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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest event reported) January 20, 1998
Integrated Packaging Assembly Corporation
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(Exact name of registrant as specified in its charter)
Delaware 0-27712 77-0309372
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(State or other jurisdiction of (Commission file number) (I.R.S. Employer
incorporation or organization) Identification No.)
2221 Old Oakland Road, San Jose, California 95131-1402
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 321-3600
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ITEM 2. OTHER EVENTS
Integrated Packaging Assembly Corporation (the "Company") entered into a
Purchase and Sale Agreement dated November 20, 1997, in connection with the sale
of certain imp roved real property located at 2219-2221 Old Oakland Road, San
Jose, California (the "Properties") and a Lease Agreement dated January 20,
1998, for the lease of a building and related property located at 2221 Old
Oakland Road, San Jose, California. Pursuant to the Purchase and Sale
Agreement, the Company sold the Properties to Lincoln Property Company N.C.,
Inc. ("Lincoln"), and pursuant to the terms of the Lease Agreement, Lincoln
agreed to lease the building and related properties at 2221 Old Oakland Road to
the Company for a term of 10 years (with options to extend the lease for two
successive five year periods) at a base rent of $82,390 per month, subject to
adjustment over the term of the lease. Net proceeds to the Company from the sale
of the Properties, which closed on January 20, 1998, were $7.3 million, net of
the transfer of $6.6 million of debt to Lincoln, fees, commissions and closing
costs. The Company intends to use the net proceeds from this sale for the
purchase of capital equipment and working capital purposes.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
a. Financial Statements: not applicable
b. Pro Forma Financial Information: not applicable
c. Exhibits:
10.26 Purchase and Sale Agreement dated November 20, 1997,
between the Company and Lincoln Property Company N.C., Inc.
10.27 Lease Agreement dated January 20, 1998, between the
Company and Lincoln Property Company, N.C., Inc.
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SIGNATURES
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 hereunto duty authorized.
Dated: January 30, 1998 Integrated Packaging Assembly Corporation
By: /s/ Alfred V. Larrenaga
___________________________________
Alfred V. Larrenaga
Vice President and Chief Financial Officer
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EXHIBIT 10.26
PURCHASE AND SALE AGREEMENT
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THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is made and entered into as
of this 19th day of November, 1997 (the "Agreement Date"), by and between IPAC
Properties, a California corporation (the "Seller"), and LINCOLN PROPERTY
COMPANY N.C., INC., a Texas corporation (the "Purchaser"), with reference to the
following facts.
RECITALS
A. Seller is the owner of that certain improved real property located at 2219-
2221 Old Oakland Road, San Jose, California, as legally described in Exhibit A
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attached hereto and made a part hereof (the "Land") together with all (i)
improvements and fixtures, including, but not limited to, those two certain one-
story R&D buildings containing approximately 138,366 square feet of building
rentable area (collectively, the "Improvements") and personal property (the
"Personal Property") of Seller located on the Land, and (ii) warranties,
guaranties, easements, air rights, development rights, appurtenances, rights and
privileges belonging thereto. The Land, the Improvements, the Personal Property
and the interests described in (ii) above, are collectively referred to herein
as the "Property."
B. Seller desires to sell to Purchaser and Purchaser desires to purchase from
Seller the Property, in accordance with the terms and provisions hereinafter
contained in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Sale of the Property. Seller shall sell to Purchaser and Purchaser shall
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buy from Seller the Property at the Closing (defined in Section 5), on the terms
and conditions contained herein.
2. Deposit. Within two (2) business days after the Agreement Date, Purchaser
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shall place on deposit into the escrow account (the "Escrow Account") to be
opened with North American Title Company ("Escrow Holder" or "Title Company"),
located at 2001 Gateway Place, Suite 220 West, San Jose, California 95110
(Teresa Woest, escrow officer), the amount of One Hundred Thousand Dollars
($100,000.00) as a deposit (the "Deposit"). The Escrow Holder shall cause the
Deposit to be placed into an interest bearing bank account acceptable to
Purchaser. Until the Closing, all interest earned thereon shall accrue to
Purchaser. For purposes of this Agreement, the term Deposit as used herein shall
mean and refer to the amount of One Hundred Thousand Dollars ($100,000.00) plus
all interest earned thereon. The Deposit shall become non-refundable to
Purchaser, except in the event of a default by Seller, upon the written removal
or written waiver by Purchaser of all Pre-Closing Conditions; provided,
Purchaser shall remove or waive such Pre-Closing Conditions prior to the
expiration of the Conditions Period or this Agreement shall be deemed terminated
and the Deposit returned to Purchaser in accordance with the provisions of
Section 4.3 hereof.
3. Purchase Price and Loan Assumption Costs. The purchase price for the
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Property shall be Fourteen Million Six Hundred Thousand Dollars ($14,600,000)
(the "Purchase Price"), adjusted for the Roof Credit (defined below) and
prorations in accordance with the provisions of Section 8 below. In addition to
the Purchase Price, at the Closing Purchaser shall also pay to the Lender
(defined below) the Loan Assumption Costs (defined below). The Deposit shall be
applied to the Purchase Price at the Closing.
3.1 Payment of Purchase Price. The Purchase Price shall be payable by
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Purchaser to Seller as follows:
3.1.1 Purchaser's Assumption of Loan. At the Closing, Purchaser shall
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assume all of Seller's obligations in, to and under that certain loan made by
Sun Life Assurance Company of Canada (U.S.), a Delaware corporation (the
"Lender") to Seller with respect to the Property, in the original principal
amount of Six Million Seven Hundred Thousand Dollars ($6,700,000) (the "Loan"),
to the extent such obligations first arise and accrue from and after the actual
Closing Date, including without limitation, Seller's unaccrued obligations in,
to and under the promissory note, the deed of trust, the assignment of rents and
leases, the financing statements and all other loan documents and instruments
given to or otherwise made in favor of the Lender with respect to the Loan
(collectively, the "Loan Documents").
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3.1.2 Balance of Purchase Price. At the Closing, the balance of the
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Purchase Price remaining after deduction for the Deposit made and the then
outstanding principal amount of the Loan assumed by Purchaser hereunder, shall
be paid by Purchaser to Seller in cash, in immediately available funds via wire
transfer, adjusted for the Roof Credit (defined below) and any prorations in
accordance with the provisions of Section 8 below.
3.2 Loan Assumption Costs. At the Closing, Purchaser shall pay to the
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Lender, through escrow, the Loan Assumption Costs in cash, in immediately
available funds via wire transfer. The "Loan Assumption Costs" shall mean and
refer to the aggregate of an assumption fee of one and one-half percent (1.5%)
of the then outstanding principal amount of the Loan, and any and all costs and
expenses actually incurred by the Lender in connection with Purchaser's
assumption of the Loan to the extent Purchaser is required to pay such costs
pursuant to the provisions of the Loan Assumption Documents (hereafter defined).
Seller shall be solely responsible for the payment of all costs and expenses
incurred by Seller in connection with the Loan Assumption and the Loan Release
Documents (defined below), including without limitation, Seller's attorneys'
fees and costs.
4. Conditions to Purchaser's Obligations. The following conditions are
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conditions precedent to Purchaser's obligation to purchase the Property:
4.1 Pre-Closing Conditions. Purchaser's obligations under this Agreement
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shall be subject to the satisfaction of or waiver by Purchaser, in writing, in
its sole and absolute discretion, on or before the earlier of (i) the expiration
of the time periods specified in each subsection below, or (ii) the expiration
of the period of time between the Agreement Date and 5:00 p.m. (Pacific Time) on
December 22, 1997 (the "Conditions Period") of the matters referred to in this
Section 4.1 (collectively, the "Pre-Closing Conditions").
4.1.1 Title. Within five (5) days following the Agreement Date, Seller
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shall cause to be issued and delivered to Purchaser a preliminary title report
for the Property (the "Title Report"), together with legible copies of all
documents evidencing exceptions to title referred to therein (collectively, the
"Title Documents") issued by the Title Company. Purchaser shall have the period
of time from and after the Agreement Date until 5:00 p.m. (Pacific Time) on
December 10, 1997 to either approve the exceptions contained in the Title Report
and any survey matters, or to notify Seller in writing, specifying any
exceptions and/or survey matters to which Purchaser objects (the "Title
Objection Notice"). Seller shall have three (3) business days after Seller's
receipt of the Title Objection Notice to remove, or agree to remove prior to the
Closing, those exceptions and/or survey matters to which Purchaser has objected,
and to inform Purchaser of the same. Failure by Seller to remove, or agree to
remove prior to the Closing, all of the specified exceptions and survey matters
within the specified period shall be deemed to be a failure of this condition,
unless Purchaser withdraws its objections in writing prior to the Closing.
4.1.2 Physical Inspection. Within five (5) days following the Agreement
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Date, Seller shall deliver to Purchaser a true and complete copy of the
following to the extent any of the following are in Seller's possession or
control: (i) any and all environmental site assessment reports and similar
information and data with respect to an evaluation of the presence (or potential
therefor), use, historical uses and/or remediation of Hazardous Materials
(defined below) in, on or under the Property, including without limitation, all
correspondence, letters and similar information to and from regulatory or
governmental agencies with respect to Hazardous Materials; (ii) the most recent
ALTA survey, if any; (iii) any and all structural calculations, roof reports,
soils reports, and engineering reports or studies; (iv) any reports or notices
received from any governmental agency, including but not limited to, any fire
department inspection reports and any state, county or city inspection reports;
(v) a copy of all certificates of occupancy and building permits; (vi) any ADA
compliance reports and a description of work completed and compliance
requirements not yet completed; and (vii) any summaries of any material
construction defects or material defects of the Improvements to the extent
actually known to Seller and any and all reports or repairs related thereto. For
purposes hereof, the terms "material construction defects" and "material
defects" shall mean any patent defect in the structural portions of the
Improvements, including roofs, foundations and basic building systems, the cost
of which to repair is estimated to exceed $10,000.00 on an individual basis. The
term Hazardous Materials as used in this Agreement shall mean and refer to all
of the following: (a) any hazardous or toxic wastes, materials or substances, or
chemicals, and other pollutants or contaminants, which are or become regulated
by all applicable local, state, regional and federal orders, ordinances, rules,
regulations (as interpreted by judicial and administrative decisions) and laws
(collectively, the "Environmental Laws"); (b) asbestos or urea formaldehyde; (c)
polychlorinated biphenyls; (d) flammables, explosive, radioactive materials,
carcinogens, and lead; and (e) diesel, petroleum or petroleum by-products.
Purchaser and its authorized agents shall have the right to enter upon the
Property during normal business hours to make and perform
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such environmental evaluations, and other inspections and investigations of the
physical condition of the Property as Purchaser may desire and make inquiry of
any persons in possession or occupancy of the Property, including but not
limited to, the soil and geologic conditions, the presence on the Property of
Hazardous Materials or the potential therefor, and the condition of the
Improvements. Notwithstanding the foregoing, Purchaser shall not be permitted to
undertake any intrusive or destructive testing of the Property without first
obtaining Seller's written consent thereto, which consent may be given or
withheld in Seller's sole discretion. If Seller elects to withhold its consent
to permit Purchaser to perform any such intrusive or destructive testing of the
Property, then (1) Purchaser may terminate this Agreement by notifying Seller of
such election, and (2) if Purchaser so elects to terminate this Agreement,
Seller shall immediately pay to and reimburse Purchaser for fifty percent (50%)
of Purchaser's verifiable third party costs incurred in connection with its
proposed acquisition of the Property, provided, such reimbursement obligation of
Seller shall not exceed the amount of Ten Thousand Dollars ($10,000.00) (the
"Due Diligence Reimbursable Costs"). Seller's reimbursement obligations under
this Section 4.1.2 shall survive any termination of this Agreement. Purchaser
shall have the period of time from and after the Agreement Date until 5:00 p.m.
(Pacific Time) on December 10, 1997 to notify Seller, in writing, of its
approval or disapproval of all of such evaluations, inspections and
investigations of the Property, in Purchaser's sole and absolute discretion.
Purchaser agrees to indemnify, defend and hold Seller harmless against any and
all claims for bodily injury, property damage and mechanics' liens arising out
of any actions of Purchaser or its agents or representatives on the Property in
the course of such activities; provided, however, any such indemnity and defense
will not include any claims or damages relating to the negligence or willful
misconduct of Seller, any pre-existing conditions, the effects of the discovery
of the presence of any Hazardous Materials, any damages for economic loss, loss
of profits, diminution in value or any other consequential damages. The
indemnity contained herein shall survive the Closing hereunder or the
termination of this Agreement, as the case may be, for a period of one (1) year.
4.1.3 Lease Documents. Within five (5) days following the Agreement
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Date, Seller shall deliver to Purchaser a true and complete copy of all of the
following: (i) existing and pending leases and subleases (and any amendments,
correspondence and any related information thereto) affecting any portion of the
Property (collectively, the "Leases"); (ii) any non-confidential information in
Seller's possession or control regarding the creditworthiness of all tenants and
subtenants; and (iii) a current rent roll ("Rent Roll") for the Property,
listing for each tenant the name, rent, percentage rent, if any, offsets or
credits to percentage rent, if any, obligation for reimbursement for expenses,
amount of deposit(s) and prepaid rent, if any, lease commencement dates, lease
termination dates, lease options, option rent, and cost of living or other rent
escalation clauses. Purchaser shall have the period of time from and after the
Agreement Date until 5:00 p.m. (Pacific Time) on December 10, 1997 to either
approve or disapprove of any such Leases in writing. In no event shall Purchaser
be responsible for the payment of any tenant improvement costs associated with
any of the Leases. Seller shall also obtain and deliver to Purchaser prior to
expiration of the Conditions Period a written reaffirmation from each guarantor
under each of the Leases for which a guaranty was initially made. If approved by
Purchaser, Seller shall assign its rights, title and interest in and to the
Leases, all security deposits and any guaranties of the Leases to Purchaser at
the Closing pursuant to the Assignment and Assumption of Leases in substantially
the form attached hereto as Exhibit B, and made a part hereof.
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4.1.4 Contracts and Other Agreements. Within five (5) days following
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the Agreement Date, Seller shall deliver to Purchaser a true and complete copy
of alt service contracts, maintenance contracts, improvement contracts, license
agreements, agreements of any nature whatsoever affecting the Property,
warranties, soils reports, and other contracts or documents affecting the
Property or its operation that Seller has in its possession or control
(collectively, the "Contracts"). Purchaser shall have the period of time from
and after the Agreement Date until 5:00 p.m. (Pacific Time) on December 10, 1997
to either approve of any such Contracts, or to notify Seller in writing,
specifying any Contracts which Purchaser desires be terminated effective as of
the Closing (the "Disapproved Contracts"). Seller shall have until three (3)
business days after Seller's receipt of such notice from Purchaser, if any, to
agree to lawfully terminate such Disapproved Contracts effective as of the
Closing, with such Disapproved Contracts being terminated effective as of the
Closing. Those Contracts specifically approved by Purchaser (the "Approved
Contracts") shall be assigned by Seller and Seller shall assign its right, title
and interest under the Approved Contracts to Purchaser at the Closing pursuant
to the Assignment and Assumption of Contracts, Warranties and Permits in
substantially the form attached hereto as Exhibit C, and made a part hereof.
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Failure by Seller to agree to so terminate the Disapproved Contracts within the
specified period shall be deemed to be a failure of this condition, unless
Purchaser withdraws its disapproval or rejection in writing prior to the
expiration of the Conditions Period.
4.1.5 Income and Expense Statements, Property Tax Bills and Other
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Information. Within five (5) days following the Agreement Date, Seller shall
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deliver to Purchaser a true and complete copy, if any in Seller's possession, of
the following: (i) all income and expense statements and year-end
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financial statements for the Property for the most recent full calendar year
prior to Closing and to the extent available, the current year; (ii) property
tax bills for the current year and the two (2) previous property tax fiscal
years; (iii) a copy of all CAM reconciliations for the past two (2) years; (iv)
a list of all vendors presently employed by Seller; (v) a list of the Personal
Property; and (vi) all operating budgets for the Property for the two (2) most
recent full calendar years prior to Closing and to the extent available, the
current year. Purchaser shall have the period of time from and after the
Agreement Date until 5:00 p.m. (Pacific Time) on December 10, 1997 to notify
Seller, in writing, of its approval or disapproval of such information.
4.1.6 Reports and Survey. Within five (5) days following the Agreement
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Date, Seller shall deliver to Purchaser a true and complete copy, if any, of all
engineer's reports and/or other studies with respect to the mechanical,
electrical, and other physical characteristics of the Property (including
without limitation, the roof of the building), and copies of any and all reports
or studies prepared by Seller or Seller's representatives, or by any third party
pursuant to a contract with Seller or Seller's representatives, relating to the
physical condition of the Property (including without limitation, as to the
Americans with Disabilities Act (the "ADA") a federal law codified at 42 U.S.C.
12101 et seq, including, but not limited to Title III thereof, all regulations
and guidelines related thereto, and any amendments thereof), and any other such
reports or studies by whomsoever prepared that are in Seller's possession or
control. Purchaser shall have the period of time from and after the Agreement
Date until 5:00 p.m. (Pacific Time) on December 10, 1997 to notify Seller, in
writing, of its approval or disapproval of such documents and information.
4.1.7 Permits and Approvals. Within five (5) days following the
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Agreement Date, to the extent in Seller's possession or control, Seller shall
deliver to Purchaser a true and complete copy of all certificates of compliance,
governmental permits and approvals obtained, applied for or otherwise held by
Seller, or required to be obtained by Seller, and relating to the construction,
operation, use or occupancy of any part of the Property, and all zoning, land
use, subdivision, environmental, building and construction laws and regulations
restricting or regulating or otherwise affecting the use, occupancy or enjoyment
of the Property. Seller shall assign all of its right, title and interest under
the approvals and permits to Purchaser at the Closing pursuant to the Assignment
and Assumption of Contracts, Warranties and Permits in substantially the form
attached hereto as Exhibit C. Purchaser shall have the period of time from and
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after the Agreement Date until 5:00 p.m. (Pacific Time) on December 10, 1997 to
notify Seller, in writing, of its approval or disapproval of such documents and
information.
4.1.8 Plans and Warranties; and Insurance Information. Within five (5)
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days following the Agreement Date, Seller shall deliver to Purchaser a true and
complete copy of (i) all certificates of insurance procured with respect to the
Property by Seller and the current tenants and/or subtenants, and a list of all
claims for more than $1,000.00 reported, filed or otherwise made under or
against any and all insurance policies for the Property, and (ii) plans,
specifications, drawings and similar documents, and all guaranties and
warranties relating to the Property, including, but not limited to, all as-built
architectural, and civil and structural engineering drawings, and all other as-
built drawings or plans prepared for all improvements constructed or to be
constructed on or in the Property or otherwise relating to the Property (such
drawings and plans should be stamped or sealed by the appropriate consultant).
Seller shall assign all of its right, title and interest under any warranties,
guaranties and plans to Purchaser at the Closing pursuant to the Assignment and
Assumption of Contracts, Warranties and Permits in substantially the form
attached hereto as Exhibit C. Purchaser shall have the period of time from and
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after the Agreement Date until 5:00 p.m. (Pacific Time) on December 10, 1997 to
notify Seller, in writing, of its approval or disapproval of such documents and
information.
4.1.9 Economic Viability. Purchaser's determination, in its sole and
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absolute discretion (reasonably exercised), of the economic viability of this
purchase of the Property for Purchaser's intended use prior to the expiration of
the period of time from and after the Agreement Date until 5:00 p.m. (Pacific
Time) on December 10, 1997.
4.1.10 Subordination, Non-Disturbance and Attornment Agreement.
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Reference is hereby made to that certain Lease Agreement to be made and entered
into at the Closing by and between Purchaser, as landlord, and an affiliated
entity of Seller, namely Integrated Packaging Assembly Corporation, a California
corporation ("IPAC"), as tenant, for the leasing of those certain premises
located at 2221 Old Oakland Road, San Jose, California (the "IPAC Premises"), in
substantially the form attached hereto as Exhibit H (the "IPAC Lease") and made
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a part hereof. Seller, Purchaser and Lender, shall agree upon the form and
content of a subordination, non-disturbance and attornment agreement (the
"SNDA.") for the purpose of effecting a subordination of the rights of IPAC
under the IPAC Lease to the lien of the deed of trust evidencing the Loan (as
modified to accomplish the Loan Assumption), prior to the expiration of the
Conditions Period. Purchaser and Seller hereby covenant and agree to use
diligent
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efforts and to negotiate in good faith to agree upon the final form of the SNDA
as soon as possible after the Agreement Date.
4.1.11 Loan Documents and Loan Assumption Documents. Within five (5)
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days following the Agreement Date, Seller shall deliver to Purchaser a true and
complete copy of all of the Loan Documents made with the Lender with respect to
the Loan together with correspondence of a material nature related thereto.
Additionally, Seller shall use all diligent and best efforts to cause the Lender
to deliver to Purchaser, as soon as practicable, such documents and instruments
which the Lender will require be executed by Purchaser in connection with, and
as a condition to, Purchaser's assumption of the Loan as contemplated herein
(the "Loan Assumption Documents"). Purchaser shall have until the expiration of
the Conditions Period to notify Seller, in writing, of its approval or
disapproval of the Loan Documents and the Loan Assumption Documents.
4.1.12 Loan Release Documents. Seller shall use all diligent and best
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efforts to cause the Lender to deliver to Seller and Purchaser, as soon as
practicable, documents pursuant to which Seller and IPAC will be completely
released by Lender from all liability under the Loan Documents (including, but
not limited to the promissory note, deed of trust and guaranty) with respect to
any and all obligations first arising or accruing on or after the Closing Date
(the "Loan Release Documents"). The Loan Release Documents shall be in such form
and substance as is reasonably acceptable to Seller, in Seller's sole and
absolute discretion. Seller shall have until the expiration of the Conditions
Period to notify Purchaser in writing, of its approval or disapproval of the
Loan Release Documents. If Seller is unable to timely obtain the Loan Release
Documents in such form and substance as is acceptable to Seller (in its sole and
absolute discretion), either Purchaser or Seller may elect to terminate this
Agreement by delivering written notice thereof to the other party on or before
the expiration of the Conditions Period. Notwithstanding the foregoing, Seller
hereby covenants, agrees and represents to Purchaser that Seller shall act in
good faith in making such determination as to the acceptability of the Loan
Release Documents and shall not use the foregoing provisions as a disguised
reason or excuse not to sell the Property to Purchaser or to otherwise sell the
Property to another party for a higher purchase price or more desirable
consideration by virtue of a better overall economic deal. In addition to the
foregoing and notwithstanding anything to the contrary contained herein
regarding any limitation on Purchaser's remedies hereunder, if Seller does not
approve of the Loan Release Documents for any reason whatsoever and permissibly
elects to terminate this Agreement solely due to the failure of the Lender to
completely release Seller and IPAC from all liability under the Loan Documents,
then in addition to Seller immediately causing the return to Purchaser of its
Deposit and all interest earned thereon Seller shall, within ten (10) days of
Purchaser's written demand therefor, pay to and reimburse Purchaser for all of
Purchaser's verifiable third party costs incurred in connection with its
proposed acquisition of the Property, including without limitation, all
attorneys' fees and costs, and all consultants' fees and costs. Seller's
reimbursement obligations under this Section 4.1.12 shall survive any
termination of this Agreement.
4.2 Closing Conditions. Following the expiration of the Conditions
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Period, Purchaser's obligation to consummate the purchase of the Property shall
be subject to the satisfaction of the following conditions (collectively, the
"Closing Conditions"):
4.2.1 Estoppel Certificates. Seller shall obtain and deliver to
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Purchaser no later than ten (10) days prior to Closing estoppel certificates
from each of the tenants, including without limitation, IPAC; said certificates
shall be substantially in the form of the Tenant Estoppel Certificate attached
hereto as Exhibit D, and made a part hereof, and as is acceptable to Purchaser
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and shall be dated no earlier than thirty (30) days prior to the date of Closing
(the "Estoppel Certificates"). As a condition of Purchaser's obligation to
consummate the transaction hereunder, Seller shall provide Purchaser with such
signed Estoppel Certificates from all such tenants; if Seller is unable to
provide Purchaser with Estoppel Certificates from all such tenants, Purchaser
may either (a) elect to terminate this Agreement in which case the Deposit and
all interest earned thereon shall be returned to Purchaser and Purchaser shall
not have any further liability or obligations hereunder, or (b) consummate the
transaction in accordance with the provisions hereof.
