California-San Francisco-201-395 Mendell Street Lease - Kifer/Mendell/Industrial Way 11 Associates Ltd. and Briazz Inc.
BASIC LEASE INFORMATION
LEASE DATE: June 28, 1996
TENANT: Briazz, Inc., a Washington corporation
TENANT'S ADDRESS: 255 Mendell Street
San Francisco, California 94124
LANDLORD: Kifer/Mendell/Industrial Way 11 Associates Limited
Partnership, a California Limited Partnership
LANDLORD'S ADDRESS: c/o Trammell Crow Company
1241 E. Hillsdale Blvd., Suite 200
Foster City, California 94404
Project: 201-395 Mendell Street, San Francisco, California 94124
Project Description: That approximately 64,710 square foot single story
industrial building known as India Basin Commerce
Center in India Basin Industrial Park, Mendell Street,
San Francisco, California
Building Description: That approximately 64,710 square foot single story
industrial building known as India Basin Commerce
Center in India Basin Industrial Park,Mendell Street,
San Francisco, California
Premises: Approximately 7,440 square feet of rentable area known
as 255 Mendell Street, San Francisco, California. The
premises are outlined on Exhibit "A".
Permitted Use: Commissary and distribution and other related legal
uses.
Parking Density: Two (2) automobile parking spaces per 1,000 square feet
leased, and one (1) truck per roll-up door.
Estimated Term
Commencement Date: November 1, 1996 (See Paragraph 2.B)
Length of Term: Sixty (60) months. See Paragraph 3.
Rent:
Base Rent $ See Paragraph 39 per month
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Estimated First Year Basic Operating Cost $ 840.00 per month
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Security Deposit: $27,996.00 (See Paragraph 19)
Tenant's Proportionate Share:
Of Building: 11.50
Of Project: 11.50
Broker:
Tenant: Behar Company
1000 Second Avenue, Suite 3330, Seattle, Washington
98104
Landlord: Trammell Crow NW, Inc.
The foregoing Basic Lease Information is incorporated into and made a part
of this Lease. Each reference in this Lease to any of the Basic Lease
Information shall mean the respective information above and shall be construed
to incorporate all of the terms provided under the particular Lease paragraph
pertaining to such information. In the event of any conflict between the Basic
Lease Information and the Lease, the latter shall control.
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TABLE OF CONTENTS
Page
BASIC LEASE INFORMATION............................................. 1
TABLE OF CONTENTS................................................... 2
1. PREMISES............................................................ 3
2. POSSESSION AND LEASE COMMENCEMENT................................... 3
3. TERM................................................................ 3
4. USE................................................................. 3
5. RULES AND REGULATIONS............................................... 4
6. RENT................................................................ 4
7. BASIC OPERATING COST................................................ 4
8. INSURANCE AND INDEMNIFICATION....................................... 7
9. WAIVER OF SUBROGATION............................................... 8
10. LANDLORD'S REPAIRS AND SERVICES..................................... 8
11. TENANT'S REPAIRS.................................................... 8
12. ALTERATIONS......................................................... 8
13. SIGNS............................................................... 10
14. INSPECTION/POSTING NOTICES.......................................... 10
15. UTILITIES........................................................... 10
16. SUBORDINATION....................................................... 10
17. FINANCIAL STATEMENTS................................................ 12
18. ESTOPPEL CERTIFICATE................................................ 12
19. SECURITY DEPOSIT.................................................... 12
20. TENANT'S REMEDIES................................................... 12
21. ASSIGNMENT AND SUBLETTING........................................... 12
22. AUTHORITY OF PARTIES................................................ 14
23. CONDEMNATION........................................................ 14
24. CASUALTY DAMAGE..................................................... 14
25. HOLDING OVER........................................................ 15
26. DEFAULT............................................................. 15
27. LIENS............................................................... 16
28. SUBSTITUTION........................................................ 16
29. TRANSFERS BY LANDLORD............................................... 17
30. RGHT OF LANDLORD TO PERFORM TENANT'S COVENANTS...................... 17
31. WAIVER.............................................................. 17
32 NOTICES............................................................. 17
33. ATTORNEYS' FEES..................................................... 17
34. SUCCESSORS AND ASSIGNS.............................................. 17
35. FORCE MAJEURE....................................................... 17
36. BROKERAGE COMMISSION................................................ 18
37. MISCELLANEOUS....................................................... 19
38. ADDITIONAL PROVISIONS............................................... 19
SIGNATURES.......................................................... 16
Exhibits:
Exhibit A...........................................Site Plan, Legal Description
Exhibit B.................................Tenant Improvements and Specifications
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LEASE
THIS LEASE is made as of this 28th day of June 1996, by and between
Kifer/Mendell/Industrial Way II Associates Limited Partnership (hereinafter
called "Landlord") and Briazz, Inc., a Washington corporation (hereinafter
called "Tenant").
PREMISES
1. Landlord leases to Tenant and Tenant leases from Landlord, upon the
terms and conditions hereinafter set forth, those premises (the "Premises")
outlined in red on Exhibit A and described in the Basic Lease Information.
The Premises may be all or part of the building (the "Building") or of the
project (the "Project") which may consist of more than one building. The
Building and Project are shown on Exhibit A.
POSSESSION AND LEASE COMMENCEMENT
2.
B. Construction of Improvements. In the event this Lease pertains to a
Building to be constructed or improvements to be constructed within a
Building, the provisions of this Paragraph 2.B. shall apply in lieu of the
provisions of Paragraph 2.A. above and the term commencement date ("Term
Commencement Date") shall be the earlier of the date on which: (1) one
hundred twenty (120) days following full lease execution (excepting the
provisions of Paragraph 41), or (2) thirty (30) days following substantial
completion of the improvements constructed or to be constructed in the
Premises shall have been substantially completed in accordance with the
plans and specifications described on Exhibit B. In the event of any
dispute as to substantial completion of work performed or required to be
performed by Landlord, the certificate of Landlord's architect or general
contractor shall be conclusive. Substantial completion shall have occurred
notwithstanding Tenant's submission of a punchlist to Landlord, which
Tenant shall submit, if at all, within thirty (30) days after the Term
Commencement Date. Tenant shall, upon demand, execute and deliver to
Landlord a letter of acceptance of delivery of the Premises.
TERM
3. The Term of this Lease shall commence on the Term Commencement Date and
continue in full force and effect for the number of months specified as the
Length of Term in the Basic Lease Information or until this Lease is
terminated as otherwise provided herein. If the Term Commencement Date is
a date other than the first day of the calendar month, the Term shall be
the number of months of the Length of Term in addition to the remainder of
the calendar month following the Term Commencement Date.
USE
4. A. General. Tenant shall use the Premises for the Permitted Use and for
no other use or purpose. Tenant shall control Tenant's employees, agents,
customers, visitors, invitees, licensees, contractors, assignees and
subtenants; (collectively, "Tenant's Parties") in such a manner that Tenant
and Tenant's Parties cumulatively do not exceed the Parking Density at any
time. Tenant and Tenant's Parties shall have the nonexclusive right to
use, in common with other parties occupying the Building or Project, the
parking areas and driveways of the Project, subject to such rules and
regulations as Landlord may from time to time prescribe. Tenant shall park
its trucks and vans in the rear of the Project, except during loading and
unloading periods. Landlord and Tenant acknowledge that the following
provision of this Paragraph 4.A may or may not be enforceable under
applicable law, and to the extent unenforceable, the remaining terms of the
Lease shall prevail. Landlord and Tenant agree that Tenant shall have the
right to use 35 parking stalls through the term of its Lease and any
extension thereof. It is hereby stipulated however, that if Tenant is in
violation of any municipal codes or applicable law that any governing
agency desires to enforce, then Tenant shall bring itself into compliance.
Landlord shall not disclose Tenant's parking requirements to any governing
agency unless such non-disclosure violates any law or ordinance.
B. Limitations. Tenant shall not permit any odors, smoke, dust, gas,
substances, noise or vibrations to emanate from the Premises other than
those associated with a commissary use, nor take any action which would
constitute a nuisance or would disturb, obstruct or endanger any other
tenants of the Building or Project in which the Premises are situated or
interfere with their use of their respective premises. Storage outside the
Premises of materials, vehicles or any other items is prohibited. Tenant
shall not use or allow the Premises to be used for any improper, immoral,
unlawful or objectionable purpose, nor shall Tenant cause or maintain or
permit any nuisance in, on or about the Premises. Tenant shall not commit
or suffer the commission of any waste in, on or about the Premises. Tenant
shall not allow any sale by auction upon the Premises, or place any loads
upon the floors, walls or ceilings which endanger the structure, or place
any harmful liquids in the drainage system of the Building or Project. No
waste, materials or refuse shall be dumped upon or permitted to remain
outside the Premises except in trash containers placed inside exterior
enclosures designated for that purpose by Landlord. Landlord shall not be
responsible to Tenant for the non-compliance by any other tenant or
occupant of the Building or Project with any of the above-referenced rules
or any other terms or provisions of such tenant's or occupant's lease or
other contract.
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C. Compliance with Regulations. By entering the Premises, Tenant accepts
the Premises in the condition existing as of the date of such entry,
subject to all existing or future applicable municipal, state and federal
and other governmental statutes, regulations, laws and ordinances,
including zoning ordinances and regulations governing and relating to the
use, occupancy and possession of the Premises and the use, storage,
generation and disposal of Hazardous Materials (hereinafter defined) in, on
and under the Premises (collectively "Regulations"). Except for pre-
existing violations, Tenant shall, at Tenant's sole expense, strictly
comply with all Regulations now in force or which may hereafter be in force
relating to the Premises and the use of the Premises and/or the use,
storage, generation of Hazardous Materials in, on and under the Premises.
Tenant shall at its sole cost and expense obtain any and all licenses or
permits necessary for Tenant's use of the Premises. Tenant shall promptly
comply with the requirements of any board of fire underwriters or other
similar body now or hereafter constituted. Tenant shall not do or permit
anything to be done in, on, or about the Premises or bring or keep anything
which will in any way increase the rate of any insurance upon the Premises,
Building or Project, or upon any contents therein or cause a cancellation
of said insurance or otherwise affect said insurance in any manner. Tenant
shall indemnify, defend, protect and hold Landlord harmless from and
against any loss, cost, expense, damage, attorneys' fees or liability
arising out of the failure of Tenant to comply with any applicable law or
comply with the requirements as set forth herein.
