California-Sunnyvale-1195 Bordeaux Drive Lease - Bowling Revocable Trust and Artisan Components Inc.
LEASE
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(SINGLE TENANT MODIFIED NET)
1. Parties.
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THIS LEASE (the "Lease"), dated June 16, 1997, is entered into by and
between Richard V. Bowling, Jr. and Kathleen S. Bowling, Trustees of the
Bowling Revocable Trust ("Landlord"), whose address is P.O. Box 1085, Danville,
CA 94526, and Artisan Components, Inc., a California corporation ("Tenant"),
whose address is 2077 Gateway Place, San Jose, CA 95110-1015.
2. Premises.
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Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord the building located at 1195 Bordeaux Drive, Sunnyvale, California,
consisting of approximately thirty-two thousand six hundred sixty (32,660)
square feet and located on that certain real property consisting of
approximately two and 41/100ths (2.41) acres as more particularly described in
EXHIBIT A, together with a right to use the Outside Area as defined in Paragraph
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3.D. (collectively, the "Premises"). Tenant shall at all times during the Term
of this Lease have the exclusive right to use the entire Premises, including the
Outside Area.
3. Definitions.
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The following terms shall have the following meanings in this Lease:
A. Alterations. Any alterations, additions or improvements made in,
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on or about the Building after the Commencement Date, including, but not limited
to, lighting, heating, ventilating, air conditioning, electrical, partitioning
(other than demountable partitioning), and carpentry installations.
B. Building. That certain building located at 1195 Bordeaux Drive,
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Sunnyvale, California, consisting of approximately thirty-two thousand six
hundred sixty (32,660) square feet.
C. Commencement Date. The Commencement Date of this Lease shall be
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the first day of the Term determined in accordance with Paragraph 4.A.
D. Outside Area. All areas and facilities within the Premises
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exclusive of the Building, such as parking areas, sidewalks, landscaped areas,
service areas, trash disposal facilities, and similar areas and facilities.
E. HVAC. Heating, ventilating and air conditioning.
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F. Interest Rate. Twelve percent (12%) per annum, however, in no
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event to exceed the maximum rate of interest permitted by law.
G. Landlord's Agents. Landlord's authorized agents, partners,
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subsidiaries, directors, officers, trustees and employees.
H. Monthly Rent. The rent payable pursuant to Paragraph 5.A., as
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adjusted from time to time pursuant to the terms of this Lease.
I. Real Property Taxes. Any form of assessment, license, fee, rent
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tax, levy, penalty (if a result of Tenant's delinquency), or tax (other than net
income, estate, succession, gift, inheritance, transfer or franchise taxes),
imposed by any authority having the direct or indirect power to tax, or by any
city, county, state or federal government or any improvement or other district
or division thereof, whether such tax is: (i) determined by the area of the
Premises or any part thereof or the rent and other sums payable hereunder by
Tenant, including, but not limited to, any gross income or excise tax levied by
any of the foregoing authorities with respect to receipt of such rent or other
sums due under this Lease; (ii) upon any legal or equitable interest of Landlord
in the Premises or any part thereof; (iii) upon this transaction or any document
to which Tenant is a party creating or transferring any interest in the
Premises; (iv) levied or assessed in lieu of, in substitution for, or in
addition to, existing or additional taxes against the Premises whether or not
now customary or within the contemplation of the parties; or (v) surcharged
against the parking area.
J. Rent. Monthly Rent plus the Additional Rent defined in Paragraph
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5.B.
K. Security Deposit. That amount paid by Tenant pursuant to
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Paragraph 7.
L. Sublet. Any transfer, sublet, assignment, license or concession
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agreement, change of ownership, mortgage, or hypothecation of this Lease or the
Tenant's interest in the Lease or in and to all or a portion of the Premises.
M. Subrent. Any consideration of any kind received, or to be
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received, by Tenant from a Subtenant if such sums are related to Tenant's
interest in this Lease or in the Premises.
N. Subtenant. The person or entity with whom a Sublet agreement is
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proposed to be or is made.
O. Tenant Improvements. Those certain improvements to the Building
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to be constructed by Tenant pursuant to EXHIBIT B.
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P. Tenant's Personal Property. Tenant's trade fixtures, furniture,
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equipment and other personal property in the Premises.
Q. Term. The term of this Lease set forth in Paragraph 4.A., as it
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may be extended hereunder pursuant to any options to extend granted herein.
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4. Lease Term.
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A. Term. The Term of this Lease shall be seven (7) years,
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commencing on the Commencement Date and expiring seven (7) years thereafter,
unless sooner terminated and subject to any extension granted hereunder. The
Commencement Date of this Lease shall be the earliest occurring of the
following:
(i) The date a Notice of Completion for the Exterior ADA Work,
the Seismic Work and the Tenant Improvements to be constructed or installed by
Tenant pursuant to EXHIBIT B is filed by Tenant's contractor; or
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(ii) The date the City of Sunnyvale has approved the Exterior
ADA Work, the Seismic Work and the Tenant Improvements constructed pursuant to
EXHIBIT B in accordance with its building code, evidenced by its completion of a
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final inspection and written approval of such improvements as so completed in
accordance with the building permit issued for such work; or
(iii) The date Tenant commences occupancy of the Premises and
commences operation of its business in the Premises.
When the actual Commencement Date is determined, the parties shall execute a
Commencement Date Memorandum setting forth such date in the form shown in
EXHIBIT C.
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B. Tenant Delays. If the Commencement Date has not occurred within
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seventy-five (75) days after the date this Lease has been fully executed, then,
beginning on the seventy-sixth (76th) day and continuing on the first day of
each calendar month thereafter until the Commencement Date, Tenant shall pay to
Landlord the Monthly Rent set forth in Paragraph 5.A. Notwithstanding the
foregoing, if the Exterior ADA Work, the Seismic Work and the Tenant
Improvements are not substantially completed within such 75-day period due to no
fault of Tenant (as defined below), then, in lieu of the Monthly Rent and
Additional Rent due pursuant to Paragraphs 5.A. and 5.B., Tenant shall pay to
Landlord monthly, as Monthly Rent, Landlord's actual out-of-pocket costs
incurred in connection with the ownership and operation of the Premises during
such period, which shall include insurance premiums, Real Property Taxes,
principal and interest due under any mortgage or deed of trust recorded against
the Premises, and any charges due under any on-going maintenance, repair or
service contracts for the Premises, which out-of-pocket costs shall not exceed a
total amount of $20,000.00 per month. Such payments by Tenant shall be due
beginning on the seventy-sixth (76th) day and continuing on the first day of
each calendar month thereafter until the Commencement Date. In no event,
however, will the Commencement Date occur later than October 1, 1997 unless
delays in completion of the Tenant Improvements and the Seismic Work are due to
Landlord's failure to timely approve the Tenant Improvement Plans, and/or the
Seismic Plans or Landlord's failure to pay when due the cost of the Exterior ADA
Work or the Seismic Work as provided in EXHIBIT B. For purposes of this Lease,
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the term "due to the fault of Tenant" shall mean: (i) Tenant's election to use
special materials, finishes or installations which are not readily available;
(ii) Tenant's failure to submit any plans in accordance with time frames
specified in EXHIBIT B; (iii) any changes to the Tenant Improvement Plans and/or
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the Seismic Plans after their approval by Landlord, where such changes are made
by Tenant at its election, and
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not required by Landlord or any governmental authority; and (iv) Tenant's
failure to make timely payment of any amounts due to Tenant's architect and/or
general contractor in connection with the Tenant Improvements.
C. Early Entry. Tenant shall be permitted to enter the Premises
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upon execution of this Lease for the purpose of demolishing and/or removing the
existing interior improvements in the Building, completing the seismic
improvements approved by Landlord, constructing the Tenant Improvements,
installing Tenant's equipment and furniture, and otherwise preparing the
Premises for Tenant's occupancy. Such early entry shall be at Tenant's sole
risk and subject to all the terms and provisions hereof, except for the payment
of Rent which, subject to the provisions of Paragraph 4.B., shall commence on
the Commencement Date. Tenant shall, however, pay when due any utility charges
incurred during such early entry period. Prior to such early entry, Tenant
shall deliver to Landlord a certificate of insurance satisfying the requirements
set forth in Paragraphs 21.B.(i) and 21.F. Landlord shall have the right to
impose such additional reasonable conditions on Tenant's early entry as Landlord
shall deem appropriate.
D. Delay in Delivery of Possession. Upon execution of this Lease by
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Landlord and Tenant, payment by Tenant of the Security Deposit and the Monthly
Rent due for the first month of the Term, and delivery to Landlord of Tenant's
insurance certificate (collectively, the "Execution Date"), Landlord shall
deliver possession of the Premises to Tenant. Notwithstanding anything to the
contrary in this Lease, if Landlord fails to deliver possession of the Premises
to Tenant on the Execution Date, the Commencement Date and Tenant's obligation
to pay Rent or Landlord's out-of-pocket costs incurred in connection with the
ownership and operation of the Premises shall be delayed by one day for each day
that Landlord fails to deliver possession of the Premises to Tenant. For example
if Landlord fails to deliver possession of the Premises to Tenant for five (5)
days after the Execution Date, then the Commencement Date, and Tenant's
obligation to pay Rent or Landlord's out-of-pocket costs, shall be five (5) days
after the date described in Paragraph 4.A. or 4.B. of the Lease, as applicable.
