California-San Jose-721 Charcot Avenue Lease - EOP-Industrial Portfolio LLC and Rackable Systems Inc.
TABLE OF CONTENTS
|2.||POSSESSION AND LEASE COMMENCEMENT||3|
|5.||RULES AND REGULATIONS||5|
|8.||INSURANCE AND INDEMNIFICATION||9|
|9.||WAIVER OF SUBROGATION||11|
|10.||LANDLORDS REPAIRS AND MAINTENANCE||11|
|11.||TENANTS REPAIRS AND MAINTENANCE||12|
|15.||SERVICES AND UTILITIES||14|
|20.||LIMITATION OF TENANTS REMEDIES||17|
|21.||ASSIGNMENT AND SUBLETTING||17|
|29.||TRANSFERS BY LANDLORD||24|
|30.||RIGHT OF LANDLORD TO PERFORM TENANTS COVENANTS||24|
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TABLE OF CONTENTS
|34.||SUCCESSORS AND ASSIGNS||25|
|36.||SURRENDER OF PREMISES||25|
|40.||JURY TRIAL WAIVER||29|
|Rules and Regulations|
|Outline And Location of Premises|
|Lease Improvement Agreement|
|Hazardous Materials Questionnaire|
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BASIS LEASE INFORMATION
|November 27, 2001|
|RACKABLE SYSTEMS, INC. a Delaware corporation|
TENANTS NOTICE ADDRESS:
|721 Charcot Avenue, San Jose, CA 95131|
TENANTS BILLING ADDRESS:
|721 Charcot Avenue, San Jose, CA 95131|
TENANT CONTACT: Jack Randall
PHONE NUMBER: 408-321-0290
FAX NUMBER: 408-321-0293
|EOP-INDUSTRIAL PORTFOLIO, L.L.C., a Delaware limited liability company|
LANDLORD NOTICE ADDRESS:
EOP-INDUSTRIAL PORTFOLIO, L.L.C.,
226 Airport Parkway
San Jose, California 95110
Attn: Property Manager
With a copy to:
Equity Office Properties Trust
Two North Riverside Plaza, Suite 2100
Chicago, Illinois 60506
Attn: Regional Counsel - San Jose Region
LANDLORD REMITTANCE ADDRESS:
|Payable to the order of Equity Office Properties to the address below:|
|That certain industrial project commonly known as Charcot Business Park which currently includes: the single-story buildings located at 2023-2037 OToole Avenue, 721-751 Charcot Avenue, 2142-2158 Paragon Drive, and 2170-2190 Paragon Drive, the parcel(s) of land on which such buildings are located and, at Landlords discretion, all other improvements thereon; and, at Landlords option, the parking areas serving the Project, all of which are located in San Jose, California 95131. If the number of buildings included in the Project increases or decreases, then the definition of the Project shall be revised accordingly to reflect such change.|
|That single story building located at 721-751 Charcot Avenue, San Jose, California 95131|
|Approximately 13,240 rentable square feet located at 721 Charcot Avenue, San Jose, California 95131|
|General office, storage, warehouse, light manufacturing and assembly for the production of rackable computer systems|
|2.5 spaces per 1,000 rentable square feet of the Premises|
Schedule Term Commencement Date:
|February 1, 2002|
Scheduled Length of Term:
|Five (5) years|
Scheduled Term Expiration Date:
|January 31, 2007|
|See Paragraph 39.A. hereof|
Estimated First Year Operating Expenses:
|$2,912.50 per month|
Tenants NAICS Code:
Tenants Proportionate Share:
The foregoing Basic Lease Information is incorporated into and made a part of this Lease, Each reference in this Lease to any of the Basic Lease Information shall mean the respective information above and shall be construed to incorporate all of the terms provided under the particular Lease paragraph pertaining to such information. In the event of any conflict between the Basic Lease Information and the Lease, the letter shall control.
THIS LEASE is made as of the 27th day of November, 2001, by and between EOP-INDUSTRIAL PORTFOLIO, L.L.C., a Delaware limited liability company (hereinafter called Landlord), and RACKABLE SYSTEMS, INC., a Delaware corporation (hereinafter called Tenant).
Landlord leases to Tenant and Tenant leases from Landlord, upon the terms and conditions hereinafter set forth, those premises (the Premises) outlined on Exhibit B and described in the Basic Lease Information. The Premises shall be all or part of a building (the Building) and of a project (the Project), which may consist of more than one building and additional facilities, an described in the Basis Lease Information. Landlord and Tenant acknowledge that physical changes may occur from time to time in the Premises, Building or Project, and that the number of buildings and additional facilities which constitute the Project may change from time to time, which may result in an adjustment in Tenants Proportionate Share, as defined in the Basis Lease Information, as provided in Paragraph 7.A.
2. POSSESSION AND LEASE COMMENCEMENT
The term commencement date (Term Commencement Date) shall be the earlier of the date on which: (1) Tenant takes possession of some or all of the Premises; or (2) the improvements to be constructed or performed in the Premises by Landlord (if any) shall have been substantially completed in accordance with the plans and specifications, if any, described on Exhibit C. Upon substantial completion of the improvements to be constructed by Landlord in the Premises, Landlord shall deliver the Premises to Tenant in a broom-clean condition and reasonably free of debris. If for any reason Landlord cannot deliver possession of the Premises to Tenant on the scheduled Term Commencement Date, Landlord shall not be subject to any liability therefore, nor shall Landlord be in default hereunder nor shall such failure affect the validity of this Lease, and Tenant agrees to accept possession of the Premises at such time as such Improvements have been substantially completed, which date shall then be deemed the Term Commencement Date. Tenant shall not be liable for any Rent for any period prior to the Term Commencement Date (but without affecting any obligation of Tenant under any improvement agreement appended to this Lease). In the event of any dispute as to substantial completion of work performed or required to be performed by Landlord, the certificate of Landlords architect or general contractor shall be conclusive. Substantial completion shall have occurred notwithstanding Tenants submission of a punchlist to Landlord, which Tenant shall submit, if at all, within three (3) business days after the Term Commencement Date or otherwise in accordance with any improvement agreement appended to this Lease. Upon Landlords request, Tenant shall promptly execute and return to Landlord a Start-Up Letter in which Tenant shall agree, among other things, in acceptance of the Premises and to the determination of the Term Commencement Date, in accordance with the terms of this Lease, but Tenants failure or refusal to do so shall not negate Tenants acceptance of the Premises or affect determination of the Term Commencement Date.
Notwithstanding the foregoing, if the Term Commencement Date has not occurred on or before the Required Completion Date (defined below), Tenant, as its sole remedy, may terminate this Lease by giving Landlord written notice of termination on or before the earlier to occur of: (i) 5 business days after the Required Completion Date and (ii) the Term Commencement Date. In such event, this Lease shall be deemed null and void and of no further force and effect and Landlord shall promptly refund any prepaid rent and Security Deposit previously advanced by Tenant under this Lease and, so long as Tenant has not previously defaulted under any of its obligations under the Lease Improvement Agreement, the parties hereto shall have no further responsibilities or obligations to each other with respect to this Lease. The Required Completion Date shall mean the date which is 120 days after the later of the date this Lease is properly executed and delivered by Tenant, the date all prepaid rental and Security Deposits required under this Lease are delivered to Landlord, the date the building permit for the Landlord Work had been obtained, and, if applicable, the date all contingencies, if any, specified in this Lease have been satisfied or waived in writing by Landlord. Landlord and Tenant acknowledge and agree that: (i) the determination of the Term Commencement Date shall take into consideration the effect of any Tenant Delays (defined below); and (ii) the Required Completion Date shall be postponed by the number of days the Term Commencement Date is delayed due to events of force majeure, as described in Paragraph 35 hereof.
Notwithstanding anything herein to the contrary, if Landlord determines in good faith that it will be unable to cause this Term Commencement Date to occur by the Required Completion Date, Landlord shall have the right to immediately cease its performance of the Landlord Work and provide Tenant with written notice (the Completion Date Extension Notice) of such inability, which Completion Date Extension Notice shall set forth the date on which Landlord reasonably believes that the Term Commencement Date will occur. Upon receipt of the Completion Date Extension Notice, Tenant shall have the right to terminate this Lease by providing written notice of termination to Landlord within 5 business days after the date of the Completion Date Extension Notice. If Tenant does not terminate this Lease within such 5 business day period, the Required Completion Date automatically shall be amended to be the date set forth in Landlords Completion Date Extension Notice. Tenant Delay means any act or omission of Tenant or its agents, employees, vendors or contractors that actually delays the substantial completion of the Landlord Work, including, without limitation: (1) Tenants failure to furnish information or approvals within any time period specified in this Lease, including the failure to prepare or approve preliminary or final plans by any applicable due date; (2) Tenants selection of equipment or materials that have long lead times after first being informed by Landlord that the selection may result in a delay; (3) changes requested or made by Tenant to previously approved plans and specifications; (4) performance of work in the Premises by Tenant or Tenants contractor(s) during the performance of the Landlord Work; or (5) if the performances of any portion of the Landlord work depends on the prior or simultaneous performance of work by Tenant, a delay by Tenant or Tenants contractor(s) in the completion of such work.
The term of this Lease (the term) shall commence on the Term Commencement Date and continue in full force and effect for the number of months specified as the Length of Term in the Basic Lease Information or until this Lease is terminated as otherwise provided herein. If the Term Commencement Date is a data other than the first day of the calendar month, the Term shall be the number of months of the Length of Term in addition to the remainder of the calendar month following the Term Commencement Date.
A. General. Tenant shall use the Premises for the permitted use specified in the Basic Lease Information. (Permitted Use) and for no other use or purpose. Tenant shall control Tenants employees, agents, customers, visitors, invitees, licensees, contractors, assignees and subtenants (collectively, Tenants Parties) in such a manner that Tenant and Tenants Parties competitively do not exceed the parking density specified in the Basic Lease Information (the Parking Density) at any time. So long as Tenant is occupying the Premises, Tenant and Tenants Parties shall have the nonexclusive right to use, in common with other parties occupying the Building or Project, the parking areas, driveways and other common areas of the Building and Project, subject to the terms of this Lease and such rules and regulations as Landlord may from time to time reasonably prescribe. Landlord reserves the right, without notice or liability to Tenant, and without the same constituting an actual or constructive eviction, to alter or modify the common areas from time to time, including the location and configuration thereof, and the amenities and facilities which Landlord may determine to provide form time to time, provided, such alteration or modification shall not materially adversely affect Tenants Permitted Use pursuant to this Lease.
B. Limitations. Tenant shall not permit any odors, smoke, dust, gas, substances, noise or vibrations to emanate from the Premises or from any portion of the common areas as a result of Tenants or any Tenants Partys use thereof, nor take any action which would constitute a nuisance or would unreasonably disturb, obstruct or endanger any other tenants or occupants of the Building or Project or elsewhere, or interfere with their use of their respective premises or common areas. Storage outside the Premises of materials, vehicles or any other items is prohibited. Tenant shall not use or allow the Premises to be used for any immoral, improper or unlawful purpose, nor shall Tenant cause or maintain or permit any nuisance in, on or about the Premises. Tenant shall not commit or suffer the commission of any waste in, on or about the Premises. Tenant shall not allow any sale by assign upon the Premises, or place any loads upon the floors, walls or ceilings which could endanger the structure, or place any harmful substances in the drainage system of the Building or Project. No waste, materials or refuse shall be dumped upon or permitted to remain outside the Premises except in trash containers placed inside exterior enclosures designated for that purpose by Landlord. Landlord shall not be responsible to Tenant for the non-compliance by any
other tenant or occupant of the Building or Project with any of the above-referenced rules or any other terms or provisions of such tenants or occupants lease or other contract.
C. Compliances with Regulations. By entering the Premises, Tenant accepts the Premises in the condition existing as of the date of such entry. Tenant shall at its sole cost and expense strictly comply with all existing or future applicable municipal, state and federal and other governmental statutes, rules, requirements, regulations, laws and ordinances, including zoning ordinances and regulations, and covenance, agreements and restrictions of record governing and relating to the use, occupancy or possession of the Premises, to Tenants use of the common areas, or to the use, storage, generation or disposal of Hazardous Materials (hereinafter defined) (collectively Regulations). Tenant shall at its sole cost and expense obtain any and all license or permits necessary for Tenants use of the Premises. Tenant shall at its sole cost and expense promptly comply with the requirements of any board of fire underwriters or other similar body now or hereafter constituted. Tenant shall not do or permit anything to be done in, on, under or about the Project or bring or keep anything which will in any way increase the rate of any insurance upon the Premises, Building or Project or upon any contents therein or cause a cancellation of said insurance or otherwise affect said insurance in any manner. Tenant shall indemnify, defend (by counsel reasonably acceptable to Landlord), protect and hold Landlord harmless from and against any loss, cost, expenses, damage, attorneys fees or liability arising out of the failure of Tenant to comply with any Regulation. Tenants obligations pursuant to the foregoing indemnity shall survive the expiration or earlier termination of this Lease.
5. RULES AND REGULATIONS
Tenant shall faithfully observe and comply with the building rules and regulations attached hereto as Exhibit A and any other rules and regulations and any modification or additions thereto which Landlord may from time to time reasonably prescribe in writing for the purpose of maintaining the proper care, cleanliness, safety, traffic flow and general order of the Premises or the Building or Project; provided, however, that if there is a conflict between this Lease and any rules and regulations enacted after the date of this Lease, the areas of this Lease shall control. Tenant shall cause Tenants Parties to comply with such rules and regulations. Landlord shall not be responsible to Tenant for the non-compliance by any other tenant or occupant of the Building or Project with any of such rules and regulations, any other tenants or occupants lease or any Regulations.
A. Base Rent. Tenant shall pay to Landlord and Landlord shall receive, without notice or demand throughout the Term, Base Rent as specified in the Basic Lease Information, payable in monthly installments in advance on or before the first day of each calendar month, in lawful money of the United states, without deduction or offset whatsoever, as the Remittance Address specified in the Basic Lease Information or to such other place as Landlord may form time to time delegate in writing. Base Rent for the third (3rd) full month of the Term shall be paid by Tenant upon Tenants execution of this Lease. If the obligation for payment of Base Rent commences on a day other than the first day of a month, then Base Rent shall be prorated and the prorated installment shall be paid on the first day of the calendar month next succeeding the Term Commencement Date. The Base Rent payable by Tenant hereunder is subject to adjustment as provided elsewhere in this Lease, as applicable. As used herein, the term Base Rent shall mean the Base Rent specified in the Basic Lease Information as it may be so adjusted form time to time.
B. Additional Rent. All monies other than the Base Rent required to be paid by Tenant hereunder, including, but not limited to, Tenants Proportionate Share of Operating Expenses, as specified in Paragraph 7 of this Lease, charges to be paid by Tenant under Paragraph 15, the interest and late charge described in Paragraphs 26.D, and E, and any monies spent by Landlord pursuant to Paragraph 30, shall be considered additional rent (Additional Rent). Rent shall mean Base Rent and Additional rent.
