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LEASE
BY AND BETWEEN
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES,
a New York corporation, as Landlord
and
FMC CORPORATION,
a Delaware corporation,
as Tenant
for
BUILDING A
<PAGE>
TABLE OF CONTENTS
Page
-----
ARTICLE 1. DEFINITIONS........................................... 1
1.1. Commencement Date....................................... 1
1.2. Rent Start Date......................................... 1
1.3. Lease Term.............................................. 1
1.4. Property................................................ 1
1.5. Premises................................................ 2
1.6. Permitted Use........................................... 2
1.7. Tenant's Minimum Liability Insurance Coverage........... 2
1.8. Tenant's Allocated Parking Stalls....................... 2
1.9. Retained Real Estate Brokers............................ 2
1.10. Address for Notices..................................... 2
1.11. Lease................................................... 2
1.12. Building C Lease........................................ 2
1.13. Tenant's Allocated Share................................ 2
1.14. Continuing Tenant Default............................... 3
1.15. Additional Definitions.................................. 3
ARTICLE 2. DEMISE AND ACCEPTANCE................................. 3
2.1. Demise of Premises...................................... 3
2.2. Delivery and Acceptance of Possession................... 3
2.3. Construction of Interior Improvements................... 3
2.4. Options to Extend Lease Term............................ 3
ARTICLE 3. RENT.................................................. 5
3.1. Base Monthly Rent....................................... 5
3.2. Additional Rent......................................... 6
3.3. Payment of Rent......................................... 6
3.4. Late Charge and Interest on Rent in Default............. 6
ARTICLE 4. USE OF PREMISES....................................... 7
4.1. Limitation on Type...................................... 7
4.2. Compliance with Laws and Private Restrictions........... 7
4.3. Insurance Requirements.................................. 7
4.4. Outside Areas........................................... 8
4.5. Signs................................................... 8
4.6. Rules and Regulations................................... 8
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4.7. Parking................................................. 8
4.8. Window Coverings........................................ 9
4.9. Outside Sales........................................... 9
ARTICLE 5. TRADE FIXTURES AND LEASEHOLD IMPROVEMENTS............. 9
5.1. Trade Fixtures.......................................... 9
5.2. Leasehold Improvements.................................. 9
5.3. Alterations Required by Law............................. 10
5.4. Landlord's Improvements................................. 11
5.5. Liens................................................... 11
5.6. Modifications to the Premises........................... 11
ARTICLE 6. REPAIR AND MAINTENANCE................................ 12
6.1. Tenant's Obligation to Maintain......................... 12
6.2. Landlord's Obligation to Maintain....................... 12
6.3. Tenant's Obligation to Reimburse........................ 13
6.4. Common Operating Expenses Defined....................... 14
6.5. Control of Common Area.................................. 14
6.6. Tenant's Negligence..................................... 15
ARTICLE 7. WASTE DISPOSAL AND UTILITIES.......................... 15
7.1. Waste Disposal.......................................... 15
7.2. Hazardous Materials..................................... 15
7.3. Utilities............................................... 17
7.4. Compliance with Governmental Regulations................ 17
ARTICLE 8. REAL PROPERTY TAXES................................... 18
8.1. Real Property Taxes Defined............................. 18
8.2. Tenant's Obligation to Reimburse........................ 18
8.3. Taxes on Tenant's Property.............................. 19
ARTICLE 9. INSURANCE............................................. 19
9.1. Tenant's Insurance...................................... 19
9.2. Landlord's Insurance.................................... 20
9.3. Tenant's Obligation to Reimburse........................ 20
9.4. Release and Waiver of Subrogation....................... 20
ARTICLE 10. LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY..... 21
10.1. Limitation on Landlord's Liability...................... 21
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10.2. Limitation on Tenant's Recourse......................... 21
10.3. Indemnification of Landlord............................. 22
ARTICLE 11. DAMAGE TO PREMISES................................... 22
11.1. Landlord's Duty to Restore.............................. 22
11.2. Landlord's Right to Terminate........................... 22
11.3. Tenant's Right to Terminate............................. 23
11.4. Abatement of Rent....................................... 23
ARTICLE 12. CONDEMNATION......................................... 24
12.1. Tenant's Termination Right.............................. 24
12.2. Restoration and Abatement of Rent....................... 24
12.3. Temporary Taking........................................ 24
12.4. Division of Condemnation Award.......................... 24
ARTICLE 13. DEFAULT AND REMEDIES................................. 25
13.1. Events of Tenant's Default.............................. 25
13.2. Landlord's Remedies..................................... 26
13.3. Waiver by Tenant of Certain Remedies.................... 27
13.4. Waiver.................................................. 27
13.5. Limitation on Exercise of Rights........................ 27
ARTICLE 14. ASSIGNMENT AND SUBLETTING............................ 27
14.1. By Tenant............................................... 27
14.2. By Landlord............................................. 29
ARTICLE 15. GENERAL PROVISIONS................................... 30
15.1. Landlord's Right to Enter............................... 30
15.2. Surrender of the Premises............................... 30
15.3. Holding Over............................................ 30
15.4. Subordination........................................... 31
15.5. Tenant's Attornment..................................... 31
15.6. Mortgagee Protection.................................... 31
15.7. Estoppel Certificates and Financial Statements.......... 31
15.8. Force Majeure........................................... 32
15.9. Notices................................................. 32
15.10. Obligation to Act Reasonably........................... 32
15.11. Corporate Authority.................................... 32
15.12. Additional Definitions................................. 32
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15.13. Miscellaneous.......................................... 33
15.14. Termination by Exercise of Right....................... 33
15.15. Brokerage Commissions.................................. 34
15.16. Entire Agreement....................................... 34
15.17. Right of First Offer to Lease.......................... 34
SCHEDULE OF EXHIBITS
EXHIBIT A - SITE PLAN OF PROPERTY
EXHIBIT B - APPROVED PLANS FOR INTERIOR IMPROVEMENTS
EXHIBIT C - INTERIOR IMPROVEMENT AGREEMENT
EXHIBIT D - FORM OF SUBORDINATION AGREEMENT
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<PAGE>
LEASE
(Building A)
THIS LEASE, dated June 1, 1989 for reference purposes only, is made by
and between THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, a New
York corporation ("Landlord"), and FMC CORPORATION, a Delaware corporation
("Tenant").
ARTICLE 1.
DEFINITIONS
1.1. COMMENCEMENT DATE: The term "Commencement Date" shall mean the date
the last signatory to this Lease whose execution is required to make it
binding on Landlord and Tenant shall have executed this Lease.
1.2. RENT START DATE: The term "Rent Start Date" shall mean November 1,
1989; provided, however, that if the Interior Improvements to be constructed
pursuant to the Interior Improvement Agreement attached as EXHIBIT "C" are
not "Substantially Completed" (as defined in EXHIBIT "C") by November 1, 1989
because of delays in construction resulting from "Force Majeure" (as defined
in this paragraph 1.2), then the Rent Start Date shall be extended for one
day for each such day of delay experienced by Tenant in constructing the
Interior Improvements pursuant to EXHIBIT "C". For purposes of this
paragraph, the following shall apply:
A. The term "Force Majeure" shall mean (i) any material default
by Landlord of its obligations under this Lease which delays construction;
(ii) strikes, labor disputes or work stoppages which are not directed solely
at the construction of the Interior Improvements or only because of job
conditions at the Premises but which also affect other construction projects;
(iii) damage to the Interior Improvements or the Premises caused by fire,
earthquake, vandalism or other peril; and (iv) civil commotion, civil unrest,
or acts of war. The term "Force Majeure" shall not include any of the
following: (i) delays caused by the Prime Contractor or any subcontractor,
including delays resulting from contractor default; (ii) inability to obtain
labor, materials, equipment, or reasonable substitutes therefor when ordered;
or (iii) inability to obtain any governmental approval required in connection
with the construction of the Interior Improvements.
B. Tenant shall notify Landlord promptly of the occurrence of
any event of Force Majeure. If Tenant does not notify Landlord in writing of
the occurrence of an event of Force Majeure within five (5) days after such
event has commenced to occur, then the Rent Start Date shall only be extended
by the amount of delay that occurs after Tenant actually gives written notice
to Landlord of the occurrence of the event of Force Majeure in question.
1.3. LEASE TERM: The Lease Term shall commence on the Commencement
Date and shall continue until the tenth (10th) anniversary of the Rent Start
Date (unless the Lease Term is extended pursuant to paragraph 2.4 hereof).
1.4. PROPERTY: The term "Property" shall mean that real property shown
on the site plan attached hereto as EXHIBIT "A" and all improvements now or
hereafter located thereon, including, without limitation, the five (5)
buildings presently located thereon, including, without limitation, the give
(5) buildings presently located thereon, the aggregate gross leasable area of
which is approximately 295,271 square feet (the "Property Gross Leasable
Area"), allocated among the five buildings as shown on the attached EXHIBIT
"A"; provided, however, that Landlord may change the boundaries and
composition of the Property by removing or adding land and/or buildings and
thereafter the term "Property" shall refer to such real property so enlarged
or reduced and the amount of the "Property Gross Leasable Area" shall be
appropriately adjusted.
<PAGE>
1.5. PREMISES: The term "Premises" shall mean the building structure
situated on the Property commonly known as Building A of Airport Technology
Park, 2890 De La Cruz Boulevard, Santa Clara, California, containing
approximately 68,708 square feet of gross leasable area (the "Premises Gross
Leasable Area") located as shown on EXHIBIT "A". Landlord and Tenant agree
that (i) all measurements of gross leasable area contained in this Lease are
conclusively agreed to be correct and binding upon the parties, even if a
subsequent measurement of any one of these areas determines that it is more
or less than the amount of area reflected in this Lease; and (ii) any such
subsequent determination that the area is more or less than shown in this
Lease shall not result in a change in any of the computations of rent,
improvement allowances, or other matters described in this Lease where gross
leasable area is a factor.
1.6. PERMITTED USE: The term "Permitted Use" shall mean the use of the
Premises for (i) research and development, production, sales, and general
administrative offices and other legal uses incidental thereto, and (ii) any
other legal use first approved in writing by Landlord.
1.7. TENANT'S MINIMUM LIABILITY INSURANCE COVERAGE: The term "Tenant's
Minimum Liability Insurance Coverage" shall mean Two Million Five Hundred
Thousand Dollars ($2,500,000).
1.8. TENANT'S ALLOCATED PARKING STALLS: The term "Tenant's Allocated
Parking Stalls" shall mean 274 parking stalls for the non-exclusive use of
Tenant. Notwithstanding the foregoing, or any other provision of this Lease,
the parties acknowledge that although Tenant is allocated a combined total of
620 parking spaces pursuant to this Lease and the Building C Lease, after a
restripping of the parking areas on the Property to increase to 1,155 the
number of spaces available, only a total of 603 spaces shall be available for
Tenant's use. In this regard the parties agree that the total number of
parking spaces allocated for Tenant's use under this Lease and under the
Building C Lease shall be reduced by 17; such spaces shall be proportionably
allocated between the Premises and the premises leased pursuant to the
Building A Lease. Landlord agrees, at the written request of Tenant, to
construct at Landlord's expense 17 additional parking spaces on the Property,
if Landlord can do so at a reasonable cost by relocating or removing
landscaped area or driveways, and the construction of such additional parking
spaces is permitted by all applicable Laws.
1.9. RETAINED REAL ESTATE BROKERS: The term "Retained Real Estate
Brokers" shall mean LaSalle Partners Limited and J.R. Parrish, Inc.
1.10. ADDRESS FOR NOTICES: The term "Address for Notices" shall mean
the following:
A. In the case of Landlord, such term shall mean The Equitable
Life Assurance Society of the United States, One Market Plaza, 1900 Steuart
Tower, San Francisco, California 94105, Attention: Property Management
Department.
B. In the case of Tenant, such term shall mean (i) before the
Commencement Date, its present address which is 881 Martin Avenue, Box 58123,
Santa Clara, California 95052; and (ii) after the Commencement Date, the
address of the Premises which is 2830 De La Cruz Boulevard, Santa Clara,
California 95050.
1.11. LEASE: The term "Lease" shall mean this printed lease, Exhibits
"A" (site plan), "B" (Approved Plans for Interior Improvements), "C"
(Interior Improvement Agreement), "D" (form of subordination agreement), all
of which are attached hereto and incorporated herein by this reference.