4.2.2 No Adverse Change. As of the Closing, no fact or condition shall
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exist which is materially and adversely inconsistent with the representations
and warranties made by Seller in Section 10 hereof, including without
limitation, any change in the number or identity of the tenants.
4.2.3 Representations and Warranties. All of Seller's representations
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and warranties contained in or made pursuant to this Agreement shall have been
true and correct when made and shall be true and correct as of the date of
Closing.
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4.2.4 Condition of Property. The physical condition of the Property
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shall be substantially the same on the day of Closing as on the date of the
execution of this Agreement, including, without limitation, the Property being
free from contamination by any Hazardous Materials (except for those Hazardous
Materials which Seller discloses, in writing, to Purchaser during the first 20
days after the Agreement Date), reasonable wear and tear and (subject to Section
12 below) loss by casualty excepted, and, as of the date of Closing, there shall
be no litigation or administrative agency or other governmental proceeding of
any kind whatsoever, pending or threatened, which after Closing would, in
Purchaser's sole discretion, materially and adversely affect the value of the
Property or the ability of Purchaser to operate the Property as intended by
Purchaser.
4.2.5 Termination of Disapproved Instruments. Seller lawfully
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terminating, or causing the lawful termination of, any and all Disapproved
Contracts and any other written agreements affecting the Property required by
Purchaser to be terminated with an effective date of termination being on or
before the Closing.
4.2.6 Delivery of Closing Documents. Seller delivering to Purchaser
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all documents required for Closing hereunder, including, without limitation, the
documents and instruments set forth in Section 5.4 below and the Seller Lease.
4.2.7 Delivery of Title Policies. At the Closing the Title Company
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shall be irrevocably committed to issue to Purchaser the ALTA Title Policy
(hereafter defined), and to the Lender, the Lender's Title Policy (hereafter
defined).
4.2.8 Termination of Existing IPAC Lease. On or before the Closing
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Seller completely, unequivocally and lawfully terminating, by written instrument
in form reasonably acceptable to Purchaser and Title Company, that certain lease
agreement, dated June 16, 1993, as subsequently assigned to Seller (as
landlord), and amended and supplemented (collectively, the "Existing IPAC
Lease") presently in force by and between IPAC, as tenant, and Seller, as
landlord, for those certain premises located at 2221 Old Oakland Road, San Jose,
California (the "IPAC Lease Termination Agreement").
4.3 Failure of Conditions. In the event that any or all of the Pre-Closing
---------------------
Conditions are not satisfied or otherwise waived by Purchaser, in writing, prior
to expiration of the applicable time periods set forth above in Section 4.1
hereof, then Purchaser may terminate this Agreement by delivering written notice
thereof to Seller on or before the expiration of the applicable time period;
provided, if Purchaser fails to timely deliver any such written notice, this
Agreement shall be deemed automatically terminated and of no further force or
effect. Purchaser's failure to approve or disapprove of any Pre-Closing
Condition before the expiration of the applicable time periods shall be deemed
disapproval of such Pre-Closing Condition. If Purchaser so elects to terminate
this Agreement or this Agreement is automatically terminated, the Deposit and
all interest earned thereon shall promptly be returned to Purchaser and
Purchaser shall not have any further liability or obligation to Seller
hereunder. If Purchaser does not elect to terminate this Agreement due to a
failure of any of the Pre-Closing Conditions and notifies Seller in writing that
it intends to proceed with the purchase of the Property prior to the expiration
of the applicable time periods, subject to the terms and provisions of this
Agreement the Deposit shall become non-refundable to Purchaser and the Deposit
shall be held in escrow for Seller's benefit, however, all interest earned
thereon after the expiration of the Conditions Period shall be for the
Purchaser's benefit. If the Pre-Closing Conditions are satisfied or waived by
Purchaser but any or all of the Closing Conditions are not satisfied or waived
by Purchaser on or before the date established for the Closing (as such date may
be extended), then Purchaser shall notify Seller in writing of those Closing
Conditions which have not been satisfied or otherwise waived by Purchaser (the
"Closing Conditions Failure Notice"). Seller shall have three (3) business days
after Purchaser has delivered to Seller the Closing Conditions Failure Notice
(and the Closing shall be extended, if necessary to give Seller such three (3)
business day period) to notify Purchaser in writing of Seller's election either
to (a) take such actions as may be necessary to cure such matters to Purchaser's
satisfaction prior to the date of Closing (as same may be extended), or (b)
advise Purchaser that Seller will not cure such matters (the "Seller's
Conditions Notice"). If Seller elects not to cure such matters, then within two
(2) business days after Purchaser's receipt of the Seller's Conditions Notice
(and the Closing shall be extended, if necessary to give Purchaser such two (2)
business day period), Purchaser, at its sole option, may elect to do any of the
following: (1) Purchaser may elect to terminate this Agreement by delivering
written notice thereof to Seller, in which event Seller shall promptly cause the
return to Purchaser of the Deposit and all interest earned thereon; (2) if the
Closing Condition in question is any of those conditions specified in Sections
4.2.2, 4.2.3 or 4.2.4 and Seller is not in any manner responsible for the
deviation or failure of such Closing Condition, then Purchaser may elect to
terminate this Agreement by delivering written notice thereof to Seller, in
which event Seller shall promptly cause the return to Purchaser of the Deposit
and all interest earned thereon; (3) if the Closing Condition in question is any
of those conditions specified
6
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in Sections 4.2.1, 4.2.5, 4.2.6, 4.2.7 or 4.2.8, or if the Closing Condition in
question is any of those conditions specified in Sections 4.2.2, 4.2.3 or 4.2.4
and Seller is responsible for the deviation or failure of such Closing
Condition, then Purchaser may pursue any and all remedies available to it at law
or in equity; or (4) Purchaser may elect to waive the Closing Condition(s) in
question and proceed with the purchase. If Purchaser elects to terminate the
Agreement, Purchaser shall not have any further liability or obligation
hereunder. If Seller elects to cure such matters as set forth in the Closing
Conditions Failure Notice, Seller shall promptly take any and all actions as may
be necessary to cure same and the date of the Closing may be extended for a
period of time acceptable to both Seller and Purchaser to enable Seller to
accomplish same; provided, the Estoppel Certificates shall in all instances be
dated no earlier than thirty (30) days prior to the date of the Closing as
extended. Failure by Purchaser to notify Seller of the satisfaction or waiver by
Purchaser of any of the contingencies set forth herein shall be deemed
disapproval by Purchaser of such matters. The foregoing conditions contained in
this Section 4 are intended solely for the benefit of Purchaser. If any of the
foregoing conditions are not satisfied, Purchaser shall have the right at its
sole election either to waive the condition in question and proceed with the
purchase or, in the alternative, terminate this Agreement and receive a return
of the Deposit and any interest thereon; provided, if Seller shall be in default
hereunder or there is a failure of a Closing Condition under the circumstances
described in subitem (3) hereinabove, Purchaser shall have the right to pursue
all remedies available to it at law or in equity. After the expiration of the
Conditions Period and provided this Agreement has not already been terminated
(or been deemed terminated) at or prior to the expiration of the Conditions
Period, the Deposit (excluding any interest earned thereon) shall be non-
refundable to Purchaser subject to (i) the satisfaction or waiver by Purchaser
of all of the Closing Conditions, (ii) the provisions of Section 12 below, and
(iii) Seller not being in default of any of the provisions of this Agreement of
a material nature.
5. Closing and Escrow.
------------------
5.1 Escrow Instructions. Upon execution of this Agreement, the parties
-------------------
hereto shall deposit a copy of an executed counterpart of this Agreement with
Escrow Holder and this instrument shall serve as the instructions to Escrow
Holder for consummation of the purchase and sale contemplated hereby. Seller and
Purchaser agree to execute such additional and supplementary escrow instructions
as may be appropriate to enable the Escrow Holder to comply with the terms of
this Agreement; provided, however, that in the event of any conflict between the
provisions of this Agreement and any supplementary escrow instructions, the
terms of this Agreement shall control.
5.2 Date of Closing. Unless otherwise agreed to in writing by the
---------------
parties, escrow shall close on or before 5:00 p.m. (Pacific Time) on December
23, 1997 (the "Closing Date"). Such date may not be extended without the prior
written approval of both Seller and Purchaser, except as otherwise expressly
provided in this Agreement. Notwithstanding the foregoing, either party may
adjourn the Closing Date for the period of time prescribed by the Lender if the
Lender so requires such extension of the Closing Date.
5.3 Conveyance. At Closing, Seller shall convey to Purchaser insurable,
----------
indefeasible and marketable fee simple title to the Property (excluding the
Personal Property), by means of a duly executed and acknowledged grant deed in
substantially the form of Exhibit E attached hereto and made a part hereof (the
---------
"Grant Deed"). Evidence of delivery of insurable fee simple title shall be the
issuance by Title Company of an ALTA Owner's Policy of Title Insurance (Form B,
rev. 10/17/70) in an amount not less than the Purchase Price insuring fee simple
title to the Property (excluding the Personal Property) in Purchaser, subject
only to such exceptions as Purchaser shall have expressly approved pursuant to
Section 4.1.1 above, general real estate taxes and assessments for the then
applicable tax fiscal year in which the Closing occurs, general real estate
taxes and assessments for subsequent years not yet due and payable, the IPAC
Lease, the Leases approved by Purchaser hereunder, and the Loan Assumption
Documents (collectively, the "Permitted Exceptions") (the "ALTA Title Policy").
Said policy shall provide full coverage against mechanics' or materialmen's
liens arising out of the construction, repair or alteration of any of the
Improvements or any tenant improvements and shall contain such special
endorsements as Purchaser may require. Additionally, at the Closing,
concurrently with the issuance of the ALTA Title Policy to Purchaser, the Title
Company shall be irrevocably committed to issue to the Lender an ALTA Loan
Policy of title insurance, with the limit of liability being the principal
amount of the Loan, subject only to the Permitted Exceptions, in form and
content reasonably acceptable to the Lender (the "Lender's Title Policy"). The
Closing shall mean the date that the Grant Deed is recorded in the official
records of Santa Clara County and possession of the Property is delivered to
Purchaser. Title shall be free and clear of all liens, encumbrances, easements
and restrictions except those expressly accepted by Purchaser. Seller hereby
covenants and agrees that from and after the Agreement Date, Seller shall not
sell, assign, encumber or create any right, title or interest in the Property,
or any part thereof, or permit to exist, any lien, encumbrance or charge
thereon, without the prior written consent
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<PAGE>
of Purchaser, which consent shall not be unreasonably withheld or delayed.
Notwithstanding anything to the contrary contained herein, Seller shall remove
or cause to be removed by the Closing any and all monetary liens or encumbrances
affecting the Property other than current taxes and assessments for which a lien
is not yet due or payable and the Loan Documents.
5.4 Seller's Closing Documents. At or before the Closing, Seller shall
--------------------------
deliver to Purchaser or to Escrow Holder for delivery to Purchaser all of the
following documents:
5.4.1 The original duly executed and acknowledged Grant Deed;
5.4.2 Originals of all leases, subleases, and lease guaranties (and
amendments thereto, if any, and all records and correspondence relating thereto)
covering any portion of the Property that Seller has in its possession and a
duly executed Assignment and Assumption of Leases;
5.4.3 The duly executed original Estoppel Certificates as required
pursuant to Section 4.2.1 above;
5.4.4 Notices to the tenants at the Property in substantially the form
of Exhibit G attached hereto and made a part hereof, duly executed by Seller;
5.4.5 To the extent available originals, or if originals are not
available, certified by Seller as true and complete copies, of all Approved
Contracts and any other agreements to be continued by Purchaser after the
Closing;
5.4.6 A duly executed Assignment and Assumption of Contracts,
Warranties and Permits, and all appropriate consents thereto, for the Approved
Contracts, any other agreements to be continued by Purchaser after Closing, all
licenses, permits, approvals, entitlements, plans, specifications, reports and
any other documents, as required and specified by Purchaser, including any and
all rights to use same without the obligation to compensate any vendors
thereunder;
5.4.7 A Bill of Sale for all of Seller's Personal Property owned in
connection with the Property, in substantially the form of Exhibit F attached
hereto and made a part hereof;
5.4.8 Copies of all governmental approvals, permits, certificates of
compliance, building permits and certificates of occupancy for the Property,
including, without limitation, the Improvements and all tenant occupied space
included within the Improvements which are in Seller's possession or control, to
the extent not already delivered to Purchaser;
5.4.9 An affidavit in form reasonably acceptable to Purchaser
certifying that Seller is not a "foreign person" within the meaning of Section
1445(e)(3) of the Internal Revenue Code of 1986, as amended, and a California
590-RE/597 form (as applicable);
5.4.10 Such corporate resolutions and/or agreements relating to Seller
as shall be reasonably required in connection with this transaction;
5.4.11 Seller shall cause the delivery to (i) Purchaser of the ALTA
Title Policy and payment for such ALTA Title Policy shall be in accordance with
Section 8 of this Agreement, and (ii) the Lender of the Lender's Title Policy;
5.4.12 Four (4) originals of the IPAC Lease, duly executed by IPAC;
5.4.13 To the extent required by the Lender to be executed by Seller,
the Loan Assumption Documents;
5.4.14 An original of the Loan Release Documents, duly executed by
Seller;
5.4.15 An original of the SNDA, duly executed and acknowledged by IPAC,
Lender and Purchaser;
5.4.16 Two (2) originals of the fully executed IPAC Lease Termination
Agreement; and
8
<PAGE>
5.4.17 Any other documents, instruments, records, correspondence or
agreements called for hereunder which have not previously been delivered.
5.5 Seller and Purchaser shall each deposit such other instruments as are
reasonably required by the Escrow Holder, the Title Company or otherwise
required to close the escrow and consummate the purchase of the Property in
accordance with the terms hereof.
5.6 Purchaser's Closing Documents. At or before the Closing, Purchaser
-----------------------------
shall deliver to Seller or to Escrow Holder for delivery to Seller all of the
following documents:
5.6.1 A duly executed Assignment and Assumption of Contracts,
Warranties and Permits, and a duly executed Assignment and Assumption of Leases;
5.6.2 Four (4) originals of the IPAC Lease, duly executed by
Purchaser, as landlord;
5.6.3 An original of the Loan Assumption Documents, duly
executed by Purchaser;
5.6.4 An original of the SNDA, duly executed and acknowledged by
IPAC, Lender and Purchaser; and
5.6.5 Any other documents, instruments, records, correspondence or
agreements called for hereunder which have not previously been delivered.
6. LIQUIDATED DAMAGES. IN THE EVENT PURCHASER FAILS TO COMPLETE THE
------------------
PURCHASE OF THE PROPERTY AS CONTEMPLATED HEREIN DUE TO THE MATERIAL FAILURE BY
PURCHASER TO PERFORM ITS OBLIGATIONS HEREUNDER AND SELLER IS READY, WILLING AND
ABLE TO CONSUMMATE THE SALE CONTEMPLATED HEREIN, PURCHASER AND SELLER HEREBY
AGREE THAT THE DEPOSIT (EXCLUDING ALL INTEREST EARNED THEREON) SHALL BE PAID TO
AND RETAINED BY SELLER AS LIQUIDATED DAMAGES. THE PARTIES HEREBY ACKNOWLEDGE AND
AGREE THAT SELLER'S ACTUAL DAMAGES, IN THE EVENT OF A MATERIAL DEFAULT HEREUNDER
BY PURCHASER, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE.
THEREFORE, BY PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT THE
AMOUNT OF THE DEPOSIT (EXCLUDING ALL INTEREST EARNED THEREON) HAS BEEN AGREED
UPON, AFTER NEGOTIATION AND TAKING INTO CONSIDERATION ALL CIRCUMSTANCES EXISTING
AS OF THE AGREEMENT DATE, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S
DAMAGES AS WELL AS THE RELATIONSHIP OF THE SUM TO THE RANGE OF HARM TO SELLER
THAT COULD BE ANTICIPATED AND SUCH SUM SHALL BE PAID TO AND RETAINED BY SELLER
AS SELLER'S SOLE AND EXCLUSIVE REMEDY AGAINST PURCHASER, AT LAW OR IN EQUITY, IN
THE EVENT OF A MATERIAL DEFAULT BY PURCHASER UNDER THIS AGREEMENT ON THE PART OF
PURCHASER. IN PLACING THEIR INITIALS BELOW, EACH PARTY SPECIFICALLY CONFIRMS THE
ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY WAS
REPRESENTED BY COUNSEL WHO EXPLAINED THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES
PROVISION AT THE TIME THIS AGREEMENT WAS MADE.
/s/ GKL
INITIALS: SELLER ____________ PURCHASER _____________
7. Prorations; and Rent Arrearages. No later than four (4) business
-------------------------------
days prior to the Closing Date, Seller shall deliver to both Purchaser and the
Escrow Holder all necessary information and documentation for the calculation of
prorations as contemplated herein. At Closing, all prepaid rents, rents actually
paid and collected, security deposits and any other charges owing and which have
been collected by Seller for or in respect of the month in which the Closing
occurs shall be prorated as of midnight on the day before the Closing Date and
the prorated amount attributable to Purchaser's ownership period shall either be
paid to Purchaser at the Closing or credited against the Purchase Price, at
Purchaser's option. In addition, real property taxes and assessments, water,
sewer and utility charges and amounts payable under the Approved Contracts
(calculated on the basis of the period covered), and other expenses normal to
the operation and maintenance of the Property shall be prorated as of midnight
on the day before the Closing Date on the basis of a 360-day year (i.e. 30 day
months). Seller shall be solely responsible for the payment of all supplemental
taxes levied, assessed or otherwise accrued prior to the Closing Date.
Notwithstanding any other provision of this Agreement to the contrary, if
Purchaser
9
<PAGE>
shall become liable after the Closing for payment of any property taxes,
supplemental or otherwise, assessed against the Property for any period of time
prior to the Closing Date, Seller shall immediately pay to Purchaser on demand
an amount equal to such tax assessment. With respect to any rent arrears arising
under any of the Leases, in no event shall Seller be credited at Closing any
pre-closing delinquent rental amounts. Any amounts received by Purchaser after
Closing which related to pre-closing delinquent rentals shall, after deduction
of Purchaser's costs of collection, be credited first, to any amounts owing to
Purchaser by such tenant for post-closing rental obligations and second, to
Seller for pre-closing delinquent rental obligations. After the Closing Seller
shall have the right to attempt to collect such pre-closing delinquent rental
obligations (including without limitation, all taxes and CAM charges) and
Purchaser may release such tenants under such Leases from such pre-closing
delinquent rental obligations (including without limitation, all taxes and CAM
charges). Notwithstanding the foregoing, in no event shall Seller be permitted
to bring an action against any tenant under any of the Leases while such tenants
are tenants of any portion of the Property which would seek to terminate any
such tenant's lease or otherwise evict any tenant, without first obtaining
Purchaser's written consent thereto, which consent may be withheld in
Purchaser's sole discretion.
8. Closing Costs and Roof Credit.
-----------------------------
8.1 Closing Costs. All costs associated with the transfer of title to the
-------------
Property and the associated escrow shall be in accordance with the customary
practices in Santa Clara County except as otherwise expressly set forth herein.
Seller shall pay one-half of the applicable city transfer taxes, all documentary
county transfer taxes, all escrow fees, any sales taxes, and the recording costs
with respect to the Grant Deed and to remove liens, encumbrances, title
exceptions and survey matters in accordance with the provisions of this
Agreement. Purchaser shall pay one-half of the applicable city transfer taxes,
the premium for the Lender's Title Policy, and the recording costs for any
instruments it desires to be recorded, including without limitation, the Loan
Assumption Documents. At Closing, Purchaser may obtain from the Title Company a
CLTA Owner's Policy of Title Insurance in the aggregate amount of the Purchase
Price plus the amount equal to all costs and expenses reimbursed or paid to
----
Seller pursuant to this Agreement, insuring fee simple title to the Property in
Purchaser, subject to only the Permitted Exceptions (the "CLTA Title Policy").
Purchaser may elect to cause the Title Company to issue the ALTA Title Policy,
and if Purchaser so elects, Purchaser shall provide the Title Company with an
updated ALTA Survey of the Property, at its sole cost and expense. Seller shall
pay the premium charged for the CLTA Title Policy (excluding endorsements except
for those endorsements required by the Title Company to be obtained in order to
cause the removal from title of objectionable title and/or survey matters which
Seller has agreed to remove in accordance with the provisions of Sections 4.1.1
and 5.3 above) and Purchaser shall pay for any incremental premiums or other
charges related to the ALTA Title Policy (including endorsements).
8.2 Roof Credit. At Closing, Seller shall pay to Purchaser, by means of a
-----------
cashier's check or a credit against the Purchase Price (at Purchaser's
election), the amount of Fifty Thousand Dollars ($50,000) (the "Roof Credit") to
compensate Purchaser for any and all repairs of the roof of that certain
building located at 2219 Old Oakland Road, San Jose, California (the "PCS
Building") Purchaser hereby acknowledges and agrees that Seller has deferred
maintenance and repairs of the roof of the PCS Building, the scope and extent of
which are as set forth in that certain letter report addressed to IPAC, dated
October 15, 1997, issued by Royal Roofing Co., Inc. (the "Roof Report").
Purchaser hereby further acknowledges and agrees that the amount of the Roof
Credit has been negotiated and agreed upon by the parties as being the total
consideration to be paid by Seller for such deferred maintenance and repairs of
the roof of the PCS Building as set forth and identified in the Roof Report.
Purchaser hereby expressly agrees that at the Closing Purchaser will accept the
Property with such deferred maintenance and repairs of the roof of the PCS
Building as set forth and identified in the Roof Report.
9. Broker and Brokerage Commission.
-------------------------------
9.1 Brokerage Commission. Seller and Purchaser respectively represent that
--------------------
there are no brokers or other intermediaries entitled to receive brokerage
commissions or fees or other compensation out of or with respect to the sale of
the Property except for Bishop Hawk (the "Broker"). At Closing, Seller shall pay
to the Broker a brokerage commission in an amount as agreed upon by Seller and
the Broker pursuant to a separate agreement between the parties. Seller shall
indemnify, defend and save and hold Purchaser harmless from and against all
claims, suits, damages and costs incurred or resulting from the claim of any
person, except the Broker (payment of the Broker being Seller's responsibility),
that a commission, fee or remuneration is due in connection with this
transaction if such claim shall be based upon any statement or agreement alleged
to have been made by Seller. Purchaser shall indemnify, defend and save and hold
Seller harmless from and against all claims, suits, damages and costs incurred
or resulting from the claim of any person, except the Broker (payment of the
Broker
10
<PAGE>
being Seller's responsibility), that a commission, fee or remuneration is due in
connection with this transaction if such claim shall be based upon any statement
or agreement alleged to have been made by Purchaser.
9.2 Separate Representation. Seller and Purchaser hereby acknowledge and
-----------------------
agree that Bishop Hawk is the broker which represents only the Seller in
connection with this transaction.
10. Representations and Warranties of Seller. Seller, on behalf of itself and
----------------------------------------
its directors, officers, employees, representatives and authorized agents,
hereby represents and warrants to Purchaser that, as of the date hereof, the
following are true and correct and shall be deemed remade as of the date of the
Closing:
10.1 To the best of Seller's knowledge without obligation to further
investigate and except for the matters referred to in the Roof Report, there are
no material physical defects of the Property or any off-site improvements and to
the best of Seller's knowledge, all such items are in good operating condition
and repair and in compliance with all applicable governmental laws or
regulations.
10.2 To the best of Seller's knowledge, the use and operation of the
Property are in full compliance with applicable building codes, environmental,
zoning and land use laws, and other applicable local, state and federal laws and
regulations.
10.3 To the best of Seller's knowledge, the certificates of occupancy,
income and expense reports, and all other books and records relating to the
Property and all other contracts or documents delivered to Purchaser pursuant to
this Agreement or in connection with the execution hereof are true and correct
copies, and are in full force and effect, without default by (or notice of
default to) any party.
10.4 Seller has not received notice of any condemnation, environmental,
zoning or other land use regulation proceedings, either instituted or planned to
be instituted, which would detrimentally affect the use and operation of the
Property for Purchaser's intended purpose or the value of the Property, nor has
Seller received notice of any special assessment proceedings affecting the
Property.
10.5 To the best of Seller's knowledge, all water, sewer, gas, electric,
telephone, and drainage facilities and all other utilities required by law or by
the normal use and operation of the Property are installed to the Improvements,
are all connected pursuant to valid permits, and are adequate to service the
Property and to permit full compliance with all requirements of law and normal
usage of the Property by the tenants thereof and their licensees and invitees.