7. OPERATING EXPENSES
A. Operating Expenses. In addition to the Base Rent required to be paid hereunder, Tenant shall pay as Additional Rent, Tenants Proportionate Share of the Building and/or Project (as applicable), as defined in the Basic Lease Information, of Operating Expenses (defined below) in the manner set forth below. Tenant shall pay the applicable Tenants Proportionate Share of each such Operating Expenses. Landlord and Tenant acknowledge that if
the number of buildings which constitute the Project increases or decreases, or if physical changes are made to the Premises, Building or Project or the configurations of any thereof, Landlord may at its discretion reasonably adjust Tenants Proportionate Share of the Building or Project to reflect the change. Landlords determination of Tenants Proportionate Share of the Building and of the Project shall be conclusive so long as it is reasonably and consistently applied. Operating Expenses shall mean all expenses and costs of very kind and nature which Landlord shall pay or become obligated to pay, because of or in connection with the ownership, management, maintenance, repair, preservation, replacement operation of the Building or Project and its supporting facilities and such additional facilities now and in subsequent years as may be determined by Landlord to be necessary or desirable to the Building and/or Project (as determined in a reasonable manner) other than those expenses and costs which are specifically attributable to Tenant or which are expressly made the financial responsibility of Landlord or specific tenants of the Building or Project pursuant to this Lease. Operating Expenses shall include, but are not limited to, the following:
(1) Taxes. All real property taxes and assessments, possesory interest taxes, sales taxes, personal property taxes, business or license taxes or fees, gross receipts taxes, service payments in lieu of such taxes or fees, annual or periodic license or use fees, excise, transit charges, and other impositions, general and special, ordinary and extraordinary, unforeseen as well as foreseen, of any kind (including fees in-lieu of any such tax or assessment) which are now or hereafter assessed, levied, charged, confirmed, or imposed by any public authority upon the Building or Project, its operations or the Rent (or any portion or component thereof), or any tax, assessment or fee imposed in substitution, partially or totally, or any of the above. Operating Expenses shall also include any taxes, assessments, reassessments, or other fees or impositions with respect to the development, leasing, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises, Building or Project or any portion thereof; including, without limitation, by or for Tenant, and all increases therein or reassessments thereof whether the increase or reassessments result from increased rate and/or valuation (whether upon a transfer of the Building or Project or any portion thereof or any interest therein or for any other reason). Operating Expenses shall not include gift, franchise, inheritance or estate taxes imposed upon or assessed against the interest of any person in the Project, or taxes computed upon the basis of the net income of any owners or any interest in the Project. If it shall not be lawful for Tenant to reimburse Landlord for all or any part of such taxes, the monthly rental payable to Landlord under this Lease shall be revised to net Landlord the same net rental after imposition of any such taxes by Landlord as would have been payable to Landlord prior to the payment of any such taxes.
(2) Insurance. All insurance premiums and costs, including, but not limited to, any deductible amounts, premiums and other costs of insurance incurred by Landlord, including for the insurance coverage set forth in Paragraph 8.A. herein.
(3) Common Area Maintenance.
(a) Repairs, replacements, and general maintenance of and for the Building and Project and public and common areas and facilities of and comprising the Building and Project, including, but not limited to, the roof and roof membrane, elevators, mechanical rooms, alarm systems, pest extermination, landscaped areas, parking and service areas, driveways, sidewalks, truck staging areas, coil spur areas, fire sprinkler systems, sanitary and storm sewer lines, utility services, heating/ventilation/air conditioning systems, electrical, mechanical or other systems, telephone equipment and wiring servicing, plumbing, lighting, and any other items or areas which affect the operation or appearance of the Building or Project, which determination shall be at Landlords discretion, except for those items to the extent paid for by the proceeds of insurance, and those items attributable solely or jointly to specific tenants of the Building or Project.
(b) Repairs, replacements, and general maintenance shall include the cost of any improvements made to or required for the Project or Building that in Landlords discretion may reduce any other Operating Expenses, including present or future repair work, are reasonably necessary for the health and safety of the occupants of the Building or Project, or for the operation of the Building systems, services and equipment, or are required to comply with any Regulation,
such costs or allocable portions thereof to be amortized in accordance with GAAP, together with interest on the unamortized balance at the publicly announced prime rate charged by Wells Fargo Bank, N.A. (San Francisco) or its successor at the time such improvements or capital aspects are constructed or acquired, plus two (w) percentage points, or in the absence of such prime rate, then at the U.S. Treasury six-month market note (or bond, if so designated) rate as published by any national financial publication selected by Landlord, plus four (4) percentage points, but in no event more than the maximum rate permitted by law, plus reasonable financing charges.
(c) Payment under or for any easement, license, permit, operating agreement, declaration, restricted covenant or instrument relating to the Building or Project.
(d) All expenses and rental related to services and costs of supplies, materials and equipment used in operating, managing and maintaining the Premises, Building and Project, the equipment therein and the adjacent sidewalks, driveways, parking and service areas, including, without limitation, expenses related to service agreements regarding security, fire and other alarm systems, janitorial services to the extent not addressed in Paragraph 11 hereof, window cleaning, elevator maintenance, Building exterior maintenance, landscaping and expenses related to the administration, management and operation of the Project, including without limitation salaries, wages and benefits and management office rent.
(e) The costs of supplying any services and utilities which benefit all or a portion of the Premises, Building or Project to the extent not addressed in Paragraph 15 hereof.
(f) Legal expenses and the cost of audits by certified public accountants; provided, however, the legal expenses chargeable as Operating Expenses shall not include the cost of negotiating leases, collecting rents, evicting tenants nor shall it include costs incurred in legal proceedings with or against any tenant or to enforce the provisions of any lease.
(g) A management and accounting cost recovery fee equal to three percent (3%) of the sum of the Projects revenues.
If the rentable area of the Building and/or Project is not fully occupied during any fiscal year of the Term as determined by Landlord, an adjustment shall be made in Landlords discretion in computing the Operating Expenses for such year so that Tenant pays an equitable portion of all variable items (e.g. utilities, janitorial services and other component expenses that are affected by variations in occupancy levels) of Operating Expenses, as reasonably determined by Landlord; provided, however, that in no event shall Landlord be entitled to collect in excess of the hundred percent (100%) of the total Operating Expenses from all of the tenants in the Building or Project, as the case may be.
Operating Expenses shall not include: the costs in connection with leasing space in the Building or Project, including brokerage commissions, lease concessions, including rental abatements and construction allowances, granted to specific tenants, the initial construction cost of the Building; the cost of capital improvements (except as set forth in Paragraph 7.A(3)(b) above); depreciation; interest (except as provided in Paragraph 7.A(3)(b) above for the amortization of capital improvements); principal payments of mortgage and other non-operating debts of Landlord; the cost of repairs or other work to the extent Landlord is reimbursed by insurance or condemnation proceeds; costs incurred in connection with the sale, financing or refinancing of the Building or the Project; fines, interest and penalties incurred due to the late payment of taxes (as described in Paragraph 7.A(1) above) or Operating Expenses, organizational expenses associated with the creation and operation of the entity which constitutes Landlord; any penalties or damages that Landlord pays to Tenant under this Lease or to other tenants in the Building under their respective leases; attorneys fees and other expenses incurred in connection with negotiations or disputes with prospective tenants or tenants or other occupants of the Building; any expenses for which Landlord has received actual reimbursement (other than through Operating Expenses); advertising and promotional expenditures; costs incurred by Landlord in connection with the correction of defects in design and original construction of the Building or Project; fines or penalties incurred as a result of violation by Landlord of any
applicable laws; any fines, penalties or interest resulting from the negligence or willful misconduct of the Landlord or its agents, contractors, or employees; the cost or expense of any services or benefits provided generally to other tenants in the Building and not provided or available to Tenant, expenses for the replacement of any item covered under warranty, unless Landlord has not received payment under such warranty and it would not be fiscally prudent to pursue legal action to collect on such warranty. Notwithstanding anything hereto to the contrary, in any instance wherein Landlord, in Landlords reasonable discretion, deems Tenant to be responsible for any amounts greater than Tenants Proportionate Share, Landlord shall have the right to allocate costs in an equitable manner Landlord reasonably deems appropriate.
The above examination of services and facilities shall not be deemed to impose an obligation on Landlord to make available or provide such services or facilities except to the extent, if any that Landlord has specifically agreed elsewhere in this Lease to make the same available or provide the same. Without limiting the generality of the foregoing, Tenant acknowledges and agrees that it shall be responsible for providing adequate security for its use of the Premises, the Building and the Project and that Landlord shall have no obligation or liability with respect therein, except to the extent if any that Landlord has specifically agreed elsewhere in this Lease to provide the same.
B. Payment of Estimated Operating Expenses. Estimated Operating Expenses for any particular year shall mean Landlords estimate of the Operating Expenses for such fiscal year made with respect to such fiscal year as hereinafter provided, Landlord shall have the right from time to time to revise its fiscal year and interim accounting periods so long as the periods as so revised are reconciled with prior periods in a reasonable manner. During the last month of each fiscal year during the Term, or as soon thereafter as practicable, Landlord shall give Tenant written notice of the Estimated Operating Expenses for the ensuing fiscal year. Tenant shall pay Tenants Proportionate Share of the Estimated Operating Expenses with installments of Base Rent for the fiscal year to which the Estimated Operating Expenses applies in monthly installments on the first day of each calendar month during such year, in advance. Such payment shall be considered to be Additional Rent for all purposes hereunder. If at any time during the course of the fiscal year, Landlord determines that Operating Expenses are projected to vary from the then Estimated Operating Expenses by more than five percent (5%), Landlord may, by written notices to Tenant, revise the Estimated Operating Expenses for the balance of such fiscal year, and Tenants monthly installments for the remainder of such year shall be adjusted so that by the end of such fiscal year Tenant has paid to Landlord Tenants Proportionate Share of the revised Estimated Operating Expenses for such year, such revised installment amounts to be Additional Rent for all purposes hereunder.
C. Computation of Operating Expense Adjustment. Operating Expense Adjustment shall mean the difference between Estimated Operating Expenses and Actual Operating Expenses for any fiscal year determined as hereinafter provided. Within one hundred twenty (120) days after the end of each fiscal year, or as soon thereafter as practicable, Landlord shall deliver to Tenant a statement of actual Operating Expenses for the fiscal year just ended, accompanied by a computation of Operating Expense Adjustment. If such statement shows that Tenants payment based upon Estimated Operating Expenses is less than Tenants Proportionate Share of Operating Expenses, then Tenant shall pay to Landlord the difference within twenty (20) days after receipt of such statement, such payment to constitute Additional Rent for all purposes hereunder. If such statement shows that Tenants payments of Estimated Operating Expenses exceed Tenants Proportionate Share of Operating Expenses, then (provided that Tenant is not in default under this Lease beyond the explanation of any applicable Parties and cure periods) Landlord shall pay to Tenant the difference within twenty (20) days after delivery of such statement to Tenant. If this Lease has been terminated or the Term hereof has expired prior to the date of such statement, then the Operating Expense Adjustment shall be paid by the appropriate party within twenty (20) days after the date of delivery of the statement. Should this Lease commence or terminate at any time other than the first day of the fiscal year, Tenants Proportionate Share of the Operating Expense Adjustment shall be prorated based on a month of 30 days and the number of calendar months during such fiscal year that this Lease is in effect. Notwithstanding anything to the contrary contained in Paragraph 7.A or 7.B, Landlords failure to provide any notices or statements within the time periods specified in those paragraphs shall in no way excuse Tenant from its obligation to pay Tenants Proportionate Share of Operating Expenses.
D. Net Lease. This shall be a triple net Lease and Base Rent shall be paid to Landlord absolutely out of all costs and expenses, except as specifically provided to the contrary in this Lease. The provisions for payment of Operating Expenses and the Operating Expense Adjustment are intended to pass on to Tenant and reimburse
Landlord for all costs and expenses of the nature described in Paragraph 7.A incurred in connection with the ownership, management, maintenance, repair, preservation, replacement and operation of the Building and/or Project and its supporting facilitates and such additional facilities now and in subsequent years as may be determined by Landlord to be necessary or desirable to the Building and/or Project.
E. Tenant Audit. If Tenant shall dispute the amount set forth in any statement provided by Landlord under Paragraph 7.B or 7.C above, Tenant shall have the right, not later than twenty (20) days following receipt of such statement and upon the condition that Tenant shall first deposit with Landlord the full amount in dispute, to cause Landlords books and records with respect to Operating Expenses for such fiscal year to be audited by certified public accountants selected by Tenant and subject to Landlords reasonable right of approval. The Operating Expense Adjustment shall be appropriately adjusted on the basis of such audit. If such audit discloses a liability for a refund in excess of ten percent (10%) of Tenants Proportionate Share of the Operating Expenses previously reported, the cost of such audit shall be borne by Landlord; otherwise the cost of such audit shall be paid by Tenant. If Tenant shall not request an audit in accordance with the provisions of this Paragraph 7.E within twenty (20) days after receipt of Landlords statement provided pursuant to Paragraph 7.B or 7.C., such statement shall be final and binding for all purposes hereof. Tenant acknowledges and agrees that any information revealed in the above described audit may contain proprietary and sensitive information and that significant damage could result to Landlord if such information were disclosed to any party other than Tenants auditors. Tenant shall not in any manner disclose, provide or make available any information revealed by the audit to any person or entity without Landlords prior written consent, which consent may be withheld by Landlord in its sole and absolute discretion. The information disclosed by the audit will be used by Tenant solely for the purpose of evaluating Landlords books and records in connection with this Paragraph 7.B.
8. INSURANCE AND INDEMNIFICATION
A. Landlords Insurance. All insurance maintained by Landlord shall be for the sole benefit of Landlord and under Landlords sole control.
(1) Property Insurance. Landlord agrees to maintain property insurance insuring the Building against damage or destruction due to risk including fire, vandalism, and malicious mischief in an amount not less than the replacement cost thereof, in the form and with describes and endorsements as selected by Landlord. At its election, Landlord may instead (but shall have no obligation to) obtain All Risk coverage, and may also obtain earthquake, and/or flood insurance in amounts selected by Landlord.
(2) Optional Insurance. Landlord, at Landlords opinion, may also (but shall have no obligation to) carry (i) insurance against loss of rent, in an amount equal to the amount of Base Rent and Additional Rent that Landlord could be required to abate to all Building tenants in the event of condemnation or casualty damage for a period of twelve (12) months; and (ii) liability insurance and such other insurance as Landlord may deem prudent or advisable, including, without limitation, liability insurance in such amounts and on such terms as Landlord shall determine. Landlord shall not be obligated to insure, and shall have no responsibility whatsoever for any damage to, any furniture, machinery, goods, inventory or supplies, or other personal property or fixtures which Tenant may keep or maintain in the Premises, or any leasehold improvements, additions or alterations within the Premises.
B. Tenants Insurances. Tenant shall procure at Tenants sole cost and expense and keep in effect from the date of this Lease and at all times until the end of the Term the following:
(1) Property Insurance. Insurance on all personal property and fixtures of Tenant and all improvements, addition or alterations made by or for Tenant to the Premises on an All Risk basis, insuring such property for the full replacement value of such property.
(2) Liability Insurance. Commercial General Liability insurance covering bodily injury and property damage liability occurring in or about the Premises or arising out of the use and occupancy of the Premises and the Project, and any part of either, and any areas adjacent thereto, and the business operated by Tenant or by any other occupant of the Premises. Such insurance shall include contractual liability
coverage insuring all of Tenants indemnity obligations under this Lease. Such coverage shall have a minimum combined single limit of liability of at least Two Million Dollars ($2,000,000.00) and a minimum general aggregate limit of Three Million Dollars ($3,000,000.00), with an Additional Insured Managers or Lessors of Premises Endorsement and the Amendment of the Pollution Exclusion Endorsement. All such policies shall be written to apply to all bodily injury (including death), property damage or loss, personal and advertising injury and other covered loss, however occasioned, occurring during the policy term, shall be endorsed to and Landlord and any party holding an interest to which this Lease may be subordinated as an additional injured, and shall provide that such coverage shall be primary and non-contributing with any insurance maintained by Landlord, which shall be excess insurance only. Such coverage shall also contain endorsements including employees as additional insureds if not covered by Tenants Commercial General Liability Insurance. All such insurance shall provide for the severability of interests of insureds; and shall be written on an occurrence basis, which shall afford coverage for all claims based on acts, commissions, injury and damages, which onset or arose (or the cost of which occurred or arose) in whole or in part during the policy period.
