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Sample Business ContractsHome: Sample Business Contracts:
STANDARD INDUSTRIAL LEASE - FULL NET
between
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
as Landlord
and
PHOENIX TECHNOLOGIES LTD.
as Tenant
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<PAGE>
TABLE OF CONTENTS
PAGE
----
1. Lease of Premises . . . . . . . . . . . . . . . . . . 1
2. Term. . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Definitions . . . . . . . . . . . . . . . . . . . . . 2
4. Tenant Improvements/Early Entry . . . . . . . . . . . 4
A. Construction of Tenant Improvements . . . . . 4
B. Early Entry . . . . . . . . . . . . . . . . . 5
5. Rent. . . . . . . . . . . . . . . . . . . . . . . . . 5
A. Basic Rent. . . . . . . . . . . . . . . . . . 5
B. Additional Rent . . . . . . . . . . . . . . . 6
C. Late Charge . . . . . . . . . . . . . . . . . 6
D. Prepaid Rent. . . . . . . . . . . . . . . . . 6
E. Payment of Rent . . . . . . . . . . . . . . . 6
F. Security Deposit. . . . . . . . . . . . . . . 6
6. [Intentionally omitted] . . . . . . . . . . . . . . . 7
7. Use . . . . . . . . . . . . . . . . . . . . . . . . . 7
A. Permitted Use . . . . . . . . . . . . . . . . 7
B. Prohibited Uses . . . . . . . . . . . . . . . 7
C. Insurance Requirements. . . . . . . . . . . . 8
D. Common Areas. . . . . . . . . . . . . . . . . 8
E. Rules and Regulations . . . . . . . . . . . . 8
F. Parking . . . . . . . . . . . . . . . . . . . 8
8. Quiet Enjoyment . . . . . . . . . . . . . . . . . . . 9
9. Taxes . . . . . . . . . . . . . . . . . . . . . . . .10
A. Real Property Taxes Defined . . . . . . . . .10
B. Tenant's Obligation to Reimburse. . . . . . .11
C. Taxes on Tenant's Property. . . . . . . . . .11
10. Utilities . . . . . . . . . . . . . . . . . . . . . .11
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TABLE OF CONTENTS
(CONTINUED)
PAGE
----
11. Insurance . . . . . . . . . . . . . . . . . . . . . .11
A. Tenant's Insurance. . . . . . . . . . . . . .11
B. Landlord's Insurance. . . . . . . . . . . . .13
C. Tenant's Obligation to Reimburse. . . . . . .13
D. Release and Waiver of Subrogation . . . . . .14
12. Landlord's Right to Perform Tenant's Covenants. . . .14
13. Maintenance and Repair. . . . . . . . . . . . . . . .15
A. Condition on Delivery . . . . . . . . . . . .15
B. Tenant's Obligations. . . . . . . . . . . . .15
C. Landlord's Obligation to Maintain . . . . . .17
D. Tenant's Early Occupancy Date or the
Obligation to Reimburse. . . . . . . . . . .18
E. Common Operating Expenses Defined . . . . . .19
F. Audit . . . . . . . . . . . . . . . . . . . .20
G. Control of Common Areas . . . . . . . . . . .21
14. Surrender of Premises . . . . . . . . . . . . . . . .21
15. Compliance With Laws. . . . . . . . . . . . . . . . .22
A. Landlord's Obligations. . . . . . . . . . . .22
B. Tenant's Obligations. . . . . . . . . . . . .23
16. Hazardous Materials . . . . . . . . . . . . . . . . .23
A. Tenant's Obligations. . . . . . . . . . . . .23
B. Tenant's Indemnity. . . . . . . . . . . . . .24
C. Notices . . . . . . . . . . . . . . . . . . .24
D. Testing . . . . . . . . . . . . . . . . . . .24
E. Survival. . . . . . . . . . . . . . . . . . .24
17. Alterations . . . . . . . . . . . . . . . . . . . . .25
A. Consent Required. . . . . . . . . . . . . . .25
B. Conditions. . . . . . . . . . . . . . . . . .26
C. Property of Tenant. . . . . . . . . . . . . .26
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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18. Damage or Destruction . . . . . . . . . . . . . . . .26
A. Landlord's Duty to Restore. . . . . . . . . .26
B. Landlord's Right to Terminate . . . . . . . .27
C. Tenant's Right to Terminate . . . . . . . . .28
D. Payment of Deductibles. . . . . . . . . . . .29
E. Abatement of Rent . . . . . . . . . . . . . .29
F. Waiver. . . . . . . . . . . . . . . . . . . .29
19. Condemnation. . . . . . . . . . . . . . . . . . . . .30
A. Tenant's Right of Termination . . . . . . . .30
B. Condemnation Award. . . . . . . . . . . . . .30
C. Restoration . . . . . . . . . . . . . . . . .30
20. Mechanic's Liens. . . . . . . . . . . . . . . . . . .30
21. Financial Statements. . . . . . . . . . . . . . . . .31
22. Landlord's Entry. . . . . . . . . . . . . . . . . . .31
23. Assignment and Subletting . . . . . . . . . . . . . .31
24. Subordination . . . . . . . . . . . . . . . . . . . .34
25. Attornment. . . . . . . . . . . . . . . . . . . . . .34
26. Indemnification . . . . . . . . . . . . . . . . . . .35
27. Attorneys' Fees . . . . . . . . . . . . . . . . . . .35
28. No Representations. . . . . . . . . . . . . . . . . .35
29. Default . . . . . . . . . . . . . . . . . . . . . . .35
A. Events of Default . . . . . . . . . . . . . .35
B. Landlord's Remedies . . . . . . . . . . . . .36
C. Cumulative Remedies . . . . . . . . . . . . .37
D. No Waivers. . . . . . . . . . . . . . . . . .37
E. Application of Tenant Deposits. . . . . . . .37
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<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
F. Landlord's Default. . . . . . . . . . . . . .37
30. Holding Over. . . . . . . . . . . . . . . . . . . . .38
31. Notices . . . . . . . . . . . . . . . . . . . . . . .38
32. Limitation of Landlord's Liability. . . . . . . . . .38
A. Upon Sale or Transfer . . . . . . . . . . . .38
B. Limitation of Recourse. . . . . . . . . . . .39
33. Estoppel Certificates . . . . . . . . . . . . . . . .39
34. Brokerage . . . . . . . . . . . . . . . . . . . . . .39
35. Signage . . . . . . . . . . . . . . . . . . . . . . .40
36. Option to Extend. . . . . . . . . . . . . . . . . . .40
37. [Intentionally Omitted.] . . . . . . . . . . . . . .41
38. Miscellaneous . . . . . . . . . . . . . . . . . . . .41
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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SCHEDULE OF EXHIBITS
Exhibit A - Map of Parcel E
Exhibit A-1 - Legal Description of Project
Exhibit A-2 Diagram of Reduced Premises Area
Exhibit B - Site Plan
Exhibit C - Improvement Agreement
Exhibit D - Form of Acceptance Agreement
Exhibit E - Hazardous Materials Questionnaire
Exhibit F Parcel E Environmental Reports
-v-
<PAGE>
STANDARD INDUSTRIAL LEASE - FULL NET
THIS LEASE, dated as of May 15, 1996, for reference purposes only,
is made by and between THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED
STATES, a New York corporation ("Landlord"), and PHOENIX TECHNOLOGIES LTD., a
Delaware corporation ("Tenant"), upon the following terms and conditions.
1. LEASE OF PREMISES. Landlord hereby leases to Tenant, and
Tenant hereby leases from Landlord, for the Lease Term and upon the terms and
conditions hereinafter set forth, that certain building structure commonly
known as 411 East Plumeria Drive, Building "E" of the Montague Industrial
Park, San Jose, California, as shown on EXHIBIT "A" attached hereto,
containing approximately 86,602 square feet of Gross Leasable Area
(interchangeably referred to herein as the "Premises" or "Building"),
together with (i) the exclusive right to use no more than the number of
Tenant's Allocated Parking Stalls (subject to the terms and conditions set
forth in subparagraph 7(F), below), and (ii) the non-exclusive right to use
the Common Areas for vehicular and pedestrian ingress to and egress from the
Premises. Notwithstanding the foregoing to the contrary, during that period
of time commencing on the Commencement Date and continuing thereafter until
the first anniversary thereof (which period of time shall be referred to
herein as the "First Lease Year"), Tenant shall have the right to occupy only
that approximately fifty-five thousand (55,000) square feet of the Premises
as shown on EXHIBIT "A-2" attached hereto (which area shall be referred to
herein as the "Reduced Premises Area") together with the use of the parking
areas and Common Areas described in clauses (i) and (ii) above of this
Paragraph 1. During the First Lease Year, Landlord shall have the right to
lease all or any portion of the Reduced Premises Area so long as the term of
any such lease expires on or before the expiration of the First Lease Year.
If Landlord does not elect to lease the Reduced Premises Area, Tenant shall
be responsible for all of the obligations and liabilities under this as they
relate to the entire Premises including, without limitation, the following:
(i) the obligation to pay Common Operating Expenses, insurance and Real
Property Taxes as they relate to the entire Premises, (ii) the obligation to
keep in good order condition and repair the entire Premises, (iii) the
obligation to maintain insurance covering the entire Premises, and (iv)
indemnifications obligations with respect to the entire Premises. If
Landlord elects to lease all or a portion of the Reduced Premises Area, then,
with respect to those obligations and liabilities that vary with the size of
the Premises including, without limitation, the obligations and liabilities
set forth in clauses (i) through (iv) above, Tenant shall only be responsible
for such obligations and liabilities to the extent that they are fairly
allocable to the Premises and to this end, Landlord and Tenant shall execute
an amendment to this Lease to implement the intent of the parties. During
the First Lease Year, Landlord shall have the right, without Tenant's
consent, to enter and use the Reduced Premises Area at any time and for any
purpose. Tenant's lease of the Premises and use of the Common Areas shall be
subject to any and all existing encumbrances, easements, conditions,
covenants, and restrictions ("CC&R's"), and rights-of-way now recorded as an
interest affecting the Project, and such other matters as may be disclosed by
inspection or survey.
<PAGE>
2. TERM. The term of this Lease shall commence on the
Commencement Date (as hereinafter defined) and terminate on the last day of
the eighty-fourth (84th) full calendar month following the Commencement Date
(the "Expiration Date"), unless sooner terminated pursuant to the provisions
hereof.
3. DEFINITIONS. As used herein, the following terms shall have
the following meanings:
A. The term "Agent" shall mean, with respect to either
Landlord or Tenant, its respective agents, employees, contractors (and their
subcontractors) and invitees (and the employees of such contractors,
subcontractors and invitees). In the case of Tenant, the term "Agent" shall
also mean and include its subtenants and the Agents of such subtenants. In
the case of Landlord, the term "Agent" shall not mean nor include the tenants
(and their subtenants) of other buildings within the Project or other
properties in the vicinity of the Project owned by Landlord.
B. The term "Alterations" shall mean all improvements,
additions, alterations and fixtures installed in the Premises by Tenant at
its expense which are not Trade Fixtures.
C. The term "Building Areas" shall mean those areas of
the Project on which buildings are constructed from time to time, intended
for the exclusive use of the occupants thereof (excluding any outside areas
such as the parking lot and driveways), which areas as now configured are so
labeled and shown on the attached Site Plan. It is expressly understood that
Landlord shall have the right at any time, and from time to time, to change
or reconfigure the Building Areas (except for the Premises), and to add
additional buildings to or delete buildings from the Project.
D. The term "Commencement Date" shall mean the later
of (i) November 1, 1996 and (ii) that date by which all of the following have
occurred: (a) Landlord has substantially completed the Tenant Improvements
in accordance with subparagraph 2.C of the Improvement Agreement; and (b)
Landlord has delivered possession of the Premises to Tenant. The
Commencement Date shall be advanced one (1) day for each day of delay in
construction or completion of the Tenant Improvements caused by "Tenant
Delay", as provided in paragraph 7 of the Improvement Agreement. Landlord
shall use reasonable efforts to notify Tenant of Landlord's estimation of the
earliest date on which the Commencement Date will occur at least fifteen (15)
days prior to such estimated date. Landlord's estimation shall be based upon
information available to Landlord at the time in question.
