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STANDARD FORM LEASE
(INDUSTRIAL MULTI-TENANT; NET)
This Lease dated April 25, 1994 (this "Lease") is entered into by and between
State of California Public Employees' Retirement System ("Landlord") and
Cardima, Inc., a California corporation ("Tenant").
ARTICLE I.
BASIC LEASE PROVISIONS
Each reference in this Lease to the "Basic Lease Provisions" shall mean and
refer to the following terms, the application of which shall be governed by the
provisions in the remaining Articles of this Lease:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. Address of Landlord: c/o O'Donnell Property Services, Inc. with a copy to:
1737 North First Street, Suite 580 2201 Dupont Drive, Suite 100
San Jose, CA 95112 Irvine, CA 92715
2. Promises Address: 47266 Benicia Street
Fremont, CA 94538
3. Address of Tenant:
(a) Notices: 47266 Benicia Street Fremont. CA 94538
(b) Billing: 47266 Benicia Street Fremont, CA 94538
4. Tenant's Trade Name: N/A
5. Tenant's Contact: Gabriel B. Vegh Telephone (510) 440-7709
6. Premises Square Footage: Approximately 44,810 Square Feet
Building Square Footage: Approximately 44,810 Square Feet
Project Square Footage: Approximately 430,104 Square Feet
7. Anticipated Commencement Date: August 1, 1994
8. Term: Five (5) years and Zero (0) months
9. Initial Monthly Rent: $17,027.80/month
(subject to adjustment per Exhibit E)
10. Security Deposit: $30,022.70
11. Permitted Uses: Develop, manufacture, store, and market and distribute
medical diagnostic and therapeutic devices and related
product and conduct stated research and office activities.
12. Brokers: J.R. Parrish (Landlord); CS Madison (Tenant)
13. Landlord's Architect: N/A
14. Guarantor: N/A
15. Vehicle Parking Spaces: One hundred seventy-nine (179) unassigned
16. Additional Insureds: THE STATE OF CALIFORNIA
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
ALEX. BROWN KLEINWORT BENSON REALTY ADVISORS
CORPORATION O'DONNELL PROPERTY SERVICES, INC.
17. Tenant's Liability Insurance Limits: $2,000,000
18. Tenant's Share: See Section 7.2 and Exhibit L
Exhibits:
A Description of Premises G Rules and Regulations
B Project Site Plan H Environmental Questionnaire
C Work Letter I Landlord's Disclosures
D Commencement Date Memorandum J [INTENTIONALLY OMITTED]
E Adjustments to Monthly Rent K [INTENTIONALLY OMITTED]
F [INTENTIONALLY OMITTED] L Calculation of Tenant's Share
Riders:
Rider Number One
Rider Number Two
</TABLE>
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ARTICLE II
DEFINITIONS
2.1. Certain Definitions. The capitalized terms set forth below, unless the
context clearly requires otherwise, shall have the following meanings in
this Lease:
"Additional Rent" means any and all sums (whether or not specifically
called "Additional Rent" in this Lease) other than Monthly Rent which
Tenant is or becomes obligated to pay to Landlord under this Lease. See
also Rent.
"Alterations" means any alterations, decorations, modifications,
additions or improvements made in, on, about, under or contiguous to the
Building or the Premises after the Commencement Date, including, but not
limited to, lighting, HVAC and electrical fixtures, pipes and conduits,
transfer, storage and disposal facilities, partitions, drapery, wall
coverings, shelves, cabinetwork, carpeting and other floor coverings,
ceiling tiles, fixtures and carpentry installations.
"Applicable Laws" means the laws, rules, regulations, ordinances,
restrictions, and practices described in Section 5.2.
"Applicable Rate" means the greater of ten percent (10%) per annum or
five percent (5%) in excess of the discount rate of the Federal Reserve
Bank of San Francisco in effect on the twenty-fifth (25/th/) day of the
calendar month immediately prior to the event giving rise to the
Applicable Rate Imposition; provided, however, the Applicable Rate shall
in no event exceed the maximum interest rate permitted to be charged by
applicable law.
"Broker" means the person or entity identified in Item 12 of the Basic
Lease Provisions.
"Building" means that certain building within which the Premises are
located.
"Casualty" is defined in Section 12.1.
"City" means the city in which the Premises are located.
"Commencement Date" means the commencement date of the term, described in
Section 3.2.
"Common Area" means all areas and facilities within the Project exclusive
of the Premises and other portions of the Project leased (or to be
leased) exclusively to other tenants. The Common Area includes, but is
not limited to, parking areas, access and perimeter roads, sidewalks,
landscaped areas and similar areas and facilities. Tenant's use of the
Common Area, and its rights and obligations with respect thereto, are
more particularly described in Article X.
"County" means the county in which the Premises are located.
"Event of Default" means the Tenant defaults described in Section 15.1.
"Guarantor" means the person(s) or entity identified in item 14 of the
Basic Lease Provisions, if any.
"HVAC" means the heating, ventilating and air conditioning system serving
the Building.
"Hazardous Materials" is defined in Section 6.1.
"Landlord's Agents" means Landlord's authorized agents, representatives,
property managers (whether as agents or independent contractors),
consultants, contractors, partners, subsidiaries, affiliates, directors,
officers and employees, including without limitation the Additional
Insureds named in Item 16 of the Basic Lease Provisions.
"Landlord's Architect" means the architect or architectural firm from
time to time designated by Landlord to perform the function of Landlord's
Architect set forth in this Lease. Landlord's Architect initially shall
be the architect or architectural firm designated in Item 13 of the Basic
Lease Provisions.
"Lease" means this instrument together with all exhibits,
amendments, addends and riders attached hereto and made a part hereof.
"Monthly Rent" means the monthly rental which Tenant is to pay to
Landlord pursuant to Section 41.1, as the same may be adjusted from time
to time as set forth in this Lease. See also Rent.
"Mortgage" means any mortgage, deed of trust, or similar lien on or
covering the Project or any part thereof.
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"Mortgagee" means any mortgagee of a mortgage, beneficiary of a deed of
trust or lender having a lien on or covering the Project or any part
thereof.
"Notice" means each and every notice, communication, request, demand,
reply or advice, or duplicate thereof, in this Lease provided or
permitted to be given, made or accepted by either party to any other
party, which shall be in writing and given in accordance with the
provisions of Section 21.6.
"Operating Expenses" means, collectively, Project Costs and Real Property
Taxes.
"Plans" means the final working drawings for the construction of the
Tenant Improvements to be prepared and approved as set forth in the Work
Letter.
"Premises" means the premises shown in Exhibit A, and all areas
---------
appurtenant thereto, if any, for the exclusive use of Tenant, as shown in
Exhibit A. The Premises are located within and constitute a portion of
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the Building at the address set forth in Item 2 of the Basic Lease
Provisions.
"Premises Square Footage" means the approximate floor area of the
Premises. The Premises Square footage as of the execution of this Lease
is set forth in Item 6 of the Basic Lease Provisions.
"Project" means that certain real property, and all improvements thereon,
including the Building and other buildings, if any, located within the
boundaries of such property, shown on the Project Site Plan.
"Project Costs" is defined in Section 7.3.
"Project Site Plan" means Exhibit B.
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"Real Property Taxes" is defined in Section 7.4.
"Rent" means Monthly Rent and Additional Rent, collectively.
"Rules and Regulations" means the rules and regulations attached hereto
as Exhibit G and any modifications thereto promulgated by Landlord or
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Landlord's Agents from time to time.
"Security Deposit" means the amount set forth in Item 10 of the Basic
Lease Provisions, which shall be paid to Landlord by Tenant pursuant to
Section 4.6.
"Substantial Completion" and "substantially completed" means the Tenant
Improvements, or repair of the Premises following a Casualty, have been
fully completed, except for minor details of construction, mechanical
adjustments or decoration the absence or completion of which do not
materially interfere with Tenant's use and enjoyment of the Premises and
which may reasonably be completed within thirty (30) days (items normally
referred to as "punch list" items).
"Tenant Delays" means (i) any and all delays in the construction of the
Tenant Improvements due to the fault of the Tenant, as defined and
specified in the Work Letter, and (ii) Tenant's failure to deliver to
Landlord prior to the Anticipated Commencement Date, executed copies of
policies of insurance or certificates thereof as required under Section
11.8.
"Tenant Improvements" means those certain improvements, if any, to
be constructed on the Premises as provided in Article XX and in the Work
Letter.
"Tenant's Agents" means Tenant's agents, representatives, consultants,
contractors, affiliates, subsidiaries, officers, directors, employees,
subtenants, guests and invitees.
"Tenant's Personal Property" means Tenant's trade fixtures, furniture,
equipment and other personal property located in or on the Premises.
"Term" means the term of this Lease, as provided in Section 3.2.
"Unavoidable Delay" means any delays which are beyond a party's
reasonable control, including, but not limited to, delays due to
inclement weather, strikes, acts of God, inability to obtain labor or
materials, inability to secure governmental approvals or permits,
governmental restrictions, civil commotion, fire, earthquake, explosion,
flood, hurricane, the elements, or the public enemy, action or
interference of governmental authorities or agents, war, invasion,
insurrection, rebellion, riots, lockouts or any other cause whether
similar or dissimilar to the foregoing which is beyond a party's
reasonable control; provided however, that in no event shall any of the
foregoing ever apply with respect to the payment of any monetary
obligation.
"Work Letter" means the work letter between Landlord and Tenant regarding
the construction of the Tenant Improvements, if any, in the form of
Exhibit C.
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3
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2.2. Other Definitions. Terms defined elsewhere in this Lease, unless the
context clearly requires otherwise, shall have the meaning as there
given.
4
<PAGE>
ARTICLE III
PREMISES AND TERM
3.1 Lease of Premises. Subject to and upon the terms and conditions set
forth herein, Landlord hereby leases the Premises to Tenant, and Tenant hereby
leases the Premises from Landlord.
3.2 Term and Commencement. Unless sooner terminated as provided herein,
the Term of this Lease shall be for that period of years and months set forth in
Item 8 of the Basic Lease Provisions, as the same may be extended in accordance
with any option or options to extend the Term granted herein, and shall commence
(the "Commencement Date") on the earlier of (i) the date upon which the City has
approved the Tenant improvements in accordance with its building code, as
evidenced by its written approval thereof in accordance with the building
permits issued for the Tenant Improvements, and Landlord's Architect has
certified in writing that the Tenant Improvements are substantially completed in
accordance with the Plans, provided that Landlord shall deliver to Tenant a
certificate of occupancy (temporary or otherwise) from the City for the Premises
within five (5) business days of such date, or (ii) the date Tenant commences
occupancy of the Premises. See Rider 3.2. When the actual Commencement Date
has occurred, Landlord and Tenant shall execute a Commencement Date Memorandum
in the form shown in Exhibit D. Landlord and Tenant anticipate that the Term
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will commence on the "Anticipated Commencement Date" set forth in Item 7 of the
Basic Lease Provisions, but the Anticipated Commencement Date shall in no event
affect the actual Commencement Date, which shall be determined as set forth in
this Section 3.2.
5
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RIDER 3.2: TERM AND COMMENCEMENT
(a) For the purposes of Clause (ii) [formerly clause (iii)] of Section
3.2, "occupancy of the Premises" shall mean occupancy of the Premises for the
conduct of Tenant's business, other than pursuant to Rider 3.2, subparagraph (b)
below.
(b) Notwithstanding any provision of the Lease to the contrary, from
and after the date on which this Lease is mutually executed by Landlord and
Tenant, Tenant shall have the right to use and occupy the ground floor lobby and
the second floor of the Premises for the conduct of Tenant's business, together
with the non-exclusive rights to the parking and other common areas of the
Project, without charge; provided, however, Tenant shall pay for all utilities
consumed by it and further provided that all provisions of this Lease other than
those dealing with Monthly Rent and Additional Rent shall apply during the
period of such use and occupancy. Such occupancy shall not cause the
Commencement Date of the Lease to occur. Tenant shall coordinate its activities
in such portion of the Premises so as to not interfere with Landlord's
construction of the Tenant Improvement pursuant to the Work Letter.