(3) Workers Compensation and Employers Liability Insurance. Workers Compensation Insurance as required by any Regulation, and Employers Liability Insurance in amounts not less than One Million Dollars ($1,000,000) each accident for bodily injury by accident; One Million Dollars ($1,000,000) policy limit for bodily injury by disease, and One Million Dollars ($1,000,000) each employee for bodily injury by disease.
(4) Intentionally Deleted.
(5) Alterations Requirements. To the event Tenant shall desire to perform any Alterations, Tenant shall deliver to Landlord, prior to commencing such Alterations (i) evidence satisfactory to Landlord that Tenant carries Builders Risk insurance covering construction of such Alterations in an amount and form approved by Landlord, (ii) such other insurance as Landlord shall nondiscriminatorily require, and (iii) a lien and completion bond or other security in form and amount satisfactory to Landlord.
(6) General Insurance Requirements. All coverage described in this Paragraph 8.B shall be endorsed to (i) provide Landlord with thirty (30) days notice of cancellation or change in terms; and (ii) waive all rights of subrogation by the insurance carrier against Landlord. If at any time during the Term the amount of coverage of insurance which Tenant is required to carry under this Paragraph 8.B is, in Landlords reasonable judgment, materially less than the amount or type of insurance coverage typically carried by owners or tenants of properties located in this general area in which the Premises are located which are similar to and operated for similar purposes as the Premises or if Tenants use of the Premises should change with or without Landlords consent, Landlord shall have the right to require Tenant to increase the amount or change the types of insurance coverage required under this Paragraph 8.B. All insurance policies required to be carried by Tenant under this Lease shall be written by companies rated A X or better in Bests Insurance Guide and authorized to do business in the State of California. In any event deductible amounts under all insurance policies required to be carried by Tenant under this Lease shall not exceed commercially reasonable amounts. Tenant shall deliver to Landlord on or before the Term Commencement Date, and thereafter at least thirty (30) days before the expiration dates of the expired policies, certified copies of Tenants insurance policies, or a certificate evidencing the same issued by the insurer thereunder; and, if Tenant shall fail to procure such insurance, or to deliver such policies or certificates, Landlord may, at Landlords option and in addition to Landlords other remedies in the event of a default by Tenant hereunder, procure the same for the account of Tenant, and the cost thereof shall be paid to Landlord as Additional Rent.
C. Indemnification of Landlord. Tenant shall indemnify, defend by counsel reasonably acceptable to Landlord, protect and hold Landlord (or any successor), Equity Office Properties Trust, a Maryland real estate investment trust, EOP Operating Limited Partnership, a Delaware limited partnership, and each of their respective directors, shareholders, partners, lenders, members, managers, contractors, affiliates, and employees (collectively, Landlord Indemnitees) harmless from and against any and all claims, liabilities, losses, costs, liens of rents, liens, damages, injuries or expenses, including reasonable attorneys and consultants fees and court costs, demands,
causes of action, or judgments (collectively, Claims), directly or indirectly arising out of or related to: (1) claims of injury to or death of persons or damage to property or business loss occurring or resulting directly or indirectly from the use or occupancy of the Premises, Building or Project by Tenant or Tenants Parties, or from activities or failures to act of Tenant or Tenants Parties; (2) claims arising from work or labor performed, or for materials or supplies furnished to or at the request of Tenant in connection with performance of any work done for the account of Tenant within the Premises or Project (3) claims arising from any breach or default on the part of Tenant in the performance of any covenant contained in this Lease; and (4) claims arising from the negligence or intentional acts or omissions of Tenant or Tenants Parties. The foregoing indemnity by Tenant shall not be applicable to such Claims to the extent arising from the negligence or willful misconduct of Landlord or Landlord indemnities. Landlord shall not be liable in Tenant and Tenant hereby waives all claims against Landlord for any injury to or death of or damage to any person or property or business loss in or about the Premises, Building or Project by or from any cause whatsoever (other than Landlords gross negligence or willful misconduct) and, without limiting the generally of the foregoing, whether caused by water leakage of any character from the roof, walls, basement or other portion of the Premises, Building or Project, or caused by gas, fire, all or electricity in, on or about the Premises, Building or Project, acts of God or of third parties, or any matter outside of the reasonable control of Landlord. The provisions of the Paragraph shall survive the expiration or earlier termination of this Lease.
D. Indemnification of Tenant. Except to the extent caused by the negligence or willful misconduct of Tenant or any Tenant Indemnitees (defined below), Landlord shall indemnify, defend and hold Tenant, its trustees, members, principals, beneficiaries, partners, officers, directors, employees and agents (Tenant Indemnitees) harmless against and from all Claims which may be imposed upon, incurred by or asserted against Tenant or any of the Tenant Indemnitees and arising out of or in connection with the negligence or willful misconduct of Landlord of the Landlord Indemnitees.
9. WAIVER OF SUBROGATION
Landlord and Tenant each waives, and shall cause their respective insurance carries to waive, any claim, loss or cost it might have against the other for any injury to or death of any person or persons, or damage to or theft, destruction, loss, or loss of use of any property (a Loss), to the extent the same is insured against (or is required to be insured against under the terms hereof) under any property damage insurance policy covering the Building, the Premises, Landlords fixtures, personal property, leasehold improvements, or business, regardless of whether the negligence of the other party caused such Loss.
10. LANDLORDS REPAIRS AND MAINTENANCE
Landlord shall, at Landlords cost except to the extent permitted to be included to Operating Expenses pursuant to this Lease, maintain in good repair, reasonable wear and tear excepted, the structural soundness of the roof, foundations, and exterior walls of the Building. The term exterior walls as used herein shall not include windows, glass or plate glass, doors, dock bumpers or dock plates, special store fronts or office entries. Any damage caused by or repairs necessitated by any negligence or act of Tenant or Tenants Parties may be required by Landlord at Landlords option and Tenants expense. Tenant shall immediately give Landlord written notice of any defect or need of repairs in such components of the Building for which Landlord is responsible, after which Landlord shall have a reasonable opportunity and the right to enter the Premises at all reasonable times to repair same. Landlords liability with respect to any defects, repairs, or maintenance for which Landlord is reasonable under any of the provisions of this Lease shall be limited to the cost of such repairs or maintenance, and there shall be no abatement of rent and no liability of Landlord by reason of any injury to or interference with Tenants business arising from the making of repairs, alterations or improvements in as to any portion of the Premises, the Building or the Project or to fixtures, appearance or equipment in the Building, except as provided in Paragraph 24. By taking possession of the Premises, Tenant accepts them as is, as being in good order, condition and repair and the condition in which Landlord is obligated to deliver them and suitable for the Permitted Use and Tenants intended operations in the Premises, whether or not any notice of acceptance is given. Notwithstanding the foregoing, Landlord shall be responsible for latent defects in the Landlord Work of which Tenant notifies Landlord to the extent that the correction of such defects is covered under valid and enforceable warranties given Landlord by contractors or subcontractors performing the Landlord Work. Landlord, at its option, may pursue such claims directly or assign any such warranties to Tenant for enforcement.
11. TENANTS REPAIRS AND MAINTENANCE
Tenant shall at all times during the Term at Tenants expense maintain all parts of the Premises and such portions of the Building as are within the exclusive control, of Tenant in a first-class, good, clean and secure condition and promptly make all necessary repairs and replacements, as determined by Landlord, including but not limited to, all window, glass, doors, walls, including dividing walls and wall finishes, floors and floor covering, heating, ventilating and air conditioning systems, ceiling structure, truck doors, hardware, dock bumpers, dock plates and levelers, plumbing work and fixtures, downspouts, entries, skylight, smoke hatches, roof vents, electrical and lighting systems, and fire sprinklers, with materials and workmanship of the same character, kind and quality as the original. Tenant shall at Tenants expense also perform regular removal of trash and debris. If Tenant uses rail and if required by the railroad company, Tenant agrees to sign a joint maintenance agreement governing the use of the rail spur, if any. Tenant shall, at Tenants own expense, enter into a regular scheduled preventative maintenance/service contract with a maintenance contractor for serving all heating and air conditioning systems and equipment within or serving the Premises. The maintenance contractor and the contract must be approved by Landlord, such approval shall not be unreasonably withheld. The service contract must include all services suggested by the equipment manufacturer within the operation/maintenance manual and must become effective and a copy thereof delivered to Landlord within thirty (30) days after the Term Commencement Date. Landlord may, upon notice to Tenant, enter into such a service contract on behalf of Tenant or perform the work and in either case charge Tenant the cost thereof. Notwithstanding anything to the contrary contained herein, Tenant shall, at its expense, promptly repair any damage to the Premises or the Building or Project resulting from or caused by any negligence or act of tenant or Tenants Parties. Nothing herein shall expressly or by implication render Tenant Landlords agent or contractor to affect any repair or maintenance required of Tenant under this Paragraph 11, as to all of which Tenant shall be solely responsible.
A. Tenant shall not make, or allow to be made, any alterations, physical additions, improvements or partitions, including without limitation the attachment of any fixtures or equipment in, about or to the Premises (Alterations) without obtaining the prior written consent of Landlord, which consent shall not be unreasonably withheld with respect to proposed Alterations which: (a) comply with all applicable Regulations, (b) are, in Landlords opinion, compatible with the Building or the Project and its mechanical, plumbing, electrical heating/ventilation/air conditioning systems, and will not cause the Building or Project or such systems to be required to be modified to comply with any Regulations (including without limitation, the Americans With Disabilities Act); and (c) will not unreasonably interfere with the use and occupancy of any other portion of the Building or Project by any other tenant or its invitees, specifically, but without limiting the generality of the foregoing, Landlord shall have the right of written consent for all plans and specifications for the proposed Alterations, construction terms and methods, all appropriate permits and licenses, any contractor or subcontractor to be employed on the work of Alterations, and the time for performance of such work and may impose rules and regulations for contractors and subcontractors performing such work. Tenant shall also supply to Landlord any documents and information reasonably requested by Landlord in connection with Landlords consideration of a request for approval hereunder. However, Landlords consent shall not be required for any Alteration that satisfies all of the following criteria (a Cosmetic Alteration); (1) is of a cosmetic nature such as painting, wallpapering, hanging pictures and installing carpeting; (2) is not visible from the exterior of the Premises or Building; (3) will not effect the systems or structure of the Building; (4) does not require work to be performed inside the walls or above the ceiling of the Premises; (5) does not cost more than $10,000.00 in the aggregate for any one job; and (6) is an Alteration of which Tenant has provided Landlord at least 10 business days prior written notice. However, even though consent is not required, the performance of Cosmetic Alterations shall be subject to all the other provisions of this Paragraph 12. Tenant shall cause all Alterations to be accomplished in a first-class, good and workmanlike manner, and to comply with all applicable Regulations and Paragraph 27 hereof. Tenant shall at Tenants sole expense, perform any additional work required under Applicable Regulations due to the Alterations hereunder. No review or consent by Landlord of or to any proposed Alteration or additional work shall constitute a waiver of Tenants obligations under this Paragraph 12. Tenant shall reimburse Landlord for all costs which Landlord may incur in connection with granting approval to Tenant for any such Alterations, including any costs or expenses which Landlord may incur in electing to have outside architects and engineers review said plans and specifications. All such Alterations shall remain the property of Tenant until the expiration or earlier termination of this Lease, at which time they shall be and become the property of Landlord;
provided, however, that Landlord may, at Landlords option, to be exercised at the time Landlord consents to (or, with respect to Cosmetic Alterations, is notified in writing by Tenant of) such Alterations, require that Tenant, at Tenants expense, remove any or all Alterations made by Tenant and restore the Premises by the expiration or earlier termination of this Lease, to their condition existing prior to the conclusion of any such Alterations. All such removals and restoration shall be accomplished in a first-class and good and workmanlike manner so as not to cause any damage to the Premises or Project whatsoever. If Tenant fails to remove such Alterations or Tenants trade fixtures or furniture or other personal property, Landlord may keep and use them or remove any of these and cause them to be stored or sold in accordance with applicable law, at Tenants sole expense. In addition to and wholly apart from Tenants obligation to pay Tenants Proportionate Share of Operating Expense, Tenant shall be responsible for and shall pay prior to delinquency any taxes or governmental service fees, possessors interest taxes, fees or charges in lieu of any such taxes, capital levels, or other charges imposed upon, levied with respect to or assessed against its fixtures or personal property, and the value of Alterations within the Premises, and on Tenants interest pursuant to this Lease, or any increase in any of the foregoing hereof on such Alterations. To the extent that any such taxes are not separately assessed or billed to Tenant, Tenant shall pay the amount thereof as invoiced to Tenant by landlord.
Notwithstanding the foregoing, at Landlords option (but without obligation), all or any portion of the Alterations shall be performed by Landlord for Tenants account and Tenant shall pay Landlords cost thereof within 10 days after written demand by Landlord. In addition, at Landlords election and notwithstanding the foregoing, however, Tenant shall pay to Landlord the cost or removing any such Alterations and restoring the Premises to their original condition, and such amount may be deducted from the Security Deposit or any other sums of amounts held by Landlord under this Lease.
B. In compliance with Paragraph 27 hereof, at least ten (10) business days before beginning construction of any alteration, Tenant shall give Landlord written notice of the expected commencement date of that construction to permit Landlord to post and record a notice of non-responsibility. Upon substantial completion of construction, if the law so provides, Tenant shall cause a timely notice of completion to be recorded in the office of the recorder of the county in which the Building is located.
Tenant shall not place, install, affix, paint or maintain any signs, notices, graphics or banners whatsoever or any window décor which is visible in or from public view of corridors, the common area or the exterior of the Premises or the Building, in or on any exterior window or window fronting upon any common areas or service area or upon any truck doors or man doors without Landlords prior written approval which Landlord shall have the right to withhold in its absolute and sole discretion; provided that (A) Tenants name shall be (i) included in any Building standard door and directory signage, if any, and (ii) permitted to be installed at the main entrance to the Premises, and (B) Tenant may post a sign on a wall near the shipping and receiving dock for the Project including the location of the shipping and receiving area for the Premises, all in accordance with Landlords Building signage program, including without limitation, payment by Tenant of any fee charged by Landlord for maintaining such signage, which fee shall constitute Additional Rent hereunder. Notwithstanding the foregoing to the contrary, all signage installed by or for Tenant shall be subject to Landlords prior written approval with respect to sign, location, color and any other specifications. Further, any installation of signs, notices, graphics or banners on or about the Premises or Project approved by Landlord shall be subject to any Regulations and to any other requirements imposed by Landlord. Tenant shall remove all such signs or graphics by the expiration or any earlier termination of this Lease. Such installations and removals shall be made in such manner as to avoid injury to or defacement of the Premises, Building or Project and any other improvements contained therein, and Tenant shall repair any injury or defacement including without limitation discoloration caused by such installation or removal.