(See Addendum 1)
D. Hazardous Wastes. Tenant shall not cause, or allow any of Tenant's
Parties to cause, any Hazardous Materials to be used, generated, stored or
disposed of on or about the Premises, the Building or the Project. As used
in this Lease, "Hazardous Materials" shall include, but not be limited to,
hazardous, toxic and radioactive materials and those substances defined as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or other similar designations in any federal, state, or local
law, regulation, or ordinance. Landlord shall have the right at all
reasonable times to inspect the Premises and to conduct tests and
investigations to determine whether Tenant is in compliance with the
foregoing provisions, the costs of all such inspections, tests and
investigations to be borne by Tenant only if Tenant is found to be in non-
compliance with any such Regulations. Tenant shall indemnify, defend,
protect and hold Landlord harmless from and against all liabilities,
losses, costs and expenses, demands, causes of action, claims or judgments
directly or indirectly arising out of the use, generation, storage or
disposal of Hazardous Materials by Tenant or any of Tenant's Parties, which
indemnity shall include, without limitation, the cost of any required or
necessary repair, cleanup or detoxification, and the preparation of any
closure or other required plans, whether such action is required or
necessary prior to or following the termination of this Lease. Neither the
written consent by Landlord to the use, generation, storage or disposal of
Hazardous Materials nor the strict compliance by Tenant with all laws
pertaining to Hazardous Materials shall excuse Tenant from Tenant's
obligation of indemnification pursuant to this Paragraph 4 D. Tenant's
obligations pursuant to the foregoing indemnity shall survive the
termination of this Lease. Landlord warrants that to the best of its
actual knowledge, with no requirement for additional investigation,
Landlord is aware of no hazardous materials on or under the Project. In
addition, if Landlord discovers any environmental contamination on or under
the Project after Tenant's occupancy which is conclusively determined to be
caused by an entity other than Tenant or Tenant's parties, Tenant shall be
indemnified against any costs associated with such contamination.
RULES AND REGULATIONS
5. Tenant shall faithfully observe and comply with any reasonable rules
and regulations Landlord may from time to time prescribe in writing for the
purpose of maintaining the proper care, cleanliness, safety, traffic flow
and general order of the Premises or Project. Tenant shall cause Tenant's
Parties to comply with such rules and regulations. Landlord shall not be
responsible to Tenant for the non-compliance by any other tenant or
occupant of the Building or Project with any of the rules and regulations.
RENT
6. A. Base Rent. Tenant shall pay to Landlord, without demand throughout the
Term, Base Rent as specified in the Basic Lease Information, payable in
monthly installments in advance on or before the first day of each calendar
month, in lawful money of the United States, without deduction or offset
whatsoever, at the address specified in the Basic Lease Information or to
such other place as Landlord may from time to time designate in writing.
Base Rent for the first full month of the Term shall be paid by Tenant upon
Tenant's execution of this Lease. If the obligation for payment of Base
Rent commences on other than the first day of a month, then Base Rent shall
be prorated and the prorated installment shall be paid on the first day of
the calendar month next succeeding the Term Commencement Date.
B. Additional Rent. All monies other than Base Rent required to be paid
by Tenant hereunder, including, but not limited to, the interest and late
charge described in Paragraph 26.D., any monies spent by Landlord pursuant
to Paragraph 30, and Tenant's Proportionate Share of Basic Operating Cost,
as specified in Paragraph 7 of this Lease, shall be considered additional
rent ("Additional Rent"). "Rent' shall mean Base Rent and Additional Rent.
BASIC OPERATION COST
7. A. Basic Operating Cost. In addition to the Base Rent required to be paid
hereunder, Tenant shall pay as Additional Rent, Tenant's Proportionate
Share, as defined in the Basic Lease Information, of Basic Operating Cost
in the manner set forth below. Landlord shall account for each item of
Basic Operating Cost as either a cost attributable to the Building or to
the Project, as determined by Landlord in Landlord's sole discretion, and
unless provided to the contrary in this Lease, Tenant shall pay the
applicable Tenant's Proportionate Share of each such Basic Operating Cost,
as set forth in the Basic Lease Information. Basic Operating Cost shall
mean all expenses and costs of every kind and nature which Landlord shall
pay or become obligated to pay, because of or in connection with the
management, maintenance, preservation and operation of the Project and its
supporting facilities (determined in accordance with generally accepted
accounting principles, consistently applied) including but not limited to
the following:
(1) Taxes. All real property taxes, possessory interest taxes, business
or license taxes or fees, service payments in lieu of such taxes or fees,
annual or periodic license or use fees, excises, transit charges, housing
fund assessments, open space charges, assessments, levies, fees or charges
general and special, ordinary and extraordinary, unforeseen as well as
foreseen, of any kind (including fees "in-lieu" of any such tax or
assessment) which are assessed, levied, charged, confirmed, or imposed by
any public authority upon the Project, its operations or the Rent (or any
portion or component thereof) (all of the foregoing being hereinafter
collectively referred to as "real property taxes"), or any tax imposed in
substitution, partially or totally, of any tax previously included within
the definition of real property taxes, or any additional tax the
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nature of which was previously included within the definition of real
property taxes, except (a) inheritance or estate taxes imposed upon or
assessed against the Project, or any part thereof or interest therein, and
(b) taxes computed upon the basis of net income of Landlord or the owner of
any interest therein, except as otherwise provided in the following
sentence. Basic Operating Cost shall also include any taxes, assessments,
or any other fees imposed by any public authority upon or measured by the
monthly rental or other charges payable hereunder, including, without
limitation, any gross income tax or excise tax levied by the local
governmental authority in which the Project is located, the federal
government, or any other governmental body with respect to receipt of such
rental, or upon, with respect to or by reason of the development,
possession, leasing, operation, management, maintenance, alteration,
repair, use or occupancy by Tenant of the Premises or any portion thereof,
or upon this transaction or any document to which Tenant is a party
creating or transferring an interest or an estate in the Premises. In the
event that it shall not be lawful for Tenant to reimburse Landlord for all
or any part of such taxes, the monthly rental payable to Landlord under
this Lease shall be revised to net to Landlord the same net rental after
imposition of any such taxes by Landlord as would have been payable to
Landlord prior to the payment of any such taxes.
(2) Insurance. All insurance premiums and costs, including but not
limited to, any deductible amounts, premiums and cost of insurance incurred
by Landlord, as more fully set forth in Paragraph 8.A herein.
(3) Repairs and Improvements. Repairs, replacements and general
maintenance for the Premises, Building and Project (except for those
repairs expressly made the financial responsibility of Landlord pursuant to
the terms of this Lease, repairs to the extent paid for by proceeds of
insurance or by Tenant or other third parties, and alterations attributable
solely to tenants of the Project other than Tenant). Such repairs,
replacements, and general maintenance shall include the cost of any capital
improvements made to or capital assets acquired for the Project, Building,
or Premises after the Term Commencement Date that reduce any other Basic
Operating Cost, are reasonably necessary for the health and safety of the
occupants of the Project, or are made to the Building by Landlord after the
date of this Lease and are required under any governmental law or
regulation, such costs or allocable portions thereof to be amortized over
such reasonable period as Landlord shall determine, but which shall be in
accordance with industry standard, together with interest on the
unamortized balance at the "prime rate" charged at the time such
improvements or capital assets are constructed or acquired by Wells Fargo
Bank, N.A. (San Francisco), plus two (2) percentage points, but in no event
more than the maximum rate permitted by law.
(4) Services. All expenses relating to maintenance, janitorial and
service agreements and services, and costs of supplies and equipment used
in maintaining the Premises, Building and Project and the equipment therein
and the adjacent sidewalks, driveways, parking and service areas,
including, without limitation, Building exterior maintenance and
landscaping.
(5) Utilities. Utilities which benefit all or a portion of the Premises,
Building or Project.
(6) Management Fee. A management and accounting cost recovery fee equal
to three percent (3%) of the sum of Base Rent and Basic Operating Cost.
(7) Legal and Accounting. Legal and accounting expenses relating to
Tenant's Lease or occupancy of the Project, including the cost of audits by
certified public accountants. In the event of legal action between Tenant
and Landlord, legal expenses of the substantially prevailing party shall be
paid by the losing party, unless stipulated otherwise.
In the event that the Building is not fully occupied during any fiscal year
of the Term as determined by Landlord, an adjustment shall be made in
computing the Basic Operating Cost for such year so that Tenant pays an
equitable portion of all variable items of Basic Operating Cost, as
reasonably determined by Landlord; provided, however, that in no event
shall Landlord be entitled to collect in excess of one hundred percent
(100%) of the total Basic Operating Cost from all of the tenants in the
Building including Tenant.
Basic Operating Cost shall not include specific costs incurred for the
account of, separately billed to and paid by specific tenants.
Notwithstanding anything herein to the contrary, in any instance wherein
Landlord, in Landlord's sole discretion, deems Tenant to be responsible for
any amounts greater than Tenant's Proportionate Share, Landlord shall have
the right to allocate costs in any manner Landlord deems appropriate.
Landlord acknowledges that Tenant's use may increase Tenant's reasonable
share of certain expenses, such as utilities, which shall be reasonably
determined by Landlord according to the increase in average utilities after
Tenant's occupancy of the Premises.
B. Payment of Estimated Basic Operating Cost. "Estimated Basic
Operating Cost' for any particular year shall mean Landlord's estimate of
the Basic Operating Cost for such fiscal year made prior to commencement of
such fiscal year as hereinafter provided. Landlord shall have the right
from time to time to revise its fiscal year and interim accounting periods
so long as the periods as so revised are reconciled with prior periods in
accordance with generally accepted accounting principles applied in a
consistent manner. During the last month of each fiscal year during the
Term, or as soon thereafter as practicable, Landlord shall give Tenant
written notice of the Estimated Basic Operating Cost for the ensuing fiscal
year. Tenant shall pay Tenant's Proportionate Share of the Estimated Basic
Operating Cost with installments of Base Rent for the fiscal year to which
the Estimated Basic Operating Cost applies in monthly installments on the
first day of each calendar month during such year, in advance. If at any
time during the course of the fiscal year, Landlord determines that Basic
Operating Cost is projected to vary from the then Estimated Basic Operating
Cost by more than ten percent (10%), Landlord may, by written notice to
Tenant, revise the Estimated Basic Operating Cost for the balance of such
fiscal year, and Tenant's monthly installments for the remainder of such
year shall be adjusted so that by the end of such fiscal year Tenant has
paid to Landlord Tenant's Proportionate Share of the revised Estimated
Basic Operating Cost for such year.
