STANDARD INDUSTRIAL COMMERCIAL MULTI-TENANT LEASE – NET
AIR COMMERCIAL REAL ESTATE ASSOCIATION
1. Basic Provisions
(“Basic Provisions”)
1.1 Parties: This Lease
(“Lease”), dated for reference purposes only August
3, 2007 is made by and between Irvine Business Properties, a
California General
Partnership
(“Lessor”) and Pro-Dex, Inc., a Colorado
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 2361 McGaw Avenue (the
“Building”), located in the City of Irvine ,
County of Orange , State of California , with zip
code 92614 , as outlined on Exhibit A attached hereto
and consisting of (describe bristly the nature of the
Premises): approximately 28,180 square feet of office and
industrial space in the Building (as depicted on the attached
Exhibit A (the “Premises”) together with a license to
use ninety-nine (99) unreserved, in-common within the parking
areas on the parcel depicted on attached Exhibit B3 (the
“Parking License”) (See Addendum Paragraph 51.). In
addition to Lessee’s rights to use and occupy the Premises as
hereinafter specified, Lessee shall have non-exclusive rights to
the 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: ninety-nine (99) unreserved
vehicle parking spaces. (See also Paragraph 2.6)
1.3 Term: ten (10)
years and zero (0) months (“Original
Term”) commencing on the Commencement Date (as defined
in Addendum Paragraph 53) and ending ten (10) years thereafter
(“Expiration Date”). (See also Paragraph 3)
1.4 Early Possession:
immediately upon Lease execution (“Early Possession
Date”). (See also Paragraphs 3.2 and 3.3)
1.5 Base Rent: $ 30,
998.00 per month (“Base Rent”), payable on the
first (lst) day of each month commencing on the
Commencement Date . (See also Paragraph 4) þ If this box is checked, there are
provisions in this Lease for the Base Rent to be adjusted.
1.6 Lessee’s Share of
Common Area Operating Expenses: sixty-five
percent ( 65 %) (“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 the 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: $
30,998.00 for the first thirty (30) days of the
Original Term.
(b) Common Are Operating
Expenses: $ 3,736.00 for the first thirty 30) days of
the Original Term.
(c) Security Deposit: $
40,297.00 (“Security Deposit”). (See also
Paragraph 5)
(d) Other: $________ for
____________________________________.
(e) Total Due Upon
Execution of this Lease: $ 75,031.00
1.8 Agreed Use: General
business office, sales, training, light assembly, metal and
plastic machine operations and associated processes, warehouse,
distribution, and other related lawful uses consistent with the
Existing Zoning and Paragraph 58 of the Addendum. (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):
þ Grubb & Ellis Company
(Gary Allen) represents Lessor exclusively
(“Lessor’s Broker”);
þ CresaPartners (Jeffrey
Sheppard) represents Lessee exclusively (“Lessee’s
Broker”); or
o ___________________________
represents both Lessor and Lessee (“Dual Agency.
(b) Payment to Brokers:
Subject to paragraph 15, below, upon execution and delivery of this
Lease by both Parties, Lessor shall pay to Lessor’s Broker
the brokerage fee subject to the terms of a separate written
agreement for the brokerage services rendered by Lessor’s
Broker.
1.11 Guarantor. The obligations of the
Lessee under this Lease are to be guaranteed by None
(“Guarantor”). (See also Paragraph 37)
1.12 Attachments. Attached hereto are the
following, all of which constitute a part of this Lease:
þ an Addendum consisting of
Paragraphs 50 through 74 ;
þ a site plan depicting the
Premises; Exhibit A
þ a site plan depicting the
Project; Exhibit B
þ a current set of the Rules and
Regulations for the Project; Exhibit C
o a current set of the Rules and
Regulations adopted by the owners’ association;
þ a Work Letter; Exhibit D;
þ other (specify);
Environmental Questionnaire and Disclosure Statement (Exhibit E)
Lease Rider No. 1 - Permitted Transfers
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 mom or less. NOTE: Lessee is advised to verify the actual size
prior to executing this Lease.
-2-
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 (or required to be 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 es toxic
under applicable state or federal law. If a non-compliance with
such warranty exists as of the Start Date, or it 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
Lessors 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, commencing on the Start
Date. 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 actual 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 only, including Premises compliance with
the ADA and Title 24 without regard to Tenant’s intended use
for the Premises without regard to the applicability, enforcement
or implementation of such requirements in connection with the
construction of the Tenant improvements or Tenant’s use of
the Premises (“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 or improvements that may be required by laws, covenants,
restrictions and regulations otherwise applicable to or resulting
from the Lessee improvements or Tenant’s use of the Premises.
