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Exhibit 10.11
NET, NET, NET
THIS LEASE dated May 1, 1996, for reference purposes only is made between the Lessor and the Lessee named below, effective on the later of the dates set forth under their respective signatures. BASIC LEASE PROVISIONS ‘
IN WITNESS WHEREOF , the parties hereto have executed this Lease, consisting of the foregoing Basic Lease Provisions, Articles I through 17 which follow, and any attached Exhibits or Addendums, as of the date first above written.
TABLE OF CONTENTS
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1. LEASE OF PREMISES
1.1 Initial Premises . The Lessor hereby leases to the Lessee and the Lessee leases from the Lessor for the term, at the rental, and upon all of the conditions set forth in this Lease, the Premises identified in Item 1 of the Basic Lease Provisions, together with the non-exclusive use, in common, with the Lessor and other tenants of the Building and their respective invitees, of common areas in or about the Building and the parking garage (if any) or parking. areas adjoining the Building. The Lessee and the Lessor have agreed on the square footage set forth in item 2 of the Basic Lease Provisions and each party will be bound by item 2 through the term of this Lease or any extension thereof. The approximate anticipated configuration of the Project and the location of the Building, Premises and associated common and parking areas is indicated on Exhibit “B”. The size, location and function of the buildings and related structures depicted here are approximate. The configuration of the development, the design, size, function and location of all other improvements, and the identity and location of other tenants to the extent depicted are subject to change without notice for any reason deemed sufficient by the owner. The Lessor reserves the right to alter the configuration of the Project to construct additional improvements thereon, to withdraw areas therefrom from time to time and alter the configuration of the associated common and parking areas, provided that the number of parking spaces intended for the Lessee’s use shall not thereby be materially diminished and provided that Lessee’s access to the Premises will not thereby be affected. The Lessee shall be allocated the number of parking spaces set forth in item 10 of the Basic Lease Provisions and the Lessee acknowledges that the Lessor shall have no responsibility to supervise or police the usage of the parking lot by the tenants of the Building. Nothing in this Lease shall cause the Lessor in any way to be construed as an employer, employee, fiduciary, a partner, a joint venturer or otherwise associated in any way with the Lessee in the operation of the Premises, or to subject the Lessor to any obligation, loss, charge or expense connection with or arising from the Lessee’s operation or use of the Premises.
Pursuant to Section 1652 of the California Civil Code, it is understood and agreed that the general intent and purpose of this Lease is that this !.ease shall be an absolute triple net lease with respect to the Lessor. The Lessee shall pay its pro rata share of all insurance, utilities, all operating costs for file Premises, the common areas of the Building, the Building and the land on which it is situated. It is intended that the rental return to the Lessor shall not be reduced, offset or diminished directly or indirectly by any cost, charge, or expense due from the Lessee and others in connection with the Premises, Building or land upon which it is situated, nor subject to suspension or termination for any reason. It is acknowledged and agreed that all provisions of this Lease shall be interpreted in a manner consistent with and subordinate to such general intent anti purpose.
1.2 First Right to Lease Additional Space . In the event that additional space within the Building (the “Additional Space”) shall become available during the term of this Lease and the Lessee is not then in default under the terms of this Lease or the lease for the adjacent building at 5540 Ekwill Street, Santa Barbara, California, the Lessor shall give the Lessee written notice of the Lessee’s first right to lean: such Additional Space. The Notice from the Lessor shall describe the Additional Space, including any unique features thereof, and the date upon which the lease for the Additional Space will commence. The lease for the Additional Space shall commence upon the date that the Additional Space is first available for occupancy
and shall continue for a term coincidental with the term of this Lease. The terms and conditions of the lease for the Additional Space shall be the same: as the terms of this Lease, including without limitation the per square foot rental payable hereunder and the obligation of the Lessee to pay Additional Rent. Rental adjustments for the lease for the Additional Space shall be made to coincide with rental adjustments under this Lease. The lease of the Additional Space shall be strictly on an “AS IS” basis, and the Lessor shall have no obligation to make any changes, alterations, modifications or repairs whatsoever to the Additional Space.
The Lessee shall have 10 business days from the date of receipt of the Lessor’s written notice to agree to lease the Additional Space. The Lessee’s election to lease the Additional Space shall only be effective if its written agreement to lease is received by the Lessor within said time period and is accompanied by a check in an amount equal to the full first month’s rent plus a security deposit of one month’s rent (collectively the “Additional Space Deposit”). In the event the Lessee fails to give timely written notice to the Lessor of its agreement to lease the Additional Space together with the required Additional Space Deposit, the Lessee’s rights hereunder shall terminate and the Lessor shall be free to lease or otherwise treat the Additional Space as it sees fit. Upon receipt of the Lessee’s agreement to lease the Additional Space and the Additional Space Deposit, the Lessor shall prepare an amendment to this Lease and deliver it to the Lessee. The Lessee shall execute and return the amendment to the Lessor within 10 business clays of receipt.
