California-Brisbane-380 Valley Drive Lease - California State Teachers' Retirement System and Babe Inc.
[AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION LOGO]
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE--NET
(DO NOT USE THIS FORM FOR MULTI-TENANT PROPERTY)
1. BASIC PROVISIONS ("BASIC PROVISIONS")
1.1 PARTIES: This Lease ("LEASE"), dated for reference purposes only,
____________________ 1994 is made by and between California State Teachers'
Retirement System, a retirement system created pursuant to the laws of the State
of California ("LESSOR") and Babe, Inc., a California corporation, dba Bebe
("LESSEE"), (collectively the "PARTIES," or individually a "PARTY").
1.2 PREMISES: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
known by the street address of 380 Valley Drive, Brisbane located in the County
of San Mateo, State of California and generally described as (describe briefly
the nature of the property) all that property and improvements thereon,
including an approximately 69,743 square foot building, located on Assessor's
Parcel #005-171-050 ("PREMISES"). (See Paragraph 2 for further provisions.)
1.3 TERM: 7 years and 6 months ("ORIGINAL TERM") commencing SEE
ADDENDUM ("COMMENCEMENT DATE") and ending _______________________ ("EXPIRATION
DATE"). (See Paragraph 3 for further provisions.)
1.4 EARLY POSSESSION: _________________________ ("EARLY POSSESSION
DATE"). (See Paragraphs 3.2 and 3.3 for further provisions.)
1.5 BASE RENT: $31,384.35 per month ("BASE RENT"), payable on the
first day of each month commencing SEE ADDENDUM
________________________________________________________________________________
________________________________________________________________________________
(See Paragraph 4 for further provisions.) / / If this box is checked, there are
provisions in this Lease for the Base Rent to be adjusted.
1.6 BASE RENT PAID UPON EXECUTION: $ None as Base Rent for the period
________________________________________________________________________________
________________________________________________________________________________
1.7 SECURITY DEPOSIT: $31,384.35 ("SECURITY DEPOSIT"). (See Paragraph
5 for further provisions.)
1.8 PERMITTED USE: general office, administration, and warehousing,
storage and distribution of clothing and accessories, and for no other use or
purpose (See Paragraph 6 for further provisions.)
1.9 INSURING PARTY: Lessor is the "INSURING PARTY" unless otherwise
stated herein. (See Paragraph 8 for further provisions.)
1.10 REAL ESTATE BROKERS: The following real estate brokers
(collectively, the "BROKERS") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable boxes):
________________________________________________________________ represents
/ / Lessor exclusively ("LESSOR'S BROKER"); / / both Lessor and Lessee, and
Grubb & Ellis and Edward Zampa and Co. represents /X/ Lessee exclusively
("LESSEE'S BROKER"); / / both Lessee and Lessor. (See Paragraph 15 for
further provisions.)
1.11 GUARANTOR. The obligations of the Lessee under this Lease are to
be guaranteed by ________________________________________________ ("GUARANTOR")
(See Paragraph 37 for further provisions.)
1.12 ADDENDA. Attached hereto is an Addendum or Addenda consisting of
Paragraphs 1 through _____ and Exhibits / / all of which constitute a part of
this Lease.
2. PREMISES.
2.1 LETTING. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor. the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of square footage set forth in this Lease, or
that may have been used in calculating rental, is an approximation which Lessor
and Lessee agree is reasonable and the rental based thereon is not subject to
revision whether or not the actual square footage is more or less.
2.4 ACCEPTANCE OF PREMISES. Lessee hereby acknowledges: (a) that it
has been advised by the Brokers to satisfy itself with respect to the condition
of the Premises (including but not limited to the electrical and fire sprinkler
systems, security, environmental aspects, compliance with Applicable Law, as
defined in Paragraph 6.3) and the present and future suitability of the Premises
for Lessee's intended use, (b) that Lessee has made such investigation as it
deems necessary with reference to such matters and assumes all responsibility
therefor as the same relate to Lessee's occupancy of the Premises and/or the
term of this Lease, and (c) that neither Lessor, nor any of Lessor's agents, has
made any oral or written representations or warranties with respect to the said
matters other than as set forth in this Lease. SEE ADDENDUM
3. TERM.
3.1 TERM. The Commencement Date, Expiration Date and Original Term of
this Lease are as specified in Paragraph 1.3.
3.2 EARLY POSSESSION. If Lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to pay Base Rent shall
be abated for the period of such early possession. All other terms of this
Lease, however, (including but not limited to the obligations to pay Real
Property Taxes and insurance premiums and to maintain the Premises) shall be in
effect during such period. Any such early possession shall not affect nor
advance the Expiration Date of the Original Term.
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3.3 DELAY IN POSSESSION. If for any reason Lessor cannot deliver
possession of the Premises to Lessee as agreed herein by the Early Possession
Date, if one is specified in Paragraph 1.4, or, if no Early Possession Date is
specified, by the Commencement Date, Lessor shall not be subject to any
liability therefor, nor shall such failure affect the validity of this Lease, or
the obligations of Lessee hereunder, or extend the term hereof, but in such
case, Lessee shall not, except as otherwise provided herein, be obligated to
pay rent or perform any other obligation of Lessee under the terms of this Lease
until Lessor delivers possession of the Premises to Lessee. SEE ADDENDUM
4. RENT.
4.1 BASE RENT. Lessee shall cause payment of Base Rent and other rent
or charges, as the same may be adjusted from time to time, to be received by
Lessor in lawful money of the United States, without offset or deduction, on or
before the day on which it is due under the terms of this Lease. Base Rent and
all other rent and charges for any period during the term hereof which is for
less than one (1) full calendar month shall be prorated based upon the actual
number of days of the calendar month involved. Payment of Base Rent and other
charges shall be made to Lessor at its address stated herein or to such other
persons or at such other addresses as Lessor may from time to time designate in
writing to Lessee.
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof
the Security Deposit set forth in Paragraph 1.7 as security for Lessee's
faithful performance of Lessee's obligations under this Lease. If Lessee fails
to pay Base Rent or other rent or charges due hereunder, or otherwise Defaults
under this Lease (as defined in Paragraph 13.1), Lessor may use, apply or retain
all or any portion of said Security Deposit for the payment of any amount due
Lessor or to reimburse or compensate Lessor for any liability, cost, expense,
loss or damage (including attorneys' fees) which Lessor may suffer or incur by
reason thereof. It Lessor uses or applies all or any portion of said Security
Deposit, Lessee shall within (10) days after written request therefor deposit
moneys with Lessor sufficient to restore said Security Deposit to the full
amount required by this Lease. Any time the Base Rent increases during the term
of this Lease, Lessee shall, upon written request from Lessor, deposit
additional moneys with Lessor sufficient to maintain the same ratio between the
Security Deposit and the Base Rent as those amounts are specified in the Basic
Provisions. Lessor shall not be required to keep all or any part of the
Security Deposit separate from its general accounts. Lessor shall, at the
expiration or earlier termination of the term hereof and after Lessee has
vacated the Premises, return to Lessee (or, at Lessor's option, to the last
assignee, if any, of Lessee's interest herein), that portion of the Security
Deposit not used or applied by Lessor. Unless otherwise expressly agreed in
writing by Lessor, no part of the Security Deposit shall be considered to be
held in trust, SEE ADDENDUM, or to be prepayment for any moneys to be paid by
Lessee under this Lease.
6. USE.
6.1 USE. Lessee shall use and occupy the Premises only for the
purposes set forth in Paragraph 1.8, and for no other purpose. Lessee shall not
use or permit the use of the Premises in a manner that creates waste or a
nuisance, or that disturbs owners and/or occupants of, or causes damage to,
neighboring premises or properties.
6.2 HAZARDOUS SUBSTANCES.
(a) REPORTABLE USES REQUIRE CONSENT. The term "HAZARDOUS
SUBSTANCE" as used in this Lease shall mean any product, substance, chemical,
material or waste whose presence, nature, quantity and/or intensity of
existence, use, manufacture, disposal, transportation, spill, release or effect,
either by itself or in combination with other materials expected to be on the
Premises, is either: (i) potentially injurious to the public health, safety or
welfare, the environment or the Premises, (ii) regulated or monitored by any
governmental authority, or (iii) a basis for liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substance shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, crude oil or any products, by-products or fractions
thereof. SEE ADDENDUM
(b) DUTY TO INFORM LESSOR. If Lessee knows, or has reasonable
cause to believe, that a Hazardous Substance, or a condition involving or
resulting from same, has come to be located in, on, under or about the Premises,
other than as previously consented to by Lessor, Lessee shall immediately give
written notice of such fact to Lessor. Lessee shall also immediately give
Lessor a copy of any statement, report, notice, registration, application,
permit, business plan, license, claim, action or proceeding given to, or
received from, any governmental authority or private party, or persons entering
or occupying the Premises, concerning the presence, spill, release, discharge
of, or exposure to, any Hazardous Substance or contamination in, on, or about
the Premises.
(c) INDEMNIFICATION. Lessee shall indemnify, protect, defend
and hold Lessor, its agents, employees, lenders and ground lessor, if any, and
the Premises, harmless from and against any and all loss of rents and/or
damages, liabilities, judgments, costs, claims, liens, expenses, penalties,
permits and attorney's and consultant's fees arising out of or involving any
Hazardous Substance or storage tank brought onto the Premises by or for Lessee
or under Lessee's control. Lessee's obligations under this Paragraph 6 shall
include, but not be limited to, the effects of any contamination or injury to
person, property or the environment created or suffered by Lessee, and the cost
of investigation (including consultant's and attorney's fees and testing),
removal, remediation, restoration and/or abatement thereof, or of any
contamination therein involved, and shall survive the expiration or earlier
termination of this Lease. No termination, cancellation or release agreement
entered into by Lessor and Lessee shall release Lessee from its obligations
under this Lease with respect to Hazardous Substances or storage tanks, unless
specifically so agreed by Lessor in writing at the time of such agreement.
6.3 LESSEE'S COMPLIANCE WITH LAW. Except as otherwise provided in
this Lease, Lessee, shall, at Lessee's sole cost and expense, fully, diligently
and in a timely manner, comply with all "APPLICABLE LAW," which term is used in
this Lease to include all laws, rules, regulations, ordinances, directives,
covenants, easements and restrictions of record, permits, the requirements of
any applicable fire insurance underwriter or rating bureau, and the
recommendations of Lessor's engineers and/or consultants, relating in any manner
to the Premises (including but not limited to matters pertaining to (i)
industrial hygiene, (ii) environmental conditions on, in, under or about the
Premises, including soil and groundwater conditions, and (iii) the use,
generation, manufacture, production, installation, maintenance, removal,
transportation, storage, spill or release of any Hazardous Substance or storage
tank), now in effect or which may hereafter come into effect, and whether or not
reflecting a change in policy from any previously existing policy. Lessee
shall, within five (5) days after receipt of Lessor's written request, provide
Lessor with copies of all documents and information, including, but not limited
to, permits, registrations, manifests, applications, reports and certificates,
evidencing Lessee's compliance with any Applicable Law specified by Lessor, and
shall immediately upon receipt, notify Lessor in writing (with copies of any
documents involved) of any threatened or actual claim, notice, citation,
warning, complaint or report pertaining to or involving failure by Lessee or the
Premises to comply with any Applicable Law.
6.4 INSPECTION; COMPLIANCE. Lessor and Lessor's Lender(s) (as defined
in Paragraph 8.3(a)) shall have the right to enter the Premises at any time, in
the case of an emergency, and otherwise at reasonable times and upon reasonable
prior written notice to Lessee for the purpose of inspecting the condition of
the Premises and for verifying compliance by Lessee with this Lease and all
Applicable Laws (as defined in Paragraph 6.3), and to employ experts and/or
consultants in connection therewith and/or to advise Lessor with respect to
Lessee's activities, including but not limited to the installation, operation,
use, monitoring, maintenance, or removal of any Hazardous Substance or storage
tank on or from the Premises. The costs and expenses of any such inspections
shall be paid by the party requesting same, unless a Default or Breach of this
Lease, violation of Applicable Law, or a contamination, caused or materially
contributed to by Lessee is found to exist or be imminent. In any such case,
Lessee shall upon request reimburse Lessor or Lessor's Lender, as the case may
be, for the costs and expenses of such inspections.
7. MAINTENANCE; REPAIRS; UTILITY INSTALLATIONS; TRADE FIXTURES AND
ALTERATIONS.
7.1 LESSEE'S OBLIGATIONS.
(a) Subject to the provisions of Paragraph
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7.2 (Lessor's obligations to repair), 9 (damage and destruction), and 14
(condemnation), Lessee shall, at Lessee's sole cost and expense and at all
times, keep the non-structural portions of the Premises and every part
thereof in good order, condition and repair (whether or not such portion of
the Premises requiring repairs, or the means of repairing the same, are
reasonably or readily accessible to Lessee, and whether or not the need for
such repairs occurs as a result of Lessee's use, any prior use, the elements
or the age of such portion of the Premises), including, without limiting the
generality of the foregoing, all equipment or facilities serving the
Premises, such as plumbing, heating, air conditioning, ventilating,
electrical, lighting facilities, boilers, fired or unfired pressure vessels,
fire sprinkler and/or standpipe and hose or other automatic fire
extinguishing system, including fire alarm and/or smoke detection systems and
equipment, fire hydrants, fixtures, walls (interior and exterior), ceilings,
roofs, floors, windows, doors, plate glass, skylights landscaping, driveways,
parking lots, fences, retaining walls, signs (other than signs identifying
Lessor, which shall be maintained by Lessor) and sidewalks located in, on,
about, or adjacent to the Premises. Lessee shall not cause or permit any
Hazardous Substance to be spilled or released in, on, under or about the
Premises (including through the plumbing or sanitary sewer system) and shall
promptly, at Lessee's expense, take all investigatory and/or remedial action
reasonably recommended, whether or not formally ordered or required, for the
cleanup of any contamination of, and for the maintenance, security and/or
monitoring of the Premises, the elements surrounding same, or neighboring
properties, that was caused or materially contributed to by Lessee, or
pertaining to or involving any Hazardous Substance and/or storage tank
brought onto the Premises by or for Lessee or under its control. Lessee, in
keeping the Premises in good order, condition and repair, shall exercise and
perform good maintenance practices. Lessee's obligations shall include
restorations, replacements or renewals when necessary to keep the Premises
and all improvements thereon or a part thereof in good order, condition and
state of repair. If Lessee occupies the Premises for ten (10) years or more,
Lessor may require Lessee to repaint the exterior of the buildings on the
Premises as reasonably required, but not more frequently than once every ten
(10) years. SEE ADDENDUM
(b) Lessee shall at Lessee's sole cost and expense, procure and
maintain contracts, with copies to Lessor, in customary form and substance for,
and with contractors specializing and experienced in the inspection, maintenance
and service of the following equipment and improvements, if any, located on the
Premises: (i) heating, air conditioning and ventilation equipment, (ii) boiler,
fired or unfired pressure vessels, (iii) fire sprinkler and/or standpipe and
hose or other automatic fire extinguishing systems, including fire alarm and/or
smoke detection, (iv) landscaping and irrigation systems, (v) roof covering and
drain maintenance and (vi) asphalt and parking lot maintenance.
7.2 LESSOR'S OBLIGATIONS. Except for the warranties and agreements of
Lessor contained in Paragraphs 9 (relating to destruction of the Premises) and
14 (relating to condemnation of the Premises), it is intended by the Parties
hereto that Lessor have no obligation, in any manner whatsoever, to repair and
maintain the Premises, the improvements located thereon, or the equipment
therein, whether structural or non structural, all of which obligations are
intended to be that of the Lessee under Paragraph 7.1 hereof. It is the
intention of the Parties that the terms of this Lease govern the respective
obligations of the Parties as to maintenance and repair of the Premises. Lessee
and Lessor expressly waive the benefit of any statute now or hereafter in effect
to the extent it is inconsistent with the terms of this Lease with respect to,
or which affords Lessee the right to make repairs at the expense of Lessor or to
terminate this Lease by reason of any needed repairs. SEE ADDENDUM
7.3 UTILITY INSTALLATIONS; TRADE FIXTURES; ALTERATIONS. SEE ADDENDUM
(a) DEFINITIONS; CONSENT REQUIRED. The term "UTILITY
INSTALLATIONS" is used in this Lease to refer to all carpeting, window
coverings, air lines, power panels, electrical distribution, security, fire
protection systems, communication systems, lighting fixtures, heating,
ventilating, and air conditioning equipment, plumbing, and fencing in, on or
about the Premises. The term "TRADE FIXTURES" shall mean Lessee's machinery and
equipment that can be removed without doing material damage to the Premises.