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. It 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,
provided, however, 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.
-3-
(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 Lessors 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. In any case, the parties agree that
the Agreed Use defined in Paragraph 1.8 shall not be considered a
specific and unique use of the Premises.
(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, roof, 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 Intentionally Omitted.
-4-
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,
without any liability thereto, 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. Notwithstanding the
foregoing, Lessee shall be responsible for its own trash service,
water, utilities, electrical services, janitorial services and
other similar services as reasonably determined by Lessor, which
shall not constitute Common Areas.
2.8 Common Areas -
Lessee’s Rights. Leaser 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, and liability 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:
-5-
(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 change the number
of buildings and improvements to the Common Areas;
(e) To use the Common
Areas while engaged in making additional improvements, maintenance,
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 to construct the Lessee
improvements per Exhibit D, the obligation to pay Base Rent and
Lessee’s Share of Common Area Operating Expenses, Real
Property Taxes and insurance premiums shall be abated for the
period of such early possession. Any such early possession shall
not affect the Expiration Date.
3.3 See Work Letter Agreement
(Exhibit D).
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). See Work Letter
Agreement (Exhibit D).
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, Lessees Share (as specified in Paragraph
7.6) of all Common Area Operating Expenses, as hereinafter defined,
during each calendar year of the term of this Lease, in accordance
with the following provisions:
(a) “Common Area
Operating Expenses” are defined, for purposes of this Lease,
as all costs incurred by Lessor relating to the ownership and
operation of the Project, including. but not limited to, the
following:
(i) The operation,
repair and maintenance, in neat, clean, good order and condition
and if necessary the replacement, 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.
-6-
(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, security
services, owners’ association dues and fees, the cost to
repaint the exterior of any structures and the cost of any
environmental inspections.
(iv) Reserves set aside for
maintenance, repair and/or replacement of Common Area improvements
and equipment.
(v) Real Property Taxes
(as defined in Paragraph 10).
(vi) The cost of the premiums
for the insurance maintained by Lessor pursuant to Paragraph 8.
(vii) Any deductible portion of an
insured loss concerning the Building or the Common Areas.
(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 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 7/144th 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 Lessors 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. 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 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.
-7-
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 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 cashiers
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. See Addendum paragraph
56.
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, as
determined solely by Lessor, 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. It 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. If the
Base Rent increases during the term of this Lease, Lessee shall,
upon written request from Lessor, deposit additional monies with
Lessor so that the total amount of the Security Deposit shall at
all times bear the same proportion to the increased Base Rent as
the Initial Security Deposit bore to the initial Base Rent. Should
the Agreed Use be amended to accommodate a material change in the
business of Lessee or to accommodate a sublessee or assignee,
Lessor shall have the right to increase the Security Deposit to the
extent necessary, in Lessor’s reasonable judgment, to account
for any increased wear and tear that the Premises may suffer as a
result thereof. If a change in control of Lessee occurs during this
Lease and following such change the financial condition of Lessee
is, in Lessors reasonable judgment, significantly reduced, Lessee
shall deposit such additional monies with Lessor as shall be
sufficient to cause the Security Deposit to be at a commercially
reasonable level based on such change in financial condition.
Lessor shall not be required to keep the Security Deposit separate
from its general accounts. Within 90 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. Lessee acknowledges and agrees that the Security
Deposit may be applied towards any rent or other sum in default or
otherwise owing to Lessor by Lessee following the expiration or
earlier termination of this Lease as allowed under Section 1951.2
of the California Civil Code, In connection therewith, Lessee
hereby waives ‘the provisions of Section 1950.7 of the
California Civil Code.
-8-
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 related 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.
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 erode 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 flied 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.
-9-
(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
(unless the content, concentration, or extent of the Hazardous
Substance has changed, in which event, notice thereof shall be
given), 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. As of the Start Date, if Lessor has
actual knowledge (without undertaking or the duty to undertake any
independent investigation or inquiry) that a Hazardous Substance
has come to be located in, on under or about the Premises, other
than as previously consented to, directly or indirectly, by Lessee,
Lessor shall immediately give written notice of such fact to
Lessee, and provide Lessee with a copy of any report notice, claim
or other documentation which it has concerning the presence of Such
Hazardous Substance.
(c) Lessee Remediation.
Lessee shall not cause or permit any Hazardous Substance to be
spilled or released in, on, under, or about the Premises (including
through the plumbing or sanitary sewer system) and shall promptly,
at Lessee’s expense, comply with all Applicable Requirements
and take all investigatory and/or remedial action reasonably
recommended, whether or not formally ordered or required, for the
cleanup of any contamination of, and for the maintenance, security
and/or monitoring of the Premises or neighboring properties, that
was caused or materially contributed to by Lessee, or pertaining to
or involving any Hazardous Substance brought onto the Premises
during the term of this Lease, by or for Lessee, or any third
party.