2. TERM
2.1 Commencement of Term
(a) The term of the Lease shall be as shown in item 6 of the Basic Lease Provisions, commencing on the Commencement Date, which the lessor and the Lessee expect to be the Commencement Date as shown in item 7 of the Basic Lease Provisions, but which may be such other date as herein provided, and ending on tire Termination Dale, unless sooner terminated pursuant to any provision hereof.
(b) Notwithstanding the foregoing, the term of this Lease and the payment of rent shall commence upon delivery of possession of the Premises. Delivery of possession of the Premises shall occur upon written tender of the same by the Lessor.
(c) If delivery of possession occurs prior to the Commencement Date, the term of this Lease shall commence on such (late; of delivery of possession, but the Termination Date shall not be advanced.
2.2 Delay in Commencement . Notwithstanding the Commencement Date, if for any reason the Lessor cannot deliver possession of the Premises to the Lessee on or before said date, the Lessor shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease or the obligations of the Lessee hereunder or extend the term hereof provided, however, that if the Lessor shall not have delivered possession of the Premises within six (6) months after the Commencement Date, the Lessee may, at the Lessee’s option by notice in writing to the Lessor, within ten (10) days thereafter, cancel this Lease, in which event the
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parties shall be discharged from all obligations hereunder. The Lessee shall not be obligated to pay rent until delivery of possession of the Premises has occurred.
2.3 Option to Extend . Provided that the Lessee is not then in default under the terms of this lease or the lease for the adjacent Building at 5540 Ekwill Street, Santa Barbara, California, Lessee shall have the right to extend the term of this Lease as to the entire Premises then leased from the Lessor by the Lessee for a term of five (5) years, on the same terms and conditions thereof, including without limitation the annual rental adjustments under Article 3.
3. RENT
3.1 Initial Annual Rent . The Lessee shall pay to the Lessor as rent for the Premises an Initial Annual Rent in the amount specified in item 4 of the Basic Lease Provisions in equal monthly installments in the amount specified in item 5 of’ the Basic Lease Provisions in advance on the first day of each month.
3.1.1 Rental Deposit . Upon Lease execution, the Lessee shall deposit with the Lessor an amount equivalent to the first and last month’s rent as provided in item 4 of the Basic Lease Provisions.
3.2 Additional Rent . The Lessee shall reimburse the Lessor, as additional rent, in the manner and at the times provided, for the Lessee’s proportionate share of all Building Operating Expenses and Common Area Operating Expenses (as hereinafter defined) incurred by the Lessor. The Lessee’s proportionate share of such Building Operating Expenses and Common Area Operating Expenses shall be based upon the Lessee’s Building Percentage in the case of Building Operating Expenses, and upon the Lessee’s Common Area percentage in the case of Common Area Operating Expenses, all as defined herein.
3.3 No Reduction or Offset . All Rent due under this Lease shall be payable without deduction, abatement or offset.
3.4 Definitions . For purposes of this Article 3:
(a) The Lessee’s Building Percentage is a percentage calculated by dividing the Leased Area of the Premises by the leasable area of the Building, and is stipulated to be as shown in item 3 of the Basic Lease Provisions.
(b) Building Operating Expenses shall mean the sum of all expenses incurred by the Lessor in connection with the operation, repair and maintenance of the Building, including, but not limited to, heating and air conditioning; all real property taxes (as hereinafter defined) imposed upon or with respect to the Building and related improvements (exclusive of the land underlying all such improvements); all fire and extended coverage, earthquake, loss of rents, vandalism, malicious mischief and other insurance covering the Building and losses suffered which fall below the insurance deductible; utilities; materials and supplies; salaries, wages and other expenses incurred with respect to the operation, repair and maintenance of the Building, the cost of repainting, security and fire protection; amortization of capital investments for improvements which are designed to reduce operating costs, improve operations or comply with governmental conservation or safety programs over such reasonable period as the Lessor
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shall determine (together with interest at five (5) percentage points above the discount rate of the Federal Reserve Bank of San Francisco on the unamortized amount); and an amount equal to fifteen percent (15%) of all such expenses to cover the Lessor’s administrative and overhead expenses. Building Operating Expenses attributable to the utilities and services furnished pursuant to Article 10 shall be apportioned among the tenants of the Building receiving such services (excluding those tenants furnishing or paying for their own utilities and janitorial services) based on the respective leased areas occupied by such tenants.
