STANDARD
INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE - NET
1.
Basic Provisions ("Basic Provisions")
1.1
Parties: This Lease ("Lease"), dated for reference purposes
only November 1, 2008, is made by and between Cartwright, LLC, a
California limited liability company dba Cartwright Real Estate
Holdings, LLC and Klein Investments Family Limited Partnership, a
California limited partnership as Co-owners ("Lessor") and Quantum
Fuel Systems Technologies Worldwide, Inc., a Delaware corporation
("Lessee"), collectively the "Parties," or individually a
"Party").
1.2
Premises: That certain real property, including all
improvements therein or to be provided by Lessor under the terms of
this Lease, and commonly known as 17872 Cartwright Road, Irvine,
located in the County of Orange, State of California, and generally
described as an approximate 88,159 square foot industrial building
on approximately 5.1 acres of land ("Premises"). The Premises shall
also include the land and improvements on which the test and
validation bunkers used by Lessee are situated.
1.3 Term: 7
years and 0 months ("Term") commencing on November 1, 2008
("Commencement Date") and ending October 31, 2015 ("Expiration
Date"). (See also Paragraph 3).
1.4 Early
Possession: N/A
1.5
Base Rent: $81,104 per month ("Base Rent"), payable on the 1
st day of each month commencing November 1, 2008. (See
also Paragraph 4)
1.6 Base
Rent and Other Monies Paid Upon Execution:
(a)
Base Rent: $81,104 for the period November 1, 2008 through November
30, 2008. Lessor acknowledges that it has previously received the
sum of $55,149.93 from Lessee resulting in a net Base Rent amount
to be paid upon execution of this Lease of $25,954.07. The Base
Rent shall be adjusted and abated as provided in Paragraph 4.
(b)
Security Deposit: $81,104. Lessor acknowledges that it has
previously received the sum of $34,826 from Lessee resulting in a
net amount to be paid upon execution of this Lease of $46,278. (See
also Paragraph 5)
(c)
Association Fees: N/A
(d)
Other: N/A
(e)
Total Due Upon Execution of this Lease: $72,232.07
1.7
Agreed Use: MANUFACTURING, DISTRIBUTION, RESEARCH AND
DEVELOPMENT (INCLUDING USE OF "BUNKERS") AND OFFICE ADMINISTRATION.
(See also Paragraph 6.)
1.8 Insuring
Party: Lessor is the "Insuring Party" unless otherwise stated
herein. (See also Paragraph 8.)
1.9 Real
Estate Brokers: (See also Paragraph 15.)
(a)
Representation: The following real estate brokers (collectively,
the "Brokers") and brokerage relationships exist in this
transaction (check applicable boxes):
Lessor is not represented by a broker.
Cresa Partners, LLC represents Lessee exclusively ("Lessee's
Broker").
1.10
Guarantor: N/A.
1.11
Attachments: N/A
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 payment based thereon is not subject to revision whether or not
the actual size is more or less.
2.2
Condition.
(a)
Lessor and Lessee acknowledge and agree that Lessee has been
occupying the Premises prior to the Commencement Date pursuant to a
Lease Agreement dated March 5, 2004 ("Prior Lease"). As a material
inducement to Lessor to enter into this Lease, Lessee hereby
acknowledges and agrees that Lessee is continuing to lease the
Premises in an "AS IS" condition and to perform certain maintenance
and repair items to the extent required to be performed by Lessee
under the Lease.
(b)
As a material inducement to Lessee's entering into of this Lease,
Lessor agrees that Lessee's restoration obligations with respect to
Utility Installations, Trade Fixtures and Alterations made by
Lessee prior to or during the term of the Prior Lease have been
waived by Lessor and that Lessee's restoration obligations during
and upon expiration of this Lease shall be as set forth in
Paragraph 7.4 of this Lease.
