SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1999
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-12708
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FRANKLIN SELECT REALTY TRUST
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(Exact name of registrant as specified in its charter)
CALIFORNIA 94-3095938
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
P. O. BOX 7777, SAN MATEO, CALIFORNIA 94403-7777
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (650) 312-2000
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N/A
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Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Common Stock Shares Outstanding as of June 30, 1999, Series A: 12,250,370
Common Stock Shares Outstanding as of June 30, 1999, Series B: 745,584
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FRANKLIN SELECT REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
JUNE DECEMBER
(In thousands, except per share amounts) 30, 1999 31, 1998
- --------------------------------------------------------------------
ASSETS
Real Estate
Rental property:
Land $34,054 $34,054
Buildings and improvements 100,584 100,241
------------------
134,638 134,295
Less: accumulated depreciation 23,016 21,341
------------------
Real estate, net 111,622 112,954
Cash and cash equivalents 3,607 1,256
Mortgage-backed securities, available for sale 12,938 7,700
Notes receivable - 7,700
Deferred rent receivable 1,546 1,543
Deferred costs and other assets 2,571 2,739
==================
Total assets $132,284 $133,892
==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes and bonds payable $26,561 $26,762
Tenant deposits, accounts payable and accrued 1,998 1,807
expenses
Distributions payable 1,726 1,641
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Total liabilities 30,285 30,210
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Minority interest 9,139 9,181
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Commitments and contingencies - -
Stockholders' equity:
Common stock, Series A, without par value;
stated value $10 per 103,161 103,161
share; 50,000 shares authorized; 12,250
issued and outstanding
Common stock, Series B, without par value;
stated value $10 per 6,294 6,294
share; 1,000 shares authorized; 746 issued
and outstanding
Accumulated other comprehensive income (30) (18)
Accumulated distributions in excess of net (16,565) (14,936)
income
-------------------
Total stockholders' equity 92,860 94,501
===================
Total liabilities and stockholders' $132,284 $133,892
equity
===================
The accompanying notes are an integral part of these consolidated financial
statements.
FRANKLIN SELECT REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
(In thousands, except per share 1999 1998 1999 1998
amounts)
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REVENUE:
Rent $3,611 $4,788 $7,480 $9,321
Interest, dividends and other 248 44 501 104
-----------------------------------
Total revenue 3,859 4,832 7,981 9,425
-----------------------------------
EXPENSES:
Property operating 911 1,016 1,717 1,925
Interest 591 824 1,184 1,677
Related party 307 388 620 764
General and administrative 361 254 902 525
Depreciation and amortization 950 1,021 1,875 2,014
-----------------------------------
Total expenses 3,120 3,503 6,298 6,905
-----------------------------------
Operating income before gain on sale
of property and minority interest 739 1,329 1,683 2,520
Gain on sale of property - - - 170
-----------------------------------
Operating income before minority 739 1,329 1,683 2,690
interest
Minority interest 195 177 372 338
===================================
NET INCOME $544 $1,152 $1,311 $2,352
===================================
Unrealized gain (loss) on
mortgage-backed securities (106) - (12) (2)
===================================
TOTAL COMPREHENSIVE INCOME $438 $1,152 $1,299 $2,350
===================================
Net income per share, based on the
weighted average
shares outstanding of Series A common
stock of 12,250
for the three- and six-month periods
ended June 30, 1999, and 1998, respectively $.04 $ .09 $.11 $ .19
===================================
Distributions per share, based on the
weighted average shares outstanding of Series
A common stock of 12,250 for the three- and
six-month periods ended June 30, 1999 and 1998,
respectively $.12 $.12 $.24 $ .24
===================================
The accompanying notes are an integral part of these consolidated financial
statements.
FRANKLIN SELECT REALTY TRUST
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
Unaudited
(In thousands) 1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $1,311 $2,352
--------------
Adjustments to reconcile net income to net cash
Provided by operating activities:
Depreciation and amortization 1,937 2,108
Gain on sale of property - (170)
Minority interest 372 338
Increase in deferred rent receivable (3) (32)
Decrease in other assets 369 218
Increase (decrease) in accounts payable, accrued
expenses and other liabilities 149 (171)
--------------
2,824 2,291
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NET CASH PROVIDED BY OPERATING ACTIVITIES 4,135 4,643
--------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of real estate - 4,471
Improvements to real estate (343) (1,135)
Collection of notes receivable 7,700 -
Leasing commissions paid (427) (178)
Acquisition of mortgage-backed securities (6,939) -
Disposition of mortgage-backed securities 1,683 48
--------------
NET CASH PROVIDED BY INVESTING ACTIVITIES 1,674 3,206
--------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes and bonds payable (201) (6,149)
Distributions paid to limited partners (371) (338)
Payment of loan costs (31) -
Distributions paid to stockholders (2,855) (2,990)
--------------
NET CASH USED IN FINANCING ACTIVITIES (3,458) (9,477)
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,351 (1,628)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,256 3,821
--------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $3,607 $2,193
==============
The accompanying notes are an integral part of these consolidated financial
statements.
FRANKLIN SELECT REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
Unaudited
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements of
Franklin Select Realty Trust (the "Company") included herein have been
prepared in accordance with the instructions to Form 10-Q pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, the Company has made all
appropriate adjustments necessary to a fair presentation of the results of
operations for the periods shown. All adjustments are of a normal recurring
nature. Certain prior year amounts have been reclassified to conform to
current year presentations. These financial statements should be read in
conjunction with the Company's audited financial statements as of and for the
year ended December 31, 1998.
NOTE 2 - NET INCOME PER SHARE
In October 1997, 1,625,000 limited partnership units (the "FSRT Units")
became eligible for exchange into a like number of Series A common shares in
the Company in accordance with the partnership agreement of FSRT. None of the
partnership units have been exchanged for common stock. The convertible
partnership units are deemed anti-dilutive to net income and consequently
there is no difference between basic and diluted net income per share.
NOTE 3 - LITIGATION
The Company is currently defending the former directors of Franklin Advantage
Real Estate Income Fund ("Advantage") against a purported class action
complaint. The complaint was filed in the California Superior Court for San
Mateo County on December 2, 1996 by two stockholders for themselves and
purportedly on behalf of certain other minority stockholders of Advantage.
Other defendants currently include Franklin Resources, Inc. and the Company's
advisor, Franklin Properties, Inc. The complaint alleges that defendants
breached fiduciary duties to plaintiffs and other minority stockholders in
connection with the purchase by Franklin Resources, Inc. in August 1994 of a
46.6% interest in Advantage and in connection with the Merger of Advantage
into the Company in May 1996, which was approved by a majority of the
outstanding shares of each of the three companies involved. Plaintiffs also
allege that defendants misstated certain material facts or omitted to state
material facts in connection with these transactions.
The complaint includes a variety of additional claims, including claims
relating to the investment of Advantage assets, the suspension of the
dividend reinvestment program, the allocation of merger-related expenses,
revisions to the investment policies of Advantage, and the restructuring of
the contractual relationship with the Advisor. Plaintiffs seek damages in an
unspecified amount and certain equitable relief. The defendants deny any
wrongdoing in these matters and intend to vigorously defend the action.
Discovery is continuing.
On June 3, 1997, Herbert S. Hodge, Jr., on behalf of himself and certain
other shareholders of Franklin Real Estate Income Fund ("FREIF"), filed an
alleged class action complaint in the California Superior Court for San Mateo
County against the Company, certain of its directors, the Company's advisor,
Franklin Properties, Inc., Franklin Resources, Inc., and Bear Stearns Co.,
Inc. The complaint alleges that defendants breached fiduciary duties to
plaintiff and certain other shareholders in connection with the merger of
FREIF into Franklin Select Realty Trust in May 1996. Plaintiff also alleges
that defendants misstated certain material facts or omitted to state material
facts in connection with this transaction. Plaintiff seeks damages in an
unspecified amount. The defendants deny any wrongdoing in these matters and
intend to vigorously defend the action. Discovery is continuing.
FRANKLIN SELECT REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
Unaudited
NOTE 3 - LITIGATION (CONTINUED)
While the outcome of litigation of these claims cannot be predicted with
certainty, the Company's management does not believe that the outcome of
litigation of these matters will have a material adverse effect on the
Company's financial condition, results of operations or cash flows.
NOTE 4 - SIGNIFICANT LEASE
On July 9, 1999, the Company executed a new lease covering 108,600 square
feet of space at the Company's industrial research and development building
located at 46360 Fremont Blvd., Fremont, California. The space was vacated in
May of this year when the prior tenant, Tanon Manufacturing, Inc., rejected
its lease under Chapter 11 of United States Bankruptcy Code. The term of the
new lease, with Sybron Laboratory Products Corporation, will be for ten years
and three months.
Base monthly rental payments under the lease of $124,890 will commence on the
earlier of October 1, 1999, or the completion of tenant improvements. The
Tenant is also responsible for the payment of all operating expenses of the
property including property taxes, maintenance, and insurance. The base
rental payment will increase approximately 4% annually. The lease also
provides the Tenant with one five-year renewal option at fair market rent.
The lease requires the Company to provide tenant improvements to the property
totaling approximately $1.7 million of which the Tenant is required to repay
up to $1,080,000 in monthly installments, including 10% annual interest,
during the term of the lease. The Company will also pay leasing commissions
related to the lease totaling approximately $614,000 including $93,000 to
Continental Property Management Co., an affiliate of the Company's advisor,
Franklin Properties, Inc.
FRANKLIN SELECT REALTY TRUST
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
The following discussion should be read in conjunction with Management's
Discussion and Analysis included in the Company's 1998 Form 10-K.
When used in the following discussion, the words "believes," "anticipates"
and similar expressions are intended to identify forward-looking statements.
Such statements are subject to certain risks and uncertainties which could
cause actual results to differ materially from those projected, including,
but not limited to, those set forth in the section entitled "Potential
Factors Affecting Future Operating Results," below. Readers are cautioned
not to place undue reliance on these forward-looking statements that speak
only as of the date hereof. The Company undertakes no obligation to publicly
release any revisions to these forward-looking statements that may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE- AND SIX-MONTH PERIODS ENDED JUNE 30, 1999 AND 1998
Total revenue for the three- and six-month periods ended June 30, 1999
decreased $973,000, or 20%, and $1,444,000, or 15%, respectively, when
compared to the same periods in 1998. The decrease was primarily due to the
sale of the following properties: Carmel Mountain Gateway Plaza in July 1998
and Mira Loma Retail Shopping Center and Glen Cove Shopping Center in
November 1998. In addition, the Company's revenues were affected by the
departure of two tenants: the Data General Corporation who vacated 34,000
square feet on January 31, 1999, and Tanon Manufacturing, Inc. who vacated
108,600 square feet on May 2, 1999. To date, the Company has re-leased all
of this space under new leases that have commenced, or will commence, rental
payments during the second and third quarters of 1999. Partially offsetting
these factors, were increased revenue from the Hathaway building, and
increased interest income following higher average investment levels in 1999.
Total expenses for the three- and six-month periods ended June 30, 1999
decreased $383,000, or 11%, and $607,000, or 9%, respectively, when compared
to the same periods in 1998. The decrease was primarily a result of the
sales of properties referred to in the preceding paragraph, offset by
increased general and administrative expenses referred to below.
General and administrative expenses for the three-month and six-month periods
ended June 30, 1999, increased $107,000, or 42%, and $377,000, or 72%,
respectively, when compared to the same periods in 1998. The increase was
primarily due to legal fees and expenses incurred with respect to the
Company's evaluation of its strategic alternatives.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1999, cash and cash equivalents aggregated $3,607,000, and the
Company held $12,938,000 in mortgage-backed securities.. The Company also
had access to a revolving line of credit at June 30, 1999 of $25 million,
which was unused at that date. On July 1, 1999 the Company chose not to
renew the line of credit agreement. Management believes that the existing
credit agreements, cash and cash equivalents, together with the
mortgage-backed securities are sufficient to meet its short-term operating
requirements.
Net cash provided by operating activities for the six-month period ended June
30,1999 was $4,129,000. The decrease in this cash flow when compared to the
same period in 1998 was primarily attributable to the reduction in revenue
and the increase in general and administrative expenses described above. This
decrease was partly offset by a decrease in tenant deposits, accounts payable
and other liabilities in the current quarter compared to an increase in the
same period last year.
FRANKLIN SELECT REALTY TRUST
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
The changes in net cash provided by investing and financing activities during
the six-month period ended June 30, 1999 was primarily the result of the
collection of the $7,700,000 note receivable, the purchase of mortgage backed
securities and distribution payments to stockholders during the period.
The Special Committee of the Board of Directors is continuing its review of
the strategic alternatives available to the Company.
Management does not believe that the outcome of the litigation described in
Note 3 to the accompanying financial statements will have a material adverse
effect on the Company's financial condition, results of operations, or cash
flows.
Management believes that the Company's sources of capital as described under
Liquidity and Capital Resources are adequate to meet its liquidity needs in
the foreseeable future.
IMPACT OF INFLATION
The Company's policy of negotiating leases which incorporate operating
expense "pass-through" provisions is intended to protect the Company against
increased operating costs resulting from inflation.
CASH DISTRIBUTION POLICY
Distributions are declared quarterly at the discretion of the Board of
Directors. The Company's present distribution policy is to at least annually
evaluate the current distribution rate. This evaluation will consider
anticipated tenant turnover over the next two or three years, the estimated
level of associated improvements and leasing commissions, planned capital
expenditures, any debt service requirements and the Company's other working
capital requirements. After balancing these considerations, and considering
the Company's earnings and cash flow, the level of its liquid reserves and
other relevant factors, the Company seeks to establish a distribution rate
which:
i) provides a stable distribution which is sustainable despite short-term
fluctuations in property cash flows;
ii) maximizes the amount of cash flow paid out as distributions consistent
with the above listed objective; and
iii) complies with the Internal Revenue Code requirement that a REIT annually
pay out as distributions not less than 95% of its taxable income.
During the six-month period ended June 30, 1999, the Company declared
distributions related to the Series A common stock totaling $2,940,000.
FUNDS FROM OPERATIONS
The Company considers funds from operations to be a useful measure of the
operating performance of an equity REIT. This is because, together with net
income and cash flows, funds from operations provides investors with an
additional basis to evaluate the ability of a REIT to support general
operating expense and interest expense before the impact of certain
activities, such as gains and losses from property sales and changes in the
accounts receivable and accounts payable. However, it does not measure
whether income is sufficient to fund all of the Company's cash needs
including principal amortization, capital improvements and distributions to
stockholders. Funds from operations should not be considered an alternative
to net income or any other GAAP measurement of performance, as an indicator
of the Company's operating performance or as an alternative to cash flows
from operating, investing or financing activities as a measure of liquidity.
As defined by the National Association of Real Estate Investment
FRANKLIN SELECT REALTY TRUST
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Trusts, funds from operations is net income (computed in accordance with
GAAP), excluding gains or losses from debt restructuring and sales of
property, plus depreciation and amortization, and after adjustment for
unconsolidated joint ventures. The Company reports funds from operations in
accordance with the revised NAREIT definition. The measure of funds from
operations as reported by the Company may not be comparable to similarly
titled measures of other companies that follow different definitions.
Funds from operations were as follows.
For the Six
Months Ended June 30,
(In thousands) 1999 1998
- -------------------------------------------------------------------
Net income $1,311 $2,352
Add: Depreciation and amortization 1,875 2,014
Less: Gain on sale of property - (170)
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Funds from Operations $3,186 $4,196
===================================================================
The primary difference between the periods reflects the changes in net income
as discussed under "Results of Operations".
POTENTIAL FACTORS AFFECTING FUTURE OPERATING RESULTS
LEASING TURNOVER
In connection with any lease renewal or new lease, the Company typically
incurs costs for tenant improvements and leasing commissions which will be
funded first from operating cash flow and, if necessary, from cash reserves
or existing credit facilities. In addition, while the Company has
historically been successful in renewing and re-leasing space, the Company
will be subject to the risk that leases expiring in the future may be renewed
or re-leased at terms that are less favorable than current lease terms.
LEASING TURNOVER - DATA GENERAL BUILDING
On January 31, 1999, the Data General Corporation vacated approximately
34,000 square feet of space at the Company's office building in Manhattan
Beach, California. During 1998, the Company recorded rental income from the
Data General lease that was equivalent to approximately $31.03 per square
foot on a full service basis. As of June 30, 1999, the Company has executed
new leases for all of the vacated space at an average annual starting rental
rate of $25.67 per square foot. Rental income under these leases commences
at various dates during the second and third quarters of the year. The
Company will incur costs for tenant improvements and leasing commissions
related to the leases totaling approximately $464,000, which will be paid in
future periods.
FRANKLIN SELECT REALTY TRUST
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
YEAR 2000
The Company has evaluated whether its computer systems, including on-site and
embedded systems, and those of third parties with whom the Company interacts
will function properly by, at or during the year 2000. The Company has
determined certain of its own systems are not currently year 2000 compliant.
Management has a plan to replace or upgrade the systems within the next three
months. The Company does not expect that the costs associated with these
replacements or upgrades will have a material adverse impact on its financial
position, results of operations or cash flows in future periods. However,
failure to successfully replace or upgrade these systems could result in
material disruptions to its business.
The Company is managed and advised by certain affiliates of Franklin
Resources, Inc. It is reliant on these entities for its basic computer
network and certain other applications. The Company is also reliant on a
third-party transfer agent for maintaining its basic shareholder records.
Management is monitoring the progress of these entities in achieving year
2000 compliance and does not currently anticipate a material adverse impact
on the Company's business.
FRANKLIN SELECT REALTY TRUST
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit
NO. LIST OF EXHIBITS FOOTNOTE
3.1 Amended and Restated Articles of Incorporation (1)
3.2 Second Amended and Restated Bylaws of Franklin Select Realty Trust (2)
10.1 Amended and Restated Advisory Agreement (3)
10.2 Property Management Agreement (4)
10.3 Agreement of Limited Partnership of FSRT, L.P. between the Company and (5)
Northport Associates No. 18, a California limited liability company,
dated as October 30, 1996.
10.4 Contribution Agreement, dated as of October 30, 1996, between FSRT, L.P.,
the Company, Northport Associates No. 18, a California limited
liability company, and the members of Northport Associates No. 18. (5)
10.5 Exchange Rights Agreement, dated as of October 30, 1996, among the
Company, FSRT L.P., and Northport Associates No. 18, a California limited
liability company. (5)
10.6 Registration Rights Agreement, dated as of October 30, 1996, among the
Company and Northport Associates No. 18, a California limited
liability company. (5)
10.7 Secured line of credit loan agreement, dated December 10, 1996, by and
between the Company and Bank of America. (6)
10.8* Lease agreement dated July 9, 1999, by and between the company and
Sybron Laboratory Products Corporation
* Filed herewith
FOOTNOTES
(1) Documents were filed in the Company's Form 10-Q for the quarter ended
March 31, 1999, and are incorporated herein by reference.