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<PAGE>
3.3 Early Entry. Tenant and its authorized agents, contractors,
subcontractors and employees shall be granted a license by Landlord to enter
upon the Premises, at Tenant's sole risk and expense, during ordinary business
hours prior to the Commencement Date, for the sole purpose of installing
Tenant's trade fixtures and equipment in the Premises; provided, however, that
(i) the provisions of this Lease, other than with respect to the payment of
Monthly Rent or Additional Rent (except as provided below), shall apply during
such early entry, including, but not limited to, the provisions of Article XI
relating to Tenant's indemnification of Landlord, (ii) prior to any such entry,
Tenant shall pay for and provide evidence of the insurance to be provided by
Tenant pursuant to the provisions of Article XI, (iii) Tenant shall pay all
utility, service and maintenance charges for the Premises attributable to
Tenant's early entry and use of the Premises as reasonably determined by
Landlord, (iv) Tenant shall not unreasonably interfere, delay or hinder
Landlord, its agents, contractors or subcontractors in the construction of the
Tenant Improvements in accordance with the provisions of this Lease, and (v)
Tenant shall not use the Premises for the storage of inventory or otherwise
commence the operation of business during the period of such early entry except
as provided in Rider 3.2. Upon Tenant's breach of any of the foregoing
conditions, Landlord may, in addition to exercising any of its other rights and
remedies set forth herein, revoke such license upon notice to Tenant. Early
entry by Tenant in accordance with this Section 3.3 shall not constitute
occupancy of the Premises for purposes of establishing the Commencement Date.
3.4. Delay in Possession. If for any reason Landlord cannot deliver
possession of the Premises to Tenant with the Tenant Improvements substantially
completed on or before the Anticipated Commencement Date, Landlord shall not be
subject to any liability therefor, and such failure shall not affect the
validity of this Lease or the obligations of Tenant hereunder, but in such case,
Tenant shall not be obligated to pay Monthly Rent or Additional Rent other than
as provided in Section 3.3 and Section 3.5 until the Commencement Date has
occurred. If the Commencement Date has not occurred within ninety (90) days
following the Anticipated Commencement Date plus periods attributable to Tenant
Delays or Unavoidable Delay or one hundred fifty (150) days after the
anticipated Commencement Date plus periods attributable to Tenant Delays (but
without regard to Unavoidable Delays), Tenant may, at its option, by Notice to
Landlord within ten (10) days thereafter, terminate this Lease, in which event
the parties shall be discharged from all further obligations hereunder;
provided, however, if Tenant fails to give such notice to Landlord within such
ten-day period, Tenant shall no longer have the right to terminate this Lease
under this Section 3.4. Tenant understands that, notwithstanding anything to
the contrary contained herein, Landlord shall have no obligation to deliver
possession the Premises to Tenant for so long as Tenant fails to deliver to
Landlord executed copies of policies of insurance or certificates thereof as
required under Section 11.8.
3.5 Tenant Delays. The Commencement Date shall not be delayed or
postponed due to Tenant Delays, and the Term, Tenant's obligations to pay Rent
and all of Tenant's other obligations under this Lease shall commence upon the
date which would have been the Commencement Date but for Tenant Delays.
3.6 Condition of Premises. Landlord's sole construction obligations, if
any, regarding Tenant improvements for the Premises are set forth in Article XX
and the Work Letter and Rider 3.6. The taking of possession or use of the
Premises by Tenant for any purpose other than as provided in Section 3.3 or
Rider 3.2 shall conclusively establish that Tenant has inspected the Premises
and accepts them as being in good and sanitary order, condition and repair and
that the Tenant Improvements have been constructed in accordance with the Plans;
provided, however, Tenant shall have a period of thirty (30) days after taking
possession of the Premises (other than as provided in Section 3.3 or Rider 3.2)
in which to notify Landlord in writing of any construction deficiencies or
defects and any uncompleted punch list items (the punch list shall be limited to
items required to be accomplished by Landlord under the Work Letter) and, except
as hereafter provided, Landlord will repair, replace or complete at its expense
all items referenced in such notice within thirty (30) days after receipt of
such notice, subject to Unavoidable Delay, or as soon thereafter as Landlord,
acting in good faith and with diligence, can repair, replace or complete the
same. If Landlord reasonably contends that a particular item in such notice is
not justified, the parties will refer the issue to Landlord's Architect for
resolution. Landlord's Architect's determination shall be final and binding
upon the parties. Nothing in this Section 3.6 shall limit or expand Landlord's
maintenance and repair obligations set forth in Article IX. See Rider 3.6.
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RIDER 3.6 CONDITION OF PREMISES:
On the Commencement Date, Landlord shall deliver the Premises to
Tenant clean and free of debris, with all utility systems, HVAC, loading docks,
exterior doors and locks, and fixtures in good operating order, condition and
repair. Landlord warrants that the utility systems and fixtures shall remain in
good operating condition and repair for a period of 120 days following the
Commencement Date and that the roof shall be in good condition and repair and
watertight for a period of 270 days following the Commencement Date. If the
foregoing warranty is violated, then Landlord, upon written notice from Tenant,
shall promptly rectify the violation at Landlord's sole cost and expense.
8
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3.7 No Representations. Tenant acknowledges that neither Landlord nor any
of Landlord's Agents has made any representations or warranties as to the
suitability or fitness of the Premises for the conduct of Tenant's business,
including, but not limited to, any representations or warranties regarding
zoning or other land use matters, or for any other purpose, and that neither
Landlord nor any of Landlord's Agents has agreed to undertake any alterations or
additions or construct any Tenant Improvements to the Premises except as
expressly provided in this Lease.
9
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ARTICLE IV
RENT AND ADJUSTMENTS
4.1 Monthly Rent. From and after the Commencement Date, Tenant shall pay
to the Landlord, for each calendar month of the Term, the Monthly Rent set forth
in Item 9 of the Basic Lease Provisions, as the same may be adjusted from time
to time as provided in Section 4.2. Monthly Rent shall be due and payable to
Landlord in lawful money of the United States, in advance, on the first (1st)
day of each calendar month of the Term, without abatement, deduction, claim or
offset, and without prior notice, invoice or demand, at Landlord's address set
forth in Item 1 of the Basic Lease Provisions or at such place as Landlord may
from time to time designate. Tenant's payment of Monthly Rent for the first
(1st) month of the Term shall be delivered to Landlord concurrently with
Tenant's execution of this Lease.
4.2 Adjustments. Monthly Rent shall be adjusted from time to time as
provided in Exhibit E.
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4.3 Additional Rent. All Additional Rent shall be due and payable to
Landlord in lawful money of the United States, at Landlord's address set forth
in Item 1 of the Basic Lease Provisions or at such other place as Landlord may
from time to time designate, without abatement, deduction, claim or offset,
within ten (10) days of receipt of Landlord's invoice or statement for same, or
if this Lease provides another time for the payment of certain items of
Additional Rent, then at such other time.
4.4 Prorations. If the Commencement Date is not the first (1st) day of a
month, or if the expiration of the Term of this Lease is not the last day of a
month, a prorated installment of Monthly Rent based on a thirty (30) day month
shall be paid for the fractional month during which the Term commences or
terminates. All items of Additional Rent shall likewise be prorated for any
fractional period at the beginning or expiration of the Term.
4.5 Late Payment Charges. Tenant acknowledges that late payment by Tenant
to Landlord of Rent under this Lease will caused Landlord to incur costs not
contemplated by this Lease, the exact amount of which is extremely difficult or
impracticable to determine. Such costs include, but are not limited to,
processing and accounting charges, late charges that may be imposed on Landlord
by the terms of any Mortgage, and late charges and penalties that may be imposed
due to late payment of Real Property Taxes. Therefor, if any installment of
Monthly Rent or any payment of Additional Rent due from Tenant is not received
by landlord in good funds by the fifth (5th) calendar day from the applicable
due date, Tenant shall pay to Landlord an additional sum equal to five percent
(5%) of the amount overdue as a late charge for every month or portion thereof
that such amount remains unpaid. The parties acknowledge that this late charge
represents a fair and reasonable estimate of the costs that Landlord will incur
by reason of the late payment by Tenant. Acceptance of late Rent and late
charge therefor shall not prevent Landlord from exercising any of the other
rights and remedies available to Landlord for any other event of default under
this Lease.
4.6 Security Deposit. Tenant has deposited with Landlord the sum set
forth in Item 10 of the Basic Lease Provisions as a Security Deposit for the
full and faithful performance of every provision of this Lease to be performed
by Tenant. Upon an Event of Default, and whether or not Landlord is informed of
or has knowledge of the Event of Default, the Security Deposit (if not already
applied as hereinabove provided) shall be deemed to be automatically applied,
without waiver of any rights Landlord may have under this Lease or at law or in
equity as a result of an Event of Default, to the payment of any Rent not paid
when due, the repair of damage to the Premises caused by Tenant or for which
Tenant is responsible under the terms of this Lease or the payment of any other
amount which Landlord may spend or become obligated to spend by reason of an
Event of Default, or to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of an Event of Default, to the full extent
permitted by law. If any portion of the Security Deposit is so applied, Tenant
shall, within ten (10) days after written demand therefor, deposit cash with
Landlord in an amount sufficient to restore the Security Deposit to its original
amount. Landlord shall not be required to keep the Security Deposit separate
from its general funds. The unused portion of the Security Deposit, if any,
shall be returned to Tenant within thirty (30) days of the expiration of this
Lease or any termination of this Lease not resulting from an Event of Default,
so long as Tenant has vacated the Premises in the manner required by this Lease
and paid all sums required to be paid under this
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Lease, provided however that Landlord may retain a portion of the Security
Deposit equal to the reasonably estimated amount of unpaid Additional Rent that
is Payable by Tenant for periods prior to the expiration of the Term until such
time as any amounts of Additional Rent due from Tenant have been determined and
paid in full but not longer than 90 days after expiration of the Term. Tenant
hereby waives the provisions of Section 1950.7(c) of the California Civil Code
and any present or future laws otherwise governing the return of the Security
Deposit to Tenant to the extent of reasonably anticipated Additional Rent
retained by Landlord pursuant to the previous sentence.
ARTICLE V
USE
5.1 Tenant's Use. Tenant shall use the Premises solely for the purposes
set forth in item 11 of the Basic Lease Provisions and shall use the Premises
for no other purpose. Tenant's use of the Premises shall be subject to all of
the terms and conditions of this Lease, including, but not limited to, all the
provisions of this Article V. Tenant, at Tenant's sole cost and expense, shall
procure, maintain and make available for Landlord's inspection throughout the
Term, all governmental approvals, licenses and permits required for the proper
and lawful conduct of Tenant's permitted use of the Premises. At Landlord's
request, Tenant shall deliver copies of all such approvals, licenses and permits
to Landlord.