2.3
Compliance. Lessor warrants that to the best of its knowledge
the improvements on the Premises comply with the building codes,
applicable laws, covenants or restrictions of record, regulations
and ordinances ("Applicable Requirements") that were in effect at
the time that each improvement, or portion thereof, was
constructed. Said warranty does not apply to the use to which
Lessee has or 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. Lessee is responsible for determining whether or
not the zoning is appropriate 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 after receipt of
written notice from Lessee setting forth with specificity the
nature and extent of such non-compliance, rectify the same at
Lessor's expense. If Lessee does not give Lessor written notice of
a non-compliance with this warranty within six (6) months following
the Commencement Date, correction of that non-compliance shall be
the obligation of Lessee at Lessee's sole cost and expense. If the
Applicable Requirements are hereafter changed (as opposed to being
in existence at the Commencement Date, which is addressed in
Paragraph 6.2(e) below), so as to require during the term of this
Lease the construction of an addition to or an alteration of the
Building, the remediation of any Hazardous Substance, or the
reinforcement or other physical modification of the 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 two (2)
years of this Lease and the cost thereof exceeds six (6) months
Base Rent, Lessee may instead terminate this Lease unless Lessor
notifies Lessee, in writing, within ten (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
six (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 ninety (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 shall pay for such
Capital Expenditures and Lessee shall only be obligated to pay,
each month during the remainder of the Term of this Lease, on the
date that the Base Rent is due, an amount equal to the product of
multiplying the cost of such Capital Expenditure by a fraction, the
numerator of which is one, and the denominator of which is the
number of months of the useful life of such Capital Expenditure as
such useful life is specified pursuant to federal income tax
regulations or guidelines for depreciation thereof (including
interest on the unamortized balance as is then commercially
reasonable in the judgment of Lessor's accountants). Lessee shall
pay interest on the balance but may prepay its obligations at any
time. 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 thereof, 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 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 has been
fully paid. If 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
thirty (30) days written notice to Lessor.
(c)
In the event that any improvements (including seismic upgrades) are
required to the Premises as a result of building code changes or
other governmental mandate, to the extent that such improvements
are required as a result of Lessee's use of or operations in the
Premises, Lessee shall pay all costs (without any cap on its
obligations) associated therewith. Otherwise, Lessor shall pay all
costs associated therewith, not to exceed the sum of One Hundred
Fifty Thousand ($150,000) Dollars, over the Term (as may be
extended) on the following terms and conditions:
(i)
To the extent that the cost of such improvement(s) is greater than
$150,000 but less than or equal to $250,000 (which $100,000 range
shall be referred to hereafter in this Section as the
"Apportionment Range"), the incremental cost of the improvement(s)
within the Apportionment Range shall be split between Lessor and
Lessee on a prorata basis based upon a ratio, the numerator of
which shall be the remaining term of the Lease, and the denominator
of which shall be the useful life of the improvement or
improvements in question (which useful life will be separately
determined for each improvement). Lessee shall pay only its prorata
share derived from such formula (which in no event shall exceed
$100,000).
(ii)
To the extent that the cost of such improvements exceeds $250,000
during the Term of the Lease, Lessor shall have the right to
terminate the Lease, however, Lessee may defeat such termination
right of Lessor by paying the full cost of such improvements that
exceeds $250,000 within a reasonable time, not to exceed thirty
(30) days after such sums become due.
(d)
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 changed in use, changed in intensity of use, or
modification to the Premises made by Lessee related to the
operation of its business then, and in that event, Lessee shall be
fully responsible for the cost thereof, and Lessee shall not have
any right to terminate the Lease.
2.4
Acknowledgements. 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 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 any Broker has made any oral
or written representations or warranties with respect to said
matters other than as set forth in this Lease. In addition, Lessor
acknowledges that: (a) Broker has made no representations, promises
or warranties concerning Lessee's ability to honor the Lease or
suitability to occupy the Premises, and (b) 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 Commencement Date Lessee was the owner or occupant of the
Premises. In such event, Lessee shall be responsible for any
necessary corrective work.
3.
Term.