(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
front 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 environmental
damages, including the cost of remediation, which are 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. Lessors 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. “Agents” of Lessor as used herein shall not
include any prior lessees, tenants or occupants of the
Premises.
(f) Investigations
and Remediations. Lessor shall retain the responsibility and pay
for any investigations or remediation measures required by
governmental entities having jurisdiction with respect to the
existence of Hazardous Substances on the Premises prior to the
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 Lessors agents to
have reasonable access to the Premises at reasonable times in order
to carry out Lessor’s investigative and remedial
responsibilities
-10
(g) Lessor Termination
Option. If a Hazardous Substance Condition (see Paragraph 9.1(e))
occurs during the term of this Lease, unless Lessee is legally
responsible therefor (in which case Lessee shall make the
investigation and remediation thereof required by the Applicable
Requirements and this Lease shall continue in full force and
effect, but subject to Lessor’s rights under Paragraph 6.2(d)
and Paragraph 13), Lessor may, at Lessor’s option, either (i)
investigate and remediate such Hazardous Substance Condition, if
required, as soon as reasonably possible at Lessor’s expense,
in which event this Lease shall continue in full force and effect,
or (ii) if the estimated cost to remediate such condition exceeds
12 times 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 Lessors 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 (applicable to Lessee’s use of the
Premises), the requirements of any applicable fire insurance
underwriter or rating bureau, which relate in any manner to such
Requirements, without regard to whether said Requirements are now
in effect or become effective after the State Commencement 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 after reasonable 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.
-11-
7. Maintenance;
Repairs, Utility Installations; Trade Fixtures and Alterations.
7.1 Lessee’s
Obligations.
(a) In General. Subject
to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance),
6.3 (Lessee’s Compliance with Applicable Requirements), 7.2
(Lessor’s Obligations), 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee’s sole expense, keep
the Premises, Utility Installations (intended for Lessee’s
exclusive use, no matter where located), and Alterations in good
order, condition and repair (whether or not the portion of the
Premises requiring repairs, or the means of repairing the same, are
reasonably or readily accessible to Lessee, and whether or not the
need for such repairs occurs as a result of Lessee’s use, any
prior use, the elements or the age of such portion of the
Premises), including, but not limited to, all equipment or
facilities, such as plumbing, HVAC equipment, electrical, lighting
facilities, boilers, pressure vessels, fixtures, interior walls,
interior surfaces of exterior walls, ceilings, floors, windows,
doors, plate glass, and skylights but excluding any items which are
the responsibility of Lessor pursuant to Paragraph 7.2. Lessee, in
keeping the Premises in good order, condition and repair, shall
exercise and perform good maintenance practices, specifically
including the procurement and maintenance of the service contracts
required by Paragraph 7.1(b) below. Lessee’s obligations
shall include restorations, replacements or renewals when necessary
to keep the Premises and all improvements thereon or a part thereof
in good order, condition and state of repair.
(b) Service Contracts.
Lessee shall, at Lessee’s sole expense, procure and maintain
contracts, terminable at will, with copies to Lessor, in customary
form and substance for, and with contractors specializing and
experienced in the maintenance of the following equipment and
improvements, if any, if and when installed on the Premises: (i)
HVAC equipment, (ii) boiler and pressure vessels, (iii) clarifiers.
and (iv) any other equipment, and (v) roof drainage and
maintenance, if reasonably required by Lessor. 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 falls 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; provided, however,
where the nature of such repair and/or maintenance is such that
same cannot be reasonably completed within such ten (10) day
period, Lessee shall have additional time to cure such default
provided that Lessee has commenced such repair and/or maintenance
within such ten (10) day period and diligently prosecutes such
repair and/or maintenance to completion within thirty (30) days
after Lessee’s receipt of such notice.
-12-
(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
(i.e. 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 Lessors 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, roof membrane, 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 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
root 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. My Alterations or
Utility Installations that Lessee shall desire to make and which
require the consent of the Lessor shall be presented to Lessor in
written form with detailed plans. Consent shall be deemed
conditioned upon Lessee’s: (i) acquiring all applicable
governmental permits, (ii) furnishing Lessor with copies of both
the permits and the plans and specifications prior to commencement
of the work, and (iii) compliance with all conditions of said
permits and other Applicable Requirements in a prompt and
expeditious manner. Any Alterations or Utility Installations shall
be performed in a workmanlike manner with good and sufficient
materials. Lessee shall promptly upon completion furnish Lessor
with as-built plans and specifications. For work which costs an
amount in excess of one month’s Base Rent, Lessor may
condition its consent upon Lessee providing a lien and completion
bond in an amount equal to 150% of the estimated cost of such
Alteration or Utility Installation and/or upon Lessee’s
posting an additional Security Deposit with Lessor.