(2) Documents were filed in the Company's Form S-4 Registration Statement,
dated November 13, 1995, (Registration No. 033-64131), and are
incorporated herein by reference.
(3) Documents were filed in the Company's Form 10-K for the year ended
December 31, 1998, and are incorporated herein by reference.
(4) Documents were filed in the Company's Form 10-K for the year ended
December 31, 1994, and are incorporated herein by reference.
(5) Documents were filed in the Company's Form 8-K, dated October 31, 1996,
and are incorporated herein by reference.
(6) Documents were filed in the Company's Form 10-K for the year ended
December 31, 1996, and are incorporated herein by reference.
(b) Reports on Form 8-K - On April 23, 1999, the Company filed a report on
Form 8-K dated April 21, 1999 (date of earliest event reported). The
report contained information related to the termination of the lease
agreement with Tanon Manufacturing Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FRANKLIN SELECT REALTY TRUST
By: /S/ DAVID P. GOSS
David P. Goss
Chief Executive Officer
Date: AUGUST 13, 1999
Exhibit 10.8
SINGLE-TENANT INDUSTRIAL/COMMERCIAL
LEASE - NET
Landlord: FSRT, L.P., a Delaware limited partnership
Tenant: SYBRON LABORATORY PRODUCTS CORPORATION,
a Wisconsin corporation
TABLE OF CONTENTS
PAGE
Article 1- PREMISES...............................................2
Article 2- TERM, POSSESSION AND LEASE COMMENCEMENT................4
Article 3- USE....................................................7
Article 4- RENT..................................................12
Article 5- REAL PROPERTY TAXES...................................12
Article 6- INSURANCE AND INDEMNIFICATION.........................13
Article 7- REPAIRS & MAINTENANCE; UTILITIES......................16
Article 8- ALTERATIONS AND SIGNS.................................19
Article 9- INSPECTION AND NOTICES................................22
Article 10- LENDER AND FINANCING PROVISIONS......................23
Article 11- ASSIGNMENT AND SUBLETTING............................24
Article 12- CONDEMNATION.........................................27
Article 13- CASUALTY DAMAGE......................................27
Article 14- HOLDING OVER.........................................30
Article 15- DEFAULT..............................................30
Article 16- TRANSFERS BY LANDLORD AND CURE RIGHTS................33
Article 17- MISCELLANEOUS........................................34
EXHIBIT A SITE PLAN
EXHIBIT B WORKLETTER
THIS LEASE (the "LEASE") is entered into by and between FSRT, L.P.,
a Delaware limited partnership ("LANDLORD") and SYBRON LABORATORY PRODUCTS
CORPORATION, a Wisconsin corporation ("TENANT").
BASIC LEASE INFORMATION
Lease Date: July __, 1999
Tenant's Address for Notices: Prior to the Term Commencement
Date:
601 California Avenue
Sunnyvale, California 94086
After the Term Commencement Date:
46360 Fremont Boulevard
Fremont, California 94538
With copies to: Sybron Laboratory Products
Corporation
10 Pleasant Street
Portsmouth, New Hampshire 03801
Attention: Group Counsel
Landlord's Address for Notices: FSRT, L.P.
c/o Franklin Properties, Inc.
2000 Alameda de las Pulgas
San Mateo, California 94403
Premises: 46360 Fremont Boulevard,
Fremont, California
Approximate Building Square 108,600
Footage:
Permitted Use: The manufacture and sale of
diagnostic reagents and related
products and services, related
office and support functions,
sales, distribution, warehousing
and storage and related lawful
purposes in conformity to
municipal zoning requirements
and any covenants, conditions
and restrictions applicable to
the Premises.
Term Commencement Date: The earlier to occur of (a)
October 1, 1999 and (b) the date
of completion of the
Improvements to be constructed
by Tenant pursuant to the
Workletter.
Length of Initial Term: One hundred twenty-three (123)
months
Term Expiration Date: The last day of the 123rd
calendar month following the
Term Commencement Date
Options to Extend Term: One (1) five (5) year option
Base Rent: Months 1-12: $124,890.00 per month
Months 13-24: $129,885.60 per month
Months 25-36: $135,081.02 per month
Months 37-48: $140,484.27 per month
Months 49-60: $146,103.64 per month
Months 61-72: $151,947.78 per month
Months 73-84: $158,025.69 per month
Months 85-96: $164,346.72 per month
Months 97-108: $170,920.59 per month
Months 109-120: $177,757.41 per month
Months 121-123: $184,867,71 per month
Advance Rent: $124,890.00
Landlord's Broker: Colliers International
Tenant's Broker: Colliers International
Exhibits: A - Site Plan
B - Workletter
Each reference in this Lease to any of the Basic Lease Information shall mean
the respective information above and shall be construed to incorporate all of
the terms provided under the particular Lease paragraph pertaining to such
information. In the event of any conflict between the Basic Lease
Information and the other terms of this the Lease, the latter shall control.
ARTICLE 1 - PREMISES
- ----------- ----------
1.1...PREMISES DESCRIBED. Landlord leases to Tenant and Tenant leases from
Landlord, upon the terms and conditions set forth herein, that certain real
property including all improvements thereon (the "PREMISES"), which Premises
are shown on the site plan attached hereto as Exhibit "A" and are described
in the Basic Lease Information. Unless otherwise provided herein, any
statement of square footage set forth in this Lease concerning the building
currently existing on the Premises (the "BUILDING"), or that may have been
used in calculating rental due hereunder, is an approximation which Landlord
and Tenant agree is reasonable and the rental based thereon is not subject to
revision based upon any deviation from the actual floor area of the Building.
1.2 CONDITION ON DELIVERY. Notwithstanding anything in this Lease to the
contrary, upon Landlord's tender of possession of the Premises to Tenant,
Landlord shall deliver the Premises to Tenant vacant, clean and free of
debris or other personal property. Landlord warrants to Tenant that the
Premises, including the roof and all Building mechanical, plumbing,
electrical, utilities and HVAC systems located therein (collectively, the
"Building Systems"), but excluding any Improvements constructed therein by
Tenant, shall be in good operating condition and repair (and free of any
contamination which would affect indoor air quality or Tenant's operations
for the Permitted Use) on the Term Commencement Date. Landlord shall be
responsible, at its sole cost and expense, for ensuring that the Building
Systems remain in good operating condition and repair for the first ninety
(90) days from and after the Term Commencement Date (one year, with respect
to the HVAC system). If Tenant does not give Landlord written notice of
non-compliance with this warranty within ninety (90) days after the Term
Commencement Date (one year, with respect to the HVAC system), then subject
to the terms and provisions of Sections 3.3, 7.1 and 7.2(d) below,
correction of such non-compliance shall be the obligation of Tenant at
Tenant's sole cost and expense. Upon receipt of written notice from Tenant,
Landlord shall promptly correct any such noncompliance. In addition,
Landlord, at its sole cost and expense and not as part of the Tenant
Improvement Allowance (as such term is defined in the Workletter attached
hereto as Exhibit "B") shall, as soon as reasonably possible following the
date of this Lease, but in any event prior to the Term Commencement Date,
perform the following: (a) clean all existing carpeting located in the
Building; (b) repaint the interior of the Building using not more than two
(2) coats of paint; (c) replace all broken, stained, damaged or missing
ceiling tiles; (d) remove all existing Cyclone fencing located within the
Building; (e) repair and/or replace all damaged, broken, missing or stained
floor tiles and, if necessary, repair any damaged subflooring; (f) make such
other improvements as are required to place the Premises in compliance as of
the date of this Lease with the provisions of the Americans With Disabilities
Act, Title 24 of the California Code of Regulations and any other applicable
laws and codes (but excluding any compliance with any of the foregoing which
is triggered or necessitated by any improvements or other work performed by
Tenant); (g) replace the boiler for the heating system; (h) patch and repair
the parking lot, as needed, and seal and restripe the parking lot;
(i) dispose of, in the manner required by law, those drums and containers
currently located in the trash disposal area adjacent to the Premises; and
(j) take any steps required under applicable law, and only to the extent
required under applicable law, to close or decommission any materials or
equipment left in the Premises by the previous tenant (collectively,
"Landlord's Work). Landlord's Work, shall be performed in coordination with
Tenant's construction schedule for the Improvements. In addition, if
Landlord and Tenant so agree, those portions of Landlord's Work as described
in (a) through (d) above may be performed by Tenant at Landlord's expense.
Landlord covenants and agrees to complete the work described in (j) above not
later than July 23, 1999, and if the necessary environmental clearance from
the City of Fremont is not obtained by such date, and Tenant's construction
of the Improvements is delayed or impeded thereby, Tenant shall receive a
credit against the rent first payable hereunder in the amount of Six Thousand
Dollars ($6,000) for each day which elapses after July 23rd until such
clearance is received.
1.3 ACCEPTANCE OF PREMISES. Tenant hereby acknowledges that subject to the
terms and provisions of Section 1.1: (a) it has been advised by Landlord to
satisfy itself with respect to the condition of the Premises (including, but
not limited to, the electrical and fire sprinkler systems, security,
environmental aspects, and compliance with Governmental Requirements, as
hereinafter defined) and the present and future suitability of the Premises
for Tenant's intended use, (b) Tenant has made such investigation as it deems
necessary with reference to such matters and assumes all responsibility
therefor as the same relate to Tenant's occupancy of the Premises during the
term of this Lease, and (c) neither Landlord, nor any of Landlord's agents,
has made any oral or written representations or warranties with respect to
the said matters other than as set forth in this Lease.
1.4 LIMITATION ON TENANT'S REMEDIES. Notwithstanding any other provision of
this Article 1, Tenant's remedies for breach of any warranty made by Landlord
pursuant to this Article 1 shall be limited to Landlord's correction of such
non-compliance as herein provided. In no event shall Landlord be liable for
any consequential damages resulting from any such breach, including, without
limitation, damages (i) in the nature of injury to Tenant's person or
property or (ii) associated with any delay in, or interference with, Tenant's
use of the Premises during any time required for rectifying such
non-compliance. If Landlord fails to perform or to commence to perform and
thereafter diligently complete any of its repair and maintenance obligations
hereunder within fifteen (15) days of receipt of written notice thereof,
Tenant may undertake such repair and/or maintenance of the Premises and
Landlord shall reimburse Tenant within ten (10) days of receipt of an invoice
therefor for Tenant's reasonable actual cost of performing such maintenance
and repair. In the event of emergency repairs, Tenant shall diligently
attempt to contact Landlord, and if Tenant is unable to contact Landlord,
Tenant may undertake such emergency repairs to the extent necessary to
eliminate the emergency nature of the repair situation. In such
circumstances, Landlord shall reimburse Tenant within ten (10) days of
receipt of an invoice therefor for Tenant's reasonable actual cost of
undertaking such emergency repair.
1.5 EARLY ACCESS RIGHTS. From and after the mutual execution and delivery
of this Lease, and subject to such safety precautions as Landlord may
reasonably impose, any requirements of the City of Fremont and in
coordination with those contractors of Landlord performing Landlord's Work,
Tenant shall have the right to enter the Premises to commence construction of
the Improvements and to install telephone and data cabling, telephone systems
and furniture and furniture systems and other similar furniture, fixtures and
equipment. No such early entry by Tenant shall be deemed acceptance of the
Premises nor shall Tenant be obligated to pay any rent in connection
therewith.
ARTICLE 2 - TERM, POSSESSION AND LEASE COMMENCEMENT
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2.1 ORIGINAL TERM. The term of this Lease ("TERM") shall commence on the
Term Commencement Date specified in the Basic Lease Information and continue
in full force and effect until the Term Expiration Date specified in the
Basic Lease Information, unless extended as set forth herein or earlier
terminated as otherwise provided herein.
2.2 OPTION TO EXTEND TERM.
(A) GRANT OF OPTION. Tenant is given the option to extend the Term hereof
for one (1) additional consecutive five (5) year period (the "OPTION TERM"),
by giving written notice of exercise of such option (the "OPTION NOTICE") to
Landlord not less than nine (9) but not more than twelve (12) months before
the expiration of the Term. Notwithstanding the foregoing, if an Event of
Default (as defined in Article 15) on the part of Tenant has occurred on or
before the date that Tenant provides an Option Notice, Tenant shall have no
right to extend the Term; or if an Event of Default on the part of Tenant
occurs subsequent to the date of such Option Notice but prior to the date the
Option Term is scheduled to commence, then, at Landlord's option, the Option
Term shall not commence and this Lease shall expire on the Term Expiration
Date. The Base Rent for the Option Term shall be the "FAIR MARKET RENTAL"
(as hereinafter defined) of the Premises at the commencement of the Option
Term (the "ADJUSTMENT DATE"). The option granted pursuant to this
Section 2.2(a) is personal to the initial Tenant named herein and is
exercisable by such named Tenant only if such initial Tenant is in possession
of the Premises upon both (i) the date of the Option Notice and (ii) the
commencement of the Option Term; for purposes of this sentence, the term
"Tenant" includes "Permitted Transferees," as defined in Article 11.
(B) FAIR MARKET RENTAL.
(I) "FAIR MARKET RENTAL" means the rate being charged to
industrial/commercial tenants for leases of comparable space in similar
industrial/commercial single-tenant buildings in Fremont, California and
located on the west side of Highway I-880 (the "Market Area"), with similar
amenities, taking into consideration only the following: size and location
of the premises; proposed term of the lease; any tenant improvement allowance
provided, but taking into account the relationship between the amount of the
tenant improvement allowance and the condition of the building (for example,
the amount of tenant improvement allowance given to a tenant for a raw shell
would not be relevant to premises which were more fully built-out); and the
amount of "free rent" provided. In determining the "Fair Market Rental", no
consideration shall be given to payment of leasing commissions. Fair Market
Rental shall be fixed for the entire Option Term. Fair Market Rental as of
the Adjustment Date shall be determined by Landlord with written notice (the
"FMR NOTICE") given to Tenant not later than thirty (30) days after receipt
of the Option Notice, subject to Tenant's right to arbitration as hereinafter
provided. Failure on the part of Tenant to demand arbitration within thirty
(30) days after receipt of the FMR Notice from Landlord shall bind Tenant to
the Fair Market Rental as determined by Landlord. Should Tenant elect to
arbitrate and should the arbitration not have been concluded prior to the
Adjustment Date, Tenant shall pay the Base Rent to Landlord after the
Adjustment Date at the rate then payable. If the amount of the Fair Market
Rental as determined by arbitration is greater than or less than Landlord's
determination the amount paid pending arbitration, then any adjustment
required to adjust the amount previously paid shall be made by payment by the
appropriate party within ten (10) days after such determination of Fair
Market Rental.
(II) If Tenant disputes the amount claimed by Landlord as Fair Market Rental,
Tenant may require that Landlord submit the dispute to arbitration. The
arbitration shall be conducted and determined in Alameda County in accordance
with the following procedure:
(A) Tenant shall make demand for arbitration in writing within thirty (30)
days after service of the FMR Notice, specifying therein the name and
address of the person to act as the arbitrator on Tenant's behalf. The
arbitrator shall be a commercial real estate broker or appraiser with at
least five (5) years full-time commercial appraisal or brokerage
experience who is familiar with the Fair Market Rental of
industrial/commercial space in single-tenant industrial/commercial
buildings located in the Market Area. Failure on the part of Tenant to
make the timely and proper demand for such arbitration shall constitute
a waiver of the right thereto. Within ten (10) business days after the
service of the demand for arbitration, Landlord shall give notice to
Tenant specifying the name and address of the person designated by
Landlord to act as arbitrator on its behalf, which arbitrator shall be
similarly qualified. If Landlord fails to notify Tenant of the
appointment of its arbitrator, within or by the time specified, then the
arbitrator appointed by Tenant shall be the arbitrator to determine the
Fair Market Rental for the Premises.
(B) If two arbitrators are chosen pursuant to Section 2.2(b)(ii)(A) above,
the arbitrators so chosen shall meet within ten (10) business days after
the second arbitrator is appointed and shall appoint a third arbitrator,
who shall be a competent and impartial person with the same
qualifications as those required of the first two arbitrators pursuant
to Section 2.2(b)(ii)(A) above. If they are unable to agree upon such
appointment within five (5) business days after expiration of such
10-day period, the third arbitrator shall be selected by the parties
themselves. If the parties do not so agree, then either party, on
behalf of both, may request appointment of such a qualified person by
the then-president of the local real estate board for Alameda County.
The three arbitrators shall decide the dispute, if it has not been
previously resolved, by following the procedures set forth in
Section 2.2(b)(ii)(C) below.
(C) The Fair Market Rental shall be fixed by the three arbitrators in
accordance with the following procedures. Each of the arbitrators
selected by the parties shall state, in writing, his determination of
the Fair Market Rental supported by the reasons therefor and shall make
counterpart copies for each of the other arbitrators. The arbitrators
shall arrange for a simultaneous exchange of such proposed
determinations. The role of the third arbitrator shall be to select
which of the two proposed determinations most closely approximates his
determination of Fair Market Rental. The third arbitrator shall have no
right to propose a middle ground or any modification of either of the
two proposed determinations. The proposed determination he chooses as
that most closely approximating his determination of the Fair Market
Rental shall constitute the decision of the arbitrators and shall be
final and binding upon Landlord and Tenant.
(D) In the event of a failure, refusal or inability of any arbitrator to
act, his successor shall be appointed by him, but in the case of the
third arbitrator, his successor shall be appointed in the same manner as
that set forth herein with respect to the appointment of the original
third arbitrator. The arbitrators shall attempt to decide the issue
within ten (10) business days after the appointment of the third
arbitrator. Any decision in which the arbitrator appointed by Landlord
and the arbitrator appointed by Tenant concur shall be binding and
conclusive upon the parties, except that such arbitrators shall not
attempt by themselves to mutually ascertain the Fair Market Rental and
any such determination, in a manner other than that provided for in
Section 2.2(b)(ii)(C) hereof, shall not be binding on the parties. Each
party shall pay the fees and expenses of its respective arbitrator and
both shall share the fees and expenses of the third arbitrator.
Attorneys' fees and expenses of counsel and of witnesses for the
respective parties shall be paid by the respective party engaging such
counsel or calling such witnesses.
(E) The arbitrators shall render their decision in writing with counterpart
copies to each party. The arbitrators shall have no power to modify the
provisions of this Lease.
ARTICLE 3 - USE
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3.1 PERMITTED USE. Tenant shall use the Premises for the Permitted Use and
for no other use or purpose without Landlord's prior written consent.
