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Exhibit 10.2
(AIR COMMERCIAL REAL ESTATE ASSOCIATION LOGO)
STANDARD MULTI-TENANT OFFICE LEASE - GROSS
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 JS Northpointe L.P., a California
Limited
Partnership ("LESSOR") and MTI Technology Inc., a Delaware
corporation
("LESSEE"), (collectively the "PARTIES", or individually a
"PARTY").
1.2(a) PREMISES: That certain portion of the Project (as defined
below),
known as Suite Numbers(s) 200, second floor(s), consisting of
approximately
10,767 rentable square feet and approximately +/-9,293 useable
square feet
("PREMISES"). The Premises are located at: 15641 Red Hill in the
City of Tustin,
County of Orange State of California, with zip code 92780. In
addition to
Lessee's rights to use and occupy the Premises as hereinafter
specified, Lessee
shall have non-exclusive rights to the Common Areas (as defined
in Paragraph 2.7
below) as hereinafter specified, but shall not have any rights
to the roof, the
exterior walls, the area above the dropped ceilings, or the
utility raceways of
the building containing the Premises ("BUILDING") or to any
other buildings in
the Project. The Premises, the Building, the Common Areas, the
land upon which
they are located, along with all other buildings and
improvements thereon, are
herein collectively referred to as the "PROJECT." The Project
consists of
approximately 139,557 rentable square feet. (See also Paragraph
2)
1.2(b) PARKING: 25 unreserved and 12 reserved vehicle parking
spaces at a
monthly cost of $N/A per unreserved space and $N/A per reserved
space. (See
Paragraph 2.6 and Paragraph 51 of Addendum)
1.3 TERM: Five (5) years and three (3) months ("ORIGINAL TERM")
commencing
September 1, 2007 ("COMMENCEMENT DATE") and ending November 30,
2012
("EXPIRATION DATE"). (See also Paragraph 3)
1.4 EARLY POSSESSION: August 18, 2007 ("EARLY POSSESSION DATE").
(See also
Paragraphs 3.2 and 3.3)
1.5 BASE RENT: $21,534.00 per month ("BASE RENT)", payable on
the first
(1st) day of each month commencing September 1, 2007. (See also
Paragraph 4 and
Paragraph 53 of Addendum)
[X] If this box is checked, there are provisions in this Lease
for the Base
Rent to be adjusted.
1.6 LESSEE'S SHARE OF OPERATING EXPENSE INCREASE: seven point
seven percent
(7.7%) ("LESSEE'S SHARE"). Lessee's Share has been calculated by
dividing the
approximate rentable square footage of the Premises by the total
approximate
square footage of the rentable space contained in the Project
and shall not be
subject to revision except in connection with an actual change
in the size of
the Premises or a change in the space available for lease in the
Project.
1.7 BASE RENT AND OTHER MONIES PAID UPON EXECUTION:
(a) BASE RENT: $21,534.00 for the period September 1-30,
2007.
(b) SECURITY DEPOSIT: $27,460.19 ("SECURITY DEPOSIT"). (See
also
Paragraph 5)
(c) PARKING: $______________ for the period
_______________________.
(d) OTHER: $_______________ for ______________________.
(e) TOTAL DUE UPON EXECUTION OF THIS LEASE: $48,994.19.
1.8 AGREED USE: general office consistent with the building.
(See also
Paragraph 6)
1.9 BASE YEAR; INSURING PARTY. The Base Year is 2007. Lessor is
the
"INSURING PARTY". (See also Paragraphs 4.2 and 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):
[X] CB Richard Ellis represents Lessor exclusively ("LESSOR'S
BROKER");
[X] Cresa Partners represents Lessee exclusively ("LESSEE'S
BROKER"); or
[ ] ________________ represents both Lessor and Lessee ("DUAL
AGENCY").
(b) PAYMENT TO BROKERS: Upon execution and delivery of this
Lease by
both Parties, Lessor shall pay to the Brokers the brokerage fee
agreed to in a
separate written agreement (or if there is no such agreement,
the sum of
_________ or _____% of the total Base Rent for the brokerage
services rendered
by the Brokers).
1.11 GUARANTOR. The obligations of the Lessee under this Lease
shall be
guaranteed by N/A ("GUARANTOR"). (See also Paragraph 37)
1.12 BUSINESS HOURS FOR THE BUILDING: 8:00 a.m. to 6:00 p.m.,
Mondays
through Fridays (except Building Holidays) and 9:00 a.m. to 1:00
p.m. on
Saturdays (except Building Holidays). "BUILDING HOLIDAYS" shall
mean the dates
of observation of New
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Year's Day, President's Day, Memorial Day, Independence Day,
Labor Day,
Thanksgiving Day, Christmas Day, and ____________________ The
hourly cost for
after hours use of the Building is $75.00 per hour.
1.13 LESSOR SUPPLIED SERVICES. Notwithstanding the provisions of
Paragraph
11.1, Lessor is NOT obligated to provide the following;
[ ] Janitorial services
[ ] Electricity
[ ] Other (specify):
_________________________________________________
1.14 ATTACHMENTS. Attached hereto are the following, all of
which
constitute a part of this Lease:
[X] an Addendum consisting of Paragraphs 50 through 57;
[ ] a plot plan depicting the Premises;
[ ] a current set of the Rules and Regulations;
[ ] a Work Letter;
[ ] a janitorial schedule;
[X] other (specify): Option to Extend Standard Lease
Addendum.