In addition, if Landlord fails to deliver possession of the Premises to Tenant
within thirty (30) days after the Execution Date, then in addition to Tenant's
other rights or remedies, Tenant may terminate this Lease by written notice to
Landlord, and in such event Landlord shall promptly refund to Tenant all monies
previously paid by Tenant to Landlord.
5. Rent.
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A. Monthly Rent. Tenant shall pay to Landlord, in lawful money of
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the United States, for each calendar month of the Term, net Monthly Rent in
accordance with the following schedule, in advance, on the first day of each
calendar month and, except as otherwise expressly permitted in this Lease,
without abatement, deduction, claim, offset, prior notice or demand, except that
the net Monthly Rent due for the first month of the Term shall be paid upon
Lease execution.
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Months of Term Net Monthly Rent
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1 through 12 $35,926.00/month
13 through 24 $37,559.00/month
25 through 36 $39,192.00/month
37 through 48 $40,825.00/month
49 through 60 $42,458.00/month
61 through 72 $44,091.00/month
73 through 84 $45,724.00/month
Additionally, Tenant shall pay, as and with the net Monthly Rent, the monthly
Real Property Taxes as set forth in paragraph 15.
B. Additional Rent. All monies required to be paid by Tenant under
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this Lease, including Real Property Taxes pursuant to Paragraph 15, and
insurance premiums pursuant to Paragraph 21, fee shall be deemed Additional
Rent.
C. Prorations. If the Commencement Date is not the first (1st) day of
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a month, or if the termination date of this Lease is not the last day of a
month, a prorated installment of Rent based on a thirty (30) day month shall be
paid for the fractional month during which the Lease commences or terminates.
6. Late Payment Charges.
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Tenant acknowledges that late payment by Tenant to Landlord of Rent and
other charges provided for under this Lease will cause Landlord to incur costs
not contemplated by this Lease, the exact amount of such costs being extremely
difficult or impracticable to fix. Therefore, if any installment of Rent or any
other charge due from Tenant is not received by Landlord when due, and such Rent
or other charge remains unpaid for more than five (5) days after such amount is
due, Tenant shall pay to Landlord an additional sum equal to four percent (4%)
of the amount overdue as a late charge. The parties agree that this late charge
represents a fair and reasonable estimate of the costs that Landlord will incur
by reason of the late payment by Tenant. In addition, if any Rent or other sum
due hereunder is not paid by Tenant within thirty (30) days after the date such
Rent or other payment is due, then Tenant shall pay interest on the amount due
at the Interest Rate from the date such Rent or other sum was due until paid.
Initials:
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RVB KSB MRT
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Landlord Tenant
7. Security Deposit.
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Tenant shall deposit with Landlord upon execution the sum of Forty-Five
Thousand Seven Hundred Twenty-Four and no/100th Dollars ($45,724.00) as the
Security Deposit for the full
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and faithful performance of every provision of this Lease to be performed by
Tenant. If Tenant defaults with respect to any provision of this Lease, Landlord
may apply all or any part of the Security Deposit for the payment of any rent or
other sum in default, the repair of any damage to the Premises caused by Tenant
or the payment of any other amount which Landlord may spend or become obligated
to spend by reason of Tenant's default or to compensate Landlord for any other
loss or damage which Landlord may suffer by reason of Tenant's default to the
full extent permitted by law. Tenant hereby waives any restriction on the use or
application of the Deposit by Landlord as set forth in California Civil Code
Section 1950.7. If any portion of the Security Deposit is so applied, Tenant
shall, within ten (10) days after written demand therefor, deposit cash with
Landlord in an amount sufficient to restore the Security Deposit to its original
amount. Landlord shall not be required to keep the Security Deposit separate
from its general funds, and Tenant shall not be entitled to interest on the
Security Deposit. If Tenant is not otherwise in default, the Security Deposit or
any balance thereof shall be returned to Tenant within thirty (30) days of
termination of the Lease. In the event of any termination of Landlord's interest
in the Premises, Landlord shall transfer the Security Deposit to Landlord's
successor-in-interest whereupon Landlord shall be released from liability for
the return of the Security Deposit or the accounting therefor.
8. Holding Over.
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Tenant shall have no right to holdover possession of the Premises
after the expiration or termination of this Lease. If, however, Tenant remains
in possession of all or any part of the Premises after the expiration of the
Term, or the extended term, if extended, such tenancy shall be month-to-month
only and shall not constitute a renewal or extension for any further term. If
Tenant remains in possession either with or without Landlord's consent, Monthly
Rent shall be increased to an amount equal to one hundred fifty percent (150%)
of the Monthly Rent payable during the last month of the Term, and any other
sums due under this Lease shall be payable in the amount and at the times
specified in this Lease. Such month-to-month tenancy shall be subject to every
other term, condition, and covenant contained herein. If Tenant fails to
surrender the Premises upon the expiration of the Term despite demand to do so
by Landlord, Tenant shall indemnify and hold Landlord harmless from all loss or
liability, including without limitation any claim made by a succeeding tenant,
resulting from Tenant's failure to surrender.
9. Tenant Improvements.
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If Tenant Improvements are to be constructed within the Premises by
Tenant, Tenant agrees to construct such Tenant Improvements pursuant to the
terms of EXHIBIT B. Tenant covenants that the Tenant Improvements (as defined
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in EXHIBIT B) to be installed in the Premises by Tenant will be valued at at
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least Twenty and no/100ths Dollars ($20.00) per square foot. The Tenant
Improvements shall be and remain the property of Tenant during the Term of this
Lease but shall become the property of Landlord, and shall remain upon the
Premises, upon the expiration or sooner termination of this Lease. Landlord
shall have the right, however, to require Tenant to remove any special purpose
Tenant Improvements from the Premises if Landlord has indicated in writing at
the time of Landlord's approval of the Tenant Improvements that such removal
will be required upon the termination of this Lease. For purposes of this
Lease, "special purpose Tenant Improvements" shall mean those Tenant
Improvements which are special or unique to Tenant's
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business and which would not be usable by an average tenant occupying the
Premises for the uses permitted under Paragraph 11.A. of this Lease. Any
cubicles installed in the Premises by Tenant shall not be considered Tenant
Improvements or Alterations but shall be and remain Tenant's Personal Property
and may be removed from the Premises by Tenant at any time.
10. Condition of Premises.
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Landlord represents and warrants to Tenant that, to the best of
Landlord's knowledge, as of the date that Landlord delivers possession of the
Premises to Tenant, all structural portions of the Premises, including, without
limitation, the roof, the foundation, exterior walls and interior load-bearing
walls; all paved surfaces; the roof membrane; and all sewer, plumbing and HVAC
systems currently serving the Premises will be in good operating condition,
order and repair. Subject to the foregoing representation and warranty, by
taking possession of the Premises, Tenant shall be deemed to have accepted the
Premises in its then current condition, "as is," subject to all applicable Laws.
Except as expressly set forth herein, Tenant acknowledges that neither Landlord
nor Landlord's Agents have made any representations or warranties as to
condition of the Premises or the suitability or fitness of the Premises for the
conduct of Tenant's business or for any other purpose, nor has Landlord or
Landlord's Agents agreed to undertake any Alterations or construct any Tenant
Improvements to the Premises.
11. Use of the Premises.
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A. Tenant's Use. Tenant shall use the Premises solely for research
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& development and general office purposes and shall not use the Premises for any
other purpose without the prior written consent of Landlord, which consent shall
not be unreasonably withheld. Tenant acknowledges that the Premises are subject
and this Lease is subordinate to any covenants, conditions and restrictions
which may be recorded against the Premises. Throughout the Term, Tenant shall
not violate any such covenants, conditions and restrictions.
B. Compliance.
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(i) Tenant shall not use the Premises or suffer or permit
anything to be done in or about the Premises which will in any way conflict with
any law, statute, zoning restriction, ordinance or governmental law, rule,
regulation or requirement of public authorities now in force or which may
hereafter be in force, relating to or affecting the condition, use or occupancy
of the Premises. Tenant shall not commit any public or private nuisance or any
other act or thing which might or would disturb the quiet enjoyment of any
occupant of nearby property. Tenant shall place no loads upon the floors, walls
or ceilings in excess of the maximum designed load for the Building or which
endanger the structure; nor place any harmful liquids in the drainage systems;
nor dump or store waste materials or refuse or allow such to remain outside the
Building proper, except in the enclosed trash areas provided. Tenant shall not
store or permit to be stored or otherwise placed any other material of any
nature whatsoever outside the Building, except in designated storage areas
reasonably approved by Landlord.
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(ii) In particular, Tenant, at its sole cost, shall comply with
all laws relating to the storage, use and disposal of hazardous, toxic or
radioactive matter by Tenant during the Term of this Lease, including those
materials identified in Sections 66680 through 66685 of Title 22 of the
California Code of Regulations, Division 4, Chapter 30 as they may be amended
from time to time (collectively "Hazardous Materials"). If Tenant does store,
use or dispose of any Hazardous Materials, Tenant shall notify Landlord in
writing at least ten (10) days prior to their first appearance on the Premises.