3.2 OBJECTIONABLE ACTIONS. Tenant shall not use or allow the Premises to be
used for any improper, immoral, unlawful or objectionable purpose, nor shall
Tenant cause or maintain or permit any nuisance in, on or about the
Premises. Tenant shall not commit or suffer the commission of any waste in,
on or about the Premises. Tenant shall not allow any sale by auction upon
the Premises, or place any loads upon the floors, walls or ceilings which
endanger the Building's structure, or place any harmful liquids in the
drainage system of the Building. No waste, materials or refuse shall be
dumped upon or permitted to remain on the Premises except in trash containers
placed inside exterior enclosures. Tenant shall not do or permit anything to
be done in, on or about the Premises or bring or keep anything which would
cause a cancellation of said insurance.
3.3 COMPLIANCE WITH LAW. Subject to the performance by Landlord of its
obligations as set forth in Section 1.2(f) above, Tenant, shall, at its sole
cost and expense, comply with all local, state and federal statutes, laws,
rules, regulations, ordinances and requirements (collectively, "GOVERNMENTAL
REQUIREMENTS") now in force, or which may hereafter be in force, pertaining
to the Premises, and shall faithfully observe in the use or occupancy of the
Premises all Governmental Requirements now or hereafter in force, including,
without limitation, the Environmental Laws (as hereinafter defined), and the
Americans with Disabilities Act, 42 U.S.C. ss.ss.12101-12213 (and any rules,
regulations, restrictions, guidelines, requirements or publications
promulgated or published pursuant thereto), whether or not any of the
foregoing were foreseeable or unforeseeable at the date of this Lease.
Tenant's obligation to comply with and observe the Governmental Requirements
shall apply regardless of whether such Governmental Requirements regulate or
relate to Tenant's particular use of the Premises or regulate or relate to
the use of premises in general, and regardless of the cost thereof. The
judgment of any court of competent jurisdiction, or the admission of Tenant
in any action or proceeding against Tenant, whether Landlord be a party
thereto or not, that any such Governmental Requirement pertaining to the
Premises has been violated, shall be conclusive of that fact as between
Landlord and Tenant. If Tenant's obligations under this Section 3.3 would
require Tenant to make any replacements or improvements which would
constitute "capital improvements" under generally accepted accounting
principles, then Landlord initially shall pay the cost of such capital
improvement and the cost of such capital improvement, together with interest
thereon at the rate of ten percent (10%) per annum (or such higher rate of
interest as may be necessary to compensate Landlord for its cost of funds),
shall be amortized over the useful life of such capital improvement, as
reasonably determined by Landlord. On or before the first day of every
calendar month during the Term (including any options to extend), Tenant
shall pay to Landlord, in equal monthly installments, such amortization
payments.
3.4 HAZARDOUS MATERIALS.
(A) HAZARDOUS MATERIALS DEFINED. As used herein, the term "HAZARDOUS
MATERIALS" means any waste, material or substance (whether liquid, solid or
gaseous), which is or may be deemed to be: (i) a pollutant or contaminant,
or which is or may be deemed to be hazardous, toxic, ignitable, reactive,
corrosive, dangerous, harmful or injurious, or which presents a risk to
public health or to the environment, or which is or may become regulated by
or under the authority of any applicable local, state or federal law,
judgment, ordinance, order, rule, regulation, code or other governmental
restriction, guideline or requirement, any amendment or successor thereto,
replacement thereof or publication promulgated pursuant thereto, including,
without limitation, any such items or substances which are or may become
regulated by any of the Environmental Laws; (ii) listed as a chemical known
to the State of California to cause cancer or reproductive toxicity pursuant
to Section 25249.8 of the California Health and Safety Code, Division 20,
Chapter 6.6 (Safe Drinking Water and Toxic Enforcement Act of 1986); or
(iii) a pesticide, petroleum product (including crude oil or any fraction
thereof), asbestos or an asbestos-containing material, a polychlorinated
biphenyl, radioactive material, or urea formaldehyde.
(B) ENVIRONMENTAL LAWS DEFINED. In addition to the laws referred to in
Section 3.4(a) above, the term "ENVIRONMENTAL LAWS" includes, without
limitation, 33 U.S.C. Section 1251 ET SEQ., 42 U.S.C. Section 6901 ET SEQ.,
42 U.S.C. Section 7401 ET SEQ., 42 U.S.C. Section 9601 ET SEQ., and
California Health and Safety Code Section 25100 ET SEQ., and 25300 ET SEQ.,
California Water Code Section 13020 ET SEQ., or any successor(s) thereto, all
local, state and federal laws, judgments, ordinances, orders, rules,
regulations, codes and other governmental restrictions, guidelines and
requirements, any amendments and successors thereto, replacements thereof and
publications promulgated pursuant thereto, which deal with, or otherwise in
any manner relate to, air or water quality, air emissions, soil or ground
conditions or other environmental matters of any kind.
(C) USE OF HAZARDOUS MATERIALS. Tenant agrees that during the Term of this
Lease, there shall be no use, presence, disposal, storage, generation,
leakage, treatment, manufacture, import, handling, processing, release, or
threatened release of Hazardous Materials on, from or under the Premises or
Building (individually and collectively, "HAZARDOUS USE") by Tenant or any
of its directors, officers, members, managers, partners, employees,
shareholders, invitees, agents, contractors or occupants (collectively,
"TENANT'S PARTIES"), except to the extent necessary for Tenant's business and
consistent with the Permitted Use, but then only in full compliance with
Environmental Laws. Tenant shall not be entitled to install any tanks under,
on or about the Premises or Building for the storage of Hazardous Materials
without the express written consent of Landlord, which may be withheld in
Landlord's sole discretion. For the purposes of this Section 3.4(c), the
term Hazardous Use shall include Hazardous Uses on, from or under the
Premises or Building by Tenant or any of Tenant's Parties, whether known or
unknown to Tenant. Notwithstanding anything in this Lease to the contrary,
in no event shall Tenant be liable or responsible for any Hazardous Use which
took place prior to the date of this Lease, or for any presence, release,
discharge or disposal of Hazardous Materials not caused by Tenant or Tenant's
Parties.
(D) HAZARDOUS MATERIALS REPORT; WHEN REQUIRED. Tenant shall submit to
Landlord a written report with respect to Hazardous Materials ("REPORT") in
the form prescribed at in subparagraph (e) below on the following dates:
(I) At any time within ten (10) days after written request by Landlord, and
(II) At any time when there has been a violation of any Environmental Law, or
in connection with any proposed request for Landlord's consent to any change
in any list of Hazardous Materials previously approved in writing by Landlord
pursuant to Section 3.4(c) above or for any change in the use or storage of
such previously approved Hazardous Materials.
(E) HAZARDOUS MATERIALS REPORT; CONTENTS. The Report shall contain, without
limitation, the following information:
(I) Whether on the date of the Report and (if applicable) during the period
since the previous Report there has been any Hazardous Use on, from or under
the Premises.
(II) If there was such Hazardous Use:
(A) the identity of the Hazardous Materials, the dates upon which such
Hazardous Materials were brought upon the Premises, the dates upon which
the Hazardous Materials were removed therefrom, and the quantity,
location, use and purpose thereof;
(B) any governmental permits maintained by Tenant with respect to such
Hazardous Materials, the issuing agency, original date of issue, renewal
dates (if any) and expiration date, together with copies of any such
permits and applications therefor;
(C) any governmental reporting or inspection requirements with respect to
such Hazardous Materials, the governmental agency to which reports are
made and/or which conducts inspections, and the dates of all such
reports and/or inspections (if applicable) since the previous Report,
together with copies of any such reports; and
(D) identification of any operation or business plan prepared for any
government agency with respect to such Hazardous Use.
(III) Any liability insurance carried by Tenant with respect to Hazardous
Materials, the insurer, policy number, date of issue, coverage amounts, and
date of expiration. Copies of any such policies or certificates of coverage
shall be attached.
(IV) Any notices of violation of Environmental Laws, written or oral,
received by Tenant from any governmental agency since the previous Report,
the date, name of agency, and description of violation. Copies of any such
written notices shall be attached.
(V) Any knowledge, information or communication which Tenant has acquired or
received relating to: (1) any enforcement, cleanup, removal or other
governmental or regulatory action threatened or commenced against Tenant or
with respect to the Premises pursuant to any Environmental Laws; (2) any
claim made or threatened by any person or entity against Tenant or the
Premises on account of any alleged loss or injury claimed to result from any
alleged Hazardous Use on or about the Premises; or (3) any report, notice or
complaint made to or filed with any governmental agency concerning any
Hazardous Use on or about the Premises. The Report shall be accompanied by
copies of any such claim, report, complaint, notice, warning or other
communication that is in the possession of or is available to Tenant.
(VI) Such other pertinent information or documents as are requested by
Landlord in writing.
(F) RELEASE OF HAZARDOUS MATERIALS; NOTIFICATION AND CLEANUP.
(I) At any time during the Term, if Tenant knows of any release of any
Hazardous Materials upon, about or beneath the Premises or Building, then
Tenant shall, immediately following the discovery thereof by Tenant, give
oral and confirmatory written notice of that condition to Landlord.
(II) At its sole cost and expense, Tenant covenants to investigate, clean up
and otherwise remediate any release of Hazardous Materials which were caused
by Tenant or any of Tenant's Parties. Such investigation, clean-up and
remediation shall be performed only after Tenant has obtained Landlord's
written consent to all aspects of the remediation plan and all other action
taken, which consent shall not be unreasonably withheld or delayed; provided,
however, that Tenant shall be entitled to respond immediately to an emergency
without first obtaining Landlord's written consent. All clean-up and
remediation shall be done in strict compliance with Environmental Laws and to
the satisfaction of Landlord in Landlord's reasonable discretion.
(III) Subject to the foregoing, Landlord shall have the right, but not the
obligation, exercisable by written notice to Tenant at any time, to undertake
within or outside the Premises all or any portion of any investigation,
clean-up or remediation with respect to such Hazardous Materials caused or
created by Tenant or any of Tenant's Parties, all at Tenant's cost and
expense, which shall be paid by Tenant as additional rent within ten (10)
days after receipt of written request therefor by Landlord. No such work by
Landlord shall create any liability on the part of Landlord to Tenant or any
other party in connection with such Hazardous Materials or constitute an
admission by Landlord of any responsibility with respect to such Hazardous
Materials.
(IV) Tenant shall not enter into any settlement agreement, consent decree or
other compromise with respect to any claim relating to any Hazardous
Materials in any way connected to the Premises without first (i) notifying
Landlord of Tenant's intention to do so and affording Landlord the
opportunity to participate in any such proceedings, and (ii) obtaining
Landlord's prior written consent, which shall not be unreasonably withheld or
delayed.
(G) INSPECTION AND TESTING BY LANDLORD. Landlord has the right at all times
during the Term of this Lease to (i) inspect the Premises, as well as
relevant portions of Tenant's books and records, and to (ii) conduct tests
and investigations to determine whether Tenant is in compliance with the
provisions of this Section 3.4. Except in case of emergency, Landlord shall
give reasonable notice to Tenant before conducting any inspections, tests, or
investigations. The cost of all such inspections, tests and investigations
shall be borne by Tenant, if it is proven that Tenant or a Tenant Party is
responsible for such Hazardous Materials under the terms of this Section 3.4;
otherwise, such inspection, tests and investigations shall be at Landlord's
cost. Neither any action nor inaction on the part of Landlord pursuant to
this Section 3.4(g) shall be deemed in any way to release Tenant from, or in
any way modify or alter, Tenant's responsibilities, obligations, and/or
liabilities incurred pursuant to this Section 3.4.
(H) OTHER TAXES. Tenant shall also pay prior to delinquency all Taxes (as
hereinafter defined) and other taxes in connection with any testing,
investigation, abatement, remediation, removal, transportation and/or
disposal of any Hazardous Materials by Tenant or any of Tenant's Parties (or
by Landlord, pursuant to any provision of this Lease granting to Landlord the
right to do any of the foregoing and to charge Tenant therefor). For
purposes of this Section 3.4(h), the terms "TAXES" and "taxes" include,
without limitation, any fees, charges, fines, penalties and costs (including,
without limitation, permit, approval or licensing fees, charges or costs)
imposed, charged or otherwise assessed upon or as a result of such act or
omission by Tenant or any of Tenant's Parties.
3.5 INDEMNITY.
(A) Tenant shall indemnify, hold harmless, and, at Landlord's option, defend
Landlord and any of Landlord's officers, directors, trustees, members,
managers, shareholders, partners, employees, contractors, property managers,
agents and mortgagees and other lien holders, from and against any and all
Losses (as hereinafter defined) arising from or related to: (i) any
violation or alleged violation by Tenant, or any of Tenant's Parties, of any
of the requirements, ordinances, statutes, regulations or other laws referred
to in this Article 3, including, without limitation, the Environmental Laws;
(ii) any breach of any provision of this Article 3 by Tenant or any of
Tenant's Parties; or (iii) any Hazardous Use on, about or from the Premises
or Building of any Hazardous Material approved by Landlord under this
Lease. "LOSSES" means all claims, demands, expenses, actions, judgments,
damages (whether consequential, direct or indirect, known or unknown,
foreseen or unforeseen), penalties, fines, liabilities, losses of every kind
and nature (including, without limitation, property damage, diminution in
value of the Premises or Building, damages for the loss or restriction on use
of any space or amenity within the Premises or Building, sums paid in
settlement of claims and any costs and expenses associated with injury,
illness or death to or of any person), suits, administrative proceedings,
costs and fees, including, but not limited to, attorneys' and consultants'
fees and expenses, and the costs of clean-up, remediation, removal and
restoration. The provisions of this Section 3.5(a) shall survive the
expiration or termination of this Lease.
(B) With respect to any release of or contamination by Hazardous Materials
for which Landlord is responsible under the terms of this Section 3.4,
Landlord, at no cost to Tenant, shall: (i) perform all remediation or other
work which is necessary or otherwise required to be performed; and
(ii) Landlord shall indemnify, hold harmless and defend Tenant from and
against any Losses arising from or related to the presence, release,
discharge or disposal of any Hazardous Materials on, at, in, under or
adjacent to the Premises as of the date of this Lease, but in no event shall
Landlord be liable for any consequential damages or lost profits. The
provisions of this Section 3.4(b) shall survive the expiration or termination
of this Lease. In no event shall Tenant have any liability or responsibility
for any Hazardous Materials introduced or released by any prior tenant of the
Premises.
ARTICLE 4 - RENT
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Tenant shall pay to Landlord, without demand throughout the Term,
base rent as specified in the Basic Lease Information ("BASE RENT"), payable
in advance on or before the first day of each calendar month. All payments
of Base Rent and all other sums under this Lease shall be in lawful money of
the United States of America, without deduction, offset or recoupment
whatsoever, to Landlord at the address specified in the Basic Lease
Information or to such other person or address as Landlord may designate from
time to time in writing. Base Rent for the first month of the Term shall be
paid by Tenant upon Tenant's execution of this Lease. If the Term
Commencement Date is other than the first day of a calendar month, Tenant's
obligation to pay Base Rent for the first month of the Term shall consist of
(i) the monthly Base Rent for the first full calendar month plus (ii) monthly
Base Rent for the partial month in which the Term Commencement Date occurs,
prorated on a daily basis at the monthly Base Rent provided for the first
calendar month.
ARTICLE 5 - REAL PROPERTY TAXES
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5.1 PAYMENT OF REAL PROPERTY TAXES. Landlord shall promptly, but in no
event less than thirty (30) days before payment is due, deliver to Tenant all
bills for "Real Property Taxes" (as defined below) applicable to the Premises
during the Term. Tenant shall pay, directly to the taxing authority (if
allowed by such taxing authority), the Real Property Taxes applicable to the
Premises during the Term. All such payments shall be made at least ten (10)
days prior to the delinquency date of the applicable installment. Tenant
shall promptly furnish Landlord with satisfactory evidence that such Real
Property Taxes have been paid. If any such Real Property Taxes to be paid by
Tenant shall cover any period of time prior to or after the expiration or
earlier termination of the Term, Tenant's share of such Real Property Taxes
shall be equitably prorated to cover only the period of time within the tax
fiscal year this Lease is in effect, and Landlord shall reimburse Tenant for
any overpayment after such proration. With respect to installments of any
special assessments, Tenant shall be responsible only for such installments
allocable to the Term of this Lease. If Tenant shall fail to pay any Real
Property Taxes required by this Lease to be paid by Tenant, Landlord shall
have the right to pay the same, and Tenant shall reimburse Landlord therefor
upon demand.
5.2 DEFINITION OF REAL PROPERTY TAXES. "REAL PROPERTY TAXES" means any form
of real estate tax or assessment, general, special, ordinary or
extraordinary, and any business or license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance, personal
income or estate taxes) imposed upon the Premises by any authority having the
direct or indirect power to tax, including any city, state or federal
government, or any school, agricultural, sanitary, fire, street, drainage or
other improvement district thereof, levied against any legal or equitable
interest of Landlord in the Premises or in the real property of which the
Premises are a part, Landlord's right to rent or derive other income
therefrom, Landlord's business of leasing the Premises and/or Tenant's
possessory interest in the Premises hereunder. The term "REAL PROPERTY
TAXES" shall also include any tax, fee, levy, assessment or charge, or any
increase therein, imposed by reason of events occurring, or changes in
applicable law taking effect, during the Term of this Lease, including, but
not limited to, a change in the ownership of the Premises or in the
improvements thereon, the execution of this Lease, or any modification,
amendment or transfer thereof, and whether foreseen or unforeseen at the date
hereof.
5.3 JOINT ASSESSMENT. If the Premises are not separately assessed, Tenant's
liability shall be an equitable proportion of the Real Property Taxes for all
of the land and improvements included within the tax parcel assessed, such
proportion to be determined by Landlord from the respective valuations
assigned in the assessor's work sheets or such other information as may be
reasonably available. Landlord's reasonable determination thereof, in good
faith, shall be conclusive.
5.4 PERSONAL PROPERTY TAXES. Tenant shall pay prior to delinquency all
taxes assessed against and levied upon all furnishings, equipment and other
personal property of Tenant ("TENANT'S PROPERTY") located in the Premises or
elsewhere. When possible, Tenant shall cause Tenant's Property to be
assessed and billed separately from the real property of Landlord. If any of
Tenant's Property shall be assessed with Landlord's real property, Tenant
shall pay Landlord the taxes attributable to Tenant within ten (10) days
after receipt of a written statement setting forth the taxes applicable to
Tenant's Property or, at Landlord's option, as provided in Section 5.1(b)
hereof.
