EXHIBIT 10.8
TRIPLE NET REAL PROPERTY LEASE
(Multi-Tenant Building)
THIS TRIPLE NET REAL PROPERTY LEASE (this "Lease"), dated for reference
purposes only as of February 16, 1998, is made and entered into by and between
BATH STREET PARTNERS, a California limited partnership (the "Landlord"), and
AVTEL COMMUNICATIONS, INC., a Delaware corporation (the "Tenant"), who,
intending to be legally bound, agree as follows:
1. LEASED PREMISES
Landlord leases to Tenant, and Tenant leases from Landlord, those certain
premises identified as the entire first floor of the building located at ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (the "Building"), as depicted on the Plot
Plan attached as Exhibit A (the "Premises"), together with all fixtures
presently located in the Premises, upon the terms and conditions set forth
below. Landlord and Tenant acknowledge and agree that the Premises consist of
6,978 square feet. The Premises do not include approximately 1,317 square feet
on the first floor of the Building comprised of the stair and elevator ▇▇▇▇▇,
pump rooms, back reception area, the electric room, and the mail room.
1.1 Acceptance of Condition. Landlord shall remove all of the prior
tenant's furnishings prior to the Commencement Date. The Premises are accepted
"AS IS" by Tenant, after Tenant's inspection, in the condition in which they
exist as of the execution of this Lease. Tenant acknowledges that there are no
warranties, express or implied, made by Landlord with regard to the Premises.
1.2 Parking. Tenant shall have the nonexclusive right, in common with the
other tenants of the Building, to use parking spaces used by all tenants of the
Building. Prior to the Commencement Date, Landlord shall cause all existing
reserved spaces for the Building to be relocated or eliminated.
1.3 Phone Room. Landlord shall have reasonable access to the main phone
room in the Premises with 24 hours' prior notice except in the event of an
emergency. Tenant may relocate the other tenant's phone and computer equipment
from this room at Tenant's expense and with Landlord's prior approval of the
relocation site.
1.4 New Address. Tenant shall, within ninety (90) days from the
Commencement Date, take such actions as may be necessary to obtain a separate
street address for the Premises. From and after the date that a separate street
address is obtained for the Premises, the Premises shall be deemed to refer to
such new street address.
2. TERM
2.1 Initial Term. The term of this Lease (the "Term") shall commence thirty
(30) days from the execution of this Lease by Landlord and Tenant (the
"Commencement Date"). The Term shall expire upon the passage of five (5) years
from that date, unless sooner terminated as provided in this Lease.
2.2 Options to Extend. Landlord hereby grants to Tenant, on the terms and
conditions set forth below, one (1) conditional option (the "Option") to extend
the term of this Lease for an additional period of five (5) years (the "Renewal
Term"). The Renewal Term shall be subject to all of the provisions of this
Lease. Landlord has no duty whatsoever to advise or remind Tenant of its rights
hereunder. The right of Tenant to exercise the Renewal Term to extend the
term of the Lease is subject to the satisfaction of the following conditions
precedent:
2.2.1 The Lease shall be in effect at the time notice of exercise is
given and on the last day of the expiring term of the Lease;
2.2.2 Landlord shall not, in good faith, have at any time served
Tenant with a three-day notice to pay rent or quit under California Code of
Civil Procedure Section 1161 during the preceding term of the Lease;
2.2.3 Tenant shall not be in default at the time notice of
exercise is given or on the last day of the then-expiring term of the Lease; and
2.2.4 Tenant shall have given notice of exercise of its Option
pursuant to this Section 2.2 not less than one hundred eighty days, nor more
than two hundred ten days, prior to the expiration of the then-expiring term of
this Lease.
3. RENT
Commencing thirty days from the Commencement Date (the "Rent Commencement
Date"), Tenant shall pay to Landlord the minimum monthly rent provided in
Section 3.1, all Operating Costs provided in Section 3.2, and any other payments
required under the terms of this Lease, without set-off or reduction. All such
sums owing under this Lease shall be considered additional rent ("Rent") and
shall be payable at Landlord's office identified on the signature page of this
Lease. Minimum monthly rent and all additional Rent shall be payable in advance,
commencing on the Rent Commencement Date, and continuing on the first day of
each month thereafter during the term of this Lease, without reduction or
set-off (except as otherwise expressly provided in Section 3.5). Upon execution
of this Lease, Tenant shall prepay the first month's minimum monthly rent that
would otherwise be due on the Rent Commencement Date. Should the Rent
Commencement Date be a date other than the first day of a month, then the rent
due on the Rent Commencement Date shall be prorated, on the basis of a
thirty-day month, for the number of days between the Rent Commencement Date
(including the Commencement Date) and the end of the month in which the Rent
Commencement Date occurs.
3.1 Minimum Monthly Rent.
3.1.1 The minimum monthly rent payable from the Rent Commencement Date
through the expiration of the first twelve (12) months of the Term shall be One
Dollar and Seventy Cents ($1.70) per square foot, or Eleven Thousand Eight
Hundred Sixty-Two Dollars and Sixty Cents ($11,862.60).
3.1.2 The minimum monthly rent shall be adjusted upon the expiration
of the first year of the Term and each year thereafter. Commencing on the first
day of the thirteenth month of the Term (the "Adjustment Date"), the parties
shall ascertain from the official Consumer's Price Index for Urban Wage Earners
and Clerical Workers, All Items, for the Los Angeles, Anaheim-Riverside area,
1982-1984=100 Base, as published by the United States Department of Labor,
Bureau of Labor Statistics (the "Index") the Index figure for the month four
months preceding the Commencement Date (the "Base Index"), and for the
corresponding month prior to the Adjustment Date (the "Adjustment Index"). The
minimum monthly rent payable from each Adjustment Date until the next date upon
which minimum monthly rent is adjusted as provided in this Lease shall be
determined by multiplying the minimum monthly rent payable at the Rent
Commencement Date by a fraction, the numerator of which shall be the Adjustment
Index, and the denominator of which shall be the Base Index. Notwithstanding the
preceding, in no event will the adjusted minimum monthly rent be less than two
percent (2%) more than the minimum monthly rent in effect prior to the
Adjustment Date, nor more than five percent (5%) more than the minimum monthly
rent in effect prior to the Adjustment Date.
A. If the Index is no longer published on the Adjustment Date,
then appropriate reference figures for the Base Index and the Adjustment Index
shall be derived from any successor or comparable index mutually agreed by the
parties to be authoritative. If the parties are unable to agree, then the
substituted index shall be selected by the then-presiding judge of the Santa
▇▇▇▇▇▇▇ County, California Superior Court upon the application of either party.
B. The parties acknowledge that the Adjustment Index may not be
available on the Adjustment Date. In such event, the minimum monthly rent in
effect immediately prior to the Adjustment Date shall continue in effect until
the appropriate Index figure is available. At that time, an appropriate
adjustment shall be made (retroactive to the Adjustment Date) between Landlord
and Tenant with respect to the minimum monthly rent payable by Tenant. Any
amounts then determined to be owing by Tenant to Landlord shall be paid by
Tenant within ten (10) days following Landlord's delivery to Tenant of written
notice of the appropriate adjustment. No delay by Landlord in the delivery of
any such notice shall constitute a waiver by Landlord of the right to receive
any rent owing.
3.1.3 The minimum monthly rent payable during the first year of the
Renewal Term shall be the greater of (a) the Fair Market Rental of the Premises
upon the commencement of any such Renewal Term, or (b) the minimum monthly rent
in effect immediately prior to the expiration of the immediately preceding
Initial Term. Such Fair Market Rental shall be determined in accordance with the
provisions of this Section 3.1.3.
A. The following definitions shall apply for the purposes of this
Section 3.1.3:
(1) "Fair Market Rental" means the price at which a willing
landlord and a willing tenant would rent the Premises, or similar first class
premises having comparable visibility, parking, access and location that the
Premises have, neither being under abnormal pressure to rent. For the purposes
of determining such Fair Market Rental, it shall be assumed that the Tenant will
not require that any tenant improvements be made to the Premises in connection
with its occupancy. The Fair Market Rental shall be determined by giving
appropriate consideration to rental rates per rentable square foot, the type of
escalation clauses contained in leases for comparable premises, the length of
the Renewal Term, the fact that this Lease is a Triple Net Lease, the location
of the Premises being leased and other generally applicable terms and conditions
of leases for comparable premises.
(2) "Qualified Appraiser" shall mean a State certified
general real estate appraiser qualified for commercial lease rental appraisals
of the type of property and the improvements then comprising the Premises with
at least five years' full-time commercial appraisal experience in Santa ▇▇▇▇▇▇▇
County.
B. Commencing six months prior to the expiration of the Initial
Term, if Tenant has properly exercised its Option for the Renewal Term, Landlord
and Tenant shall attempt to agree upon the Fair Market Rental for the Premises
within fifteen days. If Landlord and Tenant are able to agree on such Fair
Market Rental, the amount so agreed upon shall become the Fair Market Rental
upon the commencement of the Renewal Term.
C. If Landlord and Tenant fail to agree upon the Fair Market
Rental within the fifteen-day period set forth in Subsection B, above, then
within ten days following the expiration of such fifteen-day period Landlord
shall appoint a Qualified Appraiser, at its sole cost and expense, to appraise
the Fair Market Rental of the Premises within thirty days following the
appointment of the appraiser. Following such determination, Landlord shall give
notice to Tenant of the appraised Fair Market Rental of the Premises. If Tenant
does not dispute such appraised Fair Market Rental, it shall be the Fair Market
Rental upon the commencement of the Renewal Term. If Tenant disputes such
appraised Fair Market Rental, then within ten days after the delivery of notice
of such Fair Market Rental delivered by Landlord, Tenant shall appoint a
Qualified Appraiser, at its sole cost and expense, to appraise the Fair Market
Rental of the Premises within thirty days following the appointment of the
second appraiser. Within ten days following the completion of the second
appraisal, the two appraisers so appointed shall endeavor to agree upon a Fair
Market Rental for the Premises.
D. If such two appraisers are able to agree as to the Fair Market
Rental of the Premises within ten days after the second appraisal has been
completed, then the appraisers shall so inform Landlord and Tenant of their
decision, and such agreed upon Fair Market Rental shall become the Fair Market
Rental upon the commencement of the Renewal Term. If such appraisers are unable
to agree on the Fair Market Rental for the Premises within such ten-day period,
then the appraisers shall, within five days of the expiration of such ten-day
period, designate a third Qualified Appraiser and give written notice to
Landlord and Tenant of their inability to agree and the Fair Market Rental
proposed by each appraiser. Such notice shall also specify the third Qualified
Appraiser designated by such two appraisers. Either Landlord or Tenant may
appoint such designated third Qualified Appraiser to assist in the determination
of Fair Market Rental by delivering written notice of such election to the other
within five days of the expiration of such ten-day period without an agreement
as to the Fair Market Rental by the two Qualified Appraisers. If a third
Qualified Appraiser is appointed, then the fees and costs of the third appraiser
shall be borne equally by Landlord and Tenant.
