remedies granted hereunder.
Notwithstanding the above, Lessor agrees to waive one late charge per any
twelve month period during the Lease Term.
QUIET ENJOYMENT: Lessor covenants and agrees with Lessee that upon Lessee
paying Rent and performing its covenants and conditions under this Lease,
Lessee shall and may peaceably and quietly have, hold and enjoy the Premises
for the Lease Term, subject, however, to the rights reserved by Lessor
hereunder.
ACKNOWLEDGEMENT AND APPROVAL: Lessee hereby acknowledges that Lessee has
approved the site plan (attached as Exhibit A) and the Building floor plan
and elevations (attached as Exhibit C).
COMMENCEMENT DATE MEMORANDUM: When the actual Commencement Date is
determined, the parties shall execute a Commencement Date Memorandum setting
forth the Commencement Date, the actual gross exterior square footage of the
Premises, the Base rent, the CAC, Lessee's prorata share, and the TI
Allowance, but failure to do so shall not affect the continuing validity and
enforceability of this Lease, which shall remain in full force and effect.
IT IS FURTHER MUTUALLY AGREED BETWEEN THE PARTIES AS FOLLOWS:
1. POSSESSION: Possession shall be deemed tendered and the Lease Term shall
commence upon the first to occur of the following (the "Commencement Date"):
(i) the Premises are Substantially Complete or (ii) Lessee occupies the
Premises and commences to conduct business operations or (iii) if Lessor is
prevented from or delayed in completing its work under Section 2 of this
Lease due to the acts or omissions of Lessee or Lessee's failure to meet the
Lessee approval deadlines set forth in Exhibit E, such work will be deemed
Substantially Complete as of the date on which it would have been
Substantially Complete had it not been for such Lessee-caused delay. It is
the intention of Lessee and Lessor that November 15, 1996 shall be the
Commencement Date except as provided in Section 2 of this Lease
"Substantially Complete" shall mean that: (i) Lessor has tendered possession
of the Premises to Lessee, (ii) Lessor has met all legal requirements for
occupancy, (iii) the Building Shell and Lessee Interior Improvements are
materially complete per the approved plans, exclusive of telephone or other
communication systems, punchlist items and there remains no incomplete or
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defective items of work which would materially adversely affect Lessee's
intended use of the Premises and (iv) said interior of the building is in a
"broom clean" condition.
2. BUILDING SHELL AND LESSEE'S IMPROVEMENTS: The "Building Shell", as defined
in the attached Exhibit B shall be constructed at Lessor's sole cost.
The "Lessee Interior Improvements" shall be defined as all items not part of
the Building Shell and shall include all items on attached Exhibit D and
shall be constructed by independent contractors to be employed by and under
the supervision of Lessor, in accordance with complete plans and
specifications prepared by Lessor for submission to the City of Milpitas
("Lessee Improvement Plans"), complete with all mechanical and electrical
design, approved by Lessee, and then to be attached hereto as Exhibit D.
Lessee and its designated representatives, shall at all times during the
construction of the Lessee Interior Improvements have access to the Premises
to monitor the progress of construction and Lessor's compliance with its
obligation hereunder, provided however, that such access shall not
unreasonably interfere with the activities of Lessor or its contractors. If
Lessor notifies Lessee that any fittings, finishes or other materials
included in the specifications for the Lessee Interior Improvements cannot be
obtained within forty-five (45) days after placing an order therefor, Lessor,
subject to Lessee approval, shall be responsible for selecting alternative
fittings, finishes or other materials which can be obtained within said
forty-five (45) day period, or, if Lessee does not approve any alternative,
Lessee shall be responsible for any delay beyond said forty-five (45) day
period including Rent for each day of delay.
Lessor shall be responsible for ensuring that the Building Shell and Lessee
Interior Improvements conform to all applicable statutes, rules, regulations,
ordinances, and City of Milpitas Building Department interpretations
necessary for occupancy and the approved Lessee Improvement Plans.
For any contract to be entered into between Lessor and any contractor
furnishing labor or materials in connection with the construction of the
Lessee Interior Improvements where the payment due under such contract is
estimated by Lessor to be in excess of one hundred thousand dollars S
100,000, Lessor shall request bids from at least three (3) qualified
contractors selected by Lessor for bidding. Lessor will accept the lowest
bid. Lessee shall have the opportunity to review the qualified bidders list
and may select a bidder of their choice for any bid provided the bidder meets
Lessors reasonable requirements.
Lessor shall be responsible for and shall pay the cost of the Lessee Interior
Improvements up to the amount of One Million Two Hundred Forty-Eight Thousand
Eight Hundred Fifty Dollars ($1,248,850) (the "TI Allowance") as shown on
attached Exhibit D, being Twenty-Five Dollars S25.00 per square foot times
49,954 square feet. In the event the cost of the Lessee Interior Improvements
is less than the TI Allowance, the monthly base rent under this Lease shall
be decreased by $11.37 per month for every $1,000 dollar reduction in the
TI Allowance. Costs in excess of the TI Allowance, if any, will not be
incurred without the advance approval of Lessee. Any approved cost over the
TI Allowance shall be paid for by Lessee in cash within fifteen (15) days
after Lessor has provided Lessee with evidence that the work approved is
complete per plans. Lessor shall be entitled to a construction management fee
covering its overhead and profit on the costs incurred for the Lessee
Interior Improvements not to exceed six percent (6%). All costs for the
Lessee Interior Improvements shall be documented and subject to verification
by Lessee.
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Lessor shall use its best efforts to cause the Commencement Date of the initial
term to occur not later than November 15, 1996. Lessor shall advise Lessee on or
before May 15, 1996 if Lessor will be able to complete the Premises by November
15, 1996. If no notice is provided by this date, Lessor agrees to complete the
Premises by December 15, 1996 or pay any excess rent incurred by Lessee on its
existing lease, up to a maximum of 150%, from the earlier of December 15, 1996
or the date Lessor notifies Lessee in writing that the Premises shall be
completed, until such time as the Premises are completed. Lessor and Lessee
agree that having a Commencement Date after the earlier of December 15, 1996 or
the date Lessor notifies Lessee in writing that the Premises shall be completed
will cause Lessee and Lessor to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult to ascertain. Accordingly, the
parties hereby agree that Lessors payment to Lessee of excess rent specified
herein represents a fair and reasonable settlement for both parties and neither
party shall have further liability to the other for any damages. If the
Commencement Date has not occurred by February 15, 1997, Lessee may at its sole
option, by written notice to Lessor, have the right to terminate this Lease at
any time after February 15, 1997 until the Commencement Date. Notwithstanding
anything to the contrary herein, all dates stated herein shall be extended one
day for each day Lessor is unable to Substantially Complete the Premises due to
acts of God, one day for each day Lessor is unable to Substantially Complete the
Premises due to Lessee delays, one day for each day Lessor is unable to
Substantially Complete the Premises due to governmental actions (other than
governmental action of refusing to approve work which fails to comply a with the
law or the building permit) which occurs after receipt of normal building
permits, one day for each day over thirty (30) days that the City of Milpitas
requires to issue a building permit, and one day for each day Lessee fails to
meet Lessee deadlines for approvals as shown on attached Exhibit E. Lessee shall
have a minimum of 3 business days to approve or disapprove any preliminary plans
or change orders and a minimum of 10 business days to approve or disapprove any
final plans. If Lessee does not disapprove any plans or change orders within the
time period set forth herein in writing, Lessor may proceed on the basis that
the plans or change orders are approved by Lessee. If plans or change orders are
disapproved, Lessee shall state the reason for disapproval and Lessor and Lessee
shall act in good faith to resolve any issues.
