INDUSTRIAL LEASE

Exhibit 10.3

INDUSTRIAL LEASE

BETWEEN

Temescal, L.P., a California limited partnership,

and Contra Costa Industrial Park, Ltd., a California limited partnership

as Landlord

and

Powerlight Corporation,

A California corporation

as Tenant

TABLE OF CONTENTS

 

Summary of Industrial Lease Information

 

[SUMMARY CONTINUES]

 

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The foregoing Summary of Industrial Lease Information is intended to set forth certain terms of the agreement between Landlord and Tenant. In the event of any conflict between any information shown on this Summary and the Lease, the latter shall control.

 

TD		MZ
INITIALS (Tenant)		INITIALS (Landlord)

 

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INDUSTRIAL LEASE

This Industrial Lease (this “Lease”) is entered into as of the Effective Date as set forth in Summary of Industrial Lease Information (the “Summary”) by and between Temescal, L.P., a California limited partnership, and Contra Costa Industrial Park, Ltd., a California limited partnership (“Landlord”) and the tenant as identified in the Summary and as reflected on the signature block at the end of this Lease (“Tenant”).

RECITALS

A. Landlord desires to lease to Tenant and Tenant desires to lease from Landlord the premises located at Berkeley, CA (the “Leased Premises”), designated in the Summary and consisting of the approximately square footage as set forth in the Summary, which for reference purposes only is designated on the map attached to this Lease as Exhibit A and incorporated by reference.

B. The Leased Premises are located in the building at the street address identified in the Summary (the “Building”), which together with certain common areas and other buildings constitute the Temescal Business Center (the “Project).

NOW, THEREFORE, for good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereby agree as follows:

 

1.

Lease of Premises .

Landlord leases to Tenant and Tenant leases from Landlord the Leased Premises for the term, at the rental and upon all other terms, covenants, and conditions in this Lease. For purposes of this Lease, Landlord and Tenant agree that the rentable area of the Leased Premises (the “Rentable Area of the Premises”) is as stated on the Summary.

Tenant shall have the non-exclusive right to use the number of parking spaces as set forth in the Summary in the parking area located in the Project in common with the other tenants of the Project. Landlord reserves the right to alter or modify, on a nondiscriminatory basis, from time to time the location and arrangement of parking spaces in the Project Tenant and its officers, agents, employees, customers, and invitees shall park their motor vehicles only in areas designated by Landlord for that purpose from time to time. Tenant shall not at any time park or permit the parking of motor vehicles, belonging to it or to others, so as to interfere with the pedestrian sidewalks, or roadways, or in any portion of the Common Area not designated by Landlord for such use by Tenant. In no event may any automobiles not in active use and/or displaying current registration tags be stored at the Project and the storage, dismantling, or repairing of vehicles or any materials in the parking area is not permitted. Vehicles shall not be placed on blocks or otherwise made immobile or unsightly, such determination to be at the sole discretion of Landlord. If any vehicle of Tenant or any of its authorized representatives is parking in any part of the Project other than the specified parking spaces or areas. Tenant hereby authorizes Landlord to engage a towing service to remove such vehicle at Tenant’s expense. Within ten (10) days after request from Landlord, Tenant shall furnish to Landlord a list of the license numbers assigned to its motor vehicles, and those of its officers, agents and employees.

Tenant shall additionally have ingress and egress rights for loading and unloading purposes at the front loading doors depicted on Exhibit A.

 

2.

Lease Term .

2.1 Term . The term of this Lease (the “Term”) shall commence on the date set forth in the Summary (the “Commencement Date”). The Term of this Lease shall end the date as set forth in the Summary (the “Termination Date”), unless sooner terminated pursuant to any provision hereof.

2.2 Early Possession . If Tenant occupies the Leased Premises prior to the Commencement Date, such occupancy shall be subjected to all provisions of this Lease. However, such occupancy shall not advance the Termination Date. Tenant shall not be required to pay rent or other charges if it occupies before the Commencement Date. Landlord shall use its best efforts to permit Tenant to occupy as soon as possible after the current tenant vacates the Leased Premises.

 

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2.3 Delay in Possession . If Landlord fails to deliver possession of the Leased Premises to Tenant by the Commencement Date, Landlord shall not be liable for any damages resulting from that failure, nor shall that failure cause a termination of this Lease or Tenant’s obligations under this Lease, except as otherwise permitted under this Section, nor shall that failure extend the term of this Lease. If Landlord has not delivered possession of the Leased Premises to Tenant within sixty (60) days after the Commencement Date, Tenant may, however, cancel this Lease, by written notice provided to and received by Landlord within ten (10) days after the end of the sixty (60) day period; in that case, the parties shall be discharged from all obligations under this Lease, provided, however, that if the written notice of Tenant is not received by Landlord within that ten (10) day period, Tenant shall have no further right to terminate this Lease. If cither party cancels as herein above provided, landlord shall return any monies previously deposited by tenant and the parties shall be discharged from all obligations herein after.

2.4 Acknowledgment of Commencement Date . In the event the Lease Commencement Date of the term of the Lease is delayed beyond the sixty (60) days described in preceding section, then Landlord and Tenant shall execute a written acknowledgment of the dates of commencement and termination of the Lease and shall attach it to the Lease as an Exhibit.

2.5 Option to Extend .

Subject to the provisions hereinafter set forth, Landlord hereby grants to Tenant that number of options as set forth in the Summary, to extend the Term of this Lease on the same terms, conditions and provisions as contained in this Lease, except as otherwise provided herein. Each Option Period shall commence on the day following the end of the Term then in effect (the “Option Period Commencement Date”) and end on the last day of the period of such extension as set forth in the Summary.