-13-
(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 materialman’s lien against the Premises
or any interest therein. Lessee shall give Lessor not less than 10
days notice prior to the commencement of any work in, on or about
the Premises, and Lessor shall have the right to post notices of
non-responsibility. If Lessee shall contest the validity of any
such lien, claim or demand, then Lessee shall, at its sole expense
defend and protect itself, Lessor and the Premises against the same
and shall pay and satisfy any such adverse judgment that may be
rendered thereon before the enforcement thereof. If Lessor shall
require, Lessee shall furnish a surety bond in an amount equal to
150% of the amount of such contested lien, claim or demand,
indemnifying Lessor against liability for the same. If Lessor
elects to participate in any such action, Lessee shall pay
Lessor’s attorneys’ fees and costs.
7.4 Ownership; Removal;
Surrender; and Restoration.
(a) Ownership. Subject to
Lessor’s right to require removal or elect ownership as
hereinafter provided, all Alterations and Utility Installations
made by Lessee shall be the property of Lessee, but considered a
part of the Premises. Lessor may, at any time, elect in writing to
be the owner of all or any specified part of the Lessee Owned
Alterations and Utility Installations. Unless otherwise instructed
per paragraph 7.4(b) hereof, all Lessee Owned Alterations and
Utility Installations shall, at the expiration or termination of
this Lease, become the property of Lessor and be surrendered by
Lessee with the Premises,
(b) Removal. By delivery
to Lessee of written notice from Lessor not earlier than 90 and not
later than 30 days prior to the end of the term of this Lease,
Lessor may require that any or all Lessee Owned Alterations or
Utility Installations be removed by the expiration or termination
of this Lease. Lessor may require the removal at any time of all or
any part of any Lessee Owned Alterations or Utility Installations
made without the required consent.
(c) Surrender;
Restoration. Lessee shall surrender the Premises by the Expiration
Date or any earlier termination date, with all of the improvements,
parts and surfaces thereof broom clean and free of debris, and in
good operating order, condition and state of repair, ordinary wear
and tear excepted. “Ordinary wear and tear shall not include
any damage or deterioration that would have been prevented by good
maintenance practice. Notwithstanding the foregoing, if this Lease
is for 12 months or less, then Lessee shall surrender the Premises
in the same condition as delivered to Lessee on the Steel
Commencement Date with NO allowance for ordinary wear and tear.
Lessee shall repair any damage occasioned by the installation,
maintenance or removal of Trade Fixtures, Lessee owned Alterations
and/or Utility Installations, furnishings, and equipment as well as
the removal of any storage tank installed by or for Lessee. Lessee
shall also completely remove from the Premises any and all
Hazardous Substances brought onto the Premises by or for Lessee, or
any third party (except Hazardous Substances which were deposited
via underground migration from areas outside of the Project) even
if such removal would require Lessee to perform or pay for work
that exceeds statutory requirements. Trade Fixtures shall remain
the property of Lessee and shall be removed by Lessee. 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,
-14-
8. Insurance;
Indemnity.
8.1 Payment of Premiums. The
cost of the premiums for the insurance policies required to be
carried by Lessor, pursuant to Paragraphs 8.2(b), 8.3(a) and
8.3(b), shall be a Common Area Operating Expense. 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
$2,000,000 per occurrence with an annual aggregate of not less than
$5,000,000. 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 and coverage shall also be extended
to include damage caused by heat, smoke or fumes from a hostile
fire. The policy shall not contain any intra-insured exclusions as
between insured persons or organizations, but shall include
coverage for liability assumed under this Lease as an
“insured contract” for the performance of
Lessee’s indemnity obligations under this Lease. The limits
of said insurance shall not, however, limit the liability of Lessee
nor relieve Lessee of any 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 (except the perils of flood and/or earthquake unless
required by a Lender), including coverage for debris removal and
the enforcement of any Applicable Requirements requiring the
upgrading, demolition, reconstruction or replacement of any portion
of the Premises as the result of a covered loss. 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 $5,000 per occurrence.
-15-
(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 with a deductible of not to exceed $1,000
per occurrence. 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.