2.1 ACCEPTANCE OF PREMISES AND COVENANTS TO SURRENDER: Lessor represents that
the Premises will be in good order and repair, and comply with all requirements
for occupancy and all plans, specifications, designs and blue prints attached
hereto as of the Commencement Date. Lessee agrees on the last day of the Lease
Term, or on the sooner termination of this Lease. to surrender the Premises to
Lessor in Good Condition and Repair. Good Condition and Repair ("Good Condition
and Repair") shall not mean original condition, but shall mean that the Premises
are in a commercially acceptable condition suitable for occupancy by a
reasonable lessee. The interior walls of all office and warehouse areas, the
floors of all office and warehouse areas, all suspended ceilings and any
carpeting are to be cleaned and in Good Condition and Repair. Lessee also agrees
to surrender unto Lessor all alterations, additions, and improvements (not
personal property and trade fixtures) which may have been made in, to, or on the
Premises by Lessee, except that Lessee shall ascertain from Lessor, within (30)
days before the end of the Lease Term or earlier termination of this Lease,
whether Lessor desires to have the Premises or any part or parts thereof
restored to their condition as of the Commencement Date of this Lease; if Lessor
shall so desire, then Lessee shall restore said Premises or such part or parts
thereof before the end of tile Lease Term or earlier termination of this Lease
at Lessee's sole cost and expense. Lessee, on or before the end of the Lease
Term or sooner termination of this Lease, shall remove all its personal property
and trade fixtures from the Premises, and all such property not so removed shall
be deemed to be abandoned by Lessee. Lessee shall reimburse Lessor for all
disposition costs incurred by Lessor relative to Lessee's abandoned property. If
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the Premises are not surrendered at the end of the Lease Term or earlier
termination of this Lease, Lessee shall indemnify Lessor against loss or
liability resulting from any delay caused by Lessee in surrendering the Premises
including, without limitation, any claims made by any succeeding Lessee founded
on such delay.
3. USES PROHIBITED: Lessee shall not commit or suffer to be committed, any
waste upon the Premises, or any nuisance, or other act or thing which may
disturb the quiet enjoyment of any other tenant in or around the buildings in
which the subject Premises are located or allow any sale by auction upon the
Premises, or allow the Premises to be used for any improper, immoral,
unlawful or objectionable purpose, or place any loads upon the floor, walls,
or ceiling which may endanger the structure, or use any machinery or
apparatus which will in any mariner vibrate or shake the Premises or the
building of which it is a part, or place any harmful liquids in the drainage
system of the building. No waste materials or refuse shall be dumped upon or
permitted to remain upon any part of the Premises outside of the building
proper. No materials, supplies, equipment, finished products or semi-finished
products, raw materials or articles of any nature shall be stored upon or
permitted to remain on any portion of the Premises outside of the building
structure, unless approved by the local, state federal or other applicable
governing authority. Lessor consents to Lessee's use of materials which are
incidental to the normal, day-to-day operations of any office user, such as
copier fluids, cleaning materials, etc., but this does not relieve Lessee of
any of its obligations not to contaminate the Premises or related real
property or violated any Hazardous Materials Laws.
4. ALTERATIONS AND ADDITIONS: Lessee shall not make, or suffer to be made, any
alteration or addition to said Premises, or any part thereof, without the
express, advance written consent of Lessor, any addition or alteration to said
Premises, except movable furniture, movable partitions, and trade fixtures,
shall become at once a part of the realty and belong to Lessor at the end of the
Lease Term or earlier termination of this Lease. Alterations and additions which
arc not deemed as trade fixtures shall include HVAC systems, lighting systems,
electrical systems, non-movable partitioning, carpeting, or any other
installation which has become an integral part of the Premises. Lessee agrees
that it will not proceed to make such alterations or additions until all
required government permits have been obtained and after having obtained consent
from Lessor to do so, until five (5) days from the receipt of such consent, so
that Lessor may post appropriate notices to avoid any liability to contractors
or material suppliers for payment for Lessee's improvements. Lessee shall at all
times permit such notices to be posted and to remain posted until the completion
of work. At the end of the Lease Term or earlier termination of this Lease,
Lessee shall remove and shall be required to remove its special tenant
improvements and all related equipment installed by Lessee, unless approved by
Lessor not to remove, at or during the Lease Term and Lessee shall return the
Premises to the condition that existed before the installation of the special
tenant improvements. Notwithstanding the above, Lessor agrees to allow any
reasonable alterations and improvements and will use its best efforts to notify
Lessee at the time of approval if such improvements or alterations are to be
removed at Lease Expiration or earlier termination of this Lease.
Notwithstanding the above, Lessee shall have the right, during the term of this
Lease, to make improvements to the Premises at their sole cost and expense of
S25,000 per year with no approval from Lessor, provided they are not structural
and subject to the requirement to remove the subject improvements at the end of
the Lease Term or earlier termination of the Lease.
5. MAINTENANCE OF PREMISES:
(a) Lessee shall at its sole cost and expense keep and maintain the
interior of the Premises, including, but not limited to, all lighting
systems, temperature control systems and plumbing systems, in Good
Condition and Repair, including any
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required replacements. Lessee shall maintain all wall surfaces and floor
coverings in Good Condition and Repair, free of holes, gouges or defacements.
(b) Lessor shall keep and maintain in Good Condition and Repair including
replacements, at Lessee's expense, based on a pro-rata share of cost based on
square footage or costs directly related to Lessee's use of the Premises the
following, which shall be included in the monthly CAC:
1. The exterior of the building, any appurtenances and every part thereof,
including but not limited to, glazing, sidewalks, parking areas, electrical
systems, HVAC systems, roof membrane, and painting of exterior walls.
2. The HVAC by a service contract with a licensed air conditioning and
heating contractor which contract shall provide for a minimum of bi-monthly
maintenance of all air conditioning and heating equipment at the Premises
including HVAC repairs or replacements which are either excluded from such
service contract or any existing equipment warranties.
3. The landscaping by a landscape contractor to water, maintain, trim and
replace, when necessary, any shrubbery and landscaping at the Premises.
4. The roof membrane by a service contract with a licensed reputable
roofing contractor which contract shall provide for a minimum of
semi-annual maintenance, cleaning of storm gutters, drains, removing of
debris and trimming overhanging trees, repair of the roof and application
of a finish coat every five years at the Premises.
5. Extermination services.
6. Fire monitoring services.
Notwithstanding the provisions of Section 5(b) above, Lessor agrees that for the
first twelve months of the initial lease term, Lessor shall pay the repair and
replacement costs for die roof and HVAC system, provided however, that the
failure or repair is not caused by the negligence or misconduct of Lessee or
Lessee's Agents. Lessee has the obligation throughout the Lease Term, including
the first twelve months of the initial lease term, to pay for all normal
maintenance and related service contracts.
(c) Lessee hereby waives any and all tights to make repairs at the expense of
Lessor as provided in Section 1942 of the Civil Code of the State of California,
and all rights provided for by Section 1941 of said Civil Code.
(d) Lessor shall be responsible for the repair of any structural defects in the
Premises including the roof structure (not membrane), exterior walls and
foundation during the Lease Tenn.
(e) Immediately prior to the end of the Lease Term, Lessee shall provide Lessor
with a Tenant Report indicating that the Premises occupied by Lessee is free of
any active termite infestation and any related damages, if any, have been
repaired by Lessee at Lessee's sole cost and expense.