5.5 PROPERTY TAX CONTESTS. If Tenant employs a property tax consultant
and/or contests any assessment, tax, or charge against the Premises or seeks
a reduction in the assessed valuation of the Premises for the purpose of
reducing, maintaining the same or limiting the increase in any such tax
assessment (any such event, a "PROPERTY TAX CONTEST"), Tenant shall pay any
appraisal costs and the expenses of employing such consultant and/or in
contesting any assessment, tax or charge and/or in seeking a reduction in any
assessment (any such cost, a "CONTEST COST"). Notwithstanding the foregoing,
Landlord may, but shall not be obligated to, initiate a Property Tax Contest
during the Term; provided, however, that in such event Landlord shall pay for
any related Contest Costs that are not in the nature of contingent fees
payable out of any retroactive adjustment to Real Property Taxes.
ARTICLE 6 - INSURANCE AND INDEMNIFICATION
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6.1 PAYMENT FOR INSURANCE. Tenant shall pay for all insurance required
under this Article 6. Premiums for policy periods commencing prior to or
extending beyond the Term shall be prorated to correspond to the Term.
Except with respect to the rental-interruption insurance described in
Section 6.4(a) below, which insurance may be obtained and maintained, at
Tenant's option, either (i) directly by Tenant or (ii) by Landlord at
Tenant's expense (in which event Tenant shall reimburse Landlord for the
related premiums in accordance with the last sentence of this Section 6.1),
Landlord and Tenant intend for all insurance policies required pursuant to
this Article 6 to be obtained, maintained, and that any and all premiums
relating thereto to be paid directly by, Tenant. Notwithstanding the
provisions of the preceding sentence, if Tenant and Landlord agree that
Landlord shall procure (i) a policy or policies required hereunder or
(ii) the rental-interruption insurance policy described in Section 6.4(a), and
the premiums relating thereto are paid directly by Landlord to the applicable
insurance provider, the corresponding reimbursement payment by Tenant to
Landlord shall be made within ten (10) days following receipt of an invoice
therefor.
6.2 LIABILITY INSURANCE. Tenant shall obtain at its own expense and keep in
force during the Term (including any extensions thereof), a policy or
policies of commercial general liability insurance, including personal injury
and property damage, with a combined single limit of not less than Five
Million Dollars ($5,000,000.00) per occurrence. Each such policy shall
(1) name Landlord and, if applicable, its agent, and any party holding an
interest to which this Lease may be subordinated, as additional insureds;
(2) be issued by an insurance company with a Best's rating of A-X or better
and licensed to do business in the State of California; (3) provide that said
insurance shall not be canceled without thirty (30) days' prior written
notice to Landlord; (4) provide coverage for all claims incurred during the
Term, regardless of when such claims shall be first made against Tenant
and/or Landlord; (5) provide coverage for the indemnity obligations of Tenant
under this Lease; (6) contain cross liability endorsement; (7) be primary,
not contributing with, and not in excess of coverage, if any, which Landlord
may carry; and (8) contain provisions or an endorsement specifying coverage
shall be extended to include blanket contractual liability, personal injury
liability (including libel, slander, false arrest, and wrongful eviction) and
broad form property damage. If any liability insurance required pursuant to
this Lease is written on a claims-made basis, Tenant shall continue to
provide evidence of such coverage beyond the Term for a period mutually
agreed upon by Landlord and Tenant at the expiration or earlier termination
of the Term, but in no event shall such period be less than four (4) years.
6.3 PROPERTY INSURANCE. Tenant shall obtain and maintain in force
throughout the Term (including any extensions thereof), a policy of property
insurance written on the Insurance Services Office Special Causes of Loss
Form (or an insurer-specific equivalent form) covering the Building and all
improvements, fixtures, betterments, equipment, stock and all Tenant-owned
personal property located in the Building or on or about the Premises in an
amount equal to the full replacement cost thereof with a deductible not to
exceed Twenty-Five Thousand Dollars ($25,000.00). All exclusions and/or
limitations pertaining to sewer and drain back-up, subsurface water,
continuous seepage and damage to the interior without prior wind or hail
damage to the Building shall be removed. Coverage shall also be provided for
loss due to (i) the enforcement of building ordinances following a covered
loss and (ii) boiler and machinery, either by endorsement to such policy or
by separate policy. Coverage for improvements and betterments shall apply to
those made for Tenant at Landlord's expense, if any, as well as those made at
Tenant's expense, and shall be for the full replacement value and not limited
to Tenant's use value in such improvements and/or betterments. At Landlord's
option, exercisable at Landlord's sole discretion, Tenant shall insure the
Building against loss or damage due to any other peril or perils, including,
without limitation, earthquake, earth movement, mud slides, and flood. If
Landlord requires Tenant to maintain coverage for loss due to earthquake,
then, notwithstanding any other provision of this Section 6.3, deductible
applicable to such earthquake coverage shall be the lowest obtainable
percentage of the total replacement cost of the Building
commercially-available at the date of such policy or coverage endorsement.
Any and all insurance policies required pursuant to this Section 6.3 shall be
issued by an insurance carrier with a Best's rating of A-X or better that is
licensed to do business in the State of California.
6.4 OTHER INSURANCE.
(A) RENTAL VALUE. Tenant shall cause to be obtained and kept in force
throughout the Term (including any extensions thereof) either directly or, at
Tenant's option exercisable by written notice (i) prior to the Term
Commencement Date or (ii) at least five (5) business days before the
expiration or cancellation of such coverage, through Landlord's insurance
carrier at Tenant's expense (in accordance with Section 6.1 above), a policy
or policies in the name of Landlord, with loss payable to Landlord, insuring
the loss of the full rental and other charges payable by Tenant to Landlord
under this Lease for one (1) year from the date of the insured loss
(including all Real Property Taxes, insurance costs, and any scheduled
rental increases) (collectively, the "RENTAL LOSSES"). Said insurance shall
provide that, in the event the Lease is terminated by reason of an insured
loss, the period of indemnity for such coverage shall be extended beyond the
date of the completion of repairs or replacement of the Premises, to provide
for one full year's Rental Losses. Said insurance shall contain an
agreed-amount provision in lieu of any coinsurance clause, and such
agreed-amount of coverage shall be adjusted annually to reflect the projected
rental income, Real Property Taxes, insurance premium costs and other
expenses, if any, otherwise payable by Tenant, for the following twelve-
(12-) month period and shall cover Rental Losses caused by all perils
including, without limitation, earthquake and flood. Tenant shall be liable
for any deductible amount in the event of such loss.
(B) WORKER'S COMPENSATION. Tenant shall obtain and maintain during the
Term, worker's compensation insurance as required by applicable State law.
6.5 EVIDENCE OF INSURANCE COVERAGE. At the times specified in this
Section 6.5, Tenant shall provide Landlord with evidence that each of the
insurance policies required by this Article 6 is in full force and effect.
Evidence of required property insurance shall be provided on the standard
ACORD Evidence of Property Insurance form (ACORD 27) or an insurer-specific
equivalent form. Evidence of required liability insurance shall be provided
on the standard ACORD Certificate of Insurance form (ACORD 25-S) or an
insurer-specific equivalent form. The required evidence of insurance shall
also include copies of endorsements to the applicable policy specifying:
(A) Landlord and Landlord's agents, including their respective officers,
directors, partners, employees and agents, are included as additional
insureds under Tenant's commercial general liability insurance policy(ies);
(B) that Tenant's commercial general liability insurance is primary and that
any insurance available to Landlord shall be excess and not contributory;
(C) that the insurer recognizes the waiver of subrogation set forth in
Section 6.7 hereof; and
(D) that the insurer agrees not to cancel or alter the policy without
providing Landlord with at least thirty (30) days' prior written notice.
Failure to provide acceptable evidence of insurance (i) prior to the Term
Commencement Date or (ii) at least fifteen (15) days prior to the expiration
or cancellation of any such insurance policy, shall authorize Landlord to
procure such insurance in the amounts stated and charge the cost of same
together with a One-Hundred-Dollar ($100.00) service charge to Tenant.
6.6 EXEMPTION FROM LIABILITY; INDEMNIFICATION. Landlord shall not be liable
to Tenant for any loss or damage to person or property caused by theft, fire,
act of God, acts of a public enemy, riot, strike, insurrection, war, court
order, requisition or order of any governmental body or authority or for any
damage or inconvenience which may arise through repair or alteration of any
part of the Building. Notwithstanding any breach of this Lease by Landlord
or Landlord's negligence, Landlord shall under no circumstances be liable to
Tenant for any loss of income or profit. Tenant shall indemnify Landlord and
hold Landlord harmless from and against any and all loss, cost, damage,
liability, injury or expense arising out of or related to (1) claims of
injury to or death of persons or damage to property occurring or resulting
directly or indirectly from the use or occupancy of the Premises or from
activities of Tenant or any of Tenant's Parties or from any cause whatsoever,
(2) claims for work or labor performed or for materials or supplies furnished
to or at the request of Tenant or in connection with performance of any work
done for the account of Tenant within the Premises, and (3) claims arising
from any breach or default on the part of Tenant in the performance of any
covenant contained in this Lease. Such indemnity shall include, without
limitation, the obligation to provide all costs of defense against any such
claims including any action or proceeding brought against Landlord. The
foregoing indemnity shall not be applicable to claims arising from the active
negligence or willful misconduct of Landlord. The provisions of this
Section 6.6 shall survive the expiration or earlier termination of the Term of
this Lease with respect to any claims arising or liability incurred prior to
such expiration or termination.
6.7 WAIVER OF SUBROGATION. To the extent permitted by law and without
affecting the coverage provided by insurance required to be maintained
hereunder, Landlord and Tenant each waive any right to recover against the
other (a) damages for injury to or death of persons, (b) damages to property,
(c) damages to the Premises or any part thereof, or (d) claims arising by
reason of the foregoing, to the extent such damages and claims are insured
against or required to be insured against by Landlord or Tenant under this
Lease. This provision is intended to waive fully, and for the benefit of
each party, any rights and/or claims which might give rise to a right of
subrogation by any insurance carrier. The coverage obtained by each party
pursuant to this Lease shall include, without limitation, a waiver of
subrogation by the carrier which conforms to the provisions of this
Section 6.7.
ARTICLE 7 - REPAIRS & MAINTENANCE; UTILITIES
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7.1 LANDLORD'S OBLIGATIONS. Landlord shall, at Landlord's expense, maintain
in good condition and repair the structural components of the roof,
foundations and exterior walls of the Building, including any capital repairs
or replacements to any of the subsurface plumbing systems outside of the
boundaries of the Building (collectively, "STRUCTURAL COMPONENTS"),
reasonable wear and tear excepted. Landlord's obligations with respect to
the roof of the Premises pursuant to this Section 7.1 are limited to the
repair or replacement of items such as trusses, purlins, glue-lam beams or
like structural components supporting the roof. The term "walls" as used
herein shall not include windows, glass or plate glass, doors or office
entries. The term "roof" as used herein shall not include skylights, smoke
hatches or roof vents. Any damage caused by or repairs necessitated by any
act, omission or failure to act of Tenant, including any damage resulting
from Tenant's failure to discharge its maintenance obligations pursuant to
Section 7.2 below, may be repaired by Landlord at Landlord's option and at
Tenant's expense. Tenant shall immediately give Landlord written notice of
any defect in or need of repairs to Structural Components following receipt
of which Landlord shall have reasonable opportunity to repair same.
Landlord's liability with respect to any defects, repairs, or maintenance for
which Landlord is responsible under any of the provisions of this Lease shall
be limited to the cost of such repairs or maintenance. If Landlord fails to
perform or to commence to perform and thereafter diligently complete any of
its repair and maintenance obligations hereunder within fifteen (15) days
after receipt of written notice thereof, Tenant may undertake such repair
and/or maintenance of the Premises and Landlord shall reimburse Tenant within
ten (10) days of receipt of any invoice therefor for Tenant's reasonable
actual cost of performing such maintenance and repair. In the event of
emergency repairs, Tenant shall diligently attempt to contact Landlord, and
if Tenant is unable to contact Landlord, Tenant may undertake such emergency
repairs to the extent necessary to eliminate the emergency nature of the
repair situation. In such circumstances, Landlord shall reimburse Tenant
within ten (10) days of receipt of an invoice therefor for Tenant's
reasonable actual cost of undertaking such emergency repair.
7.2 TENANT'S OBLIGATIONS.
(A) Except to the extent expressly provided otherwise in Section 1.2 and
Section 7.1 above, Tenant shall, at Tenant's expense, maintain all parts of
the Premises in a good, clean and secure condition and in good repair
(reasonable wear and tear excepted), promptly making all necessary repairs
and replacements including, but not limited to, all windows, glass, doors and
any special office entries, walls and wall finishes, floor covering, heating,
ventilating and air conditioning systems, truck doors, dock bumpers, dock
plates and levelers, maintenance of roof coatings and repair of roof leaks,
plumbing work and fixtures, down spouts, skylights, smoke hatches, roof
vents, boilers, fired or unfired pressure vessels, fire sprinkler and/or
standpipe and hose or other automatic fire extinguishing system (including
fire alarm and/or smoke detection systems and equipment), fire hydrants,
fixtures, ceilings, floors, landscaping, driveways, parking lots, fences,
retaining walls, signs, sidewalks and parkways located in, on, about, or
adjacent to the Premises. Tenant shall at Tenant's expense also perform
necessary pest extermination and regular removal of trash and debris.
Tenant, in keeping the Premises in good order, condition and repair, shall
exercise and perform good maintenance practices. Tenant's obligations shall
include restorations, replacements or renewals when necessary to keep the
Premises, the Building and all improvements thereon or a part thereof (except
for restoration, replacement or renewals of the Structural Components which
are Landlord's obligation to maintain pursuant to Section 7.1 hereof) in good
order, condition and state of repair. Landlord may require Tenant to repaint
the exterior of the Building at the end of the seventh (7th) year of the Term.
(B) Tenant shall, at Tenant's sole cost and expense, procure within thirty
(30) days following the Term Commencement Date, and maintain throughout the
Term, contracts, with copies to Landlord, in customary form and substance,
for and with contractors specializing and experienced in, the inspection,
maintenance and service of the following equipment and improvements, if any,
located on the Premises: (i) heating, air conditioning and ventilation
equipment, (ii) boiler, fired or unfired pressure vessels, (iii) fire
sprinkler and/or standpipe and hose or other automatic fire extinguishing
systems (including fire alarm and/or smoke detection), (iv) landscaping and
irrigation systems, (v) roof covering and drain maintenance and (vi) asphalt
and parking lot maintenance.
(C) It is the intention of the parties that the terms of this Lease govern
their respective obligations as to maintenance and repair of the Premises.
Tenant and Landlord expressly waive the benefit of any statute now or
hereafter in effect to the extent it (i) is inconsistent with the terms of
this Lease or (ii) affords Tenant the right to (A) make repairs at the
expense of Landlord except as otherwise expressly set forth herein in
Sections 1.4 and 7.1, (B) offset the cost of repairs against rental due to
Landlord hereunder or (C) terminate this Lease by reason of any needed
repairs.
(D) If Tenant's obligations under this Section 7.2 would require Tenant to
make any replacements or improvements which would constitute "capital
improvements" under generally accepted accounting principles, then Landlord
initially shall pay the cost of such capital improvement and the cost of such
capital improvement, together with interest thereon at the rate of ten
percent (10%) per annum (or such higher rate of interest as may be necessary
to compensate Landlord for its cost of funds), shall be amortized over the
useful life of such capital improvement, as reasonably determined by
Landlord. On or before the first day of every calendar month during the Term
(including any options to extend), Tenant shall pay to Landlord, in equal
monthly installments, such amortization payments.
7.3 UTILITIES. Tenant shall pay for all water, gas, heat, air conditioning,
light, power, telephone, sewer, sprinkler charges and all other utilities and
services used on or from the Premises, together with any taxes, penalties,
surcharges or the like pertaining thereto, and maintenance charges for
utilities and shall furnish all electric light bulbs, ballasts and tubes.
Landlord shall not be liable for any damages directly or indirectly resulting
from nor shall the Base Rent or any monies owed Landlord under this Lease
herein reserved be abated by reason of (a) the installation, use or
interruption of use of any equipment used in connection with the furnishing
of any of the foregoing utilities and services, (b) failure to furnish or
delay in furnishing any such utilities or services when such failure or delay
is caused by Acts of God or the elements, labor disturbances of any
character, any other accidents or other conditions beyond the reasonable
control of Landlord, or (c) the limitation, curtailment, rationing or
restriction on use of water, electricity, gas or any other form of energy or
any other service or utility whatsoever serving the Premises.
Notwithstanding the provisions of the preceding sentence, if utility services
to the Premises are interrupted by damage or destruction caused by a casualty
or by the active negligence or willful misconduct of Landlord or its agents,
contractors or representatives, then the provisions of Article 13 hereof with
respect to any abatement of rental shall control. Landlord shall be entitled
to cooperate voluntarily and in a reasonable manner in the efforts of
national, state or local governmental agencies or utility suppliers in
reducing energy or other resource consumption. The obligation to make
services available hereunder shall be subject to the limitations of any such
voluntary, reasonable program.
7.4 LIENS. Tenant shall keep the Premises free from liens arising out of or
related to work performed, materials or supplies furnished or obligations
incurred by Tenant or in connection with work made, suffered or done by
Tenant in or on the Premises. In the event that Tenant shall not, within ten
(10) days following the imposition of any such lien, cause the same to be
released of record by payment or posting of a proper bond, Landlord shall
have, in addition to all other remedies provided herein and by law, the
right, but not the obligation, to cause the same to be released by such means
as it shall deem proper, including payment of the claim giving rise to such
lien. All sums paid by Landlord on behalf of Tenant and all expenses
incurred by Landlord in connection therewith shall be payable to Landlord by
Tenant on demand with interest at the maximum rate allowable by law.
Landlord shall have the right at all times to post and keep posted on the
Premises any notices permitted or required by law, or which Landlord shall
deem proper, for the protection of Landlord, the Premises and any other party
having an interest herein, from mechanics' and materialmen's liens, and
Tenant shall give Landlord not less than ten (10) business days prior written
notice of the commencement of any work in the Premises which could lawfully
give rise to a claim for mechanics' or materialmen's lien.
ARTICLE 8 - ALTERATIONS AND SIGNS
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8.1 ALTERATIONS.