Tenant shall be solely responsible for and shall indemnify, defend, protect and
hold harmless Landlord and Landlord's Agents from and against all costs, claims,
damages, liabilities and expenses (including reasonable attorneys' and
consultants' fees) arising out of or in connection with any storage, use,
generation, release or disposal of Hazardous Materials in, on or about the
Premises by Tenant, its agents, employees, contractors, invitees or subtenants
during the Term of this Lease or during the early entry period described in
Paragraph 4.C. above, which indemnity shall include, without limitation, damages
for personal or bodily injury, property damage, damage to the environment or
natural resources occurring on or off the Premises, and the cost of any
investigation, monitoring, government oversight, removal, remediation,
restoration, abatement and disposal. If any governmental agency or the
beneficiary of any deed of trust covering the Premises requires any testing of
the Premises, including the soil or groundwater of the Premises, to ascertain
whether there has been any release of Hazardous Materials in, on or about the
Premises, then upon reasonable prior notice to Tenant Landlord shall have the
right to install monitoring wells on or about the Outside Area and to perform
such other tests and investigations of the Premises for such purpose. Tenant
shall reimburse Landlord as Additional Rent for the reasonable cost of such
tests and investigations and of the installation, maintenance, repair and
replacement of such monitoring wells or other measuring devices to the extent
the results of such tests and investigations disclose that such Hazardous
Materials were used, stored, generated, released or disposed of in, on or about
the Premises by Tenant, its agents, employees, contractors, invitees or
subtenants during the Term of this Lease or during the early entry period
described in Paragraph 4.C. above. Tenant's obligations hereunder shall survive
the termination of this Lease.
(iii) Landlord represents that, to the best of Landlord's actual,
current knowledge, based on the results of that certain Phase I Site Assessment
prepared by Tetra Tech and dated as of September 1992 (the "Environmental
Report"): (A) there are no Hazardous Materials present on or about the Premises
or the soil, surface water or ground water of the Premises; (B) no underground
storage tanks or asbestos-containing building materials ("ACM's") are present on
the Premises, except for the possible presence of ACM's in the Building's floor
tiles, as disclosed by the Environmental Report; and (C) no action, proceeding,
or claim is pending or threatened against the Premises with respect to any
Hazardous Materials. Tenant shall not be liable for, and Landlord shall
indemnify, defend, protect and hold harmless Tenant, its agents, employees,
shareholders, directors, and officers from and against all costs, claims,
damages, liabilities and expenses (including reasonable attorneys' and
consultants' fees) arising out of or in connection with any Hazardous Materials
which were present on or about the Premises or the soil, surface water or ground
water of the Premises as of the date that Landlord delivers possession of the
Premises to Tenant including, without limitation, any Hazardous Materials that
may be disclosed by the Environmental Report or that certain Asbestos Survey
prepared by Dames and Moore dated June 1, 1997, Job #19150-005-043, or any
Hazardous Materials used, released, discharged, emitted or disposed of on or
about the Premises by Landlord or Landlord's Agents or contractors.
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(iv) The provisions of Paragraphs 11.B.(ii)-(iv) constitute the
entire agreement between Landlord and Tenant regarding Hazardous Materials and
the parties agree that no other provision of this Lease shall be deemed to apply
thereto.
12. Quiet Enjoyment.
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Landlord covenants that Tenant, upon performing the terms, conditions
and covenants of this Lease, shall have quiet and peaceful possession of the
Premises as against any person claiming the same by, through or under Landlord.
13. Alterations.
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After the Commencement Date, Tenant shall not make any Alterations in,
on or about the Premises, except for nonstructural Alterations not exceeding
Ten Thousand Dollars ($10,000.00) in cost per Alteration, without the prior
written consent of Landlord, and according to plans and specifications approved
in writing by Landlord, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing Tenant shall not, without the prior written
consent of Landlord, make any (i) Alterations to the exterior of the Building;
(ii) Alterations to and penetrations of the roof of the Building; and (iii)
Alterations to the Outside Area, to which Landlord may withhold Landlord's
consent on wholly aesthetic grounds. All Alterations shall be installed at
Tenant's sole expense (except as otherwise provided in EXHIBIT B), in compliance
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with all applicable Laws, by a licensed contractor, shall be done in a good and
workmanlike manner conforming in quality and design with the Premises existing
as of the Commencement Date, and shall not diminish the value of the Premises.
Tenant shall give Landlord written notice of Tenant's intention to perform work
on the Premises at least ten (10) days prior to the commencement of such work to
enable Landlord to post and record a Notice of Nonresponsibility or other notice
deemed proper before the commencement of any such work. If Landlord's consent
is required for any Alteration, Landlord shall notify Tenant in writing of its
approval or disapproval thereof, specifying in reasonable detail the basis for
disapproval, if applicable, within ten (10) business days after Landlord's
receipt of reasonably detailed plans and specifications, if applicable, for the
proposed Alterations. If Landlord fails to notify Tenant of approval or
disapproval within such 10-day period, Tenant may again request approval of such
Alterations in writing. If Landlord fails to notify Tenant of Landlord's
approval or disapproval of such Alterations within five (5) business days after
Landlord's receipt of Tenant's second notice, then Landlord shall be deemed to
have approved the proposed Alterations as shown on the plans and specifications
provided to Landlord. Upon request, Landlord shall advise Tenant in writing
whether Landlord reserves the right to require Tenant to remove any Alterations
from the Premises upon termination of the Lease. If Landlord fails to require
removal upon such request, Tenant shall not be required to remove such
Alterations from the Premises. All Alterations and Tenant Improvements
installed at Tenant's expense shall remain Tenant's property during the Term of
this Lease 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 damage to the Premises, Tenant may remove any
Alterations from the Premises at any time provided Tenant repairs all damage
caused by such removal. Notwithstanding any other provision of this Lease,
Tenant shall be solely responsible for the maintenance and repair of any and all
Alterations made by it to the Premises.
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14. Surrender of the Premises.
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Upon the expiration or earlier termination of the Term, Tenant shall
surrender the Premises to Landlord in the same condition and repair as on the
Commencement Date, normal wear and tear and damage by fire or other casualty,
acts of God and condemnation, Hazardous Materials which are not released or
emitted in, on or under the Premises during the Term of this Lease by Tenant,
its agents, employees, contractors or invitees, and Alterations and Tenant
Improvements which Tenant is not required to remove under the terms of this
Lease all excepted. The Tenant Improvements and Alterations installed in the
Building by Tenant shall become Landlord's property upon the expiration or
sooner termination of this Lease and shall remain in and be surrendered with the
Building unless Landlord has previously notified Tenant in writing that Landlord
desires to have Tenant remove any special purpose Tenant Improvements or
Alterations from the Premises. In such event Tenant shall remove such special
purpose Tenant Improvements and such Alterations from the Premises, as well as
Tenant's Personal Property, and repair any damage and perform any restoration
work caused by such removal. If Tenant fails to remove such special purpose
Tenant Improvements or such Alterations or any of Tenant's Personal Property,
and such failure continues after the termination of this Lease, Landlord may
retain such property and all rights of Tenant with respect to it shall cease, or
Landlord may place all or any portion of such property in public storage for
Tenant's account. Tenant shall be liable to Landlord for costs of removal of any
such special purpose Tenant Improvements, Alterations and Tenant's Personal
Property and storage and transportation costs of same, and the cost of repairing
and restoring the Premises, together with interest at the Interest Rate from the
date of expenditure by Landlord. If Landlord elects to sell any of Tenant's
Personal Property which remains on the Premises after the termination of this
Lease, Landlord shall provide Tenant with at least five (5) days' prior written
notice of such sale. If the Premises are not surrendered at the termination of
this Lease in the condition required herein, Tenant shall indemnify Landlord and
Landlord's Agents against all loss or liability, including reasonable attorneys'
fees and costs, resulting from delay by Tenant in so surrendering the Premises.
Normal wear and tear, for the purposes of this Lease, shall be
construed to mean wear and tear caused to the Premises by a natural aging
process which occurs in spite of prudent application of the best standards for
maintenance, repair and janitorial practices. It is not intended, nor shall it
be construed, to include items of neglected or deferred maintenance which would
have or should have been attended to during the Term of the Lease if the best
standards had been applied to properly maintain and keep the Premises at all
times in good condition and repair.
15. Real Property Taxes.
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A. Payment by Tenant. Tenant shall pay to Landlord monthly, as
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Additional Rent, on or before the first day of each calendar month of the Term,
one-twelfth of the annual Real Property Taxes for the Premises as set forth on
the county assessor's tax statement for such period. If Tenant fails to pay any
Real Property Taxes when due, Tenant shall pay to Landlord any penalty incurred
by such late payment. Tenant shall pay any Real Property Tax not included
within the county tax assessor's tax statement within ten (10) days after being
billed for same by Landlord. Assessments, taxes, fees, levies and charges may be
imposed by governmental agencies for such purposes as fire protection, street,
sidewalk, road, utility construction and maintenance, refuse
-10-
<PAGE>
removal and for other governmental services which may formerly have been
provided without charge to property owners or occupants. It is the intention of
the parties that all new and increased assessments, taxes, fees, levies and
charges are to be included within the definition of Real Property Taxes for
purposes of this Lease.
B. Taxes on Tenant Improvements and Personal Property. Tenant shall
--------------------------------------------------
pay any increase in Real Property Taxes resulting from any and all Alterations
and Tenant Improvements of any kind whatsoever placed in, on or about the
Premises for the benefit of, at the request of, or by Tenant. Tenant shall pay
prior to delinquency all taxes assessed or levied against Tenant's Personal
Property in, on or about the Premises or elsewhere. When possible, Tenant shall
cause its Personal Property to be assessed and billed separately from the real
or personal property of Landlord.
C. Proration. Tenant's liability to pay Real Property Taxes shall
---------
be prorated on the basis of a 365-day year to account for any fractional portion
of a fiscal tax year included at the commencement or expiration of the Term.