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6. HAZARD INSURANCE: Lessee shall not use, or permit said Premises, or any part
thereof, to be used, for any purpose other than that for which said Premises are
hereby leased; and no use shall be made or permitted to be made of the Premises,
nor acts done, which may cause a cancellation of any insurance policy covering
said building, or any part thereof, nor shall Lessee-sell or permit to be kept',
used or sold, in or about said Premises, any article which may be prohibited by
a standard form fire insurance policy. Lessee shall, at its sole cost and
expense, comply with any and all requirements, pertaining to said Premises, of
any insurance organization or company, necessary for the maintenance of
reasonable fire and general liability insurance, including flood, covering said
building and appurtenances. Lessor agrees to purchase and keep in force fire and
extended coverage insurance covering loss or damage to the Premises in amounts
not to exceed the full replacement cost of said Premises as reasonably
determined by Lessor, with proceeds payable to Lessor. Lessor may, but shall not
be obligated to obtain flood insurance and Lessor shall have no liability to
Lessee if Lessor elects not to obtain flood insurance. Lessee acknowledges that
the insurance referenced above does not include coverage for Lessee's personal
property. In the event of a loss per the insurance provisions of this paragraph,
Lessee shall be responsible for deductibles up to a maximum of $5,000 per
occurrence. Lessee agrees to pay to the Lessor as additional Rent, on demand,
the full cost of said insurance as evidenced by insurance xxxxxxxx to Lessor,
plus an accounting fee equal to five percent of such insurance costs. If said
insurance xxxxxxxx cover the Premises, and Lessee does not occupy the entire
Premises, the insurance premiums and deductibles shall be allocated to the
portion of the Premises occupied by Lessee on a pro-rata square footage or other
equitable basis, as determined by Lessor. It is understood and agreed that
Lessee's obligation under this paragraph will be prorated to reflect the
Commencement Date and the end of the Lease Term. Lessee agrees to pay to the
Lessor as additional Rent, on demand, the full cost of said insurance as
evidenced by insurance xxxxxxxx to the Lessor which shall be included in
Lessee's monthly CAC.
Lessor and Lessee hereby waive any rights each may have against die other
related to any loss or damage caused to Lessor or Lessee as the case may be, or
to the Premises or its contents, and which may arise from any risk generally
covered by fire and extended coverage insurance, including flood. The parties
shall provide that their respective insurance policies insuring the property or
die personal property include a waiver of any right of subrogation which said
insurance company may have against Lessor or Lessee, as the case may be. Lessor
shall maintain in full force and effect, a policy of rental loss insurance, in
an amount equal to the amount of Rent payable by Lessee commencing on the date
of loss during the next ensuing one (1) year, as reasonably determined by Lessor
with proceeds payable to Lessor ("Loss of Rents Insurance"). Lessee shall
reimburse Lessor for the full cost of said rental loss insurance coverage.
7. ABANDONMENT: Lessee shall not vacate or abandon the Premises at any time
during the Lease Term; and if Lessee shall abandon, vacate or surrender said
Premises, or be dispossessed by process of law, or otherwise, any personal
property belonging to Lessee and left on the Premises shall be deemed to be
abandoned, at the option of Lessor. Notwithstanding the above, the Premises
shall not be considered vacated or abandoned if Lessee maintains the Premises in
Good Condition and Repair, provides security and is not in default.
8. FREE FROM LIENS: Lessee shall keep the subject Premises and the property in
which the subject Premises are situated, free from any and all liens including
but not limited to liens arising out of any work performed, materials furnished,
or obligations incurred by Lessee. However, the Lessor shall allow Lessee to
contest a lien claim, so long as the claim is discharged prior to
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any foreclosure proceeding being initiated against the property and provided
Lessee provides Lessor a bond if the lien exceeds $5,000.
9. COMPLIANCE WITH GOVERNMENTAL REGULATIONS: Lessee shall, at its sole cost and
expense, comply with all of the requirements of all local, municipal, state and
federal authorities now in force, or which may hereafter be in force, pertaining
to Lessee's use and occupancy of the said Premises, and shall faithfully observe
in the use of the Premises all local and municipal ordinances and state and
federal statutes now in force or which may hereafter be in force.
10. LESSEE'S INSURANCE: Lessee, as a material part of the consideration to be
rendered to Lessor, hereby waives all claims against Lessor and Lessor's Agents
for damages to goods, wares and merchandise, and all other personal property in,
upon or about said Premises, and for injuries to persons in, upon or about said
Premises, from any cause arising at any time, and Lessee will hold Lessor and
Lessor's Agents exempt and harmless from any damage or injury to any person, or
to the goods, wares and merchandise and all other personal property of any
person, arising from the use or occupancy of the Premises by Lessee, or from the
failure of Lessee to keep the Premises in good condition and repair, as herein
provided. Lessee shall secure and keep in force a standard policy of commercial
general liability insurance and property damage policy covering the Premises,
including parking areas, insuring the Lessee. A certificate of said policy
naming Lessor as an additional insured shall be delivered to Lessor and will
have a combined single limit for both bodily injury, death and property damage
in an amount not less than five million dollars ($5,000,000.00). The limits of
said insurance shall not, however, limit the liability of Lessee hereunder.
Lessee shall obtain a written obligation on the part of the insurer to notify
Lessor 30 days in advance in writing before any cancellation thereof. Lessee
shall obtain, at Lessee's sole cost and expense, a policy of fire and extended
coverage insurance including coverage for direct physical loss special form, and
a sprinkler leakage endorsement insuring the personal property of Lessee. 'Me
proceeds from any personal property damage policy shall be payable to Lessee.
Lessee shall, at its sole cost and expense, comply with all of the insurance
requirements of all local, municipal, state and federal authorities now in
force, or which may hereafter be in force, pertaining to Lessee's use and
occupancy of the said Premises.
11. ADVERTISEMENTS AND SIGNS: Lessee shall not place or permit to be placed, in,
upon or about the Premises any unusual or extraordinary signs, or any signs not
approved by the city, local, state, federal or other applicable governing
authority. Lessee shall not place, or permit to be placed upon the Premises, any
signs, advertisements or notices without the written consent of the Lessor, and
such consent shall not be unreasonably withheld. A sign so placed on the
Premises shall be so placed upon the understanding and agreement that Lessee
will remove same at the end of the Lease Term or earlier termination of this
Lease and repair any damage or injury to the Premises caused thereby, and if not
so removed by Lessee, then Lessor may have the same removed at Lessee's expense.
Lessee shall be entitled to place its sign on the building monument similar to
existing signs.
12. UTILITIES: Lessee shall pay for all water, gas, heat, light, power,
telephone and other utilities supplied to the Premises. Any charges for sewer
usage or related fees shall be the obligation of Lessee and paid for by
Lessee. If any such services are not a separately metered to Lessee, Lessee
shall pay a reasonable proportion of all charges which are jointly metered,
the determination to be made by Lessor acting reasonably and on any equitable
basis.
Page 9
13. ATTORNEY'S FEES: In case suit should be brought for the possession of the
Premises, for the recovery of any sum. due hereunder, or because of the breach
of any other covenant herein, the losing party shall pay to the prevailing party
reasonable attorneys fee which shall be deemed to have accrued on the
commencement of such action and shall be enforceable whether or not such action
is prosecuted to judgment.
14.1 DEFAULT: The occurrence of any of the following shall constitute a default
and breach of' this Lease by Lessee: a) Any failure by Lessee to pay Rent or to
make any other payment required to be made by Lessee hereunder when due if not
cured within ten (10) days after written notice thereof by Lessor to Lessee; b)
The abandonment or vacation of the Premises by Use except as provided in Section
7; c) A failure by Lessee to observe and perform any other provision of this
Lease to be observed or performed by Lessee, where such failure continues for
thirty days after written notice thereof by Lessor to Lessee, provided,
however, that if the nature of such default is such that the same cannot be
reasonably cured within such thirty (30) day period, Lessee shall not be deemed
to be in default if Lessee shall, within such period, commence such cure and
thereafter diligently prosecute the same to completion; d) The making by Lessee
of any general assignment for the benefit of creditors; the filing by or against
Lessee of a petition to have Lessee adjudged a bankrupt or of a petition for
reorganization or arrangement under any law relating to bankruptcy, c) the
appointment of a trustee or receiver to take possession of substantially all of
Lessee's assets or Lessee's interest in this Lease, or the attachment, execution
or other judicial seizure of substantially all of Lessee's assets located at the
Premises or of Lessee's interest in this Lease.
