EXHIBIT 10.2
OFFICE LEASE AGREEMENT
by and between
AMERICAN TONERSERV CORP.,
a Delaware corporation
("Tenant")
and
MONROE FORSYTH, INC.,
a California corporation, as General Partner
of
MARBLES ENTERPRISES, L.P.,
a California limited partnership,
and
MOLLY BELLE PROPERTIES, L.P.,
a California limited partnership
("Landlord")
November 19, 2007
420 Aviation Boulevard, Suite 103
Santa Rosa, California
95403
TABLE OF CONTENTS
1. Demise and
Premises ......................................... 1
1.1
Demise .............................................. 1
1.2
Premises and Associated Rights ...................... 1
1.3
Commencement and Expiration Dates ................... 1
1.4
Option to Extend Term ............................... 1
2. Rent
........................................................
1
2.1
Base
Rent ........................................... 2
2.2
Rent
During Extended Term/Adjustment Pursuant to
Consumer Price Index ............................... 2
3. Additional
Rent ............................................. 3
3.1
Operating Expenses .................................. 3
3.2
Operating Expense
Exclusions ........................ 5
3.3
Excess Operating Expenses ........................... 5
3.4
Direct Tenant Obligations ........................... 5
4. Payment of
Additional Rent .................................. 6
4.1
Operating Year ...................................... 6
4.2
Tenant's Proportionate Share ........................ 6
5. Use
.........................................................
6
5.1
General ............................................. 6
5.2
Negative Covenants as to Use ........................ 6
5.3
Hazardous Substances ................................ 7
5.4
Rules and Regulations ............................... 8
6. Condition of
Premises, Maintenance and Repair ............... 8
6.1
Tenant's Acceptance ................................. 8
6.2
Tenant's Maintenance Obligations .................... 8
6.3
Manner .............................................. 9
6.4
Janitorial Services ................................. 9
6.5
Utilities to Premises ............................... 9
6.6
Landlord's Maintenance and Repair Obligations ....... 9
6.7
Waiver .............................................. 9
6.8
End
of Term ......................................... 9
7. Tenant
Alterations .......................................... 9
7.1
Landlord's Consent .................................. 9
7.2
Procedure for Approval .............................. 10
7.3
Standard for Approval ............................... 10
7.4
Compliance with Laws ................................ 10
8. Liability and
Insurance ..................................... 10
8.1
Action by Tenant .................................... 10
8.2
Landlord's Insurance ................................ 11
8.3
Waiver of Subrogation ............................... 11
8.4
Commercial General Liability Insurance .............. 11
8.5
Tenant's Fire and All Risk Coverage Insurance ....... 11
8.6
Insurance Policies .................................. 11
8.7
Increase in Coverage
................................ 12
9. Landlord's
Property, Tenant's Property ...................... 12
9.1
Landlord's Property ................................. 12
9.2
Tenant's Property ................................... 12
9.3
Removal ............................................. 12
9.4
Abandonment ......................................... 12
10. Holding Over
................................................ 12
11. Signs
.......................................................
13
12. Access and Control
of Premises .............................. 13
12.1
Access to Premises ................................. 13
12.2
Waiver in Connection with Landlord's Entry ......... 13
12.3
Building Changes ................................... 13
13. Damage or
Destruction ....................................... 14
13.1
Rights and Obligations ............................. 14
13.2
Rent
Abatement ..................................... 14
13.3
Interference with Tenant's Business ................ 14
13.4
Insurance on Tenant's Property ..................... 15
14. Eminent Domain
............................................. 15
14.1
Total Condemnation ................................. 15
14.2
Partial Condemnation ............................... 15
14.3
Effect of Termination or Continuation .............. 15
14.4
Award .............................................. 15
14.5
Temporary Taking ................................... 15
15. Landlord's
Self-Help Rights; Liability and Indemnification .. 16
15.1
Landlord's Right to Cure ........................... 16
15.2 Indemnity
.......................................... 16
15.3
Limit on Landlord's Liability ...................... 16
15.4
Defense of Claims .................................. 17
16. Defaults and
Remedies ....................................... 17
16.1
Events of Default .................................. 17
16.2
Remedies ........................................... 17
16.3
Cumulative Remedies ................................ 19
16.4
Termination ........................................ 19
17. Transfers By
Tenant ......................................... 19
17.1
General ............................................ 19
17.2
Listing Premises ................................... 20
17.3
Corporate Changes .................................. 20
17.4
Unapproved Transfers ............................... 20
17.5
Successors and Assigns ............................. 20
18. Subordination;
Attornment; Quiet Enjoyment .................. 21
18.1
Subordination, Nondisturbance ...................... 21
18.2
Attornment ......................................... 21
18.3
Quiet Enjoyment .................................... 21
18.4
Estoppel Certificates .............................. 21
18.5
Mortgagee Protection ............................... 22
18.6
Modification for Lender ............................ 22
19. Security
.................................................... 22
19.1
Deposit ............................................ 22
20. Governing Law
............................................... 22
21. No Merger
................................................... 22
22. Disputes
.................................................... 22
22.1
Attorneys' and Collection Fees ..................... 22
23. Waiver
...................................................... 23
24. Miscellaneous
Provisions .................................... 23
24.1
Successors or Assigns .............................. 23
24.2
Authority of Parties ............................... 23
24.3
Interest on Past Due Obligations ................... 23
24.4 Terms and
Headings ................................. 24
24.5
Examination of Lease ............................... 24
24.6
Time
............................................... 24
24.7
Amendments ......................................... 24
24.8
Partial Invalidity ................................. 24
24.9
Recording .......................................... 24
24.10
Notices ............................................ 24
24.11
Entire Agreement ................................... 24
24.12
Survival of Obligations ............................ 25
24.13
Representation and Warranties ...................... 25
24.14
Guarantee .......................................... 25
BASIC LEASE TERMS AND DESCRIPTION OF EXHIBITS
The following list is a summary of certain basic terms of this
Lease. In
case of a conflict between any provision of this Lease and the
information
contained in this summary, the applicable provision of this Lease
shall
control. Terms set
forth in the left-hand column, below, and used in this
Lease shall, unless otherwise defined in the Lease, have the
meaning given
opposite each such term in the right-hand column, below.