(a) The option to extend shall be exercisable by written notice from Tenant to Landlord of Tenant’s intent to exercise its election for said option and must be given not later than the date which is six (6) months prior to, the Option Period Commencement Date. If Tenant fails to timely give notice of its intent to exercise the applicable option, said option shall thereupon expire.

(b) Monthly Base Rent payable as of the commencement of each Option Period (each an “Extension Commencement Date”) with respect to the Leased Premises shall be one hundred and three percent (103%) of the Monthly Base Rent payable for the month immediately preceding such commencement. Thereafter, the Monthly Base Rent shall be adjusted annually on each anniversary of the Extension Commencement Date (the “Adjustment Date”) to an amount equal to one hundred and three percent (103%) of the Monthly Base Rent payable for the month immediately preceding such Adjustment Date.

(c) Tenant shall not have any option to extend the Term of this Lease beyond the expiration of the Option Period(s).

 

3.

Use and Condition of Premises .

3.1 Use of Premises .

(a) The Leased Premises shall be used for the use as set forth in the Summary or as otherwise approved by Landlord in writing and for no other purpose. Tenant shall not do or permit any act that could:

(i) cause any structural damage to the Project, or

(ii) cause damage to any part of the Building, except to the extent reasonably necessary for the installation of Trade Fixtures (as defined below), equipment, machinery, or the construction of alterations as permitted under this Lease or as approved in writing in advance by Landlord.

(b) Tenant shall not operate or permit the operation of any equipment or machinery on the Project that could:

(i) materially damage the Project,

 

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(ii) impair the efficient operation of the Building’s heating, ventilation, or air conditioning system.

(iii) block or otherwise impede the operation of the Building’s sprinkler system,

(iv) overload or otherwise place an undue strain on the Building’s electrical and mechanical systems, or

(v) damage, overload, or corrode the Building’s sanitary sewer system.

(c) Tenant shall not install or attach anything in the Building in excess of the load limits established for the Building. Tenant shall contain and dispose of all dust, fumes, or waste products generated by Tenant’s use of the Leased Premises so as to avoid:

(i) unreasonable fire or health hazards,

(ii) damage to the Project, or

(iii) any violation of any Law.

(d) Except as may be approved by Landlord in advance and in writing, Tenant shall not change the exterior of the Building or install any equipment, machinery, or antennas on or make any penetrations of the exterior or roof of the Building. Tenant has the right, with Landlords approval to place signs and architectural elements identifying its place of business, including entry awning, signs on walls, canopy over entry, and flags. Tenant shall not commit any waste in or around the Project and shall keep the Leased Premises in a neat, clean, attractive and orderly condition, free of any nuisances. Tenant may conduct on any portion of the Leased Premises any sale in connection with its business operations.

3.2. Compliance with Law .

(a) Tenant shall, at Tenant’s expense, comply with all applicable statutes, ordinances, rules, regulations, orders, covenants and restrictions of record and requirements of any fire insurance underwriters or rating bureaus, including, but not limited to, the Americans with Disabilities Act, now in effect or which may hereafter come into effect, whether or not they reflect a change in policy from that now existing, during the Term or any part of the Term hereof, relating in any manner to the Leased Premises and the occupation and use by Tenant of the Leased Premises and of the Common Areas. Tenant shall not use or permit the use of the Leased Premises or the Common Areas in any manner that will tend to create waste or a nuisance or shall tend to disturb other occupants of the Project. The judgment of any court of competent jurisdiction or the admission of Tenant in any action against Tenant, whether Landlord is a party thereto or not, that Tenant has violated any law, statute, ordinance, or governmental rule, regulation or requirement, shall be conclusive of the fact as between Landlord and Tenant. Landlord warrants that as of the date possession of the Leased Premises is delivered to Tenant that the Leased Premises (including building systems) complies with applicable laws.

(b) Tenant shall at all times keep the Leased Premises and Common Areas free of Hazardous Materials (as defined below). Tenant shall not use, generate, manufacture, store, release, or dispose of Hazardous Materials in, on, or about the Leased Premises (except as defined in Section 7 (b) of this lease) or the Common Areas. “Hazardous Materials” shall include, but not be limited to, substances defined as “hazardous substances,” “hazardous materials,” or “toxic substances” in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 USCS §§ 9601, et seq.; the Hazardous Materials Transportation Act, 49 USCS §§ 1801 et seq.; the Resource Conservation and Recovery Act, 42 USCS §§ 6901, et seq.; and those substances defined as “hazardous wastes” in Section 25117 of the California Health & Safety Code or as “hazardous substances” in § 25316 of the California Health & Safety Code; and in the regulations adopted and publications promulgated pursuant to said laws.

3.3. Condition of Premises .

(a) Tenant acknowledges that Tenant is leasing the Leased Premises on an “as is” basis, and Tenant and Landlord agree that the Leased Premises (inclusive of building systems) will be delivered “broom clean” and in good and sanitary order, condition and repair.

(b) Tenant hereby accepts the Leased Premises in their agreed upon condition subject to all applicable zoning, municipal, county and state laws, ordinances and regulations governing and regulating the use of the Leased Premises, and any covenants or restrictions of record, and accepts this Lease subject thereto and to all matters disclosed thereby and by any exhibits attached hereto. Tenant acknowledges that neither Landlord nor Landlord’s agent has made any representation or warranty as to the present or future suitability of the Leased Premises for the conduct of

 

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Tenant’s business, the suitability thereof for the conduct of Tenant’s business, the utility services provided to the Leased Premises or the distribution of those utility services within the Leased Premises. Landlord has not agreed to undertake any modification, alteration or improvement to the Leased Premises except as specifically provided in this Lease.