14.2 SURRENDER OF LEASE: In the event of any such default by Lessee, then in
addition to any other remedies available to Lessor at law or in equity, Lessor
shall have the immediate option to terminate this Lease before the end of the
Lease Term and all rights of Lessee hereunder, by giving written notice of such
intention to terminate. In the event that Lessor terminates this Lease due to a
default of Lessee, then Lessor may recover from Lessee: a) the worth at the time
of award of any unpaid Rent which had been earned at the time of such
termination; plus b) the worth at die time of award of unpaid Rent which would
have been earned after termination until the time of award exceeding the amount
of such rental loss that the Lessee proves could have been reasonably avoided-,
plus c) the worth at the time of award of the amount by which the unpaid Rent
for the balance of the Lease Term after. the time of award exceeds the amount of
such rental loss that the Lessee proves could have been reasonably avoided-,
plus d) any other amount necessary to compensate Lessor for all the detriment
proximately caused by Lessees failure to perform his obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom; and e) at Lessors election, such other amounts in addition to or in
lieu of die foregoing as may be permitted from time to time by applicable
California law. As used in (a) and (b) above, the "worth at the time of award"
is computed by allowing interest at the rate of Xxxxx Fargo's prime rate plus
two percent (2%) per annum. As used in (c) above, the "worth at the time of
award" is computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%).
14.3 RIGHT OF ENTRY AND REMOVAL: In the event of any such default by Lessee,
Lessor shall also have the right, with or without terminating this Lease, to
reenter the Premises and remove all persons and property from the Premises; such
property may be removed and stored in a public warehouse or elsewhere at the
cost of and for the account of Lessee.
Page 10
14.4 ABANDONMENT: In the event of the vacation or abandonment, except as
provided in Section 7, of the Premises by Lessee or in the event that Lessor
shall elect to re-enter as provided in paragraph 14.3 above or shall take
possession of the Premises pursuant to legal proceeding or pursuant to any
notice provided by law, and Lessor does not elect to terminate this Lease as
provided in paragraph 14.2 above, then Lessor 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 for such term or terms and at such rental rates and
upon such other terms and conditions as Lessor, in its sole discretion, may deem
advisable with the right to make alterations and repairs to the Premises. In the
event that Lessor elects to relet the Premises, then Rent received by Lessor
from such reletting shall be applied; first, to the payment of any indebtedness
other than Rent due hereunder from Lessee to Lessor, 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; fourth, to the payment of Rent due and unpaid
hereunder, and the residue, if any, shall be held by Lessor and applied to the
payment of future Rent as the same may become due and payable hereunder. Should
that portion of such Rent received from such reletting during any month, which
is applied by the payment of Rent hereunder according to die application
procedure outlined above, be less than the Rent payable during that month by
Lessee hereunder, then Lessee shall pay such deficiency to Lessor immediately
upon demand therefor by Lessor. Such deficiency shall be calculated and paid
monthly. Lessee shall also pay to Lessor, as soon as ascertained, any costs and
expenses incurred by Lessor in such reletting or in- making such alterations and
repairs not covered by the rentals received from such reletting.
14.5 NO IMPLIED TERMINATION: No re-entry or taking possession of the Premises by
Lessor pursuant to 14.3 or 14.4 of this Article 14 shall be construed as an
election to terminate this Lease unless a written notice of such intention is
given to Lessee or unless the termination thereof is decreed by a court of
competent jurisdiction. Notwithstanding any reletting without termination by
Lessor because of any default by Lessee, Lessor may at any time after such
reletting elect to terminate this Lease for any such default.
15. SURRENDER OF LEASE: The voluntary or other surrender of this Lease by
Lessee, or a mutual cancellation thereof, shall not work a merger, and shall, at
the option of Lessor, terminate all or any existing subleases or sub tenancies,
or may, at the option of Lessor, operate as an assignment to him of any or all
such subleases or sub tenancies.
16. TAXES: Lessee shall pay and discharge punctually before a penalty is due,
all real estate taxes, personal property taxes, taxes based on vehicles
utilizing parking areas in the Premises, taxes computed or based on rental
income (other than federal, state and municipal net income taxes), environmental
surcharges, privilege taxes, excise taxes, business and occupation taxes, school
fees or surcharges, gross receipts taxes, sales and/or use taxes, employee
taxes, occupational license taxes, water and sewer taxes, assessments
(including, but not limited to, assessments for public improvements or benefit),
assessments for local improvement and maintenance districts,. and all other
governmental impositions and charges of every kind and nature whatsoever,
regardless of whether now customary or within the contemplation of the parties
hereto and regardless of whether resolution from increased rate and/or
valuation, or whether extraordinary or ordinary, general or special, unforeseen
or foreseen, or similar or dissimilar to any of the foregoing (all of the
foregoing being hereinafter collectively called "Tax" or "Taxes") which, at any
time during the Lease Term, shall be applicable or against the Premises, or
shall become due and payable and a lien or charge upon the Premises under or by
virtue of any present or future laws, statutes, ordinances, regulations, or
other requirements of any governmental authority whatsoever. The term
"Environmental Surcharge" shall include any and all
Page 11
expenses, taxes, charges or penalties imposed by the Federal Department of
Energy, Federal Environmental Protection Agency, the Federal Clean Air Act,
or any regulations promulgated thereunder, or any other local, state or
federal governmental agency or entity now or hereafter vested with the power
to impose taxes, assessments or other types of surcharges as a means of
controlling or abating environmental pollution or die use of energy in regard
to the use, operation or occupancy of the Premises. The term "Tax" shall
include, without limitation, all taxes, assessments, levies, fees,
impositions or charges levied, imposed, assessed, measured, or based in any
manner whatsoever (i) in whole or in part on die Rent payable by Lessee under
this Lease, (ii) upon or with respect to the use, possession, occupancy,
leasing, operation or management of the Premises, (iii) upon this transaction
or any document to which Lessee is a party creating or transferring an
interest or an estate in the Premises, (iv) upon Lessee's business operations
conducted at the Premises, (v) upon, measured by or reasonably attributable
to the cost or value of Lessee's equipment, furniture, fixtures and other
personal property located on the Premises or the cost or value of any
leasehold improvements made in or to the Premises by or for Lessee,
regardless of whether title to such improvements shall be in Lessor or
Lessee, or (vi) in lieu of or equivalent to any Tax set forth in this Section
16. In the event any such Taxes are payable by Lessor and it shall not be
lawful for Lessee to reimburse Lessor for such Taxes, the n the Rent payable
thereunder shall be increased to net Lessor the same net rent after
imposition of any such Tax upon Lessor as would have been payable to Lessor
prior to the imposition of any such Tax. It is the intention of the parties
that Lessor shall be free from all such Taxes and all other governmental
impositions and charges of every kind and nature whatsoever. However, nothing
contained in this Section 16 shall require Lessee to pay any Federal or State
income, franchise, estate, inheritance, succession, transfer or excess
profits tax imposed upon Lessor. If any general or special assessment is
levied and assessed against the Premises, Lessor agrees to use its best
reasonable efforts to cause the assessment to become a lien on the Premises
securing repayment of a bond sold to finance the improvements to which the
assessment relates which is payable in installments of principal and interest
over the maximum term allowed by law. It is understood and accepted that
Lessee's obligation under this paragraph will be prorated to reflect the
Commencement Date and the end of the Lease Tenn. It is further understood
that if Taxes cover the Premises and Lessee does not occupy the entire
Premises, the Taxes will be allocated to the portion of the Premises occupied
by Lessee based on a pro-rata square footage or other equitable basis. Taxes
billed to Lessor shall be included in the monthly CAC.
Subject to any limitations or restrictions imposed by any deeds of trust or
mortgages now or hereafter covering or affecting the Premises, Lessee shall have
the right to contest or review the amount or validity of any Tax by appropriate
legal proceedings but which is not to be deemed or construed in any way as
relieving, modifying or extending Lessee's covenant to pay such Tax at the time
and in the manner as provided in this Section 16. However, as a condition of
Lessees right to contest, if such contested Tax is not paid before such contest
and if the legal proceedings shall not operate to prevent or stay the collection
of the Tax so contested, Lessee shall, before institution any such proceeding,
protect the Premises and the interest of Lessor and of the beneficiary of a deed
of trust or the mortgagee of a mortgage affecting the Premises against any lien
upon the Premises by a surety bond, issued by an insurance company acceptable to
Lessor and in an amount equal to one and one-half (1 1/2) times the amount
contested or, at Lessors option, the amount of the contested Tax and the
interest and penalties in connection therewith. Any contest as to the validity
or amount of any Tax, whether before or after payment, shall be made by Lessee
in Lessee's own name, or if required by law, in the name of Lessor or both
Lessor and Lessee. Lessee shall defend, indemnify and hold harmless Lessor from
and against any and all costs or expenses, including attorney' fees, in
connection with any such proceedings brought by Lessee, whether in its own name
or not. Lessee shall be entitled to retain any refund of any such
Page 12
contested Tax and penalties or interest thereon which have been paid by Lessee.