10.6 To the best of Seller's knowledge, Seller has obtained all licenses,
permits, easements and rights of way, including proof of dedication, required
from all governmental authorities having jurisdiction over the Property or from
private parties for the normal use and operation of the Property and to insure
vehicular and pedestrian ingress to and egress from the Property.
10.7 There is no litigation pending or, to the best of Seller's knowledge
threatened, against Seller or the Property or any basis therefor that arises out
of the ownership of the Property or that might detrimentally affect the use or
operation of the Property for Purchaser's intended purpose or the value of the
Property or adversely affect the ability of Seller to perform its obligations
under this Agreement.
10.8 Seller is a corporation validly existing and in good standing under
the laws of the State of California; this Agreement and all documents executed
by Seller which are to be delivered to Purchaser at the Closing are or at the
time of Closing will be duly authorized, executed, and delivered by Seller, are
or at the time of Closing will be legal, valid, and binding obligations of
Seller, are and at the time of Closing will be sufficient to convey title (if
they purport to do so), and do not and at the time of Closing will not violate
any provisions of any agreement or judicial order to which Seller is a party or
to which Seller or the Property is subject. Seller hereby further represents and
warrants that (i) the parties signing this Agreement on behalf of Seller have
full power and authority to do so and to fully bind Seller hereunder, and (ii)
no other parties are required to sign this Agreement on behalf of Seller, nor
are any other consents from any other parties not a signatory to this Agreement
on behalf of Seller are required to be obtained by Seller in order to fully bind
Seller hereunder.
10.9 At the time of Closing any outstanding contracts made by Seller for
any improvements to the Property shall have been fully paid for in the event
such improvements shall have been completed as of Closing. Seller shall
promptly cause to be discharged all mechanics' or
11
<PAGE>
materialmen's liens arising from any labor or materials furnished to the
Property pursuant to contracts entered into by Seller prior to Closing, whether
such liens are recorded prior to or after the Closing, and Seller hereby
covenants and agrees with Purchaser that any such liens shall be discharged no
later than ten (10) days after Seller's receipt of Purchaser's written demand
therefor.
10.10 There are no leasing commissions payable in connection with any new
lease or the renewal of any existing lease nor any tenant improvement costs
payable in connection with any new lease or existing lease. The Rent Roll
delivered to Purchaser is true, correct and complete. All of the leases of the
Property as well as the IPAC Lease are (or, in the case of the IPAC Lease, will
be as of the Closing Date) in full force and effect and all of the landlord's
obligations under such leases which have accrued to date have been performed or
will have been performed prior to the Closing; and there are no material
disputes with any tenant regarding a Lease, including, without limitation, any
notice of default or breach, or with any adjoining property owner.
10.11 Seller is not a "foreign person" within the meaning of Section
1445(f)(3) of the Internal Revenue Code, as amended.
10.12 To Seller's best knowledge without obligation to further investigate
and except as Seller otherwise discloses to Purchaser in either the documents
actually delivered to Purchaser by Seller or in writing during the first twenty
(20) days following the Agreement Date, there are no Hazardous Materials which
are now or have been located on or within any portion of the Property which are
in violation of any applicable federal, state or local laws or ordinances and
implementing regulations or guidelines as in effect as of the Agreement Date or
as of the date of the Closing; there are and have been no enforcement, cleanup,
removal or other governmental or regulatory actions instituted, completed or
threatened pursuant to any applicable federal, state or local laws or ordinances
relating to any Hazardous Materials and affecting the Property; there are and
have been no claims made or threatened by any third party against Seller or the
Property relating to damage, contribution, cost recovery compensation, loss or
injury resulting from any Hazardous Materials; there are no underground storage
tanks located on the Property, whether now or formerly used for the storage or
containment of any Hazardous Materials, including any petroleum products or by-
products; and the Property does not contain or include any asbestos or asbestos
containing materials or any petroleum or petroleum by-products.
10.13 Seller is the sole owner of (and Purchaser will acquire hereunder)
the entire right, title and interest in and to the Property.
10.14 The Loan Documents and all other documents, instruments and
information relating to the Loan delivered or made available to Purchaser
pursuant to this Agreement or in connection with the execution hereof are true,
complete and correct copies, and are in full force and effect, without default
by (or notice of default to) by either Seller, as borrower, or the Lender under
the Loan and the Loan Documents and no event has occurred that, with the passage
of time or the giving of notice, or both, would constitute a default by either
Seller, as borrower, or the Lender under the Loan and the Loan Documents. Seller
hereby further represents and warrants that all of the borrower's and the
Lender's obligations under the Loan Documents which have accrued to date have
been performed prior to and through the Closing Date, there are no material
disputes between Seller, as borrower, and the Lender regarding the Loan or the
Loan Documents, and Seller presently asserts no claim of default or offset or
defense against the payment of principal, interest or other charges payable by
Seller, as borrower, under the Loan and the Loan Documents.
11. Possession. Possession of the Property shall be delivered to Purchaser on
----------
the Closing Date subject to the possessory rights of the tenants under the
Leases and of IPAC under the IPAC Lease, provided, however, that prior to
Closing, and subject to Purchaser's indemnity provided in Section 4.1.2 above,
Seller shall afford authorized representatives of Purchaser reasonable access to
the Property for the purposes of satisfying Purchaser with respect to the
representations, warranties, and covenants of Seller contained herein and with
respect to satisfaction of any conditions precedent to the Closing contained
herein.
12. Maintenance of the Property: Casualty and Condemnation. Between the
------------------------------------------------------
Agreement Date and the Closing, except for Seller's performance of the roof
repairs identified in the Roof Report (which shall not be required during the
escrow period), Seller shall maintain the Property in good order, condition and
repair, and at least in substantially the same manner as at present, reasonable
wear and tear excepted, shall perform all work required to be done by the
landlord under the terms of any lease, sublease or other agreement affecting the
Property, shall comply with all laws, CC&Rs and recorded restrictions and
agreements affecting the Property, and shall make all repairs, maintenance and
replacements of the Improvements and any personal property and otherwise operate
the Property in the
12
<PAGE>
same manner as before the making of this Agreement, the same as though Seller
were retaining the Property except as hereinafter set forth in Section 13 below.
In the event that, prior to Closing, the Property, or any part thereof, is
destroyed or materially damaged, or if condemnation proceedings are commenced or
threatened against the Property, Purchaser shall have the right, exercisable by
giving notice of such decision to Seller within twenty (20) days after receiving
written notice of such damage, destruction or condemnation proceedings or threat
thereof, to terminate this Agreement, in which case, Seller shall cause the
return to Purchaser of the Deposit and all interest earned thereon, and neither
Purchaser nor Seller shall have any further liability or obligation to each
other. For purposes of this Agreement, material damage shall mean any damage or
loss which would (a) cost in excess of Fifty Thousand Dollars ($50,000.00) to
repair or restore, as determined in good faith by Seller and Purchaser, (b)
require more than thirty (30) days to repair or restore, as determined in good
faith by Seller and Purchaser, (c) reduce the total square footage of the
Property by more than ten percent (10%), or (d) materially impairs access to or
from the Property. If Purchaser elects to accept the Property in its then
condition, all proceeds of insurance or condemnation awards paid or payable to
Seller by reason of such damage, destruction or condemnation shall be paid or
assigned to Purchaser and the Purchase Price shall be reduced by an amount equal
to any applicable deductible or self-insured retention. In the event of non-
material damage to the Property, which damage Seller is unwilling to repair or
replace, Purchaser shall accept the Property in its then condition and proceed
with the purchase, in which case Purchaser shall be entitled to a reduction of
the Purchase Price to the extent of the cost of any applicable deductible or
self-insured retention. For purposes of any repairs or replacements of non-
material damage under this Section 12, the Closing Date may be extended, at
Purchaser's or Seller's election, for a reasonable time to allow such repairs or
replacements to be made, which time period shall not exceed ninety (90) days.
13. Purchaser's Consent to New Contracts Affecting the Property; Seller's
---------------------------------------------------------------------
Cooperation. Seller shall not, after the Agreement Date, do any of the following
- -----------
without first involving Purchaser therein and obtaining Purchaser's prior
written consent thereto: (a) enter into any lease, amendment of lease, contract
or agreement; or (b) other than the permitted sublease by IPAC of a portion of
the IPAC Premises in accordance with the provisions of the IPAC Lease, permit
any tenant of the Property to terminate or cancel its lease or vacate its
premises (other than in accordance with the now existing terms of its lease), or
consent to or permit any tenant to enter into any sublease or assignment of
lease; or (c) enter into any contract or agreement pertaining to the Property
which would survive the Closing or create any lien or obligation on the Property
that could survive the Closing; or (d) modify any of the Loan Documents, any
lease, contract or agreement pertaining to the Property or waive any rights of
Seller thereunder, without in each case obtaining Purchaser's prior written
consent thereto; or (e) market the Property or any portion thereof to any
potential purchaser, joint venture partner, lender or tenant. If Seller desires
to so enter into any new lease, contract or agreement or otherwise modify any of
the foregoing, Seller shall obtain Purchaser's prior written consent thereto,
which consent shall not be unreasonably withheld or delayed. Within five (5)
business days after Purchaser's receipt of any such proposed document or
instrument, Purchaser shall advise Seller of whether or not Purchaser approves
of such proposed document or instrument. If Purchaser fails to notify Seller of
its decision within such five (5) business day period, then such proposed
document or instrument shall be deemed approved by Purchaser. In all events
Seller shall promptly deliver to Purchaser a copy of each and every such
document or instrument executed by Seller affecting the Property. Seller shall
fully cooperate with Purchaser in its acquisition of the Property, including,
but not limited to, promptly delivering to Purchaser a list of all active
tenants or potential tenants and their representatives and telephone numbers,
and if requested to do so by Purchaser, making introductions to such
representatives, touring prospective tenants through the Property, allowing
Purchaser to directly negotiate with any and all tenants, subtenants and
potential tenants, and executing any and all reasonably necessary documents as
requested by Purchaser. Purchaser shall have the right to disclose to all
interested parties the existence of this Agreement.
14. Limited Liability. Seller on behalf of itself and its directors,
-----------------
officers and representatives hereby agrees that in no event or circumstance
shall Purchaser, any of its directors, officers, representatives, agents or
employees, any partners and members of Purchaser, or any representatives,
agents, employees or partners or members of the partners or members of Purchaser
have any personal liability under this Agreement, or to any other party in
connection with the Property.
15. Miscellaneous.
-------------
15.1 Notices. Any notice required or permitted to be given under
-------
this Agreement shall be in writing and shall be deemed to have been given when
delivered by U.S. mail, registered or certified, return receipt requested,
postage prepaid, or by overnight delivery service showing receipt of delivery,
or by personal delivery, or by facsimile transmission. If to Purchaser, notices,
documents and/or demands shall be sent to:
13
<PAGE>
Lincoln Property Company N.C., Inc.
101 Lincoln Centre Drive, Fourth Floor
Foster City, California 94404
Attn: Mr. Steve Dunn and Ms. Darleen Fraser
Phone number: 650-571-2200
Facsimile number: 650-573-8624
with a copy to:
Real Estate Law Group, LLP
2330 Marinship Way, Suite 211
Sausalito, California 94965
Attention: Bonnie Frank, Esquire
Phone number: 415-331-2555
Facsimile number: 415-331-7272
and if to Seller:
IPAC Properties
2221 Old Oakland Road
San Jose, California 95131-1402
Attention: Mr. Gerald K. Fehr
Phone number: 408-321-3600
Facsimile number: 408-321-0311
with a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94034-1050
Attention: Marc Gottschalk, Esquire
Phone number: 650-493-9300
Facsimile number: 650-493-6811
Notices as aforesaid shall be effective upon the earlier of actual receipt, or
twenty-four (24) hours after deposit with the messenger or delivery service, or
the next business day after delivery to an overnight delivery service, or within
three (3) days after the deposit in the U.S. mail, or upon confirmation of
transmission by facsimile.
15.2 Successors and Assigns. This Agreement shall be binding upon, and
----------------------
inure to the benefit of, the parties hereto and their respective successors,
heirs, administrators and assigns. Without being relieved of any liability under
this Agreement, Purchaser reserves the right to take title to the Property in a
name or nominee other than Purchaser. Purchaser may assign its rights and
delegate its obligations under this Agreement, without Seller's consent thereto,
to an entity in which Purchaser or a related or affiliated entity of Purchaser
is a member or partner, or is otherwise the manager thereof, provided Purchaser
delivers to Seller prior written notice of any such assignment.
15.3 Amendments. Except as otherwise provided herein, this Agreement
----------
may be amended or modified only by a written instrument executed by Seller and
Purchaser.
15.4 Continuation and Survival of Representations and Warranties. All
------------------------------------------------------------
representations and warranties by Seller contained herein or made in writing
pursuant to this Agreement are intended to and shall remain true and correct as
of the time of Closing, shall be deemed to be material, and shall survive the
execution and delivery of this Agreement and the delivery of the Grant Deed and
transfer of title to the Property for a period of one (1) year. All statements
contained in any certificate delivered at any time by or on behalf of Seller in
connection with the transaction contemplated hereby shall constitute
representations and warranties hereunder.
15.5 Entire Agreement. This Agreement constitutes the entire understanding
----------------
of the parties and all prior agreements, representations, and understandings
between the parties, whether oral or written, are deemed null and void, all of
the foregoing having been merged into this Agreement. The parties acknowledge
that each party and/or its counsel have reviewed and revised this Agreement and
that no rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall be employed in the interpretation of
this Agreement or any amendments or exhibits to this Agreement or any document
executed and delivered by either party in connection with this Agreement.
14
<PAGE>
15.6 Enforceability. If for any reason, any provision of this
--------------
Agreement shall be held to be unenforceable, it shall not affect the validity or
enforceability of any other provision of this Agreement and to the extent any
provision of this Agreement is not determined to be unenforceable, such
provision, or portion thereof, shall be, and remain, in full force and effect.
15.7 Counterparts. This Agreement may be executed in counterparts. All
------------
executed counterparts shall constitute one agreement, and each counterpart shall
be deemed an original.
15.8 Dispute Costs. In the event any dispute between the parties with
-------------
respect to this Agreement results in litigation or other proceedings, the
prevailing party shall be reimbursed by the party not prevailing in such
proceeding for all reasonable costs and expenses, including, without limitation,
reasonable attorneys' and experts' fees and costs incurred by the prevailing
party in connection with such litigation or other proceeding and any appeal
thereof. Such costs, expenses and fees shall be included in and made a part of
the judgment recovered by the prevailing party, if any.
15.9 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of California.
15.10 Time of the Essence: and Business Days. Time is of the essence
--------------------------------------
of this Agreement. Unless the context otherwise requires, all periods
terminating on a given day, period of days, or date shall terminate at 5:00 p.m.
(Pacific Time) on such date or dates and references to "days" shall refer to
calendar days except if such references are to "business days" which shall refer
to days which are not a Saturday, Sunday or legal holiday. Notwithstanding the
foregoing, if any period terminates on a Saturday, Sunday or legal holiday,
under the laws of the State of California, the termination of such period shall
be on the next succeeding business day. The time in which any act provided under
this Agreement is to be done, shall be computed by excluding the first day and
including the last day, unless the last day is a Saturday, Sunday or legal
holiday under the laws of the State of California, and then it is also so
excluded.
16. Agreement Date. The parties hereby covenant and agree that the "Agreement
--------------
Date" shall be the date on which the Escrow Holder confirms in writing to both
Seller and Purchaser that the Escrow Holder has actually received from both
parties two (2) signed and initialled original counterparts of this Agreement
and the Escrow Holder is in a position to release to each of the parties a fully
executed original of this Agreement signed and initialled in counterparts. The
Escrow Holder shall insert such date in each original counterpart of this
Agreement on Page 1 hereof.
17. No Successor Liability. Seller agrees that, except for any Leases
----------------------
expressly approved by Purchaser hereunder, the Loan Assumption Documents, the
IPAC Lease and the Approved Contracts, Purchaser shall have no liability
whatsoever as a successor in interest for any contracts or agreements entered
into by Seller in connection with its ownership or operation of the Property or
the use, occupancy or construction of the improvements located thereon; and
Seller shall fully perform all of its commitments and obligations under any such
contracts and agreements and shall indemnify and defend Purchaser against (by
counsel reasonably acceptable to Purchaser) and hold Purchaser and its partners
and members harmless from any and all losses, costs, damages, liabilities and
expenses, including without limitation, reasonable attorneys' and experts' fees
and costs, brokerage commissions and lease assumptions under the Leases with
respect to such contracts and agreements referenced herein.
18. AS-IS Condition of Property. Purchaser acknowledges and agrees that prior
---------------------------
to Closing, it or its agents will have inspected the Property and observed the
physical characteristics and condition of the Property. Purchaser hereby waives
any and all deficiencies or defects in the physical characteristics and
condition of the Property which would be disclosed by such inspection. Purchaser
further acknowledges and agrees that except for any representations made by
Seller in this Agreement or pursuant to this Agreement neither Seller or any of
Seller's employees, agents or representatives have made any representations,
warranties or agreements by or on behalf of Seller as to any matters concerning
the Property, the size of the Land, the size of the Improvements, the present
use of the Property or the suitability of Purchaser's intended use of the
Property, including without limitation, the suitability of the topography; the
availability of water rights or utilities; the present and future zoning,
subdivision and any and all other land use matters; the condition of the soil,
subsoil or groundwater of the Property and any and all other environmental
matters; the purpose(s) to which the Property is suited; drainage; flooding;
access to public roads; or proposed routes or roads or extensions thereof other
than explicitly disclosed in this Agreement. Purchaser hereby acknowledges and
agrees that, except for any representations made by Seller in this Agreement or
pursuant to this Agreement, the Property is to be purchased, conveyed and
accepted by Purchaser in its present condition, "AS IS", "WHERE IS" AND WITH ALL
FAULTS, and that no patent or latent defect in the condition of the Property
whether or not known or discovered,
15
<PAGE>
shall affect the rights of either Seller or Purchaser hereunder. Any and all
information and documents furnished to Purchaser by or on behalf of Seller
relating to the Property shall be deemed furnished as a courtesy to Purchaser
but without any warranty of any kind from Seller as to the information contained
therein. Purchaser hereby represents and warrants to Seller that as of the
Closing Date Purchaser has performed an independent inspection and investigation
of the Property and has also investigated and has knowledge of operative or
proposed governmental laws and regulations including without limitation, land
use laws and regulations to which the Property may be subject, and Purchaser
further represents that, except for any representations made by Seller in this
Agreement or pursuant to this Agreement, it shall acquire the Property solely
upon the basis of its independent inspection and investigation of the Property,
including without limitation, Purchaser's review and determination of the
applicability and effect of such laws and regulations. Except for any
representations made by Seller in this Agreement or pursuant to this Agreement,
Purchaser has neither received nor relied upon any representations concerning
such laws and regulations from Seller, Seller's employees, agents or any other
person acting on or in behalf of Seller.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed as of
the Agreement Date.
SELLER:
IPAC Properties, a California corporation
/s/ Gerald K. Fehr
___________________________________________
Name: GERALD K FEHR
Title: PRESIDENT
PURCHASER:
LINCOLN PROPERTY COMPANY N.C., INC., a Texas corporation
By: _____________________________________
Its: ____________________________________
16
<PAGE>
EXHIBIT 10.27
LEASE AGREEMENT
(NNN R&D)
BASIC LEASE INFORMATION
LEASE DATE: December 30, 1997
LANDLORD: LINCOLN-RECP OLD OAKLAND OPCO, LLC,
a Delaware limited liability company
LANDLORD'S ADDRESS: c/o Lincoln Property Company Management Services, Inc.
101 Lincoln Centre Drive, Fourth Floor
Foster City, California 94404-1167
TENANT: Integrated Packaging Assembly Corporation,
a California corporation
TENANT'S ADDRESS: 2221 Old Oakland Road
San Jose, California 95131-1402
PREMISES: Approximately 82,390 rentable square feet as shown on
Exhibit A
---------
PREMISES ADDRESS: 2221 Old Oakland Road
San Jose, California 95131-1402
<TABLE>
<CAPTION>
<C> <S>
BUILDING [BUILDING 23]: Approximately 82,390 rentable square feet
LOT (BUILDING'S TAX PARCEL): APN 237-01-044
PARK: Approximately 138,366 rentable square feet
</TABLE>
TERM: January 16, 1998 ("Commencement Date"), through
January 15, 2008 ("Expiration Date")
BASE RENT ((P)3): Eighty-Two Thousand Three Hundred Ninety Dollars ($82,390)
per month for Months 1 - 24
<TABLE>
<CAPTION>
<S> <C> <C>
ADJUSTMENTS TO BASE RENT: Months 25 - 48 $ 90,629.00
Months 49 - 72 $ 99,691.90
Months 73 - 96 $109,661.09
Months 97 - 120 $120,627.20
</TABLE>
SECURITY DEPOSIT ((P)4): None
<TABLE>
<CAPTION>
<S> <C>
*TENANT'S SHARE OF OPERATING EXPENSES ((P)6.1): 100% of the Building and 59.5%
of the Park
*TENANT'S SHARE OF TAX EXPENSES ((P)6.2): 59.5% of the Park
*TENANT'S SHARE OF COMMON AREA UTILITY COSTS ((P)7): 100% of the Building and 59.5% of
the Park
*TENANT'S SHARE OF UTILITY EXPENSES ((P)7): 100% of the Building
</TABLE>
*The amount of Tenant's Share of the expenses as referenced above shall be
subject to modification as set forth in this Lease.
PERMITTED USES ((P)9): General manufacturing, including packaging and
assembly of computer and semiconductor components
and related warehouse, sales, research and
development, but only to the extent permitted by
the City of San Jose and all agencies and
governmental authorities having jurisdiction
thereof
UNRESERVED
PARKING SPACES: One hundred fifty-two (152) non-exclusive and non-
designated spaces
BROKER ((P)38): None
<TABLE>
<CAPTION>
<S> <C> <C>
EXHIBITS: Exhibit A Premises, Building, Lot and/or Park
Exhibit B Intentionally omitted
Exhibit C Rules and Regulations
Exhibit D Intentionally Omitted
Exhibit E Hazardous Materials Disclosure Certificate - Example
Exhibit F Intentionally Omitted
Exhibit G Tenant's Initial Hazardous Materials Disclosure Certificate
Exhibit H Intentionally Omitted
Exhibit I Existing Improvements
Exhibit J Form of Consent to Subletting
Exhibit K Removable Equipment
ADDENDA: Addendum 1: Options to Extend
</TABLE>
1
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<C> <S> <C>
1. PREMISES........................................................ 3
2. ADJUSTMENT OF COMMENCEMENT DATE; CONDITION OF THE PREMISES...... 3
3. RENT............................................................ 3
4. SECURITY DEPOSIT................................................ 3
5. TENANT IMPROVEMENTS............................................. 3
6. ADDITIONAL RENT................................................. 3
7. UTILITIES....................................................... 7
8. LATE CHARGES.................................................... 8
9. USE OF PREMISES................................................. 8
10. ALTERATIONS AND ADDITIONS; AND SURRENDER OF PREMISES............ 9
11. REPAIRS AND MAINTENANCE......................................... 10
12. INSURANCE....................................................... 11
13. WAIVER OF SUBROGATION........................................... 13
14. LIMITATION OF LIABILITY AND INDEMNITY........................... 13
15. ASSIGNMENT AND SUBLEASING....................................... 14
16. AD VALOREM TAXES................................................ 16
17. SUBORDINATION................................................... 16
18. RIGHT OF ENTRY.................................................. 16
19. ESTOPPEL CERTIFICATE............................................ 16
20. TENANT'S DEFAULT................................................ 17
21. REMEDIES FOR TENANT'S DEFAULT................................... 17
22. HOLDING OVER.................................................... 18
23. LANDLORD'S DEFAULT.............................................. 18
24. PARKING......................................................... 19
25. SALE OF PREMISES................................................ 19
26. WAIVER.......................................................... 19
27. CASUALTY DAMAGE................................................. 19
28. CONDEMNATION.................................................... 20
29. ENVIRONMENTAL MATTERS/HAZARDOUS MATERIALS....................... 21
30. FINANCIAL STATEMENTS............................................ 23
31. GENERAL PROVISIONS.............................................. 23
32. SIGNS........................................................... 25
33. MORTGAGEE PROTECTION............................................ 25
34. QUITCLAIM....................................................... 25
35. MODIFICATIONS FOR LENDER........................................ 25
36. WARRANTIES OF TENANT............................................ 25
37. COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT................. 25
38. BROKERAGE COMMISSION............................................ 26
39. QUIET ENJOYMENT................................................. 26
40. LANDLORD'S ABILITY TO PERFORM TENANT'S UNPERFORMED OBLIGATIONS.. 26
41. TENANT'S ABILITY TO PERFORM LANDLORD'S UNPERFORMED OBLIGATIONS.. 27
</TABLE>
2
<PAGE>
LEASE AGREEMENT
DATE: This Lease is made and entered into as of the Lease Date set forth on
Page 1. The Basic Lease Information set forth on Page 1 and this Lease
are and shall be construed as a single instrument.