2. PREMISES.
2.1 LETTING. Lessor hereby leases to Lessee, and Lessee hereby
leases from
Lessor, the Premises, for the term, at the rental, and upon all
of the terms,
covenants and conditions set forth in this Lease. Unless
otherwise provided
herein, any statement of size set forth in this Lease, or that
may have been
used in calculating Rent, is an approximation which the Parties
agree is
reasonable and any payments based thereon are not subject to
revision whether or
not the actual size is more or less. NOTE: LESSEE IS ADVISED TO
VERIFY THE
ACTUAL SIZE PRIOR TO EXECUTING THIS LEASE.
2.2 CONDITION. Lessor shall deliver the Premises to Lessee in a
clean
condition on the Commencement Date or the Early Possession Date,
whichever first
occurs ("START DATE"), and warrants that the existing
electrical, plumbing, fire
sprinkler, lighting, heating, ventilating and air conditioning
systems ("HVAC"),
and all other items which the Lessor is obligated to construct
pursuant to this
lease the Work Letter attached hereto, if any, other than those
constructed by
Lessee, shall be in good operating condition on said date, that
the structural
elements of the roof (including roof membrane), bearing walls
and foundation of
the Unit shall be free of material defects, and that the
Premises do not contain
hazardous levels of any mold or fungi defined as toxic under
applicable state or
federal law.
2.3 COMPLIANCE. Lessor warrants to the best of its knowledge
that the
improvements comprising 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
("APPLICABLE
REQUIREMENTS") in effect on the Start Date. Said warranty does
not apply to the
use to which Lessee will put the Premises, modifications which
may be required
by the Americans with Disabilities Act or any similar laws as a
result of
Lessee's use (see Paragraph 49), or to any Alterations or
Utility Installations
(as defined in Paragraph 7.3(a)) made or to be made by Lessee.
NOTE: LESSEE IS
RESPONSIBLE FOR DETERMINING WHETHER OR NOT THE ZONING AND OTHER
APPLICABLE
REQUIREMENTS ARE APPROPRIATE FOR LESSEE'S INTENDED USE, AND
ACKNOWLEDGES THAT
PAST USES OF THE PREMISES MAY NO LONGER BE ALLOWED. If the
Premises do not
comply with said warranty, Lessor shall, except as otherwise
provided, promptly
after receipt of written notice from Lessee setting forth with
specificity the
nature and extent of such non-compliance, rectify the same. 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
Premises, the
remediation of any Hazardous Substance, or the reinforcement or
other physical
modification of the Premises ("CAPITAL EXPENDITURE"), Lessor and
Lessee shall
allocate the cost of such work as follows:
(a) Subject to Paragraph 2.3(c) below, if such Capital
Expenditures
are required as a result of the specific and unique use of the
Premises by
Lessee as compared with uses by tenants in general, Lessee shall
be fully
responsible for the cost thereof, provided, however that if such
Capital
Expenditure is required during the last 2 years of this Lease
and the cost
thereof exceeds 6 months' Base Rent, Lessee may instead
terminate this Lease
unless Lessor notifies Lessee, in writing, within 10 days after
receipt of
Lessee's termination notice that Lessor has elected to pay the
difference
between the actual cost thereof and the amount equal to 6
months' Base Rent. If
Lessee elects termination, Lessee shall immediately cease the
use of the
Premises which requires such Capital Expenditure and deliver to
Lessor written
notice specifying a termination date at least 90 days
thereafter. Such
termination date shall, however, in no event be earlier than the
last day that
Lessee could legally utilize the Premises without commencing
such Capital
Expenditure.
(b) If such Capital Expenditure is not the result of the
specific and
unique use of the Premises by Lessee (such as, governmentally
mandated seismic
modifications), then Lessor shall pay for such Capital
Expenditure and Lessee
shall only be obligated to pay, each month during the remainder
of the term of
this Lease, on the date that on which the Base Rent is due, an
amount equal to
144th of the portion of such costs reasonably attributable to
the Premises.
Lessee shall pay Interest on the balance but may prepay its
obligation at any
time. If, however, such Capital Expenditure is required during
the last 2 years
of this Lease or if Lessor reasonably determines that it is not
economically
feasible to pay its share thereof, Lessor shall have the option
to terminate
this Lease upon 90 days prior written notice to Lessee unless
Lessee notifies
Lessor, in writing, within 10 days after receipt of Lessor's
termination notice
that Lessee will pay for such Capital Expenditure. If Lessor
does not elect to
terminate, and fails to tender its share of any such Capital
Expenditure, Lessee
may advance such funds and deduct same, with interest, from Rent
until Lessor's
share of such costs have been fully paid. If Lessee is unable to
finance
Lessor's share, or if the balance of the Rent due and payable
for the remainder
of this Lease is not sufficient to fully reimburse Lessee on an
offset basis,
Lessee shall have the right to terminate this Lease upon 30 days
written notice
to Lessor.
