Exhibit 10.3
OFFICE AND INDUSTRIAL/COMMERCIAL LEASE
THIS OFFICE AND INDUSTRIAL/COMMERCIAL LEASE (“Lease”) is entered into as of June
___, 2005, by and between Stafford Office Park DST, a Delaware statutory trust
(“Landlord”), and INPUT-OUTPUT, INC., a Delaware corporation (“Tenant”).
1. BASIC LEASE TERMS. For purposes of this Lease, the following terms have the
following definitions and meanings:
(a) Landlord: Stafford Office Park DST, a Delaware statutory trust
(b) Landlord’s Address (For Notices): c/o Titan Real Estate Investment Group,
Inc., 12121 Wilshire Blvd., Suite 200, Los Angeles, California 90025 or such
other place as Landlord may from time to time designate by written notice to
Tenant.
(c) Tenant: INPUT-OUTPUT, INC., a Delaware corporation.
(d) Tenant’s Address (For Notices): INPUT-OUTPUT, INC., 12300 Parc Crest Drive,
Stafford, Texas 77477, or such other place as Tenant may from time to time
designate by written notice to Landlord.
(e) Intentionally Deleted
(f) Intentionally Deleted
(g) Premises: The real property located at 12300 Parc Crest Drive (“Building
Two”), and 12400 Parc Crest Drive (“Building Three”), Stafford, Fort Bend
County, Texas, located on that certain property described in Exhibit A-1 (the
“Property”) as shown on the site plan attached hereto as Exhibit “A” (the
“Development”), together with all buildings, improvements and facilities, now or
subsequently located on the Property from time to time, including, without
limitation, Building Two and Building Three containing approximately 189,566
rentable square feet (collectively, the “Premises”). Building Two contains
approximately 79,566 rental square feet and Building Three contains
approximately 110,000 rentable square feet.
(h) Intentionally omitted.
(i) Term: Twelve (12) Lease Years.
(j) Commencement Date: June ___, 2005.
     Expiration Date: June 30, 2017.
(k) Monthly Base Rent: The Monthly Base Rent will be as set forth below, with
each “Lease Year” being the period beginning on the Commencement Date (or the
anniversary thereof) and ending on the day preceding the next anniversary of the
Commencement Date and the Monthly Base Rent being the amount calculated by
multiplying the applicable yearly Rental Rate by 189,566 square feet and
dividing by twelve, as set forth in the table below:
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Year 1
  $8.89/RSF/Year   $ 140,361.29
 
             
Year 2
  $9.13/RSF/Year   $ 144,247.40
 
             
Year 3
  $9.38/RSF/Year   $ 148,250.08
 
             
Year 4
  $9.65/RSF/Year   $ 152,372.85
 
             
Year 5
  $9.91/RSF/Year   $ 156,619.30
 
             
Year 6
  $10.19/RSF/Year   $ 160,993.14
 
             
Year 7
  $10.48/RSF/Year   $ 165,498.20
 
             
Year 8
  $10.77/RSF/Year   $ 170,138.41
 
             
Year 9
  $11.07/RSF/Year   $ 174,917.63
 
             
Year 10
  $11.38/RSF/Year   $ 179,840.63
 
             
Year 11
  $11.71/RSF/Year   $ 184,911.11
 
             
Year 12
  $12.04/RSF/Year   $ 190,133.71

     
Renewal Term (if any): Year 13
through Expiration Date
  Fair Market Value Rental (as hereinafter defined) as determined
pursuant to Paragraph 3.1(b) of this Lease

