STANDARD INDUSTRIAL/COMMERCIAL
MULTI-TENANT LEASE - GROSS
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
1. Basic Provisions ("Basic
Provision").
1.1 Parties: This Lease
("Lease") dated for _________ purposes only
December 19, 2003 made by and between
TENNANT DESERT PROPERTIES, LLC
("Lessor") AND AQUENTIUM, INC. ("Lessee"),
(collectively the "Parties", or
individually a "Party").
1.2(a) Premises:
That certain portion of the Project (as defined below),
including all improvements therein or to be
provided by Lessor under the terms
of this Lease, commonly known by the street
address of 19125 N. Indian Ave
located in the City of Palm Springs, County
of Riverside, State of CA, with
zip code _______________, as outlined on
Exhibit ____ attached hereto
("Premises") and generally described as
(describe briefly the nature of the
Premises): 10,000 Sq. Ft. of warehouse
space plus two (2) offices in the front
section of the subject bldg. (Part of an
approx. 84,772 s.f. Ind. Bldg.) In
addition to Lessee's rights to use and
occupy the Premises as hereinafter
specified, Lessee shall have non-exclusive
rights to the Common Areas (as
defined in Paragraph 2.7 below) as
hereinafter specified, but shall not have
any rights to the roof, exterior walls or
utility raceways of the building
containing the Premises ("Building") or to
any other buildings in the Project.
The Premises, the Building, the Common
Areas, the land upon which they are
located, along with all other buildings and
improvements thereon, are herein
collectively referred to as the "Project."
(See also Paragraph 2.)
1.2(b) Parking:
ten (10 unreserved vehicle parking spaces ("Unreserved
Parking Spaces") and ________________
reserved vehicle parking spaces
("Reserved Parking Spaces"). (See also
Paragraph 2.6.)
1.3 Term: Ninety (90) days
xxx and -
months ("Original Term")
commencing Jan. 1, 2004 ("Commencement
date") and ending March 31, 2004
("Expiration Date"). (See also Paragraph
3.)
1.4 Early Possession:
___________________ ("Early Possession Date")
(See also Paragraphs 3.2 and 3.3.)
1.5 Base Rent: $ 4,500.00
per month ("Base Rent"), payable on the See
Addendum day of each month commencing
______________________. (See also
Paragraph 4.)
[ ] If this box is checked, there are
provisions in this Lease for the Base
rent to be adjusted.
1.6 Lessee's Share of
Common Area Operating Expenses: none percent
(__%) ("Lessee's Share").
1.7 Base Rent and Other
Monies Paid Upon Execution:
(a) Base Rent: $
4,500.00 for the period Jan. 1st thru Jan. 31st
2004
(b) Common Area
Operating Expenses: $ none for the period ______
(c) Security Deposit:
$ 4,500.00 ("Security Deposit"). (See also
Paragraph 5.)
(d) Other: $__________
for _________________________________
(e) Total Due Upon
Execution of this Lease: $ 18,000.00 (See
Addendum)
1.8 Agreed Use:
Administration offices, manufacturing and storage
(manufacturing and storage in conformity
with city codes, septic system and
environmental laws and regulations) (See
also Paragraph 6.)
1.9 Insuring Party: Lessor
is the "Insuring Party". (See also
Paragraph 8.)
1.10
Real Estate
Brokers: (See also Paragraph 15.)
(a) Representation:
The following real estate brokers (the
"Brokers") and brokerage relationships
exist in this transaction (check
applicable boxes):
[ ] __________________________________
represents Lessor exclusively
("Lessor's Broker");
[ ] __________________________________
represents Lessee exclusively
("Lessees's Broker"); or
[x] ORR COMPANY represents both Lessor and
Lessee ("Dual Agency")
(b) Payment to
Brokers: Upon execution and delivery of this Lease
by both Parties, Lessor shall pay to the
Brokers the brokerage fee agreed to
in a separate written agreement (or if
there is no such agreement, the sum of
___________________ or ____% of the total
Base Rent for the brokerage services
rendered by the Brokers).
1.11
Guarantor. The
obligations of the Lessee under this Lease are to
be guaranteed by
______________________________________________("Guarantor").
(See also Paragraph 37)
1.12
Addenda and
Exhibits. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 50 through 52 and
Exhibits ____ through ____, all of
which constitute a part of this Lease.
2. Premises.
2.1 Letting. Lessor hereby
leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at
the rental, and upon all of the
terms, covenants and conditions set forth
in this Lease. Unless otherwise
provided herein, any statement of size set
forth in this Lease, or that may
have been used in calculating Rent, is an
approximation which the parties
agree is reasonable and any payments based
thereon are not subject to revision
whether or not the actual size is more or
less.
2.2 Condition. Lessor
shall deliver that portion of the Premises
contained within the building ("Unit") to
Lessee broom clean and free of
debris on the Commencement Date or the
Early Possession Date, whichever first
occurs ("Start Date"), and, so long as the
required service contracts
described in Paragraph 7.1(b) below are
obtained by Lessee and in effect
within thirty days following the Start
Date, warrants that the existing
electrical, plumbing, fire sprinkler,
lighting, heating, ventilating and air
conditioning systems ("HVAC"), loading
doors, if any, and all other such
elements in the Unit, other than those
constructed by Lessee, shall be in good
operating condition on said date and that
the structural elements in the Unit,
other than those constructed by Lessee,
shall be in good operating condition
on said date and that the structural
elements of the roof, bearing walls and
foundation of the Unit shall be free of
material defects. If a non-compliance
with such warranty exists as of the Start
Date, or if one of such systems or
elements should malfunction or fail within
the appropriate warranty period,
Lessor shall, at Lessor's sole obligation
with respect to such matter, except
as otherwise provided in this Lease,
promptly after receipt of written notice
from Lessee setting forth with specialty
the nature and extent of such
non-compliance, malfunction or failure,
rectify same at Lessor's expense. The
warranty periods shall be as follows: (i) 6
months as to the HVAC systems; and
(ii) 30 days as to the remaining systems
and other elements of the Unit. If
Lessee does not give Lessor the required
notice within the appropriate
warranty period, correction of any such
non-compliance, malfunction or failure
shall be the obligation of Lessee at
Lessee's sole cost and expense (except
for the repairs to the fire sprinkler
systems, roof, foundations, and/or
bearing walls - see Paragraph 7).
