Exhibit 10.50
AIR COMMERCIAL REAL ESTATE
ASSOCIATION
STANDARD
INDUSTRIAL/COMMERCIAL
MULTI-TENANT LEASE –
GROSS
1. Basic Provisions (“Basic
Provisions”).
1.1 Parties: This Lease
(“Lease”) , dated for reference purposes only
April 23, 2008 , is made by and between KLP
Properties, Inc, a California corporation
(“Lessor”) and DURECT Corporation, a Delaware
corporation (“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 830 Eubanks
Drive, Suites A, B & C , located in the City of
Vacaville , County of Solano , State of
California , with zip code 95688 , as outlined on
Exhibit A attached hereto (“Premises”)
and generally described as (describe briefly the nature of the
Premises): approximately ±24,634 square feet of office and
warehouse space within a larger ±42,663 square foot
building.
In addition to Lessee’s rights
to use and occupy the Premises as hereinafter specified, Lessee
shall have non-exclusive rights to any utility raceways of the
building containing the Premises (“ Building ”)
and to the Common Areas (as defined in Paragraph 2.7 below), but
shall not have any rights to the roof, or exterior walls of the
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 : (See
Addendum I, Paragraph 55) unreserved vehicle parking spaces.
(See also Paragraph 2.6)
1.3 Term : Five
(5) years and -0- months (“Original Term”)
commencing September 1, 2008 (“Commencement
Date”) and ending August 31, 2013
(“Expiration Date”) . (See also Paragraph
3)
1.4 Early Possession : N/A
(“Early Possession Date”) . (See also
Paragraphs 3.2 and 3.3)
1.5 Base Rent : $ (See
Addendum I, Paragraph 50) per month (“Base
Rent”) , payable on the first day of each month
commencing September 1, 2008 . (See also Paragraph
4)
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If this box is
checked, there are provisions in this Lease for the Base Rent to be
adjusted.
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1.6 Lessee’s Share of
Common Area Operating Expenses : Twelve & 63/100
percent ( 12.23 %) (“ Lessee’s Share
”).
Lessee’s Share has been
calculated by dividing the approximate square footage of the
Premises by the approximate square footage of the Project. In the
event that that size of the Premises and/or the Project are
modified during the term of this Lease, Lessor shall recalculate
Lessee’s Share to reflect such modification.
1.7 Base Rent and Other Monies
Paid Upon Execution :
(a) Base Rent : $
14,780.00 for the period September 1, 2008 -
September 30, 2008 .
(b) Common Area Operating
Expenses : $ Included in Rent for the period.
(c) Security Deposit : $
5,000.00 additional Deposit (see Addendum, Paragraph 53(b))
(“Security Deposit”) . (See also Paragraph
5)
(d) Other : $ N/A for
.
(e) Total Due Upon Execution of
this Lease : $ 5,000.00; representing additional
Deposit. Base Rent in the amount of $14,780.00 shall be due
and payable by September 1, 2008.
1.8 Agreed Use : Office,
laboratory, manufacturing, testing and storage or any other related
uses. (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):
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represents
Lessor exclusively ( “Lessor’s Broker”
);
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represents
Lessee exclusively ( “Lessee’s Broker” );
or
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x
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Colliers
Parrish International, Inc. represents both Lessor and Lessee (
“Dual Agency” ).
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(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.
1.11 Guarantor . The
obligations of the Lessee under this Lease are to be guaranteed by
N/A ( “Guarantor” ). (See also Paragraph
37)
1.12 Attachments . Attached
hereto are the following, all of which constitute a part of this
Lease:
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an Addendum
consisting of Paragraphs 50 through 60;
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a site plan
depicting the Premises (Exhibit A);
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a site plan
depicting the Project;
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a current set
of the Rules and Regulations for the Project;
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a current set
of the Rules and Regulations adopted by the owners’
association;
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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. NOTE: Lessee is advised to verify the actual
size prior to executing this Lease .