(c) Notwithstanding the above, the provisions concerning
Capital
Expenditures are intended to apply only to nonvoluntary,
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) Lessee has
been advised
by Lessor and/or Brokers to satisfy itself with respect to the
condition of the
Premises (including but not limited to the electrical, HVAC and
fire sprinkler
systems, security, environmental aspects, and compliance with
Applicable
Requirements), and their suitability for Lessee's intended use,
(b) Lessee has
made such investigation as it deems necessary with reference to
such matters and
assumes all responsibility therefor as the same relate to its
occupancy of the
Premises, and (c) neither Lessor, Lessor's agents nor Brokers
have made any oral
or written representations or warranties with respect to said
matters other than
as set forth in this Lease. In addition, Lessor acknowledges
that: (i) Brokers
have made no representations, promises or warranties concerning
Lessee's ability
to honor the Lease or suitability to occupy the Premises, and
(ii) it is
Lessor's sole responsibility to investigate the financial
capability and/or
suitability of all proposed tenants.
2.5 LESSEE AS PRIOR OWNER/OCCUPANT. The warranties made by
Lessor in
Paragraph 2 shall be of no force or effect if immediately prior
to the Start
Date, Lessee was the owner or occupant of the Premises. In such
event, Lessee
shall be responsible for any necessary corrective work.
2.6 VEHICLE PARKING. So long as Lessee is not in default, and
subject to
the Rules and Regulations attached hereto, and as established by
Lessor from
time to time. Lessee shall be entited to rent and use the number
of parking
spaces specified in Paragraph 1.2(b) at the rental rate
applicable from time to
time for monthly parking as set by Lessor and/or its
licensee.
(a) If Lessee commits, permits or allows any of the
prohibited
activities described in the Lease or the rules then in effect,
then Lessor shall
have the right, without notice, in addition to such other rights
and remedies
that it may have, to remove or tow away the vehicle involved and
charge the cost
to Lessee, which cost shall be immediately payable upon demand
by Lessor.
(b) The monthly rent per parking space specified in Paragraph
1.2(b)
is subject to change upon 30 days prior written notice to
Lessee. The rent for
the parking is payable one month in advance prior to the first
day of each
calendar month.
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
Premises that are provided and designated by the Lessor from
time to time for
the general nonexclusive use of Lessor. Lessee and other tenants
of the Project
and their respective employees, suppliers, shippers, customers,
contractors and
invitees, including, but not limited to, common entrances,
lobbies, corridors,
stairwells, public restrooms, elevators, parking areas, loading
and unloading
areas, trash areas, roadways, walkways, driveways and landscaped
areas.
2.8 COMMON AREAS - LESSEE'S RIGHTS. Lessor grants to Lessee, for
the
benefit of Lessee and its employees, suppliers, shippers,
contractors, customers
and invitees, during the term of this Lease, the nonexclusive
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
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Common Areas be deemed to include the right to store any
property, temporarily
or permanently, in the Common Areas. Any such storage shall be
permitted only by
the prior written consent of Lessor or Lessor's designated
agent, which consent
may be revoked at any time. In the event that any unauthorized
storage shall
occur then Lessor shall have the right, without notice, in
addition to such
other rights and remedies that it may have, to remove the
property and charge
the cost to Lessee, which cost shall be immediately payable upon
demand by
Lessor.
2.9 COMMON AREAS - RULES AND REGULATIONS. Lessor or such other
person(s) as
Lessor may appoint shall have the exclusive control and
management of the Common
Areas and shall have the right, from time to time, to adopt,
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. The 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 noncompliance with
said Rules and
Regulations by other tenants of the Project.
2.10 COMMON AREAS - CHANGES. Lessor shall have the right, in
Lessor's sole
discretion, from time to time:
(a) To make changes, provided that it does not materially or
adversely
affect Lessee's use of the Premises or Common Areas, to the
Common Areas,
including, without limitation, changes in the location, size,
shape and number
of the lobbies, windows, stairways, air shafts, elevators,
escalators,
restrooms, driveways, entrances, parking spaces, parking areas,
loading and
unloading areas, ingress, egress, direction of traffic,
landscaped areas,
walkways and utility raceways;
(b) To close temporarily any of the Common Areas for
maintenance
purposes so long as reasonable access to the Premises remains
available;
(c) To designate other land outside the boundaries of the
Project to
be a part of the Common Areas;
(d) To add additional buildings and improvements to the Common
Areas;
(e) To use the Common Areas while engaged in making
additional
improvements, repairs or alterations to the Project, or any
portion thereof; and
(f) To do and perform such other acts and make such other
changes in,
to or with respect to the Common Areas and Project as Lessor
may, in the
exercise of sound business judgment, deem to be appropriate.
3. TERM.
3.1 TERM. The Commencement Date. Expiration Date and Original
Term of this
Lease are as specified in Paragraph 1.3.
3.2 EARLY POSSESSION. If Lessee totally or partially occupies
the Premises
prior to the Commencement Date, the obligation to pay Base Rent
shall be abated
for the period of such early possession. All other terms of this
Lease
(including but not limited to the obligations to pay Lessee's
share of the
Operating Expense Increase) and the obligation to pay Lessee's
share of the
operating expense increase, shall be in effect during such
period. Any such
early possession shall not affect the Expiration Date.