The term "ALTERATIONS" shall mean any modification of the improvements on the
Premises from that which are provided by Lessor under the terms of this Lease,
other than Utility Installations or Trade Fixtures, whether by addition or
deletion. "LESSEE OWNED ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined
as Alterations and/or Utility Installations made by lessee that are not yet
owned by Lessor as defined in Paragraph 7.4(a). Lessee shall not make any
Alterations or Utility Installations in, on, under or about the Premises without
Lessor's prior written consent. Lessee may, however, make non-structural
Utility Installations to the interior of the Premises (excluding the roof), as
long as they are not visible from the outside, do not involve puncturing,
relocating or removing the roof or any existing walls, and the cumulative cost
thereof does not exceed $75,000 in any four year period.
(b) CONSENT. Any Alterations or Utility Installations that
Lessee shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with proposed detailed plans. All consents
given by Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific
consent, shall be deemed conditioned upon: (i) Lessee's acquiring all applicable
permits required by governmental authorities, (ii) the furnishing of copies of
such permits together with a copy of the plans and specifications for the
Alteration or Utility Installation to Lessor prior to commencement of the work
thereon, and (iii) the compliance by Lessee with all conditions of said permits
in a prompt and expeditious manner. Any Alterations or Utility Installations by
Lessee during the term of this Lease shall be done in a good and workmanlike
manner, with good and sufficient materials, and in compliance with all
Applicable Law. Lessee shall promptly upon completion thereof furnish Lessor
with as-built plans and specifications therefor.
(c) INDEMNIFICATION. Lessee shall pay, when due, all claims
for labor or materials furnished or alleged to have been furnished to or for
Lessee at or for use on the Premises, which claims are or may be secured by any
mechanics' or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than ten (10) days' notice prior to the
commencement of any work in, on or about the Premises, and Lessor shall have the
right to post notices of non-responsibility in or on the Premises as provided by
law. If Lessee shall, in good faith, contest the validity of any such lien,
claim or demand, then Lessee shall, at its sole expense defend and protect
itself, Lessor and the Premises against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before the enforcement
thereof against the Lessor or the Premises. If Lessor shall require, in
connection with the contest of any such lien, Lessee shall furnish to Lessor a
surety bond satisfactory to Lessor in an amount equal to one and one-half times
the amount of such contested lien claim or demand, indemnifying Lessor against
liability for the same, as required by law for the holding of the Premises free
from the effect of such lien or claim. In addition, Lessor may require Lessee
to pay Lessor's attorney's fees and costs in participating in such action if
Lessor shall decide it is to its best interest to do so.
7.4 OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION.
(a) OWNERSHIP. Subject to Lessor's right to require their
removal or become the owner thereof as hereinafter provided in this Paragraph
7.4, all alterations and Utility Installations made to the Premises by Lessee
shall be the property of and owned by Lessee, but considered a part of the
Premises. Lessor may, at any time and at its option, elect in writing to Lessee
to be the owner of all or any specified part of the Lessee Owned Alterations and
Utility Installations. Unless otherwise instructed per subparagraph 7.4(b)
hereof, all Lessee Owned Alterations and Utility Installations shall, at the
expiration or earlier termination of this Lease, become the property of Lessor
and remain upon and be surrendered by Lessee with the Premises.
(c) SURRENDER/RESTORATION. Lessee shall surrender the Premises
by the end of the last day of the Lease term or any earlier termination date,
with all of the improvements, parts and surfaces thereof clean and free of
debris and in good operating order, condition and state of repair, ordinary wear
and tear excepted. "ORDINARY WEAR AND TEAR" shall not include any damage or
deterioration that would have been prevented by good maintenance practice or by
Lessee performing all of its obligations under this Lease. Except as otherwise
agreed or specified in writing by Lessor, the Premises, as surrendered, shall
include the Utility Installations. The obligation of Lessee shall include the
repair of any damage occasioned by the installation, maintenance or removal of
Lessee's Trade Fixtures, furnishings, equipment, and Alterations and/or Utility
Installations, as well as the removal of any storage tank installed by or for
Lessee, and the removal, replacement, or remediation of any soil, material or
ground water contaminated by Lessee, all as may then be required by Applicable
Law and/or good service practice. Lessee's Trade Fixtures shall remain the
property of Lessee and shall be removed by Lessee subject to its obligation to
repair and restore the Premises per this Lease.
8. INSURANCE; INDEMNITY.
8.1 PAYMENT FOR INSURANCE. Regardless of whether the Lessor or Lessee
is the Insuring Party, Lessee shall pay for all insurance required under this
Paragraph 8. Premiums for policy periods commencing prior to or extending
beyond the Lease term shall be prorated to correspond to the Lease term.
Payment shall be made by Lessee to Lessor within ten (10) days following
receipt of an invoice for any amount due. SEE ADDENDUM
8.2 LIABILITY INSURANCE.
(a) CARRIED BY LESSEE. Lessee shall obtain and keep in force
during the term of this Lease a Commercial General Liability policy of insurance
protecting Lessee and Lessor and AMB Institutional Realty Advisors, Inc. (each
as an additional insured) against claims for bodily injury, personal injury and
property damage based upon, involving or arising out of the ownership, use,
occupancy or maintenance of the Premises and all areas appurtenant thereto.
Such insurance shall be on an occurrence basis providing single limit coverage
in an amount not less than $1,000,000 per occurrence with an "Additional
Insured-Managers or Lessors of Premises" Endorsement and contain the "Amendment
of the Pollution Exclusion" for damage caused by heat, smoke or fumes from a
hostile fire. The policy shall not contain any intra-insured exclusions as
between insured persons or organizations, but shall include coverage for
liability assumed under this Lease as an "insured contract" for the performance
of Lessee's indemnity obligations under this Lease. The limits of said
insurance required by this Lease or as carried by Lessee shall not, however,
limit the liability of Lessee nor relieve Lessee of any obligation hereunder.
All insurance to be carried by Lessee shall be primary to and not contributory
with any similar insurance carried by Lessor, whose insurance shall be
considered excess insurance only.
(b) CARRIED BY LESSOR. In the event Lessor is the Insuring
Party, Lessor shall also maintain liability insurance described in Paragraph
8.2(a), above, in addition to, and not in lieu of, the insurance required to be
maintained by Lessee. Lessee shall not be named as an additional insured
therein.
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8.3 PROPERTY INSURANCE--BUILDING, IMPROVEMENTS AND RENTAL VALUE. SEE
ADDENDUM
(a) BUILDING AND IMPROVEMENTS. The Insuring Party shall obtain
and keep in force during the term of this Lease a policy or policies in the name
of Lessor, with loss payable to Lessor and to the holders of any mortgages,
deeds of trust or ground leases on the Premises ("LENDER(S)"), insuring loss or
damage to the Premises. The amount of such insurance shall be equal to the full
replacement cost of the Premises, as the same shall exist from time to time, or
the amount required by Lenders, but in no event more than the commercially
reasonable and available insurable value thereof if, by reason of the unique
nature or age of the improvements involved, such latter amount is less than full
replacement cost. If Lessor is the Insuring Party, however, Lessee Owned
Alterations and Utility Installations shall be insured by Lessee under Paragraph
8.4 rather than by Lessor. If the coverage is available and commercially
appropriate, such policy or policies shall insure against all risks of direct
physical loss or damage (except the perils of flood and/or earthquake unless
required by a Lender), including coverage for any additional costs resulting
from debris removal and reasonable amounts of coverage for the enforcement of
any ordinance or law regulating the reconstruction or replacement of any
undamaged sections of the Premises required to be demolished or removed by
reason of the enforcement of any building, zoning, safety or land use laws as
the result of a covered cause of loss. Said policy or policies shall also
contain an agreed valuation provision in lieu of any coinsurance clause, waiver
of subrogation, and inflation guard protection causing an increase in the annual
property insurance coverage amount by a factor of not less than the adjusted
U.S. Department of Labor Consumer Price Index for All Urban Consumers for the
city nearest to where the Premises are located. If such insurance coverage has
a deductible clause, the deductible amount shall not exceed $1,000 per
occurrence, and Lessee shall be liable for such deuctible amount in the event of
an Insured Loss, as defined in Paragraph 9.1(c).
(b) RENTAL VALUE. The Insuring Party shall, in addition,
obtain and keep in force during the term of this Lease a policy or policies
in the name of Lessor, with loss payable to Lessor and Lender(s), insuring
the loss of the full rental and other charges payable by Lessee to Lessor
under this Lease for one (1) year (including all real estate taxes, insurance
costs, and any scheduled rental increases). Said insurance shall provide
that in the event the Lease is terminated by reason of an insured loss, the
period of indemnity for such coverage shall be extended beyond the date of
the completion of repairs or replacement of the Premises, to provide for one
full year's loss of rental revenues from the date of any such loss. Said
insurance shall contain an agreed valuation provision in lieu of any
coinsurance clause, and the amount of coverage shall be adjusted annually to
reflect the projected rental income, property taxes, insurance premium costs
and other expenses, if any, otherwise payable by Lessee, for the next twelve
(12) month period. Lessee shall be liable for any deductible amount in the
event of such loss.
(c) ADJACENT PREMISES. If the Premises are part of a larger
building, or if the Premises are part of a group of buildings owned by Lessor
which are adjacent to the Premises, the Lessee shall pay for any increase in
the premiums for the property insurance of such building or buildings if said
increase is caused by Lessee's acts, omissions, use or occupancy of the
Premises.
(d) TENANT'S IMPROVEMENTS. If the Lessor is the Insuring
Party, the Lessor shall not be required to insure Lessee Owned Alterations and
Utility Installations unless the item in question has become the property of
Lessor under the terms of this Lease. If Lessee is the Insuring Party, the
policy carried by Lessee under this Paragraph 8.3 shall insure Lessee Owned
Alterations and Utility Installations.
8.4 LESSEE'S PROPERTY INSURANCE. Subject to the requirements of
Paragraph 8.5, Lessee at its cost shall either by separate policy or, at
Lessor's option, by endorsement to a policy already carried, maintain insurance
coverage on all of Lessee's personal property, Lessee Owned Alterations and
Utility Installations in, on, or about the Premises similar in coverage to that
carried by the Insuring Party under Paragraph 8.3. Such insurance shall be full
replacement cost coverage with a deductible of not to exceed $1,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for
the replacement of personal property or the restoration of Lessee Owned
Alterations and Utility Installations. Lessee shall be the Insuring Party with
respect to the insurance required by this Paragraph 8.4 and shall provide Lessor
with written evidence that such insurance is in force.
8.5 INSURANCE POLICIES. Insurance required hereunder shall be in
companies duly licensed to transact business in the state where the Premises are
located, and maintaining during the policy term a "General Policyholders Rating"
of at least B+, V, or such other rating as may be required by a Lender having a
lien on the Premises, as set forth in the most current issue of "Best's
Insurance Guide." Lessee shall not do or permit to be done anything which shall
invalidate the insurance policies referred to in this Paragraph 8. If Lessee is
the Insuring Party, Lessee shall cause to be delivered to Lessor certified
copies of policies of such insurance or certificates evidencing the existence
and amounts of such insurance with the insureds and loss payable clauses as
required by this Lease. No such policy shall be cancellable or subject to
modification except after thirty (30) days prior written notice to Lessor.
Lessee shall at least thirty (30) days prior to the expiration of such policies,
furnish Lessor with evidence of renewals or "insurance binders" evidencing
renewal thereof, or Lessor may order such insurance and charge the cost thereof
to Lessee, which amount shall be payable by Lessee to Lessor upon demand. If
the Insuring Party shall fail to procure and maintain the insurance required to
be carried by the Insuring Party under this Paragraph 8, the other Party may,
but shall not be required to, procure and maintain the same, but at Lessee's
expense. SEE ADDENDUM
8.6 WAIVER OF SUBROGATION. Without affecting any other rights or
remedies, Lessee and Lessor ("WAIVING PARTY") each hereby release and relieve
the other, and waive their entire right to recover damages (whether in
contract or in tort) against the other, for loss of or damage to the Waiving
Party's property arising out of or incident to the perils required to be
insured against under Paragraph 8. The effect of such releases and waivers of
the right to recover damages shall not be limited by the amount of insurance
carried or required, or by any deductibles applicable thereto. SEE ADDENDUM
8.7. INDEMNITY. Except for Lessor's negligence and/or breach of
express warranties, Lessee shall indemnify, protect, defend and hold harmless
the Premises, Lessor and its agents, Lessor's master or ground lessor, partners
and Lenders, from and against any and all claims, loss of rents and/or damages,
costs, liens, judgments, penalties, permits, attorney's and consultant's fees,
expenses and/or liabilities arising out of, involving, or in dealing with, the
occupancy of the Premises by Lessee, the conduct of Lessee's business, any act,
omission or neglect of Lessee, its agents, contractors, employees or invitees,
and out of any Default or Breach by Lessee in the performance in a timely manner
of any obligation on Lessee's part to be performed under this Lease. The
foregoing shall include, but not be limited to, the defense or pursuit of any
claim or any action or proceeding involved therein, and whether or not (in the
case of claims made against Lessor) litigated and/or reduced to judgment, and
whether well founded or not. In case any action or proceeding be brought
against Lessor by reason of any of the foregoing matters, Lessee upon notice
from Lessor shall defend the same at Lessee's expense by counsel reasonably
satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense.
Lessor need not have first paid any such claim in order to be so indemnified.
SEE ADDENDUM
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable
for injury or damage to the person or goods, wares, merchandise or other
property of Lessee, Lessee's employees, contractors, invitees, customers, or any
other person in or about the Premises, whether such damage or injury is caused
by or results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
wires, appliances, plumbing, air conditioning or lighting fixtures, or from any
other cause, whether the said injury or damage results from conditions arising
upon the Premises or upon other portions of the building of which the Premises
are a part, or from other sources or places, and regardless of whether the cause
of such damage or injury or the means of repairing the same is accessible or
not. Lessor shall not be liable for any damages arising from any act or neglect
of any other tenant of Lessor. Notwithstanding Lessor's negligence or breach of
this Lease, Lessor shall under no circumstances be liable for injury to Lessee's
business or for any loss of income or profit therefrom.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "PREMISES PARTIAL DAMAGE" shall mean damage or destruction
to the improvements on the Premises, other than Lessee Owned Alterations and
Utility Installations, the repair cost of which damage or destruction is less
than 50% of the then Replacement Cost of the Premises immediately prior to such
damage or destruction, excluding from such calculation the value of the land and
Lessee Owned Alterations and Utility Installations.
(b) "PREMISES TOTAL DESTRUCTION" shall mean damage or
destruction to the Premises, other than Lessee Owned Alterations and Utility
Installations the repair cost of which damage or destruction is 50% or more of
the then Replacement Cost of the Premises immediately prior to such damage or
destruction, excluding from such calculation the value of the land and Lessee
Owned Alterations and Utility Installations.
(c) "INSURED LOSS" shall mean damage or destruction to
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(a), irrespective of any deductible amounts
or coverage limits involved.
(d) "REPLACEMENT COST" shall mean the cost to repair or rebuild
the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of applicable building codes,
ordinances or laws, and without deduction for depreciation.
(e) "HAZARDOUS SUBSTANCE CONDITION" shall mean the
occurrence or discovery of a condition involving the presence of, or a
contamination by, a Hazardous Substance as defined in Paragraph 6.2(a), in,
on, or under the Premises.