E. The term "Common Areas" shall mean all areas of the
Project other than Building Areas, including parking areas, access road and
driveways, landscaped areas, loading areas, pedestrian sidewalks and plazas,
which Common Areas are shown on the attached Site Plan. It is understood
that Landlord shall have the right at any time, and from time to time, to add
property to or remove property from the Common Areas, or to reconfigure same,
provided that (i) there is at all times parking available within the Project
satisfying the requirements of applicable Law, (ii) any such
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<PAGE>
changes do not materially interfere with access to the Premises and (iii) any
such changes do not reduce the number of parking spaces granted to Tenant
under subparagraph 7(F) of this Lease.
F. The term "Default Interest Rate" shall mean an
annual rate equal to four percent (4%) over the annual prime rate of interest
announced publicly by Citibank, N.A. in New York, New York from time to time
or the maximum interest rate permitted by any applicable usury law, whichever
is less.
G. The term "Effective Date" shall mean the date this
Lease is executed by the last signatory hereto whose execution of this Lease
is required to make it legally binding on both Landlord and Tenant.
H. The term "Gross Leasable Area" shall mean the area
within the Building, and each building located on the Project, measured from
the exterior faces of exterior walls, including the inset area at each
entryway and the inset area for glazing, but excluding truck dock areas, roof
overhangs, atriums, courtyards and outside decks.
I. The term "Hazardous Materials" shall mean any
substances, materials, and wastes that are or become regulated as hazardous
or toxic substances under any applicable local, state or federal law,
regulation or order.
J. The term "Law" shall mean any judicial decision,
statute, constitution, ordinance, resolution, regulation, rule,
administrative order, or other requirement of any municipal, county, state,
federal or other governmental agency or authority having jurisdiction over
the parties to this Lease or the Premises.
K. The term "Lease Term" shall mean the term of this
Lease as described in paragraph 2 hereof and, upon exercise of an option to
extend, as provided in paragraph 36 hereof, shall include the Option Term
resulting from such exercise.
L. The term "Lender" shall mean the holder of any
mortgage or deed of trust encumbering, or ground leasehold interest in, the
Premises.
M. The term "Parcel E" shall mean that certain real
property upon which the Premises is located and shown as Parcel "E" on
EXHIBIT "A" attached hereto.
N. The term "Premises Gross Leasable Area" shall mean
the Gross Leasable Area of the Building. For purposes of this Lease, the
Gross Leasable Area of the Building as now configured shall be deemed to be
86,602 square feet. Even if the Gross Leasable Area of the Building is
actually determined to be otherwise, Landlord and Tenant agree that Basic
Rent, Additional Rent and Tenant's Prorata Share shall be as provided in this
Lease and shall not be adjusted.
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<PAGE>
O. The term "Project" shall mean all of the property
shown on the attached Site Plan, and all buildings and other improvements
located thereon from time to time, commonly known as Montague Industrial
Park, and more particularly described in attached EXHIBIT "A-1".
P. The term "Project Gross Leasable Area" shall mean
the total aggregate Gross Leasable Area of all buildings constructed from
time to time within the Project. It is acknowledged and agreed that the
current Gross Leasable Area of all buildings now constructed within the
Project is approximately 417,532 square feet. If Landlord at any time
hereafter changes the composition of the Project by removing or adding
buildings thereto, the "Project Gross Leasable Area" shall be appropriately
adjusted. Landlord represents and warrants that the method of measurement of
the Project Gross Leasable Area is the same as the method of measurement of
the Premises Gross Leasable Area.
Q. The term "Site Plan" shall mean that certain Site
Plan attached hereto as EXHIBIT "B", showing the Premises and depicting the
existing location and configuration of all Building Areas and the Common
Areas of the Project.
R. The term "Tenant Improvements" shall mean those
improvements to be constructed by Landlord as provided in the Improvement
Agreement, EXHIBIT "C" hereto.
S. The term "Tenant's Allocated Parking Stalls" shall
mean Three Hundred Twenty-Nine (329) parking stalls contained within Parcel E
for the use of Tenant, its employees and invitees, as provided in
subparagraph 7(F), below.
T. The term "Tenant's Prorata Share" shall mean twenty
and seventy-four one-hundredths percent (20.74%).
U. The term "Trade Fixtures" shall mean anything
installed in or affixed to the Premises by Tenant at its expense for purposes
of trade, manufacture, ornament or use (except replacement of similar work or
material originally installed by Landlord) which can be removed without
injury to the Premises (E.G., demountable partitions, business and production
equipment and systems, furniture and furnishings) unless such thing has, by
the manner in which it is affixed, become an integral part of the Premises.
4. TENANT IMPROVEMENTS/EARLY ENTRY.
A. CONSTRUCTION OF TENANT IMPROVEMENTS. Landlord
shall construct or cause to be constructed the Tenant Improvements pursuant
to the Improvement Agreement attached hereto as EXHIBIT "C", and shall cause
such work to be completed as soon after the Effective Date as reasonably
practicable.
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<PAGE>
B. EARLY ENTRY. If, before November 1, 1996, the
Tenant Improvements are substantially completed and Tenant has obtained all
governmental approvals and permits required for the legal occupancy of the
Premises for Tenant's intended use, then Tenant shall have the right to
occupy the Premises at such time that the foregoing events have occurred (the
"Early Occupancy Date"). If Tenant elects to take early occupancy of the
Premises, then during the period commencing on the Early Occupancy Date and
continuing until the Commencement Date, any entry by Tenant onto the Premises
shall be subject to all of the terms and conditions of this Lease other than
payment of Basic Rent.
5. RENT. Tenant shall pay rent during the Lease Term in
accordance with the terms of this paragraph 5, as follows:
A. BASIC RENT. During the Lease Term, Tenant shall
pay a fixed monthly net rental (the "Basic Rent") in accordance with the
following:
(1) Basic Rent for the period commencing on the
Commencement Date and continuing until the first (1st) day of the thirteenth
(13th) month of the Lease Term shall be Fifty-Seven Thousand Seven Hundred
Fifty Dollars ($57,750.00).
(2) Basic Rent for the period commencing on the
first day of the thirteenth (13th) full calendar month of the Lease Term and
continuing until the first (1st) day of the twenty-fifth (25th) full calendar
month of the Lease Term shall be Ninety-Nine Thousand Five Hundred Ninety-Two
Dollars ($99,592.00).
(3) Basic Rent for the period commencing on the
first (1st) day of the twenty-fifth (25th) full calendar month of the Lease
Term and continuing until the first (1st) day of the thirty-seventh (37th)
full calendar month of the Lease Term shall be One Hundred Three Thousand
Nine Hundred Twenty-Two Dollars ($103,922.00).
(4) Basic Rent for the period commencing on the
first (1st) day of the thirty-seventh (37th) full calendar month of the Lease
Term and continuing until the first (1st) day of the forty-ninth (49th) full
calendar month of the Lease Term shall be One Hundred Eight Thousand Two
Hundred Fifty-Two Dollars ($108,252.00).
(5) Basic Rent for the period commencing on the
first (1st) day of the forty-ninth (49th) full calendar month of the Lease
Term and continuing until the first (1st) day of the sixty-first(61st) full
calendar month of the Lease Term shall be One Hundred Twelve Thousand Five
Hundred Eighty-Two Dollars ($112,582.00).
(6) Basic Rent for the period commencing on the
first (1st) day of the sixty-first (61st) full calendar month of the Lease
Term and continuing until the first (1st) day of the
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seventy-third (73rd) full calendar month of the Lease Term shall be One
Hundred Sixteen Thousand Nine Hundred Twelve Dollars ($116,912.00).
(7) Basic Rent for the period commencing on the
first (1st) day of the seventy-third (73rd) full calendar month of the Lease
Term and continuing until the Expiration Date shall be One Hundred Twenty-One
Thousand Two Hundred Forty-Two Dollars ($121,242.00).
B. ADDITIONAL RENT. Commencing on the Commencement
Date and continuing throughout the Lease Term, Tenant shall be obligated to
pay Real Property Taxes (as provided in paragraph 9 hereof), insurance
premiums (as provided in paragraph 11 hereof), and all other sums required to
be paid by Tenant under this Lease. All Real Property Taxes, insurance
premiums, late charges, costs and expenses which Tenant is required to pay
hereunder, together with all interest and penalties that may accrue thereon
in the event of Tenant's failure to pay such amounts, shall be deemed to be
additional rent ("Additional Rent"), and shall be paid in addition to the
Basic Rent. In the event of Tenant's nonpayment of Additional Rent, Landlord
shall have all of the rights and remedies with respect thereto as Landlord
has for the nonpayment of Basic Rent.
C. LATE CHARGE. If any installment of rent or any
other sum due from Tenant shall not be received by Landlord when due, and if
such amount remains unpaid at the end of ten (10) business days after such
sum is due, Tenant shall pay to Landlord a late charge equal to five percent
(5%) of such overdue amount. The parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Landlord will incur by
reason of late payment by Tenant based upon the circumstances existing as of
the date of this Lease.
D. PREPAID RENT. On or before the Effective Date,
Tenant shall pay to Landlord Fifty-Seven Thousand Seven Hundred Fifty Dollars
($57,750) as prepayment of Basic Rent for credit against the first
install-ment of Basic Rent due pursuant to this Lease.
E. PAYMENT OF RENT. All rent required to be paid in
monthly installments pursuant to this Lease shall be paid in advance on the
first day of each calendar month during the Lease Term. All rent shall be
paid in lawful money of the United States, without any abatement, deduction
or offset whatsoever (except as otherwise specifically provided in this
Lease), and without any prior demand therefor. Rent shall be paid to
Landlord at such place or address as Landlord may designate in writing from
time to time. Tenant's obligation to pay Basic Rent and Additional Rent
shall be prorated at the commencement and expiration of the Lease Term.
F. SECURITY DEPOSIT. On or before the Effective Date,
Tenant shall deposit with Landlord in cash Ninety-Nine Thousand Five Hundred
Ninety-Two Dollars ($99,592) which amount shall be held by Landlord as
security for the performance by Tenant of its obligations under this Lease
and not as prepayment of rent (the "Security Deposit"). Landlord may from
time to time apply or draw upon such Security Deposit as is reasonably
necessary for the following purposes: (i) to remedy
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<PAGE>
any default by Tenant in the payment of rent; (ii) to repair damages to the
Premises caused by Tenant; (iii) to clean the Premises upon termination of
the Lease; and (iv) to remedy any other default of Tenant under this Lease to
the extent permitted by Law, and, in this regard, Tenant hereby waives any
restriction on the uses to which the Security Deposit may be put contained in
California Civil Code Section 1950.7. In the event the Security Deposit or
any portion thereof is so used or drawn upon, Tenant agrees to pay to
Landlord promptly upon demand an amount in cash in an amount sufficient to
restore the Security Deposit to the full original amount. Landlord shall not
be deemed a trustee of the Security Deposit, may use the Security Deposit in
its business, and shall not be required to segregate it from its general
accounts. Tenant shall not be entitled to any interest on the Security
Deposit. If Landlord transfers the Premises during the Lease Term, Landlord
may transfer any Security Deposit to any transferee of Landlord's interest in
conformity with provisions of California Civil Code Section 1950.7 and any
successor statute, in which event Landlord will be released from all
liability for the return of any such cash Security Deposit.
6. [Intentionally omitted]
7. USE.
A. PERMITTED USE. The Premises may be used and
occupied only for general administrative offices, testing, research and
development, manufacturing and storage of computer technology, related
marketing and sales activity, and any other related use conforming to Law and
all existing recorded covenants, conditions, and restrictions affecting the
Premises which related use has been approved by Landlord.