2.3 Compliance. Lessor
warrants that the improvements on the Premises
and the Common Areas comply with the
building codes that were in effect at the
time that each such improvement, or portion
thereof, was constructed, and also
with applicable laws, covenants or
restrictions of record, regulations, and
ordinances in effect on the Start Date
("Applicable Requirements"). Said
warranty does not apply to the use to which
Lessee will put the Premises or to
any Alterations or Utility Installations
(as defined in Paragraph 7.3(a).)
Made or to be made by Lessee. NOTE: Lessee
is responsible for determining
whether or not the zoning is
appropriate
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for Lessee's intended use, and acknowledges
that past uses of the Premises may
no longer be allowed. If the Premises do
not comply with said warranty, Lessor
shall, except as otherwise provided,
promptly alter receipt of written notice
from Lessee setting forth with specificity
the nature ane extent of such
non-compliance, rectify the same at Lessors
expense. If Lessee does not give
Lessor written notice of a non-compliance
with this warranty within 6 months
following the start Date, correction of
that non-compliance shall be the
obligation of the Lessee and Lessee's sole
cost and expense. If the Applicable
Requirements are hereafter changed so as to
require during the term of this
lease the construction of an addition to or
an alteration of the Unit,
Premises and/or building, the remediation
of any Hazardous Substance, or the
reinforcement or other physical
modification of the Unit, Premises and/or
Building ("Capital Expenditure"), Lessor
and Lessee shall allocate the cost of
such work as follows:
(a) Subject to Paragraph 2.3(c) below, if such Capital
Expenditures are required as a result of
the specific and unique use of the
Premises by Lessee as compared with uses by
tenants in general, Lessee shall
be fully responsible for the cost thereof,
provided however, that if such
Capital Expenditure is required during the
last 2 years of this Lease and the
cost thereof exceeds 6 months Base Rent.
Lessee may instead terminate this
Lease unless Lessor notifies Lessee, in
writing, within 10 days after receipt
of Lessee's termination notice that Lessor
has elected to pay the difference
between the actual cost thereof and the
amount equal to 6 months Base Rent. If
Lessee elects termination, Lessee shall
immediately cease the use of the
Premises which requires such Capital
Expenditure and deliver to Lessor written
notice specifying a termination date at
least 90 days thereafter. Such
termination date shall, however, in no
event be earlier than the last day that
Lessee could legally utilize the Premises
without commencing such Capital
Expenditure.
(b) If such Capital Expenditure is not the result of the
specific
and unique use of the Premises by Lessee
(such as, governmentally mandated
seismic modifications), then Lessor and
Lessee shall allocate the obligation
to pay for the portion of such costs
reasonably attributable to the Premises
pursuant to the formula set out in
Paragraph 7.1(d); provided, however, that
if such Capital Expenditure is required
during the last 2 years of this Lease
or if Lessor reasonably determines that it
is not economically feasible to pay
its share hereof, Lessor shall have the
option to terminate this Lease upon 90
days prior written notice to Lessee unless
Lessee notifies Lessor, in writing,
within 10 days after the receipt of
Lessor's termination notice that Lessee
will pay for such Capital Expenditure. If
lessor does not elect to terminate,
and fails to tender its share of any such
Capital Expenditure, Lessee may
advance such funds and deduct same, with
interest, from Rent until Lessor's
share of such costs have been fully paid.
Of Lessee is unable to finance
Lessor's share or if the balance of the
Rent due and payable for the remainder
of this Lease is not sufficient to fully
reimburse Lessee on an offset basis.
Lessee shall have the right to terminate
this Lease upon 30 days written
notice to Lessor.
(c) Notwithstanding the above, the provisions concerning
Capital
Expenditures are intended to apply only to
non-voluntary, unexpected, and new
Applicable Requirements. If the Capital
Expenditures are instead triggered by
Lessee as a result of an actual or proposed
change in use, change in intensity
of use, or modification to the Premises
then, and in that event, Lessee shall
be fully responsible for the cost thereof,
and Lessee shall not have any right
to terminate this Lease.
2.4 Acknowledgments.
Lessee acknowledges that: (a) it has been advised
by Lessor and/ or Brokers to satisfy itself
with respect to the condition of
the Premises (including but not limited to
the electrical, HVAC and fire
sprinkler systems, security environmental
aspects, and compliance with
Applicable requirements and the Americans
with Disabilities Act), and their
suitability for Lessee's intended use, (b)
Lessee has made such investigation
as it deems necessary with reference to
such matters and assumes all
responsibility therefor as the same relate
to its occupancy of the Premises,
and (c) neither Lessor, Lessor's agents,
nor brokers have made any oral or
written representations or warranties with
respect to said matters other than
as set forth in this Lease. I addition,
Lessor acknowledges that: (i) Brokers
have made no representations, promises or
warranties concerning Lessee's
ability to honor the Lease or suitability
to occupy the Premises, and (ii) it
is Lessor's sole responsibility to
investigate the financial capability and/or
suitability of all proposed tenants.
2.5 Lessee as Prior
Owner/Occupant. The warranties made by Lessor in
Paragraph 2 shall be of no force or effect
if immediately prior to the Start
Date Lessee was the owner or occupant of
the Premises. In such event, Lessee
shall be responsible for any necessary
corrective work.
2.6 Vehicle Parking.
Lessee shall be entitled to use the number of
Unreserved Parking Spaces and Reserved
Parking Spaces specified in Paragraph
1.2(b) on those portions of the Common Ares
designated from time to time by
Lessor for parking Lessee shall not use
more parking spaces than said number.