3.3 DELAY IN POSSESSION. Lessor agrees to use its best
commercially
reasonable efforts to deliver possession of the Premises to
Lessee by the
Commencement Date. If, despite said efforts, Lessor is unable to
deliver
possession by such date, Lessor shall not be subject to any
liability therefor,
nor shall such failure affect the validity of this Lease. Lessee
shall not,
however, be obligated to pay Rent or perform its other
obligations until Lessor
delivers possession of the Premises and any period of rent
abatement that Lessee
would otherwise have enjoyed shall run from the date of delivery
of possession
and continue for a period equal to what Lessee would otherwise
have enjoyed
under the terms hereof, but minus any days of delay caused by
the acts or
omissions of Lessee. If possession is not delivered within 60
days after the
Commencement Date, as the same may be extended under the terms
of any Work
Letter executed by Parties, Lessee may, at its option, by notice
in writing
within 10 days after the end of such 60 day period, cancel this
Lease, in which
event the Parties shall be discharged from all obligations
hereunder. If such
written notice is not received by Lessor within said 10 day
period, Lessee's
right to cancel shall terminate. If possession of the Premises
is not delivered
within 120 days after the Commencement Date, this Lease shall
terminate unless
other agreements are reached between Lessor and Lessee, in
writing.
3.4 LESSEE COMPLIANCE. Lessor shall not be required to deliver
possession
of the Premises to Lessee until Lessee complies with its
obligation to provide
evidence of insurance (Paragraph 8.5). Pending delivery of such
evidence, Lessee
shall be required to perform all of its obligations under this
Lease from and
after the Start Date, including the payment of Rent,
notwithstanding Lessor's
election to withhold possession pending receipt of such evidence
of insurance.
Further, if Lessee is required to perform any other conditions
prior to or
concurrent with the Start Date, the Start Date shall occur but
Lessor may elect
to withhold possession until such conditions are satisfied.
4. RENT.
4.1. RENT DEFINED. All monetary obligations of Lessee to Lessor
under the
terms of this Lease (except for the Security Deposit) are deemed
to be rent
("RENT").
4.2 OPERATING EXPENSE INCREASE. Lessee shall pay to Lessor
during the term
hereof, in addition to the Base Rent, Lessee's Share of the
amount by which all
Operating Expenses for each Comparison Year exceeds the amount
of all Operating
Expenses for the Base Year, such excess being hereinafter
referred to as the
"OPERATING EXPENSE INCREASE", in accordance with the following
provisions:
(a) "BASE YEAR" is as specified in Paragraph 1.9.
(b) "COMPARISON YEAR" is defined as each calendar year during
the term
of this Lease subsequent to the Base Year; provided, however,
Lessee shall have
no obligation to pay a share of the Operating Expense Increase
applicable to the
first 12 months of the Lease Term (other than such as are
mandated by a
governmental authority, as to which government mandated expenses
Lessee shall
pay Lessee's Share, notwithstanding they occur during the first
twelve (12)
months). Lessee's Share of the Operating Expense Increase for
the first and last
Comparison Years of the Lease Term shall be prorated according
to that portion
of such Comparison Year as to which Lessee is responsible for a
share of such
increase.
(c) The following costs relating to the ownership and operation
of the
Project, calculated as if the Project was at least 95% occupied,
are defined as
"OPERATING EXPENSES":
(i) Costs relating to the operation, repair, and maintenance
in
neat, clean, safe, good order and condition, but not the
replacement (see
subparagraph (g)), of the following:
(aa) The Common Areas, including their surfaces, coverings,
decorative items, carpets, drapes and window coverings, and
including parking
areas, loading and unloading areas, trash areas, roadways,
sidewalks, walkways,
stairways, parkways, driveways, landscaped areas, striping,
bumpers, irrigation
systems, Common Area lighting facilities, building exteriors and
roofs (which
shall be limited to annual preventive maintenance on roofs and
not roof
replacements), fences and gates;
(bb) All heating, air conditioning, plumbing, electrical
systems, life safety equipment, communication systems and other
equipment used
in common by, or for the benefit of, tenants or occupants of the
Project,
including elevators and escalators, tenant directories, fire
detection systems
including sprinkler system maintenance and repair.
(ii) The cost of trash disposal, janitorial and security
services, pest control services, and the costs of any
environmental inspections;
(iii) The cost of any other service to be provided by Lessor
that
is elsewhere in this Lease stated to be an "Operating
Expense";
(iv) The cost of the premiums for the insurance policies
maintained by Lessor pursuant to paragraph 8 and any deductible
portion of an
Insured loss concerning the Building or the Common Areas;
(v) The amount of the Real Property Taxes payable by Lessor
pursuant to paragraph 10;
(vi) The cost of water, sewer, gas, electricity, and other
publicly mandated services not separately metered;
(vii) Labor, salaries, and applicable fringe benefits and
costs,
materials, supplies and tools, used in maintaining and/or
cleaning the Project
and accounting and management fees attributable to the operation
of the Project;
(viii) 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
1/144th of the cost of such Capital Expenditure in any given
month;
(ix) The cost to replace equipment or improvements that have
a
useful life for accounting purposes of 5 years or less.
(d) Any item of Operating Expense that is specifically
attributable to
the Premises, the Building or to any other building in the
Project or to the
operation, repair and maintenance thereof, shall be allocated
entirely to such
Premises, Building, or other building. However, any such item
that is 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.
(e) The inclusion of the improvements, facilities and services
set
forth in Subparagraph 4.2(c) 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.
(f) Lessee's Share of Operating Expenses Increase is payable
monthly
on the same day as the Base Rent is due hereunder.