E. Upon appointment of the third Qualified Appraiser, the three
appraisers shall meet and attempt to reach agreement upon the Fair Market Rental
for the Premises for the Renewal Term within the ten-day period following the
appointment of the third Qualified Appraiser. If the three Qualified Appraisers
are able to reach unanimous agreement regarding the Fair Market Rental, the
agreed upon Fair Market Rental shall become the Fair Market Rental upon the
commencement of the Renewal Term. If the three Qualified Appraisers are unable
to agree upon the Fair Market Rental, then the Third Qualified Appraiser shall
appraise the Fair Market Rental of the Premises within thirty days following the
expiration of such ten-day period. On or prior to the expiration of such
thirty-day period, the three Qualified Appraisers shall give Landlord and Tenant
written notice of their inability to agree and the Fair Market Rentals proposed
by each appraiser. If the highest appraised Fair Market Rental is more than one
hundred five percent (105%) of the middle appraised Fair Market Rental, then the
highest appraised Fair Market Rental shall be disregarded. If the lowest
appraised Fair Market Rental is less than ninety-five percent (95%) of the
middle appraised Fair Market Rental, then the lowest appraised Fair Market
Rental shall be disregarded. If there is then only one remaining appraised Fair
Market Rental, it shall be the Fair Market Rental upon the commencement of the
Renewal Term. If there is then more than one remaining appraised Fair Market
Rental, the remaining appraised Fair Market Rentals shall be averaged and the
average of such appraised Fair Market Rentals shall be the Fair Market Rental
upon the commencement of the Renewal Term.
F. If the appraisal proceedings provided for in this Section are
not complete prior to the commencement of the Renewal Term, then Tenant shall
pay the minimum monthly rent in effect immediately prior to such Renewal Term
until the appraisal proceedings have been completed and a new minimum monthly
rent is determined. Once the new minimum monthly rent has been determined, a
retroactive adjustment to such rent shall be made, effective as of the
commencement date of the Renewal Term. Within ten days after the date on which
the new minimum monthly rent has been determined, (1) Tenant shall pay any
deficiency owing to Landlord, and (2) Landlord and Tenant shall enter into a
written agreement setting forth the minimum monthly rent upon the commencement
of the Renewal Term.
G. Following the establishment of the minimum monthly rent upon
the commencement of the Renewal Term, such minimum monthly rent shall be
adjusted as provided herein. The adjustment shall be made in accordance with the
provisions of Section 3.1.2, with the following modifications: (1) all
references to the "Initial Term" shall be deemed to refer to the Renewal Term;
(2) the term "Commencement Date" shall refer to the first day of the Renewal
Term; and (3) the term "Rent Commencement Date" shall be deemed to refer to the
first day of such Renewal Term.
3.2 Common Area Expenses; Operating Costs.
3.2.1 In addition to any other payments due under this Lease, Tenant
shall pay to Landlord, as additional rent, Tenant's monthly proportionate share
of Landlord's estimated total Operating Costs. Such payments shall commence on
the Rent Commencement Date and continue thereafter through the end of the Term.
For the purposes of this Lease, the term "Operating Costs" shall mean all costs
and expenses whatsoever incurred or accrued by Landlord in connection with the
ownership, operation, maintenance, repair and improvement of the Premises, the
common areas, the Building and the land upon which the Building is situated
(collectively, the "Property"), except as otherwise specifically provided in
this Lease. Tenant's proportionate share of the total Operating Costs (the
"Tenant's Proportionate Share") shall be forty-three percent (43%). Landlord
estimates that Tenant's Proportionate Share of the Operating Costs will be $0.50
per square foot per month. In no event shall Tenant's Proportionate Share of the
Operating Costs for the calendar year 1998 exceed $0.60 per square foot per
month. After the calendar year 1998, the foregoing limitation of Tenant's
Proportionate Share of the Operating Costs shall not apply.
A. Operating Costs for any portion of Landlord's accounting
period not included within the Term, or occurring prior to the Rent Commencement
Date, shall be prorated on the basis of a 360-day year.
B. The accounting period for determining Landlord's total
Operating Costs shall be the calendar year, except that the first accounting
period shall commence on the Rent Commencement Date and the last accounting
period shall end on the date the Term expires or Lease otherwise terminates.
3.2.2 Tenant shall pay Tenant's Proportionate Share of Operating Costs
as additional rent owing in the manner provided in this Section 3.2.2.
A. Landlord may furnish to Tenant, on the Rent Commencement Date
and at the commencement of each accounting period, an estimate of the Operating
Costs reasonably anticipated by Landlord for the ensuing accounting period or
the remainder of such accounting period, and Tenant's Proportionate Share
thereof, calculated on a monthly basis. If Tenant's Proportionate Share of the
actual Operating Costs for the preceding accounting period exceeds the estimated
payments made by Tenant, then Tenant shall pay any deficiency to Landlord within
ten (10) days after Tenant's receipt of Landlord's statement. Should the
estimated payments made by Tenant during the preceding accounting period exceed
Tenant's Proportionate Share of the Operating Costs, Landlord shall credit
Tenant the excess through reductions to the subsequent accounting period's
payments of Tenant's Proportionate Share of Operating Costs due from Tenant.
B. Alternatively, Landlord may ▇▇▇▇ Tenant for Tenant's
Proportionate Share of the actual Operating Costs incurred by Landlord. Any such
▇▇▇▇ shall be made in arrears for Operating Costs incurred during the preceding
month, and shall be due and payable within ten (10) days following delivery of
such ▇▇▇▇. The expiration of the Term shall not affect Tenant's obligation to
pay its Proportionate Share of Operating Costs accrued during the last month of
the Term.
3.2.3 As used herein, the term "Operating Costs" shall include,
without limitation, all amounts paid or incurred by Landlord for: real property
taxes and assessments, as provided in Section 4, and other taxes and assessments
of any nature levied and assessed against Landlord on account of, and/or against
the, Property; repair, remodeling, renovation, replacement, improvement and
operation of the Property, including, without limitation, wiring, machinery and
equipment, plumbing, sewers, the roof, load bearing exterior walls, joists,
supports, subflooring, gutters, downspouts, heating, ventilating and
air-conditioning, glass and doors, and reasonable reserves pertaining thereto;
Landlord's reasonable costs of supervision and administration, including the
costs of any property manager engaged by Landlord; attorneys' fees and costs not
relating to a particular tenant or lease; maintenance of the Property,
including, without limitation, costs of resurfacing and repainting, costs of
security, cleaning, sweeping, and other services, supplies, policing, purchase,
construction, location, and maintenance of refuse receptacles, maintaining and
operating the heating, ventilating, and air-conditioning equipment and related
distribution facilities and controls providing climatic control of the common
areas, the Building and the Premises, planting and relandscaping, maintaining
directional signs and other markers and lighting; premiums and deductible
amounts payable on insurance purchased by Landlord as provided herein; and all
costs of utilities used in connection with the maintenance, operation and
management of the Property that are not separately metered and billed to
particular tenants.
3.2.4 Landlord shall keep at its principal place of business, full,
accurate and separate books of account showing Landlord's Operating Costs. The
statements of Landlord to Tenant shall accurately reflect the total Operating
Costs shown on such books of account. These books of account shall be retained
by Landlord for at least six (6) months after the close of each accounting
period. Tenant shall have the right at reasonable times during the Term to
inspect these books of account.
3.2.5 Notwithstanding the foregoing, Landlord reserves the right to
▇▇▇▇ Tenant promptly for any surcharge or penalty incurred by Landlord as a
result of utilities in the Premises or the Building in which the Premises are
located. If such surcharge or penalty pertains to the Premises, Tenant shall pay
all of such penalty or surcharge. If such surcharge or penalty relates to the
Building or common area, Tenant shall pay its pro rata portion. Such payment
shall be payable in full prior to the expiration of thirty (30) days from the
date Landlord delivers such a statement of the amount of the surcharge to
Tenant.
3.3 Late Payment Charges. If Tenant fails to make any payment of rent
within five (5) days of the date when such payment first becomes due, or if any
check tendered to Landlord by Tenant is returned to Landlord by Tenant's bank
for insufficient funds, then Tenant shall pay to Landlord, in addition to such
payment, a late charge in the amount of five percent (5%) of the rent or other
payment due. The parties agree this late payment charge is a reasonable estimate
of the amount necessary to reimburse damages and additional costs not
contemplated by this Lease that Landlord will incur as a result of the
delinquent payment or returned check, including processing and accounting
charges and late charges that may be imposed on Landlord by its lender. Upon
notice of nonpayment given by Landlord to Tenant, the entire amount then due,
including such late charge, shall thereafter bear interest at the highest rate
permitted by law on the due date for such payment, until paid in full.
Landlord's acceptance of any payment shall not constitute waiver of any late
charges or interest which may be due.
3.4 Security Deposit. On execution of this Lease, Tenant shall deposit with
Landlord Eleven Thousand Eight Hundred Sixty-Two Dollars and Sixty Cents
($11,862.60), as a security deposit (the "Security Deposit") for the performance
by Tenant of the provisions of this Lease. If Tenant is in default, Landlord may
use the Security Deposit, or any portion of it, to cure the default or to
compensate Landlord for all damage sustained by Landlord resulting from Tenant's
default. Tenant shall immediately on demand pay to Landlord any amounts required
to maintain the Security Deposit in the amount required to be deposited with
Landlord. Upon the adjustment of any minimum monthly rent owing, Tenant shall
deposit with Landlord such sum as necessary to maintain the Security Deposit in
the same proportion to the minimum monthly rent then owing as the original
Security Deposit bore to the initial minimum monthly rent. Landlord's
obligations with respect to the Security Deposit are those of a debtor and not a
trustee. Landlord may maintain the Security Deposit separate and apart from
Landlord's general funds or may commingle the Security Deposit with Landlord's
general and other funds. Landlord shall not be required to pay Tenant interest
on the Security Deposit. In the event of bankruptcy or other debtor-creditor
proceedings against Tenant, the Security Deposit shall be offset against any
unpaid rent. If Tenant is not in default at the termination of this Lease, and
after Tenant has vacated the Premises, then Landlord shall return the Security
Deposit, less any damages, to Tenant (or at Landlord's option, to the last
assignee, if any, of Tenant's interest).
3.5 Temporary Rent Abatement. Provided that Tenant is not in default of its
obligations under this Lease, minimum monthly rent shall ▇▇▇▇▇ for the first six
(6) months for which rent is payable in the amount of Four Thousand Six Hundred
Fifty-Two Dollars ($4,652) per month, for total rent abatement of Twenty-Seven
Thousand Nine Hundred Twelve Dollars ($27,912) (i.e., 6,978 square feet x $4.00
per square foot).
4. PROPERTY TAXES AND ASSESSMENTS
4.1 Personal Property Taxes. Tenant shall pay before delinquency all taxes
assessed against any personal property of Tenant installed or located in or upon
the Premises and that are attributable to any period included within the Term,
whether or not such taxes are actually payable during the Term.