Landlord:
Monroe Forsyth, Inc., a California corporation, as
General Partner for Marbles Enterprises, L.P., a
California limited partnership, and Molly Belle
Properties, L.P., a California limited partnership
Address of Landlord: c/o Anderson, Zeigler,
Disharoon, Gallagher & Gray
50 Old Courthouse Square, Fifth Floor
Santa Rosa, CA
95404
Attn:
Wendy D. Whitson
Facsimile: (707)
544-0260
Tenant:
American TonerServ Corp., a Delaware corporation
Address of Tenant: 420 Aviation
Boulevard, Suite 103
Santa Rosa, CA
95403
Address for Payment
of Rent:
Randy Pennington
2375 Hardies Lane
Santa Rosa, CA
95405
Premises:
3,740 rentable square feet of space located at 420
Aviation Boulevard, Suite 103, Santa Rosa, California.
Lease Term:
Sixty (60) months.
Renewal Term(s): One
(1) thirty-six (36) month term.
Effective Date:
The date on which this Lease has been executed by both
Landlord and Tenant, as indicated following the
signature block for each.
Commencement Date: December 1,
2007.
Expiration Date:
November 30, 2012.
Lease Year:
Each twelve (12) month period beginning on the
Commencement Date during the Lease Term.
Base Rent:
The following rents:
Period
Rent
12/1/07 - 11/30/08
$6,919.00*
12/1/08 - 11/30/09
$7,126.57
12/1/09 - 11/30/10
$7,340.37
12/1/10 - 11/30/11
$7,560.58
12/1/11 - 11/30/12
$7,787.40
*Rent shall be abated for the first three (3) months
of the Term.
Rent for Extended
Term:
At the commencement of the Extended Term, the Rent
shall be the Fair Market Rent increased by three
percent (3%) annually.
Adjustment Date for
Base Rent:
Each annual anniversary of the Commencement Date.
Base Year:
2008
Initial Proportionate
Share of Excess
Operating Expenses: 11.89%, subject to
adjustment pursuant to Section
4.
Permitted Use:
General office.
Initial Tenant
Improvements:
Landlord shall complete the following, in a good and
workmanlike manner, prior to delivery: (1) paint all
interior walls; (2) relocate kitchen counter and sink
as depicted on Exhibit B; (3) carpet current kitchen;
(4) install door in open storage area.
Security Deposit: Six
Thousand Nine Hundred Nineteen Dollars
($6,919.00).
Prepaid Rent:
Six Thousand Nine Hundred Nineteen Dollars
($6,919.00).
Brokers:
Colliers International for Landlord and Tenant.
Guarantor and
Address:
None
Parking:
Four (4) non-reserved, unassigned spaces per one
thousand (1,000) square feet of rentable space.
EXHIBITS
Exhibit A ................................................. Legal
Description
Exhibit B ............................ Premises Description and/or
Floor Plan
Exhibit C ............................................. Rules and
Regulations
Exhibit D ......................................... Form of
Acceptance Letter
Exhibit E ................................................. Form of
Guarantee
LEASE AGREEMENT
THIS
LEASE AGREEMENT (this "Lease" or this "Agreement") is made and
entered into as of the Effective Date identified in the summary of
Basic
Lease Terms preceding this Lease by and between the Tenant and
Landlord also
identified in such summary.
1. Demise and
Premises.