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, sump pumps, 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, that the structural
elements of the roof, bearing walls and foundation of the Unit
shall be free of material defects, and that the Unit does not
contain hazardous levels of any mold or fungi defined as toxic
under applicable state or federal law. 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, as 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 specificity 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 to the best of its knowledge 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 all 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, modifications which may be
required by the Americans with Disabilities Act or any similar laws
as a result of Lessee’s use (see Paragraph 49), 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 Applicable
Requirements, and especially the zoning are 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 6 months following the Start 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 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 shall pay for such Capital Expenditure and Lessee shall
only be obligated to pay, each month during the remainder of the
term of this Lease, on the date that on which the Base Rent is due,
an amount equal to 144th of the portion of such costs reasonably
attributable to the Premises. Lessee shall pay Interest on the
balance but may prepay its obligation at any time. If, however,
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
have 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 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 either: (i) immediately cease such changed use or
intensity of use and/or take such other steps as may be necessary
to eliminate the requirement for such Capital Expenditure, or (ii)
complete such Capital Expenditure at its own expense. Lessee shall
not have any right to terminate this 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 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.
In 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 Parking Spaces specified in
Paragraph 1.2(b) on those portions of
the Common Areas designated from time to time by
Lessor for parking. Lessee shall not use more parking spaces than
said number. Said parking spaces shall be used for parking by
vehicles no larger than full-size 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. In
addition:
(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 circumstances 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
shall use its best efforts 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,
parking areas, 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
(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 judgment, 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 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
Lessee’s Share of Common Area Operating Expenses, Real
Property Taxes and insurance premiums and to maintain the Premises)
shall 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 or change the
Expiration Date. Lessee shall not, however, be obligated to pay
Rent or perform its other obligations until Lessor delivers
possession of the Premises and any period of rent abatement that
Lessee would otherwise have enjoyed shall run from the date of the
delivery of possession and continue for a period equal to what
Lessee would otherwise have enjoyed, but minus any days of delay
caused by the acts or omissions of Lessee. 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 within said 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 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 Lessor’s
election to withhold possession pending receipt of such evidence 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
that exceeds the Common Area Operating Expenses from
September 1, 2008 through August 31, 2009, as hereinafter
defined, during each calendar year of the term of this Lease, in
accordance with the following provisions:
(a) The following costs relating to
the ownership and operation of the Project are defined as
“Common Area Operating Expenses” :
(i) Costs relating to the operation,
repair and maintenance, in neat, clean, 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 cost of water, gas,
electricity and telephone to service the Common Areas and any
utilities not separately metered.
(iii) The cost of trash disposal,
pest control services, property management (not to exceed 4% of
gross rents), security services and the cost to repaint the
exterior of any structure,
(iv) [BLANK]
(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 provided
Tenant’s share of any insurance deductible amount shall not
exceed $25,000.00 per occurrence.
(viii) Auditors’,
accountants’ and attorneys’ fees and costs related to
the operation, maintenance, repair and replacement of the
Project.
(ix) The cost of any capital improvement to the
Building or the Project not covered under the provisions of
Paragraph 2.3 that are incurred as a labor saving measure or to
reduce expenses in the operation or maintenance of the Building or
in the ordinary course of maintenance and repair provided; however,
that Lessor shall allocate the cost of any such capital improvement
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
improvement in any given month.
(x) The cost of 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 is payable monthly on the same day as the
Base Rent is due hereunder.
The amount of such payments shall be
based on Lessor’s estimate of the annual Common Area
Operating Expenses. Within 60 days after written request (but not
more than once each year) Lessor shall deliver to Lessee a
reasonably detailed statement showing Lessee’s Share of the
actual Common Area Operating Expenses incurred during the preceding
year. If Lessee’s payments during such year exceed
Lessee’s Share, Lessor shall credit the amount of such
over-payment against Lessee’s future payments or shall refund
such amount if no rent is due. If Lessee’s payments during
such year were less than Lessee’s Share, Lessee shall pay to
Lessor the amount of the deficiency within 10 days after delivery
by Lessor to Lessee of the statement.