Said parking spaces shall be sued for
parking by vehicles no larger than
full-sized passenger automobiles or pick-up
trucks, herein called "Permitted
Size Vehicles." Lessor may regulate the
loading and unloading of vehicles by
adopting Rules and Regulations as provided
in Paragraph 2.9. No vehicles other
than Permitted Size Vehicles may be parked
in the Common Area without the
prior written permission of Lessor.
(a) Lessee shall not
permit or allow any vehicles that belong to
or are controlled by Lessee or Lessee's
employees, suppliers, shippers,
customers, contractors or invitees to be
loaded, unloaded, or parked in areas
other than those designated by Lessor for
such activities.
(b)
Lessee shall not
service or store any vehicles in the Common
Areas.
(c) If Lessee permits
or allows any of the prohibited activities
described in this Paragraph 2.6, then
Lessor shall have the right, without
notice, in addition to such other rights
and remedies that it may have, to
remove or tow away the vehicle involved and
charge the cost to Lessee, which
cost shall be immediately payable upon
demand by Lessor.
2.7 Common Areas -
Definition. The term "Common Areas' is defined as
all areas and facilities outside the
Premises and within the exterior boundary
line of the Project and interior utility
raceways and installations within the
Unit that are provided and designated by
the Lessor from time to time for the
general non-exclusive use of Lessor, Lessee
and other tenants of the Project
and their respective employees; suppliers,
shippers, customers, contractors
and invitees, including parking areas,
loading and unloading areas, trash
areas, roadways, walkways, driveways and
landscaped areas.
2.8 Common Areas -
Lessee's Rights. Lessor grants to Lessee, for the
benefit of Lessee and its employees,
suppliers, shippers, contractors,
customers and invitees, during the term of
this Lease, the non-exclusive right
to use, in common with others entitled to
such use, the Common Areas as they
exist from time to time, subject to any
rights, powers, and privileges
reserved by Lessor under the terms hereof
or under the terms of any rules and
regulations or restrictions governing the
use of the Project. Under no
ci8rcumstances shall the right herein
granted to use the Common Areas be
deemed to include the right to store any
property, temporarily or permanently,
in the Common areas. Any such storage shall
be permitted only by the prior
written consent of Lessor or Lessor's
designated agent, which consent may be
revoked at any time. In the event that any
unauthorized storage shall occur,
then Lessor shall have the right, without
notice, in addition to such other
rights and remedies that it may have, to
remove the property and charge the
cost to Lessee, which cost shall be
immediately payable upon demand by Lessor.
2.9 Common Areas - Rules
and Regulations. Lessor or such other
person(s) as Lessor may appoint shall have
the exclusive control and
management of the Common Areas and shall
have the right, from time to time, to
establish, modify, amend, and enforce
reasonable rules and regulations ("Rules
and Regulations") for the management,
safety , care, and cleanliness of the
grounds, the parking and unloading of
vehicles and the preservation of good
order, as well as for the convenience of
other occupants or tenants of the
Building and the Project and their
invitees. Lessee agrees to abide by and
conform to all such Rules and Regulations,
and to cause its employees,
suppliers, shippers, customers, contractors
and invitees to so abide and
conform. Lessor shall not be responsible to
Lessee for the non-compliance with
said Rules and Regulations by other tenants
of the Project.
2.10
Common
Areas - Changes. Lessor shall have the right, in Lessor's
sole discretion, from time to time:
(a) To make changes to
the common Areas, including, without
limitation, changes in the location, size,
shape and number of driveways,
entrances, parking spaces, loading and
unloading areas, ingress, egress,
direction of traffic, landscaped areas,
walkways and utility raceways;
(b) To close
temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to
the Premises remains available;
(c) To designate other
land outside the boundaries of the Project
to be a part of the Common Areas;
(d) To add additional
buildings and improvements to the Common
Areas;
(e) To use the Common
Areas while engaged in making additional
improvements, repairs or alterations to the
Project, or any portion thereof;
and
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(f) To do and perform
such other acts and make such other changes
in, to or with respect to the Common Areas
and Project as Lessor may, in the
exercise of sound business judgement, deem
to be appropriate.
3. Term.
3.1 Term, the Commencement
Date, Expiration Date and Original Term of
this Lease are as specified in Paragraph
1.3.
3.2 Early Possession. If
lessee totally or partially occupies the
Premises prior to the Commencement Date,
the obligation to bay Blase Rent
shall be abated for the period of such
early possession. All other terms of
this Lease (including but not limited to
the obligations to pay Lessee's Share
of Common Area Operating Expenses, Real
Property Taxes and insurance premiums
and to maintain the Premises) shall,
however be in effect during such period.
Any such early possession shall not affect
the Expiration Date.
3.3 Delay in Possession.
Lessor agrees to use its best commercially
reasonable efforts to deliver possession of
the Premises to Lessee by the
Commencement Date. If despite said efforts,
Lessor is unable to deliver
possession as agrees. Lessor shall not be
subject to any liability therefor,
not shall failure effect the validity of
this Lease. Lessee shall not,
however, be obligated to pay Rent or
perform its other obligations until it
receives possession of the Premises. If
possession is not delivered within 60
days after the Commencement Date, Lessee
may, at its option, by notice in
writing within 10 days after the end of
such 60 day period, cancel this Lease
in which event the Parties shall be
discharged from all obligations hereunder.
If such written notice is not received by
Lessor by the Start Date and Lessee
does not terminate this Lease, as
aforesaid, any period of rent abatement that
Lessee would otherwise have enjoyed shall
run from the date of delivery of
possession and continue for a period equal
to what Lessee would otherwise have
enjoyed under the terms hereof, but minus
any days of delay caused by the acts
or omissions of Lessee. If possession of
the Premises is not delivered with in
4 months after the Commencement Date, this
Lease shall terminate unless other
agreements are reached between Lessor and
Lessee, in writing.
3.4 Lessee Compliance. Lessor
shall not be required to tender
possession of the Premises to Lessee until
Lessee complies with its obligation
to provide evidence of insurance (Paragraph
8.5). Pending delivery of such
evidence, Lessee shall be required to
perform all of its obligations under
this Lease from and after the Start Date,
including the payment of Rent,
notwithstanding Lessors election to
withhold possession pending receipt of
such evidences of insurance. Further, if
Lessee is required to perform any
other conditions prior to or concurrent
with the Start Date, the Start Date
shall occur but Lessor may elect to
withhold possession until such conditions
are satisfied.