C. Computation of Basic Operating Cost Adjustment. "Basic Operating Cost
Adjustment' shall mean the difference between Estimated Basic Operating
Cost and Basic Operating Cost for any fiscal year determined as hereinafter
provided. Within one hundred twenty (120) days after the end of each fiscal
year, as determined by Landlord, or as soon thereafter as practicable,
Landlord shall deliver to Tenant a statement of Basic Operating Cost for
the fiscal year just ended, accompanied by a computation of Basic Operating
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Cost Adjustment. If such statement shows that Tenant's payment based upon
Estimated Basic Operating Cost is less than Tenants Proportionate Share of
Basic Operating Cost, then Tenant shall pay to Landlord the difference
within twenty (20) days after receipt of such statement. If such statement
shows that Tenant's payments of Estimated Basic Operating Cost exceed
Tenant's Proportionate Share of Basic Operating Cost, then (provided that
Tenant is not in default under this Lease) Landlord shall pay to Tenant the
difference within twenty (20) days after delivery of such statement to
Tenant. If this Lease has been terminated or the Term hereof has expired
prior to the date of such statement, then the Basic Operating Cost
Adjustment shall be paid by the appropriate party within twenty (20) days
after the date of delivery of the statement. Should this Lease commence or
terminate at any time other than the first day of the fiscal year, Tenant's
Proportionate Share of the Basic Operating Cost adjustment shall be
prorated by reference to the exact number of calendar days during such
fiscal year that this Lease is in effect.
D. Net Lease. This shall be a net Lease and Base Rent shall be paid to
Landlord absolutely net of all costs and expenses, except as specifically
provided to the contrary in this Lease. The provisions for payment of
Basic Operating Cost and the Basic Operating Cost Adjustment are intended
to pass on to Tenant and reimburse Landlord for all costs and expenses of
the nature described in Paragraph 7.A. incurred in connection with the
ownership, maintenance and operation of the Building or Project and such
additional facilities now and in subsequent years as may be determined by
Landlord to be necessary to the Building or Project.
E. Tenant Audit. In the event that Tenant shall dispute the amount set
forth in any statement provided by Landlord under Paragraph 7.B or 7.C
above, Tenant shall have the right, not later than twenty (20) days
following the receipt of such statement and upon the condition that Tenant
shall first deposit with Landlord the full amount in dispute, to cause
Landlord's books and records with respect to Basic Operating Cost for such
fiscal year to be audited by certified public accountants selected by
Tenant and subject to Landlord's reasonable right of approval. The Basic
Operating Cost Adjustment shall be appropriately adjusted on the basis of
such audit. If such audit discloses a liability for a refund in excess of
ten percent (10%) of Tenant's Proportionate Share of the Basic Operating
Cost Adjustment previously reported, the cost of such audit shall be borne
by Landlord; otherwise the cost of such audit shall be paid by Tenant. If
Tenant shall not request an audit in accordance with the provisions of this
Paragraph 7.E within twenty (20) days after receipt of Landlord's statement
provided pursuant to Paragraph 7.B or 7.C., such statement shall be final
and binding for all purposes hereof.
INSURANCE AND INDEMNIFICATION
8. A. Landlord's Insurance. Landlord agrees to maintain reasonable
insurance which is similar to other industrial building insurance in the
San Francisco Bay Area, insuring the Building against fire, lightning,
vandalism and malicious mischief (including, if Landlord elects, "All Risk"
coverage, earthquake, and/or flood insurance), in an amount not less than
eighty percent (80%) of the replacement cost thereof, with deductibles and
the form and endorsements of such coverage as selected by Landlord. Such
insurance may also include, at Landlord's option, insurance against loss of
Base Rent and Additional Rent, in an amount equal to the amount of Base
Rent and Additional Rent payable by Tenant for a period of at least twelve
(12) months commencing on the date of loss. Such insurance shall be for the
sole benefit of Landlord and under Landlord's sole control. Landlord shall
not be obligated to insure any furniture, equipment, machinery, goods or
supplies which Tenant may keep or maintain in the Premises, or any
leasehold improvements, additions or alterations within the Premises.
Landlord may also carry such other insurance as Landlord may deem prudent
or advisable, including, without limitation, liability insurance in such
amounts and on such terms as Landlord shall determine.
B. Tenant's Insurance
(1) Property Insurance. Tenant shall procure at Tenant's sole cost and
expense and keep in effect from the date of this Lease and at all times
until the end of the Term, insurance on all personal property and fixtures
of Tenant and all improvements made by or for Tenant to the Premises,
insuring such property for the full replacement value of such property.
(2) Liability Insurance. Tenant shall procure at Tenant's sole cost and
expense and keep in effect from the date of this Lease and at all times
until the end of the Term either Comprehensive General Liability insurance
or Commercial General Liability insurance applying to the use and occupancy
of the Premises and the Building, and any part of either, and any areas
adjacent thereto, and the business operated by Tenant, or by any other
occupant on the Premises. Such insurance shall include Broad Form
Contractual Liability insurance coverage insuring all of Tenant's indemnity
obligations under this Lease. Such coverage shall have a minimum combined
single limit of liability of at least One Million Dollars ($1,000,000.00)
Two Million Dollars ($2,000,000.00), and a general aggregate limit of Two
Million Dollars ($2,000,000.00) Three Million Dollars ($3,000,000.00). All
such policies shall be written to apply to all bodily injury, property
damage or loss, personal injury and other covered loss, however occasioned,
occurring during the policy term, shall be endorsed to add Landlord and any
party holding an interest to which this Lease may be subordinated as an
additional insured, and shall provide that such coverage shall be primary
and that any insurance maintained by Landlord shall be excess insurance
only. Such coverage shall also contain endorsements: (i) deleting any
employee exclusion on personal injury coverage; (ii) including employees as
additional insureds; (iii) deleting any liquor liability exclusion; and
(iv) providing for coverage of employer's automobile non-ownership
liability. All such insurance shall provide for severability of interests;
shall provide that an act or omission of one of the named insureds shall
not reduce or avoid coverage to the other named insureds; and shall afford
coverage for all claims based on acts, omissions, injury and damage, which
claims occurred or arose (or the onset of which occurred or arose) in whole
or in part during the policy period. Said coverage shall be written on an
"occurrence" basis, if available. If an "occurrence" basis form is not
available, Tenant must purchase "tail" coverage for the most number of
years available, and tenant must also purchase "tail" coverage if the
retroactive date of an 'occurrence" basis form is changed so as to leave a
gap in coverage for occurrences that might have occurred in prior years.
If a "claims made' policy is ever used, the policy must be endorsed so that
Landlord is given the right to purchase "tail" coverage should Tenant for
any reason not do so or if the policy is to be canceled for nonpayment of
premium.
(3) General Insurance Requirements. All coverages described in this
Paragraph 8.B shall be endorsed to provide Landlord with thirty (30) days'
notice of cancellation or change in terms.
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All insurance policies required to be carried under this Lease shall be
written by companies rated A+XII or better in "Best's Insurance Guide" and
authorized to do business in California. Any deductible amounts under any
insurance policies required hereunder shall be subject to Landlord's prior
written approval. In any event deductible amounts shall not exceed One
Thousand Dollars ($1,000.00). Tenant shall deliver to Landlord on or before
the Term Commencement Date, and thereafter at least thirty (30) days before
the expiration dates of the expiring policies, certified copies of Tenant's
insurance policies, or a certificate evidencing the same issued by the
insurer thereunder, showing that all premiums have been paid for the full
policy period; and, in the event Tenant shall fail to procure such
insurance, or to deliver such policies or certificates, Landlord may, at
Landlord's option and in addition to Landlord's other remedies in the event
of a default by Tenant hereunder, procure the same for the account of
Tenant, and the cost thereof shall be paid to Landlord as Additional Rent.
C. Indemnification. Landlord shall not be liable to Tenant for any loss
or damage to person or property caused by theft, fire, acts of God, acts of
a public enemy, riot, strike, insurrection, war, court order, requisition
or order of governmental body or authority or for any damage or
inconvenience except resulting from Landlord's gross negligence or willful
misconduct, which may arise through repair or alteration of any part of the
Building or Project or failure to make any such repair, except as expressly
otherwise provided in Paragraph 10. Tenant shall indemnify, defend by
counsel acceptable to Landlord, protect and hold Landlord harmless from and
against any and all liabilities, losses, costs, damages, injuries or
expenses, including reasonable attorneys' fees and court costs, arising out
of or related to: (1) claims of injury to or death of persons or damage to
property occurring or resulting directly or indirectly from the use or
occupancy of the Premises, or from activities of Tenant, Tenant's Parties
or anyone unrelated to Landlord in or about the Premises or Project; (2)
claims for work or labor performed, or for materials or supplies furnished
to or at the request of Tenant in connection with performance of any work
done for the account of Tenant within the Premises or Project; and (3)
claims arising from any breach or default on the part of Tenant in the
performance of any covenant contained in this Lease. The foregoing
indemnity shall not be applicable to claims arising from the active
negligence or willful misconduct of Landlord. The provisions of this
Paragraph shall survive the expiration or termination of this Lease with
respect to any claims or liability occurring prior to such expiration or
termination.
WAIVER OF SUBROGATION
9. To the extent permitted by law and without affecting the coverage provided
by insurance to be maintained hereunder, Landlord and Tenant each waive any
right to recover against the other for: (a) damages for injury to or death
of persons; (b) damages to property; (c) damages to the Premises or any
part thereof, and (d) claims arising by reason of the foregoing due to
hazards covered by insurance to the extent of proceeds recovered therefrom.
This provision is intended to waive fully, and for the benefit of each
party, any rights and/or claims which might give rise to a right of
subrogation in favor of any insurance carrier. The coverage obtained by
each party pursuant to this Lease shall include, without limitation, a
waiver of subrogation by the carrier which conforms to the provisions of
this paragraph.
LANDLORD'S REPAIRS AND SERVICES
10. Landlord shall at Landlord's expense maintain the structural soundness of
the structural beams of the roof, foundations and exterior walls of the
Building in good repair, reasonable wear and tear excepted. The term
"exterior walls" as used herein shall not include windows, glass or plate
glass, doors, special store fronts or office entries. Landlord shall
perform on behalf of Tenant and other tenants of the Project, as an item of
Basic Operating Cost, the maintenance of the Building, Project, and public
and common areas of the Project, including but not limited to the roof,
pest extermination, the landscaped areas, parking areas, driveways, the
truck staging areas, rail spur areas, fire sprinkler systems, sanitary and
storm sewer lines, utility services, electric and telephone equipment
servicing the Building(s), exterior lighting, and anything which affects
the operation and exterior appearance of the Project, which determination
shall be at Landlord's sole discretion. Except for the expenses directly
involving the items specifically described in the first sentence of this
Paragraph 10, Tenant shall reimburse Landlord for all such costs in
accordance with Paragraph 7. Any damage caused by or repairs necessitated
by any act of Tenant may be repaired by Landlord at Landlord's option and
at Tenant's expense. Tenant shall immediately give Landlord written notice
of any defect or need of repairs after which Landlord shall have a
reasonable opportunity to repair same. Landlord's liability with respect
to any defects, repairs, or maintenance for which Landlord is responsible
under any of the provisions of this Lease shall be limited to the cost of
such repairs or maintenance, except for Landlord's gross negligence or
willful misconduct, in which such liability shall not be limited.