With respect to any assessments which may be levied against or upon the
Premises, or which under the Laws then in force may be evidenced by improvements
or other bonds or may be paid in annual installments, only the amount of such
annual installment (with appropriate proration for any partial year) and
interest due thereon shall be included within the computation of the annual Real
Property Taxes levied against the Premises.
16. Utilities and Services.
----------------------
Tenant shall be responsible for and shall pay promptly all charges for
water, gas, electricity, telephone, refuse pickup, janitorial service and all
other utilities used by Tenant in, on or about the Premises during the Term,
together with any taxes thereon. Landlord shall not be liable in damages or
otherwise for any failure or interruption, of any utility service or other
service furnished to the Premises, except that resulting from the gross
negligence or willful misconduct of Landlord or Landlord's Agents. In addition,
Tenant shall not be entitled to any abatement or reduction of Rent by reason of
such failure or interruption, no eviction of Tenant shall result from such
failure or interruption and Tenant shall not be relieved from the performance of
any covenant or agreement in this Lease because of such failure or interruption;
provided, however, that in the event Tenant's use or occupancy of the Premises
is materially impaired as a result of any failure or interruption of utilities,
and such impairment continues for three (3) consecutive business days or longer,
then Rent shall be abated proportionately, to the extent of such impairment and
for the duration of such impairment, if and only if such failure or interruption
was caused by the gross negligence or willful misconduct of Landlord or
Landlord's Agents or contractors, or the abatement of Rent will be covered by
Landlord's rent loss insurance or other insurance maintained by Landlord.
Furthermore, if any failure or interruption of utilities occurs that materially
impairs Tenant's use or occupancy of the Premises for ninety (90) consecutive
days or longer, then so long as such failure or interruption was not caused by
the negligence or willful misconduct of Tenant, its agents, employees,
contractors, or invitees, Tenant shall have the right to terminate this Lease
upon written notice to Landlord.
-11-
<PAGE>
17. Repair and Maintenance.
----------------------
A. Landlord's Obligations. Landlord shall keep in good order,
----------------------
condition and repair the structural parts of the Building, which structural
parts include only the foundation and subflooring of the Building and the
structural condition of the roof and the exterior walls of the Building (but
excluding interior surfaces of exterior walls, windows, doors which shall be
maintained and repaired by Tenant), except that any damage to any of the
foregoing caused by the negligence or willful acts or omissions of Tenant or of
Tenant's agents, employees or invitees, or by reason of the failure of Tenant to
perform any of its repair and maintenance obligations in accordance with the
terms of this Lease, or caused by Alterations made by Tenant or by Tenant's
agents, employees or contractors shall be repaired by Tenant, at Tenant's
expense, with contractors approved by Landlord. It is an express condition
precedent to all obligations of Landlord to repair that Tenant shall have
notified Landlord of the need for such repairs. Tenant waives the provisions of
Sections 1941 and 1942 of the California Civil Code and any similar or successor
law regarding Tenant's right to make repairs and deduct the expenses of such
repairs from the Rent due under this Lease.
B. Tenant's Obligations. Tenant shall at all times and at its own
--------------------
expense clean, keep and maintain in good order, condition and repair every part
of the Premises which is not within Landlord's obligation pursuant to Paragraph
17.A. Tenant's repair and maintenance obligations shall include all parking
areas, sidewalks, driveways, entrances and exits, landscaping and exterior
lighting, all plumbing and sewage facilities within the Building, fixtures,
interior walls and ceiling, the roof membrane, floors, windows, doors,
entrances, plateglass, showcases, skylights, all electrical facilities and
equipment, including lighting fixtures, lamps, fans and any exhaust equipment
and systems, the HVAC system, any automatic fire extinguisher equipment within
the Premises, electrical motors and all other appliances and equipment of every
kind and nature located in, upon or about the Premises. Notwithstanding the
foregoing, if the roof membrane requires replacement during the Term of this
Lease, including any extended term, then Landlord shall replace the roof
membrane and the cost of such replacement shall be paid by Landlord and Tenant
as follows. The cost to replace the roof membrane shall be fully amortized on a
straight-line basis over the useful life of the roof membrane and Tenant shall
pay to Landlord, within thirty (30) days after receipt of an itemized invoice
for the cost of replacing the roof membrane, the amortized portion of such cost
that is allocable to the then remaining Term of this Lease. For instance, if
the useful life of the roof membrane is twenty (20) years and, at the time the
roof membrane is replaced there are three (3) years remaining in the Term, then
Tenant would pay to Landlord three-tenths (3/20ths) of the cost of such
replacement and Landlord would pay the balance. If, however, the Term of this
Lease is extended as provided in Paragraph 39, then Tenant shall pay to Landlord
the amortized portion of the cost that is allocable to such extended Term. If
this Lease is terminated prior to the expiration of the Term or any extended
Term, for any reason other than a default by Tenant, then Landlord shall
reimburse Tenant that portion of the amortized cost of such replacement that is
allocable to the period from the date of termination until the expiration date
of the Term or the extended Term, as applicable. The cost for replacement shall
be reasonably incurred and shall be consistent with replacement costs charged
by owners of buildings of similar age and construction in Santa Clara County for
similar replacements. Tenant shall also be responsible for all pest control
within the Premises. Landlord shall assign to Tenant any warranties with
respect to the Premises which would
-12-
<PAGE>
reduce Tenant's maintenance obligations under this Lease and shall cooperate
with Tenant to enforce such warranties.
Tenant shall obtain HVAC systems preventive maintenance contracts
with bimonthly or monthly service in accordance with manufacturer
recommendations, which shall be subject to the reasonable approval of Landlord
and paid for by Tenant, and which shall provide for and include replacement of
filters, oiling and lubricating of machinery, parts replacement, adjustment of
drive belts, oil changes and other preventive maintenance, including annual
maintenance of duct work, interior unit drains and caulking at sheet metal, and
recaulking of jacks and vents on an annual basis. Tenant shall have the benefit
of all warranties available regarding the equipment in such HVAC systems.
Landlord may, at Landlord's election, have the HVAC systems inspected by a
licensed HVAC contractor at the expiration of the Term to confirm whether Tenant
has maintained the HVAC systems as required herein. The cost of such inspection
shall be paid by Tenant within ten (10) days after Landlord's written request
therefor. Additionally, if any repairs and/or replacements to the HVAC system
are recommended by the contractor, Tenant shall perform such repairs and/or
replacements and shall provide Landlord with evidence that such repairs and/or
replacements have been completed in accordance with the contractor's
recommendations. If at any time during the Term of this Lease Landlord
determines that Tenant is not maintaining the roof membrane and/or the HVAC
system in good order, condition and repair as required herein, Landlord may,
upon not less than thirty (30) days prior written notice to Tenant, elect to
assume the obligation to maintain and repair the roof membrane and/or the HVAC
system, as applicable, and to enter into one or more maintenance contracts with
third parties for the provision of such repair and maintenance obligations. Upon
such election, Tenant shall be relieved from its obligations to perform only
those maintenance and repair obligations covered by such maintenance contracts,
and Tenant shall pay Landlord monthly as Additional Rent the cost of such
maintenance contracts, including the cost of any maintenance, repairs and
replacements incurred thereunder.
D. Compliance with Governmental Regulations. Subject to the
----------------------------------------
provisions of Exhibit B, Tenant shall, at its cost, comply with all present and
---------
future regulations, rules, laws, ordinances, and requirements of all
governmental authorities, including, without limitation state, municipal, county
and federal governments and their departments, bureaus, boards and officials
(collectively, "Laws"), arising from Tenant's use or occupancy of the Premises;
provided, however, that Tenant shall not be required to make any alterations or
improvements to the Premises that are required to comply with any Laws unless
such alterations or improvements are required by Laws applicable to the Premises
and effective after the Commencement Date, and provided further that Tenant
shall not be required to make any capital or structural improvements to the
Premises unless such compliance is necessitated solely as a result of Tenant's
particular use of the Premises or any Alterations to the Premises made by
Tenant. If any capital or structural improvements to the Premises are required
to comply with any Laws applicable to the Premises and effective after the
Commencement Date and such improvements are not required solely as a result of
Tenant's particular use of the Premises or any Alterations to the Premises made
by Tenant, then such improvements shall be made by Landlord and the cost of such
improvements shall be allocated between Landlord and Tenant as follows. The
cost of such improvements shall be fully amortized on a straight-line basis over
the useful life of such improvements and Tenant shall pay to Landlord, within
thirty (30) days after receipt of a description of the improvements to be
completed and an
-13-
<PAGE>
itemized invoice for the cost of designing, constructing and/or installing such
improvements in the Premises, the amortized portion of such cost that is
allocable to the then remaining Term of this Lease. For instance, if the useful
life of the improvements is ten (10) years and, at the time the improvements are
completed there are three (3) years remaining in the Term, then Tenant would pay
to Landlord three-tenths (3/10ths) of the cost of such improvements and Landlord
would pay the balance. If, however, the Term of this Lease is extended as
provided in Paragraph 39, then Tenant shall pay to Landlord the amortized
portion of the cost that is allocable to such extended Term. If this Lease is
terminated prior to the expiration of the Term or any extended Term, for any
reason other than a default by Tenant, then Landlord shall reimburse Tenant that
portion of the amortized cost of such improvements that is allocable to the
period from the date of termination until the expiration date of the Term or the
extended Term, as applicable.