5.2 Compliance With Applicable Laws. Throughout the Term, Tenant, at
Tenant's sole cost and expense, shall comply with, and shall not use the
Premises, Building or Common Area, or suffer or permit anything to be done in or
about the same which will in any way conflict with, (i) any and all present and
future laws, statutes, zoning restrictions, ordinances, orders, regulations,
directions, rules and requirements of all governmental authorities having
jurisdiction over all or any part of the Premises (including, but not limited
to, state, municipal, county and federal governments and their departments,
bureaus, boards and officials) pertaining to the use or occupancy of, or
applicable to, the Premises or privileges appurtenant to or in connection with
the enjoyment of the Premises, (ii) any and all applicable federal, state and
local laws, regulations or ordinances pertaining to air and water quality,
Hazardous Materials (as defined in Section 6.1), waste disposal, air emissions
and other environmental or health and safety matters, zoning, land use and
utility availability, which impose any duty upon Tenant directly or with respect
to the use or occupation of the Premises or any portion thereof, (iii) the
requirements of the Board of Fire Underwriters or other similar body now or
hereafter constituted relating to or affecting the condition, use or occupancy
of the Premises or any portion thereof, (iv) any covenants, conditions,
easements or restrictions, including but not limited to the Restrictions, now
affecting or encumbering the project or any portion thereof, regardless of when
they become effective, (v) the Rules and Regulations, and (vi) good business
practices (collectively, (i) through (vi) above are hereinafter referred to as
"Applicable Laws"). Tenant shall not commit any waste of the Premises, Building
or Project, or any public or private nuisance or any other act or thing which
might or would disturb the quiet enjoyment of any other tenant of Landlord or
any occupant of nearby property. Tenant shall not place or permit to be placed
any loads upon the floors, walls or ceilings in excess of the maximum designed
load specified by Landlord or which might damage the Premises or the Building,
or place or permit to be placed any harmful liquids in the drainage systems, and
Tenant shall not dump or store, or permit to be dumped or stored, any inventory,
waste materials, refuse or other materials or allow any such materials to remain
outside the Building proper, except in designated enclosed trash areas. Tenant
shall not conduct or permit any auctions, sheriff's sales or other like
activities at the Project or any portion thereof. See Rider 5.2.
5.3 Restrictions. Tenant agrees that it will subordinate this Lease to
any other covenants, conditions and restrictions and any reciprocal easement
agreements or any similar agreements which Landlord may hereafter record against
the Premises and to any amendment or modification to any of the existing
Restrictions, provided that such subordination does not unreasonably interfere
with Tenant's use and enjoyment of the Premises. See Rider 5.3.
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RIDER 4.6 SECURITY DEPOSIT:
Pursuant to Section 21.20, certain obligations of Tenant under this
Lease are guaranteed by Guarantor. As provided in the Lease Guaranty Agreement
attached as Lease Rider Number Three and subject to the terms hereof, the
obligations of Guarantor shall terminate, for among other reasons, upon the
delivery to Landlord of a certificate certifying that Tenant has received
additional equity capital in the amount of not less than $6,750,000 and a
standby letter of credit, as further described in the Lease Guaranty Agreement.
Such standby letter of credit if and when delivered to Landlord, shall
constitute an additional security deposit under this Lease, subject to the
provisions of this Section 4.6.
RIDER 5.2 COMPLIANCE WITH LAW:
Landlord represents and warrants to Tenant that, to Landlord's
knowledge, the Premises complies with all Applicable Laws existing as of the
Commencement Date. Landlord further represents and warrants that Landlord has
received no notice from any governmental authority claiming that the Project (or
any portion thereof) fails to comply with any Applicable Law, commencing an
investigation to determine if the Project (or any portion thereof) may violate
any Applicable Law, or otherwise requiring any work to be done on or about the
Project. If any of the foregoing warranties is violated or if any structural
alteration or improvement is required by any governmental authority to be made
to the Premises in order to bring it into compliance with any Applicable Law now
in effect, then Landlord shall, at its sole cost, promptly upon notice from
Tenant, rectify such violation or effect such structural alteration or
improvement to the extent required by applicable governmental authorities.
Notwithstanding any provision of this Lease to the contrary, Tenant shall not
(a) be obligated to effect, or to reimburse Landlord for, any alteration
required by Applicable Law to be made to the Premises, unless and to the extent
such alteration is required solely because of the particular use of the Premises
being made by Tenant (as opposed to use of the Premises by tenants in general);
or (b) be liable, under any circumstance, for violations or alleged violations
of law which were otherwise not caused by Tenant or Tenant's Agents.
RIDER 5.3 RESTRICTIONS:
And provided, further, that such documents shall provide that no
violation of any restriction, and no foreclosure or other action thereunder
shall terminate Tenant's rights under the Lease. Notwithstanding the foregoing,
Tenant shall have no obligation to comply with or observe any modification to or
amendment of any Restrictions existing at the date of this Lease or any new
Restrictions that may be imposed after the date of this Lease to the extent such
modification, amendment or new Restrictions impose any financial obligation on
Tenant, unreasonably increase Tenant's duties or obligations thereunder or
unreasonably interfere with Tenant's use and enjoyment of the Premises and
Common Areas.
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5.4 Landlord's Right of Entry. Landlord and Landlord's Agents shall have
the right to enter the Premises at all reasonable times during Tenant's business
hours upon reasonable notice to Tenant (24 or more hours being deemed
reasonable), except for emergencies in which case no notice shall be required,
to inspect the Premises, to take samples and conduct environmental
investigations, to post notices of nonresponsibility and similar notices and
signs indicating the availability of the Premises for sale, to show the Premises
to interested parties such as prospective lenders and purchasers, to make
necessary Alternations or maintenance and repairs, to perform Tenant's
obligations as permitted herein when Tenant has failed to do so and, at any
reasonable time after one hundred eighty (180) days prior to the expiration of
the Term, to place upon the Premises reasonable signs indicating the
availability of the Premises for lease and to show the Premises to prospective
tenants, all without being deemed to have caused an eviction of Tenant and
without any liability to Tenant or abatement of Rent. The above rights are
subject to reasonable security regulations of Tenant (including, without
limitation, those pertaining to Tenant's trade secrets and clean-room
operations) and in exercising its rights set forth herein. Landlord shall
endeavor to cause the least possible interference with Tenant's business.
Landlord shall at all times have the right to retain a key which unlocks all of
the doors in the Premises, excluding Tenant's vaults and safes, and Landlord and
Landlord's Agents shall have the right to use any and all means which Landlord
may deem proper to open the doors Landlord's Agents shall not under any
circumstances be deemed to be a forcible or unlawful entry into, or a detainer
of, the Premises, or an eviction of Tenant from the Premises. Except during the
last six (6) months of the Term, Tenant may rightfully refuse access to the
Premises to any person known or suspected by Tenant to be a competitor of
Tenant.
ARTICLE VI
HAZARDOUS MATERIALS
6.1 Definition of Hazardous Materials. For purposes of this Lease, the
term "Hazardous Materials" includes (i) any "hazardous materials" as defined in
Section 25501(k) of the California Health and Safety Code unless Tenant
establishes, to the satisfaction of Landlord, that because of the quantity,
concentration, or physical or chemical characteristics, such substance or matter
does not pose a present or potential hazard to human health and safety or to the
environment, (ii) any other substance or matter which results in liability to
any person or entity from exposure to such substance or matter under any
statutory or common law theory, and (iii) any substance or matter which is in
excess of relevant and appropriate levels set forth in any applicable federal,
state or local law or regulation pertaining to any hazardous or toxic substance,
material or waste, or for which any applicable federal, state or local agency
orders or otherwise requires removal, treatment or remediation.
6.2 Use of Hazardous Materials. Tenant shall not cause or permit any
Hazardous Materials to be brought upon, stored, used, generated, released into
the environment or disposed of on, under, from or about the Premises (which for
purposes of this Article VI shall include, but is not limited to, subsurface
soil and ground water), by Tenant or Tenant's Agents without the prior written
consent of Landlord. Landlord may, in its reasonable discretion, place such
conditions as Landlord deems appropriate with respect to such Hazardous
Materials, and may further require that Tenant demonstrates to Landlord that
such Hazardous Materials are necessary or useful to Tenant's business and will
be generated, stored, used and disposed of in a manner that complies with all
Applicable Laws regulating such Hazardous Materials and with good business
practices. Tenant understands that Landlord may utilize an environmental
consultant to assist in determining conditions of approval and monitoring in
connection with the presence, storage, generation or use of Hazardous Materials
on or about the Premises by Tenant, and Tenant agrees that any costs reasonably
incurred by landlord in connection with any such environmental consultant's
services shall be reimbursed by Tenant to Landlord as Additional Rent upon
demand. See Rider 6.2.
6.3 Environmental Questionnaire; Disclosure. Prior to the execution of
this Lease, Tenant shall complete, execute and deliver to Landlord an
Environmental Questionnaire and Disclosure Statement (the "Environmental
Questionnaire") in the form of Exhibit H, and Tenant shall certify to Landlord
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all information contained in the Environmental Questionnaire as true and correct
to the best of Tenant's knowledge and belief. The
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completed Environmental Questionnaire shall be deemed incorporated into this
Lease for all purposes, and Landlord shall be entitled to rely fully on the
information contained therein. On each anniversary of the Commencement Date
(each such date is hereinafter referred to as a "Disclosure Date"), until and
including the first Disclosure Date occurring after the expiration or sooner
termination of this Lease, Tenant shall disclose to Landlord in writing the
names and amounts of all Hazardous Materials, or any combination thereof, which
were stored, generated, used or disposed of on, under or about the Premises for
the twelve-month period prior to each Disclosure Date, and which Tenant intends
to store, generate, use or dispose of on, under or about the Premises through
the next Disclosure Date. At Landlord's option, Tenant's disclosure obligations
under this Section 6.3 shall include a requirement that Tenant update, execute
and deliver to Landlord the Environmental Questionnaire, as the same may be
modified by Landlord from time to time. In addition to the foregoing, Tenant
shall promptly notify Landlord of, and shall promptly provide Landlord with
true, correct, complete and legible copies of, all of the following
environmental items relating to Hazardous Materials used by Tenant or the
Premises: reports filed pursuant to any self-reporting requirements; reports
filed pursuant to any Applicable Laws or this Lease; all permit applications,
permits, monitoring reports, workplace exposure and community exposure warnings
or notices, and all other reports, disclosures, plans or documents (even those
which may be characterized as confidential but excluding document for which a
legal evidentiary disclosure privilege applies provided that Tenant complies
with California Health and Safety Code Section 25359.7) relating to water
discharges, air pollution, waste generation or disposal, underground storage
tanks or Hazardous Materials; all orders, reports, notices, listings and
correspondence (even those which may be considered confidential but excluding
document for which a legal evidentiary disclosure privilege applies provided
that Tenant complies with California Health and Safety Code Section 25359.7) of
or concerning the release, investigation, compliance, clean up, remedial and
corrective actions, and abatement of Hazardous Materials whether or not required
by Applicable Laws; and all complaints, pleadings and other legal documents
filed against Tenant related to Tenant's use, handling, storage or disposal of
Hazardous Materials.
6.4 Inspection; Compliance. Landlord and Landlord's Agents shall have the
right, but not the obligation, to inspect, investigate, sample and/or monitor
the Premises, including any air, soil, water, groundwater or other sampling, and
any other testing, digging, drilling or analyses, at any time to determine
whether Tenant is complying with the terms of this Article VI, and in connection
therewith, Tenant shall provide Landlord with full access to all relevant
facilities, records and personnel, subject to Section 5.4 and excluding
documents to which a legal evidentiary privilege applies provided that Tenant
complies with California Health and Safety Code Section 25359.7. If Tenant is
not in compliance with any of the provisions of this Article VI, or in the event
of a release of any Hazardous Material on, under, from or about the Premises,
Landlord and Landlord's Agents shall have the right, but not the obligation,
without limitation on any of Landlord's other rights and remedies under this
Lease, to immediately enter upon the Premises and (if such release was caused by
Tenant or Tenant's Agents) to discharge Tenant's obligations under this Article
VI at Tenant's expense, including without limitation the taking of emergency or
long-term remedial action. Landlord and Landlord's Agents shall endeavor to
minimize interference with Tenant's business but shall not be liable for any
such interference. In addition, Landlord, at Tenant's sole costs and expense,
shall have the right, but not the obligation, to join and participate in any
legal proceedings or actions initiated in connection with any claims or causes
of action under, from or about the Premises. All sums reasonably disbursed,
deposited or incurred by Landlord in connection herewith, including, but not
limited to, all costs, expenses and actual attorneys fees, shall, to the extent
incurred as the result of the use, storage, disposal or release by Tenant, be
due and payable by Tenant to Landlord, as an item of Additional Rent, on demand
by Landlord, together with interest thereon at the Applicable Rate from the date
of such demand until paid by Tenant.