TENANT'S REPAIRS
11. Tenant shall at Tenant's expense maintain all parts of the Premises in a
good clean and secure condition and promptly make all necessary repairs and
replacements, including but not limited to all windows, glass, doors, walls
and wall finishes, floor covering, heating, ventilating and air
conditioning systems, truck doors, dock bumpers, dock plates and levelers,
plumbing work and fixtures, downspouts, electrical and lighting systems,
and fire sprinklers. Tenant shall at Tenant's expense also perform regular
removal of trash and debris. Tenant shall, at Tenant's own expense, enter
into a regularly scheduled preventive maintenance/service contract with a
maintenance contractor for servicing all hot water, heating and air
conditioning systems and equipment within or serving the Premises. The
maintenance contractor and the contract must be approved by Landlord. The
service contract must include all services suggested by the equipment
manufacturer within the operation/maintenance manual and must become
effective and a copy thereof delivered to Landlord within thirty (30) days
after the Term Commencement Date. Tenant shall not damage any demising wall
or disturb the integrity and support provided by any demising wall and
shall, at its sole expense, immediately repair any damage to any demising
wall caused by Tenant or Tenant's Parties.
ALTERATIONS
12. Tenant shall not make, or allow to be made, any alterations or physical
additions in, about or to the Premises without obtaining the prior written
consent of Landlord, which consent shall not be unreasonably withheld with
respect to proposed alterations and additions which: (a) comply with all
applicable laws, ordinances, rules and regulations; (b) are in Landlord's
opinion compatible with the Project and its mechanical, plumbing,
electrical, heating/ventilation/air conditioning systems; and (c) will not
interfere with the use and occupancy of any other portion of the Building
or Project by any other tenant or its invitees. Specifically, but without
limiting the generality of the foregoing, Landlord shall have the right of
written consent for all plans and specifications for the proposed
alterations or additions, construction means and methods, all appropriate
permits and licenses, any contractor or subcontractor to be employed on the
work
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of alteration or additions, and the time for performance of such work.
Tenant shall also supply to Landlord any documents and information
reasonably requested by Landlord in connection with Landlord's
consideration of a request for approval hereunder. Tenant shall reimburse
Landlord for all costs which Landlord may incur in connection with granting
approval to Tenant for any such alterations and additions, including any
costs or expenses which Landlord may incur in electing to have outside
architects and engineers review said plans and specifications. All such
alterations, physical additions or improvements shall remain the property
of Tenant until termination of this Lease, at which time they shall be and
become the property of Landlord if Landlord so elects (except for Tenant's
trade fixtures); provided, however, that Landlord may, at Landlord's
option, require that Tenant, at Tenant's expense, remove any or all
alterations, additions, improvements and partitions made by Tenant and
restore the Premises by the termination of this Lease, whether by lapse of
time, or otherwise, to their condition existing prior to the construction
of any such alterations, additions, partitions or leasehold improvements
excepting normal wear and tear. All such removals and restoration shall be
accomplished in a good and workmanlike manner so as not to cause any damage
to the Premises or Project whatsoever. If Tenant fails to so remove such
alterations, additions, improvements and partitions or Tenant's trade
fixtures or furniture, Landlord may keep and use them or remove any of them
and cause them to be stored or sold in accordance with applicable law, at
Tenant's sole expense. In addition to and wholly apart from Tenant's
obligation to pay Tenant's Proportionate Share of Basic Operating Cost,
Tenant shall be responsible for and shall pay prior to delinquency any
taxes or governmental service fees, possessory interest taxes, fees or
charges in lieu of any such taxes, capital levies, or other charges imposed
upon, levied with respect to or assessed against its personal property, on
the value of the alterations, additions or improvements within the
Premises, and on Tenant's interest pursuant to this Lease. To the extent
that any such taxes are not separately assessed or billed to Tenant, Tenant
shall pay the amount thereof as invoiced to Tenant by Landlord.
SIGNS
13. All signs, notices and graphics of every kind or character, visible in or
from public view or corridors, the common areas or the exterior of the
Premises, shall be subject to Landlord's prior written approval. Tenant
shall not place or maintain any banners whatsoever or any window decor in
or on any exterior window or window fronting upon any common areas or
service area or upon any truck doors or man doors without Landlord's prior
written approval. Any installation of signs or graphics on or about the
Premises and Project shall be subject to any applicable governmental laws,
ordinances, regulations and to any other requirements imposed by Landlord.
Tenant shall remove all such signs and graphics prior to the termination of
this Lease. Such installations and removals shall be made in such manner
as to avoid injury or defacement of the Premises, Building or Project and
any other improvements contained therein, and Tenant shall repair any
injury or defacement, including without limitation, discoloration caused by
such installation or removal.
INSPECTION/POSTING NOTICES
14. After reasonable notice, except in emergencies where no such notice shall
be required, Landlord, and Landlord's agents and representatives, shall
have the right to enter the Premises to inspect the same, to clean, to
perform such work as may be permitted or required hereunder, to make
repairs or reasonable alterations to the Premises or Project or to other
tenant spaces therein which do not substantially impair Tenant's ability to
conduct business in the Premises, to deal with emergencies, to post such
notices as may be permitted or required by law to prevent the perfection of
liens against Landlord's interest in the Project or to exhibit the Premises
to prospective tenants, purchasers, encumbrancers or others, or for any
other purpose as Landlord may deem necessary or desirable; provided,
however, that Landlord shall use reasonable efforts not to unreasonably
interfere with Tenant's business operations. Tenant shall not be entitled
to any abatement of Rent by reason of the exercise of any such right of
entry. At any time within six (6) months prior to the end of the Term,
Landlord shall have the right to erect on the Premises and/or Project a
suitable sign indicating that the Premises are available for lease. Tenant
shall give written notice to Landlord at least thirty (30) days prior to
vacating the Premises and shall meet with Landlord for a joint inspection
of the Premises at the time of vacating. In the event of Tenant's failure
to give such notice or participate in such joint inspection, Landlord's
inspection at or after Tenant's vacating the Premises shall conclusively be
deemed correct for purposes of determining Tenant's responsibility for
repairs and restoration.
UTILITIES
15. Tenant shall pay directly for all water, gas, heat, air conditioning,
light, power, telephone, sewer, sprinkler charges and other utilities and
services used on or from the Premises, together with any taxes, penalties,
surcharges or the like pertaining thereto, and maintenance charges for
utilities and shall furnish all electric light bulbs, ballasts and tubes.
If any such services are not separately metered to Tenant, Tenant shall pay
a reasonable proportion, as determined by Landlord, of all charges jointly
serving other premises. Landlord acknowledges that Tenant's use may
increase Tenant's reasonable share of certain expenses, such as utilities,
which shall be reasonably determined by Landlord according to the increase
in average utilities after Tenant's occupancy of the Premises provided
other tenancies in the Project remain reasonably constant. Landlord shall
not be liable for any damages directly or indirectly resulting from nor
shall the Rent or any monies owed Landlord under this Lease herein reserved
be abated by reason of: (a) the installation, use or interruption of use of
any equipment used in connection with the furnishing of any such utilities
or services, provided however, that Landlord shall be liable for damages
directly incurred as a result of interruption of service directly caused by
Landlord's gross negligence or willful misconduct; (b) the failure to
furnish or delay in furnishing any such utilities or services when such
failure or delay is caused by acts of God or the elements, labor
disturbances of any character, or any other accidents or other conditions
beyond the reasonable control of Landlord; or (c) the limitation,
curtailment, rationing or restriction on use of water, electricity, gas or
any other form of energy or any other service or utility whatsoever serving
the Premises or Project. Landlord shall be entitled to cooperate
voluntarily and in a reasonable manner with the efforts of national, state
or local governmental agencies or utility suppliers in reducing energy or
other resource consumption. The obligation to make services available
hereunder shall be subject to the limitations of any such voluntary,
reasonable program.
SUBORDINATION
16. Without the necessity of any additional document being executed by Tenant
for the purpose of effecting a subordination, the Lease shall be subject
and subordinate at all times to: (a) all ground leases or underlying leases
which may now exist or hereafter be executed affecting the Premises and/or
the land upon which the Premises and Project are situated, or both; and (b)
any mortgage or deed of trust which may now exist or be placed upon said
Project, land, ground leases or underlying leases, or Landlord's interest
or estate in any of said items which is specified as security.
Notwithstanding the foregoing, Landlord shall have the right to subordinate
or cause to be subordinated any such ground leases or underlying leases or
any such liens to this Lease. In the event that any ground lease or
underlying lease terminates for any reason or
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any mortgage or deed of trust is foreclosed or a conveyance in lieu of
foreclosure is made for any reason, Tenant shall, notwithstanding any
subordination, attorn to and become the Tenant of the successor in interest
to Landlord at the option of such successor in interest. Within ten (10)
days after request by Landlord, Tenant shall execute and deliver any
additional documents evidencing Tenant's attornment or the subordination of
this Lease with respect to any such ground leases or underlying leases or
any such mortgage or deed of trust, in the form requested by Landlord or by
any ground landlord, mortgagee, or beneficiary under a deed of trust
provided, however, that in connection with such subordination Landlord
shall obtain for the benefit of Tenant a non-disturbance agreement in the
form acceptable to the party to whose interest Tenant's Lease is
subordinated. Notwithstanding anything to the contrary in this Paragraph
16, Landlord's subordination of this Lease shall be conditioned upon there
being no material change to the obligation or rights of Landlord and Tenant
under the Lease.
FINANCIAL STATEMENTS
17. At the request of Landlord, Tenant shall provide to Landlord Tenant's
current financial statement or other information discussing financial worth
of Tenant, which Landlord shall use solely for purposes of this Lease and
in connection with the ownership, management and disposition of the
Project. Landlord shall keep such financial information strictly
confidential, showing such information only to those individuals referenced
herein.