14. INSPECTION/POSTING NOTICES
After reasonable prior notice, except in emergencies where no such notice shall be required, Landlord and Landlords agents and representatives, shall have the right to enter the Premises to inspect the same, to clean, to perform such work as may be permitted or required hereunder, to make repairs, improvements or alterations to the Premises, Building or Project or to other tenant spaces therein, to deal with emergencies to post such notices as may
be permitted or required by law to prevent the perfection of liens against Landlords interest to the Project or to exhibit the Premises to prospective tenants, purchasers, encumbrances or to others, or for any other purpose as Landlord may deem necessary or desirable; provided, however, that Landlord shall use reasonable efforts not to unreasonably interfere with Tenants business operations and Tenants Permitted Use. Tenant shall not be entitled to any abatement of Rent by reason of the exercise of any such right of entry. Notwithstanding the foregoing, if Landlord temporarily closes the Premises for a period in excess of 10 consecutive days, Tenant, as its sole remedy, shall be entitled to receive a per diem abatement of Base Rent during the period beginning on the 10th consecutive day of closure and ending on the date on which the Premises are returned to Tenant in a tenantable condition. Tenant, however, shall not be entitled to an abatement if the repairs, alterations and/or additions to be performed are repaired as a result of the acts or omissions of Tenant, its agents, employees or contractors, including without limitation, a default by Tenant to its maintenance and repair obligations under the Lease. Tenant waives any claim for damages for any injury or inconvenience to or interference with Tenants business, any loss of occupancy or quiet enjoyment of the Premises and any other loss occasioned thereby. Landlord shall at all times have and retain a key with which to unlock all of the doors in, upon and about the Premises, excluding Tenants vaults and safes or special security areas (designed in advance), and Landlord shall have the right to use any and all means which Landlord may deem necessary or proper to open said doors in an emergency, in order to obtain entry to any portion of the Premises, and any entry to the Premises or portions thereof obtained by Landlord by any of said means, or otherwise, shall not be construed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction, actual or constructive, of Tenant from the Premises or any portions thereof. At any time within six (6) months prior to the expiration of the Term or following any earlier termination of this Lease or agreement to terminate this Lease, Landlord shall have the right to erect on the Premises, Building and/or Project a suitable sign indicating that the Premises are available for lease.
15. SERVICES AND UTILITIES
A. Tenant shall (where practicable) contract for and pay directly when due, for all water, gas, heat, air conditioning, light, power, telephone, sewer, sprinkler charges, cleaning, waste disposal and other utilities and services used on or from the Premises, together with any taxes. If any such services are not separately billed or metered to Tenant. Tenant shall pay an equitable proportion, as determined in good faith by Landlord, of all charges billed or metered with other premises. All sums payable under this Paragraph 15 shall constitute Additional Rent hereunder.
B. Tenant acknowledges that Tenant has inspected and accepts the water, electricity, heat and air conditioning and other utilities and services being supplied or furnished to the Premises as of the date Tenant takes possession of the Premises. If any, as being sufficient in their present condition, as is, for the Permitted Use, and for Tenants intended operations in that Premises. Landlord shall have no obligation to provide additional or after-hours electricity, heating or air conditioning, but if Landlord elects to provide such services at Tenants request, Tenant shall pay upon demand to Landlords reasonable charge for such services as determined by Landlord. Tenant agrees to cooperate fully with Landlord and to abide by all of the regulations and requirements which Landlord may prescribe for the proper functioning and protection of electrical, heating, ventilating and air conditioning systems. Wherever heat-generating machines, excess lighting or equipment are used in the Premises which affect the temperature otherwise maintained by the air conditioning system, Landlord reserves the right to install supplementary air conditioning units in the Premises and the cost thereof, including the cost of installation and the cost of operation and maintenance thereof, shall be paid by Tenant to Landlord upon demand by Landlord.
C. Tenant shall not without written consent of Landlord use any apparatus, equipment or device in the Premises, including without limitation, computers, electronic data processing machines, copying machines, and other machines, using excess lighting or using electric current, water, or any other resource in excess of or which will in any way increase the amount of electricity, water, or any other resource being furnished or supplied for the use of the Premises for reasonable and normal office use, to each case as of the date Tenant takes possession of the Premises and as determined by Landlord, or which will require additions or alterations to or interfere with the Building power distribution systems nor connect with electric current, except through existing electrical outlets in the Premises or water pipes, any apparatus, equipment or device for the purpose of using electrical current, water, or any other resource. If Tenant shall require water or electric current or any other resources in excess of that being furnished or supplied for the use of the Premises as of the date Tenant takes possession of the Premises, if any, as
determined by Landlord, Tenant shall first procure the written consent of Landlord which Landlord may refuse, to the use thereof, and Landlord may cause a special meter to be installed in the Premises so as to measure the amount of water, electric current or other resource consumed for any such other use. Tenant shall pay directly to Landlord upon demand as an addition to and separate from payment of Operating Expenses the cost of all such additional resources, energy, utility services and meters (and of installation, maintenance and repair thereof and of any additional circuits or other equipment necessary to furnish such additional resources, energy, utility or service. Landlord shall in no case be liable for any damages directly or indirectly resulting from nor shall the Rent or any monies owed Landlord under this Lease herein reserved be abated (except as expressly set forth in Paragraph 15.D below) by reason of (a) the installation, use or intersection of use of any equipment used in connection with the furnishing of any such utilities or services, or any changes in the character or means of supplying or providing any such utilities or services or any supplier thereof; (b) the failure to furnish or delay in furnishing any such utilities or services when such failure or delay is caused by acts of God or the elements, labor disturbances of any character, or otherwise, or because of any interruption of service due to Tenants use of water, electric current or other resource to excess of that being supplied or furnished for the use of the Premises as of the date Tenant takes possession of the Premises; or (c) the inadequacy, limitation, curtailment, rationing or restrictions on use of water, electricity, gas or any other form of energy or any other service or utility whatsoever serving the Premises or Project otherwise; or (d) the partial or total unavailability of any such utilities or services to the Premises or the Building or the distribution in the quality or quantity thereof, whether by Regulation or otherwise; or (e) any interruption in Tenants business operations as a result of any such occurrence; nor shall any such occurrence constitute an actual or constructive eviction of Tenant or a breach of an implied warranty by Landlord. Landlord shall further have no obligation to protect or preserve any apparatus, equipment or devices installed by Tenant in the Premises, including without limitation by providing additional or after-hours heating or air conditioning. Landlord shall be entitled to cooperate voluntarily and in a reasonable manner with the efforts of national, state or local governmental agencies or utility suppliers in reducing energy or other resource consumption. The obligation to make services available hereunder shall be subject to the limitations of any such voluntary, reasonable program. In addition, Landlord reserves the right to change the supplier or provider of any such utility or service from time to time. Landlord may, but shall not be obligated to, upon notice to Tenant, contract with or otherwise obtain any electrical or other such service for or with respect to the Premises or Tenants operations therein from supplier or provider of any such service. Tenant shall cooperate with Landlord and any supplier or provider of such services designated by Landlord from time to time to facilitate the delivery of such services to Tenant at the premises and to the Building and Project, including without limitation allowing Landlord and Landlords supplier or provider, and their respective agents and contractors, reasonable access to the Premises for the purpose of installing, maintaining, repairing, replacing or upgrading such service or any equipment or machinery associated therein.
D. Notwithstanding anything to the contrary contained in this Paragraph 15, if the Premises, or a material portion of the Premises, is made untenantable for a period in excess of 3 consecutive business days as a result of Landlords failure to furnish, or any interruption or termination of, any services or utilities repaired to be provided by landlord to Tenant hereunder due to the application of laws, the failure of any equipment, the performance of repairs, improvements or alterations, or the occurrence of any event or cause beyond the reasonable control of Landlord (a Service Failure), then Tenant, as its sole remedy, shall be entitled to receive an abatement of Rent payable hereunder during the period beginning on the 4th consecutive business day of the Service Failure and ending on the day the service has been restored. If the entire Premises has not been rendered untenantable by the Service Failure, the amount of abatement that Tenant is entitled to receive shall be prorated based upon the percentage of the Premises rendered untenantable and not used by Tenant. In no event, however, shall Landlord be liable to Tenant for any loss or damage, including the theft of Tenants property, arising out of or in connection with the failure of any security services, personnel or equipment.
Without the necessity of any additional documents being executed by Tenant for the purpose of effecting a subordination, this Lease shall be and is hereby declared to be subject and subordinate at all times to: (a) all ground leases or underlying leases which may now exist or hereafter be executed affecting the Premises and/or the land upon which the Premises and Project are situated, or both; and (b) any mortgage or deed of trust which may now exist or be placed upon the Building, the Project and/or the land upon which the Premises or the Project are situated, or said ground leases or underlying leases or Landlords interest or estate in any of said items which is specified as
security. Notwithstanding the foregoing, Landlord shall have the right to subordinate or cause to be subordinated any such ground leases or underlying leases or any such liens to this Lease. If any ground lease or underlying lease terminates for any reason or any mortgage or deed of trust is foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant shall, notwithstanding any subordination, action to and become the Tenant of the successor in interest to Landlord provided that Tenant shall not be disturbed in its possession under this Lease by such successor in interest so long as Tenant is not in default under this Lease. Within ten (10) days after request by Landlord, Tenant shall execute and deliver any additional documents evidencing Tenants attornment or the subordination of this Lease with respect to any such ground leases or underlying leases or any such mortgage or deed of trust, in the form requested by Landlord or by any ground landlord, mortgages, or beneficiary under a deed of trust, subject to such nondisturbance requirement. If requested in writing by Tenant, Landlord shall use commercially reasonable efforts to obtain a subordination, nondisturbance and attornment agreement for the benefit of Tenant reflecting the foregoing from any ground landlord, mortgage or beneficiary, at Tenants expense, subject to such other terms and conditions as the ground landlord, mortgagee or beneficiary may require.
17. FINANCIAL STATEMENTS
At the request of Landlord from time to time, Tenant shall provide to Landlord Tenants and any guarantors current financial statements or other information discussing financial worth of Tenant and any guarantor, which Landlord shall use solely for purposes of this Lease and in connection with the ownership, management, financing and disposition of the Project.
18. ESTOPPEL CERTIFICATE
Tenant agrees from time to time, within twenty (20) days after request of Landlord, to deliver to Landlord, or Landlords designee, an estoppel certificate stating that this Lease is in full force and affect, that this Lease has not been modified (or stating all modifications, written or oral, to this Lease), the date to which Rent has been paid, the unexpired portion of this Lease, that there are no current defaults by Landlord or Tenant under this Lease (or specifying any such defaults), that the leasehold estate granted by this Lease is the sole interest of Tenant in the premises and/or the land at which the Premises are situated, and such other matters pertaining to this Lease as may be reasonably requested by Landlord or any mortgages, beneficiary, purchaser or prospective purchaser of the Building or Project or any interest therein. Failure by Tenant to execute and deliver such certificate shall constitute an acceptance of the Premises and acknowledgment by Tenant that the statements included are true and correct without exception. Tenant agrees that if Tenant fails to execute and deliver such certificate within such twenty (20) day period, Landlord may execute and deliver such certificate on Tenants behalf and that such certificate shall be binding on Tenant. Landlord and Tenant intend that any statement delivered pursuant to this Paragraph may be relied upon by any mortgagee, beneficiary, purchaser or prospective purchaser of the Building or Project or any interest therein. The parties agree that Tenants obligation to furnish such estoppel certificates in a timely fashion in a material inducement for Landlords execution of this Lease, and shall be no event of default (without any cure period that might be provided under Paragraph 26.A(3) of this Lease) if Tenant fails to fully comply or makes any material misstatement in any such certificate.
19. SECURITY DEPOSIT
Tenant agrees to deposit with Landlord upon execution of this Lease, a security deposit as stated, in the Basic Lease Information (the Security Deposit), which sum shall be held and owned by Landlord, without obligation to pay interest, as security for the performance of Tenants covenants and obligations under this Lease. The Security Deposit is not an advance rental deposit or a measure of damages incurred by Landlord in case of Tenants deposit. Upon the occurrence of any event of default by Tenant, and after the expiration of any applicable notice and cure periods, Landlord may from time to time, without prejudice to any other remedy provided herein or by law, use such fund as a credit to the extent necessary to credit against any arrears of Rent or other payments due to Landlord hereunder, and any other damage, injury, expense or liability caused by such event of default, and Tenant shall pay to Landlord, on demand, the amount so applied in order to restore the Security Deposit to its original amount. Although the Security Deposit shall be deemed the property of Landlord, any remaining balance of such deposit shall be returned by Landlord to Tenant within forty-five (45) days after the date of termination of this Lease and the date that all of Tenants obligation under this Lease have been fulfilled, reduced by such amounts as may be
required by Landlord to remedy defaults on the part of Tenant in the payment of Rent or other obligations of Tenant under this Lease, to repair damage to the Premises, Building or Project caused by Tenant or any Tenants Parties and to clean the Premises. Landlord is hereby granted a security interest in the Security Deposit in accordance with applicable provisions of the California Commercial Code. Landlord may use and commingle the Security Deposit with other funds of Landlord. Tenant hereby waives the provisions of Section 1950.7 of the California Civil Code, and all other provisions of any Regulations, now or hereinafter in force, which restricts the amount or types of claim that a landlord may make upon a security deposit or imposes upon a landlord (or its successors) any obligation with respect to the handling or return of security deposits. If Landlord transfers its interest in the Premises, Landlord may assign the Security Deposit to the transferee and, following the assignment, Landlord shall have no further liability for the return of the Security Deposit.
20. LIMITATION OF TENANTS REMEDIES
The obligations and liability of Landlord to Tenant for any default by Landlord under the terms of this Lease are not personal obligations of Landlord or of this individual or other partners of Landlord or its or their partners, directors, officers, or shareholders, and Tenant agrees to look solely to Landlords interest in the Project for the recovery of any amount from Landlord, and shall not look to other assets of Landlord nor seek recourse against the assets of the individual or other partners of Landlord or its or their partners, directors, officers or shareholders. Any lien obtained to enforce any such judgment and any levy of execution thereon shall be subject and subordinate to any lien, mortgage or deed of trust on the Project. Under no circumstances shall Tenant have the right to offset against or recoup Rent or other payments due and to become due to Landlord hereunder except as expressly provided in this Lease, which Rent and other payments shall be absolutely due and payable hereunder in accordance with the terms hereof. In no case shall Landlord be liable to Tenant for any lost profits, damage to business, or any form of special, indirect or consequential damage on account of any breach of this Lease or otherwise, notwithstanding anything to the contrary contained in this Lease.
21. ASSIGNMENT AND SUBLETTING
A. (1) General. This Lease has been negotiated to be and is granted as an accommodation to Tenant. Accordingly, this Lease is personal to Tenant, and Tenants rights granted hereunder do not include the right to assign this Lease or sublease the Premises, or to receive any excess, either in installments or lump sum, over the Rent which is expressly reserved by Landlord as hereinafter provided, except as otherwise expressly hereinafter provided. Tenant shall not assign or pledge this Lease or sublet the Premises or any part thereof, whether voluntarily or by operation of law, or permit the use or occupancy of the Premises or any part thereof by anyone other than Tenant, or suffer or permit any such assignment, pledge, subleasing or occupancy, without Landlords prior written consent except as provided herein. If Tenant desires to assign this Lease or sublet any or all of the Premises, Tenant shall give Landlord written notice (the Transfer Notice) at least sixty (60) days prior to the anticipated effective date of the proposed assignment or sublease, which shall contain all of the information reasonably requested by Landlord to address Landlords decision criteria specified hereinafter. Landlord shall then have a period of thirty (30) days following receipt of the Transfer Notice to notify Tenant in writing that Landlord elects either (i) to terminate this Lease as to the space so affected as of the date so requested by Tenant; or (ii) to consent to the proposed assignment or sublease subject, however, to Landlords prior written consent of the proposed assignee or subtenant and of any related documents or agreements associated with the assignment or sublease. If Landlord should fail to notify Tenant in writing of such election within said period, Landlord shall be deemed to have waived option (i) above, but written consent by Landlord of the proposed assignee or subtenant shall still be required. If Landlord does not exercise option (i) above, Landlords consent to a proposed assignment or sublease shall not be unreasonably withheld. Consent to any assignment or subletting shall not constitute consent to any subsequent transaction to which this Paragraph 21 applies.