B. PROHIBITED USES. Tenant shall not do or permit
anything to be done in or about the Premises or Common Areas which will
interfere with the rights of other occupants of the Project, cause damage to
the structure, roof or other parts of the Premises. Tenant shall not operate
any equipment within the Premises which will (i) injure, vibrate or shake the
Premises, (ii) overload existing electrical systems or other mechanical
equipment servicing the Premises, or (iii) impair the efficient operation of
the fire sprinkler system or the heating, ventilating or air conditioning
("HVAC") equipment servicing the Premises, or (iv) damage, overload or
corrode the sanitary sewer system. Tenant shall not attach, hang or suspend
anything from the ceiling, roof, walls or columns of the Premises or set any
load on the floor in excess of approved structural limits as defined by
Landlord's architect. Any dust, fumes, or waste products generated by
Tenant's use of the Premises shall be contained and disposed of in a manner
that does not create a fire or health hazard, damage the Premises, or
interfere with the businesses of other occupants of the Project. All noise
or odors generated by Tenant shall be contained or muffled so that they do
not interfere with the businesses of other occupants of the Project. Tenant
shall not commit nor permit to be committed any waste in or about the
Premises, and Tenant shall not create or permit at the Premises any
objectionable noises, odors, dust or nuisances which may disturb the quiet
enjoyment of other occupants of the Project.
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<PAGE>
C. INSURANCE REQUIREMENTS. Tenant shall not use or
permit Tenant's Agents to use the Premises or Common Areas in any manner
which will cause a cancellation of any insurance policy covering the
Premises. Tenant shall not sell, or permit to be kept, used, or sold in or
about the Premises any article which may be prohibited by Lessor's standard
form of fire and property damage insurance policy. Tenant shall comply with
all reasonable requirements of any insurance company, insurance underwriter,
or Board of Fire Underwriters which directly relate to use of the Premises
and which are necessary to maintain, at reasonable rates, the insurance
coverage carried by Landlord pursuant to this Lease.
D. COMMON AREAS. No materials, supplies, storage
tanks or containers, equipment, finished products or semi-finished products,
raw materials, inoperable vehicles or articles of any nature shall be stored
upon or permitted to remain outside of the Premises, except in enclosed areas
specifically designed for exterior storage designated or otherwise approved
by Landlord for such use. All entrances to such outside trash enclosures, if
any, shall be kept closed, and waste shall be stored in such manner as not to
be visible from the exterior of such outside enclosures.
E. RULES AND REGULATIONS. Landlord may from time to
time promulgate reasonable rules and regulations applicable to all occupants
of the Project for the care and orderly management of the Project and the
safety of its tenants and invitees, provided (i) the Common Operating
Expenses and other costs payable by Tenant hereunder are not thereby
materially increased, (ii) such rules and regulations do not materially
increase the obligations or decrease the rights of Tenant under this Lease,
and (iii) such rules and regulations are nondiscriminatory among the
occupants of the Project. Such rules and regulations shall be binding upon
Tenant upon delivery of a copy thereof to Tenant, and Tenant agrees to abide
by such rules and regulations. If there is a conflict between the rules and
regulations and any of the provisions of this Lease, the provisions of this
Lease shall prevail. Landlord shall not be responsible for the violation of
such rules and regulations by any other occupants of the Project, but
Landlord shall use commercially reasonable efforts to enforce compliance with
such rules and regulations by all occupants of the Project.
F. PARKING. Tenant is hereby allocated, and shall
with its Agents have the exclusive right to use, without charge in addition
to the Basic Rent, no more than the number of Tenant's Allocated Parking
Stalls within that portion of the Common Areas of the Project hereinafter
designated, subject to the following terms and conditions:
(1) Tenant and its Agents shall be permitted to
park only within those parking spaces located on Parcel E shown cross-hatched
on EXHIBIT "A" attached hereto.
(2) Landlord shall have no obligation to police
or otherwise enforce Tenant's exclusive parking rights hereunder against any
other occupants or users of the Project, but shall, upon written request by
Tenant, notify other occupants of the Project of Tenant's exclusive
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parking rights and request that such other occupants, their employees and
invitees, park in those portions of the Common Areas not designated for
Tenant's exclusive use.
(3) Tenant shall not at any time use or permit
its employees or invitees to use more parking spaces within the Common Areas
than the number of Tenant's Allocated Parking Stalls or to park or permit the
parking of its vehicles or the vehicles of others in any portion of the
Project not designated by Landlord as Tenant's parking area.
(4) Tenant shall furnish Landlord, within ten
(10) business days after written request from Landlord, with a list of its
employees' vehicle license numbers and Tenant shall thereafter notify
Landlord of any change in such list within five (5) days after each such
change occurs. Tenant shall have the right, at Tenant's option, to provide
its employees with stickers or other identification markers or tags to be
placed in or on the employees' automobiles or other vehicles, evidencing the
right of such employees to use the parking areas. Such stickers shall be
subject to prior review and approval by Landlord. Tenant shall furnish to
Landlord a list of identifying numbers for the stickers distributed from time
to time by Tenant to its employees. If Tenant elects to use such stickers as
provided herein, Tenant shall not be obligated to furnish Landlord with a
list of vehicle license numbers for its employees, for as long as Tenant
maintains in effect such sticker system of identification. Landlord reserves
the right to have any vehicles owned by Tenant or its Agents utilizing
parking spaces in excess of Tenant's Allocated Parking Stalls, to be towed
away at Tenant's cost.
(5) All trucks and delivery vehicles shall be
(i) parked only within those specific areas designated as loading zones, and
(ii) loaded and unloaded in a manner which does not unreasonably interfere
with the businesses of other occupants of the Project. Landlord has advised
Tenant that the parking areas, driveways and sidewalks within the Common Area
have been improved with two different strengths of paving, one of which is
designated for heavy truck traffic, the location of which pavement is shown
as the "Truck Circulation Area" on EXHIBIT "B" attached hereto. Tenant shall
cause all trucks brought onto the Project by Tenant, its agents, employees,
contractors and invitees to be operated and parked only within such Truck
Circulation Area to minimize damage to the other paved areas of the Common
Area.
(6) In the event Landlord is required by any
Law to limit or control parking on the Property, whether by validation of
parking tickets or any other method of assessment, Tenant agrees to
participate in such validation or assessment program under such reasonable
rules and regulations as are from time to time established by Landlord.
8. QUIET ENJOYMENT. Provided Tenant performs its obligations
hereunder, Tenant may lawfully and quietly occupy the Premises during the
Lease Term without hindrance or molestation by Landlord, subject, however, to
the matters herein set forth, and neither Landlord, nor any party claiming
under or through Landlord, shall disturb Tenant's use or occupancy of the
Premises.
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9. TAXES.
A. REAL PROPERTY TAXES DEFINED.
(1) INCLUDED IN DEFINITION. The term "Real
Property Taxes" as used herein shall mean (i) all taxes, assessments, levies,
and other charges of any kind or nature whatsoever, general and special,
foreseen and unforseen (including all installments of principal and interest
required to pay any existing or future general or special assessments for
public improvements, services or benefits, and any increases resulting from
reassessments or resulting from a change in ownership or any other cause),
now or hereafter imposed by any governmental or quasi-governmental authority
or special district having the direct or indirect power to tax or levy
assessments, which are levied or assessed against, or with respect to the
value, occupancy or use of, all or any portion of Parcel E (as now
constructed or as may at any time hereafter be constructed, altered, or
otherwise changed) or Landlord's interest therein, the fixtures, equipment
and other property of Landlord, real or personal, that are an integral part
of and located on Parcel E, the gross receipts, income or rentals from Parcel
E, or the use of parking areas, public utilities, or energy within Parcel E;
(ii) all charges, levies or fees imposed by reason of environmental
regulation or other governmental control of Parcel E (but not including any
tax on Hazardous Materials which is expressly excluded from the definition of
Real Property Taxes under the provisions of subparagraph 9(A)(2)(vii),
below); and (iii) all costs and fees (including reasonable attorneys' fees)
incurred by Landlord in contesting any Real Property Tax and in negotiating
with public authorities as to any Real Property Tax. If at any time during
the Lease Term the method of taxation or assessment of Parcel E prevailing as
of the Effective Date shall be altered so that in lieu of or in addition to
any Real Property Tax described above there shall be levied, assessed or
imposed (whether by reason of a change in the method of taxation or
assessment, creation of a new tax or charge, or any other cause) an alternate
or additional tax or charge (i) on the value, use or occupancy of Parcel E,
(ii) on or measured by the gross receipts, income or rentals from Parcel E,
(iii) on Landlord's business of leasing Parcel E, or (iv) computed in any
manner with respect to the operation of Parcel E, then any such tax or
charge, however, designated, shall be included within the meaning of the term
"Real Property Taxes" for purposes of this Lease. If any Real Property Tax
is based upon property or rents unrelated to Parcel E, then only that part of
such Real Property Tax that is fairly allocable to Parcel E shall be included
within the meaning of the term "Real Property Taxes".
(2) EXCLUDED FROM DEFINITION. Notwithstanding
the foregoing, the following shall not constitute Real Property Taxes for the
purpose of this Lease, and nothing herein shall be deemed to require Tenant
to pay any of the following: (i) any state, local, federal, personal or
corporate income tax measured by the net income of Landlord from all sources;
(ii) any estate or inheritance taxes; (iii) any franchise, succession or city
or county transfer taxes; (iv) interest on taxes or penalties resulting from
Landlord's failure to pay taxes (unless due to Tenant's failure to pay to
Landlord Real Property Taxes as provided herein); and (v) any tax imposed on
the Premises due to
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the presence, use or release of Hazardous Materials thereon unless based on
Tenant's storage, disposal or use of Hazardous Materials on the Premises.
B. TENANT'S OBLIGATION TO REIMBURSE. As Additional
Rent, Tenant shall pay to Landlord all Real Property Taxes which become due
after the Commencement Date and continuing throughout the remainder of the
Lease Term to the extent that such Real Property Taxes are fairly allocable
to the Lease Term. Tenant shall pay Real Property Taxes (i) within thirty
(30) days after Tenant's receipt of Landlord's written billing therefor
(which billing shall include a copy of Landlord's applicable tax bills or
other evidence reasonably available to Landlord substantiating the amount
billed to Tenant), or (ii) no later than twenty (20) days before such Real
Property Tax becomes delinquent, whichever last occurs. Tenant may not
withhold payment of such bill pending receipt and/or review of such evidence.
If any Lender requires Landlord to impound Real Property Taxes on a periodic
basis during the Lease Term, then Tenant, on notice from Landlord indicating
this requirement, shall pay a sum of money toward its liability under this
paragraph to Landlord on the same periodic basis as required by Tenant's
Lender, if any, but no more frequently than once a month. If any assessments
are levied against Parcel E, Landlord may elect either to pay the assessment
in full or to allow the assessment to go to bond. If Landlord pays the
assessment in full, Tenant shall pay to Landlord each time payment of Real
Property Taxes is made a sum equal to that which would have been payable (as
both principal and interest) had Landlord allowed the assessment to go to
bond with the maximum payment period allowed thereunder.
C. TAXES ON TENANT'S PROPERTY. Tenant shall pay
before delinquency any and all taxes, assessments, license fees and public
charges levied, assessed or imposed against Tenant or Tenant's estate in this
Lease or the property of Tenant situated within the Premises which become due
during the Lease Term. Tenant shall furnish Landlord with satisfactory
evidence of these payments within thirty (30) days after receipt of written
request therefor from Landlord, but no more than once each year.
10. UTILITIES. Tenant shall pay all utility deposits and fees,
and all monthly service charges for heat, water, gas, electricity, sewer
service, elevator (if there be any) and cleaning service, telephone service,
and any other utilities whatsoever furnished to the Premises during the
period commencing on the earlier to occur of the Commencement Date or the
date Tenant occupies any portion of the Premises pursuant to subparagraph
4(B) and continuing throughout the remainder of the Lease Term.
11. INSURANCE.
A. TENANT'S INSURANCE. Tenant shall maintain
insurance complying with all of the following:
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(1) Tenant shall procure, pay for and keep in
full force and effect the following:
a. Commercial general liability
insurance, including property damage, against liability for personal injury,
bodily injury, death and damage to property occurring in or about, or
resulting from an occurrence in or about, the Premises with combined single
limit coverage of not less than Two Million Dollars ($2,000,000), which
insurance shall contain a "contractual liability" endorsement insuring
Tenant's performance of Tenant's obligation to indemnify Landlord contained
in paragraph 26 hereof;
b. Fire and property damage insurance
in so-called "all risk" form insuring Tenant's Trade Fixtures and Tenant's
Alterations for the full replacement cost thereof;
c. Such other insurance that is
reasonably required by Landlord or Landlord's Lender and customarily required
by landlords of similar properties in Santa Clara County, or lenders who do
business in Santa Clara County, and available at commercially reasonable
rates.