ESTOPPEL CERTIFICATE
18. Tenant agrees from time to time, within ten (10) days after request of
Landlord, to deliver to Landlord, or Landlord's designee, an estoppel
certificate stating that this Lease is in full force and effect, the date
to which Rent has been paid, the unexpired portion of this Lease, and such
other matters pertaining to this Lease as may be reasonably requested by
Landlord which to the best of Tenant's knowledge are true as of the date
Tenant executes the estoppel certificate. Failure by Tenant to execute and
deliver such certificate shall constitute an acceptance of the Premises and
acknowledgment by Tenant that the statements included are true and correct
without exception. Landlord and Tenant intend that any statement delivered
pursuant to this Paragraph may be relied upon by any mortgagee,
beneficiary, purchaser or prospective purchaser of the Project or any
interest therein. The parties agree that Tenant's obligation to furnish
such estoppel certificates in a timely fashion is a material inducement for
Landlord's execution of the Lease, and shall be an event of default if
Tenant fails to fully comply.
SECURITY DEPOSIT
19. Tenant agrees to deposit with Landlord upon execution of this Lease, a
Security Deposit as stated in the Basic Lease Information, which sum shall
be held by Landlord, without obligation for interest, as security for the
performance of Tenant's covenants and obligations under this Lease. The
Security Deposit is not an advance rental deposit or a measure of damages
incurred by Landlord in case of Tenant's default. Upon the occurrence of
any event of default by Tenant, Landlord may, from time to time, without
prejudice to any other remedy provided herein or provided by law, use such
fund to the extent necessary to make good any arrears of Rent or other
payments due to Landlord hereunder, and any other damage, injury, expense
or liability caused by such event of default, and Tenant shall pay to
Landlord, on demand, the amount so applied in order to restore the Security
Deposit to its original amount. Although the Security Deposit shall be
deemed the property of Landlord, any remaining balance of such deposit
shall be returned by Landlord to Tenant within thirty (30) days of at such
time after termination of this Lease that all of Tenant's obligations under
this Lease have been fulfilled. Landlord may use and commingle the
Security Deposit with other funds of Landlord.
(See Addendum 2)
TENANT'S REMEDIES
20. The liability of Landlord to Tenant for any default by Landlord under the
terms of this Lease are not personal obligations of the individual or other
partners, directors, officers and shareholders of Landlord, and Tenant
agrees to look solely to Landlord's interest in the Project for the
recovery of any amount from Landlord, and shall not look to other assets of
Landlord nor seek recourse against the assets of the individual or other
partners, directors, officers and shareholders of Landlord. Any lien
obtained to enforce any such judgment and any levy of execution thereon
shall be subject and subordinate to any lien, mortgage or deed of trust on
the Project.
ASSIGNMENT AND SUBLETTING
21. A. General. Tenant shall not assign or sublet the Premises or any part
thereof without Landlord's prior written approval except as provided
herein. If Tenant desires to assign this Lease or sublet any or all of the
Premises, Tenant shall give Landlord written notice thirty (30) ninety (90)
days prior to the anticipated effective date of the assignment or sublease.
Landlord shall then have a period of ten (10) thirty (30) days following
receipt of such notice to notify Tenant in writing that Landlord elects
either: (1) to terminate this Lease as to the space so affected as of the
date so requested by Tenant; or (2) to permit Tenant to assign this Lease
or sublet such space, subject, however, to Landlord's prior written
approval of the proposed assignee or subtenant and of any related documents
or agreements associated with the assignment or sublease. If Landlord
should fail to notify Tenant in writing of such election within said
period, Landlord shall be deemed to have waived option (1) above, but
written approval by Landlord of the proposed assignee or subtenant shall be
required. If Landlord does not exercise the option provided in subitem (1)
above, Landlord's consent to a proposed assignment or sublet shall not be
unreasonably withheld. Without limiting the other instances in which it
may be reasonable for Landlord to withhold Landlord's consent to an
assignment or subletting, Landlord and Tenant acknowledge that it shall be
reasonable for Landlord to withhold Landlord's consent in the following
instances: The use of the Premises by such proposed assignee or subtenant
would not be a permitted use or would increase the Parking Density of the
Project; the proposed assignee or subtenant is not of sound financial
condition; the proposed assignee or subtenant is a governmental agency; the
proposed assignee or subtenant does not have a good reputation as a tenant
of property: the proposed assignee or subtenant is a person with whom
Landlord is negotiating to lease space in the Project; the assignment or
subletting would entail any alterations which would lessen the value of the
leasehold improvements in the Premises; or if Tenant is in default of any
obligation of Tenant under this Lease, or Tenant has defaulted under this
Lease on three (3) or more occasions during any twelve (12) months
preceding the date that Tenant shall request consent. Failure by Landlord
to approve a proposed assignee or subtenant shall not cause a termination
of this Lease. Upon a termination under this Paragraph 21.A., Landlord may
lease the Premises to any party, including parties with whom Tenant has
negotiated an assignment or sublease, without incurring any liability to
Tenant.
B. Bonus Rent. Any Rent or other consideration realized by Tenant under
any such sublease or assignment in excess of the Rent payable hereunder,
after amortization of a reasonable brokerage commission, shall be divided
and paid, fifty percent (50%) ten percent (10%) to Tenant, fifty percent
(50%) ninety percent (90%) to Landlord. In any subletting or assignment
undertaken by Tenant, Tenant shall
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diligently seek to obtain the maximum rental amount available in the
marketplace for such subletting or assignment.
C. Corporation. If Tenant is a corporation, a transfer of corporate
shares by sale, assignment, bequest, inheritance, operation of law or other
disposition (including such a transfer to or by a receiver or trustee in
federal or state bankruptcy, insolvency or other proceedings), so as to
result in a change in the present control of such corporation or any of its
parent corporations by the person or persons owning a majority of said
corporate shares, shall constitute an assignment for purposes of this
Lease. Notwithstanding anything in the Lease to the contrary, if Tenant is
a corporation, upon at least sixty (60) days prior notice to Owner, this
lease in its entirety may be assigned without Owner's consent to a
corporation into which Tenant merges or consolidates, or which controls, is
controlled by or under common control with Tenant, so long as the demised
premises continue to be used for the use described in the Basic Lease
Information; the transfer is not principally for the purpose of
transferring the leasehold estate created hereby; the net worth of the
assignee is at least equal to or in excess of the net worth of Tenant at
the time of execution of this lease or immediately prior to such assignment
whichever is less or the assignee can otherwise secure and guaranty the
payment to Owner of all rent and any other amounts due from Tenant pursuant
to this lease in a manner reasonably satisfactory to Owner; the assignee
assumes by documents satisfactory to Owner all of Tenant's obligations to
be performed under this lease, and; provided such assignment shall be
subject to all of the other terms and conditions of this lease. If Tenant
is a corporation, Tenant may sublet all or a portion of the demised
premises to an affiliated company which is owned by the same parent company
or to its parent company without Owner's consent but with sixty (60) days
prior notice.
D. Partnership. If Tenant is a partnership, joint venture or other
incorporated business form, a transfer of the interest of persons, firms or
entities responsible for managerial control of Tenant by sale, assignment,
bequest, inheritance, operation of law or other disposition, so as to
result in a change in the present control of said entity and/or a change in
the identity of the persons responsible for the general credit obligations
of said entity shall constitute an assignment for all purposes of this
Lease.
E. Liability. No assignment or subletting by Tenant shall relieve
Tenant of any obligation under this Lease. Any assignment or subletting
which conflicts with the provisions hereof shall be void.
AUTHORITY OF PARTIES
22. Landlord represents and warrants that it has full right and authority to
enter into this Lease and to perform all of Landlord's obligations
hereunder. Tenant represents and warrants that it has full right and
authority to enter into this Lease and to perform all of Tenant's
obligations hereunder.
CONDEMNATION
23. A. Condemnation Resulting in Termination. If the whole or any
substantial part of the Project of which the Premises are a part should be
taken or condemned for any public use under governmental law, ordinance or
regulation, or by right of eminent domain, or by private purchase in lieu
thereof, and the taking would prevent or materially interfere with the
Permitted Use of the Premises, this Lease shall terminate and the Rent
shall be abated during the unexpired portion of this Lease, effective when
the physical taking of said Premises shall have occurred.
B. Condemnation Not Resulting in Termination. If a portion of the
Project of which the Premises are a part should be taken or condemned for
any public use under any governmental law, ordinance, or regulation, or by
right of eminent domain, or by private purchase in lieu thereof, and this
Lease is not terminated as provided in Paragraph 23.A above, this Lease
shall not terminate, but the Rent payable hereunder during the unexpired
portion of the Lease shall be reduced, beginning on the date when the
physical taking shall have occurred, to such amount as may be fair and
reasonable under all of the circumstances.
C. Award. Landlord shall be entitled to any and all payment, income,
rent, award, or any interest therein whatsoever which may be paid or made
in connection with such taking or conveyance and Tenant shall have no claim
against Landlord or otherwise for the value of any unexpired portion of
this Lease. Notwithstanding the foregoing, any compensation specifically
awarded Tenant for loss of business, Tenants personal property, moving
costs or loss of goodwill, shall be and remain the property of Tenant.
CASUALTY DAMAGE
24. A. General. If the Premises or Building should be damaged or destroyed
by fire, tornado or other casualty, Tenant shall give immediate written
notice thereof to Landlord. Within thirty (30) days after Landlord's
receipt of such notice, Landlord shall notify Tenant whether in Landlord's
opinion such repairs can reasonably be made either: (1) within ninety (90)
days; (2) in more than ninety (90) days but in less than one hundred eighty
(180) days; or (3) in more than one hundred eighty (180) days from the date
of such notice. Landlord's determination shall be binding on Tenant.
B. Less Than 90 Days. If the Premises or Building should be damaged by
fire, tornado or other casualty but only to such extent that rebuilding or
repairs can in Landlord's estimation be reasonably completed within ninety
(90) days after the date of such damage, this Lease shall not terminate,
and provided that insurance proceeds are available to fully repair the
damage, Landlord shall proceed to rebuild and repair the Premises in the
manner determined by Landlord, except that Landlord shall not be required
to rebuild, repair or replace any part of the partitions, fixtures,
additions and other leasehold improvements which may have been placed in,
on or about the Premises. If the Premises are untenantable in whole or in
part following such damage, the Rent payable hereunder during the period in
which they are untenantable shall be abated proportionately, but only to
the extent of rental abatement insurance proceeds received by Landlord
during the time and to the extent the Premises are unfit for occupancy.