4.2 Real Property Taxes. In addition to all other rent payable by Tenant,
Tenant agrees to pay as additional rent Tenant's Proportionate Share of real
property taxes levied and assessed against the Property. Such payments shall be
made as a part of Tenant's payments of Tenant's Proportionate Share of Operating
Costs, as provided above. Real property taxes for any fractional portion of a
fiscal year included in the Term shall be prorated on the basis of a 360-day
year.
4.3 Taxes Defined; Special Assessments. The term "real property taxes"as
used in this Section shall include, without limitation, all taxes, assessments,
improvement bonds, levies and other governmental charges, general and special,
ordinary and extraordinary, of any kind and nature whatsoever, levied or
assessed against the Property, or against Landlord as a result of its ownership
thereof, including but not limited to, assessments for public improvements or
benefits that are levied or assessed against the Property, and any changes in
taxes resulting from a change in ownership or other reassessment, but excluding
franchise, estate, inheritance, succession, capital levy, transfer, income or
excess profits tax imposed upon Landlord. If at any time during the Term, under
the laws of California, or any political subdivision thereof in which the
Premises are situated, a tax or excise on rents or other tax, however described,
is levied or assessed against Landlord on account of the rent expressly reserved
hereunder, in addition to or as a substitute in whole or in part for taxes
assessed or imposed by California or such political subdivision on land and/or
buildings, such tax or excise shall be included within the definition of "real
property taxes", but only to the extent of the amount thereof which is lawfully
assessed or imposed as a direct result of Landlord's ownership of leases related
to the Property, or of the rental accruing under such leases. With respect to
any assessment which may be levied against or upon the Property, and which,
under the laws then in force, may be evidenced by improvement or other bonds, or
may be paid in installments, Tenant shall be required to pay each year only the
amount of such installments as Landlord is required to pay during such year
(with appropriate proration for any partial year) and shall have no
obligation to continue such payments after the expiration of the Term.
5. UTILITIES
Tenant shall pay when due all utility charges when separately billed to
Tenant because of separate installation or connection of service by Tenant. Any
utility, including, without limitation, refuse disposal, for which no separate
installation or connection can be made for Tenant, shall be paid as prorated in
Landlord's discretion among Tenants of the Building based on either percentage
of leased space or estimated usage, as reasonably determined by Landlord. Tenant
shall comply with all applicable laws and regulations and rules regarding
utilities. The suspension or interruption in utility services to the Property
for reasons beyond Landlord's ability to control shall not constitute a default
by Landlord or entitle Tenant to any reduction or abatement of rent.
6. LANDLORD'S MANAGEMENT OF THE BUILDING
6.1 Management of the Building. Landlord shall have the right, at its sole
cost and expense, which will be reimbursed by Tenant as an Operating Cost:
6.1.1 To close the common areas when and to the extent necessary for
maintenance or renovation purposes or to prevent a dedication of any part
thereof or the accrual of any rights therein in favor of the public or any third
person;
6.1.2 To make changes to the common areas, including, without
limitation, changes in the location or nature of entrances and exits;
6.1.3 To remodel or renovate the Property and, in connection
therewith, to install pipes, supports, utilities, conduits, ducts and similar
fixtures beneath or through the Premises, provided that such remodeling or
renovation does not substantially change the size, dimension, configuration or
nature of the Premises or unreasonably interfere with Tenant's use thereof; and
6.1.4 To change the plan of the Building to the extent necessary for
its expansion, or the remodeling or renovation thereof, so long as the changes
do not substantially interfere with ingress to and egress from the Premises.
6.2 Other Tenants. Landlord reserves the right to effect such other
tenancies in the Building as Landlord, in the exercise of its sole business
judgment, determines will best promote Landlord's interests. Tenant acknowledges
that Tenant does not rely on the fact, and Landlord does not represent, that any
specific tenant, or number or type of tenants, shall occupy any space in the
Building.
6.3 Rules and Regulations. Landlord shall have the right, from time to
time, to promulgate, amend and enforce against all occupants of the Building,
reasonable rules and regulations for the safety, care and cleanliness of the
Building, or for the preservation of good order. All such rules and regulations
shall apply without discrimination to all occupants and tenants in the Building.
Tenant agrees to conform to and abide by such rules and regulations. A violation
of any of them shall constitute a default by Tenant under this Lease.
6.4 Tenant's Use of Premises. Tenant agrees that the Premises shall be used
and occupied only for general office use, and for no other purpose whatsoever
without Landlord's prior written consent. No exclusive rights regarding use are
granted. Tenant shall neither engage in nor permit others to engage in any
activity or conduct that will cause the cancellation of or an increase in the
premium for any fire or other insurance maintained by Landlord.
6.5 Compliance with Law. Tenant shall, at Tenant's sole cost and
expense, comply promptly and at all times with all laws, requirements,
ordinances, statutes, and regulations of all municipal, state or federal
authorities, or any board of fire insurance underwriters, or other similar
bodies, now in force, or which may hereafter be in force, pertaining to the
Building and the Premises and the occupancy thereof, including, without
limitation, any law that requires alteration, maintenance or improvement of the
Premises as the result of Tenant's use.
6.6 Waste, Nuisance. Tenant shall not commit, or suffer to be committed,
any waste of the Premises, or any nuisance, annoyance or other unreasonable
annoyance which may disturb the quiet enjoyment of other portions of the
Building or the common areas by the owners or occupants.
7. CARE AND MAINTENANCE
7.1 Landlord's Maintenance. Except as otherwise provided in this Lease,
Landlord agrees to maintain in good condition and repair (1) the structural
components of the Building, which structural components are limited to the
foundation and the exterior walls; (2) the common areas and the exterior of the
Building; and (3) any heating, ventilating and air conditioning systems
furnished by Landlord to the common areas or to the Building. All such costs,
whether related to repairs, replacements or improvements, shall be Operating
Costs.
7.2 Tenant's Maintenance. Except as otherwise provided in this Lease,
Tenant, at its own cost and expense, agrees:
7.2.1 To maintain throughout the Term in good and sanitary order,
condition and repair, all portions of the Premises, including, without
limitation, (1) the interior of the Premises, including flooring, exposed
plumbing and wiring, paint and finish; (2) any windows, lights or skylights; (3)
any storefront or portion of the Premises fronting on any common area or the
exterior of the Building; (4) any heating, ventilating and air conditioning
which serves only the Premises; and (5) any personal property of Tenant situated
in or upon the Premises;
7.2.2 To notify Landlord promptly of any damage to the Premises
resulting from or attributable to the acts or omissions of Tenant, its invitees
or its authorized representatives, or any other party and thereafter to promptly
repair all such damage; and
7.2.3 To keep the front of the Premises adjacent to any property line
or common area, any area adjacent thereto, and the refuse area used by Tenant
clean and neat at all times, and to remove immediately therefrom any litter,
debris or other unsightly or offensive matter placed or deposited thereon by
Tenant's agents or customers.
8. IMPROVEMENT TO LEASED PREMISES
Any improvements to the Premises shall be constructed by Tenant, or its
designated agent, at Tenant's sole cost and expense. Tenant shall pay, prior to
delinquency, absolutely all costs for such improvements.
8.1 Conditions to Commencement of Construction. Before construction of the
improvements is commenced on the Premises, and before any building materials
have been delivered thereto by or pursuant to the authority or request of
Tenant, Tenant shall comply with the following conditions, or obtain Landlord's
prior written waiver thereof:
8.1.1 Tenant shall prepare and deliver to Landlord for approval a
complete set of all preliminary and final plans and specifications to be
utilized by Tenant for the purpose of constructing the new improvements. Tenant
must obtain the written approval of Landlord to the final plans and
specifications prior to the commencement of any construction work. Tenant will
reimburse Landlord for Landlord's architect's or contractor's charges to review
these plans. Landlord shall not unreasonably withhold approval of the plans and
specifications. No review, inspection or approval by Landlord, or its architect,
shall relieve Tenant of any liability or create any obligation or responsibility
for Landlord.
8.1.2 Tenant shall give Landlord at least fifteen (15) days' written
notice prior to (a) the commencement of construction of any tenant improvements,
or (b) the delivery of any building materials to the site. Landlord, or, upon
request, Tenant, as the agent of Landlord, shall post on and affix to the
Premises a "Notice of Non-Responsibility" in the name and on behalf of Landlord,
as provided in Sections 3094 and 3129 of the California Civil Code, and shall
cause such Notice to be recorded promptly following posting in the Santa ▇▇▇▇▇▇▇
County Recorder's Office.
8.1.3 Tenant shall purchase and maintain in effect, until a Notice of
Completion is filed and recorded, insurance coverage for all-risk "Builders'
Risk" or "Course of Construction" insurance and "Worker's Compensation"
insurance covering all persons employed in connection with the construction of
the improvements and with respect to whom claims could be asserted against
Landlord, the Building or the Premises. Tenant shall furnish to Landlord
certificates of such insurance, and evidence of the payment of premiums
therefor, and for any other insurance required by the provisions of this Lease
to be furnished by Tenant.
8.1.4 Tenant shall pay, when due, all claims for labor or materials
furnished or alleged to have been furnished to or for Tenant. Landlord reserves
the right to require Tenant to deliver to Landlord payment and performance bonds
in an amount equal to one hundred fifty percent (150%) of the estimated cost of
the work undertaken by Tenant pursuant hereto. Tenant promptly shall cause the
elimination and removal of any mechanic's, materialmen's or other liens arising
out of any improvements performed, materials furnished or obliga-
tions incurred by or on behalf of Tenant in connection with any tenant
improvements in accordance with Section 9.2.
8.2 Construction of Improvements. Tenant warrants and covenants to Landlord
that:
8.2.1 The improvements shall be of good quality and the development
and construction work shall be performed in a good and workmanlike manner,
consistent with and comparable to standards of practice in the area in which the
Building is located for similar space of first-class construction;
8.2.2 Tenant shall secure or cause to be secured all permits and
licenses necessary for the proper construction and completion of the
improvements, and shall assume full responsibility for the compliance of Tenant
and the improvements with all governmental laws, codes, ordinances, regulations
and standards applicable thereto; and
8.2.3 The improvements shall be constructed in accordance with the
plans and specifications. All such improvements shall be completed by Tenant and
a certificate of occupancy for the Premises shall be obtained by Tenant on or
before the Commencement Date. Tenant shall give notice to Landlord of the
imminent completion of the improvements not less than ten (10) days prior to
their expected completion. Promptly upon completion of the improvements, Tenant
shall cause a "Notice of Completion" as described in Section 3093 of the
California Civil Code, to be filed and recorded in the manner provided by such
Section.
8.3 Cooperation by Landlord. Landlord agrees, upon the request of Tenant,
to join with Tenant to execute and deliver such documents and instruments
as may be necessary or proper for applying for or obtaining any permits,
licenses, approvals or records as may be necessary or appropriate to the
construction of the improvements and operation of the Premises. Landlord shall
incur no expense and no liability as a result of such cooperation. Landlord
shall have the right to approve any conditions imposed by any governmental
agency in connection with obtaining any such permits, or other documents or
approvals, which may impact the Premises separate and apart from Tenant's
occupancy thereof, which approval shall not be withheld unreasonably.