(c) Lessee’s Common Area Percentage is a percentage figure calculated by the project architect by dividing the Leased Area of the Premises by the average leasable area in all improvements, including the Building and other buildings, shown on Exhibit “B”, during such year as is initially stipulated to be as shown in item 3 of the Basic Lease Provisions. Should the Building and/or landscape area become a separate legal lot, or should additional improvements or common area be added to or deleted from Exhibit “B”, the Lessor may, at its option, calculate the Lessee’s Common Area Percentage by comparing the common area attributable to the Premises with the common area on such legal lot or otherwise within Exhibit “B” as so revised.
(d) Common Area Operating Expenses shall mean the sum of all expenses incurred by the Lessor in connection with the operation and maintenance of driveways, landscaping, walkways, plazas, parking facilities, and perimeter property including, but not limited to: all items described in Section 6.1 hereof; all real properly taxes (its hereinafter defined) imposed upon or with respect to the land included within Exhibit “B”; all public liability insurance covering Exhibit “B”, and losses suffered which fall below the insurance deductible; security and fire protection; salaries, wages and other expenses incurred with respect to maintenance of the common areas, gardening, landscaping, repaving, repainting and trash removal; depreciation of equipment used in such maintenance; amortization of capital investments for improvements which comply with governmental conservation or safety programs over such reasonable period as the Lessor shall determine (together with interest at five (5) percentage points above the discount rate of the Federal Reserve Bank of San Francisco on the unamortized amount); and an amount equal to fifteen percent (15%) of all such expenses to cover the Lessor’s administrative and overhead expenses. General overhead and depreciation of improvements shall not be included in the expenses except as specifically set forth in the foregoing. Any governmental surcharge, fee or assessment imposed with respect to the parking facilities within Exhibit “B” shall, to the extent paid by the Lessor and not passed on to the users of said parking facilities, be included in Common Area Operating Expenses.
(e) Real Properly Taxes shall mean all real and personal property taxes and assessments incurred during any calendar year, including, but not limited to: special and extraordinary assessments, meter and sewer rates and charges, occupancy taxes or similar taxes imposed on or with respect to the real or personal property, whether or not imposed on or measured by the rent payable by the Lessee, and other governmental levies and charges, general and special, ordinary and extraordinary, unforeseen as well as foreseen, of any kind and nature whatsoever relating to the real or personal property, and any gross rental, license or business tax measured by or levied on rent payable or space occupied. If, by law, any property taxes are payable, or may at the option of the taxpayer be paid, in installments (whether or not interest shall accrue on the unpaid balance of such property taxes), the Lessor may, at the Lessor’s
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option, pay the same and, in such event, any accrued interest on the unpaid balance of Such property taxes shall be deemed to be Real Property Taxes as defined herein. Real Property Taxes shall also include all expenses reasonably incurred by the Lessor in seeking a reduction by the taxing authorities of Real Property Taxes applicable to the Project. Real Property Taxes shall not include any capital levy, franchise, estate, inheritance, succession, gift or transfer tax of the Lessor, or any income, profits or excess profits tax, assessment, charge or levy upon the income of the Lessor; provided, however, that if at any time during the term of this lease under the laws of the United States or the State of California, or any political subdivision of either, a tax or excise on rents, space or other aspects of real property, is levied or assessed against the Lessor, the same shall be deemed to be Real Property Taxes. If any such property taxes upon the income of the Lessor shall be imposed on a graduated scale, based upon the Lessor’s aggregate rental income, Real Property Taxes shall include only such portion of such property taxes as would be payable if the rent payable with respect to the Building and Common Areas were the only rental income of the Lessor subject thereto.