(A) LANDLORD'S CONSENT. Tenant shall not make, or allow to be made, any
alterations, additions or improvements in, about or to the Premises,
including, without limitation, any alterations, additions or improvements
that result in increased telecommunication demands or require the addition of
new communication wires, cables and related devices or expand the number of
telephone or communication lines dedicated to the Premises by the Building's
telecommunication design (any such construction, "ALTERATIONS"), without
obtaining the prior written consent of Landlord, which consent shall not be
unreasonably withheld with respect to proposed Alterations which (a) comply
with all applicable laws, ordinances, rules and regulations, (b) do not
affect the structural integrity of the Building, (c) do not, in Landlord's
reasonable opinion, adversely affect the Building's mechanical, plumbing,
electrical, and heating/ventilation/air conditioning systems, and (d) in
Landlord's reasonable opinion, will not affect or impair any
telecommunication or utility line or facility at the Building. Landlord may
withhold its consent in the exercise of its sole discretion with respect to
any Alteration which may affect the structural integrity of the Building.
Specifically, but without limiting the generality of the foregoing, Landlord
shall have the right of consent for all plans and specifications for the
proposed Alterations, construction means and methods, any contractor or
subcontractor to be employed on the work for such Alterations (collectively,
"Tenant's Contractor"), and the time for performance of such work. Landlord
shall have the right to require, at Tenant's expense, the delivery of
performance and payment bonds showing Landlord as a beneficiary. Tenant
shall also supply to Landlord any documents and information reasonably
requested by Landlord in connection with its consideration of a request for
approval hereunder. Tenant shall (i) obtain Landlord's written approval and
all appropriate permits and licenses and (ii) deliver copies of all such
permits to Landlord prior to the commencement of construction of any
Alterations.
(B) PERFORMANCE. All Alterations permitted hereunder shall be made and
performed by or on behalf of Tenant in a good and workmanlike manner without
cost or expense to Landlord including, without limitation, any costs or
expenses which Landlord may incur for third party review of the plans and
specifications for any such Alterations. The cost of third-party review for
which Tenant is responsible pursuant to the foregoing shall be limited to the
reasonable, market-rate cost of such services.
(C) REMOVAL. All Alterations made by Tenant shall become the property of
Landlord and shall be surrendered to Landlord upon the expiration or earlier
termination of the Term; provided, however, that this clause shall not apply
to Tenant's "Specialized Improvements" (as defined below). As used herein,
the term "Specialized Improvements" means (i) trade fixtures, (ii) furniture,
(iii) personal property and equipment, and (iv) alterations or improvements
which are particular to Tenant's operations and/or would not be usable by
subsequent tenants of the Premises. On or before the expiration or earlier
termination of the Term, unless Landlord elects otherwise in writing, Tenant
at its sole cost shall remove all Specialized Improvements and repair all
damage caused by such removal. All such removal and repair shall be
accomplished in a good and workmanlike manner so as not to cause any damage
to the Premises whatsoever. Upon the expiration or earlier termination of
the Term, Tenant shall surrender possession of the Premises to Landlord
vacant of all persons and personal property, clean and free of debris, and in
the same condition as when received, ordinary wear and tear excepted.
(D) PLANS. Tenant shall not make any change in the plans and/or
specifications for the Alterations, following approval thereof by Landlord,
without the prior written consent of Landlord. Upon completion of the
Alterations, Tenant shall deliver to Tenant a copy of the "as-built" plans,
building permits (with all inspection approvals signed by the applicable
local governmental agency) and certificates of occupancy.
(E) REQUIRED INSURANCE. Tenant shall cause Tenant's Contractors to secure,
pay for, and maintain during the performance of the construction of any
Alterations, insurance in the following minimum coverages and limits of
liability:
(i) Workmen's Compensation and Employer's Liability Insurance as required by
law.
(ii) Commercial General Liability Insurance (including Owner's and
Contractors' Protective Liability) in an amount not less than Two Million
Dollars ($2,000,000) per occurrence, whether involving bodily injury
liability (or death resulting therefrom) or property damage liability or a
combination thereof with a minimum aggregate limit of Two Million Dollars
($2,000,000), and with umbrella coverage with limits not less than Ten
Million Dollars ($10,000,000). Such insurance shall provide for explosion
and collapse, completed operations coverage with a two-year extension after
completion of the work, and broad form blanket contractual liability coverage
and shall insure Tenant's Contractors against any and all claims for bodily
injury, including death resulting therefrom and damage to the property of
others and arising from its operations under the contracts whether such
operations are performed by Tenant's Contractors, or by anyone directly or
indirectly employed by any of them.
(iii) Comprehensive Automobile Liability Insurance, including the ownership,
maintenance, and operation of any automotive equipment, owned, hired, or
non-owned in an amount not less than Five Hundred Thousand Dollars ($500,000)
for each person in one accident, and One Million Dollars ($1,000,000) for
injuries sustained by two or more persons in any one accident and property
damage liability in an amount not less than One Million Dollars ($1,000,000)
for each accident. Such insurance shall insure Tenant's Contractors against
any and all claims for bodily injury, including death resulting therefrom,
and damage to the property of others arising from its operations under the
contracts, whether such operations are performed by Tenant's Contractors, or
by anyone directly or indirectly employed by any of them.
(iv) "All-risk" builder's risk insurance upon the Alterations to the full
insurance value thereof. Such insurance shall include the interest of
Landlord and Tenant (and their respective contractors and subcontractors of
any tier to the extent of any insurable interest therein) in the Alterations
and shall insure against the perils of fire and extended coverage and shall
include "all-risk" builder's risk insurance for physical loss or damage
including, without duplication of coverage, theft, vandalism, and malicious
mischief. If portions of the Alterations are stored off the site of the
Premises or in transit to such site are not covered under such "all-risk"
builder's risk insurance, then Tenant shall effect and maintain similar
property insurance on such portions of the Alterations. Any loss insured
under such "all-risk" builder's risk insurance is to be adjusted with
Landlord and Tenant and made payable to Landlord as trustee for the insureds,
as their interest may appear, subject to the agreement reached by such
parties in interest, or in the absence of any such agreement, then in
accordance with a final, nonappealable order of a court of competent
jurisdiction. If after such loss no other special agreement is made, the
decision to replace or not replace any such damaged the Alterations shall be
made in accordance with the terms and provisions of the Lease. The waiver of
subrogation provisions contained in the Lease shall apply to the "all-risk"
builder's risk insurance policy to be obtained by Tenant pursuant to this
paragraph.
All policies (except the workmen's compensation policy) shall be
endorsed to include as additional named insureds Landlord and its officers,
employees, and agents, Landlord's contractors, Landlord's architect, and such
additional persons as Landlord may designate. Such endorsements shall also
provide that all additional insured parties shall be given thirty (30) days'
prior written notice of any reduction, cancellation, or nonrenewal of
coverage by certified mail, return receipt requested (except that ten (10)
days' notice shall be sufficient in the case of cancellation for nonpayment
of premium) and shall provide that the insurance coverage afforded to the
additional insured parties thereunder shall be primary to any insurance
carried independently by such additional insured parties. At Tenant's
request, Landlord shall furnish a list of names and addresses of parties to
be named as additional insureds. The insurance policies required hereunder
shall be considered as the primary insurance and shall not call into
contribution any insurance then maintained by Landlord. Additionally, where
applicable, such policy shall contain a crossliability and severability or
interest clause.
To the fullest extent permitted by law, Tenant (and Tenant's
Contractors) and Landlord (and its contractors) shall indemnify and hold
harmless the other party, its officers, agents and employees, from and
against all claims, damages, liabilities, losses and expenses of whatever
nature, including but not limited to reasonable attorneys' fees, the cost of
any repairs to the Premises necessitated by activities of the indemnifying
party's contractors, bodily injury to persons or damage to property of the
indemnified party, its employees, agents, invitees, licensees, or others,
arising out of or resulting from the performance of work by the indemnifying
party or its contractors. The foregoing indemnity shall be in addition to
the insurance requirements set forth above and shall not be in discharge or
substitution of the same, and shall not be limited in any way by any
limitations on the amount or type of damages, compensation or benefits
payable by or for Tenant's Contractors under Workers' or Workmen's
Compensation Acts, Disability Benefit Acts or other Employee Benefit Acts.
8.2 SIGNS. Tenant shall not place any sign upon the Premises, except that
Tenant may, with Landlord's prior written consent, install (but not on the
roof of the Building) such signs identifying the name of Tenant and including
Tenant's logo as are reasonably required to advertise Tenant's own business.
The installation and maintenance of any sign on the Premises by or for Tenant
shall be subject to the provisions of Article 7 and this Article 8.
8.3 SATELLITE DISHES/ROOF ANTENNAE. Subject to the provisions of Article 7
and this Article 8, Tenant may, at Tenant's option, install one (1) satellite
dish or similar roof antenna (the "ROOF ANTENNA"), which Roof Antenna shall
be used solely (i) for the benefit of Tenant and (ii) as an incidental use in
connection with Tenant's primary business operations in the Premises. Tenant
agrees to indemnify, defend, and hold Landlord harmless from any claim
asserted, or threatened to be asserted, by any person in the vicinity of the
Premises, which claim relates in any manner whatsoever to Tenant's
transmissions from such Roof Antenna. Any use of such Roof Antenna by or for
the benefit of third parties without the written consent of Landlord, which
consent may be withheld in Landlord's sole discretion, is expressly
prohibited by this Section 8.3. Landlord shall have the right to require
Tenant to install, at Tenant's sole cost and expense and in accordance with
Article 8 hereof, an equipment screen to surround and shield the Roof Antenna
from view ("EQUIPMENT SCREEN") so long as such Equipment Screen is
(i) required under local ordinances or (ii) necessary in Landlord's reasonable
determination. Notwithstanding any provision of Section 7.1 hereof, Tenant
acknowledges that its repair and maintenance obligations under this Lease
include the repair of any damage caused to the Building including, without
limitation, any damage to the roof or any Structural Component whatsoever,
caused by Tenant's installation or operation of any Roof Antenna or Equipment
Screen.
ARTICLE 9 - INSPECTION AND NOTICES
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After reasonable notice, except in emergencies when no such notice
shall be required, Landlord, its agents and representatives, shall have the
right to enter the Premises to inspect the same, to perform such work on, or
make such repairs to, the Premises or Building as may be permitted or
required hereunder, to deal with emergencies, to post such notices as may be
permitted or required by law to prevent the perfection of liens against
Landlord's interest in the Premises or to exhibit the Premises to prospective
tenants, purchasers, encumbrancers or others, or for any other purpose as
Landlord may deem necessary or desirable; provided, however, that Landlord
shall not unreasonably interfere with Tenant's business operations. Tenant
shall not be entitled to any abatement of Base Rent or any other sums due
hereunder by reason of the exercise of any such right of entry. From and
after the date that is six (6) months prior to the end of the Term, Landlord
shall have the right to erect on the Premises or Building a suitable sign
indicating that the Premises are available for lease. Tenant shall give
written notice (the "TENANT VACATION NOTICE") to Landlord at least thirty
(30) days prior to vacating the Premises and shall meet with Landlord upon
five (5) business days' prior notice from Landlord ("INSPECTION NOTICE") for
a joint inspection of the Premises on a date specified (the "SCHEDULED
INSPECTION DATE") in the Inspection Notice, which date shall be a business
day prior to the time of Tenant's vacating the Premises.
ARTICLE 10 - LENDER AND FINANCING PROVISIONS
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10.1 SUBORDINATION. Without the necessity of any additional document being
executed by Tenant for the purpose of effecting a subordination, this Lease
shall be subject and subordinate at all times to (a) all ground leases or
underlying leases which may now exist or hereafter be executed affecting the
Premises or any portion thereof and (b) any mortgage, deed of trust or other
hypothecation or security device (collectively, "SECURITY DEVICE") which may
now exist or be placed upon the Building, land, ground leases or underlying
leases, or Landlord's interest or estate in any of said items, which is
specified as security for any and all advances made thereunder, and to all
renewals, modifications, consolidations, replacements and extensions thereof
provided that any such lessor or lender agrees in writing that so long as
Tenant is not in default hereunder, Tenant's rights under this Lease will not
be terminated following foreclosure. With respect to any Security Device in
existence as of the date of this Lease which is senior to this Lease,
Landlord shall use its commercially reasonable efforts to cause the lender to
provide a nondisturbance agreement, in such lessor's or lender's standard
form, which provides that Tenant's rights under this Lease will not be
terminated following foreclosure as long as Tenant is not in default under
this Lease. Notwithstanding the foregoing, Landlord shall have the right to
subordinate, or cause to be subordinated, any such ground leases or
underlying leases or any such Security Device to this Lease. In the event
that any ground lease or underlying lease terminates for any reason or any
Security Device is foreclosed or a conveyance in lieu of foreclosure is made
for any reason (any such event, a "TERMINATING ACT"), Tenant shall,
notwithstanding any subordination, attorn to and become the tenant of the
successor-in-interest to Landlord at the option of such
successor-in-interest, provided that such successor-in-interest shall not
disturb Tenant's possession as long as Tenant is not in default under this
Lease and shall be bound by all of the obligations imposed by this Lease upon
Landlord. Notwithstanding the foregoing, in the event of such foreclosure or
conveyance in lieu of foreclosure, such new owner shall not: (i) be liable
for any act or omission of Landlord or with respect to events occurring prior
to acquisition of ownership by such new owner, except such acts, omissions or
events which are of a continuing nature (including any repair, restoration,
rebuilding or maintenance obligations of Landlord that are ongoing at the
time such new owner obtains title to the Premises), (ii) be subject to any
offsets or defenses which Tenant might have against Landlord, or (iii) be
bound by prepayment of more than one (1 ) month's rent. The foregoing shall
not limit the successor-in-interest's obligation to perform the obligations
of Landlord under the Lease from and after the date of attornment or to
correct any conditions that existed as of the date of attornment and violate
the successor-in-interest's obligation as landlord under this Lease. Tenant
agrees that, prior to the occurrence of any such Terminating Act, the
lender(s) holding any such Security Device shall have no duty, liability or
obligation to perform any of the obligations of Landlord under this Lease,
but that, in the event of Landlord's default with respect to any such
obligation, Tenant shall give any lender whose name and address has been
furnished Tenant in writing for such purpose, notice of Landlord's default
and allow such lender thirty (30) days following receipt of such notice for
the cure of said default before invoking any remedies Tenant may have by
reason thereof. Tenant shall execute and deliver, upon demand by Landlord
and in the form requested by Landlord, any additional documents evidencing
the priority or subordination of this Lease with respect to any such ground
lease or underlying lease or any such Security Device provided that such
documents provide that so long as Tenant is not in default under this Lease,
Tenant's use and occupancy of the Premises shall not be disturbed.
10.2 FINANCIAL STATEMENTS. At the request of Landlord, from time to time
during the Term, Tenant shall provide to Landlord its current financial
statements or other information discussing financial worth which Landlord
shall use solely for purposes of this Lease and in connection with the
ownership, management and disposition of the Premises.
10.3 ESTOPPEL CERTIFICATES. Tenant agrees from time to time within twenty
(20) days after request by Landlord, to deliver to Landlord, or Landlord's
designee, an estoppel certificate stating that this Lease is in full force
and effect, the date to which Base Rent has been paid, the unexpired portion
of the Term and such other matters pertaining to this Lease as may be
reasonably requested by Landlord. Failure by Tenant to execute and deliver
such estoppel certificate shall constitute an acknowledgment by Tenant that
the statements included therein are true and correct without exception.
Landlord and Tenant intend that any estoppel certificate delivered pursuant
to this Section 10.3 may be relied upon by any mortgagee, beneficiary,
purchaser or prospective purchaser of the Premises or any interest therein.
The parties agree that Tenant's obligation to furnish such estoppel
certificates in a timely fashion is a material inducement for Landlord's
execution of this Lease.
ARTICLE 11 - ASSIGNMENT AND SUBLETTING
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11.1 LANDLORD'S CONSENT.
(A) IN GENERAL. Tenant shall not assign this Lease or sublet the Premises,
or any part thereof, without Landlord's prior written consent, except as
provided herein.
(B) PROCEDURE. If Tenant desires to assign this Lease or sublet any or all
of the Premises, Tenant shall give Landlord written notice thirty (30) days
prior to the anticipated effective date of such assignment or sublease. Each
such request for consent to an assignment or subletting shall be accompanied
by information relevant to Landlord's determination as to the financial and
operational responsibility and appropriateness of the proposed assignee or
sublessee, including, but not limited to, the intended use and/or required
modification of the Premises, if any. Tenant agrees to provide Landlord with
such other or additional information and/or documentation as may be
reasonably requested by Landlord. Landlord shall then have a period of
fifteen (15) business days following receipt of (i) such notice and (ii) all
information required hereunder to notify Tenant in writing that Landlord
elects either (1) to terminate this Lease as to the space so affected as of
the date so requested by Tenant, (2) to permit Tenant to assign this Lease or
sublet such space, SUBJECT, HOWEVER, to Landlord's prior written approval of
any related documents or agreements associated with the assignment or
sublease, such consent not to be unreasonably withheld, or (3) to withhold
consent to the requested assignment or subletting provided it is reasonable
to do so. If Landlord should fail to notify Tenant in writing of such
election within said period, Landlord shall be deemed to have waived its
option to terminate this Lease pursuant to clause (1) above, but written
approval by Landlord of the proposed assignee or subtenant shall be
required. Failure by Landlord to approve a proposed assignee or subtenant
shall not cause a termination of this Lease.
(C) PERMITTED TRANSFEREES. Notwithstanding the foregoing provisions, Tenant
shall have the right to assign this Lease, without Landlord's consent (and
without a recapture right on the part of Landlord), to a "Permitted
Transferee" (as defined below), provided that the net worth of the assignee
equals or exceeds the greater of (i) Tenant's net worth at the time this
Lease is executed or (ii) Tenant's net worth immediately prior to such
assignment. In the event of an assignment to a Permitted Transferee, Tenant
shall notify Landlord within ten (10) days after the effective date of such
assignment. As used herein, term "Permitted Transferee" means Tenant's
parent corporation, any subsidiary of Tenant or any subsidiary of Tenant's
parent corporation. In addition, Tenant shall have the right to sublease all
or any portion of the Premises, without Landlord's consent (and without a
recapture right on the part of Landlord) to a "Permitted Transferee". Tenant
shall notify Landlord within ten (10) days after the effective date of any
such sublease and shall furnish Landlord with a copy of the sublease.
11.2 BONUS RENT. Any rent or other consideration realized by Tenant under
any sublease or assignment (other than an assignment to a Permitted
Transferee) in excess of the Base Rent payable hereunder shall be divided and
paid fifty percent (50%) to Tenant and fifty percent (50%) to Landlord, after
amortization and deduction of (1) the reasonable cost of any improvements
which Tenant has made for the purpose of assigning or subletting all or part
of the Premises, (2) reasonable subletting and assignment leasing commissions
paid by Tenant to unaffiliated third parties, and (3) reasonable attorneys'
fees incurred in connection therewith.