(e) Common Area Operating Expenses
shall not include the cost of replacing equipment or capital
components such as the roof, foundations, exterior walls or Common
Area capital improvements, such as the parking lot paving,
elevators, fences that have a useful life for accounting purposes
of 5 years or more.
(f) Common Area Operating Expenses
shall not include any expenses paid by any tenant directly to third
parties, or as to which Lessor is otherwise reimbursed by any third
party, other tenant, or insurance proceeds.
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. All monetary amounts shall be rounded to the
nearest whole dollar. In the event that any statement or 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. 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 given by Lessee to Lessor is dishonored for any reason,
Lessee agrees to pay to Lessor the sum of $25 in addition to any
Late Charge and Lessor, at its option, may require all future Rent
be paid by cashier’s check. Payments will be applied first to
accrued late charges and attorney’s fees, second to accrued
interest, then to Base Rent and Common Area Operating Expenses, and
any remaining amount to any other outstanding charges or
costs.
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 already due Lessor, for Rents which will be due
in the future, and/ 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
said Security Deposit to the full amount required by this
Lease.
Lessor shall not be required to keep the
Security Deposit separate from its general accounts. Within 60 days
after the expiration or termination of this Lease, 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
to be 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. Other than guide, signal and seeing eye dogs, Lessee
shall not keep or allow in the Premises any pets, animals, birds,
fish, or reptiles. 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 Building or the mechanical or electrical systems therein,
and/or is not significantly more burdensome to the Project. 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 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, ordinary office supplies (copier toner,
liquid paper, glue, etc.) and common household cleaning materials,
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. Notwithstanding anything contained in this
section 6.2 of the Lease, Lessor hereby consents to and
acknowledges that it is aware that Lessee procures, handles and
disposes of certain Hazardous Substances in the ordinary course of
its business. Lessee agrees to abide by the terms of this Lease and
the requirements of any governmental authority pertaining to any
handling or disposal of Hazardous Substances at, on or about the
Premises.
(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.
(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 no liability under this Lease with
respect to underground migration of any Hazardous Substance under
the Premises from areas outside of the Project 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 damages, including the cost of remediation,
which suffered as a direct result of Hazardous Substances on the
Premises prior to Lessee taking possession 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 Lessee
taking possession , 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
pursuant to the Terms of this Lease 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 the then monthly Base
Rent or $100,000, whichever is greater, give written notice to
Lessee, within 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
within 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
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 such Requirements, without regard to whether said
Requirements are now in effect or become effective after the Start
Date. Lessee shall, within 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
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) and consultants shall have the right to enter into Premises at
any time, in the case of an emergency, and otherwise at reasonable
times, upon 24 hours 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 Condition (see Paragraph 9.1) 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.
In addition, Lessee shall provide copies of all relevant material
safety data sheets ( MSDS ) to Lessor within 10 days of the
receipt of written request therefor.
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 non-structural portions of 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, and (iii) clarifiers.
However, Lessor reserves the right, upon notice to Lessee, to
procure and maintain any or all of such service contracts, and
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 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 an item 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 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 but
may prepay 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 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 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 Alterations and/or 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 a sum equal to 3
month’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 to 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.
(c) Liens; Bonds . 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 Lessee has
not bonded the lien and Lessor elects to participate in any such
action, Lessee shall pay Lessor’s attorneys’ fees and
costs.
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 at the time of Lessor’s
granting consent, 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 and casualty damage 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 (except
Hazardous Substances which were deposited via underground migration
from areas outside of the Premises),
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. Any personal property of Lessee not removed on or before
the Expiration Date or any earlier termination date shall be deemed
to have been abandoned by Lessee and may be disposed of or retained
by Lessor as Lessor may desire.