9.2 PARTIAL DAMAGE--INSURED LOSS. If a Premises Partial Damage
that is an Insured Loss occurs, then Lessor shall, at Lessor's expense,
repair such damage (but not Lessee's Trade Fixtures or Lessee Owned
Alterations and Utility Installations) as soon as reasonably possible and
this Lease shall continue in full force and effect. Notwithstanding the
foregoing, if the required insurance was not in force or the insurance
proceeds are not sufficient to effect such repair, the Insuring Party shall
promptly contribute the shortage in proceeds (except as to the deductible
which is Lessee's responsibility) as and when required to complete said
repairs. In the event, however, the shortage in proceeds was due to the fact
that, by reason of the unique nature of the improvements, full replacement
cost insurance coverage was not commercially reasonable and available,
Lessor shall have no obligation to pay for the shortage in insurance proceeds
or to fully restore the unique aspects of the Premises unless Lessee provides
Lessor with the funds to cover same, or adequate assurance thereof, within
ten (10) days following receipt of written notice of such shortage and
request therefor. If Lessor receives said funds or adequate assurance
thereof within said ten (10) day period, the party responsible for making the
repairs shall complete them as soon as reasonably possible and this Lease
shall remain in full force and effect. If Lessor does not receive such funds
or assurance within said period, Lessor may nevertheless elect by written
notice to Lessee within (10) days thereafter to make such restoration and
repair as is commercially reasonable with Lessor paying any shortage in
proceeds, in which case this Lease shall remain in full force and effect. If
in such case Lessor does not so elect, then this Lease shall terminate sixty
(60) days following the occurrence of the damage or destruction.
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Premises Partial Damage due to flood or earthquake shall be treated in the
manner provided for Premises Partial Damage that is not an Insured Loss rather
than Paragraph 9.2, notwithstanding that there may be some insurance coverage,
but the net proceeds of any such insurance shall be made available for the
repairs if made by either Party.
9.4 TOTAL DESTRUCTION. Notwithstanding any other provision hereof, if
a Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction, whether or not the damage
or destruction is an Insured Loss or was caused by a negligent or willful act of
Lessee. In the event, however, that the damage or destruction was caused by
Lessee, Lessor shall have the right to recover Lessor's damages from Lessee
except as released and waived in Paragraph 8.6. SEE ADDENDUM
9.5 DAMAGE NEAR END OF TERM. If at any time during the last six (6)
months of the term of this Lease there is damage for which the cost to repair
exceeds one (1) month's Base Rent, whether or not an Insured Loss, Lessor may,
at Lessor's option, terminate this Lease effective sixty (60) days following the
date of occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage. Provided, however, if Lessee at that time has an exercisable option to
extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease by, within twenty (20) days following the occurrence of the damage, or
before the expiration of the time provided in such option for its exercise,
whichever is earlier ("EXERCISE PERIOD"), (i) exercising such option and (ii)
providing Lessor with any shortage in insurance proceeds (or adequate assurance
thereof) needed to make the repairs. If Lessee duly exercises such option
during said Exercise Period and provides Lessor with funds (or adequate
assurance thereof) to cover any shortage in insurance proceeds, Lessor shall, at
Lessor's expense repair such damage as soon as reasonably possible and this
Lease shall continue in full force and effect. If Lessee fails to exercise such
option and provide such funds or assurance during said Exercise Period, then
Lessor may at Lessor's option terminate this Lease as of the expiration of said
sixty (60) day period following the occurrence of such damage by giving written
notice to Lessee of Lessor's election to do so within ten (10) days after the
expiration of the Exercise Period, notwithstanding any term or provision in the
grant of option to the contrary.
9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) In the event of damage described in Paragraph 9.2 (Partial
Damage--Insured), whether or not Lessor or Lessee repairs or restores the
Premises, the Base Rent, Real Property Taxes, insurance premiums, and other
charges, if any, payable by Lessee hereunder for the period during which such
damage, its repair or the restoration continues from and after the date of the
casualty (not to exceed the period for which rental value insurance is required
under Paragraph 8.3(b)), shall be abated in proportion to the degree to which
Lessee's use of the Premises is impaired. Except for abatement of Base Rent,
Real Property Taxes, insurance premiums, and other charges, if any, as
aforesaid, all other obligations of Lessee hereunder shall be performed by
Lessee, and Lessee shall have no claim against Lessor for any damage suffered by
reason of any such repair or restoration. SEE ADDENDUM
(b) If Lessor shall be obligated to repair or restore the
Premises under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair or restoration of the Premises within
ninety (90) days after such obligation shall accrue, Lessee may, at any time
prior to the commencement of such repair or restoration, give written notice to
Lessor and to any Lenders of which Lessee has actual notice of Lessee's election
to terminate this Lease on a date not less than sixty (60) days following the
giving of such notice. If Lessee gives such notice to Lessor and such Lenders
and such repair or restoration is not commenced within thirty (30) days after
receipt of such notice, this Lease shall terminate as of the date specified in
said notice. If Lessor or a Lender commences the repair or restoration of the
Premises within thirty (30) days after receipt of such notice, this Lease shall
continue in full force and effect. "Commence" as used in this Paragraph shall
mean either the unconditional authorization of the preparation of the required
plans, or the beginning of the actual work on the Premises, whichever first
occurs.
9.7 HAZARDOUS SUBSTANCE CONDITIONS. If a Hazardous Substance
Condition occurs, unless Lessee is legally responsible therefor (in which
case Lessee shall make the investigation and remediation thereof required by
Applicable Law and this Lease shall continue in full force and effect, but
subject to Lessor's rights under Paragraph 13), Lessor may at Lessor's option
either (i) investigate and remediate such Hazardous Substance Condition, if
required, as soon as reasonably possible at Lessor's expense, in which event
this Lease shall continue in full force and effect, or (ii) if the estimated
cost to investigate and remediate such condition exceeds twelve (12) times
the then monthly Base Rent or $100,000, whichever is greater, give written
notice to Lessee within thirty (30) days after receipt by Lessor of knowledge
of the occurrence of such Hazardous Substance Condition of Lessor's desire to
terminate this Lease as of the date sixty (60) days following the giving of
such notice. In the event Lessor elects to give such notice of Lessor's
intention to terminate this Lease, Lessee shall have the right within ten
(10) days after the receipt of such notice to give written notice to Lessor
of Lessee's commitment to pay for the investigation and remediation of such
Hazardous Substance Condition totally at Lessee's expense and without
reimbursement from Lessor except to the extent of an amount equal to twelve
(12) times the then monthly Base Rent or $100,000, whichever is greater.
Lessee shall provide Lessor with the funds required of Lessee or satisfactory
assurance thereof within thirty (30) days following Lessee's said commitment.
In such event this Lease shall continue in full force and effect, and Lessor
shall proceed to make such investigation and remediation as soon as
reasonably possible and the required funds are available. If Lessee does not
give such notice and provide the required funds or assurance thereof within
the times specified above, this Lease shall terminate as of the date
specified in Lessor's notice of termination. If a Hazardous Substance
Condition occurs for which Lessee is not legally responsible, there shall be
abatement of Lessee's obligations under this Lease to the same extent as
provided in Paragraph 9.6(a) for a period of not to exceed twelve (12) months.
9.8 TERMINATION--ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to this Paragraph 9, an equitable adjustment shall be made concerning
advance Base Rent and any other advance payments made by Lessee to Lessor.
9.9 WAIVE STATUTES. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
with respect to the termination of this Lease and hereby waive the provisions of
any present or future statute to the extent inconsistent herewith.
10. REAL PROPERTY TAXES. SEE ADDENDUM
10.1 (a) PAYMENT OF TAXES. Lessee shall pay the Real Property
Taxes, as defined in Paragraph 10.2, applicable to the Premises during the term
of this Lease. Subject to Paragraph 10.1(b), all such payments shall be made
at least ten (10) days prior to the delinquency date of the applicable
installment Lessee shall promptly furnish Lessor with satisfactory evidence that
such taxes have been paid. If any such taxes to be paid by Lessee shall cover
any period of time prior to or after the expiration or earlier termination of
the term hereof, Lessee's share of such taxes shall be equitably prorated to
cover only the period of time within the tax fiscal year this Lease is in
effect, and Lessor shall reimburse Lessee for any overpayment after such
proration. If Lessee shall fail to pay any Real Property Taxes required by this
Lease to be paid by Lessee, Lessor shall have the right to pay the same, and
Lessee shall reimburse Lessor therefor upon demand.
(b) ADVANCE PAYMENT. In order to insure payment when due
and before delinquency of any or all Real Property Taxes, Lessor reserves the
right Lessor's option, to estimate the current Real Property Taxes applicable
to the Premises, and to require such current year's Real Property Taxes to be
paid in advance to Lessor by Lessee, either: )i) in a lump sum amount equal
to the installment due, at least twenty (20) days prior to the applicable
delinquency date, or (ii) monthly in advance with the payment of the Base
Rent. If Lessor elects to require payment monthly in advance, the monthly
payment shall be that equal monthly amount which, over the number of months
remaining before the month in which the applicable tax installment would
become delinquent (and without interest thereon), would provide a fund large
enough to fully discharge before delinquency the estimated installment of
taxes to be paid. When the actual amount of the applicable tax bill is
known, the amount of such equal monthly advance payment shall be adjusted as
required to provide the fund needed to pay the applicable taxes before
delinquency. If the amounts paid to Lessor by Lessee under the provisions of
this Paragraph are insufficient to discharge the obligations of Lessee to pay
such Real Property Taxes as the same become due, Lessee shall pay to Lessor
upon Lessor's demand, such additional sums as are necessary to pay such
obligations. All moneys paid to Lessor under this Paragraph may be
intermingled with other moneys of Lessor and shall not bear interest. In the
event of a Breach by Lessee in the performance of the obligations of Lessee
under this Lease, then any balance of funds paid to Lessor under the
provisions of this Paragraph may, subject to proration as provided in
Paragraph 10.1(a) at the option of Lessor, be treated as an additional
Security Deposit under Paragraph 5.
10.2 DEFINITION OF "REAL PROPERTY TAXES." As used herein, the term
"REAL PROPERTY TAXES" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed upon the Premises by any authority
having the direct or indirect power to tax, including any city, state or federal
government, or any school, agricultural, sanitary, fire, street, drainage or
other improvement district thereof, levied against any legal or equitable
interest of Lessor in the Premises or in the real property of which the Premises
are a part, Lessor's right to rent or other income therefrom, and/or Lessor's
business of leasing the Premises. The term "REAL PROPERTY TAXES" shall also
include any tax, fee, levy, assessment or charge, or any increase therein,
imposed by reason of events occurring, or changes in applicable law taking
effect, during the term of this Lease, including but not limited to a change in
the ownership of the Premises or in the improvements thereon, the execution of
this Lease, or any modification, amendment or transfer thereof, and whether or
not contemplated by the Parties. SEE ADDENDUM
10.3 JOINT ASSESSMENT. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Real Property Taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be determined by Lessor from the respective valuations
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assigned in the assessor's work sheets or such other information as may be
reasonably available. Lessor's reasonable determination thereof, in good faith,
shall be conclusive.
10.4 PERSONAL PROPERTY TAXES. Lessee shall pay prior to delinquency
all taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal
property of Lessee contained in the Premises or elsewhere. When possible,
Lessee shall cause its Trade Fixtures, furnishings, equipment and all other
personal property to be assessed and billed separately from the real property
of Lessor. If any of Lessee's said personal property shall be assessed with
Lessor's real property, Lessee shall pay Lessor the taxes attributable to
Lessee within ten (10) days after receipt of a written statement setting
forth the taxes applicable to Lessee's property or, at Lessor's option, as
provided in Paragraph 10.1(b).
11. UTILITIES. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered with other premises.
12. ASSIGNMENT AND SUBLETTING. SEE ADDENDUM
12.1 LESSOR'S CONSENT REQUIRED.
(a) Lessee shall not voluntarily or by operation of law
assign, transfer, mortgage or otherwise transfer or encumber (collectively,
"ASSIGNMENT") or sublet all or any part of Lessee's interest in this Lease or
in the Premises without Lessor's prior written consent given under and
subject to the terms of Paragraph 36.
(d) An assignment or subletting of Lessee's interest in this
Lease without Lessor's specific prior written consent shall, at Lessor's option,
be a Default curable after notice per Paragraph 13.1(c), or a noncurable Breach
without the necessity of any notice and grace period.
(e) Lessee's remedy for any breach of this Paragraph 12.1 by
Lessor shall be limited to compensatory damages and injunctive relief.
12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.
(a) Regardless of Lessor's consent, any assignment or
subletting shall not: (i) be effective without the express written assumption
by such assignee or sublessee of the obligations of Lessee under this Lease,
(ii) release Lessee of any obligations hereunder, or (iii) alter the primary
liability of Lessee for the payment of Base Rent and other sums due Lessor
hereunder or for the performance of any other obligations to be performed by
Lessee under this Lease.
(b) Lessor may accept any rent or performance of Lessee's
obligations from any person other than Lessee pending approval or disapproval
of an assignment. Neither a delay in the approval or disapproval of such
assignment nor the acceptance of any rent or performance shall constitute a
waiver or estoppel of Lessor's right to exercise its remedies for the Default
or Breach by Lessee of any of the terms, covenants or conditions of this
Lease.
(c) The consent of Lessor to any assignment or subletting
shall not constitute a consent to any subsequent assignment or subletting by
Lessee or to any subsequent or successive assignment or subletting by the
sublessee. However, Lessor may consent to subsequent sublettings and
assignments of the sublease or any amendments or modifications thereto
without notifying Lessee or anyone else liable on the Lease or sublease and
without obtaining their consent, and such action shall not relieve such
persons from liability under this Lease or sublease.
(d) In the event of any Default or Breach of Lessee's
obligations under this Lease, Lessor may proceed directly against Lessee, any
Guarantors or any one else responsible for the performance of the Lessee's
obligations under this Lease, including the sublessee, without first exhausting
Lessor's remedies against any other person or entity responsible therefor to
Lessor, or any security held by Lessor or Lessee.
(e) Each request for consent to an assignment or subletting
shall be in writing, accompanied by information relevant to Lessor's
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not limited
to the intended use and/or required modification of the Premises. Lessee agrees
to provide Lessor with such other or additional information and/or documentation
as may be reasonably requested by Lessor.
(f) Any assignee of, or sublessee under, this Lease shall, by
reason of accepting such assignment or entering into such sublease, be deemed,
for the benefit of Lessor, to have assumed and agreed to conform and comply with
each and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than
such obligations as are contrary to or inconsistent with provisions of an
assignment or sublease to which Lessor has specifically consented in writing.
13. DEFAULT; BREACH; REMEDIES.
13.1 DEFAULT; BREACH. Lessor and Lessee agree that if an attorney
is consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter defined) under Paragraph 13.1(b) below, $350.00 is a reasonable
minimum sum per such occurrence for legal services and costs in the
preparation and service of a notice of Default, and that Lessor may include
the cost of such services and costs in said notice as rent due and payable to
cure said Default. A "DEFAULT" is defined as a failure by the Lessee to
observe, comply with or perform any of the terms, covenants, conditions or
rules applicable to Lessee under this Lease. A "BREACH"
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is defined as the occurrence of any one or more of the following Defaults, and,
where a grace period for cure after notice is specified herein, the failure by
Lessee to cure such Default prior to the expiration of the applicable grace
period, shall entitle Lessor to pursue the remedies set forth in Paragraphs 13.2
and/or 13.3:
(a) The vacating of the Premises without the intention to
reoccupy same, or the abandonment of the Premises.
(b) Except as expressly otherwise provided in this Lease, the
failure by Lessee to make any payment of Base Rent or any other monetary payment
required to be made by Lessee hereunder, whether to Lessor or to a third party,
as and when due, the failure by Lessee to provide Lessor with reasonable
evidence of insurance or surety bond required under this Lease, or the failure
of Lessee to fulfill any obligation under this Lease which endangers or
threatens life or property, where such failure continues for a period of three
(3) days following written notice thereof by or on behalf of Lessor to Lessee.