3.5 Rent Adjustment for Consumer Price Index . As specified in item 4 of the Basic Lease Provisions, the annual rent shall be increased as of the expiration of each full or partial calendar year of the lease term (the “Adjustment Date”) to reflect any increase in the United States Department of Labor, Bureau of Labor Statistics, Consumer Price Index, “Urban Wage Earners and Clerical Workers (Revised) Series) All Items - Los Angeles - Anaheim Riverside Average (1982-1984=100)”. The index for said subgroup applicable for the month of December (or the month preceding the Commencement Date for the first full or partial calendar year of the lease term) preceding each Adjustment Date shall be considered the “base”, and the annual rent following each Adjustment Date shall be computed by adjusting the annual rent payable for the preceding calendar year thereof by the percentage change in the index as of the adjustment date over the “base”; provided, however, in no event shall the rent payable for any year be less than the rent payable for the preceding period on account of the adjustment pursuant to this Section 3.5, notwithstanding the fact that the index may, as of some Adjustment Date, be less than the “base”. The adjustment effective January 1, 1997 shall be based upon the changes in the index for the full prior 12 months. If as of any Adjustment Date there shall not exist the Consumer Price Index in the same format as set forth above, the parties shall substitute any official index published by the Bureau of Labor Statistics or any successor or similar Governmental agency as may then be in existence and shall be most nearly equivalent thereto. If the parties shall be unable to agree upon it successor index, the parties shall refer the choice to arbitration in accordance with the rules of the American Arbitration Association. This provision shall not apply to the Building Operating Expenses or Common Area Operating Expenses.
3.6 Calculation and Payment
(a) Annual rent shall be payable to the Lessor without deduction or offset, in lawful money of the United States at the Lessor’s address herein or to such other persons or at such other places as the Lessor designates in writing. Rent payable for any period for less than one (1) month shall be prorated based upon a thirty (30) day month.
Prior to the commencement of the lease term and of each December thereafter, the Lessor shall give the Lessee a written estimate of the Lessee’s share of Building and Common Area Operating Expenses for the ensuing year or portion thereof. The Lessee shall
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pay such estimated amount to the Lessor in equal monthly installments, in advance. Within ninety (90) days after the end of each calendar year, the Lessor shall furnish to the Lessee a statement showing in reasonable detail the actual Building and Common Area Operating Expenses incurred by the Lessor during such period, and the parties shall within thirty (30) days make any payment or allowance necessary to adjust the Lessee’s estimated payment to the Lessee’s actual proportionate share as shown by such annual statement. Any amount due the Lessee shall be credited against installments next coming due under this paragraph. The Lessee or its representatives shall be entitled to examine the Lessor’s books and records pertaining to such costs upon reasonable advance notice to the Lessor.
(b) Within ninety (90) days after each Adjustment Date, the Lessor shall furnish the Lessee with a written statement showing the percentage change in the index for the period ending on the Adjustment Date and specifying the increase, if any, in the annual rent subsequent to the Adjustment Date, taking into account all prior adjustments to annual rent for the period preceding the Adjustment Date pursuant to this paragraph above and applying any percentage increase in the index to the annual rent as previously adjusted. At the rental payment date next following the Lessee’s receipt of such statement, the Lessee shall pay to the Lessor an amount equal to one-twelfth (1/12th) of the adjustment pursuant to this Paragraph (b) multiplied by the number of rent payment dates (including the current one) since the relevant Adjustment Date. Subsequent rental payments shall be increased by one-twelfth (1/12th) of the adjustment pursuant to this Paragraph (b).
3.7 End of Term . Upon the expiration or earlier termination of this Lease, the Lessee shall pay the Lessor, as additional rent, the aggregate rental increase which would have been payable by the Lessee pursuant to this Article 3, except for such expiration or termination, for the portion of the year in which termination or expiration occurs through the Termination Date. The amount of such payment shall be calculated by the Lessor based upon Sections 3.2, 3.3 and 3.5 (using the expiration or Termination Date as the Adjustment Date for Section 3.5) and the best information then available to the Lessor, and shall give effect to all prior adjustments and payments on account by Lessee pursuant to this Article 3.
4. SECURITY DEPOSIT
Concurrently with the Lessee’s execution of this lease, the Lessee shall deposit with the Lessor the sum specified in item 8 of the Basic Lease Provisions as security for the faithful performance by the Lessee of all covenants and conditions of this Lease. If the Lessee shall breach or default in the performance of any covenants or conditions of this Lease, including the payment of rent, the Lessor may use, apply or retain the whole or any part of such security deposit for the payment of any rent in default or for any other sum which the Lessor may spend or be required to spend by reason of the Lessee’s default. If the Lessor so uses or applies all or any portion of said deposit, the Lessee shall, within ten (10) days after written demand therefor, deposit cash with the Lessor in an amount sufficient to restore said deposit to the full amount hereinabove stated and the Lessee’s failure to do so shall be a material breach of this Lease. Should the Lessee comply with all covenants and conditions of this Lease, the security deposit or any balance thereof shall be returned to the Lessee (or at the option of the Lessor, to the last assignee of the Lessee’s interest in this Lease) at the expiration of the term. The Lessee shall not be entitled to interest on the security deposit and the Lessor shall have the right to commingle
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said security deposit with other funds of the Lessor. Should the Lessor sell its interest in the Premises, the Lessor may transfer to the purchaser thereof the then unexpended or unappropriated deposit and thereupon the Lessor shall be discharged from any liability for such funds.