Nothing contained herein shall be construed as affecting or limiting Lessees
right to contest any Tax at Lessor's expense.
17. NOTICES: Unless otherwise provided for in this Lease, any and all written
notices or other communication (the "Communication") to be given in connection
with this Lease shall be given in writing and shall be given by personal
delivery, facsimile transmission or by mailing by registered or certified mail
with postage thereon or recognized overnight courier, fully prepaid; in a sealed
envelope addressed to the intended recipient as follows:
(a) to the Lessor at: 00000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxx
Fax No: (000) 000-0000
(b) to the Lessee at: 0000 XxXxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx
Attention:
Fax No:
or such other addresses, facsimile number or individual as may be designated by
a Communications given by a party to the other parties as aforesaid. Any
Communication given by personal delivery shall be conclusively deemed to have
been given and received on a date it is so delivered at such address provided
that such date is a business day, otherwise on the first business day following
its receipt, and if given by registered or certified mail, on the day on which
delivery is made or refused or if given by recognized overnight courier, on the
first business day following deposit such overnight courier and if given by
facsimile transmission, oil the day oil which it was transmitted provided such
day is a business day, failing which, on the next business day thereafter.
18. ENTRY BY LESSOR: Lessee shall permit Lessor and its agents to enter into and
upon said Premises at all reasonable times and upon reasonable notice using the
minimum amount of interference and inconvenience to Lessee and Lessees business,
subject to any security regulations of Lessee, for the purpose of inspecting the
same or for the purpose of maintaining the building in which said Premises are
situated, or for the purpose of making repairs, alterations or additions to any
other portion of said building, including the erection and maintenance of such
scaffolding, canopies, fences and props as may be required, without any rebate
of Rent and without any liability to Lessee for any loss of occupation or quiet
enjoyment of the Premises; and shall pen-nit Lessor and his agents, at any time
within ninety (90) days prior to the end of the Lease Term, to place upon said
Premises any usual or ordinary "For Sale" or "For Lease" signs and exhibit the
Premises to prospective tenants at reasonable hours.
19. DESTRUCTION OF PREMISES: In the event of a partial destruction of the said
Premises during the Lease Term from any cause which is covered by Lessors
property insurance, Lessor shall forthwith repair the same, provided such
repairs can be made within ninety (90) days under the laws and regulations of
State, Federal, County, or Municipal authorities, but such partial
Page 13
destruction shall in no way annul or void this Lease, except that Lessee
shall be entitled to a proportionate reduction of Rent while such repairs are
being made to the extent of payments received by Lessor under its Loss of
Rents Insurance coverage. With respect to any partial destruction which
Lessor is obligated to repair or may elect to repair under the terms of This
paragraph, the provision of Section 1932, Subdivision 2, and of Section 1933,
Subdivision 4, of the Civil Code of the State of California are waived by
Lessee. In the event that the building in which the subject Premises may be
situated is destroyed to an extent greater than thirty-three and one-third
(33 1/3%) of the replacement cost thereof, either party may, at its sole
option, elect to terminate this Lease, whether the subject Premises is
insured or not. A total destruction of the building in which the subject
Premises are situated shall terminate this Lease. Notwithstanding the above,
Lessor is only obligated to repair or rebuild to the extent of available
insurance proceeds including any deductible amount. Should Lessor determine
that insufficient or no insurance proceeds are available for repair or
reconstruction of Premises, Lessor, at its sole option, may terminate the
Lease. Lessee shall have the option of continuing this Lease by agreeing to
pay all repair costs to the subject Premises.
20. ASSIGNMENT AND SUBLETTING: Lessee shall not assign this Lease, or any
interest therein, and shall not sublet the said Premises or any part thereof, or
any right or privilege appurtenant thereto, or cause any other person or entity
(a bona fide subsidiary or affiliate of Lessee excepted) to occupy or use the
Premises, or any portion thereof, without the advance written consent of Lessor
which consent shall not be unreasonably withheld except as provided in this
paragraph. Any such assignment or subletting without such consent shall be void,
and shall, at the option of the Lessor, terminate this 1,ease. This Lease shall
not, or shall any interest therein, be assignable, as to the interest of Lessee,
by operation of law, without the written consent of Lessor. Notwithstanding
Lessor's obligation to provide reasonable approval, Lessor reserves the right to
withhold its consent for any proposed sublessee or assignee of Lessee if the
proposed sublessee or assignee is a user or generator of Hazardous Materials.
Notwithstanding the foregoing, Lessee may assign this Lease to a successor in
interest, whether by merger or acquisition, provided there is no substantial
reduction in the net worth of die resulting entity and the resulting entity is
not a user or generator of Hazardous Materials. Whether or not Lessors consent
to a sublease or assignment is required, in the event of any sublease or
assignment, Lessee shall be and shall remain primarily liable for the
performance of all conditions, covenants, and obligations of Lessee hereunder
and, in the event of a default by an assignee or sublicense, Lessor may proceed
directly against the original Lessee hereunder and/or any other predecessor of
such assignee or sublessee without the necessity of exhausting remedies against
said assignee or sublease.
21. CONDEMNATION: If any part of the Premises shall be taken for any public or
quasi-public use, under any statute or by right of eminent domain or private
purchase in lieu thereof, and a part thereof remains which is susceptible of
occupation hereunder, this Lease shall as to the part so taken, terminate as of
the date title vests in the condemnor or purchaser, and the Rent payable
hereunder shall be adjusted so that the Lessee shall be required to pay for the
remainder of the Lease Term only that portion of Rent as the value of the part
remaining rental adjustment resulting will be computed at the same Rental rate
for the remaining part not taken; however, Lessor shall have the option to
terminate this Lease as of the date when title to the part so taken vests in the
condemnor or purchaser. If all of the Premises, or such part thereof be taken so
that there does not remain a portion sufficient for the reasonable needs of
Lessee's business, this Lease shall thereupon terminate, provided Lessee
notifies Lessor in writing within fifteen (15) days after Lessee's notice of the
taking. If a part or all of the Premises be taken, all
Page 14
compensation awarded upon such taking shall be payable to the Lessor.
Lessee may file a separate claim and be entitled to any award granted to
Lessee
22. EFFECTS OF CONVEYANCE: The term "Lessor" as used in this Lease, means only
the owner for the time being of the land and building constituting the Premises,
so that, in the event of any sale of said land or building, or in the event of a
Lease of said building, Lessor shall be and hereby is entirely freed and
relieved of all covenants and obligations of Lessor hereunder, and it shall be
deemed and construed, without further agreement between the parties and the
purchaser of any such sale, or the Lessor of the building, that the purchaser or
lessor of the building has assumed and agreed to carry out any and all covenants
and obligations of the Lessor hereunder. If any security is given by Lessee to
secure the faithful performance of all or any of the covenants of this Lease on
the part of Lessee, Lessor shall transfer and deliver the security, as such, to
the purchaser at any such sale of the building, and thereupon the Lessor shall
be discharged from any further liability.
23. SUBORDINATION: This Lease, in the event Lessor notifies Lessee in writing,
shall be subordinate to any ground lease, deed of trust, or other hypothecation
for security now or hereafter placed upon the real property at which the
Premises arc a part and to any and all advances made on the security thereof and
to renewals, modifications, replacements and extensions thereof Lessee agrees to
promptly execute any documents which may be required to effectuate such
subordination. Notwithstanding such subordination, if Lessee is not in default
and so long as Lessee shall pay the Rent and observe and perform all of the
provisions and covenants required under this Lease, Lessees right to quiet
possession of the Premises shall not be disturbed or effected by any
subordination.