(c) Except as expressly otherwise provided in this Lease,
the failure by Lessee to provide Lessor with reasonable written evidence (in
duly executed original form, if applicable) of (i) compliance with Applicable
Law per Paragraph 6.3, (ii) the inspection, maintenance and service contracts
required under Paragraph 7.1(b), (iii) the recission of an unauthorized
assignment or subletting per Paragraph 12.1(b), (iv) a Tenancy Statement per
Paragraphs 16 or 37, (v) the subordination or non-subordination of this Lease
per Paragraph 30, (vi) the guaranty of the performance of Lessee's
obligations under this Lease if required under Paragraphs 1.11 and 37, (vii)
the execution of any document requested under Paragraph 42 (easements), or
(viii) any other documentation or information which Lessor may reasonably
require of Lessee under the terms of this Lease, where any such failure
continues for a period of ten (10) days following written notice by or on
behalf of Lessor to Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions
or provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
that are to be observed, complied with or performed by Lessee, other than those
described in subparagraphs (a), (b) or (c), above, where such Default continues
for a period of thirty (30) days after written notice thereof by or on behalf of
Lessor to Lessee; provided, however, that if the nature of Lessee's Default is
such that more than thirty (30) days are reasonably required for its cure, then
it shall not be deemed to be a Breach of this Lease by Lessee if Lessee
commences such cure within said thirty (30) day period and thereafter diligently
prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) The
making by lessee of any general arrangement or assignment for the benefit of
creditors; (ii) Lessee's becoming a "debtor" as defined in 11 U.S.C. Section 101
or any successor statute thereto (unless, in the case of a petition filed
against Lessee, the same is dismissed within sixty (60) days); (iii) the
appointment of a trustee or receiver to take possession of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where possession is not restored to Lessee within thirty (30) days; or (iv) 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, where such
seizure is not discharged within thirty (30) days; provided, however, in the
event that any provision of this subparagraph (e) is contrary to any applicable
law, such provision shall be of no force or effect, and not affect the validity
of the remaining provisions.
(f) The discovery by Lessor that any financial statement given
to Lessor by Lessee or any Guarantor of Lessee's obligations hereunder was
materially false.
13.2 REMEDIES. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written notice
to Lessee (or in case of an emergency, without notice), Lessor may at its option
(but without obligation to do so), perform such duty or obligation on Lessee's
behalf, including but not limited to the obtaining of reasonably required bonds,
insurance policies, or governmental licenses, permits or approvals. The costs
and expenses of any such performance by Lessor shall be due and payable by
Lessee to Lessor upon invoice therefor. If any check given to Lessor by Lessee
shall not be honored by the bank upon which it is drawn, Lessor, at its option,
may require all future payments to be made under this Lease by Lessee to be made
only by cashier's check. In the event of a Breach of this Lease by Lessee, as
defined in Paragraph 13.1, with or without further notice or demand, and without
limiting Lessor in the exercise of any right or remedy which Lessor may have by
reason of such Breach, Lessor may: SEE ADDENDUM
(a) Terminate Lessee's right to possession of the Premises by
any lawful means, in which case this Lease and the term hereof shall terminate
and Lessee shall immediately surrender possession of the Premises to Lessor. In
such event Lessor shall be entitled to recover from Lessee: (i) the worth at the
time of the award of the unpaid rent which had been earned at the time of
termination; (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 rental loss that the Lessee proves could have
been reasonably avoided; (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 rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees, and that
portion of the leasing commission paid by Lessor applicable to the unexpired
term of this Lease. The worth at the time of award of the amount referred to in
provision (iii) of the prior sentence shall be 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%). Efforts by Lessor to mitigate damages
caused by Lessee's Default or Breach of this Lease shall not waive Lessor's
right to recover damages under this Paragraph. If termination of this Lease is
obtained through the provisional remedy of unlawful detainer, Lessor shall have
the right to recover in such proceeding the unpaid rent and damages as are
recoverable therein, or Lessor may reserve thereinthe right to recover all or
any part thereof in a separate suit for such rent and/or damages. If a notice
and grace period required under subparagraphs 13.1(b), (c) or (d) was not
previously given, a notice to pay rent or quit, or to perform or quit, as the
case may be, given to Lessee under any statute authorizing the forfeiture of
leases for unlawful detainer shall also constitute the applicable notice for
grace period purposes required by subparagraphs 13.1(b), (c) or (d). In such
case, the applicable grace period under subparagraphs 13.1(b), (c) or (d) and
under the unlawful detainer statute shall run concurrently after the one such
statutory notice, and the failure of Lessee to cure the Default within the
greater of the two such grace periods shall constitute both an unlawful detainer
and a Breach of this Lease entitling Lessor to the remedies provided for in this
Lease and/or by said statute.
(b) Continue the Lease and Lessee's right to possession in
effect (in California under California Civil Code Section 1951.4) after Lessee's
Breach and abandonment and recover the rent as it becomes due, provided Lessee
has the right to sublet or assign, subject only to reasonable limitations. See
Paragraphs 12 and 36 for the limitations on assignment and subletting which
limitations Lessee and Lessor agree are reasonable. Acts of maintenance or
preservation, efforts to relet the Premises, or the appointment of a receiver to
protect the Lessor's interest under the Lease, shall not constitute a
termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available to
Lessor under the laws or judicial decisions of the state wherein the Premises
are located.
(d) The expiration or termination of this Lease and/or the
termination of Lessee's right to possession shall not relieve Lessee from
liability under any indemnity provisions of this Lease as to matters occurring
or accruing during the term hereof or by reason of Lessee's occupancy of the
Premises.
13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee to Lessor of rent and other sums due hereunder will cause Lessor 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
upon Lessor by the terms of any ground lease, mortgage or trust deed covering
the Premises. Accordingly, if any installment of rent or any other sum due
from Lessee shall not be received by Lessor or Lessor's designee within ten
(10) days after such amount shall be due, more than once in any 12 month
period then, without any requirement for notice to Lessee, and Lessee shall
pay to Lessor a late charge equal to six percent (6%) 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 payment
by Lessee. Acceptance of such late charge by Lessor shall in no event
constitute a waiver of Lessee's Default or Breach with respect to such
overdue amount, nor prevent Lessor from exercising any of the other rights
and remedies granted hereunder. In the event that a late charge is payable
hereunder, whether or not collected, for three (3) consecutive installments
of Base Rent, then notwithstanding Paragraph 4.1 or any other provision of
this Lease to the contrary, Base Rent shall, at Lessor's option, become due
and payable quarterly in advance.
13.5 BREACH BY LESSOR. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph 13.5, a
reasonable time shall in no event be less than thirty (30) days after receipt by
Lessor and by the holders of any ground lease, mortgage or deed of trust
covering the Premises whose name and address shall have been furnished Lessee in
writing for such purpose, of written notice specifying wherein such obligation
of Lessor has not been performed; provided, however, that if the nature of
Lessor's obligation is such that more than thirty (30) days after such notice
are reasonably required for its performance, then Lessor shall not be in breach
of this Lease if performance is commenced within such thirty (30) day period and
thereafter diligently pursued to completion. SEE ADDENDUM
14. CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(all of which are herein called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes
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title or possession, whichever first occurs. If more than ten percent (10%) of
the floor area of the Premises, or more than twenty-five percent (25%) of the
land area not occupied by any building, is taken by condemnation, Lessee may, at
Lessee's option, to be exercised in writing within ten (10) days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice, within ten (10) days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in the same
proportion as the rentable floor area of the Premises taken bears to the total
rentable floor area of the building located on the Premises. No reduction of
Base Rent shall occur if the only portion of the Premises taken is land on which
there is no building. Any award for the taking of all or any part of the
Premises under the power of eminent domain or any payment made under threat of
the exercise of such power shall be the property of Lessor, whether such award
shall be made as compensation for diminution in value of the leasehold or for
the taking of the fee, or as severance damages; provided, however, that Lessee
shall be entitled to any compensation separately awarded to Lessee for Lessee's
relocation expenses and/or loss of Lessee's Trade Fixtures in the event that
this Lease is not terminated by reason of such condemnation. Lessor shall to
the extent of its net severance damages received, over and above the legal and
other expenses incurred by Lessor in the condemnation matter, repair any damage
to the Premises caused by such condemnation, except to the extent that Lessee
has been reimbursed therefor by the condemning authority. Lessee shall be
responsible for the payment of any amount in excess of such net severance
damages required to complete such repair.
15. BROKER'S FEE.
15.1 The Brokers named in Paragraph 1.10 are the procuring causes of
this Lease.
15.2 Upon execution of this Lease by both Parties, Lessor shall pay to
said Brokers jointly, or in such separate shares as they may mutually designate
in writing, a fee as set forth in a separate written agreement between Lessor
and said Brokers.
15.5 Lessee and Lessor each represent and warrant to the other that it
has had no dealings with any person, firm, broker or finder (other than the
Brokers, if any named in Paragraph 1.10) in connection with the negotiation of
this Lease and/or the consummation of the transaction contemplated hereby, and
that no broker or other person, firm or entity other than said named Brokers is
entitled to any commission or finder's fee in connection with said transaction.
Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold
the other harmless from and against liability for compensation or charges which
may be claimed by any such unnamed broker, finder or other similar party by
reason of any dealings or actions of the indemnifying Party, including any
costs, expenses, attorneys' fees reasonably incurred with respect thereto.
15.6 Lessor and Lessee hereby consent to and approve all agency
relationships, including any dual agencies, indicated in Paragraph 1.10.
16. TENANCY STATEMENT.
16.1 Each Party (as "RESPONDING PARTY") shall within ten (10) days
after written notice from the other Party (the "REQUESTING PARTY") execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current "TENANCY STATEMENT" form published by the
American Industrial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.
16.2 If Lessor desires to finance, refinance, or sell the Premises,
any part thereof, or the building of which the Premises are a part, Lessee
and all Guarantors of Lessee's performance hereunder shall deliver to any
potential lender or purchaser designated by Lessor such financial statements
of Lessee and such Guarantors as may be reasonably required by such lender or
purchaser, including but not limited to Lessee's financial statements for the
past three (3) years. All such financial statements shall be received by
Lessor and such lender or purchaser in confidence and shall be used only for
the purposes herein set forth.
17. LESSOR'S LIABILITY. The term "LESSOR" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or, if
this is a sublease, of the Lessee's interest in the prior lease. In the event
of a transfer of Lessor's title or interest in the Premises or in this Lease,
Lessor shall deliver to the transferee or assignee (in cash or by credit) any
unused Security Deposit held by Lessor at the time of such transfer or
assignment. Except as provided in Paragraph 15, upon such transfer or
assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor
shall be relieved of all liability with respect to the obligations and/or
covenants under this Lease thereafter to be performed by the Lessor provided
that if any uncured Lessor default then exists, such relief of liability shall
not be effective until the cure of such default. Subject to the foregoing, the
obligations and/or covenants in this Lease to be performed by the Lessor shall
be binding only upon the Lessor as hereinabove defined.
18. SEVERABILITY. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction shall in no way affect the
validity of any other provision hereof.
19. INTEREST ON PAST-DUE OBLIGATIONS. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within thirty (30)
days following the date on which it was due, shall bear interest from the
thirty-first (31st) day after it was due at the rate of 12% per annum, but not
exceeding the maximum rate allowed by law, in addition to the late charge
provided for in Paragraph 13.4.
20. TIME OF ESSENCE. Time is of the essence with respect to the performance
of all obligations to be performed or observed by the Parties under this Lease.
21. RENT DEFINED. All monetary obligations of Lessee to Lessor under the
terms of this Lease are deemed to be rent.
22. NO PRIOR OR OTHER AGREEMENTS. This Lease contains all agreements between
the Parties with respect to any matter mentioned herein, and no other prior or
contemporaneous agreement or understanding shall be effective. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party.
23. NOTICES
23.1 All notices required or permitted by this Lease shall be in
writing and may be delivered in person (by hand or by messenger or courier
service) or may be sent by regular, certified or registered mail or U.S. Postal
Service Express Mail, with postage prepaid, and shall be deemed sufficiently
given if served in a manner specified in this Paragraph 23. The addresses noted
adjacent to a Party's signature on this Lease shall be that Party's address for
delivery or mailing of notice purposes. Either Party may by written notice to
the other specify a different address for notice purposes, except that upon
Lessee's taking possession of the Premises, the Premises shall constitute
Lessee's address for the purpose of mailing or delivering notices to Lessee. A
copy of all notices required or permitted to be given to Lessor hereunder shall
be concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate by written notice to Lessee.
23.2 Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt
card, or if no delivery date is shown, the postmark thereon. If sent by regular
mail the notice shall be deemed given forty-eight (48) hours after the same is
addressed as required herein and mailed with postage prepaid. Notices delivered
by United States Express Mail or overnight courier that guarantees next day
delivery shall be deemed given twenty-four (24) hours after delivery of the same
to the United States Postal Service or courier. If notice is received on a
Sunday or legal holiday, it shall be deemed received on the next business day.
24. WAIVERS. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or of any other term, covenant or condition hereof. Lessor's
consent to, or approval of, any act shall not be deemed to render unnecessary
the obtaining of Lessor's consent to, or approval of, any subsequent or similar
act by Lessee, or be construed as the basis of an estoppel to enforce the
provision or provisions of this Lease requiring such consent. Regardless of
Lessor's knowledge of a Default or Breach at the time of accepting rent, the
acceptance of rent by Lessor shall not be a waiver of any preceding Default or
Breach by Lessee of any provision hereof, other than the failure of Lessee to
pay the particular rent so accepted. Any payment given Lessor by Lessee may be
accepted by Lessor on account of moneys or damages due Lessor, notwithstanding
any qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Lessor at or before the
time of deposit of such payment.
26. NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease. SEE ADDENDUM
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27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. COVENANTS AND CONDITIONS. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.
29. BINDING EFFECT; CHOICE OF LAW. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.
30. SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.
30.1 SUBORDINATION. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "SECURITY DEVICE"), now or
hereafter placed by Lessor upon the real property of which the Premises are a
part, to any and all advances made on the security thereof, and to all renewals,
modifications, consolidations, replacements and extensions thereof. Lessee
agrees that the Lenders holding any such Security Device shall have no duty,
liability or obligation to perform any of the obligations of Lessor under this
Lease, but that in the event of Lessor's default with respect to any such
obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default and
allow such Lender thirty (30) days following receipt of such notice for the cure
of said default before invoking any remedies Lessee may have by reason thereof.
If any Lender shall elect to have this Lease and/or any Option granted hereby
superior to the lien of its Security Device and shall give written notice
thereof to Lessee, this Lease and such Options shall be deemed prior to such
Security Device, notwithstanding the relative dates of the documentation or
recordation thereof.
30.2 ATTORNMENT. Subject to the non-disturbance provisions of
Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party who
acquires ownership of the Premises by reason of a foreclosure of a Security
Device, and that in the event of such foreclosure, such new owner shall not:
(i) be liable for any act or omission of any prior lessor or with respect to
events occurring prior to acquisition of ownership, (ii) be subject to any
offsets or defenses which Lessee might have against any prior lessor, or
(iii) be bound by prepayment of more than one (1) month's rent.
30.3 NON-DISTURBANCE. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving assurance (a "NON-DISTURBANCE AGREEMENT") from the
Lender that Lessee's possession and this Lease, including any options to extend
the term hereof, will not be disturbed so long as Lessee is not in Breach hereof
and attorns to the record owner of the Premises.
30.4 SELF-EXECUTING. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that, upon written request from Lessor or a Lender in connection with a
sale, financing or refinancing of the Premises, Lessee and Lessor shall execute
such further writings as may be reasonably required to separately document any
such subordination or non-subordination, attornment and/or non-disturbance
agreement as is provided for herein.