18. Liens.
-----
Tenant shall keep the Premises free from any liens arising out of any
work performed, materials furnished or obligations incurred by or on behalf of
Tenant and hereby indemnifies and holds Landlord and Landlord's Agents harmless
from all liability and cost, including attorneys' fees and costs, in connection
with or arising out of any such lien or claim of lien. Tenant shall cause any
such lien imposed to be released of record by payment or posting of a proper
bond acceptable to Landlord within ten (10) days after written request by
Landlord. Tenant shall give Landlord written notice of Tenant's intention to
perform work on the Premises which might result in any claim of lien at least
ten (10) days prior to the commencement of such work to enable Landlord to post
and record a Notice of Nonresponsibility. If Tenant fails to so remove any such
lien within the prescribed ten (10) day period, then Landlord may do so at
Tenant's expense and Tenant shall reimburse Landlord as Additional Rent for such
amounts upon demand. Such reimbursement shall include all costs incurred by
Landlord including Landlord's reasonable attorneys' fees with interest thereon
at the Interest Rate.
19. Landlord's Right to Enter the Premises.
--------------------------------------
Tenant shall permit Landlord and Landlord's Agents to enter the
Premises at all reasonable times with written notice, except for emergencies in
which case no notice shall be required, to inspect the same, to post Notices of
Nonresponsibility and similar notices , to show the Premises to interested
parties such as prospective lenders and purchasers, to make necessary repairs,
to discharge Tenant's obligations hereunder when Tenant has failed to do so
within thirty (30) days after written notice from Landlord (or such longer time
as may be reasonably necessary to complete the performance of such obligation so
long as Tenant is diligently pursuing such performance to completion), and at
any reasonable time within one hundred and twenty (120) days prior to the
expiration of the Term, to place upon the Building ordinary "For Lease" signs
and to show the Premises to prospective tenants. The above rights are subject
to reasonable security regulations of Tenant, and to the requirement that
Landlord shall at all times act in a manner to cause the least possible
interference with Tenant's business and shall be accompanied by a representative
of Tenant during any scheduled entry and, to the extent reasonably possible,
during emergencies.
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<PAGE>
20. Signs.
-----
Tenant shall have the right to install a Tenant identification sign on
the monument sign structure located in the Outside Area of the Premises and in
any other location on the Building or in the Outside Area permitted by
applicable Laws. The size, design, color and other physical aspects of any
Tenant identifications sign shall be subject to Landlord's written approval
prior to installation, which approval shall not be unreasonably withheld, the
CC&R's and any appropriate municipal or other governmental approvals. The cost
of any signs, their installation, maintenance and removal expense shall be
Tenant's sole expense. If Tenant fails to maintain its signs, or, if Tenant
fails to remove its signs upon termination of this Lease, Landlord may do so
at Tenant's expense and Tenant's reimbursement to Landlord for such amounts
shall be deemed Additional Rent.
21. Insurance.
---------
A. Indemnification.
---------------
(i) Tenant hereby agrees to defend, indemnify, protect, and
hold harmless Landlord and Landlord's Agents from and against any and all
damage, loss, liability or expense, including attorneys' fees and legal costs,
suffered directly or by reason of any claim, suit or judgment brought by or in
favor of any person or persons for damage, loss or expense due to, but not
limited to, bodily injury and property damage sustained by such person or
persons to the extent arising out of, occasioned by or in any way attributable
to the use or occupancy of the Premises or any part thereof by Tenant, the acts
or omissions of Tenant, its agents, employees or any contractors brought onto
the Premises by Tenant, except to the extent caused by the gross negligence or
willful misconduct of Landlord or Landlord's Agents or contractors. Tenant
agrees that the obligations assumed herein shall survive this Lease.
(ii) Landlord hereby agrees to defend, indemnify, protect, and
hold harmless Tenant from and against any and all damage, loss, liability or
expense, including attorneys' fees and legal costs, suffered directly or by
reason of any claim, suit or judgment brought by or in favor of any person or
persons for damage, loss or expense due to, but not limited to, bodily injury
and property damage sustained by such person or persons to the extent arising
from the negligence or willful misconduct of Landlord or Landlord's Agents or
contractors or from Landlord's violation of applicable Laws. Landlord agrees
that the obligations assumed herein shall survive this Lease.
B. Tenant's Insurance. Tenant agrees to maintain in full force and
------------------
effect at all times during the Term, at its own expense, for the protection of
Tenant and Landlord, as their interests may appear, policies of insurance issued
by a responsible carrier or carriers acceptable to Landlord which afford the
following coverages:
(i) Commercial general liability insurance protecting Landlord
and Tenant against claims for bodily injury, personal injury and property damage
based upon or arising out of the use, occupancy or maintenance of the Premises.
Such insurance shall be on an occurrence basis providing single limit coverage
in an amount not less than Two Million and no/100ths Dollars ($2,000,000.00) per
occurrence with an "Additional Insured - Managers or Lessors of Premises
-15-
<PAGE>
Endorsement" and contain the "Amendment of the Pollution Exclusion Endorsement"
for damage caused by heat, smoke or fumes from a hostile fire. The policy
shall not contain any intra-insured exclusions between insured persons or
organizations, but shall include coverage for liability assumed under this Lease
as an "insured contract" for the performance of Tenant's indemnity obligations
under this Lease. All insurance carried by Tenant shall be primary to and not
contributing with any similar insurance carried by Landlord, whose insurance
shall be considered excess insurance only.
(ii) "All-risk" or causes of loss-special form property
insurance (including, without limitation, vandalism, malicious mischief,
inflation endorsement, and sprinkler leakage endorsement) on Tenant's Personal
Property located on or in the Premises and any Alterations to the Premises
constructed by Tenant at Tenant's expense. Such insurance shall be in the full
amount of the replacement cost, as the same may from time to time increase as a
result of inflation or otherwise. Landlord shall have no interest in the
insurance proceeds on Tenant's Personal Property, any Alterations to the
Premises constructed at Tenant's expense, or any additional insurance that
Tenant may elect to maintain with respect to the Tenant Improvements.
C. Premises Insurance. During the Term Landlord shall maintain
------------------
"all-risk" or causes of loss - special form property insurance (including
vandalism, malicious mischief, inflation endorsement, sprinkler leakage
endorsement) and earthquake insurance on the Building in the full amount of the
replacement cost thereof, excluding coverage of all Tenant's Personal Property
or Alterations located on or in the Premises, but including the Tenant
Improvements. Such insurance shall also include insurance against loss of rents
on an all-risk basis and coverage for earthquake in an amount equal to the
Monthly Rent and Additional Rent, and any other sums payable under the Lease,
for a period of twelve (12) months commencing on the date of loss. Such
insurance shall name Landlord and Landlord's Agents as named insureds and
include a lender's loss payable endorsement in favor of Landlord's lender (Form
438 BFU Endorsement). Tenant shall reimburse Landlord annually, as Additional
Rent, for the annual premiums for such insurance within thirty (30) days after
Tenant's receipt of an invoice therefor. For the first year of the Term, the
total premiums for Landlord's insurance, including earthquake insurance, shall
not exceed Eighteen Thousand Five Hundred and no/100ths Dollars ($18,500.00).
If the property insurance premiums are increased after the Commencement Date,
due to an increase in the value of the Building or its replacement cost, or due
to Tenant's use of the Premises or any improvements installed by in the Building
by Tenant, Tenant shall pay such increase within ten (10) days of notice of such
increase. Any insurance maintained by Landlord covering the Premises and/or the
Tenant Improvements shall be primary to and not contributing with any insurance
maintained by Tenant covering the Premises and/or the Tenant Improvements, which
insurance shall be considered excess insurance only.
D. Increased Coverage. Upon demand, Tenant shall provide Landlord,
------------------
at Tenant's expense, with such increased amount of existing insurance, and such
other insurance as Landlord or Landlord's lender may reasonably require to
afford Landlord and Landlord's lender adequate protection; provided that such
increased insurance or other insurance is warranted due to a substantial change
in the nature of Tenant's operations at the Premises and the increased risks
associated therewith or due to the total amount of any claims paid on Tenant's
insurance policies in the prior twelve (12) month period, or such insurance is
customarily required for similar uses by owners of comparable buildings in Santa
Clara County.
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<PAGE>
E. Co-Insurer. If, on account of Tenant's failure to maintain any
----------
of the insurance required by this Lease, Landlord is adjudged a co-insurer by
its insurance carrier, then, any loss or damage Landlord shall sustain by reason
thereof, including attorneys' fees and costs, shall be borne by Tenant and shall
be immediately paid by Tenant upon receipt of a bill therefor and evidence of
such loss.
F. Insurance Requirements. All insurance shall be in a form
----------------------
satisfactory to Landlord and shall be carried with companies that have a general
policy holder's rating of not less than "A" due to Tenant's use of the Premises,
improvements installed by Tenant and a financial rating of not less than Class
"X" in the most current edition of Best's Insurance Reports; shall provide that
------------------------
such policies shall not be subject to material alteration or cancellation except
after at least thirty (30) days' prior written notice to Landlord. The policy
or policies, or duly executed certificates for them, together with satisfactory
evidence of payment of the premium thereon shall be deposited with Landlord
prior to the Commencement Date, and upon renewal of such policies, not less than
thirty (30) days prior to the expiration of the term of such coverage. If
Tenant fails to procure and maintain the insurance required hereunder, Landlord
may, but shall not be required to, order such insurance at Tenant's expense and
Tenant shall reimburse Landlord upon demand. Such reimbursement shall include
all costs incurred by Landlord including Landlord's reasonable attorneys' fees,
with interest thereon at the Interest Rate.