24. Waiver: The waiver by Lessor of any breach of any term, covenant or
condition, herein contained shall not be construed to be a waiver of such term,
covenant or condition or any subsequent breach of the same or any other term,
covenant or condition therein contained. Thc subsequent acceptance of Rent
hereunder by Lessor shall not be deemed to be a waiver of Lessees breach of any
term, covenant, or condition of the Lease.
25. HOLDING OVER: Any holding over after the end of the Lease Term requires
Lessor's written approval prior to the end of the Lease Term, which Lessor
may unreasonably withhold and shall be construed to be a tenancy at
sufferance from month to month. Lessee shall pay to Lessor monthly base rent
equal to one and one-half (1.5) times the monthly base rent installment due
in the last month of the Lease Term and all other additional rent, including
CAC, and all other terms and conditions of the Lease shall apply, so far as
applicable. Holding over by Lessee without written approval of Lessor shall
subject Lessee to the liabilities and obligations provided for in this Lease
and by law, including, but not limited to those in Section 2.1 of this Lease.
Lessee shall indemnify and hold Lessor harmless against any loss or liability
resulting from any delay caused by Lessee in a surrendering the Premises,
including without limitation, any claims made or penalties incurred by any
succeeding lessee or by Lessor. No holding over shall be deemed or construed
to exercise any option to extend or renew this Lease in lieu of full and
timely exercise of any such option as required hereunder.
26. SUCCESSORS AND ASSIGNS: The covenants and conditions herein contained shall,
subject to the provisions as to assignment, apply to and bind the heirs,
successors, executors, administrators and assigns of all of the parties hereto;
and all of the parties hereto shall be jointly and severally liable hereunder.
Page 15
27. ESTOPPEL CERTIFICATES: Lessee shall at any time during the Lease Term,
upon not less than ten (10) business days prior written notice from Lessor,
execute and deliver to Lessor a statement in writing certifying that, this
Lease is unmodified and in full force and effect (or, if modified, stating
the nature of such modification) and the dates to which the Rent and other
charges have been paid in advance, if any, and acknowledging that there are
not, to Lessee's knowledge, any uncured defaults on the part of Lessor
hereunder or specifying such defaults if they are claimed. Any such statement
may be conclusively relied upon by any prospective purchaser or encumbrance
of the Premises. Lessees failure to deliver such a statement within such time
shall be conclusive upon the Lessee that (a) this Lease is in full force and
effect, without modification except as may be represented by Lessor, (b)
there are no uncured defaults in Lessors performance.
28. TIME: Time is of the essence of the Lease.
29. CAPTIONS: The headings on titles to the paragraphs of this Lease arc not
a part of this Lease and shall have no effect upon the construction or
interpretation of any part thereof. This instrument contains all of the
agreements and conditions made between the parties hereto and may not be
modified orally or in any other manner than by an agreement in writing signed
by all of the parties hereto or their respective successors in interest.
30. PARTY NAMES: Landlord and Tenant may be used in various places in this
Lease as a substitute for Lessor and Lessee respectively.
31. EARTHQUAKE INSURANCE: As a condition of Lessor agreeing to waive the
requirement for earthquake insurance, Lessee agrees that it will pay, as
additional Rent, which shall be included in the monthly CAC, an amount not to
exceed twenty thousand dollars ($20,000) per year for earthquake insurance if
Lessor desires to obtain some form of earthquake insurance in the future, if and
when available, on terms acceptable to Lessor.
32. HABITUAL DEFAULT: Notwithstanding anything to the contrary contained in
Section 14 herein, Lessor and Lessee agree that if Lessee shall have
defaulted in die payment of Rent for three or more times during any twelve
month period during the Lease Term, then such conduct shall, at the option of
the Lessor, represent a separate event of default which cannot be cured by
Lessee. Lessee acknowledges that die purpose of this provision is to prevent
repetitive defaults by die Lessee under the Lease, which constitute a
hardship to the Lessor and deprive the Lessor of the timely performance by
the Lessee hereunder.
33. HAZARDOUS MATERIALS
33.1 DEFINITIONS: As used herein, the following terms shall have the
following meaning:
a. the term "Hazardous Materials" shall mean (i) polychlorinated biphenyls;
(ii) radioactive materials and (iii) any chemical, material or substance now
or hereafter defined as or included in the definitions of "hazardous
substance' "hazardous water", "hazardous material", "extremely hazardous
waste", "restricted hazardous waste" under Section 25115, 25117 or 15122.7,
or listed pursuant to Section 25140 of the California Health and Safety
Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined
as "hazardous substance" under Section 25316 of the California Health and
Safety Code, Division 20, Chapter 6.8 (Xxxxxxxxx-Presale-Xxxxxx Hazardous
Substances
Page 16
Account Act), (iii) defined as "hazardous material", "hazardous substance",
or "hazardous waste, under Section 25501 of the California Health and Safety
Code, Division 20, Chapter 6.95 (Hazardous Materials Release, Response,
Plans and Inventory), (iv) defined as a "hazardous substance" under Section
25181 of the California Health and Safety Code, Division 201, Chapter 6.7
(Underground Storage of Hazardous Substances), (v) petroleum, (vi) asbestos,
(vii) listed under Article 9 or defined as "hazardous" or "extremely
hazardous" pursuant to Article 11 of Title 22 of the California
Administrative Code, Division 4, Chapter 20, (viii) defined as "hazardous
substance" pursuant to Section 311 of the Federal Water Pollution Control
Act, 33 U.S.C. 1251 et seq. or listed pursuant to Section 1004 of the
Federal Water Pollution Control Act (33 U.S.C.1317), (ix) defined as a
"hazardous waste, pursuant to Section 1004 of the Federal Resource
Conservation and Recovery Act, 42 U.S.C. 6901 et scq., (x) defined as
"hazardous substance" pursuant to Section 101 of the Comprehensive
Environmental Responsibility Compensations, and Liability Act,
42 U.S.C. 9601 et seq., or (xi) regulated under the Toxic Substances Control
Act, 156 U.S.C. 2601 et seq.
b. The term "Hazardous Materials Laws" shall mean any local, state and
federal laws, rules, regulations, or ordinances relating to the use,
generation, transportation, analysis, manufacture, installation, release,
discharge, storage or disposal of Hazardous Material.
c. The term "Lessor's Agents" as used herein shall mean Lessor's agents,
representatives, employees, contractors, subcontractors, directors, officers
and partners.
d. The term "Lessees Agents" as used herein shall mean Lessee's agents,
representatives, employees, contractors, subcontractors, directors, officers,
partners, invitees or any other person in or about the Premises.
33.2 LESSEE'S RIGHT TO INVESTIGATE: Lessee shall be entitled to cause such
inspection, soils and ground water tests, and other evaluations to be made of
the Premises as Lessee deems necessary regarding (i) the presence and use of
Hazardous Materials in or about the Premises, and (ii) the potential for
exposure to Lessees employees and other persons to any Hazardous Materials used
and stored by previous occupants in or about the Premises. Lessee shall provide
Lessor with copies of all inspections, tests and evaluations. Lessee shall
indemnify, defend and hold Lessor harmless from any cost, claim or expense
arising from such entry by Lessee or from the performance of any such
investigation by such Lessee.
33.3 LESSOR'S REPRESENTATIONS: Lessor hereby represents and warrants to the best
of Lessor's knowledge that the Premises are, as of the date of this Lease, in
compliance with all Hazardous Material Laws.