4. Rent.
4.1 Rent Defined. All
monetary obligations of Lessee to Lessor under
the terms of this Lease (except for the
Security Deposit) are deemed to be
rent ("Rent").
4.2 Common Area Operating
Expenses. Lessee shall pay to Lessor during
the term hereof, in addition to the Base
Rent Lessee's Share (as specified in
Paragraph 1.6.) Of all Common Area
Operating Expenses, as hereinafter defined,
during each calendar year of the term of
this Lease, in accordance with the
following provisions:
(a) "Common Area
Operating Expenses" are defined, for purposes of
this Lease, as all costs incurred by Lessor
relating to the ownership and
operation of the Project, including, but
not limited to, the following:
(i) The
operation, repair and maintenance, in neat, clan,
good order and condition, but not the
replacement (see subparagraph (e)), of
the following:
(aa) The Common Areas and Common Area improvements,
including parking areas, loading and
unloading areas, trash areas, roadways,
parkways, walkways, driveways, landscaped
areas, bumpers, irrigation systems,
Common Area lighting facilities, fences and
gates, elevators, roofs and roof
drainage systems.
(bb) Exterior signs
and any tenant directories.
(cc) Any fire
sprinkler systems.
(ii) The operation,
repair and maintenance, in neat, clean,
good order and condition, but not the
replacement (see subparagraph (e)). of
the following:
(iii) Trash disposal, pest control services, property
management, security services, and the
costs of any environmental inspections.
(iv) Reserves set
aside for maintenance and repair of Common
Areas.
(v) Any increase
above the Base Real Property Taxes (as
defined in Paragraph 10).
(vi) Any "Insurance
Cost Increase" (as defined in Paragraph
8).
(vii) Any deductible portion of an insured loss concerning
the Building or the Common Areas.
(viii) The cost of any Capital Expenditure to the Building or
the Project not covered under the
provisions of Paragraph 2.3 provided;
however, that Lessor shall allocate the
cost of any such Capital Expenditure
over a 12 year period and Lessee shall not
be required to pay more than
Lessee's Share of 1/144th of the cost of
such Capital Expenditure in any given
month.
(ix) Any other
services to be provided by Lessor that are
stated elsewhere in this Lease to be a
Common Area Operating Expense.
(b) Any Common Area
Operating Expenses and Real Property Taxes
that are specifically attributable to the
Unit, the building or to any other
building in the Project or to the
operation, repair and maintenance thereof,
shall be allocated entirely to such Unit,
Building, or other building.
However, any Common Area Operating Expenses
and real Property Taxes that are
not specifically attributable to the
Building or to any other building or to
the operation, repair and maintenance
thereof, shall be equitably allocated by
Lessor to all buildings in the Project.
(c) The inclusion of
the improvements, facilities and services
set forth in Subparagraph 4.2(a) shall not
be deemed to impose an obligation
upon Lessor to either have said
improvements or facilities or to provide those
services unless the Project already has the
same, Lessor already provides the
services, or Lessor has agreed elsewhere in
this Lease to provide the same or
some of them.
(d) Lessee's Share of
Common Area Operating Expenses shall be
payable by Lessee within 10 days after a
reasonably detailed statement of
actual expenses is presented to Lessee. At
Lessor's option, however, an amount
may be estimated by Lessor from time to
time of Lessee's Share of annual
Common Area Operating Expenses and the same
shall be payable monthly or
quarterly, as Lessor shall designate,
during each 12 month period of the Lease
term, on the same day as the Base Rent is
due hereunder. Lessor shall deliver
to Lessee within 60 days after the
expiration of each calendar year a
reasonably detailed statement showing
Lessee's Share of the actual Common Area
Operating Expenses incurred during the
preceding year. If Lessee's payments
under this Paragraph 4.2(d) during the
preceding year exceed Lessee's Share as
indicated on such statement, Lessor shall
be credited the amount of such
over-payment against Lessee' Share of
Common Area Operating Expenses next
becoming due. If Lessee's payments under
this Paragraph 4.2(d) during the
preceding year were less than Lessee's
Share as indicated on such statement,
Lessee shall pay to Lessor the amount of
the deficiency within 10 days after
delivery by Lessor to Lessee of the
statement.
(e) When a
capital component such as the roof, foundations,
exterior walls or a Common Area capital
improvement, such as the parking lot
paving, elevators, fences, etc. requires
replacement, rather than repair or
maintenance, Lessor shall, at Lessor's
expense. Be responsible for such
replacement. Such expenses and/or costs are
not Common Area Operating
Expenses.
4.3 Payment. Lessee shall
cause payment of Rent to be received by
Lessor in lawful money of the United
States, without offset or deduction
(except as specifically permitted in this
Lease), on or before the day on
which it is due. Rent for any period during
the term hereof which is for less
than one full calendar month shall be
prorated based upon the actual number of
days of said month. Payment of Rent shall
be made to Lessor at its address
stated herein or to such other persons or
place as Lessor may from time to
time designate in writing. Acceptance of a
payment which is less than the
amount then due shall not be a waiver of
Lessor's rights to the balance of
such Rent, regardless of Lessor's
endorsement of any check so stating. In the
event that any check, draft, or other
instrument of payment being given by
Lessee to Lessor is dishonored for any
reason, Lessee agrees to pay Lessor the
sum of $25.
5. Security
Deposit. Lessee shall deposit with Lessor upon execution
hereof the security Deposit as security for
Lessee's faithful performance of
its obligations under this Lease. If Lessee
fails to pay Rent, or otherwise
Defaults under this Lease, Lessor may use,
apply or retain all or any portion
of said Security Deposit for the payment of
any amount due Lessor or to
reimburse or compensate Lessor for any
liability, expense, loss or damage
which Lessor may suffer or incur by reason
thereof. If Lessor uses or applies
all or any portion of the Security Deposit,
Lessee shall within 10 days after
written request therefor deposit monies
with Lessor sufficient to restore.