31. ATTORNEY'S FEES. If any Party brings an action or proceeding to enforce
the terms hereof or declare rights hereunder, the Prevailing Party (as hereafter
defined) in any such proceeding, action, or appeal thereon, shall be entitled to
reasonable attorney's fees. Such fees may be awarded in the same suit or
recovered in a separate suit, whether or not such action or proceeding is
pursued to decision or judgment. The term, "PREVAILING PARTY" shall include,
without limitation, a Party who substantially obtains or defeats the relief
sought, as the case may be, whether by compromise, settlement, judgment, or the
abandonment by the other Party of its claim or defense. The attorney's fees
award shall not be computed in accordance with any court fee schedule, but shall
be such as to fully reimburse all attorney's fees reasonably incurred. Lessor
shall be entitled to attorney's fees, costs and expenses incurred in the
preparation and service of notices of Default and consultations in connection
therewith, whether or not a legal action is subsequently commenced in connection
with such Default or resulting Breach.
32. LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times for the purpose of showing the same
to prospective purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises or to the building of which
they are a part, as Lessor may reasonably deem necessary Lessor may at any time
place on or about the Premises or building any ordinary "For Sale" signs and
Lessor may at any time during the last one hundred twenty (20) days of the term
hereof place on or about the Premises any ordinary "For Lease" signs. All such
activities of Lessor shall be without abatement of rent or liability to Lessee.
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Lessor's prior written consent, Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.
35. TERMINATION; MERGER. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, Lessor shall, in the event of any such surrender,
termination or cancellation, have the option to continue any one or all of any
existing subtenancies. Lessor's failure within ten (10) days following any such
event to make a written election to the contrary by written notice to the holder
of any such lesser interest, shall constitute Lessor's election to have such
event constitute the termination of such interest.
36. CONSENTS.
(a) Except for Paragraph 33 hereof (Auctions) or as
otherwise provided herein, wherever in this Lease the consent of a Party is
required to an act by or for the other Party, such consent shall not be
unreasonably withheld or delayed. Lessor's actual reasonable costs and
expenses (including but not limited to architects', attorneys', engineers' or
other consultants' fees) incurred in the consideration of, or response to, a
request by Lessee for any Lessor consent pertaining to the presence or use of
a Hazardous Substance, practice or storage tank, shall be paid by Lessee to
Lessor upon receipt of an invoice and supporting documentation therefore.
Subject to Paragraph 12.2(e) (applicable to assignment or subletting), Lessor
may, as a condition to considering any such request by Lessee, require that
Lessee deposit with Lessor an amount of money (in addition to the Security
Deposit held under Paragraph 5) reasonably calculated by Lessor to represent
the cost Lessor will incur in considering and responding to Lessee's request.
Except as otherwise provided, any unused portion of said deposit shall be
refunded to Lessee without interest. Lessor's consent to any act, assignment
of this Lease or subletting of the Premises by Lessee shall not constitute an
acknowledgement that no Default or Breach by Lessee of this Lease exists, nor
shall such consent be deemed a waiver of any then existing Default or Breach,
except as may be otherwise specifically stated in writing by Lessor at the
time of such consent.
(b) All conditions to Lessor's consent authorized by this Lease
are acknowledged by Lessee as being reasonable. The failure to specify herein
any particular condition to Lessor's consent shall not preclude the imposition
by Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being
given.
38. QUIET POSSESSION. Upon payment by Lessee of the rent for the Premises
and the observance and performance of all of the covenants, conditions and
provisions on Lessee's part to be observed and performed under this Lease,
Lessee shall have quiet possession of the Premises for the entire term hereof
subject to all of the provisions of this Lease.
39. OPTIONS. SEE ADDENDUM
39.1 DEFINITION. As used in this Paragraph 39 the word "OPTION" has
the following meaning: (a) the right to extend the term of this Lease or to
renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor.
SEE ADDENDUM
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39.3 MULTIPLE OPTIONS. In the event that Lessee has any Multiple
Options to extend or renew this Lease, a later Option cannot be exercised unless
the prior Options to extend or renew this Lease have been validly exercised.
39.4 EFFECT OF DEFAULT ON OPTIONS.
(a) Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary, if Lessee
is in monetary Default of this Lease, which is not cured within the cure period
set forth in Paragraph 13.1(b) after Lessee's receipt of written notice thereof.
(b) The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a).
40. MULTIPLE BUILDINGS. If the Premises are part of a group of buildings
controlled by Lessor, Lessee agrees that it will abide by, keep and observe all
reasonable rules and regulations which Lessor may make from time to time for the
management, safety, care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of such other buildings and their
invitees, and that Lessee shall pay its fair share of common expenses incurred
in connection therewith.
41. SECURITY MEASURES. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.
42. RESERVATIONS. Lessor reserves to itself the right, from time to time, to
grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.
43. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to
any amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment and there shall survive the right
on the part of said Party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said Party
to pay such sum or any part thereof, said Party shall be entitled to recover
such sum or so much thereof as it was not legally required to pay under the
provisions of this Lease.
44. AUTHORITY. It either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.
45. CONFLICT. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the typewritten
or handwritten provisions.
46. OFFER. Preparation of this Lease by Lessor or Lessor's agent and
submission of same to Lessee shall not be deemed an offer to lease to Lessee.
This tone is not intended to be binding until executed by all Parties hereto.
47. AMENDMENTS. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. The parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional, insurance company, or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the property
of which the Premises are a part.
48. MULTIPLE PARTIES. Except as otherwise expressly provided herein, if more
than one person or entity is named herein as either Lessor or Lessee, the
obligations of such Multiple Parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR
SUBMISSION TO YOUR ATTORNEY FOR HIS APPROVAL. FURTHER, EXPERTS
SHOULD BE CONSULTED TO EVALUATE THE CONDITION OF THE PROPERTY AS
TO THE POSSIBLE PRESENCE OF ASBESTOS, STORAGE TANKS OR HAZARDOUS
SUBSTANCES. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE
BROKER(S) OR THEIR AGENTS OR EMPLOYEES AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR
THE TRANSACTION TO WHICH IT RELATES: THE PARTIES SHALL RELY SOLELY
UPON THE ADVICE OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX
CONSEQUENCES OF THIS LEASE. IF THE SUBJECT PROPERTY IS LOGGED IN
A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM THE STATE WHERE
THE PROPERTY IS LOCATED SHOULD BE CONSULTED.
The parties hereto have executed this Lease at the place on the dates specified
above to their respective signatures.
<TABLE>
<S> <C>
Executed at _____________________________ Executed at San Francisco
on ______________________________________ on Aug 8th, '94
by LESSOR: by LESSEE:
STATE TEACHERS' RETIREMENT SYSTEM, a Babe, Inc., a California corporation
retirement system created pursuant to dba Bebe
the laws of the State of California
By: AMB INSTITUTIONAL REALTY ADVISORS, INC., a By /s/ Manny Mashouf
Name Printed: California corporation Name Printed: MANNY MASHOUF
Title: as advisor Title: President
By /s/ Gayle P. Starr By ______________________________________
Name Printed: ___________________________ Name Printed: ___________________________
Title: __________________________________ Title: __________________________________
Address: ________________________________ Address: ________________________________
_________________________________________ _________________________________________
Tel. No (___) ______Fax No. (___) _______ Tel. No (___) ______Fax No. (___) _______
</TABLE>
NET PAGE 10
NOTICE: These forms are often modified to meet changing requirements of law and
industry needs. Always write or call to make sure you are utilizing the most
current form. American Industrial Real Estate Association, 345 South Figueroa
Street, Suite M-1, Los Angeles, Ca 90071, (213) 687-87777. Fax. No. (213)
687-8616.
COPYRIGHT 1990--BY AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION.
ALL RIGHTS RESERVED.
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ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE-NET
THIS ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE-NET
(this "ADDENDUM") is made as of the _____ day of _____, 1994, by and between
CALIFORNIA STATE TEACHERS' RETIREMENT SYSTEM, a retirement system created
pursuant to the laws of the State of California ("LESSOR"), and BABE, INC., a
California corporation, dba Bebe ("LESSEE").
RECITALS
A. Concurrently herewith, Lessor and Lessee have entered into that
certain Standard Industrial/Commercial Single-Tenant Lease-Net (the "LEASE"),
with respect to the lease of certain "PREMISES" located at 380 Valley Drive,
Brisbane, California, as more particularly described in the Lease. All terms
used herein and defined in the Lease but not herein defined shall have the
meaning ascribed to such terms in the Lease.
B. Lessor and Lessee now desire to enter into this Addendum to amend
and supplement the Lease as herein provided.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Lessor and Lessee agree as follows:
1. The "COMMENCEMENT DATE" shall be deemed to occur on the date which
is thirty (30) days following Lessee's receipt from Lessor of the Lease and this
Addendum fully executed by Lessor and Lessee. If Lessor is unable to deliver
possession of the Premises to Lessee upon the Commencement Date, Lessee shall
have no right to terminate the Lease or other remedy or claim against Lessor,
except that Lessee shall be entitled to one day of abatement of Base Rent
applicable to Base Rent first otherwise coming due under the Lease for each day
following the Commencement Date until such delivery of possession of the
Premises.
2. Notwithstanding anything to the contrary contained in the Lease
(including, without limitation, Lease ARTICLE 2):
(a) Following the Commencement Date, the building located upon
the Premises (the "BUILDING") shall be improved pursuant to SCHEDULE 1 attached
hereto and incorporated herein by this reference. Lessee's obligation for the
payment of Base Rent shall commence on the date which is six (6) months
following the Commencement Date, provided that such six (6) month period shall
be extended on a day for day basis, for any delay in the occurrence of the
"SUBSTANTIAL COMPLETION" of the "LESSEE IMPROVEMENTS" due to the occurrence of
any "FORCE MAJEURE EVENT" (as such terms are defined in SCHEDULE 1), provided
that in no event shall such six (6) month period be extended pursuant hereto (i)
by a period in excess of sixty (60) days due to Force Majeure Events in
obtaining necessary building permits for the construction of the Lessee
Improvements, or (ii) by an aggregate period in excess of ninety (90) days due
to any and all Force Majeure Events.
(b) Notwithstanding anything to the contrary contained in the
Lease, Lessor makes no representation or warranty as to whether the Premises
complies with Applicable Laws, including, without limitation, Applicable Laws
respecting accessibility and/or use of the Premises by disabled persons
(collectively, "DISABLED PERSONS LAWS"), including, without limitation, the
Americans with Disabilities Act of 1990; except, however, that Lessor hereby
represents that it has not received any written notice from applicable
governmental authorities stating that the Premises is in violation of Applicable
Laws. Without in any manner limiting the other obligations of Lessee under the
Lease, as hereby amended, the "LESSEE IMPROVEMENTS" (as defined in SCHEDULE 1
attached hereto) shall include, without limitation, all alterations and
improvements necessary to cause the Premises (including, without limitation, the
Building entry area, entrance door and restrooms) to comply with all Disabled
Persons Laws, and Lessee, at its sole cost and expense, shall cause the Premises
to comply with all Disabled Persons Laws throughout the Lease term.
(c) Prior to the Commencement Date, Lessor shall cause the
abatement of certain asbestos-containing materials upon the Premises such that
upon the Commencement Date, to Lessor's actual knowledge, the Premises shall
comply with Applicable Laws respecting asbestos-containing materials.
Throughout the term of the Lease, Lessor shall indemnify, defend and hold
harmless Lessee from and against any and all liability, cost, loss, demand,
claim, cause of action, cost and/or expense (including, without limitation,
attorneys' fees and expenses), arising as a result of the presence of any
"HAZARDOUS SUBSTANCES" (as hereinafter defined), including, without limitation,
asbestos, existing upon the Premises as of the Commencement Date.
3. Monthly Base Rent payable by Lessee pursuant to the Lease shall be
adjusted on the commencement of the nineteenth (19th) month following the
Commencement Date and at the expiration of each twelve (12) month period
thereafter occurring during the Lease term (each such date is referred to herein
as an "ADJUSTMENT DATE") to equal the product obtained by multiplying the
monthly Base Rent in effect immediately preceding such Adjustment Date by a
fraction, the numerator of which is the "INDEX" (as hereinafter defined) for the
calendar month which is three (3) full months preceding the calendar month
containing the Adjustment Date, and the denominator of which is the Index for
the calendar month which is fifteen (15) full months preceding the calendar
month containing the Adjustment Date. In no event shall any such adjustment
upon an Adjustment Date result in an increase in monthly Base Rent in excess of
four percent (4%) per annum on a cumulative and compounding basis or in a
decrease in the monthly Base Rent. As used herein, the "INDEX" shall mean the
Consumer Price Index for All Urban Consumers (San Francisco-Oakland-San Jose
Area; Base 1982-84 = 100), as published by the United States Department of
Labor, Bureau of Labor Statistics (the "BUREAU"). Should the Bureau discontinue
the publication of the Index, publish the same less frequently or alter the same
in some other manner, then Lessor shall adopt a substitute index or substitute
procedure which reasonably reflects and monitors consumer prices.
4. Notwithstanding anything to the contrary contained in Lease
ARTICLE 6, Lessee's Security Deposit shall accrue interest at the money market
interest rates in effect from time to time during the Lease term, which interest
shall be held, applied and/or refunded by Lessor in the manner set forth in the
Lease with respect to the Security Deposit.
5. Notwithstanding anything to the contrary contained in Lease
ARTICLE 7:
(a) Lessor shall be responsible, at Lessor's sole cost, for all
maintenance and repairs required with respect to the Building foundation and
structural components (and repairs to other portions of the Building where such
repairs are necessitated by such repair of structural components) during the
Lease term, except that Lessee shall be responsible for the cost of any such
maintenance and/or repairs necessitated by the acts or omissions of Lessee
and/or its employees, agents, representatives and/or contractors.
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(b) In the event Lessee's cumulative costs for roof repairs
during the initial term of the Lease made following the Substantial Completion
of the Lessee Improvements (exclusive of (i) routine maintenance such as
clearing of downspouts and gutters, and (ii) roof repairs necessitated by the
acts or omissions of Lessee and/or its employees, agents, representatives and/or
contractors) exceed Twenty-Four Thousand Dollars ($24,000.00), Lessor shall
thereafter be responsible, at its sole cost, for all repairs and maintenance and
replacements to the Building roof during the Lease term (exclusive of roof
repairs necessitated by the acts or omissions of Lessee and/or its employees,
agents, representatives and/or contractors, which shall remain the
responsibility of Lessee); except that if Lessor shall replace the Building roof
(such replacement to be completed at Lessor's sole cost), Lessee shall
thereafter be obligated for maintenance and repair of the Building roof in the
manner set forth in the Lease.
(c) In the event that the aggregate cost incurred by Lessee for
repairs made following the Substantial Completion of the Lessee Improvements to
any fence, sidewalk, driveway, parking lot or retaining wall upon the Premises
during the Lease term (exclusive of (i) routine maintenance such as clearing of
leaves, litter or debris, and (ii) repairs necessitated by the acts or omissions
of Lessee and/or its employees, agents, representatives and/or contractors) is
greater than or equal to the cost of replacement of such item, Lessor shall
thereafter be responsible for all repairs and replacements (as necessary) to
such item.
(d) Lessor shall be responsible for making such repairs to
other portions of the Building as are necessitated by damage caused by Lessor's
performance of repairs and maintenance which are Lessor's responsibility
pursuant to the Lease (as herein amended). For purposes of this SECTION 5,
Lessee's costs of repairs shall be evidenced by paid invoices.
(e) Lessee shall not be obligated to remove any Lessee Owned
Alterations or Utility Installations upon the expiration of the Lease term or
earlier termination of the Lease, except that Lessor may require Lessee, at
Lessee's sole cost, to (i) remove such Lessee Alterations and/or Utility
Installations which are particular to Lessee's use of the Premises and/or are
located in the warehouse area of the Building and do not constitute office area
or extensions of the office area of the Building, and (ii) promptly repair any
damage to the Building or Premises resulting from such removal and restore the
affected portion of the Building and/or Premises to the condition existing prior
to the installation thereof, ordinary wear and tear excepted. Other than the
"PARTITIONS" (as defined in SCHEDULE 1), Lessee shall remove its Trade Fixtures
from the Premises upon such expiration or earlier termination, and repair any
damage resulting from such removal, ordinary wear and tear excepted.