1.1
Demise. Landlord hereby leases to Tenant
and Tenant hereby leases
from Landlord, upon the terms and subject to the conditions set
forth in this
Lease, the Premises described in Section 1.2 within the Building
known as 420
Aviation Boulevard, Santa Rosa, Sonoma County, California (the
"Building").
The Building is located upon the land legally described in Exhibit
A (the
"Land").
1.2
Premises and
Associated Rights. The
premises leased to Tenant
consist of the interior space in the Building having the square
footage and
location generally identified in the summary of Basic Lease Terms
preceding
this Lease, as more particularly identified on the description
and/or floor
plans attached as Exhibit B (the "Premises"), excluding, however,
the roof
and exterior walls, if any, of such space. The Premises also include the
appurtenant right to use, in common with others, the public
portions of the
Building, including public hallways and lobbies, elevators,
parking
facilities to the extent allocated to Tenant in the summary of
Basic Lease
Terms, restrooms, sidewalks, ramps, landscape areas, and driveways.
1.3
Commencement and
Expiration Dates. The
term of this Lease shall be
for the period of months designated in the summary of Basic Lease
Terms
preceding this Lease, and shall have the Commencement Date and
Expiration
Date also designated in such summary (the "Term").
1.4
Option to Extend Term.
Provided that Tenant
is not in default at
either the time of option exercise or upon commencement of the
renewal term,
Tenant shall have one (1) option to extend the term on all
provisions
contained in this Lease for an additional thirty-six (36) month
period
("Extended Term") following expiration of the initial Term, by
giving written
notice of exercise of the option ("Option Notice") to Landlord at
least
ninety (90) days prior to the expiration of the preceding Term.
2. Rent.
Tenant shall pay to
Landlord rent consisting of a Base Rent, as
set forth in this Section 2, and Additional Rent, as set forth in
Section 3
(Base Rent and Additional Rent, along with all other sums that
become payable
by Tenant under this Lease, whether to Landlord directly, or to a
third party
for the benefit of Landlord and the Premises, are referred to herein as
"Rent"). All Rent
shall be paid in advance on the first day of each month
unless otherwise provided herein. All Rent shall be paid in lawful
money of
the United States to Landlord at the address for payment of rent
set forth in
the Summary of Basic Lease Terms preceding this Lease, or at such
other place
as Landlord shall designate by written notice to Tenant.
Tenant shall pay
all Rent promptly when due without notice or demand therefor and
without any
abatement, deduction or off set, for any reason whatsoever, except
as may be
expressly provided in this Lease. If the Tenant's obligation to pay
Base
Rent does not commence on the first day of a calendar month, or
does not
expire on the last day of the calendar month, the Base Rent payable
by Tenant
on the first fractional month, or the last fractional month, as the
case may
be, shall be prorated for said month. Tenant acknowledges that Tenant's
late
payment of Rent due Landlord will cause Landlord to incur costs
not
contemplated by this Lease, the exact amount of such cost being
extremely
difficult and impractical to ascertain. Therefore, if Landlord does
not
receive any Rent due from Tenant within five (5) days of when due,
Tenant
shall pay to Landlord an additional sum equal to five percent (5%)
of the
overdue amount, which late charge (a) shall be due and payable on
demand, (b)
constitutes liquidated damages for each delinquent payment under
California
Civil Code Section 1671, and (c) the payment of late charges and
the payment
of interest are distinct and separate from one another in that the
payment of
interest is to compensate Landlord for the use of Landlord's money
by Tenant,
while the payment of
late charges is to compensate Landlord for the
additional administrative expenses incurred by Landlord in handling
and
processing delinquent payments. By their execution of this Lease,
Landlord
and Tenant confirm that such late charge represents a fair and
reasonable
estimate of the costs that Landlord will incur by reason of any
such late
payment, that the late charge is in addition to any and all
remedies
available to Landlord and that the assessment and/or collection of
the late
charge shall not be deemed a waiver by Landlord of such failure or
to any
other default under this Lease. Additionally, all such delinquent
Rent, plus
any late charge, shall bear interest at the rate of ten percent
(10%) per
annum, or, if lower, the maximum interest rate permitted by law
(as
applicable, the "Default Rate"), from the date due until paid.
If any
payment of Rent is returned for insufficient funds, Landlord may
require
Tenant to pay all future payments by cashier's check.
2.1
Base Rent. The monthly
Base Rent shall be the amount specified in
the summary of Basic Lease Terms preceding this Lease (the "Base
Rent").
2.2
Rent During Extended
Term/Adjustment Pursuant to Consumer Price
Index.
2.2.1 The parties
shall have thirty (30) days after Landlord
receives the Option Notice in which to agree on rent during the
Extended
Term. If the parties
agree on rent for the Extended Term during that period,
they shall immediately execute an amendment to this Lease stating
the Rent.
If the parties are unable to agree on Rent for the Extended
Term
within that period, then within ten (10) days after the expiration
of that
period each party, at its cost and by giving written notice to the
other
party, shall appoint a real estate appraiser with at least five (5)
years of
full-time commercial appraisal experience in Sonoma County to
appraise and
set the monthly rent for the Extended Term ("Fair Market Rental").