(c) Tenant shall not overload the floor of the Leased Premises. Landlord shall have the right to prescribe the weight, size and position of all safes and other heavy equipment brought into the Leased Premises or Project, the times and manner of moving the same in or out of the Leased Premises or Project, and all such moving must be done under the supervision of Landlord. Safes or other heavy equipment shall, if considered necessary by Landlord, stand on a platform of such thickness as is necessary to properly distribute the weight. Landlord reserves the right to require Tenant to secure the written recommendations of a qualified structural engineer as to the safe installation of such property or equipment. Landlord shall not be responsible for loss of or damage to any such property from any cause, and all damage done to the Leased Premises or Project by moving or maintaining any such property shall be immediately repaired at the expense of Tenant.

 

4.

Construction .

The obligations of Landlord and Tenant to perform work, supply labor and materials and prepare the Leased Premises for occupancy are set forth in detail in Exhibit B. Landlord and Tenant shall expend all funds and do all acts required of them in Exhibit B and shall have the work performed promptly and diligently and in a first-class, workmanlike manner. If Landlord is obligated hereunder to perform construction or remodeling work, then possession shall not be deemed tendered and the term of this Lease shall not commence until the first to occur of the following: (a) three (3) days after written notice by Landlord that Landlord’s construction work has been completed; (b) upon the Tenant’s opening for business within the Leased Premises or (c) the Commencement Date written in the Summary.

 

5.

Rent .

5.1. Base Rent . Tenant agrees to pay to Landlord as base rent, without notice or demand, the sum set forth in the Summary as Monthly Base Rent (“Monthly Base Rent”) increased by (i) Tenant’s Share of the total dollar increase, if any, in Property Taxes (as defined in §9) and Insurance (as defined in §16.2) paid or incurred by Landlord in that year over the Base Year (the Property Taxes and Insurance, collectively, the “Escalation Rent”) and (ii) Tenant’s Share of Project Operating Expenses (as defined in §9) in advance, on or before the first day of each and every successive calendar month during the Term hereof. Tenant’s obligation to pay rent shall commence on the Commencement Date. The Monthly Base Rent shall be paid to Landlord without deduction or offset, in lawful money of the United States of America and at the Landlord’s address as designated in the Summary, or such place as Landlord may from time to time designate in writing. Monthly Base Rent for any period which is for less than one (1) month shall be a prorated portion of the monthly installment herein based upon a thirty (30) day month, except that Tenant shall pay, at the time of execution hereof, a full (30 day) Monthly Base Rent for the first 30 days of the Term and, as appropriate, the Monthly Base Rent for the next, succeeding month shall be prorated and paid at the beginning of such month. Landlord is not be required to send monthly statements, invoices or billings of any kind as a condition to Tenant paying any Rent due under this Lease.

5.2 Rent Adjustments . The Monthly Base Rent shall be adjusted for the then remaining portion of the initial Term of this Lease as of the first and each anniversary date(s) of the Commencement Date. Each such anniversary date is hereunder referred to as an “Adjustment Date.” The Monthly Base Rent shall be adjusted as of each Adjustment Date to an amount equal to one hundred and three percent (103%) of the Monthly Base Rent payable for the month immediately preceding such Adjustment Date.

5.3 Returned Checks . In the event a check from Tenant to Landlord is returned for non-payment of funds, Tenant shall replace said check with only the following: (a) cashier’s check, (b) cash, or (c) certified money order. In addition, Landlord shall assess a returned check handling fee of $25.00 for the first, $35.00 for the second and $45.00 for each successive occurrence. The returned check fee shall be tendered with the replacement payment. Said returned check handling fee shall in no way void Landlord’s right to assess and collect late charges. The third check rejection shall require payment by money order.

5.4 Date of Receipt of Tenant’s Payment . The date of delivery of payment to Landlord shall be considered the bona fide date of receipt of payment. The date of postmark, posting date, or mailing machine date shall not be considered date of payment. Tenant accepts full responsibility for delivery of payments to Landlord.

 

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5.5 Additional Rent . Tenant shall pay, as additional rent, all sums of money or charges required to be paid by Tenant under this Lease in addition to the Monthly Base Rent, Escalation Rent and late charges, all of which are agreed by the parties hereto to be considered “Additional Rent.” If such amounts or charges are not paid at the time provided in this Lease, they shall nevertheless be collectible as Additional Rent with the next installment of Monthly Base Rent thereafter falling due, but nothing contained in this Lease shall be deemed to suspend or delay the payment of any amount of money or charge at the time the same becomes due and payable under this Lease or limit any other remedy of Landlord.

5.6 Escalation Rent/Operating Expenses Estimation and Accounting . Escalation Rent and Operating Expenses shall be paid monthly on an estimated basis, with subsequent annual statement, in accordance with the following procedures:

(a) Escalation Rent . No later than forty-five (45) days prior to the end of the Base Year set forth in the summary and no later than forty-five (45) days prior to the end of each subsequent calendar year, or as soon after that time as practicable. Landlord shall give Tenant notice of Landlord’s estimate of any Escalation Rent due under this Section for the ensuing calendar Lease year. On or before the first day of each month during the ensuing calendar year. Tenant shall pay to Landlord one-twelfth (l/12th) of the estimated Escalation Rent. If Landlord fails to give notice as required in this Section, Tenant shall continue to pay on the basis of the prior year’s estimate until the month after that notice is given. If at any time it appears to Landlord that the Escalation Rent for the current calendar year will vary from the estimate by more than five percent (5%), Landlord shall, by notice to Tenant, revise the estimate for that year, and subsequent payments by Tenant for that year shall be based on the revised estimate.

(b) Operating Expenses . Operating Expenses (as defined in §9) shall initially be estimated by Landlord based upon reasonably anticipated costs, and shall be the sum as set forth in the Summary. Thereafter, Landlord may upon fifteen (15) days written notice to Tenant, adjust this estimate quarterly.