1. PREMISES: Landlord hereby leases the Premises to Tenant upon the terms and
--------
conditions contained herein. Landlord hereby grants to Tenant a license for the
right to use, on a non-exclusive basis, parking areas and ancillary facilities
located within the Common Areas of the Park, subject to the terms of this Lease.
Landlord and Tenant hereby agree that for purposes of this Lease, as of the
Lease Date, the rentable square footage area of the Premises, the Building, the
Lot and the Park shall be deemed to be the number of rentable square feet as set
forth in the Basic Lease Information on Page 1.
2. ADJUSTMENT OF COMMENCEMENT DATE; CONDITION OF THE PREMISES: Landlord and
----------------------------------------------------------
Tenant hereby acknowledge and agree that Landlord is acquiring the Park from an
affiliated entity of Tenant. Tenant hereby further acknowledges and agrees that
prior to the Commencement Date hereof, Tenant has occupied the Premises and
conducted its operations therein. Landlord will deliver to Tenant possession of
the Premises, and the Commencement Date of this Lease shall occur,
simultaneously with the close of escrow of Landlord's purchase of the Park from
an affiliated entity of Tenant. In the event the commencement date and/or the
expiration date of this Lease is other than the Commencement Date and/or
Expiration Date specified in the Basic Lease Information, as the case may be,
Landlord and Tenant shall execute a written amendment to this Lease,
substantially in the form of Exhibit F hereto, wherein the parties shall specify
---------
the actual commencement date, expiration date and the date on which Tenant is to
commence paying Rent. The word "Term" whenever used herein refers to the initial
term of this Lease and any extension thereof. By taking possession of the
Premises, Tenant shall be deemed to have accepted the Premises in good condition
and state of repair. Tenant hereby acknowledges and agrees that neither Landlord
nor Landlord's agents or representatives has made any representations or
warranties as to the suitability, safety or fitness of the Premises for the
conduct of Tenant's business, Tenant's intended use of the Premises or for any
other purpose.
3. RENT: On the date that Tenant executes this Lease, Tenant shall deliver to
----
Landlord the original executed Lease, the Base Rent (which shall be applied
against the Rent payable for the first month Tenant is required to pay Base
Rent) and all insurance certificates evidencing the insurance required to be
obtained by Tenant under Section 12 of this Lease. Tenant agrees to pay
Landlord, without prior notice or demand, or abatement, offset, deduction or
claim, the Base Rent specified in the Basic Lease Information, payable in
advance at Landlord's address specified in the Basic Lease Information on the
Commencement Date and thereafter on the first (1st) day of each month throughout
the balance of the Term of the Lease. In addition to the Base Rent set forth in
the Basic Lease Information, Tenant shall pay Landlord in advance on the
Commencement Date and thereafter on the first (1st) day of each month throughout
the balance of the Term of this Lease, as Additional Rent, Tenant's Share of
Operating Expenses, Tax Expenses, Common Area Utility Costs, and Utility
Expenses. The term "Rent" whenever used herein refers to the aggregate of all
these amounts. The Rent for any fractional part of a calendar month at the
commencement or termination of the Lease term shall be a prorated amount of the
Rent for a full calendar month based upon a thirty (30) day month. The prorated
Rent shall be paid on the Commencement Date and the first day of the calendar
month in which the date of termination occurs, as the case may be.
4. SECURITY DEPOSIT: Intentionally Omitted.
----------------
5. TENANT IMPROVEMENTS: Tenant hereby accepts the Premises as suitable for
-------------------
Tenant's intended use and as being in good operating order, condition and
repair, "AS IS". Tenant acknowledges and agrees that neither Landlord nor any of
Landlord's agents, representatives or employees has made any representations as
to the suitability, fitness or condition of the Premises for the conduct of
Tenant's business or for any other purpose, including without limitation, any
storage incidental thereto. Tenant further acknowledges and agrees that neither
Landlord nor any of Landlord's agents, representatives or employees has agreed
to perform or undertake (i) any alterations to the Premises, or (ii) construct
any improvements in or to the Premises (collectively, "Tenant Improvements").
Any exception to the foregoing provisions must be made by express written
agreement by both parties.
6. ADDITIONAL RENT: It is intended by Landlord and Tenant that this Lease be a
---------------
"triple net lease." The costs and expenses described in this Section 6 and all
other sums, charges, costs and expenses
3
<PAGE>
specified in this Lease other than Base Rent are to be paid by Tenant to
Landlord as additional rent (collectively, "Additional Rent").
6.1 OPERATING EXPENSES: In addition to the Base Rent set forth in Section
3, Tenant shall pay Tenant's Share, which is specified in the Basic Lease
Information, of all Operating Expenses as Additional Rent. The term "Operating
Expenses" as used herein shall mean the total amounts paid or payable by
Landlord in connection with the ownership, maintenance, repair and operation of
the Premises, the Building and the Lot, and where applicable, of the Park
referred to in the Basic Lease Information. The amount of Tenant's Share of
Operating Expenses shall be subject to modification by Landlord if there is a
change in the rentable square footage of the Premises, the Building and/or the
Park. These Operating Expenses may include, but are not limited to:
6.1.1 Landlord's cost of repairs to, and maintenance of, the roof,
the roof membrane and the exterior walls of the Building as set forth in
Section 11 hereof;
6.1.2 Landlord's cost of maintaining the outside paved area,
landscaping and other common areas for the Park. The term "Common Areas"
shall mean all areas and facilities within the Park exclusive of the
Premises and the other portions of the Park leasable exclusively to other
tenants. The Common Areas include, but are not limited to, interior lobbies,
mezzanines, parking areas, access and perimeter roads, sidewalks, rail
spurs, landscaped areas and similar areas and facilities;
6.1.3 Landlord's annual cost of insurance insuring against fire and
extended coverage (including, if Landlord elects, "all risk" or "special
purpose" coverage) and all other insurance, including, but not limited to,
earthquake (subject to the provisions of Section 12.5 hereof), flood and/or
surface water endorsements for the Building, the Lot and the Park (including
the Common Areas), rental value insurance against loss of Rent in an amount
equal to the amount of Rent for a period of at least six (6) months
commencing on the date of loss, and subject to the provisions of Section 27
below, any deductible;
6.1.4 Landlord's cost of: (i) modifications and/or new improvements to
the Building, the Common Areas and/or the Park occasioned by any rules, laws
or regulations effective subsequent to the date on which the Building was
originally constructed; (ii) reasonably necessary replacement improvements
to the Building, the Common Areas and the Park after the Lease Date; and
(iii) new improvements to the Building, the Common Areas and/or the Park
that reduce operating costs or improve life/safety conditions, all as
reasonably determined by Landlord; provided, however, if any of the
foregoing are in the nature of capital improvements, then the cost of such
capital improvements shall be amortized on a straight-line basis over a
reasonable period, which shall be the period of time specified under
generally accepted accounting principles as the estimated useful life of
such modifications, new improvements or replacement improvements in question
(at an interest rate as reasonably determined by Landlord), and Tenant shall
pay Tenant's Share of the monthly amortized portion of such costs (including
interest charges) as part of the Operating Expenses herein;
6.1.5 If Landlord elects to so procure in accordance with the
provisions of Section 11 hereof, Landlord's cost of preventative
maintenance, and repair contracts including, but not limited to, contracts
for elevator systems and heating, ventilation and air conditioning systems,
lifts for disabled persons, and trash or refuse collection;
6.1.6 Landlord's cost of security and fire protection services for
the Building and/or the Park, as the case may be, if in Landlord's sole but
reasonable discretion such services are provided;
6.1.7 Landlord's cost for the maintenance and repair of any rail spur
and rail crossing, and for the creation and negotiation of, and pursuant to,
any rail spur or track agreements, licenses, easements or other similar
undertakings;
6.1.8 Landlord's cost of supplies, equipment, rental equipment and
other similar items used in the operation and/or maintenance of the Park;
6.1.9 Landlord's cost for the repairs and maintenance items set forth
in Section 11.2 below; and
6.1.10 Landlord's cost for the management and administration of the
Premises, the Building, the Common Areas and the Park, including without
limitation, a property management fee, accounting, auditing, billing,
salaries for clerical and supervisory employees (whether located within the
Park or off-site) and all fees, licenses and permits related to the
ownership, operation and management of any portion of the Park in an amount
not to exceed three percent (3%) of the Rent, excluding for purposes of
calculating this sum, the costs described in this Section 6.1.11.
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Notwithstanding the foregoing, for purposes of this Lease, the term
"Operating Expenses" shall not include the following:
(i) interest, principal, points, fees and other financing costs on
debt (except in connection with the financing of items which may be
included in the definition of Operating Expenses herein) or amortization
on any mortgage or mortgages or any other debt instrument made by
Landlord encumbering the Premises and/or Building (including the Lot on
which the Building is situated) or payments on any ground lease;
(ii) any items for which Landlord is actually reimbursed by insurance
proceeds or by direct reimbursement by any other tenant of the Park;
(iii) costs of repairs or other work necessitated by fire, windstorm
or other casualty (excluding any commercially reasonable deductibles)
and/or costs of repair or other work necessitated by the exercise of the
right of eminent domain to the extent insurance proceeds or a
condemnation award, as applicable, is actually received by Landlord for
such purposes; provided such costs of repairs or other work shall be
paid by the parties in accordance with the provisions of Section 27 and
28 below;
(iv) overhead and profit increment paid to Landlord or to
subsidiaries or affiliates of Landlord for goods and/or services in the
Building to the extent the same exceeds the costs of such by
unaffiliated third parties on a competitive basis; or any costs included
in Operating Expenses representing an amount paid to a person, firm,
corporation or other entity related to Landlord which is in excess of
the amount which would have been paid in the absence of such
relationship;
(v) Landlord's general corporate overhead and general administrative
expenses, including, but not limited to, salaries of officers and
executives of Landlord (other than any such costs and expenses to be
paid as part of the management fee referred to in Section 6.1.10 above);
(vi) advertising and promotional expenditures, and costs of signs
identifying the owner of the Building;
(vii) costs associated with the investigation and/or remediation of
Hazardous Materials (hereafter defined) present in, on or about the
Premises, the Building or the Park, unless such costs and expenses are
the responsibility of Tenant as provided in Section 29 of this Lease, in
which event such costs and expenses shall be paid solely by Tenant in
accordance with the provisions of Section 29 of this Lease;
(viii) legal and accounting fees for preparation of Landlord's
business documents, including the preparation of any and all tax
returns;
(ix) any payments under a ground lease or master lease;
(x) costs which are actually reimbursed by any contractor,
manufacturer or supplier under any warranty;
(xi) costs and expenses incurred by Landlord to perform its
obligations under Section 11.3 of this Lease;
(xii) expenses resulting directly from the willful misconduct or gross
negligence of Landlord;
(xiii) costs of purchasing, installing and replacing artwork, excluding
repair and maintenance required as a result of normal wear and tear, to
the extent properly capitalized under generally accepted accounting and
management practices;
(xiv) fees, commissions, attorneys' fees, costs or other disbursements
incurred in connection with negotiations or disputes with any other
occupant of the Park and costs directly resulting from the violation by
Landlord or any occupant of the Park (other than Tenant) of the terms
and conditions of any lease or other occupancy agreement;
(xv) depreciation and amortization except on materials, tools,
supplies and vendor type equipment purchased by Landlord to supply
services for the Park, or other expense reserves; and
(xvi) costs directly resulting from the intentional or grossly
negligent act, omission or violation of Law by Landlord, any other
occupant of the Park (other than Tenant), or their respective authorized
agents, employees or contractors.
6.2 TAX EXPENSES: In addition to the Base Rent set forth in Section 3,
Tenant shall pay its share, which is specified in the Basic Lease Information,
of all real property taxes applicable to the land
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and improvements included within the Lot on which the Premises are situated and
one hundred percent (100%) of all personal property taxes now or hereafter
assessed or levied against the Premises or Tenant's personal property. The
amount of Tenant's Share of Tax Expenses shall be subject to modification by
Landlord if there is a change in the rentable square footage of the Premises or
if the square footage of the Park (excluding the Premises) or the other Building
is changed due to a casualty or condemnation. Tenant shall also pay one hundred
percent (100%) of any increase in real property taxes attributable, in
Landlord's reasonable discretion, to any and all future alterations or other
improvements of any kind, which are above standard improvements customarily
installed for similar buildings located within the Building or the Park (as
applicable), whatsoever placed in, on or about the Premises for the benefit of,
at the request of, or by Tenant. The term "Tax Expenses" shall mean and include,
without limitation, any form of tax and assessment (general, special,
supplemental, ordinary or extraordinary), commercial rental tax, payments under
any improvement bond or bonds, license fees, license tax, business license fee,
rental tax, transaction tax, levy, or penalty imposed by authority having the
direct or indirect power of tax (including any city, county, state or federal
government, or any school, agricultural, lighting, drainage or other improvement
district thereof) as against any legal or equitable interest of Landlord in the
Premises, the Building, the Lot or the Park, as against Landlord's right to
rent, or as against Landlord's business of leasing the Premises or the occupancy
of Tenant or any other tax, fee, or excise, however described, including, but
not limited to, any value added tax, or any tax imposed in substitution
(partially or totally) of any tax previously included within the definition of
real property taxes, or any additional tax the nature of which was previously
included within the definition of real property taxes. The term "Tax Expenses"
shall not include any franchise, estate, inheritance, net income, or excess
profits tax imposed upon Landlord. Provided Tenant is not in default of any of
the terms, provisions or obligations under this Lease beyond any applicable cure
periods as specified in this Lease, and Tenant has delivered to Landlord at
least sixty (60) days prior written notice of Tenant's intention to initiate
such a proceeding, Tenant shall have the right to contest the amount or validity
of any Tax Expenses payable by Tenant hereunder with respect to the Premises
only, by appropriate administrative and legal proceedings brought either in its
own name, Landlord's name or jointly with Landlord. Any such proceeding shall be
undertaken by counsel selected by Tenant and reasonably approved by Landlord,
and if Landlord deems it appropriate, such measures shall be taken in the name
of Tenant. Landlord hereby agrees that it will promptly upon receipt of a
written request therefor from Tenant (but in no event later than forty-five (45)
business days after Landlord's receipt of such written request) furnish Tenant
copies of all notices of assessment of Tax Expenses with respect to the Premises
only, to the extent Landlord has possession of such notices of assessment. At
absolutely no cost or expense to Landlord (and Tenant shall immediately
reimburse Landlord for all of such costs and expenses), Landlord shall execute
and deliver to Tenant whatever documents may be reasonably necessary or proper
to permit Tenant to so contest such taxes or which may be necessary to secure
payment of any refund which may result from any such proceedings; provided,
however, if Tenant makes such contest the following shall apply: (i) Tenant
shall comply with all Laws applicable thereto; (ii) Tenant shall be solely
responsible and liable for any and all penalties and liabilities arising
therefrom as well as for providing such security (by way of example only, a
bond, letter of credit or cash deposit) as Landlord may reasonably request in
connection with any such contest; and (iii) Tenant hereby agrees to, and shall,
protect, defend (with counsel acceptable to Landlord) and hold Landlord and
Landlord's lenders, partners, members, property management company (if other
than Landlord), agents, directors, officers, employees, representatives,
contractors, shareholders, successors and assigns and each of their respective
partners, members, directors, employees, representatives, agents, contractors,
shareholders, successors and assigns (collectively, the "Indemnitees") harmless
and indemnify the Indemnitees from and against all liabilities, damages (of
every nature and kind, regardless of the speculative nature of such), claims,
losses, penalties, judgments, charges and expenses (including reasonable
attorneys' fees, costs of court and expenses necessary in the prosecution or
defense of any litigation including the enforcement of this provision) arising
from or in any way related to, directly or indirectly, any such contest. Any
such proceeding shall be undertaken at the sole cost and expense of Tenant and
any refund resulting therefrom shall, only to the extent of the Tax Expenses
payable by Tenant hereunder with respect to the Premises, actually paid by
Tenant to Landlord for the fiscal tax year or years being contested, belong
solely to Tenant to the extent such refund is attributable to only the Premises
and for a period concurrent with the term of the Lease (otherwise an appropriate
apportionment shall be made), and any excess amount of any such refund shall
belong solely to Landlord. Notwithstanding anything to the contrary contained
herein, Tenant may not allow any portion of the Park to be subject to actual or
threatened sale due to non-payment of taxes or assessments.
6.3 PAYMENT OF EXPENSES: Landlord shall estimate Tenant's Share of the
Operating Expenses and Tax Expenses for the calendar year in which the Lease
commences. Commencing on the Commencement Date, one-twelfth (1/12th) of this
estimated amount shall be paid by Tenant to Landlord, as Additional Rent, and
thereafter on the first (1st) day of each month throughout the remaining months
of such calendar year. Thereafter, Landlord may estimate such expenses as of the
beginning of each calendar year during the Term of this Lease and Tenant shall
pay one-twelfth (1/12th) of such estimated amount as Additional Rent hereunder
on the first (1st) day of each month during such calendar year and for each
ensuing calendar year throughout the Term of this Lease. Tenant's obligation to
pay Tenant's Share of Operating Expenses and Tax Expenses shall survive the
expiration or earlier termination of this Lease.
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6.4 ANNUAL RECONCILIATION: By June 30th of each calendar year, or as soon
thereafter as reasonably possible, Landlord shall endeavor to furnish Tenant
with an accounting of actual Operating Expenses and Tax Expenses. Within thirty
(30) days of Landlord's delivery of such accounting, Tenant shall pay to
Landlord the amount of any underpayment. Notwithstanding the foregoing, failure
by Landlord to give such accounting by such date shall not constitute a waiver
by Landlord of its right to collect any of Tenant's underpayment within one (1)
year thereafter. Landlord shall credit the amount of any overpayment by Tenant
toward the next estimated monthly installment(s) falling due, or where the Term
of the Lease has expired, refund the amount of overpayment to Tenant. If the
Term of the Lease expires prior to the annual reconciliation of expenses
Landlord shall have the right to reasonably estimate Tenant's Share of such
expenses, and if Landlord determines that an underpayment is due, Tenant hereby
agrees to pay Landlord such underpayment within thirty (30) days of demand
therefor. If Landlord reasonably determines that an overpayment has been made by
Tenant, Landlord shall refund said overpayment to Tenant as soon as practicable
thereafter. Notwithstanding the foregoing, failure of Landlord to accurately
estimate Tenant's Share of such expenses or to otherwise perform such
reconciliation of expenses shall not constitute a waiver of Landlord's right to
collect any of Tenant's underpayment at any time during the Term of the Lease or
within one (1) year after the expiration or earlier termination of this Lease.
6.5 AUDIT: After delivery to Landlord of at least thirty (30) days prior
written notice, Tenant, at its sole cost and expense through any accountant
designated by it, shall have the right to examine and/or audit the books and
records evidencing such costs and expenses for the previous one (1) calendar
year, during Landlord's reasonable business hours but not more frequently than
once during any calendar year. Any such accounting firm designated by Tenant may
not be compensated on a contingency fee basis. The results of any such audit
(and any negotiations between the parties related thereto) shall be maintained
strictly confidential by Tenant and its accounting firm and shall not be
disclosed, published or otherwise disseminated to any other party other than to
Landlord and its authorized agents. Landlord and Tenant shall use their best
efforts to cooperate in such negotiations and to promptly resolve any
discrepancies between Landlord and Tenant in the accounting of such costs and
expenses.
7. UTILITIES: Utility Expenses, Common Area Utility Costs and all other
---------
sums or charges set forth in this Section 7 are considered part of Additional
Rent. In addition to the Base Rent set forth in Section 3 hereof, Tenant shall
pay the cost of all water, sewer use, sewer discharge fees and sewer connection
fees, gas, heat, electricity, refuse pickup, janitorial service, telephone and
other utilities billed or metered separately to the Premises and/or Tenant.
Tenant shall also pay Tenant's Share of any assessments or charges for utility
or similar purposes included within any tax bill for the Lot on which the
Premises are situated, including, without limitation, entitlement fees,
allocation unit fees, and/or any similar fees or charges, and any penalties
related thereto. For any such utility fees or use charges that are not billed or
metered separately to Tenant, including without limitation, water and refuse
pick up charges, Tenant shall pay to Landlord, as Additional Rent, without prior
notice or demand, on the Commencement Date and thereafter on the first (1st) day
of each month throughout the balance of the Term of this Lease the amount which
is attributable to Tenant's use of the utilities or similar services, as
reasonably estimated and determined by Landlord based upon factors such as size
of the Premises and intensity of use of such utilities by Tenant such that
Tenant shall pay the portion of such charges reasonably consistent with Tenant's
use of such utilities and similar services ("Utility Expenses"). If Tenant
disputes any such estimate or determination, then Tenant shall either pay the
estimated amount or cause the Premises to be separately metered at Tenant's sole
expense. In addition, Tenant shall pay to Landlord Tenant's Share of any Common
Area utility costs, fees, charges or expenses ("Common Area Utility Costs").
Tenant shall pay to Landlord one-twelfth (1/12th) of the estimated amount of
Tenant's Share of the Common Area Utility Costs on the Commencement Date and
thereafter on the first (1st) day of each month throughout the balance of the
Term of this Lease and any reconciliation thereof shall be substantially in the
same manner as specified in Section 6.4 above. The amount of Tenant's Share of
Common Area Utility Costs shall be subject to modification by Landlord if there
is a change in the rentable square footage of the Premises or if the square
footage of the Park (excluding the Premises) or the other Building is changed
due to a casualty or condemnation. Tenant acknowledges that the Premises may
become subject to the rationing of utility services or restrictions on utility
use as required by a public utility company, governmental agency or other
similar entity having jurisdiction thereof. Notwithstanding any such rationing
or restrictions on use of any such utility services, Tenant acknowledges and
agrees that its tenancy and occupancy hereunder shall be subject to such
rationing restrictions as may be imposed upon Landlord, Tenant, the Premises,
the Building or the Park, and Tenant shall in no event be excused or relieved
from any covenant or obligation to be kept or performed by Tenant by reason of
any such rationing or restrictions. Tenant further agrees to timely and
faithfully pay, prior to delinquency, any amount, tax, charge, surcharge,
assessment or imposition levied, assessed or imposed upon the Premises, or
Tenant's use and occupancy thereof. Notwithstanding anything to the contrary
contained herein, if permitted by applicable Laws, Landlord shall have the right
at any time and from time to time during the Term of this Lease to either
contract for service from a different company or companies (each such company
shall be referred to herein as an "Alternate Service Provider") other than the
company or companies presently providing electricity service for the Building or
the Park (the "Electric Service Provider") or continue to contract for service
from the Electric Service Provider, at Landlord's reasonable
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discretion. Tenant hereby agrees to cooperate with Landlord, the Electric
Service Provider, and any Alternate Service Provider at all times and, as
reasonably necessary, shall allow Landlord, the Electric Service Provider, and
any Alternate Service Provider reasonable access to the Building's electric
lines, feeders, risers, wiring, and any other machinery within the Premises.
8. LATE CHARGES: Any and all sums or charges set forth in this Section 8 are
------------
considered part of Additional Rent. Tenant acknowledges that late payment (the
fifth (5th) day of each month or any time thereafter) by Tenant to Landlord of
Base Rent, Tenant's Share of Operating Expenses, Tax Expenses, Common Area
Utility Costs, and Utility Expenses or other sums due hereunder, will cause
Landlord to incur costs not contemplated by this Lease, the exact amount of such
costs being extremely difficult and impracticable to fix. Such costs include,
without limitation, processing and accounting charges, and late charges that may
be imposed on Landlord by the terms of any note secured by any encumbrance
against the Premises, and late charges and penalties due to the late payment of
real property taxes on the Premises. Therefore, if any installment of Rent or
any other sum due from Tenant is not received by Landlord within four (4) days
of when due, Tenant shall promptly pay to Landlord an additional sum equal to
six percent (6%) of such delinquent amount plus interest on such delinquent
amount at the rate equal to the prime rate plus two percent (2%) for the time
period such payments are delinquent as a late charge for every month or portion
thereof that such sums remain unpaid. The parties agree that this late charge
and the other charges referenced above represent a fair and reasonable estimate
of the costs that Landlord will incur by reason of late payment by Tenant.