11.3 OTHER TRANSFERS. If Tenant is a corporation, a transfer of corporate
shares by sale, assignment, bequest, inheritance, operation of law or other
disposition (including such a transfer to or by a receiver or trustee in
federal or state bankruptcy, insolvency or other proceedings, but excluding
an assignment to a Permitted Transferee), so as to result in a change in
control of such corporation or any of its parent corporations shall be deemed
an assignment for purposes of this Article 11. For purposes of the preceding
sentence, "change in control" means the transfer, on a cumulative basis, of
twenty-five percent (25%) or more of the shares of such corporation having
voting rights. If Tenant is a partnership, joint venture, limited liability
company, trust or other unincorporated business form, a transfer of the
interest of persons, firms or entities responsible for managerial control of
Tenant by sale, assignment, bequest, inheritance, or operation of law or
other disposition (including such a transfer to or by a receiver or trustee
in federal or state bankruptcy, insolvency or other proceedings), so as to
result in a change in the present control of said entity and/or a change in
the identity of the persons responsible for the general credit obligations of
said entity shall also be deemed an assignment for purposes of this
Article 11.
11.4 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.
(A) Regardless of Landlord's consent, any assignment or subletting shall
not: (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Tenant under this Lease, (ii)
release Tenant of any obligations hereunder, or (iii) alter the primary
liability of Tenant for the payment of Base Rent and other sums due Landlord
hereunder or for the performance of any other obligations to be performed by
Tenant under this Lease.
(B) Landlord may accept any rent or performance of Tenant's obligations from
any person other than Tenant pending approval or disapproval of an
assignment. Neither a delay in the approval or disapproval of such
assignment nor the acceptance of any rent or performance shall constitute a
waiver or estoppel of Landlord's right to exercise its remedies for the
default by Tenant of any of the terms, covenants or conditions of this Lease.
(C) The consent of Landlord to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Tenant or
to any subsequent or successive assignment or subletting by the assignee or
sublessee.
(D) In the event of any default of Tenant's obligations under this Lease,
Landlord may proceed directly against Tenant, any guarantors or/and anyone
else responsible for the performance of the Tenant's obligations under this
Lease, including the sublessee, without first exhausting Landlord's remedies
against any other person or entity responsible therefor to Landlord, or any
security held by Landlord or Tenant.
(E) Any assignee of, or sublessee under, this Lease shall, by reason of
accepting such assignment or entering into such sublease, be deemed, for the
benefit of Landlord, to have assumed and agreed to conform and comply with
each and every term, covenant, condition and obligation herein to be observed
or performed by Tenant during the term of said assignment or sublease, other
than such obligations as are contrary to or inconsistent with provisions of
an assignment or sublease to which Landlord has specifically consented in
writing.
11.5 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The
following terms and conditions shall apply to any subletting by Tenant of all
or any part of the Premises and shall be deemed included in all subleases
under this Lease whether or not expressly incorporated therein:
(A) In the event of a default by Tenant in the performance of its
obligations under this Lease, Landlord, at its option and without any
obligation to do so, may require any sublessee to attorn to Landlord, in
which event Landlord shall undertake the obligations of the sublessor under
such sublease from the time of the exercise of said option to the expiration
of such sublease; PROVIDED, HOWEVER, Landlord shall not be liable for any
prepaid rents or security deposit paid by such sublessee to such sublessor or
for any other prior defaults of such sublessor under such sublease.
(B) No sublessee shall further assign or sublet all or any part of the
Premises without Landlord's prior written consent.
11.6 REASONABLE RESTRICTION. The restrictions on assignment and subletting
described in this Lease are acknowledged by Tenant to be reasonable for all
purposes, and if this Lease is governed by the laws of the State of
California, including, without limitation, the provisions of California Civil
Code (the "CODE") Section 1951.4(b)(2). Tenant expressly waives any rights
which it might otherwise be deemed to possess pursuant to applicable law to
limit any remedy of Landlord by means of proof that enforcement of a
restriction on use of the Premises would be unreasonable, and, if this Lease
is governed by the laws of the State of California, including, without
limitation, the otherwise applicable provisions of Sections 1997.040, 1951.2
or 1951.4 of the Code.
ARTICLE 12 - CONDEMNATION
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12.1 CONDEMNATION. If the Premises or any portion thereof is taken under the
power of eminent domain or sold under the threat of the exercise of said
power (any of which, a "CONDEMNATION"), this Lease shall terminate as to the
part so taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than fifteen percent (15%) of
the floor area of the Building, or more than fifteen percent (15%) of the
land area of the Premises not occupied by the Building and used for parking
purposes, is taken by Condemnation, Tenant may, at Tenant's option, to be
exercised in writing within ten (10) days after Landlord shall have given
Tenant written notice of such taking (or in the absence of such notice,
within ten (10) days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority
takes such possession. If Tenant does not terminate this Lease in accordance
with the foregoing, this Lease shall remain in full force and effect as to
the portion of the Premises remaining, except that the Base Rent shall be
reduced in the same proportion as the rentable floor area of the Building so
taken bears to the total rentable floor area of the Building. No reduction
of Base Rent shall occur if the only portion of the Premises taken is land on
which there is no Building and if fewer than fifteen percent (15%) of the
parking spaces are taken.
12.2 AWARD. Any award for the taking of all or any part of the Premises
under the power of eminent domain, or any payment made under threat of the
exercise of such power, shall be the property of Landlord, whether such award
shall be made as compensation for diminution in value of the leasehold or for
the taking of the fee, or as severance damages; PROVIDED, HOWEVER, that
Tenant shall be entitled to any compensation separately awarded to Tenant for
Tenant's relocation expenses and/or loss of Tenant's trade fixtures.
12.3 REPAIRS. In the event that this Lease is not terminated by reason of
any such Condemnation, Landlord shall, to the extent of its net severance
damages received in excess of the legal and other expenses incurred by
Landlord in the Condemnation matter, repair any damage to the Premises caused
by such Condemnation, except to the extent that Tenant has been reimbursed
therefor by the condemning authority.
ARTICLE 13 - CASUALTY DAMAGE
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13.1 CASUALTY. If the Premises should be damaged or destroyed by any
casualty, Tenant shall give immediate written notice thereof to Landlord.
Within thirty (30) days following Landlord's receipt of such notice, Landlord
shall notify Tenant whether, in Landlord's reasonable opinion, such repairs
can be made within one hundred eighty (180) days from the date of such
Landlord notice (the "DETERMINATION DATE"). Landlord's determination as to
the amount of time required for repair shall be based upon the written
estimate of a third-party architect or contractor.
13.2 MINOR DAMAGE. If the Premises should be damaged by any casualty and
rebuilding or repairs can, in Landlord's reasonable estimation (based upon
the written estimate of a third-party architect or contractor), be completed
within one hundred eighty (180) days after the Determination Date, this Lease
shall not terminate, and Landlord shall, at its sole cost and expense,
thereupon proceed with reasonable diligence to rebuild and repair the
Premises to substantially the condition in which they existed prior to such
casualty (including the restoration of any Improvements to the Premises
installed by Tenant prior to the Term Commencement Date), except that
Landlord shall not be required to rebuild, repair or replace any part of any
Alterations which may have been placed in, on or about the Premises by
Tenant. If the Premises are untenantable in whole or in part following such
casualty damage, the Base Rent payable hereunder during the period in which
the Premises are untenantable shall be reduced to such extent as may be fair
and reasonable under all of the circumstances. If Landlord should fail to
complete such repairs and rebuilding within one hundred eighty (180) days
following the Determination Date, such one hundred eighty- (180-) day period
to be extended for delays caused by the fault or neglect of Tenant ("Tenant
Delay") or because of Force Majeure (as defined in Section 17.15), Tenant
may, at its option, terminate this Lease by delivering fifteen (15) business
days prior written notice of termination to Landlord as Tenant's exclusive
remedy, whereupon all rights and obligations hereunder shall cease and
terminate unless within such fifteen- (15-) business day period Landlord
substantially completes such restoration and tenders the Premises to Tenant.
13.3 PARTIAL DAMAGE. If the Premises should be damaged by any casualty and
rebuilding or repairs can, in Landlord's reasonable estimation (based upon
the written estimate of a third-party architect or contractor), be completed
in more than one hundred eighty (180) days but in less than three hundred
sixty (360) days following the Determination Date (the "Restoration Period"),
then each of Landlord and Tenant shall have the option of terminating the
Lease effective upon the date of the occurrence of such damage, provided that
Tenant shall not have the right to terminate this Lease if Tenant or any of
Tenant's Parties caused the casualty. If neither party elects to terminate
this Lease as provided above, then Landlord shall rebuild or repair the
Premises to substantially the condition in which they existed prior to such
casualty (including the restoration of any Improvements installed by Tenant
prior to the Term Commencement Date) except that Landlord shall not be
required to rebuild, repair or replace any part of any Alterations which may
have been placed in, on or about the Premises by Tenant. If the Premises are
untenantable in whole or in part following such damage, the Base Rent payable
hereunder during the period in which the Premises are untenantable shall be
reduced to such extent as may be fair and reasonable under all of the
circumstances. If Landlord should fail to complete such repairs and
rebuilding within the Restoration Period, as such Restoration Period may be
extended for Tenant Delay or because of Force Majeure, Tenant may, at its
option, terminate this Lease by delivering fifteen (15) business days' prior
written notice of termination to Landlord as Tenant's exclusive remedy,
whereupon all rights and obligations hereunder shall cease and terminate
unless within such fifteen (15) business day period Landlord substantially
completes such restoration and tenders the Premises to Tenant.
13.4 MAJOR DAMAGE. If the Premises should be damaged by any casualty and
rebuilding or repairs cannot, in Landlord's estimation, be completed within
three hundred sixty (360) days after the Determination Date, this Lease shall
terminate upon the Determination Date, and the Base Rent shall be abated
during the portion of the Term commencing on the date of the occurrence of
such damage.
13.5 LENDER REQUIREMENTS. Notwithstanding anything herein to the contrary,
in the event that the holder of any indebtedness secured by a Security Device
covering the Premises requires that the insurance proceeds be applied to such
indebtedness, then Landlord shall have the right to terminate this Lease by
delivering written notice of termination to Tenant within fifteen (15) days
after such requirement is made by any such holder, whereupon all rights and
obligations hereunder shall cease and terminate.
13.6 UNINSURED LOSS. If the Premises or Building is damaged or destroyed by
any casualty that is not covered by the insurance required to be maintained
pursuant to Article 6 hereof (excluding the amount of any applicable
deductible), then, regardless of the length of time to restore the damaged
portion of the Premises, Landlord shall have the right to terminate this
Lease as of the date of such damage or destruction. If Landlord elects so to
terminate this Lease, then Tenant shall have the right, for a period of ten
(10) days after Landlord's termination notice, to give written notice to
Landlord of Tenant's election to pay for all costs and expenses of such
repair and restoration, without reimbursement from Landlord. If Tenant gives
such notice within such 10-day period, and if Tenant is able to provide
Landlord with adequate assurance (as determined by Landlord in Landlord's
sole but good faith discretion) of Tenant's ability to fund such repair and
restoration (which, at Landlord's election, may be in the form of funds held
in escrow), then this Lease shall continue in full force and effect and
either Landlord or Tenant, as elected by Landlord, shall proceed to make such
repairs and restoration.
13.7 END OF TERM. In the event of any damage or destruction occurring during
the last year of the Term or of any Option Term, Landlord need not undertake
any repairs and may terminate this Lease, unless Tenant has the
then-exercisable right under the terms of this Lease to extend the Term for
an additional period of at least five (5) years and exercises such right
within thirty (30) days of the date of such damage or destruction.
13.8 REPAIR COSTS. Landlord shall only be obligated to make repairs,
pursuant to this Article 13, out of the insurance proceeds paid to Landlord.
Tenant shall, within five (5) days of delivery by Landlord of Landlord's
invoice therefor, reimburse Landlord upon completion of the repairs for the
amount of any deductible under the applicable insurance policy.
13.9 LANDLORD'S ELECTION. Notwithstanding any other provision of this
Article 13, if the Building is destroyed to the extent of not less than fifty
percent (50%) of the then replacement cost thereof as determined by Landlord,
Landlord may elect to terminate this Lease, regardless of the estimated time
to repair or restore the Premises.
13.10 WAIVER. Landlord and Tenant agree that the terms of this Lease shall
govern the effect of any damage to or destruction of the Premises with
respect to the termination of this Lease and hereby waive the provisions of
any present or future statute to the extent inconsistent herewith including,
without limitation, the provisions of Section 1942, Subdivision 2, and
Section 1933, Subdivision 4, of the Code.
13.11 TERMINATION - ADVANCE PAYMENTS. Upon termination of this Lease pursuant
to this Article 13, an equitable adjustment shall be made concerning advance
Base Rent and any other advance payments made by Tenant to Landlord.
Landlord shall, in addition, return to Tenant so much of Tenant's Security
Deposit as has not been, or is not then required to be, applied by Landlord
pursuant to the terms of this Lease.
ARTICLE 14 - HOLDING OVER
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If Tenant shall retain possession of the Premises or any portion
thereof without Landlord's consent following the expiration or earlier
termination of the Term for any reason, then Tenant shall pay to Landlord for
each day of such retention one hundred fifty percent (150%) of the amount of
the monthly Base Rent (prorated on a daily basis) in effect during the month
immediately prior to the date of expiration or termination. Tenant shall
also indemnify and hold Landlord harmless from any loss or liability
resulting from delay by Tenant in surrendering the Premises, including,
without limitation, any claims made by any succeeding tenant founded on such
delay. Acceptance of Base Rent by Landlord following expiration or
termination shall not constitute a renewal of this Lease, and nothing
contained in this Article 14 shall waive Landlord's right of reentry or any
other right. Unless Landlord exercises the option to renew the Lease
hereunder, Tenant shall be a tenant at sufferance, regardless of whether
Landlord accepts any Base Rent from Tenant while Tenant is holding over
without Landlord's written consent. Additionally, in the event that upon
termination of the Lease, Tenant has not fulfilled its obligation with
respect to repairs and cleanup of the Premises or any other Tenant obligation
set forth in this Lease, then Landlord shall have the right to perform any
such obligation as it deems necessary at Tenant's sole cost and expense.
ARTICLE 15 - DEFAULT
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15.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an event of default ("EVENT OF DEFAULT") on the part of Tenant:
(A) NONPAYMENT OF RENT. Failure to pay any installment of Base Rent or any
other amount due hereunder (including payments under the Tenant Improvement
Loan), whether to Landlord or to a third party, within five (5) days after
the date when said payment is due. Landlord shall provide Tenant with a
written courtesy notice of such default and Tenant shall have an additional
five (5) days to cure such default before Landlord has a right to exercise
its default remedies; provided, however, that Landlord shall not be required
to give a courtesy notice more than one (1) time in any 12-month period.
(B) OTHER OBLIGATIONS. Failure to perform any obligations, agreement or
covenant under this Lease other than those matters specified in subparagraphs
(a) and (b) of this Section 15.1, such failure continuing for thirty (30)
days after written notice of such failure by or on behalf of Landlord to
Tenant; provided, however, that if Landlord determines that more than thirty
(30) days are reasonably necessary to cure such default, then it shall not be
deemed to be an Event of Default on the part of Tenant if Tenant commences
such cure within such 30-day period and thereafter diligently prosecutes such
cure to completion.
(C) GENERAL ASSIGNMENT. A general assignment by Tenant for the benefit of
creditors.
(D) RECEIVERSHIP. The employment of a receiver to take possession of
substantially all of Tenant's assets located at the Premises, if such
possession is not restored to Tenant within thirty (30) days after such
receiver's taking thereof.
(E) ATTACHMENT. The attachment, execution or other judicial seizure of all
or substantially all of Tenant's assets located at the Premises, if such
attachment or other seizure is not dismissed or discharged within thirty
(30) days after the levy thereof.
(F) FINANCIAL STATEMENTS. The discovery by Landlord that any financial
statement given to Landlord by Tenant or any guarantor of Tenant's
obligations hereunder was materially false.
15.2 REMEDIES UPON DEFAULT.
(A) TERMINATION. In the event of the occurrence of any Event of Default,
Landlord shall have the right, with or without notice or demand, to
immediately terminate this Lease, and at any time thereafter recover
possession of the Premises or any part thereof and expel and remove therefrom
Tenant and any other person occupying the same, by any lawful means, and
again repossess and enjoy the Premises without prejudice to any of the
remedies that Landlord may have under this Lease, or at law or equity by
reason of Tenant's default or of such termination. If termination of this
Lease is obtained through the provisional remedy of unlawful detainer,
Landlord shall have the right to recover in such proceeding the unpaid rent
and damages as are recoverable therein, or Landlord may reserve therein the
right to recover all or any part thereof in a separate suit for such rent
and/or damages. If any notice and/or grace period required under
Section 15.1 hereof was not previously given, a notice to pay rent or quit, or
to perform or quit, as the case may be, given to Tenant under any statute
authorizing the forfeiture of leases for unlawful detainer shall also
constitute the applicable notice, if any, required by Section 15.1 hereof.
In such case, any applicable notice and/or grace period under Section 15.1
hereof and the notice period under the unlawful detainer statute shall run
concurrently after the one such statutory notice, and the failure of Tenant
to cure the default within the greater of the two such periods shall
constitute both an unlawful detainer and a breach of this Lease entitling
Landlord to the remedies provided for in this Lease and/or by said statute.
(B) CONTINUATION AFTER DEFAULT. Even though Tenant has breached this Lease,
this Lease shall continue in effect for so long as Landlord does not
terminate Tenant's right to possession under Section 15.2(a) hereof, and
Landlord may enforce all its rights and remedies under this Lease, including,
but without limitation, the right to recover Base Rent and any other sums due
hereunder as they become due, without terminating this Lease, and Landlord
may exercise all of the rights and remedies of a landlord under
Section 1951.4 of the Code or any successor statute. Tenant acknowledges that
acts of maintenance or preservation, efforts to relet the Premises, or the
appointment of a receiver upon application of Landlord to protect Landlord's
interest under this Lease, shall not constitute an election by Landlord to
terminate Tenant's right to possession of the Premises.