(l) Security Deposit: No Security Deposit at lease signing subject to conditions
and adjustments as set forth in Paragraph 7 below.
(m) Tenant Improvements: None. Tenant agrees to accept the Buildings “AS IS,
WHERE IS, AND WITH ALL FAULTS” as further provided in Paragraph 4 below.
(n) Tenant Improvement Allowance: None.
(o) Permitted Use: General office, light manufacturing and incidental uses, and
assembly and any other legal use allowed under current City zoning or other
applicable law, as same may be amended from time to time.
(p) Intentionally Deleted
(q) Broker(s): Studley, Inc., representing Tenant
(r) Intentionally Deleted
(s) Interest Rate: Shall mean four percent (4%) in excess of the prime lending
or reference rate of Bank of America, N.A., or any successor bank in effect on
the twenty-fifth (25th) day of the calendar month immediately prior to the event
giving rise to the Interest Rate imposition; provided, however, the Interest
Rate will in no event exceed the maximum interest rate permitted to be charged
by applicable law.
(t) Exhibits: A through D, inclusive, which Exhibits are attached to this Lease
and incorporated herein by this reference.
This Paragraph 1 represents a summary of the basic terms and definitions of this
Lease. In the event of any inconsistency between the terms contained in this
Paragraph 1 and any specific provision of this Lease, the terms of the more
specific provision shall prevail.
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2. PREMISES.
(a) Premises. Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord the Premises.
(b) Mutual Covenants. Landlord and Tenant agree that the letting and hiring of
the Premises is upon and subject to the terms, covenants and conditions
contained in this Lease and each party covenants as a material part of the
consideration for this Lease to keep and perform their respective obligations
under this Lease.
3.0 TERM. Initial Term. The term of this Lease will be for the period designated
in Subparagraph 1(i), commencing on the Commencement Date, and ending on the
Expiration Date (“Initial Term”). Each consecutive twelve (12) month period of
the Term of this Lease, commencing on the Commencement Date, will be referred to
herein as a “Lease Year”; provided, however, that if the Commencement Date is
not the first day of a calendar month, then the first Lease Year shall begin on
the Commencement Date and shall end on the last day of the calendar month in
which the first anniversary of the Commencement Date occurs.
3.1. OPTION TERM.
(a) Option Right. Landlord hereby grants the originally named Tenant herein (or
any affiliate to which this Lease has been assigned pursuant to Paragraph 24(c)
above (a “Permitted Assignee”)), up to four (4) consecutive dependant options to
extend the Initial Term for a total period of twenty (20) years (the “Option
Term”) with respect to the entire Premises, which option(s) shall be exercisable
only by written notice delivered by Tenant to Landlord as provided below, and
provided further that, as of the date of delivery of such notice, Tenant is not
in default under this Lease beyond any applicable cure period. Each such option
may be exercised at Tenant’s election for either a five (5) or ten (10) year
period (“Option Term Period”), provided, however, that the total Option Term
exercised may not exceed twenty (20) years. Upon the proper exercise of such
option to extend, and provided that, as of the end of the Initial Term or
exercised portion of the Option Term, Tenant is not in default under this Lease
beyond any applicable cure period, the Term, as it applies to the Premises,
shall be extended for a period of five (5) or ten (10) years, at the election of
Tenant, at the monthly base rent and on the other terms set forth in
Paragraph 3.1(b) below. The rights contained in this Paragraph 3.1 shall be
personal to Tenant or a Permitted Assignee. Any renewal event outside exercise
of one of the four (4) options (i.e. a renewal negotiated outside an option)
shall be considered use of an option and will reduce the number of options
remaining but will not eliminate Tenant’s rights to future renewal options.
(b) Option Rent. The monthly base rent payable by Tenant during the Option Term
(the “Option Rent”) shall be equal to 95% of the rent that a willing tenant and
a willing landlord would agree to in arm’s length, bona fide negotiation for a
new lease of direct space that is comparable in size, location and quality to
the Premises, for a comparable term, which comparable space is located in other
comparable buildings in the southwest sub market area of Houston, TX and taking
into consideration all other relevant terms and conditions of any comparable
leasing transactions, including, without limitation: (i) location, quality and
age of the building; (ii) use and size of the space in question; (iii) extent of
leasehold improvement allowances; (iv) the amount of any abatement of rental or
other charges; (v) parking charges or inclusion of same in rental; (vi) lease
takeovers/assumptions; (vii) relocation, refurbishment and repainting
allowances; (viii) any and all other concessions or inducements; (ix) extent of
services provided or to be provided, including maintenance and repair
obligations; (x) distinction between “gross” and “net” lease; (xi) base year or
dollar amount for escalation purposes (both operating costs and ad valorem/real
estate); (xii) any other adjustments (including by way of indexes) to base
rental; (xiii) credit standing and financial stature of the tenant; and
(xiv) length of term (the “Fair Market Value Rental” or “FMVR”). All other terms
and conditions of this Lease shall apply throughout the Option Term.
(c) Exercise of Option. The option contained in this Paragraph 3.1 shall be
exercised by Tenant, if at all, and only in the following manner: (i) Tenant
shall deliver written notice to Landlord no less than nine (9) months prior to
the expiration of the Initial Term or Option Term Period as exercised, stating
that
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Tenant is exercising its option and as to what portion of the Premises such
renewal shall apply; (ii) Landlord, after receipt of Tenant’s notice, shall
deliver notice (the “Option Rent Notice”) to Tenant not more than one (1) month
after receipt of the notice to extend, setting forth Landlord’s proposed Option
Rent; and (iii) if Tenant wishes to object to the Option Rent, Tenant shall, on
or before the date occurring one (1) month after receipt of the Option Rent
Notice deliver written notice thereof to Landlord, in which case the parties
shall follow the procedure, and the Option Rent shall be determined, as set
forth in Paragraph 3.1(d) below.
(d) Determination of Option Rent. In the event Tenant timely and appropriately
objects to the Option Rent proposed by Landlord, Landlord and Tenant shall
attempt to agree upon the Option Rent using their best good-faith efforts. If
Landlord and Tenant fail to reach agreement within ten (10) business days
following Tenant’s objection to the Option Rent, (the “Outside Agreement Date”),
then each party shall make a separate determination of the Option Rent, as the
case may be, within five (5) business days, and such determinations shall be
submitted to arbitration in accordance with Subparagraphs (i) through
(vii) below.
(i) Landlord and Tenant shall each appoint one arbitrator who shall by
profession be a licensed real estate brokers who shall have been active over the
five (5) year period ending on the date of such appointment in the leasing of
commercial office and industrial properties in Houston, Texas. The determination
of the arbitrators shall be limited solely to the issue area of whether
Landlord’s or Tenant’s submitted Option Rent, is the closest to the actual
Option Rent as determined by the arbitrators, taking into account the
requirements of Paragraph 3.1(b) above. Each such arbitrator shall be appointed
within fifteen (15) business days after the applicable Outside Agreement Date.
(ii) The two arbitrators so appointed shall within ten (10) business days of the
date of the appointment of the last appointed arbitrator agree upon and appoint
a third arbitrator who shall be qualified under the same criteria set forth
hereinabove for qualification of the initial two arbitrators.
(iii) The three arbitrators shall within thirty (30) days of the appointment of
the third arbitrator reach a decision as to whether the parties shall use
Landlord’s or Tenant’s submitted Option Rent, and shall notify Landlord and
Tenant thereof.
(iv) The decision of the majority of the three arbitrators shall be binding upon
Landlord and Tenant.
(v) If either Landlord or Tenant fails to appoint an arbitrator within fifteen
(15) business days after the applicable Outside Agreement Date, the arbitrator
appointed by one of them shall reach a decision, notify Landlord and Tenant
thereof, and such arbitrator’s decision shall be binding upon Landlord and
Tenant.
(vi) If the two arbitrators fail to agree upon and appoint a third arbitrator,
or both parties fail to appoint an arbitrator, then the appointment of the third
arbitrator or any arbitrator shall be dismissed and the matter to be decided
shall be forthwith submitted to arbitration under the provisions of the American
Arbitration Association, but subject to the instruction set forth in this
Paragraph 3.1(d).
(vii) The cost of arbitration (including, without limitation, reasonable
attorneys’ fees) shall be paid by the non-prevailing party.
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(e) Partial Renewal. Tenant will have the right under this Paragraph 3 to
exercise the Option Term for all of the Premises or for Building Two or Building
Three as Tenant in its sole discretion may elect. In the event Tenant elects to
exercise the Option Term for either Building Two or Building Three, the Option
Rent shall be determined as provided for in this paragraph 3 but shall be 100%
or FMVR, and all remaining dependent options shall apply only to that portion of
the Premises subject to the exercised Option Term.
4. POSSESSION.
(a) Delivery of Possession. Landlord and Tenant acknowledge that Tenant is in
possession of the Premises as of the date hereof pursuant to the terms of lease
between Tenant and NL VENTURES III STAFFORD, L.P., a Texas limited partnership,
Landlord’s predecessor in interest with respect to the Premises. Landlord and
Tenant acknowledge and agree that Tenant shall remain in possession of the
Premises and that the existing lease between Tenant and NL VENTURES III
STAFFORD, L.P. shall terminate concurrently with the Commencement Date of this
Lease which shall occur at such time as Landlord completes its acquisition of
the Premises.
(b) Condition of Premises. By taking possession of the Premises, Tenant will be
deemed to have accepted the Premises in its “as is” “where is” and “with all
faults” condition on the date of delivery of possession and to have acknowledged
that neither Landlord nor any agent of Landlord has made any representation or
warranty with respect to the Premises or any portions thereof or with respect to
the suitability of same for the conduct of Tenant’s business. THIS LEASE IS
EXPRESSLY ENTERED INTO WITHOUT ANY REPRESENTATION OR WARRANTY OF ANY KIND,
EXPRESS, IMPLIED OR STATUTORY AND LANDLORD IS TRANSFERRING POSSESSION OF THE
PREMISES AS IS, WHERE IS, AND WITH ALL FAULTS, AND WITHOUT REPRESENTATIONS OR
WARRANTY (ALL OF WHICH LANDLORD HEREBY DISCLAIMS) AS TO FITNESS FOR ANY
PARTICULAR PURPOSE, MERCHANTABILITY, DESIGN, QUALITY, LAYOUT, FOOTAGE, PHYSICAL
CONDITION, OPERATION, COMPLIANCE WITH SPECIFICATIONS, ABSENCE OF LATENT DEFECTS,
OR COMPLIANCE WITH LAWS AND REGULATIONS (INCLUDING, WITHOUT LIMITATION, THOSE
RELATING TO HEALTH, SAFETY AND THE ENVIRONMENT) OR ANY OTHER MATTER AFFECTING OR
RELATED TO THE PROPERTY. TENANT HEREBY FURTHER ACKNOWLEDGES THAT LANDLORD HAS
NOT MADE, DOES NOT MAKE AND SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS OR
WARRANTIES AS TO WATER, SOIL OR GEOLOGY OF THE PREMISES. WITHOUT LIMITING THE
FOREGOING, LANDLORD DOES NOT AND HAS NOT MADE ANY REPRESENTATION OR WARRANTY
REGARDING THE PRESENCE OR ABSENCE OF ANY HAZARDOUS MATERIALS (as defined in
Paragraph 7(c) below) ON, UNDER OR ABOUT THE PREMISES OR THE COMPLIANCE OR
NON-COMPLIANCE OF THE PREMISES WITH THE COMPREHENSIVE ENVIRONMENTAL RESPONSE,
COMPENSATION AND LIABILITY ACT, THE SUPERFUND AMENDMENT AND REAUTHORIZATION ACT,
THE RESOURCE CONSERVATION RECOVERY ACT, THE FEDERAL WATER POLLUTION CONTROL ACT,
THE FEDERAL INSECTICIDE, RODENTICIDE AND FUNGICIDE ACT, THE CLEAN WATER ACT, THE
CLEAN AIR ACT, ANY SO-CALLED FEDERAL, STATE OR LOCAL “SUPERFUND” OR “SUPERLIEN”
STATUTE, OR ANY OTHER STATUTE, LAW, ORDINANCE, CODE, RULE, REGULATION, ORDER OR
DECREE REGULATING, RELATING TO OR IMPOSING LIABILITY (INCLUDING STRICT
LIABILITY) OR STANDARDS OF CONDUCT CONCERNING ANY HAZARDOUS MATERIALS
(collectively, the “Environmental Laws”). TENANT HEREBY FURTHER ACKNOWLEDGES AND
AGREES THAT IT IS RELYING SOLELY UPON ITS CURRENT POSSESSION, INSPECTION,
EXAMINATION, AND EVALUATION OF THE PREMISES.
5. RENT.
(a) Monthly Base Rent. Tenant agrees to pay Landlord the Monthly Base Rent (as
set forth in paragraph 1(k) above) for the Premises (subject to adjustment as
hereinafter provided) in advance on the first day of each calendar month during
the Term without prior notice or demand, except that Tenant agrees to pay the
Monthly Base Rent for the first month of the Term directly to Landlord
concurrently with Tenant’s delivery of the executed Lease to Landlord. If the
Term of this Lease commences or ends on a day other than the first day of a
calendar month, then the rent for such period will be prorated in the
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proportion that the number of days this Lease is in effect during such period
bears to the number of days in such month. All rent must be paid to Landlord,
without any deduction or offset, in lawful money of the United States of
America, at the address designated by Landlord or to such other person or at
such other place as Landlord may from time to time designate in writing.
(b) Additional Rent. All amounts and charges to be paid by Tenant hereunder,
including, without limitation, payments for Operating Expenses, insurance, and
repairs for which Tenant is responsible pursuant to Subparagraph 14(b) below,
will be considered additional rent for purposes of this Lease, and the word
“rent” as used in this Lease will include all such additional rent unless the
context specifically or clearly implies that only Monthly Base Rent is intended.
(c) Late Payments. Late payments of Monthly Base Rent and/or any item of
additional rent (with the exception of direct payments for landscaping and
janitorial services) will be subject to interest and a late charge as provided
in Subparagraph 22(f) below.
6. REAL PROPERTY TAXES.
(a) Real Property Taxes. Tenant shall pay all real property taxes on the
Premises during the term of this Lease. Tenant agrees to pay to Landlord one
twelfth (1/12th) of the total annual real property taxes due on a monthly basis
concurrently with the payment of Monthly Base Rent. Failure of Tenant to pay
said real property taxes as and when herein specified shall, in addition to all
other rights and remedies of Landlord hereunder, subject Tenant to any fine,
penalty, interest, or cost which Landlord may incur as a result thereof. Tenant
shall, within thirty (30) days after demand, reimburse Landlord for any such
fine, penalty, interest, or cost paid by Landlord, together with interest
thereon at the Interest Rate.
(b) Definition of “Real Property Tax.” “Real property tax” means; (i) any fee,
license fee, license tax, business license fee, commercial rental tax, levy,
charge, assessment, penalty or tax imposed by any taxing authority against the
Premises; (ii) any tax or charge for fire protection, streets, sidewalks, road
maintenance, refuse or other services provided to the Premises by any
governmental agency; (iii) any tax imposed upon this transaction or based upon a
re-assessment of the Premises due to a change of ownership, as defined by
applicable law, or other transfer of all or part of Landlord’s interest in the
Premises ; and (iv) any charge or fee replacing any tax previously included
within the definition of real property tax, or in substitution of or in lieu of
an increase in real property taxes. “Real property tax” does not, however,
include Landlord’s federal or state income, franchise, inheritance or estate
taxes or any other taxes applicable to Landlord’s general or net income.
(c) Impounds for Real Property Taxes. If Tenant is more than ten (10) days late
in the payment of real property taxes more than two (2) times during the initial
Term of this Lease, Tenant shall pay Landlord a sum equal to one-twelfth (1/12)
of the estimated annual real property taxes payable by Tenant under this Lease,
together with each payment of Monthly Base Rent. Landlord shall hold such
payments in a non-interest bearing impound account, and Landlord shall use such
funds to pay the real property taxes on the Premises to the taxing authority
entitled thereto at least fifteen (15) days prior to the delinquency date
established by the taxing authority. If unknown, Landlord shall reasonably
estimate the amount of real property taxes when due. Tenant shall pay any
deficiency of funds in the impound account to Landlord upon written request.
Landlord shall refund any excess to Tenant once the actual amount of the real
property taxes is known. If Tenant defaults under this Lease, Landlord may apply
any funds in the impound account to any obligation then due under this Lease.
(d) Right to Contest. Tenant will have the exclusive right throughout the Term
(including any extensions) to contest the assessed valuation of the Premises by
all appropriate proceedings, and to settle or compromise any such proceedings
initiated by Tenant, all at Tenant’s sole cost and expense. Any tax savings
shall inure solely to the benefit of Tenant.
7. SECURITY DEPOSIT. Tenant will not be required to deposit with Landlord any
Security Deposit provided that Tenant demonstrates by way of audited financial
statements that it maintains a Tangible Net Worth (“TNW”) (defined in accordance
with Generally Accepted Accounting Principles consistently
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applied) of Fifty Million Dollars ($50,000,000) and a Current Ratio (“CR”)
(defined as the ratio of current assets to current liabilities) of 1.5. If
during the term of this Lease either of these conditions is not satisfied,
Tenant shall deposit a Security Deposit with Landlord in an amount equal to six
(6) times the then applicable monthly rent. The Security Deposit will be
returned after Tenant satisfies the TNW and CR conditions for four
(4) consecutive quarters. Any Security Deposit will be held by Landlord in an
interest-bearing account as security for the full and faithful performance by
Tenant of all of the terms, covenants, and conditions of this Lease to be kept
and performed by Tenant during the Term hereof. If the Security Deposit, if any,
has not been returned prior to the expiration of the Lease Term, and Tenant
fully and faithfully performs its obligations under this Lease including,
without limitation, surrendering the Premises upon the expiration or sooner
termination of this Lease in compliance with Subparagraph 11(a) below, the
Security Deposit (and interest earned thereon) or any balance thereof will be
returned to Tenant (or, at Landlord’s option, to the last assignee of Tenant’s
interest hereunder) within thirty (30) days following the expiration of the
Lease Term or as required under applicable law, provided that Landlord may
retain the Security Deposit (and interest earned thereon) until such time as any
outstanding rent or additional rent amount has been determined and paid in full.
The Security Deposit (and interest earned thereon) is not, and may not be
construed by Tenant to constitute, rent for the last month or any portion
thereof. If Tenant defaults with respect to any provisions of this Lease
including, but not limited to, the provisions relating to the payment of rent or
additional rent, Landlord may (but will not be required to) use, apply or retain
all or any part of the Security Deposit (and interest earned thereon) for the
payment of any rent or any other sum in default, or for the payment of any other
amount which Landlord may spend or become obligated to spend by reason of
Tenant’s default or to compensate Landlord for any loss or damage which Landlord
may suffer by reason of Tenant’s default. If any portion of the Security Deposit
is so used or applied, Tenant agrees, within ten (10) business days after
Landlord’s written demand therefor, to deposit cash with Landlord in an amount
sufficient to restore the Security Deposit to its original amount and Tenant’s
failure to do so shall constitute a default under this Lease. Should Landlord
sell its interest in the Premises during the Term hereof and deposit with the
purchaser thereof the then unappropriated Security Deposit (and interest earned
thereon), Landlord will be discharged from any further liability with respect to
such Security Deposit.
8. USE.
(a) Tenant’s Use of the Premises. The Premises may be used for the use or uses
set forth in Subparagraph 1(o) only, and Tenant will not use or permit the
Premises to be used for any other purpose without the prior written consent of
Landlord, which consent Landlord may withhold in its sole and absolute
discretion.
(b) Compliance. At Tenant’s sole cost and expense, Tenant agrees to procure,
maintain and hold available for Landlord’s inspection, all governmental licenses
and permits required, if any, for the proper and lawful conduct of Tenant’s
business from the Premises Tenant will be responsible for compliance of its use
and occupancy of the Premises, and any alterations to the Premises, at Tenant’s