Acceptance of any late charge or other charges shall not constitute a waiver by
Landlord of Tenant's default with respect to the delinquent amount, nor prevent
Landlord from exercising any of the other rights and remedies available to
Landlord for any other breach of Tenant under this Lease. If a late charge or
other charge becomes payable for any three (3) installments of Rent within any
twelve (12) month period, then Landlord, at Landlord's sole option, can either
require the Rent be paid quarterly in advance, or be paid monthly in advance by
cashier's check or by electronic funds transfer.
9. USE OF PREMISES:
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9.1 COMPLIANCE WITH LAWS, RECORDED MATTERS, AND RULES AND REGULATIONS: The
Premises are to be used solely for the purposes and uses specified in the Basic
Lease Information and for no other uses or purposes without Landlord's prior
written consent, which consent shall not be unreasonably withheld or delayed so
long as the proposed use (i) does not involve the use of Hazardous Materials
other than as expressly permitted under the provisions of Section 29 below, (ii)
does not require any additional parking in excess of the parking spaces already
licensed to Tenant pursuant to the provisions of Section 24 of this Lease, and
(iii) is compatible and consistent with the other uses then being made in the
Park and in other similar types of buildings in the vicinity of the Park, as
reasonably determined by Landlord. The use of the Premises by Tenant and its
employees, representatives, agents, invitees, licensees, subtenants, customers
or contractors (collectively, "Tenant's Representatives") shall be subject to,
and at all times in compliance with, (a) any and all applicable laws,
ordinances, statutes, orders and regulations as same exist from time to time
(collectively, the "Laws"), (b) any and all documents, matters or instruments,
including without limitation, any declarations of covenants, conditions and
restrictions, and any supplements thereto, each of which has been or hereafter
is recorded in any official or public records with respect to the Premises, the
Building, the Lot and/or the Park, or any portion thereof (collectively, the
"Recorded Matters"), and (c) any and all rules and regulations set forth in
Exhibit C, attached to and made a part of this Lease, and any other reasonable
- ---------
rules and regulations promulgated by Landlord now or hereafter enacted relating
to parking and the operation of the Premises, the Building and the Park
(collectively, the "Rules and Regulations"). Tenant agrees to, and does hereby,
assume full and complete responsibility to ensure that the Premises are suitable
to satisfy the needs and requirements of Tenant's intended operations of its
business within the Premises, and Tenant's use of the Premises and that same are
in compliance with all applicable Laws throughout the Term of this Lease.
Additionally, Tenant shall be solely responsible for the payment of all costs,
fees and expenses associated with any modifications, improvements or alterations
to the Premises, Building, the Common Areas and/or the Park occasioned by the
enactment of, or changes to, any Laws arising directly from Tenant's particular
use of the Premises or alterations, improvements or additions made to the
Premises regardless of when such Laws became effective.
9.2 PROHIBITION ON USE: Tenant shall not use the Premises or permit
anything to be done in or about the Premises nor keep or bring anything therein
which will in any way increase the existing rate of or affect any policy of fire
or other insurance upon the Building or any of its contents, or cause a
cancellation of any insurance policy. No auctions may be held or otherwise
conducted in, on or about the Premises, the Building, or the Park without
Landlord's written consent thereto, which consent may be given or withheld in
Landlord's sole discretion. Tenant shall not do or permit anything to be done in
or about the Premises which will in any way obstruct or interfere with the
rights of Landlord, other tenants or occupants of other buildings in the Park,
or other persons or businesses in the area, or injure or annoy other tenants or
use or allow the Premises to be used for any unlawful or objectionable purpose,
as determined by Landlord, in its reasonable discretion, for the benefit, quiet
enjoyment and use by
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Landlord and all other tenants or occupants of the Building or other buildings
in the Park; nor shall Tenant cause, maintain or permit any private or public
nuisance in, on or about the Premises, Building, Park and/or the Common Areas,
including, but not limited to, any offensive odors, noises, fumes or vibrations.
Tenant shall not damage or deface or otherwise commit or suffer to be committed
any waste in, upon or about the Premises. Tenant shall not place or store, nor
permit any other person or entity to place or store, any property, equipment,
materials, supplies, personal property or any other items or goods outside of
the Premises for any period of time except for (i) Tenant's equipment presently
situated outside of the Premises within a fenced and screened area (the
"Tenant's Existing Equipment"), and (ii) for a period of one (1) year following
the Commencement Date, three (3) outside storage containers presently existing
outside of the Premises (collectively, the "Outside Containers"). Tenant hereby
agrees that on or prior to the expiration of said one-year period, Tenant, at
Tenant's sole cost and expense, shall remove the Outside Containers and repair
to the reasonable satisfaction of Landlord any and all damage occasioned by the
installation and/or removal of the Outside Containers. Tenant shall not permit
any animals, including, but not limited to, any household pets, to be brought or
kept in or about the Premises. Tenant shall place no loads upon the floors,
walls, or ceilings in excess of the maximum designed load permitted by the
applicable Uniform Building Code or which may damage the Building or outside
areas; nor place any harmful liquids in the drainage systems; nor dump or store
waste materials, refuse or other such materials, or allow such to remain outside
the Building area, except for any non-hazardous or non-harmful materials which
may be stored in refuse dumpsters or in any enclosed trash areas provided.
Tenant shall honor the terms of all Recorded Matters relating to the Premises,
the Building, the Lot and/or the Park.
10. ALTERATIONS AND ADDITIONS; AND SURRENDER OR PREMISES:
----------------------------------------------------
10.1 ALTERATIONS AND ADDITIONS: Tenant shall be permitted to make, at its
sole cost and expense, non-structural alterations and additions to the Premises
without obtaining Landlord's prior written consent, provided the cost of same
does not exceed $15,000 each job and $25,000 cumulatively each calendar year
(the "Permitted Improvements"). Tenant, however, shall first notify Landlord of
such alterations or additions so that Landlord may post a Notice of Non-
Responsibility on the Premises. Within ten (10) business days of Landlord's
receipt of Tenant's written notice of any item comprising the Permitted
Improvements, Landlord shall notify Tenant, in writing, whether or not Landlord
will require Tenant to remove such item from the Premises upon the expiration or
earlier termination of this Lease. Except for the Permitted Improvements, Tenant
shall not install any signs, fixtures, improvements, nor make or permit any
other alterations or additions to the Premises without the prior written consent
of Landlord, which consent shall not be unreasonably withheld. If any such
alteration or addition is expressly permitted by Landlord, Tenant shall deliver
at least twenty (20) days prior notice to Landlord, from the date Tenant intends
to commence construction, sufficient to enable Landlord to post a Notice of Non-
Responsibility. In all events, Tenant shall obtain all permits or other
governmental approvals prior to commencing any of such work and deliver a copy
of same to Landlord. All alterations and additions shall be installed by a
licensed contractor reasonably approved by Landlord (including the right to
competitively bid), at Tenant's sole expense in compliance with all applicable
Laws (including, but not limited to, the ADA as defined herein), Recorded
Matters, and Rules and Regulations. Tenant shall keep the Premises and the
property on which the Premises are situated free from any liens arising out of
any work performed, materials furnished or obligations incurred by or on behalf
of Tenant. As a condition to Landlord's consent to the installation of any
fixtures, additions or other improvements the cost of which exceeds One Hundred
Thousand Dollars ($100,000) (other than the initial Tenant Improvements),
Landlord may require Tenant to post and obtain a completion and indemnity bond
for up to one hundred fifty percent (150%) of the cost of the work.
10.2 SURRENDER OF PREMISES: Upon the termination of this Lease, whether by
forfeiture, lapse of time or otherwise, or upon the termination of Tenant's
right to possession of the Premises, Tenant will at once surrender and deliver
up the Premises, together with the attached fixtures (other than the Removable
Equipment (defined below), trade fixtures, and any furniture bolted for
earthquake purposes which shall be deemed to be not attached to the Premises),
additions and improvements which Landlord has notified Tenant, in writing at the
time of their installation, that Landlord will require Tenant not to remove, to
Landlord in good condition and repair (including, but not limited to, replacing
all light bulbs and ballasts not in good working condition) and in the condition
in which the Premises existed as of the Commencement Date, except for reasonable
wear and tear. Notwithstanding the foregoing or anything to the contrary in this
Lease, in no event shall Tenant be required to remove from the Premises any
improvements made to the Premises prior to the Commencement Date of this Lease,
as such existing improvements are depicted in those certain as-built plans for
the Premises attached hereto as Exhibit I (the "Existing Improvements").
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Reasonable wear and tear shall not include any damage or deterioration to the
floors of the Premises arising from the use of forklifts in, on or about the
Premises (including, without limitation, any marks or stains of any portion of
the floors caused by forklifts), and any damage or deterioration that would have
been prevented by Tenant timely performing all of its obligations under this
Lease. Upon such termination of this Lease, except as otherwise set forth in
this Section 10.2 with respect to the Existing Improvements, Tenant shall remove
the Permitted Improvements (to the extent Landlord has notified Tenant in
writing, at the time set forth in Section 10.1, that it will require such
removal), all tenant signage, trade fixtures, non-attached fixtures, furniture,
furnishings, personal
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property, additions, and other improvements unless Landlord reasonably requests,
in writing, that Tenant not remove some or all of such attached fixtures (other
than trade fixtures), additions or improvements installed by, or on behalf of
Tenant or situated in or about the Premises. By the date which is twenty (20)
days prior to such termination of this Lease, Landlord shall notify Tenant in
writing of those attached fixtures (other than trade fixtures), alterations,
additions and other non-attached improvements which Landlord shall require
Tenant not to remove from the Premises. Tenant shall repair any damage caused by
the installation or removal of such signs, trade fixtures, furniture,
furnishings, fixtures, additions and improvements which are to be removed from
the Premises by Tenant hereunder. If Landlord fails to so notify Tenant at least
twenty (20) days prior to such termination of this Lease, then except as
otherwise set forth in this Section 10.2 with respect to the Existing
Improvements, Tenant shall remove the Removable Equipment (defined below), all
tenant signage, alterations, furniture, furnishings, trade fixtures, cabling and
other lines of a non-standard nature, additions and other improvements installed
in or about the Premises by, or on behalf of Tenant. In addition to the
foregoing, certain equipment of Tenant used in, on or about the Premises is
listed in Exhibit K, attached hereto and made a part hereof (collectively, the
---------
"Removable Equipment"). Notwithstanding anything to the contrary contained
herein, at the expiration or earlier termination of this Lease Tenant may remove
from the Premises the Removable Equipment. If Tenant elects not to remove the
Removable Equipment from the Premises, then no later than ninety (90) days prior
to the expiration or earlier termination of this Lease Tenant shall deliver to
Landlord written notice that Tenant has so elected not to remove the Removable
Equipment from the Premises ("Tenant's Removable Equipment Notice"). Within
thirty (30) days after Landlord's receipt of Tenant's Removable Equipment Notice
Landlord shall notify Tenant, in writing, of whether or not Landlord will
require Tenant to remove the Removable Equipment from the Premises at the time
of expiration or earlier termination of this Lease. If Landlord fails to timely
notify Tenant of such decision, then it shall be conclusively deemed that
Landlord will require Tenant to remove the Removable Equipment from the Premises
at the time of expiration or earlier termination of this Lease. Tenant shall
ensure that the removal of such items and the repair of the Premises will be
completed prior to such termination of this Lease.
11. REPAIRS AND MAINTENANCE:
-----------------------
11.1 TENANT'S REPAIRS AND MAINTENANCE OBLIGATIONS: Except for those
portions of the Building to be maintained by Landlord, as provided in Sections
11.2 and 11.3 below, Tenant shall, at Tenant's sole cost and expense, keep and
maintain the Premises and the adjacent dock and staging areas in good, clean and
safe condition and repair to the reasonable satisfaction of Landlord including,
but not limited to, repairing any damage caused by Tenant or Tenant's
Representatives and replacing any property so damaged by Tenant or Tenant's
Representatives. Without limiting the generality of the foregoing, Tenant shall
be solely responsible for maintaining, repairing and replacing (a) all
mechanical systems, heating, ventilation and air conditioning systems
exclusively serving the Premises, (b) all plumbing, electrical wiring and
equipment located within and serving the Premises, (c) all interior lighting
(including, without limitation, light bulbs and/or ballasts) and exterior
lighting serving the Premises or adjacent to the Premises, (d) all glass,
windows, window frames, window casements, skylights, interior and exterior
doors, door frames and door closers, (e) all roll-up doors, ramps and dock
equipment, including without limitation, dock bumpers, dock plates, dock seals,
dock levelers and dock lights, (f) all tenant signage, (g) lifts for disabled
persons serving the Premises, (h) sprinkler systems, fire protection systems and
security systems, (i) all partitions, fixtures, equipment, interior painting,
and interior walls and floors of the Premises and every part thereof (including,
without limitation, any demising walls contiguous to any portion of the
Premises), (j) during the first five (5) years of the Term of this Lease, the
roof membrane other than the replacement thereof, (k) Tenant's Existing
Equipment and the Outside Containers as well as the area immediately surrounding
same. Notwithstanding anything to the contrary contained herein, if during the
first five (5) years of the Term of this Lease the roof of the Building
collapses or otherwise suffers substantial damage for reasons other than
Landlord's failure to perform its obligations under Section 11.3 hereof with
respect to replacing the structural portions of the roof, then Tenant shall be
solely liable and responsible for any and all costs related to repairing and,
possibly replacing the damaged portions of the roof except for the structural
portions thereof, but only to the extent the structural portions of the roof are
not in a state of disrepair due to Tenant's failure to properly perform its
obligations hereunder with respect to the roof (in which event Tenant will also
be solely liable and responsible for any and all costs related to repairing and,
possibly replacing such structural portions of the roof). In addition to
Tenant's obligations described hereinabove, Tenant shall procure and maintain
the heating, ventilation and air conditioning systems preventative maintenance
and repair contract(s) with reputable and insured companies reasonably
acceptable to Landlord; such contract(s) to be on a bi-monthly or quarterly
basis, as reasonably determined by Landlord. Landlord reserves the right, in the
event Tenant fails to do so, to procure and maintain the heating, ventilation
and air conditioning systems preventative maintenance and repair contract(s).
If Tenant so fails to procure and maintain such preventative maintenance and
repair contract(s) and Landlord so elects to procure and maintain any such
preventative maintenance and repair contract(s), Tenant will reimburse Landlord
for the entirety of the cost thereof, as additional rent hereunder as part of
the Operating Expenses. During the time period Tenant procures and maintains any
of such preventative maintenance and repair contract(s), Tenant will promptly
deliver to Landlord a true and complete copy of each such contract and any and
all renewals
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or extensions thereof, and each service report or other summary received by
Tenant pursuant to or in connection with such contract(s).
11.2 REIMBURSABLE REPAIRS AND MAINTENANCE OBLIGATIONS: Subject to the
provisions of Sections 6 and 9 of this Lease and except for (i) the obligations
of Tenant set forth in Section 11.1 above, (ii) the obligations of Landlord set
forth in Section 11.3 below, and (iii) the repairs rendered necessary by the
intentional or negligent acts or intentional or negligent omissions of Tenant or
any of Tenant's Representatives, Landlord agrees, at Landlord's expense, subject
to reimbursement pursuant to Section 6 above, to keep in good repair the
plumbing and mechanical systems exterior to the Premises, the roof, roof
membranes (subject to the provisions of this Section 11.2), exterior walls of
the Building, signage (exclusive of tenant signage), and exterior electrical
wiring and equipment, exterior lighting, exterior glass, exterior
doors/entrances and door closers, exterior window casements, exterior painting
of the Building (exclusive of the Premises), and underground utility and sewer
pipes outside the exterior walls of the Building. For purposes of this Section
11.2, the term "exterior" shall mean outside of and not exclusively serving the
Premises. Unless otherwise notified by Landlord, in writing, that Landlord has
elected to procure and maintain the following described contract(s), Tenant
shall procure and maintain the fire and sprinkler protection services and
preventative maintenance and repair contract(s) (including, without limitation,
monitoring services); such contract(s) to be on a bi-monthly or quarterly basis,
as reasonably determined by Landlord. Landlord reserves the right, in the event
Tenant fails to do so, to procure and maintain the fire and sprinkler protection
services and preventative maintenance and repair contract(s) (including, without
limitation, monitoring services). If Landlord so elects to procure and maintain
any such contract(s), Tenant will reimburse Landlord for the cost thereof in
accordance with the provisions of Section 6 above. If Tenant procures and
maintains any of such contract(s), Tenant will promptly deliver to Landlord a
true and complete copy of each such contract and any and all renewals or
extensions thereof, and each service report or other summary received by Tenant
pursuant to or in connection with such contract(s). Notwithstanding anything to
the contrary contained herein, if at any time after the first five (5) years of
the Term of this Lease the roof membrane of the Building requires replacement,
as reasonably determined by Landlord, then from and after the date such
replacement is made Tenant shall pay to Landlord, as additional rent hereunder,
the amortized cost thereof capped at a maximum amount of $15,000 per calendar
year throughout the balance of the Term of this Lease (including all extensions
and renewals of the initial term of this Lease); such replacement cost to be
amortized on a straight-line basis over a reasonable period of time, which shall
be the period of time reasonably estimated by Landlord to be useful life
thereof, and which amortized amount shall include interest thereon at an
interest rate as reasonably determined by Landlord.
11.3 LANDLORD'S REPAIRS AND MAINTENANCE OBLIGATIONS: Except for repairs
rendered necessary by the intentional or negligent acts or intentional or
negligent omissions of Tenant or any of Tenant's Representatives and except for
the parties' obligations under Sections 11.1 and 11.2 above, Landlord agrees, at
Landlord's sole cost and expense, to (a) keep in good repair the structural
portions of the floors, foundations and exterior perimeter walls of the Building
(exclusive of glass and exterior doors), and (b) replace the structural
portions of the roof of the Building (excluding the roof membrane) as, and when,
Landlord determines such replacement to be necessary in Landlord's sole
discretion.
11.4 TENANT'S FAILURE TO PERFORM REPAIRS AND MAINTENANCE OBLIGATIONS:
Except for normal maintenance and repair of the items described above, Tenant
shall have no right of access to or right to install any device on the roof of
the Building nor make any penetrations of the roof of the Building without the
express prior written consent of Landlord. If Tenant refuses or neglects to
repair and maintain the Premises and the adjacent areas properly as required
herein and to the reasonable satisfaction of Landlord, Landlord may, but without
obligation to do so, at any time make such repairs and/or maintenance without
Landlord having any liability to Tenant for any loss or damage that may accrue
to Tenant's merchandise, fixtures or other property, or to Tenant's business by
reason thereof, except to the extent any damage is caused by the willful
misconduct or gross negligence of Landlord or its authorized agents and
representatives. In the event Landlord makes such repairs and/or maintenance,
upon completion thereof Tenant shall pay to Landlord, as additional rent, the
Landlord's costs for making such repairs and/or maintenance, plus ten percent
(10%) for overhead, upon presentation of a bill therefor. The obligations of
Tenant hereunder shall survive the expiration of the Term of this Lease or the
earlier termination thereof. Subject to the provisions of Section 41 hereof,
Tenant hereby waives any right to repair at the expense of Landlord under any
applicable Laws now or hereafter in effect respecting the Premises.
12. INSURANCE:
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12.1 TYPES OF INSURANCE: Tenant shall maintain in full force and effect
at all times during the Term of this Lease, at Tenant's sole cost and expense,
for the protection of Tenant and Landlord, as their interests may appear,
policies of insurance issued by a carrier or carriers reasonably acceptable to
Landlord and its lender(s) which afford the following coverages: (i) worker's
compensation: statutory limits; (ii) employer's liability, as required by law,
with a minimum limit of $100,000 per employee and $500,000 per occurrence; (iii)
commercial general liability insurance (occurrence form) providing coverage
against any and all claims for bodily injury and property damage occurring in,
on or about the
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Premises arising out of Tenant's and Tenant's Representatives' use and/or
occupancy of the Premises. Such insurance shall include coverage for blanket
contractual liability, fire damage, premises, personal injury, completed
operations, products liability, personal and advertising, and a plate-glass
rider to provide coverage for all glass in, on or about the Premises including,
without limitation, skylights. Such insurance shall have a combined single limit
of not less than Two Million Dollars ($2,000,000) per occurrence with a Three
Million Dollar ($3,000,000) aggregate limit and excess/umbrella insurance in the
amount of Two Million Dollars ($2,000,000). If Tenant has other locations which
it owns or leases, the policy shall include an aggregate limit per location
endorsement. If necessary, as reasonably determined by Landlord, Tenant shall
provide for restoration of the aggregate limit; (iv) comprehensive automobile
liability insurance: a combined single limit of not less than $2,000,000 per
occurrence and insuring Tenant against liability for claims arising out of the
ownership, maintenance, or use of any owned, hired or non-owned automobiles; (v)
"all risk" or "special purpose" property insurance, including without
limitation, sprinkler leakage, boiler and machinery comprehensive form, if
applicable, covering damage to or loss of any personal property, trade fixtures,
inventory, fixtures and equipment located in, on or about the Premises, and in
addition, coverage for business interruption of Tenant, together with, if the
property of Tenant's invitees is to be kept in the Premises, warehouser's legal
liability or bailee customers insurance for the full replacement cost of the
property belonging to invitees and located in the Premises. Such insurance
shall be written on a replacement cost basis (without deduction for
depreciation) in an amount equal to one hundred percent (100%) of the full
replacement value of the aggregate of the items referred to in this subparagraph
(v); and (vi) such other insurance or higher limits of liability as is then
customarily required to be carried for similar types of buildings within the
general vicinity of the Park or as may be reasonably required by any of
Landlord's lenders.
12.2 INSURANCE POLICIES: Insurance required to be maintained by Tenant shall
be written by companies (i) licensed to do business in the State of California,
(ii) domiciled in the United States of America, and (iii) having a "General
Policyholders Rating" of at least A:X (or such higher rating as may be required
by a lender having a lien on the Premises) as set forth in the most current
issue of "A.M. Best's Rating Guides." Any deductible amounts under any of the
insurance policies required hereunder shall not exceed Twenty-Five Thousand
Dollars ($25,000). Tenant shall deliver to Landlord certificates of insurance
and true and complete copies of any and all endorsements required herein for all
insurance required to be maintained by Tenant hereunder at the time of execution
of this Lease by Tenant. Tenant shall, at least thirty (30) days prior to
expiration of each policy, furnish Landlord with certificates of renewal or
"binders" thereof. Each certificate shall expressly provide that such policies
shall not be cancelable or otherwise subject to modification except after thirty
(30) days prior written notice to the parties named as additional insureds as
required in this Lease (except for cancellation for nonpayment of premium, in
which event cancellation shall not take effect until at least ten (10) days'
notice has been given to Landlord). Tenant shall have the right to provide
insurance coverage which it is obligated to carry pursuant to the terms of this
Lease under a blanket insurance policy, provided such blanket policy expressly
affords coverage for the Premises and for Landlord as required by this Lease.
12.3 ADDITIONAL INSUREDS AND COVERAGE: Landlord, any property management
company and/or agent of Landlord for the Premises, the Building, the Lot or the
Park, and any lender(s) of Landlord having a lien against the Premises, the
Building, the Lot or the Park shall be named as additional insureds under all of
the policies required in Section 12.l(iii) above. Additionally, such policies
shall provide for severability of interest. All insurance to be maintained by
Tenant shall, except for workers' compensation and employer's liability
insurance, be primary, without right of contribution from insurance maintained
by Landlord. Any umbrella/excess liability policy (which shall be in "following
form") shall provide that if the underlying aggregate is exhausted, the excess
coverage will drop down as primary insurance. The limits of insurance maintained
by Tenant shall not limit Tenant's liability under this Lease. It is the
parties' intention that the insurance to be procured and maintained by Tenant as
required herein shall provide coverage for any and all damage or injury arising
from or related to Tenant's operations of its business and/or Tenant's or
Tenant's Representatives' use of the Premises and/or any of the areas within the
Park, whether such events occur within the Premises (as described in Exhibit A
hereto) or in any other areas of the Park. It is not contemplated or anticipated
by the parties that the aforementioned risks of loss be borne by Landlord's
insurance carriers, rather it is contemplated and anticipated by Landlord and
Tenant that such risks of loss be borne by Tenant's insurance carriers pursuant
to the insurance policies procured and maintained by Tenant as required herein.