(2) Where applicable and required by Landlord,
each policy of insurance required to be carried by Tenant pursuant to this
paragraph 11: (i) shall name as additional insureds Landlord and, if
requested by Landlord, Landlord's Lender, property manager and/or directors;
(ii) shall be primary insurance which provides that the insurer shall be
liable for the full amount of the loss up to and including the total amount
of liability set forth on the declaration page of each such policy without
the right of contribution from any other insurance coverage of Landlord;
(iii) shall be carried with companies licensed to do business in California
and which have a general policy holders rating of at least "A" and a
financial rating of at least "VIII" as set forth in the most current issue of
Best's Insurance Guide; (iv) shall contain a provision whereby the insurer
will endeavor to provide Landlord with thirty (30) days' prior written notice
of any proposed cancellation, lapse or change of any policy; (v) shall not
have a "deductible" in excess of Twenty-Five Thousand Dollars ($25,000)
without Landlord's consent; (vi) shall contain a "cross liability"
endorsement; and (vii) shall contain a "severability of interest" clause. If
Tenant has in full force and effect a blanket policy of liability insurance
with the same coverage for the Premises as described above, as well as other
coverage of other premises and properties of Tenant, or in which Tenant has
some interest, such blanket insurance shall satisfy the requirements of this
subparagraph 11.A.
(3) Evidence of insurance certifying that the
insurance to be carried by Tenant pursuant to this subparagraph 11.A is in
effect, shall be delivered to Landlord prior to the time Tenant or any of its
Agents takes possession of, or commences any construction activities at, the
Premises and upon renewal of such policies, but not less than ten (10) days
prior to the expiration of the term of such coverage. If any Lender or
Landlord's insurance advisor reasonably determines at any time that the
amount of coverage required for any policy of insurance Tenant is to obtain
pursuant to this subparagraph 11.A is not adequate, then Tenant shall
increase such coverage for such
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insurance to such amount as such Lender or insurance advisor reasonably deems
adequate, not to exceed the level of coverage for such insurance as is
reasonable and customarily required of tenants occupying similar properties
in Santa Clara County owned by life insurance companies and other
institutional investors.
B. LANDLORD'S INSURANCE. Landlord shall have the
following obligations and options regarding insurance:
(1) Landlord shall maintain a policy or
policies of fire and property damage insurance in so-called "all risk" form
(on an "occurrence" basis) insuring Landlord (and such others as Landlord may
designate) against loss of rents for a period of not more than twelve (12)
months and from physical damage to the Premises and, if Landlord so elects,
to the improvements within the Common Areas, with coverage of not less than
the full replacement cost thereof (which insurance is hereinafter referred to
as "Landlord's Property Insurance"). Landlord may so insure the Premises
separately, or may insure the Premises with other property owned by Landlord
which Landlord elects to insure together under the same policy or policies,
provided that the amount of insurance and the type of coverage required to be
provided hereunder is not thereby diminished, changed or adversely affected.
Landlord's Property Insurance may be endorsed to cover loss caused by such
additional perils against which Landlord may elect to insure, including
earthquake and/or flood, and to provide such additional coverage as Landlord
reasonably requires. Landlord shall not be required to cause such insurance
to cover any Trade Fixtures or Alterations of Tenant.
(2) Landlord shall maintain a policy or
policies of commercial general liability insurance (on an "occurrence" basis)
insuring Landlord (and such others as are designated by Landlord) against
liability for personal injury, bodily injury, death and damage to property
occurring or resulting from an occurrence in, on or about the Premises, with
combined single limit coverage in the amount of Two Million Dollars
($2,000,000); provided, however, if any Lender or Landlord's insurance
advisor reasonably determines that the coverage limits of such policy are
inadequate, then Landlord may increase such coverage to such amount as such
Lender or insurance advisor reasonably deems adequate, not to exceed the
level of coverage for such insurance customarily carried by owners of
comparable properties similarly situated. If Landlord has in full force and
effect a blanket policy of liability insurance with the same coverage for the
Premises as described above, as well as other coverage of other premises and
properties of Landlord, or in which Landlord has some interest, such blanket
insurance shall satisfy the requirements of this subparagraph 11.B.
C. TENANT'S OBLIGATION TO REIMBURSE. Tenant shall
reimburse Landlord for the full amount of the cost of the insurance described
in paragraph 2.B(1) and Tenant's Prorata Share of the cost of the insurance
described in paragraph 2.B(2) which, if billed separate and apart from Common
Operating Expenses, shall be paid within thirty (30) days of Tenant's receipt
of Landlord's billing therefor. Landlord shall provide Tenant with evidence
reasonably available to Landlord substantiating the cost of such insurance.
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D. RELEASE AND WAIVER OF SUBROGATION. Any other
provision of this Lease to the contrary notwithstanding, the parties hereto
release each other, and their respective agents and employees, from any
liability for injury to any person or damage to property that is caused by or
results from any risk to the extent insured against under any valid and
collectible insurance policy carried by either of the parties, subject to the
following limitations: (i) the foregoing provision shall not apply to the
commercial general liability insurance described by subparagraphs 11.A(1)(a)
and 11.B(2); (ii) such release shall apply to liability resulting from any
risk insured against by Tenant in satisfaction of the requirements of
subparagraph 11.A(1)(b) and by Landlord in satisfaction of the requirements
of subparagraph 11.B(1) of the Lease; and (iii) neither Landlord nor Tenant
shall be released from any such liability to the extent any damages resulting
from such injury or damage are not part of the recovery obtained by the other
from such insurance, but only if the insurance in question permits such
partial release in connection with obtaining a waiver of subrogation from the
insurer. Notwithstanding the preceding sentence, the release set forth in
this subparagraph 11.D shall apply to the extent any sums are payable under
the policy in question, whether or not recovery is actually obtained by the
releasing party. Tenant's obligations to pay any deductible amounts under
insurance policies carried by Landlord pursuant to paragraph 11.B shall be
limited by the express provisions of paragraph 18.D. This release shall be
in effect only so long as the applicable insurance policy contains a clause
to the effect that this release shall not affect the right of the insured to
recover under such policy. Each party shall cause its property insurance
policy to provide that the insurer waives all right of recovery by way of
subrogation against the other party and its Agents in connection with any
injury or damage covered by such policy; provided, however, if any such
insurance policy cannot be obtained with such a waiver of subrogation, or
such waiver of subrogation is only available at rates which are not
commercially reasonable, then the party obtaining such insurance shall notify
the other party of that fact and thereupon shall be relieved of the
obligation to obtain such waiver of subrogation rights from the insurer with
respect to the particular insurance involved. Each party represents to the
other that, as of the Commencement Date of this Lease, a waiver of
subrogation rights as described herein is in effect, and each party shall
provide the other with a minimum of thirty (30) days' written notice before
any such waiver with respect to that party's insurance coverage ceases to be
in effect.
12. LANDLORD'S RIGHT TO PERFORM TENANT'S COVENANTS. Tenant
agrees that, if Tenant shall at any time fail to pay within the grace period
herein provided any mechanics lien, taxes or other fees and charges the
non-payment of which may place in jeopardy Landlord's interest in the Project
or any portion thereof, or if Tenant shall at any time fail to perform any
other act to be made or performed by it under this Lease within the grace
period provided therefor, Landlord may, but shall not be obligated to, make
such payment or perform such other act to the extent Landlord may reasonably
deem such action necessary for the protection of the Premises or the Project,
and without waiving or releasing Tenant from any obligation under this Lease.
All sums so paid by Landlord and all reasonable expenses paid in connection
therewith, together with interest thereon at the Default Interest Rate from
the date of such payment until repaid by Tenant, shall be paid by Tenant to
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Landlord on demand. Landlord shall provide Tenant with evidence reasonably
available to Landlord as to such sums and expenses paid by Landlord.
13. MAINTENANCE AND REPAIR.
A. CONDITION ON DELIVERY. Tenant shall accept the
Premises in the condition existing as of the Effective Date, "as-is", subject
to performance by Landlord of its obligations under the Improvement Agreement
and except that Landlord shall, at its sole expense, cause the following
building systems and equipment to be in good working order as of the
Commencement Date and during the seven (7) months thereafter (the "Specified
Systems"): HVAC, electrical and lighting, plumbing, mechanical, fixtures
existing on the Premises on the Commencement Date, the roof (including the
roof membrane), the structural elements of the Building, the fire protection
system and all exterior landscaping, walkways, paved areas and driveways.
Landlord, at Landlord's sole cost, shall make any repair or replacement
required to be made to the mechanical, electrical, plumbing and/or HVAC
systems of which Landlord is notified in writing on or before the two hundred
tenth (210th) day following the Commencement Date; provided, however, that
Landlord shall not be responsible for any such repair or replacement
necessitated as a result of the actions or omissions of Tenant or its Agents.
B. TENANT'S OBLIGATIONS. Except as otherwise provided
in subparagraphs 13.A and 13.C, Tenant shall be responsible, at its sole
expense, for the following during the period beginning on the earlier to
occur of the Commencement Date or the date Tenant enters into occupancy of
any portion of the Premises pursuant to subparagraph 4.B and continuing
throughout the remainder of the Lease Term:
(1) Tenant shall clean and maintain in good
order, condition, and repair and replace (subject, however, to the
limitations of subparagraph 13.B(5), below) when necessary the interior,
non-structural portions of the Building, through regular inspections and
servicing, including, but not limited to: (i) all plumbing and sewage
facilities inside the Building (including all sinks, toilets, faucets and
drains), and all ducts, pipes, vents or other parts of the HVAC or plumbing
system as provided in subparagraph 13.B(2), below; (ii) all fixtures,
interior walls, floors, carpets and ceilings; (iii) all windows, doors,
entrances, plate glass, showcases and skylights (including cleaning both
interior and exterior surfaces); (iv) all electrical facilities and all
equipment (including all lighting fixtures, lamps, bulbs, tubes, fans, vents,
exhaust equipment and systems) as provided in subparagraph 13.B(2) below; and
(v) any automatic fire extinguisher equipment in the Premises. However, in
no event shall Tenant's obligation to repair under this paragraph extend to
(i) damage and repairs covered by any insurance policy carried by Landlord in
connection with the Premises for which Landlord receives proceeds; (ii)
damage caused in whole or in part by the negligence or willful misconduct of
Landlord or Landlord's Agents; (iii) repairs covered under Common Operating
Expenses; (iv) damage by fire and other casualties, or acts of governmental
authorities, or acts of God and the elements, (v) repairs and or alterations
required by Law, except as otherwise provided in
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paragraph 15 of this Lease, and (vi) damage and repairs the cost for which
Landlord is reimbursed by others. Notwithstanding anything to the contrary
contained in this subparagraph 13.B, Tenant's obligations and liabilities in
connection with the presence of Hazardous Materials on the Premises shall be
limited to the express provisions of paragraph 16 of this Lease. Landlord
shall identify and, upon request of Tenant, assign to Tenant, any and all
warranties in existence with respect to items to be maintained or repaired by
Tenant hereunder and shall assist Tenant as reasonably necessary to enforce
any such warranties.
(2) With respect to utility facilities serving
the Premises (including electrical wiring and conduits, gas lines, water
pipes, and plumbing and sewage fixtures and pipes), Tenant shall be
responsible for the maintenance and repair of any such facilities which are
within the Premises. For the purpose of this subparagraph 13.B(1) and
paragraph 13.C(1), the term "within the Premises" shall mean from the point
that the element of the utility facility in question (E.G. the conduit, line,
pipe) exits from the foundation, second floor deck or interior wall of the
Building, as applicable, and into the Premises. Tenant shall replace any
damaged or broken glass in the Premises (including all interior and exterior
doors and windows) with glass of the same kind, size and quality. Tenant
shall repair any damage to the Premises (including exterior doors and
windows) caused by vandalism or any unauthorized entry, but not including
cosmetic damage to the exterior of the Building, which shall be repaired by
Landlord and charged as a Common Operating Expense as provided in
subparagraph 13.E, below.