3.1 Term.
T he Commencement Date, Expiration Date and 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 pay Base
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 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 agreed, Lessor shall not be subject to any liability
therefor, nor shall such failure affect 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 sixty (60) days after the
Commencement Date, Lessee may, at its option, by notice in writing
within ten (10) days after the end of such sixty (60) day period,
cancel this Lease, in which event the Parties shall be discharged
from all obligations thereunder. If such written notice is not
received by Lessor within said ten (10) day period, Lessee's right
to cancel shall terminate. Except as otherwise provided, if
possession is not tendered to Lessee 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 within four
(4) months after the Commencement Date, this Lease shall terminate
unless other agreements are reached between Lessor and Lessee, in
writing.
4.
Rent.
4.1 Rent
Defined. All monitory obligations of Lessee to Lessor under the
terms of this Lease (except for the Security Deposit) are deemed to
be ("Rent").
4.2
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. In the event that any invoice
prepared by Lessor is inaccurate such inaccuracy shall not
constitute a waiver and Lessee shall be obligated to pay the amount
set forth in this Lease. 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. 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 given by Lessee to
Lessor is dishonored for any reason other than bank error, Lessee
agrees to pay to Lessor the sum of $25 in addition to any Late
Charge. Payments will be applied first to accrued late charges, and
attorneys' fee, second to accrued interest, third to Base Rent and
fourth to any remaining amount to any other outstanding charges or
costs.
4.3
Adjustments and Abatements.
(a)
The Base Rent, as defined in Paragraph 1.5 of the Lease, shall be
increased annually commencing on the first anniversary date of the
Commencement Date and on each anniversary date thereafter (each, an
"Adjustment Date") to an amount equal to 103% of the Base Rent
payable by Lessee immediately prior to each applicable Adjustment
Date.
(b)
The Base Rent shall be fully abated for the 13 th and 25
th months of Term provided that Lessee is not in Breach
(as defined in Section 13.1 of the Lease) of this Lease at the time
of such abatement.
4.4
Tenant Improvement Allowance. Lessee shall be responsible
for the cost of improvements to the Premises required by Lessee's
proposed use of the Premises ("Lessee's Work"). Lessor has agreed
to provide Lessee with a tenant improvement allowance of Two
Hundred Fifty Thousand Dollars ($250,000) to help cover the cost of
such Lessee's Work (the "Allowance"). As used herein, the term
"allowed costs" shall mean all out-of-pocket costs incurred by
Lessee with respect to the performance of Lessee's Work, but
excluding Lessee's trade fixtures, furniture and other personal
property and all costs and expenses paid to affiliates of Lessee to
the extent the same are in excess of fees and costs which would
have been payable in an arm's length transaction. Lessor shall be
entitled to all tax benefits in connection with the allowed costs
covered by the Allowance. Lessee shall from time to time submit to
Lessor an application for payment which shall be accompanied by an
invoice from Lessee's contractor as to the amount of allowed costs
for Lessee's Work. Lessor shall pay such invoice directly or
reimburse Lessee within fifteen (15) days of receipt of the
application for payment. Costs for Lessee's Work which are greater
than the Allowance shall be paid for by Lessee within fifteen (15)
days after submittal to Lessee.
5.
Security Deposit. Lessee shall deposit with Lessor upon
execution hereof the net Security Deposit stated in Paragraph
1.6(b) 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 said Security Deposit, Lessee shall within ten (10) days
after written request therefor deposit moneys with Lessor
sufficient to restore said Security Deposit to the full amount
required by this Lease. 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 Lessor's
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 moneys 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 thirty (30) days after the expiration or termination of this
Lease, if Lessor elects to apply the Security Deposit only to
unpaid Rent, and otherwise within seven (7) 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 moneys
to be paid under this Lease.
6.
Use of Premises.