(2) Conditions of Landlords Consent. Without limiting the other instances in which it may be reasonable for Landlord to withhold Landlords comment to an assignment or subletting, Landlord and Tenant acknowledge that it shall be reasonable for Landlord to withhold Landlords consent in the following instances: if the proposed assignee does not agree to be bound by and assume the obligations of Tenant under this Lease in form and substance satisfactory to Landlord; the use of the Premises by such
proposed assignee or subtenant would not be a Permitted Use or would violate any exclusivity or other arrangement which Landlord has with any other tenant or occupant or any Regulation or would increase the Occupancy Density or Parking Density of the Building or Project, or would otherwise result in an undesirable tenant mix for the Project as determined by Landlord; the proposed assignee or subtenant is not of sound financial condition as determined by Landlord in Landlords sole discretion; the proposed assignee or subtenant is a governmental agency; the proposed assignee or subtenant does not have a good reputation as a tenant of property or a good business reputation; the proposed assignee or subtenant is a person with whom Landlord is negotiating to lease space in the Project or is a present tenant of the Project, the assignment or subletting would entail any Alterations which would lessen the value of the leasehold improvements in the Premises or use of any Hazardous Materials or other noxious use or use which may disturb other tenants of the Project; or Tenant is in default of any obligation of Tenant under this Lease, or Tenant has defaulted under this Lease on three (3) or more occasions during any twelve (12) months preceding the date that Tenant shall request consent. Failure by or refusal of Landlord to consent to a proposed assignee or subtenant shall not cause a termination of the Lease. Upon a termination under Paragraph 21.A(1)(2), Landlord may lease the Premises to any party, including parties with whom Tenant has negotiated an assignment or sublease, without incurring any liability to Tenant. At the option of Landlord, a surrender and termination of this Lease shall operate as an assignment to Landlord of some or all subleases or subtenants. Landlord shall exercise this option by giving notice of that assignment to such subtenants on or before the effective date of the surrender and termination. In connection with each request for assignment or subletting, Tenant shall pay to Landlord Landlords standard fee for approving such requests, as well as all costs incurred by Landlord or any mortgagee or ground lessor in approving each such request and effecting any such transfer, including, without limitation, reasonable attorneys fee.
B. Bonus Rent. Any Rent or other consideration realized by Tenant under any such sublease or assignment in excess of the Rent payable hereunder, after amortization of a reasonable brokerage commission incurred by Tenant and after deducting from such excess all other reasonable and customary expenses directly incurred by Tenant attributable to the Transfer, including legal fees and construction costs, shall be divided and paid, fifty percent (50%) to Tenant, fifty percent (50%) to Landlord. In any subletting or assignment undertaken by Tenant, Tenant shall diligently seek to obtain the maximum rental amount available in the marketplace for comparable space available for primary leasing.
C. Corporation. If Tenant is a corporation, a transfer of corporate shares by sale, assignment, bequest, inheritance, operation of law or other disposition (including such a transfer to or by a receiver or trustee in federal or state bankruptcy, insolvency or other proceedings) resulting in a change in the present control of such corporation or any of its parent corporations by the person or persons owning a majority of said corporate shares, shall constitute an assignment for purposes of this Lease.
D. Unincorporated Entity. If Tenant is a partnership, joint venture, unincorporated limited liability company or other unincorporated business form, a transfer of the interest of persons, items or entities responsible for wrongful control of Tenant by sale, assignment, bequest, inheritance, operation of law or other disposition, so as to result in a change in the present control of said entity and/or of the underlying beneficial interests of said entity and/or a change in the identity of the persons responsible for the general credit obligations of said entity shall constitute an assignment for all purposes of this Lease.
E. Liability. No assignment or subletting by Tenant, permitted or otherwise, shall relieve Tenant of any obligation under this Lease or any guarantor of this Lease of any liability under its guaranty or alter the primary liability of the Tenant named herein for the payment of Rent or for the performance of any other obligations to be performed by Tenant, including obligations contained in Paragraph 25 with respect to any assignee or subtenant. If Tenant is in default under the terms of this Lease beyond any applicable notice and cure periods, Landlord may collect rent or other amounts or any portion thereof from any assignee, subtenant, or other occupant of the Premises, permitted or otherwise, and apply the past rent collected to the Rent payable hereunder, but no such collection shall be deemed to be a waiver of this Paragraph 21, or the acceptance of the assignee, subtenant or occupant as tenant, or a release of Tenant from the further performance by Tenant of the obligations of tenant under this Lease or any guarantor of this Lease of any liability under its guaranty. Any assignment or subletting which conflicts with the provisions hereof shall be void.
F. Permitted Transfer. Tenant may assign its entire interest under this Lease to a successor to Tenant by purchase, merger, consolidation or reorganization without the consent of Landlord, provided that all of the following conditions are satisfied (a Permitted Transfer): (1) Tenant is not in default under this Lease; (2) Tenants successor shall own all or substantially all of the assets of Tenant; (3) Tenants successor shall have a net worth which is at lease equal to the greater of Tenants net worth at the date of this Lease or Tenants net worth as of the day prior to the proposed purchase, merger, consolidation or reorganization; (4) the Permitted Use does not allow the Premises to be used for retail purposes; and (5) Tenant shall give Landlord written notice at least 13 days prior to the effective date of the proposed purchase, merger, consolidation or reorganization. Tenants notice to Landlord shall include information and documentation showing that each of the above conditions has been satisfied. If requested by Landlord, Tenants successor shall sign a commercially reasonable form of assumption agreement. In no event shall any Permitted Transfer release or relieve Tenant from any obligation under the Lease.
Landlord represents and warrants that it has full right and authority to enter into this Lease and to perform all of Landlords obligations hereunder and that all persons signing this Lease on its behalf are authorized to do. Tenant and the person or persons, if any, signing on behalf of Tenant, jointly and severally represent and warrant that Tenant has full right and authority to enter into this Lease, and to perform all of Tenants obligations hereunder, and that all persons signing this Lease on its behalf are authorized to do so.
A. Condemnation Resulting in Termination. If the whole or any substantial part of the Premises should be taken or condemned for any public use under any Regulation, or by right of eminent domain, or by private purchase in lieu thereof, and the taking would prevent or materially interfere with the Permitted Use of the Premises, either party shall have the right to terminate this Lease as its option. If any material portion of the Building or Project is taken or condemned for any public use under any Regulation, or by right of eminent domain, or by private purchase in lieu thereof, Landlord may terminate this Lease at its option. In either of such events, the Rent shall be shared during the unexpired portion of this Lease, effective when the physical taking of said Premises shall have occurred.
B. Condemnation Not Resulting in Termination. If a portion of the Project of which the Premises are a part should be taken or condemned for any public use under any Regulation, or by right of eminent domain, or by private purchase in lieu thereof, and the taking prevents or materially interferes with the Permitted Use of the Premises, and this Lease is not terminated as provided in Paragraph 23A, above, the Rent payable hereunder during the unexpired portion of this Lease shall be reduced, beginning on the date when the physical taking shall have occurred, to such amount as may be fair and reasonable under all of the circumstances, but only after giving Landlord credit for all sums received or to be received by Tenant by the condemning authority. Notwithstanding anything to the contrary contained in this Paragraph, if the temporary use or occupancy of any part of the Premises shall be taken or appropriated under power of eminent domain during the Term, this Lease shall be and remain unaffected by such taking or appropriation and Tenant shall continue to pay in full all Rent payable hereunder by Tenant during the Term; in the event of any such temporary appropriation or taking, Tenant shall be entitled to receive that portion of any award which represents compensation for the use of or occupancy of the Premises during the Term.
C. Award. Landlord shall be entitled to (and Tenant shall assign to Landlord) any and all payment, income, rent, award or any interest therein whatsoever which may be paid or made in connection with such taking or conveyance and Tenant shall have no claim against Landlord or otherwise for any sums paid by virtue of such proceedings, whether or not attributable to the value of any unexpired portion of this Lease, except as expressly provided in this Lease. Notwithstanding the foregoing, any compensation specifically and separately awarded Tenant for Tenants personal property and moving costs, shall be and remain the property of Tenant.
D. Waiver of CCP§1265.130. Each party waives the provisions of California Civil Code Procedure Section 1265.130 allowing either party to petition the superior court to terminate this Lease as a result of a partial taking.
24. CASUALTY DAMAGE
A. General. If the Premises or Building should be damaged or destroyed by fire, tornado, or other casualty (collectively, Casualty), Tenant shall give immediate written notice thereof to Landlord. Within thirty (30) days after Landlords receipt of such notice, Landlord shall notify Tenant whether in Landlords estimation material restoration of the Premises can reasonably be made within one hundred eighty (180) days from the date of such notice and receipt of required permits for such restoration. Landlords determination shall be binding on Tenant.
B. Within 180 Days. If the Premises or Building should be damaged by Casualty to such extent that material restoration can in Landlords estimation be reasonably completed within one hundred eighty (180) days after the date of such notice and receipt of required permits for such restoration, this Lease shall not terminate. Provided that insurance proceeds are received by Landlord to fully repair the damage, Landlord shall proceed to rebuild and repair the Premises diligently and in the manner determined by Landlord, except that Landlord shall not be required to rebuild, repair or replace any part of any Alterations which may have been placed on or about the Premises or paid for by Tenant. If the Premises are untenantable in whole or in part following such damage, the Rent payable hereunder during the period in which they are untenantable shall be abated proportionately, but only to the extent of rental abatement insurance proceeds received by Landlord during the time and to the extent the Premises are unfit for occupancy.
C. Greater Than 180 Days. If the Premises or Building should be damaged by Casualty to such extent that rebuilding or repairs cannot in Landlords estimation be reasonably completed within one hundred eighty (180) days after the date of such notice and receipt of required permits for such rebuilding or repair, then Landlord shall have the option of either (1) terminating this Lease effective upon the date of the occurrence of such damage, in which event the Rent shall be abated during the unexpired portion of this Lease; or (2) electing to rebuild or repair the Premises diligently and in the manner determined by Landlord. Landlord shall notify Tenant of its election within thirty (30) days after Landlords receipt of notice of the damage or destruction. Notwithstanding the above, Landlord shall not be required to rebuild, repair or replace any part of any Alterations which may have been placed, on or about the Premises or paid for by Tenant. If the Premises are untenantable in whole or in part following such damage, the Rent payable hereunder during the period in which they are untenantable shall be abated proportionately, but only to the extent of rental abatement insurance proceeds received by Landlord during the time and to the extent the Premises are until occupancy.
D. Tenants Fault. Notwithstanding anything herein to the contrary, if the Premises or any other portion of the Building are damaged by Casualty resulting from the fault, negligence, or breach of this Lease by Tenant or any of Tenants Parties, Base Rent and Additional Rent shall not be diminished during the repair of such damage and Tenant shall be liable to Landlord for the cost and expense of the repair and restoration of the Building caused thereby to the extent such cost and expense is not covered by business proceeds.
E. Insurance Proceeds. Notwithstanding anything herein in the contrary, if the Premises or Building are damaged or destroyed and are not fully covered by the insurance proceeds received by Landlord or if the holder of any indebtedness secured by a mortgage or deed of trust covering the Premises requires that the insurance proceeds be applied to such indebtedness, than in either case Landlord shall have the right to terminate this Lease by delivering written notice of termination to Tenant within thirty (30) days after the date of notice in Landlord that said damage or destruction is not fully covered by insurance or such requirement is made by any such holder, as the case may be, whereupon this Lease shall terminate.
F. Waiver. This Paragraph 24 shall be Tenants sole and exclusive remedy in the event of damage or destruction to the Premises or the Building. As a material inducement to Landlord entering into this Lease, Tenant hereby waives any rights it may have under Sections 1932, 1933(4), 1941 or 1942 of the Civil Code of California with respect to any destruction of the Premises, Landlords obligation for tenantability of the Premises and Tenants right to make repairs and deduct the expenses of such repairs, or under any similar tax, statute or ordinance now or hereafter in effect.
G. Tenants Personal Property. In the event of any damage or destruction of the Premises or the Building, under no circumstances shall Landlord be required to repair any injury or damage to, or make any repairs to replacements of, Tenants personal property.
25. HOLDING OVER
Unless Landlord expressly consents in writing to Tenants holding over, Tenant shall be unlawfully and illegally in possession of the Premises, whether or not Landlord accepts any rent from Tenant or any other person while Tenant remains in possession of the Premises without Landlords written consent. If Tenant shall retain possession of the Premises or any portion thereof without Landlords consent following the expiration of this Lease or sooner termination for any reason, then Tenant shall pay to Landlord for each day of such retention one hundred fifty percent (150%) of the amount of daily rental as of the last month prior to the date of expiration or earlier termination. Tenant shall also indemnify, defend, present and hold Landlord harmless from any loss, liability or cost, including consequential and incidental damages and reasonable attorneys fees, incurred by Landlord resulting from delay by Tenant in surrendering the Premises, including, without limitation, any claims made by the succeeding tenant founded on such delay. Acceptance of Rent by Landlord following expiration or earlier termination of this Lease, or following demand by Landlord for possession of the Premises, shall not constitute a renewal of this Lease, and nothing contained in this Paragraph 25 shall waive landlords right of reentry or any other right. Additionally, if upon expiration or earlier termination of the Lease, or following demand by Landlord for possession of the Premises, Tenant has not fulfilled its obligation with respect to repairs and cleanup of the Premises or any other Tenant obligations as set forth in this Lease, then Landlord shall have the right to perform any such obligations as it deems necessary at Tenants sole cost and expense, and any time required by Landlord to complete such obligations shall be considered a period of holding over and the terms of this Paragraph 25 shall apply. The provisions of the Paragraph 25 shall survive any expiration or earlier termination of this Lease.
A. Events of Default. The occurrence of any of the following shall constitute an event of default on the part of Tenant:
(1) Abandonment. Abandonment of the Premises for a continuous period to excess of five (5) days. Tenant waives any right to notice Tenant may have under Section 1951.3 of the Civil Code of the State of California, the terms of this Paragraph 26.A being deemed such notice to Tenant as required by said Section 1951.3.
(2) Nonpayment of Rent. Failure to pay any installment of Rent or any other amount due and payable hereunder if the failure continues for 5 days after written notice to Tenant, as to which time is of the essence.