If a
party does not appoint an appraiser within ten (10) days after the
other
party has given written notice of the name of its appraiser, the
single
appraiser appointed shall be the sole appraiser and shall set the
Fair Market
Rental. If the two (2)
appraisers are appointed by the parties as stated in
this paragraph, they shall meet promptly and attempt to set the
Fair Market
Rental. If they are
unable to agree within thirty (30) days after the second
(2nd) appraiser has been appointed, they shall attempt to elect a
third (3rd)
appraiser meeting the qualifications stated in this paragraph
within ten (10)
days after the last day the two (2) appraisers are given to set the
Fair
Market Rental. If they
are unable to agree on the third (3rd) appraiser,
either of the parties to this Lease may apply to the American
Arbitration
Association (or any successor thereto) for the appointment of an
arbitrator
in Sonoma County to act as the third (3rd) appraiser. Each of the parties
shall bear one-half (1/2) of the cost of appointing this third
(3rd)
appraiser and of the third (3rd) appraiser's fee. The third (3rd) appraiser,
however selected, shall be a person who has not previously acted in
any
capacity for either party.
Within thirty (30) days after the election of the third (3rd)
appraiser, a majority of the appraisers shall set the Fair Market
Rental. If
a majority of the appraisers are unable to set the Fair Market
Rental within
this thirty (30) day period, the three (3) appraisals shall be
added together
and their total divided by three (3); the resulting quotient shall
be the
Fair Market Rental.
In no event shall the Fair Market Rental be an amount which is
less
than the monthly rent in effect on the last day before the
beginning of the
Extended Term.
If the Fair Market Rental has not been established by the
commencement of the Extended Term, Tenant shall continue to pay the
monthly
rental in effect on the last day before the commencement of the
Extended Term
and Landlord and Tenant shall adjust their accounts once the Fair
Market
Rental has been established.
2.2.2 This option is
not transferable; the parties hereto
acknowledge and agree that they intend that the aforesaid option to
renew
this Lease shall be "personal" to Tenant and/or Permitted
Transferees as set
forth above and that in no event will any assignee or sublessee
have any
rights to exercise the aforesaid option to renew.
2.2.3 Tenant shall
have no further right to extend the term of
this Lease.
Subject to the limitations, and on the terms, set forth in this
Lease,
the Base Rent for the Extended Term shall be increased, effective
on the
anniversary of the Commencement Date, beginning with the second
year of the
Extended Term ("Adjustment Date"), by three percent (3%)
annually.
3. Additional
Rent. Tenant, throughout the Term, shall be obligated to pay
its Proportionate Share (as that term is defined in Section 4) of
all Excess
Operating Expenses (as that term is defined in Section 3.3)
actually incurred
by Landlord. Tenant's
Proportionate Share of Excess Operating Expenses shall
be Additional Rent.
3.1
Operating Expenses.
The term "Operating
Expenses" shall mean all
expenses reasonably paid or incurred by Landlord or on Landlord's
behalf as
determined by Landlord to be necessary or appropriate for the
operation,
maintenance and repair of the Land and/or Building, including the
common
areas thereof, and the curbs, sidewalks and plazas adjoining the
same,
including without limitation:
3.1.1 Salaries, wages,
medical, insurance, union and general
welfare benefits, pension payments, payroll taxes, worker's
compensation
insurance, uniforms and related expenses and benefits of employees
of
Landlord engaged in the repair, operation, maintenance,
management,
engineering and security of the Land and/or Building;
3.1.2 All expenses
incurred for gas, steam, electricity, heat,
ventilation, air-conditioning, water, elevator service and other
services or
utilities furnished to the Building, together with any taxes
thereon;
3.1.3 All maintenance
costs relating to public and service areas
of the Building and/or Land, including, but not limited to
sidewalks,
landscaping, parking, service areas, mechanical rooms, loading
areas, and
Building exteriors;
3.1.4 The cost of all
insurance premiums and charges including but
not limited to rent loss insurance, casualty, liability, fire with
extended
coverage endorsement, flood and fidelity insurance, with regard to
the Land
and/or Building and the maintenance and/or operation thereof;
3.1.5 The cost or
rental of all supplies, including without
limitation, cleaning supplies, light bulbs, tubes and ballasts,
materials and
equipment, and all taxes thereon;
3.1.6 The cost of hand
tools and other moveable equipment used in
the repair, maintenance or operation of the Building and Land,
provided said
tools and equipment are used solely on the Building and Land not
other
locations;
3.1.7 The cost of all
charges for window and other cleaning,
janitorial and security services;
3.1.8 Charges of
independent contractors performing repairs or
services to the Land and/or Building not otherwise chargeable to a
specific
tenant;
3.1.9 Repairs,
replacement and general maintenance made by
Landlord;
3.1.10 All taxes and
assessments and governmental charges, whether