5. USE
5.1 Use . The Premises shall be used and occupied for the purposes described in item 1 of the Basic Lease Provisions, permitted under applicable ordinances and other Governmental requirements, the covenants, conditions and restrictions affecting the Project, as the same may be amended from time to time, and the Rules and Regulations as the Lessor may from time to time reasonably adopt for the safety, care and cleanliness of the Building and the Project or the preservation of good order. The Rules and Regulations presently in effect are attached hereto as Exhibit “C”. The Lessor shall not be responsible to the Lessee for the nonperformance of any of said Rules and Regulations, or non-compliance with said covenants, conditions and restrictions, by any other tenant of the Building.
5.2 Compliance with Law; Nuisance . The Lessee, at the Lessee’s sole cost and expense, shall comply promptly and at all times with all laws, requirements, ordinances, statutes, and regulations of all municipal, state or federal authorities, or any board of fire insurance underwriters, or other similar bodies, now in force or which may hereafter be in force, pertaining to the Building and the Premises and the occupancy thereof, including any law that requires alteration, maintenance or restoration of the Premises as the result of the Lessee’s use thereof. The judgment of any court of competent jurisdiction, or the admission of the Lessee in any action or proceeding against the Lessee, whether the Lessor is a party thereto or not, that the Lessee violated any such ordinances or statutes in the use of the Premises shall be conclusive of that fact as between the Lessor and the Lessee. The Lessee, at its sole expense, shall also comply with all requirements for fire extinguishers or fire extinguisher systems required in the Premises.
The Lessee shall not commit, or suffer to be committed, any waste of the Premises, or any nuisance, annoyance or other unreasonable annoyance which may disturb the quiet enjoyment of adjoining premises or of the Building by the owners or occupants thereof.
5.3 Insurance Cancellation . Notwithstanding the provisions of Paragraph 5.1 above, the Lessee shall not do or permit anything to be done in or about the Premises nor bring or keep anything therein, including all uses permitted under Section 5.1 above, which will in any way increase the existing rate of or affect any fire or other insurance upon the Building, or any other part thereof, or any of its contents, and if the Lessee’s use of the Premises causes all increase in said insurance rates, the Lessee shall pay as additional rent the amount of such increase. The Lessee shall be in default under this Lease should the Lessee cause the cancellation of fire or other insurance upon the Building or Property or should the Lessee fail to pay any increased insurance rate attributable to the Lessee’s use of the Premises. In determining whether increased premiums are a result of the Lessee’s use or occupancy of the Premises or Building, a schedule issued by the Lessor’s insurer computing the insurance rate on the Premises or Building, or the leasehold improvements showing the various components of such rate, shall be conclusive evidence of the several items and charges which make up such rate. The Lessee
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shall promptly comply with all reasonable requirements of the insurance authority or of any insurer now or hereafter in effect relating to the Premises.
5.4 Hazardous Substances . Any corrosive, flammable, hazardous or other special waste or materials shall be handled or disposed of as directed by applicable state, Federal, County and City regulations. The Lessee shall handle, store or dispose of such materials in a careful and prudent manner. At the termination of the Lease, or any option period thereof, the Lessee shall fully clean the Premises in such a manner that no residue of such materials or waste shall remain on the Premises. The Lessee shall notify the appropriate governmental authority of the presence and amount of any such material or waste, and shall comply with all conditions imposed by such authority. The Lessee shall contact the appropriate governmental authority prior to occupancy to determine the existence of any records for the Building and/or Premises. Specifically thirty (30) days prior to occupancy, the Lessee shall submit a Hazardous Materials Management Plan (HMMP) and a Hazardous Materials Floor Plan (HMF) to the Lessor and the appropriate governmental authority for approval. These plans shall be attached in full to this Lease.
The HMMP shall include the following:
(a) The company name, address and contact person.
(b) General facility description with map showing location of all buildings and structures.
(c) Facility hazardous material storage map showing the location of each proposed hazardous material storage area and access to such facilities. The map shall be updated annually by the occupant and submitted by January l each year.
(d) A floor plan showing the location of each hazardous material storage area, storage area access, and the location of emergency equipment.
The HMF shall include file following:
(a) Hazardous Materials Handling Report describing the safe handling of hazardous materials to prevent accidents.
(b) Separation or Hazardous Material Report outlining the methods to be utilized to insure separation and protection of hazardous materials from such factors that could cause fire, explosion, spills, etc.