(3) Other Obligations. Failure to perform any obligation, agreement or covenant under this Lease other than those matters specified in subparagraphs (1) and (2) of this Paragraph 26.A, and in Paragraphs 8, 16, 18 and 25, such failure continuing for twenty (20) days after written notice of such failure, as to which time is of the essence, however, if Tenants failure to comply cannot reasonably be cured within 30 days, Tenant shall be allowed additional time (not to exceed 60 days) as is reasonably necessary to cure the failure so long as: (1) Tenant continues to cure the failure within 20 days, and (2) Tenant diligently pursues a cause of action that will cure the failure and bring Tenant back into compliance with the Lease. However, if Tenants failure to comply creates a hazardous condition, the failure must be cured immediately upon notice to Tenant. In addition, if Landlord provides Tenant with notice of Tenants failure to comply with any particular term, provision or covenant of the Lease on 3 occasions during any 12 month period, Tenants subsequent violation of such term, provision or covenant shall, at Landlords option, be an incurable event of default by Tenant.
(4) General Assignment. A general assignment by Tenant for the benefit of creditors.
(5) Bankruptcy. The filing of any voluntary petition in bankruptcy by Tenant, or the filing of an involuntary petition by Tenants creditors, which involuntary petition remains undischarged for a period of thirty (30) days. If under applicable law, the trustee in bankruptcy or Tenant has the right to affirm this Lease and continue to perform the obligation of Tenant hereunder, such trustee or Tenant shall, in such time period as may be permitted by the bankruptcy court having jurisdiction, cure all defaults of Tenant hereunder outstanding as of the date of the affirmance of this Lease and provide to Landlord such adequate assurances as may be necessary to ensure Landlord of the continued performance of Tenants obligations under this Lease.
(6) Receivership. The employment of a receiver to take possession of substantially all of Tenants assets or the Premises, if such appointment remains undismissed or undischarged for a period of fifteen (15) days after the order therefor.
(7) Attachment. The attachment, execution or other judicial seizure of all or substantially all of Tenants assets or Tenants leasehold of the Premises, if such attachment or other seizure remains undismissed or undischarged for a period of fifteen (15) days after the levy thereof.
(8) Insolvency. The admission by Tenant in writing of its inability to pay its debts as they become due.
B. Remedies Upon Default.
(1) Termination. In the event of the occurrence of any event of default, Landlord shall have the right to give a written termination notice to Tenant, and on the date specified in such notice, Tenants right to possession shall terminate, and this Lease shall terminate unless on or before such date all Rent in arrears and all costs and expenses incurred by or on behalf of Landlord hereunder shall have been paid by Tenant and all other events of default of this Lease by Tenant at the time existing shall have been fully remedied to the satisfaction of Landlord. At any time after such termination, Landlord may recover possession of the Premises or any part thereof and expel and remove therefrom Tenant and any other person occupying the same, including any subtenant or subtenants notwithstanding Landlords consent to any sublease, by any lawful means, and again repossess and enjoy the Premises without prejudice to any of the remedies that Landlord may have under this Lease, or at law or equity by any reason of Tenants default or of such termination. Landlord hereby reserves the right, but shall not have the obligation, to recognize the continued possession of any subtenant. The delivery or surrender to Landlord by or on behalf of Tenant of keys, entry codes, or other means to bypass security at the Premises shall not terminate this Lease.
(2) Continuation After Default. Even though an event of default may have occurred, this Lease shall continue in effect for so long as Landlord does not terminate Tenants right to possession under Paragraph 26.B(1) hereof. Landlord shall have the remedy described in California Civil Code Section 1951.4 (Landlord may continue this Lease in effect after Tenants breach and abandonment and recover Rent as it becomes due, if Tenant has the right to sublet or assign, subject only to reasonable limitations), or any successor code section. Accordingly, if Landlord does not elect to terminate this Lease on account of any event of default by Tenant, Landlord may enforce all of Landlords rights and remedies under this Lease, including the right to recover Rent as it becomes due. Acts of maintenance, preservation or efforts to lease the Premises or the appointment of a receiver under application of Landlord to protect Landlords interest under this Lease or other entry by Landlord upon the Premises shall not constitute an election to terminate Tenants right to possession.
C. Damages After Default. Should Landlord terminate this Lease pursuant to the provisions of Paragraph 26.B(1) hereof, Landlord shall have the rights and remedies of a Landlord provided by Section 1951.2 of the Civil Code of the State of California, or any successor code sections. Upon such termination, in addition to any other rights and remedies to which Landlord may be entitled under applicable law or at equity, Landlord shall be entitled to recover from Tenant: (1) the worth at the time of award of the unpaid Rent and other amounts which had been earned at the time of termination, (2) the worth at the time of award of the amount by which the unpaid Rent and other amounts that would have been earned after the date of termination until the time of award exceeds the amount
of such Rent loss that Tenant proves could have been reasonably avoided; (3) the worth at the time of award of the amount by which the unpaid Rent and other amounts for the balance of the Term after the time of award exceeds the amount of such Rent loss that the Tenant proves could be reasonably avoided; and (4) any other amount and court costs necessary to compensate Landlord for all detriment proximately caused by Tenants failure to perform Tenants obligations under this Lease or which, in the ordinary course of things, would be likely to result therefrom. The worth at the time of award as used in (1) and (2) above shall be computed at the Applicable Interest Rate (defined below). The worth at the time of award as used in (3) above shall be computed by discounting such amount at the Federal Discount Rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%). If this Lease provides for any periods during the Term during which Tenant is not required to pay Base Rent or if Tenant otherwise receives a Rent concession, than upon the occurrence of an event of default, Tenant shall owe to Landlord the full amount of such Base Rent or value of such Rent concession, plus interest at the Applicable Interest Rate, calculated from the date that such Base Rent or Rent concession would have been payable.
D. Late Charge. In addition to its other remedies, Landlord shall have the right without notice or deemed to add to the amount of any payment required to be made by Tenant hereunder, and which is not paid and received by Landlord on or before the third day of each calendar month, an amount equal to five percent (5%) of the delinquent amount, or $150.00, whichever amount is greater, for each month or portion thereof that the delinquency remains outstanding to compensate Landlord for the loss of the use of the amount not paid and the administrative costs caused by the delinquency, the parties agreeing that Landlords damage by virtue of such delinquencies would be extremely difficult and impracticable to compute and the amount stated herein represents a reasonable estimate thereof. Any waiver by Landlord of any late charges or failure to claim the same shall not constitute a waiver of other late charges or any other remedies available to Landlord.
E. Interest. Interest shall accrue on all sums not paid when due hereunder at the lesser of eighteen percent (18%) per annum or the maximum interest rate allowed by law (Applicable Interest Rate) from the due date until paid.
F. Remedies Cumulative. All of Landlords rights, privileges and elections or remedies are cumulative and not alternative, to the extent permitted by law and except as otherwise provided herein.
G. Replacement of Statutory Notice Requirements. When this Lease requires service of a notice, that notice shall replace rather than supplement any equivalent or similar statutory notice, including any notice required by California Code of Civil Procedure Section 1161 or any similar or successor statute. When a statute requires service of a notice in a particular manner, service of that notice (or a similar notice required by this Lease) in the manner required by this Paragraph 26 shall replace and satisfy the statutory service of notice procedures, including those required by California Code of Civil Procedure Section 1162 or any similar or successor statute.
Tenant shall at all times keep the Premises and the Project free from liens arising out of or related to work or services performed, materials or supplies furnished or obligations incurred by or on behalf of Tenant or in connection with work made, suffered or done by or on behalf of Tenant in or on the Premises of Project. If Tenant shall not, within ten (10) days following notice of the imposition of any such lien, cause the same to be released of record by payment or posting of a proper bond, Landlord shall have, in addition to all other remedies provided herein and by law, the right, but not the obligation, to cause the same to be released by such means as Landlord shall deem proper, including payment of the claim giving rise to such lien. All sums paid by Landlord on behalf of Tenant and all expenses incurred by Landlord in connection therefor shall be payable to Landlord by Tenant on demand with interest at the Applicable Interest Rate as Additional Rent. Landlord shall have the right at all times to post and keep posted on the Premises any notices permitted or required by law, or which Landlord shall deem proper, for the protection of Landlord, the Premises, the Project and any other party having an interest therein, from mechanics and materialmens liens, and Tenant shall give Landlord not less than ten (10) business days prior written notice of the commencement of any work in the Premises or Project which could lawfully give time to a claim for mechanics or materialmens liens to permit Landlord to post and record a timely notice of non-responsibility, as Landlord may elect to proceed or as the law may from time to time provide, for which purpose, if
Landlord shall so determine, Landlord may enter the Premises. Tenant shall not remove any such notice posted by Landlord without Landlords consent, and in any event not before completion of the work which could lawfully give rise to a claim for mechanics or materialmens liens.
28. INTENTIONALLY DELETED
29. TRANSFERS BY LANDLORD
In the event of a sale or conveyance by Landlord of the Building or a foreclosure by any creditor of Landlord, the same shall operate to release Landlord from any liability upon any of the covenants or conditions, express or implied, herein contemplated in favor of Tenant, to the extent required to be performed after the passing of title to Landlords successor-in-interest. In such event, Tenant agrees to look solely to the responsibility of the successor-in-interest of Landlord under this Lease with respect to the performance of the covenants and duties of Landlord to be performed after the passing of title to Landlords successor-in-interest. This Lease shall not be affected by any such sale and Tenant agrees to attorn to the purchaser or assignee. Landlords successor(s)-in-interest shall not have liability to Tenant with respect to the failure to perform any of the obligations of Landlord, to the extent required to be performed prior to the date such successor(s)-in-interest became the owner of the Building.
30. RIGHT OF LANDLORD TO PERFORM TENANTS COVENANTS
All covenants and agreements to be performed by Tenant under any of the terms of this Lease shall be performed by Tenant at Tenants sole cost and expense and without any abatement of Rent. If Tenant shall fail to pay any sum of money, other than Base Rent, required to be paid by Tenant hereunder or shall fail to perform any other act on Tenants part to be performed hereunder, including Tenants obligations under Paragraph 31 hereof, and such failure shall continue for fifteen (15) days after notice thereof by Landlord, in addition to the other rights and remedies of Landlord, Landlord may make any such payment and perform any such act on Tenants part. In the case of an emergency, no prior notification by Landlord shall be required. Landlord may take such actions without any obligation and without releasing Tenant from any of Tenants obligations. All sums so paid by Landlord and all individual costs incurred by Landlord and interest thereon at the Applicable Interest Rate, from the date of payment by Landlord, shall be paid to Landlord on demand as Additional Rent.
If either Landlord or Tenant waives the performance of any term, covenant or condition contained in this Lease, such waiver shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, or constitute a course of dealing contrary to the expressed terms of this Lease. The acceptance of Rent by Landlord shall not constitute a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, regardless of Landlords knowledge of such preceding breach at the time Landlord accepted such Rent. Failure by Landlord to enforce any of the terms, covenants or conditions of this Lease for any length of time shall not be deemed to waive or decrease the right of Landlord to insist thereafter upon strict performance by Tenant. Waiver by Landlord of any term, covenant or condition contained in this Lease may only be made by a written document signed by Landlord, based upon full knowledge of the circumstances.
Each provision of this Lease or of any applicable governmental laws, ordinances, regulations and other requirements with reference to sending, mailing, or delivery of any notice or the making of any payment by Landlord or Tenant to the other shall be deemed to be complied with when and if the following steps are taken:
A. Rent. All Rent and other payments required to be made by Tenant to Landlord hereunder shall be payable to Landlord at Landlords Remittance Address set forth in the Basic Lease Information, or at such other address as Landlord may specify from time to time by written notice delivered in acceptance herewith. Tenants obligation to pay Rent and any other amounts to Landlord under the terms of this Lease shall not be deemed satisfied until such Rent and other amounts have been actually received by Landlord.
B. Other. All notices, demands, consents and approvals which may or are required to be given by either party to the other hereunder shall be in writing and either personally delivered, sent by commercial overnight courier, mailed, certified or registered, postage prepaid or sent by facsimile with confirmed receipt (and with an original sent by commercial overnight courier), and in each case addressed to the party to be notified at the Notice Address for such party as specified in the Basic Lease Information or to such other place as the party to be notified may from time to time designate by at least fifteen (15) days notice to the notifying party. Notices shall be deemed served upon receipt or refusal to accept delivery. Tenant appoints as its agent to receive the service of all default notices and notice of commencement of unlawful detainer proceedings the person in charge of or apparently in charge of occupying the Premises at the time, and, if there is no such person, then such service may be made by attaching the same on the main entrance of the Premises.
C. Required Notices. Tenant shall immediately notify Landlord in writing of any notice of a violation or a potential or alleged violation of any Regulation that relates to the Premises or the Project, or of any inquiry, investigation, enforcement or other action that is instituted or threatened by any governmental or regulatory agency against Tenant or any other occupant of the Premises, or any claim that is instituted or threatened by any third party that relates to the Premises or the Project.
33. ATTORNEYS FEES
If Landlord places the enforcement of this Lease, or any part thereof, or the collection of any Rent due, or to become due hereunder, or recovery of possession of the Premises in the hands of an attorney; Tenant shall pay to Landlord, upon demand, Landlords reasonable attorneys fees and court costs, whether incurred at trial, appeal or review. In any action which Landlord or Tenant brings to enforce its respective rights hereunder, the unsuccessful party shall pay all costs incurred by the prevailing party including reasonable attorneys fee, to be fixed by the court, and said costs and attorneys fees shall be a part of the judgment in said action.
34. SUCCESSORS AND ASSIGNS
This Lease shall be binding upon and inure to the benefit of Landlord, its successors and assigns, and shall be binding upon and inure to the benefit of Tenant, its successors, and to the extent assignment is approved by Landlord as provided hereunder, Tenants assigns.
35. FORCE MAJEURE
If performance by a party of any portion of this Lease is made impossible by any prevention, delay or stoppage caused by strikes, lockouts, labor disputes, acts of God, inability to obtain services, labor, or materials or reasonable substitutes for those items, government actions, civil commotions, fire or other casualty, or other causes beyond the reasonable control of the party obligated to perform, performance by that party for a period equal to the period of that prevention, delay, or stoppage is excused. Tenants obligation to pay Rent, however, is not excused by this Paragraph 35.
36. SURRENDER OF PREMISES
Tenant shall, upon expiration or sooner termination of this Lease, surrender the Premises to Landlord in the same condition as existed on the date Tenant originally took possession thereof, including, but not limited to, all interior walls cleaned, all holes in walls repaired, all carpets shampooed and cleaned, all HVAC equipment in operating order and in good repair, and all floors cleaned, waxed, and free of any Tenant-introduced marking or painting, all to the reasonable satisfaction of Landlord, ordinary wear and tear and damage by fire or other casualty for which Landlord is required to make repairs hereunder excepted. Tenant shall remove all of its debris from the Project. At or before the time of surrender, Tenant shall comply with the terms of Paragraph 12.A. hereof with respect to Alterations to the Premises and all other matters addressed in such Paragraph. If the Premises are not so surrendered at the expiration or sooner termination of this Lease, the provisions of paragraph 25 hereof shall apply. All keys to the Premises or any part thereof shall be surrendered to Landlord upon expiration or sooner termination of the Term. Tenant shall give written notice to Landlord at least thirty (30) days prior to vacating the Premises and shall meet with Landlord for a joint inspection of the Premises at the time of vacating, but nothing contained herein shall be
construed as an extension of the Term or as a consent by Landlord to any holding over by Tenant. In the event of Tenants failure to give such notice or participate in such joint inspection, Landlords inspection at or after Tenants vacating the Premises shall conclusively be deemed correct for purposes of determining Tenants responsibility for repairs and restoration.