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The amount of such payments shall be based on Lessor's estimate
of the Operating
Expense 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 a reasonably detailed statement
showing Lessee's
Share of the actual Operating Expense Increase incurred during
such year. If
Lessee's payments during such Year exceed Lessee's Share, Lessee
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 said statement. Lessor and Lessee shall forthwith
adjust between them
by cash payment any balance determined to exist with respect to
that portion of
the last Comparison Year for which Lessee is responsible as to
Operating Expense
Increases, notwithstanding that the Lease term may have
terminated before the
end of such Comparison Year.
(g) Operating Expenses shall not include the costs of
replacement for
equipment or capital components such as the roof, roof
membranes, foundations,
exterior walls or a Common Area capital improvement, such as the
parking lot
paving, elevators, fences that have a useful life for accounting
purposes of 5
years or more.
(h) 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 by insurance proceeds.
4.3 PAYMENT. Lessee shall cause payment of Rent to be received
by Lessor in
lawful money of the United States on or before the day on which
it is due,
without offset or deduction (except as specifically permitted in
this Lease).
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 slated
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 slating. In
the event that
any check, draft, or other instrument of payment given by Lessee
to Lessor is
dishonored for any reason, Lessee agrees to pay to Lessor the
sum of $25 in
addition to any Late Charge and Lessor, at its option, may
require all future
Rent be paid by cashier's check. Payments will be applied first
to accrued late
charges and attorney's fees, second to accrued interest, then to
Base Rent and
Common Area Operating Expenses, and any remaining amount to any
other
outstanding charges or costs.
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon
execution hereof the
Security Deposit as security for Lessee's faithful performance
of its
obligations under this Lease. If Lessee fails to pay Rent, or
otherwise Defaults
under this Lease, Lessor may use, apply or retain all or any
portion of said
Security Deposit for the payment of any amount due already due
Lessor, for Rents
which will be due in the future, and/ or to reimburse or
compensate Lessor for
any liability, expense, loss or damage which Lessor may suffer
or incur by
reason thereof. If Lessor uses or applies all or any portion of
the Security
Deposit, Lessee shall within 10 days after written request
therefor deposit
monies with Lessor sufficient to restore said Security Deposit
to the full
amount required by this Lease. 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 Lessor's reasonable
judgment,
significantly reduced, Lessee shall deposit such additional
monies with Lessor
as shall be sufficient to cause the Security Deposit to be at a
commercially
reasonable level based on such change in financial condition.
Lessor shall not
be required to keep the Security Deposit separate from its
general accounts.
Within 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.
6. USE.
6.1 USE. Lessee shall use and occupy the Premises only for the
Agreed Use,
or any other legal use which is reasonably comparable thereto,
and for no other
purpose. Lessee shall not use or permit the use of the Premises
in a manner that
is unlawful, creates damage, waste or a nuisance, or that
disturbs occupants of
or causes damage to neighboring premises or properties. Other
than guide, signal
and seeing eye dogs, Lessee shall not keep or allow in the
Premises any pets,
animals, birds, fish, or reptiles. Lessor shall not unreasonably
withhold or
delay its consent to any written request for a modification of
the Agreed Use,
so long as the same will not impair the structural integrity of
the improvements
of the Building, will not adversely affect the mechanical,
electrical, HVAC, and
other systems of the Building, and/or will not affect the
exterior appearance of
the Building. If Lessor elects to withhold consent, Lessor shall
within 7 days
after such request give written notification of same, which
notice shall include
an explanation of Lessor's objections to the change in the
Agreed Use.
6.2 HAZARDOUS SUBSTANCES.
(a) REPORTABLE USES REQUIRE CONSENT. The term "HAZARDOUS
SUBSTANCE" as
used in this Lease shall mean any product, substance, or waste
whose presence,
use, manufacture, disposal, transportation, or release, either
by itself or in
combination with other materials expected to be on the Premises,
is either: (i)
potentially injurious to the public health, safety or welfare,
the environment
or the Premises, (ii) regulated or monitored by any governmental
authority, or
(iii) a basis for potential liability of Lessor to any
governmental agency or
third party under any applicable statute or common law theory.
Hazardous
Substances shall include, but not be limited to, hydrocarbons,
petroleum,
gasoline, and/or crude oil or any products, byproducts or
fractions thereof.
Lessee shall not engage in any activity in or on the Premises
which constitutes
a Reportable Use of Hazardous Substances without the express
prior written
consent of Lessor and timely compliance (at Lessee's expense)
with all
Applicable Requirements. "REPORTABLE USE" shall mean (i) the
installation or use
of any above or below ground storage tank, (ii) the generation,
possession,
storage, use, transportation, or disposal of a Hazardous
Substance that requires
a permit from, or with respect to which a report, notice,
registration or
business plan is required to be filed with, any governmental
authority, and/or
(iii) the presence at the Premises of a Hazardous Substance with
respect to
which any Applicable Requirements requires that a notice be
given to persons
entering or occupying the Premises or neighboring properties.
Notwithstanding
the foregoing, Lessee may use any ordinary and customary
materials reasonably
required to be used in the normal course of the Agreed Use such
as ordinary
office supplies (copier toner, liquid paper, glue, etc.) and
common household
cleaning materials, so long as such use is in compliance with
all Applicable
Requirements, is not a Reportable Use, and does not expose the
Premises or
neighboring property to any meaningful risk of contamination or
damage or expose
Lessor to any liability therefor. In addition, Lessor may
condition its consent
to any Reportable Use upon receiving such additional assurances
as Lessor
reasonably deems necessary to protect itself, the public, the
Premises and/or
the environment against damage, contamination, injury and/or
liability,
including, but not limited to, the installation (and removal on
or before Lease
expiration or termination) of protective modifications (such as
concrete
encasements) and/or increasing the Security Deposit.