federal, state, county, or municipal, and whether by taxing
districts or
authorities presently taxing the Land and/or Building, or by
others, whether
subsequently created or otherwise, whether foreseen or unforeseen,
and any
other taxes and assessments attributable to the Land and/or
Building, whether
or not directly paid by Landlord, including local improvement
district
assessments, traffic or signalization improvement assessments, rent
taxes,
gross receipt taxes, business license taxes and fees for permits
for the
Building, and any other tax or charge, including income taxes and
sales
taxes, levied wholly or partly in lieu thereof and any increase in
any tax,
including income taxes and any imposition of any taxes such as a
sales tax,
if increased or imposed due to a reduction in property taxes,
excepting only
inheritance or estate taxes and state or federal income taxes
computed on the
basis of the net income of the owners of the Building;
3.1.11 Alterations and
improvements to the Building made by reason
of the laws and requirements of any public authorities or the
requirements of
insurance companies or the holders of any encumbrances against the
land
and/or Building;
3.1.12 Management fees
paid to a third party, or, if no managing
agent is employed by Landlord, a management fee which is not in
excess of the
then-prevailing rates for management fees of other first-class
buildings
devoted to similar uses in the County and State, metropolitan
area;
3.1.13 The costs of
any capital improvements or repairs to the
Building and/or of any machinery or equipment installed in the
Building
amortized over the useful life of the improvements, machinery
and/or
equipment as estimated by Landlord, that is made or becomes
operational, as
the case may be, after the completion of the initial construction
of the
Building that will improve the operating efficiency of the Building
or which
may be required to comply with laws, ordinances, rules or
regulations'
promulgated, adopted or enforced after completion of the initial
construction
of the Building;
3.1.14 Legal,
accounting and other professional fees incurred in
connection with operation, maintenance and management of the Land
and/or
Building;
3.1.15 All other
charges properly allocable to the operation,
repair and maintenance of the Land and/or Building in accordance
with
generally accepted accounting principles;
3.1.16 The cost of air
monitoring within the Building in order to
detect and monitor the level of any hazardous materials within the
air in the
Building.
3.2
Operating Expense
Exclusions.
Notwithstanding anything contained
in the foregoing Section 3.1 the following expenses shall be
excluded from
Operating Expenses:
3.2.1 Depreciation or
amortization on the initial construction of
the Building;
3.2.2 Debt service
(including without limitation, interest,
principal and any impound payments) required to be made on any
mortgage or
deed of trust recorded with respect to the Building and/or
Land;
3.2.3 The cost of
leasehold improvements made for any tenants of
the Building;
3.2.4 Leasing
commissions, costs and disbursements and other
expenses (including advertising) incurred in connection with
leasing,
renovating, or improving space for tenants or other occupants of
the
Building;
3.2.5 Repairs,
replacements, supplies, alterations, janitorial
services, and general maintenance paid for by insurance proceeds or
by Tenant
or other third parties; or
3.2.6 Specific costs
incurred for the account of, or separately
billed to and paid by specific tenants of the Building.
3.2.7 Expenses related
to elevator service, lobby janitorial and
plant service and common area restroom janitorial expense.
3.3
Excess Operating
Expenses. The term
"Excess Operating Expenses"
means, for any Operating Year (defined at Section 4.1), the amount
by which
the total Operating Expenses for such Operating Year exceed the
total
Operating Expenses for the Base Year identified in the Basic Lease
Terms
preceding this Lease.
The provisions for payment of Tenant's Proportionate
Share of Operating Expenses are intended to pass on to Tenant, and
reimburse
Landlord for, all costs and expenses of the nature described in
Section 3.1
incurred in connection with ownership and operating of the Building
to the
extent such costs and expenses exceed in amount the same costs and
expenses
for the Base Year.
3.4
Direct Tenant
Obligations.
3.4.1 Business Taxes.
Tenant shall be
directly liable for, and
shall pay as and when due throughout the Term, all license and
excise fees
and occupation taxes covering the business conducted on the
Premises. If any
governmental authority or unit under any present or future law
effective at
any time during the Term shall in any manner levy a tax on rents
payable
under this Lease or rents accruing from use of the Premises, or a
tax in any
form against Landlord because of, or measured by, income derived
from the
leasing or rental thereof, such tax shall be paid by Tenant, either
directly
or through Landlord, and Tenant's failure to do so shall constitute
an Event
of Default. Tenant
shall not, however, be liable to pay any net income tax
imposed on Landlord unless, and then only to the extent that, the
net income
tax is a substitute for real estate taxes.
3.4.2 Taxes on
Tenant's Property.