37. HAZARDOUS MATERIALS
A. General Restrictions. Tenant shall conduct its business and shall cause each Tenant Party to act in such a manner as to (a) not release or permit the release of Hazardous Material in, under, on or about the Premises or Project, or (b) not use, store, generate, treat, discharge, dispense, handle, manufacture, transport or dispose of (collectively, Handle) any Hazardous Materials (other than incidental amounts of customary cleaning and office supplies) in or about the Premises or Project without the prior written consent of Landlord, which consent Landlord may withhold in its sole and absolute discretion (Hazardous Materials Consent Requirements), Hazardous Material means any hazardous, explosive, radioactive or toxic substance, material or waste which is or becomes regulated by any local, state or federal governmental authority or agency, including, without limitation, any material or substance which is (i) defined or listed as a hazardous waste, extremely hazardous waste, restricted hazardous waste, hazardous substance, hazardous material, pollutant or contaminant under any Regulation, (ii) petroleum or petroleum derivative, (iii) a flammable explosive, (iv) a radioactive material or waste, (v) a polychlorinated biphenyl, (vi) asbestos or asbestos containing material, (vii) infectious waste, or (viii) a carcinogen.
B. Required Disclosures. Prior to Tenant (and at least five (5) days prior to any assignee or any subtenant of Tenant) taking possession of any part of the Premises, and on each anniversary of the Term 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 Handled on, in, under or about the Premises or Project for the twelve (12) month period prior to such Disclosure Date, or which Tenant intends to Handle on, under or about this Premises during the twelve (12) month period following the Disclosure Date by executing and delivering to Landlord a Hazardous Materials Questionnaire, in the form attached hereto as Exhibit D (as updated and modified by Landlord, from time to time). Tenants disclosure obligations under this Paragraph 37.B shall include a requirement that, to the extent any information contained in a Hazardous Materials Questionnaire previously delivered by Tenant shall become inaccurate in any material respect, Tenant shall immediately deliver to Landlord a new updated Hazardous Materials Questionnaire.
C. Additional Obligations. If any Hazardous Materials shall be released into the environment comprising or surrounding the Project in connection with the acts, omissions or operations of Tenant or any Tenant Party, Tenant shall at its sole expense promptly prepare a remediation plan therefor consistent with applicable Regulations and recommended industry practices (and approved by Landlord and all governmental agencies having jurisdiction) to fully remediate such release, and thereafter shall prosecute the remediation plan so approved to completion with all reasonable diligence and to the satisfaction of Landlord and applicable governmental agencies. If any Hazardous Materials are Handled in, under, on or about the Premises during the Term, or if Landlord determines in good faith that any release of any Hazardous Material or violation of Hazardous Materials Regulations may have occurred in, on, under or about the Premises during the Term, Landlord may require Tenant to at Tenants sole expense, (i) retain a qualified environmental consultant reasonably satisfactory to Landlord to conduct a reasonable investigation (an Environmental Assessment) of a nature and scope reasonably approved in writing in advance by Landlord with respect to the existence of any Hazardous Materials in, on, under or about the Premises and providing a review of all Hazardous Materials activities of Tenant and the Tenant Parties, and (ii) provide to Landlord a reasonably detailed, written report, prepared in accordance with the institutional real estate standards, of the Environmental Assessment.
D. Indemnity. Tenant shall identify, defend (by counsel reasonably acceptable to Landlord), protect and hold Landlord harmless from and against any and all claims, liabilities, losses, costs, loss of rents, liens, damages, injuries or expenses (including attorneys and consultants fees and court costs), demands, causes of action, or judgments directly or indirectly arising out of or related to the use, generation, storage, release, or disposal of Hazardous Materials by Tenant or any of Tenants Parties in, on, under or about the Premises, the Building or the Project or surrounding land or environment, which indemnity shall include, without limitation, damages for personal or bodily
injury, property damage, damage to the environment or natural resources occurring on or off the Premises, losses attributable to diminution in value or adverse effects on marketability, the cost of any investigation, monitoring, government oversight, repair, removal, remediation, restoration, abatement, and disposal, and the preparation of any closure or other required plans, whether such action is required or necessary prior to or following the expiration or earlier termination of this Lease. Neither the consent by Landlord to the use, generation, storage, release or disposal of Hazardous Materials nor the strict compliance by Tenant with all laws pertaining to Hazardous Materials shall excuse Tenant from Tenants obligation of indemnification pursuant to this Paragraph 37.D. Tenants obligations pursuant to the foregoing indemnity shall survive the expiration or earlier termination of this Lease.
A. General. The term Tenant or any pronoun used in place thereof shall indicate and include the masculine or feminine, the singular or plural number, individuals, firms or corporations, and their respective successors, executors, administrators and permitted assigns, according to the context hereof.
B. Time. Time is of the essence regarding this Lease and all of its provisions.
C. Choice of Law. This Lease shall in all respects be governed by the laws of the State of California.
D. Entire Agreement. This Lease and the following exhibits and attachments, which are hereby incorporated into and made a part of this Lease, constitute the entire agreement between the parties and supersede all prior agreements and understandings related to the Premises, including all lease proposals, letters of intent and other documents: Exhibit A (Rules and Regulations), Exhibit B (Outline and Location of Premises), Exhibit C (Lease Improvement Agreement) and Exhibit D (Hazardous Materials Questionnaire).
E. Modification. This Lease may not be modified except by a written instrument signed by the parties hereto. Tenant accepts the area of the Premises as specified in the Basic Lease Information as the appropriate area of the Premises for all purposes under this Lease, and acknowledges and agrees that no other definition of the area (rentable, usable or otherwise) of the Premises shall apply. Tenant shall in no event be entitled to a recalculation of the square footage of the Premises, rentable, usable or otherwise, and no recalculation, if made, irrespective of its purpose, shall reduce Tenants obligations under this Lease in any manner, including without limitation the amount of Base Rent payable by Tenant or Tenants Proportionate Share of the Building and of the Project.
F. Severability. If, for any reason whatsoever, any of the provisions hereof shall be unenforceable or ineffective, all of the other provisions shall be and remain in full force and effect.
G. Recordation. Tenant shall not record this Lease or a short form memorandum hereof.
H. Examination of Lease. Submission of this Lease to Tenant does not constitute an option or offer to lease and this Lease is not effective otherwise until execution and delivery by both Landlord and Tenant.
I. Accord and Satisfaction. No payment by Tenant of a lesser amount than the total Rent due nor any endorsement on any check or letter accompanying any check or payment of Rent shall be deemed an accord and satisfaction of full payment of Rent, and Landlord may accept such payment without prejudice to Landlords right to recover the balance of such Rent or to pursue other remedies. All offers by or on behalf of Tenant of accord and satisfaction are hereby rejected in advance.
J. Easements. Landlord may grant easements on the Project and dedicate for public use portions of the Project without Tenants consent; provided that no such grant or dedication shall materially interfere with Tenants Permitted Use of the Premises. Upon Landlords request, Tenant shall execute, acknowledge and deliver to Landlord documents, instruments, maps and plats necessary to effectuate Tenants covenants hereunder.
K. Drafting and Determination Presumption. The parties acknowledge that this Lease has been agreed to by both the parties, that both Landlord and Tenant have consulted with attorneys with respect to the terms of this Lease and that no presumption shall be created against Landlord because Landlord drafted this Lease. Except as
otherwise specifically set forth in this Lease, with respect to any consent, determination or estimation of Landlord required or allowed in this Lease or requested of Landlord, Landlords consent, determination or estimation shall be given or made solely by Landlord in Landlords good faith opinion, whether or not objectively reasonable. If Landlord fails to respond to any request for its consent within the time period, if any, specified in this Lease, Landlord shall be deemed to have disapproved such request.
L. Exhibits. The Basic Lease Information, and the Exhibits, addenda and attachments attached hereto are hereby incorporated herein by this reference and made a part of this Lease as though fully set forth herein.
M. No Light, Air or View Easement. Any disruption or shutting off of light, air or view by any structure which may be erected on lands adjacent to or in the vicinity of the Building shall in no way affect this Lease or impose any liability on Landlord.
N. No Third Party Benefit. This Lease is a contract between Landlord and Tenant, and nothing herein is intended to create any third party benefit.
O. Quiet Enjoyment. Upon payment by Tenant of the Rent, and upon the observance and performance of all of the other covenants, terms and conditions on Tenants part to be observed and performed, Tenant shall peaceably and quietly hold and enjoy the Premises for the term hereby demised without hindrance or interruption by Landlord or any other person or persons lawfully or equitably claiming by, through or under Landlord, subject, nevertheless, to all of the other terms and conditions of this Lease. Landlord shall not be liable for any hindrance, interruption, interference or disturbance by other tenants or third persons, nor shall Tenant be released from any obligations under this Lease because of such hindrance, interruption, interference or disturbance.
P. Counterparts. This Lease may be executed in any number of counterparts, each of which shall be deemed an original.
Q. Multiple Parties. If more than one person or entity is named herein as Tenant, such multiple parties shall have joint and several responsibility to comply with the terms of this Lease.
R. Prorations. Any Rent or other amounts payable to Landlord by Tenant hereunder for any fractional month shall be prorated based on a month of 30 days. As used herein, the term fiscal year shall mean the calendar year or such other fiscal year as Landlord may deem appropriate.
39. ADDITIONAL PROVISIONS
A. Base Rent. Tenant shall pay Base Rent pursuant to the following schedule:
Year of Term
Per Square Foot
Notwithstanding anything in this Paragraph 39.A. to the contrary, so long as Tenant is not in default under this Lease, Tenant shall be entitled to an abatement of Base Rent in the amount of $15,888.00 per month, and of Tenants Proportionate Share of Operating Expenses, for 1.25 consecutive full calendar months of the Term, beginning on the Term Commencement Date (the Rent Abatement Period). The total amount of Base Rent abated during the Rent Abatement Period shall equal $19,860.00 (the Abated Base Rent). During the Rent Abatement Period, only Base Rent and Tenants Proportionate Share of Operating Expenses shall be abated, and all other Additional Rent and other costs and charges specified in this Lease shall remain as due and payable pursuant to the provisions of this Lease.
B. Early Entry. Notwithstanding anything to the contrary contained in this Lease, but subject to the terms of this Paragraph 39.B., Landlord grants Tenant the right to enter the Premises, at Tenants sole risk, (i) following installation of the ceiling grid in the Premises, solely for the purpose of installing telecommunications and data cabling in the Premises, and (ii) following installation of the carpeting in the Premises solely for the purpose of installing equipment, furnishings and other personality, Landlord may withdraw such permission to enter the Premises prior to the Term Commencement Date at any time that Landlord reasonably determines that such entry by Tenant is causing a dangerous situation for Landlord, Tenant or their respective contractors or employees, or if Landlord reasonably determines that such entry by Tenant is hampering or otherwise preventing Landlord from proceeding with the completion of Landlords Work at the earliest possible date.
40. JURY TRIAL WAIVER
EACH PARTY HERETO (WHICH INCLUDES ANY ASSIGNEE, SUCCESSOR HEIR OR PERSONAL REPRESENTATIVE OF A PARTY) SHALL NOT SEEK A JURY TRIAL, HEREBY WAIVES TRIAL BY JURY, AND HEREBY FURTHER WAIVES ANY OBJECTION TO VENUE IN THE COUNTY IN WHICH THE BUILDING IS LOCATED, AND AGREES AND CONSENTS TO PERSONAL JURISDICTION OF THE COURTS OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IN ANY ACTION OR PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST THE OTHER ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANTS USE OR OCCUPANCY OF THE PREMISES, OR ANY CLAIM OF INJURY OR DAMAGE, OR THE ENFORCEMENT OF ANY REMEDY UNDER ANY STATUTE, EMERGENCY OR OTHERWISE, WHETHER ANY OF THE FOREGOING IS BASED ON THIS LEASE OR ON TORT LAW. EACH PARTY REPRESENTS THAT IT HAS HAD THE OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL CONCERNING THE EFFECT OF THIS PARAGRAPH 40. THE PROVISIONS OF THIS PARAGRAPH 40 SHALL SURVIVE THE EXPIRATION OR EARLIER TERMINATION OF THIS LEASE.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day and the year first above written.
|EOP INDUSTRIAL PORTFOLIO, L.L.C.,|
a Delaware limited liability company
|By:||EOP Operating Limited Partnership,|
a Delaware limited partnership, its sole member
|By:||Equity Office Properties Trust|
a Maryland real estate investment trust,
its general partner
John W. Peterson
Regional Senior Vice President
November 29, 2001
|RACKABLE SYSTEMS, INC., a Delaware corporation|
/s/ Jack Randall
/s/ Giovanni Coglitore
[Insert Officers Title Here]
Rules and Regulations
|1.||Driveways, sidewalks, halls, passages, exits, entrances, elevators, escalators and stairways shall not be obstructed by tenants or used by tenants for any purpose other than for ingress to and egress from their respective premises. The driveways, sidewalks, halls, passages, exits, entrances, elevators and stairways are not for the use of the general public and Landlord shall in all cases retain the right to control and prevent access thereto by all persons whose presence, in the judgment of Landlord, shall be prejudicial to the safety, character, reputation and interests of the Building, the Project and its tenants, provided that nothing herein contained shall be construed to prevent such access to persons with whom any tenant normally deals in the ordinary course of such tenants business unless such persons are engaged in illegal activities. No tenant, and no employees or invitees of any tenant, shall go upon the roof of any Building, except as authorized by Landlord.|
|2.||No sign, placard, banner, picture, name, advertisement or notice, visible from the exterior of the Premises or the Building or the common areas of the Building shall be inscribed, painted, affixed, installed or otherwise displayed by Tenant either on its Premises or any part of the Building or Project without the prior written consent of Landlord in Landlords sole and absolute discretion. Landlord shall have the right to remove any such sign, placard, banner, picture, name, advertisement, or notice without notice to and at the expense of Tenant, which were installed or displayed in violation of this rule. If Landlord shall have given such consent to Tenant at any time, whether before or after the execution of Tenants Lease, such consent shall in no way operate as a waiver or release of any of the provisions hereof or of the Lease, and shall be deemed to relate only to the particular sign, placard, banner, picture, name, advertisement or notice so consented to by Landlord and shall not be construed as dispensing with the necessity of obtaining the specific written consent of Landlord with respect to any other such sign, placard, banner, picture, name, advertisement or notice.|
All approved signs or lettering on doors and walls shall be printed, painted, affixed or inscribed at the expense of Tenant by a person or vendor approved by Landlord and shall be removed by Tenant at the time of vacancy at Tenants expense.
|3.||The directory of the Building or Project will be provided exclusively for the display of the name and location of tenants only and Landlord reserves the right to charge for the use thereof and to exclude any other names therefrom.|
|4.||No curtains, draperies, blinds, shutters, shades, screens or other coverings, awnings, hangings or decorations shall be attached to, hung or placed in, or used in connection with, any window or door on the Premises without the prior written consent of Landlord. In any event with the prior written consent of Landlord, all such items shall be installed inboard of Landlords standard window covering and shall in no way be visible from the exterior of the Building. All electrical ceiling fixtures hung in offices or spaces along the perimeter of the Building must be fluorescent or of a quality, type, design, and bulb color approved by Landlord. No articles shall be placed or kept on the window sills so as to be visible from the exterior of the Building. No articles shall be placed against glass partitions or doors which Landlord considers unsightly from outside Tenants Premises.|
|5.||Each Tenant shall be responsible for all persons for whom it allows to enter the Building or the Project and shall be liable to Landlord for all acts of such persons.|
Landlord and its agents shall not be liable for damages for any error concerning the admission to, or exclusion from, the Building or the Project of any persons.