(b) DUTY TO INFORM LESSOR. If either Lessor or Lessee knows, or
has
reasonable cause to believe, that a Hazardous Substance has come
to be located
in, on, under or about the Premises or Common Area, other than
as previously
consented to by Lesser, Lessee said party shall immediately give
written notice
of such fact to Lessor the other party, and provide Lesser such
party 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 from areas outside of the Project not caused
or contributed
to by Lessee). Lessee's obligations shall include, but not be
limited to, the
effects of any contamination or injury to person, property or
the environment
created or suffered by Lessee, and the cost of investigation,
removal,
remediation, restoration and/or abatement, and shall survive the
expiration or
termination of this Lease. No termination, cancellation or
release agreement
entered into by Lessor and Lessee shall release Lessee from its
obligations
under this Lease with respect to Hazardous Substances, unless
specifically so
agreed by Lessor in writing at the time of such agreement.
(e) LESSOR INDEMNIFICATION. Lessor and its successors and
assigns
shall indemnify, defend, reimburse and hold Lessee, its
employees and lenders,
harmless from and against any and all environmental damages,
including the cost
of remediation, which result from Hazardous Substances which
existed on the
Premises prior to Lessee's occupancy or which are caused by the
gross negligence
or willful misconduct of Lessor, its agents or employees.
Lessor's obligations,
as and when required by the Applicable Requirements, shall
include, but not be
limited to, the cost of investigation, removal, remediation,
restoration and/or
abatement, and shall survive the expiration or termination of
this Lease.
(f) INVESTIGATIONS AND REMEDIATIONS. Lessor shall retain the
responsibility and pay for any investigations or remediation
(Illegible) (Illegible)
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measures required by governmental entities having jurisdiction
with
respect to the existence of Hazardous Substances on the Premises
prior to
Lessee's occupancy, unless such remediation measure is required
as a result of
Lessee's use (including "Alterations", as defined in paragraph
7.3(a) below) of
the Premises, in which event Lessee shall be responsible for
such payment.
Lessee shall cooperate fully in any such activities at the
request of Lessor,
including allowing Lessor and Lessor's agents to have reasonable
access to the
Premises at reasonable times in order to carry out Lessor's
investigative and
remedial responsibilities.
(g) LESSOR TERMINATION OPTION. If a Hazardous Substance
Condition (see
Paragraph 9.1(e)) occurs during the term of this Lease, unless
Lessee is legally
responsible therefor (in which case Lessee shall make the
investigation and
remediation thereof required by the Applicable Requirements in
accordance with
this Section 6.2 and this Lease shall continue in full force and
effect, but
subject to Lessor's rights under Paragraph 6.2(d) and Paragraph
13), Lessor may,
at Lessor's option, either (i) investigate and remediate such
Hazardous
Substance Condition, if required, as soon as reasonably possible
at Lessor's
expense, in which event this Lease shall continue in full force
and effect, or
(ii) if the estimated cost to remediate such condition exceeds
12 times the then
monthly Base Rent or $100,000, whichever is greater, give
written notice to
Lessee, within 30 days after receipt by Lessor of knowledge of
the occurrence of
such Hazardous Substance Condition, of Lessor's desire to
terminate this Lease
as of the date 60 days following the date of such notice. In the
event Lessor
elects to give a termination notice, Lessee may, within 10 days
thereafter, give
written notice to Lessor of Lessee's commitment to pay the
amount by which the
cost of the remediation of such Hazardous Substance Condition
exceeds an amount
equal to 12 times the then monthly Base Rent or $100,000,
whichever is greater.
Lessee shall provide Lessor with said funds or satisfactory
assurance thereof
within 30 days following such commitment. In such event, this
Lease shall
continue in full force and effect, and Lessor shall proceed to
make such
remediation as soon as reasonably possible after the required
funds are
available, if Lessee does not give such notice and provide the
required funds or
assurance thereof within the time provided, this Lease shall
terminate as of the
date specified in Lessor's notice of termination.
6.3 LESSEE'S COMPLIANCE WITH APPLICABLE REQUIREMENTS. Except as
otherwise
provided in this Lease, Lessee shall, at Lessee's sole expense,
fully,
diligently and in a timely manner, materially comply with all
Applicable
Requirements, the requirements of any applicable fire insurance
underwriter or
rating bureau, and the recommendations of Lessor's engineers
and/or consultants
which relate in any manner to the Premises, without regard to
whether said
requirements are now in effect or become effective after the
Start Date. Lessee
shall, within 10 days after receipt of Lessor's written request,
provide Lessor
with copies of all permits and other documents, and other
information evidencing
Lessee's compliance with any Applicable Requirements specified
by Lessor, and
shall immediately upon receipt, notify Lessor in writing (with
copies of any
documents involved) of any threatened or actual claim, notice,
citation,
warning, complaint or report pertaining to or involving the
failure of Lessee or
the Premises to comply with any Applicable Requirements.