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said Security Deposit to the full amount
required by this Lease. If the Base
Rent increases during the term of this
Lease, Lessee shall, upon written
request from Lessor, deposit additional
monies with Lessor so that the total
amount of the security Deposit shall at all
times bear the same proportion to
the increased Base Rent as the initial
Security Deposit bore to the initial
base Rent. Should the Agreed Use be amended
to accommodate a material change
in the business of Lessee or to accommodate
a sublessee or assignee, Lessor
shall have the right to increase the
security Deposit to the extent necessary,
in Lessors reasonable judgment, to account
for any increased wear and tear
that the Premises may suffer as a result
thereof. If a change in control of
lessee occurs during this Lease and
following such change the financial
condition of Lessee is, in Lessor's
reasonable judgment, significantly
reduced, Lessee shall deposit such
additional monies with Lessor as shall be
sufficient to cause the Security Deposit to
be at a commercially reasonable
level based on such change in financial
condition. Lessor shall not be
required to keep the Security deposit
separate from its general accounts.
Within 14 days after the expiration or
termination of this Lease, if Lessor
elects to apply the security Deposit only
to unpaid Rent, and otherwise within
30 days after the Premises have been
vacated pursuant to Paragraph 7.4(c)
below, Lessor shall return that portion of
the Security Deposit not used or
applied by Lessor. No part of the Security
Deposit shall be considered to be
held in trust, to bear interest or to be
prepayment for any monies paid by
Lessee under this Lease.
6. Use.
6.1 Use. Lessee shall use
and occupy the Premises only for the Agreed
Use, or any other legal use which is
reasonably comparable thereto, and for no
other purpose. Lessee shall not use or
permit the use of the Premises in a
manner that is unlawful, creates damage,
waste or a nuisance, or that disturbs
occupants of or causes damage to
neighboring premises or properties. Lessor
shall not unreasonably withhold or delay
its consent to any written request
for a modification of the agreed Use, so
long as the same will not impair the
structural integrity of the improvements on
the Premises or the mechanical or
electrical systems therein, and/or is not
significantly more burdensome to the
Premises. If Lessor elects to withhold
consent, Lessor shall within 7 days
after such request give written
notification of same, which notice shall
include an explanation of Lessor's
objections to the change in the Agreed Use.
6.2 Hazardous
Substances.
(a) Reportable Uses
Require Consent. The term "Hazardous
Substance" as used in this Lease shall mean
any product, substance, or waste
whose presence, use, manufacture, disposal,
transportation, or release, either
by itself or in combination with other
materials expected to be on the
Premises, is either: (i) potentially
injurious to the public health, safety or
welfare, the environment or the Premises,
(ii) regulated or monitored by any
governmental authority, or (iii)
a basis for potential
liability of Lessor to
any governmental agency or third party
under any applicable statute or common
law theory. Hazardous Substances shall
include, but not be limited to,
hydrocarbons, petroleum, gasoline, and/or
crude oil or any products,
by-products or fractions thereof. Lessee
shall not engage in any activity in
or on the Premises which constitutes a
Reportable Use of Hazardous Substances
without the express prior written consent
of Lessor and timely compliance (at
Lessee's expense) with all Applicable
requirements. "Reportable Use" shall
mean (i) the installation or use of any
above or below ground storage tank,
(ii) the generation, possession, storage,
use, transportation or disposal of a
Hazardous Substance that requires a permit
from, or with respect to which a
report, notice, registration or business
plan required to be filed with, any
governmental authority, and/or (iii) the
presence at the Premises of a
Hazardous substance with respect to which
any Applicable Requirements required
that a notice be given to persons entering
or occupying the Premises or
neighboring properties. Notwithstanding the
foregoing, Lessee may use any
ordinary and customary materials reasonably
required to be used in normal
course of the Agreed Use, so long as such
use is in compliance with all
Applicable Requirements, is not a
Reportable Use, and does not expose the
Premises or neighboring property to any
meaningful risk of contamination or
damage or expose Lessor to any liability
therefor. In addition, Lessor may
condition its consent to any Reportable Use
upon receiving such additional
assurances as Lessor reasonably deems
necessary to protect itself, the public,
the Premises and/or the environment against
damage, contamination injury
and/or liability including, but not limited
,to the installation (and removal
on or before Lease expiration or
termination) of protective modifications
(such as concrete encasements) and/or
increasing the Security Deposit.
(b) Duty to Inform Lessor. If Lessee knows, or has reasonable
cause to believe, that a Hazardous
Substance has come to be located in, on,
under or about the Premises, other than as
previously consented to by Lessor,
lessee shall immediately give written
notice of such fact to Lessor, and
provide Lessor with a copy of any report,
notice, claim or other documentation
which it has concerning the presence of
such Hazardous Substance.
(c) Lessee Remediation. Lessee shall not cause or permit any
Hazardous Substance to be spilled or
released in, on , under or about the
Premises (including through the plumbing or
sanitary sewer system) and shall
promptly, at Lessee's expense, take all
investigatory and/or remedial action
reasonably recommended, whether or not
formally ordered or required, for the
cleanup of any contamination of, and for
the maintenance, security and/ or
monitoring of the Premises or neighboring
properties, that was caused or
materially contributed to by Lessee, or
pertaining to or involving any
Hazardous Substance brought onto the
Premises during the term of this Lease,
by or for Lessee, or any third party.