1.12. BUILDING C LEASE: The term "Building C Lease" shall mean that
lease dated as of June 1, 1989 between Landlord and Tenant, pursuant to which
Tenant leases from Landlord that certain building identified as Building C on
the site plan attached hereto as EXHIBIT "A" and which contains approximately
86,785 square feet, the address of which is 2830 De La Cruz Boulevard, Santa
Clara, California.
1.13. TENANT'S ALLOCATED SHARE: The term "Tenant's Allocated Share"
shall mean one hundred percent (100%).
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<PAGE>
1.14. CONTINUING TENANT DEFAULT: A "Continuing Tenant Default" shall
be deemed to exist when an "Event of Tenant's Default" (as defined in
paragraph 13.1) has occurred, and the underlying default or breach by Tenant
of its obligations which resulted in such Event of Tenant's Default has not
been completely cured.
1.15. ADDITIONAL DEFINITIONS: As used in this Lease or any addendum or
amendment thereto, the following terms shall have the meanings set forth in
paragraph 15.12: "Agreed Interest Rate", "Common Area", "Law", "Leasehold
Improvements", "Lender", "Private Restrictions" and "Trade Fixtures".
ARTICLE 2.
DEMISE AND ACCEPTANCE
2.1. DEMISE OF PREMISES: Landlord hereby leases to Tenant, and Tenant
leases from Landlord, for the Lease Term upon the terms and conditions of
this Lease, the Premises together with (i) the non-exclusive right to use no
more than the number of Tenant's Allocated Parking Stalls within the Common
Area (subject to the limitations set forth in paragraph 4.7), and (ii) the
non-exclusive right to use the Common Area for ingress to and egress from the
Premises. Tenant's lease of the Premises shall be subject to (i) all Laws,
(ii) all Private Restrictions, easements, and other matters of public record,
and (iii) the reasonable and non-discriminatory rules and regulations from
time to time promulgated by Landlord pursuant to paragraph 4.6.
2.2. DELIVERY AND ACCEPTANCE OF POSSESSION: Landlord shall deliver to
Tenant possession of the Premises on the Commencement Date in their presently
existing condition, broom clean. Tenant shall accept possession of the
Premises in its presently existing condition, "as-is" (except for latent
defects in the structural elements of the Premises), acknowledging that (i)
Tenant intends to do substantial renovation work and construct completely new
interior improvements pursuant to paragraph 2.3 hereof and the Interior
Improvement Agreement attached as EXHIBIT "C", and (ii) Landlord is obligated
to make certain repairs as set forth in the Interior Improvement Agreement.
2.3. CONSTRUCTION OF INTERIOR IMPROVEMENTS: Tenant shall construct
certain improvements for Tenant's use in the Premises pursuant to the terms
of the Interior Improvement Agreement executed concurrently with this Lease
by Landlord and Tenant and attached hereto as EXHIBIT "C".
2.4. OPTIONS TO EXTEND LEASE TERM: Landlord hereby grants to Tenant
two (2) options (each referred to as the "Option") to extend the Lease Term
each for a five (5) year period (the "Option Term"), on the following terms
and conditions:
A. Tenant must give Landlord notice in writing of its exercise
of the Option before the later to occur of (i) the two hundred fortieth
(240th) day before the date of the initial Lease Term (or then extended Lease
Term as the case may be) would end but for said exercise, or (ii) the seventh
(7th) day following the establishment of the fair market rent for the
Premises by appraisal pursuant to subparagraph 2.4F if such appraisal process
is commenced pursuant to subparagraphs 2.4E and 2.4F.
B. Tenant may not exercise the Option at any time that either
of the following is true: (i) a Continuing Tenant Default exists under this
Lease (unless caused by a subTenant of the original Tenant under this Lease
and such original Tenant is using reasonable efforts to cause such default to
be cured) or (ii) a Continuing Tenant Default exists under the Building A
Lease (unless caused by a subTenant or assignee of the original Tenant under
this Lease and such original Tenant is using reasonable efforts to cause such
default to be cured) and the same person or entity is the owner of record of
both the Premises and the real property leased pursuant to the Building C
Lease.
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<PAGE>
C. All terms and conditions of this Lease shall apply during
the Option Term, except that the Base Monthly Rent for the Option Term shall
be determined as provided in subparagraph 2.4D below.
D. The Base Monthly Rent for the Option Term with respect to
the Premises shall be the ninety-five percent (95%) of the fair market rent
for the Premises for the Option Term on the terms contained in this Lease as
of the commencement of the Option Term, determined pursuant to subparagraphs
2.4E and 2.4F. For purposes of this Lease, the term "fair market rent for
the Premises" shall mean the projected going market rent for the Premises as
of the commencement of the Option Term in question, including a provision for
periodic increases of such rent during the Option Term (which increases shall
be established as part of such fair market rent), taking into account the
value of all improvements in the Premises, regardless of whether made by
Landlord or Tenant (except for those Leasehold Improvements that Tenant has
the right to remove at the expiration of the Lease Term).
E. Tenant may not exercise the Option in question unless Tenant
has delivered to Landlord a written request (a "Rent Quote Request") that
Landlord state in writing Landlord's opinion of the fair market rent for the
Premises for the upcoming Option Term in question, which Rent Quote Request
may only be delivered and shall only be effective if delivered (i) no sooner
than fifteen (15) months before the expiration of the Lease Term, and (ii) no
later than thirteen (13) months prior to the expiration of the Lease Term.
After receipt of a Rent Quote Request and no later than twelve (12) months
prior to the expiration of the Lease Term, Landlord shall deliver to Tenant a
written statement setting forth Landlord's opinion of the fair market rent
for the Premises for the Option Term in question (a "Landlord's Rent Quote").
For a period of thirty (30) days following delivery to Tenant of Landlord's
Rent Quote (the "Negotiation Period"), Landlord and Tenant shall confer to
attempt to reach agreement upon the fair market rent for the Premises for the
Option Term in question. If Landlord and Tenant are unable to reach
agreement in writing within the Negotiation Period, for purposes of
establishing the Base Monthly Rent for the Option Term in question, the fair
market rent for the Premises shall be deemed to be the amount stated in
Landlord's Rent Quote unless Tenant delivers to Landlord during the
Negotiation Period a written notice which states the following: (i) Tenant
requires that the fair market rent for the Premises for the Option Term in
question be established by the appraisal process described in subparagraph
2.4F; and (ii) the name, address, and qualifications of the appraiser
selected by Tenant for purposes of the appraisal process described in
subparagraph 2.4F ("Tenant's Appraisal Demand"). If Tenant so timely
delivers to Landlord a Tenant's Appraisal Demand, the Base Monthly Rent for
the Option Term in question shall be established based on the result of the
appraisal process described in subparagraph 2.4F.
F. If Tenant delivers to Landlord a Tenant's Appraisal Demand
during the Negotiation Period, then the fair market rent for the Premises
shall be determined by three (3) real estate appraisers, all of whom shall be
members of the American Institute of Real Estate Appraisers with not less
than five (5) years experience appraising real property (other than
residential or agricultural property) located in Santa Clara County,
California, in accordance with the following procedures:
(1) One of the appraisers shall be the appraiser identified
in Tenant's Appraisal Demand. Within ten (10) days of receipt of Tenant's
Appraisal Demand, Landlord shall select its appraiser and notify Tenant, in
writing, of the name, address and qualifications of an appraiser selected by
it. Failure by Landlord to select a qualified appraiser within said ten (10)
day period shall be deemed a waiver of its right to select a second appraiser
on its own behalf and Tenant shall select a second appraiser on behalf of
Landlord within five (5) days after the expiration of said ten (10) day
period. Within ten (10) days from the date the second appraiser shall have
been appointed, the two (2) appraisers selected by the parties shall appoint
a third appraiser. If the two appraisers fail to select a third qualified
appraiser, the third appraiser shall be selected by the American Arbitration
Association at the request of either party or, if there is then no American
Arbitration Association or if it refuses to perform this function, then at
the request of either Landlord or Tenant, the third appraiser shall be
appointed by the then Presiding Judge of the Superior Court of the State of
California for the County of Santa Clara.
(2) The three (3) appraisers so selected shall meet in San
Jose,
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<PAGE>
California, not later than twenty (20) days following the selection of the
third appraiser. At said meeting the appraisers shall attempt to determine
the fair market rent for the Premises for the Option Term in question.
(3) If the appraisers are unable to complete their
determinations in one meeting, they may continue to consult at such times as
they deem necessary for a fifteen (15) day period from the date of their
first meeting, in an attempt to have at least two (2) of them agree. If, at
the initial meeting or at any time during said fifteen (15) day period, two
(2) or more of the appraisers agree on the fair market rent for the Premises,
such agreement shall be determinative and binding on the parties hereto, and
the agreeing appraisers shall, in simple letter form executed by the agreeing
appraisers, forthwith notify both Landlord and Tenant of the amount set by
such agreement.
(4) If two (2) or more appraisers do not agree within said
fifteen (15) day period as set forth above, then each appraiser shall, within
five (5) days after the expiration of said fifteen (15) day period, submit
his independent appraisal in simple letter form to Landlord and Tenant
stating his determination of the fair market rent for the Premises for the
Option Term in question. Landlord and Tenant shall then determine the fair
market rent for the Premises for the Option Term by determining the average
of the fair market rent set by each of the appraisers; provided, however, if
the lowest appraisal is less than eighty-five percent (85%) of the middle
appraisal then such lowest appraisal shall be disregarded, and/or if the
highest appraisal is greater than one hundred fifteen percent (115%) of the
middle appraisal then such highest appraisal shall be disregarded. If any
appraisal is disregarded, then the average shall be determined by computing
the average set by the other appraisals that have not been disregarded. For
purposes of determining the relative amount of the appraisals to implement
the provisions of this subparagraph requiring that an appraisal be
disregarded if it is too high or too low, the amount of an appraisal that
calls for periodic rent increases based upon an index (E.G., the Consumer
Price Index) shall be determined by assuming that such index will increase at
the same average annual rate during the option period in question that such
index increased on an average annual basis during the five (5) year period
preceding the commencement of the option period in question.
(5) Each party shall bear the fees and expenses of the
appraisers selected by or for it, and the fees and expenses of the third
appraiser shall be borne fifty percent (50%) by Landlord and fifty percent
(50%) by Tenant.
ARTICLE 3.
RENT
3.1. BASE MONTHLY RENT: Commencing on the Rent Start Date and
continuing thereafter throughout the initial Lease Term, Tenant shall pay to
Landlord a monthly rent (which rent is referred to as the "Base Monthly
Rent"), which shall be the following:
A. No Base Monthly Rent shall be payable for the period
beginning on the Rent Start Date and ending on the last day of the sixth
(6th) month of the Lease Term.
B. The Base Monthly Rent for the period beginning on the first
day of the seventh (7th) month of the Lease Term and ending on the last day
of the twenty-fourth (24th) month of the Lease Term is Forty Eight Thousand
Ninety Six Dollars ($48,096) (I.E., $0.70 per square foot per month).
C. The Base Monthly Rent for the period beginning on the first
day of the twenty-fifth (25th) month of the Lease Term and ending on the last
day of the forty-eighth (48th) month of the Lease Term is Fifty Eight
Thousand Four Dollars ($58,402) (I.E., $0.85 per square foot per month).
D. The Base Monthly Rent for the period beginning on the first
day of the forty-ninth (49th) month of the Lease Term and ending on the last
day of the seventy-second
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(72nd) month of the Lease Term is Sixty-One Thousand Eight Hundred
Thirty-Seven Dollars ($61,837.90) (I.E., $0.90 per square foot per month).
E. The Base Monthly Rent for the period beginning on the first
day of the seventy-third (73rd) month of the Lease Term and ending on the
last day of the one hundred twentieth (120th) month of the Lease Term is
Sixty-Five Thousand Two Hundred Seventy-Three Dollars ($65,273) (I.E., $0.95
per square foot per month).