(c) Annual Statement . Within ninety (90) days after the close of each calendar year, or as soon after the ninety (90) day period as practicable, Landlord shall deliver to Tenant a statement of the actual Escalation Rent and Operating Expenses for that calendar year, accompanied by a statement showing the basis on which the actual Escalation Rent and Operating Expenses were determined. At Tenant’s request, Landlord shall provide Tenant reasonable supporting detail underlying the calculations of Escalation Rent and Operating Expenses. If Landlord’s statement discloses that Tenant owes an amount that is less than the estimated payments for the calendar year previously made by Tenant, Landlord shall credit the excess first against any sums then owed by Tenant, and then against the next payments of rental due. If Landlord’s statement discloses that Tenant owes an amount that is more than the estimated payments for the calendar year previously made by Tenant, Tenant shall pay the deficiency to Landlord within thirty’ (30) days after delivery of the statement. Any statement provided by Landlord pursuant to this subsection shall be conclusively deemed to be correct if not objected to by Tenant within ninety (90) days following Landlord’s delivery of such statement. Tenant hereby waives the benefit of any statute of limitations that would extend Tenant’s right to challenge the propriety of any expenses contained in any statement beyond the period agreed to in the preceding sentence.

(d) Proration of Escalation Rent . The amount of Escalation Rent for any fractional year in the Term shall be appropriately prorated. The proration of Property Taxes and Insurance for the calendar year in which termination occurs shall be calculated on the basis of a fraction of said expenses for that entire calendar year. The termination of this Lease shall not affect the obligations of the parties pursuant to this Section to be performed after the termination.

 

6.

Security Deposit .

Tenant shall deposit with Landlord upon execution hereof that sum identified in the Summary as the Security Deposit (the “Security Deposit”) as security for Tenant’s faithful performance of Tenant’s obligations hereunder. If Tenant fails to pay rent or other charges due hereunder (all of which, collectively, are defined to be “Rent”), or otherwise defaults with respect to any provision of this Lease, Landlord may use, apply, or retain all or any portion of said deposit for the payment of any rent or other charge in default or for the payment of any other sum to which Landlord may become obligated by reason of Tenant’s default, or to compensate Landlord for any loss or damage which Landlord may suffer thereby. The use, application, or retention of the Security Deposit by Landlord shall not prevent Landlord from exercising any other remedy provided hereunder or at law and shall not be construed as liquidated damages. If Landlord so uses or

 

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applies all or any portion of said deposit, Tenant shall, within ten (10) days after written demand therefor, deposit cash with Landlord in an amount sufficient to restore said deposit to the full amount then required of Tenant. Landlord shall not be required to keep the Security Deposit separate from its general accounts and Tenant shall not be entitled to, and Tenant hereby specifically waives any requirement that Landlord pay interest on the Security Deposit. If Tenant performs all of Tenant’s obligations hereunder, the Security Deposit, or so much thereof as has not theretofore been applied by Landlord, shall be returned, without payment of interest or other increment for its use, to Tenant or, at Landlord’s option, to the last assignee, if any, of Tenant’s interest hereunder. at the expiration of the Term hereof, and after Tenant has vacated the Leased Premises. No trust or fiduciary relationship is created herein between Landlord and Tenant with respect to the Security Deposit. If Landlord transfers the Leased Premises during the Term hereof, Landlord may pay the Security Deposit to Landlord’s successor in interest in accordance with Civil Code § 1950.7 or any successor statute, in which event the transferring Landlord shall be released from all liability for the return of the Security Deposit.

 

7.

Hazardous Materials .

(a) Landlord represents and warrants to Tenant that to Landlord’s actual knowledge and as of the Commencement Date: (i) the Leased Premises are in compliance with all Environmental Laws (as defined below) governing and relating to the Leased Premises as in effect and enforced as of the Commencement Date; and (ii) except as disclosed to Tenant in writing prior to the execution of this Lease, no Toxic Materials are present in, on or under the Leased Premises or the Project.