C. Greater Than 90 Days. If the Premises or Building should be damaged
by fire, tornado or other casualty but only to such extent that rebuilding
or repairs can in Landlord's estimation be reasonably completed in more
than ninety (90) days but in less than one hundred eighty (180) days, then
Landlord shall have the option of either: (1) terminating the Lease
effective upon the date of the occurrence of such damage, in which event
the Rent shall be abated during the unexpired portion of the Lease: or (2)
electing to rebuild or repair the Premises to substantially the condition
in which they existed prior to such damage, provided that insurance
proceeds are available, to fully repair the damage, except that Landlord
shall not be required to rebuild, repair or replace any part of the
partitions, fixtures, additions and other improvements which may have been
placed in, on or about the Premises. If the Premises are untenantable in
whole or in part following
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such damage, the Rent payable hereunder during the period in which they are
untenantable shall be abated proportionately, but only to the extent of
rental abatement insurance proceeds received by Landlord during the time
and to the extent the Premises are unfit for occupancy. In the event that
Landlord should fail to complete such repairs and rebuilding within one
hundred eighty days (180) days after the date upon which Landlord is
notified by Tenant of such damage, such period of time to be extended for
delays caused by the fault or neglect of Tenant or because of acts of God,
acts of public agencies, labor disputes, strikes, fires, freight embargoes,
rainy or stormy weather, inability to obtain materials, supplies or fuels,
or delays of the contractors or subcontractors or any other causes or
contingencies beyond the reasonable control of Landlord, Tenant may at
Tenant's option within ten (10) days after the expiration of such one
hundred eighty (180) day period (as such may be extended), terminate this
Lease by delivering written notice of termination to Landlord as Tenant's
exclusive remedy, whereupon all rights hereunder shall cease and terminate
thirty (30) days after Landlord's receipt of such termination notice.
D. Greater Than 180 Days. If the Premises or Building should be so
damaged by fire, tornado or other casualty that rebuilding or repairs
cannot in Landlord's estimation be completed within one hundred eighty
(180) days after such damage, this Lease shall terminate and the Rent shall
be abated during the unexpired portion of this Lease, effective upon the
date of the occurrence of such damage.
E. Tenant's Fault. If the Premises or any other portion of the Building
are damaged by fire or other casualty resulting from the fault, negligence,
or breach of this Lease by Tenant or any of Tenant's Parties, Base Rent and
Additional Rent shall not be diminished during the repair of such damage
and Tenant shall be liable to Landlord for the cost and expense of the
repair and restoration of the Building caused thereby to the extent such
cost and expense is not covered by insurance proceeds.
F. Uninsured Casualty. Notwithstanding anything herein to the contrary,
in the event that the Premises or Building are damaged or destroyed and are
not fully covered by the insurance proceeds received by Landlord or in the
event that the holder of any indebtedness secured by a mortgage or deed of
trust covering the Premises requires that the insurance proceeds be applied
to such indebtedness, then in either case Landlord shall have the right to
terminate this Lease by delivering written notice of termination to Tenant
within thirty (30) days after the date of notice to Landlord that said
damage or destruction is not fully covered by insurance or such requirement
is made by any such holder, as the case may be, whereupon all rights and
obligations hereunder shall cease and terminate.
G. Waiver. Except as otherwise provided in this Paragraph 24, Tenant
hereby waives the provisions of Sections 1932(a), 1933(4), 1941 and 1942 of
the Civil Code of California.
HOLDING OVER
25. If Tenant shall retain possession of the Premises or any portion
thereof without Landlord's consent following the expiration of the Lease or
sooner termination for any reason, then Tenant shall pay to Landlord for
each day of such retention double triple the amount of the daily rental as
of the last month prior to the date of expiration or termination. Tenant
shall also indemnify, defend, protect and hold Landlord harmless from any
loss, liability or cost, including reasonable attorneys' fees, resulting
from delay by Tenant in surrendering the Premises, including, without
limitation, any claims made by any succeeding tenant founded on such delay.
Acceptance of Rent by Landlord following expiration or termination shall
not constitute a renewal of this Lease, and nothing contained in this
Paragraph 25 shall waive Landlord's right of reentry or any other right.
Unless Landlord consents in writing to Tenant's holding over, Tenant shall
be only a Tenant at sufferance, whether or not Landlord accepts any Rent
from Tenant while Tenant is holding over without Landlord's written
consent. Additionally, in the event that upon termination of the Lease,
Tenant has not fulfilled its obligation with respect to repairs and cleanup
of the Premises or any other Tenant obligations as set forth in this Lease,
then Landlord shall have the right to perform any such obligations as it
deems necessary at Tenant's sole cost and expense, and any time required by
Landlord to complete such obligations shall be considered a period of
holding over and the terms of this Paragraph 25 shall apply.
DEFAULT
26. A. Events of Default. The occurrence of any of the following shall
constitute an event of default on the part of Tenant:
(1) Abandonment. Abandonment of the Premises for a continuous period in
excess of thirty (30) five (5) days other than in connection with Tenant's
active marketing of the Premises for sublease or in connection with
Tenant's vacating the Premises during the final four (4) months of the
Lease. Tenant waives any right to notice Tenant may have under Section
1951.3 of the Civil Code of the State of California, the terms of this
Paragraph 26.A being deemed such notice to Tenant as required by said
Section 1951.3.
(2) Nonpayment of Rent. Failure to pay any installment of Rent or any
other amount due and payable hereunder upon the date when said payment is
due.
(3) Other Obligations. Failure to perform any obligation, agreement or
covenant under this Lease other than those matters specified in
subparagraphs (1) and (2) of this Paragraph 26.A., such failure continuing
for fifteen (15) days after written notice of such failure.
(4) General Assignment. A general assignment by Tenant for the benefit of
creditors.
(5) Bankruptcy. The filing of any voluntary petition in bankruptcy by
Tenant, or the filing of an involuntary petition by Tenant's creditors,
which involuntary petition remains undischarged for a period of thirty (30)
days. In the event that under applicable law the trustee in bankruptcy or
Tenant has the right to affirm this Lease and continue to perform the
obligations of Tenant hereunder, such trustee or Tenant shall, in such time
period as may be permitted by the bankruptcy court having jurisdiction,
cure all defaults of Tenant hereunder outstanding as of the date of the
affirmance of this Lease and provide to Landlord such adequate assurances
as may be necessary to ensure Landlord of the continued performance of
Tenant's obligations under this Lease .
(6) Receivership. The employment of a receiver to take possession of
substantially all of Tenant's assets or the Premises, if such appointment
remains undismissed or undischarged for a period of ten (10) days after the
order therefor.
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(7) Attachment. The attachment, execution or other judicial seizure of
all or substantially all of Tenant's assets or the Premises, if such
attachment or other seizure remains undismissed or undischarged for a
period of ten (10) days after the levy thereof.
B. Remedies Upon Default.
(1) Termination. In the event of the occurrence of any event of default,
Landlord shall have the right to give a written termination notice to
Tenant, and on the date specified in such notice, Tenant's right to
possession shall terminate, and this Lease shall terminate unless on or
before such date all arrears of rental and all other sums payable by Tenant
under this Lease and all costs and expenses incurred by or on behalf of
Landlord hereunder shall have been paid by Tenant and all other events of
default of this Lease by Tenant at the time existing shall have been fully
remedied to the satisfaction of Landlord. At any time after such
termination, Landlord may recover possession of the Premises or any part
thereof and expel and remove therefrom Tenant and any other person
occupying the same, by any lawful means, and again repossess and enjoy the
Premises without prejudice to any of the remedies that Landlord may have
under this Lease, or at law or equity by reason of Tenant's default or of
such termination.
(2) Continuation After Default. Even though an event of default may have
occurred, this Lease shall continue in effect for so long as Landlord does
not terminate Tenant's right to possession under Paragraph 26.B(1) hereof,
and Landlord may enforce all of Landlord's rights and remedies under this
Lease, including without limitation, the right to recover Rent as it
becomes due, and Landlord, without terminating this Lease, may exercise all
of the rights and remedies of a landlord under Section 1951.4 of the Civil
Code of the State of California or any successor code section. Acts of
maintenance, preservation or efforts to lease the Premises or the
appointment of a receiver upon application of Landlord to protect
Landlord's interest under this Lease shall not constitute an election to
terminate Tenant's right to possession.
C. Damages After Default. Should Landlord terminate this Lease pursuant
to the provisions of Paragraph 26.B(1) hereof, Landlord shall have the
rights and remedies of a Landlord provided by Section 1951.2 of the Civil
Code of the State of California, or successor code sections. Upon such
termination, in addition to any other rights and remedies to which Landlord
may be entitled under applicable law, Landlord shall be entitled to recover
from Tenant: (1) the worth at the time of award of the unpaid Rent and
other amounts which had been earned at the time of termination, (2) the
worth at the time of award of the amount by which the unpaid Rent which
would have been earned after termination until the time of award exceeds
the amount of such Rent loss that Tenant proves could have been reasonably
avoided; (3) the worth at the time of award of the amount by which the
unpaid Rent for the balance of the Term after the time of award exceeds the
amount of such Rent loss that the Tenant proves could be reasonably
avoided; and (4) any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform Tenant's
obligations under this Lease or which, in the ordinary course of things,
would be likely to result therefrom. The "worth at the time of award" of
the amounts referred to in (1) and (2), above shall be computed at the
lesser of the "prime rate," as announced from time to time by Wells Fargo
Bank, N.A. (San Francisco), plus five (5) percentage points, or the
maximum interest rate allowed by law ("Applicable Interest Rate'). The
worth at the time of award" of the amount referred to in (3) above shall be
computed by discounting such amount at the Federal Discount Rate of the
Federal Reserve Bank of San Francisco at the time of the award.
D. Late Charge. If any installment of Rent is not paid promptly when
due, such amount shall bear interest at the Applicable Interest Rate from
the date on which said payment shall be due until the date on which
Landlord shall receive said payment. In addition, Tenant shall pay
Landlord a late charge equal to five percent (5%) of the delinquency, to
compensate Landlord for the loss of the use of the amount not paid and the
administrative costs caused by the delinquency, the parties agreeing that
Landlord's damage by virtue of such delinquencies would be difficult to
compute and the amount stated herein represents a reasonable estimate
thereof. This provision shall not relieve Tenant of Tenant's obligation to
pay Rent at the time and in the manner herein specified.
E. Remedies Cumulative. All rights, privileges and elections or remedies
of the parties are cumulative and not alternative, to the extent permitted
by law and except as otherwise provided herein.
LIENS
27. Tenant shall keep the Premises free from liens arising out of or related to
work performed, materials or supplies furnished or obligations incurred by
Tenant or in connection with work made, suffered or done by or on behalf of
Tenant in or on the Premises or Project. In the event that Tenant shall
not, within ten (10) days following the imposition of any such lien, cause
the same to be released of record by payment or posting of a proper bond,
Landlord shall have, in addition to all other remedies provided herein and
by law, the right, but not the obligation, to cause the same to be released
by such means as Landlord shall deem proper, including payment of the claim
giving rise to such lien. All sums paid by Landlord on behalf of Tenant and
all expenses incurred by Landlord in connection therefor shall be payable
to Landlord by Tenant on demand with interest at the Applicable Interest
Rate. Landlord shall have the right at all times to post and keep posted on
the Premises any notices permitted or required by law, or which Landlord
shall deem proper, for the protection of Landlord, the Premises, the
Project and any other party having an interest therein, from mechanics' and
materialmen's liens, and Tenant shall give Landlord not less than ten (10)
business days prior written notice of the commencement of any work in the
Premises or Project which could lawfully give rise to a claim for
mechanics' or materialmen's liens.