F. For purposes of applying the provisions of this paragraph
3.1, the term "month of the Lease Term" shall mean that period which begins
on that day of the calendar month in question which corresponds to the Rent
Start Date and which continues for thirty (30) or thirty-one (31) days until
the day of the next calendar month which precedes the day in that calendar
month which corresponds to the Rent Start Date. By way of example only, if
it is assumed that the Rent Start Date is September 15, 1989, then for
purposes of this paragraph 3.1 (i) the first month of the Lease Term would
commence September 15 and end on October 14, 1989; and (ii) the seventh (7th)
month of the Lease Term would commence on March 15 and end on April 14, 1990.
3.2. ADDITIONAL RENT: Commencing on the Rent Start Date and
continuing thereafter throughout the Lease Term, Tenant shall pay, as
additional rent (the "Additional Rent"), (i) Tenant's share of Common
Operating Expenses as required by paragraph 6.3, (ii) Tenant's share of the
Real Property Taxes as required by paragraph 8.2, (iii) Landlord's share of
the net consideration received by Tenant upon certain assignments and
sublettings as required by paragraph 14.1, (iv) any late charges or interest
due Landlord pursuant to paragraph 3.4, (v) Tenant's share of the amortized
cost of certain additional improvements as provided in paragraph 5.4, and
(vi) any other charges due Landlord pursuant to this Lease.
3.3. PAYMENT OF RENT: All rent required to be paid in monthly
installments shall be paid in advance on the first day of each calendar month
during the Lease Term. All rent shall be paid in lawful money of the United
States, without any abatement, deduction or offset whatsoever (except as
permitted by paragraphs 11.4 and 12.2), and without any prior demand
therefor, to Landlord at its address set forth above or at such other place
as Landlord may designate from time to time. Tenant's obligation to pay rent
shall be prorated as of the Rent Start Date and at expiration or earlier
termination of the Lease Term such that Tenant shall not be required to pay
Base Monthly Rent or Additional Rent for any period preceding the Rent Start
Date or following the expiration or earlier termination of the Lease Term
(except in the case of a termination of this Lease as a result of an Event of
Tenant's Default).
3.4. LATE CHARGE AND INTEREST ON RENT IN DEFAULT: Tenant acknowledges
that the late payment by Tenant of any monthly installment of Base Monthly
Rent or any Additional Rent will cause Landlord to incur certain costs and
expenses not contemplated under this Lease, the exact amount of which are
extremely difficult or impractical to fix. Such costs and expenses will
include, without limitation, administration and collection costs and
processing and accounting expenses. Therefore, if any such Base Monthly Rent
or Additional Rent is not received by Landlord from Tenant within five (5)
days after Landlord delivers written notice to Tenant that such amount is
delinquent, Tenant shall immediately pay to Landlord a late charge equal to
five percent (5%) of such delinquent rent. Landlord and Tenant agree that
this late charge represents a reasonable estimate of such costs and expenses
and is fair compensation to Landlord for its loss suffered by Tenant's
failure to make timely payment. In no event shall this provision for a late
charge be deemed to grant to Tenant a grace period or extension of time
within which to pay any rent or prevent Landlord from exercising any right or
remedy available to Landlord upon Tenant's failure to pay any rent due under
this Lease in a timely fashion, including the right to terminate this Lease.
If any rent remains delinquent for a period in excess of thirty (30) days
after Landlord delivers written notice to Tenant that such amount is
delinquent, in addition to such late charge, Tenant shall pay to Landlord
interest on any rent that is not paid when due at the Agreed Interest Rate
following the date such amount became due until paid.
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ARTICLE 4.
USE OF PREMISES
4.1. LIMITATION ON TYPE: Tenant shall use the Premises solely for the
Permitted Use (as described in paragraph 1.6). Tenant shall not do or permit
anything to be done in or about the Premises or Common Area which will (i)
interfere with the rights of other occupants of the Property, (ii) cause
structural damage to the Premises and Tenant fails to promptly commence and
diligently pursue to completion the repair of such damage, or (iii) cause
damage to any part of the Premises or Property except to the extent
reasonably necessary for the installation of Tenant's equipment and trade
fixtures and Tenant fails to promptly commence and diligently pursue to
completion the repair of such damage. Tenant shall not operate any equipment
within the Premises which will (i) injure, vibrate or shake the Premises,
(ii) overload existing electrical systems or other mechanical equipment
servicing the Premises, or (iii) impair the efficient operation of the
sprinkler system or the heating, ventilating or air conditioning ("HVAC")
equipment servicing the Premises, or (iv) damage, overload or corrode the
sanitary sewer system. Tenant shall not attach, hang or suspend anything
from the ceiling, roof, walls or columns of the Premises or set any load on
the floor in excess of approved structural limits as defined by Landlord's
architect. Any dust, fumes, or waste products generated by Tenant's use of
the Premises shall be contained and disposed so that they do not (i) create a
fire or health hazard, (ii) damage the Premises, or (iii) interfere with the
businesses of other Tenants of the Property. All noise or odors generated by
Tenant's use of the Premises shall be contained or muffled so that they do
not interfere with the businesses of other Tenants of the Property. Tenant
shall not (i) change the exterior of the Premises (subject to Tenant's right
to install signs pursuant to paragraph 4.5), or (ii) install any equipment or
antennas on or make any penetrations of the exterior or roof of the Premises
without the prior written consent of Landlord. Tenant shall not commit nor
permit to be committed any waste in or about the Premises, and Tenant shall
keep the Premises in a neat, clean, attractive and orderly condition, free of
any objectionable noises, odors, dust or nuisances which may disturb the
quiet enjoyment of other Tenants or occupants of the Property.
Notwithstanding the foregoing restrictions, the parties agree as follows:
A. Tenant may bring military fighting vehicles onto the first
floor of the Premises so long as (i) Tenant puts into place such reinforcing
as is reasonably necessary to upgrade the floor load capacity so that it will
accept such fighting vehicles; and (ii) Tenant repairs any damage to the
Premises caused by the entry of such vehicles.
B. Tenant may install antennas, radio "dishes" or other
electronic equipment reasonably necessary for the conduct of Tenant's
business upon the roof of the Premises so long as (i) such installations are
done in compliance with all Laws and Private Restrictions; (ii) such
installations are accomplished in a manner which does not compromise the
watertight integrity of the roof; (iii) all damage to the Premises caused by
such installation is repaired by Tenant; and (iv) any such equipment is
properly and effectively screened from view in a manner reasonably acceptable
to Landlord.
C. In the event Tenant desires to operate equipment within the
Premises that will or may overload existing mechanical, electrical, or other
systems, Tenant may do so only if it first installs, at its sole cost, all
necessary modifications, repairs or upgrades of existing systems so that such
equipment may be operated without overloading such systems as so modified by
Tenant.
4.2. COMPLIANCE WITH LAWS AND PRIVATE RESTRICTIONS: Tenant shall not
use or permit any person to use the Premises in any manner which violates any
Laws or Private Restrictions. Tenant shall abide by and promptly observe and
comply with all Laws and Private Restrictions and shall indemnify and hold
Landlord harmless from any liability resulting from Tenant's failure to do so.
4.3. INSURANCE REQUIREMENTS: Tenant shall not use or permit any
person to use the Premises or Common Area in any manner which will cause a
cancellation of any insurance policy covering the Premises. Tenant shall not
sell, or permit to be kept, used, or sold in or about
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the Premises any article which may be prohibited by the standard form of fire
insurance policy; provided, however, that Tenant may bring military fighting
vehicles onto the first floor of the Premises as permitted pursuant to
subparagraph 4.1A. Tenant shall comply with all reasonable requirements of
any insurance company, insurance underwriter, or Board of Fire Underwriters
which are necessary to maintain, at reasonable rates, the insurance coverage
carried by Landlord pursuant to this Lease.
4.4. OUTSIDE AREAS: No materials, supplies, storage tanks or
containers, equipment, finished products or semi-finished products, raw
materials, inoperable vehicles or articles of any nature shall be stored upon
or permitted to remain outside of the Premises except in fully fenced and
screened areas outside the Premises which have been designed for such purpose
and have been approved in writing by Landlord for such use by Tenant;
provided, however, that Tenant may bring military fighting vehicles onto the
first floor of the Premises as permitted pursuant to subparagraph 4.1A.
4.5. SIGNS: Tenant shall not place on any portion of the Premises or
the Property any sign, placard, lettering in or on windows, banner, displays
or other advertising or communicative material which is visible from the
exterior of the Premises without the prior written approval of Landlord. All
such approved signs shall strictly conform to all Laws and Private
Restrictions and shall be installed at the expense of Tenant. If Landlord so
elects, Tenant shall, at the expiration or sooner termination of this Lease,
remove all signs installed by it and repair any damage caused by such
removal. Tenant shall at all times maintain such signs in good condition and
repair. Upon Tenant's written request and at Tenant's cost and expense,
Landlord shall remove both of the Airport Technology Park monument signs
located on De La Cruz Boulevard. Subject to Landlord's prior written
approval of Tenant's specific design plan, (i) Tenant shall have the right to
install a monument sign at the entrance to the Premises, and at the two
entrances to Airport Technology Park, and (ii) Tenant shall have the right to
install signs on the exterior of the Premises. Approved signs installed by
Tenant may be illuminated in compliance with the provisions of applicable
laws and Private Restrictions.
4.6. RULES AND REGULATIONS: Landlord may from time to time promulgate
reasonable and nondiscriminatory rules and regulations applicable to all
occupants of the Property for the care and orderly management of the Property
and the safety of its Tenants and invitees. Such rules and regulations shall
be binding upon Tenant upon delivery of a copy thereof to Tenant, and Tenant
agrees to abide by such rules and regulations. If there is a conflict
between the rules and regulations and any of the provisions of this Lease,
the provisions of this Lease shall prevail. Landlord shall not be
responsible for the violation by any other Tenant of the Property of any such
rules and regulations.
4.7. PARKING: Tenant is allocated and shall have the non-exclusive
right to use (without charge in addition to the Base Monthly Rent) no more
than the number of parking spaces contained within the Property described in
paragraph 2.1 for its use and the use of its employees and invitees, the
location of which may be designated from time to time by Landlord but shall
be on the Property and within reasonable proximity to the Premises. Tenant
shall not at any time use or permit its employees or invitees to use more
parking spaces than the number so allocated to Tenant or to park or permit
the parking of its vehicles or the vehicles of others in any portion of the
Property not designated by Landlord as a non-exclusive parking area.
Landlord shall not oversubscribe the parking within the Property, and shall
assure that the total number of spaces committed to the non-exclusive use of
all Tenants of the Property shall not exceed the total number of spaces
within the Common Area. Of the parking spaces allotted to Tenant pursuant to
paragraph 2.1, Tenant shall have the right to designate a reasonable number
of such spaces as reserved spaces for its executives, which shall not exceed
ten percent (10%) of the total of spaces and which shall be in immediate
proximity to the Premises. In the event Tenant elects to install a patio as
set forth in subparagraph 5.6A, the number of parking spaces allocated to
Tenant shall be reduced based upon the square footage of said patio, which at
the time this Lease is executed is anticipated to be a reduction in eight (8)
parking spaces. If Landlord grants to any other Tenant the exclusive right
to use any particular parking space(s), neither Tenant nor its employees or
invitees shall use such spaces. Within ten (10) business days after written
request therefor from Landlord, Tenant shall furnish Landlord with a list of
its and its employees vehicle license numbers and Tenant shall thereafter
notify Landlord of any change in such list within five
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(5) days after each such change occurs. Tenant shall have the right, at
Tenant's option, to provide its employees with stickers or other
identification markers or tags to be affixed to or on the employees'
automobiles or other vehicles, evidencing the right of such employees to use
the parking area. Such stickers shall be subject to prior review and
approval by Landlord, which shall not be unreasonably withheld or delayed.
Tenant shall furnish to Landlord a list of identifying numbers for the
stickers distributed from time to time by Tenant to its employees. If Tenant
elects to use such stickers as provided herein, Tenant shall not be obligated
to furnish Landlord with a list of vehicle license numbers for its employees,
for as long as Tenant maintains such sticker system of identification.
Landlord reserves the right, after having given Tenant reasonable notice, to
have any vehicles owned by Tenant or its employees or invitees utilizing
parking spaces in excess of the parking spaces allowed for Tenant's use to be
towed away at Tenant's cost. All trucks and delivery vehicles shall be (i)
parked at the rear of the Premises, (ii) loaded and unloaded in a manner
which does not interfere with the businesses of other occupants of the
Property, and (iii) permitted to remain on the Property only so long as is
reasonably necessary to complete loading and unloading. In the event
Landlord elects or is required by any Law to limit or control parking in the
Property, whether by validation of parking tickets or any other method of
assessment, Tenant agrees to participate in such validation or assessment
program under such reasonable rules and regulations as are from time to time
established by Landlord, so long as such participation does not result in any
increase in costs to Tenant.