G. Landlord's Disclaimer. Neither Landlord nor Landlord's Agents
---------------------
shall be liable for any loss or damage to persons or property resulting from
fire, explosion, falling plaster, glass, tile or sheetrock, steam, gas,
electricity, water or rain which may leak from any part of the Building or from
the pipes, appliances or plumbing works therein or from the roof, street or
subsurface, or from any other cause whatsoever, unless caused by or due to the
sole negligence or willful misconduct of Landlord or Landlord's Agents or
contractors. Tenant shall give prompt written notice to Landlord in case of a
casualty, accident or repair needed in the Premises.
22. Waiver of Subrogation.
---------------------
Notwithstanding anything to the contrary in this Lease, Landlord and
Tenant each hereby release each other and their respective agents, employees,
successors, assigns and Subtenants (so long as in the event of any Sublet such
Subtenant provides a mutual release to Landlord), from any liability for, and
waive all rights of recovery against the other on account of, loss or damage
occasioned to such waiving party for its property or the property of others
under its control to the extent that such loss or damage would be covered by a
standard form policy of all-risk or causes of loss - special form insurance
(including, without limitation, vandalism, malicious mischief, inflation
endorsement, and sprinkler leakage endorsement) or is otherwise insured against
by Landlord or Tenant under any insurance policies which may be in force at the
time of such loss or damage, without regard to the negligence or willful
misconduct of the party so released. Tenant and Landlord shall, upon obtaining
policies of insurance required hereunder, give notice to the insurance carrier
that the foregoing mutual waiver of subrogation is contained in this Lease and
Tenant and Landlord shall cause each insurance policy obtained by such party to
provide that the insurance company waives all right of recovery by way of
subrogation against either Landlord or Tenant in connection with any damage
covered by such policy.
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<PAGE>
23. Damage or Destruction.
---------------------
A. Landlord's Obligation to Rebuild. If the Premises are damaged or
--------------------------------
destroyed, Landlord shall promptly and diligently repair the same unless it has
the right to terminate this Lease as provided herein and it elects to so
terminate.
B. Right to Terminate. Landlord shall have the right to terminate
------------------
this Lease in the event any of the following events occur:
(i) The cost to repair any uninsured damage to the Premises
exceeds One Hundred Fifty Thousand and no/100ths Dollars ($150,000.00) and
Tenant has not agreed to pay the cost of repair in excess of One Hundred Fifty
Thousand Dollars ($150,000.00);
(ii) The Building cannot, with reasonable diligence, be fully
repaired by Landlord within two hundred forty (240) days after the date of the
damage or destruction; or
(iii) The Building cannot be safely repaired because of the
presence of hazardous factors, including, but not limited to, earthquake faults,
radiation, chemical waste and other similar dangers.
If Landlord elects to terminate this Lease, Landlord may give Tenant
written notice of its election to terminate within thirty (30) days after such
damage or destruction, and this Lease shall terminate fifteen (15) days after
the date Tenant receives such notice. In such event, Landlord shall pay to
Tenant from any insurance proceeds received by Landlord an amount equal to the
then unamortized portion of the cost of the Tenant Improvements in excess of
$10.00 per square foot. For example, if the casualty occurred during the forty-
eighth month of the Term, and the original cost of the Tenant Improvements was
$30.00 per square foot, or $979,800.00, then $20.00 per square foot, or
$653,200.00, would be fully amortized over the seven-year Term, and 3/7ths of
such amount, or $279,942.86, would be paid to Tenant from the insurance proceeds
received by Landlord. If Landlord elects not to terminate the Lease, subject to
Tenant's termination right set forth below, Landlord shall promptly commence the
process of obtaining necessary permits and approvals and repair of the Building
as soon as practicable, and this Lease will continue in full force and effect.
All insurance proceeds from insurance under Paragraph 21.C., excluding proceeds
for Tenant's Personal Property and Alterations, shall be disbursed and paid to
Landlord.
Tenant shall be required to pay to Landlord the amount of any
deductible payable in connection with Landlord's all risk or causes of loss-
special form policy of insurance (which deductible shall not exceed $5,000.00
per occurrence without the prior written consent of Tenant), unless the casualty
was caused by the sole negligence or willful misconduct of Landlord. Landlord
and Tenant shall each pay one-half ( 1/2) of the deductible payable under
Landlord's policy of earthquake insurance. Landlord and Tenant agree that any
deductible payable under all earthquake insurance policies maintained by
Landlord shall not exceed a total of $300,000.00 per occurrence unless a greater
amount is agreed to by both Landlord and Tenant. Landlord and Tenant shall
review Landlord's earthquake insurance coverage annually to determine whether
the premium and deductible payable under such policy are reasonable in light of
the coverage provided and the total
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<PAGE>
value of the improvements insured and whether Landlord should continue to
maintain earthquake insurance coverage for the Premises and the Tenant
Improvements.
Tenant shall have the right to terminate this Lease, if the Building
cannot with reasonable diligence be fully repaired, or is not fully repaired,
within one hundred eighty (180) days from the date of damage or destruction.
The determination of the estimated repair period shall be made by Landlord's
architect or engineer in its good faith business judgment within thirty (30)
days after such damage or destruction. Landlord shall deliver written notice of
the repair period to Tenant after such determination has been made and Tenant
shall exercise its right to terminate this Lease, if at all, within thirty (30)
days of receipt of such notice from Landlord.
C. Limited Obligation to Repair. Landlord's obligation, should it
----------------------------
elect or be obligated to repair or rebuild, shall be limited to the basic
Building provided by Landlord as of the date of this Lease and the original
Tenant Improvements installed by Tenant, as the case may be, and Tenant shall,
at Tenant's expense, replace or fully repair all Tenant's Personal Property and
any Alterations installed by Tenant and existing at the time of such damage or
destruction. Landlord shall not be entitled to share in the proceeds of any
separate insurance which may be maintained by Tenant covering the Tenant
Improvements nor shall Tenant be required to contribute the proceeds of any such
insurance to rebuild the Tenant Improvements.
D. Abatement of Rent. Rent shall be temporarily abated
-----------------
proportionately during any period when, by reason of such damage or destruction,
there is interference with Tenant's use of the Premises, having regard to the
extent to which Tenant may be required to discontinue Tenant's use of the
Premises. Such abatement shall commence upon such damage or destruction and end
upon substantial completion by Landlord of the repair or reconstruction which
Landlord is obligated or undertakes to do. If, however, the damage or
destruction to the Premises is caused by the negligence or willful misconduct of
Tenant, its agents or employees, Rent shall be abated only to the extent of any
proceeds received by Landlord from rental abatement insurance described in
Paragraph 21.C. Tenant shall not be entitled to any compensation or damages
from Landlord for loss of the use of the Premises, damage to Tenant's Personal
Property or any inconvenience occasioned by such damage, repair or restoration.
Tenant hereby waives the provisions of Section 1932, Subdivision 2, and Section
1933, Subdivision 4, of the California Civil Code, and the provisions of any
similar law hereinafter enacted.
E. Damage Near End of Term. Anything herein to the contrary
-----------------------
notwithstanding, if the Building is destroyed or damaged during the last twelve
(12) months of the Term, then Landlord may, at its option, cancel and terminate
this Lease as of the date of the occurrence of such damage. If Landlord does not
elect to so terminate this Lease, the repair of such damage shall be governed by
Paragraphs 23.A. and 23.B.
24. Condemnation.
------------
If title to all of the Building or the Premises is taken for any
public or quasipublic use under any statute or by right of eminent domain, or
title to a portion of the Building or the Premises is taken so that
reconstruction of the Building or the Premises will not, in Landlord's and
Tenant's
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<PAGE>
mutual opinion, result in the Premises being reasonably suitable for Tenant's
continued occupancy for the uses and purposes permitted by this Lease, this
Lease shall terminate as of the date that possession of the Building or the
Premises or part thereof be taken. If as a result of any partial taking of the
Building or the Premises, the remaining portion of the Premises will not be
reasonably suitable for Tenant's continued occupancy, Tenant may terminate this
Lease by written notice to Landlord. A sale by Landlord to any authority having
the power of eminent domain, either under threat of condemnation or while
condemnation proceedings are pending, shall be deemed a taking under the power
of eminent domain for all purposes of this paragraph.
If any part of the Building or the Premises is taken and the remaining
part is reasonably suitable for Tenant's continued occupancy for the purposes
and uses permitted by this Lease, this Lease shall, as to the part so taken,
terminate as of the date that possession of such part of the Building or the
Premises is taken. The Rent and other sums payable hereunder shall be reduced
in the same proportion that Tenant's use and occupancy of the Premises is
reduced. If any portion of the Outside Area is taken, Tenant's Rent shall be
reduced to the extent such taking interferes with Tenant's use of the Premises
for the purposes permitted by this Lease. Each party hereby waives the
provisions of Section 1265.130 of the California Code of Civil Procedure
allowing either party to petition the Superior Court to terminate this Lease in
the event of a partial taking of the Premises.
No award for any partial or entire taking shall be apportioned.
Tenant assigns to Landlord its interest in any award which may be made in such
taking or condemnation, together with any and all rights of Tenant arising in or
to the same or any part thereof; provided, however, that Landlord shall pay to
Tenant from any award received by Landlord an amount equal to the then
unamortized portion of the cost of the Tenant Improvements in excess of $10.00
per square foot, which shall be determined as described in Paragraph 23.B.