SUBSTITUTION
28.
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TRANSFERS BY LANDLORD
29. In the event of a sale or conveyance by Landlord of the Building or a
foreclosure by any creditor of Landlord, the same shall operate to release
Landlord from any liability upon any of the covenants or conditions,
express or implied, herein contained in favor of Tenant, to the extent
required to be performed after the passing of title to Landlord's
successor-in-interest. In such event, Tenant agrees to look solely to the
responsibility of the successor-in-interest of Landlord under this Lease
with respect to the performance of the covenants and duties of "Landlord"
to be performed after the passing of title to Landlord's successor-in-
interest. This Lease shall not be affected by any such sale and Tenant
agrees to attorn to the purchaser or assignee. Landlord's successor(s)-in-
interest shall not have liability to Tenant with respect to the failure to
perform all of the obligations of "Landlord", to the extent required to be
performed prior to the date such successor(s)-in-interest became the owner
of the Building.
RIGHT OF LANDLORD TO PERFORM TENANT'S COVENANTS
30. All covenants and agreements to be performed by Tenant under any of
the terms of this Lease shall be performed by Tenant at Tenant's sole cost
and expense and without any abatement of Rent. If Tenant shall fail to pay
any sum of money, other than Base Rent and Basic Operating Cost, required
to be paid by Tenant hereunder or shall fail to perform any other act on
Tenant's part to be performed hereunder, and such failure shall continue
for five (5) days after notice thereof by Landlord, Landlord may, but shall
not be obligated to do so, and without waiving or releasing Tenant from any
obligations of Tenant, make any such payment or perform any such act on
Tenant's part to be made or performed. All sums, so paid by Landlord and
all necessary incidental costs together with interest thereon at the
Applicable Interest Rate from the date of such payment by Landlord shall be
payable to Landlord on demand, and Tenant covenants to pay such sums, and
Landlord shall have, in addition to any other right or remedy of Landlord,
the same right and remedies in the event of the non-payment thereof by
Tenant as in the case of default by Tenant in the payment of Base Rent and
Basic Operating Cost.
WAIVER
31. If either Landlord or Tenant waives the performance of any term,
covenant or condition contained in this Lease, such waiver shall not be
deemed to be a waiver of any subsequent breach of the same or any other
term, covenant or condition contained herein. The acceptance of Rent by
Landlord shall not constitute a waiver of any preceding breach by Tenant of
any term, covenant or condition of this Lease, regardless of Landlord's
knowledge of such preceding breach at the time Landlord accepted such Rent.
Failure by Landlord to enforce any of the terms, covenants or conditions of
this Lease for any length of time shall not be deemed to waive or to
decrease the right of Landlord to insist thereafter upon strict performance
by Tenant. Waiver by Landlord of any term, covenant or condition contained
in this Lease may only be made by a written document signed by Landlord.
NOTICES
32. Each provision of this Lease or of any applicable governmental laws,
ordinances, regulations and other requirements with reference to sending,
mailing or delivery of any notice or the making of any payment by Landlord
or Tenant to the other shall be deemed to be complied with when and if the
following steps are taken:
A. Rent. All Rent and other payments required to be made by Tenant to
Landlord hereunder shall be payable to Landlord at the address set forth in
the Basic Lease Information, or at such other address as Landlord may
specify from time to time by written notice delivered in accordance
herewith. Tenants obligation to pay Rent and any other amounts to Landlord
under the terms of this Lease shall not be deemed satisfied until such Rent
and other amounts have been actually received by Landlord.
B. Other. All notices, demands, consents and approvals which may or are
required to be given by either party to the other hereunder shall be in
writing and either personally delivered, sent by commercial overnight
courier, or mailed, certified or registered, postage prepaid, and addressed
to the party to be notified at the address for such party as specified in
the Basic Lease Information or to such other place as the party to be
notified may from time to time designate by at least fifteen (15) days
notice to the notifying party. Notices shall be deemed served upon receipt
or refusal to accept delivery. Tenant appoints as its agent to receive the
service of all default notices and notice of commencement of unlawful
detainer proceedings the person in charge of or apparently in charge of
occupying the Premises at the time, and, if there is no such person, then
such service may be made by attaching the same on the main entrance of the
Premises.
ATTORNEYS' FEES
33. In the event that Landlord places the enforcement of this Lease, or
any part thereof, or the collection of any Rent due, or to become due
hereunder, or recovery of possession of the Premises in the hands of an
attorney, Tenant shall pay to Landlord, upon demand, Landlord's reasonable
attorneys' fees and court costs. In any action which Landlord or Tenant
brings to enforce its respective rights hereunder, the unsuccessful party
shall pay all costs incurred by the prevailing party including reasonable
attorneys' fees, to be fixed by the court, and said costs and attorneys'
fees shall be a part of the judgment in said action.
SUCCESSORS AND ASSIGNS
34. This Lease shall be binding upon and inure to the benefit of Landlord,
its successors and assigns, and shall be binding upon and inure to the
benefit of Tenant, its successors, and to the extent assignment is approved
by Landlord hereunder, Tenant's assigns.
FORCE MAJEURE
35. Whenever a period of time is herein prescribed for action to be taken
by Landlord, Landlord shall not be liable or responsible for, and there
shall be excluded from the computation for any such period of time, any
delays due to strikes, riots, acts of God, shortages of labor or materials,
war, governmental laws, regulations or restrictions or any other causes of
any kind whatsoever which are beyond the control of Landlord.
BROKERAGE COMMISSION
36. Landlord shall pay a brokerage commission to Broker in accordance with
a separate agreement between Landlord and Broker. Tenant warrants to
Landlord that Tenant's sole contact with Landlord or with the Premises in
connection with this transaction has been directly with Landlord and
Broker(s) as noted in the Basic Lease Information, and that no other broker
or finder can properly claim a right to a commission or a finder's fee
based upon contacts between the claimant and Tenant with respect to
Landlord or the Premises.
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Tenant shall indemnify, defend by counsel acceptable to Landlord, protect
and hold Landlord harmless from and against any loss, cost or expense,
including, but not limited to, attorneys' fees and costs, resulting from
any claim for a fee or commission by any broker or finder in connection
with the Premises and this Lease other than Broker.
MISCELLANEOUS
37. A. General. The term 'Tenant' or any pronoun used in place thereof shall
indicate and include the masculine or feminine, the singular or plural
number, individuals, firms or corporations, and their respective
successors, executors, administrators and permitted assigns, according to
the context hereof.
B. Time. Time is of the essence regarding this Lease and all of its
provisions.
C. Choice of Law. This Lease shall in all respects be governed by the
laws of the State of California.
D. Entire Agreement. This Lease, together with its Exhibits, contains
all the agreements of the parties hereto and supersedes any previous
negotiations. There have been no representations made by the Landlord or
understandings made between the parties other than those set forth in this
Lease and its exhibits.
E. Modification. This Lease may not be modified except by a written
instrument by the parties hereto.
F. Severability. If, for any reason whatsoever, any of the provisions
hereof shall be unenforceable or ineffective, all of the other provisions
shall be and remain in full force and effect.
G. Recordation. Tenant shall not record this Lease or a short form
memorandum hereof.
H. Examination of Lease. Submission of this Lease to Tenant does not
constitute an option or offer to lease and this Lease is not effective
otherwise until execution and delivery by both Landlord and Tenant.
I. Accord and Satisfaction. No payment by Tenant of a lesser amount
than the Rent nor any endorsement on any check or letter accompanying any
check or payment of Rent shall be deemed an accord and satisfaction of full
payment of Rent, and Landlord may accept such payment without prejudice to
Landlord's right to recover the balance of such Rent or to pursue other
remedies.
J. Easements. Landlord may grant easements on the Project and dedicate
for public use portions of the Project without Tenant's consent; provided
that no such grant or dedication shall substantially interfere with
Tenant's use of the Premises. Upon Landlord's demand, Tenant shall
execute, acknowledge and deliver to Landlord documents, instruments, maps
and plats necessary to effectuate Tenant's covenants hereunder.
K. Drafting and Determination Presumption. The parties acknowledge that
this Lease has been agreed to by both the parties, that both Landlord and
Tenant have consulted with attorneys with respect to the terms of this
Lease and that no presumption shall be created against Landlord because
Landlord drafted this Lease.
L. Exhibits. Exhibits A and B attached hereto are hereby incorporated
herein by this reference.
M. No Light, Air or View Easement. Any diminution or shutting off of
light, air or view by any structure which may be erected on lands adjacent
to or in the vicinity of the Building shall in no way affect this Lease or
impose any liability on Landlord.
N. No Third Party Benefit. This Lease is a contract between Landlord
and Tenant and nothing herein is intended to create any third party
benefit.
ADDITIONAL PROVISIONS
38. Paragraphs 39 through 44 and Addendums 1 and 2 and Exhibits A and B are
attached hereto and made a part thereof.
39. Base Rent: Rent for the Premises shall be as follows:
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Months 1 - 30: $4,836 per month
Months 31 - 60: $5,059 per month
40. Tenant Improvements:
-------------------
Tenant accepts the Premises, including the Building, the underlying land
and the Common Areas, in their present conditions, AS-IS, including latent
defects, without any representations or warranties, expressed or implied,
except as expressly set forth in this Lease. Landlord shall have no
obligation to perform any alterations, additions or improvements to the
Premises to prepare the same for Tenant's occupancy or, except as expressly
set forth below, to pay for any improvements to the Premises made by Tenant
to prepare the Premises for Tenant's occupancy.
Tenant agrees, at Tenant's sole cost and expense, to install all
improvements necessary and appropriate for the conduct of the business in
the Premises contemplated by the Lease (the "Tenant Improvements"). The
Tenant Improvements shall be performed in accordance with all Applicable
Laws, including ADA and Title 24 requirements, and the requirements of all
carriers of insurance on the Premises and the Board of Underwriters, Fire
Rating Bureau, or similar organization. The Tenant Improvements shall be
shown on final working drawings submitted to and approved by Landlord
(which approval shall not be unreasonably withheld or delayed), and any
changes from such working drawings shall be submitted to and approved by
Landlord (which approval shall not be unreasonably withheld or delayed).