sole cost and expense, with (i) any and all laws, statutes, zoning restrictions,
ordinances, rules, regulations, orders and rulings now or hereafter in force and
any requirements of any insurer, insurance authority or duly constituted public
authority having jurisdiction over the Premises now or hereafter in force,
(ii) the requirements of the Board of Fire Underwriters and any other similar
body, (iii) the Certificate of Occupancy issued for the Buildings, and (iv) any
recorded covenants, conditions and restrictions and similar regulatory
agreements, if any, which affect the use, occupation or alteration of the
Buildings or the Premises. Tenant agrees to comply with the Rules and
Regulations referenced in Paragraph 28 below. Tenant agrees not to allow the
Premises to be used for any unlawful or unreasonably objectionable purpose.
Tenant agrees not to cause, maintain or permit any nuisance or waste in, on,
under or about the Premises. Notwithstanding anything contained in this Lease to
the contrary, all transferable development rights related in any way to that
portion of the Property owned by Landlord are and will remain vested in
Landlord, and Tenant hereby waives any rights thereto.
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(c) Hazardous Materials.
Except for (i) ordinary and general office supplies typically used in the
ordinary course of business, such as copier toner, liquid paper, glue, ink and
common household cleaning materials (some or all of which may constitute
“Hazardous Materials” as defined in this Lease), in ordinary quantities,
(ii) those Hazardous Materials that are necessary for Tenant’s business,
provided that such usage and storage is only to the extent of the quantities as
reasonably necessary in the ordinary course of Tenant’s business, Tenant agrees
not to cause or permit any Hazardous Materials to be brought upon, stored, used,
handled, generated, released or disposed of on, in, under or about any portion
of the Premises by Tenant, its agents, employees, subtenants, assignees,
licensees, contractors or invitees (collectively, “Tenant’s Parties”), without
the prior written consent of Landlord, which consent Landlord may withhold in
its sole and absolute discretion. Upon the expiration or earlier termination of
this Lease, Tenant agrees to promptly remove from the Premises, at its sole cost
and expense, any and all Hazardous Materials, including any equipment or systems
containing Hazardous Materials which are installed, brought upon, stored, used,
generated or released upon, in, under or about the Premises or any portion
thereof by Tenant or any of Tenant’s Parties. Landlord reserves the right,
during the last one hundred eighty (180) days of the Term, to have an
experienced and qualified environmental consultant perform an environmental
inspection of the Premises to determine the existence of any Hazardous Materials
for which Tenant is responsible for their removal. If Landlord’s inspection
reveals or confirms the existence of any such Hazardous Materials (except for
Hazardous Materials that have been previously approved by Landlord in writing
and such Hazardous Materials have been used, handled, stored and disposed of in
accordance with all applicable Environmental Laws), or if Landlord has
reasonable cause to believe that any such Hazardous Materials are likely to
exist at the Premises, then Tenant shall be responsible for the cost of such
inspection; in all other instances, Landlord shall be responsible for the cost
of such inspection. To the fullest extent permitted by law, Tenant agrees to
promptly indemnify, protect, defend and hold harmless Landlord and Landlord’s
members, managers, partners, officers, directors, employees, agents, successors
and assigns (collectively, “Landlord Indemnified Parties”) and lenders from and
against any and all claims, damages, judgments, suits, causes of action, losses,
liabilities, penalties, fines, expenses and costs (including, without
limitation, clean-up, removal, remediation and restoration costs, sums paid in
settlement of claims, attorneys’ fees, consultant fees and expert fees and court
costs) which arise or result from the presence of Hazardous Materials on, in,
under or about the Premises and which are caused or permitted by Tenant or any
of Tenant’s Parties. Tenant agrees to promptly notify Landlord of any release of
Hazardous Materials at the Premises which Tenant becomes aware of during the
Term of this Lease, whether caused by Tenant or any other persons or entities.
In the event of any release of Hazardous Materials caused or permitted by Tenant
or any of Tenant’s Parties, Landlord shall have the right, but not the
obligation, to cause Tenant to immediately take all steps Landlord deems
reasonably necessary or appropriate to remediate such release and prevent any
similar future release to the reasonable satisfaction of Landlord and Landlord’s
mortgagee(s). As used in this Lease, the term “Hazardous Materials” shall mean
and include any chemical, substance, material, controlled substance, object,
condition, waste, living organism or combination thereof, whether solid,
semi-solid, liquid or gaseous, which is or may be hazardous to human health or
safety or to the environment due to its radioactivity, ignitability,
corrosivity, reactivity, explosivity, toxicity, carcinogenicity, mutagenicity,
phytotoxicity, infectiousness or other harmful or potentially harmful properties
or effects, including, without limitation, tobacco smoke, petroleum and
petroleum products, asbestos, radon, polychlorinated biphenyls (PCBs),
refrigerants (including those substances defined in the Environmental Protection
Agency’s “Refrigerant Recycling Rule,” as amended from time to time) and all of
those chemicals, substances, materials, controlled substances, objects,
conditions, wastes, living organisms or combinations thereof which are now or
become in the future listed, defined or regulated in any manner by any
Environmental Law based upon, directly or indirectly, such properties or
effects. As used herein, “Environmental Laws” means any and all federal, state
or local environmental, health and/or safety-related laws, regulations,
standards, decisions of courts, ordinances, rules, codes, orders, decrees,
directives, guidelines, permits or permit conditions, currently existing and as
amended, enacted, issued or adopted in the future which are or become applicable
to Tenant, the Premises. The provisions of this Subparagraph 8(c) shall survive
the expiration or earlier termination of this Lease.
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(d) Tenant shall have the right to self-manage the Premises on behalf of Tenant
at Tenant’s sole cost and expense. Tenant’s right to manage the Premises as set
forth above shall be exclusive and Landlord will have no right to manage the
Premises, either directly or through a third-party property manager or asset
manager. However, notwithstanding the foregoing, Landlord shall at all times
have the right to inspect the Premises as set forth in paragraph 16, below.
9. NOTICES. Any notice required or permitted to be given hereunder must be in
writing and may be given by personal delivery (including delivery by overnight
courier or an express mailing service) or by mail, if sent by registered or
certified mail. Notices to Tenant shall be sufficient if delivered to Tenant at
the addresses designated in Subparagraph 1(d) and notices to Landlord shall be
sufficient if delivered to Landlord at the address designated in Subparagraph
1(b). Either party may specify a different address for notice purposes by
written notice to the other.
10. BROKERS. The parties acknowledge that the broker(s) who were retained by the
parties in connection with this Lease are stated in Subparagraph 1(q). Each
party represents and warrants to the other, that, to its knowledge, no other
broker, agent or finder (a) negotiated or was instrumental in negotiating or
consummating this Lease on its behalf, and (b) is or might be entitled to a
commission or compensation in connection with this Lease. LANDLORD AND TENANT
EACH AGREE TO PROMPTLY INDEMNIFY PROTECT, DEFEND AND HOLD HARMLESS THE OTHER
FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES, JUDGMENTS, SUITS, CAUSES OF
ACTION, LOSSES, LIABILITIES, PENALTIES, FINES, EXPENSES, AND COSTS (INCLUDING
ATTORNEYS’ FEES AND COURT COSTS) RESULTING FROM ANY BREACH BY THE INDEMNIFYING
PARTY. THE FOREGOING MUTUAL INDEMNITY SHALL SURVIVE THE EXPIRATION OR EARLIER
TERMINATION OF THIS LEASE. LANDLORD SHALL BE RESPONSIBLE FOR PAYMENT OF A
COMMISSION TO BROKER PER THE TERMS OF A SEPARATE AGREEMENT BETWEEN LANDLORD AND
BROKER.
11. SURRENDER; HOLDING OVER.
(a) Surrender. The voluntary or other surrender of this Lease by Tenant, or a
mutual cancellation thereof, shall not constitute a merger, and shall, at the
option of Landlord, operate as an assignment to Landlord of any or all subleases
or subtenancies. Upon the expiration or earlier termination of this Lease,
Tenant agrees to peaceably surrender the Premises to Landlord broom clean and,
in the case of all warehouse floors, scrubbed clean (to remove all oil, grease
and other debris to the extent practicable) and in a state of good order, repair
and condition, ordinary wear and tear and casualty damage (if this Lease is
terminated as a result thereof pursuant to Paragraph 20) excepted, with all of
Tenant’s personal property and Structural Alterations (as defined in
Paragraph 13) removed from the Premises to the extent required under
Paragraph 13 and all damage caused by such removal repaired as required by
Paragraph 13. If any wiring and/or cabling is not removed from the Premises upon
expiration of this lease then such wiring and/or cabling shall become the
property of Landlord (without payment by Landlord). The delivery of keys to any
employee of Landlord or to Landlord’s agent or any employee thereof alone will
not be sufficient to constitute a termination of this Lease or a surrender of
the Premises.
(b) Holding Over. Tenant will not be permitted to hold over possession of the
Premises after the expiration or earlier termination of the Term without the
express written consent of Landlord, which consent Landlord may withhold in its
sole and absolute discretion. If Tenant holds over after the expiration or
earlier termination of the Term, Landlord may, at its option, treat Tenant as a
tenant at sufferance only, and such continued occupancy by Tenant shall be
subject to all of the terms, covenants and conditions of this Lease, so far as
applicable, except that the Monthly Base Rent for any such holdover period shall
be equal to one hundred fifty percent (150%) of the Monthly Base Rent in effect
under this Lease immediately prior to such holdover.. Acceptance by Landlord of
rent after such expiration or earlier termination will not result in a renewal
of this Lease. The foregoing provisions of this Paragraph 11 are in addition to
and do not affect Landlord’s right of re-entry or any rights of Landlord under
this Lease or as otherwise provided by law. If Tenant fails to surrender the
Premises upon the expiration of this Lease in accordance with the terms of this
Paragraph 11 despite demand to do so by Landlord, Tenant agrees to promptly
indemnify, protect, defend and hold Landlord harmless from all claims, damages,
judgments, suits, causes of action, losses, liabilities, penalties, fines,
expenses and
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costs (including attorneys’ fees and costs), including, without limitation,
costs and expenses incurred by Landlord in returning the Premises to the
condition in which Tenant was to surrender it and claims made by any succeeding
tenant founded solely on or resulting solely from Tenant’s failure to surrender
the Premises. The provisions of this Subparagraph 11(b) will survive the
expiration or earlier termination of this Lease.
12. TAXES ON TENANT’S PROPERTY. Tenant agrees to pay before delinquency, all
taxes and assessments (real and personal) levied against (a) any personal
property or trade fixtures placed by Tenant in or about the Premises (including
any increase in the assessed value of the Premises based upon the value of any
such personal property or trade fixtures); (b) any Tenant Improvements or
Alterations in the Premises (whether installed and/or paid for by Landlord or
Tenant) to the extent such items are assessed at a valuation higher than the
valuation at which tenant improvements conforming to Landlord’s building
standard tenant improvements are assessed, (c) any franchise, sales or rent tax,
and (d) any taxes imposed or levied against Tenant due to any sub-tenancies or
assignment of the Lease (or any part thereof). If any such taxes or assessments
based upon items in (a), (b), (c) or (d) above, are levied against Landlord or
Landlord’s property, Landlord may, after written notice to Tenant (and under
proper protest if requested by Tenant) pay such taxes and assessments, in which
event Tenant agrees to reimburse Landlord all amounts paid by Landlord within
ten (10) business days after demand by Landlord; provided, however, Tenant, at
its sole cost and expense, will have the right, with Landlord’s cooperation, to
bring suit in any court of competent jurisdiction to recover the amount of any
such taxes and assessments so paid under protest.
13. ALTERATIONS. Subject to and upon the terms and conditions set forth below,
Tenant may, at its sole cost and expense, make non-structural alterations,
additions, improvements and decorations to the Premises as well as any repairs
under Paragraph 14 below (collectively, “Alterations”) without Landlord’s
approval, provided such Alterations (i) do not affect the outside appearance,
character or use of the Buildings, (ii) do not materially adversely affect the
structure, equipment, services or systems of the Buildings or Development,
(iii) in the reasonable opinion of Landlord, do not materially adversely affect
the value of the Buildings, (iv) violate any occupancy certificate applicable to
the Buildings or the Development, or (v) cost less than Two Hundred Fifty
Thousand Dollars ($250,000).
(a) Intentionally Deleted.
(b) Landlord’s Notice. Before proceeding with any Alterations, Tenant must first
deliver to Landlord written notice and a copy of any final plans, specifications
and working drawings for any such Alterations if required for such work (i.e.
carpeting work does not require drawings) at least ten (10) business days prior
to commencement of the work thereof, and (B) comply with the other conditions of
this Paragraph 13, including, without limitation, conforming to Landlord’s
rules, regulations and insurance requirements which govern contractors.
Landlord’s review of plans, specifications and/or working drawings for
Alterations will not create any responsibility or liability on the part of
Landlord for their completeness, design sufficiency, or compliance with
applicable permits, laws, rules and regulations of governmental agencies or
authorities. If the Alteration is structural or does not comply with 13 (i)-(v)
above (a “Structural Alteration”), Landlord will have the right to approve such
Structural Alteration, such approval not to be unreasonably withheld, delayed or
conditioned. Landlord will notify Tenant in writing of (i) any objections to a
proposed Structural Alteration within twenty (20) business days following
receipt of Tenant’s notice, which objections will provide sufficient detail and
specifics of Landlord’s objections to allow Tenant to review the plans,
specifications and working drawings to eliminate Landlord’s objections, If
Landlord fails to provide notice of any objections within such twenty
(20) business day period, then Tenant shall provide Landlord a second written
notice. If Landlord fails to provide notice of any objections within ten
(10) business day from receipt of the second notice, then Landlord will be
deemed to have approved the proposed Structural Alteration and Tenant will be
entitled to proceed with same without further consent from Landlord.
(c) Contractors. Tenant may select architects, engineers contractors,
subcontractors and other consultants of Tenant’s choice to perform any
Alterations or Structural Alterations provided same are properly licensed.
Before proceeding with any Alterations or Structural Alterations, Tenant’s
contractors
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must obtain and maintain, on behalf of Tenant and at Tenant’s sole cost and
expense: (i) all necessary governmental permits and approvals for the
commencement and completion of such Alterations or Structural Alterations; and
(ii) if reasonably requested by Landlord, a completion and lien indemnity or
payment performance bond, or other surety, reasonably satisfactory to Landlord
for such Structural Alterations. Throughout the performance of any Alterations
or Structural Alterations, Tenant agrees to obtain, or cause its contractors to
obtain, workers compensation insurance and general liability insurance in
compliance with the provisions of Paragraph 19 of this Lease.
(d) Manner of Performance. All Alterations and Structural Alterations must be
performed: (i) in accordance with the approved plans, specifications and working
drawings; (ii) in a lien-free and first-class and workmanlike manner; and
(iii) in compliance with all applicable permits, laws, statutes, ordinances,
rules, regulations, orders and rulings now or hereafter in effect and imposed by
any governmental agencies and authorities which assert jurisdiction.
(e) Ownership. Any tenant improvements, including, without limitation, all
affixed sinks, dishwashers, microwave ovens and other fixtures, and all
Alterations and Structural Alterations will become the property of Landlord and
will remain upon and be surrendered with the Premises at the end of the Term of
this Lease; provided, however, Landlord may, by written notice delivered to
Tenant at least ninety (90) days before the end of the Term, identify those
Structural Alterations which Landlord will require Tenant to remove at the end
of the Term of this Lease, provided that at the time Landlord approves the
Structural Alterations, Landlord has reserved the right to require Tenant to
remove such Structural Alterations.. If Landlord requires Tenant to remove any
Structural Alterations, Tenant, at its sole cost and expense, agrees to remove
the identified Structural Alterations on or before the expiration or earlier
termination of this Lease and repair any damage to the Premises caused by such
removal (or, at Landlord’s option, Tenant agrees to pay to Landlord all of
Landlord’s costs of such removal and repair).
(f) Plan Review. Tenant agrees to pay Landlord, as additional rent, the
reasonable costs of professional services and costs for general conditions of
Landlord’s third party consultants if utilized by Landlord (but not Landlord’s
“in-house” personnel) for review of all plans, specifications and working
drawings for any Alterations, within ten (10) business days after Tenant’s
receipt of invoices either from Landlord or such consultants.
(g) Personal Property. All articles of personal property owned by Tenant or
installed by Tenant at its expense in the Premises (including Tenant’s business
and trade fixtures, furniture, movable partitions and equipment) will be and
remain the property of Tenant, and must be removed by Tenant from the Premises,
at Tenant’s sole cost and expense, on or before the expiration or earlier
termination of this Lease. Tenant agrees to repair any damage caused by such
removal at its cost on or before the expiration or earlier termination of this
Lease.
(h) Removal of Alterations. If Tenant fails to remove by the expiration or
earlier termination of this Lease all of its personal property, or any
Structural Alterations properly identified by Landlord for removal, Landlord
may, (without liability to Tenant for loss thereof) treat such personal property
and/or Structural Alterations as abandoned and, at Tenant’s sole cost and
expense, and in addition to Landlord’s other rights and remedies under this
Lease, at law or in equity: (a) remove and store such items; and/or (b) upon ten
(10) business days prior notice to Tenant, sell, discard or otherwise dispose of
all or any such items at private or public sale for such price as Landlord may
obtain or by other commercially reasonable means. Tenant shall be liable for all
costs of disposition of Tenant’s abandoned property plus a surcharge of five
percent (5%) and Landlord shall have no liability to Tenant with respect to any
such abandoned property. Landlord agrees to apply the proceeds of any sale of
any such property (except the five percent surcharge) to any amounts due to
Landlord under this Lease from Tenant (including Landlord’s reasonable
attorneys’ fees and other costs incurred in the removal, storage and/or sale of
such items), with any remainder to be paid to Tenant.
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14. REPAIRS AND MAINTENANCE.
(a) Tenant’s Obligations. Tenant agrees to keep, maintain and preserve the
Premises (excluding the structural portions of the Buildings as set forth in
Paragraph 14(c) below) in good condition and repair and, when and if needed, at
Tenant’s sole cost and expense, to make all repairs to the Premises and every
part thereof. Tenant shall enter into and maintain in effect preventive
maintenance or service contracts with respect to (i) HVAC equipment,
(ii) boiler, and pressure vessels, (iii) fire extinguishing systems, including
fire alarm and/or smoke detection, (iv) landscaping and irrigation systems,
(v) parking areas, driveways and sidewalks, (vi) roof surface and membrane,
(vii) window cleaning, (viii) clarifiers, and (ix) any other equipment, if
reasonably required by Landlord. All such service contracts shall be subject to
Landlord’s prior written approval not to be unreasonably withheld. Tenant shall