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RIDER 6.2 USE OF HAZARDOUS MATERIALS:
Notwithstanding the foregoing, Tenant may, without Landlord's prior
consent, but in compliance with all Applicable Laws, use any ordinary and
customary materials reasonably required to be used by Tenant in the normal
course of Tenant's business permitted on the Premises, so long as such use does
not expose the Premises or neighboring properties to any meaningful risk of
contamination or damage or expose Landlord to any liability therefor. Landlord
acknowledges and agrees that, unless Landlord has a reasonable belief that there
has been (i) a violation of Applicable Laws in connection with the presence,
storage, generation or use of Hazardous Materials on or about the Premises, or
(ii) a spill or release of Hazardous Materials on or about the Premises by
Tenant since Landlord's most recent environmental consultant's inspection of the
Premises, Tenant shall not be required to reimburse Landlord more than once
annually for Landlord's costs incurred in monitoring or inspecting the Premises.
Tenant shall not be required to expend more than $5,000 for each of Landlord's
annual inspections (which inspections shall be reasonable in scope taking into
consideration the use by Tenant of the Premises and the degree of risk that such
use has resulted in contamination thereof), except that Tenant may be required
to expend up to $10,000 for such annual inspection upon the expiration of the
Lease (the foregoing limitations shall not apply with respect to inspections
performed because of clause (i) or (ii) of the preceding sentence). Without
diminishing Tenant's obligations under Section 6.7 hereof, provided that Tenant
shall have obtained Landlord's prior written approval of any investigation to be
performed by Tenant pursuant to Section 6.7, Landlord shall not thereafter seek
reimbursement from Tenant for Landlord's annual inspection in the final year of
the Term as contemplated in the preceding sentence.
6.5 Tenant Obligation. If the presence of any Hazardous Materials on,
under or about the Premises or the Project caused by Tenant or Tenant's Agents
results in (i) injury to any person, (ii) injury to or contamination of the
Premises for the Project, or (iii) injury to or contamination of any real or
personal property wherever situated, Tenant, at its sole cost and expense, shall
promptly take all actions necessary to return the Premises and the Project to
the condition existing prior to the introduction of such Hazardous Materials to
the Premises and Project and to remedy or repair any such injury or
contamination. See Rider 6.5. Without limiting any other rights or remedies of
Landlord under this Lease. Tenant shall pay the cost of any cleanup work
performed on, under or about the Premises, the Building and the Project as
required by this Lease or any Applicable Laws in connection with the removal,
disposal, neutralization or other treatment of such Hazardous Materials caused
by Tenant or Tenant's Agents. If Landlord has reason to believe that Tenant or
Tenant's Agents may have caused the release of a Hazardous Material on, under,
from or about the Premises, then Landlord may require Tenant, at Tenant's sole
cost and expense, to conduct monitoring activities on or about the Premises
satisfactory to Landlord. In its sole and absolute judgment, concerning such
release of Hazardous Materials on, under, from or about the Premises.
Notwithstanding anything in the foregoing, Tenant shall not, without Landlord's
prior written consent, take any remedial action in response to the presence of
any Hazardous Materials on, under or about the Premises, or enter into any
settlement agreement, consent decree or other compromise with any governmental
agency with respect to any Hazardous Materials claims; provided, however,
Landlord's prior written consent shall not be necessary in the event that the
presence of Hazardous Materials on, under or about the Premises (i) poses an
immediate threat to the health, safety or welfare of any individual or (ii) is
of such nature that an immediate remedial response is necessary and it is not
possible to obtain Landlord's consent before taking such action.
6.6 Indemnification. To the fullest extent permitted by law, Tenant
hereby agrees to indemnify, hold harmless, protect and defend (with attorneys
acceptable to Landlord) Landlord and Landlord's Agents, and any successors to
all or any portion of Landlord's interest in the Premises, the Building and the
Project and their directors, officers, partners, employees, authorized agents,
affiliates, representatives and Mortgagees, from and against any and all
liabilities, losses, damages (including, but not limited to, damages for the
loss or restriction on use of rentable or usable space or any amenity of the
premises, the Building and the Project or damages arising from any adverse
impact on marketing of space in the Premises, the Building and the Project
during any required repair, restoration or clean-up of the Premises),
diminution in the value of the Premises, the Building and the Project,
judgments, fines, demands, claims, recoveries, deficiencies, costs and
expenses (including, but not limited to,
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reasonable attorneys' fees, disbursements and court costs and all other
professional or consultant's expenses), whether foreseeable or unforeseeable,
arising directly or indirectly out of the presence, use, generation, storage,
treatment, on or off-site disposal or transportation of Hazardous Materials
on, in or, from, under or about the Premises, the Building and the Project by
Tenant or Tenant's Agents, and specifically including the cost of any required
or necessary repair, restoration, clean-up (including, but not limited to, the
costs of investigation and removal of Hazardous Materials) or detoxification
of the Premises, the Building and the Project and the preparation of any
closure or other detoxification of the Premises, the Building and the Project
and the preparation of any closure or other required plans, whether or not
such action is required or necessary during the Term or after the expiration
of this Lease.
6.7 Tenant's Responsibility at Conclusion of Lease. Promptly upon the
expiration or sooner termination of this Lease, Tenant shall represent to
Landlord in writing that (i) Tenant has made a diligent effort to determine
whether any Hazardous Materials are on, under or about the Premises as a result
of any acts or omissions of Tenant or Tenant's Agents and (ii) to Tenant's
knowledge no such Hazardous Materials exist on, under or about the Premises
other than as specifically identified to Landlord by Tenant in writing. If
Tenant discloses the existence of Hazardous Materials on, under or about the
Premises caused by Tenant or Tenant's Agents, or if Landlord at any time
discovers that Tenant or Tenant's Agents caused the release of a Hazardous
Material on, under, from or about the Premises, Tenant shall, at Landlord's
request, immediately prepare and submit to Landlord within thirty (30) days
after such request a comprehensive plan, subject to Landlord's approval,
specifying the actions to be taken by Tenant to return the Premises to the
condition existing prior to the introduction of such Hazardous Materials. Upon
Landlord's approval of such clean up plan, Tenant shall, at Tenant's sole cost
and expense, without limitation on any rights and remedies of Landlord under
this Lease or at law or in equity, immediately implement such plan and proceed
to clean up such Hazardous Materials in accordance with all Applicable Laws and
as required by such plan and this Lease. See Rider 6.7.
6.8 Landlord's Disclosures. Landlord hereby discloses to Tenant, and
Tenant hereby acknowledges, certain facts relating to Hazardous Materials at the
Project known by Landlord to exist as of the date of this Lease, as more
particularly described in Exhibit I attached hereto. Tenant shall have no
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liability or responsibility with respect to the Hazardous Materials facts
described in Exhibit I. See Rider 6.8.
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RIDER 6.5 TENANT OBLIGATIONS:
If restoration of the Premises or Project to such pre-existing
condition is not possible or reasonably practicable, then Tenant shall
nevertheless take such actions to reduce the level and extent of contamination
to the extent that the governmental regulatory authorities having jurisdiction
thereover shall acknowledge in writing that tenant has complied with the
requirements of Applicable Law.
RIDER 6.7 TENANT'S RESPONSIBILITY AT CONCLUSION OF LEASE
If restoration of the Premises or Project to such pre-existing
condition is not possible or reasonably practicable, then Tenant shall
nevertheless take such actions to reduce the level and extent of contamination
to the extent that the governmental regulatory authorities having jurisdiction
thereover shall acknowledge in writing that Tenant has complied with the
requirements of Applicable Law.
RIDER 6.8 HAZARDOUS MATERIALS:
(a) Landlord represents and warrants to Tenant as follows:
(i) To the best of Landlord's knowledge, except as disclosed in
Exhibit I and without undertaking any investigation other than that which was
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performed in connection with Landlord's purchase of the Project, no Hazardous
Materials are located in, on, under or about the Premises or Project.
(ii) Landlord has received no notice of (A) any violation or
alleged violation of any Applicable Law pertaining to Hazardous Materials with
respect to the Project; or (B) any pending claims or investigations relating to
the presence of any Hazardous Materials in, on, under or about the Project.
(b) Except for matters that constitute Tenant's obligations under
Article VI of the Lease, Landlord shall, at its sole expense, take all actions
required by applicable governmental authorities to investigate and remediate any
Hazardous Materials which are found or suspect to exist in, on, under or about
the Project. Landlord hereby agrees to indemnify, hold harmless, protect and
defend Tenant (with attorneys acceptable to Tenant), from and against any
remediation costs or expenses imposed upon or incurred by Tenant in connection
with any investigation or remediation of Hazardous Materials present in, on or
under the Premises caused by Landlord or by a party or parties not party to this
Lease, which is required by a governmental agency with jurisdiction, provided
that such indemnification shall be limited to costs imposed upon or incurred by
Tenant to remediate the Premises, including, without limitation, actual
attorneys and consultants fees and costs, and it is not intended to and shall
not include losses, liabilities or expenses of any other type whatsoever,
including, without limitation, losses, liabilities or expenses due to business
interruption, economic or personal injury claims or otherwise.
(c) Except with respect to Hazardous Materials for which Tenant is
responsible pursuant to Article VI of the Lease, in no event shall Tenant be
required to pay (and Landlord shall not seek reimbursement from Tenant as an
item of Project Costs or otherwise) any costs or expenditure incurred in
connection with (i) any testing, investigation, monitoring, analysis or
remediation of any Hazardous Materials; (ii) any violation or alleged violation
of, or the defense of any claim arising under, any Applicable Law pertaining to
Hazardous Materials; (iii) any consequential damages suffered as a result of any
Hazardous Material contamination; or (iv) Landlord's compliance with its
obligations under subsection (b) above.
ARTICLE VII
OPERATING EXPENSES; TAXES; UTILITIES
7.1 Tenant to Bear Tenant's Share of Operating Expenses. Tenant shall pay
to Landlord Tenant's Share (as defined in Section 7.2) of Operating Expenses as
follows: Prior to the Commencement Date and thereafter prior to the
commencement of each of Landlord's fiscal years during the Term, Landlord shall
give Tenant a written estimate of Tenant's Share of Operating Expenses for the
ensuing fiscal year or partial fiscal year, as the case may be. Tenant shall
pay, as an item of Additional Rent, such estimated amount in equal monthly
installments, in advance, on or before the first (1st) day of each calendar
month concurrent with its payment of Monthly Rent. If Landlord has not
furnished its written estimate by the time set forth above, Tenant shall pay
monthly installments of Operating Expenses at the rate established for the prior
fiscal year, if any; provided that
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when the new estimate is delivered to Tenant, Tenant shall at the next monthly
payment date pay Landlord any accrued deficiency based on the new estimate, or
Landlord shall credit any accrued overpayment after the end of each fiscal year
(in no event less than one hundred (120) days after the end of each fiscal year
unless sooner completed by Landlord) Landlord shall furnish Tenant a statement
showing in reasonable detail Tenant's Share of the actual Operating Expenses
incurred for the period in question. If Tenant's estimated payments are less
than Tenant's Share of actual Operating Expenses incurred for the period in
question. If Tenant's estimated payments are less than Tenant's Share of actual
Operating Expenses as shown by the applicable statement, Tenant shall pay the
difference to Landlord within thirty (30) days thereafter. If Tenant shall have
overpaid Landlord, Landlord shall credit such overpayment toward Tenant's next
installment payment hereunder. When the final determination is made of Tenant's
Share of the actual Operating Expenses for the fiscal year in which this Lease
terminates, Tenant shall, even if this Lease has terminated, pay to Landlord
within fifteen (15) days after notice the excess of Tenant's Share of such
actual Operating Expenses over the estimate of Tenant's Share of Operating
Expenses paid. Conversely, any overpayment shall be rebated by landlord to
Tenant within fifteen (15) days. If Landlord shall determine at any time that
the estimate of Tenant's Share of Operating Expenses for the current fiscal year
is or will become inadequate to meet Tenant's Share of all such Operating
Expenses for any reason, Landlord shall immediately determine the approximate
amount of such inadequacy and issue a supplemental estimate as to Tenant's Share
of such Operating Expenses and Tenant shall pay any increase as reflected by
such supplemental estimate. Landlord shall keep or cause to be kept separate and
complete books of accounting covering all Operating Expenses and showing the
method of calculating Tenant's Share of Operating Expenses, and shall preserve
for at least twelve (12) months after the close of each fiscal year all material
documents evidencing said Operating Expenses for that fiscal year. Tenant, at
its sole cost and expense, through its officers or any public accountant
designated by it, shall have the right, during reasonable business hours and not
more frequently than once during any fiscal year, to examine and/or audit the
books and documents mentioned above evidencing such costs and expenses for the
previous fiscal year. Any delay or failure by Landlord in delivering any
estimate or statement pursuant to this Section 7.1 shall not constitute a waiver
of its right to require Tenant to pay Tenant's Share of Operating Expenses
pursuant hereto. See Rider 7.1.