(c) Inspection and Record Keeping Plan indicating the procedures for inspecting each storage facility. An authorized record of inspection shall be maintained by the Lessee.
(d) Employee “training Program to insure that employees know how to safety handle hazardous materials.
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(e) Hazardous Materials Contingency Plan that clearly describes appropriate response procedures and measures in case of an accident.
(f) A floor plan identifying the location and quantity of each hazardous material, including the chemical name and quantity limit for each class.
The Lessee shall pay inspection fees, based on the hourly inspection rate, for an environmental audit to be conducted by the appropriate governmental authority, or the Lessor at the termination of the Lease and prior to reoccupation of the Building and/or the Premises, if hazardous materials were in use on the Building and/or Premises. The appropriate governmental authority shall perform or the Lessee shall arrange for such an audit in a timely manner to prevent economic hardship to the Lessor and shall certify that the Premises are available for reoccupation, or shall specify clean-up measures that will render the Premises safe for reoccupation. The Lessee shall be responsible for any clean-up that may be required as a result of the audit.
Should the Lessee fail to comply with any duty set forth in this Section 5.4, the Lessor may, in addition to all other remedies now or hereafter provided by this Lease, or by law, perform such duty or make good such default, and any amounts which the Lessor shall advance pursuant thereto shall be repaid by the Lessee to the Lessor on demand.
5.5 Environmental Laws .
(a) Compliance with Environmental Laws . The Lessee, in its conduct of business on or in any activity, work, thing done, permitted or suffered by the Lessee, its agents, contractors, employees or invitees on the Premises, shall at all times and in all respects comply with all federal, state and county laws, ordinances and regulations (the “Hazardous Materials Laws”) relating to industrial hygiene, environmental protection or the use, analysis, generation, manufacture, storage, disposal or transportation of any oil, flammable explosives, asbestos, radioactive materials or waste, or other hazardous, toxic, contaminated or polluting materials, substances, or wastes, including, without limitation, any “hazardous substances,” “hazardous wastes,” “hazardous materials,” or “toxic substances” under any such laws, ordinances or regulations (collectively, the “Hazardous Materials”). Such laws, ordinances or regulations shall include, but not be limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq; the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq; the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901 et seq; the Clean Water Act, 33 U.S.C. Section 466, et seq; the Safe Drinking Water Act, 14 U.S.C. Section 1401, et seq; the Superfund Amendment and Reauthorization Act of 1986; Public Law 99-499, 100 Stat. 1613; the Toxic Substances Control Act, 15 U.S.C. Section 2601, et seq, as amended; those substances defined as “hazardous waste”, “extremely hazardous waste”, “restricted hazardous waste” or “hazardous substance” in the Hazardous Waste Control Act, Section 25100 et seq of the California Health & Safety Code; and those materials and substances similarly described in the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section 136, et seq., as amended; the Atomic Energy Act of 1954, 42 U.S.C. Section 2011, et seq., as amended; the Porter Cologne Water Quality Control Act, Section 1300 et seq. of the California Health & Safety Code; and any regulations adopted and publications promulgated pursuant to said Laws.
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(b) Hazardous Materials Handling . The Lessee shall, at its own expense, procure, maintain in effect and comply with all conditions of any and all permits, licenses and other governmental and regulatory approvals required for the Lessee’s use of the Premises, including, without limitation, discharge of (appropriately treated) materials or wastes into or through any sanitary sewer serving the Premises. Except as discharged into the sanitary sewer in strict accordance and conformity with all applicable Hazardous Materials Laws, the Lessee shall cause any and all hazardous Materials removed from the Premises to be removed and transported solely by duly licensed haulers to duly licensed facilities for final disposal of such materials and wastes. The Lessee shall in all respects handle, treat, deal with and manage any and all Hazardous Materials in, on, under or about the Premises in total conformity with all applicable Hazardous Materials Laws and prudent industry practices regarding management of such Hazardous Materials. Upon expiration or earlier termination of the term of the Lease, the Lessee shall cause all Hazardous Materials to be removed from the Premises and transported for use, storage or disposal in accordance and compliance with all applicable Hazardous Materials Laws. The Lessee shall not take any remedial action in response to the presence of any Hazardous Materials in or about the Premises or the Building, nor enter into any settlement agreement, consent, decree or other compromise; in respect to any claims relating to any Hazardous Materials in any way connected with the Premises or the Building, without first notifying the Lessor of the Lessee’s intention to do so and affording the Lessor ample opportunity to appear, intervene or otherwise appropriately assert and protect the Lessor’s interest with respect thereto.