Tenant shall be liable for and
shall pay at least ten (10) days before delinquency, taxes levied
against any
personal property or trade fixtures placed by Tenant in or about
the
Premises. If any such
taxes on Tenant's personal property or trade fixtures
are levied against the Premises, Landlord or Landlord's property,
or if the
assessed value of the Premises is increased by the inclusion
therein of a
value placed upon such personal property or trade fixtures, then
Landlord
shall have the right to pay the taxes based upon such increased
assessments,
regardless of the validity thereof, but only under proper protest
if
requested by Tenant in writing. If Landlord shall so pay such
taxes, then
Tenant shall, upon demand, repay to Landlord the taxes so levied
and paid by
Landlord, or the proportion of such taxes resulting from such
increase in the
assessment. In any
such event, Tenant, shall have the right, at Tenant's
sole cost and expense, in the name of Landlord and with Landlord's
full
cooperation, to bring suit in any court of competent jurisdiction
to recover
the amount of any such taxes so paid under protest, any amount so
recovered
to belong to Tenant.
3.4.3 Tenant
Improvements. If the
Tenant Improvements in the
Premises, whether installed and/or paid for by Landlord or Tenant
and whether
or not affixed to the real property so as to become a part thereof,
are
assessed for real property tax purposes at a valuation higher than
the
valuation at which improvements conforming to Landlord's "building
standard"
in other space in the Building are assessed, then the real property
taxes and
assessments levied against Landlord or the Premises by reason of
such excess
assessed valuation shall be deemed to be property taxes and
assessments
levied against personal property of Tenant and shall be governed by
the
provisions of Section 3.4.2, above. If the records of the County
assessor
are available and sufficiently detailed to serve as a basis for
determining
whether said Tenant Improvements are assessed at a higher valuation
than
Landlord's "building standard", such records shall be binding on
both
Landlord and Tenant.
If the records of the County assessor are not available
or sufficiently detailed to serve as a basis for making said
determination,
the actual costs of construction shall be used.
3.4.4 Utilities.
All utility charges
for the Premises and the
Building shall be treated as Operating Expenses and reimbursed by
Tenant
pursuant to Section 3.
4. Payment of
Additional Rent.
4.1
Operating Year.
As used in this
Section 4 the term "Operating
Year" shall mean each calendar year of the Lease Term specified in
Section
1.3 and if this Lease begins or ends on any date other than the
first day of
the calendar year, the calculations, costs and payment referred to
herein
shall be prorated on a daily basis.
4.2
Tenant's Proportionate
Share. Tenant's
Proportionate Share of
Excess Operating Expenses shall equal the rentable square feet
contained
within the Leased Premises divided by the total rentable square
feet from
time to time contained within the Building and intended for lease
to tenants,
subject to an equitable adjustment, determined by Landlord if there
is any
disproportionate usage or consumption by Tenant. As of the date of this
Lease Tenant's Proportionate Share is the percentage stated in the
summary of
Basic Lease Terms preceding this Lease.
5. Use.
5.1
General.
5.1.1 Tenant shall use
and occupy the Premises continuously during
the Term of this Lease for uses specified in the summary of Basic
Lease Terms
preceding this Lease.
5.1.2 If any
governmental license or permit, other than a
Certificate of Occupancy, shall be required for the proper and
lawful conduct
of Tenant's business in the Premises, Tenant, at its expense, shall
procure,
maintain and comply with the terms and conditions of each such
license or
permit. Tenant shall,
at Tenant's expense, comply with all laws and
requirements of public authorities relating to Tenant's use and
occupancy of
the Premises and shall observe the Rules and Regulations as may be
adopted
pursuant to Section 5.4 hereof of which Landlord notifies Tenant
from time to
time for the safety and general order of the Premises and the
Building.
5.2
Negative Covenants as
to Use. Tenant shall
not, without the prior
written consent of Landlord, use any apparatus, machinery or device
in or
about the Premises that will cause any substantial noise,
vibration, fumes or
electronic interference. Tenant shall not at any time use
or occupy, or
suffer or permit anyone to use or occupy the Premises, or permit
anything to
be done in the Premises, in any manner that: (a) violates the
Certificate of
Occupancy for the Premises or for the Building, or provisions of
zoning laws
or ordinances, or use permits, applicable to the Building; (b)
causes injury
to the Premises or the Building or any equipment, facilities or
systems
therein; (c) constitutes a violation of the laws or requirements of
any
public authorities or the requirements of insurance bodies, or
the
requirements of any restrictive covenants of record; (d) involves
gambling in
any form, or the use of lottery, gaming or arcade devices, (e)
involves the
sale, rental or viewing of pornographic, obscene or "adult
materials," or
involves adult entertainment of any kind, (f) otherwise impairs
the
character, reputation or appearance of the Building as a
first-class office
building; (g) impairs the proper and economic maintenance,
operation and
repair of the Building and/or its equipment, facilities or systems;
or (h)
annoys or inconveniences other tenants or occupants of the
Building.
5.3
Hazardous Substances.