(d) Lessee Indemnification. Lessee shall indemnify, defend and
hold Lessor, its agents, employees, lenders
and ground lessor, if any,
harmless from and against any and all loss
of rents and/or damages,
liabilities, judgments, claims, expenses,
penalties and attorneys' and
consultants' fees arising out of or
involving any Hazardous Substance brought
onto the Premises by or for Lessee, or any
third party (provided, however,
that Lessee shall have o liability under
this Lease with respect to
underground migration of any Hazardous
Substance under the Premises from areas
outside of the Project). Lessee's
obligations shall include, but not be
limited to the effects of any contamination
or injury to person, property or
the environment created or suffered by
Lessee, and the cost of investigation,
removal, remediation, restoration and/or
abatement, and shall survive the
expiration or termination of this Lease. No
termination, cancellation, or
release agreement entered into by Lessor
and Lessee shall release Lessee from
its obligations under this Lease with
respect to Hazardous Substances, unless
specifically so agreed by Lessor and Lessee
shall release Lessee from its
obligations under this Lease with respect
to Hazardous Substances, unless
specifically so agreed by Lessor in writing
at the time of such agreement.
(e) Lessor
Indemnification. Lessor and its successors and assigns
shall indemnify, defend, reimburse and hold
Lessee, its employees and lenders,
harmless from and against any and all
environmental damages, including the
cost of remediation, which existed as a
result of Hazardous Substances on the
Premises prior to the Start Date or which
are caused by the gross negligence
or willful misconduct of Lessor, its agents
or employees. Lessor's
obligations, as and when required by the
Applicable Requirements shall
include, but not be limited to, the cost of
investigation, removal,
remediation, restoration and/or abatement,
and shall survive the expiration or
termination of this Lease.
(f) Investigations and remediations. Lessor shall retain the
responsibility and pay for any
investigations or remediation measures required
by governmental entities having
jurisdiction with respect to the existence of
Hazardous Substances on the Premises prior
to the Start Date, unless such
remediation measure is required as a result
of Lessee's use (including
"Alterations" as defined in paragraph
7.3(a) below) of the Premises, in which
event Lessee shall be responsible for such
payment Lessee shall cooperate
fully in any such activities at the request
of Lessor, including allowing
Lessor and Lessor's agents to have
reasonable access to the Premises at
reasonable times in order to carry out
Lessor's investigative and remedial
responsibilities.
(g) Lessor Termination Option. If a Hazardous Substance
Condition
(see Paragraph 9.1(e)) occurs during the
term of this Lease, unless Lessee is
legally responsible therefor (in which case
Lessee shall make the
investigation and remediation thereof
required by the Applicable Requirements
and this Lease shall continue in full force
and effect, but subject to
Lessor's rights under Paragraph 6.2(d) and
Paragraph 13), Lessor may, at
Lessor's option, either (i) investigate and
remediate such Hazardous Substance
Condition, if required, as soon as
reasonably possible at Lessor's expense, in
which event this Lease shall continue in
full force and effect; or (ii) if the
estimated cost to remediate such condition
exceeds 12 times then the monthly
Base Rent of $100,000, whichever is
greater, give written notice to Lessee,
with 30 days after receipt by Lessor of
knowledge of the occurrence of such
Hazardous Substance Condition, of Lessor's
desire to terminate this Lease as
of the date 60 days following the date of
such notice. In the event Lessor
elects to give a termination notice, Lessee
may, within 10 days thereafter,
give written notice to Lessor of Lessee's
commitment to pay the amount by
which the cost of the remediation of such
Hazardous Substance Condition
exceeds an amount equal to 12 times the
then monthly Base Rent or $100,000,
whichever is greater. Lessee shall provide
Lessor with said funds or
satisfactory assurance thereof with 30 days
following such commitment In such
event, this Lease shall continue in full
force and effect, and Lessor shall
proceed to make such remediation as soon as
reasonably possible after the
required funds are available If lessee does
not give such notice and provide
the required funds or assurance thereof
within the time provided, this Lease
shall terminate as of the date specified on
Lessors notice of termination.
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6.3 Lessee's Compliance
with Applicable Requirements. Except as
otherwise provided in this Lease, Lessee
shall, at Lessee's sole expense,
fully, diligently and in a timely manner,
materially comply with all
Applicable Requirements, the requirements
of any applicable fire insurance
underwriter or rating bureau, and the
recommendations of Lessor's engineers
and/or consultants which relate in any
manner to the Premises, without regard
to whether said requirements are now in
effect or become effective after the
Start Date. Lessee shall, within 10 days
alter receipt of Lessor's written
request, provide Lessor with copies of all
permits and other documents, and
other information evidencing Lessee's
compliance with any Applicable
Requirements specified by Lessor, and shall
immediately upon receipt, notify
Lessor in writing (with copies of any
documents involved) of any threatened or
actual claim, notice, citation, warning,
complaint or report pertaining to or
involving the failure of Lessee or the
Premises to comply with any Applicable
Requirements.
6.4 Inspection:
Compliance. Lessor and Lessor's "Lender" (as defined
in Paragraph 30) and consultants shall have
the right to enter into Premises
at any time, in the case of an emergency,
and otherwise at reasonable times,
for the purpose of inspecting the condition
of the Premises and for verifying
compliance by Lessee with this Lease. The
cost of any such inspections shall
be paid by Lessor, unless a violation of
Applicable Requirements, or a
contamination is found to exist or be
imminent, or the inspection is requested
or ordered by a governmental authority. In
such case, Lessee shall upon
request reimburse Lessor for the cost of
such inspection, so long as such
inspection is reasonably related to the
violation or contamination.
7. Maintenance; Repairs;
Utility Installations; Trade Fixtures and
Alterations.
7.1 Lessee's
Obligations.
(a) In General. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance, 6.3 (Lessee's
Compliance with Applicable
requirements), 7.2 (Lessor's Obligations) ,
9 (Damage or Destruction and 14
(Condemnation), Lessee shall, at Lessee's
sole expense, keep the Premises,
Utility Installations (intended for
Lessee's exclusive use, no matter where
located, and Alterations in good order,
condition and repair (whether or not
the portion of the Premises requiring
repairs, or the means of repairing the
same are reasonably or readily accessible
to Lessee, and whether or not the
need for such repairs occurs as a result of
Lessee's use, any prior use, the
elements or the age of such portion of the
Premises), including, but not
limited to, all equipment or facilities,
such as plumbing, HVAC equipment,
electrical, lighting facilities, boilers,
pressure vessels, fixtures, interior
walls, interior surfaces of exterior walls,
ceilings, floors, windows, doors,
plate glass and skylights but excluding any
items which are the responsibility
of Lessor pursuant to Paragraph 7.2.