(3) Except as otherwise provided in
subparagraph 13.A, Tenant shall (i) maintain, repair and replace (subject,
however, to the limitations set forth in subparagraph 13.B(5), below) when
necessary all HVAC equipment and elevators (if any) which serve the Premises,
and shall keep the same in good condition through regular inspection and
servicing, and (ii) maintain continuously throughout the Lease Term service
contracts for the maintenance of all such HVAC equipment and elevators (if
any) with licensed repair and maintenance contractors approved by Landlord,
which contracts shall provide for the periodic inspection and servicing of
the HVAC equipment and elevators (if any) at intervals not less frequent than
those recommended by the manufacturer of the equipment which is the subject
of such contract. All such service contracts shall include terms and
conditions which are usual and customary for similar services provided in the
vicinity of the Project. On Landlord's request, Tenant shall furnish Landlord
with copies of all such service contracts and shall thereafter provide
Landlord with copies of any amendments thereto or replacement contracts. All
such service contracts shall provide that they may not be canceled or changed
without at least thirty (30) days prior written notice to Landlord.
(4) All repairs and replacements required of
Tenant shall be promptly made with materials of a kind and quality
substantially similar to Landlord's building standard at that time. If the
work affects the structural parts of the Building, then Tenant shall first
obtain Landlord's approval of the scope of work, plans therefor, materials to
be used, and the contractor selected by Tenant to perform such work.
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(5) If the aggregate replacements or
restorations required of Tenant pursuant to this subparagraph 13.B would
cause Tenant to make payments constituting capital expenditures in excess of
Fifty Thousand Dollars ($50,000) per year (applying generally accepted
accounting principles), then the amount of such capital expenditure in excess
of such amount each year shall be paid by Landlord. The amount so paid by
Landlord shall be amortized over the useful life of the improvement or
equipment in question with interest on the unamortized balance at the then
prevailing market rate Landlord would pay if it borrowed funds on a
non-secured basis to construct such improvements from an institutional
lender, and Tenant shall pay monthly amortization payments and interest on
account thereof for the remainder of the Lease Term. Landlord shall inform
Tenant of the monthly amortization and interest payment required to so
amortize such cost, and shall also provide Tenant with the information (in
reasonable detail) upon which Landlord made such determination.
C. LANDLORD'S OBLIGATION TO MAINTAIN.
(1) BUILDING. Landlord, at its cost without
right of reimbursement from Tenant, shall be responsible for the maintenance,
repair and replacement of (i) the structural portions of the Building,
including the foundation, exterior and interior load-bearing walls, ground
floor slab and second floor deck (if any), and structural roof system (but
excluding roof membrane); and (ii) any damage to the Premises caused by the
negligence or willful misconduct of Landlord or Landlord's Agents. In
addition, Landlord shall maintain, clean, repair and replace as necessary,
subject to reimbursement from Tenant as part of Common Operating Expenses,
(i) paint on the exterior of the Building; (ii) gutters, downspouts and
exterior doors of the Building; (iii) the roof membranes of the Building; and
(iv) all portions of any utility facilities serving the Premises and other
buildings within the Project (including electrical wiring and conduits, gas
lines, water pipes, and plumbing and sewage fixture and pipes) which are not
the responsibility of Tenant pursuant to subparagraph 13.B(2), above. Tenant
shall reimburse Landlord for any damage to the portions of the Premises
described in this subparagraph 13.C which is caused by the negligence or
willful misconduct of Tenant or Tenant's Agents and which is not covered by
Landlord's insurance. Tenant may give Landlord notice of any repairs that
are required of Landlord under the terms of this Lease and Landlord shall
proceed to complete such repairs with reasonable diligence, but in no event
later than thirty (30) days of receipt of such notice, or such additional
period as may be reasonably required to complete such repairs provided that
such repair work has commenced within said thirty (30) day period and is
thereafter prosecuted to completion with diligence and continuity. In the
event of an emergency, Tenant shall be empowered to undertake immediate
repairs of such nature as would be Landlord's responsibility and notify
Landlord promptly after such repairs have been undertaken. If Landlord fails
to complete any repairs or maintenance required of it hereunder within the
thirty (30) days following receipt of Tenant's written notice as provided
hereunder (which 30-day period may be extended as provided above), or if
Tenant undertakes emergency repairs as above stated, Tenant may, in addition
to any other remedies it may have at law or in equity, perform the repairs or
maintenance and bill Landlord
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for the cost thereof, in which event Landlord shall reimburse Tenant for such
cost within thirty (30) days of the date of such billing.
(2) COMMON AREAS. Landlord shall repair,
maintain, operate and replace when necessary the Common Areas in order to
keep them in good, clean and safe condition, with such right of reimbursement
from Tenant as is specified in subparagraphs 13.D and E, below. Landlord
shall not be responsible for repairs required by an accident, fire or other
peril except as otherwise required by paragraph 18 hereof, or for damage
caused to any part of the Project by any act, negligence or omission of
Tenant or its Agents, except to the extent covered by Landlord's insurance.
Landlord may engage contractors of its choice to perform the obliga-tions
required of it by this paragraph, and the necessity of any expenditure to
perform such obligations shall be at the sole discretion of Landlord.
D. TENANT'S EARLY OCCUPANCY DATE OR THE OBLIGATION TO
REIMBURSE. As Additional Rent, commencing on the Early Occupancy Date or the
Commencement Date, as applicable, and continuing throughout the remainder of
the Lease Term, Tenant shall pay a share of all Common Operating Expenses
fairly allocable to the Premises including (i) all Common Operating Expenses
paid with respect to the maintenance, repair, replacement and use of the
Premises, and (ii) Tenant's Prorata Share of all Common Operating Expenses
which relate to the Project in general and are not fairly allocable to any
one building on the Project. As used herein, expenses which are "fairly
allocable to the Premises" or "fairly allocable to any one building on the
Project" shall mean those expenses of maintenance, repair, replacement or use
which benefit the Premises or such single building only, such as (by way of
illustration, but not limitation) exterior repainting of the Premises or
other building. Landlord agrees that it shall not recover from all occupants
of the Project more than one hundred percent (100%) of the actual Common
Operating Expenses incurred by Landlord for the period in question. Any
Common Operating Expenses charged to Landlord by any of its affiliates for
goods and services provided to the Common Areas shall not exceed the
prevailing cost thereof that would be charged to Landlord by non-affiliated
parties. All Common Operating Expenses shall be directly attributable to the
operations, maintenance, management and repair of the Project. Payment shall
be made by whichever of the following methods is from time to time designated
by Landlord, and Landlord may change the method of payment at any time so
long as (i) Landlord gives Tenant at least sixty (60) days prior written
notice, and (ii) the method is not changed more than once in any calendar
year. Tenant shall pay such share of the actual Common Operating Expenses
incurred or paid by Landlord but not theretofore billed to Tenant within
thirty (30) days after receipt of a written bill therefor from Landlord, on
such periodic basis as Landlord shall designate, but in no event more
frequently than once a month. Alternatively, (i) Landlord shall deliver to
Tenant Landlord's reasonable estimate of the Common Operating Expenses it
anticipates will be paid or incurred for the calendar year in question, (ii)
during such calendar year, Tenant shall pay Tenant's Prorata Share of the
estimated Common Operating Expenses in advance in monthly installments as
required by Landlord due with each installment of Basic Rent, and (iii)
within ninety (90) days after the end of each calendar year, Landlord shall
furnish to Tenant a statement in reasonable detail, certified by an
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officer of Landlord, of the actual Common Operating Expenses paid or incurred
by Landlord during the calendar year just ended and thereupon there shall be
an adjustment between Landlord and Tenant, with payment to Landlord or credit
by Landlord against the next installment of Basic Rent, as the case may
require, within thirty (30) day after delivery by Landlord to Tenant of said
statement, so that Landlord shall receive the entire amount of Tenant's
Prorata Share of all Common Operating Expenses for such calendar year and no
more.
E. COMMON OPERATING EXPENSES DEFINED. The term
"Common Operating Expenses" shall mean the sum of the following:
(1) All costs and expenses reasonably paid or
incurred by Landlord in doing the following (including payments to
independent contractors providing services related to the performance of the
following): (i) maintaining, cleaning, and repairing the exterior surfaces
(including repainting of exterior surfaces of buildings as reasonably
necessary) of all buildings located on the Project; (ii) maintenance of
Landlord's insurance required under the provisions of paragraph 11 (including
the prepayment of premiums for coverage of up to one year); (iii)
maintaining, repairing, operating and replacing when necessary utility
facilities and other equipment serving all buildings within the Project
and/or the Common Areas; (iv) providing utilities to the Common Areas
(including lighting, trash removal and water for landscaping irrigation); (v)
complying with all applicable Laws (subject to subparagraph 13.E(2)); (vi)
operating, maintaining, repairing, cleaning, painting, restriping and
resurfacing the Common Areas; (vii) maintaining, repairing, operating and
replacing when necessary those items described in the second sentence of
subparagraph 13.C(1);(viii) replacement or installation of lighting fixtures,
directional or other signs and signals, irrigation systems, trees, shrubs,
ground cover and other plant materials, and all landscaping in the Common
Areas; and (ix) rental paid for maintenance and operating machinery and
equipment (if rented).
(2) All additional costs and expenses
reasonably incurred by Landlord with respect to the operation, protection,
maintenance, repair and replacement of the Project which pursuant to
generally accepted accounting principles would be considered a current
expense and not a capital expenditure; provided, however, any cost and
expenses incurred by the Landlord with respect to the operation, protection,
maintenance, repair and replacement of the Project which, according to
generally accepted accounting principles, would be a capital expenditure,
shall be amortized over the useful life of the equipment or improvement which
is the subject of such expenditure, and there shall be included in "Common
Operating Expenses" only that portion of such amortization as is fairly
allocable to the calendar year in question. Any such capital expenditure
shall be amortized over the useful life of the capital improvement or
equipment in question with interest on the unamor-tized balance at the then
prevailing market rate Landlord would pay if it borrowed funds on a
non-secured basis to construct such improvements from an institutional lender.
(3) That portion of all compensation (including
benefits and premiums for workers' compensation and other insurance) paid to
or on behalf of employees of Landlord but only
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to the extent they are involved in the performance of the work described by
subparagraphs 1 and 2 above and that is fairly allocable to the Project.
(4) An administrative fee payable to Landlord
or, if maintenance and operation of the Common Areas is managed by an
independent property management service engaged by Landlord, to such property
management service, in an amount not greater than ten percent (10%) of the
sum of Tenant's per annum obligation to pay (i) Common Operating Expenses
(less the administrative fee described in this subparagraph 13.E(4)), and
(ii) Real Property Taxes.
(5) Notwithstanding anything contained herein,
the term "Common Operating Expenses" shall not include any of the following:
(i) mortgage principal payments; (ii) ground rent and other payments made
pursuant to any ground lease or any financing secured by real estate within
the Project; (iii) the cost of refinancing any loan secured by the Project;
(iv) interest and penalties imposed against Landlord for late payments by
Landlord (except to the extent resulting from a default by Tenant hereunder);
(v) legal fees incurred by Landlord in connection with the negotiation or
enforcement of, or litigation in connection with, any lease affecting the
Project or, except as otherwise expressly provided in any other paragraph of
this Lease, in connection with any other dispute with any other tenant in the
Project; (vi) any costs reimbursed to Landlord by insurance or other third
party payments that are not reimbursements by occupants of the Project for
their share of Common Operating Expenses; (vii) brokerage commissions or
other costs related to the leasing of space within the Project; (viii) the
cost of any tenant improvements installed for the exclusive use of any other
occupant of the Project or any services that are supplied for the exclusive
benefit of any other occupant of the Project; (ix) alterations, additions,
improvements or replacements made to rectify or correct any defect in the
design, materials or workmanship of the Common Areas or Project; (x) repairs
necessitated by the negligence or willful misconduct of Landlord or
Landlord's Agents; (xi) Landlord's general overhead expenses; (xii)
depreciation, (xiii) any costs which are not fairly allocable to the Lease
Term, and (xiv) any costs in connection with the maintenance, repair or
replacement of the structural portions of the Building which are Landlord's
obligations pursuant to subparagraph 13.C(1) of this Lease. Notwithstanding
anything to the contrary contained in this subparagraph 13.E, Tenant's
obligations and liabilities arising from or in connection with the presence
of Hazardous Materials on the Premises shall be limited to the express
provisions of paragraph 16 of this Lease.