8.4 Ownership of Improvements. All of Tenant's improvements constructed
hereunder, and all subsequent additions and alterations thereto and replacements
thereof, shall be deemed affixed to, become and remain a part of the Premises
and shall not be removed, encumbered, transferred or materially altered except
as provided by this Lease. Upon the expiration of the Term, or upon the sooner
termination of this Lease, all of the improvements other than Tenant's personal
property, removable trade fixtures and equipment, shall become the property of
Landlord without further obligation to Tenant.
9. ALTERATIONS; LIENS
9.1 Changes by Tenant. Following the completion of the improvements
contemplated by Section 8, if any, any alterations, additions, improvements or
changes, including any remodeling or redecorating, that Tenant may desire to
make in, to or upon the Premises, shall be made at Tenant's sole cost and
expense. Prior to undertaking any such alterations, Tenant shall first submit
the plans and specifications therefor to Landlord and obtain the consent of
Landlord thereto in writing. The parties' rights and obligations with respect to
such alterations, additions, improvements or changes shall be identical to those
rights and remedies concerning Tenant's construction of improvements, as set
forth in Section 8. Should Landlord so elect, any such alterations, additions,
improvements or changes shall become a part of the Premises at the expiration or
sooner termination of the Lease, and shall be surrendered to Landlord upon the
expiration of the Term or the sooner termination of this Lease. Alternatively,
at any time prior to the ten (10) days following the expiration or sooner
termination of this Lease, Landlord may elect to have Tenant remove any such
alterations, additions or improvements. In such case, Tenant shall so remove
such items within ten (10) days following Tenant's receipt of Landlord's notice
of election, and shall restore the Premises to the condition in which they
existed prior to the completion of the work that Landlord specifies should be
removed.
9.2 Mechanic's Liens. Tenant agrees to keep the Premises, and any
improvements thereon, at all times free of mechanic's liens and other liens for
labor, services, supplies, equipment or material purchased by or directly or
indirectly furnished to Tenant. Tenant, however, shall have the right to contest
the validity or amount of any such lien as filed upon posting a bond in an
amount equal to one hundred fifty percent (150%) of the dollar amount sufficient
to discharge the lien. Upon the final determination of any such contest, Tenant
shall immediately pay and discharge any judgment rendered, together with all
costs and charges incidental thereto, and shall cause the lien thereof to be
released from the Premises. If Tenant fails, within thirty (30) days after
notice of the filing of any such lien, to discharge or cause the release of such
liens or charges or to contest the same and post bond as above provided for,
then Landlord, at Landlord's option, may satisfy such liens by payment. In such
event, the amount of such payment, together with interest thereon at the maximum
rate permitted by law, from the time the payment is so made until repayment the-
reof, shall be payable by Tenant at the time installment of rent shall be due
and payable. Tenant shall reimburse Landlord, within ten days following written
demand, for all costs and expenses, including, without limitation, attorneys'
fees, incurred by Landlord in connection with addressing any mechanic's liens or
similar claims related to Tenant's occupancy of the Premises.
10. TENANT'S PERSONAL PROPERTY
10.1 Installation of Property. Landlord shall have no interest in any
removable equipment, furniture or trade fixtures owned by Tenant or installed in
or upon the Premises solely at the cost and expense of Tenant. Prior to creating
or permitting the creation of any lien or security or reversionary interest in
any removable personal property to be placed in or upon the Premises, Tenant
shall obtain the written agreement of the party holding such lien or interest to
make such repairs required by the removal of such property as may be necessary
to restore the Premises to good condition and repair, excepting only reasonable
wear and tear, in the event such property is thereafter removed from the
Premises by such party, or by any agent or representative thereof or purchaser
therefrom, without any cost or expense to Landlord.
10.2 Removal of Personal Property. Tenant shall have the right to remove at
its own cost and expense upon the expiration of this Lease all removable
equipment, furniture or trade fixtures owned by or installed at the expense of
Tenant on the Premises during the Term. All such personal property shall be
removed prior to the close of business on the last day of the Term. Tenant shall
make such repairs required by the removal of such property and any damage
resulting therefrom as may be necessary to restore the Premises to good
condition and repair, excepting only reasonable wear and tear. Any such property
not so removed shall be deemed to have been abandoned or, at the option of
Landlord, shall be removed and placed in storage for the account and at the cost
and expense of Tenant.
11. WAIVER AND INDEMNITY
This Lease is made upon the express condition that Landlord is to be free
from all liability and claims for damages by reason of any injury to any person
and damage to any property (including Tenant's), resulting from any cause
whatsoever while in, upon, about, or in any way connected with the Premises or
the Building in which the Premises is located, during the Term. In no event
shall Landlord be liable for events that occur in the common areas, or for
damage or injury caused by fire, utility outage or interruption, pipe or
sprinkler leakage, or similar causes. Tenant waives all claims against Landlord
for, and agrees to defend with counsel acceptable to Landlord, and to indemnify
and hold Landlord harmless from, any loss or liability, and all costs or
expenses, including attorneys' fees and costs of defense, arising from or
attributable to any such injury or damage from any cause at any time related in
any way to the Premises during the term hereof, other than those caused by the
gross negligence or willful misconduct of Landlord, to the extent of such gross
negligence or willful misconduct. This Section 11 shall survive the termination
of the Lease.
12. INSURANCE, PUBLIC LIABILITY AND PROPERTY DAMAGE
12.1 Insurance Coverage. Tenant agrees to maintain in force throughout the
Term, at Tenant's sole cost and expense, comprehensive general liability
insurance with a broad form general liability endorsement insuring against any
liability to the public for any claim for damages due to death, bodily injury or
property damage related to the use of or resulting from any accident occurring
in or about the Premises, with single limit coverage of not less than $1,000,000
for any loss and $3,000,000 for any policy period.
12.1.1 Such policy shall insure the contingent liability of Landlord
and the performance by Tenant of its indemnity obligations under this Lease.
Landlord shall be named as an additional insured in such policy, and such policy
shall contain a cross-liability endorsement.
12.1.2 Tenant further agrees that the amount of the insurance coverage
shall be reviewed every three (3) years, at least sixty (60) days before the
expiration of a three-year period. If the parties are unable to agree upon
the amount of such coverage, Tenant shall be required to maintain for the next
three-year period (or prior to the expiration of the Term, whichever is less)
the amount of coverage recommended in writing by an insurer selected by
Landlord.
12.2 Tenant's Property Insurance. Tenant, at its own cost, shall maintain
on all of its personal property and removable fixtures and equipment situated
in, on or about the Premises, a policy of standard fire and extended coverage
insurance, with vandalism and malicious mischief endorsements (and sprinkler
leakage and earthquake sprinkler leakage endorsements, if the Building has
sprinklers), to the extent of at least one hundred percent (100%) of their
actual replacement cost. The proceeds of any such policy that become payable due
to damage, loss or destruction of such property shall be used by Tenant for the
repair or replacement of such property.
12.3 Miscellaneous Insurance Provisions.
12.3.1 Each policy of insurance required of Tenant by this Lease shall
be a primary policy, issued by an insurance company reasonably satisfactory to
Landlord, and shall contain an endorsement requiring thirty (30) days' written
notice from the insurer to Landlord before cancellation or change in the nature,
scope or amount of coverage. Each policy of insurance maintained by Tenant shall
be primary and noncontributing with any policy maintained by Landlord. Each
policy, or a certificate of the policy, together with evidence of the payment of
premiums, shall be deposited with Landlord at the commencement of the Term of
this Lease and prior to any expiration of any such policy.
12.3.2 Landlord and Tenant each release the other, and their
respective agents and representatives, from any claims for damage to any person
or to the Premises and to the fixtures and personal property situated therein,
resulting from or attributable to any risk insured under any insurance policies
carried by the parties and in force at the time of the damage. Each party shall
cause any insurer providing insurance to it pursuant to this Lease to waive all
rights or recovery by way of subrogation against either party by virtue of the
payment of any loss under such insurance. Such waiver shall be effective as long
as such insurance is required under the provisions of this Lease.
12.4 Casualty Insurance; Damage or Destruction. Landlord shall, at all
times during the Term, keep the Building and improvements in which the Premises
are situated insured against loss or damage by fire and the perils covered by a
combined single limit bodily injury and broad form property damage insurance
policy, extended coverage, or an "all risk" insurance, with inflation guard,
vandalism and malicious mischief endorsements, zoning ordinance coverage, and
any other endorsements selected by Landlord. Landlord, at its discretion, may
purchase (a) an earthquake policy of insurance and zoning ordinance coverage, in
any amount sufficient to prevent either Landlord or Tenant from becoming a
co-insured under the provisions of the policies, (b) a policy of rental value or
rent continuation insurance for a period of one year, and (c) any other
insurance that may be required from time to time by Landlord's lender. In
addition, Landlord may purchase any other insurance which it, in its sole
discretion, deems necessary or desirable. All such insurance shall be payable to
Landlord and the holder of any encumbrances on the Property as their interests
may appear. All of the costs and expenses and deductible amounts of such
insurance shall be an Operating Cost.
12.5 Insurable Casualty Loss.
12.5.1 Except as provided in Section 12.5.2, in the event the
Premises, or the Building in which the Premises are situated, is damaged or
destroyed as the result of any risk required to be insured against by this
Section 12, then Landlord shall forthwith restore the Premises or the Building
to substantially the same condition as existed immediately prior to such damage
or destruction. Any insurance proceeds remaining after the completion of such
work shall belong to Landlord. Except as otherwise provided in Section 12.5.2,
below, any amount by which the cost of such repair and the deductible amount
required by such insurance policies exceeds the amount of such insurance
proceeds shall be deemed an Operating Cost pursuant to Section 3.2.
12.5.2 If at any time during the Term, the Premises are totally
destroyed, or are sufficiently damaged to render them unusable without
substantial repair or reconstruction, due to a casualty required to be insured
against as provided herein, or should then applicable laws or zoning ordinances
preclude the restoration or repair of the Premises, or should the costs of
restoration exceed five percent (5%) of the amount of the insurance proceeds,
then Landlord shall have the option, exercisable by giving at least ten (10)
days' prior written notice to Tenant within one hundred twenty (120) days after
the occurrence of any such casualty, to terminate this Lease.
12.6 Uninsured Casualty Loss.
12.6.1 If, during the Term, the Premises or the Building are damaged
or partially destroyed from a risk not required to be insured against by this
Section 12, Landlord shall restore the Premises to substantially the same
condition as existed immediately prior to such damage or destruction.
12.6.2 If the costs of repair or restoration necessitated by an
uninsured casualty loss exceed five percent (5%) of the then replacement value
of the Premises, then Landlord shall have the option, exercisable by giving at
least ten (10) days' prior written notice to Tenant within one hundred twenty
(120) days after the occurrence of any such casualty, to terminate this Lease.