12.4 FAILURE OF TENANT TO PURCHASE AND MAINTAIN INSURANCE: In the event
Tenant does not purchase the insurance required in this Lease or keep the same
in full force and effect throughout the Term of this Lease (including any
renewals or extensions), Landlord may, but without obligation to do so, purchase
the necessary insurance and pay the premiums therefor. If Landlord so elects to
purchase such insurance, Tenant shall promptly pay to Landlord as Additional
Rent, the amount so paid by Landlord, upon Landlord's demand therefor. In
addition, Landlord may recover from Tenant and Tenant agrees to pay, as
Additional Rent, any and all damages which Landlord may sustain by reason of
Tenant's failure to obtain and maintain such insurance. If Tenant fails to
maintain any insurance required in this Lease, Tenant shall be liable for all
losses, damages and costs resulting from such failure.
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12.5 LANDLORD'S INSURANCE: Landlord shall maintain in full force and effect
during the Term of this Lease, subject to reimbursement as provided in Section
6, policies of insurance which afford such coverages as Landlord deems
reasonable and as is consistent with other properties in Landlord's portfolio.
Notwithstanding the foregoing, Landlord shall obtain and keep in force during
the Term of this Lease, as an item of Operating Expenses, a policy or policies
in the name of Landlord, with loss payable to Landlord and to the holders of any
mortgages, deeds of trust or ground leases on the Premises ("Lender(s)"),
insuring loss or damage to the Building, including all improvements, fixtures
(other than trade fixtures) and permanent additions. However, all alterations,
additions and improvements made to the Premises by Tenant shall be insured by
Tenant rather than by Landlord. The amount of such insurance procured by
Landlord shall be equal to at least eighty percent (80%) of the full replacement
cost of the Building, including all improvements and permanent additions as the
same shall exist from time to time, or the amount required by Lenders. At
Landlord's option, such policy or policies shall insure against all risks of
direct physical loss or damage (including, without limitation, the perils of
flood and earthquake), including coverage for any additional costs resulting
from debris removal and reasonable amounts of coverage for the enforcement of
any ordinance or law regulating the reconstruction or replacement of any
undamaged sections of the Building required to be demolished or removed by
reason of the enforcement of any building, zoning, safety or land use laws as
the result of a covered cause of loss. Notwithstanding the foregoing, with
respect only to earthquake insurance coverage procured by Landlord hereunder,
the maximum amount of the insurance premium which Tenant shall be required to
pay to Landlord, as part of Operating Expenses, solely for earthquake insurance
coverage procured by Landlord hereunder shall be as follows: (i) during the
first five (5) years of the initial term of the Lease, the amount equal to one
and one-half cents ($0.015) per rentable square foot per month; and (ii) during
the last five (5) years of the initial term of the Lease, the amount equal to
two cents ($0.02) per rentable square foot per month. Tenant hereby acknowledges
and agrees that other than the foregoing cap on the amount payable by Tenant
solely for insurance premiums charged with respect to earthquake coverage, no
other costs or premiums for insurance procured by Landlord hereunder shall be
capped, restricted or otherwise limited. If any such insurance coverage procured
by Landlord has a deductible clause, the deductible shall not exceed
commercially reasonable amounts, and in the event of any casualty, the amount of
such deductible shall be an item of Operating Expenses. Notwithstanding anything
to the contrary contained herein, to the extent the cost of maintaining
insurance with respect to the Building and/or any other buildings within the
Park is increased as a result of Tenant's acts, omissions, use or occupancy of
the Premises, Tenant shall pay for such increase(s).
13. WAIVER OF SUBROGATION: Landlord and Tenant hereby mutually waive their
---------------------
respective rights of recovery against each other for any loss of, or damage to,
either parties' property to the extent that such loss or damage is insured by an
insurance policy required to be in effect at the time of such property loss or
property damage, or would have been insured had the waiving party carried the
type of insurance required to be carried by such party under this Lease. Each
party shall obtain any special endorsements, if required by its insurer whereby
the insurer waives its rights of subrogation against the other party. This
provision is intended to waive fully, and for the benefit of the parties hereto,
any rights and/or claims which might give rise to a right of subrogation in
favor of any insurance carrier. The coverage obtained by Tenant pursuant to
Section 12 of this Lease shall include, without limitation, a waiver of
subrogation endorsement attached to the certificate of insurance. The provisions
of this Section 13 shall not apply in those instances in which such waiver of
subrogation would invalidate such insurance coverage or would cause either
party's insurance coverage to be voided or otherwise uncollectible.
14. LIMITATION OF LIABILITY AND INDEMNITY: Except to the extent of damage
-------------------------------------
resulting from the gross negligence or willful misconduct of Landlord or its
authorized representatives, Tenant agrees to protect, defend (with counsel
acceptable to Landlord) and hold Landlord and Landlord's lenders, partners,
members, property management company (if other than Landlord), agents,
directors, officers, employees, representatives, contractors, shareholders,
successors and assigns and each of their respective partners, members,
directors, employees, representatives, agents, contractors, shareholders,
successors and assigns (collectively, the "Indemnitees") harmless and indemnify
the Indemnitees from and against all liabilities, damages, claims, losses,
judgments, charges and expenses (including reasonable attorneys' fees, costs of
court and expenses necessary in the prosecution or defense of any litigation
including the enforcement of this provision) arising from or in any way related
to, directly or indirectly, (i) Tenant's or Tenant's Representatives' use of the
Premises, Building and/or the Park, (ii) the conduct of Tenant's business, (iii)
from any activity, work or thing done, permitted or suffered by Tenant in or
about the Premises, (iv) any liability for injury to person or property of
Tenant, Tenant's Representatives, or third party persons, and/or (v) Tenant's
failure to perform any covenant or obligation of Tenant under this Lease. Tenant
agrees that the obligations of Tenant herein shall survive the expiration or
earlier termination of this Lease.
Except to the extent of damage resulting from the gross negligence or
willful misconduct of Landlord or its authorized representatives, to the fullest
extent permitted by law, Tenant agrees that neither Landlord nor any of
Landlord's lender(s), partners, members, employees, representatives, legal
representatives, successors or assigns shall at any time or to any extent
whatsoever be liable, responsible
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or in any way accountable for any loss, liability, injury, death or damage to
persons or property which at any time may be suffered or sustained by Tenant or
by any person(s) whomsoever who may at any time be using, occupying or visiting
the Premises, the Building or the Park, including, but not limited to, any
intentional or negligent acts, intentional or negligent errors or intentional or
negligent omissions by or on behalf of any other tenants or occupants of the
Building and/or the Park. Except as otherwise set forth in Section 41 hereof,
Tenant shall not, in any event or circumstance, be permitted to offset or
otherwise credit against any payments of Rent required herein for matters for
which Landlord may be liable hereunder. Landlord and its authorized
representatives shall not be liable for any interference with light or air, or
for any latent defect in the Premises or the Building.
15. ASSIGNMENT AND SUBLEASING:
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15.1 PROHIBITION: Except for the Permitted Sublease made by Tenant strictly
in accordance with the provisions of Section 15.5 below, Tenant shall not
assign, mortgage, hypothecate, encumber, grant any license or concession, pledge
or otherwise transfer this Lease (collectively, "assignment"), in whole or in
part, whether voluntarily or involuntarily or by operation of law, nor sublet or
permit occupancy by any person other than Tenant of all or any portion of the
Premises without first obtaining the prior written consent of Landlord, which
consent shall not be unreasonably withheld. Tenant hereby agrees that Landlord
may withhold its consent to any proposed sublease or assignment if the proposed
sublessee or assignee or its business is subject to compliance with additional
requirements of the ADA (defined below) and/or Environmental Laws (defined
below) beyond those requirements which are applicable to Tenant, unless the
proposed sublessee or assignee shall (a) first deliver plans and specifications
for complying with such additional requirements and obtain Landlord's written
consent thereto, and (b) comply with all Landlord's reasonable conditions for or
contained in such consent, including without limitation, requirements for
security to assure the lien-free completion of such improvements. If Tenant
seeks to sublet or assign all or any portion of the Premises, Tenant shall
deliver to Landlord at least fifteen (15) business days prior to the proposed
commencement of the sublease or assignment (the "Proposed Effective Date") the
following: (i) the name of the proposed assignee or sublessee; (ii) such
information as to such assignee's or sublessee's financial responsibility and
standing as Landlord may reasonably require; and (iii) the aforementioned plans
and specifications, if any. Within five (5) business days after Landlord's
receipt of a written request from Tenant that Tenant seeks to sublet or assign
all or any portion of the Premises, Tenant shall deliver to Landlord a copy of
Tenant's standard form of sublease or assignment agreement (as applicable),
which sublease or assignment agreement shall be reasonably acceptable to
Landlord (provided Tenant and such subtenant shall execute Landlord's standard
form of Consent to Subletting, in substantially the form of Exhibit J hereto).
---------
Such sublease or assignment agreement shall include a provision whereby the
assignee or sublessee assumes all of Tenant's obligations hereunder and agrees
to be bound by the terms hereof. As Additional Rent hereunder, Tenant shall pay
to Landlord a fee in the amount of five hundred dollars ($500) plus Tenant shall
reimburse Landlord for actual legal and other expenses incurred by Landlord in
connection with any actual or proposed assignment or subletting, except for an
assignment to a Related Entity pursuant to Section 15.4 hereof. Except with
respect to an assignment or sublease described in Section 15.4 below, in the
event the sublease or assignment (1) by itself or taken together with prior
sublease(s) or partial assignment(s) covers or totals, as the case may be, more
than fifty percent (50%) of the rentable square feet of the Premises or (2) is
for a term which by itself or taken together with prior or other subleases or
partial assignments is greater than fifty percent (50%) of the period remaining
in the Term of this Lease as of the time of the Proposed Effective Date, then
Landlord shall have the right, to be exercised by giving written notice to
Tenant, to recapture the space described in the sublease or assignment. If such
recapture notice is given, it shall serve to terminate this Lease with respect
to the proposed sublease or assignment space, or, if the proposed sublease or
assignment space covers all the Premises, it shall serve to terminate the entire
term of this Lease in either case, as of the Proposed Effective Date. However,
no termination of this Lease with respect to part or all of the Premises shall
become effective without the prior written consent, where necessary, of the
holder of each deed of trust encumbering the Premises or any part thereof. If
this Lease is terminated pursuant to the foregoing with respect to less than the
entire Premises, the Rent shall be adjusted on the basis of the proportion of
square feet retained by Tenant to the square feet originally demised and this
Lease as so amended shall continue thereafter in full force and effect. Each
permitted assignee or sublessee shall assume and be deemed to assume this Lease
and shall be and remain liable jointly and severally with Tenant for payment of
Rent and for the due performance of, and compliance with all the terms,
covenants, conditions and agreements herein contained on Tenant's part to be
performed or complied with, for the term of this Lease. No assignment or
subletting shall affect the continuing primary liability of Tenant (which,
following assignment, shall be joint and several with the assignee), and Tenant
shall not be released from performing any of the terms, covenants and conditions
of this Lease. Tenant hereby acknowledges and agrees that it understands that
Landlord's accounting department may process and accept Rent payments without
verifying that such payments are being made by Tenant, a permitted sublessee or
a permitted assignee in accordance with the provisions of this Lease. Although
such payments may be processed and accepted by such accounting department
personnel, any and all actions or omissions by the personnel of Landlord's
accounting department shall not be considered as acceptance by Landlord of any
proposed assignee or sublessee nor shall such actions or omissions be deemed to
be a substitute for the requirement that Tenant obtain Landlord's prior written
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consent to any such subletting or assignment, and any such actions or omissions
by the personnel of Landlord's accounting department shall not be considered as
a voluntary relinquishment by Landlord of any of its rights hereunder nor shall
any voluntary relinquishment of such rights be inferred therefrom. For purposes
hereof, in the event Tenant is a corporation, partnership, joint venture, trust
or other entity other than a natural person, any change in the direct or
indirect ownership of Tenant (whether pursuant to one or more transfers) which
results in a change of more than fifty percent (50%) in the direct or indirect
ownership of Tenant shall be deemed to be an assignment within the meaning of
this Section 15 and shall be subject to all the provisions hereof. Any and all
options, first rights of refusal, tenant improvement allowances and other
similar rights granted to Tenant in this Lease, if any, shall not be assignable
by Tenant unless expressly authorized in writing by Landlord.
15.2 EXCESS SUBLEASE RENTAL OR ASSIGNMENT CONSIDERATION: Except for any
assignment or sublease to a Related Entity pursuant to the provisions of Section
15.4 below, in the event of any sublease or assignment of all or any portion of
the Premises where the rent or other consideration provided for in the sublease
or assignment either initially or over the term of the sublease or assignment
exceeds the Rent or pro rata portion of the Rent, as the case may be, for such
space reserved in the Lease, Tenant shall pay the Landlord monthly, as
Additional Rent, at the same time as the monthly installments of Rent are
payable hereunder, fifty percent (50%) of the excess of each such payment of
rent or other consideration in excess of the Rent called for hereunder.
15.3 WAIVER: Notwithstanding any assignment or sublease, or any
indulgences, waivers or extensions of time granted by Landlord to any assignee
or sublessee, or failure by Landlord to take action against any assignee or
sublessee, Tenant agrees that Landlord may, at its option, proceed against
Tenant without having taken action against or joined such assignee or sublessee,
except that Tenant shall have the benefit of any indulgences, waivers and
extensions of time granted to any such assignee or sublessee.
15.4 RELATED ENTITIES: Notwithstanding anything to the contrary contained
in this Section 15, so long as Tenant delivers to Landlord (1) at least fifteen
(15) business days prior written notice of its intention to assign or sublease
the Premises to any Related Entity, which notice shall set forth the name of the
Related Entity, (2) a copy of the proposed agreement pursuant to which such
assignment or sublease shall be effectuated, and (3) such other information
concerning the Related Entity as Landlord may reasonably require, including
without limitation, information regarding any change in the proposed use of any
portion of the Premises and any financial information with respect to such
Related Entity, and so long as (i) any change in the proposed use of the subject
portion of the Premises is in conformance with the uses permitted to be made
under this Lease and do not involve the use or storage of any Hazardous
Materials (other than nominal amounts of ordinary household cleaners, office
supplies and janitorial supplies which are not regulated by any Environmental
Laws), and (ii) at the time of the proposed assignment or sublease, the net
profits and financial condition of the Related Entity is reasonably adequate and
sufficient in relation to the then remaining obligations of Tenant under this
Lease or, at the time of such proposed assignment or sublease, the Related
Entity's net worth is substantially the same or better than Tenant's net worth,
then Tenant may assign this Lease or sublease any portion of the Premises (X) to
any Related Entity, or (Y) in connection with any merger, consolidation or sale
of substantially all of the assets of Tenant, without having to obtain the prior
written consent of Landlord thereto. For purposes of this Lease the term
"Related Entity" shall mean and refer to any corporation or entity which
controls, is controlled by or is under common control with Tenant, as all of
such terms are customarily used in the industry.
15.5 PERMITTED SUBLEASE: Landlord hereby acknowledges that Tenant has
advised Landlord that it desires to sublease (the "Proposed Sublease") a portion
of the Premises consisting of approximately 10,800 rentable square feet (the
"Proposed Sublease Space"). Tenant may enter into the Proposed Sublease without
first obtaining Landlord's written consent thereto so long as all of the
following conditions are satisfied by Tenant to Landlord's reasonable
satisfaction (collectively, the "Permitted Sublease Conditions"): (i) Tenant and
the proposed subtenant actually execute a written sublease agreement (the
"Permitted Sublease Agreement") for the Proposed Sublease Space within six (6)
months following the Commencement Date and Tenant delivers to Landlord a true
and complete copy thereof within said 6-month period; (ii) Landlord's form of
Consent to Subletting shall be incorporated as part of the Permitted Sublease
Agreement; (iii) the term of such Permitted Sublease Agreement shall be for a
period not to exceed three (3) years (including, for purposes of calculating
such 3-year period, all extension or renewal terms thereof); (iv) Tenant
expressly agrees in the Permitted Sublease Agreement to remain primarily liable
and responsible hereunder; and (v) Tenant shall be liable and responsible for
any and all costs in any manner associated with the Proposed Sublease, including
without limitation, reimbursement of Landlord's costs and expenses in connection
therewith (including without limitation, all reasonable attorneys' fees and
costs incurred by Landlord), all costs and expenses to demise, alter or
otherwise improve the Proposed Sublease Space, and all brokerage and/or leasing
commissions due or payable in connection therewith. If all of the Permitted
Sublease Conditions are satisfied by Tenant to Landlord's reasonable
satisfaction and in strict accordance with the provisions hereof, then Tenant
may enter into the Proposed Sublease for the Proposed Sublease Space (the
"Permitted Sublease") without (a) first obtaining Landlord's prior written
consent thereto, and (b) the necessity of paying to Landlord the excess
subrental payments therefor pursuant to the provisions of Section 15.2 hereof.
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16. AD VALOREM TAXES: Prior to delinquency, Tenant shall pay all taxes and
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assessments levied upon trade fixtures, alterations, additions, improvements,
inventories and personal property located and/or installed on or in the Premises
by, or on behalf of, Tenant; and if requested by Landlord, Tenant shall promptly
deliver to Landlord copies of receipts for payment of all such taxes and
assessments. To the extent any such taxes are not separately assessed or billed
to Tenant, Tenant shall pay the amount thereof as invoiced by Landlord.
17. SUBORDINATION: Without the necessity of any additional document being
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executed by Tenant for the purpose of effecting a subordination, and at the
election of Landlord or any bona fide mortgagee or deed of trust beneficiary
with a lien on all or any portion of the Premises or any ground lessor with
respect to the land of which the Premises are a part, the rights of Tenant under
this Lease and this Lease shall be subject and subordinate at all times to: (i)
all ground leases or underlying leases which may now exist or hereafter be
executed affecting the Building or the land upon which the Building is situated
or both, and (ii) the lien of any mortgage or deed of trust which may now exist
or hereafter be executed in any amount for which the Building, the Lot, ground
leases or underlying leases, or Landlord's interest or estate in any of said
items is specified as security. Notwithstanding the foregoing, Landlord or any
such ground lessor, mortgagee, or any beneficiary shall have the right to
subordinate or cause to be subordinated any such ground leases or underlying
leases or any such liens to this Lease. If any ground lease or underlying lease
terminates for any reason or any mortgage or deed of trust is foreclosed or a
conveyance in lieu of foreclosure is made for any reason, Tenant shall,
notwithstanding any subordination and upon the request of such successor to
Landlord, attorn to and become the Tenant of the successor in interest to
Landlord, provided such successor in interest will not disturb Tenant's use,
occupancy or quiet enjoyment of the Premises so long as Tenant is not in default
of the terms and provisions of this Lease. The successor in interest to Landlord
following foreclosure, trustee's or judicial sale or deed in lieu thereof shall
not be (a) liable for any act or omission of any prior lessor or with respect to
events occurring prior to acquisition of ownership; (b) subject to any offsets
or defenses which Tenant might have against any prior lessor; or (c) bound by
prepayment of more than one (1) month's Rent, except in those instances when
Tenant pays Rent quarterly in advance pursuant to Section 8 hereof, then not
more than three months' Rent. Tenant covenants and agrees to execute (and
acknowledge if required by Landlord, any lender or ground lessor) and deliver,
within ten (10) days of a demand or request by Landlord and in the form
requested by Landlord, ground lessor, mortgagee or beneficiary, any additional
documents evidencing the priority or subordination of this Lease with respect to
any such ground leases or underlying leases or the lien of any such mortgage or
deed of trust. Tenant's failure to timely execute and deliver such additional
documents shall, at Landlord's option, constitute a material default hereunder.
Tenant's agreement to subordinate this Lease to any future ground or underlying
lease or any future deed of trust or mortgage pursuant to the foregoing
provisions of this Section 17 is conditioned upon Landlord delivering to Tenant
from the lessor under such future ground or underlying lease or the holder of
any such mortgage or deed of trust, a non-disturbance agreement agreeing, among
other things, that Tenant's right to possession of the Premises pursuant to the
terms and conditions of this Lease shall not be disturbed provided Tenant is not
in default under this Lease beyond the applicable cure periods hereunder (if
any).
18. RIGHT OF ENTRY: Tenant grants Landlord or its agents the right to
--------------
enter the Premises at all reasonable times, after delivery of prior reasonable
notice, for purposes of inspection, exhibition, posting of notices, repair or
alteration. At Landlord's option, Landlord shall at all times have and retain a
key with which to unlock all the doors in, upon and about the Premises,
excluding Tenant's vaults and safes. It is further agreed that Landlord shall
have the right to use any and all means Landlord deems necessary to enter the
Premises in an emergency. Landlord shall have the right to place "for rent" or
"for lease" signs on the outside of the Premises, the Building and in the Common
Areas during the last twelve (12) months of the Lease Term or the earlier
termination thereof. Landlord shall also have the right to place "for sale"
signs on the outside of the Building and in the Common Areas. Tenant hereby
waives any claim from damages or for any injury or inconvenience to or
interference with Tenant's business, or any other loss occasioned thereby except
for any claim for any of the foregoing arising out of the gross negligence or
willful misconduct of Landlord or its authorized representatives.
19. ESTOPPEL CERTIFICATE: Tenant shall execute (and acknowledge if required by
--------------------
any lender or ground lessor) and deliver to Landlord, within ten (10) days after
Landlord provides such to Tenant, a statement in writing certifying that this
Lease is unmodified and in full force and effect (or, if modified, stating the
nature of such modification), the date to which the Rent and other charges are
paid in advance, if any, acknowledging that there are not, to Tenant's
knowledge, any uncured defaults on the part of Landlord hereunder or specifying
such defaults as are claimed, and such other matters as Landlord may reasonably
require. Any such statement may be conclusively relied upon by Landlord and any
prospective purchaser or encumbrancer of the Premises. Tenant's failure to
deliver such statement within such time shall be conclusive upon the Tenant that
(a) this Lease is in full force and effect, without modification except as may
be represented by Landlord; (b) there are no uncured defaults in Landlord's
performance; and (c)
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not more than one month's Rent has been paid in advance, except in those
instances when Tenant pays Rent quarterly in advance pursuant to Section 8
hereof, then not more than three month's Rent has been paid in advance. Failure
by Tenant to so deliver such certified estoppel certificate shall be a material
default of the provisions of this Lease.
20. TENANT'S DEFAULT: The occurrence of any one or more of the following events
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shall, at Landlord's option, constitute a material default by Tenant of the
provisions of this Lease:
20.1 The abandonment of the Premises by Tenant or the vacation of the
Premises by Tenant which would cause any insurance policy to be invalidated or
otherwise lapse;
20.2 The failure by Tenant to make any payment of Rent, Additional Rent or
any other payment required hereunder within three (3) business days after the
delivery by Landlord of written notice that said payment is past due. Tenant
agrees that, to the fullest extent permitted by law, such written notice by
Landlord shall serve as the statutorily required notice under the Law (including
without limitation, any unlawful detainer statutes), and Tenant further agrees
to notice and service of notice as provided for in this Lease and waives any
right to any other or further notice or service of notice which Tenant may have
under any statute or law now or hereafter in effect on the date said payment is
due;
20.3 The failure by Tenant to observe, perform or comply with any of the
conditions, covenants or provisions of this Lease (except failure to make any
payment of Rent and/or Additional Rent) and such failure is not cured within (i)
thirty (30) days of the date on which Landlord delivers written notice of such
failure to Tenant for all failures other than with respect to Hazardous
Materials (defined in Section 29 hereof), and (ii) ten (10) days of the date on
which Landlord delivers written notice of such failure to Tenant for all
failures in any way related to Hazardous Materials. However, Tenant shall not be
in default of its obligations hereunder if such failure cannot reasonably be
cured within such thirty (30) or ten (10) day period, as applicable, and Tenant
promptly commences, and thereafter diligently proceeds with same to completion,
all actions necessary to cure such failure as soon as is reasonably possible,
but in no event shall the completion of such cure be later than sixty (60) days
after the date on which Landlord delivers to Tenant written notice of such
failure, unless Landlord, acting reasonably and in good faith, otherwise
expressly agrees in writing to a longer period of time based upon the
circumstances relating to such failure as well as the nature of the failure and
the nature of the actions necessary to cure such failure;
20.4 The making of a general assignment by Tenant for the benefit of
creditors, the filing of a voluntary petition by Tenant or the filing of an
involuntary petition by any of Tenant's creditors seeking the rehabilitation,
liquidation, or reorganization of Tenant under any law relating to bankruptcy,
insolvency or other relief of debtors and, in the case of an involuntary action,
the failure to remove or discharge the same within sixty (60) days of such
filing, the appointment of a receiver or other custodian to take possession of
substantially all of Tenant's assets or this leasehold, Tenant's insolvency or
inability to pay Tenant's debts or failure generally to pay Tenant's debts when
due, any court entering a decree or order directing the winding up or
liquidation of Tenant or of substantially all of Tenant's assets, Tenant taking
any action toward the dissolution or winding up of Tenant's affairs, the
cessation or suspension of Tenant's use of the Premises, or the attachment,
execution or other judicial seizure of substantially all of Tenant's assets or
this leasehold; or
20.5 Tenant's use or storage of Hazardous Materials in, on or about the
Premises, the Building, the Lot and/or the Park other than as expressly
permitted by the provisions of Section 29 below.