F. AUDIT. Landlord shall keep for a period of at
least two (2) years after the expiration of each calendar year, full and
accurate books, records and supporting documents in connection with Real
Property Taxes and Common Operating Expenses incurred by Landlord. Tenant
shall have the right to challenge the accuracy of Real Property Taxes and
Common Operating Expenses for any given calendar year only by giving Landlord
written notice of such challenge by the date which is one hundred eighty
(180) days following the date that Tenant receives Landlord's statement of
Real Property Taxes and Common Operating Expenses. If Tenant does not give
Landlord such notice by such date, Tenant shall be deemed to have waived any
further right to
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challenge the accuracy of Real Property Taxes and Common Operating Expenses
for the calendar year most recently ended. If Tenant timely challenges any
Real Property Taxes and Common Operating Expenses, Landlord shall, upon not
less than five (5) business days prior written notice from Tenant, make
available to Tenant Landlord's books and supporting materials, and Tenant may
audit the same. The Real Property Taxes and Common Operating Expenses shall
be appropriately adjusted on the basis of such audit. Tenant shall pay the
cost and expense of such audit, unless such audit shows that Real Property
Taxes and Common Operating Expenses for the period covered by such audit have
been overstated by more than ten percent (10%), in which event Landlord shall
pay the reasonable costs and expenses of such audit.
G. CONTROL OF COMMON AREAS. Landlord shall at all
times have exclusive control of the Common Areas. Landlord shall have the
right, at Landlord's sole cost and expense, without benefit of reimbursement
from Tenant as a Common Operating Expense (except as otherwise expressly
provided below), without the same constituting an actual or constructive
eviction and without entitling Tenant to any abatement of rent, to: (i)
close any part of the Common Areas to whatever extent required in the opinion
of Landlord's counsel to prevent a dedication thereof or the accrual of any
prescriptive rights therein; (ii) temporarily close the Common Areas to
perform maintenance or for any other reason reasonably deemed sufficient by
Landlord; (iii) change the shape, size, location and extent of the Common
Areas (the costs of which may not be charged as Common Operating Expenses);
(iv) make changes to the Common Areas including, without limitation, changes
in the location of driveways, entrances, passageways, doors and doorways,
elevators, stairs, restrooms, exits, parking spaces, parking areas, sidewalks
or the direction of the flow of traffic and the site of the Common Areas,
subject, however, to the restrictions and limitations set forth in
subparagraph 3.E hereof; (v) remove unauthorized persons or vehicles from the
Common Areas; and/or (vi) change the name of the Project and/or Building.
Landlord may not change the address of the Building without the prior written
consent of Tenant. Tenant shall keep the Common Areas clear of all
obstructions created or permitted by Tenant. If in the opinion of Landlord
unauthorized persons are using any of the Common Areas by reason of the
presence of Tenant in the Building, Tenant, upon demand of Landlord, shall
restrain such unauthorized use by appropriate proceedings. In exercising any
such rights regarding the Common Areas, Landlord shall make a reasonable
effort to minimize any disruption to Tenant's business or interfere with
Tenant's access to the Premises. Tenant assumes all responsibility for the
protection of Tenant and Tenant's Agents from acts of third parties except to
the extent of damage caused by the gross negligence of Landlord or Landlord's
employees, agents or contractors.
14. SURRENDER OF PREMISES. Upon expiration or any sooner
termination of this Lease (hereinafter "Lease Termination"), Tenant shall
surrender to Landlord the entire Premises, together with all Alterations
which Tenant is not allowed to remove pursuant to the terms of this Lease, in
the same condition as when received or installed, ordinary wear and tear and
damage due to casualty or other event outside the control of Tenant excepted,
and clean and free of debris and free of any liens created or suffered to be
created by Tenant. As to any Alterations made to the Premises after
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completion of the initial Tenant Improvements, Landlord shall inform Tenant
when Landlord consents to an Alteration whether or not such Alteration must
be removed by Tenant at Lease Termination. If simultaneously with its
consent to the Alteration, Landlord requests Tenant to remove any Alteration
at Lease Termination, Tenant shall remove the same prior to Lease Termination
and shall at its expense restore the Premises to the condition existing
before the Alteration was made. In addition, Tenant shall remove prior to
Lease Termination all Alterations made without Landlord's consent and shall,
at Tenant's expense, restore the Premises to the condition existing before
such Alterations were made. Any Alterations, changes or additions not
required to be removed by Tenant and not actually removed by Tenant prior to
Lease Termination (if Tenant has the right to remove such Alterations
pursuant to subparagraph 17.C of this Lease) shall immediately upon Lease
Termination become Landlord's property. Landlord may, at Tenant's expense,
dispose of in any manner permitted by Law any Trade Fixtures or personal
property of Tenant that Tenant does not remove from the Premises upon
expiration or termination of the Lease Term.
15. COMPLIANCE WITH LAWS.
A. LANDLORD'S OBLIGATIONS.
(1) Landlord represents and warrants that as of
the execution of this Lease, to Landlord's knowledge, no action, proceeding
or claim is pending or threatened with respect to the Premises concerning a
violation of any Law applicable to the condition of the Premises.
(2) Landlord shall, at Landlord's sole cost and
expense (which cost and expense shall not be included in the Allowance or
Additional Allowance, as such terms are defined in the Improvement Agreement)
construct any alterations or improvements to the Premises (both interior and
exterior) required by Law as a condition to the issuance of all required
permits and approvals from the appropriate governmental authorities for the
construction of the Tenant Improvements and legal occupancy of the Premises
by Tenant (which work shall be referred to herein as the "Initial Compliance
Work"). Notwithstanding the foregoing to the contrary, the following shall
apply:
(i) Tenant shall be responsible for
the cost of any Initial Compliance Work in excess of One Hundred Thousand
Dollars ($100,000) (which excess cost may be paid by Tenant out of the
Allowance and Additional Allowance).
(ii) Landlord shall not be responsible
for any work described in subparagraph 15.A(2) if required as a result of the
construction of Tenant's special purpose improvements, if any. The cost of
such work, however, may be paid out of the Allowance and Additional
Allowance. For the purpose of this subparagraph 15.A(2), the term "special
purpose improvements" shall mean improvements that are not of general utility
to the Building (such as wall, window, and floor covering, walls, doors and
lighting fixtures), which special purpose improvements
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include, without limitation, clean rooms, wet and dry labs, raised computer
floors, auditoriums, cafeterias, atmosphere controlled areas (including,
without limitation, increased HVAC capacity), command modules, satellite
transmission dishes and interior stairwells. Notwithstanding the foregoing,
Landlord shall be responsible for work described in subparagraph 15.A(2) to
be made to the cafeteria so long as such work is not required as a result of
special improvements made by Tenant to the cafeteria.
(3) Except to the extent provided to the
contrary in the preceding subparagraphs of this paragraph 15.A or in
paragraph 15.B which follows, if any Law requires any alteration, repair,
replacement or addition to the interior of the Building ("Law Compliance
Work"), the cost of which, according to generally accepted accounting
principles, would be a capital expenditure, Landlord shall cause such Law
Compliance Work to be completed and the cost thereof shall be amortized over
the useful life of the improvement or equipment so constructed with interest
on the unamortized balance at the then prevailing market rate Landlord would
pay if it borrowed funds on a non-secured basis to construct such
improvements or equipment from an institutional lender. Landlord shall
furnish to Tenant verification of all costs so incurred and details of the
amortization thereof. Tenant shall pay as Additional Rent each month during
the remainder of the Lease Term following completion of the Law Compliance
Work in question, on the due date of each installment of Basic Rent, that
portion of amortization of cost of such Law Compliance Work and interest as
is applicable to such month."
B. TENANT'S OBLIGATIONS. Except to the extent
provided to the contrary in paragraph 15.A, Tenant shall, at its sole
expense, comply promptly with all Laws applicable on account of Tenant's use
of the Premises. Additionally, and notwithstanding anything to the contrary
in subparagraph 15.A(3), Tenant shall be solely responsible for compliance
with any Law applicable to the Premises, where such compliance is required
because of Tenant's particular use of the Premises or because of or as a
condition to the issuance of any governmental approval required by reason of
Alterations constructed and installed by Tenant.
16. HAZARDOUS MATERIALS.
A. TENANT'S OBLIGATIONS. Tenant has completed and
duly executed, and there is attached hereto as EXHIBIT "E", a copy of a
questionnaire pertaining to Tenant's use of Hazardous Materials (the
"Hazardous Materials Questionnaire"). Tenant represents and warrants to
Landlord that all information set forth in the Hazardous Materials
Questionnaire is true and correct as of the Effective Date. Tenant shall not
cause or permit any of Tenant's Agents to cause the use, generation, storage,
disposal, transportation or release of any Hazardous Materials on, under, in,
above, to, or from the Project except that which is (i) fully described in
the Hazardous Materials Questionnaire, (ii) incidental to Tenant's use and
operation of the Premises, and (iii) in compliance with all applicable Laws.
Tenant may not use at the Premises Hazardous Materials other than those
specified in the Hazardous Materials Questionnaire, or in quantities
different from those specified in the Hazardous
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Materials Questionnaire, unless Tenant obtains Landlord's prior written
consent to such new use (which consent shall not be withheld unless Landlord
reasonably determines that the manner of use of such Hazardous Materials
poses an unreasonable risk of contamination of the Property) and submits a
new Hazardous Materials Questionnaire that accurately describes the new use.
B. TENANT'S INDEMNITY. Tenant shall indemnify,
defend, protect and hold Landlord harmless from and reimburse Landlord for
any claims, liabilities, damages, costs, and expenses (including, without
limitation, attorneys' fees, court costs, and investigation and remediation
expenses) arising from or related to any breach of Tenant's obligations
contained in this paragraph 16 or the use, generation, storage,
transportation, disposal, or release of Hazardous Materials by Tenant or its
Agents on the Project, including all of the following which may result
therefrom: (i) any loss, cost, expense, claim, or liability arising out of
any investigation, reporting, monitoring, clean-up, containment, removal,
storage, or restoration work required by any applicable Law, governmental
agency, or political subdivision or prudent standards of real estate
ownership and management;(ii) any claims of third parties for loss, injury,
expense, or damage; and (iii) any loss of rents or income and/or diminution
in the value of the Property.
C. NOTICES. Landlord and Tenant shall each give
written notice to the other as soon as reasonably practicable of (i) any
communication received from any governmental agency concerning Hazardous
Materials which relates to the Project or Premises, and (ii) any
contamination of the Project by Hazardous Materials which constitutes or
could become a violation of applicable Law or subject the Project to an
investigation or remediation requirement imposed by Law.
D. TESTING. Landlord may conduct tests of soils and
groundwater beneath the Premises and in any other location on the Project,
including installation of groundwater monitoring wells, to detect the
presence of Hazardous Materials. Any such tests or well installation shall
be done at Landlord's cost in a manner which reasonably minimizes
interference with Tenant's use and enjoyment of the Premises; provided,
however, that Tenant shall pay for the costs of any such tests which disclose
the presence of Hazardous Materials released by Tenant or Tenant's Agents.
Landlord shall notify Tenant before Landlord installs any monitoring or
extraction wells or before it commences any groundwater or soil sampling. No
testing or sampling of the soil or groundwater of the Project may be done by
Tenant without Landlord's prior consent.
E. SURVIVAL. The obligations of Landlord and Tenant
set forth in paragraph 16 shall survive the expiration or earlier termination
of the Lease. Tenant's obligations and liabilities with respect to the
presence of Hazardous Materials on the Project are limited to the express
provisions of this paragraph 16.