12.7 Termination; Abatement of Rent. This Lease shall not be terminated by
any damage to or destruction of the Premises or other improvements of which the
Premises are a part, unless notice of termination is given by Landlord to Tenant
as provided by this Section 12. Tenant waives the provisions of Section 1932(2)
and 1933(4) of the California Civil Code with respect to any such damage or
destruction.
12.7.1 Should the Premises be damaged or destroyed at any time during
the Term, there shall be an abatement or reduction of the minimum monthly rent,
between the date of destruction and the date of completion of restoration, based
on the extent to which the destruction interferes with Tenant's use of the
Premises.
12.7.2 Should it be determined by Landlord that then-applicable laws
or zoning ordinances would preclude the restoration or replacement of the
Premises in a manner that will result in the approximate functional equivalent
of the Premises, then Landlord shall have the right to terminate this Lease
within ninety (90) days of such determination by giving written notice of
termination to Tenant.
12.8 Notice; Tenant's Right to Terminate. Notwithstanding any provision of
this Lease to the contrary, if Landlord determines in good faith that the repair
and restoration of the Premises to be made by Landlord pursuant to this Section
12 reasonably cannot be made within eighteen (18) months following the
occurrence of any casualty, Landlord shall give written notice of such
determination to Tenant within ninety (90) days following the occurrence of the
casualty. Tenant may terminate this Lease only by written notice given to
Landlord within thirty (30) days after receipt by Tenant of Landlord's notice of
such determination.
13. CONDEMNATION
13.1 Entire Premises. Should title or possession of the whole of the
Premises or the Building be taken by duly constituted authority in condemnation
proceedings under the exercise of the right of eminent domain, or should a
partial taking render the remaining portion of the Premises wholly unacceptable
for occupation, then this Lease shall terminate upon the vesting of title or
taking of possession.
13.2 Partial Taking.
13.2.1 Landlord shall have the right to terminate this Lease upon such
thirty (30) days' notice if title to a portion of the Premises is taken in
connection with, or by deed in lieu of, any condemnation proceedings under the
exercise of the right of eminent domain, and is such as to prevent Tenant from
using the Premises, or the remaining portion, in substantially the same manner
as they were used prior to such taking. If Landlord does not terminate this
Lease as provided herein, then this Lease shall remain in full force and effect.
In such event, Landlord shall promptly make any necessary repairs or restoration
at the cost and expense of Landlord. The minimum monthly rent from and after the
date of the taking shall be reduced in the proportion that the value of the area
of the portion of the Premises taken bears to the total value of the Premises
immediately prior to the date of such taking or conveyance.
13.2.2 Each party waives the provisions of Code of Civil Procedure
Section 1265.130 allowing either party to petition the Superior Court to
terminate this Lease in the event of a partial taking of the Premises. Any
dispute between the parties concerning the extent to which a partial taking by
eminent domain interferes with the use and occupancy of the Premises by Tenant
shall be settled by arbitration in the city in which the Premises are located,
in accordance with the rules of the American Arbitration Association then in
effect.
13.3 Conveyance Under Threat of Condemnation. Any sale or conveyance by
Landlord to any person or entity having the power of eminent domain, either
under threat of condemnation or while condemnation proceedings are pending,
shall be deemed to be a taking by eminent domain under this Section 13.
13.4 Awards and Damages. All payments made on account of any taking by
eminent domain shall be made to Landlord, except that Tenant shall be entitled
to any payment or award made for or attributable to the reasonable removal and
relocation costs of any removable property that Tenant has the right to remove,
or for loss and damage to any such property that Tenant elects or is not
required to remove.
14. ASSIGNING, MORTGAGING, SUBLETTING OR CHANGE IN OWNERSHIP
14.1 Limitation. Tenant shall not transfer, assign, sublet, mortgage,
hypothecate, share rights in this Lease or Tenant's interest in the Premises, or
permit any other person or entity to use the Premises (collectively, a
"Transfer"), without first procuring the written consent of Landlord, which
consent shall not be unreasonably withheld. Any attempted Transfer without
Landlord's written consent shall be void and shall constitute a material default
under this Lease. Tenant agrees to reimburse Landlord for Landlord's attorneys'
fees (if any) incurred in connection with any requested Transfer by Tenant of
Tenant's rights hereunder.
14.2 Deemed Transfer. If Tenant is a nonpublicly traded corporation, or an
unincorporated association or partnership, any direct or indirect cumulative
transfer, assignment or hypothecation of any stock or interest in such
corporation, association or partnership in the aggregate in excess of thirty
percent (30%) of the beneficial ownership thereof (or, in the case of a
partnership, of the beneficial ownership thereof or of the general partner
interest thereof) shall be deemed a Transfer within the meaning and provisions
of this Section 14 and subject to its provisions.
14.3 Standard for Consent. If Tenant desires at any time to assign this
Lease or to sublease the Premises, or any portion thereof, it shall first notify
Landlord of its desire to do so and shall submit in writing to Landlord: (a) the
name of the proposed subtenant or assignee and the proposed guarantors of such
subtenant's or assignee's obligations; (b) the nature of the proposed
subtenant's or assignee's business to be carried on in the Premises; (c) the
terms and provisions of the proposed sale, transfer or sublease of Tenant's
business and leasehold interest, including the price, rent and terms of payment;
and (d) any other information required by Landlord. Landlord shall not
unreasonably withhold its consent provided: (i) the use of the Premises remains
the same as provided in this Lease (unless Landlord, for reasonable cause,
decides that the use and/or the location of the use is incompatible with
Landlord's present or future plans for operation of the Property); (ii) the
proposed subtenant or assignee and their respective guarantors demonstrate that
it is financially responsible by submission to Landlord of such reasonable
information as Landlord may request concerning the proposed subtenant or
assignee, including, but not limited to, a balance sheet of the proposed
subtenant or assignee as of a date within ninety (90) days of the request for
Landlord's consent, and statements of income or profit and loss of the proposed
subtenant or assignee and guarantor for the two-year period preceding the
request for Landlord's consent; (iii) the proposed subtenant or assignee
demonstrates a record of successful experience in operating the same type of
business by submission to Landlord of such reasonable information as Landlord
may request concerning the proposed subtenant or assignee, including, but not
limited to, a written statement in reasonable detail as to the business
experience of the proposed subtenant or assignee during the five (5) years
preceding the request for Landlord's consent; and (iv) the proposed subtenant or
assignee has a reputation for honesty and is of good moral character. No
subletting or assignment, even with the consent of Landlord, shall relieve
Tenant of its obligation to pay the rent and to perform all of the other
obligations to be performed by Tenant hereunder.
14.4 Conditions. Each Transfer to which there has been consent shall be by
an instrument in writing, in a form satisfactory to Landlord. Such instrument
shall be executed by the transferor, assignor, sublessor, hypothecator or
mortgagor and the transferee, assignee, sublessee, mortgagee or other person or
entity, as the case may be. Each transferee, assignee, sublessee, mortgagee or
other person or entity shall agree in writing for the benefit of Landlord to
assume, to be bound by, and to perform the terms, covenants and conditions of
this Lease to be performed by Tenant, including the payment of all amounts due,
or to become due, under this Lease. In addition, as conditions precedent to
Landlord's consent to any Transfer of this Lease, Landlord may require any or
all of the following:
14.4.1 Tenant shall provide Landlord with evidence reasonably
satisfactory to Landlord that the value of Landlord's interest under this Lease
will not thereby be diminished or reduced, which evidence shall include, but not
need be limited to, evidence respecting the relevant business experience and
financial responsibility and status of the third party concerned;
14.4.2 If the Transfer provides for the receipt by, on behalf of, or
on account of Tenant of any consideration or any kind whatsoever (including, but
not by way of limitation, a premium rental for the sublease or lump sum payment
for an assignment) in excess of the rent due Landlord under this Lease, Tenant
shall pay seventy-five percent (75%) of such excess, less Tenant's reasonable
costs (not to exceed twenty five percent (25%) of such excess) to Landlord,
which payment(s) to Landlord shall be made upon receipt of any such payment(s)
by Tenant;
14.4.3 Tenant shall not be then in default hereunder in any
respect;
14.4.4 Tenant shall deliver to Landlord one executed copy of all
written instruments evidencing or relating to Tenant's assignment, transfer or
sharing of the Premises; and
14.4.5 Tenant shall provide a written agreement from any third party
concerned that, in the event Landlord gives such third party notice that Tenant
is in default under this Lease, such third party shall thereinafter make all
payments otherwise due Tenant directly to Landlord. Any such payments will be
received by Landlord without the imposition of any liability on Landlord, except
to credit such payments against those due under the Lease. Any such third party
shall agree to attorn to Landlord, or its successors and assigns, should this
Lease be terminated for any reason; provided, however, that in no event shall
Landlord, or its successors or assigns, be obligated to accept such attorn-
ment.
14.5 Limitation on Consent.
14.5.1 Tenant agrees and acknowledges that the conditions permitted to
be imposed upon Landlord's grant of its consent hereunder are reasonable.
Landlord's imposition of such conditions shall under no circumstances impair or
limit Landlord's rights and remedies under California Civil Code Section 1951.4
or any successor statute.
14.5.2 Landlord's consent to Tenant's Transfer on any one occasion
shall apply only to the specific transaction thereby authorized. Such consent
shall not be construed as a waiver of the duty of Tenant, or any transferee, to
obtain Landlord's consent to any other or subsequent Transfer, or as modifying
or limiting Landlord's rights hereunder in any way. Landlord's acceptance of
rent, or any other payment directly from any third party, shall not be construed
as a waiver of any of Landlord's rights or as Landlord's agreement to accept the
attornment of any third party, in the event of a termination of this Lease. In
no event shall Landlord's enforcement of any provision of this Lease against any
third party be deemed a waiver of Landlord's right to enforce any provision of
this Lease against Tenant or any other person.
14.6 Applicability to Successors. If Landlord gives consent to a Transfer,
such third party in respect of which such consent was given may in turn apply to
Landlord for its consent to subsequent Transfers. In such case, the provisions
of this Section 14 shall apply as fully as possible to such third party
(including this Section 14.5 in the case of more remote transfers). Any such
transfer shall be subject to all the terms and conditions of this Lease, and
each such successive transfer shall be made only upon like conditions. Tenant,
and each successor to Tenant's interest in the Premises, shall agree to remain
fully responsible to Landlord for the performance of all of Tenant's obligations
under this Lease.