7.2 Definition of Tenant's Share. The term "Tenant's Share" means that
portion of an Operating Expense determined by multiplying the cost of such item
by a fraction, the numerator of which is the Premises Square Footage and the
denominator of which is the total square footage of the floor area, as of the
date on which the computation is made, to be charged with such Operating
Expense. A determination of Tenant's Share for various Operating Expenses is
set forth in Exhibit I attached to and made a part of this Lease.
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7.3 Definition of Project Costs. The term "Project Costs" means all costs
and expenses incurred by Landlord or Landlord's Agents in connection with the
operation of the Project, including, but not limited to the following: repair
and maintenance of the roof, foundation and exterior walls of the buildings in
the Project, periodic painting of the buildings in the Project, periodic
cleaning of the exterior windows of the buildings in the Project, landscaping
services, outside pest control, normal maintenance and repair of the HVAC,
unless Landlord elects to maintain the same pursuant to Section 9.2), sweeping,
maintenance services, repairs to and replacement of asphalt paving, bumpers,
striping, light bulbs, light standards, monument and directional signs and
lighting systems, perimeter walls, retaining walls, sidewalks, planters,
landscaping and sprinkler system in planting area, any and all assessments
levied against the Project pursuant to the Restrictions, water, electrical and
other utility services not supplied directly to a tenant, removal of trash,
rubbish and other refuse from the Project, cleaning of and replacement of signs
of the Project, including relamping and repairs made as required; repair,
operation and maintenance of the Common Area, including, but not limited to,
removal of any obstructions not reasonably required for the Common Area uses,
prohibition and removal of the sale or display of merchandise or the storing of
materials and/or equipment in the Common Area, and payment of all electrical,
water and other utility charges or fees for services furnished to the Common
Area; obtaining and maintaining public liability, property damage and other
forms of insurance which Landlord may or is required to maintain in connection
with the Project (including the payment of any deductibles thereunder); costs
incurred in connection with compliance of any laws or changes in
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laws applicable to the Project, including without limitation any laws or changes
in laws regarding Hazardous Materials; employment of such personnel as Landlord
may deem reasonably necessary, if any, to direct parking and police the Common
Area and facilities; the cost of any capital improvements (other than tenant
improvements for specific tenants) made by or on behalf of Landlord to the
Project or Common Area to the extent of the amortized amount thereof over the
useful life of such capital improvements calculated at a market cost of funds,
all as reasonably determined by Landlord, for each such year of useful life
during the Term; depreciation of machinery and equipment used in connection with
the maintenance and operation of the Common Area for which a reasonable reserve
has not been established as herein provided; employment of personnel used in
connection with any of the foregoing, including, but not limited to, cost of
bookkeeping, accounting and auditing and legal services provided in connection
with any of the foregoing; the cost of any environmental consultant or other
services used in connection with Landlord's monitoring of the Project with
respect to Hazardous Materials; the cost of any tax, insurance or other
consultant utilized in connection with the Project; and any other items
reasonably necessary from time to time to properly repair, replace, maintain and
operate the Project. Project Costs shall also include management fee to cover
Landlord's management, overhead and administrative expenses; provided, however,
if Landlord elects to delegate its duties hereunder to a professional property
manager, then Project Costs shall not include any fee to Landlord, but under
such circumstances any reasonable amounts paid to the professional property
manager shall be added to and deemed a part of Project Costs. If Landlord elects
to perform any maintenance or repair herein described in conjunction with
properties other than the Project, and if a common maintenance contractor is
contracted with for such purpose, the contract amount allocable to the Project,
as reasonably determined by Landlord, shall be added to and deemed a part of
Project Costs hereunder. Increases in Project Costs by reason of a
disproportionate impact by Tenant thereon (for example, and not by way of
limitation, increases in costs of trash collection because of Tenant's excessive
generation of trash or increases in costs of Common Area maintenance because of
Tenant's unpermitted storage of inventory or materials in the Common Area), in
Landlord's reasonable judgment, may be billed by Landlord, as an item of
Additional Rent, directly to Tenant. See Rider 7.3.
7.4 Definition of Real Property Taxes. The term "Real Property Taxes"
means any form of tax, assessment, charge, license, fee, rent tax, levy, penalty
(if a result of Tenant's delinquency), real property or other tax (other than
Landlord's net income, estate, succession, inheritance, or franchise taxes), now
or hereafter imposed with respect to the Project or any part thereof (including
any Alterations), this Lease or any Rent payable under this Lease by any
authority having the direct or indirect power to tax, or by any city, county,
state or federal government or any improvement district or other district or
division thereof, whether such tax or any portion thereof (i) is determined by
the area of the Project or any part thereof or the Rent payable under this Lease
by Tenant including, but not limited to, any gross income or excise tax levied
by any of the foregoing authorities with respect to receipt of the Rent due
under this Lease, (ii) is levied or assessed in lieu of, in substitution for, or
in addition to, existing or additional taxes with respect to the Project or any
part thereof whether or not now customary or within the contemplation of
Landlord or Tenant, or (iii) is based upon any legal or equitable interest in
Landlord in the Project or any part thereof. See Rider 7.4.
7.5 Apportionment of Taxes. If the Project is assessed as part of a
larger parcel, then Landlord shall equitably apportion the Real Property Taxes
assessed against the real property which includes the Project and reasonably
determine the amount of Real Property Taxes attributable to the Project. If
other buildings exist on the assessed parcel, the Real Property Taxes
apportioned to the Project shall be based upon the ratio of the square footage
of all buildings within the Project to the square footage of all buildings on
the assessed parcel, and the amount of real Property Taxes so apportioned to the
Project shall be included as part of Operating Expenses. Landlord's reasonable
determination of such apportionment shall be conclusive.
7.6 Tax on Improvements; Permitted Contests. Tenant shall, at Landlord's
election, be directly responsible for and shall pay the full amount of any
increase in Real Property Taxes attributable to any and all Tenant Improvements
and any other improvements of any kind whatsoever placed in, on or about the
Premises for the benefit of, at the request of, or by Tenant. Tenant may
contest the amount or validity of any Real Property Taxes by appropriate
proceedings, provided that Tenant gives Landlord prior Notice of any such
contest and keeps
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Landlord advised as to all proceedings, and provided further that Tenant shall
continue to reimburse Landlord for Landlord's payment of such Real Property
Taxes unless such proceedings shall operate to prevent or stay such payment and
the collection of the tax so contested. Landlord shall join in any such
proceedings if any Applicable Laws shall so require, provided that Tenant shall
hold harmless, indemnify, protect and defend Landlord from and against any
liability, claim, demand, cost or expense in connection therewith, including,
but not limited to, actual attorneys' fees and costs reasonably incurred.
7.7 Utilities and Services. Tenant shall be responsible for and shall pay
promptly, directly to the appropriate supplier, all charges for water, gas,
electricity, heat, light, power, telephone, refuse pickup, janitorial service,
interior landscape maintenance and all other utilities, materials and services
furnished directly to Tenant or the remises or use by Tenant in, on or about the
Premises during the Term, together with any taxes thereon. If any utilities or
services are not separately metered or assessed to Tenant, Landlord shall make a
reasonable determination of Tenant's proportionate share of the cost of such
utilities and services and Tenant shall pay such amount to Landlord, as an item
of Additional Rent, within ten (10) days after receipt of Landlord's statement
or Invoice therefor. Landlord may also require Tenant to have any Specialized
HVAC system separately metered to Tenant, at Tenant's expense. Landlord shall
not be liable in damages or otherwise for any failure or interruption of any
utility or other service furnished to the Premises unless such failure or
interruption is due to Landlord's gross negligence or willful misconduct. No
such failure or interruption shall be deemed an eviction or entitle Tenant to
terminate this Lease or withhold or abate any Rent due hereunder.
RIDER 7.1 OPERATING EXPENSES:
If, as a result of Tenant's examination or audit, it is determined
that the amount charged to Tenant for Tenant's Share of Operating Expenses
exceeded by more than 5% the amount actually due, then Landlord shall promptly
reimburse Tenant's costs of the examination and/or audit.
RIDER 7.3 PROJECT COSTS:
Notwithstanding anything to the contrary in the Lease, Project Costs
(and any terms of similar meaning in the Lease) shall not include, and Tenant
shall have no liability for, the expense items listed below, and Project Costs
shall be subject to the limitations listed below:
(a) The following operating expense items shall not be charged to
Tenant:
1. The costs of original construction, the purchase price or
any depreciation of the Premises, Building or Project, any additions or
improvements thereto or any Premises, Building or Project service or utility
systems therein, including, without limitation, the cost of tools, equipment and
materials purchased in connection therewith.
2. Costs incurred for the repair, maintenance and replacement
of the structural components of the Premises, Building or Project, including,
without limitation, beams, columns, foundations, footings, load bearing and
exterior walls, structural slabs and the structural components of, the roof
(except that Tenant is solely responsible for the cost of all non-structural
repairs and maintenance to the roof commencing 270 days following the
Commencement Date).
3. Costs incurred for the repair, maintenance or replacement of
the Premises, Building or Project, or any portion thereof, to the extent: (a)
of the proceeds of insurance which Landlord is required to maintain under the
Lease or actually maintains (whichever is greater), (b) of any reimbursement
which Landlord receives therefor under any warranties or from any third party
(other than on account of a tenant's pro rata share of Project Costs), or (c)
caused by the gross negligence or willful misconduct of Landlord or Landlord's
Agents.
4. Rentals and other payments by Landlord under any ground
lease or other lease underlying this Lease, and interest, principal, points,
penalties and fees on any security instrument encumbering all or any portion of
the Premises, Building or Project.
5. Expenses and penalties (including, without limitation,
attorneys fees) incurred due to Landlord's violation of any lease, deed of
trust, mortgage, other security instrument, ground lease, Applicable Law or
private restriction.
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6. Leasing commissions, attorneys' fees, tenant improvement
costs and other costs and expenses incurred in connection with the leasing, or
the improvement for leasing, of any premises.
7. Any cost incurred in furnishing items or services other than
for the benefit of all tenants of the Building or Project generally.
8. Advertising, marketing, media and promotional expenditures
regarding the Premises, Building or Project, and costs of signs in or on the
Premises, Building or Project identifying the owner, lender or any contractor.
9. The rental value of any management office, engineer's
office, mechanical spaces and Common Areas.
10. Costs incurred in connection with the presence,
investigation, monitoring, release, removal or remediation of any Hazardous
Materials on, under, in or about the Premises, Building or Project, unless such
costs are incurred because of the activities of Tenant or Tenants Agents.