6.1
Agreed Use of Premises. Lessee shall use and occupy the
Premises only for the Agreed Use set forth in Paragraph 1.7, or any
other legal use which is reasonably comparable thereto, and for no
other purpose, without the prior written consent of Lessor. 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
owners and/or occupants of, or causes damage to neighboring
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 seven (7) business days after
such request give written notification of same, which notice shall
include an explanation of Lessor's objections to the change in use.
Lessor expressly acknowledges and agrees that Lessee shall be
permitted to continue to use the test and validation bunkers
included within the definition of Premises.
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 bases 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 is 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 requires 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 the 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 assurance as Lessor reasonably deems
necessary to protect itself, the public, the Premises and/or
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,
comply with all Applicable Requirements and 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 for or on behalf of
Lessee.
(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 for or on behalf of Lessee, (provided, however, that Lessee
shall have no liability under this Lease with respect to
underground migration of any Hazardous Substance under the Premises
from adjacent properties not caused or contributed to by Lessee).
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 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 cost of remediation, which existed as a result
of Hazardous Substances which existed on the Premises prior to the
Prior Lease or which are caused by the 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 commencement date of the Prior Lease, 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
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 twelve (12) times the then monthly Base Rent or $1,000,000,
whichever is greater, give written notice to Lessee, within thirty
(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 sixty (60) days following the date of
such notice. In the event Lessor elects to give a termination
notice, Lessee may, within ten (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 twelve (12) times the then monthly Base
Rent or $1,000,000, whichever is greater. Lessee shall provide
Lessor with said funds of satisfactory assurance thereof within
thirty (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 in Lessor's notice of termination.
6.3 Lessee's
Compliance with Applicable Requirements. Except as otherwise
provided in the this Lease, Lessee shall, at Lessee's sole expense,
fully, diligently and in a timely manner, materially comply with
all Applicable Requirements, the reasonable requirements of any
applicable fire insurance underwriter or rating bureau, and the
reasonable 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 Commencement Date. Lessee shall, within ten (10) days
after 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. Likewise,
Lessee shall immediately give written notice to Lessor of: (i) any
water damage to the Premises, and any suspected seepage, pooling,
dampness or other condition conducive to the production of mold; or
(ii) any unusual mustiness or other odors that might indicate the
presence of mold in the Premises.
6.4 Inspection;
Compliance. Lessor and Lessor's "Lender" (as defined in
Paragraph 30 below) and consultants shall have the right to enter
into the Premises at any time, in the case of an emergency, and
otherwise at reasonable times after reasonable prior notice 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 Hazardous Substance or 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 inspections, so
long as such inspection is reasonably related to the violation or
contamination. In addition, Lessee shall provide copies of all
relevant material safety data sheets (MSDS) to Lessor within ten
(10) days of the receipt of a written request therefore.
7.
Maintenance; Repairs, Utilities 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), 7.4 (Ownership; Removal;
Surrender; and Restoration), 9 (Damage or Distraction), and 14
(Condemnation), Lessee shall, at Lessee's sole expense, keep the
Premises, Utility Installations, 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, heating, ventilating, air-conditioning, electrical,
lighting facilities, boilers, presser vessels, fire protection
system, fixtures, walls (interior and exterior), foundations,
ceilings, roofs, floors, windows, doors, plate glass, skylights,
landscaping, driveways, parking lots, fences, retaining walls,
signs, sidewalks and parkways located in, on, or adjacent to the
Premises. 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 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, ordinary wear and
tear excepted. Lessee shall, during the term of this Lease, keep
the exterior appearance of the building in a first-class condition
consistent with the exterior appearance of other similar facilities
of comparable age and size in the vicinity, including, when
necessary, the exterior repainting of the building.
(b)
Service Contracts. Lessee shall, at Lessee's sole expense, procure
and maintain contracts, with copies to Lessor upon request, in
customary form and substance for, and with contractors specializing
and experienced the maintenance of the following equipment and
improvements, if any, if and when installed on the Premises ("Basic
Elements"): (i) HVAC equipment, (ii) boiler, and pressure vessels,
(iii) fire extinguishing system, including fire alarm and/or smoke
detection, (iv) landscaping and irrigation systems, (v) roof
covering and drains, and (vi) clarifiers.