(f) The parties hereby acknowledge that the word "parkways" has
been deleted from Lease PARAGRAPH 7.1(a) because there are no parkways existing
upon the Building or other portions of the Premises.
6. Notwithstanding anything to the contrary contained in Lease
PARAGRAPH 6.2:
(a) Lessee warrants that Lessee's business and all activities
to be performed by Lessee in, on or about the Premises shall comply with all
Applicable Laws respecting Hazardous Substances and Lessee agrees to change any
such activity or install any equipment, safety devices, pollution control
systems and/or other installations as may be required at any time during the
Lease term to comply therewith.
(b) Lessee shall not cause or permit any Hazardous Substance
to be brought upon, kept, or used in or about the Premises by Lessee, its
agents, employees, contractors or invitees, without the prior written consent
of Lessor. If Lessee breaches the obligations stated in the preceding
sentence, or if the presence of Hazardous Substance on the Premises caused or
permitted by Lessee or otherwise caused to be located upon the Premises
during the Lease term results in contamination of the Premises or any
adjacent property, then Lessee shall indemnify, defend and hold Lessor
harmless from any and all claims, judgments, damages, penalties, fines,
costs, liabilities or losses (including, without limitation, diminution in
value of the Premises and/or adjacent property, damages for the loss or
restriction on use of rentable or usable space or of any amenity of the
Premises and/or adjacent property, damages arising from any adverse impact on
marketing of the Premises and/or adjacent property, and sums paid in
settlement of claims, attorneys' fees, consultant fees and expert fees) which
arise during or after the Lease term (including any Option Term) as a result
of such contamination. This indemnification of Lessor by Lessee includes,
without limitation, costs incurred in connection with any investigation of
site conditions or any cleanup, remedial, removal or restoration work
required by any federal, state or local governmental agency or political
subdivision because of Hazardous Substance present in the soil or ground
water on or under the Premises and/or adjacent property. Without limiting
the foregoing, if the presence of any Hazardous Substance on the Premises
caused or permitted by Lessee results in any contamination of the Premises
and/or adjacent property, Lessee shall promptly take all actions at its sole
expense as are necessary to return the Premises and/or adjacent property to
the condition existing prior to the introduction of any such Hazardous
Substance to the Premises and/or adjacent property; provided that Lessor's
approval of such actions shall first be obtained, which approval shall not be
unreasonably withheld so long as such actions would not potentially have any
material adverse long-term or short-term effect on the Premises or adjacent
property.
(c) Lessor shall have the right, but not the duty, to inspect
the Premises at any time to determine whether Lessee is complying with the
requirements of the Lease (as hereby amended). If Lessee is not in compliance
with the requirements of the provisions of the Lease (as hereby amended)
relating to Hazardous Substances, Lessor shall have the right, but not the
obligation, to immediately enter upon the Premises to remedy any condition
caused by Lessee's failure to comply with the requirements of the Lease (as
hereby amended). Lessor shall use reasonable efforts to minimize interference
with Lessee's business as a result of any such entry by Lessor but shall not be
liable for any interference caused thereby.
7. Notwithstanding anything to the contrary in Lease ARTICLE 8:
(a) Any policy of insurance required by the Lease and/or this
Addendum (including, without limitation, SCHEDULE 1 attached hereto) to be
maintained by Lessee in connection with the Premises shall name both Lessor and
AMB Institutional Realty Advisors, Inc. as additional insureds, and shall be
primary and non-contributing with respect to any insurance maintained by Lessor.
(b) If the waiver of subrogation pursuant to Lease PARAGRAPH
8.6 results in an additional premium charge to Lessor, Lessee agrees to promptly
pay Lessor such additional charge upon receiving a written billing therefor.
However, if such insurance policies cannot be obtained with a waiver of
subrogation, the parties are relieved of the obligation to obtain such a waiver
hereunder.
(c) Lessor shall have the right to require Lessee to make
payment for Lessor's insurance costs to be reimbursed by Lessee pursuant to
Lease PARAGRAPH 8.1 monthly in advance on the basis of Lessor's reasonable
estimate of the
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amount of such costs, subject to annual reconciliation Lessee payment or Lessor
refund, as applicable, to be made within thirty (30) days following Lessor's
delivery to Lessee of a statement of such insurance costs for the applicable
year. In the event Lessor so requires such payment on a monthly estimated basis
subject to annual reconciliation, (i) Lessor shall deliver a statement of actual
insurance costs to be so reimbursed by Lessee within ninety (90) days following
the close of each applicable year during the Lease term for which such payment
is made on such estimated basis or as soon thereafter as information pertaining
thereto becomes available to Lessor, and (ii) Lessor shall have the right to
adjust its estimate of such costs from time to time during the Lease term upon
written notice to Lessee, based upon reasonably anticipated changes in the
amount of such costs.
(d) In the event Lessor elects to maintain earthquake
insurance pursuant to Lease PARAGRAPH 8.3(a) and the occurrence of any Insured
Loss, in no event shall Lessee be liable for the amount of any deductible under
such policy of earthquake insurance. Lessor shall maintain such earthquake
insurance with respect to the Premises for so long as maintenance thereof is
commercially reasonable in Lessors reasonable business judgment. Lessor
presently maintains such earthquake insurance with respect to the Premises and
shall promptly notify Lessee in writing in the event Lessor ceases to maintain
such earthquake insurance.
(e) Lessee's obligation for indemnity pursuant to Lease
PARAGRAPH 8.7 shall only apply to the extent (i) Lessor does not receive
proceeds covering the applicable matter from any policy of insurance maintained
by Lessee pursuant to the provisions of Lease PARAGRAPH 8, or (ii) the
applicable matter is not covered by any policy of insurance required to be
maintained by Lessor pursuant to the provisions of Lease PARAGRAPH 8.
(f) Lessor shall indemnify, defend and hold harmless Lessee
from and against any and all liability, claim, demand, cause of action, loss,
cost and/or expense (including, without limitation, attorneys' fees and
expenses) to the extent incurred as a result of the negligence or wilful
misconduct of Lessor its employees or agents, except to the extent the same is
covered by insurance maintained by Lessee or such insurance as Lessee is
required to maintain pursuant to the Lease (as hereby amended).
8. Notwithstanding anything to the contrary in Lease PARAGRAPH 9:
(a) In the event of a Premises Total Destruction, the repair
and/or restoration of which, in the judgment of a licensed general contractor
designated by Lessor, subject to Lessee's prior approval (which approval shall
not be unreasonably withheld), is capable of being substantially completed to a
condition so as to permit the operation of Lessee's business from the Premises
within one hundred eighty (180) days following the date of casualty, Lessor may
elect by written notice to Lessee delivered within forty-five (45) days
following the date of casualty, to repair the Premises in the same manner as if
such casualty had constituted Premises Partial Damage that was an Insured Loss
under Lease PARAGRAPH 9.2 in the event of which election, the Lease shall
not terminate, Lessor shall repair the Premises in the same manner as if such
casualty had constituted Premises Partial Damage that was an Insured Loss under
Lease PARAGRAPH 9.2, and the Lease (as hereby amended) shall continue in full
force and effect.
(b) If a Premises Partial Damage that is not an Insured Loss
occurs, unless caused by a negligent or willful act of Lessee and/or any of
Lessee's employees, agents, representatives and/or contractors (in which event
Lessee shall make the repairs at Lessee's expense and the Lease shall continue
in full force and effect, but subject to Lessor's rights under Lease PARAGRAPH
13 (as herein modified)), and such damage materially interferes with the
operation of Lessee's business from the Premises for its intended use, then
either party may elect within sixty (60) days following the occurrence of the
casualty either (i) to pay the cost of repair and/or restoration of the
Premises, in which event the Lease (as hereby amended) shall continue in full
force and effect, or (ii) to terminate the Lease by written notice to the other
party; provided that the party receiving such termination notice may elect to
nullify such termination by agreeing in written notice to the terminating party
(delivered by the later to occur of (A) ten (10) days following receipt of such
termination notice, or (B) sixty (60) days following the occurrence of the
casualty) to pay the cost of repair and/or restoration of the Premises, in the
event of which election, the election to terminate shall be null and void, the
party making such election shall be responsible for the cost of repair and/or
restoration of the Premises, and the Lease (as hereby amended) shall continue in
full force and effect. In the event either party agrees to pay the cost of
repair and/or restoration of the Premises, Lessor shall perform such repair
and/or restoration of the Premises in the same manner as if such casualty had
constituted Premises Partial Damage that was an Insured Loss under Lease
PARAGRAPH 9.2 at the cost of the party so agreeing to pay the cost of such
repair and/or restoration; provided that if Lessee is the party so electing to
pay the cost of repair and/or restoration of the Premises, as a condition to
Lessor's obligation to repair (which condition may be waived by Lessor without
in any manner limiting Lessee's responsibility for the making of such payment),
Lessee shall within thirty (30) days following such election, provide Lessor
with funds equal to the estimated cost thereof (or security for the payment
thereof satisfactory to Lessor), and if such funds (or such security) is not so
received by Lessor within such thirty (30) day period, Lessor may terminate the
Lease by written notice to Lessee.
(c) In the event of a casualty to the Premises which is not an
Insured Loss but which does not result in the termination of the Lease, provided
such casualty was not caused by the negligence or willful act of Lessee and/or
any of Lessee's employees, agents, representatives and/or contractors, Lessee
shall be entitled to a proportionate abatement of its rental and other monetary
obligations under the Lease from and after the date of such casualty during the
course of repair and/or restoration, in the same manner as is provided in Lease
PARAGRAPH 9.6(a) with respect to a casualty which is a Partial Damage Insured
Loss.
9. Notwithstanding anything contained in the Lease (including,
without limitation, Lease ARTICLE 10) to the contrary:
(a) Lessee acknowledges and agrees that for so long as Lessor's
interest in the Premises is owned by the state or any local public entity or
government, including without limitation a state public retirement system, the
Lease (as herein amended) and Lessee's interest thereunder may constitute a
possessory interest subject to property taxation and as a result Lessee may be
subject to the payment of real estate taxes levied on that interest (in which
event, Lessee shall promptly pay such taxes). In addition, for so long as the
Lessor's interest in the Premises is owned by a state public retirement system,
the full cash value, as defined in Sections 110 and 110.1 of the Revenue and
Taxation Code, of the possessory interest upon which Real Estate Taxes will be
based shall equal the greater of (a) the full cash value of the possessory
interest, or (b) Lessee's allocable share of the full cash value of the property
that would have been taxed if the property had been subject to property tax upon
acquisition by the state public retirement system.
(b) In the event of the occurrence of any "change in ownership"
as defined in Section 60 of the California Revenue and Taxation Code during the
initial seven (7) year and six (6) month Original Term of the Lease, Lessee
shall be liable for
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fifty percent (50%) of any increase in Real Property Taxes attributable to a
reassessment due to such change in ownership, which increase shall be measured
from the amount of Real Property Taxes which would have been payable by Lessee
prior to such change in ownership if Lessor were not a public entity (resulting
in the payment by Lessee of possessory interest taxes pursuant to subsection (a)
above) and Real Property Taxes had been payable under the Proposition 13 method
of calculation (based upon Lessors purchase price for the Premises, subject to
annual increases in assessment value permitted under the Proposition 13 method
of calculation).
(c) "REAL PROPERTY TAXES" shall not include any taxes or
assessments imposed in order to finance the initial development or construction
of the Premises.
10. Notwithstanding anything to the contrary contained in Lease
ARTICLE 12:
(a) In determining whether to reasonably consent to a proposed
assignment or subletting, (i) it shall not be unreasonable for Lessor to
withhold its consent to any such assignment or subletting if a proposed
assignee's or subtenant's anticipated or proposed use of the Premises involves
the generation storage, use, treatment or disposal of any Hazardous Substance;
and (ii) Lessor may consider, among other things, whether the use of the
Premises by the proposed assignee or subtenant will involve the generation,
storage, use, treatment or disposal of any Hazardous Substances, or will in any
way increase any potential risk or liability to Lessor arising out of or
relating to Hazardous Substances.
(b) Should Lessee desire to enter into an assignment or
subletting, Lessee shall provide not less than thirty (30) days prior written
notice thereof to Lessor setting forth the name of the proposed assignee or
subtenant, the term, use, rental rate and other relevant particulars of the
proposed assignment or subletting, including, without limitation, evidence
satisfactory to Lessor that the proposed assignee or subtenant will not use,
store or dispose of any Hazardous Substances in or on the Premises, and that
the proposed assignee or subtenant will immediately occupy and thereafter use
the Premises for the entire term of the Lease or the sublease (as the case
may be). Such notice shall be accompanied by a copy of the proposed
assignment or sublease agreement and any documents or financial information
Lessor may require in order to make a determination as to the suitability of
the assignee or subtenant.
(c) In addition to Lessor's right of approval of any proposed
assignment or subletting as provided herein, Lessor shall have the option, in
the event of any proposed assignment or subletting of all or substantially all
of the Premises, to terminate the Lease as to the affected portion of the
Premises as of the proposed effective date of the proposed assignment or
subletting set forth in Lessee's notice. Such option to terminate shall be
exercised, if at all, by Lessor giving Lessee written notice thereof within
thirty (30) days following Lessor's receipt of Lessee's written request. In the
event of such termination by Lessor, from and after the effective date of such
termination, Lessor and Lessee shall have no further obligations or liabilities
to each other with respect to the affected portion of the Premises, except with
respect to obligations or liabilities which have accrued as of, or survive, such
termination (in the same manner as if such termination date were the date
originally fixed for the expiration of the Lease term). Without in any manner
limiting the rights of Lessor, following any such termination by Lessor, Lessor
may lease the affected portion of the Premises to the prospective assignee or
subtenant proposed by Lessee, without liability to the Lessee. Lessor's failure
to exercise such termination right as herein provided shall not be construed as
Lessor's consent to the proposed assignment or subletting.
(d) Notwithstanding anything to the contrary contained in the
Lease (as hereby amended):
(i) Lessee shall be permitted to assign the Lease
without Lessor's prior consent and without being subject to the provisions of
SECTION 1O(c) above, but upon fifteen (15) days prior written notice to Lessor,
in the event that (1) at the time of the proposed assignment, Lessee is not in
monetary default beyond the applicable cure period set forth in the Lease, (2)
the proposed assignee shall agree in writing to assume all of Lessee's
obligations under the Lease, as hereby amended, (3) Lessee shall assign
substantially all of its other leases for premises leased by Lessee to such
assignee, and (4) the proposed assignee has a tangible no worth of at bast Two
Million Dollars ($2,000,000.00); and
(ii) Without the same being deemed to constitute an
assignment requiring Lessor's consent pursuant hereto, provided the business
operated from the Premises continues to be operated in accordance with the
provisions of the Lease (as hereby amended), (1) Lessee shall be permitted to
sell or offer to sell up to ninety-five percent (95%) of Lessee's capital stock
to a private corporation or the public in accordance with the qualifications or
registration requirements of the laws and regulations of the State of
California; and/or (2) Lessee may transfer its ownership interest by bequest or
inheritance between or among the present majority shareholders of Lessee, to
their immediate family (IE., spouses, parents, siblings, children and/or
grandchildren), or any trust created for the benefit of such immediate family
member or members.
However, any transfer of stock or other ownership interest of Lessee
which is made with the primary purpose of circumventing the restrictions imposed
under Lease PARAGRAPH 12 or the other provisions of this Addendum shall be
deemed to be an assignment requiring Lessor's consent.