21. REMEDIES FOR TENANT'S DEFAULT:
-----------------------------
21.1 LANDLORD'S RIGHTS: In the event of Tenant's material default under
this Lease, Landlord may terminate Tenant's right to possession of the Premises
by any lawful means in which case upon delivery of written notice by Landlord
this Lease shall terminate on the date specified by Landlord in such notice and
Tenant shall immediately surrender possession of the Premises to Landlord. In
addition, the Landlord shall have the immediate right of re-entry whether or not
this Lease is terminated, and if this right of re-entry is exercised following
abandonment of the Premises by Tenant, Landlord may consider any personal
property belonging to Tenant and left on the Premises to also have been
abandoned. No re-entry or taking possession of the Premises by Landlord pursuant
to this Section 21 shall be construed as an election to terminate this Lease
unless a written notice of such intention is given to Tenant. If Landlord relets
the Premises or any portion thereof, (i) Tenant shall be liable immediately to
Landlord for all costs Landlord incurs in reletting the Premises or any part
thereof, including, without limitation, broker's commissions, expenses of
cleaning, and further improving the Premises and other similar costs
(collectively, the "Reletting Costs"), and (ii) the rent received by Landlord
from such reletting shall be applied to the payment of, first, any indebtedness
from Tenant to Landlord other than Base Rent, Operating Expenses, Tax Expenses,
Common Area Utility Costs, and Utility Expenses; second, all costs
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including maintenance, incurred by Landlord in reletting; and, third, Base Rent,
Operating Expenses, Tax Expenses, Common Area Utility Costs, Utility Expenses,
and all other sums due under this Lease. Any and all of the Reletting Costs
shall be fully chargeable to Tenant and shall not be prorated or otherwise
amortized in relation to any new lease for the Premises or any portion thereof.
After deducting the payments referred to above, any sum remaining from the
rental Landlord receives from reletting shall be held by Landlord and applied in
payment of future Rent as Rent becomes due under this Lease. In no event shall
Tenant be entitled to any excess rent received by Landlord. Reletting may be for
a period shorter or longer than the remaining term of this Lease. No act by
Landlord other than giving written notice to Tenant shall terminate this Lease.
Acts of maintenance, efforts to relet the Premises or the appointment of a
receiver on Landlord's initiative to protect Landlord's interest under this
Lease shall not constitute a termination of Tenant's right to possession. So
long as this Lease is not terminated, Landlord shall have the right to remedy
any default of Tenant, to maintain or improve the Premises, to cause a receiver
to be appointed to administer the Premises and new or existing subleases and to
add to the Rent payable hereunder all of Landlord's reasonable costs in so
doing, with interest at the maximum rate permitted by law from the date of such
expenditure.
21.2 DAMAGES RECOVERABLE: If Tenant breaches this Lease and abandons the
Premises before the end of the Term, or if Tenant's right to possession is
terminated by Landlord because of a breach or default under this Lease, then in
either such case, Landlord may recover from Tenant all damages suffered by
Landlord as a result of Tenant's failure to perform its obligations hereunder,
and all Reletting Costs, and the worth at the time of the award (computed in
accordance with paragraph (3) of Subdivision (a) of Section 1951.2 of the
California Civil Code) of the amount by which the Rent then unpaid hereunder for
the balance of the Lease Term exceeds the amount of such loss of Rent for the
same period which Tenant proves could be reasonably avoided by Landlord and in
such case, Landlord prior to the award, may relet the Premises for the purpose
of mitigating damages suffered by Landlord because of Tenant's failure to
perform its obligations hereunder; provided, however, that even though Tenant
has abandoned the Premises following such breach, this Lease shall nevertheless
continue in full force and effect for as long as Landlord does not terminate
Tenant's right of possession, and until such termination, Landlord shall have
the remedy described in Section 1951.4 of the California Civil Code (Landlord
may continue this Lease in effect after Tenant's breach and abandonment and
recover Rent as it becomes due, if Tenant has the right to sublet or assign,
subject only to reasonable limitations) and may enforce all its rights and
remedies under this Lease, including the right to recover the Rent from Tenant
as it becomes due hereunder. The "worth at the time of the award" within the
meaning of Subparagraphs (a)(1) and (a)(2) of Section 1951.2 of the California
Civil Code shall be computed by allowing interest at the rate of ten percent
(10%) per annum. Tenant waives redemption or relief from forfeiture under
California Code of Civil Procedure Sections 1174 and 1179, or under any other
present or future law, in the event Tenant is evicted or Landlord takes
possession of the Premises by reason of any default of Tenant hereunder.
21.3 RIGHTS AND REMEDIES CUMULATIVE: The foregoing rights and remedies of
Landlord are not exclusive; they are cumulative in addition to any rights and
remedies now or hereafter existing at law, in equity by statute or otherwise, or
to any equitable remedies Landlord may have, and to any remedies Landlord may
have under bankruptcy laws or laws affecting creditor's rights generally.
21.4 WAIVER OF A DEFAULT: The waiver by Landlord of any default of any
provision of this Lease shall not be deemed or construed a waiver of any other
default by Tenant hereunder or of any subsequent default of this Lease, except
for the default specified in the waiver.
22. HOLDING OVER: If Tenant holds possession of the Premises after the
------------
expiration of the Term of this Lease with Landlord's consent, Tenant shall
become a tenant from month-to-month upon the terms and provisions of this Lease,
provided the monthly Base Rent during such hold over period shall be 150% of the
Base Rent due on the last month of the Lease Term, payable in advance on or
before the first day of each month. Acceptance by Landlord of the monthly Base
Rent without the additional fifty percent (50%) increase of Base Rent shall not
be deemed or construed as a waiver by Landlord of any of its rights to collect
the increased amount of the Base Rent as provided herein at any time. Such
month-to-month tenancy shall not constitute a renewal or extension for any
further term. All options, if any, granted under the terms of this Lease shall
be deemed automatically terminated and be of no force or effect during said
month-to-month tenancy. Tenant shall continue in possession until such tenancy
shall be terminated by either Landlord or Tenant giving written notice of
termination to the other party at least thirty (30) days prior to the effective
date of termination. This paragraph shall not be construed as Landlord's
permission for Tenant to hold over. Acceptance of Base Rent by Landlord
following expiration or termination of this Lease shall not constitute a renewal
of this Lease.
23. LANDLORD'S DEFAULT: Landlord shall not be deemed in breach or default of
------------------
this Lease unless Landlord fails within a reasonable time to perform an
obligation required to be performed by Landlord hereunder. For purposes of this
provision (except as otherwise set forth below), a reasonable time shall not be
less than thirty (30) days after receipt by Landlord of written notice
specifying the nature of the
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obligation Landlord has not performed; provided, however, that if the nature of
Landlord's obligation is such that more than thirty (30) days, after receipt of
written notice, is reasonably necessary for its performance, then Landlord shall
not be in breach or default of this Lease if performance of such obligation is
commenced within such thirty (30) day period and thereafter diligently pursued
to completion. In the event of a default by Landlord of its obligations under
this Lease, Tenant may exercise the rights conferred upon Tenant in Section 41
hereof. Notwithstanding the foregoing, if the obligation of Landlord in question
is to repair the structural components of the roof (but only to the extent
Landlord is actually then responsible therefor under the provisions of Section
11.3 of this Lease) because the condition thereof, through no fault of Tenant or
Tenant's Representatives, is causing leakage of water into the Premises,
Landlord shall respond within five (5) business days after Landlord's receipt of
a written demand from Tenant for repairs to be made. Landlord's failure to
commence any such required roof repairs within five (5) business days, and
diligently pursue the same to completion, shall be a default on the part of
Landlord hereunder, whereupon Tenant shall have the right to cause such repairs
to be made at Landlord's expense. In such event, Tenant shall deliver to
Landlord a written demand for the actual reasonable costs incurred by Tenant
therefor (for purposes hereof, "actual reasonable costs" shall include costs
incurred for overtime and/or expedited services to the extent reasonably
appropriate given the damage sustained to the Premises) together with written
documentation evidencing such costs and Landlord shall pay to Tenant such actual
reasonable costs; provided, if Landlord fails to pay to Tenant the undisputed
amount of such actual reasonable costs for said roof repairs within thirty (30)
days of Landlord's receipt of Tenant's written demand therefor, thereafter
Tenant may pursue all remedies available at law or in equity with respect
thereto. If there exists a good faith dispute between the parties regarding any
portion of such actual reasonable costs for said roof repairs, the parties shall
meet and confer and attempt to promptly resolve any such dispute.
24. PARKING: Tenant shall have a license to use the number of non-designated
-------
and non-exclusive parking spaces specified in the Basic Lease Information.
Landlord shall exercise reasonable efforts to insure that such spaces are
available to Tenant for its use, but Landlord shall not be required to enforce
Tenant's right to use the same.
25. SALE OF PREMISES: In the event of any sale of the Premises by Landlord or
----------------
the cessation otherwise of Landlord's interest therein, Landlord shall be and is
hereby entirely released from any and all of its obligations to perform or
further perform under this Lease and from all liability hereunder accruing from
or after the date of such sale; and the purchaser, at such sale or any
subsequent sale of the Premises shall be deemed, without any further agreement
between the parties or their successors in interest or between the parties and
any such purchaser, to have assumed and agreed to carry out any and all of the
covenants and obligations of the Landlord under this Lease. For purposes of this
Section 25, the term "Landlord" means only the owner and/or agent of the owner
as such parties exist as of the date on which Tenant executes this Lease. A
ground lease or similar long term lease by Landlord of the entire Building, of
which the Premises are a part, shall be deemed a sale within the meaning of this
Section 25. Tenant agrees to attorn to such new owner provided such new owner
does not disturb Tenant's use, occupancy or quiet enjoyment of the Premises so
long as Tenant is not in default of any of the provisions of this Lease.
26. WAIVER: No delay or omission in the exercise of any right or remedy of
------
either party on any default by the other party shall impair such a right or
remedy or be construed as a waiver. The subsequent acceptance of Rent by
Landlord after default by Tenant of any covenant or term of this Lease shall not
be deemed a waiver of such default, other than a waiver of timely payment for
the particular Rent payment involved, and shall not prevent Landlord from
maintaining an unlawful detainer or other action based on such breach. No
payment by Tenant or receipt by Landlord of a lesser amount than the monthly
Rent and other sums due hereunder shall be deemed to be other than on account of
the earliest Rent or other sums due, nor shall any endorsement or statement on
any check or accompanying any check or payment be deemed an accord and
satisfaction; and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such Rent or other sum or pursue any
other remedy provided in this Lease. No failure, partial exercise or delay on
the part of the Landlord in exercising any right, power or privilege hereunder
shall operate as a waiver thereof.
27. CASUALTY DAMAGE: If the Premises or any part thereof shall be damaged by
---------------
fire or other casualty, Tenant shall give prompt written notice thereof to
Landlord. In case the Building shall be so damaged by fire or other casualty
that the cost of repair, restoration or reconstruction of the Building shall, in
Landlord's sole and reasonable opinion, exceed fifty percent (50%) of the
replacement cost of the Building, or insurance proceeds will not, in Landlord's
sole and reasonable opinion, be available to fully repair the damage, or access
to the Building is wholly impaired, then in any of the foregoing instances
Landlord may, at its option, terminate this Lease by notifying Tenant in writing
of such termination within ninety (90) days after the date of such damage, in
which event the Rent shall be abated as of the date of such damage. In addition
to the foregoing, if the Premises or any part thereof shall be damaged
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by fire or other casualty such that the reparation of such damage or casualty
shall, in Landlord's reasonable judgment, require more than one hundred fifty
(150) days to complete (subject to extension for 90 days for force majeure
delays (which delays include without limitation, delays in obtaining permits,
delays in processing of any insurance claim, governmental delays or moratoriums,
inclement weather and similar events outside of the reasonable control of
Landlord), and extension for delays attributable to Tenant's or any of Tenant's
Representatives' acts or omissions), then either Tenant or Landlord may
terminate this Lease by notifying the other party of such election to terminate
this Lease within thirty (30) days after the date of Landlord's determination of
the extent of such damage (which determination shall be made within ninety (90)
days after the date of such damage), in which event the Rent shall be abated as
of the date of such damage. If neither party exercises their rights to so elect
to terminate this Lease in accordance with the aforesaid provisions, Landlord
shall as soon as practicable after the date of such damage commence to repair
and restore the Building and shall proceed with reasonable diligence to complete
the restoration of the Building (except that Landlord shall not be responsible
for delays outside its control, however, the time period for extension due to
force majeure delays shall be limited to ninety (90) days) to substantially the
same condition in which it was immediately prior to the happening of the
casualty; provided, Landlord shall not be required to rebuild, repair, or
replace any part of Tenant's furniture, furnishings, trade fixtures, non-
attached fixtures and/or equipment removable by Tenant or any improvements,
alterations or additions installed by or for the benefit of Tenant under the
provisions of this Lease. If the restoration work is not substantially completed
by Landlord within such one hundred fifty (150) day period (subject to extension
for ninety (90) days for force majeure delays (which delays include without
limitation, delays in obtaining permits, delays in processing of any insurance
claim, governmental delays or moratoriums, inclement weather and similar events
outside of the reasonable control of Landlord), and extension for delays
attributable to Tenant's or any of Tenant's Representatives acts or omissions),
then Tenant may terminate this Lease by notifying Landlord of such election to
terminate this Lease within thirty (30) days after the expiration of such 150-
day period (as same may be extended as contemplated above for force majeure
delays and tenant delays). Landlord shall not in any event be required to spend
for such work an amount in excess of the insurance proceeds (excluding any
deductible) and any contributions from Tenant, if necessary, actually received
by Landlord as a result of the fire or other casualty; provided, however, if due
to such shortfall in insurance proceeds Tenant cannot, after completion of such
repairs or restoration, conduct its operations in the Premises, Tenant may
terminate this Lease by delivering to Landlord written notice of such election
within thirty (30) days of Landlord advising Tenant that there will be such a
shortfall in insurance proceeds; provided, to the extent then known by Landlord,
Landlord shall advise Tenant of the amount of such shortfall within ninety (90)
days after the date of such damage or as soon as possible after Landlord obtains
knowledge of same. Landlord shall not be liable for any inconvenience or
annoyance to Tenant, injury to the business of Tenant, loss of use of any part
of the Premises by the Tenant or loss of Tenant's personal property resulting in
any way from such damage or the repair thereof, except that, subject to the
provisions of the next sentence, Landlord shall allow Tenant a fair diminution
of Rent during the time and to the extent the Premises are unfit for occupancy.
Notwithstanding anything to the contrary contained herein, if the Premises or
any other portion of the Building be damaged by fire or other casualty resulting
from the intentional or negligent acts or omissions of Tenant or any of Tenant's
Representatives, (i) the Rent shall not be diminished during the repair of such
damage to the extent any portion of the Rent is not actually reimbursed to
Landlord from the proceeds of any rental loss insurance procured by Landlord
hereunder, (ii) Tenant shall not have any right to terminate this Lease due to
the occurrence of such casualty or damage, and (iii) Tenant shall be liable to
Landlord for the cost and expense of the repair and restoration of all or any
portion of the Building caused thereby (including, without limitation, any
deductible) to the extent such cost and expense is not covered by insurance
proceeds. Notwithstanding anything to the contrary contained herein, in the
event the holder of any indebtedness secured by 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 thirty (30) days after the date of notice to Tenant of any such
event, whereupon all rights and obligations shall cease and terminate hereunder
except for those obligations expressly intended to survive any such termination
of this Lease. Except as otherwise provided in this Section 27, Tenant hereby
waives the provisions of Sections 1932(2.), 1933(4.), 1941 and 1942 of the
California Civil Code with respect to the provisions of this Section 27.
28. CONDEMNATION: If twenty-five percent (25%) or more of the Premises is
------------
condemned by eminent domain, inversely condemned or sold in lieu of condemnation
for any public or quasi-public use or purpose ("Condemned"), then Tenant or
Landlord may terminate this Lease as of the date when physical possession of the
Premises is taken and title vests in such condemning authority, and Rent shall
be adjusted to the date of termination. Tenant shall not because of such
condemnation assert any claim against Landlord or the condemning authority for
any compensation because of such condemnation, and Landlord shall be entitled to
receive the entire amount of any award without deduction for any estate of
interest or other interest of Tenant; provided, however, the foregoing
provisions shall not preclude Tenant, at Tenant's sole cost and expense, from
obtaining any separate award to Tenant for loss of or damage to Tenant's trade
fixtures and removable personal property or for damages for cessation or
interruption of Tenant's business provided such award is separate from
Landlord's award and provided further such separate award does not diminish nor
impair the award otherwise payable to Landlord. In
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addition to the foregoing, Tenant shall be entitled to seek compensation for the
relocation costs recoverable by Tenant pursuant to the provisions of California
Government Code Section 7262. If neither party elects to terminate this Lease,
Landlord shall, if necessary, promptly proceed to restore the Premises or the
Building to substantially its same condition prior to such partial condemnation,
allowing for the reasonable effects of such partial condemnation, and a
proportionate allowance shall be made to Tenant, as solely and reasonably
determined by Landlord, for the Rent corresponding to the time during which, and
to the part of the Premises of which, Tenant is deprived on account of such
partial condemnation and restoration. Landlord shall not be required to spend
funds for restoration in excess of the amount received by Landlord as
compensation awarded.
29. ENVIRONMENTAL MATTERS/HAZARDOUS MATERIALS:
-----------------------------------------
29.1 HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE: Prior to executing this
Lease, Tenant has completed, executed and delivered to Landlord Tenant's initial
Hazardous Materials Disclosure Certificate (the "Initial HazMat Certificate"), a
copy of which is attached hereto as Exhibit G and incorporated herein by this
---------
reference. Tenant covenants, represents and warrants to Landlord that the
information on the Initial HazMat Certificate is true and correct and accurately
describes the use(s) of Hazardous Materials which will be made and/or used on
the Premises by Tenant. Tenant shall commencing with the date which is one year
from the Commencement Date and continuing every year thereafter, complete,
execute, and deliver to Landlord, a Hazardous Materials Disclosure Certificate
(the "HazMat Certificate") describing Tenant's present use of Hazardous
Materials on the Premises, and any other reasonably necessary documents as
requested by Landlord. The HazMat Certificate required hereunder shall be in
substantially the form as that which is attached hereto as Exhibit E. Landlord
---------
hereby acknowledges and agrees that as of the date on which both parties execute
and deliver this Lease, Landlord has approved the Initial HazMat Certificate;
however, any such approval by Landlord shall not be construed to relieve Tenant
from its obligations and/or any liabilities under the provisions of this Section
29.
29.2 DEFINITION OF HAZARDOUS MATERIALS: As used in this Lease, the term
Hazardous Materials shall mean and include (a) any hazardous or toxic wastes,
materials or substances, and other pollutants or contaminants, which are or
become regulated by any Environmental Laws; (b) petroleum, petroleum by
products, gasoline, diesel fuel, crude oil or any fraction thereof; (c) asbestos
and asbestos containing material, in any form, whether friable or non-friable;
(d) polychlorinated biphenyls; (e) radioactive materials; (f) lead and lead-
containing materials; (g) any other material, waste or substance displaying
toxic, reactive, ignitable or corrosive characteristics, as all such terms are
used in their broadest sense, and are defined or become defined by any
Environmental Law (defined below); or (h) any materials which cause or threatens
to cause a nuisance upon or waste to any portion of the Premises, the Building,
the Lot, the Park or any surrounding property; or poses or threatens to pose a
hazard to the health and safety of persons on the Premises or any surrounding
property.
29.3 PROHIBITION; ENVIRONMENTAL LAWS: Except for small quantities of
ordinary and customary office supplies as specified in the Initial HazMat
Certificate, Tenant shall not be entitled to use nor store any Hazardous
Materials on, in, or about the Premises, the Building, the Lot and the Park, or
any portion of the foregoing, without, in each instance, obtaining Landlord's
prior written consent thereto. If Landlord consents to any such usage or
storage, then Tenant shall be permitted to use and/or store only those Hazardous
Materials that are necessary for Tenant's business and to the extent disclosed
in the Initial HazMat Certificate, or the then applicable HazMat Certificate and
as expressly approved by Landlord in writing, provided that such usage and
storage is only to the extent of the quantities of Hazardous Materials as
specified in the then applicable HazMat Certificate as expressly approved by
Landlord and the then applicable HMMP (defined below) for Tenant's operations,
and, provided further chat in all instances such usage and storage is in full
compliance with any and all local, state and federal environmental, health
and/or safety-related laws, statutes, orders, standards, courts' decisions,
ordinances, rules and regulations (as interpreted by judicial and administrative
decisions), decrees, directives, guidelines, permits or permit conditions,
currently existing and as amended, enacted, issued or adopted in the future
which are or become applicable to Tenant or all or any portion of the Premises
(collectively, the "Environmental Laws") and the then applicable HMMP (defined
below) for Tenant's operations Tenant agrees that any changes to the type and/or
quantities of Hazardous Materials specified in the Initial HazMat Certificate or
the most recent HazMat Certificate may be implemented only with the prior
written consent of Landlord, which consent may be given or withheld in
Landlord's sole discretion. Tenant shall not be entitled nor permitted to
install any tanks under, on or about the Premises for the storage of Hazardous
Materials without the express written consent of Landlord, which may be given or
withheld in Landlord's sole discretion. Landlord shall have the right at all
times during the Term of this Lease to (i) inspect the Premises, (ii) conduct
tests and investigations to determine whether Tenant is in compliance with the
provisions of this Section 29, and (iii) request lists of all Hazardous
Materials used, stored or otherwise located on, under or about any portion of
the Premises and/or the Common Areas. Except as otherwise set forth in Section
29.7 below, the cost of all such inspections, tests and investigations shall be
proportionately borne by Tenant commensurate with the extent of Hazardous
Materials revealed by any such inspection, test or investigation (such
determination to be made by one or more environmental consultants jointly
selected by Landlord and Tenant) to be present in, on or about
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the Premises and/or the Common Areas due to the acts or omissions of Tenant or
any of Tenant's Representatives and all other costs and expenses shall be borne
by parties other than Tenant. The aforementioned rights granted herein to
Landlord and its representatives shall not create (a) a duty on Landlord's part
to inspect, test, investigate, monitor or otherwise observe the Premises or the
activities of Tenant and Tenant's Representatives with respect to Hazardous
Materials, including without limitation, Tenant's operation, use and any
remediation related thereto, or (b) liability on the part of Landlord and its
representatives for Tenant's use, storage, disposal or remediation of Hazardous
Materials, it being understood that Tenant shall be solely responsible for all
liability in connection therewith.