(b) Except for reasonable amounts of commercially available office and manufacturing products used, stored and disposed of in compliance with all applicable local, state and federal statutes, orders, ordinances, rules and regulations, Tenant shall not cause or permit any substance, material, waste or item which is or becomes regulated by any federal, state, regional or local governmental authority because it is in any way hazardous, toxic, carcinogenic, mutagenic or otherwise adversely affects any part of the environment, or creates risks of any such hazards or effects to be brought upon, kept or used in or about the Leased Premises or the Project by Tenant, its agents, employees, contractors, licensees, customers, or invitees, without the prior written consent of Landlord, which consent Landlord shall not withhold so long as Tenant demonstrates to Landlord’s satisfaction, in the exercise of Landlord’s sole and absolute discretion, that such items, and the quantities thereof, are necessary or materially useful to Tenant’s business and will be used, kept and stored in a manner that complies with all Environmental Laws (as defined below). Tenant shall comply, at its sole cost, with all federal, state and local laws, statutes, ordinances, codes, regulations and orders relating to the receiving, handling, use, storage, accumulation, transportation, generation, spillage, migration, discharge, release and disposal of any flammable, combustible, explosive, infectious, corrosive, caustic, irritant, strong sensitizing, carcinogenic or radioactive materials, hazardous waste, toxic substances or related materials, including without limitation, substances defined as “hazardous substances,” “hazardous materials,” “toxic substances” or “asbestos containing materials” by federal, state or local laws, and in the regulations adopted in publications promulgated pursuant to said laws, including but not limited to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) [42 USCS §§ 9601 et seq.]; the Resource Conservation and Recovery Act of 1976 (RCRA) [42 USCS §§ 6901 et seq.]; the Clean Water Act, also known as the Federal Water Pollution Control Act (FWPCA) [33 USCS §§ 1251 et seq.]; the Toxic Substances Control Act (TSCA) [15 USCS §§ 2601 et seq.]; the Hazardous Materials Transportation Act (HMTA) [49 USCS §§ 1801 et seq.]; the Insecticide, Fungicide, Rodenticide Act [7 USCS §§ 136 et seq.]; the Superfund Amendments and Reauthorization Act [42 USCS §§ 6901 et seq.]; the Clean Air Act [42 USCS §§ 7401 et seq.]; the Safe Drinking Water Act [42 USCS §§ 3OOf et seq.]; the Solid Waste Disposal Act [42 USCS §§ 6901 et seq.]; the Surface Mining Control and Reclamation Act [30 USCS §§ 1201 et seq.]; the Emergency Planning and Community Right to Know Act [42 USCS §§ 11001 et seq.]; the Occupational Safety and Health Act [29 USCS §§ 655 and 657]; the California Underground Storage of Hazardous Substances Act [II & SC §§ 25280 et seq.]; the California Hazardous Substances Account Act [H & S C §§ 25300 et seq.]; the California Hazardous Waste Control Act [H & SC §§ 25100 et seq.]; the California Safe Drinking Water and Toxic Enforcement Act [H & SC §§ 24249.5 et seq.]; the Porter-Cologne Water Quality Act [Wat C §§ 13000 et seq.] together with any amendments of or regulations promulgated under the statutes cited above and any other federal, state, or local law, statute, ordinance, or regulation now in effect or later enacted that pertains to occupational health or industrial hygiene, and only to the extent that the occupational health or industrial hygiene laws, ordinances, or regulations relate to Hazardous Substances on, under, or about the Property, or the regulation or protection of the environment, including ambient air, soil, soil vapor, groundwater, surface water, or land use (collectively referred to herein as the “Environmental Laws”). Such materials and substances are hereinafter collectively referred to as “Toxic Materials.” It shall be the sole obligation of Tenant to obtain any permits and approvals required pursuant to the Environmental Laws. Without limiting the generality of the foregoing, Tenant shall comply with requirements for the inventory of Toxic Materials imposed by any state or local laws, including the Environmental Laws.

 

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(c) Tenant shall be solely responsible for and shall indemnify, protect, defend and hold harmless Landlord and its agents, employees, representatives, directors and officers (collectively hereinafter referred to as the “Landlord Indemnitees”) from and against any and all claims, costs, penalties, fines, losses, liabilities, attorneys’ fees, damages, injuries, causes of action, judgments, and expenses which arise during or after the Lease Term as a result of the receiving, handling, use, storage, accumulation, transportation, generation, spillage, migration, discharge, release or disposal of Toxic Materials in, upon or about the Leased Premises or the Project, by Tenant or its agents, employees, contractors, licensees, customers or invitees. This indemnification of the Landlord Indemnitees by Tenant includes, without limitation, any and all costs incurred in connection with any investigation of site conditions and any clean-up, remediation, removal or restoration work required by any federal, state or local governmental agency or political subdivision because of Toxic Materials present in the soil, subsoils, ground water or elsewhere in, on, under or about the Leased Premises or the Project. This indemnification by Tenant under this Section shall survive the termination of this Lease.

(d) If Tenant or its agents, employees, contractors, licensees, customers or invitees or any other parties (except the Landlord Indemnitees) causes contamination or deterioration of water or soil resulting in a level of contamination greater than the maximum levels established from time to time during the term of this Lease by any governmental authority having jurisdiction over such contamination, then Tenant shall promptly take any and all action necessary to clean-up such contamination in the manner required by law. If Tenant fails to take such action, Landlord may, but shall not be obligated to, take such action. In such event, all costs incurred by Landlord with respect to such clean-up activities shall be for the account of Tenant. Any amount so expended by Landlord shall be paid by Tenant promptly after demand by Landlord, with interest at the maximum rate permitted by law.

(e) Tenant shall immediately provide Landlord with telephonic notice, which shall later be confirmed by written notice, of any and all accumulations, spillage, discharge, release and disposal of Toxic Materials, onto or within the Leased Premises or the Project, and any injuries or damages relating directly or indirectly therefrom.

(f) On or before the expiration or earlier termination of this Lease, Tenant shall take any and all action required to be taken under the Environmental Laws in order to surrender the Leased Premises, including such portions of the Project which are subject to this Lease, to Landlord in a condition which would be completely free of any and all Toxic Materials caused or permitted to be in or about the Leased Premises or the Project by Tenant, its agents, employees, contractors, licensees, customers, or invitees.

(g) With regard to any Toxic Materials in, on, under or about the Leased Premises or the Project (i) prior to the commencement of this Lease or (ii) that have been spilled, discharged, or disposed on the Leased Premises or the Project by Landlord, its agents, employees or contractors, or any Toxic Materials generated by Landlord, Landlord shall (i) bear all financial and other responsibility for insuring that such Toxic Materials shall be used, kept and stored in a manner which strictly complies with all Environmental Laws regulating such Toxic Materials; (ii) maintain in effect and comply with all conditions and requirements of any and all permits, licenses and other governmental and regulatory approvals or authorizations required under any Environmental Laws; (iii) take any necessary remedial action if and when so ordered by governmental authorities with jurisdiction over such materials; and (iv) indemnify, defend and hold harmless Tenant from and against any and all claims caused by such Toxic Materials.

 

8.

Common Areas .

(a) As used in this Lease, the term Common Areas shall mean all areas and facilities within the Project that are not designated by Landlord for the exclusive use of Tenant, Landlord, or any other tenant of the Project, including but not limited to pedestrian sidewalks, landscaped areas, common bathrooms, lobby areas, parking areas, incinerators, interior stairs and balconies and similar areas and improvements, the truckways, roadways, loading docks, loading areas, railroad tracks, roofs, common areas and delivery yards.