11. Any insurance premiums for insurance coverage or policy
limits which materially exceed the coverage or limits maintained by landlords of
comparable properties in the city in which the Premises is located.
(b) Project costs shall be subject to the following limitations:
1. Any management fee included in Project Costs shall not
exceed three and one-half percent (3 1/2%) of the Monthly Rent and shall
exclude: salaries, wages and benefits paid or provided to persons not employed
full-time in the management and operation of the Project; costs of automobiles
and travel expenses; professional, civic or recreational memberships; costs of
seminars, conventions, educational programs and the like; charitable
contributions; and any other administrative cost or expense not directly related
to the management and operation of the Project.
2. No fee shall be charged for the use of the Project parking
area or any other Common Area facility.
3. The aggregate sum of all Project Costs items allocated to
tenants of the Project for any year upon which an allocation is made shall not
exceed the aggregate sum of such cost items which are actually incurred by
Landlord for the year in question. No cost item shall be included more than
once or allocated under more than one expense category.
4. All expense items which are classified as capital
expenditures, improvements or replacements under generally accepted accounting
principles and which are permitted to be charged to Tenant hereunder shall be
amortized on a monthly basis over their maximum estimated useful lives at the
lesser of Landlord's cost of funds or the Bank of America prime rate plus two
percent (2%) per annum. Only the monthly amortized portion of such expense
which accrues or falls due during the Term shall be included as a Project Cost
item payable by Tenant hereunder.
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RIDER 7.4 REAL PROPERTY TAXES:
Notwithstanding anything to the contrary in the Lease, "Real Property
Taxes" shall not include, and Tenant shall have no liability for the following
items, and Real Property Taxes shall be subject to the following limitations:
(a) Real Property Taxes shall not include the following items:
1. Interest or penalties imposed as a result of Landlord's
failure to pay taxes or assessments when due;
2. Any taxes, fees, assessments, levies or similar impositions
that are charged or assessed other than with respect to the Premises, Building
or Project or Tenant's possessory interest therein;
3. Any increase in taxes resulting from the construction of
improvements for the benefit of a particular tenant or resulting from the use of
premises by a particular tenant;
4. Landlord's income, transfer, gift, estate, succession,
franchise or excess profits tax, or fees, taxes or assessments imposed on
Landlord for the privilege or right to conduct its business in general
(including, for example, fees paid for Landlord's business license) rather than
for a permit or license to operate the Project or any equipment or facility
therein in particular.
(b) Real Property Taxes shall be subject to the following limitations:
1. All taxes and assessments which can be paid by Landlord in
installments shall be included as a reimbursable expense item as if paid over
the maximum number of installments permitted, regardless of when Landlord
actually pays such assessments.
2. Taxes and assessments shall be prorated for the portion of
the year in which the Lease Term commences or ends.
ARTICLE VIII
ALTERATIONS
8.1 Permitted Alterations. After the Commencement Date, Tenant shall not
make or permit any Alterations in, on or about the Premises without the prior
written consent of Landlord (which consent shall not be unreasonably withheld or
delayed, except for Alterations not exceeding One Dollar ($1.00) per square foot
of the Premises in aggregate costs per year. Notwithstanding the foregoing,
without the prior written consent of Landlord. In no event shall any
Alterations (i) affect the exterior of the Building or the outside areas (or be
visible from adjoining sites), (ii) affect or penetrate any of the structural
portions of the Building, including, but not limited to, the roof, (iii) require
any change to the structural or mechanical components of the Premises, (iv)
interfere in any manner with the proper functioning of or Landlord's access to
any mechanical, electrical, plumbing or HVAC systems, facilities or equipment
located in or serving the Building, or (v) diminish the value of the premises.
All Alterations shall be constructed pursuant to plans and specifications
previously provided to and, when applicable, approved in writing by landlord,
shall be installed by a licensed contractor at Tenant's sole expense in
compliance with all Applicable Laws, and shall be accomplished in a good and
workmanlike manner conforming in quality and design with the Premises existing
as of the Commencement Date. No Hazardous Materials, including, but not limited
to, asbestos or asbestos containing materials, shall be used by Tenant or
Tenant's Agents in the construction of any Alterations permitted hereunder. All
Alterations made by Tenant shall be and become the property of Landlord upon the
installation thereof and shall not be deem Tenant's Personal Property; provided,
however, that Landlord may, at its option, require that Tenant, upon the
termination of this Lease, at Tenant's expense, remove any or all non-structural
Alterations installed by or on behalf of Tenant and return the Premises to its
condition as of the Commencement Date of this Lease, normal wear and tear
excepted. Notwithstanding any other provisions of this Lease, Tenant shall be
solely responsible for the maintenance, repair and replacement of any and all
Alterations made by or on behalf of Tenant (including without limitation by
Landlord on behalf of Tenant) to the Premises. See Rider 8.1.
8.2 Trade Fixtures. Tenant shall, at its own expense, provide, install
and maintain in good condition all of Tenant's Personal Property required in the
conduct of its business in the Premises.
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8.3 Mechanics' Liens. Tenant shall give Landlord Notice of Tenant's
intention to perform any work on the Premises which might result in any claim of
lien at least twenty (20) days prior to the commencement of such work to enable
Landlord to post and record a notice of nonresponsibility or other notice
Landlord deems proper prior to the commencement of any such work. Tenant shall
not permit any mechanic's, materialmen's or other liens to be filed against the
property of which the Premises are part or against Tenant's leasehold interest
in the premises. If Tenant fails to cause the release of record of any lien(s)
filed against the Premises or its leasehold estate therein by payment or posting
of a proper bond within ten (10) days from the date of the lien filing(s), then
Landlord may, at Tenant's expense, cause such lien(s) to be released by any
means Landlord deems proper, including, but not limited to, payment of or
defense against the claim giving rise to the lien(s). All sums reasonably
disbursed, deposited or incurred by Landlord in connection with the release of
the lien(s), including, but not limited to, all costs, expenses and actual
attorneys' fees, shall be due and payable by Tenant to Landlord, as an item of
Additional Rent, on demand by Landlord, together with interest thereon at the
Applicable Rate from the date of such demand until paid by Tenant.
RIDER 8.1 PERMITTED ALTERATIONS:
Within 15 days after Tenant's written request, Landlord shall inform Tenant
in writing whether or not Landlord will require any Alteration made or proposed
to be made by Tenant of the Lease Term. Failure of Landlord to respond timely
to Tenant's request shall constitute Landlord's consent to the surrender of such
Alteration with the Premises, excluding any trade fixtures and non-structural
Alterations which Tenant elects to remove, provided that Tenant shall repair all
damage to the Premises caused by such removal.
ARTICLE IX
MAINTENANCE AND REPAIR
9.1 Landlord's Maintenance and Repair Obligations. Landlord shall,
subject to Section 9.2, Article XII and Article XIII, maintain in good condition
and repair the roof (including any skylights, but including as needed any
replacement thereof), exterior walls, structural components and foundation of
the Building, utility systems within the structural components of the Building
and the Common Areas, provide normal maintenance services for the HVAC serving
the Building through maintenance contracts or otherwise, and paint the exterior
of the Building and clean the exterior windows of the Building as and when such
painting or window cleaning, as the case may be, becomes necessary in Landlord's
sole discretion. Landlord shall also provide maintenance and repair services to
the electrical, plumbing, and mechanical systems serving the Premises. Landlord
shall not be required to make any repairs to the roof, exterior walls,
foundation or any systems within the Premises unless and until Tenant has
notified Landlord in writing of the need for such repair and Landlord shall have
a reasonable period of time thereafter to commence and complete said repair, if
warranted. The cost of any maintenance and repairs on the part of Landlord
provided for in this Section 9.1 shall be considered part of Project Costs,
except that repairs which Landlord deems arise out of any gross negligence or
willful misconduct of Tenant or Tenant's Agents shall be made at the expense of
Tenant. Landlord's obligation to so repair and maintain the premises shall be
limited to the cost of effecting such repair and maintenance and in no event
shall Landlord be liable for any costs or expenses in excess of said amounts,
including, but not limited to, any consequential damages, opportunity costs or
lost profits incurred or suffered by Tenant.
9.2 Tenant's Maintenance and Repair Obligations. Subject to Section 9.1
and Articles XII and XIII. Tenant shall at all times during the Term of this
Lease, at Tenant's sole cost and expense, clean, keep, maintain, repair and make
necessary improvements to, the Premises and every portion thereof and all
improvements therein or thereto, in good and sanitary order and condition to the
reasonable satisfaction of Landlord and in compliance with all Applicable Laws,
usual wear and tear excepted. Any damage or deterioration of the Premises shall
not be deemed usual wear and tear if the same could have been prevented by good
maintenance practices by Tenant. Tenant's repair and maintenance obligations
herein shall include, but are not limited to, all necessary maintenance and
repairs to all portions of the Premises, and all exterior entrances, all glass,
windows, window easements, show window moldings, partitions, doors, door jams,
door closures, hardware, fixtures, electrical lighting and outlets, plumbing
fixtures, sewage facilities, interior walls, floors, ceilings, fans and exhaust
equipment, fire extinguisher
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equipment and systems, and all repairs to Specialized HVAC (as hereinafter
defined). As part of its maintenance obligations hereunder, Tenant shall, at
Landlord's request, provide Landlord with copies of all maintenance schedules,
reports and notices prepared by, for, or on behalf of Tenant. Landlord may
impose reasonable restrictions and requirements with respect to repairs by
Tenant, which repairs shall be at least equal in quality to the original work,
and the provisions of Section 8.3 shall apply to all such repairs. Tenant's
obligation to repair includes the obligation to replace, as necessary,
regardless of whether the benefit of such replacement extends beyond the Term.
Any special or above-standard heating, ventilating and air conditioning
installed by, on behalf of, or at the request of Tenant ("Specialized HVAC"),
shall be paid for and maintained by Tenant at Tenant's sole cost and expense.
Notwithstanding the foregoing, Landlord shall have the right, upon Notice to
Tenant, to undertake the responsibility for maintenance and repair of automatic
fire extinguisher equipment, such as sprinkler systems and alarms, Specialized
HVAC and other obligations of Tenant hereunder which Landlord deems appropriate
to undertake that affect the Building as a whole, in which event the cost
thereof shall be included as part of Project Costs and paid by Tenant in the
manner set forth in Section 7.1. Tenant shall not permit or authorize any person
to go onto the roof of the Building without the prior written consent of
Landlord.
9.3. Waiver. Tenant hereby waives all rights provided for by the
provisions of Sections 1941 and 1942 of the California Civil Code and any
present or future laws regarding Tenant's right to make repairs at the expense
of Landlord or to terminate this Lease because of the condition of the Premises.
9.4 Self-Help. If Tenant refuses or fails to initiate the repair and
maintenance of the Premises as required hereunder within ten (10) days from the
date on which Landlord makes a written demand on Tenant to effect such repair
and maintenance, Landlord may enter upon the Premises and make such repairs or
perform such maintenance without liability to Tenant for any loss or damage that
may accrue to Tenant or its merchandise, fixtures or other property or to
Tenant's business by reason thereof. All sums reasonably disbursed, deposited
or incurred by Landlord in connection with such repairs or maintenance, plus
five percent (5%) for overhead, shall be due and payable by Tenant to Landlord,
as an item of Additional Rent, on demand by Landlord, together with interest at
the Applicable Rate on such aggregate amount from the date of such demand until
paid by Tenant.
ARTICLE X
COMMON AREA AND PARKING
10.1 Grant of Nonexclusive Common Area License and Right. Landlord hereby
grants to Tenant and its permitted subtenants, in common with Landlord and all
persons, firms and corporations conducting business in the Project and their
respective customers, guests, licensees, invitees, subtenants, employees and
agents, to use the Common Area within the Project for vehicular parking, for
pedestrian and vehicular ingress, egress and travel, and for such other purposes
and for doing such other things as may be provided for, authorized and/or
permitted by the Restrictions, such nonexclusive license and right to be
appurtenant to Tenant's leasehold estate created by this Lease. The
nonexclusive license and rights granted pursuant to the provisions of this
Article X shall be subject to the provisions of the Restrictions, which pertain
in any way to the Common Area covered by such Restrictions, and the provisions
of this Lease.