15. DEFAULT BY TENANT; LANDLORD'S REMEDIES
15.1 Events of Default. Each of the following shall constitute a
material
default and breach by Tenant under this Lease:
15.1.1 If Tenant is at any time in default of its obligations to pay
any rent or other charges, and such default continues for more than five (5)
days after the date upon which the obligation to pay is due;
15.1.2 If Tenant is in default in the prompt and full performance of
any other of its obligations under this Lease and such default continues more
than thirty (30) days after Landlord's delivery of written notice
specifying the particulars of such default, unless such default cannot be cured
within thirty (30) days, in which case Tenant shall be in default if Tenant (a)
does not commence the cure of such default within such thirty-day period, and
(b) actually cures such default within sixty (60) days of Landlord's delivery of
written notice of such default;
15.1.3 If Tenant vacates or abandons the Premises or otherwise fails
to occupy and operate the Premises in accordance with the terms of this Lease;
15.1.4 If Tenant or any guarantor of this Lease makes a general
assignment or general arrangement for the benefit of creditors; or if a petition
for adjudication of bankruptcy or for reorganization or rearrangement is filed
by or against Tenant or any guarantor and is not dismissed within thirty (30)
days; or if a trustee or receiver is appointed to take possession of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease and possession is not restored to Tenant within sixty
(60) days; or if substantially all of Tenant's assets located at the Premises or
Tenant's interest in this Lease is subjected to attachment, execution or other
judicial seizure which is not discharged within sixty (60) days. If a court of
competent jurisdiction determines that any of the acts described in this Section
15.1.4 is not a default under this Lease and a trustee is appointed to take
possession of Tenant's assets or if Tenant remains a debtor in possession and
such trustee or Tenant transfers Tenant's interest in this Lease, then Landlord
shall receive, as additional rent, the excess, if any, of the rent (or any other
consideration) paid in connection with such assignment or sublease over the rent
payable by Tenant hereunder; or
15.1.5 If any guarantor of the Lease revokes or otherwise terminates,
or purports to revoke or otherwise terminate, any guaranty of all or any portion
of Tenant's obligations under the Lease.
15.2 Remedies Upon Breach of Lease. On the occurrence of any breach of this
Lease by Tenant, Landlord may, at any time thereafter, with or without notice or
demand and without limiting Landlord in the exercise of any right or
remedy which Landlord may have:
15.2.1 Terminate Tenant's right to possession of the Premises and
re-enter the Premises by any lawful means. In such case, Tenant shall
immediately surrender possession of the Premises to Landlord. If Landlord
reenters the Premises under the provisions of this Section, Landlord shall not
be deemed to have terminated this Lease, or the liability of Tenant to pay any
rent or other charges that are due or thereafter accruing, or Tenant's liability
for damages under any of the provisions of this Lease. In the event of any such
entry or taking possession of the Premises, Landlord shall have the right, but
not the obligation, to remove from the Premises any personal property located
therein and to place it in storage at a public warehouse at Tenant's expense and
risk;
15.2.2 Maintain Tenant's right to possession of the Premises, in which
case this Lease shall continue in effect whether or not Tenant has abandoned the
Premises. In such event, Landlord shall be entitled to enforce all of Landlord's
rights and remedies under this Lease, including the right to recover the rent as
it becomes due, and Landlord shall have the right to occupy or relet the whole
or any part of the Premises for the account of Tenant; or
15.2.3 Pursue any other remedy now or hereafter available to Landlord
under the laws or judicial decisions of the State of California.
15.3 Termination. Notwithstanding any other term or provision hereof
to
the contrary, this Lease shall terminate on the occurrence of any act which
affirms Landlord's intention to terminate this Lease as provided in this Section
15.3, including the filing of an unlawful detainer action against Tenant. Acts
of maintenance or preservation, efforts to relet the Premises, or the
appointment of a receiver at the initiative of Landlord shall not constitute a
termination of Tenant's right to possession unless written notice of termination
is given. On any such termination, Landlord's damages for default shall include
all costs and fees, including reasonable attorneys' fees, incurred by Landlord
in connection with filing, commencing, pursuing or defending any action in any
bankruptcy court or other court with respect to the Lease, obtaining relief from
any stay in bankruptcy restraining any action to evict Tenant or pursuing any
action with respect to Landlord's right to possession of the Premises. All such
damages suffered (apart from minimum monthly rent and other rent payable
hereunder) shall constitute pecuniary damages which must be reimbursed to
Landlord prior to assumption of the Lease by Tenant or any successor to Tenant
in any bankruptcy or other proceeding.
15.4 Cumulative Rights. The rights and remedies given to Landlord in this
Section shall be in addition and supplemental to all other rights or remedies
which Landlord may have under the laws in force when the default occurs.
Landlord's exercise of any right or remedy shall not prevent it from exercising
any other right or remedy.
15.5 Landlord's Damages.
15.5.1 If Landlord elects to terminate this Lease and Tenant's rights
to possession of the Premises in accordance with the provisions of this Lease,
Landlord may recover from Tenant as damages all of the following:
A. The worth at the time of award of any unpaid rent and
other charges which has been earned at the time of such termination; plus
B. The worth at the time of award of the amount by which the
unpaid rent and other charges which would have been earned after termination
until the time of award exceeds the amount of such rental loss Tenant proves
Landlord could have reasonably avoided; plus
C. The worth at the time of award of the amount by which the
unpaid rent and all other charges which Tenant would have paid for the balance
of the term of the Lease after the time of award exceeds the amount of such
rental loss that Tenant proves Landlord could have reasonably avoided; plus
D. Any other amount necessary to compensate Landlord for all of
the detriment proximately caused by Tenant's failure to perform its obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom, including, without limitation, any costs or expenses incurred
by Landlord in (a) maintaining or preserving the Premises after such default,
(b) recovering possession of the Premises, including reasonable attorneys' fees
therefor; (c) expenses of reletting the Premises to a new tenant, including
necessary renovations or alterations of the Premises, reasonable attorneys' fees
incurred, and leasing commission incurred; plus
E. Such other amounts in addition to or in lieu of the foregoing
as may be permitted from time to time by the laws of the State of California.
15.5.2 As used in Subsections A and B, above, the "worth at the time
of award" is computed by allowing interest on unpaid amounts at the rate of ten
percent (10%) per annum. As used in Subsection C, above, the "worth at the time
of award" is computed by discounting such amount at the discount rate of the
Federal Reserve Bank located nearest to the Building in effect at the time of
award, plus one percent (1%).
15.5.3 For purposes of this Section 15, all rent other than minimum
monthly rent shall, for purposes of calculating any amount due under the
provisions of Subsection C, above, be computed on the basis of the average
monthly amount of rent, other than minimum monthly rent, payable by Tenant
during the immediately preceding thirty-six-month period, except that if it
becomes necessary to compute such rental before such thirty-six-month period has
expired, then such rent shall be computed on the basis of the average monthly
amount of rent payable during such shorter period.
15.6 No Waiver. The waiver by Landlord of any breach by Tenant of any
provision, covenant or condition contained in this Lease shall not be deemed to
be a waiver of such provision, covenant or condition, of any subsequent breach
thereof, or of any other provision, covenant or condition of this Lease.
15.6.1 The subsequent acceptance of rent hereunder by Landlord shall
not be deemed to be a waiver of any preceding breach by Tenant of any provision,
covenant or condition of this Lease or of any right of Landlord to a forfeiture
of the Lease by reason of such breach, regardless of Landlord's knowledge of
such preceding breach at the time of acceptance of such rent. No provision,
covenant or condition of this Lease shall be deemed to have been waived by
Landlord unless such waiver is in writing and signed by Landlord.
15.6.2 Landlord is entitled to accept, receive and cash or deposit any
payment made by Tenant for any reason or purpose or in any amount whatsoever,
and apply the same at Landlord's option to any obligation of Tenant and the same
shall not constitute payment of any amount owed, except that to which Landlord
has applied the same. No endorsement or statement on any check or letter of
Tenant shall be deemed an accord and satisfaction or otherwise recognized for
any purpose whatsoever. The acceptance of any such check or payment shall be
without prejudice to Landlord's right to recover any and all amounts owed by
Tenant hereunder and Landlord's right to pursue any other available remedy.
15.7 Power of Receiver. Upon a default by Tenant, Landlord shall have the
right to obtain the appointment of a receiver to take possession of the Premises
and/or to collect the rents or profits. Tenant irrevocably agrees that any such
receiver may, if necessary or convenient in order to collect such rents and
profits, conduct the business then being carried on by Tenant on the Premises
and that the receiver may take possession of any personal property belonging to
Tenant and used in the conduct of such business, and may use the same in
conducting such business on the Premises without compensation to Tenant for such
use. Neither the application for nor the appointment of such a receiver shall be
construed as an election on Landlord's part to terminate this Lease unless a
written notice of such intention is given by Landlord.
15.8 Landlord's Right to Cure Defaults. Landlord, at any time after Tenant
commits a default in the performance of any of Tenant's obligations under this
Lease, shall be entitled (but is not obligated) to cure such default, or to
cause such default to be cured, at the sole cost and expense of Tenant. If, by
reason of any default by Tenant, Landlord incurs any expense or pays any sum, or
performs any act requiring Landlord to incur any expense or to pay any sum,
including reasonable fees and expenses paid or incurred by Landlord in order to
prepare and post or deliver any notice permitted or required by the provisions
of this Lease, or otherwise permitted or contemplated by law, then the amount so
paid or incurred by Landlord shall be immediately due and payable to Landlord by
Tenant as additional Rent. Tenant hereby authorizes Landlord to deduct such sums
from any Security Deposit held by Landlord. If there is no Security Deposit,
such sums shall be paid by Tenant immediately upon demand by Landlord, and shall
bear interest at the rate of ten percent (10%) per annum, or such greater sum as
may be permitted by law from the date of such demand until paid in full.
15.9 Assumption of Lease. If Tenant becomes a Debtor under Chapter 7
of
the Bankruptcy Code ("Code"), or a petition for reorganization or adjustment of
debts is filed concerning Tenant under Chapters 11 or 13 of the Code, or a
proceeding is filed under Chapter 7 and is transferred to Chapters 11 or 13 of
the Code, the Trustee or Tenant, as Debtor and as Debtor-In-Possession, may not
elect to assume this Lease unless, at the time of such assumption, the Trustee
or Tenant has:
15.9.1 Cured or provided Landlord "Adequate Assurance" (as defined
below) that: (a) within ten days from the date of such assumption the Trustee or
Tenant will cure all monetary defaults under this Lease and compensate Landlord
for any actual pecuniary loss resulting from any existing default, including,
without limitation, Landlord's reasonable costs, expenses, late charges and
accrued interest as set forth in this Lease, and attorneys' fees incurred as a
result of the default; (b) within thirty (30) days from the date of such
assumption, the Trustee or Tenant will cure all nonmonetary defaults under this
Lease; and (c) the assumption will be subject to all of the provisions of this
Lease.
15.9.2 For purposes of Sections 15.9 and 15.10, Landlord and Tenant
acknowledge that, in the context of a bankruptcy proceeding of Tenant, at a
minimum, "Adequate Assurance" shall mean: (a) the Trustee or Tenant has and will
continue to have sufficient unencumbered assets after the payment of all secured
obligations and administrative expenses to assure Landlord that the Trustee or
Tenant will have sufficient funds to fulfill the obligations of Tenant under
this Lease, and to keep the Premises properly staffed with sufficient employees
to conduct a fully-operational, actively promoted business in the Premises; (b)
the Bankruptcy Court shall have entered an order segregating sufficient cash
payable to Landlord and/or the Trustee, or Tenant shall have granted a valid and
perfected first lien and security interest and/or mortgage in property of
Trustee or Tenant acceptable as to value and kind to Landlord, to secure to
Landlord the obligation of the Trustee or Tenant to cure the monetary and/or
nonmonetary defaults under this Lease within the time periods set forth above;
and (c) the Trustee or Tenant at the very least shall deposit a sum equal to one
month's minimum monthly rent to be held by Landlord (without any allowance for
interest thereon) to secure Tenant's future performance under the Lease.