33.4 LESSEE'S OBLIGATION TO INDEMNIFY: Lessee, at its sole cost and expense,
shall indemnify, defend, protect and hold Lessor and Lessor's Agents harmless
from and against any and all cost or expenses, including those described
under subparagraphs i, ii and iii herein below set forth, arising from or
caused in whole or in part, directly or indirectly by:
a. Lessees or Lessee's Agents' use, analysis, storage, transportation,
disposal, release, threatened release, discharge or generation of
Hazardous Material to, in, on, under, about or from the Premises, or
b. Lessees or Lessee's Agents failure to comply with Hazardous Material
laws; or
c. Any release of Hazardous Material to, in, on, under, about, from or
onto the Premises caused by Lessee or Lessees Agents or occurring
during the Lease Term, except ground water contamination from other
parcels where the source is from off the Premises not arising from or
caused by Lessee or Lessee's Agents.
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The cost and expenses indemnified against include, but arc not limited to the
following:
i. Any and all claims, actions, suits, proceedings, losses, damages,
liabilities, deficiencies, forfeitures, penalties, fines, punitive
damages, cost or expenses;
ii. Any claim, action, suit or proceeding for personal injury
(including sickness, disease, or death), tangible or intangible
property damage, compensation for lost wages, business income, profits
or other economic loss, damage to the natural resources of the
environment, nuisance, pollution, contamination, leaks, spills, release
or other adverse effects on the environment-,
iii. The cost of any repair, clean-up, treatment or detoxification of
the Premises necessary to bring the Premises into compliance with all
Hazardous Material Laws, including the preparation and implementation
of any closure, disposal, remedial action, or other actions with regard
to the Premises, and expenses (including, without limitation,
reasonable attorney's fees and consultants fees, investigation and
laboratory fees, court cost and litigation expenses).
33.5 LESSEE'S OBLIGATION TO REMEDIATE CONTAMINATION: Lessee shall, at its sole
cost and expense, promptly take any and all action necessary to remediate
contamination of the Premises by Hazardous Materials during the Lease Term.
33.6 OBLIGATION TO NOTIFY: Lessor and Lessee shall each give written notice to
the other as soon as reasonably practical of (i) any communication received from
any governmental authority concerning Hazardous Material which related to the
Premises and (ii) any contamination of the Premises by Hazardous Materials which
constitutes a violation of any Hazardous Material Laws.
33.7 SURVIVAL: The obligations of Lessee under this Section 33 shall survive the
Lease Term or earlier termination of this Lease.
33.8 CERTIFICATION AND CLOSURE: On or before the end of the Lease Term or
earlier termination of this Lease, Lessee shall deliver to Lessor a
certification executed by Lessee stating that, to the best of Lessee's
knowledge, there exists no violation of Hazardous Material Laws resulting from
Lessee's obligation in Paragraph 33. if pursuant to local ordinance, state or
Weral law, Lessee is required, at the expiration of the Lease Term, to submit a
closure plan for the Premises to a local, state or federal agency, then Lessee
shall furnish to Lessor a copy of such plan.
33.9 PRIOR HAZARDOUS MATERIALS: Lessee shall have no obligation to clean up or
to hold Lessor harmless; with respect to, any Hazardous Material or wastes
discovered on the Premises which were not introduced into, in, on, about, from
or under the Premises during the Lease Term or ground water contamination from
other parcels where the source is from off the Premises not arising from or
caused by Lessee or Lessees Agents.
34. BROKERS: Lessor and Lessee represent that they have not utilized or
contacted a real estate broker or finder with respect to this Lease other than
Cornish & Xxxxx ("C&C") and Lessee agrees to indemnify and hold Lessor harmless
against any claim, cost, liability or cause of action asserted by any broker or
finder claiming through Lessee other than C&C.Lessor shall at its sole cost and
expense pay the brokerage Lessors standard commission schedule to C&C in
connection with this transaction. Lessor represents and warrants that it has not
utilized or contacted a real estate broker or finder with respect to
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this Lease other than C&C and Lessor agrees to indemnify and hold Lessee
harmless against any claim, cost, liability or cause of action asserted by any
broker or finder claiming through Lessor.
35. OPTION TO EXTEND
A. OPTION: Lessor hereby grants to Lessee one (1) option to extend the Lease
Term, with die extended term to be for a period of five (5) years, on the
following terms and conditions:
(i) Lessee shall give Lessor written notice of its exercise of its option
to extend no earlier than twenty-four (24) calendar months, nor later than
six (6) calendar months before the Lease Term would end but for said
exercise. Time is of the essence.
(ii) Lessee may not extend the Lease Term pursuant to any option granted
by this section 35 if Lessee is in default as of the date of the exercise
of its option. If Lessee has committed a default by Lessee as defined in
Section 14 or 32 that has not been cured or waived by Lessor in writing by
the date that any extended term is to commence, then Lessor may elect not
to allow the Lease Term to be extended, notwithstanding any notice given
by Lessee of an exercise of this option to extend.
(iii) All terms and conditions of this Lease shall apply during the
extended term, except that the base rent and rental increases for each
extended term shall be determined as provided in Section 3 5 (B) below
(iv) Once Lessee delivers a notice of exercise of its options to extend
the Lease Term, Lessee may not withdraw such exercise and subject to the
provisions of this Section 35, such notice shall operate to extend the
Lease Term. Upon any extension of the Lease Term pursuant to this
Section 35, the term "Lease Term" as used in this Lease shall thereafter
include the then extended term.
(v) The option rights of Sherpa Corporation granted under this Section 35
are granted for Sherpa Corporation's and its affiliate's personal benefit
and may not be assigned or transferred by Sherpa Corporation or its
affiliate or exercised if Sherpa Corporation or its affiliate is not
occupying the Premises at the time of exercise.
B. EXTENDED TERM RENT - OPTION PERIOD: The monthly Rent for the Premises during
the extended term shall equal ninety-five percent (95%) of the fair market
monthly Rent for the Premises as of the commencement date of the extended term,
but in no case, less than the Rent during the last month of the prior Lease
term. Promptly upon Lessee's exercise of the option to extend, Lessee and Lessor
shall meet and attempt to agree on the fair market monthly Rent for the Premises
as of the commencement date of the extended term. In the event the parties fail
to agree upon the amount of the monthly Rent for the extended term prior to
commencement thereof, the monthly Rent for the extended term shall be determined
by appraisal in the manner hereafter set forth; provided, however, that in no
event shall the monthly Rent for the extended term be less than in the immediate
preceding period. Annual base rent increases durin6 the extended term shall be
equal to those being imposed on similar properties at the time of option
exercise. In the event it becomes necessary under this paragraph to determine
the fair market monthly Rent of the Premises by appraisal, Lessor and Lessee
each shall appoint a real estate appraiser who shall be a
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member of the American Institute of Real Estate Appraiser ("AUZJEA") and such
appraisers shall each determine the fair market monthly Rent for the Premises
taking into account the value of the Premises and the amenities provided by
the outside areas, the common areas, and the Building, and prevailing
comparable Rentals in the area. Such appraisers shall, within twenty (20)
business. days after their appointment, complete their appraisals and submit
their appraisal reports to Lessor and Lessee. If the fair market monthly Rent
of the Premises established in the two (2) appraisals varies by five percent
(5%) or less of the higher Rent, the average of the two shall be controlling.
If said fair market monthly Rent varies by more than five percent (5%) of the
higher Rental, said appraisers, within ten (10) days after submission of the
last appraisal, shall appoint a third appraiser who shall be a member of the
AIREA and who shall also be experienced in die appraisal of Rent values and
adjustment practices for commercial properties in the vicinity of the
Premises. Such third appraiser shall, within twenty (20) business days after
his appointment, determine by appraisal the fair market monthly Rent of the
Premises taking into account the same factors referred to above, and submit
his appraisal report to Lessor and Lessee. The fair market monthly Rent
determined by the third appraiser for the Premises shall be controlling,
unless it is less than that set forth in the lower appraisal previously
obtained, in which case the value set forth in said lower appraisal shall be
controlling, or unless it is greater than that set forth in the higher
appraisal previously obtained in which case the Rent set for in said higher
appraisal shall be controlling. If either Lessor or Lessee fails to appoint
an appraiser, or if an appraiser appointed by either of them fails, after his
appointment to submit his appraisal within the required period in accordance
with the foregoing, the appraisal submitted by the appraiser properly
appointed and timely submitting his appraisal shall be controlling. If the
two appraisers appointed by Lessor and Lessee are unable to agree upon a
third appraiser within the required period in accordance with die foregoing,
application shall be made within twenty (20) days thereafter by either Lessor
or Lessee to AIREA, which shall appoint a member of said institute willing to
serve as appraiser. The cost of all appraisals under this subparagraph shall
be borne equally be Lessor and Lessee.