F. LANDLORD'S REPRESENTATIONS: Landlord hereby makes
the following representations and warranties to Tenant, each of which is made
to the actual knowledge of
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Landlord's Designated Individuals (hereinafter defined) as of the Effective
Date, without having made any investigation to verify the accuracy thereof.
(1) Landlord has provided to Tenant prior to
the Effective Date copies of all reports in Landlord's possession concerning
the environmental condition of Parcel E and the soil and groundwater in, on,
and about Parcel E, which reports are described in attached EXHIBIT "F" and
are hereinafter collectively referred to as the "Parcel E Environmental
Reports".
(2) Except as otherwise stated in the Parcel E
Environmental Reports, Parcel E, (including the soil and groundwater on or
under Parcel E) does not contain Hazardous Materials in material amounts.
(3) Except as otherwise stated in the Parcel E
Environmental Reports, during the time that Landlord has directly held fee
title to Parcel E or held an interest in an entity which held fee title to
Parcel E, Landlord (or such entity in which Landlord held an interest) has
received no written notice of (i) any violation, or alleged violation, of any
Law pertaining to Hazardous Materials with respect to Parcel E, (ii) any
pending claims relating to the presence of Hazardous Materials on Parcel E,
or (iii) any pending investigation by any governmental agency concerning
Parcel E relating to Hazardous Materials.
(4) There are no underground storage tanks
presently existing under Parcel E.
(5) As used above, "Landlord's Designated
Individuals" shall mean the following people: (i) James Piane and (ii) Paul
Radich.
G. LANDLORD'S OBLIGATIONS: Landlord and Tenant
acknowledge that the Parcel E Environmental Reports discloses that there
exists asbestos in the roof sealant of the Building. If and when the roof
needs repair or replacement, Landlord shall be solely responsible for any
costs in connection with such repair or replacement to the extent solely
attributable to the existence of such asbestos and Landlord shall not have a
right of reimbursement from Tenant for such costs.
17. ALTERATIONS.
A. CONSENT REQUIRED. Except for interior,
non-structural Alterations costing less than Ten Thousand Dollars ($10,000)
for each integrated or related work of improvement (not to exceed Thirty
Thousand Dollars ($30,000) during any twelve (12)-month period) , Tenant
shall not alter the Premises without the prior written consent of Landlord.
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B. CONDITIONS. All work done by or for Tenant in or
about the Premises (hereinafter called the "Work") shall be done in all cases
subject to the following conditions, each of which Tenant covenants to
observe and perform:
(1) No Work involving any structural change and
no Work involving any Alteration, restoration, or rebuilding costing more
than Ten Thousand Dollars ($10,000) for each integrated or related work of
improvement (not to exceed Thirty Thousand Dollars ($30,000) in the aggregate
during any twelve (12)-month period) shall be undertaken until detailed plans
and specifications have first been submitted to and approved in writing by
Landlord, which approval shall not be unreasonably withheld or delayed. The
foregoing notwithstanding, if plans and specifications are required in order
to obtain a building permit for any such Work, Tenant shall furnish a copy
thereof to Landlord prior to commencement of such Work.
(2) No Work involving a cost, as reasonably
estimated by Tenant, of more than Fifty Thousand Dollars ($50,000) for each
integrated or related work of improvement shall be undertaken except under
the supervision of an architect or engineer approved in writing by Landlord,
which approval shall not be unreasonably withheld or delayed (unless such
requirement is waived by Landlord in writing, which waiver shall not be
unreasonably withheld).
(3) All Work shall be (i) commenced only after
providing to Landlord not less than five (5) business days prior written
notice, to allow Landlord sufficient time to post notices of
non-responsibility, and only after all required governmental permits and
authorizations have been obtained, (ii) done in a good and workmanlike
manner, (iii) performed in compliance with all applicable Laws and in
accordance with the reasonable recommendations of any insurer under any
policies required by this Lease, and (iv) completed promptly and free of
liens.
C. PROPERTY OF TENANT. Except as otherwise provided
herein, all Alterations, Trade Fixtures and personal property made or
installed at the Premises by Tenant at its expense shall immediately upon
completion of installation thereof be and remain the property of Tenant and
Tenant shall be entitled to all depreciation, amortization and other tax
benefits with respect thereto. Except for Alterations which cannot be
removed without structural injury to the Premises, Tenant may at any time
during the Lease Term remove such Alterations, Trade Fixtures and personal
property from the Premises, provided Tenant repairs all damage caused by such
removal.
18. DAMAGE OR DESTRUCTION.
A. LANDLORD'S DUTY TO RESTORE. If the Premises are
damaged by any peril after the Effective Date, Landlord shall restore the
Premises and Common Areas unless the Lease is terminated by Landlord pursuant
to subparagraph 18.B or by Tenant pursuant to subparagraph 18.C. All
insurance proceeds available from the fire and property damage insurance
carried by Landlord pursuant to subparagraph 11(B) shall be paid to and
become the property of Landlord. If this Lease
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is not so terminated, then upon receipt of the insurance proceeds (if the
loss is covered by insurance) and the issuance of all necessary governmental
permits, Landlord shall immediately commence and diligently prosecute to
completion the restoration of the Premises to their pre-existing condition,
to the extent then allowed by Law. Landlord shall act diligently to obtain
such permits and insurance proceeds as quickly as possible. Landlord's
obligation to restore the Premises shall be limited to the Premises and
Tenant Improvements constructed by Landlord as they existed as of the
Commencement Date, excluding any of Tenant's Alterations, Trade Fixtures
and/or personal property constructed or installed by Tenant in the Premises.
B. LANDLORD'S RIGHT TO TERMINATE. Landlord shall have
the right to terminate this Lease in the event any of the following occurs,
which right may be exercised only by delivery to Tenant of a written notice
of election to terminate within thirty (30) days after the date of such
damage:
(1) The Building is damaged by an Insured Peril
to such an extent that the estimated cost to restore exceeds eighty percent
(80%) of the then actual replacement cost thereof and, at the time of such
damage, less than three (3) years remains on the Lease Term; provided,
however, Landlord may not terminate this Lease pursuant to this subparagraph
if Tenant, at the time of such damage, has a then valid express written
option to extend the Lease Term and Tenant exercises such option to extend
the Lease Term within thirty (30) days following receipt of Landlord's notice
of election to terminate the Lease. If Landlord elects to terminate this
Lease pursuant to the provisions of the subparagraph 18.B(1), Landlord shall
deliver to Tenant together with Landlord's termination notice a written
estimate of the time Landlord reasonably believes will be required for
restoration of the Premises and the amount of the deductible portion of the
loss for which Tenant will be responsible.
(2) The Building is damaged by an Uninsured
Peril to such an extent that the estimated cost to restore exceeds five
percent (5%) of the then actual replacement cost thereof; provided, however,
Landlord may not terminate this Lease pursuant to this subparagraph if within
thirty (30) days after Landlord has notified Tenant of its election to
terminate this Lease Tenant (i) pays to Landlord in cash the full amount of
such excess, or (ii) delivers to Landlord written notice of its agreement to
pay such excess in monthly progress payments, as costs are incurred during
the work of restoration, which obligation shall be secured by a letter of
credit delivered to Landlord at the time of such notice, which letter of
credit shall be in the amount of such excess and payable to Landlord on sight
(and shall be in a form and drawn on a bank reasonably satisfactory to
Landlord).
(3) The Building is damaged by any peril within
twelve (12) months of the last day of the Lease Term to such an extent that
the estimated cost to restore equals or exceeds an amount equal to six (6)
times the Basic Rent then payable; provided, however, that Landlord may not
terminate this Lease pursuant to this subparagraph if Tenant, at the time of
such damage, has a then
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valid express written option to extend the Lease Term and Tenant exercises
such option to extend the Lease Term within fifteen (15) days following
Tenant's receipt of Landlord's termination notice.
(4) The Building is damaged by any peril and,
because of the Laws then in force, the Building cannot be used for the same
use being made thereof before such damage if restored as required by this
paragraph.
As used herein, the following terms used in this paragraph 18 shall have the
following meanings: (i) the term "Insured Peril" shall mean a peril actually
insured against for which the insurance proceeds actually received by
Landlord are sufficient (except for any "deductible" amount specified by such
insurance) to restore the Building under then-existing building codes to the
condition existing immediately prior to the damage or would have been insured
had Landlord complied with its obligations under subparagraph 11.B, above;
and (ii) the term "Uninsured Peril" shall mean any peril which is not an
Insured Peril. Notwithstanding the foregoing, if the "deductible" for any
insurance carried by Landlord exceeds five percent (5%) of the replacement
cost of the property insured, the peril covered by such insurance shall be
deemed to be an "Uninsured Peril".
C. TENANT'S RIGHT TO TERMINATE. If the Premises are
damaged by any peril and Landlord does not elect to terminate this Lease or
is not entitled to terminate this Lease pursuant to the provisions of
subparagraphs 18(B)(1), (2) (3) or (4), above, then, as soon as reasonably
practicable, but not later than forty-five (45) days following the date of
damage or destruction, the parties and their respective architects or
construction consultants shall meet and attempt to reach agreement on an
estimate of the time period necessary for Landlord to complete restoration of
the Premises (which estimated time period is referred to herein as the
"Estimated Restoration Period"). If within said 45-day period the parties
are unable to agree on the Estimated Restoration Period, then within ten (10)
days following the end of said 45-day period Landlord shall select a licensed
contractor experienced in the construction of buildings similar to the
Premises for the purpose of establishing the Estimated Restoration Period.
Tenant shall have the right to approve such contractor. Upon mutual approval
of such contractor, Landlord and Tenant shall immediately furnish to such
contractor plans and specifications for the Building and such other
information as is necessary for such contractor to determine the Estimated
Restoration Period. Within fifteen (15) days following receipt of plans and
specifications for the Building and such other relevant information as has
been provided by the parties, such contractor shall determine the Estimated
Restoration Period and give written notice thereof to the parties. The
Estimated Restoration Period as so determined by such contractor shall be
conclusive and binding upon the parties. Tenant shall have the right to
terminate this Lease under any of the following circumstances:
(1) The Premises are damaged by any peril and
the Estimated Restoration Period extends beyond the two hundred seventieth
(270th) day after the date of such damage, and Tenant gives written notice of
termination within seven (7) days following receipt of notice of the
Estimated Restoration Period.
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(2) The Premises are damaged by any peril
within twelve (12) months of the last day of the Lease Term, and (i) the
Estimated Restoration Period extends beyond the thirtieth (30th) day after
the date of such damage, (ii) such damage renders unusable more than twenty
percent (20%) of the Premises, and (iii) Tenant gives written notice of
termination within seven (7) days following receipt of notice of the
Estimated Restoration Period.
D. PAYMENT OF DEDUCTIBLES. If following an event of
damage or destruction the Lease is not terminated and Landlord proceeds with
restoration of the Premises, Tenant shall have the following obligations with
respect to payment of deductibles under Landlord's Property Insurance:
(1) If the Premises are damaged by fire or
other casualty typically covered under a standard "all risk" policy of
property insurance, Tenant shall be obligated to pay one hundred percent
(100%) of the deductible.
(2) If the Premises are damaged by earthquake
or flood which is covered by earthquake or flood insurance, Tenant shall pay
to Landlord within thirty (30) days following commencement of the restoration
work an amount equal to the lesser of (i) one month of Basic Rent at the rate
then payable hereunder, or (ii) twenty percent (20%) of the deductible
payable in connection with such casualty, which amount shall be applied
toward repair of the damage or destruction. The balance of such deductible,
up to a maximum of ten percent (10%) of the full replacement cost of the
Building (less the amount payable by Tenant pursuant to (i), above) shall be
amortized over the useful life of the improvements to be restored with
interest on the unamortized balance at the then prevailing market rate
Landlord would pay if it borrowed funds on a non-secured basis to construct
such improvements from an institutional lender, and Tenant shall pay to
Landlord each month as Additional Rent that portion of such amortized amount
as is applicable to such month.
E. ABATEMENT OF RENT. In the event of damage to the
Premises which does not result in the termination of this Lease, the Basic
Rent and the Additional Rent shall be temporarily abated during the period of
restoration in proportion to the degree to which Tenant's use of the Premises
is impaired by such damage. Tenant shall not be entitled to any compensation
or damages from Landlord for loss of Tenant's business or property or for any
inconvenience or annoyance caused by such damage or restoration.