Lessee, in keeping the Premises in good
order, condition and repair, shall exercise
and perform good maintenance
practices, specifically including the
procurement and maintenance of the
service contracts required by Paragraph
7.1(b) below. Lessee's obligations
shall include restorations, replacements or
renewals when necessary to keep
the Premises and all improvements thereon
or a part thereof in good order,
condition and state of repair.
(b) Service Contracts. Lessee shall, at Lessee's sole expense,
procure and maintain contracts, with copies
to Lessor, in customary form and
substance for, and with contractors
specializing and experienced in the
maintenance of the following equipment and
improvements, if any, if and when
installed on the Premises: (i) HVAC
equipment, (ii) boiler and pressure
vessels, (iii) (illegible), and (iv) any
other equipment, if reasonably
required by Lessor. However, Lessor
reserves the right, upon notice to Lessee,
to procure and maintain any or all such
service contracts, and if Lessor so
elects, Lessee shall reimburse Lessor, upon
demand, for the cost thereof.
(c) Failure to Perform. If Lessee fails to perform Lessee's
obligations under this Paragraph 7.1,
Lessor may enter upon the Premises after
10 days' prior written notice to Lessee
(except in the case of an emergency,
in which case no notice shall be required),
perform such obligations on
Lessee's behalf, and put the Premises in
good order, condition and repair, and
Lessee shall promptly reimburse Lessor for
the cost thereof.
(d) Replacement. Subject to Lessee's indemnification of Lessor
as
set forth in Paragraph 8.7 below, and
without relieving Lessor liability
resulting from Lessee's failure to exercise
and perform good maintenance
practices, if an item described in
Paragraph 7.4(b) cannot be repaired other
than at a cost which is in excess of 50% of
the cost of replacing such item,
then such item shall be replaced by Lessor,
and the cost thereof shall be
prorated between the Parties and Lessee
shall only be obligated to pay, each
month during the remainder of the term of
this Lease, on the date on which
Base Rent is due, an amount equal to the
product of multiplying the cost of
such replacement by a fraction, the
numerator of which is one, and the
denominator of which is 144 (ie. 1/144th of
the cost per month). Lessee shall
pay interest on the unamortized balance at
a rate that is commercially
reasonable in the judgement of Lessor's
accountants. Lessee may, however,
repay its obligation at any time.
7.2 Lessor's Obligations.
Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 4.2 (Common
Area Operating Expenses), 6. (Use,
7.1 (Lessee's Obligations), 9.(Damage or
Destruction) and 14.(Condemnation),
Lessor, subject to reimbursement pursuant
to Paragraph 4.2, shall keep in good
order, condition and repair the
foundations, exterior walls, structural
condition of interior bearing walls,
exterior roof, fire sprinkler system,
Common Area fire alarm and/or smoke
detection systems, fire hydrants, parking
lots, walkways, parkways, driveways,
landscaping, fences, signs and utility
systems serving the Common Areas and all
parts thereof, as well as providing
the services for which there is a common
Area Operating Expense pursuant to
Paragraph 4.2. Lessor shall not be
obligated to paint the exterior or interior
surfaces of exterior walls nor shall Lessor
be obligated to maintain, repair
or replace windows, doors or plate glass of
the Premises. Lessee expressly
waives the benefit of any statute now or
hereafter in effect to the extent it
is inconsistent with the terms of this
Lease.
7.3 Utility Installations;
Trade Fixtures; Alterations.
(a) Definitions. The term "Utility Installations" refers to all
floor and window coverings, air lines,
power panels, electrical distribution,
security and fire protection systems,
communication systems, lighting
fixtures, HVAC equipment, plumbing, and
fencing to or on the Premises. The
term "Trade Fixtures" shall mean Lessee's
machinery and equipment that can be
removed without doing material damage to
the Premises. The term "Alterations"
shall mean any modification of the
improvements, other than Utility
Installations or Trade Fixtures, whether by
addition or deletion. "Lessee
Owned Alterations and/or Utility
Installations" are defined as Alterations
and/or Utility Installations made by Lessee
that are not yet owned by Lessor
pursuant to Paragraph 7.4(a).
(b) Consent. Lessee shall not make any alterations or Utility
Installations to the Premises without
Lessor's prior written consent. Lessee
may, however, make non-structural Utility
Installations to the interior of the
Premises (excluding the roof) without such
consent but upon notice to Lessor,
as long as they are not visible from the
outside, do not involve puncturing,
relocating or removing the roof or any
existing walls, and the cumulative cost
thereof during this Lease as extended does
not exceed a sum equal to 3
months's Base Rent in the aggregate or a
sum equal to one month's Base Rent in
any one year. Notwithstanding the foregoing
Lessee shall not make or permit
any roof penetrations and/or install
anything on the roof without the prior
written approval of Lessor. Lessor may, as
a precondition of granting such
approval, require Lessee to utilize a
contractor chosen and/or approved by
Lessor. Any Alterations or Utility
Installations that Lessee shall desire to
make and which require the consent of the
Lessor shall be presented to Lessor
in written form with detailed plans.
Consent shall be deemed conditioned upon
Lessee's: (i) acquiring all applicable
governmental permits, (ii) furnishing
Lessor with copies of both the permits and
the plans and specifications prior
to commencement of the work, and (iii)
compliance with all conditions of said
permits and other Applicable Requirements
in a prompt and expeditious manner.
Any Alterations or Utility Installations
shall be performed in a workmanlike
manner with good and sufficient materials.
Lessee shall promptly upon
completion furnish Lessor with as-built
plans and specifications. For work
which costs and amount in excess of one
month's Base Rent, Lessor may
condition its consent upon Lessee providing
a lien and completion bond in an
amount in excess of one month's Base Rent.
Lessor may condition its consent
upon Lessee providing a lien and completion
bond in an amount equal to 150% of
the estimated cost of such Alteration or
Utility Installation and/or upon
Lessee's posting an additional Security
Deposit with Lessor.