29.4 TENANT'S ENVIRONMENTAL OBLIGATIONS: Prior to executing this Lease
Tenant has completed and delivered to Landlord a copy of Tenant's Hazardous
Materials Management Plan (the "HMMP"). Tenant covenants, represents and
warrants to Landlord that the information in the HMMP is true and correct and
accurately describes the use(s) of Hazardous Materials which will be made and/or
used on the Premises by Tenant and Tenant's Representatives. Tenant hereby
covenants and agrees to materially conform and comply, and otherwise cause all
of Tenant's Representatives to materially conform and comply, with all of the
procedures, requirements and other provisions of the HMMP as same relate to the
Premises. Tenant hereby further agrees to promptly deliver to Landlord a true
and complete copy of all modifications, updates and supplements to the HMMP as
well as any and all new or additional HMMPs as may be required to be prepared
and implemented by Tenant (which Tenant hereby agrees to so prepare and
implement all additional HMMPs) in order to fully comply with all Environmental
Laws or the requirements of all regulatory, governmental or quasi-governmental
agencies, divisions and/or departments with respect thereto. Tenant shall give
to Landlord immediate verbal and follow-up written notice of any spills,
releases, discharges, disposals, emissions, migrations, removals or
transportation of Hazardous Materials on, under or about any portion of the
Premises or, of which Tenant is aware, in any Common Areas. Tenant, at its sole
cost and expense, covenants and warrants to promptly investigate, clean up,
remove, restore and otherwise remediate (including, without limitation,
preparation of any feasibility studies or reports and the performance of any and
all closures) any spill, release, discharge, disposal, emission, migration or
transportation of Hazardous Materials arising from or related to the intentional
or negligent acts or omissions of Tenant or Tenant's Representatives such that
the affected portions of the Park and any adjacent property are returned to the
condition existing prior to the appearance of such Hazardous Materials. Any such
investigation, clean up, removal, restoration and other remediation shall only
be performed after Tenant has obtained Landlord's prior written consent, which
consent shall not be unreasonably withheld so long as such actions would not
potentially have a material adverse long-term or short-term effect on any
portion of the Premises, the Building, the Lot or the Park. Notwithstanding the
foregoing, Tenant shall be entitled to respond immediately to an emergency
without first obtaining Landlord's prior written consent. Tenant, at its sole
cost and expense, shall conduct and perform, or cause to be conducted and
performed, all closures as required by any Environmental Laws or any agencies or
other governmental authorities having jurisdiction thereof. If Tenant fails to
so promptly investigate, clean up, remove, restore, provide closure or otherwise
so remediate, Landlord may, but without obligation to do so, take any and all
steps necessary to rectify the same and Tenant shall promptly reimburse
Landlord, upon demand, for all costs and expenses to Landlord of performing
investigation, clean up, removal, restoration, closure and remediation work. All
such work undertaken by Tenant, as required herein, shall be performed in such a
manner so as to enable Landlord to make full economic use of the Premises, the
Building, the Lot and the Park after the satisfactory completion of such work.
29.5 ENVIRONMENTAL INDEMNITY: In addition to Tenant's obligations as set
forth hereinabove but subject to the provisions of Section 29.7 below, Tenant
agrees to, and shall, protect, indemnify, defend (with counsel reasonably
acceptable to Landlord) and hold Landlord and the other Indemnitees harmless
from and against any and all claims, judgments, damages, penalties, fines,
liabilities, losses (including, without limitation, diminution in value of any
portion of the Premises, the Building, the Lot or the Park, damages for the loss
of or restriction on the use of rentable or usable space, and from any adverse
impact of Landlord's marketing of any space within the Building and/or Park),
suits, administrative proceedings and costs (including, but not limited to,
attorneys' and consultant fees and court costs) arising at any time during or
after the Term of this Lease in connection with or related to, directly or
indirectly, the use, presence, transportation, storage, disposal, migration,
removal, spill, release or discharge of Hazardous Materials on, in or about any
portion of the Premises, the Common Areas, the Building, the Lot or the Park as
a result (directly or indirectly) of the intentional or negligent acts or
intentional or negligent omissions of Tenant or any of Tenant's Representatives.
Neither the written consent of Landlord to the presence, use or storage of
Hazardous Materials in, on, under or about any portion of the Premises, the
Building, the Lot and/or the Park, nor the strict compliance by Tenant with all
Environmental Laws shall excuse Tenant from its obligations of indemnification
pursuant hereto. Tenant shall not be relieved of its indemnification obligations
under the provisions of this Section 29.5 due to Landlord's status as either an
"owner" or "operator" under any Environmental Laws.
29.6 SURVIVAL: Tenant's obligations and liabilities pursuant to the
provisions of this Section 29 shall survive the expiration or earlier
termination of this Lease. If it is determined by Landlord's environmental
consultants that the condition of all or any portion of the Premises, the
Building, the Lot and/or the Park is not in compliance with the provisions of
this Lease with respect to Hazardous Materials
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due to the intentional or negligent acts or intentional or negligent omissions
of Tenant or any of Tenant's Representatives, including without limitation all
Environmental Laws at the expiration or earlier termination of this Lease, then
in Landlord's sole discretion, Landlord may require Tenant to hold over
possession of the Premises until Tenant can surrender the Premises to Landlord
in the condition in which the Premises existed as of the Commencement Date and
prior to the appearance of such Hazardous Materials except for reasonable wear
and tear, including without limitation, the conduct or performance of any
closures as required by any Environmental Laws. For purposes hereof, the term
"reasonable wear and tear" shall not include any deterioration in the condition
or diminution of the value of any portion of the Premises, the Building, the Lot
and/or the Park in any manner whatsoever related to directly, or indirectly,
Hazardous Materials caused or permitted to exist by Tenant or any of Tenant's
Representatives. Any such holdover by Tenant will be with Landlord's consent,
will not be terminable by Tenant in any event or circumstance and will otherwise
be subject to the provisions of Section 22 of this Lease but at the Base Rent
then due and payable by Tenant hereunder.
29.7 TENANT'S EXCULPATION: Tenant shall not be liable for nor otherwise
obligated to Landlord under any provision of the Lease with respect to (i) any
claim, remediation obligation, investigation obligation, liability, cause of
action, attorney's fees, consultants' cost, expense or damage resulting from any
Hazardous Material present in, on or about the Premises or any of the Buildings
in the Park to the extent not caused nor otherwise permitted, directly or
indirectly, by Tenant or Tenant's Representatives; or (ii) the removal,
investigation, monitoring or remediation of any Hazardous Material present in,
on or about the Premises, the Building or the Park caused by any source,
including third parties other than Tenant and Tenant's Representatives, as a
result of or in connection with the acts or omissions of persons other than
Tenant or Tenant's Representatives; provided, however, Tenant shall be fully
liable for and otherwise obligated to Landlord under the provisions of this
Lease for all liabilities, costs, damages, penalties, claims, judgments,
expenses (including without limitation, attorneys' and experts' fees and costs)
and losses to the extent (a) Tenant or any of Tenant's Representatives
contributes to the presence of such Hazardous Materials or Tenant and/or any of
Tenant's Representatives exacerbates the conditions caused by such Hazardous
Materials, or (b) Tenant and/or Tenant's Representatives allows or permits
persons over which Tenant or any of Tenant's Representatives has control and/or
for which Tenant or any of Tenant's Representatives are legally responsible for,
to cause such Hazardous Materials to be present in, on, under, through or about
any portion of the Premises, the Building or the Park, or does not take all
reasonably appropriate actions to prevent such persons over which Tenant or any
of Tenant's Representatives has control and/or for which Tenant or any of
Tenant's Representatives are legally responsible from causing the presence of
Hazardous Materials in, on, under, through or about any portion of the Premises,
the Building or the Park.
30. FINANCIAL STATEMENTS: Tenant, for the reliance of Landlord, any lender
--------------------
holding or anticipated to acquire a lien upon the Premises, the Building or the
Park or any portion thereof, or any prospective purchaser of the Building or the
Park or any portion thereof, within ten (10) days after Landlord's request
therefor, but not more often than once annually so long as Tenant is not in
default of this Lease, shall deliver to Landlord the then current audited
financial statements of Tenant (including interim periods following the end of
the last fiscal year for which annual statements are available) which statements
shall be prepared or compiled by a certified public accountant and shall present
fairly the financial condition of Tenant at such dates and the result of its
operations and changes in its financial positions for the periods ended on such
dates. If an audited financial statement has not been prepared, Tenant shall
provide Landlord with an unaudited financial statement and/or such other
information, the type and form of which are acceptable to Landlord in Landlord's
reasonable discretion, which reflects the financial condition of Tenant. If
Landlord so requests, Tenant shall deliver to Landlord an opinion of a certified
public accountant, including a balance sheet and profit and loss statement for
the most recent prior year, all prepared in accordance with generally accepted
accounting principles consistently applied.
31. GENERAL PROVISIONS:
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31.1 TIME. Time is of the essence in this Lease and with respect to each
and all of its provisions in which performance is a factor.
31.2 SUCCESSORS AND ASSIGNS. The covenants and conditions herein contained,
subject to the provisions as to assignment, apply to and bind the heirs,
successors, executors, administrators and assigns of the parties hereto.
31.3 RECORDATION. Tenant shall not record this Lease or a short form
memorandum hereof without the prior written consent of the Landlord.
31.4 LANDLORD'S PERSONAL LIABILITY. The liability of Landlord (which, for
purposes of this Lease, shall include Landlord and the owner of the Building if
other than Landlord) to Tenant for any default by Landlord under the terms of
this Lease shall be limited to the actual interest of Landlord and its present
or future partners or members in the Premises or the Building, and Tenant agrees
to look
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solely to the Premises for satisfaction of any liability and shall not look to
other assets of Landlord nor seek any recourse against the assets of the
individual partners, members, directors, officers, shareholders, agents or
employees of Landlord (including without limitation, any property management
company of Landlord); it being intended that Landlord and the individual
partners, members, directors, officers, shareholders, agents and employees of
Landlord (including without limitation, any property management company of
Landlord) shall not be personally liable in any manner whatsoever for any
judgment or deficiency. The liability of Landlord under this Lease is limited to
its actual period of ownership of title to the Building.
31.5 SEPARABILITY. Any provisions of this Lease which shall prove to be
invalid, void or illegal shall in no way affect, impair or invalidate any other
provisions hereof and such other provision shall remain in full force and
effect.
31.6 CHOICE OF LAW. This Lease shall be governed by, and construed in
accordance with, the laws of the State of California.
31.7 ATTORNEYS' FEES. In the event any dispute between the parties results
in litigation or other proceeding, the prevailing party shall be reimbursed by
the party not prevailing for all reasonable costs and expenses, including,
without limitation, reasonable attorneys' and experts' fees and costs incurred
by the prevailing party in connection with such litigation or other proceeding,
and any appeal thereof. Such costs, expenses and fees shall be included in and
made a part of the judgment recovered by the prevailing party, if any.
31.8 ENTIRE AGREEMENT. This Lease supersedes any prior agreements,
representations, negotiations or correspondence between the parties, and
contains the entire agreement of the parties on matters covered. No other
agreement, statement or promise made by any party, that is not in writing and
signed by all parties to this Lease, shall be binding.
31.9 WARRANTY OF AUTHORITY. On the date that Tenant executes this Lease,
Tenant shall deliver to Landlord an original certificate of status for Tenant
issued by the California Secretary of State or statement of partnership for
Tenant recorded in the county in which the Premises are located, as applicable,
and such other documents as Landlord may reasonably request with regard to the
lawful existence of Tenant. Each person executing this Lease on behalf of a
party represents and warrants that (1) such person is duly and validly
authorized to do so on behalf of the entity it purports to so bind, and (2) if
such party is a partnership, corporation or trustee, that such partnership,
corporation or trustee has full right and authority to enter into this Lease and
perform all of its obligations hereunder. Tenant hereby warrants that this Lease
is valid and binding upon Tenant and enforceable against Tenant in accordance
with its terms.
31.10 NOTICES. Any and all notices and demands required or permitted to be
given hereunder to Landlord shall be in writing and shall be sent: (a) by United
States mail, certified and postage prepaid; or (b) by personal delivery; or (c)
by overnight courier, addressed to Landlord at 101 Lincoln Centre Drive, Fourth
Floor, Foster City, California 94404-1167. Any and all notices and demands
required or permitted to be given hereunder to Tenant shall be in writing and
shall be sent: (i) by United States mail, certified and postage prepaid; or (ii)
by personal delivery to any employee or agent of Tenant over the age of eighteen
(18) years of age; or (iii) by overnight courier, all of which shall be
addressed to Tenant at the Premises. Notice and/or demand shall be deemed given
upon the earlier of actual receipt or the third day following deposit in the
United States mail. Any notice or requirement of service required by any statute
or law now or hereafter in effect, including, but not limited to, California
Code of Civil Procedure Sections 1161, 1161.1, and 1162 (including any
amendments, supplements or substitutions thereof), is hereby waived by Tenant.
31.11 JOINT AND SEVERAL. If Tenant consists of more than one person or
entity, the obligations of all such persons or entities shall be joint and
several.
31.12 COVENANTS AND CONDITIONS. Each provision to be performed by Tenant
hereunder shall be deemed to be both a covenant and a condition.
31.13 UNDERLINING. The use of underlining within the Lease is for
Landlord's reference purposes only and no other meaning or emphasis is intended
by this use, nor should any be inferred.
31.14 MERGER. The voluntary or other surrender of this Lease by Tenant,
the mutual termination or cancellation hereof by Landlord and Tenant, or a
termination of this Lease by Landlord for a material default by Tenant
hereunder, shall not work a merger, and, at the sole option of Landlord, (i)
shall terminate all or any existing subleases or subtenancies, or (ii) may
operate as an assignment to Landlord of any or all of such subleases or
subtenancies. Landlord's election of either or both of the foregoing options
shall be exercised by delivery by Landlord of written notice thereof to Tenant
and all known subtenants under any sublease.
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32. SIGNS: All signs and graphics of every kind visible in or from public view
-----
or corridors or the exterior of the Premises shall be subject to Landlord's
prior written approval and shall be subject to any applicable governmental laws,
ordinances, and regulations and in compliance with Landlord's sign criteria as
same may exist from time to time or as set forth in Exhibit H hereto and made a
---------
part hereof. Notwithstanding the foregoing, Tenant, at Tenant's sole cost and
expense, shall be permitted to install an identification sign on the northeast
comer of the facia of the Building, subject to obtaining Landlord's prior
reasonable approval thereof and further subject to Tenant's compliance with any
and all applicable governmental laws, ordinances, and regulations. Tenant shall
remove all such signs and graphics prior to the expiration or earlier
termination of this Lease. Such installations and removals shall be made in a
manner as to avoid damage or defacement of the Premises; and Tenant shall repair
any damage or defacement, including without limitation, discoloration caused by
such installation or removal. Notwithstanding the foregoing, in no event shall
any: (a) neon, flashing or moving sign(s) or (b) sign(s) which shall interfere
with the visibility of any sign, awning, canopy, advertising matter, or
decoration of any kind of any other business or occupant of the Building or the
Park be permitted hereunder. Tenant further agrees to maintain any such sign,
awning, canopy, advertising matter, lettering, decoration or other thing as may
be approved in good condition and repair at all times.
33. MORTGAGEE PROTECTION: Upon any default on the part of Landlord, Tenant will
--------------------
give written notice by registered or certified mail to any beneficiary of a deed
of trust or mortgagee of a mortgage covering the Premises who has provided
Tenant with notice of their interest together with an address for receiving
notice, and shall offer such beneficiary or mortgagee a reasonable opportunity
to cure the default, including time to obtain possession of the Premises by
power of sale or a judicial foreclosure, if such should prove necessary to
effect a cure (which opportunity to cure, including time to obtain possession of
the Premises, shall not be more than one hundred twenty (120) days). Subject to
the provisions of Section 41 hereof, if such default cannot be cured within such
time period, then such additional time as may be necessary will be given to such
beneficiary or mortgagee to effect such cure so long as such beneficiary or
mortgagee has commenced the cure within the original time period and thereafter
diligently pursues such cure to completion, in which event this Lease shall not
be terminated while such cure is being diligently pursued. Tenant agrees that
each lender to whom this Lease has been assigned by Landlord is an express third
party beneficiary hereof. Tenant shall not make any prepayment of Rent more than
one (1) month in advance without the prior written consent of each such lender,
except if Tenant is required to make quarterly payments of Rent in advance
pursuant to the provisions of Section 8 above. Tenant waives the collection of
any deposit from such lender(s) or any purchaser at a foreclosure sale of such
lender(s)' deed of trust unless the lender(s) or such purchaser shall have
actually received and not refunded the deposit. Tenant agrees to make all
payments under this Lease to the lender with the most senior encumbrance upon
receiving a direction, in writing, to pay said amounts to such lender. Tenant
shall comply with such written direction to pay without any liability therefor
to Landlord and without determining whether an event of default exists under
such lender's loan to Landlord. Any such payment made by Tenant to Landlord's
lender shall discharge Tenant's obligations hereunder to the extent actually
made.
34. QUITCLAIM: Intentionally Omitted.
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35. MODIFICATIONS FOR LENDER: Intentionally Omitted.
------------------------
36. WARRANTIES OF TENANT: Tenant hereby warrants and represents to Landlord, for
--------------------
the express benefit of Landlord, that Tenant has undertaken a complete and
independent evaluation of the risks inherent in the execution of this Lease and
the operation of the Premises for the use permitted hereby, and that, based upon
said independent evaluation, Tenant has elected to enter into this Lease and
hereby assumes all risks with respect thereto. Tenant hereby further warrants
and represents to Landlord, for the express benefit of Landlord, that in
entering into this Lease, Tenant has not relied upon any statement, fact,
promise or representation (whether express or implied, written or oral) not
specifically set forth herein in writing and that any statement, fact, promise
or representation (whether express or implied, written or oral) made at any time
to Tenant, which is not expressly incorporated herein in writing, is hereby
waived by Tenant.
37. COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT: Landlord and Tenant hereby
-----------------------------------------------
agree and acknowledge that the Premises, the Building and/or the Park may be
subject to the requirements of the Americans with Disabilities Act, a federal
law codified at 42 U.S.C. 12101 et seq, including, but not limited to Title III
thereof, all regulations and guidelines related thereto, together with any and
all laws, rules, regulations, ordinances, codes and statutes now or hereafter
enacted by local or state agencies having jurisdiction thereof including all
requirements of Title 24 of the State of California, as the same may be in
effect on the date of this Lease and may be hereafter modified, amended or
supplemented (collectively, the "ADA"). Tenant shall be solely responsible for
conducting its own independent
25
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investigation of this matter and for ensuring that the design of all
improvements or alterations to be made to the Premises by, or on behalf of,
Tenant strictly comply with all requirements of the ADA. Subject to
reimbursement pursuant to Section 6 of the Lease, if any barrier removal work or
other work is required to the Building, the Common Areas or the Park under the
ADA, then such work shall be the responsibility of Landlord; provided, if such
work is required under the ADA as a result of Tenant's use of the Premises or
any work or alteration made to the Premises by or on behalf of Tenant, then such
work shall be performed by Landlord at the sole cost and expense of Tenant.
Except as otherwise expressly provided in this provision, Tenant shall be
responsible at its sole cost and expense for fully and faithfully complying with
all applicable requirements of the ADA, including without limitation, not
discriminating against any disabled persons in the operation of Tenant's
business in or about the Premises, and offering or otherwise providing auxiliary
aids and services as, and when, required by the ADA. Within ten (10) days after
receipt, Landlord and Tenant shall advise the other party in writing, and
provide the other with copies of (as applicable), any notices alleging violation
of the ADA relating to any portion of the Premises or the Building; any claims
made or threatened in writing regarding noncompliance with the ADA and relating
to any portion of the Premises or the Building; or any governmental or
regulatory actions or investigations instituted or threatened regarding
noncompliance with the ADA and relating to any portion of the Premises or the
Building. Tenant shall and hereby agrees to protect, defend (with counsel
acceptable to Landlord) and hold Landlord and the other Indemnitees harmless and
indemnify the Indemnitees from and against all liabilities, damages, claims,
losses, penalties judgments, charges and expenses (including reasonable
attorneys' fees, costs of court and expenses necessary in the prosecution or
defense of any litigation including the enforcement of this provision) arising
from or in any way related to, directly or indirectly, Tenant's or Tenant's
Representatives' violation or alleged violation of the ADA. Tenant agrees that
the obligations of Tenant herein shall survive the expiration or earlier
termination of this Lease.
38. BROKERAGE COMMISSION: Landlord and Tenant each represents and warrants for
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the benefit of the other that it has had no dealings with any real estate
broker, agent or finder in connection with the Premises and/or the negotiation
of this Lease, except for the Broker(s) (as set forth on Page 1), and that it
knows of no other real estate broker, agent or finder who is or might be
entitled to a real estate brokerage commission or finder's fee in connection
with this Lease or otherwise based upon contacts between the claimant and
Tenant. Each party shall indemnify and hold harmless the other from and against
any and all liabilities or expenses arising out of claims made for a fee or
commission by any real estate broker, agent or finder in connection with the
Premises and this Lease other than Broker(s), if any, resulting from the actions
of the indemnifying party. Any real estate brokerage commission or finder's fee
payable to the Broker(s) in connection with this Lease shall only be payable and
applicable to the extent of the initial Term of the Lease and to the extent of
the Premises as same exist as of the date on which Tenant executes this Lease.
Unless expressly agreed to in writing by Landlord and Broker(s), no real estate
brokerage commission or finder's fee shall be owed to, or otherwise payable to,
the Broker(s) for any renewals or other extensions of the initial Term of this
Lease or for any additional space leased by Tenant other than the Premises as
same exists as of the date on which Tenant executes this Lease. Tenant further
represents and warrants to Landlord that Tenant will not receive (i) any portion
of any brokerage commission or finder's fee payable to the Broker(s) in
connection with this Lease or (ii) any other form of compensation or incentive
from the Broker(s) with respect to this Lease.
39. QUIET ENJOYMENT: Landlord covenants with Tenant, upon the paying of Rent and
---------------
observing and keeping the covenants, agreements and conditions of this Lease on
its part to be kept, and during the periods that Tenant is not otherwise in
default of any of the terms or provisions of this Lease, and subject to the
rights of any of Landlord's tenders, (i) that Tenant shall and may peaceably and
quietly hold, occupy and enjoy the Premises and the Common Areas during the Term
of this Lease, and (ii) neither Landlord, nor any successor or assign of
Landlord, shall disturb Tenant's occupancy or enjoyment of the Premises and the
Common Areas.
40. LANDLORD'S ABILITY TO PERFORM TENANT'S UNPERFORMED OBLIGATIONS:
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Notwithstanding anything to the contrary contained in this Lease, if Tenant
shall fail to perform any of the terms, provisions, covenants or conditions to
be performed or complied with by Tenant pursuant to this Lease, and/or if the
failure of Tenant relates to a matter which in Landlord's judgment reasonably
exercised is of an emergency nature and such failure shall remain uncured for a
period of time commensurate with such emergency, then Landlord may, at
Landlord's option without any obligation to do so, and in its sole discretion as
to the necessity therefor, and upon prior notice to Tenant, perform any such
term, provision, covenant, or condition, or make any such payment and Landlord
by reason of so doing shall not be liable or responsible for any loss or damage
thereby sustained by Tenant or anyone holding under or through Tenant. If
Landlord so performs any of Tenant's obligations hereunder, the full amount of
the cost and expense entailed or the payment so made or the amount of the loss
so sustained shall immediately be owing by Tenant to Landlord, and Tenant shall
promptly pay to Landlord upon demand, as Additional
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Rent, the full amount thereof with interest thereon from the date of payment at
the greater of (i) ten percent (10%) per annum, or (ii) the highest rate
permitted by applicable law.
41. TENANT'S ABILITY TO PERFORM LANDLORD'S UNPERFORMED OBLIGATIONS:
--------------------------------------------------------------
Notwithstanding anything to the contrary contained in this Lease, if Landlord
shall fail to perform any of the terms, provisions, covenants or conditions to
be performed or complied with by Landlord pursuant to this Lease after
expiration of all applicable notice and cure periods for Landlord's and any
mortgagee's benefit as set forth in Sections 23 and 33, respectively and to the
extent applicable, then Tenant may, at Tenant's option without any obligation to
do so, after delivery of an additional written notice to Landlord, perform any
such term, provision, covenant, or condition. If Tenant so performs any of
Landlord's obligations hereunder, the lull amount of the reasonable and actual
cost and expense incurred by Tenant shall immediately be owing by Landlord to
Tenant, and Landlord shall promptly pay to Tenant upon demand the full
undisputed amount thereof with interest thereon from the date of payment at the
greater of (i) ten percent (10%) per annum, or (ii) the highest rate permitted
by applicable law.
IN WITNESS WHEREOF, this Lease is executed by the parties as of the Lease
Date referenced on Page 1 of this Lease.
LANDLORD:
LINCOLN-RECP OLD OAKLAND OPCO, LLC,
a Delaware limited liability company
By: Lincoln Property Company Management Services, Inc.
as manager for LINCOLN-RECP OLD OAKLAND OPCO, LLC
By: ___________________________________________
Senior Vice President
TENANT:
Integrated Packaging Assembly Corporation,
a California corporation
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
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