F. WAIVER. Tenant hereby waives California Civil Code
Sections 1932, 1933, 1941 and 1942, and the provisions of any other law now
or hereafter in effect that would give Tenant the right to terminate this
Lease or relieve Tenant of its obligation to pay rent under this Lease,
except to the extent expressly provided herein.
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19. CONDEMNATION.
A. TENANT'S RIGHT OF TERMINATION. If the Premises or
any portion thereof are taken under the power of eminent domain (hereinafter
referred to as "Condemnation"), this Lease shall terminate as to the part so
taken as of the date the condemning authority takes title or possession,
whichever occurs first. If more than twenty percent (20%) of the Gross
Leasable Area of the Building is taken by Condemnation, or there is a taking
affecting the Common Area and, as a result of such taking, Landlord cannot
provide parking spaces within the Project equal in number to at least ninety
percent (90%) of Tenant's Allocated Parking Stalls, as specified in
subparagraph 3(S), above, and as a result thereof the Premises are unsuitable
for Tenant's use (in Tenant's reasonable opinion), then at Tenant's option,
exercisable only in writing and within thirty (30) days after Landlord shall
have given Tenant written notice of such taking (or, in the absence of such
notice, within thirty (30) days after the condemning authority shall have
taken possession), Tenant may terminate this Lease as of the date the
condemning authority takes possession. If Tenant does not terminate this
Lease in accordance with the foregoing, this Lease shall remain in full force
and effect as to the portion of the Premises remaining, except that the Basic
Rent shall be reduced as follows: (i) if only a portion of the Building, and
no portion of the Common Areas, is taken, the Basic Rent shall be reduced in
the proportion that the Gross Leasable Area of the portions of the Building
so taken bears to the total Gross Leasable Area of the Building; or (ii) if
only portions of the Common Areas are taken, or if both portions of the
Common Areas and Building are taken, the Basic Rent shall be reduced in
proportion to the reduction in fair rental value of the Premises following
such condemnation. If the parties are unable to agree as to the amount of
abatement, within forty-five (45) days after the condemnation, the matter
shall be submitted to binding arbitration under the rules of the American
Arbitration Association.
B. CONDEMNATION AWARD. Landlord shall be entitled to
any award paid if the Premises are wholly or partially condemned, except that
Tenant shall be entitled to receive from either the condemning authority or
Landlord, as applicable, the following: (i) the then unamortized cost of any
Alterations or Tenant Improvements paid for by Tenant; (ii) the value of
Tenant's Trade Fixtures; (iii) Tenant's loss of goodwill; (iv) Tenant's
relocation costs; and (v) Tenant's loss of business and business interruption.
C. RESTORATION. If less than the entire Premises
shall be taken by Condemnation, and this Lease is not terminated pursuant to
subparagraph A above, Landlord shall promptly restore that portion of the
Building and Common Areas not so taken to a complete architectural unit to
the extent of condemnation proceeds received by Landlord to which Landlord is
entitled pursuant to the terms hereof.
20. MECHANIC'S LIENS. Tenant shall not suffer or permit any
mechanics' or other liens (or claims thereof) to be filed against the
Premises or Tenant's leasehold interest therein or hereunder by reason of
work, labor, services, or materials supplied or claimed to have been supplied
to Tenant or
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anyone holding the Premises or any part thereof through or under Tenant.
Landlord shall have the right at all reasonable times to post and keep posted
on the Premises any notices that Landlord may deem necessary or advisable for
the protection of Landlord and the Premises from mechanics' liens. If any
such liens (or claims thereof) shall at any time be filed against the
Premises, Tenant shall cause the same to be discharged of record within
forty-five (45) days after the date of filing.
21. FINANCIAL STATEMENTS. Upon the request of Landlord, Tenant
shall provide to Landlord from time to time (but no more than twice in any
calendar year), at no expense to Landlord, copies of all financial statements
filed by Tenant with the United States Securities and Exchange Commission
(the "SEC") during such calendar year or the preceding calendar year or, if
Tenant is not obligated to file financial statements with the SEC, copies of
fiscal quarterly and annual balance sheets and income statements prepared by
or for Tenant which financial statements shall be either audited or certified
by Tenant's chief financial officer.
22. LANDLORD'S ENTRY. Tenant agrees to permit Landlord and its
Agents to enter the Premises upon written notice reasonably in advance
(except in case of emergency where no prior notice shall be required) with
reasonable frequency during usual business hours, or at any other time in
case of emergency, (i) to inspect the Premises and, if Landlord so desires,
but without implying any obligation of Landlord to do so, to make any repairs
deemed necessary or desirable by Landlord and to perform any work in the
Premises deemed necessary by Landlord to comply with any Laws or the
recommendations of any insurer, and (ii) during the final nine (9) months of
the Lease Term, for the purpose of showing the Premises to prospective
tenants. Landlord may display on the Premises usual "For Lease" and/or "For
Sale" signs during the final six (6) months of the Lease Term, provided that
no such signs block visibility of Tenant's signs. By exercising the
foregoing rights, Landlord shall not unreasonably interfere with Tenant's use
of the Premises and shall use reasonable efforts to minimize any necessary
interference.
23. ASSIGNMENT AND SUBLETTING.
A. Tenant shall not, without the prior consent of
Landlord, which consent shall not be unreasonably withheld or delayed by
Landlord, transfer, assign or hypothecate this Lease or any interest herein,
sublet the Premises or any part thereof, or permit the use of the Premises by
any party other than Tenant. This Lease shall not, nor shall any interest
herein, be assignable as to the interest of Tenant by operation of law
without the consent of Landlord, which consent shall not be unreasonably
withheld. Any of the foregoing acts without such consent shall be void and
shall, at the option of Landlord, terminate this Lease.
B. If the Tenant is a privately held corporation, or
is an unincorporated association or partnership, the transfer (except
pursuant to a public offering), assignment, or hypothecation of any stock or
interest in such corporation, association, or partnership resulting in one
entity or a group of affiliated entities obtaining in excess of fifty percent
(50%) (in the aggregate) of
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the voting shares of stock or interest in such corporation, association or
partnership ("Stock Transfer") shall be deemed an assignment or transfer
within the meaning and provisions of this paragraph. Notwithstanding
anything to the contrary in this subparagraph 23.B, in no event shall the
public offering or trading of stock in Tenant over a public exchange
(including the transfer of fifty percent (50%) or more of the outstanding
stock in Tenant) be deemed an assignment or transfer within the meaning of
this paragraph.
C. Without limiting the other instances in which it
may be reasonable for Landlord to withhold its consent to an assignment or
subletting, Landlord and Tenant acknowledge that it shall be reasonable for
Landlord to withhold its consent in the following instances:
(1) if at the time consent is requested or at
any time prior to the granting of consent, Tenant is in material default
under this Lease or would be in default under this Lease but for the pendency
of any grace or cure period specified in this Lease;
(2) if the proposed assignee or sublessee is a
governmental agency;
(3) if, in Landlord's reasonable judgment, the
use of the Premises by the proposed assignee or sublessee would involve
occupancy in violation of this Lease; or
(4) if, in Landlord's reasonable judgment, the
financial worth of the proposed assignee or sublessee does not meet the
current credit standards applied by Landlord or its investment advisors for a
new tenant of the Premises.
D. Tenant shall give Landlord at least fifteen (15)
days prior written notice of any proposed assignment or sublease
("Transfer"), which notice shall be accompanied by the following information
and documentation: (i) the name and legal composition of the proposed
transferee; (ii) a current financial statement of the transferee, financial
statements of the transferee covering the preceding three (3) years if the
same exist, and (if available) an audited financial statement of the
transferee for a period ending not more than one year prior to the proposed
effective date of the Transfer; (iii) the nature of the proposed transferee's
business to be conducted in the Premises; (iv) all consideration to be given
on account of the Transfer; (v) a current financial statement of Tenant
(subject, however, to the limitations of paragraph 21 hereof); (vi) the form
of sublease or assignment and all other agreements evidencing the transfer;
(vii) an environmental questionnaire in the form attached as EXHIBIT "E",
completed and signed by the proposed transferee; and (viii) such other
informa-tion as may be reasonably requested by Landlord. Tenant's notice
shall not be deemed to have been served or given until such time as Tenant
has provided Landlord with all information reasonably requested by Landlord
pursuant to this subparagraph D. Tenant shall immediately notify Landlord of
any modification to the proposed terms of such Transfer. Within five (5)
business days following receipt of Tenant's written request for approval of a
Transfer, Landlord shall notify Tenant in writing if the documentation
accompanying such request does not satisfy all of the requirements of this
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paragraph, and Landlord's failure to do so shall be deemed its acceptance as
complete the notification of Transfer and documentation provided by Tenant.
Within ten (10) business days following receipt of Tenant's request and
complete documentation satisfying the requirements of this paragraph,
Landlord shall notify Tenant in writing of its approval or disapproval of the
proposed Transfer. If Landlord disapproves the proposed Transfer, Landlord
shall specify in its notice its reasons for disapproval. If Landlord
approves such Transfer, or fails to respond within said ten (10) business day
period, Tenant shall be free for a period of one hundred twenty (120) days
after the end of said ten (10) business day period to assign its entire
interest in this Lease or to sublet such space to the entity specified in
Tenant's original request upon the terms set forth therein.
E. Notwithstanding the provisions of subparagraphs
23.A and B, above, and provided that Tenant is not in material breach of the
Lease and no uncured default of Tenant under the Lease then exists, Tenant
may, with prior notice to Landlord but without Landlord's prior consent,
assign this Lease or sublet the Premises to any corporation which controls,
is controlled by or is under common control with Tenant by means of an
ownership of one hundred percent (100%) of the outstanding voting shares of
stock. In the case of any such assignment or sublease not requiring
Landlord's prior consent, Tenant shall nevertheless notify Landlord in
writing, not less than ten (10) days prior to the effective date of such
assignment or sublease, of the nature and purpose of such assignment or
sublease and the identity of the proposed assignee or subtenant and the
address and telephone number of its principal office. As to any assignment
or sublease described above, Tenant shall provide Landlord, upon request,
with such additional information pertaining to the business purpose and
nature of such assignment or sublease as Landlord may reasonably require to
verify compliance with the terms of this Lease, and Tenant shall cooperate in
good faith with Landlord in addressing and/or answering any reasonable
questions or concerns Landlord may have pertaining to the proposed assignment
or sublease.
F. Except to the extent provided to the contrary
pursuant to subparagraph 23.F hereof, no sublessee shall have a right further
to sublet without Landlord's prior consent, and any assignment by a sublessee
of its sublease shall be subject to Landlord's prior consent in the same
manner as if Tenant were entering into a new sublease. No sublease, once
consented to by Landlord, shall be modified or terminated by Tenant without
Landlord's prior consent, which consent shall not be unreasonably withheld.
G. In the event of any assignment or sublease, Tenant
shall pay to Landlord, within ten (10) days following receipt by Tenant,
fifty percent (50%) of any rent or other consideration received by Tenant
from an assignee or subtenant after first deducting out for Tenant's account:
(i) all sums payable by Tenant under this Lease (ii) broker's commissions
payable by Tenant with regard to the transfer; (iii) reasonable legal fees;
and (iv) the cost of improvements made to the portion of the Premises subject
to the transfer by Tenant at Tenant's expense for the purpose of the transfer.
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H. Regardless of Landlord's consent, no subletting or
assignment shall release Tenant of Tenant's obligation or alter the primary
liability of Tenant to pay the rent and to perform all other obligations to
be performed by Tenant hereunder. The acceptance of rent by Landlord from
any other person shall not be deemed to be a waiver by Landlord of any
provision hereof. Consent to one assignment or subletting shall not be deemed
consent to any subsequent assignment or subletting. In the event of default
by any assignee 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 assignee or successor.
Landlord may consent to subsequent assignments or subletting of this Lease or
amendments or modifications to this Lease with assignees of Tenant, with
Tenant's prior written consent thereto, and such action shall not relieve
Tenant of liability under this Lease.
24. SUBORDINATION. At Landlord's option, this L |