15.10 Assignment of Lease. If the Trustee or Tenant has assumed the Lease
pursuant to the provisions of Sections 15.9 and 15.10, for the purpose of
assigning Tenant's interest hereunder to any other person or entity, such
interest may be assigned only after the Trustee, Tenant or the proposed assignee
has complied with all of the provisions, covenants and conditions of Section 14.
Landlord and Tenant acknowledge that such provisions, covenants and conditions
are commercially reasonable in the context of a bankruptcy proceeding of Tenant.
Any person or entity to which this Lease is assigned pursuant to the provisions
of the Code shall be deemed without further act or deed to have assumed all of
the obligations arising under this Lease on and after the date of such
assignment. Any such assignee shall upon request execute and deliver to Landlord
an instrument confirming such assignment.
15.11 Adequate Protection. Upon the filing of a petition by or against
Tenant under the Code, Tenant, as Debtor and as Debtor-in-Possession, and any
Trustee who may be appointed agree to adequately protect Landlord as follows:
15.11.1 To perform each and every obligation of Tenant under this
Lease until such time as this Lease is either rejected or assumed by order of
the Bankruptcy Court;
15.11.2 To pay all monetary obligations required under this Lease,
including, without limitation, the payment of minimum monthly rent, and such
other additional rent charges payable hereunder which are considered reasonable
compensation for the use and occupancy of the Premises;
15.11.3 To provide Landlord a minimum thirty days' written notice,
unless a shorter period is agreed to in writing by the parties, of any
proceeding relating to any assumption of this Lease or any intent to abandon the
Premises, which abandonment shall be deemed a rejection of this Lease; and
15.11.4 To perform to the benefit of Landlord otherwise required under
the Code.
The failure of Tenant to comply with the above shall result in an
automatic rejection of this Lease.
15.12 Cumulative Rights. The rights, remedies and liabilities of Landlord
and Tenant set forth in Sections 15.9, 15.10 and 15.11 shall be in addition to
those which may now or hereafter be accorded, or imposed upon, Landlord and
Tenant by the Code.
16. DEFAULTS BY LANDLORD
If Landlord fails to perform any covenant, condition or agreement contained
in this Lease within thirty (30) days after receipt of written notice from
Tenant specifying such failure (or if such failure cannot reasonably be cured
within thirty (30) days, if Landlord does not commence to cure the failure
within that thirty-day period), then such failure shall constitute a default by
Landlord. In such case, Landlord shall be liable to Tenant for any damages
sustained by Tenant as a result of Landlord's default.
16.1 Liability Limitation. Tenant and Landlord expressly agree that if
Tenant obtains a money judgment against Landlord resulting from any default or
other claim arising under this Lease, that judgment shall be satisfied only out
of the rents, issues, profits, and other income, including insurance proceeds,
if any, actually received on account of Landlord's right, title and interest in
the Property. No other real, personal or mixed property of Landlord (or of any
of the partners which comprise Landlord, or of partners or principals of such
partners comprising Landlord, if any, or of the officers, shareholders or
directors, if any, of any such entity) wherever situated, shall be subject to
levy, attachment or execution, or otherwise used to satisfy any such judgment.
Tenant hereby waives any right to satisfy a judgment against Landlord except
from the rents, issues, profits and other income, including insurance proceeds,
if any, actually received on account of Landlord's right, title and interest in
the Property.
16.2 Cure. If, after notice to Landlord of default, Landlord fails to cure
the default as provided below, then subject to the provisions of this Lease,
Tenant shall have the right to cure that default at Landlord's expense. In such
case, Landlord shall pay the reasonable cost of such cure promptly following
receipt of a ▇▇▇▇ from Tenant itemizing the cost of such cure. Tenant shall not
have the right to terminate this Lease or to withhold, reduce or offset any cost
of such cure against any payments of rent or other charges due and payable to
Landlord under this Lease, except as otherwise specifically provided in this
Lease.
16.3 Waiver of Code Provisions. Tenant hereby agrees that Civil Code
Sections 1932(2), 1933(4), 1941 and 1942 shall not be applicable to this Lease
and Tenant hereby waives any right it may have under any of such Civil Code
Sections.
17. ENVIRONMENTAL MATTERS
Landlord does not have actual knowledge of the presence of any Hazardous
Substances, as defined below, on the Property not in conformance with applicable
law. Tenant has had sufficient opportunity to satisfy itself of the condition of
the Premises prior to the execution hereof.
17.1 Compliance. Tenant shall at all times and in all respects comply with
all federal, state and local laws, ordinances and regulations (collectively,
"Hazardous Substances Laws") relating to industrial hygiene, environmental
protection or the use, analysis, generation, manufacture, storage, disposal or
transportation of any oil, hydrocarbons, flammables, explosives, asbestos,
radioactive materials or wastes or other hazardous, toxic, contaminating or
polluting materials, substances or wastes, including, without limitation, any
hazardous substances which are the subject of any laws, ordinances or
regulations intend to protect the environment or health, safety and welfare
(collectively, the "Hazardous Substances").
17.2 Licenses and Permits. Tenant shall, at its own expense, procure,
maintain in effect, and comply with all conditions of any and all permits,
licenses and other governmental and regulatory approval required for Tenant's
use of the Premises, including, without limitation, discharge of appropriately
treated materials or wastes which may be discharged into or through any sanitary
sewer serving the Premises. Tenant shall, in all respects, deal with the
Hazardous Substances in conformity with the Hazardous Substances Laws.
17.3 Indemnification. Tenant shall indemnify, defend, by counsel reasonably
acceptable to Landlord, protect, and hold Landlord and each of Landlord's
partners, employees, agents, attorneys, successors and assigns, free and
harmless from and against any and all claims, liabilities, penalties,
forfeitures, losses or expenses (including attorneys' fees), damages or death of
or injury to any person or damage to any property whatsoever, arising from or
caused in whole or in part, directly or indirectly, by Tenant's failure to
comply with any Hazardous Substances Law, or other environmental, health or
safety law, regulation or ordinance. Tenant's obligations hereunder shall
include, without limitation, and whether foreseeable or unforeseeable, all costs
of any kind whatsoever related in any way to the repair, clean-up or remediation
of the Premises, and the preparation and implementation of any closure, remedial
action or other required plans. Tenant's obligations hereunder shall survive the
expiration or earlier termination of the Term. For purposes of this indemnity
provision, any acts or omission of Tenant, or by employees, agents, assignees,
contractors or subcontractors of Tenant, or others acting for or on behalf of
Tenant (whether or not they are negligent, intentional, willful or unlawful)
shall be strictly attributable to Tenant.
18. SUBORDINATION OF LEASE
18.1 Subordination Agreement. Tenant agrees to execute, acknowledge and
deliver to Landlord within ten days following Landlord's written request, such
documents and instruments that may be necessary to subordinate this Lease to (a)
any mortgages or trust deeds that now exist or may hereafter be placed upon the
Premises by Landlord, (b) to any and all advances made or to be made thereunder,
(c) to the interest on all obligations secured thereby, (d) to all renewals,
modifications, consolidations, replacements and extensions thereof, and (e) any
easements, covenants, conditions or restrictions executed by Landlord provided
that they do not materially interfere with Tenant's use, enjoyment and occupancy
of the Premises. In each case the mortgagee or beneficiary named in any such
mortgage or trust deed shall agree in writing that, as long as Tenant performs
its obligations under this Lease, no foreclosure or deed in lieu of foreclosure,
or sale under the encumbrance or other procedures to enforce the rights incident
thereto, shall affect Tenant's rights under this Lease.
18.2 Attornment. Tenant shall attorn to any purchaser at any
foreclosure
sale or to any grantee or transferee designated in any deed given in lieu of
foreclosure.
18.3 Estoppel Certificate. Within ten (10) days after receipt of a
written request therefor, Tenant shall deliver in recordable form a written
statement certifying (if such is the case) that this Lease is in full force and
effect and that there are no defenses or offsets thereto, or stating those
claimed to exist and such other information as Landlord may reasonably request
be included in such statement. The failure of Tenant to deliver such certificate
within such time period shall constitute conclusive affirmation by Tenant for
the benefit of Landlord, its lender, mortgagee or assignee, and their respective
successors in interest, that this Lease is in full force and effect and has not
been modified except as may be represented by Landlord in its written request
for such statement.
19. LANDLORD'S ENTRY ON PREMISES
19.1 Right of Entry. Landlord and its authorized representatives shall have
the right without liability and without abatement of rent to enter the Premises
at all reasonable times for, without limitation, any of the following purposes:
19.1.1 To determine whether the Premises and/or the Building are in
good condition, and whether Tenant is complying with its obligations under this
Lease;
19.1.2 To do any necessary maintenance, repairs, restoration or
remodeling to the Premises and/or the Building that Landlord has the right or
obligation to perform;
19.1.3 To serve, post, or keep posted any notices required or allowed
under the provisions of this Lease, including "for rent" or "for lease" notices
during the last six months of this Lease, or during any period while Tenant is
in default, and any notices provided by law for the protection of Landlord's
interest in the Premises;
19.1.4 To shore the foundations, footings and walls of the Building,
and to erect scaffolding and protective barricades around and about the
Building, but not so as to prevent entry to the Premises, and to do any other
act or thing necessary for the safety or preservation of the Premises or the
Building; and
19.1.5 To show the Premises and/or the Building to prospective
purchasers, lenders, tenants, brokers and others for business purposes, and for
such other purposes as Landlord may deem appropriate.
19.2 Exercise of Right. Landlord shall exercise its rights of entry in a
manner that will not interfere unreasonably with Tenant's use and occupancy of
the Premises; provided that Landlord's entry and activities do not result from
Tenant's default. Landlord shall not be liable in any other manner for any
inconvenience, disturbance, loss of business, nuisance, or other damage arising
out of Landlord's entry on the Premises as provided herein, except damage
resulting from the acts or omissions of Landlord or its authorized represent-
atives.
20. SALE OR TRANSFER OF PREMISES
If Landlord sells or transfers all or any portion of the Premises, the
Building, or the improvements and land of which the Premises and the Building
are a part, then Landlord shall be released from any liability thereafter
accruing under this Lease upon (a) the consummation of such sale or transfer,
and (b) Landlord accounting to any such transferee for any Security Deposit and
prepaid rent of Tenant.