11. Notwithstanding anything to the contrary contained in the
Lease, following the first Lessee Default pursuant to Lease PARAGRAPH 13.1
(a), (b), (c) or (d), Lessor shall not pursue the remedy set forth in Lease
PARAGRAPH 13.2(a) unless Lessee shall have failed to cure the applicable
Default within ninety (90) days following such Default; provided, however,
that nothing contained herein shall be deemed to (a) limit Lessor's right to
pursue any other rights and/or remedies with respect to such initial Default
available under the Lease, at law and/or in equity (including, without
limitation, the right to repossess the Premises pursuant to an unlawful
detainer action), without regard to such ninety (90) day period, (b) limit
Lessor's right to pursue any rights and/or remedies with respect to any
subsequent Default by Lessee pursuant to Lease PARAGRAPH 13.1 (a), (b), (c)
or (d), available under the Lease, at law and/or in equity, without regard to
such ninety (90) day period, or (c) limit Lessor's right to pursue any rights
and/or remedies with respect to any Default by Lessee pursuant to Lease
PARAGRAPH 13.1 (e) or (f), available under the Lease, at law and/or in
equity, without regard to such ninety (90) day period.
12. Notwithstanding anything to the contrary contained in the Lease,
in the event of any default by Lessor under the Lease which results in imminent
threat of personal injury or material property damage such that the giving of
notice thereof is not reasonably practical, Lessee shall have the right to cure
such default in which event Lessor shall reimburse Lessee for the reasonable
cost of such cure within thirty (30) days following Lessee's submission to
Lessor of invoices or other reasonable evidence of the amount of such cost.
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13. (a) Subject to all terms of PARAGRAPH 39 of the Lease, Lessee
shall have the option (the "EXTENSION OPTION") to extend the term of the Lease
by one additional five (5) year period (the "OPTION TERM") commencing upon the
expiration of the initial Lease term by delivering written notice to Lessor of
the irrevocable exercise of such option not earlier than twelve (12) months, and
not later than six (6) months, prior to the expiration of the initial Lease
term. Lessee's occupancy of the Premises during such Option Term shall be
subject to all terms and conditions of the Lease applicable prior to the
expiration of the initial term, except that (i) monthly Base Rent shall be
adjusted as of the commencement of such Option Term to equal the then monthly
"FAIR MARKET RENTAL VALUE" (as hereinafter defined) of the Premises as
determined pursuant to SECTION 13(b) below, provided that in no event shall such
monthly Base Rent as adjusted be less than the monthly Base Rent in effect
immediately prior to the expiration of the initial Lease term, and (ii) Lessee
shall have no further option to extend the term of the Lease. All references in
the Lease and/or this Addendum to the Lease term or to the term of the Lease
shall be deemed to refer to the initial Lease term, as extended by the Option
Term, as applicable.
(b) The Fair Market Rental Value of the Premises shall be
determined as follows. Within fifteen (15) days following Lessor's receipt of
Lessee's notice electing to exercise the Extension Option, Lessor shall deliver
notice to Lessee setting forth Lessor's determination of the Fair Market Rental
Value of the Premises. Within ten (10) days following receipt of such notice
from Lesson Lessee shall deliver written notice ("LESSEE'S RESPONSE NOTICE") to
Lessor electing either to accept or dispute Lessor's determination of Fair
Market Rental Value of the Premises. If Lessee disputes Lessor's determination,
the parties shall thereafter promptly meet and endeavor in good faith to agree
upon the Fair Market Rental Value of the Premises. If, despite the exercise of
such good faith efforts, the parties are unable to agree upon the Fair Market
Rental Value of the Premises by the date (the "START DATE") which is fifteen
(15) days following Lessor's receipt of Lessee's Response Notice (, the Fair
Market Rental Value of the Premises shall be determined by appraisal as follows:
Within fifteen (15) days following the Start Date, each party shall deliver
written notice to the other of its determination of the Fair Market Rental Value
of the Premises. Failure by either party to make a determination of the Fair
Market Rental Value of the Premises within such fifteen (15) day period shall
conclusively be deemed such party's approval of the Fair Market Rental Value
determined by the other party. If both parties make such determination within
such fifteen (15) day period, within ten (10) days following the date such
determination has been made by each party, each party shall appoint an appraiser
who shall be M.A.I. and shall have at least five (5) years experience, ending on
the date of their appointment, in the appraisal of industrial properties
comparable to the Premises in the vicinity of the Premises who shall have not
been employed by, or affiliated with, either of the parties during the five (5)
year period immediately prior to such appointment, and provide written notice to
the other party of such appointment. The determination of the appraisers shall
be limited solely to the issue of whether Lessor's or Lessee's submitted
determination of Fair Market Rental Value of the Premises is closest to the
actual Fair Market Rental Value as determined by the appraisers, taking into
account the definition of Fair Market Rental Value set forth herein. If either
party fails to appoint an appraiser within such ten (10) day period provided
herein, the appraiser appointed by one of them shall reach a decision, notify
the parties thereof, and such appraiser's decision shall be binding upon the
parties. If two (2) appraisers are appointed as provided herein, the two (2)
appraisers so appointed shall, within ten (10) days of the date of the
appointment of the last appointed appraiser, agree upon and appoint a third
appraiser meeting the qualifications set forth above with respect to the initial
two (2) appraisers, and deliver written notice of such appointment to the
parties. If the two (2) appraisers are unable to agree on the third appraiser
within such ten (10) day period, either party may request the M.A.I. President
of the Chapter of the American Institute of Real Estate Appraisers with
jurisdiction over the area of the Premises to select a third appraiser meeting
the qualifications stated herein. The three (3) appraisers so appointed shall,
within thirty (30) days of the appointment of the third appraiser, reach a
decision as to whether the parties shall use Lessor's or Lessee's submitted
determination of the Fair Market Rental Value of the Premises, and shall notify
Lessor and Lessee thereof. The decision of the majority of the appraisers shall
be binding upon Lessor and Lessee. Each party shall pay the cost of its own
appraiser and one-half of the cost of the third appraiser.
(c) As used herein, the "FAIR MARKET RENTAL VALUE" of the
Premises shall mean an amount per square foot within the Premises equivalent to
what a willing, comparable, non-expansion, non-equity tenant would pay, and a
willing, comparable landlord of an industrial facility comparable to the
Premises in terms of location, quality, level of service, amenities, age and
appearance, would accept, at arm's length for a comparable amount of space for a
comparable amount of time (as if such transaction were entered into with respect
to a lease of premises commencing upon the commencement of the Option Term).
(d) The original Lessee signatory to the Lease shall remain
liable for the performance of the obligations of "Lessee" under the Lease (as
hereby amended) during any Option Term, notwithstanding any assignment,
subletting and/or other transfer by Lessee pursuant to the Lease, whether with
or without Lessor's consent.
14. Neither the Lease, this Addendum, nor any memorandum of either
thereof shall be recorded by either Lessor or Lessee.
15. Lessee shall vacate the Premises upon the expiration of the Lease
term or earlier termination of the Lease. Lessee indemnify, defend and hold
harmless Lessor from and against any and all claims, losses, liabilities, causes
of action, damages, costs and/or expenses (including, without limitation,
attorneys' fees and expenses) arising as a result of any delay by Lessee in
vacating the Premises, including, without limitation, damages sought by the next
prospective lessee due to Lessor's inability to deliver the premises as agreed
with new lessee. If Lessee does not vacate the Premises upon the expiration of
the Lease term or earlier termination of the Lease, Lessee's occupancy of the
Premises shall be deemed to be as a tenant at sufferance only, subject to all
applicable provisions of the Lease, except that the month Base Rent payable
during such holding over shall equal one hundred fifty percent (150%) of the
monthly Base Rent in effect immediately prior to such expiration or termination.
16. It is expressly understood and agreed that notwithstanding
anything in the Lease, as hereby amended, to the contrary, and notwithstanding
any Applicable Law to the contrary, the liability of Lessor hereunder (including
any successor to Lessor) and any recourse by Lessee against Lessor shall be
limited solely and exclusively to the equity interest of Lessor in and to the
Premises, Lessor shall not have any personal liability therefor, and Lessee
hereby expressly waives and releases such personal liability on behalf of itself
and all persons claiming by, through or under Lessee. If the Lease is being
executed by AMB Institutional Realty Advisors, Inc. ("AMB"), on behalf of
Lessor, no present or future officer, director, employee, trustee, member,
investment manager or agent of AMB shall have any personal liability, directly
or indirectly, and recourse shall not be had against any such officer, director,
employee, trustee, member, investment manager or agent under or in connection
with the Lease, as hereby amended, or any other document or instrument
heretofore or hereafter executed in connection with the Lease or this Addendum.
Lessee hereby waives and releases any and all such personal liability and
recourse. The limitations of liability provided in this Section are in addition
to, and not in limitation of, any limitation on liability applicable to Lessor
provided by law or in any other contract, agreement or instrument.
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<PAGE>
17. Lessor is a unit of the California State and Consumer Services
Agency established pursuant to Title I, Division 1, Part 13 of the California
Education Code, Sections 22000 et seq., as amended (the "EDUCATION CODE"). As a
result, Lessor is prohibited from engaging in certain transactions with a
"school district or other employing agency" as a "member, retirant or
beneficiary" (as those terms are defined in the Education Code). In addition,
Lessor may be subject to certain restrictions and requirements under the
Internal Revenue Code, 26 USC Section 1 et seq. (the "CODE"). Accordingly,
Lessee hereby certifies, represents and warrants that: (a) Lessee is neither a
school district or other employing agency nor a member, retirant or beneficiary;
(b) Lessee has not made any contribution or contributions to Lessor; (c) neither
a school district or other employing agency, nor a member, retirant or
beneficiary, nor any person who has made any contribution to Lessor, nor any
combination thereof, is related to Lessee by any relationship described in
Section 267(b) of the Education Code; (d) neither Lessor, AMB, their affiliates,
related entities, officers or employees, nor any Lessor board member, employee
or internal investment contractor (collectively, "LESSOR AFFILIATES") has
received or will receive, directly or indirectly, any payment considered or
other benefit from, nor does any Lessor Affiliate have any agreement or
arrangement with, Lessee or any person or entity affiliated with Lessee,
relating to the transactions contemplated by the Lease as hereby amended, except
as expressly stated therein; and (e) to the best of Lessee's knowledge, no
Lessor Affiliate has any direct or indirect ownership in Lessee or any person or
entity affiliated with Lessee.
18. Lessee hereby agrees and acknowledges that the Premises is
presently leased by Lessor to an alternate occupant and that it shall be a
condition precedent to the effectiveness of the Lease and this Addendum (the
"CONDITION PRECEDENT") that Lessor enter into an agreement for the termination
of the lease of the Premises by such existing occupant on terms and conditions
acceptable to Lessor in its sole and absolute discretion. If such Condition
Precedent is not satisfied by October 1, 1994, it shall be deemed that the
Condition Precedent shall not be satisfied and the Lease and this Addendum shall
be of no further force or effect and neither party shall have any further
obligation or liability thereunder.
IN WITNESS WHEREOF, the parties hereto have entered into this Addendum as
of the date first written above.
LESSOR: LESSEE
CALIFORNIA STATE TEACHERS' BABE, INC., a California corporation
RETIREMENT SYSTEM, a retirement dba Bebe
system created pursuant to the
laws of the State of California By: /s/ Manny Mashouf
By: AMB INSTITUTIONAL REALTY Print Name: Manny Mashouf
ADVISORS, INC., a
California corporate, Its: President
as advisor
By: /s/ Gayle P. Starr By: ________________________
Print Name: Gayle P. Staff Print Name: ________________
Its: Asset Manager Its: _______________________
Date: ______________, 1994 Date: ______________, 1994
AGREED AS TO PERFORMANCE OF THE OBLIGATIONS OF "MASHOUF" SET FORTH IN
SCHEDULE 1:
/s/ Manny Mashouf
------------------
MANNY MASHOUF
Aug 8th, 1994
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<PAGE>
SCHEDULE 1
IMPROVEMENT OF THE PREMISES
1 AS IS LEASE. Within sixty (60) days following the Commencement Date,
Lessor shall cause the performance of that certain work described in SCHEDULE 2
attached to the Addendum of which this SCHEDULE 1 is a part and incorporated in
the Addendum by this reference under the heading "Lessor Work Within 60 Days
Following the Commencement Date", and promptly following the completion of the
Lessee Improvements, by June 1, 1995, subject to delays due to "FORCE MAJEURE
EVENTS" (as hereinafter defined), Lessor shall cause the performance of that
certain work described in SCHEDULE 2 attached to the Addendum under the heading
"Lessor Work Following the Completion of the Lessee Improvements". At the
conclusion of such construction by Lessor, Lessor shall deliver to Lessee a copy
of all warranties, guaranties, and operating manuals and information relating to
the improvements, equipment, and systems in the Premises installed or
constructed as a part of such work set forth on SCHEDULE 2. Except as otherwise
expressly provided in the Lease or the Addendum of which this SCHEDULE 1 is a
part, Lessee and Lessor hereby agree and acknowledge that the lease of the
Premises by Lessee shall be on an entirely "AS IS" basis, Lessee having
inspected the Premises and agreeing (a) to accept the Premises in the condition
existing as of the Commencement Date, with Lessor having no obligation for the
alteration or improvement of the Premises, and (b) that neither Lessor nor any
of Lessor's agents or representatives, nor broker or any other person or entity
has made any representations or warranties as to the condition of the Premises
or any part thereof or anything therein or thereon.
2 LESSEE IMPROVEMENTS.
2.1 Lessee shall be entitled to a one-time tenant improvement
allowance (the "Allowance") in the amount of Two Hundred Thirty Thousand Dollars
($230,000.00) for the costs ("PERMITTED IMPROVEMENT COSTS") relating to the
design, architecture, engineering (including mechanical work) and initial
construction of Lessee's improvements which are actually permanently affixed to
the Premises and pre-fabricated partitions (the "PARTITIONS") which,
notwithstanding anything to the contrary contained in the Lease of the Addendum
of which this SCHEDULE 1 is a part, shall not be removed by Lessee during the
Lease term without Lessor's prior written consent, and which shall become the
sole property of Lessor upon the expiration of the Lease term or earlier
termination of the Lease (the "LESSEE IMPROVEMENTS"). In no event shall Lessor
be obligated to make disbursements pursuant to this SCHEDULE 1 in a total amount
which exceeds the Allowance. The parties hereby agree and acknowledge that
Permitted Improvement Costs shall not include costs of design, construction or
installation of any of Lessee's Trade Fixtures (other than the Partitions),
furniture or other personal property including, without limitation, computer
systems, telephone systems, shelving, tables, chairs and desks.
2.2 Payment of the Allowance shall be made in two (2) equal
installments as follows. The first installment of the Allowance shall be paid
by Lessor to Lessee by check payable to Lessee within fifteen (1 5) business
days following completion of not less fifty percent (50%) of the Lessee
Improvements and Lessee's submission to Lessor of certification executed by
Lessee, the Contractor and Manny Mashouf, an individual ("MASHOUF"), certifying
that the Lessee Improvements have then been completed to an extent of not less
than fifty percent (50%) and that such payment shall be used to pay for
Permitted Improvement Costs theretofore incurred by Lessee and/or to reimburse
Lessee for Permitted Improvement Costs theretofore paid by Lessee. The second
installment of the Allowance shall be paid by Lessor to Lessee by check payable
to Lessee within fifteen (15) business days following the last to occur of (a)
full completion of the Lessee Improvements and Lessor's receipt of certification
thereof executed by Lessee, the Contractor and Mashouf, which certification
shall also state that all materials and all property constituting Lessee's
Improvements are free and clear of encumbrances, liens or charges irrespective
of whether or not said liens have been filed or otherwise placed in public
record, that the Permitted Improvement Costs are equal to exceed the amount of
the Allowance, and that such payment shall be used to pay for Permitted
Improvement Costs theretofore incurred by Lessee and/or to reimburse Lessee for
Permitted Improvement Costs theretofore paid by Lessee, (b) delivery to Lessor
of final unconditional lien waivers and releases, in statutorily-required form,
from the General Contractor and all of Lessee's Agents with respect to all work
in connection with the Lessee Improvements, (c) Lessee's receipt of a
certificate of occupancy with respect to the Premises, opening for business from
the Premises and commencement of payment of Base Rent. In the event any portion
of the Allowance is not so paid by Lessor to Lessee when due in accordance with
this SECTION 2, notwithstanding anything to the contrary contained in the Lease,
Lessee shall have the right to offset such amounts as remain unpaid and are so
owing from Lessor to Lessee against Lessee's rental obligations first otherwise
coming due under the Lease.