4.8. WINDOW COVERINGS: To the extent Tenant elects to use window
coverings visible from the exterior of the Premises, Tenant shall use the
same window covering to cover all windows Tenant so elects to cover in the
Premises to maintain a consistent and uniform exterior appearance.
4.9. OUTSIDE SALES: Tenant shall not conduct or permit to be
conducted on any portion of the Common Area any sale of any kind, including
(i) any public or private auction, fire sale, going-out-of-business sale,
distress sale or other liquidation sale, or (ii) any so-called "flea market",
open-air market or any other similar activity. Notwithstanding the
foregoing, Tenant shall be allowed to conduct occasional sales outside of the
Premises on that part of the Common Area that is in close proximity to the
Premises so long as each of the following conditions is satisfied with
respect to each such sale: (i) Landlord is given at least two (2) business
days prior written notice of the date of any such sale; (ii) such sale does
not violate any Laws; (iii) such sale is conducted in a manner that does not
interfere with the rights of other occupants of the Property; (iv) Tenant
provides all necessary security, cleans up all debris and repairs any damage
caused by such sale; and (v) the purpose of such sale is to permit employees
of Tenant to purchase or to receive free of charge property of Tenant.
ARTICLE 5.
TRADE FIXTURES AND LEASEHOLD IMPROVEMENTS
5.1. TRADE FIXTURES: Throughout the Lease Term, Tenant shall provide,
install, and maintain in good condition all Trade Fixtures required in the
conduct of its business in the Premises. All Trade Fixtures shall remain
Tenant's property.
5.2. LEASEHOLD IMPROVEMENTS: The following provisions govern
Leasehold Improvements constructed by Tenant:
A. Tenant shall not construct any Leasehold Improvements or
otherwise alter the Premises without Landlord's prior approval if such action
results in the demolition, removal, or material alteration of existing
Improvements (including partitions, wall and floor coverings, ceilings,
lighting fixtures or other utility installations) and if the cost of such
construction or alteration exceeds Fifteen Thousand Dollars ($15,000) per
work of improvement or if the cost of Leasehold Improvements done, under
construction, or for which approval is sought during any calendar quarter
exceeds Twenty-Five Thousand Dollars ($25,000). With respect to any
Leasehold Improvements which must be approved by Landlord pursuant to the
immediately
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preceding sentence, Tenant shall not commence construction of such Leasehold
Improvements until Landlord shall have first approved the plans and
specifications therefor, which approval shall be deemed given if not denied
in writing within ten (10) working days after Landlord shall have received
Tenant's request for such approval. In no event shall Tenant make any
alterations to the Premises which could significantly affect the structural
integrity or the exterior design of the Premises without Landlord's prior
approval.
B. All Leasehold Improvements requiring Landlord's approval
shall be installed by Tenant in substantial compliance with the approved
plans and specifications therefor. All construction undertaken by Tenant
shall be done in accordance with all Laws and in a good and workmanlike
manner using materials of good quality. Tenant shall not commence
construction of any Leasehold Improvements until (i) all required
governmental approvals and pe-rmits shall have been obtained, (ii) all
requirements regarding insurance imposed by this Lease have been satisfied,
and (iii) if reasonably requested by Landlord, Tenant shall have obtained
contingent liability and broad form builders risk insurance in an amount
reasonably satisfactory to Landlord if there are any perils relating to the
proposed construction not covered by insurance carried pursuant to Article 9.
If Landlord so requests in writing with respect to Leasehold Improvements
requiring Landlord's prior approval, Tenant shall inform Landlord of Tenant's
scheduled date for commencement of construction at least five (5) days prior
to such date of commencement.
C. At all times during the Lease Term, (i) Tenant shall
maintain all plans and change orders prepared in connection with the
construction of any Leasehold Improvements which required a building permit
or other governmental approval, and (ii) Tenant shall provide to Landlord
copies of such plans and change orders (and, to the extent Tenant causes such
to be prepared for its own use, "As-Built" plans) at any time that Landlord
requests copies thereof.
D. All Leasehold Improvements shall remain the property of
Tenant during the Lease Term. Tenant shall have the right to remove only the
following kinds of Leasehold Improvements so long as it repairs all damage
caused by the installation thereof and returns the Premises to the condition
existing prior to the installation of such Leasehold Improvements: (i)
built-in cabinets, file drawers and bookcases; (ii) computer room air
conditioning; (iii) canteen equipment; (iv) office cubicle systems; and (v)
ornamental statues. At the expiration or sooner termination of the Lease
Term, all Leasehold Improvements that Tenant does not remove shall be
surrendered to Landlord as a part of the realty and shall then become
Landlord's property, and Landlord shall have no obligation to reimburse
Tenant for all or any portion of the value or cost thereof. However, if
Landlord so requires, at the expiration or earlier termination of the Lease
Term, Tenant shall remove any Leasehold Improvements designated for removal
by Landlord and shall restore the Premises to the condition existing prior to
the installation of such Leasehold Improvements to the extent necessary to
return the Premises to substantially the same condition that existed on the
completion of the Interior Improvements constructed pursuant to EXHIBIT "C",
ordinary wear and tear excepted. Notwithstanding the foregoing:
(1) Tenant shall only be required to remove Leasehold
Improvements for which either of the following is true: (i) such Leasehold
Improvements were not approved in writing by Landlord; or (ii) at the time
approval was given by Landlord, Landlord informed Tenant in writing that
Landlord would require that such Leasehold Improvements be removed at the
termination of the Lease Term.
(2) Tenant may cause interior partitions to be moved,
reconfigured, or removed altogether, or cause interior offices to be deleted
or added, all without the obligation to restore such partitions or interior
offices to any prior condition upon expiration or termination of the Lease.
5.3. ALTERATIONS REQUIRED BY LAW: Tenant shall make any alteration,
addition or change of any sort, whether structural or otherwise, to the
Premises that is required by any Law because of (i) a specific use or change
of use made of the Premises by Tenant (which alteration, addition or change
is not generally required to be made by owners or Tenants of other properties
similar to the Premises), (ii) Tenant's application for any permit or
governmental approval, or (iii) Tenant's construction or installation of any
Leasehold Improvements or Trade Fixtures.
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5.4. LANDLORD'S IMPROVEMENTS: All fixtures, improvements or equipment
which are installed, constructed on or attached to the Property by Landlord
at its expense shall become a part of the realty and belong to Landlord.
Tenant shall pay additional rent in the event Landlord, in its sole
discretion, elects to make any of the following kinds of capital improvements
to the Property: (i) capital improvements required to be constructed in
order to comply with any Law not in effect or applicable to the Property as
of the Commencement Date; (ii) modification of existing or construction of
additional capital improvements or building service equipment for the purpose
of reducing the consumption of utility services or Common Operating Expenses
of the Property; (iii) replacement of capital improvements or building
service equipment existing as of the Commencement Date when required because
of normal wear and tear; and (iv) the amount of "deductibles" paid by
Landlord for the restoration of any part of the Property that has been
damaged to the extent such "deductible" is not included within Common
Operating Expenses. With respect to any expenditure in excess of Fifty
Thousand Dollars ($50,000) for which Landlord seeks contribution pursuant to
this paragraph 5.4 from Tenant, prior to incurring such expense, Landlord
shall notify Tenant of the nature and estimated amount of such expenditure
and, if Tenant so requests, shall provide Tenant with such information upon
which such cost estimate is based for Tenant's approval. The amount of
additional rent Tenant is to pay with respect to each such capital
improvement shall be determined as follows:
A. Tenant shall have the option to pay in cash an amount
equal to Tenant's Allocated Share of all costs paid by Landlord to construct
the improvements in question fairly allocable to the Premises (including
financing costs) in cash within thirty (30) days after the improvement has
been substantially completed and Landlord has notified Tenant of the cost of
such improvement and the amount of Tenant's required contribution. If Tenant
does not exercise such option to pay such amount in cash, then the provisions
of subparagraph 5.4B shall apply.
B. All costs paid by Landlord to construct such
improvement (including financing costs) shall be amortized on a straight line
basis over the useful life of such improvement (determined in accordance with
generally accepted accounting principles) with interest on the unamortized
balance at the then prevailing market rate Landlord would pay if it borrowed
funds to construct such improvement from an institutional lender, and
Landlord shall inform Tenant of the monthly amortization payment required to
so amortize such costs, and shall also provide Tenant with the information
upon which such determination is made. As additional rent, Tenant shall pay
an amount equal to Tenant's Allocated Share of that portion of such monthly
amortization payment fairly allocable to the Premises (as reasonably
determined by Landlord) for each month after such improvement is completed
until the first to occur of (i) the expiration of the Lease Term (as the same
may be extended), or (ii) the end of the term over which such costs were
amortized, which amount shall be due at the same time the Base Monthly Rent
is due.
C. Notwithstanding anything contained in this paragraph
5.4, the additional rent Tenant is to pay with respect to any modification of
existing or construction of additional capital improvements or building
service equipment for the purpose of reducing the consumption of utility
expenses or Common Operating Expenses of the Property shall not for any
period exceed the actual amount of savings in Additional Rent realized by
Tenant as a result of such modification or construction.
5.5. LIENS: Tenant shall keep the Premises and the Property free from
any liens and shall pay when due all bills arising out of any work performed,
materials furnished, or obligations incurred by Tenant, its agents, employees
or contractors relating to the Premises. If any claim of lien is recorded,
Tenant shall bond against or discharge the same within thirty (30) days after
the same has been recorded against the Premises and/or the Property. Should
any lien be filed against the Premises or any action commenced affecting
title to the Premises, the party receiving notice of such lien or action
shall immediately give the other party written notice thereof.
5.6. MODIFICATIONS TO THE PREMISES: Subject to Landlord's prior
written approval, and the provisions of paragraphs 5.2 and 5.3 hereof, Tenant
shall have the right to:
A. Modify the parking area behind the Premises, which area is
highlighted on the attached EXHIBIT "A", to construct a patio;
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B. Install a datalink approximately twenty (20) inches wide
between the Premises and Building A;
C. Install up to a total of four (4) flagpoles allocated
between the front of the Premises and the front of the premises leased
pursuant to the Building A Lease; and
D. Fill in existing loading docks so long as (i) existing
drainage systems serving such loading docks are appropriately capped; (ii)
such fill is accomplished in a manner that the loading docks may be restored
to their condition existing as of the Commencement Date upon expiration of
the Lease Term, and (iii) Tenant agrees to restore such loading docks to the
condition existing as of the Commencement Date upon the expiration of the
Lease Term.
E. Trim or relocate on the Property to a new location approved
by Landlord any trees, shrubs or other landscaping that obscures any sign
installed on the Property by Tenant.
ARTICLE 6.