5.3.1 Tenant Shall Not
Permit Hazardous Substances Upon the
Premises. Tenant will
not itself, and will not suffer or permit its
employees, agents, contractors or invitees in or about the Premises
or
Building to use, generate, process, store, transport, handle, or
dispose of,
on, under, in, or from the Premises, the Building or the Land, any
Hazardous
Substances (as that term is defined in Section 5.3.4, below) in
quantities or
concentrations that exceed amounts allowed by, or in a manner that
fails to
comply with, applicable law.
5.3.2 Notification.
Tenant shall
immediately notify Landlord
should Tenant (a) become aware of the existence of any Hazardous
Substance on
the Premises or the Building, (b) receive any notice of, or become
aware of,
any actual or alleged violation with respect to the Premises or
Building of
any federal, state, or local statute, ordinance, rule, regulation,
or other
law pertaining to Hazardous Substances, or (c) become aware of any
lien or
action with respect to any of the foregoing. Tenant shall deliver to
Landlord, promptly upon receipt, (i) copies of any documents
received from
the United States Environmental Protection Agency ("EPA") and/or
any state,
county, or municipal environmental or health agency concerning
Tenant's
ownership, use, or operations upon or in connection with the
Premises; and
(ii) copies of any documents submitted by Tenant to the EPA and/or
any state,
county, or municipal environmental or health agency concerning the
Premises.
5.3.3 Inspection and
Remedial Action.
Landlord is hereby
authorized to enter the Premises thereon at reasonable times, and
after
reasonable notice, for the purpose of inspecting the Premises, to
ascertain
Tenant's compliance with all covenants made in this Section.
Upon Landlord's
written request (a) Tenant, through professional engineers approved
by
Landlord and at Tenant's cost, shall thoroughly investigate
suspected
Hazardous Substances contamination of the Premises occurring after
the
Commencement Date, or of the Building or Land and caused by a
breach of
Tenant's covenant at Section 5.3.1, and (b) Tenant shall forthwith
take such
remedial action with respect to any such contamination as may be
necessary to
ensure that no such Hazardous Substances are present on the
Premises or in
the groundwater of the Premises, Building or Land in quantities
or
concentrations that exceed amounts allowed by applicable law.
Tenant's
obligations under this Section shall arise upon Landlord's demand
as provided
herein, regardless of whether the EPA or any other federal, state,
or local
agency or governmental authority has taken or threatened any action
in
connection with the presence of any Hazardous Substance on, or
release of any
Hazardous Substance from, the Premises, Building or the Land.
If Tenant
shall fail promptly to discharge its obligations under this
Section, Landlord
may, at its election, but without the obligation to do so, cause
such
investigation to be made or remedial action to be taken and/or take
any and
all other actions that Landlord may deem necessary or advisable to
protect
its interests or to avoid or minimize its liability for the
existence of
Hazardous Substances on the Premises, the Building or the Land, or
for a
release thereof from the Premises, the Building or Land.
All amounts
expended by Landlord under this Section shall be payable by Tenant
to
Landlord upon demand.
5.3.4 Definition of
Hazardous Substance(s). The term "Hazardous
Substance" shall mean:
(a) "Hazardous
substances" as defined by 40 CFR Part 302;
(b) "Extremely
hazardous substance" as defined by 40 CFR Part
355;
(c) "Toxic chemicals"
as defined by 40 CFR Part 372;
(d)
"Hazardous chemical"
as defined by 29 CFR Section 1910.120, to the
extent it is included in the employer's written Hazard
Communication Program
or in Material Safety Data Sheets that are located on site;
(e) "Hazardous Waste"
as defined by applicable administrative
rules;
(f) Petroleum,
including crude oil and any fraction thereof;
and
(g) Any material that
contains more than one percent (1%) of
asbestos.
5.3.5 Survival.
Tenant's covenants set
forth in this Section 5.3
shall survive the termination of the Lease or any transfer by
Tenant, by
assignment or otherwise, of any or all right, title, or interest of
Tenant in
the Premises, except that should Tenant no longer be in possession
of the
Premises and have no actual knowledge of hazardous substances being
used by a
successor, Tenant shall have no responsibility to notify Landlord
under
Section 5.3.2.
5.4
Rules and Regulations.
Tenant and its
employees and agents shall
faithfully observe and comply with, and Tenant shall cause its
invitees and
licensees to observe and comply with, the rules and regulations
attached as
Exhibit C and with such changes therein as Landlord may from time
to time
make and of which Landlord has notified Tenant (the "Rules and
Regulations").
Landlord shall not be liable to Tenant for violation of the Rules
and
Regulations by any other tenant or such other tenant's employees,
agents,
invitees or licensees.
6. Condition of
Premises, Maintenance and Repair.
6.1
Tenant's Acceptance.
Tenant accepts the
Premises AS IS, and as
being in good, sanitary and working order, condition, and repair.