(c)
Indemnification. Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to
have been furnished to or for
Lessee at or for use on the Premises, which
claims are or may be secured by
any mechanic's or materialmen's lien
against the Premises or any interest
therein. Lessee shall give Lessor not less
than 10 days notice prior to the
commencement of any work in, on or about
the Premises, and Lessor shall have
the right to post notices of
non-responsibility. If Lessee shall contest the
validity of any such lien, claim or demand,
then Lessee shall, at its sole
expense defend and protect itself, Lessor
and the Premises against the same
and shall pay and satisfy any such adverse
judgment that may be rendered
thereon before the enforcement thereof. If
lessor shall require, Lessee shall
furnish a surety bond in an amount equal to
150% of the amount of such
contested lien, claim or demand,
indemnifying Lessor against liability for the
same. If lessor elects to participate in
any such action, Lessee shall pay
Lessor's attorneys' fees and costs.
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7.4 Ownership; Removal;
Surrender; and Restoration.
(a) Ownership. Subject to Lessor's right to require removal or
elect ownership as hereinafter provided,
all Alterations and Utility
Installations made by Lessee shall be the
property of Lessee, but considered a
part of the Premises, Lessor may, at any
time, elect in writing to be the
owner of all or any specified part of the
Lessee Owned Alterations and Utility
Installations. Unless otherwise instructed
per paragraph 7.4(b) hereof, all
Lessee Owned Alterations and Utility
Installations shall, at the expiration or
termination of this Lease, become the
property of Lessor and be surrendered by
Lessee with the Premises.
(b) Removal. By delivery to Lessee of written notice from
Lessor
not earlier than 90 and not later than 30
days prior to the end of the term of
this Lease, Lessor may require that any or
all Lessee Owned Alterations or
Utility Installations be removed by the
expiration or termination of this
Lease. Lessor may require the removal at
any time of all or any part of any
Lessee Owned Alterations, or Utility
Installations made without the required
consent.
(c) Surrender; Restoration. Lessee shall surrender the Premises
by
the Expiration Date or any earlier
termination date with all of the
improvements, parts and surfaces thereof
broom clean and free of debris, and
in good operating order, condition and
state of repair, ordinary wear and tear
excepted. "Ordinary wear and tear" shall
not include any damage or
deterioration that would have been
prevented by good maintenance practice.
Notwithstanding the foregoing, if this
Lease is for 12 months or less, then
Lessee shall surrender the Premises in the
same condition as delivered to
Lessee on the Start Date with NO allowance
for ordinary wear and tear. Lessee
shall repair any damage occasioned by the
installation, maintenance or removal
of Trade Fixtures, Lessee owned Alterations
and/or Utility Installations,
furnishings and equipment as well as the
removal of any storage tank installed
by or for Lessee. Lessee shall also
completely remove from the Premises any
and all Hazardous Substances brought onto
the Premises by or for Lessee, or
any third party (except Hazardous
Substances which were deposited via
underground migration from areas outside of
the Project) even if such removal
would require Lessee to perform or pay for
work that exceeds statutory
requirements. Trade Fixtures shall remain
the property of Lessee and shall be
removed by Lessee. The failure by Lessee to
timely vacate the Premises
pursuant to this Paragraph 7.4(c) without
the express written consent of
Lessor shall constitute a holdover under
the provisions of Paragraph 26 below.
8. Insurance; Indemnify.
8.1 Payment of Premium
Increases.
(a) As used herein, the term "Insurance Cost Increase" is
defined
as any increase in the actual cost of the
insurance applicable to the building
and/or the Project and required to be
carried by Lessor, pursuant to
Paragraphs 8.2(b), 8.2(a) and 8.3(b)
("required Insurance"), over and above
the Base Premium, as hereinafter defined,
calculated on an annual basis.
Insurance Cost Increase shall include, but
not be limited to, requirements of
the holder of a mortgage or deed of trust
covering the Premises, building
and/or Project, increased valuation of the
Premises, Building and/or Project,
and/or a general premium rate increase. The
term Insurance Cost Increase shall
not, however, include any premium increases
resulting from the nature of the
occupancy of any other tenant of the
Building. If the parties insert a dollar
amount in Paragraph 1.9, such amount shall
be considered the "Base Premium."
The Base Premium shall be the annual
premium applicable to the 12 month period
immediately preceding the Start Date. If
however, the Project was not insured
for the entirety of such 12 month period,
then the Base Premium shall be the
lowest annual premium reasonably obtainable
for the Required Insurance as of
the Start Date, assuring the most nominal
use possible of the Building. In any
event, however, shall Lessee be responsible
for any portion of the premium
cost attributable to liability insurance
coverage in excess of $2,000,000
procured under Paragraph 8.2(b).
(b) Lessee shall pay any Insurance Cost Increase to Lessor
pursuant to Paragraph 4.2. Premiums for
policy periods commencing prior to, or
extending beyond, the term of this Lease
shall be prorated to coincide with
the corresponding Start Date or Expiration
Date.
8.2 Liability
Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force a
Commercial General Liability policy of
insurance protecting Lessee and Lessor
as an additional insured against claims for
bodily injury, personal injury and
property damage based upon or arising out
of the ownership, use, occupancy or
maintenance of the Premises and all areas
appurtenant thereto. Such insurance
shall be on an occurrence basis providing
single limit coverage in an amount
not less than $1,000,000 per occurrence
with an annual aggregate of not less
than $2,000,000, and "Additional
Insured-Managers or Lessors of Premises
Endorsement" and contain the "Amendment of
the Pollution Exclusion
Endorsement" for damage caused by heat,
smoke or fumes from a hostile fire.
The policy shall not contain any
intra-insured exclusions as between insured
persons or organizations, but shall include
coverage for liability assumed
under this Lease as an "insured contract"
for the performance of Lessee's
indemnity obligations under this Lease. The
limits of said insurance shall
not, however, limit the liability of Lessee
nor relieve Lessee of any
obliga