REPAIR AND MAINTENANCE
6.1. TENANT'S OBLIGATION TO MAINTAIN: Except as otherwise provided in
paragraph 6.2 and in Article 11 regarding the restoration of damage caused by
fire and other perils, Tenant shall, at all times during the Lease Term,
clean, keep, and maintain in good order, condition, and repair the Premises
and every part thereof, through regular inspections and servicing, including,
but not limited to, (i) all plumbing and sewage facilities (including all
sinks, toilets, faucets and drains), and all ducts, pipes, vents or other
parts of the HVAC or plumbing system, (ii) all fixtures, interior walls,
floors, carpets and ceilings, (iii) all windows, doors, entrances, plate
glass, showcases and skylights (including cleaning both interior and exterior
surfaces), (iv) all electrical facilities and all HVAC equipment and other
mechanical systems (including all lighting fixtures, lamps, bulbs, tubes,
fans, vents, exhaust equipment and systems), (v) any automatic fire
extinguisher equipment in the Premises, and (vi) the roof membrane (including
any necessary resurfacing or patching to preserve the membrane or to repair
leaks except that Tenant shall not be required to make any repair to the
extent such repair is required because of Landlord's repair or maintenance of
the structural roof system). Tenant shall replace any damaged or broken
glass in the Premises (including all interior and exterior doors and windows)
with glass of the same kind, size and quality. Tenant shall repair any
damage to the Premises (including exterior doors and windows) caused by
vandalism or any unauthorized entry. Tenant shall maintain continuously
throughout the Lease Term a service contract for the maintenance of all HVAC
equipment serving the Premises with a licensed HVAC repair and maintenance
contractor, which contract provides for the periodic inspection and servicing
of the HVAC equipment at least once every sixty (60) days during the Lease
Term. Tenant shall also maintain continuously throughout the Lease Term a
service contract for the washing of all windows (both interior and exterior
surfaces) in the Premises with a contractor, which contract provides for the
periodic washing of all such windows on such basis as shall keep the exterior
appearance of the Premises in first class condition, but no less frequently
than once every calendar year. If and when Landlord so requests in writing,
Tenant shall furnish Landlord with copies of all such service contracts. All
repairs and replacements required of Tenant shall be promptly made with
materials of good quality. If the work affects the structural parts of the
Premises or if the estimated cost of any item of repair or replacement is in
excess of Fifteen Thousand Dollars ($15,000), then Tenant shall first obtain
Landlord's written approval of the scope of work, plans therefor, and
materials to be used, except in the case of emergency in which event Tenant
shall within a reasonable period of time after performing the work, notify
Landlord of the scope of the work performed and the materials used, and shall
furnish Landlord with the plans therefor.
6.2. LANDLORD'S OBLIGATION TO MAINTAIN: Landlord, at its cost
without right of reimbursement from Tenant, shall be responsible for the
maintenance, repair, and replacement of the structural parts of the Premises
(I.E., foundation, first and second story floor slab and second story floor
deck, load-bearing walls, and structural roof system, but excluding roof
membrane) except to the extent that (i) the same is necessitated by the wrongful
or negligent act or omission
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of Tenant, its subTenants, or their respective agents, employees,
contractors, or invitees, or (ii) reimbursement is permitted pursuant to
paragraph 5.4 hereof. Landlord at its cost without right of reimbursement
from Tenant, shall repair damage to interior improvements and Leasehold
Improvements that have been approved by Landlord pursuant to the terms
hereof, or damage to the roof membrane of the Premises if caused by the
maintenance work required to be performed by Landlord pursuant to the
provisions of this paragraph. Landlord shall repair, maintain, operate and
replace when necessary the Common Area, with such right of reimbursement from
Tenant as is specified in paragraphs 5.4 and 6.3. The parties acknowledge
that the air-conditioning units located on the roof of the Premises were
installed when the Building was constructed and subsequently have not
operated. Landlord agrees to make any repairs necessary to put such units in
good operating condition, if within the six month period following the
Commencement Date, Tenant notifies Landlord in writing of the need for such
repairs. Landlord shall not be responsible for repairs required by an
accident, fire or other peril except as otherwise required by Article 11, or
for damage caused to any part of the Property by any act, negligence or
omission of Tenant or its agents, contractors, employees or invitees.
Landlord may engage contractors of its choice to perform the obligations
required of it by this Article, and the necessity of any expenditure to
perform such obligations shall be at the sole discretion of Landlord.
6.3. TENANT'S OBLIGATION TO REIMBURSE: As additional rent, commencing
on the Rent Start Date and continuing throughout the remainder of the Lease
Term, Tenant shall pay Tenant's Allocated Share of all Common Operating
Expenses fairly allocable to the Premises including (i) all Common Operating
Expenses paid with respect to the maintenance, repair, replacement and use of
the Premises and (ii) a proportionate share (based on the Premises Gross
Leasable Area as a percentage of the Property Gross Leasable Area) of all
Common Area Expenses which relate to the Property in general and are not
fairly allocable to any one building on the Property. Landlord agrees that
it shall not recover from all Tenants of the Property more than one hundred
percent (100%) of the actual Common Operating Expenses incurred by Landlord
for the period in question. As provided in paragraph 3.3, Tenant's
obligation to pay Tenant's Allocated Share of Common Operating Expenses
fairly allocable to the Premises shall be prorated as of the Rent Start Date
and at the expiration or earlier termination of the Lease Term, and if Tenant
has paid any amount on account of Common Operating Expenses relating to a
period that is not within the Lease Term (E.G., prepayment of insurance
premiums for one year), such amount shall be reimbursed to Tenant in
connection with such proration. Payment shall be made by whichever of the
following methods is from time to time designated by Landlord, and Landlord
may change the method of payment at any time so long as (i) Landlord gives
Tenant at least sixty (60) days prior written notice, and (ii) the method is
not changed more than once in any calendar year. Tenant shall pay such share
of the actual Common Operating Expenses incurred or paid by Landlord but not
theretofore billed to Tenant within thirty (30) days after receipt of a
written bill therefor from Landlord, on such periodic basis as Landlord shall
designate, but in no event more frequently than once a month. Alternatively,
(i) Landlord shall deliver to Tenant Landlord's reasonable estimate of the
Common Operating Expenses it anticipates will be paid or incurred for the
calendar year in question, (ii) during such calendar year, Tenant shall pay
such share of the estimated Common Operating Expenses in advance in monthly
installments as required by Landlord due with the installments of Base
Monthly Rent, and (iii) within ninety (90) days after the end of each
calendar year, Landlord shall furnish to Tenant a statement in reasonable
detail of the actual Common Operating Expenses paid or incurred by Landlord
during the just ending calendar year and thereupon there shall be an
adjustment between Landlord and Tenant, with payment to Landlord or credit by
Landlord against the next installment of Base Monthly Rent, as the case may
require, within thirty (30) days after delivery by Landlord to Tenant of said
statement, so that Landlord shall receive the entire amount of Tenant's share
of all Common Operating Expenses for such calendar year and no more. Tenant
and its agents (including accountants) shall have the right at its expense,
exercisable upon reasonable prior written notice to Landlord, to inspect at
Landlord's office during normal business hours Landlord's books and records
as they relate to Common Operating Expenses. Such inspection must be made
within one hundred eighty (180) days of Tenant's receipt of Landlord's annual
statement for the same, and shall be limited to verification of the charges
contained in such statement. Tenant may not withhold payment of such bill
pending completion of such inspection.
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6.4. COMMON OPERATING EXPENSES DEFINED: The term "Common Operating
Expenses" shall mean the sum of the following:
A. All costs and expenses paid or incurred by Landlord in doing
the following (including payments to independent contractors providing
services related to the performance of the following): (i) maintaining,
cleaning, and repairing the exterior surfaces (including painting of exterior
surfaces of buildings not more than once every 5 years) of all buildings
located on the Property; (ii) maintenance of the liability, fire and property
damage insurance covering the Property carried by Landlord pursuant to
paragraph 9.2 (including the payment of commercially reasonable "deductibles"
and the prepayment of premiums for coverage of up to one year); (iii)
maintaining, repairing, operating and replacing when necessary HVAC
equipment, utility facilities and other building service equipment; (iv)
providing utilities to the Common Area (including lighting, trash removal and
water for landscaping irrigation); (v) complying with all applicable Laws and
Private Restrictions; (vi) operating, maintaining, repairing, cleaning,
painting, restripping and resurfacing the Common Area; (vii) replacement or
installation of lighting fixtures, directional or other signs and signals,
irrigation systems, trees, shrubs, ground cover and other plant materials,
and all landscaping in the Common Area; and (viii) depreciation and financing
costs on maintenance and operating machinery and equipment (if owned) and
rental paid for such machinery and equipment (if rented);
B. All additional costs and expenses incurred by Landlord with
respect to the operation, protection, maintenance, repair and replacement of
the Property which pursuant to generally accepted accounting principles would
be considered a current expense and not a capital expenditure;
C. That portion of all compensation (including benefits and
premiums for workers' compensation and other insurance) paid to or on behalf
of employees of Landlord but only to the extent they are involved in the
performance of the work described by subparagraphs A and B above and that is
fairly allocable to the Property;
D. An additional amount equal to a commercially reasonable and
competitive management fee that would be charged by an independent third
party property manager for the management of the Property (except that
Tenant's Allocated Share of such management fee for any period shall not
exceed two percent (2%) of the Base Monthly Rent and Additional Rent payable
by Tenant for the same period); and
E. Notwithstanding anything contained herein, the term "Common
Operating Expenses" shall not include any of the following: (i) mortgage
principle payments; (ii) ground rent and other payments made pursuant to any
ground lease affecting the Property; (iii) the cost of refinancing any loan
secured by the Property; (iv) interest and penalties imposed against Landlord
for late payments by Landlord; (v) legal fees incurred by Landlord in
connection with the negotiation or enforcement of, or litigation in
connection with, any lease affecting the Property; (vi) the cost of any
paintings, sculptures, or other art objects installed on the Property; (vii)
any costs reimbursed to Landlord by insurance or other third party payments
that are not reimbursements by Tenants for their share of Common Operating
Expenses; (viii) brokerage commissions or other costs related to the leasing
of space within the Property; (ix) the cost of any Tenant improvements
installed for the exclusive use of any other Tenant of the Property.
6.5. CONTROL OF COMMON AREA: Landlord shall at all times have
exclusive control of the Common Area. Landlord shall have the right, without
the same constituting an actual or constructive eviction and without
entitling Tenant to any abatement of rent, to: (i) close any part of the
Common Area to the minimum extent reasonably necessary in the reasonable
opinion of Landlord's counsel to prevent a dedication thereof or the accrual
of any prescriptive rights therein; (ii) temporarily close the Common Area to
perform maintenance or for any other reason deemed sufficient by Landlord;
(iii) designate other property outside the boundaries of the Property to
become part of the Property; (iv) construct multi-deck parking structures in
any part of the Common Area; (v) change the shape, size, location, number and
extent of improvements on the Common Area; (vi) select a third party to
maintain and operate any of the Common Area at any time Landlord determines
that the best interests of the Property will be served by having the Common
Area maintained and operated by that third party so long as the fees and
charges of such third party are reasonable and competitive with the fees of
others in the marketplace
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providing the same services; (vii) make changes to the Common Area including,
without limitation, changes in the location of driveways, parking spaces,
parking areas, sidewalks or the direction of the flow of traffic and the site
of the Common Area; and/or (viii) voluntarily change the address of the
Property. Landlord agrees not to change the name of Airport Technology Park
without the prior consent of Tenant. The use of the Common Area shall be
subject to such reasonable regulation and changes therein as Landlord shall
make from time to time. Landlord shall not exercise its rights to control
the Common Area in a manner that would materially interfere with Tenant's use
of the Premises without first obtaining Tenant's approval. Tenant shall keep
the Common Area free and clear of all obstructions created or permitted by
Tenant. If in the opinion of Landlord unauthorized persons are using any of
the Common Area by reason of the presence of Tenant in the Premises, Tenant,
upon demand of Landlord, shall restrain such unauthorized use by appropriate
proceedings. Nothing herein shall affect the right of Landlord at any time
to remove such unauthorized person from the Common Area nor to prohibit the
use of the Common Area by unauthorized persons. In exercising any such
rights described in this paragraph 6.5 regarding the Common Area, Landlord
shall make a reasonable effort to minimize any disruption to Tenant's
business.
6.6. TENANT'S NEGLIGENCE: Anything in this Lease to the contrary
notwithstanding, Tenant shall pay for all damage to the Premises or the
Property caused by the negligent act or omission of Tenant, its employees,
contractors, or invitees, or by the failure of Tenant to discharge promptly
its obligations under this Lease or to comply with the terms of this Lease,
but only to the extent such damage is not covered by insurance proceeds
actually recovered by Landlord. Tenant shall make payment within thirty (30)
days after demand therefor by Landlord.
ARTICLE 7.
WASTE DISPOSAL AND UTILITIES
7.1. WASTE DISPOSAL: Tenant shall store its waste either inside the
Premises or within outside trash enclosures that are (i) fully fenced and
screened in compliance with all Private Restrictions, (ii) designed for such
purpose to be used either exclusively by Tenant or in common with other
occupants of the Property, as designated by Landlord, and (iii) first
approved by Landlord. All entrances to such outside trash enclosures shall
be kept closed, and waste shall be stored in such manner as not to be visible
from the exterior of such outside enclosures. Tenant shall cause all of its
waste to be regularly removed from the Property at Tenant's sole cost.