10.2 Use of Common Area. Notwithstanding anything to the contrary herein,
Tenant and its successors, assigns, employees, agents and invitees shall use the
Common Area only for the purposes permitted hereby and by the Restrictions and
the Rules and Regulations. All uses permitted within the Common Area shall be
undertaken with reason and judgment so as not to interfere with the primary use
of the Common Area which is to provide parking and vehicular and pedestrian
access throughout the Common Area within the Project and to adjacent public
streets for the Landlord, Landlord's Agents, its tenants, subtenants and all
persons, firms and corporations conducting business within the Project and their
respective customers, guests and licensees. In no event shall Tenant erect,
install, or place, or cause to be erected, installed, or placed any structure,
building, trailer, fence, wall, signs or other obstructions on the Common Area
except as otherwise permitted herein and in the Restrictions, and Tenant shall
not store or sell any merchandise, equipment or materials on the Common Area.
10.3 Control of Common Area. Subject to provisions of the Restrictions,
all Common Area and all improvements located from time to time within the Common
Area shall at all times be subject to the exclusive
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control and management of the Landlord. Landlord shall have the right to
construct, maintain and operate lighting facilities within the Common Area; to
police the Common Area from time to time; to change the area, level, location
and arrangement of the parking areas and other improvements within the Common
Area; to close all or any portion of the Common Area or improvements therein to
such extent as may, in the opinion of counsel for Landlord, be legally
sufficient to prevent a dedication thereof or the accrual of any rights to any
person or to the public therein; to close temporarily all or any portion of the
Common Area and/or the improvements thereon; to discourage noncustomer parking;
and to do and perform such other acts in and to said Common Area and
improvements thereon as, in the use of good business judgment, Landlord shall
determine to be advisable; provided that, at all times and subject to the terms
hereof, Tenant shall have available for use the number of parking spaces set
forth in Section 15 of the Basic Lease Information.
10.4 Maintenance of Common Area. Subject to the provisions of the
Restrictions, Landlord shall operate and maintain (or cause to be operated and
maintained) the Common Area in a first-class condition, in such manner as
Landlord in its discretion shall determine from time to time. Without limiting
the scope of such discretion, Landlord shall have the full right and authority
to employ or cause to be employed all personnel and to make or cause to be made
all rules and regulations pertaining to or necessary for the proper operation
and maintenance of the Common Area and the improvements located thereon. The
cost of such maintenance of the Common Area shall be included as part of Project
Costs. No part of the Common Area may be used for the storage of any items,
including without limitation, vehicles, materials, inventory and equipment. All
trash and other refuse shall be placed in designated receptacles. No work of
any kind, including, but not limited to, painting, drying, cleaning, repairing,
manufacturing, assembling, cutting, merchandising or displaying shall be
permitted upon the Common Area.
10.5 Revocation of License. All Common Area and improvements located
thereon which Tenant is permitted to use and occupy pursuant to the provisions
of this Lease are to be used and occupied under a revocable license and right,
and if any such license be revoked, or if the amount of such areas be
diminished, Landlord shall not be subject to any liability nor shall Tenant be
entitled to compensation or diminution or abatement of Rent, and such revocation
or diminution of such areas shall not be deemed constructive or actual eviction.
It is understood and agreed that the condemnation or other taking or
appropriation by any public or quasi-public authority, or sale in lieu of
condemnation, of all or any portion of the Common Area shall not constitute a
violation of Landlord's agreements hereunder, and Tenant shall not be entitled
to participate in or make any violation of Landlord's agreements hereunder, and
Tenant shall not be entitled to participate in or make any claim for any award
or other condemnation proceeds arising from any such taking or appropriation of
the Common Area. Notwithstanding the foregoing, during the term of this Lease,
Landlord shall provide to Tenant the number of vehicle parking spaces set forth
in Item 15 of the basic Lease Provisions throughout the Term (subject to the
rights of Landlord under this Article X), and reasonable rights of ingress and
egress.
10.6 Landlord's Reserved Rights. Landlord reserves the right to install,
use, maintain, repair relocate and replace pipes, ducts, conduits, wires and
appurtenant meters and equipment included in the Premises or outside the
Premises, change the boundary lines of the Project and install, use, maintain,
repair, alter or relocate, expand and replace any Common Area; provided,
however, Landlord shall not unreasonably interfere with Tenant's use of the
Premises. Such rights of Landlord shall include, but are not limited to,
designating from time to time certain portions of the parking lot as exclusively
for the benefit of certain Tenants in the Project (so long as such exclusive
rights to the parking lot do not impair Tenant's parking rights under this
Lease).
10.7 Parking. Tenant shall be entitled to the number of vehicle parking
spaces set forth in Item 15 of the Basic Lease Provisions, which spaces shall be
unreserved and unassigned, on those portions of the Common Area designated by
Landlord for parking. Tenant shall not use more parking spaces than such
number. All parking spaces shall be used only for parking by vehicles no larger
than full size passenger automobiles or pick-up trucks. Tenant shall not permit
or allow any vehicles that belong to or are controlled by Tenant or Tenant's
employees, suppliers, shippers, customers, or invitees to be loaded, unloaded,
or parked in areas other than those designated by Landlord for such activities.
If Tenant permits or allows any of the prohibited activities described above,
then
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Landlord shall have the right, after reasonable notice, in addition to such
other rights and remedies that Landlord may have, to remove or tow away the
vehicle involved and charge the cost to Tenant, which cost shall be immediately
payable upon demand by Landlord. Parking within the Common Area shall be limited
to striped parking stalls, and no parking shall be permitted in any driveways,
accessways or in any area which would prohibit or impede the free flow of
traffic within the Common Area. Vehicles which have been abandoned or parking in
violation of the terms hereof may be towed away at the owner's expense.
Notwithstanding the foregoing, delivery vehicles may be parked, staged and
stored overnight, on a temporary basis.
ARTICLE XI
INDEMNITY AND INSURANCE
11.1 Indemnification. To the fullest extent permitted by Law, Tenant
hereby agrees to defend (with attorneys acceptable to Landlord), indemnify,
protect and hold harmless Landlord and Landlord's Agents and any successors to
all or any portion of Landlord's interest in the Premises and their directors,
officers, partners, employees, authorized agents, representatives, affiliates
and Mortgagees, from and against any and all damage, loss, claim, liability and
expense including, but not limited to, actual attorneys' fees and legal costs,
incurred directly or indirectly by reason of any claim, suit or judgment brought
by or on behalf of (i) any person or persons for damage, loss or expense due to,
but not limited to, bodily injury or property damage sustained by such person or
persons which arise out of, are occasioned by, or are in any way attributable to
the use or occupancy of the Premises by Tenant or the acts or omissions of the
Tenant or Tenant's Agents in or about the Premises or the Project (including but
not limited to any Event of Default hereunder), or (ii) Tenant or Tenant's
Agents for damage, loss or expense due to, but not limited to, bodily injury or
property damage which arise out of, are occasioned by, or are in any way
attributable to the use of any of the Common Area, except to the extent caused
by the gross negligence or willful misconduct of Landlord or Landlord's Agents.
11.2 Property Insurance. Landlord shall obtain and keep in force during
the Terms of this Lease a policy or policies of insurance, with deductibles at
the sole discretion of Landlord, covering loss of rents and loss or damage to
the Premises and the Building, the Tenant improvements and objects owned by
Landlord and normally covered under a "Boiler and Machinery" policy (as such
term is used in the insurance industry) at least in the amount of the full
replacement cost thereof, and in no event less than the total amount required by
Mortgagees, against all perils included within the classification of fire,
extended coverage, vandalism, malicious mischief, special extended perils ("all
risk" or "special causes of action," as such terms are used in the insurance
industry, including, at Landlord's option, collapse, earthquake and flood) and
other perils as required by the Mortgagees or deemed necessary by Landlord. A
stipulated value or agreed amount endorsement deleting any co-insurance
provision of said policy or policies shall be procured with said insurance. The
cost of such insurance policies shall be included in the definition of Project
Costs, and shall be paid by Tenant in the manner set forth in Section 7.1. Such
insurance policies shall provide for payment of loss thereunder to Landlord or,
at Landlord's election, to the Mortgagees. If the Premises are part of a larger
building, or if the Premises are part of a group of buildings owned by Landlord
which are adjacent to the Premises, then Tenant shall pay for any increase in
the property insurance of the Building or such other building or buildings
within the Project if such increase is caused by Tenant's acts, omissions, use
or occupancy of the Premises. Tenant shall obtain and keep in force during the
Term, at its sole cost and expense, (i) an "all risk" or "special causes of
action" property policy in the amount of the full replacement cost covering
tenant's Personal Property and any Alterations made by or at the request of
Tenant, with Landlord insured as its interest may appear.
11.3 Liability/Miscellaneous Insurance. Tenant shall maintain in full
force and effect at all times during the Term (plus such earlier and later
periods as Tenant may be in occupancy of the Premises), at its sole cost and
expense, for the protection of Tenant, Landlord and Landlord's Agents and
Mortgagees, policies of insurance issued by a carrier or carriers acceptable to
Landlord and the Mortgagees which afford the following coverages: (i) statutory
workers' compensation, (ii) employer's liability with minimum limits of Five
Hundred Thousand Dollars ($500,000), (iii) commercial general liability
insurance including, but not limited to, blanket contractual liability
(including the indemnity set forth in Section 11.1), fire and water legal
liability, broad form property damage,
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personal injury, independent contractors, and, if alcoholic beverages are
served, manufactured, distributed or sold in the Premises, comprehensive liquor
liability, and owned, non-owned and hired vehicles, of not less than the limits
set forth in Item 17 of the Basic Lease Provisions (or current limit carried,
whichever is greater), naming Landlord, the Mortgagees, and the Additional
insureds named in Item 16 of the Basic Lease Provisions as additional insureds,
and including a cross-liability or severability of interests endorsement, and
(iv) such other insurance in such terms and amounts as may be required by
Landlord or the Mortgagees from time to time. Landlord or Landlord's Agents on
behalf of Landlord may, at Landlord's election, obtain liability insurance in
such amounts and on such terms as Landlord shall determine, and the cost thereof
shall be included in Project Costs and paid by Tenant in the manner described in
Section 7.1.
11.4 Hazardous Materials. In the event Landlord consents to Tenant's use,
generation or storage of Hazardous Materials on, under or about the Premises
pursuant to Section 6.2, Landlord shall have the continuing right to require
Tenant, at Tenant's sole cost and expense, to purchase insurance specified and
approved by Landlord, with coverage of no less than Two Million Dollars
($2,000,000), insuring (i) any Hazardous Materials shall be removed from the
Premises, (ii) the Premises shall be restored to a clean, neat, attractive,
healthy, safe and sanitary condition, and (iii) any liability of Tenant,
Landlord and Landlord's Agents arising from such Hazardous Materials; provided,
however, that such insurance is available and can be obtained at commercially
reasonable rates.
11.5 Deductibles; Blanket Coverage. Any policy of insurance required
pursuant to this Lease containing a deductible exceeding Five Thousand Dollars
($5,000) per occurrence must be approved in writing by Landlord prior to the
issuance of such policy. Tenant shall be solely responsible for the payment of
any deductible. Any insurance required of Tenant pursuant to this Lease may be
provided by means of a so-called "blanket policy", so long as (i) the Premises
are specifically covered (by rider, endorsement or otherwise), (ii) the limits
of the policy are applicable on a "per location" basis to the Premises and
provide for restoration of the aggregate limits, and (iii) the policy otherwise
complies with the provisions of this Lease. Tenant may obtain the coverage
limits specified herein by an umbrella policy, if desired.