21. SURRENDER ON TERMINATION; HOLDING OVER
21.1 Surrender. On the last day of the Term, or upon sooner termination of
this Lease, Tenant shall surrender to Landlord the Premises and all Tenant's
improvements and alterations (except for improvements and alterations that
Tenant has the right or is obligated to remove under the provisions of this
Lease), broom clean, maintained and repaired in accordance with the terms
hereof, and otherwise in the same condition as when received, except for
reasonable wear and tear. Any damage to or deterioration of the Premises will
not be deemed reasonable wear and tear if the same could have been prevented by
good maintenance practices of Tenant. Tenant shall also remove all of its
personal property on or prior to such last day. Tenant shall promptly repair any
physical damage to the Premises arising as a result of Tenant's vacation of the
Premises. Landlord may elect to retain or dispose of in any manner any
improvements or alterations or Tenant's personal property that Tenant does not
remove from the Premises on expiration or termination of the Term as allowed or
required by this Lease by giving at least ten days' written notice to Tenant.
Title to any such improvements or alterations or Tenant's personal property that
Landlord elects to retain or dispose of on expiration of the ten-day period
shall vest in Landlord. Tenant waives all claims against Landlord for any damage
to Tenant resulting from Landlord's retention or disposition of any such
alterations or Tenant's personal property.
21.2 Holding Over. If Tenant, with Landlord's consent, remains in
possession of the Premises after expiration or termination of the Term, or after
the date in any notice given by Landlord to Tenant terminating this Lease, such
possession by Tenant shall be deemed to be a month-to-month tenancy terminable
on thirty (30) days' notice given at any time by either party. The minimum
monthly rent for any such tenancy shall be equal to double the aggregate of the
monthly minimum rent in effect on the date of such expiration. Such minimum rent
shall be subject to adjustment as provided in this Lease. Such tenancy shall
otherwise be subject to all of the terms and conditions of this Lease, except
those pertaining to Term and Option(s) to extend, if any. Any holding over
without Landlord's consent shall not give Tenant tenure.
22. GENERAL PROVISIONS
22.1 Notices. Any and all notices by Landlord to Tenant, or by Tenant to
Landlord, shall be in writing and delivered personally or by U.S. certified
mail, return receipt requested, addressed to the parties at the addresses
specified on the signature page of this Lease. Either party may, at any time,
change the address by written notice to the other party in accordance with this
Section. If notice is mailed, it shall be deemed received on the third business
day following the date on which it is mailed.
22.2 Binding Effect; Complete Agreement. Landlord and Tenant agree that
each of the provisions, conditions and obligations of this Lease shall extend to
and bind, or inure to the benefit of (as the case may require), the respective
parties hereto, and each and every one of their respective heirs, executors,
administrators, representatives, successors and assigns. This Lease, and the
exhibits hereto, constitute the entire agreement between the parties and may not
be altered, amended, modified or extended, except by an instrument in writing
signed by all parties. The parties respectively acknowledge and agree that
neither has made any representations or warranties to the other not expressly
set forth in this Lease. This Lease supersedes any proposals regarding the
leasing of the Premises, whether written or oral. Any such proposals will be
terminated, and of no force or effect, effective upon the execution of this
Lease.
22.3 Attorneys' Fees. If any legal action is instituted by either of the
parties hereto to enforce or construe any of the provisions, conditions or
covenants of this Lease, or the validity thereof, the party prevailing in any
such action shall be entitled to recover from the other party all court costs
and
reasonable attorneys' fees to be set by the court, and the costs and fees
incurred in enforcing any judgment entered. Attorneys' fees and costs, whenever
mentioned in this Lease, shall include those incurred with respect to
arbitration proceedings, if any.
22.4 Partial Invalidity. If any term or provision, in whole or in part, of
this Lease or the application thereof to any person or circumstance shall, to
any extent, be invalid, unenforceable, or inapplicable in the stated
circumstances or for stated purposes, in any jurisdiction, then the remainder of
this Lease, or the application of such term or provision to persons or
circumstances other than those to which it is held invalid, unenforceable or
inapplicable, shall not be affected. Each term and provision of this Lease shall
be valid and be enforceable to the fullest extent permitted by law.
22.5 Recordation; Quitclaim. Neither party shall record this Lease. Upon
the request of Landlord, in Landlord's sole discretion, Tenant shall execute and
acknowledge in recordable form a Memorandum of Lease in content agreeable to
Landlord. The reasonable costs and expenses, including attorneys' fees, incurred
by Landlord in preparing, filing and recording the Memorandum of Lease shall be
borne by Landlord. Concurrently with the execution of any Memorandum of Lease,
Tenant shall execute and deliver to Landlord for filing and recording, upon the
expiration or termination of this Lease, a quitclaim deed designating Landlord,
its successors and assigns, as the transferee of the Premises.
22.6 Broker. Landlord shall pay a leasing commission to Leider Commercial
Real Estate and ▇▇▇▇▇ ▇▇▇▇▇ Commercial Real Estate in accordance with the terms
of a separate listing agreement between Landlord and Leider Commercial Real
Estate. Tenant represents and warrants to Landlord that Tenant has not engaged
any broker or finder other than ▇▇▇▇▇ ▇▇▇▇▇ Commercial Real Estate and shall
indemnify, defend, and hold Landlord free and harmless from any and all claims
arising from this transaction brought by any other finder or broker.
22.7 Consent of Party. If this Lease requires the consent of a party
hereto, such consent shall not be unreasonably withheld or delayed.
22.8 Corporate Authority. If Tenant is a corporation, each individual
executing this Lease on behalf of such corporation represents and warrants that
he or she is duly authorized to execute and deliver this Lease on behalf of such
corporation, in accordance with a duly adopted resolution of the Board of
Directors, or in accordance with the Bylaws of such corporation; that this Lease
is binding upon such corporation in accordance with its terms; that Tenant is a
duly qualified corporation and all steps have been taken prior to the date
hereof to qualify Tenant to do business in the State in which the Premises are
situated, if Tenant is a foreign corporation; that all franchise and corporate
taxes have been paid to date; and that all future forms, reports, fees and other
documents necessary to comply with applicable laws will be filed when due.
22.9 Time. Time is of the essence of this Lease and each and every term,
covenant and condition.
22.10 Signs. Tenant shall install signs, at Tenant's sole expense, on the
Premises in accordance with the City of Santa ▇▇▇▇▇▇▇ sign ordinance and with
Landlord's prior approval. Tenant shall have the exclusive right to signage to
the main entrance to the Building, with the exception of the existing
wall-mounted tenant directory sign. The monument sign will be converted back to
building identification signage.
22.11 Financial Statements. Tenant shall deliver to Landlord copies of such
financial statements as are submitted to the Securities and Exchange Commission
with Tenant's Form 10-Q and 10-K within ten (10) business days of the filing
thereof.
22.12 Confidentiality of Lease. Tenant acknowledges and agrees that the
terms of this Lease are confidential and constitute proprietary information of
Landlord. Disclosure of the terms hereof could adversely affect the ability of
Landlord to negotiate other leases with respect to the Building and impair
Landlord's relationship with other tenants of the Building. Tenant agrees that
it, its partners, officers, directors, employees and attorneys, shall not
disclose the terms and conditions of this Lease to any other person without the
prior written consent of Landlord. A breach of this covenant by Tenant shall
constitute a material default under this Lease that, by its nature, is not
susceptible to cure by Tenant. It is understood and agreed that damages, alone,
would be an inadequate remedy for the breach of this provision by Tenant.
Landlord therefore shall have the right to specific performance of this
provision and to injunctive relief to prevent its breach or continued breach, as
well as all other remedies available at law or in equity.
22.13 Security Measures. Tenant hereby acknowledges that Landlord shall
have no obligation whatsoever to provide guard service or other security
measures for the benefit of the Premises or the Building. Tenant assumes all
responsibility for the protection of Tenant and its agents, employees and
invitees, and the property of Tenant, and its agents, employees and invitees,
from acts of third parties. Nothing herein contained shall prevent Landlord, at
Landlord's sole option, from providing security protection for the Building or
any part thereof, in which event the cost thereof shall be included as an
Operating Cost.
22.14 Construction of Lease. The language in all parts of this Lease
shall
in all cases be construed as a whole according to its fair meaning and not
strictly for nor against Landlord or Tenant.
22.15 Negation of Joint Venture. Nothing in this Lease shall cause Landlord
in any way to be construed as an employer, employee, fiduciary, a partner, a
joint venturer, or otherwise associated in any way with Tenant in the operation
of the Premises. Nothing contained herein shall subject Landlord to any
obligation, loss, charge or expense connected with or arising from Tenant's
operation in or use of the Premises.
22.16 Triple Net Lease. The parties agree that the general intent and
purpose of this Lease is that this Lease shall be an absolute triple net lease
with respect to Landlord. Tenant shall pay its pro rata share of all Operating
Costs for the Premises, the common areas of the Building, the Building and the
land on which it is situated. Landlord and Tenant intend that the rental return
to Landlord shall not be reduced, offset or diminished directly or indirectly by
any cost, charge or expense due from Tenant and others in connection with the
Premises, Building or land upon which the Building is situated, nor subject to
suspension or termination for any reason. Landlord and Tenant agree that all
provisions of this Lease shall be interpreted in a manner consistent with and
subordinate to such general intent and purpose. Tenant further acknowledges that
all tenants of the Building may not be subject to triple net leases.
22.17 Liquidated Damages. BY INITIALING IN THE SPACES PROVIDED BELOW, THE
PARTIES AGREE THAT A LATE OPENING OF THE PREMISES, LATE OR INSUFFICIENT PAYMENT
OF RENT OR OTHER CHARGES PAYABLE HEREUNDER, OR TENANT'S HOLDING OVER, WILL CAUSE
LANDLORD TO INCUR COSTS NOT CONTEMPLATED BY THIS LEASE, THE EXACT AMOUNT OF SUCH
COSTS BEING EXTREMELY DIFFICULT AND IMPRACTICABLE TO ASCERTAIN. SUCH COSTS
INCLUDE ADMINISTRATIVE EXPENSES AND LOST GOOD WILL TO THE BUILDING. THEREFORE,
THIS LEASE PROVIDES FOR CERTAIN LATE CHARGES AND OTHER LIQUIDATED DAMAGES. SUCH
LATE CHARGES AND DAMAGES REPRESENT FAIR AND REASONABLE ESTIMATES OF THE COSTS
AND/OR DAMAGES THAT LANDLORD WILL INCUR UNDER THE CIRCUMSTANCES. ACCEPTANCE OF
ANY SUCH LATE CHARGE OR DAMAGES SHALL CONSTITUTE NEITHER A WAIVER OF TENANT'S
DEFAULT NOR AN ELECTION OF REMEDY.
LANDLORD TENANT
(Signatures appear on the following page.)
IN WITNESS WHEREOF, the parties have executed this Lease on this 16 day of
February, 1998, at the location of the Premises.
"LANDLORD":
BATH STREET PARTNERS,
a California limited partnership
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
General Partner
Address:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
"TENANT":
AVTEL COMMUNICATIONS, INC., a
Delaware corporation
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Chief Executive Officer
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Operating Officer
Address:
Prior to the Commencement Date:
AvTel Communications, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
After the Commencement Date:
AvTel Communications, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇*
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
*subject to the provisions of
Section 1.4