Tenant shall keep all fire corridors and mechanical equipment rooms in the
Premises free and clear of all obstructions at all times.
7.2. HAZARDOUS MATERIALS: Landlord and Tenant agree as follows with
respect to the existence or use of Hazardous Materials on the Property:
A. Landlord hereby makes the following representations to
Tenant, each of which is made to the best of Landlord's knowledge as of the
Commencement Date:
(1) The soil and ground water on or under the Property
does not contain Hazardous Materials in amounts which violate any Hazardous
Materials Laws to the extent that any governmental entity could require
either Landlord or Tenant to take any remedial action or impose any penalties
with respect to such Hazardous Materials.
(2) During Landlord's period of ownership, no litigation
or any administrative proceeding has been brought or threatened, nor any
settlements reached with any governmental or private party, concerning the
actual or alleged presence of Hazardous Materials on or about the Property or
any disposal, release or threatened release of Hazardous Materials in or
about the Property.
(3) During the time that Landlord has owned the Property,
Landlord has received no notice of (i) any violation, or alleged violation,
of any Hazardous Material Law that has not been corrected to the satisfaction
of the appropriate authority, (ii) any pending claims relating to the
presence of Hazardous Material on the Property, or (iii) any pending
investigation
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by any governmental agency concerning the Property relating to Hazardous
Materials.
(4) The Property does not contain any (i) equipment
containing PCBs, or (ii) underground storage tanks.
B. Any handling, transportation, storage, treatment, disposal
or use of Hazardous Materials by Tenant and Tenant's agents, employees,
contractors, invitees or subTenants after the Commencement Date in or about
the Property shall strictly comply with all applicable Hazardous Materials
Laws. Tenant shall indemnify, defend upon demand with counsel reasonably
acceptable to Landlord, and hold harmless Landlord from and against any and
all liabilities, losses, claims, damages, interest, penalties, fines,
monetary sanctions, attorneys' fees, experts' fees, court costs, remediation
costs, investigation costs, and other expenses which result from or arise in
any manner whatsoever out of the use, storage, treatment, transportation,
release, or disposal of Hazardous Materials on or about the Property by
Tenant or Tenant's agents, employees, contractors, invitees or subTenants
after the Commencement Date.
C. If the presence of Hazardous Materials on the Property
caused or permitted by Tenant or Tenant's agents, employees, contractors,
invitees or subTenants after the Commencement Date results in contamination
or deterioration of water or soil resulting in a level of contamination
greater than the levels established as acceptable by any governmental agency
having jurisdiction over such contamination, then Tenant shall promptly take
any and all action necessary to clean up such contamination if required by
Law or as a condition to the issuance or continuing effectiveness of any
governmental approval which relates to the use of the Property or any part
thereof. Tenant shall further be solely responsible for, and shall defend,
indemnify and hold Landlord and its agents harmless from and against, all
claims, costs and liabilities, including attorneys' fees and costs, arising
out of or in connection with any removal, clean-up and restoration work and
materials required hereunder to return the Property to its condition existing
prior to the appearance of such Hazardous Materials.
D. Landlord and Tenant shall each give written notice to the
other as soon as reasonably practicable of (i) any communication received
from any governmental authority concerning Hazardous Materials which relates
to the Property, and (ii) any contamination of the Property by Hazardous
Materials which constitutes a violation of any Hazardous Materials Law.
Landlord and Tenant agree to keep such information confidential, except for
(i) disclosures that are approved by the other party, (ii) disclosures
required by Law or (iii) disclosures to any environmental consultant, lender,
purchaser, prospective purchaser, attorneys for either Landlord or Tenant, or
brokers for either Landlord or Tenant, so long as an agreement of
confidentiality is obtained from a party to whom the disclosure is to be
made, and (iv) disclosures in connection with any litigation or
administrative proceeding in which either Landlord or Tenant is involved.
Tenant and Tenant's agents, employees, contractors, invitees or subTenants
shall not bring Hazardous Materials onto the Property without first obtaining
the written consent of Landlord; provided, however, Tenant may, without being
required to obtain the prior written consent of Landlord, use at the Premises
in small quantities office supplies, cleaning materials and other maintenance
materials that are customarily used in business offices, even though such
supplies and materials may fall within the definition of Hazardous Materials.
At any time during the Lease Term, Tenant shall, within five days after
written request therefor received from Landlord, disclose in writing all
Hazardous Materials that are being used by Tenant on the Property, the nature
of such use, and the manner of storage and disposal.
E. Landlord may cause testing wells to be installed on the
Property, and may cause the ground water to be tested to detect the presence
of Hazardous Material by the use of such tests as are then customarily used
for such purposes. Any such installation of wells or tests shall be done in
a manner which minimizes the interference with Tenant's use of the Premises.
If Tenant so requests, Landlord shall supply Tenant with copies of such test
results. The cost of such tests and of the installation, maintenance, repair
and replacement of such wells shall be paid by Tenant if such tests disclose
the existence of facts which give rise to liability of Tenant pursuant to its
indemnity given in subparagraph 7.2B or 7.2C, and Tenant's liability is
established in a judicial or administrative proceeding, or in an action for
declaratory relief brought by Landlord.
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F. Landlord, at its sole cost, shall comply with all Hazardous
Materials Laws affecting the Property (without right of reimbursement from
Tenant) to the extent that (i) Landlord is legally obligated to do so by such
Laws, and (ii) such compliance (or the cost of such compliance) is not made
the responsibility of Tenant pursuant to subparagraph 7.2B or subparagraph
7.2C. Landlord shall indemnify, defend upon demand with competent counsel,
and hold harmless Tenant from and against any and all liability for response
costs imposed upon Tenant by any governmental agency pursuant to the Federal
Law known as "CERCLA" (more particularly identified in subparagraph 7.2G) and
the comparable California statute (commonly known as the
Carpenter-Presley-Tanner Hazardous Substances Account Act, California Health
and Safety Code Section 25300 et. seq.) that results from the presence of
Hazardous Materials on the Property not caused or contributed to by the use,
storage, treatment, release or disposal of Hazardous Materials on or about
the Property by Tenant, its subTenants, or their respective agents,
employees, contractors, or invitees. Notwithstanding the foregoing, the
indemnity given by Landlord in the immediately preceding sentence shall not
apply with respect to liability caused by any contamination of the Property
by a Hazardous Material that is or has been used, stored, treated, released
or disposed of on the Property by Tenant, its subTenants, or their respective
agents, employees, contractors, or invitees unless Tenant can prove such
contamination was not caused or contributed to by any of such parties.
G. As used herein, the term "Hazardous Material," means any
hazardous or toxic substance, material or waste which is or becomes regulated
by any local governmental authority, the State of California or the United
States Government. The term "Hazardous Material," includes, without
limitation, asbestos, PCBs, petroleum and petroleum products, and any
material or substance which is (i) listed under Article 9 or defined as
hazardous or extremely hazardous pursuant to Article 11 of Title 22 of the
California Administrative Code, Division 4, Chapter 20, (ii) defined as a
"hazardous waste" pursuant to Section 1004 of the Federal Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq. (42 U.S.C.
Section 6903), or (iii) defined as a "hazardous substance" pursuant to
Section 101 of the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et seq. (42 U.S.C. Section
9601). As used herein, the term "Hazardous Material Law" shall mean any
statute, law, ordinance, or regulation of any governmental body or agency
(including the U.S. Environmental Protection Agency, the California Regional
Water Quality Control Board, and the California Department of Health
Services) which regulates the use, storage, release or disposal of any
Hazardous Material.
H. The obligations of Landlord and Tenant under this paragraph
7.2 shall survive the expiration or earlier termination of the Lease Term.
The rights and obligations of Landlord and Tenant with respect to issues
relating to Hazardous Materials are exclusively established by this paragraph
7.2. In the event of any inconsistency between any other part of this Lease
and this paragraph 7.2, the terms of this paragraph 7.2 shall control.
7.3 UTILITIES: Tenant shall promptly pay, as the same become due,
all charges for water, gas, electricity, telephone, sewer service, waste pick-up
and any other utilities, materials or services furnished directly to or used by
Tenant on or about the Premises during the Lease Term, including, without
limitation, (i) meter, use and/or connection fees, hook-up fees, standby fees,
and (ii) penalties for discontinued or interrupted service.
7.4 COMPLIANCE WITH GOVERNMENTAL REGULATIONS: Landlord and Tenant
shall comply with all rules, regulations and requirements promulgated by
national, state or local governmental agencies or utility suppliers
concerning the use of utility services, including any rationing, limitation
or other control. Landlord may voluntarily cooperate in a reasonable manner
with the efforts of all governmental agencies or utility suppliers in
reducing energy or other resource consumption. Tenant shall not be entitled
to terminate this Lease nor to any abatement in rent by reason of such
compliance or cooperation. Tenant agrees at all times to cooperate fully with
Landlord and to abide by all rules, regulations and requirements which
Landlord may prescribe in order to maximize the efficient operation of the
HVAC system and all other utility systems.
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ARTICLE 8.
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REAL PROPERTY TAXES
8.1. REAL PROPERTY TAXES DEFINED: The term "Real Property Taxes" as
used herein shall mean (i) all taxes, assessments, levies, and other charges
of any kind or nature whatsoever, general and special, foreseen and
unforeseen (including all installments of principal and interest required to
pay any existing or future general or special assessments for public
improvements, services or benefits, and any increases resulting from
reassessments or resulting from a change in ownership or any other cause),
now or hereafter imposed by any governmental or quasi-governmental authority
or special district having the direct or indirect power to tax or levy
assessments, which are levied or assessed against, or with respect to the
value, occupancy or use of, all or any portion of the Property (as now
constructed or as may at any time hereafter be constructed, altered, or
otherwise changed) or Landlord's interest therein, the fixtures, equipment
and other property of Landlord, real or personal, that are an integral part
of and located on the Property, the gross receipts, income, or rentals from
the Property, or the use of parking areas, public utilities, or energy within
the Property, (ii) all charges, levies or fees imposed by reason of
environmental regulation or other governmental control of the Property
(excluding costs and expenses for which Landlord is responsible pursuant to
subparagraph 7.2F), and (iii) all costs and fees (including attorneys' fees)
incurred by Landlord in contesting any Real Property Tax and in negotiating
with public authorities as to any Real Property Tax. If at any time during
the Lease Term the method of taxation or assessment of the Property
prevailing as of the Commencement Date shall be altered so that in lieu of or
in addition to any Real Property Tax described above there shall be levied,
assessed or imposed (whether by reason of a change in the method of taxation
or assessment, creation of a new tax or charge, or any other cause) an
alternate or additional tax or charge (i) on the value, use or occupancy of
the Property, (ii) on or measured by the gross receipts, income, or rentals
from the Property, (iii) on Landlord's business of leasing the Property, or
(iv) computed in any manner with respect to the operation of the Property,
then any such tax or charge, however designated, shall be included within the
meaning of the term "Real Property Taxes" for purposes of this Lease. If any
Real Property Tax is based upon property or rents unrelated to the Property,
then only that part of such Real Property Tax that is fairly allocable to the
Property shall be included within the meaning of the term "Real Property
Taxes". Notwithstanding the foregoing, the term "Real Property Taxes" shall
not include estate, inheritance, transfer, gift or franchise taxes of
Landlord or the federal or state net income tax imposed on Landlord's income
from all sources.