(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 pay to Lessor a sum
equal to 115% of the cost thereof.
(d)
Replacement. Subject to Lessee's indemnification of Lessor as set
forth in Paragraph 8.7 below, and without relieving Lessee of
liability resulting from Lessee's failure to exercise and perform
good maintenance practices, if the Basic Elements described in
Paragraph 7.1(b) cannot be repaired other than at a cost which is
in excess of 50% of the cost of replacing such Basic Elements, then
such Basic Elements 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 of 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 the number of months of the useful life of such
replacement as such useful life is specified pursuant to federal
income tax regulations or guidelines for depreciation thereof
(including interest on the unamortized balance as is then
commercially reasonable in the judgment of Lessor's accountants),
with Lessee reserving the right to prepay its obligation at any
time.
7.2
Lessor's Obligations. Subject to the provisions of Paragraph
2.2 (Condition), 2.3 (Compliance), 7.1(c) (Replacement of Basic
Elements), 7.4 (Ownership; Removal; Surrender; and Restoration), 9
(Damage or Destruction), and 14 (Condemnation), it is intended by
the Parties hereto that Lessor have no obligation, in any manner
whatsoever, to repair and maintain the Premises, or the equipment
therein, all which obligations are intended to be that of the
Lessee. It is the intention of the Parties that the terms of this
Lease govern the respective obligations of the Parties as to
maintenance and repair of the Premises, and they expressly waive
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; Consent Required. The term "Utility Installations"
refers to all floor and window coverings, air and/or vacuum lines,
power panels, electrical distribution, security and fire protection
systems, communication cabling, lighting fixtures, HVAC equipment,
plumbing, and fencing in 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 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 Alterations and
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,
will not affect the electrical, plumbing, HVAC and/or life safety
systems, and the cumulative cost thereof during this Lease as
extended does not exceed $750,000 in the aggregate or $350,000 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 to granting such approval, require Lessee to utilize a
contractor chosen 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 unless this requirement is waived by
Lessor. 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 cost an amount equal to the greater of one month's
Base Rent, or $80,000, Lessor may condition its consent upon Lessee
providing a lien and completion bond in an amount equal to one and
one-half times the estimated cost of such Alterations 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 ten (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 one and one-half times 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 cost.
(d)
Acknowledgment by Lessor. Lessor hereby acknowledges and agrees
that as long as any executive officer of Lessee is also an owner of
Lessor, then Lessor shall be deemed to have automatically consented
to any Alterations or Utility Installations made by Lessee to the
Premises and the consent (including conditions to consent) and
notification requirements set forth in Paragraph 7.3(b) are waived.
Provided, however, that Paragraph 7.3(c) is still applicable.
7.4 Ownership;
Removal; Surrender; and Restoration.
(a)
Ownership. All Alterations and Utility Installations shall be the
property of Lessee, but considered a part of the Premises. Unless
Lessee elects to remove any of the Alterations and/or Utility
Installations in accordance with 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. Lessee shall have the right, but not the obligation, to
remove any or all Lessee Owned Alterations or Utility Installations
upon expiration or termination of this Lease. If Lessee does not
elect to remove any of the Lessee Owned Alterations or Utility
Installations, then Lessee shall have no obligation to do so and
such Alterations and Utility Installations shall automatically
become the property of Lessor in its "AS IS" condition.
(c)
Surrender/Restoration. Lessee shall surrender the Premises upon
expiration of the Term, 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. Lessee shall repair any damage occasioned by
the installation, maintenance or removal of Trade Fixtures, Lessee
Owned Alterations and/or Utility Installations, furnishing, and
equipment as well as the removal of any storage tank installed by
or for Lessee, and the removal, replacement, or remediation of any
soil, material or groundwater contaminated by Lessee. 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. Lessee shall have the right, but not the
obligation, to remove any Utility Installations and Alterations
made by Tenant prior to or during the Term of this Lease.