perform its obligations under this Paragraph 14(a) with diligence and consistent
with good building management. Tenant agrees to cause any mechanics’ liens or
other liens arising as a result of work performed by Tenant or at Tenant’s
direction to be eliminated as provided in Paragraph 15 below. Landlord has no
obligation to alter, remodel, improve, repair, decorate or paint any portion of
the Premises.
(b) Tenant’s Failure to Repair or Maintain. If Tenant refuses or neglects to
repair and maintain the Premises as required hereunder to the reasonable
satisfaction of Landlord, Landlord, at any time following ten (10) business days
from the date on which Landlord makes a written demand on Tenant to effect such
repair and maintenance, may enter upon the Premises and make such repairs and/or
maintenance, and upon completion thereof, Tenant agrees to pay to Landlord as
additional rent, Landlord’s reasonable costs for making such repairs within ten
(10) business days of receipt from Landlord of a written itemized bill therefor.
Any amounts not reimbursed by Tenant within such ten (10) business day period
will bear interest at the Interest Rate until paid by Tenant.
(c) Landlord’s Obligations. Landlord covenants and agrees, at its expense
without reimbursement or contribution by Tenant, to keep, maintain and replace,
as necessary, the foundations, structural systems including, without limitation,
the roof structure (excluding the roof membrane), and load-bearing walls, floor
slabs and , exterior walls in good condition and repair unless any of the
foregoing is damaged due to Tenant’s negligence or misuse. Throughout the
performance of any maintenance or repair work performed by or for Landlord under
this Paragraph 14(c), Landlord agrees to obtain, or cause its contractors to
obtain, workers compensation insurance and general liability insurance in
compliance with the provisions of Paragraph 19 of this Lease.
15. LIENS. Tenant agrees not to permit any mechanic’s, materialmen’s or other
liens to be filed against all or any part of the Premises, nor against Tenant’s
leasehold interest in the Premises, by reason of or in connection with any
repairs, alterations, improvements or other work contracted for or undertaken by
Tenant or any other act or omission of Tenant or Tenant’s agents, employees,
contractors, licensees or invitees. At Landlord’s request, Tenant agrees to
provide Landlord with enforceable, conditional and final lien releases (or other
evidence reasonably requested by Landlord to demonstrate protection from liens)
from all persons furnishing labor and/or materials at the Premises. Landlord
will have the right at all reasonable times to post on the Premises and record
any notices of non-responsibility which it deems necessary for protection from
such liens. If any such liens are filed, Tenant will, at its sole cost, promptly
cause such liens to be released of record or bonded so that it no longer affects
title to the Premises. If Tenant fails to cause any such liens to be so released
or bonded within thirty (30) business days after filing thereof, such failure
will be deemed a material breach by Tenant under this Lease without the benefit
of any additional notice or cure period described in Paragraph 22 below, and
Landlord may, without waiving its rights and remedies based on such breach, and
without releasing Tenant from any of its obligations, cause such liens to be
released by any means it shall deem proper, including payment in satisfaction of
the claims giving rise to such liens. Tenant agrees to pay to Landlord within
ten (10) business days after receipt of invoice from Landlord, any sum paid by
Landlord to remove such liens, together with interest at the Interest Rate from
the date of such payment by Landlord.
16. ENTRY BY LANDLORD. Landlord and its employees and agents will at all times
have the right to enter the Premises to inspect the same, to show the Premises
to prospective purchasers or (during the last 12 months of the Lease Term only,
provided Tenant has not exercised its renewal option) tenants, to
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post notices of nonresponsibility, and/or to repair the Premises as permitted or
required by this Lease. In exercising such entry rights, Landlord will endeavor
to minimize, as reasonably practicable, the interference with Tenant’s business,
and will provide Tenant with reasonable advance notice of any such entry (except
in emergency situations). Landlord may, in order to carry out such purposes,
erect scaffolding and other necessary structures where reasonably required by
the character of the work to be performed. Landlord will have the right to use
any and all means which Landlord may reasonably deem proper to open said doors
in an emergency in order to obtain entry to the Premises. Any entry to the
Premises obtained by Landlord by any of said means, or otherwise, will not be
construed or deemed to be a forcible or unlawful entry into the Premises, or an
eviction of Tenant from the Premises.
17. UTILITIES AND SERVICES. Tenant shall arrange and pay for all water, gas,
heat, sewer services, light, power, trash disposal and other utilities and
services supplied to the Premises together with any taxes thereon. Tenant shall
arrange and pay for janitorial services and any telephone and other
telecommunications services provided to the Premises. Landlord will not be
liable to Tenant for any failure to furnish any of the foregoing utilities and
services to the Premises for any cause whatsoever. In addition, in the event of
any stoppage or interruption of services or utilities, Tenant shall not be
entitled to any abatement or reduction of rent, no eviction of Tenant will
result from such failure and Tenant will not be relieved from the performance of
any covenant or agreement in this Lease because of such failure. In the event of
any failure, stoppage or interruption thereof, Tenant agrees to diligently
attempt to resume service promptly.
18. ASSUMPTION OF RISK AND INDEMNIFICATION.
(a) Assumption of Risk. Tenant, as a material part of the consideration to
Landlord, hereby agrees that neither Landlord nor any Landlord Indemnified
Parties (as defined in Subparagraph 8(c) above) will be liable to Tenant for,
and Tenant expressly assumes the risk of and waives any and all claims it may
have against Landlord or any Landlord Indemnified Parties with respect to,
(i) any and all damage to property or injury to persons in, upon or about the
Buildings or the Premises resulting from any act or omission (except for the
negligent or intentionally wrongful act or omission) of Landlord or any Landlord
Indemnified Parties, (ii) any such damage caused by other persons in or about
the Buildings or the Premises, or caused by quasi-public work, (iii) any loss of
or damage to property by theft or otherwise, or (iv) any injury or damage to
persons or property resulting from any casualty, explosion, falling plaster or
other masonry or glass, steam, gas, electricity, water or rain which may leak
from any part of the Buildings or any other portion of the Premises or from the
pipes, appliances or plumbing works therein or from the roof, street or
subsurface or from any other place, or resulting from dampness. Notwithstanding
anything to the contrary contained in this Lease, neither Landlord nor any
Landlord Indemnified Parties will be liable for consequential damages arising
out of any loss of the use of the Premises or any equipment or facilities
therein by Tenant or any Tenant Parties or for interference with light or other
incorporeal hereditaments. Tenant agrees to give prompt notice to Landlord in
case of fire or accidents at the Premises, or of defects in the Building or in
the fixtures or equipment.
(b) Indemnification. SUBJECT TO THE PROVISIONS OF PARAGRAPH 19(E), TENANT WILL
BE LIABLE FOR, AND AGREES, TO THE MAXIMUM EXTENT PERMISSIBLE UNDER APPLICABLE
LAW, TO PROMPTLY INDEMNIFY, PROTECT, DEFEND AND HOLD HARMLESS LANDLORD AND ALL
LANDLORD INDEMNIFIED PARTIES, FROM AND AGAINST, ANY AND ALL CLAIMS, DAMAGES,
JUDGMENTS, SUITS, CAUSES OF ACTION, LOSSES, LIABILITIES, PENALTIES, FINES,
EXPENSES AND COSTS, INCLUDING ATTORNEYS’ FEES AND COURT COSTS (COLLECTIVELY,
“INDEMNIFIED CLAIMS”), ARISING OR RESULTING FROM (I) ANY ACT OR OMISSION OF
TENANT OR ANY TENANT PARTIES (AS DEFINED IN SUBPARAGRAPH 8(C) ABOVE); (II) THE
USE OF THE PREMISES AND CONDUCT OF TENANT’S BUSINESS BY TENANT OR ANY TENANT
PARTIES, OR ANY OTHER ACTIVITY, WORK OR THING DONE, PERMITTED OR SUFFERED BY
TENANT OR ANY TENANT PARTIES, IN OR ABOUT THE PREMISES; AND/OR (III) ANY DEFAULT
BY TENANT OF ANY OBLIGATIONS ON TENANT’S PART TO BE PERFORMED UNDER THE TERMS OF
THIS LEASE IN CASE ANY ACTION OR PROCEEDING IS BROUGHT AGAINST LANDLORD OR ANY
LANDLORD INDEMNIFIED PARTIES BY REASON OF ANY SUCH INDEMNIFIED CLAIMS, TENANT,
UPON NOTICE FROM LANDLORD, AGREES TO PROMPTLY DEFEND THE SAME AT TENANT’S
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SOLE COST AND EXPENSE BY COUNSEL APPROVED IN WRITING BY LANDLORD, WHICH APPROVAL
LANDLORD WILL NOT UNREASONABLY WITHHOLD.
SUBJECT TO THE PROVISIONS OF PARAGRAPH 19(E), LANDLORD HEREBY AGREES TO
INDEMNIFY, PROTECT, AND DEFEND TENANT, ITS OFFICERS, DIRECTORS, SHAREHOLDERS,
EMPLOYEES, AGENTS, SUCCESSORS, AND ASSIGNS (“TENANT INDEMNIFICATION PARTIES”)
AND HOLD THEM HARMLESS FROM ANY AND ALL INDEMNIFIED CLAIMS ASSERTED AGAINST
TENANT BY A THIRD PARTY AND CAUSED BY THE (I) NEGLIGENCE OR WILLFUL MISCONDUCT
OF LANDLORD, IT’S EMPLOYEES OR AGENTS AND/OR (II) ANY DEFAULT BY LANDLORD OF ANY
OBLIGATIONS ON LANDLORD’S PART TO BE PERFORMED UNDER THE TERMS OF THIS LEASE IN
CASE ANY ACTION OR PROCEEDING IS BROUGHT AGAINST TENANT OR ANY TENANT
INDEMNIFICATION PARTIES BY REASON OF ANY SUCH INDEMNIFIED CLAIMS, LANDLORD, UPON
NOTICE FROM TENANT, AGREES TO PROMPTLY DEFEND THE SAME AT LANDLORD’S SOLE COST
AND EXPENSE BY COUNSEL APPROVED IN WRITING BY TENANT, WHICH APPROVAL TENANT WILL
NOT UNREASONABLY WITHHOLD.
(c) Survival; No Release of Insurers. The indemnification obligations under
Subparagraph 18(b) will survive the expiration or earlier termination of this
Lease. Tenant’s covenants, agreements and indemnification obligation in
Subparagraphs 18(a) and 18(b) above, are not intended to and will not relieve
any insurance carrier of its obligations under policies required to be carried
by Tenant pursuant to the provisions of this Lease.
19. INSURANCE.
(a) Tenant’s Insurance. On or before the Commencement Date, and continuing
throughout the entire Term hereof and any other period of occupancy, Tenant
agrees to keep in full force and effect, at its sole cost and expense, the
following insurance:
(i) Intentionally Deleted.
(ii) One (1) year insurance coverage for loss of income and extra expenses in
such amounts as will reimburse Landlord for any direct Monthly Base Rent and
Additional Rent attributable to any such perils including prevention of access
to the Building or any other portion of the Premises as a result of any such
perils. Such insurance shall name Landlord and its lender as loss payees solely
with respect to Monthly Base Rent and Additional Rent. These limits may be
provided by primary insurance or by primary and Excess/Umbrella Liability
insurance combined.
(iii) Commercial General Liability Insurance or Comprehensive General Liability
Insurance (on an occurrence form) insuring bodily injury, personal injury and
property damage including the following divisions and extensions of coverage:
Premises and Operations; Owners and Contractors protective; blanket contractual
liability (including coverage for Tenant’s indemnity obligations under this
Lease); products and completed operations; and liquor liability (if Tenant
serves alcohol on the Premises). Such insurance must have the following minimum
limits of liability: bodily injury, personal injury and property damage
$5,000,000 each occurrence, $10,000,000 in the aggregate, provided that if
liability coverage is provided by a Commercial General Liability policy the
general aggregate limit shall apply separately and in total to this location
only (per location general aggregate), and provided further, such minimum limits
of liability may be adjusted from year to year to reflect increases in coverages
as recommended by Landlord’s insurance carrier as being prudent and commercially
reasonable.
(iv) Comprehensive Automobile Liability insuring bodily injury and property
damage arising from all owned, non-owned and hired vehicles, if any, with
minimum limits of liability of $1,000,000 per accident.
(v) Worker’s Compensation as required by the laws of the State.
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(vi) Any other form or forms of insurance as Tenant or Landlord or any
mortgagees of Landlord may reasonably require from time to time in form, in
amounts, and for insurance risks against which, a prudent tenant would protect
itself, but only to the extent coverage for such risks and amounts are available
in the insurance market at commercially acceptable rates. Landlord makes no
representation that the limits of liability required to be carried by Tenant
under the terms of this Lease are adequate to protect Tenant’s interests and
Tenant should obtain such additional insurance or increased liability limits as
Tenant deems appropriate.
(b) Property Insurance. On or before the Commencement Date, and continuing
throughout the entire Term hereof and any other period of occupancy, Tenant
agrees to keep in full force and effect, at its sole cost and expense, Special
Form (fka All Risk) insurance, including fire and extended coverage, sprinkler
leakage (including earthquake sprinkler leakage), vandalism, malicious mischief,
earthquake and flood coverage upon property of every description and kind
located on the Premises, including, without limitation, furniture, equipment and
any other personal property, any Tenant Improvements, Alterations and the
Building in an amount not less then the full replacement cost thereof. In the
event that there shall be a dispute as to the amount which comprises full
replacement cost, the decision of Landlord or the mortgagees of Landlord shall
be presumptive.
(c) Supplemental Tenant Insurance Requirements.
(i) All policies must be in a form reasonably satisfactory to Landlord, issued
by an insurer admitted to do business in the State, and have deductibles no
greater than Fifty Thousand Dollars ($50,000).
(ii) All policies must be issued by insurers with a policyholder rating of “A”
and a financial rating of “X” in the most recent version of Best’s Key Rating
Guide.
(iii) All policies must contain a requirement to notify Landlord (and Landlord’s
partners, members and property manager and any mortgagees or ground lessors of
Landlord who are named as additional insureds, if any) in writing not less than
thirty (30) days prior to any material change, reduction in coverage,
cancellation or other termination thereof. Tenant agrees to deliver to Landlord,
as soon as practicable after placing the required insurance, but in any event
within the time frame specified in Subparagraph 19(a) above, certificate(s) of
insurance evidencing the existence of such insurance and Tenant’s compliance
with the provisions of this Paragraph 19. Tenant agrees to cause certificates to
be delivered to Landlord not less than thirty (30) days prior to the expiration
of any such policy or policies. If any such initial or certificates are not
furnished within the time(s) specified herein, and such failure is not rectified
within ten (10) days following written notice thereof to Tenant, then Tenant
will be deemed to be in material default under this Lease without the benefit of
any additional notice or cure period provided in Subparagraph 22(a)(iii) below,
and Landlord will have the right, but not the obligation, to procure such
insurance as Landlord deems necessary to protect Landlord’s interests at
Tenant’s expense. If Landlord obtains any insurance that is the responsibility
of Tenant under this Paragraph 19, Landlord agrees to deliver to Tenant a
written statement setting forth the cost of any such insurance and showing in
reasonable detail the manner in which it has been computed and Tenant agrees to
promptly reimburse Landlord for such costs as additional rent.
(iv) General Liability and Automobile Liability policies under Subparagraphs
19(a)(iii) and (iv) and the Special Form insurance policy under Subparagraph
19(b) must name Landlord and Landlord’s partners, members and property manager
(and at Landlord’s request, Landlord’s mortgagees and ground lessors of which
Tenant has been informed in writing) as additional insureds/loss payees (as
applicable) and must also contain a provision that the insurance afforded by
such policy is primary insurance and any insurance carried by Landlord and
Landlord’s property manager or Landlord’s mortgagees or ground lessors, if any,
will be excess over and non-contributing with Tenant’s insurance.
(d) Waiver of Subrogation. Landlord’s and Tenant’s property insurance shall each
contain a clause whereby the insurer waives all rights of recovery by way of
subrogation against the other party. Tenant shall also obtain and furnish
evidence to Landlord of the waiver by Tenant’s worker’s compensation insurance
carrier of all rights of recovery by way of subrogation against Landlord.
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(e) Landlord’s Insurance. Landlord shall maintain a general E & O insurance
policy providing not less than $1,000,000 per occurrence, $2,000,000 in the
aggregate coverage, and shall require all third parties entering the Premises on
Landlord’s behalf to carry similar insurance coverage.
20. DAMAGE OR DESTRUCTION.
(a) Casualty. In case of damage to or destruction of the Premises, whether or
not by a risk required to be covered by insurance as set forth in Paragraph 19
of this Lease, this Lease shall not terminate and Tenant shall promptly restore,
rebuild, replace or repair (hereinafter referred to as “Restore” or
“Restoration”) the Premises to substantially the same condition as existed
immediately prior to such damage or destruction if, in the good faith estimate
of a mutually acceptable architect or contractor, such Restoration can be
substantially completed within 180 days from the occurrence of the damage or
destruction. Such Restoration shall be commenced promptly and shall thereafter
be prosecuted with due diligence. Notwithstanding the foregoing, however, in the
case of damage to or destruction of the Premises the Restoration of which cannot
be substantially completed within 180 days from the occurrence or if the damage
or destruction occurs during the last twelve (12) months of the Term that will
render the Premises inaccessible or unusable for purposes of conducting Tenant’s
business for a period of ninety (90) days or more, Tenant may elect to terminate
this Lease by giving Landlord written notice of such election within thirty
(30) days following the casualty, in which event Tenant shall have no obligation
to Restore the Premises; provided, however, Tenant shall, at its cost, clear the
Premises of debris and return the same to a safe and clean condition, and
deliver any insurance proceeds (other than those for payable for damages to
Tenant’s personal property or business interruption or Tenant’s costs to clear
the Premises) to Landlord and/or Landlord’s mortgagee in accordance with
Subparagraph 20(e) below. If Tenant elects to terminate this Lease in accordance
with this paragraph, this Lease shall terminate thirty (30) days following the
date Landlord receives Tenant’s written notice of such election (the
"Termination Date”) upon the payment by Tenant of all rent and all other sums
then due and payable under this Lease to and including the Termination Date.
Said termination shall not release Tenant nor Landlord from the obligations and
liabilities of either under this Lease, actual or contingent, which have accrued
on or prior to the Termination Date.
(b) Reconstruction and Repair Requirements. Tenant shall obtain Landlord’s prior
approval of all plans for Restoration work performed by Tenant, which approval
shall not be unreasonably withheld or delayed. Such Restoration work shall be
performed in accordance with Paragraph 13 (and for purposes of such
Paragraph 13, the Restoration work shall be treated as Structural Alterations).
(c) No Rent Abatement During Reconstruction. There shall be no rent abatement
during Restoration of the Premises or during that period after any casualty and
prior to commencement of Restoration.
(d) Adjustment of Loss and Disbursement of Insurance Proceeds upon Restoration.
Except for Restoration that is reasonably expected to cost less than Fifty
Thousand Dollars ($50,000), Landlord shall have the right to adjust the loss
with the insurance company(ies) and all proceeds of the insurance policies
maintained pursuant to Subparagraph 19(b) above (“Proceeds”) shall be deposited
with a depository acceptable to Landlord and Tenant (the “Depository”). If the
Proceeds are insufficient to cover the anticipated cost of Restoration, Tenant
shall deposit with the Depository prior to the commencement of Restoration funds
in the amount of such deficiency. The Depository shall disburse the Proceeds and
Tenant’s funds, if applicable, during the course of Restoration in accordance
with customary construction disbursements, including a ten percent (10%)
retention. If, after the Restoration has been completed in accordance with the
terms of this Lease, there are remaining funds held by the Depository, then such
funds (after first deducting from such funds the fees and expenses of the
Depository) shall be delivered to Tenant. If there are not sufficient funds
remaining to pay for the Depository’s fees and expenses, Tenant shall be
responsible for the payment of same.
(e) Disbursement of Insurance Proceeds upon Termination. Upon any termination of
this Lease under the provisions of this Paragraph 20, all proceeds from