(c) Notices . The Lessee shall immediately notify the Lessor in writing of any of the following activities relating to the Lessee’s operations on the Premises: (i) any enforcement, clean-up, removal or other governmental or regulatory action instituted, completed or threatened pursuant to any Hazardous Materials laws; (ii) any claim made or threatened by any person against the Lessee, the Premises or the Building relating to damage, contribution, cost recovery compensation, loss or injury resulting from or claimed to result from any Hazardous Materials in, on or removed from the Premises or the Building; and (iii) any reports made to any environmental agency arising out of or in connection with any Hazardous Materials in or removed from the Premises or the Building, including any complaints, notices, warnings or asserted violations in connection therewith. The Lessee shall also supply to the Lessor as promptly as possible, and in any event within five (5) business days after the Lessee first receives or sends the same, with copies of all claims, reports, complaints, notices, warnings or asserted violations relating in any way to the Premises, the Building or the Lessee’s use thereof. The Lessee shall promptly deliver to the Lessor copies of hazardous waste manifests reflecting the legal and proper disposal of all Hazardous Materials removed from the Premises.
(d) Indemnification of Lessor . The Lessee shall indemnify, defend, protect, and hold the Lessor, and each of the Lessor’s partners, employees, agents, attorneys, successors and assigns, free and harmless from and against any and all claims, liabilities, penalties, forfeitures, losses or expenses (including attorneys’ fees) for death of or injury to any person or damage to any property whatsoever arising from or caused in whole or in part, directly or indirectly, by (A) the presence in, on, under or about the Premises or the Building, or discharge in or from the Premises or the Building of any Hazardous Materials or the Lessee’s use, analysis, storage, transportation, disposal, release, threatened release, discharge or generation of Hazardous Materials to, in, on, under, about or from the Premises or the Building,
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but only to the extent such Hazardous Materials are present as a result of actions of the Lessee, its officers, employees, invitees, assignees, contractors, or agents, or (B) the Lessee’s failure to comply with any Hazardous Materials Law. The Lessee’s obligations hereunder shall include, without limitation, and whether foreseeable or unforeseeable, all costs of any required or necessary repair, clean-tip or detoxification or decontamination of the Premises or the Building, and the preparation and implementation of any closure, remedial action or other required plans in connection therewith, and shall survive the expiration or earlier termination of the term of the Lease. For purposes of the release and indemnity provisions hereof, any acts or omissions of the Lessee, or by officers, invitees, employees, agents, assignees, contractors or subcontractors of the Lessee or others acting for or on behalf of the Lessee (to the extent any such individual is acting within the scope of his relationship with the Lessee), whether or :lot such acts or omissions are negligent, intentional, willful or unlawful, shall be strictly attributable to the Lessee.
6. MAINTENANCE, REPAIRS AND ALTERATIONS
6.1 Lessor’s Obligations . The Lessor shall cause to be maintained, in good order, condition and repair, the foundation, structural walls and exterior walls, common windows and doors of the Building (excluding the interior surface thereof), heating, venting and air conditioning systems, and any public and common areas in the Building, as well as all parking areas, driveways, sidewalks, private roads or streets, landscaping and all other areas located within the Project other than areas occupied by other buildings (such non-building areas being herein referred to as “Common Areas”). The costs of such maintenance are chargeable to the Lessee pursuant to Section 3.2 hereof.
6.2 Lessee’s Obligations . The Lessee shall, during the term of this Lease, keep in good order, condition and repair, the roof and roof membrane, the interior of the Premises and every part thereof, including, but not limited to, all interior windows and doors in and to the Premises. The Lessor shall incur no expense nor have any obligation of any kind whatsoever in connection with the maintenance of the interior of the Premises and the Lessee expressly waives the benefits of any statute now or hereafter in effect which would otherwise afford the Lessee the right to make repairs at the Lessor’s expense or to terminate this Lease because of any failure to keep the interior of the Premises in good order, condition and repair. Notwithstanding the foregoing, the Lessor shall be liable for maintenance or repairs which are caused by the Lessor’s gross negligence. The Lessee shall be responsible for interior janitorial services.
6.3 Alterations and Additions .
(a) The Lessee shall not, without the Lessor’s prior written consent, which shall not be unreasonably withheld, make any alterations, improvements, additions or utility installations in, on or about the Premises unless such work is non-structural and does not exceed TWENTY THOUSAND DOLLARS ($20,000). For all work, the Lessee will provide the Lessor with as-built drawings reflecting any changes to the Premises. As used in this Paragraph 6.3, the term “utility installations” shall include bus ducting, power panels, fluorescent fixtures, space heaters, conduits and wiring. As a condition to giving such consent, the Lessor may require that the Lessee (i) agree to remove any such alterations, improvements, additions or utility installations at the expiration or sooner termination of the terms, and to restore the
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Premises to their prior condition and/or (ii) provide the Lessor, at the Lessee’s sole cost and expenses, a lien and completion bond in an amount equal to one and one-half (1 1/2) times the estimated cost of such improvements, to insure the Lessor against any liability for mechanics’ and materialmen’s liens and to insure completion of work.