11.6 Increased Coverage. Upon demand, Tenant shall provide Landlord, at
Tenant's expense, with such increased amount of existing insurance, and such
other insurance as Landlord or the Mortgagees may reasonably require.
11.7 Sufficiency of Coverage. Neither Landlord nor any of Landlord's
Agents makes any representation that the types of insurance and limits specified
to be carried by Tenant under this Lease are adequate to protect Tenant. If
Tenant believes that any such insurance coverage is insufficient, Tenant shall
provide, at its own expense, such additional insurance as Tenant deems adequate.
Nothing contained herein shall limit Tenant's liability under this Lease, and
Tenant's liability under any provision of this Lease, including without
limitation under any indemnity provisions, shall not be limited to the amount of
any insurance obtained.
11.8 Insurance Requirements. Tenant's insurance shall be carried with
companies that have a general policyholder's rating of not less than "A" and
that are determined by Landlord, as financially sound on a current basis, (ii)
shall provide that such policies shall not be subject to material alteration or
cancellation except after at least thirty (30) days prior written notice to
Landlord, and (iii) shall be primary, and any insurance carried by Landlord or
Landlord's Agents shall be noncontributing. Tenant's policy or policies, or
duly executed certificates for them in the form and content of acceptable to the
Property Manager, shall be deposited with Landlord prior to the Commencement
Date, and prior to renewal of such policies. If Tenant fails to procure and
maintain the insurance required to be procured by tenant under this Lease,
Landlord may, but shall not be required to, order such insurance at Tenant's
expense. All sums reasonably disbursed, deposited or incurred by Landlord in
connection therewith, including, but not limited to, all costs, expenses and
actual attorneys' fees, shall be due and payable by Tenant to Landlord, as an
item of Additional Rent, on demand by Landlord, together with interest thereto
at the Applicable Rate from the date of such demand until paid by Tenant.
11.10 Landlord's Disclaimer. Notwithstanding any other provisions of this
Lease, and to the fullest extent permitted by law, Landlord and Landlord's
Agents shall not be liable for any loss or damage to persons or property
resulting from theft, vandalism, fire, explosion, failing materials, glass, tile
or sheetrock, steam, gas,
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electricity, water or rain which may leak from any part of the Premises, or from
the pipes, appliances or plumbing works therein or from the roof, street or
subsurface or whatsoever, unless caused by or due to the negligence or willful
misconduct of Landlord or Landlord's Agent, Landlord or Landlord's Agents shall
not be liable for interference with light or air, or for any latent defect in
the Premises except as otherwise expressly provided in this Lease. Tenant shall
give prompt Notice to Landlord in case of a casualty, accident or repair needed
to the Premises.
11.11 Waiver of Subrogation. Landlord and Tenant each hereby waives all
rights of recovery against the other and the other's agents on account of loss
and damage occasioned to such waiving party to the extent only that such loss or
damage is insured against under any insurance policies required by this Article
XI (and to the extent such insurance is inadequate to cover such loss, this
waiver shall not apply to amounts of loss above such coverage). Tenant and
Landlord shall, upon obtaining policies of insurance required hereunder, give
notice to the insurance carriers that the foregoing waiver of subrogation is
contained this Lease.
ARTICLE XII
DAMAGE OR DESTRUCTION
12.1 Landlord's Obligation to Rebuild. If the Premises ar damaged or
destroyed by fire or other casualty (a "Casualty"), Tenant shall promptly give
notice thereof to Landlord, and Landlord shall thereafter repair the Premises as
set forth in Sections 12.4 and 12.6 unless Landlord has the right to terminate
this Lease as provided in Section 12.2 and Landlord elects to so terminate or
Tenant has the right to terminate this Lease as provided in Section 12.3 and
Tenant elects to so terminate.
12.2 Landlord's Right to Terminate. Landlord shall have the right to
terminate this Lease following a Casualty if any of the following occurs: (i)
insurance proceeds (together with any additional amounts Tenant elects, at its
option, to contribute) are not available to Landlord to pay one hundred percent
(100%) of the cost to fully repair the Premises, excluding the deductible (for
which Tenant shall pay Tenant's Share of such deductible); (ii) Landlord's
Architect determines that the Premises cannot, with reasonable diligence, be
fully repaired by Landlord (or cannot be safely repaired because of the presence
of hazardous factors, including, but not limited to, Hazardous Materials,
earthquake faults, radiation, chemical waste and other similar dangers) within
one hundred eighty (180) days after the date of such Casualty; (iii) the
Premises are destroyed or damaged during the last twelve (12) months of the
Term; (but not later than six months prior to the expiration of the Term). If
Landlord elects to terminate this Lease following a Casualty pursuant to this
Section 12.2, Landlord shall give Tenant Notice of its election to terminate
within thirty (30) days after Landlord has knowledge of such Casualty, and this
Lease shall terminate fifteen (15) days after the date of such Notice. See
Rider 12.2.
12.3 Tenant's Right to Terminate. Subject to the later terms hereof,
Tenant shall have the right to terminate this Lease following the destruction of
the Premises (or damage to the Premises so extensive as to reasonably prevent
Tenant'' substantial use and enjoyment of the Premises) if any of the following
occurs: (i) the Premises cannot, with reasonable diligence, be or is not fully
repaired by Landlord within one hundred eighty (180) days after the date of the
damage or destruction, as determined by Landlord's Architect; (ii) the Premises
cannot safely be repaired because of the presence of hazardous factors,
including Hazardous Materials, earthquake faults, radiation, chemical waste and
other similar dangers; or (iii) the damage or destruction occurs during the last
twelve (12) months of the Term and cannot, with reasonable diligence, be fully
repaired by Landlord within ninety (90) days after the date of the destruction
or damage (but not later than six months prior to the expiration of the Term) as
determined by Landlord's Architect. Notwithstanding the foregoing, Tenant shall
not have the right to terminate under this Section 12.3 if (an Event of Default
has occurred and is continuing at the time of such damage or destruction or at
the time of exercising the right to terminate, or (b) the damage or destruction
was caused, in whole or in part, by the willful act or omission of Tenant or
Tenant's Agents. If Tenant elects to terminate this Lease pursuant to this
Section 2.3, Tenant shall give Landlord Notice of its election to terminate
within thirty (30) days after the date of such damage or destruction or ten (10)
days after receipt of the estimated construction period from Landlord's
Architect under clause (iii) if applicable, and this Lease shall terminate
thirty (30) days after the date of such Notice.
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12.4 Effect of Termination. If this Lease is terminated following a
Casualty pursuant to Section 12.2 or Section 12.3, Landlord shall, subject to
the rights of the Mortgagees, be entitled to receive and retain all the
insurance proceeds resulting from or attributable to such Casualty, except for
those proceeds payable under policies obtained by Tenant which specifically
insure Tenant's Personal Property. If neither party exercises any such right to
terminate this Lease, this Lease will continue in full force and effect, and
Landlord shall, promptly following the tenth (10th) day after the date of such
Casualty and receipt of the amounts set forth in clause (i) of Section 12.2,
commence the process of obtaining necessary permits and approvals for the repair
of the Premises, and shall commence such repair and prosecute the same
diligently to completion as soon thereafter as is practicable. Tenant shall
fully cooperate with Landlord in removing Tenant's Personal Property and any
debris from the Premises to facilitate the making of such repairs.
12.5 Limited Obligation to Repair. Landlord's obligation, should it elect
to or be obligated to repair the Premises following a Casualty, shall be limited
to the basic Building and Tenant Improvements and Tenant shall, at its expense,
replace or fully repair all Tenant's Personal Property and at Tenant's option,
any Alterations installed by Tenant existing at the time of such Casualty. If
the Premises are to be repaired in accordance with the foregoing, Tenant shall
make available to Landlord any portion of insurance proceeds it receives which
are allocable to the Tenant Improvements.
12.6 Abatement of Monthly Rent. During any period when Landlord or
Landlord's Architect reasonably determines that there is substantial
interference with Tenant's use of the Premises by reason of a Casualty, Monthly
Rent and Additional Rent shall be temporarily abated in proportion to the degree
of such substantial interference. Such abatement shall commence upon the date
of such Casualty and shall end upon the Substantial Completion of the repair of
the Premises which Landlord undertakes or is obligated to undertake hereunder.
Tenant shall not be entitled to any compensation or damages from Landlord for
loss of the use of the Premises, Tenant's Personal Property or other damage or
any inconvenience occasioned by a Casualty or by the repair or restoration of
the Premises thereafter, including, but not limited to, any consequential
damages, opportunity costs or lost profits incurred or suffered by Tenant.
Tenant hereby waives the provisions of Section 1932(2) and Section 1933(4) of
the California Civil Code, and the provisions of any similar or successor
statutes.
12.7 Landlord's Determination. The determination in good faith by
Landlord's Architect of or relating to the estimated cost of repair of any
damage, replacement cost, the time period required for repair or the
interference with or suitability of the Premises for Tenant's use or occupancy
shall be conclusive for purposes of this Article XII and Article XIII.
RIDER 12.2 LANDLORD'S RIGHT TO TERMINATE:
Notwithstanding the terms of Tenant's option to extend the Term,
pursuant to Lease Rider No. One, if a Casualty occurs during the initial Term of
this Lease during the period in which Tenant is entitled to exercise such
option, Tenant shall have the right (but not the obligation) to exercise such
option by giving Landlord written notice of exercise within thirty (30) days
after Tenant receives the estimate of Landlord's Architect of the period needed
to restore the Premises and, in that event, Landlord may not terminate the Lease
under clause (iii) above.
ARTICLE XIII
CONDEMNATION
13.1 Total Taking--Termination. If title to the Premises, the Common Areas
or so much thereof is taken for any public or quasi-public use under any statute
or by right of eminent domain so that reconstruction of the Premises or Common
Areas will not result in the Premises being reasonably suitable for Tenant's
continued occupancy for the uses and purposes permitted by this Lease, this
Lease shall terminate as of the date possession of the Premises or part thereof
is so taken.
13.2 Partial Taking. If any part of the Premises, or the parking and
access rights granted hereby not being sufficient for Tenant's use, or Common
Area, is taken for any public or quasi-public use under any statute or by right
of eminent domain and the remaining part is reasonably suitable for Tenant's
continued occupancy for the
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uses permitted by this Lease, this Lease shall, as to the part so taken,
terminate as of the date that possession of such part of the Premises or Common
Area is taken and the Monthly Rent and Additional Rent shall be reduce in the
same proportion that the floor area of the portion of the Premises so taken
(less any addition thereto by reason of any reconstruction) bears to the
original floor area of the Premises, as reasonably determined by Landlord or
Landlord's Architect. Landlord shall, at its own cost and expense, make all
necessary repairs or alternations to the Premises so as to make the portion of
the Premises not taken a complete architectural unit. Such work shall not,
however, exceed the scope of the work done by Landlord in originally
constructing the Premises including Tenant Improvements under this Lease. If
severance damages from the condemning authority are not available to Landlord in
sufficient amounts to permit such restoration, landlord may terminate this Lease
upon Notice to Tenant. Monthly Rent and Additional Rent due and payable
hereunder shall be temporarily abated during such restoration period in
proportion to the degree to which there is substantial interference with
Tenant's use of the Premises, as reasonably determined by Landlord or Landlord's
Architect. Each party hereby waives the provisions of Section 1265.130 of the
California Code of Civil Procedure and any present or future law allowing either
party to petition the Superior Court to terminate this Lease in the event of a
partial taking of the Building or Premises.
13.3 No Apportionment of Award. No award for any partial or total taking
shall be apportioned, it being agreed and understood that Landlord shall be
entitled to the entire award for any partial or entire taking. Tenant assigns
to Landlord its interest in any award which may be made in such taking or
condemnation, together with any and all rights of Tenant arising in or to the
same or any part thereof. Nothing contained herein shall be deemed to |