insurance policies maintained under Subparagraph 19(b) (other than proceeds
attributable to Tenant’s personal property or business
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interruption) shall be disbursed and paid to Landlord and/or Landlord’s
mortgagee, less such amounts that are used by Tenant in clearing any debris from
the Premises and returning the Premises to a safe and clean condition as
required by this Paragraph 20.
(f) Waiver of Termination. The agreements contained in this Paragraph 20 provide
a material part of the consideration for this Lease and in bargaining for and
obtaining its rights under this Paragraph 20, Tenant waives any right to
terminate this Lease under applicable law.
21. EMINENT DOMAIN.
(a) Total or Partial Taking. In case any of the Buildings, or such part of the
Premises as shall materially and substantially interfere with Tenant’s ability
to conduct its business upon the Premises, shall be taken for any public or
quasi-public purpose by any lawful power or authority by exercise of the right
of appropriation, condemnation or eminent domain, or sold to prevent such
taking, Tenant shall have the right to terminate this Lease effective as of the
date possession is required to be surrendered to said authority. Tenant shall
not assert any claim against Landlord for any compensation because of such
taking, and Landlord shall be entitled to receive the entire amount of any award
without deduction for any estate or interest of Tenant; provided, however, in
the event of such a taking, Tenant shall be entitled to pursue a separate award
for losses incurred by Tenant, including such portion of the award as shall be
attributable to goodwill and for damage to, or the cost of removal of, Tenant’s
personal property and the value of Tenant’s leasehold estate. In the event this
Lease is not terminated following a taking, Landlord shall be entitled to the
entire amount of the award without deduction for any estate or interest of
Tenant, Landlord shall restore the Premises to substantially their same
condition prior to such partial taking to the extent of any award proceeds
received by Landlord, and a fair and equitable abatement shall be made to Tenant
for the Monthly Base Rent corresponding to the time during which, and to the
part of the Premises of which, Tenant shall be so deprived on account of such
taking and restoration. If the award proceeds from the taking are insufficient
to restore the Premises as required by the preceding sentence and Landlord does
not provide its own funds to so restore the Premises, and if as a result thereof
Tenant’s ability to use the Premises as contemplated by this Lease is materially
and substantially impaired, then Tenant may elect to terminate this Lease by
giving Landlord written notice thereof; provided, however, Landlord may rescind
such termination by giving Tenant written notice within ten (10) business days
following Landlord’s receipt of such termination notice from Tenant that
Landlord will provide the necessary funds to so restore the Premises.
(b) Temporary Taking. In the event of taking of the Premises or any part thereof
for temporary use, (i) this Lease will remain unaffected thereby and rent shall
not abate and (ii) Tenant shall be entitled to receive for itself such portion
or portions of any award made for such use with respect to the period of the
taking which is within the Lease Term. For purpose of this Subparagraph 21(b), a
temporary taking shall be defined as a taking for a period of one (1) year or
less.
22. DEFAULTS AND REMEDIES.
(a) Defaults. The occurrence of any one or more of the following events will be
deemed an Event of Default by Tenant:
(i) The failure by Tenant to make any payment of rent or additional rent or any
other payment required to be made by Tenant hereunder within three (3) business
days after such payment becomes due (provided that the first two (2) occurrences
of such a delinquency in any twelve (12) month period shall be a default only if
Tenant fails to cure each of such delinquencies within five (5) days after
written notice from Landlord thereof).
(ii) The failure by Tenant to observe or perform any of the express or implied
covenants or provisions of this Lease to be observed or performed by Tenant,
other than as specified in Subparagraph 22(a)(i) or (ii) above, where such
failure continues (where no other period of time is expressly provided) for a
period of thirty (30) days after written notice thereof from Landlord to Tenant.
The provisions of any such notice will be in lieu of, and not in addition to,
any notice required under applicable law. If the nature of Tenant’s
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default is such that more than thirty (30) days are reasonably required for its
cure, then Tenant will not be deemed to be in default if Tenant diligently
commences such cure within such thirty (30) day period and thereafter diligently
prosecutes such cure to completion.
(iii) (A) The making by Tenant of any general assignment for the benefit of
creditors; (B) the filing by or against Tenant of a petition to have Tenant
adjudged a bankrupt or a petition for reorganization or arrangement under any
law relating to bankruptcy (unless, in the case of a petition filed against
Tenant, the same is dismissed within sixty (60) days); (C) the appointment of a
trustee or receiver to take possession of substantially all of Tenant’s assets
located at the Premises or of Tenant’s interest in this Lease, where possession
is not restored to Tenant within thirty (30) days; or (D) the attachment,
execution or other judicial seizure of substantially all of Tenant’s assets
located at the Premises or of Tenant’s interest in this Lease where such seizure
is not discharged within thirty (30) days.
(b) Landlord’s Remedies; Termination. In the event of any Event of Default by
Tenant, in addition to any other remedies available to Landlord at law or in
equity under applicable law, Landlord will have the immediate right and option
to terminate this Lease and all rights of Tenant hereunder. If Landlord elects
to terminate this Lease then, to the extent permitted under applicable law,
Landlord may recover from Tenant (i) The worth at the time of award of any
unpaid rent which had been earned at the time of such termination; plus (ii) the
worth at the time of award of the amount by which the unpaid rent which would
have been earned after termination until the time of award exceeds the amount of
such rent loss that Tenant proves could have been reasonably avoided; plus
(iii) the worth at the time of award of the amount by which the unpaid rent for
the balance of the Term after the time of award exceeds the amount of such rent
loss that Tenant proves could be reasonably avoided; plus (iv) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant’s failure to perform its obligations under this Lease or which, in the
ordinary course of things, results therefrom including, but not limited to:
reasonable attorneys’ fees and costs; brokers’ commissions; the costs of
refurbishment, alterations, renovation and repair of the Premises, and removal
(including the repair of any damage caused by such removal) and storage (or
disposal) of Tenant’s personal property, equipment, fixtures, Alterations, the
Tenant Improvements and any other items which Tenant is required under this
Lease to remove but does not remove, as well as the unamortized value of any
free rent, reduced rent, free parking, reduced rate parking and any Tenant
Improvement Allowance or other costs or economic concessions provided, paid,
granted or incurred by Landlord pursuant to this Lease. The unamortized value of
such concessions shall be determined by taking the total value of such
concessions and multiplying such value by a fraction, the numerator of which is
the number of months of the Lease Term not yet elapsed as of the date on which
the Lease is terminated, and the denominator of which is the total number of
months of the Lease Term. As used in Subparagraphs 22(b)(i) and (ii) above, the
“worth at the time of award” is computed by allowing interest at the Interest
Rate. As used in Subparagraph 22(b)(iii) above, the “worth at the time of award”
is computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1%).
(c) Landlord’s Remedies; Re-Entry Rights. In the event of any Event of Default
by Tenant, in addition to any other remedies available to Landlord under this
Lease, at law or in equity, Landlord will also have the right, with or without
terminating this Lease, to re-enter the Premises and remove all persons and
property from the Premises; such property may be removed and stored in a public
warehouse or elsewhere and/or disposed of at the sole cost and expense of and
for the account of Tenant in accordance with the provisions of Subparagraph
13(h) of this Lease or any other procedures permitted by applicable law. No
re-entry or taking possession of the Premises by Landlord pursuant to this
Subparagraph 22(c) will be construed as an election to terminate this Lease
unless a written notice of such intention is given to Tenant or unless the
termination thereof is decreed by a court of competent jurisdiction.
(d) Landlord’s Remedies; Re-Letting. In the event following an Event of Default
Landlord elects to re-enter the Premises or takes possession of the Premises
pursuant to legal proceeding or pursuant to any notice provided by law, then if
Landlord does not elect to terminate this Lease, Landlord will use reasonably
good-faith efforts to relet the Premises or any part thereof on terms and
conditions as
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Landlord in its sole and absolute discretion may deem advisable with the right
to make alterations and repairs to the Premises in connection with such
reletting. If Landlord is able to relet the Premises or any portion thereof,
then rents received by Landlord from such reletting will be applied: first, to
the payment of any indebtedness other than rent due hereunder from Tenant to
Landlord; second, to the payment of any cost of such reletting; third, to the
payment of the cost of any alterations and repairs to the Premises incurred in
connection with such reletting; fourth, to the payment of rent due and unpaid
hereunder and the residue, if any, will be held by Landlord and applied to
payment of future rent as the same may become due and payable hereunder. Should
that portion of such rents received from such reletting during any month, which
is applied to the payment of rent hereunder, be less than the rent payable
during that month by Tenant hereunder, then Tenant agrees to pay such deficiency
to Landlord immediately upon demand therefor by Landlord. Such deficiency will
be calculated and paid monthly.
(e) Landlord’s Remedies; Performance for Tenant. All covenants and agreements to
be performed by Tenant under any of the terms of this Lease are to be performed
by Tenant at Tenant’s sole cost and expense and without any abatement of rent.
If Tenant fails to pay any sum of money owed to any party other than Landlord,
for which it is liable under this Lease, or if Tenant fails to perform any other
act on its part to be performed hereunder, and such failure continues for ten
(10) days after notice thereof by Landlord, Landlord may, without waiving or
releasing Tenant from its obligations, but shall not be obligated to, make any
such payment or perform any such other act to be made or performed by Tenant.
Tenant agrees to reimburse Landlord upon demand for all sums so paid by Landlord
and all necessary incidental costs, together with interest thereon at the
Interest Rate, from the date of such payment by Landlord until reimbursed by
Tenant. This remedy shall be in addition to any other right or remedy of
Landlord set forth in this Paragraph 22.
(f) Late Payment. If Tenant fails to pay any installment of rent within five
(5) days of when due or if Tenant fails to make any other payment for which
Tenant is obligated under this Lease within five (5) days of when due and such
failure continues for three (3) business days following written notice thereof
to Tenant, then such late amount will accrue interest at the Interest Rate and
Tenant agrees to pay Landlord as additional rent such interest on such amount
from the date such amount becomes due until such amount is paid. In addition,
Tenant agrees to pay to Landlord concurrently with such late payment amount, as
additional rent, a late charge equal to five percent (5%) of the amount due to
compensate Landlord for the extra costs Landlord will incur as a result of such
late payment. The parties agree that (i) it would be impractical and extremely
difficult to fix the actual damage Landlord will suffer in the event of Tenant’s
late payment, (ii) such interest and late charge represents a fair and
reasonable estimate of the detriment that Landlord will suffer by reason of late
payment by Tenant, and (iii) the payment of interest and late charges are
distinct and separate in that the payment of interest is to compensate Landlord
for the use of Landlord’s money by Tenant, while the payment of late charges is
to compensate Landlord for Landlord’s processing, administrative and other costs
incurred by Landlord as a result of Tenant’s delinquent payments. Acceptance of
any such interest and late charge will not constitute a waiver of the Tenant’s
default with respect to the overdue amount, or prevent Landlord from exercising
any of the other rights and remedies available to Landlord.
(g) Rights and Remedies Cumulative. All rights, options and remedies of Landlord
contained in this Lease will be construed and held to be cumulative, and no one
of them will be exclusive of the other, and Landlord shall have the right to
pursue any one or all of such remedies or any other remedy or relief which may
be provided by law or in equity, whether or not stated in this Lease. Nothing in
this Paragraph 22 will be deemed to limit or otherwise affect Tenant’s
indemnification of Landlord pursuant to any provision of this Lease.
23. LANDLORD’S DEFAULT. Landlord will not be in default in the performance of
any obligation required to be performed by Landlord under this Lease unless
Landlord fails to perform such obligation within thirty (30) days after the
receipt of written notice from Tenant specifying in detail Landlord’s failure to
perform; provided however, that if the nature of Landlord’s obligation is such
that more than thirty (30) days are required for performance, then Landlord will
not be deemed in default if it commences such performance within such thirty
(30) day period and thereafter diligently pursues the same to completion and
provided further that if Landlord’s failure to perform any of its obligations
under Paragraph 14(c)
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creates or results in an emergency condition that in Tenant’s good faith
judgment (i) poses a material risk of personal injury or death, or of damage to
Tenant’s property, or (ii) materially interferes with Tenant’s use and enjoyment
of the Premises, then Tenant may take commercially reasonable action to perform
Landlord’s obligations, and Landlord shall, after notice and opportunity to
inspect, reimburse Tenant for all such reasonable costs within thirty (30) days.
Upon any default by Landlord, Tenant may exercise any of its rights provided at
law or in equity, subject to the limitations on liability set forth in
Paragraph 35 of this Lease.
24. ASSIGNMENT AND SUBLETTING.
(a) Restriction on Transfer. Except as expressly provided in this Paragraph 24,
Tenant will not, either voluntarily or by operation of law, assign or encumber
this Lease or any interest herein or sublet the Premises or any part thereof, or
permit the use or occupancy of the Premises by any party other than Tenant and
it’s consultants and business partners (any such assignment, encumbrance,
sublease or the like will sometimes be referred to as a “Transfer”), without the
prior written consent of Landlord, which consent Landlord will not unreasonably
withheld or delay. All Transfers shall expire no later than the expiration of
the Initial Term or Option Term, as and if exercised.
(b) Corporate and Partnership Transfers. For purposes of this Paragraph 24, if
Tenant is a corporation, partnership or other entity, any transfer, assignment,
encumbrance or hypothecation of thirty-five percent (35%) or more (individually
or in the aggregate) of any stock or other ownership interest in such entity,
and/or any transfer, assignment, hypothecation or encumbrance of any controlling
ownership or voting interest in such entity, will be deemed a Transfer and will
be subject to all of the restrictions and provisions contained in this
Paragraph 24. Notwithstanding the foregoing, the immediately preceding sentence
will not apply to any transfers of stock of Tenant if Tenant is a publicly-held
corporation or partnership and such stock is transferred publicly over a
recognized security exchange or over-the-counter market.
(c) Permitted Controlled Transfers. Notwithstanding the provisions of this
Paragraph 24 to the contrary, Tenant may assign this Lease or sublet the
Premises or any portion thereof (“Permitted Transfer”), without Landlord’s
consent and without extending any sublease termination option to Landlord, to
any parent, subsidiary or affiliate corporation which controls, is controlled by
or is under common control with Tenant, or to any corporation resulting from a
merger or consolidation with Tenant, or to any person or entity which acquires
all the assets of Tenant’s business as a going concern, provided that: (i) at
least twenty (20) days prior to such assignment or sublease, Tenant delivers to
Landlord the financial statements and other financial and background information
of the assignee or sublessee described in Subparagraph 24(d) below (except in
the event of a merger or consolidation involving one or more publicly-held
corporations or partnerships, in which event no such disclosure will be required
until after the public announcement of such merger or consolidation; (ii) if an
assignment, the assignee assumes, in full, the obligations of Tenant under this
Lease (or if a sublease, the sublessee of a portion of the Premises or Term
assumes, in full, the obligations of Tenant with respect to such portion);
(iii) the tangible net worth of the assignee or sublessee as of the time of the
proposed assignment or sublease is not less than Fifty Million Dollars
($50,000,000); (iv) Tenant remains fully liable under this Lease; and (v) the
use of the Premises under Paragraph 8 remains unchanged.
(d) Transfer Notice. If Tenant desires to effect a Transfer, then at least
thirty (30) days prior to the date when Tenant desires the Transfer to be
effective (the “Transfer Date”), Tenant agrees to give Landlord a notice (the
“Transfer Notice”), stating the name, address and business of the proposed
assignee, sublessee or other transferee (sometimes referred to hereinafter as
“Transferee”), reasonable information (including references) concerning the
character, ownership, and financial condition of the proposed Transferee, the
Transfer Date, any ownership or commercial relationship between Tenant and the
proposed Transferee, and the consideration and all other material terms and
conditions of the proposed Transfer, all in such detail as Landlord may
reasonably require. If Landlord reasonably requests additional detail, the
Transfer Notice will not be deemed to have been received until Landlord receives
such additional detail, and Landlord may withhold consent to any Transfer until
such information is provided to it.
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(e) Landlord’s Options. Within fifteen (15) days of Landlord’s receipt of any
Transfer Notice, and any additional information requested by Landlord concerning
the proposed Transferee’s financial responsibility, Landlord will elect to do
one of the following (i) consent to the proposed Transfer or (ii) refuse such
consent, which refusal shall be on reasonable grounds including, without
limitation, those set forth in Subparagraph 24(f) below. If Landlord does not
respond to a Transfer Notice within such fifteen (15) day period, Tenant shall
provide Landlord with a second Transfer Notice. If Landlord does not respond to
the second Transfer Notice within fifteen (15) days, Landlord shall be deemed to
consent to such Transfer.
(f) Reasonable Disapproval. Landlord and Tenant hereby acknowledge that
Landlord’s disapproval of any proposed Transfer pursuant to Subparagraph 24(e)
will be deemed reasonably withheld if based upon any reasonable factor,
including, without limitation, any or all of the following factors: (i) the use
of the Premises by the Transferee (A) is not permitted by the use provisions in
Paragraph 8 hereof, or (B) otherwise poses a risk of increased liability to
Landlord; (ii) the Transferee does not have the financial capability to fulfill
the obligations imposed by the Transfer and this Lease; or (iii) the Transferee
poses a business or other economic risk which Landlord reasonably deems
unacceptable.
(g) Additional Conditions. A condition to Landlord’s consent to any Transfer of
this Lease will be the delivery to Landlord of a true copy of the fully executed
instrument of assignment, sublease, transfer or hypothecation, and, in the case
of an assignment, the delivery to Landlord of an agreement executed by the
Transferee in form and substance reasonably satisfactory to Landlord, whereby
the Transferee assumes and agrees to be bound by all of the terms and provisions
of this Lease and to perform all of the obligations of Tenant hereunder. As a
condition for granting its consent to any assignment or sublease, Landlord may
require that the assignee or sublessee remit directly to Landlord on a monthly
basis, all monies due to Tenant by said assignee or sublessee. As a condition to
Landlord’s consent to any sublease, such sublease must provide that it is