8.2. TENANT'S OBLIGATION TO REIMBURSE: As Additional Rent, Tenant shall
pay to Landlord Tenant's Allocated Share of all Real Property Taxes which
become due after the Rent Start Date and during the Lease Term which are
fairly allocable to the Premises, which include (i) all Real Property Taxes
assessed with respect to the value, use or occupancy of the Premises and the
land beneath it, and (ii) a proportionate share (based on the Premises Gross
Leasable Area as a percentage of the Property Gross Leasable Area) of all
Real Property Taxes assessed with respect to the Common Area or with respect
to the Property in general which are not fairly allocable to any one building
on the Property. Tenant shall pay its share of Real Property Taxes (i) within
thirty (30) days after being billed for the same by Landlord, or (ii) no
later than ten (10) days before such Real Property Tax becomes delinquent,
whichever last occurs. If requested by Tenant in writing within one year
from receipt of a bill for Tenant's Allocated Share of Real Property Taxes,
Landlord shall furnish Tenant with such evidence as is reasonably available
to Landlord with respect to the amount of any Real Property Tax which is part
of such bill. Tenant may not withhold payment of such bill pending receipt
and/or review of such evidence. Upon Landlord's election or if any Lender
requires Landlord to impound Real Property Taxes on a periodic basis during
the Lease Term, then Tenant, on notice from Landlord indicating this
requirement, shall pay a sum of money toward its liability under this Article
to Landlord on the same periodic basis in accordance with the Lender's
requirements (if any). Landlord shall impound the Real Property Tax payments
received from Tenant in accordance with the requirements of the Lender (if
any). If any assessments are levied against the Property, Landlord may elect
either to pay the assessment in full or to allow the assessment to go to
bond. If Landlord pays the assessment in full, Tenant shall pay to Landlord
each time payment of Real Property Taxes is made a sum equal to that which
would have been payable (as both principal
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and interest) had Landlord allowed the assessment to go to bond.
Notwithstanding anything to the contrary contained in paragraphs 8.1 and 8.2,
if there is an increase in Real Property Taxes resulting from a "change in
ownership" (as that term is defined in California Revenue and Taxation Code
Section 60, et. seq.) which occurs prior to the fourth (4th) anniversary of
the Commencement Date, then Tenant shall not be obligated to pay any such
increase that results from such "change of ownership".
8.3. TAXES ON TENANT'S PROPERTY: Tenant shall pay before delinquency
any and all taxes, assessments, license fees and public charges levied,
assessed or imposed against Tenant or Tenant's estate in this Lease or the
property of Tenant situated within the Premises which become due during the
Lease Term. Tenant shall furnish Landlord with satisfactory evidence of
these payments within thirty (30) days after receipt of written request
therefor from Landlord.
ARTICLE 9
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INSURANCE
9.1. TENANT'S INSURANCE: Tenant shall maintain insurance complying
with all of the following:
A. Tenant shall procure, pay for and keep in full force and
effect the following:
(1) Commercial general liability insurance, including
property damage, against liability for personal injury, bodily injury, death
and damage to property occurring in or about, or resulting from an occurrence
in or about, the Premises with combined single limit coverage of not less
than the amount of Tenant's Minimum Liability Insurance Coverage set forth in
paragraph 1.8, which insurance shall contain a "contractual liability"
endorsement insuring Tenant's performance of Tenant's obligation to indemnify
Landlord contained in paragraph 10.3;
(2) Plate-glass insurance, at actual replacement cost; and
(3) Fire and property damage insurance against loss caused by
fire, extended coverage perils including steam boiler insurance, sprinkler
leakage, if applicable, vandalism, malicious mischief and such other
additional perils as now are or hereafter may be included in a standard
extended coverage endorsement from time to time in general use in the county
in which the Property is located, insuring Tenant's personal property,
inventory, Trade Fixtures and Leasehold Improvements within the Premises for
the full actual replacement cost thereof.
B. Where applicable and required by Landlord, each policy of
insurance required to be carried by Tenant pursuant to this paragraph
(i) shall name Landlord and such other parties in interest as Landlord
designates as additional insureds; (ii) shall be primary insurance which
provides that the insurer shall be liable for the full amount of the loss up
to and including the total amount of liability set forth in the declarations
without the right of contribution from any other insurance coverage of
Landlord; (iii) shall be in a form satisfactory to Landlord; (iv) shall be
carried with companies reasonably acceptable to Landlord; (v) shall provide
that such policy shall not be subject to cancellation, lapse or change except
after at least thirty (30) days prior written notice to Landlord; (vi) shall
not have a "deductible" in excess of $500,000 or such greater amount as is
approved by Landlord; (vii) shall (to the extent available) contain a waiver
by the insurer of any right to subrogation against Landlord, its agents,
employees and contractors which might arise by reason of any payment under
such policy or by reason of any act or omission of Landlord, its agents,
employees or contractors; and (viii) shall contain a "severability" clause.
If Tenant has in force and effect a blanket policy of liability insurance
with the same coverage for the Premises as described above, as well as other
coverage of other premises and properties of Tenant, or in which Tenant has
some interest, such blanket insurance shall satisfy the requirements hereof.
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C. A certificate of each paid-up policy evidencing the insurance
required to be carried by Tenant pursuant to this paragraph (appropriately
authenticated by the insurer), certifying that such policy has been issued,
providing the coverage required by this paragraph, and containing the
provisions specified herein, shall be delivered to Landlord prior to the time
Tenant or any of its contractors enters the Premises and upon renewal of such
policies, but not less than five (5) days prior to the expiration of the term
of such coverage. If Landlord's insurance advisor reasonably determines at
any time that the amount of coverage required for any policy of insurance
Tenant is to obtain pursuant to this paragraph is not adequate, then Tenant
shall increase such coverage for such insurance to such amount as Landlord's
insurance advisor reasonably deems adequate, not to exceed the level of
coverage commonly carried by comparable businesses similarly situated for
such insurance; provided, however, that Landlord may not require an
adjustment pursuant to this sentence more frequently than once every two (2)
years during the Lease Term.
9.2. LANDLORD'S INSURANCE: Landlord shall have the following
obligations and options regarding insurance:
A. Landlord shall maintain a policy or policies of fire and
property damage insurance in so-called "all risk" form insuring Landlord (and
such others as Landlord may designate) against loss of rents for a period of
not less than six (6) months and from physical damage to the Premises with
coverage of not less than the full replacement cost of (i) the building of
which the Premises are a part, including the structural elements thereof and
all electrical, mechanical, plumbing, and other systems, and (ii) all
Interior Improvements constructed pursuant to the Interior Improvement
Agreement attached as Exhibit "C". Landlord may so insure the Premises
separately, or may insure the Premises with other buildings and improvements
within the Property and/or other property owned by Landlord which Landlord
elects to insure together under the same policy or policies. Such fire and
property damage insurance, at Landlord's election, (i) may be endorsed to
cover loss caused by such additional perils against which Landlord may elect
to insure, including earthquake and/or flood, (ii) shall contain commercially
reasonable "deductibles" which, in the case of earthquake and flood
insurance, may be up to ten percent (10%) of the replacement value of the
property insured or such higher amount as is then commercially reasonable,
(iii) may provide coverage for loss of rents for a period of up to twelve
(12) months, and (iv) may contain additional endorsements or coverage
reasonably required by Landlord or any Lender, including an "agreed amount"
endorsement, demolition insurance (covering the cost of demolishing damaged
improvements or improvements required by Law to be demolished), and
difference in condition coverage. Landlord shall not be required to cause
such insurance to cover any Trade Fixtures, Leasehold Improvements or any
inventory or other personal property of Tenant.
B. Landlord may maintain a policy or policies of commercial
general liability insurance insuring Landlord (and such others as are
designated by Landlord) against liability for personal injury, bodily injury,
death and damage to property occurring or resulting from an occurrence in, on
about the Property, with combined single limit coverage in such amount as
Landlord may from time to time determine is reasonably necessary for its
protection and with commercially reasonable deductibles.
9.3. TENANT'S OBLIGATION TO REIMBURSE: The cost of the insurance
carried by Landlord pursuant to paragraph 9.2 (and any commercially
reasonable "deductible" amount paid by Landlord in connection with the
restoration of any loss and excluded from the coverage of such insurance)
shall be a Common Operating Expense and Tenant shall pay its share thereof as
provided in paragraph 6.3. However, if Landlord's insurance rates for the
Premises are increased at any time during the Lease Term as a result of the
nature of Tenant's use of the Premises, Tenant shall reimburse Landlord for
the full amount of such increase immediately upon receipt of a bill from
Landlord therefor.
9.4. RELEASE AND WAIVER OF SUBROGATION: The parties hereto release
each other, and their respective agents and employees, from any liability for
injury to any person or damage to property that is caused by or results from
any risk insured against under any valid and collectible insurance policy
carried by either of the parties which contains a waiver of subrogation by
the insurer and is in force at the time of such injury or damage, subject to
the following limitations:
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(i) the foregoing provisions shall not apply to the commercial general
liability insurance described by subparagraph 9.1A and 9.1B; and (ii) such
release shall apply to liability resulting from any risk insured against or
covered by self-insurance maintained or provided by Tenant to satisfy the
requirements of paragraph 9.1. This release shall be in effect only so long
as the applicable insurance policy contains a clause to the effect that this
release shall not affect the right of the insured to recover under such
policy. Each party shall use reasonable efforts to cause each insurance
policy obtained by it to provide that the insurer waives all right of
recovery by way of subrogation against the other party and its agents and
employees in connection with any injury or damage covered by such policy.
However, if any insurance policy cannot be obtained with such a waiver of
subrogation, or if such waiver of subrogation is only available at additional
cost and the party for whose benefit the waiver is to be obtained does not
pay such additional cost, then the party obtaining such insurance shall
notify the other party of that fact and thereupon shall be relieved of the
obligation to obtain such waiver of subrogation rights from the insurer with
respect to the particular insurance involved.
ARTICLE 10.
LIMITATION ON LANDLORD'S
LIABILITY AND INDEMNITY
10.1. LIMITATION ON LANDLORD'S LIABILITY: Landlord shall not be liable
to Tenant, nor shall Tenant be entitled to terminate this Lease or to any
abatement of rent, for any injury to Tenant, its agents, employees,
contractors or invitees, damage to Tenant's property, or loss to Tenant's
business resulting from any cause, including without limitation any (i)
failure, interruption or installation of any HVAC or other utility system or
service; (ii) failure to furnish or delay in furnishing any utilities or
services when such failure or delay is caused by Acts of God or the elements,
labor disturbances of any character, any other accidents or other conditions
beyond the reasonable control of Landlord; (iii) limitation, curtailment,
rationing or restriction on the use of water or electricity, gas or any other
form of energy or any services or utility serving the Premises; (iv)
vandalism or forcible entry by unauthorized persons; or (v) penetration of
water into or onto any portion of the Premises or the Common Area through
roof leaks or otherwise. Notwithstanding the foregoing:
A. Subject to paragraph 9.4, Landlord shall be liable for any
such injury, damage or loss which is proximately caused by Landlord's gross
negligence or willful misconduct, of which Landlord has actual notice and a
reasonable opportunity to cure but which it fails to so cure.
B. Tenant shall have the option to terminate this Lease upon
the occurrence of the following: (i) water, electricity, or other utility
service essential to the conduct of Tenant's business in the Premises is
interrupted or substantially impaired for a period of more than two hundred
seventy (270) consecutive days during which time the Premises are rendered
substantially unusable for the conduct of Tenant's business (a "Material
Interruption"); and (ii) the Material Interruption is not caused by the act
or omission of Tenant, its agents, employees or contractors.
10.2. LIMITATION ON TENANT'S RECOURSE: So long as the Landlord is a
corporation, trust, partnership, joint venture, unincorporated association or
other form of business entity, (i) the obligations of Landlord shall not
constitute personal obligations of the officers, directors, trustees,
partners, joint venturers, members, owners, stockholders, or other principals
or representatives of such business entity, and (ii) Tenant shall have
recourse only to the assets of such business entity for the satisfaction of
such obligations and not against the assets of such officers, directors,
trustees, partners, joint venturers, members, owners, stockholders,
principals or representatives, except to the extent of their interests in the
entity that is Landlord. If Landlord is a natural person or persons, Tenant
shall have recourse only to the interest of such natural persons in the
Property for the satisfaction of the obligations of Landlord and shall not
have recourse to any other assets of such natural persons for the
satisfaction of such obligations.
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10.3. INDEMNIFICATION OF LANDLORD: Tenant shall hold harmless,
indemnify and defend Landlord, and its employees, agents and contractors,
with competent counsel, from all liability, penalties, losses, damages,
costs, expenses, causes of action, claims and/or judgments arising by reason
of any death, bodily injury, personal injury or property damage (i) resulting
from any cause or causes whatsoever (other than the negligence or willful
misconduct of Landlord of which Landlord has had notice and a reasonable time
to cure, but which Landlord has failed to cure) occurring in or about or
resulting from an occurrence in or about the Premises, or (ii) resulting from
the negligence or willful misconduct of Tenant, its agents, employees and
contractors, wherever the same may occur, or (iii) resulting from an Event of
Tenant's Default. The provisions of this paragraph shall survive the
expiration or sooner termination of this Lease.