During the continuance of any invasion, mob, riot, public excitement or other circumstance rendering such action advisable in Landlords opinion, Landlord reserves the right (but shall not be obligated) to prevent
access to the Building and the Project during the continuance of that event by any means it considers appropriate for the safety of tenants and protection of the Building, property in the Building and the Project.
|6.||Tenant shall not alter any lock or access device or install a new or additional lock or access device or bolt on any door of its Premises, without the prior written consent of Landlord. If Landlord shall give its consent, Tenant shall in each case furnish Landlord with a key for any such lock. Tenant, upon the termination of its tenancy, shall deliver to Landlord the keys for all doors which have been furnished to Tenant, and in the event of loss of any keys so furnished, shall pay Landlord therefor.|
|7.||The restrooms, toilets, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed and no foreign substance of any kind whatsoever shall be thrown into them. The expense of any breakage, stoppage, or damage resulting from violation of this rule shall be borne by the tenant who, or whose employees or invitees shall have caused the breakage, stoppage, or damage.|
|8.||Tenant shall not use or keep in or on the Premises, the Building or the Project any kerosene, gasoline, or inflammable or combustible fluid or material except in strict accordance with the terms of the Lease.|
|9.||Tenant shall not use, keep or permit to be used or kept in the Premises any foul or noxious gas or substance. Tenant shall not allow the Premises to be occupied or used in a manner offensive or objectionable to Landlord or other occupants of the Building by reason of noise, odors and/or vibrations or interfere in any way with other tenants or those having business therein, nor shall any animals or birds be brought or kept in or about the Premises, the Building, or the Project.|
|10.||Except with the prior written consent of Landlord, Tenant shall not sell, or permit the sale, at retail, of newspapers, magazines, periodicals, theater tickets or any goods or merchandise in or on the Premises, nor shall Tenant carry on or permit or allow any employee or other person to carry on, the business of stenography, typewriting or any similar business in or from the Premises for the service or accommodation of occupants of any other portion of the Building, or the business of a public barber shop, beauty parlor, nor shall the Premises be used for any illegal, improper, immoral or objectionable purpose, or any business or activity other than that specifically provided for in such Tenants Lease. Tenant shall not accept hairstyling, barbering, shoeshine, nail, message or similar services to the Premises or common areas except as authorized by Landlord.|
|11.||If Tenant requires telegraphic, telephonic, telecommunications, data processing, burglar alarm or similar services, it shall first obtain and comply with, Landlords instructions in their installation. The cost of purchasing, installation and maintenance of such services shall be borne solely by Tenant.|
|12.||Landlord will direct electricians as to where and how telephone, telegraph and electrical wires are to be introduced or installed. No boring or cutting for wires will be allowed without the prior written consent of Landlord. The location of burglar alarms, telephones, call boxes and other office equipment affixed to the Premises shall be subject to the prior written approval of Landlord.|
|13.||Tenant shall not install any radio or television antenna, satellite dish, loudspeaker or any other device on the exterior walls or the roof of the Building, without Landlords consent. Tenant shall not interfere with radio or television broadcasting or reception from or in the Building, the Project or elsewhere.|
|14.||Tenant shall not mark, or drive nails, screw or drill into the partition, woodwork or drywall or in any way deface the Premises or any part thereof. Tenant shall not lay linoleum, tile, carpet or any other floor covering so that the same shall be affixed to the floor of its Premises in any manner except as approved in writing by Landlord. The expense of repairing any damage resulting from a violation of this rule or the removal of any floor covering shall be borne by the tenant by whom, or by whose contractors, employees or invitees, the damage shall have been caused.|
|15.||Tenant shall not place a load upon any floor of its Premises which exceeds the load per square foot which such floor was deigned to carry or which is allowed by law.|
Business machines and mechanical equipment belonging to Tenant which cause noise or vibration that may be transmitted to the structure of the Building or to any space therein to such degree as to be objectionable to Landlord or to any tenants in the Building shall be placed and maintained by Tenant, at Tenants expense, on vibration eliminators or other devices sufficient to eliminate noise or vibration. The person employed to move such equipment in or out of the Building must be acceptable to Landlord.
|16.||Each tenant shall store all its trash and garbage within the interior of the Premises or as otherwise directed by Landlord from time to time. Tenant shall not place in the trash boxes or receptacles any personal trash or any material that may not or cannot be disposed of in the ordinary and customary manner of removing and disposing of trash and garbage in the city, without violation of any law or ordinance governing such disposal.|
|17.||Canvassing soliciting, distribution of handbills or any other written material and peddling in the Building and the Project are prohibited and each tenant shall cooperate to prevent the same. No tenant shall make room-to-room solicitation of business from other tenants in the Building or the Project, without the written consent of Landlord.|
|18.||Landlord shall have the right, exercisable without notice and without liability to any tenant, to change the name and address of the Building and the Project.|
|19.||Landlord reserves the right to exclude or expel from the Project any person who, in Landlords judgment, is under the influence of alcohol or drugs or who commits any act in violation of any of these Rules and Regulations.|
|20.||Without the prior written consent of Landlord, Tenant shall not use the name of the Building or the Project or any photograph or other likeness of the Building or the Project in connection with, or in promoting or advertising Tenants business except that Tenant may include the Buildings or Projects name in Tenants address.|
|21.||Tenant shall comply with all safety, fire protection and evacuation procedures and regulations established by Landlord or any governmental agency.|
|22.||Tenant assumes any and all responsibility for protecting its Premises from theft, robbery and pilferage, which includes keeping doors locked and other means of entry to the Premises closed.|
|23.||Landlord reserves the right to designate the uses of the parking spaces on the Project. Tenant or Tenants guests shall park between designated parking lines only, and shall not occupy two parking spaces with one car. No trucks, truck tractors, trailers or fifth wheel are allowed to be parked anywhere at any time within the Project other than in Tenants own truck dock wall. Vehicles in violation of the above shall be subject to tow-away, at vehicle owners expense. Vehicles parked on the Project overnight without prior written consent of the Landlord shall be deemed abandoned and shall be subject to tow-away at vehicle owners expense. No tenant of the Building shall park in visitor or reserved parking areas or loading areas. Any tenant found parking in such designated visitor or reserved parking areas or loading areas or unauthorized area shall be subject to tow-away at vehicle owners expense. The parking areas shall not be used to provide car wash, oil changes, detailing, automotive repair or other services unless otherwise approved or furnished by Landlord. Tenant will from time to time, upon the request of Landlord, supply Landlord with a list of license plate number of vehicles owned or operated by its employee or agents.|
No Tenant is allowed to unload, unpack, pack or in any way manipulate any products, materials or goods in the common areas of the Project including the parking and driveway areas of the Project. All products, goods and materials must be manipulated, handled, kept, and stored within the tenants Premises and not in any exterior areas, including, but not limited to, exterior dock platforms, against the exterior of the
Building, parking areas and driveway areas of the Project. Tenant also agrees to keep the exterior of the Premises clean and free of nails, wood, pallets, packing materials, barrels and any other debris produced from their operation. All products, materials and goods are to enter and exit the premises by being loaded or unloaded through dock high doors into trucks and or trailers, over dock high loading platforms into trucks and or trailers or loaded or unloaded into trucks and or trailers within the Premises through grade level door access.
|25.||Tenant shall be responsible for the observance of all of the foregoing Rules and Regulations by Tenants employees, agents, clients, customers, invitees and guests.|
|26.||These Rules and Regulations are in addition to, and shall not be construed or in any way be modify, alter or amend, in whole or in part, the terms, covenants, agreements and conditions of any lease of any premises in the Project.|
|27.||Landlord may waive any one or more of these Rules and Regulations for the benefit of any particular tenant or tenants, but no such waiver by Landlord shall be construed as a waiver of such Rules and Regulations in favor of any other tenant or tenants, nor prevent Landlord from thereafter enforcing any such Rules and Regulations against any or all tenants of the Building.|
Landlord reserves the right to make such other and reasonable rules and regulations as in its judgment may from time to time be needed for safety and security, for care and cleanliness of the Building and the Project and for the preservation of good order therein. Tenant agrees to abide by all such Rules and Regulations herein stated and any additional rules and regulations which are adopted.
HAZARDOUS MATERIALS QUESTIONNAIRE
This questionnaire is designed to solicit information regarding Tenants proposed use, generation, treatment, storage, transfer or disposal of hazardous or toxic materials, substances or wastes. If this Questionnaire is attached to or provided in connection with a lease, the reference herein to any such items shall include all items defined as Hazardous Materials, Hazardous Substances, Hazardous Wastes, Toxic Materials, Toxic Substances, Toxic Wastes, or such similar definitions contained in the lease. Please complete the questionnaire and return it to Landlord for evaluation. If your use of materials or substances, or generation of wastes is considered to be significant, further information may be requested regarding your plans for hazardous and toxic materials management. Your cooperation in this matter is appreciated. If you have any questions, do not hesitate to call us for assistance.
Name (Corporation, Individual, Corporate or Individual DBA, or Public Agency): Rackable Systems Inc.
Standard Industrial Classification Code (SIC): 3571
|2381 Zanker Road|
City, State, Zip Code:
|San Jose, CA 95131|
Contact Person & Title:
|Jack Randall, V.P. Operations|
|(408) 321-0290 Facsimile Number: (408) 321-0293|
|2.||LOCATION AND ADDRESS OF PROPOSED LEASE|
|Street Address:||721 Charcot Avenue|
|City, State, Zip Code:||San Jose, CA 95131|
|Bordering Streets:||Otoole Road|
|Streets to which Premises has Access: Charcot Avenue|
|3.||DESCRIPTION OF PREMISES|
|Floor Area:||13,240 sq. ft.|
|Number of Parking Spaces:||2.5 per 1000 sq. ft.|
|Date of Original Construction:||unknown by Rackable Systems|
|Past Uses of Premises:||unknown by Rackable Systems|
|Dates and Descriptions of Significant Additions, Alterations or Improvements: unknown by Rackable Systems|
|4.||DESCRIPTION OF PROPOSED PREMISES USE|
Describe proposed use and operation of Premises including (i) services to be performed, (ii) nature and types of manufacturing or assembly processes, if any, and (iii) the materials or products to be stored at the Premises.
(i) Manufacture computers, (ii) assembly involves screwing parts together, installing software, and occasionally soldering wires, (iii) materials to be stored are metal chassis, brackets, and computer components.
Will the operation of your business at the Premises involve the use, generation, treatment, storage, transfer or disposal of hazardous wastes or materials? Do they now? Yes ¨ No x If the answer is yes, or if your SIC code number is between 2000 to 4000, please complete Section V.
Does or will the operation of any facet of your business at the Premises require any permits, licenses or plan approvals from any of the following agencies?
U.S. Environmental Protection Agency
|Yes ¨||No x|
City or County Sanitation District
|Yes ¨||No x|
State Department of Health Services
|Yes ¨||No x|
U.S. Nuclear Regulatory Commission
|Yes ¨||No x|
Air Quality Management District
|Yes ¨||No x|
Bureau of Alcohol, Firearms and Tobacco
|Yes ¨||No x|
City or County Fire Department
|Yes ¨||No x|
Regional Water Quality Control Board
|Yes ¨||No x|
Other Governmental Agencies (if yes,
|Yes ¨||No x|
If the answer to any of the above is yes, please indicate permit or license numbers, issuing agency and expiration date or renewal date, if applicable.
If your answer to any of the above is yes, please complete Sections VI and VII.
|6.||HAZARDOUS MATERIALS DISCLOSURE|
Will any hazardous materials or toxic or substances be stored on the Premises? Yes ¨ No ¨ If the answer is yes, please describe the materials or substances to be stored, the quantities thereof and the proposed method of storage of the same (i.e., drums, aboveground or underground storage tanks, cylinders, other), and whether the material is a Solid (S), Liquid (L) or Gas (G):
Quantity to be Stored
|Amount to be Stored|
on a Monthly Basis
|Maximum Period of|
Attach additional sheets if necessary.
Is any modification of the Premises improvements required or planned to mitigate the release of toxic or hazardous materials substance or wastes into the environment? Yes ¨ No ¨ If the answer is yes, please describe the proposed Premises modifications:
|7.||HAZARDOUS WASTE DISCLOSURE|
Will any hazardous waste, including recyclable waste, be generated by the operation of your business at the Premises? Yes ¨ No ¨ If the answer is yes, please list the hazardous waste which is expected to be generated (or potentially will be generated) at the Premises, its hazard class and volume/frequency of generation on a monthly basis.
|Maximum Period of|
Attach additional sheets if necessary.
If the answer is yes, please also indicate if any such wastes are to be stored within the Premises and the proposed method of storage (i.e., drums, aboveground or underground storage tanks, cylinders, other).
Attach additional sheets if necessary.
Is any treatment or processing of hazardous wastes to be conducted at the Premises? Yes ¨ No ¨ If the answer is yes, please describe proposed treatment/processing methods:
Which agencies are responsible for monitoring and evaluating compliance with respect to the storage and disposal of hazardous materials or wastes at or from the Premises? (Please list all agencies):
Have there been any agency enforcement actions regarding Tenant (or any affiliate thereof), or any existing Tenants (or any affiliates) facilities, or any past, pending or outstanding administrative orders or consent decrees with respect to Tenant or any affiliate thereof? Yes ¨ No ¨ If the answer is yes, have there been any continuing compliance obligations imposed on Tenant or its affiliates as a result of the decrees or orders? Yes ¨ No ¨ If the answer is yes, please describe:
Has Tenant or any of its affiliates been the recipient of requests for information, notice and demand letters, cleanup and abatement orders, or cease and desist orders or other administrative inquiries? Yes ¨ No ¨ If the answer is yes, please describe:
Are there any pending citizen lawsuits, or have any notices of violations been provided to Tenant or its affiliates or with respect to any existing facilities pursuant to the citizens suit provisions of any statute? Yes ¨ No ¨ If the answer is yes, please describe:
Has an environmental audit ever been conducted at any of your companys existing facilities? Yes ¨ No ¨ If the answer is Yes, please describe:
Does your company carry environmental impairment insurance? Yes ¨ No ¨ If the answer is yes, what is the name of the carrier and what are the effective periods and monetary limits of such coverage?
|8.||EQUIPMENT LOCATED OR TO BE LOCATED AT THE PREMISES|
Is (or will there be) any electrical transformer or other equipment containing polychlorinated biphenyls located at the Premises? Yes ¨ No ¨ If the answer is yes, please specify the size, number and location (or proposed location):
Is (or will there be) any tank for storage of a petroleum product located at the Premises? Yes ¨ No ¨ If the answer is yes, please specify capacity and contents of tank; permits, licenses and/or approvals received or to be received therefor and any spill prevention control or conformance plan to be taken in connection therewith:
|9.||ONGOING ACTIVITIES (APPLICABLE TO TENANTS IN POSSESSION)|
Has any hazardous material, substance or waste spilled, leaked, discharged, leached, escaped or otherwise been released into the environment at the Premises? Yes ¨ No ¨ If the answer is yes, please describe including (i) the date and duration of each such release, (ii) the material, substance or waste released, (iii) the extent of the spread of such release into or onto the air, soil and/or water, (iv) any action to clean up the release, (v) any reports or notifications made of filed with any federal, state, or local agency, or any quasi-governmental agency (please provide copies of such reports or notifications) and (vi) describe any legal, administrative or other action taken by any of the foregoing agencies or by any other person as a result of the release.
This Hazardous Materials Questionnaire is certified as being true and accurate and has been completed by the party whose signature appears below on behalf of Tenant as of the date set forth below.