subject and subordinate to this Lease and to all mortgages; that Landlord may
enforce the provisions of the sublease, including collection of rent; that in
the event of termination of this Lease for any reason, including without
limitation a voluntary surrender by Tenant, or in the event of any reentry or
repossession of the Premises by Landlord, Landlord may, at its option, either
(i) terminate the sublease, or (ii) take over all of the right, title and
interest of Tenant, as sublessor, under such sublease, in which case such
sublessee will attorn to Landlord, but that nevertheless Landlord will not
(1) be liable for any previous act or omission of Tenant under such sublease,
(2) be subject to any defense or offset previously accrued in favor of the
sublessee against Tenant, or (3) be bound by any previous modification of any
sublease made without Landlord’s written consent, or by any previous prepayment
by sublessee of more than one month’s rent.
(h) Excess Rent. If Landlord consents to any assignment of this Lease, and the
assignee has agreed to pay Tenant as consideration for the assignment any amount
in excess of the rent payable hereunder for the remainder of the Lease Term,
then Tenant agrees to pay to Landlord, as additional rent, fifty percent (50%)
of such excess as and when such sums and other consideration are due and payable
by the assignee to or for the benefit of Tenant (or, if Landlord so requires,
and without any release of Tenant’s liability for the same, Tenant agrees to
instruct the assignee to pay such sums and other consideration directly to
Landlord). If for any sublease, Tenant receives rent or other consideration,
either initially or over the term of the sublease, in excess of the rent fairly
allocable to the portion of the Premises which is subleased based on square
footage, Tenant shall retain all of the excess of each such payment of rent or
other consideration received by Tenant. Notwithstanding the preceding, Tenant’s
sub-lease with Colibrys shall be excluded from the requirements of this
paragraph.
(i) No Release. No Transfer or subletting will release Tenant of Tenant’s
obligations under this Lease or alter the primary liability of Tenant to pay the
rent and to perform all other obligations to be performed by Tenant hereunder.
Landlord may require that any Transferee remit directly to Landlord on a monthly
basis, all monies due Tenant by said Transferee, in which event Landlord agrees
to promptly notify Tenant of such requirement. However, the acceptance of rent
by Landlord from any other person will not be deemed to be a waiver by Landlord
of any provision hereof. Consent by Landlord to one Transfer will not be deemed
consent to any subsequent Transfer. In the event of default by any
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Transferee of Tenant or any successor of Tenant in the performance of any of the
terms hereof, Landlord may proceed directly against Tenant without the necessity
of exhausting remedies against such Transferee or successor. Landlord may
consent to subsequent assignments of this Lease or sublettings or amendments or
modifications to this Lease with assignees of Tenant, without notifying Tenant,
or any successor of Tenant, and without obtaining its or their consent thereto
and any such actions will not relieve Tenant of liability under this Lease.
(J) Administrative and Attorneys’ Fees. If Tenant effects a Transfer or requests
the consent of Landlord to any Transfer (whether or not such Transfer is
consummated), then, upon demand, Tenant agrees to pay Landlord all third party,
out-of-pocket costs and expenses, including but not limited to reasonable
attorneys’ and paralegal fees incurred by Landlord in connection with such
Transfer or request for consent. Acceptance of the cost and/or expense
reimbursement will in no event obligate Landlord to consent to any proposed
Transfer.
25. SUBORDINATION. Without the necessity of any additional document being
executed by Tenant for the purpose of effecting a subordination, and at the
election of Landlord or any mortgagee or beneficiary with a deed of trust
encumbering the Premises, or any lessor of a ground or underlying lease with
respect to the Premises, this Lease will be subject and subordinate at all times
to: (i) all ground leases or underlying leases which may now exist or hereafter
be executed affecting the Premises; and (ii) the lien of any mortgage or deed of
trust which may now exist or hereafter be executed for which the Premises or any
leases thereof, or Landlord’s interest and estate in any of said items, is
specified as security; provided, however, that the subordination of this Lease
to any mortgage or deed of trust or any ground or underlying lease is subject to
Tenant’s receipt of a commercially reasonable non-disturbance agreement from the
holder of such mortgage or deed of trust or such ground or underlying lease in
which such holder agrees not to disturb Tenant’s possession of the Premises so
long as no Tenant Event of Default has occurred and is continuing under this
Lease. Notwithstanding the foregoing, Landlord reserves the right to subordinate
any such ground leases or underlying leases or any such liens to this Lease. If
any such ground lease or underlying lease terminates for any reason or any such
mortgage or deed of trust is foreclosed or a conveyance in lieu of foreclosure
is made for any reason, at the election of Landlord’s successor in interest,
Tenant agrees to attorn to and become the tenant of such successor in which
event Tenant’s right to possession of the Premises will not be disturbed as long
as Tenant is not in default under this Lease. Tenant hereby waives its rights
under any law which gives or purports to give Tenant any right to terminate or
otherwise adversely affect this Lease and the obligations of Tenant hereunder in
the event of any such foreclosure proceeding or sale. Tenant covenants and
agrees to execute and deliver, upon demand by Landlord and in the form
reasonably required by Landlord, any additional documents evidencing the
priority or subordination of this Lease and Tenant’s attornment agreement with
respect to any such ground lease or underlying leases or the lien of any such
mortgage or deed of trust. If Tenant fails to sign and return any such documents
or engage in reasonable, good faith negotiations on the terms and conditions of
such documents within ten (10) business days of receipt, Tenant will be in
default hereunder.
26. ESTOPPEL CERTIFICATE.
(a) Tenant’s Obligations. Within ten (10) days following any written request
which Landlord may make from time to time, Tenant agrees to execute and deliver
to Landlord a statement, in a form substantially similar to the form of Exhibit
“C” attached hereto or as may reasonably be required by Landlord’s lender,
certifying: (i) the date of commencement of this Lease; (ii) the fact that this
Lease is unmodified and in full force and effect (or, if there have been
modifications, that this Lease is in full force and effect, and stating the date
and nature of such modifications); (iii) the date to which the rent and other
sums payable under this Lease have been paid; (iv) that there are no current
defaults under this Lease by either Landlord or Tenant except as specified in
Tenant’s statement; and (v) such other factual matters pertaining to this lease
as are described in Exhibit C or are otherwise reasonably requested by Landlord.
Landlord and Tenant intend that any statement delivered pursuant to this
Paragraph 26 may be relied upon by any mortgagee, beneficiary, purchaser or
prospective purchaser of the Premises or any interest therein.
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(b) Tenant’s Failure to Deliver. Tenant’s failure to deliver such statement
within such time will be conclusive upon Tenant (i) that this Lease is in full
force and effect, without modification except as may be represented by Landlord,
(ii) that there are no uncured defaults in Landlord’s performance, and
(iii) that not more than one (1) month’s rent has been paid in advance. Without
limiting the foregoing, if Tenant fails to deliver any such statement within
such ten (10) business day period, Landlord may deliver to Tenant an additional
request for such statement and Tenant’s failure to deliver such statement to
Landlord within five (5) business days after delivery of such additional request
will constitute a default under this Lease. Tenant agrees to indemnify and
protect Landlord from and against any and all claims, damages, losses,
liabilities and expenses (including attorneys’ fees and costs) attributable to
any failure by Tenant to timely deliver any such estoppel certificate to
Landlord as required by this Paragraph 26.
27. SECURITY MEASURES. Tenant hereby acknowledges that Landlord shall have no
obligation to provide guard service or other security measures for the benefit
of the Premises. Tenant hereby assumes all responsibility for the protection of
Tenant and its agents, employees, contractors, invitees and guests, and the
property thereof, from acts of third parties, including keeping doors locked and
other means of entry to the Building closed, whether or not Landlord, at its
option, elects to provide security protection for the Premises or any portion
thereof. Tenant further assumes the risk that any safety and security devices,
services and programs which Landlord elects, in its sole discretion, to provide
may not be effective, or may malfunction or be circumvented by an unauthorized
third party, and Tenant shall, in addition to its other insurance obligations
under this Lease, obtain its own insurance coverage to the extent Tenant desires
protection against losses related to such occurrences. Tenant shall cooperate in
any reasonable safety or security program developed by Landlord or required by
law.
28. RULES AND REGULATIONS. Tenant agrees to faithfully observe and comply with
the “Rules and Regulations,” a copy of which is attached hereto and incorporated
herein by this reference as Exhibit “D”, and all reasonable and
nondiscriminatory modifications thereof and additions thereto from time to time
put into effect by Landlord
29. MODIFICATION AND CURE RIGHTS OF LANDLORD’S MORTGAGEES AND LESSORS.
(a) Modifications. If, in connection with Landlord’s obtaining or entering into
any financing or ground lease for any portion of the Premises, the lender or
ground lessor requests modifications to this Lease, Tenant, within ten
(10) business days after request therefor, agrees to execute an amendment to
this Lease incorporating such modifications, provided such modifications are
reasonable and do not increase the obligations of Tenant under this Lease or
adversely affect the leasehold estate created by this Lease.
(b) Cure Rights. In the event of any default on the part of Landlord, Tenant
will give notice by registered or certified mail to any beneficiary of a deed of
trust or mortgage covering the Premises or ground lessor of Landlord whose
address has been furnished in writing to Tenant, and Tenant agrees to offer such
beneficiary, mortgagee or ground lessor a reasonable opportunity to cure the
default (including with respect to any such beneficiary or mortgagee, time to
obtain possession of the Premises, subject to this Lease and Tenant’s rights
hereunder, by power of sale or a judicial foreclosure, if such should prove
necessary to effect a cure).
30. DEFINITION OF LANDLORD. The term “Landlord,” as used in this Lease, so far
as covenants or obligations on the part of Landlord are concerned, means and
includes only the owner or owners, at the time in question, of the fee title of
the Premises or the lessees under any ground lease, if any. In the event of any
transfer, assignment or other conveyance or transfers of any such title (other
than a transfer for security purposes only), Landlord herein named (and in case
of any subsequent transfers or conveyances, the then grantor) will be
automatically relieved from and after the date of such transfer, assignment or
conveyance of all liability as respects the performance of any covenants or
obligations on the part of Landlord contained in this Lease thereafter to be
performed, so long as the transferee assumes in writing all such covenants and
obligations of Landlord arising after the date of such transfer. Landlord and
Landlord’s transferees and assignees have the absolute right to transfer all or
any portion of their respective title and interest in the Premises and/or this
Lease without the consent of Tenant, and
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such transfer or subsequent transfer will not be deemed a violation on
Landlord’s part of any of the terms and conditions of this Lease.
31. WAIVER. The waiver by either party of any breach of any term, covenant or
condition herein contained will not be deemed to be a waiver of any subsequent
breach of the same or any other term, covenant or condition herein contained,
nor will any custom or practice which may develop between the parties in the
administration of the terms hereof be deemed a waiver of or in any way affect
the right of either party to insist upon performance in strict accordance with
said terms. The subsequent acceptance of rent or any other payment hereunder by
Landlord will not be deemed to be a waiver of any preceding breach by Tenant of
any term, covenant or condition of this Lease, other than the failure of Tenant
to pay the particular rent so accepted, regardless of Landlord’s knowledge of
such preceding breach at the time of acceptance of such rent. No acceptance by
Landlord of a lesser sum than the basic rent and additional rent or other sum
then due will be deemed to be other than on account of the earliest installment
of such rent or other amount due, nor will any endorsement or statement on any
check or any letter accompanying any check be deemed an accord and satisfaction,
and Landlord may accept such check or payment without prejudice to Landlord’s
right to recover the balance of such installment or other amount or pursue any
other remedy provided in this Lease. The consent or approval of Landlord to or
of any act by Tenant requiring Landlord’s consent or approval will not be deemed
to waive or render unnecessary Landlord’s consent or approval to or of any
subsequent similar acts by Tenant.
32. PARKING. Tenant and Tenant’s Authorized User’s shall have the exclusive
right to use the parking area at no additional charge. Tenant and Tenant’s
Authorized Users shall comply with all rules and regulations regarding parking
set forth in Exhibit “D” attached hereto and Tenant agrees to cause its
employees, subtenants, assignees, contractors, suppliers, customers and invitees
to comply with such rules and regulations. Landlord reserves the right from time
to time to modify and/or adopt such other reasonable and non-discriminatory
rules and regulations for the parking area as it deems reasonably necessary for
the use of the parking area.
33. INTENTIONALLY DELETED.
34. SIGNS. The size, design, color and other physical aspects of any and all
exterior sign(s) installed by Tenant during the Lease Term will be subject to
(i) any covenants, conditions or restrictions governing the Premises, and
(ii) any applicable municipal or governmental permits, approvals, guidelines and
restrictions (including, without limitation, any guidelines issued or
restrictions imposed by the City). Tenant will be solely responsible for all
costs for installation, maintenance, repair and removal of any Tenant
identification sign(s). If Tenant fails to remove Tenant’s sign(s) upon
termination of this Lease and repair any damage caused by such removal, Landlord
may do so at Tenant’s sole cost and expense.
35. LIMITATION ON LIABILITY. In consideration of the benefits accruing
hereunder, Tenant on behalf of itself and all successors and assigns of Tenant
covenants and agrees that, in the event of any actual or alleged failure, breach
or default hereunder by Landlord: (a) Tenant’s recourse against Landlord for
monetary damages will be limited to Landlord’s interest in the Premises
including, subject to the prior rights of any Mortgagee, Landlord’s interest in
the rents of the Premises and any insurance proceeds payable to Landlord;
(b) Except as may be necessary to secure jurisdiction of the partnership or
company, no partner or member of Landlord shall be sued or named as a party in
any suit or action and no service of process shall be made against any partner
or member of Landlord; (c) No partner or member of Landlord shall be required to
answer or otherwise plead to any service of process; (d) No judgment will be
taken against any partner or member of Landlord and any judgment taken against
any partner or member of Landlord may be vacated and set aside at any time after
the fact; (e) No writ of execution will be levied against the assets of any
partner or member of Landlord; (f) The obligations under this Lease do not
constitute personal obligations of the individual members, partners, directors,
officers or shareholders of Landlord, and Tenant shall not seek recourse against
the individual members, partners, directors, officers or shareholders of
Landlord or any of their personal assets for satisfaction of any liability in
respect to this Lease; and (g) These covenants and agreements are enforceable
both by Landlord and also by any partner or member of Landlord.
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36. FINANCIAL STATEMENTS. Provided Tenant is and remains a public corporation
and its financials are timely filed and therefore available online, Landlord
shall obtain same as necessary online. However, in the event Tenant is no longer
a public company or it fails to timely file its financial statements as required
of a public company, Tenant, at any time during the Term of this Lease upon ten
(10) business days prior written notice from Landlord, agrees to provide
Landlord with a current financial statement for Tenant and any guarantors of
Tenant and financial statements for the two (2) years prior to the current
financial statement year for Tenant and any guarantors of Tenant. Such
statements are to be prepared in accordance with generally accepted accounting
principles and, if such is the normal practice of Tenant, audited by an
independent certified public accountant except when Landlord’s demand is based
on Tenant’s failure to timely file in which case the statements may be reviewed
provided disclosing reviewed statements does not violate any law applicable to
Tenant, in which case Tenant may provide internal financial statements. Landlord
agrees to keep the information in Tenant’s financial statements confidential and
not to such disclose such information to any person or entity, except to any
actual or prospective purchasers of the Premises, any actual or prospective
lenders on the Premises, any actual or prospective investors in Landlord, and to
the respective accountants, attorneys and advisors of Landlord and of each of
the foregoing parties, and except as may be required by law or by court order.
37. QUIET ENJOYMENT. Landlord covenants and agrees with Tenant that upon Tenant
paying the rent required under this Lease and paying all other charges and
performing all of the covenants and provisions on Tenant’s part to be observed
and performed under this Lease, Tenant may peaceably and quietly have, hold and
enjoy the Premises in accordance with this Lease without hindrance or
molestation by Landlord or its employees or agents or by any third party
claiming superior title to Landlord.
38. MISCELLANEOUS.
(a) Conflict of Laws. This Lease shall be governed by and construed solely
pursuant to the laws of the State, without giving effect to choice of law
principles thereunder.
(b) Successors and Assigns. Except as otherwise provided in this Lease, all of
the covenants, conditions and provisions of this Lease shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors and assigns.
(c) Professional Fees and Costs. If either Landlord or Tenant should bring suit
against the other with respect to this Lease, then all costs and expenses,
including without limitation, actual professional fees and costs such as
appraisers’, accountants’ and attorneys’ fees and costs, incurred by the party
which prevails in such action, whether by final judgment or out of court
settlement, shall be paid by the other party, which obligation on the part of
the other party shall be deemed to have accrued on the date of the commencement
of such action and shall be enforceable whether or not the action is prosecuted
to judgment. As used herein, attorneys’ fees and costs shall include, without
limitation, attorneys’ fees, costs and expenses incurred in connection with any
(i) post judgment motions; (ii) contempt proceedings; (iii) garnishment, levy,
and debtor and third party examination; (iv) discovery; and (v) bankruptcy
litigation.
(d) Terms and Headings. The words “Landlord” and “Tenant” as used herein shall
include the plural as well as the singular. Words used in any gender include
other genders. The paragraph headings of this Lease are not a part of this Lease
and shall have no effect upon the construction or interpretation of any part
hereof.
(e) Time. Time is of the essence with respect to the performance of every
provision of this Lease in which time of performance is a factor.
(f) Prior Agreement; Amendments. This Lease constitutes and is intended by the
parties to be a final, complete and exclusive statement of their entire
agreement with respect to the subject matter of this Lease. This Lease
supersedes any and all prior and contemporaneous agreements and understandings
of any kind relating to the subject matter of this Lease. There are no other
agreements, understandings, representations, warranties, or statements, either
oral or in written form, concerning the subject matter of
TENANT’S INITIALS                      LANDLORD’S INITIALS                    