8.
Insurance; Indemnity.
8.1 Payment for
Insurance. Lessee shall pay for all insurance required under
Paragraph 8 except to the extent of the cost attributable to
liability insurance carried by Lessor under Paragraph 8.2 (b) in
excess of $2,000,000 per occurrence. Premiums for policy periods
commencing prior to or extending beyond the Lease term shall be
prorated to correspond to the Lease term. Payment shall be made by
Lessee to Lessor within ten (10) days following receipt of an
invoice.
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 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.
Lessee shall add Lessor as an additional insured by means of an
endorsement at least as broad as the Insurance Service
Organization's "Additional insured-Managers or Lessors of Premises
Endorsement." The Policy shall not contain any inter-insured
exclusions as between insured parsons or organizations, but shall
include coverage for liability assumed under this Lease as an
"insured contract" for the performance of Lessee's of any
obligation hereunder. The limits of said insurance shall not,
however, limit the liability of Lessee nor relieve Lessee of any
obligation hereunder. Lessee shall provide an endorsement on its
liability policy(ies) which provides that its insurance shall be
primary to and not contributory with any similar insurance carried
by lessor, whose insurance shall be considered excess insurance
only.
(b)
Carried by Lessor. Lessor shall maintain liability insurance as
described in Paragraph 8.2(a) in addition to, and not in lieu of,
the insurance required to be maintained by Lessee. Lessee shall not
be named as an additional insured therein.
8.3 Property
Insurance - Building Improvements and Rental Value.
(a)
Building and improvements. The insuring Party shall obtain and keep
in force a policy or policies in the name of Lessor, with loss
payable to Lessor, any ground lessor, and to any Lender(s) insuring
loss or damage to the Premises. The amount of such insurance shall
be equal to the full insurable replacement cost of the Premises, as
the same shall exist from time to time, or the amount required by
any Lenders, but in no event more than the commercially reasonable
and available insurable value thereof. If Lessor is the insuring
Party, however, Lessee Owned Alterations and Utility and Utility
Installations, Trade Fixtures, and Lessee's personal property
shall, during the Term, be insured by Lessee under Paragraph 8.4
rather than by Lessor. If the coverage is available and
commercially appropriate, such policy or Policies shall insure
against all risks of direct physical loss or damage (except the
perils of flood, earthquake and/or terrorism unless required by
Lender), including coverage for debris removal and the enforcement
of any Applicable Requirements requiring the upgrading, demolition,
reconstruction or replacement of any portion of the Premises as the
result of a covered loss and the perils of terrorism or acts or
terrorism as required by Lender. Said policy or policies shall also
contain an agreed valuation provision in lieu of any coinsurance
clause, waiver of subrogration, and inflation guard protection
causing an increase in the annual property insurance coverage
amount by a factor of not less than the adjusted US Department of
Labor Consumer Price index for all Urban Consumers Price Index for
all Urban Consumers for the city nearest to where the Premises are
located. If such insurance coverage has a deductible clause, the
deductible amount shall not exceed $1,000 per occurrence, and
Lessee shall be liable for such deductible amount in the event of
an insured loss.
(b)
Rental Value. The Lessor shall obtain and keep in force a policy or
policies in the name of Lessor with loss payable to Lessor and any
Lender, insuring the loss of the full Rent for one (1) year. Said
insurance shall provide that in the event the Lease is terminated
by reason of an insured loss, the period of indemnity of such
coverage shall be extended beyond the date of the completion of
repairs or replacement of the Premises, to provide for one full
year's loss of Rent from the date of any such loss. Said insurance
shall contain an agreed valuation provision in lieu of any
coinsurance clause, and the amount of coverage shall be adjusted
annually to reflect the projected Rent otherwise payable by Lessee,
for the next twelve (12) month period. Lessee shall be liable for
any deductible amount in the event of such loss.
(c)
Adjacent Premises. If the Premises are part of a larger building,
or of a group of a group bu