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; Indemnity
.
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), 8.3(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, assuming the most
nominal use possible of the Building. In no 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. 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
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 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
. Lessor shall obtain and keep in force a policy or policies of
insurance in the name of Lessor, with loss payable to Lessor, any
ground-lessor, and to any Lender 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 Lender, but in no
event more than the commercially reasonable and available insurable
value thereof. Lessee Owned Alterations and Utility Installations,
Trade Fixtures, and Lessee’s personal property shall be
insured by Lessee under Paragraph 8.4. If the coverage is available
and commercially appropriate, such policy or policies shall insure
against all risks of direct physical loss or damage (including
earthquake), 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. Said policy or policies
shall also contain an agreed valuation provision in lieu of any
coinsurance clause, waiver of subrogation, and inflation
guard
protection causing an increase in the annual
property insurance coverage amount by a factor of not less than the
adjusted U.S. Department of Labor Consumer 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.
(b) Rental Value . Lessor
shall also 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 year with an extended period of
indemnity for an additional 180 days ( “ Rental Value
insurance ” ). 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 12 month
period.
(c) Adjacent Premises .
Lessee shall pay for any increase in the premiums for the property
insurance of the Building and for the Common Areas or other
buildings in the Project if said increase is caused by
Lessee’s acts, omissions, use or occupancy of the
Premises.
(d) Lessee’s
Improvements . Since Lessor is the Insuring Party, Lessor shall
not be required to insure Lessee Owned Alterations and Utility
Installations unless the item in question has become the property
of Lessor under the terms of this Lease.
8.4 Lessee’s Property;
Business Interruption Insurance .
(a) Property Damage . Lessee
shall obtain and maintain insurance coverage on all of
Lessee’s personal property, Trade Fixtures, and Lessee Owned
Alterations and Utility Installations. Such insurance shall be full
replacement cost coverage. The proceeds from any such insurance
shall be used by Lessee for the replacement of personal property,
Trade Fixtures and Lessee Owned Alterations and Utility
Installations. Lessee shall provide Lessor with written evidence
that such insurance is in force.
(b) Business Interruption .
Lessee shall obtain and maintain loss of income and extra expense
insurance in amounts as will reimburse Lessee for direct or
indirect loss of earnings attributable to all perils commonly
insured against by prudent lessees in the business of Lessee or
attributable to prevention of access to the Premises as a result of
such perils.
(c) No Representation of Adequate
Coverage . Lessor makes no representation that the limits or
forms of coverage of insurance specified herein are adequate to
cover Lessee’s property, business operations or obligations
under this Lease.
8.5 Insurance Policies .
Insurance required herein shall be by companies duly licensed or
admitted to transact business in the state where the Premises are
located, and maintaining during the policy term a “General
Policyholders Rating” of at least A-, VI, as set forth in the
most current issue of “Best’s Insurance Guide”,
or such other rating as may be required by a Lender. Lessee shall
not do or permit to be done anything which invalidates the required
insurance policies. Lessee shall, prior to the Start Date, deliver
to Lessor certified copies of policies of such insurance or
certificates evidencing the existence and amounts of the required
insurance. No such policy shall be cancelable or subject to
modification except after 30 days prior written notice to Lessor.
Lessee shall, at least 10 days prior to the expiration of such
policies, furnish Lessor with evidence of renewals or
“insurance binders” evidencing renewal thereof, or
Lessor may order such insurance and charge the cost thereof to
Lessee, which amount shall be payable by Lessee to Lessor upon
demand. Such policies shall be for a term of at least one year, or
the length of the remaining term of this Lease, whichever is less.
If either Party shall fail to procure and maintain the insurance
required to be carried by it, the other Party may, but shall not be
required to, procure and maintain the same.
8.6 Waiver of Subrogation .
Without affecting any other rights or remedies, Lessee and Lessor
each hereby release and relieve the other, and waive their entire
right to recover damages against the o