(C) DAMAGES UPON TERMINATION. Should Landlord terminate this Lease pursuant
to the provisions of Section 15.2(a) hereof, Landlord shall have all the
rights and remedies of a landlord provided by Section 1951.2 of the Code, or
any successor statute. Upon any termination of this Lease pursuant to
Section 15.2(a) hereof, in addition to any other rights and remedies to which
Landlord may be entitled under applicable law, Landlord shall be entitled to
recover from Tenant: (1) the worth at the time of award of the unpaid Base
Rent and other amounts which had been earned at the time of termination, (2)
the worth at the time of award of the amount by which the unpaid Base Rent
which would have been earned after termination until the time of award
exceeds the amount of such rental loss that the Tenant proves could have been
reasonably avoided, (3) the worth at the time of award of the amount by which
the unpaid Base Rent for the balance of the Term after the time of award
exceeds the amount of such rental loss that the Tenant proves could be
reasonably avoided, and (4) any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which, in the ordinary course of things,
would be likely to result therefrom, including, but not limited to, the cost
of recovering possession of the Premises, expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorneys'
fees and costs, and that portion of any leasing commission paid by Landlord
applicable to the unexpired portion of the Term. The "worth at the time of
award" of the amounts referred to in clauses (1) and (2) of the preceding
sentence shall be computed with interest at the maximum rate allowed by law.
The "worth at the time of award" of the amount referred to in clause (3)
above shall be computed by discounting such amount at the Federal Discount
Rate of the Federal Reserve Bank of San Francisco at the time of the award
plus one percent (1%). Landlord shall use reasonable efforts to mitigate its
damages following a default by Tenant under this Lease.
15.3 LANDLORD'S DEFAULT. Landlord shall not be in default under this Lease
unless it fails to perform any of its obligations under this Lease for a
period of thirty (30) days after receipt of written notice thereof from
Tenant; provided, however, that if such obligation cannot reasonably be
performed within thirty (30) days, then Landlord shall not be deemed to be in
default if it commences performance within such 30-day period and thereafter
diligently pursues the same to completion. Upon the occurrence of any
default by Landlord, Tenant may sue for injunctive relief or to recover
damage for any loss directly resulting from Landlord's breach, subject to the
limitations of this Lease, but Tenant shall not be entitled to terminate this
Lease on account of Landlord's default.
15.4 LATE CHARGE. In addition to its other remedies, Landlord has the right,
without notice or demand, to add to the amount of any payment required to be
made by Tenant to Landlord hereunder, and which is not paid on or before the
date the same is due, an amount equal to five thousand dollars ($5,000.00)
for each month or portion thereof that the delinquency remains outstanding to
compensate Landlord for the loss of the use of the amount not paid and the
administrative costs caused by the delinquency, the parties agreeing that
Landlord's damage by virtue of such delinquencies would be difficult to
compute and the amount stated herein represents a reasonable estimate thereof.
15.5 INTEREST. Any amount owed by Tenant to Landlord which is not paid when
due shall bear interest at a rate (the "SPECIFIED RATE") from the date due
until such amount is received by Landlord, which Specified Rate is the lesser
of (i) ten percent (10%) per annum or (ii) the maximum rate of interest
permitted by applicable law. However, interest shall not be payable on late
charges to be paid by Tenant under this Lease. The payment of interest on
such amounts shall not excuse or cure any default by Tenant under this Lease.
15.6 REMEDIES CUMULATIVE. All rights, privileges and elections or remedies
of the parties are cumulative and not alternative to the extent permitted by
law and except as otherwise provided herein.
15.7 BANKRUPTCY. If at any time during the Term there shall be filed by or
against Tenant in any court pursuant to any statute either of the United
States or of any State a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee of all or a
portion of Tenant's property, or if a receiver or trustee takes possession of
any of the assets of Tenant, or if the leasehold interest herein passes to a
receiver, or if Tenant makes an assignment for the benefit of creditors or
petitions for or enters into an arrangement (any of which are referred to
herein as a "BANKRUPTCY EVENT"), then the following provisions shall apply:
(A) At all Bankruptcy Events, any receiver or trustee in bankruptcy or
Tenant as debtor in possession ("DEBTOR") shall either expressly assume or
reject this Lease within sixty (60) days following the entry of an "Order for
Relief."
(B) In the event of an assumption of the Lease by a Debtor, receiver, or
trustee, such Debtor, receiver, or trustee shall immediately after such
assumption (1) cure any default or provide adequate assurances that defaults
will be promptly cured; and (2) compensate Landlord for actual pecuniary loss
or provide adequate assurances that compensation will be made for actual
pecuniary loss; and (3) provide adequate assurance of future performance.
(C) Where a default exists under this Lease, the party assuming the Lease
may not require Landlord to provide services or supplies incidental to the
Lease before its assumption by such trustee or debtor, unless Landlord is
compensated under the terms of the Lease for such services and supplies
provided before the assumption of this Lease.
(D) Landlord specifically reserves any and all remedies available to
Landlord in this Article 15 or at law or in equity in respect of a bankruptcy
event by Tenant to the extent such remedies are permitted by law.
ARTICLE 16 - TRANSFERS BY LANDLORD AND CURE RIGHTS
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16.1 TRANSFER BY LANDLORD. In the event of a sale or conveyance by Landlord
of the Premises and the assumption by the transferee of Landlord's duties and
obligations hereunder, the same shall operate to release Landlord from any
liability with respect to events occurring subsequent to such sale or
conveyance upon any of the covenants or conditions, express or implied,
herein contained in favor of Tenant, and in such event Tenant agrees to look
solely to the responsibility of the successor-in-interests of Landlord in and
to this Lease. This Lease shall not be affected by any such sale and Tenant
agrees to attorn to the purchaser or assignee.
16.2 CURE RIGHTS. All covenants and agreements to be performed by Tenant
under any of the terms of this Lease shall be performed by Tenant, at
Tenant's sole cost and expense, and without any abatement of Base Rent or any
other sums due hereunder. If Tenant shall fail to pay any sum of money other
than Base Rent, required to be paid by it hereunder, or shall fail to perform
any other act on its part to be performed hereunder, and such failure
constitutes an Event of Default pursuant to Section 15.1 hereof, Landlord
may, but shall not be obligated to, and without waiving any of Landlord's
rights or releasing Tenant from any of its obligations hereunder, make any
such payment or perform any such act on the Tenant's part to be made or
performed. All sums so paid by Landlord, and all necessary incidental costs
together with interest thereon at the Specified Rate from the date of such
payment by Landlord, shall be payable to Landlord on demand, and Tenant
covenants to pay such sums, and Landlord has, in addition to any other rights
or remedy of Landlord, the same rights and remedies in the event of the
nonpayment thereof by Tenant as in the case of default by Tenant in the
payment of Base Rent.
ARTICLE 17 - MISCELLANEOUS
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17.1 LIMITATION. Tenant shall look solely to Landlord's interest in the
Premises for recovery of any judgment from Landlord. Landlord, or if
Landlord is a partnership, its partners whether general or limited, or if it
is a corporation, its directors, officers or shareholders, or if Landlord is
a trust, its trustees, officers and employees, or if Landlord is a limited
liability company or other entity, its members or managers or owners, shall
not be personally liable for any such judgment. Any lien obtained to enforce
any such judgment, and any levy of execution thereon shall be subject and
subordinate to any lien or Security Device on the Premises. Tenant
acknowledges that no trustee, shareholder, officer, employee or agent of
Landlord shall be held for any personal liability, jointly or severally, for
any obligation of or claim against Landlord.
17.2 QUIET ENJOYMENT. Landlord represents that it has full right and
authority to enter into this Lease and that Tenant, upon paying the Base Rent
and performing its other covenants and agreements herein set forth, shall
peaceably and quietly have, hold and enjoy the Premises for the Term hereof
without hindrance or molestation from Landlord, subject to the terms and
provisions of this Lease.
17.3 WAIVER. If either Landlord or Tenant waives the performance of any
term, covenant or condition contained in this Lease, such waiver shall not be
deemed to be a waiver of any subsequent breach of the same or any other term,
covenant or condition contained herein. The acceptance of Base Rent or any
other sum due hereunder by Landlord shall not constitute a waiver of any
preceding breach by Tenant of any term, covenant or condition of this Lease,
regardless of Landlord's knowledge of such preceding breach at the time
Landlord accepted such Base Rent or other sum. Failure by Landlord to
enforce any of the terms, covenants or conditions of this Lease for any
length of time shall not be deemed to waive or to decrease the right of
Landlord to insist thereafter upon strict performance by Tenant. Waiver of
Landlord of any term, covenant or condition contained in this Lease may only
be made by Landlord in writing.
17.4 NOTICES. Each provision of this Lease or of any applicable governmental
laws, ordinances, regulations and other requirements with reference to the
sending, mailing or delivery of any notice or the making of any payment by
Landlord or Tenant to the other shall be deemed to be complied with when and
if the following steps are taken:
(A) All Base Rent and other payments required to be made by Tenant to
Landlord hereunder shall be payable to Landlord at the address set forth in
the Basic Lease Information, or at such other address as Landlord may specify
from time to time by written notice delivered in accordance herewith.
Tenant's obligation to pay Base Rent and any other amounts to Landlord under
the terms of this Lease shall not be deemed satisfied until such Base Rent
and other amounts have been actually received by Landlord.
(B) All notices, demands, consents and approvals which may or are required
to be given by either party to the other hereunder shall be in writing and
shall be deemed to have been fully given on the date of delivery or attempted
delivery shown on the receipt card, when deposited (i) in the United States
mail, certified or registered, return receipt requested, postage prepaid, or
(ii) with a nationally-recognized overnight delivery service, charges
prepaid, and addressed to the party to be notified at the address for such
party specified in the Basic Lease Information or to such other place as the
party to be notified may from time to time designate by at least fifteen (15)
days' prior notice to the notifying party. Tenant appoints as its agent to
receive the service of all default notices and notice of commencement of
unlawful detainer proceedings the person in charge of, or apparently in
charge of, or occupying the Premises at the time, and, if there is no such
person, then such service may be made by attaching the same on the main
entrance of the Premises.
17.5 RENT DEFINED. All monetary obligations of Tenant to Landlord under the
terms of this Lease are deemed to be rent.
17.6 RECORDING. Either Landlord or Tenant shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The party requesting recordation shall be
responsible for payment of any fees or taxes applicable thereto.
17.7 AUCTIONS. Tenant shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first
having obtained Landlord's prior written consent, which consent may be
withheld in Landlord's sole discretion.
17.8 SECURITY MEASURES. Tenant hereby acknowledges that the rental payable
to Landlord hereunder does not include the cost of guard services or other
security measures, and that Landlord shall have no obligation whatsoever to
provide same. Tenant assumes all responsibility for the protection of the
Premises, Tenant, its agents and invitees and their property from the acts of
third parties.
17.9 RESERVATIONS. Landlord reserves to itself the right, from time to time,
to grant, without the consent or joinder of Tenant, such easements, rights
and dedications that Landlord deems necessary, and to cause the recordation
of parcel maps and restrictions, so long as such easements, rights,
dedications, maps and restrictions do not unreasonably interfere with the use
of the Premises by Tenant. Tenant agrees to sign any documents reasonably
requested by Landlord to effectuate any such easement rights, dedication, map
or restrictions.
17.10 AUTHORITY. If either party hereto is a corporation, trust, or general
or limited partnership, each individual executing this Lease on behalf of
such entity represents and warrants that he or she is duly authorized to
execute and deliver this Lease on its behalf. If Tenant is a corporation,
trust or partnership, Tenant shall, within thirty (30) days after request by
Landlord, deliver to Landlord evidence satisfactory to Landlord of such
authority.
17.11 TERMINATION; MERGER. Unless otherwise stated in writing by Landlord,
the voluntary or other surrender of this Lease by Tenant, the mutual
termination or cancellation hereof, or a termination hereof by Landlord for a
default by Tenant, shall automatically terminate any sublease or lesser
estate in the Premises; provided, however, Landlord shall, in the event of
any such surrender, termination or cancellation, have the option to continue
any one or all of any existing subtenancies. Landlord's failure within ten
(10) days following any such event to make an election to the contrary by
written notice to the holder of any such lesser interest, shall constitute
Landlord's election to have such event constitute the termination of such
interest.
17.12 NO BROKERS. Tenant and Landlord each represent and warrant to the other
that except for Landlord's Broker and Tenant's Broker, it has had no dealings
with any other person, firm, broker or finder in connection with the
negotiation of this Lease and/or the consummation of the transaction
contemplated hereby, and that except for Landlord's Broker and Tenant's
Broker, no broker or other person, firm or entity is entitled to any
commission or finder's fee in connection with said transaction. Landlord
shall be responsible for the payment of all commissions due Landlord's Broker
and Tenant's Broker pursuant to the terms of a separate agreement. Tenant
and Landlord do each hereby agree to indemnify, protect, defend and hold the
other harmless from and against liability for compensation or charges which
may be claimed by any such unnamed broker, finder or other similar party by
reason of any dealings or actions of the indemnifying party, including any
costs, expenses, and attorneys' fees reasonably incurred with respect thereto.
17.13 ATTORNEYS' FEES. In the event of any litigation or arbitration
proceeding between the parties with respect to this Lease, then all costs and
expenses, including without limitation, all reasonable professional fees such
as appraisers', accountants' and attorneys' fees, incurred by the prevailing
party therein shall be paid or reimbursed by the other party. Should
Landlord be named as a defendant or requested or required to appear as a
witness or produce any documents in any suit brought by Tenant against any
other party or against Tenant in connection with or arising out of Tenant's
occupancy of the Premises hereunder, Tenant shall pay to Landlord Landlord's
costs and expenses incurred in such suit, including without limitation, its
actual professional fees such as appraisers', accountants' and attorneys'
fees.
17.14 SUCCESSORS AND ASSIGNS. This Lease shall be binding upon and inure to
the benefit of Landlord, its successors and assigns, and shall be binding
upon and inure to the benefit of Tenant, its successors, and, to the extent
such assignment may be approved by Landlord hereunder, Tenant's assigns.
17.15 FORCE MAJEURE. Whenever a period of time is herein prescribed for
action to be taken by Landlord, Landlord shall not be liable or responsible
for, and there shall be excluded from the computation for any such period of
time, any delays due to strike, riots, acts of God, windy, stormy or
inclement weather, shortages of labor or materials, war, governmental laws,
regulations, acts of public agencies or restrictions or any other causes of
any kind whatsoever which are beyond the control of Landlord (collectively,
"FORCE MAJEURE").
17.16 REFERENCE. The term "TENANT" or any pronoun used in place thereof shall
indicate and include the masculine or feminine, the singular or plural
number, individuals, firms or corporations, and their and each of their
respective successors, executors, administrators and permitted assigns,
according to the context hereof.
17.17 TIME OF THE ESSENCE. Time is of the essence regarding this Lease and
all of its provisions.
17.18 GOVERNING LAW. This Lease shall in all respects be governed by the laws
of the State of California.
17.19 INTEGRATION. This Lease, together with its exhibits, contains all the
agreements of the parties hereto and supersedes any previous negotiations.
There have been no representations made by the Landlord or understandings
made between the parties other than those set forth in this Lease and its
exhibits.
17.20 MODIFICATIONS. This Lease may not be modified except by a written
instrument signed by the parties hereto.
17.21 SEVERABILITY. If, for any reason whatsoever, any of the provisions
hereof shall be unenforceable or ineffective, all of the other provisions
shall be and remain in full force and effect.
17.22 COUNTERPARTS. This Lease may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which when taken
together shall constitute one agreement.
17.23 LEASE EFFECTIVE DATE. Submission of this instrument for examination or
signature by Tenant does not constitute a reservation or option for lease,
and it is not effective as a lease or otherwise until execution by Landlord
and Tenant.
IN WITNESS WHEREOF, the parties hereto have executed this Lease
effective as of the Lease Date set forth in the Basic Lease Information.
LANDLORD: TENANT:
FSRT, L.P., SYBRON LABORATORY PRODUCTS
a Delaware limited partnership CORPORATION, a Wisconsin
corporation
By: ___________________________
Name: ___________________________ By: ___________________________
Its: ___________________________ Name: ___________________________
Its: ___________________________
Date: July ___, 1999
Date: July___, 1999
EXHIBIT "B"
WORKLETTER
This Workletter is attached as an exhibit to that certain Lease (the
"Lease"), dated as of the date hereof between FSRT, L.P. ("Landlord"), and
Sybron Laboratory Products Corporation ("Tenant"), wherein Tenant is leasing
that certain building (the "Premises") commonly known as 46360 Fremont
Boulevard, Fremont, California, as more particularly described in the Lease.
In consideration of the parties entering into the Lease and of the mutual
promises and covenants hereinafter contained, Landlord and Tenant hereby
agree as follows:
1. PROPOSED AND FINAL PLANS.
(A) On or before July 31, 1999, Tenant shall cause to be prepared and
delivered to Landlord, for Landlord's approval, the following proposed
drawings ("Proposed Plans") for all improvements Tenant desires to complete
or have completed in the Premises (the "Improvements"):
(i) Architectural drawings (consisting of floor construction plan, ceiling
lighting and layout, power, and telephone plan).
(ii) Mechanical drawings (consisting of HVAC, electrical, telephone, and
plumbing).
(iii) Finish schedule (consisting of wall finishes and floor finishes and
miscellaneous details).
(B) All architectural drawings shall be prepared at Tenant's sole cost and
expense by a licensed architect designated and employed by Tenant and
approved by Landlord (which approval shall not be unreasonably withheld).
Landlord hereby approves WHL, 250 South Mathilda Avenue, Sunnyvale,
California, as Tenant's architect. Tenant shall deliver one set of
reproducible architectural drawings to Landlord. All mechanical drawings
shall be prepared at Tenant's sole cost and expense by a licensed engineer
designated and employed by Tenant, but approved by Landlord. Landlord hereby
approves West Bay Mechanical as Tenant's engineer. Tenant shall reimburse
Landlord for all reasonable out-of-pocket costs incurred by Landlord in
reviewing the Proposed Plans.
(C) Within five (5) business days after Landlord's receipt of the
architectural drawings, Landlord shall advise Tenant of any changes or
additional information required to obtain Landlord's approval, provided that
if such architectural drawings do not require third-party review, Landlord
shall reasonably endeavor to complete the review within one (1) business day
following receipt thereof.
(D) Within five (5) business days after receipt of mechanical drawings,
Landlord shall advise Tenant of any changes required to obtain Landlord's
approval, provided that if such mechanical drawings do not require
third-party review, Landlord shall reasonably endeavor to complete the review
within one (1) business day following receipt thereof.