Likewise, Lessee shall
immediately give written notice to Lessor of: (i) any water
damage to the
Premises and any suspected seepage, pooling, dampness or other
condition
conducive to the production of mold; or (ii) any mustiness or
other odors that
might indicate the presence of mold in the Premises.
6.4 INSPECTION; COMPLIANCE. Lessor and Lessor's "Lender" (as
defined in
Paragraph 30) and consultants shall have the right to enter into
Premises at any
time, in the case of an emergency, and otherwise at reasonable
times, 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
9.1e) 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 therefore.
7. MAINTENANCE; REPAIRS; UTILITY INSTALLATIONS; TRADE FIXTURES
AND ALTERATIONS.
7.1 LESSEE'S OBLIGATIONS. Notwithstanding Lessor's obligation to
keep the
Premises in good condition and repair, Lessee shall be
responsible for payment
of the cost thereof to Lessor as additional rent for that
portion of the cost of
any maintenance and repair of the Premises, or any equipment
(wherever located)
that serves only Lessee or the Premises, to the extent such cost
is attributable
to causes beyond normal wear and tear. Lessee shall be
responsible for the cost
of painting, repairing or replacing wall coverings, and to
repair or replace any
improvements with the Premises. Lessor may, at its option, upon
reasonable
notice, elect to have Lessee perform any particular such
maintenance or repairs
the cost of which is otherwise Lessee's responsibility
hereunder.
7.2 LESSOR'S OBLIGATIONS. Subject to the provisions of
Paragraphs 2.2
(Condition), 2.3 (Compliance), 4.2 (Operating Expenses), 6
(Use), 7.1 (Lessee's
Obligations), 9 (Damage or Destruction) and 14 (Condemnation),
Lessor, subject
to reimbursement pursuant to Paragraph 4.2, shall keep in good
order, condition
and repair the foundations, exterior walls, structural condition
of interior
bearing walls, exterior roof and roof Structure, fire sprinkler
system, fire
alarm and/or smoke detection systems, fire hydrants, and the
Common Areas.
Lessee expressly waives the benefit of any statute now or
hereafter in effect to
the extent it is inconsistent with the terms of this Lease.
7.3 UTILITY INSTALLATIONS; TRADE FIXTURES; ALTERATIONS.
(a) DEFINITIONS. The term "UTILITY INSTALLATIONS" refers to all
floor
and window coverings, air lines, vacuum lines, power panels,
electrical
distribution, security and fire protection systems,
communication cabling,
lighting fixtures, HVAC equipment, and plumbing 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, ceilings, floors 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 $2000
$6,000. Notwithstanding the foregoing, Lessee shall not make or
permit any roof
penetrations and/or install anything on the roof without the
prior written
approval of Lessor. Lessor may, as a precondition to granting
such approval,
require Lessee to utilize a contractor chosen and/or approved by
Lessor. Any
Alterations or Utility Installations that Lessee shall desire to
make and which
require the consent of the Lessor shall be presented to Lessor
in written form
with detailed plans. Consent shall be deemed conditioned upon
Lessee's; (i)
acquiring all applicable governmental permits, (ii) furnishing
Lessor with
copies of both the permits and the plans and specifications
prior to
commencement of the work, and (iii) compliance with all
conditions of said
permits and other Applicable Requirements in a prompt and
expeditious manner.
Any Alterations or Utility Installations shall be performed in a
workmanlike
manner with good and sufficient materials. Lessee shall promptly
upon completion
furnish Lessor with as built plans and specifications. 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.
(c) LIENS; BONDS. Lessee shall pay, when due, all claims for
labor or
materials furnished or alleged to have been furnished to or for
Lessee at or for
use on the Premises, which claims are or may be secured by any
mechanic's or
materialmen's lien against the Premises or any interest therein.
Lessee shall
give Lessor not less than 10 days notice prior to the
commencement of any work
in, on or about the Premises, and Lessor shall have the right to
post notices of
non-responsibility. If Lessee shall contest the validity of any
such lien, claim
or demand, then Lessee shall, at its sole expense defend and
protect itself,
Lessor and the Premises against the same and shall pay and
satisfy any such
adverse judgment that may be rendered thereon before the
enforcement thereof. If
Lessor shall require, Lessee shall furnish a surety bond in an
amount equal to
150% of the amount of such contested lien, claim or demand,
indemnifying Lessor
against liability for the same. If 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 clean and free of debris, and in good
operating
order, condition and state of repair, ordinary wear and tear
excepted "Ordinary
wear and tear" shall not include any damage or deterioration
that would have
been prevented by good maintenance practice. Notwithstanding the
foregoing, if
this Lease is for 12 months or less, then Lessee shall surrender
the Premises in
the same condition as delivered to Lessee on the Start Date with
NO allowance
for ordinary wear and tear. Lessee shall repair any damage
occasioned by the
installation, maintenance or
(Illegible) (Illegible)
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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 Premises) even
if such removal
would require Lessee to perform or pay for work that exceeds
statutory
requirements. Trade Fixtures shall remain the property of Lessee
and shall be
removed by Lessee. Any personal property of Lessee not removed
on or before the
Expiration Date or any earlier termination date shall be deemed
to have been
abandoned by Lessee and may be disposed of or retained by Lessor
as Lessor may
desire. The failure by Lessee to timely vacate the Premises
pursuant to this
Paragraph 7.4(c) without the express written consent of Lessor
shall constitute
a holdover under the provisions of Paragraph 26 below.