The Tenant Improvements shall be performed in a good and workmanlike
manner, and diligently prosecuted to completion to the end that the
improvements on the Premises shall at all times be a complete unit except
during the period of work. Upon completion of the Tenant Improvements,
Tenant shall deliver to Landlord as-built plans thereof.
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Upon completion of the Tenant Improvements, as approved by Landlord and
certified as complete by Tenant's architect, Landlord shall reimburse
Tenant for Tenant Improvements in an amount not to exceed $26,040.00 (which
amount is $3.50 per square foot of the agreed area of the Building)
("Landlord's Contribution"). As a condition to Landlord's disbursement of
Landlord's Contribution, Tenant shall provide Landlord with invoices for
the work done to the Premises, and statutory lien waivers and releases upon
final payment, satisfactory to Landlord, for all work performed. In the
event that the cost of the Tenant improvements is less than Landlord's
Contribution as set forth above, Landlord's Contribution shall be reduced
accordingly. Landlord's Contribution may be used solely for the Tenant
Improvements, and may not be applied to Tenants moving expenses, costs of
furniture, equipment or other personal property, toward Tenant's rent
obligations under this Lease or toward the costs of any subsequent
alterations made by Tenant to or upon the Premises. Tenant shall use
commercially reasonable efforts to complete the Tenant Improvements in an
expeditious manor, provided that Tenant acknowledges that the Lease
commences pursuant to Paragraph 2.B.
Within thirty (30) days after execution of this Lease, Tenant shall prepare
and deliver to Landlord plans and specifications for its initial
improvements to the Premises (the "Plans"). Landlord shall not
unreasonably withhold its approval, and shall within five (5) business days
after receipt of the Plans, deliver its response to Tenant in writing,
either approving the Plans or noting specifically those items it
disapproves. If Landlord disapproves any aspect of the Plans, the parties
shall negotiate in good faith to revise the Plans to meet with Landlord's
reasonable approval.
41. Early Occupancy: To the extent Tenant Improvements are completed prior to
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one hundred twenty (120) days following full lease execution, Tenant shall
have up to thirty (30) days of early occupancy free of Base Rent and Basic
Operating Costs. Tenant shall perform all duties and obligations imposed
by this Lease, including, but not limited to, those provisions relating to
insurance and indemnification, saving and excepting only the obligation to
pay Base Rent and Basic Operating Costs which obligation shall commence at
the time specified in Paragraph 2(B). Notwithstanding anything to the
contrary in this Paragraph 41, the Lease shall commence and Tenant shall
begin paying Rent no later than November 1, 1996.
42. Option to Renew: Tenant shall have an option to re-lease the Premises in
---------------
"as is" condition for a term of five (5) years at 95% of the then current
market rent for comparable warehouse space in the proximate San Francisco
market area on the terms and conditions of the Lease. The definition of
comparable warehouse space shall incorporate the parking amenities of the
Premises, and the Building's location, age, quality, amenities, identity,
exterior appearance, interior improvements, and type of construction. If
Tenant had been in default under this Lease prior to the exercise date of
this option to re-lease the Premises, Tenant shall forfeit all of its
rights under this Paragraph 42, provided however, that Tenant's late
payment of rent by not more than twenty (20) days on no more than three (3)
occasions shall not terminate this Option to Renew.
Tenant shall give Landlord written notice of its intent to exercise its
option at least one hundred eighty (180) days but not more than two hundred
seventy (270) days prior to the expiration of the current lease term.
Within fifteen (15) days after Tenant exercises its option to re-lease,
Landlord will provide Tenant with Landlord's current market rental, as
determined by Landlord, as well as terms and conditions for the extended
term. The parties are obligated to negotiate in good faith to agree on the
market rental rate. If the parties have not mutually agreed on the market
rental within forty-five (45) days from notification by Landlord to Tenant
of Landlord's rental determination, each party hereto shall appoint one
representative who shall be a licensed real estate broker experienced in
the leasing of comparable warehouse space in the County of Alameda to act
as an arbitrator. The two (2) arbitrators so appointed shall determine the
current rental value for comparable warehouse space for the subsequent
sixty (60) months pursuant to the terms and conditions of the Lease and of
the option period. The determination of said current rental value shall be
made by said two (2) arbitrators within ninety (90) days from notification
by Landlord to Tenant of Landlord's rental determination and they shall
submit said determination in writing and signed by said arbitrators in
duplicate. One of the written notifications shall be delivered to Landlord
and the other to Tenant.
In the event the two (2) arbitrators of the parties hereto cannot agree on
the current rental value for the Premises herein, said two (2) arbitrators
shall appoint a third arbitrator who shall be a licensed real estate broker
experienced in the leasing of comparable warehouse space in the County of
Alameda to act as an arbitrator. The current rental value for comparable
warehouse space for the subsequent sixty (60) month period shall be
independently determined by the third of said arbitrators, which said
determination shall be made within one hundred twenty (120) days from
notification by Landlord to Tenant of Landlord's rental determination. The
role of the third arbitrator shall then be to immediately select from the
proposed resolutions of arbitrators #1 and #2 the one that most closely
approximates the third arbitrator's determination of market rental value.
The third arbitrator shall have no right to adopt a compromise or middle
ground or any modification of either of the two final proposed resolutions.
The resolution the third arbitrator chooses as mostly closely approximating
his determination of the question in issue shall constitute the decision
and award of the arbitrators and be final and binding upon the parties.
The parties hereto shall pay the charges of the arbitrator appointed by him
and any expenses incurred by such arbitrator. The charges and expenses of
the third arbitrator, as provided herein, shall be paid by the parties
hereto in equal shares.
In the event either arbitrator #1 or arbitrator #2 fails to present a
market rental figure within the forty-five (45) day period, the rental
presented by the other arbitrator shall be considered final and binding on
both parties.
In the event the third arbitrator fails to present a current market rent
within the thirty (30) day period, then by mutual consent of Landlord and
Tenant:
(a) The time period shall be extended, or
(b) If Landlord or Tenant do not wish to extend the period, a fourth
arbitrator shall be selected by arbitrator #1 and arbitrator #2 and a
new thirty (30) day period shall begin.
Notwithstanding anything to the contrary herein contained, Tenants right to
extend the term by exercise of the foregoing option shall be conditioned
upon the following: (i) at the time of the exercise of the option, and at
the time of the commencement of the extended term, Tenant shall be in
possession of and occupying the
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Premises for the conduct of its business therein and the same shall not be
occupied by any assignee, subtenant or licensee, the option to extend being
applicable hereunder only with respect to so much of the Premises as is
actually occupied by Tenant; and (ii) the notice of exercise shall
constitute a representation by Tenant to Landlord effective as of the date
of the exercise and as of the date of commencement of the extended term,
that Tenant does not intend to seek to assign the Lease in whole or in
part, or sublet all or any portion of the Premises, the election to extend
the term being for purposes of utilizing the Premises for Tenant's purposes
in the conduct of Tenant's business therein; however, such notice shall not
be deemed a waiver of Tenant's rights hereunder to assign or sublet.
43. Right of First Offering: Tenant shall have a one-time Right of First
-----------------------
Offering to lease the adjacent 7,440 square foot space located at 225
Mendell Street and/or the adjacent 7,440 square foot space located at 275
Mendell Street. Upon Landlord learning that either 225 or 275 Mendell
Street are becoming available, Landlord shall give Tenant notice of said
availability. Tenant shall have five (5) business days from the date of
such notice to exercise Tenant's Right of First Offering, which such notice
shall include the Rent Tenant is willing to pay on an as-is basis for such
space. If Tenant does not exercise this Right of First Offering, or if the
Rent Tenant has offered is unacceptable to Landlord, Landlord shall be free
to lease the premises to any third party. Tenant shall forfeit all of its
rights under this Paragraph 43 upon the date that the premises of 225
Mendell Street and 275 Mendell Street are leased to any third party.
44. Quiet Enjoyment: Landlord covenants to Tenant that, so long as Tenant is
---------------
not in default under this Lease beyond any applicable cure period, Tenant
shall have quiet enjoyment of the Premises and all of the rights granted
hereunder without interference by Landlord or anyone acting by, through or
under Landlord, subject, however, to the exceptions, reservations and
conditions of this Lease.
Addendum 1
Paragraph 4.C. Compliance with Regulations: Notwithstanding anything to
------------------------------------------
the contrary in this Lease, should Tenant be unable to obtain the necessary
use permit(s) for the Permitted Use by any governmental agency, Tenant
shall have the right to terminate this Lease five (5) business days
following the date Tenant provides Landlord: (i) written notification of
its intent to terminate the Lease, and (ii) a cashier's check in the amount
of (a) $34,056 (six (6) months Rent) plus (b) all or any portion of the
Landlord's Contribution which has been paid to Tenant plus (c) any out-of-
pocket expenses incurred by Landlord in connection with this Lease
including, but not limited to, any commissions or legal fees paid by
Landlord.
Once obtained, Tenant shall provide Landlord with a copy of any applicable
occupancy or business permit. Upon receipt by Landlord of such permit, the
terms of this Addendum 1 shall become null and void and shall not affect
any other terms of this Lease.
Addendum 2
Paragraph 19. Security Deposit: Notwithstanding anything to the contrary
------------------------------
in this Paragraph 19, Tenant shall provide a Security Deposit of $27,996
upon full lease execution. Provided Tenant is not then, and has not been,
in default of the Lease during the first six (6) months, $22,320 shall be
returned to Tenant and $5,676 shall remain in Landlord's possession as
Security Deposit for the remainder of the Lease. If Tenant defaults during
the first six (6) months and cures such default within thirty (30) days, or
if a non-monetary default is not reasonably curable within thirty (30) days
and Tenant commences action within thirty (30) days and diligently pursues
such cure to its completion within an acceptable period of time as
reasonably determined by Landlord, Landlord shall return the $22,320 to
Tenant upon such cure, less any out of pocket expenses (including attorney
fees) Landlord incurs in connection with such default.
IN WITNESS WHEREOF, the parties hereto have executed this Lease the day and
year first above written.
"Landlord"
Kifer/Mendell/Industrial Way II
Associates Limited Partnership,
a California Limited Partnership
By: /s/ Albert W. Sandell
-------------------------------------
Albert W. Sandell
Trammell Crow NW, Inc.
Its.: Executive Vice President as Agent
----------------------------------
"Tenant
Briazz, Inc., a Washington corporation
By: /s/ Victor D. Alhadeff
-------------------------------------
Victor Alhadeff
Its.: President
-----------------------------------
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[Initials]
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Exhibit A
[Site Plan]
[Initials]
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Exhibit B
[Initials]