(b) Landlord shall have exclusive control over the Common Areas, provided that Tenant and Tenant’s employees, agents, suppliers, shippers, customers, and invitees shall have the nonexclusive right to use the Common Areas during the term of this Lease, subject to the rights reserved by Landlord under this Lease and further subject to all rules and regulations governing the use of the Common Areas from time to time issued by Landlord.

(c) Landlord shall have the right, without it constituting an actual or constructive eviction of Tenant, without any abatement of rent under this Lease and without notice (unless so stated below) to or the consent of Tenant, to

 

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(i) upon five (5) days notice to Tenant, close any part of the Common Areas to the extent necessary in Landlord’s opinion to prevent the accrual of any prescriptive rights, provided, however, that access by Tenant shall not be unreasonably disrupted, and Landlord shall, to the maximum extent possible, avoid any disruption to Tenant’s access that exceeds four (4) hours;

(ii) upon five (5) days notice to Tenant, temporarily close any part of the Common Areas to repair and maintain them or for any other reasonable purpose, provided, however, that access by Tenant shall not be unreasonably disrupted, and Landlord shall, to the maximum extent possible, avoid any disruption to Tenant’s access that exceeds four (4) hours;

(iii) upon five (5) days notice to Tenant, change the nature of 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, and walkways, provided, however, that Landlord shall use its best efforts to avoid any impact upon Tenant’s use of the Project;

(iv) upon five (5) days notice to Tenant, eliminate from or add to the Project any land or improvement provided, however, that Landlord shall use its best efforts to avoid any impact upon Tenant’s use of the Project;

(v) upon five (5) days notice to Tenant, designate additional property outside the boundaries of the Project to be a part of the Common Areas;

(vi) remove unauthorized persons from the Project;

(vii) upon five (5) days notice to Tenant, change the name or address of the Building or the Project;

(viii) upon five (5) days notice to Tenant, use or allow the use of the Common Areas while engaged in maintenance, repairs, construction, or other alterations to the Project; and

(ix) perform any other acts and make other changes or alterations in the Common Areas and the Project as Landlord may deem reasonably appropriate, upon notice to Tenant within a reasonable time prior to taking such action or making such changes.

 

9.

Operating Expenses .

(a) Tenant shall pay to Landlord during the term of this Lease, as set forth above in Section 5, Tenant’s Share, as set forth in the Summary, of all Project Operating Expenses (as defined below), incurred in connection with the operation of the Project.

(b) As used in this Lease, Operating Expenses means:

(i) all costs and expenses incurred by Landlord for the following:

(A) the provision of utilities to the Common Areas, including but not limited (o gas, electricity, and water for irrigation, including the maintenance and repair of same;

(B) the maintenance of all landscaping in the Common Areas, including the installation and maintenance of irrigation systems, the planting and maintenance of shrubs, trees, flowering plants and ground cover;

(C) the compliance with all Laws;

(D) the operation, maintenance, repair, cleaning, painting, and resurfacing of the parking lots included in the Common Areas;

(E) the installation, repair, and maintenance of all light fixtures and signs located in the Common Areas and on or in the Project;

(F) the provision of security to the Project and the Common Areas;

(G) the maintenance of all parking areas, roadways, sidewalks, walkways, driveways, striping, fences and gates contained in the Common Areas;

(H) the establishment and maintenance of directories of tenants in the Project;

(I) the maintenance and repair of all fire prevention and detection systems, including smoke detectors and sprinkler systems; and

 

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(J) charges and/or fees levied by the City of Berkeley, including but not limited to those for street lighting, street landscaping, library service, school tax, clean storm water, street improvements and traffic mitigation.

(ii) management fees, whether for services rendered by Landlord, an affiliate of Landlord, Landlord’s employees, or a third-party property manager hired by Landlord.

(iii) the amount of any deductible paid by Landlord in connection with an insured loss resulting from damage to the Project, but in no event more than $1,000 per occurrence;

(iv) the amount of any uninsured loss resulting from damage to the Project; and

(v) all additional costs and expenses incurred by Landlord in connection with the operation, maintenance, repair, replacement, and protection of the Project that would be considered a current expense according to generally accepted accounting principles.

(c) Operating Expenses shall not include

(i) depreciation;

(ii) any capital expenditures, except as permitted in subsection (b)(v), set forth above;

(iii) payments on any loans or ground leases affecting the Project;

(iv) leasing commissions; and

(v) the cost of tenant improvements installed exclusively for the use of other tenants.

(d) As used in this Lease, the term “Property Taxes” shall mean any and all taxes, assessments, levies, and other charges of any kind, general and special, foreseen and unforeseen (including all installments of principal interest required to pay any existing or future general or special assessments (the “Assessments”), and any increases resulting from reassessments made in connection with a change in ownership, new construction, or any other cause), now or later imposed by any governmental or quasi-governmental authority or special district having the power to tax or levy assessments, which are levied or assessed against or with respect to the value, occupancy, or use of all or any portion of the Project (as now constructed or as may at any later time be constructed, altered, or otherwise changed) or Landlord’s interest in the Project, the fixtures, equipment, and other property of Landlord, real or personal, that are an integral part of and located on the Project, the gross receipts, income, or rentals from the Project, or the use of parking areas, public utilities, or energy within the Project, or Landlord’s business of leasing the Project. Property Taxes include but are not limited to any ad valorem real property tax imposed on the Leased Premises up to the limits imposed by the California Constitution, Article 13A, Section l(a). “Assessments” include any other form of assessment, license fee, rent tax, levy, or other tax (other than estate, inheritance, net income or franchise taxes), imposed by any authority having the direct or indirect power to tax including without limitation, the EPA, any county, state, or federal government or any improvement or other district or division thereof, and specifically including, without limitation, all additional taxes and assessments hereafter levied by the County of Alameda. Neither the term “Property Taxes” nor “Assessments” shall include charges levied by the City of Berkeley, including but not limited to those for street lighting, street landscaping, library service, school tax, clean storm water, street improvements and traffic mitigation.