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this Lease. No alteration, modification, amendment or interpretation of this
Lease shall be binding on the parties unless contained in a writing which is
signed by both parties.
(g) Separability. The provisions of this Lease shall be considered separable
such that if any provision or part of this Lease is ever held to be invalid,
void or illegal under any law or ruling, all remaining provisions of this Lease
shall remain in full force and effect to the maximum extent permitted by law.
(h) Recording. Tenant shall have the right but not the obligation to record a
memorandum of lease in a recordable form setting forth the interest of the
parties, the description of the leasehold interest, the term of the lease
including any options and other matters mutually agreeable. It is agreed that
the memorandum of lease shall contain no information or representation
concerning the Rent or other financial obligations or conditions of the Lease.
If the disclosure of any such financial information is required in order to
record the memorandum of lease, then neither Landlord nor Tenant shall have the
right to record such a memorandum. The memorandum of lease shall be prepared by
and the costs of recordation shall be paid by the party requesting the
recordation thereof.
(i) Counterparts. This Lease may be executed in one or more counterparts, each
of which shall constitute an original and all of which shall be one and the same
agreement.
(j) Press Release. Tenant shall not issue any publicity or press release
concerning this Lease without the prior written approval of Landlord, such
approval not to be unreasonably witheld.
(k) Non-Discrimination. Tenant acknowledges and agrees that there shall be no
discrimination against, or segregation of, any person, group of persons, or
entity on the basis of race, color, creed, religion, age, sex, marital status,
national origin, or ancestry in the leasing, subleasing, transferring,
assignment, occupancy, tenure, use, or enjoyment of the Premises, or any portion
thereof.