Nothing contained herein shall be deemed to give Landlord any interest in or
require Tenant to assign to Landlord any separate award made to Tenant for the
taking of Tenant's Personal Property or any Alterations, or its moving costs.
25. Assignment and Subletting.
-------------------------
A. Landlord's Consent. Tenant shall not enter into a Sublet without
------------------
Landlord's prior written consent, which consent shall not be unreasonably
withheld. Any Sublet made without Landlord's prior written consent shall be
void and confer no rights upon any third person and, at Landlord's election,
shall terminate this Lease. Each assignee shall agree in writing, for the
benefit of Landlord, to assume, to be bound by, and to perform the terms,
conditions and covenants of this Lease to be performed by Tenant.
Notwithstanding anything contained herein, Tenant shall not be released from
liability for the performance of each term, condition and covenant of this Lease
by reason of Landlord's consent to a Sublet unless Landlord specifically grants
such release in writing. Consent by Landlord to any Sublet shall not be deemed a
consent to any subsequent Sublet.
B. Information to be Furnished. If Tenant desires at any time to
---------------------------
Sublet the Premises or any portion thereof, it shall first notify Landlord of
its desire to do so and shall submit in writing to Landlord: (i) the name of
the proposed Subtenant; (ii) the nature of the proposed Subtenant's business to
be carried on in the Premises; (iii) the terms and provisions of the proposed
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Sublet and a copy of the proposed Sublet form containing a description of the
subject premises; and (iv) such financial information, including financial
statements, as Landlord may reasonably request concerning the proposed
Subtenant.
C. Landlord's Alternatives. Within twenty (20) days after
-----------------------
Landlord's receipt of the information specified in Paragraph 25.B., Landlord
shall, by written notice to Tenant, elect: (i) to consent to the Sublet by
Tenant; or (ii) to refuse its consent to the Sublet. If Landlord consents to
the Sublet, Tenant may thereafter enter into a valid Sublet of the Premises or
portion thereof, upon the terms and conditions and with the proposed Subtenant
set forth in the information furnished by Tenant to Landlord pursuant to
Paragraph 25.B., subject, however, at Landlord's election, to the condition that
one-half ( 1/2) of any excess of the Subrent over the sum of the Rent required
to be paid by Tenant under this Lease, plus reasonable and customary brokerage
commissions, attorneys' fees and tenant improvement costs paid by Tenant in
connection with such Sublet and, in the event of a Sublet made during the
initial Term, the then unamortized portion of the cost of the Tenant
Improvements in excess of $10.00 per square foot, shall be paid to Landlord. If
Landlord fails to notify Tenant of its consent or refusal to grant consent to
the proposed Sublet within such 20-day period, Tenant may again request approval
of such Sublet in writing. If Landlord fails to notify Tenant of Landlord's
consent or refusal to grant consent to such Sublet within ten (10) days after
Landlord's receipt of Tenant's second notice, then Landlord shall be deemed to
have approved the proposed Sublet as described in the information provided to
Landlord pursuant to Paragraph 25.B.
D. Proration. If a portion of the Premises is Sublet, the pro rata
---------
share of the Rent attributable to such partial area of the Premises shall be
determined by Landlord by dividing the Rent payable by Tenant hereunder by the
total square footage of the Premises and multiplying the resulting quotient (the
per square foot rent) by the number of square feet of the Premises which are
Sublet.
E. Exempt Sublets. Notwithstanding the above, Landlord's prior
--------------
written consent shall not be required for a Sublet of this Lease to (and
Landlord shall not be entitled to payment of any excess Subrent in connection
with such Sublet) a corporation controlling, controlled by or under common
control with Tenant; a subsidiary or affiliate of Tenant; a successor to Tenant
by merger, consolidation, nonbankruptcy reorganization or government action; or
a purchaser of substantially all of Tenant's assets located at the Premises
provided that (i) Tenant gives Landlord prior written notice of the name of any
such assignee, (ii) at the time of such assignment, the assignee has a net worth
that is equal to or greater than the net worth of Tenant immediately prior to
such assignment; and (iii) the assignee assumes, in writing, for the benefit of
Landlord all of Tenant's obligations under this Lease. For purposes of this
Lease, any sale or transfer of Tenant's capital stock through any national
market system or public exchange shall not be deemed a Sublet.
26. Default.
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A. Tenant's Default. A default under this Lease by Tenant shall
----------------
exist if any of the following occurs:
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(i) If Tenant fails to pay Rent or any other sum required to be
paid hereunder when due and Tenant fails to cure such breach within five (5)
days after written notice from Landlord that such Rent or other sum is past due;
provided, however, that such notice shall be in lieu of, and not in addition to,
any notice required under Section 1161 of the California Code of Civil Procedure
regarding unlawful detainer actions;
(ii) If Tenant fails to execute and deliver to Landlord, within
ten (10) days after Landlord's written request therefor, any subordination
documentation required under Paragraph 27, or any estoppel certificate required
under Paragraph 31;
(iii) If Tenant fails to perform any other term, covenant or
condition of this Lease except as provided in Paragraphs 26.A.(i) or (ii) above,
and Tenant fails to cure such breach within thirty (30) days after written
notice from Landlord where such breach could reasonably be cured within such
thirty (30) day period; provided, however, that where such failure could not
reasonably be cured within the thirty (30) day period, that Tenant shall not be
in default if it commences such performance within the thirty (30) day period
and diligently thereafter prosecutes the same to completion;
(iv) If Tenant assigns its assets for the benefit of its
creditors;
(v) If the sequestration or attachment of or execution on any
material part of Tenant's Personal Property essential to the conduct of Tenant's
business occurs, and Tenant fails to obtain a return or release of such Personal
Property within thirty (30) days thereafter, or prior to sale pursuant to such
sequestration, attachment or levy, whichever is earlier;
(vi) If Tenant shall have abandoned the Premises and failed to
pay Rent when due; or
(vii) If a court makes or enters any decree or order other than
under the bankruptcy laws of the United States adjudging Tenant to be insolvent;
or approving as properly filed a petition seeking reorganization of Tenant; or
directing the winding up or liquidation of Tenant and such decree or order shall
have continued for a period of thirty (30) days.
B. Remedies. Upon a default, Landlord shall have the following
--------
remedies, in addition to all other rights and remedies provided by law or
otherwise provided in this Lease, to which Landlord may resort cumulatively or
in the alternative:
(i) Landlord may continue this Lease in full force and effect,
and this Lease shall continue in full force and effect as long as Landlord does
not terminate this Lease, and Landlord shall have the right to collect Rent when
due.
(ii) Landlord may terminate Tenant's right to possession of the
Premises at any time by giving written notice to that effect, and relet the
Premises or any part thereof. Reletting may be for a period shorter or longer
than the remaining term of this Lease. No act by Landlord other than giving
written notice to Tenant shall terminate this Lease. Acts of maintenance,
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efforts to relet the Premises or the appointment of a receiver on Landlord's
initiative to protect Landlord's interest under this Lease shall not constitute
a termination of Tenant's right to possession. On termination, Landlord has the
right to remove all Tenant's Personal Property and store same at Tenant's cost
and to recover from Tenant as damages:
(a) The worth at the time of award of unpaid Rent and other sums
due and payable which had been earned at the time of termination; plus
(b) The worth at the time of award of the amount by which the
unpaid Rent and other sums due and payable which would have been payable after
termination until the time of award exceeds the amount of such Rent loss that
Tenant proves could have been reasonably avoided; plus
(c) The worth at the time of award of the amount by which the
unpaid Rent and other sums due and payable for the balance of the Term after the
time of award exceeds the amount of such Rent loss that Tenant proves could be
reasonably avoided; plus
(d) Any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform Tenant's obligations
under this Lease, or which, in the ordinary course of things, would be likely to
result therefrom, including, without limitation, any costs or expenses incurred
by Landlord: (i) in retaking possession of the Premises; (ii) in maintaining,
repairing, or cleaning the Premises or any portion thereof, including such acts
for reletting to a new tenant or tenants; (iii) for leasing commissions; or (iv)
for any other reasonable costs necessary or appropriate to relet the Premises;
plus
(e) At Landlord's election, such other amounts in addition to or
in lieu of the foregoing as may be permitted from time to time by the Laws of
the State of California.
The "worth at the time of award" of the amounts referred to in Paragraphs
26.B.(ii)(a) and 26.B.(ii)(b) is computed by allowing interest at the Interest
Rate on the unpaid rent and other sums due and payable from the termination date
through the date of award. The "worth at the time of award" of the amount
referred to in Paragraph 26.B.(ii)(c) is computed by discounting such amount at
the discount rate of the Federal Reserve Bank of San Francisco at the time of
award plus one percent (1%).
(iii) If the Premises have been abandoned by Tenant or this
Lease has been terminated, Landlord may re-enter the Premises and remove all
property from the Premises; such property may be removed and stored in a public
warehouse or elsewhere at the cost of and for the account of Tenant.
C. Landlord's Default. Landlord shall not be deemed to be in default in
the performance of any obligation required to be performed by it hereunder
unless and until it has failed to perform such obligation within thirty (30)
days after receipt of written notice by Tenant to Landlord specifying the nature
of such default; provided, however, that if the nature of Landlord's obligation
is such that more than thirty (30) days are required for its performance, then
Landlord
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shall not be deemed to be in default if it shall commence such performance
within such thirty (30) day period and thereafter diligently prosecute the same
to completion.