(b) All alterations, improvements and additions to the Premises shall be performed by the Lessor’s contractor for the Project or other licensed contractor approved by the Lessor, which approval shall not be unreasonably withheld. The Lessee shall pay, when due, all claims for labor or materials furnished to or for the Lessee at or for use in the Premises, which claims are or may be secured by any mechanics’ or materialmen’s lien against the Premises or any interest therein, and the Lessor shall have the right to post notices of non-responsibility in or on the Premises as provided by law.
6.4 Surrender . On the last day of the term hereof, or on any sooner termination, the Lessee shall surrender to the Lessor the Premises and, subject to the provisions of Paragraph 6.3(a) hereof, all alterations, additions and improvements thereto, in the same condition as when received or made, ordinary wear and tear excepted; provided, however, that the Lessee’s machinery, equipment and trade fixtures (including utility installations) which may be removed without irreparable or material damage to the Premises, shall remain the property of the Lessee and be removed by the Lessee. The Lessee shall repair any damage to the Premises occasioned by the removal of the Lessee’s furnishings, machinery, equipment and trade fixtures, which repair shall include the patching and filing of holes and repair of structural damage.
6.5 Lessor’s Rights . If the Lessee fails to perform the Lessee’s obligations under this Article 6, the Lessor may, at its option (but shall not be required to), and with a five (5) day written notice to the Lessee, perform such obligations on behalf of the Lessee, and the cost thereof, together with interest thereon at the rate specified in Paragraph 12.2(a) hereof, shall immediately become due and payable as additional rent to the Lessor.
7. INSURANCE
The Lessee, at its sole cost and expense, shall, commencing on the date the Lessee is given access to the Premises for any purpose, and during the entire term hereof, procure, pay for and keep in full force and effect:
7.1 Lessee’s Liability Insurance . Comprehensive general liability insurance with respect to the Premises and the operations of or on behalf of the Lessee in, on or about the Premises, including, but not limited to, personal injury, product liability (if applicable), blanket contractual, owner’s protective, broad form property damage liability coverage, host liquor liability and owned and non-owned automobile liability in an amount not less than TWO MILLION DOLLARS ($2,000,000) Combined Single Limit. Such policy shall contain (i) severability of interest, (ii) cross liability, and (iii) an endorsement stating in substance that “such insurance as is afforded by this policy for the benefit of the Lessor shall be primary as respects any liability or claims arising out of the occupancy of the Premises by the Lessee, or out of the Lessee’s operations, and any insurance carried by the Lessor shall be excess and noncontributory. “
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7.2 Lessee’s Worker’s Compensation Insurance . Worker’s Compensation coverage as required by law, together with Employer liability coverage.
7.3 Lessee’s Fire and Extended Coverage Insurance . Insurance against fire, vandalism, malicious mischief and such other additional perils its now are or hereafter may be included in a standard “All Risks” coverage, insuring all improvements and betterments made to the Premises, the Lessee’s trade fixtures, furnishings, equipment, stock, loss of income or extra expense, and other items of personal property in an amount not less than 100% of replacement value. Such insurance shall contain (i) no coinsurance or contribution clauses, (ii) a Replacement Cost Endorsement, and (iii) deductible amounts acceptable to the Lessor.
7.4 Policy Requirements . All policies of insurance required to be carried by the Lessee pursuant to these requirements shall be written by responsible insurance companies authorized to do business in the State of California. Any such insurance required by the Lessee hereunder may be furnished by the Lessee under any blanket policy carried by it or under a separate policy therefor. A true and exact copy of each paid up policy evidencing such insurance or a certificate of the insurer, certifying that such policy has been issued, providing the coverage required and containing the provisions specified herein, shall he delivered to the Lessor prior to the date the Lessee is given the right to possession of the Premises, and upon renewals, not less than thirty (30) days prior to the expiration of such coverage. The Lessor may, at any time, and from time to time, inspect and/or copy any and all insurance policies required hereunder. In no event shall the then limits of any policy be considered as limiting the liability of the Lessee under this Lease.
Each policy evidencing insurance required to be carried by the Lessee pursuant to, these requirements shall contain, in form and substan | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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