ARTICLE 11.
DAMAGE TO PREMISES
11.1. LANDLORD'S DUTY TO RESTORE: If the Premises are damaged by any
peril after the Commencement Date of this Lease, Landlord shall restore the
Premises unless the Lease is terminated by Landlord pursuant to paragraph
11.2 or by Tenant pursuant to paragraph 11.3. All insurance proceeds
available from the fire and property damage insurance carried by Landlord
pursuant to paragraph 9.2 shall be paid to and become the property of
Landlord. If this Lease is terminated pursuant to either paragraphs 11.2 or
11.3, then all insurance proceeds available from insurance carried by Tenant
which covers loss to property that is Landlord's property or would become
Landlord's property on termination of this Lease shall be paid to and become
the property of Landlord. If this Lease is not so terminated, then upon
receipt of the insurance proceeds (if the loss is covered by insurance) and
the issuance of all necessary governmental permits, Landlord shall commence
and diligently prosecute to completion the restoration of the Premises, to
the extent then allowed by Law, to substantially the same condition in which
the Premises were immediately prior to such damage. Landlord's obligation to
restore shall be limited to the Premises and interior improvements
constructed by Tenant but financed by Landlord pursuant to the Interior
Improvement Agreement as such improvements existed upon completion thereof
excluding any Leasehold Improvements, Trade Fixtures and/or personal property
constructed or installed by Tenant in the Premises. To the extent that
insurance proceeds recovered by Landlord from the insurance carried pursuant
to paragraph 9.2A exceed the amount needed by Landlord to discharge its
restoration obligation pursuant to the immediately preceding sentence,
Landlord shall make such excess insurance proceeds available to Tenant for
the purpose of restoring interior improvements that were constructed by
Tenant and financed by Tenant pursuant to the Interior Improvement Agreement,
so that such improvements may be restored to substantially the same condition
existing as of the date such improvements were initially completed.
11.2. LANDLORD'S RIGHT TO TERMINATE: Landlord shall have the right to
terminate this Lease in the event any of the following occurs, which right
may be exercised only by delivery to Tenant of a written notice of election
to terminate within thirty (30) days after the date of such damage:
A. Either the Property or the Premises is damaged by an Insured
Peril to such an extent that the estimated cost to restore equals or exceeds
eighty percent (80%) of the then actual replacement cost thereof and there
remains less than three (3) years in the Lease Term; provided, however, that
Landlord may not terminate this Lease pursuant to this subparagraph 11.2A if
Tenant at the time of such damage has a then valid written option to extend
the Lease Term and Tenant exercises such option to extend the Lease Term
within fifteen (15) days after Tenant receives Landlord's notice of election
to terminate and such action results in there being more than three (3) years
remaining in the Lease Term (as it has been extended by the Exercise of such
option);
B. Either the Property or the Premises is damaged by an
Uninsured Peril to such an extent that the estimated cost to restore exceeds
two percent (2%) of the actual replacement cost thereof; provided, however,
that Landlord may not terminate this Lease
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pursuant to this paragraph 11.2B if one or more Tenants of the Property agree
in writing to pay the amount by which the cost to restore the damage exceeds
such amount and subsequently deposit such amount with Landlord within thirty
(30) days after Landlord has notified Tenant of its election to terminate
this Lease;
C. The Premises are damaged by any peril within twelve (12)
months of the last day of the Lease Term to such an extent that the estimated
cost to restore equals or exceeds an amount equal to six (6) times the Base
Monthly Rent then due; provided, however, that Landlord may not terminate
this Lease pursuant to this subparagraph 11.2C if Tenant, at the time of such
damage, has a then valid express written option to extend the Lease Term and
Tenant exercises such option to extend the Lease Term within fifteen (15)
days following the date of such damage; or
D. As used herein, the following terms shall have the following
meanings: (i) the term "Insured Peril" shall mean a peril actually insured
against for which the insurance proceeds paid or made available to Landlord
are sufficient (except for any "deductible" amount specified by such
insurance) to restore the Property under the then existing building codes to
the condition existing immediately prior to the damage; and (ii) the term
"Uninsured Peril" shall mean and include any peril not actually insured
against, any peril actually insured against but for which the insurance
proceeds paid or made available to Landlord are for any reason (except for
any "deductible" amount specified by such insurance) insufficient to restore
the Property under then existing building codes to the condition existing
immediately prior to the damage, and any peril actually insured against but
for which the insurance proceeds are not paid or made available to Landlord.
11.3. TENANT'S RIGHT TO TERMINATE: If the Premises are damaged by any
peril and Landlord does not elect to terminate this Lease or is not entitled
to terminate this Lease pursuant to paragraph 11.2, then as soon as
reasonably practicable, Landlord shall furnish Tenant with the written
opinion of Landlord's architect or construction consultant as to when the
restoration work required of Landlord may be completed. Tenant shall have
the right to terminate this Lease in the event any of the following occurs,
which right may be exercised only by delivery to Landlord of a written notice
of election to terminate within thirty (30) days after Tenant receives from
Landlord the estimate of the time needed to complete such restoration:
A. The Premises are damaged by any peril and, in the reasonable
opinion of Landlord's architect or construction consultant, the restoration
of the Premises cannot be substantially completed within two hundred seventy
(270) days after the date of such damage; or
B. The Premises are damaged by any peril within twelve (12)
months of the last day of the Lease Term and in the reasonable opinion of
Landlord's architect or construction consultant the restoration of the
Premises cannot be substantially completed within ninety (90) days after the
date of such damage; or
C. The Premises are not restored within eighteen (18) months
following the date of such damage; provided, however, that if at the time
restoration of the "shell" of the building in which the Premises are located
is substantially completed (excluding Interior Improvements) Landlord
reasonably estimates that Landlord will not be able to complete restoration
of the Premises within such eighteen (18) month period, then at that time
Landlord may offer in writing to Tenant the option to terminate this Lease,
and if Tenant does not exercise such option to terminate the Lease so offered
to Tenant by Landlord, then Tenant may not thereafter elect to terminate this
Lease pursuant to this subparagraph 11.3C.
11.4. ABATEMENT OF RENT: In the event of damage to the Premises which
does not result in the termination of this Lease, the Base Monthly Rent and
the Additional Rent shall be temporarily abated commencing on the date of
damage and continuing through the Period of restoration in proportion to the
degree to which Tenant's use of the Premises is impaired by such damage.
Tenant shall not be entitled to any compensation or damages from Landlord for
loss of Tenant's business or property or for any inconvenience or annoyance
caused by such damage or restoration. Tenant hereby waives the provisions of
Section 1932, Subdivision 2, and Section 1933, Subdivision 4, of the
California Civil Code, and the provisions of any similar law hereinafter
enacted.
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ARTICLE 12.
CONDEMNATION
12.1. TENANT'S TERMINATION RIGHT: Tenant shall have the right to
terminate this Lease if, as a result of any taking by means of the exercise
of the power of eminent domain (including any voluntary sale or transfer by
Landlord to any condemnor under threat of condemnation), (i) ten percent
(10%) or more of the Premises is so taken, or (ii) there is a taking
affecting the Common Area and, as a result of such taking, Landlord cannot
provide parking spaces within reasonable walking distance of the Premises
equal in number to at least ninety percent (90%) of the number of spaces
allocated to Tenant by paragraph 2.1, whether by rearrangement of the
remaining parking areas in the Common Area (including construction of
multi-deck parking structures or restripping for compact cars where permitted
by Law) or by alternative parking facilities on other land. Tenant must
exercise such right within a reasonable period of time, to be effective on
the date that possession of that portion of the Premises or Common Area that
is condemned is taken by the condemnor.
12.2 RESTORATION AND ABATEMENT OF RENT: If any part of the Premises
or the Common Area is taken by condemnation and this Lease is not terminated,
then Landlord shall restore the remaining portion of the Premises and Common
Area to substantially the same condition in which the Premises and Common
Area were immediately prior to such taking, excluding any Leasehold
Improvements, Trade Fixtures and/or personal property constructed or
installed by Tenant; provided, however, that Landlord shall not be obligated
to spend more for such restoration than the amount of any condemnation award
recovered by or pursuant to paragraph 12.3. Thereafter, except in the case
of a temporary taking, (i) as of the date possession is taken the Base
Monthly Rent (but not any Additional Rent) shall be reduced in the same
proportion that the floor area of that part of the Premises so taken (less
any addition thereto by reason of any reconstruction) bears to the original
floor area of the Premises, and (ii) to the extent that Landlord is obligated
to undertake any restoration work as a result of such condemnation, the Base
Monthly Rent shall be further abated in proportion to the extent to which
such restoration work interferes with Tenant's ability to use that part of
the Premises which remains after the condemnation.
12.3 TEMPORARY TAKING: If any portion of the Premises is temporarily
taken for six (6) months or less, this Lease shall remain in effect and
Tenant shall be entitled to recover any condemnation award that is made for
such taking and shall be responsible for restoring the Premises to the
condition existing immediately prior to such temporary taking. If any
portion of the Premises is temporarily taken by condemnation for a period
which exceeds six (6) months or which extends beyond the natural expiration
of the Lease Term, and such taking materially and adversely affects Tenant's
ability to use the Premises for the Permitted Use, then Tenant shall have the
right to terminate this Lease, effective on the date possession is taken by
the condemnor.
12.4. DIVISION OF CONDEMNATION AWARD: Any award made as a result of
any condemnation of the Premises or the Common Area shall belong to and be
paid to Landlord, and Tenant hereby assigns to Landlord all of its right,
title and interest in any such award; provided, however, that Tenant shall be
entitled to recover out of any condemnation award made for a taking of all or
part of the Premises an amount equal to the unamortized cost of all interior
improvements paid for by Tenant constructed pursuant to the Interior
Improvement Agreement and all Leasehold Improvements constructed by Tenant
(amortized on a straight line basis over the initial Lease Term for Interior
Improvements, and over the period from completion of construction until
expiration of the Lease Term for Leasehold Improvements); and provided
further that Tenant shall be entitled to receive any condemnation award that
is made directly to Tenant for the following so long as the award made to
Landlord is not thereby reduced: (i) for the taking of personal property or
Trade Fixtures belonging to Tenant, (ii) for the interruption of Tenant's
business or its moving costs, (iii) for loss of Tenant's goodwill, or
(iv) for any temporary taking where this Lease is not terminated as a result of
such taking. The rights of Landlord and Tenant regarding any condemnation
shall be determined as provided in this Article,
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and each party hereby waives the provisions of Section 1265.130 of the
California Code of Civil Procedure and the provisions of any similar law
hereinafter enacted allowing either party to petition the Superior Court to
terminate this Lease in the event of a partial taking of the Premises.
ARTICLE 13.
DEFAULT AND REMEDIES
13.1. EVENTS OF TENANT'S DEFAULT: Tenant shall be in default of its
obligations under this Lease if any of the following events occurs (an "Event
of Tenant's Default"):
A. Tenant shall have failed to pay Base Monthly Rent or any
Additional Rent when due and such failure is not cured within ten (10) days
after delivery of written notice from Landlord specifying such failure to
pay; or
B. Tenant shall have failed to perform any term, covenant, or
condition of this Lease except those requiring the payment of Base Monthly
Rent or Additional Rent, and Tenant shall have failed to cure such breach
within thirty (30) days after written notice from Landlord specifying the
nature of such breach, or if such breach could not reasonably be cured within
said thirty (30) day period, Tenant shall have failed to commence such cure
within said thirty (30) day period and thereafter continue with due diligence
to prosecute such cure to completion within such time period as is reasonably
needed; or
C. Tenant shall have made a general assignment of its assets
for the benefit of its creditors; or
D. Tenant shall have sublet the Premises or assigned its
interest in the Lease in violation of the provisions contained in Article 14,
whether voluntarily or by operation of law; Landlord shall have notified
Tenant in writing that such Transfer constitutes a violation of the
provisions contained in Article 14, and Tenant does not cause such Transfer
to be rescinded or terminated and possession of the Premises affected by the
Transfer recovered from the Transferee within ninety (90) days after receipt
of such notice; or
E. Tenant shall have permitted the sequestration or attachment
of, or execution on, or the appointment of a custodian or receiver with
respect to, all or any substantial part of the property of Tenant o