39.   EXECUTION OF LEASE.

(a) Joint and Several Obligations. If more than one person executes this Lease
as Tenant, their execution of this Lease will constitute their covenant and
agreement that (i) each of them is jointly and severally liable for the keeping,
observing and performing of all of the terms, covenants, conditions, provisions
and agreements of this Lease to be kept, observed and performed by Tenant, and
(ii) the term “Tenant” as used in this Lease means and includes each of them
jointly and severally. The act of or notice from, or notice or refund to, or the
signature of any one or more of them, with respect to the tenancy of this Lease,
including, but not limited to, any renewal, extension, expiration, termination
or modification of this Lease, will be binding upon each and all of the persons
executing this Lease as Tenant with the same force and effect as if each and all
of them had so acted or so given or received such notice or refund or so signed.
(b) Tenant as Corporation or Partnership. If Tenant executes this Lease as a
corporation or partnership, then Tenant and the persons executing this Lease on
behalf of Tenant represent and warrant that such entity is duly qualified and in
good standing to do business in Texas and that the individuals executing this
Lease on Tenant’s behalf are duly authorized to execute and deliver this Lease
on its behalf, and in the case of a corporation, in accordance with a duly
adopted resolution of the board of directors of Tenant, a copy of which is to be
delivered to Landlord on execution hereof, if requested by Landlord, and in
accordance with the by-laws of Tenant, and, in the case of a partnership, in
accordance with the partnership agreement and the most current amendments
thereto, if any, copies of which are to be delivered to Landlord on execution
hereof, if requested by Landlord, and that this Lease is binding upon Tenant in
accordance with its terms.
(c) Examination of Lease. Submission of this instrument by Landlord to Tenant
for examination or signature by Tenant does not constitute a reservation of or
option for lease, and it is not effective as a lease or otherwise until
execution by and delivery to both Landlord and Tenant.
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IN WITNESS WHEREOF, the parties have caused this Lease to be duly executed by
their duly authorized representatives as of the date first above written.

                      TENANT:       LANDLORD:
 
                    INPUT-OUTPUT, INC.,
a Delaware corporation   Stafford Office Park DST, a Delaware Statutory Trust,
by Stafford Office Park Sponsor, LLC, a Delaware limited liability company, its
discretionary trustee By: /s/ J. Michael Kirksey                            
Print Name:                
 
                    Print Title: EVP and CFO   By:   /s/ Kevin P. Kaseff        
         
 
          Name:  Kevin P. Kaseff
 
          Title:  Manager
 
                   
By: 
                                    Print Name:                
 
                    Print Title:                
 
                   

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EXHIBIT A
SITE PLAN
[To be supplied]
TENANT’S INITIALS                      LANDLORD’S INITIALS                     
EXHIBIT “A”
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EXHIBIT B
INTENTIONALLY OMITTED
TENANT’S INITIALS                      LANDLORD’S INITIALS                     
EXHIBIT “B”
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EXHIBIT C
ESTOPPEL CERTIFICATE
     This TENANT ESTOPPEL CERTIFICATE is executed as of the Estoppel Execution
Date by Tenant, who is the current tenant or lessee under that certain written
lease agreement (“Lease”) dated as of the Lease Date by and between Original
Landlord and Original Tenant for the lease of the Premises.

     
Definitions:
   
Estoppel Execution Date:
                                          ,                      200_
 
   
Lease Date:
                                          
 
   
Tenant:
                                          
 
   
Landlord:
                                          
 
   
Premises:
                                          
 
   
Monthly Base Rental:
                                          
 
   
Security Deposit:
  $
 
   
Advance Rent:
  $
 
   
Lease Term (incl. Option
   
Periods Exercised):
                                          
 
   
Commencement Date:
                                          
 
   
Expiration Date:
                                          
 
   
 
   
Unexercised Option Periods:
                                          
 
   
Current Rent Date:
                                          
 
   
Tenant’s Address for Notices:
                                          
 
   
 
                                          
 
   
 
                                          

          Tenant represents, warrants, certifies and states to
                                                            , a
                                        , and its successors, assignees, and
lenders (collectively, “                     ”), each of the following:
1. A true and correct copy of the Lease and all amendments thereto is attached
hereto as Exhibit “A” incorporated herein by this reference. The Lease is
presently in full force and effect and has not been amended, supplemented,
modified or otherwise changed, except pursuant to the written amendments
attached in Exhibit “A” attached hereto.
2. All space and improvements leased by Tenant pursuant to the Lease have been
completed and furnished in accordance with the provisions of the Lease, and
Tenant has accepted, taken possession of, and is currently occupying, the
Premises.
TENANT’S INITIALS                      LANDLORD’S INITIALS                     
EXHIBIT “C”
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3. Landlord has satisfied all commitments made to induce Tenant to enter in the
Lease, and to the best of Tenant’s knowledge, Landlord is not in any respect in
default in the performance by Landlord of its obligations under the Lease.
4. Tenant is not in any respect in material default or breach of the Lease and
has not assigned, sublet, transferred or hypothecated its interest under the
Lease, except as shown on Exhibit “B” attached hereto and incorporated herein by
this reference.
5. The Lease Term commenced on the Commencement Date and expires on the
Expiration Date.
6. The Lease provides for no extensions or renewals beyond the Lease Term except
the Unexercised Option Periods. Tenant has not exercised any of the Unexercised
Option Periods. Tenant has no option or preferential right to purchase or lease
all or any part of the Premises nor any right, title or interest with respect to
the Premises other than as a tenant or lessee under the Lease.
7. Tenant has no right to cancel the Lease prior to the Expiration Date.
8. Tenant has paid the Monthly Base Rent and all other monetary obligations
under the Lease through the Current Rent Date.
9. There is no period of free rent, rental abatement or reduction, except the
Free Rent Periods. Landlord has not given or conceded to Tenant any other
concessions, abatements or compromises, free rent, rental abatement or reduction
with respect to the rental obligations under the Lease.
10. If the Lease requires a security deposit, Tenant has deposited an amount
equal to the Security Deposit with Landlord. No person or entity has guaranteed
any portion of Tenant’s obligations under the Lease.
11. There are no offsets or credits against any rentals payable or which have
been paid under the Lease, and Tenant has made no payment to Landlord as a
security deposit or advance or prepaid rental except any Security Deposit and
any Advance Rent and payments made not earlier than thirty (30) days prior to
the date upon which such payment is due.
12. Tenant’s current address for receipt of notices, elections, demands or other
communications under the Lease is Tenant’s Address for Notices.
13. Tenant has received no notice of any sale, transfer, pledge, assignment, or
hypothecation of the Lease, or the rentals owed thereunder, by Landlord.
     Tenant makes this statement for the benefit and protection of
                                         and its successors, assigns, and
lenders, with the understanding that each or all of said parties intends to and
may rely on this statement in making a determination about purchasing or
financing certain real property, which real property includes the Premises.
     IN WITNESS WHEREOF, Tenant executes this Tenant Estoppel Certificate as of
the Estoppel Execution Date.
     

         
 
  TENANT:  
 
  By:    
 
       
 
       
 
  Its:    
 
       

TENANT’S INITIALS                      LANDLORD’S INITIALS                     
EXHIBIT “C”
-2-

 

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EXHIBIT D
RULES AND REGULATIONS
EXHIBIT “D”
-1-