(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 terra a ‘General
Policyholders Rating” of at least A-, VI XIV, 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
Commencement 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, al 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 fall 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 other, for loss of or damage
to its property arising out of or incident to the perils required
to be insured against herein. The effect of such releases and
waivers is not limited by the amount of insurance carried or
required, or by any deductibles applicable hereto. The Parties
agree to have their respective property damage insurance carriers
waive any right to subrogation that such companies may have against
Lessor or Lessee, as the case may be, so long as the insurance is
not invalidated thereby.
-16-
8.7 Indemnity. Except for
Lessor’s and Lessor’s partners, agents,
contractors’ and employees gross negligence or willful
misconduct, Lessee shall indemnity, protect, defend and hold
harmless the Premises, Lessor and its agents, Lessor’s master
or ground lessor, partners and Lenders, from and against any and
all claims, loss of rents and/or damages, liens, judgments,
penalties, attorneys’ and consultants’ fees, expenses
and/or liabilities arising out of, involving, or in connection
with, the use and/or occupancy of the Premises by Lessee. If any
action or proceeding is brought against Lessor by reason of any of
the foregoing matters, Lessee shall upon notice defend the same at
Lessee’s expense by counsel reasonably satisfactory to Lessor
and Lessor shall cooperate with Lessee in such defense. Lessor need
not have first paid any such claim in order to be defended or
indemnified.
8.8 Exemption of Lessor and its
Agents from Liability. Notwithstanding the negligence or breach of
this Lease by Lessor or its agents, neither Lessor nor its partners
or agents shall be liable under any circumstances for: (i) injury
or damage to the person or goods, wares, merchandise or other
property of Lessee, Lessee’s employees, contractors,
invitees, customers, or any other person in or about the Premises,
whether such damage or injury is caused by or results from fire,
steam, electricity, gas, water or rain, indoor air quality, the
presence of mold or from the breakage, leakage, obstruction or
other defects of pipes, fire sprinklers, wires, appliances,
plumbing, HVAC or lighting fixtures, or from any other cause,
whether the said injury or damage results from conditions arising
upon the Premises or upon other portions of the Building, or from
other sources or places, (ii) any damages arising from any act or
neglect of any other tenant of Lessor or from the failure of Lessor
or its agents to enforce the provisions of any other lease in the
Project, or WO injury to Lessee’s business or for any loss of
income or profit therefrom. Instead, it is intended that
Lessee’s sole recourse in the event of such damages or injury
be to file a claim on the insurance policy(ies) that Lessee is
required to maintain pursuant to the provisions of paragraph 8.
8.9 Failure to Provide
Insurance. Lessee acknowledges that any failure on its part to
obtain or maintain the insurance required herein will expose Lessor
to risks and potentially cause Lessor to incur costs not
contemplated by this Lease, the extent of which will be extremely
difficult to ascertain. Accordingly, for any month or portion
thereof that Lessee does not maintain the required insurance and/or
does not provide Lessor with the required binders or certificates
evidencing the existence of the required insurance, the Base Rent
shall be automatically increased, without any requirement for
notice to Lessee, by an amount equal to 10% of the then existing
Base Rent or $100, whichever is greater. The parties agree that
such increase in Base Rent represents fair and reasonable
compensation for the additional risk/costs that Lessor will incur
by reason of Lessee’s failure to maintain the required
insurance. Such increase in Base Rent shall in no event constitute
a waiver of Lessee’s Default or Breach with respect to the
failure to maintain such insurance, prevent the exercise of any of
the other rights and remedies granted hereunder, nor relieve Lessee
of its obligation to maintain the insurance specified in this
Lease.
9. Damage or
Destruction.
9.1 Definitions.
-17-
(a) “Premises
Partial Damage” shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations
and Utility Installations, which can reasonably be repaired in 3
months or less from the date of the damage or destruction, and the
cost thereof does not exceed a sum equal to 6 month’s Base
Rent Lessor shall notify Lessee in writing within 30 days from the
date of the damage or destruction as to whether or not the damage
is Partial or Total. Notwithstanding the foregoing, Premises
Partial Damage shall not include damage to windows, doors, and/or
other similar items which Lessee has the responsibility to repair
or replace pursuant to the provisions of Paragraph 7.1.
(b) “Premises Total
Destruction” shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations
and Utility Installations and Trade Fixtures, which cannot
reasonably be repaired in 3 months or less from the date of the
damage or destruction and/or the cost thereof exceeds a sum equal
to 6 month’s Base Rent. Lessor shall notify Lessee in writing
within 30 days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.
(c) “Insured
Loss” shall mean damage or destruction to improvements on the
Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which was caused by an event
required to be covered by the insurance described in Paragraph
8.3(a), irrespective of any deductible amounts or coverage limits
involved.
(d) “Replacement
Cost” shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the