Tenant
shall have thirty (30) days following delivery of possession to
provide
Landlord with a punch list of any corrections which need to be made
in the
Initial Tenant Improvements detailed in the Basis Lease Terms.
Landlord
shall promptly address all such punch list items.
6.2
Tenant's Maintenance
Obligations. Tenant,
at its expense, shall be
responsible for maintaining the Premises, the fixtures and
improvements in
the Premises, and Tenant's Property (defined at Section 9.2),
except for the
maintenance of structural elements of the Building included in the
Premises,
lighting, plumbing, mechanical, and electrical systems which shall
be
maintained by Landlord and the cost of which shall be an Operating
Expense.
Tenant, at its expense, shall promptly replace all scratched,
damaged or
broken doors and glass in and about the Premises and shall be
responsible for
all repairs, maintenance and replacement of millwork, cabinets,
wall and
floor coverings in the Premises. Tenant shall be responsible for
all
repairs, interior and exterior, structural and non-structural,
ordinary and
extraordinary, in and to the Premises and the Building and the
facilities and
systems thereof, the need for which arises out of the performance
or
existence of Tenant Improvements (defined at Section 7.1); the
installation,
use or operation of Tenant's Property in the Premises; the moving
of Tenant's
Property in or out of the Building; or the act, omission, misuse or
neglect
of Tenant or any of its subtenants or its or their employees,
agents,
contractors or invitees. Tenant shall promptly report to
Landlord any damage
or injury occurring on or to the Premises or the Building.
6.3
Manner. Tenant shall promptly make, at
Tenant's expense, all
repairs in or to the Premises and the Building for which Tenant
is
responsible. Such work
shall be performed only by contractors reasonably
approved by Landlord.
Any such repairs in or to the Building and the
facilities and systems thereof for which Tenant is responsible may,
at
Landlord's election be performed by Landlord at Tenant's expense
provided the
expenses for such work by Landlord are reasonable in light of the
nature of
the work and by bids obtained by Tenant, and Landlord may, at its
option
before commencing any such work or at any time thereafter, require
Tenant to
furnish to Landlord such security, bond or surety in a form and
amount as
Landlord shall reasonably deem necessary to assure the payment for
such work
by Tenant.
6.4
Janitorial Services.
Landlord shall provide
routine janitorial
services to the Premises of a standard that is substantially
equivalent to
the services provided in similar buildings in the County and
State
metropolitan area.
6.5
Utilities to the
Premises. Landlord
shall supply water, sewer,
gas, heat, ventilation, and electricity to the Premises at
Landlord's cost,
subject to paragraph 3. Tenant will not be entitled to any
abatement or
reduction of Rent by reason of any interruption or failure of any
utility,
service, or material provided to the Premises.
6.6
Landlord's Maintenance
and Repair Obligations. Landlord shall
cause to be made all structural repairs to the roof, walls and
foundations of
the Building as and when needed in or about the Premises and the
cost thereof
shall be an item of Operating Expenses as defined in Section 3.1
hereof,
except for those repairs for which Tenant is responsible pursuant
to any of
the provisions of this Lease.
6.7
Waiver. Landlord shall have no liability
to Tenant, nor shall
Tenant's covenants and obligations under this Lease be reduced or
abated in
any manner whatsoever, by reason of any inconvenience,
annoyance,
interruption of or injury to Tenant's business arising from
Landlord's acting
reasonably to make any repairs or changes that Landlord is required
or
permitted by this Lease or required by law to make in or to any
portion of
the Building or the Premises, or in or to the fixtures, equipment
or
appurtenances of the Building or the Premises. Landlord shall have no
liability to Tenant nor shall Tenant's covenants and obligations
under this
Lease be reduced or abated in any manner whatsoever, by reason of
any act or
failure to act of any security personnel or mechanism used in the
Building,
or by reason of any lack of security in the Building. To the fullest extent
permitted by applicable law, Tenant hereby waives any and all
rights under
any law in existence during the Term that is inconsistent with the
provisions
of this Section 6.7, including, without limitation, any right
arising under
the provisions of Sections 1941 and 1942 of the California Civil
Code, or
arising under any law purporting to authorize a tenant to make
repairs at the
expense of a landlord or to terminate a lease.
6.8
End of Term.
Upon termination of
this Lease for any reason
whatsoever Tenant will peacefully surrender to Landlord the entire
Premises
with all improvements, changes, alterations and replacements
thereto, in good
order, condition and repair, but in any event with all windows,
walls,
floors, and carpets cleaned, all equipment in good working order,
and the
Premises restored to their original condition as of the
Commencement Date,
ordinary wear and tear excepted. Upon such termination, Tenant
shall have
the right to remove Tenant's Property, as provided at Section
9.2.
7. Tenant
Alterations.
7.1
Landlord's Consent.
Tenant shall make no
alterations, additions,
or im