If at any time during the term of this Lease, the method of taxation or assessment of the Project prevailing as of the Commencement Date is altered so that in lieu of or in addition to any Property Tax described above there shall be levied, assessed, or imposed (whether because of a change in the method of taxation or assessment, creation of a new tax or charge, or any other cause) an alternate or additional tax or charge (i) on the value, use, or occupancy of the Project or Landlord’s interest in the Project, or (ii) on or measured by the gross receipts, income or rentals from the Project, on Landlord’s business of leasing the Project, or computed in any manner with respect to the operation of the Project, then any tax or charge, however designated, shall be included within the meaning of the term Property Taxes for purposes of this Lease. However, the term Property Taxes shall not include estate, inheritance, transfer, gift, or franchise taxes of Landlord or the federal or state net income tax imposed on Landlord’s income from all sources.

Tenant shall not be responsible for paying Tenant’s Share of any Property Taxes resulting from additional improvements by other tenants, provided, however, that any Property Taxes resulting from Alterations made for or on

 

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behalf of Tenant under this Lease shall be paid entirely by Tenant. If the Leased Premises is not separately assessed, Tenant’s Share of any Property Taxes shall be an equitable proportion of the Property Taxes for all of the land and improvements included within the tax parcel that is assessed.

(e) Tenant shall pay prior to delinquency all taxes assessed against and levied upon trade fixtures, furnishings, equipment and all other personal property of Tenant contained within the Leased Premises or elsewhere. When possible, Tenant shall cause said trade fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real or personal property of Landlord.

(f) The inclusion of any services, facilities, or improvements in subsection (b), above, shall not be deemed to impose an obligation on Landlord to provide those services, facilities, or improvements unless otherwise required by this Lease.

 

10.

Repairs and Maintenance .

(a) Subject to reimbursement pursuant to this Lease, and except for damage caused by any negligent or intentional act or omission of Tenant or Tenant’s employees or agents, in which event Tenant shall repair the damage, Landlord shall keep in good order and condition the Common Areas and repair and maintain the foundation, roof and exterior walls of the Building. Landlord shall not be obligated to paint the exterior of the Building or Project, nor shall Landlord be required to maintain the steel sashes, windows, glass, doors, or interior surface of exterior walls. Landlord shall not have the obligation to make repairs under this Section until a reasonable time after receipt of written notice from Tenant of the need for such repairs. Landlord shall not be responsible for repairs required by an accident, fire, or other peril or for damage caused to any part of the Project by any act or omission of Tenant or Tenant’s employees or agents, except as otherwise required by this Lease. Landlord may engage contractors of Landlord’s choice to perform the obligations required by this Section, and the necessity of any expenditure to perform those obligations shall be at the sole discretion of Landlord. Tenant expressly waives the benefits of any statute now or later in effect that would otherwise give Tenant the right to make repairs at Landlord’s expense and deduct that cost from rent owing to Landlord.

(b) Subject to the provisions of the preceding subsection, Tenant shall clean and maintain in good order, condition, and repair and replace when necessary the following:

(i) all plumbing and sewage facilities in the Leased Premises, including but not limited to all plumbing fixtures, pipes, fittings, or other parts of the plumbing system in the Leased Premises;

(ii) all fixtures, interior walls, floors, carpets, draperies, window coverings, and ceilings in the Leased Premises;

(iii) all windows, doors, entrances, and plate glass in the Leased Premises; and

(iv) all electrical facilities and all equipment in the Leased Premises, including all light fixtures, lamps, bulbs and tubes.

(c) With respect to utility facilities serving the Leased Premises Tenant shall be responsible for the maintenance and repair of any facilities that serve only the Leased Premises including all facilities that are within the walls or floor or on the roof of the Leased Premises, and any part of the facility that is not within the Leased Premises, but only up to the point where the facilities join a main or other junction from which the utility services are distributed to other parts of the Project as well as to the Leased Premises.

(d) Tenant shall:

(i) maintain, repair, and replace when necessary all heating, air conditioning, and ventilation equipment that services only the Leased Premises, and shall keep the them in good condition through regular inspection and servicing;

(ii) all plumbing and sewage facilities in the Leased Premises, including but not limited to all plumbing fixtures, pipes, fittings, or other parts of the plumbing system in the Leased Premises; and

(iii) maintain continuously throughout the term of the Lease a service contract for the maintenance of all heating, air conditioning, and ventilation equipment with a licensed repair and maintenance contractor approved by Landlord; the contract should provide for periodic inspections and servicing of the heating, air conditioning, and ventilation equipment at least once every ninety (90) days during the term of the Lease.

 

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However, Landlord may elect at any time during the term of this Lease to assume responsibility for and or all of the preceding items (i) through (iii), in which event all expenses incurred by Landlord in connection with the preceding items shall be charged to the Tenant.

(e) All repairs and replacements required of Tenant shall be promptly made with new materials of like kind and quality. If the work affects the structural parts of the Building or if the estimated cost of any item of repair or replacement is in excess of $750. Tenant shall first obtain Landlord’s written approval of the scope of the work, the plans for the work, the materials to be used, and the contractor hired to perform the work. Tenant shall not, and shall not permit others, to enter the roofs of the Leased Premises, without Landlord’s prior written consent.

(f) If Tenant fails to perform Tenant’s obligations under this Section or under any other section of this Lease, after ten (10) days’ prior written notice to Tenant, except in an emergency when no notice shall be required, Landlord may enter the Leased Premises, perform the obligations on Tenant’s behalf, and recover the cost of performance, together with interest at the maximum rate then allowed by law, as additional rent payable by Tenant with the next installment of Monthly Base Rent. Tenant shall maintain adequate insurance to compensate Tenant for any loss of, or damage to, Tenant’s property. In the event that Tenant does not maintain such insurance, Tenant will be deemed to have self-insured Tenant’s property.