36. APPROVALS: Whenever in this Lease the Lessor's or Lessee's consent is
required, such consent shall not be unreasonably or arbitrarily withheld or
delayed. In the event that die Lessor or Lessee does not respond to a request
for any consents which may be required of it in this Lease within ten business
days of the request of such consent in writing by the Lessee or Lessor, such
consent shall be deemed to have been given by the Lessor or Lessee.
37. AUTHORITY: Each party executing this Lease represents and warrants that he
or she is duly authorized. to execute and deliver the Lease. If executed on
behalf of a corporation, that the Lease is executed in accordance with the
by-laws of said corporation (or a partnership that the Lease is executed in
accordance with the partnership agreement of such partnership), that no other
party's approval or consent to such execution and delivery is required, and that
the Lease is binding upon said individual, corporation (or partnership) as the
case may be in accordance with its terms.
38. INDEMNIFICATION OF LESSOR: Except to the extent caused by the sole
negligence or willful misconduct of Lessor or Lessor's a Agents, Lessee shall
defend, indemnify and hold Lessor harmless from and against any and all
obligations, losses, costs, expenses, claims, demands, reasonable attorney's
fees, investigation costs or liabilities on account of, or arising out of the
use, condition or occupancy of the Premises or any act or omission to act of
Lessee or Lessee's Agents or any occurrence in, upon, about or at the Premises,
including, without limitation, any of the foregoing provisions arising out of
the use, generation, manufacture, installation, release, discharge, storage, or
disposal or Hazardous Materials by Lessee or Lessee's Agents. It is understood
that Lessee is and shall be in control and possession of the Premises and that
Lessor shall in no event be
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responsible or liable for any injury or damage or injury to any person
whatsoever, happening on, in, about, or in connection with the Premises, or for
any injury or damage to the Premises or any part thereof. This Lease is entered
into on the express condition that Lessor shall not be liable for, or suffer
loss by reason of injury to person or property, from whatever cause, which in
any way may be connected with the use, condition or occupancy of the Premises or
personal property located herein. The provisions of this Lease permitting Lessor
to enter and inspect the Premises arc for the purpose of enabling Lessor to
become informed as to whether Lessee is complying with, the terms of this Lease
and Lessor shall be under no duty to enter, inspect or to perform any of
Lessee's covenants set forth in this Lease. Lessee shall further indemnify,
defend and hold harmless Lessor from and against any and all claims arising from
any breach or default in the performance of any obligation to Lessee's part to
b- performed under the terms of this Lease. The provisions of Section 38 shall
survive the Lease Term or earlier termination of this Lease with respect to any
damage, injury or death occurring during the Lease Tenn.
39. LESSOR'S LIABILITY: If Lessee should recover a money judgment against
Lessor arising in connection with this Lease, the judgment shall be satisfied
only out of the Lessors interest in the Premises and neither Lessor or any of
its partners shall be liable personally for any deficiency.
40. RIGHT OF FIRST OFFER: Prior to Lessor accepting any offer to lease the
balance of the space in the building in which the Premises are located,
Lessor shall give Lessee written notice of such offer ("Lessor's First
Notice") and Lessee shall have the opportunity to lease the space or the part
thereof offered for lease on the terms and conditions set forth in Lessor's
First Notice. Lessee shall have the option, which may be exercised by written
notice to Lessor at any time within five (5) days from the receipt of Lessors
First Notice to agree to lease die space specified in the Lessor's First
Notice on the terms and conditions set forth in Lessor's First Notice. If
Lessee fails to exercise its option within the 5-day period, Lessor shall
have 180 days thereafter to lease the space specified in Lessor's First
Notice, but in no case on terms more favorable than those offered to Lessee
in Lessor's First Notice. Notwithstanding the above, Lessee's right of first
offer shall be subordinate to any existing rights of first offer and shall be
subordinate to any existing options to extend. If Lessor elects, within 180
days of Lessors notice, to lease the space to a third party on terms more
favorable to the third party lessee than the terms set forth in Lessor's
First Notice, then Lessor must re-offer the space to Lessee on the same terms
and conditions offered to the third party lessee ("Lessors Second Notice").
Lessee shall have five (5) days from Lessees receipt of Lessors Second Notice
to elect to lease the space on the terms and conditions set forth in Lessor's
Second Notice. If Lessee does not respond in writing accepting all terms and
conditions, Lessor shall thereafter be entitled to lease the space to the
third party on the terms and conditions set forth in Lessors Second Notice or
on other terms and conditions at least as favorable to Lessor as said terms
and conditions in Lessors Second Notice for a period of 180 after which
Lessee's Right of First Offer to Lease shall again be in effect for the
remaining space in the building in which the Premises are located.
Notwithstanding the above, Lessor shall notify Lessee during the 12 months
after Lease signing of any serious prospective lessees for the balance of the
space in the building and shall provide Lessee with 3 business days to lease
the balance of the space in the building on terms provided by Lessor.
41. MISCELLANEOUS PROVISIONS: All rights and remedies hereunder are
cumulative and not alternative to the extent permitted by law and are in
addition to all other rights or remedies in law and in equity.
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42. CHOICE OF LAW: This lease shall be construed and enforced in accordance with
the substantive laws of the State of California. The language of all parts of
this lease shall in all cases be construed as a whole according to its fair
meaning and not strictly for or against either Lessor or Lessee.
43. ENTIRE AGREEMENT: This Lease is the entire agreement between the parties,
and there are no agreements or representations between the parties except as
expressed herein. Except as otherwise provided for herein, no subsequent change
or addition to this Lease shall be binding unless in writing and signed by the
parties hereto.
In Witness Whereof, Lessor and Lessee have executed these presents, the day and
year first above written.
Lessor Lessee
Xxxx & Xxxx Developers Sherpa Corporation
By: /s/ Xxxx X. Xxxx /s/ Xxxxxxx X. Xxxxx
------------------------------ -----------------------------
signature of authorized representative signature of authorized representative
Xxxx X. Xxxx Xxxxxxx X. Xxxxx
------------------------------ -----------------------------
printed name printed name
G.P. VP Finance & CFO
------------------------------ -----------------------------
title title
April 11, 1996 April 11, 1996
------------------------------ -----------------------------
date date
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Exhibit B
Xxxx & Xxxx ("Building Shell") includes the following items in customary
quantities and quality. All items not listed are part of Lessee Interior
Improvements.
Exterior walls
Foundation
Floor slabs
Roof structure and membrane
Glazing
Exit doors
Truck doors
Landscaping
Parking and paving
Storm sewer line to building
Sanitary sewer line to building
Water line to building
Paint of exterior walls
Shell architecture and engineering
All permits for the above items
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Exhibit C
Building floor plan and elevations to be attached.
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Exhibit D.
Lessee Interior Improvement plans to be attached.
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Exhibit E
Lessee Approval Deadlines
Lease signed 04/11/96
Approval of preliminary Lessee improvement floor plan,
single line 03/22/96
Approval of restroom and underground plumbing 04/16/96
Approval of interior plans and specifications 04/25/96
Final selection of all material and interior finishes
for construction such as carpet, ceramic tile,
paint and any other lessee selected materials & finishes 05/15/96
Lessee shall not unreasonably withhold approval of interior plans if they
conform in general to the preliminary lessee improvement floor plan.
If desired, Lessor shall provide Lessee with assistance in selection of
materials and interior finishes.
One day of Lessee delay will be charged for each day Lessee does not meet each
deadline set forth on this Exhibit E.
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