(E) If Landlord disapproves of, or requests additional information regarding
the Proposed Plans, Tenant shall, within ten (10) days thereafter, revise the
Proposed Plans disapproved by Landlord and resubmit such plans to Landlord or
otherwise provide such additional information to Landlord. Landlord shall,
within five (5) business days after receipt of Tenant's revised plans or such
sooner period as is commercially reasonable, advise Tenant of any additional
changes which may be required to obtain Landlord's approval. If Landlord
does not so notify Landlord within such five (5) business day period,
Landlord's approval shall be deemed given. If Landlord disapproves the
revised plans specifying the reason therefor, or requests further additional
information, Tenant shall, within ten (10) days of receipt of Landlord's
required changes, revise such plans and resubmit them to Landlord or deliver
to Landlord such further information as Landlord has requested. Landlord
shall, again within five (5) business days after receipt of Tenant's revised
plans or such sooner period as is commercially reasonable, advise Tenant of
further changes, if any, required for Landlord's approval. If Landlord does
not so notify Landlord within such five (5) business day period, Landlord's
approval shall be deemed given. This process shall continue until Landlord
has approved Tenant's revised Proposed Plans. "Final Plans" shall mean the
Proposed Plans, as revised, which have been approved by Landlord and Tenant
in writing. Landlord agrees not to withhold its approval unless the Proposed
Plans call for work or improvements which, in Landlord's reasonable opinion,
adversely affect the structural integrity, appearance, functionality or
market value of the Building, the building systems or roof, or the Structural
Components.
(F) All Proposed Plans and Final Plans shall comply with all applicable
statutes, ordinances, regulations, laws, and codes and with the requirements
of Landlord's fire insurance underwriters. Neither review nor approval by
Landlord of the Proposed Plans and resulting Final Plans shall constitute a
representation or warranty by Landlord that such plans either (i) are
complete or suitable for their intended purpose, or (ii) comply with
applicable laws, ordinances, codes, regulations, or any insurance
requirements, it being expressly agreed by Tenant that Landlord assumes no
responsibility or liability whatsoever to Tenant or to any other person or
entity for such completeness, suitability or compliance. Tenant shall not
make any changes in the Final Plans without Landlord's prior written
approval, which shall not be unreasonably withheld or delayed; provided that
Landlord may, in the exercise of its sole and absolute discretion, disapprove
any proposed changes adversely affecting the Building's structure, any
asbestos-containing materials, systems, equipment or the appearance or value
of the Building.
2. PERFORMANCE OF THE IMPROVEMENTS.
(A) FILING OF FINAL PLANS, PERMITS. Tenant, at its sole cost and expense,
shall file the Final Plans with the governmental agencies having jurisdiction
over the Improvements. Tenant shall furnish Landlord with copies of all
documents submitted to all such governmental agencies and with the
authorizations to commence work and the permits for the Improvements issued
by such governmental agencies. Tenant shall not commence the Improvements
until the required governmental authorizations for such work are obtained and
delivered to Landlord.
(B) LANDLORD APPROVAL OF CONTRACTORS. No later than five (5) days following
Landlord's approval of the Final Plans, Tenant shall enter into a contract
for construction of the Improvements with a general contractor reasonably
acceptable to Landlord (the "General Contractor"). Landlord hereby approves
C. P. Construction, 6662 Mayhews Landing Road, Newark, California, as the
General Contractor. Tenant's construction contract with the General
Contractor shall be subject to Landlord's prior approval, which approval
shall not be unreasonably withheld. The General Contractor shall be
responsible for all required construction, management and supervision,
including bidding by subcontractors for the various components of the work of
the Improvements. Tenant shall submit to Landlord not less than ten (10)
days prior to commencement of construction the following information and
items:
(i) The names and addresses of the other subcontractors, and
subsubcontractors (collectively, together with the General Contractor, the
"Tenant's Contractors") Tenant intends to employ in the construction of the
Improvements. All contractors and subcontractors engaged by or on behalf of
Tenant for the Premises shall be licensed contractors, possessing good labor
relations, and capable of performing quality workmanship.
(ii) The scheduled commencement date of construction, the estimated date of
completion of construction work, fixturing work, and date of occupancy of the
Premises by Tenant.
(iii) Itemized statement of estimated construction cost, including permits and
fees, architectural, engineering, and contracting fees.
(iv) Certified copies of insurance policies or certificates of insurance as
hereinafter described. Tenant shall not permit Tenant's Contractors to
commence work until the required insurance has been obtained and certified
copies of policies or certificates have been delivered to Landlord.
(C) ACCESS TO PREMISES. Tenant, its employees, designers, contractors and
workmen shall have access to and primary use of the Premises prior to the
commencement of the Term of the Lease to construct the Improvements.
(D) LANDLORD'S RIGHT TO PERFORM. Landlord shall have the right, but not the
obligation, to perform, on behalf of and for the account of Tenant, subject
to reimbursement by Tenant, any of the Improvements which (i) Landlord
reasonably deems necessary to be done on an emergency basis, or (ii) pertains
to structural components or the general building systems. Except in case of
emergency, Landlord shall give prior reasonable written notice to Tenant of
its intention to perform such work.
(E) WARRANTIES. On completion of the Improvements, Tenant shall provide
Landlord with copies of all warranties of at least one (1) year duration on
all the Improvements. At Landlord's request, Tenant shall enforce, at
Tenant's expense, all guarantees and warranties made and/or furnished to
Tenant with respect to the Improvements.
(F) PROTECTION OF PREMISES. All work performed by Tenant shall conform to
those rules and regulations governing construction in the building as
Landlord may impose. Tenant will take all reasonable and customary
precautionary steps to protect its facilities and the facilities of others
affected by the Improvements and to properly police same and Landlord shall
have no responsibility for any loss by theft or otherwise. Tenant shall at
all times keep the Premises and adjacent areas free from accumulations of
waste materials or rubbish caused by its suppliers, contractors or workmen.
Landlord may require daily clean-up if required for fire prevention and life
safety reasons or applicable laws and reserves the right to do clean-up at
the expense of Tenant if Tenant fails to comply with Landlord's cleanup
requirements. At the completion of the Improvements, Tenant's Contractors
shall forthwith remove all rubbish and all tools, equipment and surplus
materials from and about the Premises. Any damage caused by Tenant's
Contractors to any portion of the Premises or to any property of Landlord
shall be repaired forthwith after written notice from Landlord to its
condition prior to such damage by Tenant at Tenant's expense.
(G) COMPLIANCE BY ALL TENANT CONTRACTORS. Tenant shall impose and enforce
all terms hereof on Tenant's Contractors and its designers, architects and
engineers. Landlord shall have the right to order Tenant or any of Tenant's
Contractors, designers, architects or engineers who willfully violate the
provisions of this Workletter to cease work and remove himself or itself and
his or its equipment and employees from the Premises.
(H) ACCIDENTS, NOTICE TO LANDLORD. Tenant's Contractors shall assume
responsibility for the prevention of accidents to its agents and employees
and shall take all reasonable safety precautions with respect to the work to
be performed and shall comply with all reasonable safety measures initiated
by the Landlord and with all applicable laws, ordinances, rules, regulations
and orders of any public authority for the safety of persons or property.
Tenant shall advise the Tenant's Contractors to report to Landlord any injury
to any of its agents or employees and shall furnish Landlord a copy of the
accident report filed with its insurance carrier within three (3) days of its
occurrence.
(I) REQUIRED INSURANCE. Tenant shall cause Tenant's Contractors to secure,
pay for, and maintain during the performance of the construction of the
Improvements, insurance in the following minimum coverages and limits of
liability:
(i) Workmen's Compensation and Employer's Liability Insurance as required by
law.
(ii) Commercial General Liability Insurance (including Owner's and
Contractors' Protective Liability) in an amount not less than Two Million
Dollars ($2,000,000) per occurrence, whether involving bodily injury
liability (or death resulting therefrom) or property damage liability or a
combination thereof with a minimum aggregate limit of Two Million Dollars
($2,000,000), and with umbrella coverage with limits not less than Ten
Million Dollars ($10,000,000). Such insurance shall provide for explosion
and collapse, completed operations coverage with a two-year extension after
completion of the work, and broad form blanket contractual liability coverage
and shall insure Tenant's Contractors against any and all claims for bodily
injury, including death resulting therefrom and damage to the property of
others and arising from its operations under the contracts whether such
operations are performed by Tenant's Contractors, or by anyone directly or
indirectly employed by any of them.
(iii) Comprehensive Automobile Liability Insurance, including the ownership,
maintenance, and operation of any automotive equipment, owned, hired, or
non-owned in an amount not less than Five Hundred Thousand Dollars ($500,000)
for each person in one accident, and One Million Dollars ($1,000,000) for
injuries sustained by two or more persons in any one accident and property
damage liability in an amount not less than One Million Dollars ($1,000,000)
for each accident. Such insurance shall insure Tenant's Contractors against
any and all claims for bodily injury, including death resulting therefrom,
and damage to the property of others arising from its operations under the
contracts, whether such operations are performed by Tenant's Contractors, or
by anyone directly or indirectly employed by any of them.
(iv) "All-risk" builder's risk insurance upon the entire Improvements to the
full insurance value thereof. Such insurance shall include the interest of
Landlord and Tenant (and their respective contractors and subcontractors of
any tier to the extent of any insurable interest therein) in the Improvements
and shall insure against the perils of fire and extended coverage and shall
include "all-risk" builder's risk insurance for physical loss or damage
including, without duplication of coverage, theft, vandalism, and malicious
mischief. If portions of the Improvements are stored off the site of the
Building or in transit to such site are not covered under such "all-risk"
builder's risk insurance, then Tenant shall effect and maintain similar
property insurance on such portions of the Improvements. Any loss insured
under such "all-risk" builder's risk insurance is to be adjusted with
Landlord and Tenant and made payable to Landlord as trustee for the insureds,
as their interest may appear, subject to the agreement reached by such
parties in interest, or in the absence of any such agreement, then in
accordance with a final, nonappealable order of a court of competent
jurisdiction. If after such loss no other special agreement is made, the
decision to replace or not replace any such damaged the Improvements shall be
made in accordance with the terms and provisions of the Lease including,
without limitation, this Workletter. The waiver of subrogation provisions
contained in the Lease shall apply to the "all-risk" builder's risk insurance
policy to be obtained by Tenant pursuant to this paragraph.
All policies (except the workmen's compensation policy) shall be
endorsed to include as additional named insureds Landlord and its officers,
employees, and agents, Landlord's contractors, Landlord's architect, and such
additional persons as Landlord may designate. Such endorsements shall also
provide that all additional insured parties shall be given thirty (30) days'
prior written notice of any reduction, cancellation, or nonrenewal of
coverage by certified mail, return receipt requested (except that ten (10)
days' notice shall be sufficient in the case of cancellation for nonpayment
of premium) and shall provide that the insurance coverage afforded to the
additional insured parties thereunder shall be primary to any insurance
carried independently by such additional insured parties. At Tenant's
request, Landlord shall furnish a list of names and addresses of parties to
be named as additional insureds. The insurance policies required hereunder
shall be considered as the primary insurance and shall not call into
contribution any insurance then maintained by Landlord. Additionally, where
applicable, such policy shall contain a crossliability and severability or
interest clause.
To the fullest extent permitted by law, Tenant (and Tenant's
Contractors) and Landlord (and its contractors) shall indemnify and hold
harmless the other party, its officers, agents and employees, from and
against all claims, damages, liabilities, losses and expenses of whatever
nature, including but not limited to reasonable attorneys' fees, the cost of
any repairs to the Premises necessitated by activities of the indemnifying
party's contractors, bodily injury to persons or damage to property of the
indemnified party, its employees, agents, invitees, licensees, or others,
arising out of or resulting from the performance of work by the indemnifying
party or its contractors. The foregoing indemnity shall be in addition to
the insurance requirements set forth above and shall not be in discharge or
substitution of the same, and shall not be limited in any way by any
limitations on the amount or type of damages, compensation or benefits
payable by or for Tenant's Contractors under Workers' or Workmen's
Compensation Acts, Disability Benefit Acts or other Employee Benefit Acts.
(J) QUALITY OF WORK. The Improvements shall be constructed in a first-class
workmanlike manner using only good grades of material and in compliance with
the Final Plans, all insurance requirements, applicable laws and ordinances
and rules and regulations of governmental departments or agencies and the
rules and regulations adopted by Landlord for the Premises.
(K) "AS-BUILT" PLANS. Upon completion of the Improvements, Tenant shall
furnish Landlord with "as built" plans for the Premises, final waivers of
lien for the Improvements, a detailed breakdown of the costs of the
Improvements (which may be in the form of an owner's affidavit) and evidence
of payment reasonably satisfactory to Landlord, and an occupancy permit for
the Premises.
(L) MECHANICS' LIENS. Tenant shall not permit any of the Tenant's
Contractors to place any lien upon the Premises, and if any such lien is
placed upon the Premises, Tenant shall within ten (10) days of notice
thereof, cause such lien to be discharged of record, by bonding or
otherwise. If Tenant shall fail to cause any such lien to be discharged,
Landlord shall have the right to have such lien discharged and Landlord's
expense in so doing, including bond premiums, reasonable legal fees and
filing fees, shall be immediately due and payable by Tenant.
3. PAYMENT OF COSTS OF THE IMPROVEMENTS.
(A) Subject to the provisions of Paragraph 3(b) below, the Improvements
shall be installed by Tenant at Tenant's sole cost and expense. The cost of
the Improvements shall include, and Tenant agrees to pay Landlord for, the
following costs ("Landlord's Costs"): (i) the cost of all work performed by
Landlord on behalf of Tenant and for all materials and labor furnished on
Tenant's behalf, and (ii) the cost of any services provided to Tenant or
Tenant's Contractors including but not limited to the cost for rubbish
removal, hoisting, and utilities to the extent not included in general
conditions charges by the general contractor. Landlord may render bills to
Tenant monthly for Landlord's Costs (provided that the supervision fee shall
be billed based on the cost of the Improvements performed during the period
in question). All bills shall be due and payable no later than the fifteenth
(15th) day after delivery of such bills to Tenant.
(B) Landlord shall provide Tenant with an allowance of three hundred
twenty-five thousand eight hundred dollars ($325,800.00) (the "Tenant
Improvement Allowance") to be used toward payment of the costs incurred by
Tenant in connection with the Improvements. Funds may be drawn against the
Tenant Improvement Allowance at any time and from time to time prior to six
(6) months following the Term Commencement Date of the Lease, subject to the
following:
(i) Tenant may not make more than one draw in any calendar month;
(ii) With each draw request, Tenant shall submit to Landlord the following
documents:
(A) A true and correct copy of the application for payment by Tenant's
Contractors for the Improvements completed to date, including sworn
statements evidencing the cost of the Improvements performed to date (or
in the case of subcontractors and materialmen, sworn statements for the
last preceding draw request) together with copies on all receipted bills
and invoices;
(B) Conditional or final lien waivers with respect to the Improvements
performed to date from Tenant's Contractors and any materialmen (or in
the case of subcontractors and materialmen and except for the final
disbursement of the Tenant Improvement Allowance, unconditional lien
waivers for the last preceding draw request);
(C) Tenant's certification to Landlord that the amounts set forth in all
contractor's sworn statements are owed to Tenant's Contractors for the
Improvements performed to date;
(D) The total cost of the Improvements based on the Final Plans, as such
cost may change from time to time;
(E) With the final draw request, Tenant shall submit to Landlord a
certificate from Tenant's Architect stating that the Improvements has
been completed in accordance with the Final Plans and applicable zoning,
building, environmental and other laws and Unconditional Waiver and
Release Upon Progress Payment from the General Contractor and each of
Tenant's Contractors who have not theretofore delivered such
unconditional waiver and release.
(iii) Landlord will disburse the portion of the Tenant Improvement Allowance
allocable to each draw request to Tenant or at Tenant's request or at
Landlord's option directly to Tenant's Contractors within thirty (30) days
after Tenant has submitted the required information for such draw and has
otherwise complied with the requirements hereof.
(C) If the cost to design and construct the Tenant Improvements exceeds the
amount of the Tenant Improvement Allowance, Landlord shall lend to Tenant, if
Tenant so requests, the additional cost to complete such Tenant Improvements
in an amount not to exceed one million eighty-six thousand dollars
($1,086,000.00) (the "Tenant Improvement Loan"). The Tenant Improvement Loan
shall bear interest at the rate of eleven percent (11%) per annum, shall be
amortized over the Term of the Lease and shall be payable in equal monthly
installments on the first (1st) day of each month concurrently with, and in
addition to, Tenant's payment of monthly Base Rent commencing with the Term
Commencement Date. Interest under the Tenant Improvement Loan shall commence
to accrue at such time as Landlord first advances funds in excess of the
amount of the Tenant Improvement Allowance from the date of, and to the
extent of, each such advance. If the Lease terminates for any reason prior
to the repayment in full of the principal balance of the Tenant Improvement
Loan, then the outstanding principal balance, together with all accrued
interest thereon, shall be immediately due and payable.
4. MISCELLANEOUS.
Tenant agrees that, in connection with the Improvements and
its use of the Premises prior to the commencement of the Term of the Lease,
Tenant shall have those duties and obligations with respect thereto that it
has pursuant to the Lease during the Term, except the obligation for payment
of rent, and further agrees that Landlord shall not be liable in any way for
injury, loss, or damage which may occur to any of the Improvements or
installations made in the Premises, or to any personal property placed
therein, the same being at Tenant's sole risk.
(A) Except as expressly set forth herein, Landlord has no other agreement
with Tenant and Landlord has no other obligation to do any other work or pay
any amounts with respect to the Premises. Any other work in the Premises
which may be permitted by Landlord pursuant to the terms and conditions of
the Lease shall be done at Tenant's sole cost and expense and in accordance
with the terms and conditions of the Lease.
(B) The failure by Tenant to pay any monies due Landlord pursuant to this
Workletter within the time period herein stated shall be deemed a default
under the terms of the Lease for which Landlord shall be entitled to exercise
all remedies available to Landlord for nonpayment of Rent. All late payments
shall bear interest pursuant to the terms of the Lease.
(C) Tenant shall be solely responsible to determine at the site all
dimensions of the Premises and the Building which affect any work to be
performed by Tenant hereunder.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
REGISTRANT'S FINANCIAL STATEMENTS FOR THE QUARTER ENDED JUNE 30, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 3,607
<SECURITIES> 12,938
<RECEIVABLES> 4,117
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 20,662
<PP&E> 134,638
<DEPRECIATION> 23,016
<TOTAL-ASSETS> 132,284
<CURRENT-LIABILITIES> 30,285
<BONDS> 0
0
0
<COMMON> 109,455
<OTHER-SE> (16,595)
<TOTAL-LIABILITY-AND-EQUITY> 132,284
<SALES> 0
<TOTAL-REVENUES> 7,981
<CGS> 0
<TOTAL-COSTS> 5,114
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,184
<INCOME-PRETAX> 1,311
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,311
<EPS-BASIC> 0.11
<EPS-DILUTED> 0.11
</TABLE>