8. INSURANCE; INDEMNITY.
8.1 INSURANCE PREMIUMS. The cost of the premiums for the
insurance policies
maintained by Lessor pursuant to paragraph 8 are included as
Operating Expenses
(see paragraph 4.2 (c)(iv)). Said costs shall include increases
in the premiums
resulting from additional coverage related to requirements of
the holder of a
mortgage or deed of trust covering the Premises, Building and/or
Project,
increased valuation of the Premises, Building and/or Project,
and/or a general
premium rate increase. Said costs shall not, however, include
any premium
increases resulting from the nature of the occupancy of any
other tenant of the
Building. If the Project was not insured for the entirety of the
Base Year, then
the base premium shall be the lowest annual premium reasonably
obtainable for
the required insurance as of the Start Date, assuming the most
nominal use
possible of the Building and/or Project. In no event, however,
shall Lessee be
responsible for any portion of the premium cost attributable to
liability
insurance coverage in excess of $2,000,000 procured under
Paragraph 8.2(b).
8.2 LIABILITY INSURANCE.
(a) CARRIED BY LESSEE. Lessee shall obtain and keep in force
a
Commercial General Liability policy of insurance protecting
Lessee and Lessor as
an additional insured against claims for bodily injury, personal
injury and
property damage based upon or arising out of the ownership, use,
occupancy or
maintenance of the Premises and all areas appurtenant thereto.
Such insurance
shall be on an occurrence basis providing single limit coverage
in an amount not
less than $1,000,000 per occurrence with an annual aggregate of
not less than
$2,000,000. Lessee shall add Lessor as an additional insured by
means of an
endorsement at least as broad as the Insurance Service
Organization's
"Additional Insured-Managers or Lessors of Premises" Endorsement
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
Building and/or Project. The amount of such insurance shall be
equal to the full
insurable replacement cost of the Building and/or Project, 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 Utilily 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 $1,000 per occurrence.
(b) RENTAL VALUE. Lessor shall also obtain and keep in force a
policy
or policies in the name of Lessor with loss payable to Lessor
and any Lender,
insuring the loss of the full Rent for one year with an extended
period of
indemnity for an additional 180 days ("RENTAL VALUE INSURANCE").
Said insurance
shall contain an agreed valuation provision in lieu of any
coinsurance clause,
and the amount of coverage shall be adjusted annually to reflect
the projected
Rent otherwise payable by Lessee, for the next 12 month
period.
(c) ADJACENT PREMISES. Lessee shall pay for any increase in
the
premiums for the property insurance of the Building and for the
Common Areas or
other buildings in the Project if said increase is caused by
Lessee's acts,
omissions, use or occupancy of the Premises.
(d) LESSEE'S IMPROVEMENTS. Since Lessor is the Insuring Party,
Lessor
shall not be required to insure Lessee Owned Alterations and
Utility
Installations unless the item in question has become the
property of Lessor
under the terms of this Lease.
8.4 LESSEE'S PROPERTY; Business Interruption Insurance .
(a) PROPERTY DAMAGE. Lessee shall obtain and maintain
insurance
coverage on all of Lessee's personal property, Trade Fixtures,
and Lessee Owned
Alterations and Utilily 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.
(b) BUSINESS INTERRUPTION. Lessee shall obtain and maintain loss
of
income and extra expense insurance in amounts as will reimburse
Lessee for
direct or indirect loss of earnings attributable to all perils
commonly insured
against by prudent lessees in the business of Lessee or
attributable to
prevention of access to the Premises as a result of such
perils.
(c) NO REPRESENTATION OF ADEQUATE COVERAGE. Lessor makes no
representation that the limits or forms of coverage of insurance
specified
herein are adequate to cover Lessee's property, business
operations or
obligations under this Lease.
8.5 INSURANCE POLICIES. Insurance required herein shall be by
companies
duly licensed or admitted to transact business in the state
where the Premises
are located, and maintaining during the policy term a "General
Policyholders
Rating" of at least A-, VI, as set forth in the most current
issue of "Best's
Insurance Guide", or such other rating as may be required by a
Lender. Lessee
shall not do or permit to be done anything which invalidates the
required
insurance policies. Lessee shall, prior to the Start Date,
deliver to Lessor
certified copies of policies of such insurance or certificates
evidencing the
existence and amounts of the required insurance. No such policy
shall be
cancelable or subject to modification except after 10 days prior
written notice
to Lessor. Lessee shall, at least 30 days prior to the
expiration of such
policies, furnish Lessor with evidence of renewals or "insurance
binders"
evidencing renewal thereof, or Lessor may order such insurance
and charge the
cost thereof to Lessee, which amount shall be payable by Lessee
to Lessor upon
demand. Such policies shall be for a term of at least one year,
or the length of
the remaining term of this Lease, whichever is less. If either
Party shall fail
to procure and maintain the insurance required to be carried by
it, the other
Party may, but shall not be required to, procure and maintain
the same.
8.6 WAIVER OF SUBROGATION. Without affecting any other rights or
remedies,
Lessee and Lessor each hereby release and relieve the other, and
waive their
entire right to recover damages against the 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.
8.7 INDEMNITY. Except for Lessor's gross negligence or willful
misconduct,
Lessee shall indemnify, 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 I
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