2.3 Lessor shall only be obligated to make disbursements from the
Allowance to the extent costs are incurred by Lessee for Allowance Items. All
Allowance Items for which the Allowance has been made available shall be deemed
Lessor's property under the terms of the Lease. Lessee shall not be entitled to
the payment of, use, or offset against rental in the amount of, any unused
portion of the Allowance remaining following the completion of the Lessee
Improvements.
3 FINAL PLANS AND SPECIFICATIONS. Lessee shall, subject to Lessor's
approval, which approval shall not be unreasonably withheld, retain an architect
or space planner (the "ARCHITECT") to prepare the "FINAL PLANS AND
SPECIFICATIONS" (as hereinafter defined), and engineering consultants (the
"ENGINEERS"), to prepare all plans and engineering working drawings relating to
the structural, mechanical, electrical, plumbing, HVAC, lifesafety, and
sprinkler work to be completed in the Premises. Promptly following the
satisfaction of the "CONDITION PRECEDENT" (as defined in the Addendum of which
this SCHEDULE 1 is a part) but in no event later than ten (10) business days
thereafter, Lessee shall cause the Architect and Engineers to prepare the
architectural and engineering drawings for the Premises, and Architect shall
compile a fully coordinated set of architectural, structural, mechanical,
electrical and plumbing working drawings in a form which is complete to allow
subcontractors to bid on the work and to obtain all applicable permits
(collectively, the "FINAL PLANS AND SPECIFICATIONS") and shall submit four
complete sets of the same to Lessor for Lessor's approval. Lessor shall advise
Lessee within five (5) business days after Lessor's receipt of the Final Plans
and Specifications for the Premises if the same are unsatisfactory or incomplete
in any respect. If Lessee is so advised, Lessee shall immediately revise the
Final Plans and Specifications in accordance with such review and any
disapproval of Lessor in connection therewith, and resubmit the such revised
Final Plans and Specifications for Lessor's approval. Lessor shall advise
Lessee within five (5) business days after Lessor's receipt of any such revised
Final Plans and Specifications if the same are unsatisfactory or incomplete in
any respect, and in the event of any disapproval, the parties shall continue
with the process of revision and resubmission of the Final Plans and
Specifications in accordance herewith until the approval of the Final Plans and
Specifications by Lessor. The Final Plans and Specifications shall be approved
by Lessor prior to the commencement of construction of the Lessee Improvements
by Lessee. As used herein, the "APPROVED WORKING DRAWINGS" shall mean the Final
Plans and Specifications approved by Lessor. Within three (3) business days
after approval by Lessor of the Approved Working Drawings, Lessee shall submit
the same to the applicable governmental authorities for all applicable building
permits. Lessee hereby agrees that neither Lessor nor
SCHEDULE 1 - PAGE 1
<PAGE>
Lessor's consultants shall be responsible for obtaining any building permit or
certificate of occupancy for the Premises and that obtaining the same shall be
Lessee's responsibility; provided, however, that Lessor shall cooperate with
Lessee in executing permit applications and performing other ministerial acts
reasonably necessary to enable Lessee to obtain any such permit or certificate
of occupancy. No changes, modifications or alterations in the Approved Working
Drawings may be made without the prior written consent of Lessor, which consent
shall not be unreasonably withheld. Lessor's review of the Final Plans and
Specification as set forth herein, shall be for its sole purpose and shall not
imply Lessor's review of the same, or obligate Lessor to review the same, for
quality, design, compliance with Applicable Laws or other like matters.
Accordingly, notwithstanding that the Approved Working Drawings are reviewed by
Lessor or its space planner, architect, engineers and consultants, and
notwithstanding any advice or assistance which may be rendered to Lessee by
Lessor or Lessor's space planner, architect, engineers, and consultants, Lessor
shall have no liability whatsoever in connection therewith and shall not be
responsible for any omissions or errors contained in the Approved Working
Drawings, and Lessee's indemnity and waiver set forth in the PARAGRAPHS 8.7 and
8.8 of the Lease shall specifically apply to the Approved Working Drawings.
Furthermore, Lessee and Architect shall verify, in the field, the existing
improvements in the Premises, and Lessee and Architect shall be solely
responsible for such verification.
4 CONSTRUCTION OF THE LESSEE IMPROVEMENTS.
4.1 Lessee shall retain a licensed general contractor (the
"CONTRACTOR"), as contractor for the construction of the Lessee Improvements
designated by Lessee and reasonably approved by Lessor. All subcontractors,
laborers, materialmen, and suppliers used by Lessee (such subcontractors,
laborers, materialmen, and suppliers, and the Contractor to be known
collectively as "Lessee's Agents") must be approved in writing by Lessor, which
approval shall not be unreasonably withheld or delayed.
4.2 (a) Prior to Lessee's execution of the construction contract and
general conditions with Contractor (the "CONTRACT"), Lessee shall submit the
Contract to Lessor for its approval, which approval shall not be unreasonably
withheld or delayed. Prior to the commencement of the construction of the
Lessee Improvements, and after Lessee has accepted all bids for the Lessee
Improvements, Lessee shall provide Lessor with a detailed breakdown, by trade,
of the final costs to be incurred or which have been incurred in connection with
the design and construction of the Lessee Improvements to be performed by or at
the direction of Lessee or the Contractor. Mashouf hereby guaranties for the
benefit of Lessor the payment by Lessee of all amounts owing to the Contractor
pursuant to the Contract. The execution of the Addendum of which this SCHEDULE
1 is a part by Mashouf shall constitute Mashouf's agreement to such guaranty.
(b) (i) The Lessee Improvements shall be constructed in
strict accordance with the Approved Working Drawings, all Applicable Laws,
applicable standards of the American Insurance Association (formerly, the
National Board of Fire Underwriters), the National Electrical Code, and building
material manufacturer's specifications. Each of Lessee's Agents shall guarantee
to Lessee and for the benefit of Lessor that the portion of the Lessee
Improvements for which it is responsible shall be free from any defects in
workmanship and materials for a period of not less than one (1) year from the
date of completion thereof. Each of Lessee's Agents shall be responsible for
the replacement or repair, without additional charge, of all work done or
furnished in accordance with its contract that shall become defective within one
(1) year after the completion of the work performed by such contractor or
subcontractor. The correction of such work shall include, without additional
charge, all additional expenses and damages incurred in connection with such
removal or replacement of all or any part of the Lessee Improvements, the
Building and/or Premises that may be damaged or disturbed thereby. All such
warranties or guarantees as to materials or workmanship of or with respect to
the Lessee Improvements shall be contained in the Contract or subcontract and
shall be written such that such guarantees or warranties shall inure to the
benefit of both Lessor and Lessee, as their respective interests may appear, and
can be directly enforced by either. Lessee covenants to give to Lessor any
assignment or other assurances which may be necessary to effect such right of
direct enforcement.
(ii) Lessee's indemnity of Lessor as set forth in
PARAGRAPH 8.7 of the Lease shall also apply with respect to any and all costs,
losses, damages, injuries and liabilities related in any way to any act or
omission of Lessee or Lessee's Agents, or anyone directly or indirectly employed
by any of them, or in connection with Lessee's non-payment of any amount arising
out of the Lessee Improvements and/or Lessee's disapproval of all or any portion
of any request for payment. Such indemnity by Lessee, as set forth in PARAGRAPH
8.7 of the Lease, shall also apply with respect to any and all cases, losses,
damages, injuries and liabilities related in any way to Lessor's performance of
any ministerial acts reasonably necessary to permit Lessee to complete the
Lessee Improvements, and to enable Lessee to obtain any building permit or
certificate of occupancy for the Premises. All of Lessee's Agents shall carry
worker's compensation insurance covering all of their respective employees.
Lessee, any construction manager retained by Lessee and the Contractor shall
carry commercial general liability insurance covering the construction of the
Lessee Improvements by Lessee's Agents, naming both Lessor and AMB Institutional
Realty Advisors, Inc. as additional insureds, which insurance shall be primary
and non-contributing with respect to any insurance maintained by Lessor and
otherwise comply with the limits, be in the form, and be provided by companies,
all as set forth in PARAGRAPH 8.2(a) of the Lease. Lessee shall carry
"Builder's All Risk" insurance in an amount approved by Lessor covering the
construction of the Lessee Improvements and including such extended coverage
endorsements as may be reasonably required by Lessor, it being understood and
agreed that the Lessee Improvements shall be insured by Lessee pursuant to
PARAGRAPH 8.3 of the Lease immediately upon completion thereof. Certificates
for all insurance carried pursuant to this SECTION 4.2(b)(ii) shall be delivered
to Lessor before the commencement of construction of the Lessee Improvements and
before the Contractor's equipment is moved onto the site. All such policies of
insurance must contain a provision that the company writing said policy will
give Lessor thirty (30) days prior written notice of any cancellation or lapse
of the effective date or any reduction in the amounts of such insurance. In the
event that the Lessee Improvements are damaged by any cause during the course of
the construction thereof, Lessee shall immediately repair the same at Lessee's
sole cost and expense. All of the foregoing insurance coverage shall be
maintained in force until the Lessee Improvements are fully completed and
accepted by Lessor, except that Products and Completed Operation Coverage
insurance shall be maintained by the Contractor for five (5) years following
completion of the work and acceptance by Lessor and Lessee. All insurance
maintained by Lessee's Agents shall preclude subrogation claims by the insurer
against anyone insured thereunder. Such insurance shall provide that it is
primary insurance as respects Lessor and that any other insurance maintained by
Lessor is excess and noncontributing with the insurance required hereunder.
(c) Lessor shall have the right to inspect the Lessee
Improvements at all times, provided however, that Lessor's failure to inspect
the Lessee Improvements shall in no event constitute a waiver of any of Lessor's
rights hereunder nor shall Lessor's inspection of the Lessee Improvements
constitute Lessor's approval of the same. Should Lessor disapprove any portion
of the Lessee Improvements, Lessor shall notify Lessee in writing of such
disapproval and shall specify the items disapproved, Any defects or deviations
in, and/or disapproval by Lessor of, the Lessee Improvements shall be rectified
by Lessee at no expense to Lessor.
SCHEDULE 1 - PAGE 2
<PAGE>
4.3 NOTICE OF COMPLETION: COPY OF "AS BUILT" PLANS. Within ten (10)
days after completion of construction of the Lessee Improvements, Lessee shall
cause a Notice of Completion to be recorded in the office of the Recorder of the
County of San Mateo in accordance with Section 3093 of the Civil Code of the
State of California or any successor statute, and shall furnish a copy thereof
to Lessor upon such recordation. If Lessee fails to do so, Lessor may execute
and file the same on behalf of Lessee as Lessee's agent for such purpose, at
Lessee's sole cost and expense. At the conclusion of construction, Lessee shall
cause the Architect and Contractor (a) to update the Approved Working Drawings
as necessary to reflect all changes made to the Approved Working Drawings during
the course of construction, (b) to certify to the best of their knowledge that
the "record-set" of as-built drawings are true and correct, which certification
shall survive the expiration or termination of the Lease, and (c) to deliver to
Lessor two (2) sets of sepias of such as-built drawings within ninety (90) days
following issuance of a certificate of occupancy for the Premises. In addition,
at the conclusion of construction, Lessee shall deliver to Lessor a copy of all
warranties, guaranties, and operating manuals and information relating to the
improvements, equipment, and systems in the Premises.
5 MISCELLANEOUS.
5.1 The "SUBSTANTIAL COMPLETION OF THE LESSEE IMPROVEMENTS" shall be
deemed to occur for purposes of the Lease on such date as the Lessee
Improvements have been substantially completed but for such customary "punch
list" items (to be promptly completed by Lessee) which do not materially
interfere with Lessee's operation of its business from the Premises.
5.2 Notwithstanding any provision to the contrary contained herein, in
the event of the occurrence of any Lessee default under the Lease (as amended by
the Addendum of which this SCHEDULE 1 is a part) at any time on or before the
completion of the Lessee Improvements, then (a) in addition to all other rights
and remedies granted to Lessor pursuant to the Lease, Lessor shall have the
right to withhold payment of all or any portion of the Allowance and/or Lessor
may cause Contractor to cease the construction of the Lessee Improvements in the
Premises, and (b) all other obligations of Lessor under the terms of this
SCHEDULE 1 shall be forgiven until such time as such default is cured pursuant
to the terms of the Lease (as amended by the Addendum).
5.3 The time for performance by either party of any obligation under this
SCHEDULE 1 (other than monetary payments, except as specifically provided in
SECTION 2 (a) of the Addendum of which this SCHEDULE 1 is a part) shall be
extended on a day for day basis to the extent of any delay resulting from the
occurrence of any of the following (collectively, any "FORCE MAJEURE EVENT"):
fire, earthquake, explosion, flood, weather, the elements, acts of God or the
public enemy, strike, other labor trouble, interference of governmental
authorities or agents, or shortages of fuel, supplies or labor resulting
therefrom or any other cause, whether similar or dissimilar to the above, beyond
the reasonable control of the party obligated for such performance (financial
inability excepted); provided, however, that the parties hereby agree that
obtaining necessary building permits for construction of Lessee Improvements,
with Lessee using its best efforts and diligence, is estimated to require six
(6) weeks to obtain, with Lessee using its best efforts and due diligence to
obtain such building permits, and therefore, delays in obtaining such building
permits shall only be deemed to constitute a Force Majeure Event to the extent
the time for obtaining such permits exceeds six (6) weeks following submission
by Lessee of all necessary fees, plans, specifications and other materials
required by the applicable governmental authority in order to issue such
building permits, with Lessee using its best efforts and diligence to obtain
such permits. Notwithstanding anything to the contrary contained herein, the
acts or omissions of Lessee's Agents shall not constitute Force Majeure Events.
Lessee shall provide Lessor with written notice (the "FORCE MAJEURE NOTICE") of
the occurrence of any Force Majeure Event within three (3) business days
following Lessee's or any of Lessee's Agents' first learning of the occurrence
thereof, and if Lessee fails to deliver such Force Majeure Notice within such
three (3) business day period, (i) such Force Majeure Event shall not be deemed
to have occurred for all purposes of the Lease (as amended by the Addendum of
which this SCHEDULE 1 is a part) until the date Lessee provides such Force
Majeure Notice to Lessor, and (ii) Lessee shall not be entitled to any extension
of the commencement date for payment of Base Rent for delays due to such Force
Majeure Event occurring prior to Lessee's delivery of such Force Majeure Notice
to Lessor.
SCHEDULE 1 - PAGE 3
<PAGE>
SCHEDULE 2
LESSOR WORK WITHIN 60 DAYS FOLLOWING THE COMMENCEMENT DATE
1. Certain HVAC work as set forth in that certain proposal dated May 10,
1994 from Burlingame Heating & Ventilation, Inc.
2. Certain roof repair work as set forth in that certain roof survey dated
April 28, 1994 from Alliance Roofing.
3. Certain repairs to the roll-up doors, dock levelers and dock bumpers
as set forth in that certain proposal dated June 3, 1994 from Trucking
Equipment Supply Co.
4. Certain repairs to the fire protection system as set forth in that
certain proposal dated July 14, 1994 from Allen Automatic Sprinkler.
LESSOR WORK FOLLOWING THE COMPLETION OF THE LESSEE IMPROVEMENTS
1. Certain exterior painting and paving repairs as set forth in that certain
proposal dated May 4, 1994 from Dibble & Company Construction Consultants.
2. Certain landscape upgrades as set forth in that certain proposal dated
May 3, 1994 from Industrial Park Landscape Maintenance.
The parties hereby acknowledge that reference to the foregoing proposals
is only for purposes of describing work to be performed and that Lessor may use
the party providing such proposal and/or any other contractor, consultant or
other entity for the performance of such work.
SCHEDULE 2 - PAGE 1