(g) In the event Tenant fails to perform Tenant’s obligations under this Section, Landlord shall give Tenant notice to do such acts as are reasonably required to so maintain the Leased Premises. If within fifteen (15) days after such notice is given by Landlord, Tenant fails to do the work and diligently prosecute it to completion, then Landlord shall have the right (but not the obligation) to do such acts and expend such funds at the expense of Tenant as are reasonably required to perform such work. Any amount so expended by Landlord shall be paid by Tenant promptly after demand with interest at the maximum rate permitted by law from the date of such work. There shall be no abatement of rent and no liability of Landlord by reason of any injury or interference with Tenant’s business arising from the making of any repairs, alterations, or improvements in or to any portions of the Project or the Leased Premises or in or to fixtures, appurtenances, and equipment, therein. Landlord reserves the right to enter the Leased Premises to repair the Project, to repair the roof or roof structures or to install electrical, water, drain, sewer, telephone, ventilation, and other conduits for the benefit of the Project or of other tenants of the Project. Repair of the roof or of roof structures may require exposing certain areas of the Project to the elements.

 

11.

Alterations and Additions .

(a) Tenant shall not construct any alterations, improvements or additions or otherwise alter the Leased Premises (the “Alterations”) without Landlord’s prior written consent. Alterations includes any utility installation, including but not limited to alterations, improvements or additions to gas lines, water lines, ducting, power panels, fluorescent fixtures, space heaters, conduit and wiring. All Alterations shall be constructed by a licensed contractor in accordance with all Laws using new materials of good quality and shall be done at Tenant’s sole expense and in such a manner as not to unreasonably disrupt existing operations or disturb existing tenants and occupants of the Project.

(b) Tenant shall not commence construction of any Alterations until:

(i) all required governmental approvals and permits have been obtained,

(ii) all requirements regarding insurance imposed by this Lease have been satisfied,

(iii) Tenant has given Landlord at least ten (10) days’ prior written notice of Tenant’s intention to commence construction, and

(iv) Tenant has provided to Landlord, at Tenant’s sole cost and expense, a lien and completion bond in an amount equal to one and one-half (1 1/2) the estimated cost of the Alterations, where the cost of the intended Alterations will exceed $50,000, to insure Landlord against any liability for mechanic’s and materialmen’s liens and to ensure completion of the Alterations.

(c) Tenant shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished in connection with the Alterations that are or may become mechanics’ or materialmen’s liens against the Leased Premises or the Project or any interest in them. Tenant shall have the right to, in good faith, contest the validity of any lien, claim, or demand, provided that Tenant shall, at Tenant’s sole expense, defend Landlord against the lien, claim, or demand,

 

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and, upon the request of Landlord, Tenant shall furnish to Landlord a surety bond in an amount equal to the contested lien, claim, or demand indemnifying Landlord against liability and holding the Leased Premises, the Building, and the Project free from the effect of the lien, claim, or demand. In addition, Landlord may require Tenant to pay Landlord’s attorney fees and costs in connection with and during the course of any defense of any lien, claim or demand. Tenant shall pay and satisfy any adverse judgment that may be rendered to enforce the lien, claim, or demand against the Landlord, the Leased Premises, or the Project. In addition to any other remedy provided in the Lease, in the event Tenant fails to comply with this Section. Landlord may require Tenant to cease all work being performed by or on behalf of Tenant and Landlord may deny access to the Leased Premises to any person performing work in or supplying materials to the Leased Premises.

(d) All Alterations shall be and remain the property of Tenant during the term of this Lease but shall not be altered or removed from the Leased Premises. At the expiration or sooner termination of the term of this Lease, all Alterations shall become the property of Landlord, and Landlord shall have no obligation to reimburse Tenant for any portion of the value or cost. If Landlord advises Tenant in writing, in advance of the construction of any Alterations, that Landlord will request Tenant to remove such Alterations at the expiration of the term of this Lease, then Landlord shall have the right to require Tenant to remove any Alterations, in which event Tenant shall remove the Alterations prior to the expiration or sooner termination of the term of this Lease.

(e) Tenant shall solely be responsible for making any alteration, addition or change of any sort to the Leased Premises that is required by any Law because of:

(i) Tenant’s particular use or change of use of the Leased Premises;

(ii) Tenant’s application for any permit or governmental approval; or

(iii) Tenant’s construction or installation of any Alterations.

(f) Notwithstanding the foregoing, personal property, business and trade fixtures, cabinetwork, furniture, movable partitions, machinery and equipment, other than that which is affixed to the Leased Premises, shall remain the property of Tenant and may be removed by Tenant subject to the provisions of this Lease concerning the Surrender of the Leased Premises, at any time during the term of this Lease when Tenant is not in default.

 

12.

Utilities .

Tenant shall pay. from the earlier of the Early Possession Date or the Lease Commencement Date, and throughout the term of this Lease, prior to delinquency for all water, gas, heat, light, power, telephone, sewage, air conditioning and ventilating, scavenger, janitorial, landscaping, and all other services, materials, and utilities supplied to the Leased Premises. In the event that such services are not separately metered to Tenant, Tenant shall pay its pro rata share, as provided in the Summary and this Lease, of all charges which are jointly metered, the determination to be made by Landlord. Such payment to be made by Tenant within fifteen (15) days of receipt of a statement for such charges. Any utilities as to which Landlord determines, in its reasonable discretion, that Tenant is using more than its pro rata share shall be separately metered or submetered at Tenant’s sole expense, and thereafter Tenant shall pay all such c