27. Subordination.
-------------
This Lease is subject and subordinate to any ground and underlying
leases and any first mortgages and first deeds of trust (collectively
"Encumbrances") which may now affect the Premises and to all renewals,
modifications, consolidations, replacements and extensions thereof; provided,
however, if the holder or holders of any such Encumbrance ("Holder") shall
require this Lease be prior and superior to such Encumbrance, within ten (10)
days of written request of Landlord to Tenant, Tenant shall execute, have
acknowledged and deliver any and all reasonable documents or instruments, in
substantially the form presented to Tenant, which Landlord or Holder deems
necessary or desirable for such purposes. Landlord shall have the right to cause
this Lease to be and become and remain subject and subordinate to any and all
Encumbrances which are now or may hereafter be executed covering the Premises or
any renewals, modifications, consolidations, replacements or extensions thereof,
for the full amount of all advances made or to be made thereunder and without
regard to the time or character of such advances, together with interest thereon
and subject to all the terms and provisions thereof; provided only, that in the
event of termination of any such lease or upon the foreclosure of any such
mortgage or deed of trust, so long as Tenant is not in default beyond any notice
and applicable cure period, Holder agrees to recognize Tenant's rights under
this Lease as long as Tenant shall pay the Rent and observe and perform all the
provisions of this Lease to be observed and performed by Tenant. Within ten
(10) days after Landlord's written request, Tenant shall execute any and all
reasonable documents required by Landlord or the Holder to make this Lease
subordinate to any lien of the Encumbrance.
Notwithstanding anything to the contrary set forth in this paragraph,
Tenant hereby attorns and agrees to attorn to any entity purchasing or otherwise
acquiring the Premises at any sale or other proceeding or pursuant to the
exercise of any other rights, powers or remedies under such Encumbrance provided
such entity agrees to recognize all of Tenant's rights under this Lease in
writing.
Prior to the Commencement Date, or following the Commencement Date if
Landlord refinances any Encumbrance or places any new Encumbrance on the
Premises which the Holder thereof desires to be prior to this Lease, Landlord
shall obtain from any Holder of any Encumbrance a written agreement, in form
reasonably acceptable to Tenant, providing for the non-disturbance and
recognition of Tenant's rights and interests under this Lease in the event of a
foreclosure or termination of the Holder's Encumbrance.
28. Notices.
-------
Any notice or demand required or desired to be given under this Lease
shall be in writing and shall be personally served or in lieu of personal
service may be given by mail. If given by mail, such notice shall be deemed to
have been given when seventy-two (72) hours have elapsed from the time when such
notice was deposited in the United States mail, registered or certified, and
postage prepaid, addressed to the party to be served. At the date of execution
of this Lease, the
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addresses of Landlord and Tenant are as set forth in Paragraph 1. After the
Commencement Date, the address of Tenant shall be the address of the Premises.
Either party may change its address by giving notice of same in accordance with
this paragraph.
29. Attorneys' Fees.
---------------
If either party brings any action or legal proceeding for damages for
an alleged breach of any provision of this Lease, to recover rent, or other sums
due, to terminate the tenancy of the Premises or to enforce, protect or
establish any term, condition or covenant of this Lease or right of either
party, the prevailing party in such action or proceeding shall be entitled to
recover its reasonable attorneys' fees (including attorneys' fees on appeal, and
costs and expenses incurred in out-of-court negotiations, workouts and/or
settlements or in seeking relief from stay or otherwise seeking to protect its
rights in any bankruptcy proceeding) and all reasonable costs (including costs
of consultants and experts) incurred, which shall be payable whether or not such
action is prosecuted to judgment. In addition, the prevailing party shall be
entitled to its reasonable attorneys' fees, costs and expenses incurred in post-
judgment proceedings to collect and enforce a judgment. This provision is
separate and several and shall survive the merger of this Lease into any
judgment on this Lease.
30. Estoppel Certificates.
---------------------
Tenant shall within twenty (20) days following written request by
Landlord:
(i) Execute and deliver to Landlord an estoppel certificate, in the
form prepared by Landlord (a) certifying that this Lease is unmodified and in
full force and effect or, if modified, stating the nature of such modification
and certifying that this Lease, as so modified, is in full force and effect and
the date to which the Rent and other charges are paid in advance, if any, and
(b) acknowledging that there are not, to Tenant's knowledge, any uncured
defaults on the part of Landlord, or, if there are uncured defaults on the part
of the Landlord, stating the nature of such uncured defaults, and (c) evidencing
the status of the Lease as may be required either by a lender making a loan to
Landlord to be secured by deed of trust or mortgage covering the Premises or a
purchaser of the Premises from Landlord. Tenant's failure to deliver an
estoppel certificate within twenty (20) days after delivery of Landlord's
written request therefor shall be a breach of this Lease and shall be conclusive
upon Tenant (a) that this Lease is in full force and effect, without
modification except as may be represented by Landlord, (b) that there are now no
uncured defaults in Landlord's performance and (c) that no Rent has been paid in
advance.
(ii) Deliver to Landlord the current financial statements of Tenant,
and financial statements of the two (2) years prior to the current financial
statements year, with an opinion of a certified public accountant, including a
balance sheet and profit and loss statement for the most recent prior year, all
prepared in accordance with generally accepted accounting principles
consistently applied. All financial statements delivered by Tenant to Landlord
shall be held in strict confidence by Landlord (and Landlord's lender or any
prospective purchaser of the Premises requiring such financial statements) and
shall be used by Landlord, Landlord's lender or such prospective purchaser only
to evaluate Tenant's financial condition in connection with this Lease.
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<PAGE>
31. Transfer of the Premises by Landlord.
------------------------------------
In the event of any conveyance of the Premises and assignment by
Landlord of this Lease, Landlord shall be and is hereby entirely released from
all liability under any and all of its covenants and obligations contained in or
derived from this Lease occurring after the date of such conveyance and
assignment (but excluding any obligations or liabilities which arose prior to
the date of such transfer) and, with respect to the Security Deposit, shall be
released of its obligations with respect thereto so long as Landlord transfers
the Security Deposit to the transferee in accordance with California Civil Code
Section 1950.7. Tenant agrees to attorn to such transferee provided such
transferee assumes Landlord's obligations under this Lease in writing for the
benefit of Tenant.
32. Landlord's Right to Perform Tenant's Covenants.
----------------------------------------------
If Tenant shall at any time fail to make any payment or perform any
other act on its part to be made or performed under this Lease, Landlord may,
but shall not be obligated to and without waiving or releasing Tenant from any
obligation of Tenant under this Lease, make such payment or perform such other
act to the extent Landlord may deem desirable, and in connection therewith, pay
expenses and employ counsel, but only if Tenant has failed to make such payment
or perform such obligation within thirty (30) days after written notice from
Landlord specifying the payment to be made or the obligation to be performed.
All reasonable sums so paid by Landlord and all penalties, interest and costs in
connection therewith shall be due and payable by Tenant on the next day after
written notice to Tenant of any such payment by Landlord, together with interest
thereon at the Interest Rate from such date to the date of payment by Tenant to
Landlord, plus collection costs and attorneys' fees. Landlord shall have the
same rights and remedies for the nonpayment thereof as in the case of default in
the payment of Rent.
33. Tenant's Remedy.
---------------
If, as a consequence of a default by Landlord under this Lease, Tenant
recovers a money judgment against Landlord, such judgment shall be satisfied
only out of the proceeds of sale received upon execution of such judgment and
levied thereon against the right, title and interest of Landlord in the Premises
and out of Rent or other income from such property received by Landlord or out
of consideration received by Landlord from the sale or other disposition of all
or any part of Landlord's right, title or interest in the Premises, and neither
Landlord nor Landlord's Agents shall be liable for any deficiency.
34. Mortgagee Protection.
--------------------
If Landlord defaults under this Lease, Tenant will notify any
beneficiary of a first deed of trust or mortgagee of a first mortgage covering
the Premises of which Tenant has received written notice, including its address.
Such beneficiary or mortgagee shall have thirty (30) days after receipt of such
notice to cure the default specified therein; provided, however, that if the
nature of the default is such that more than thirty (30) days are reasonably
required to cure the default, such beneficiary or mortgagee shall have such
additional time as is reasonably necessary to cure such
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default so long as such beneficiary or mortgagee commences to cure the default
within such 30-day period and thereafter diligently prosecute such cure to
completion.
35. Brokers.
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Tenant warrants and represents that it has had no dealings with any
real estate broker or agent in connection with the negotiation of this Lease,
except for Bristol Commercial Brokerage and CPS, The Commercial Property
Services Company and that it knows of no other real estate broker or agent who
is or might be entitled to a commission in connection with this Lease. Tenant
and Landlord shall each indemnify, defend and hold each other harmless from
and against any and all liabilities or expenses, including reasonable attorneys'
fees and costs, arising out of or in connection with claims for commissions or
fees made by any other broker or individual who represented or claims to have
represented the indemnifying party. Landlord shall pay to CPS, The Commercial
Property Services Company, pursuant to a separate written agreement, any
commission due in connection with this Lease.
36. Acceptance.
----------
This Lease shall only become effective and binding upon full execution
hereof by Landlord and delivery of a signed copy to Tenant. Neither party shall
record this Lease nor a short form memorandum thereof.
37. Parking.
-------
Tenant shall have the exclusive right to use the Premises' parking
facilities upon such reasonable terms and conditions as may from time to time be
established by Landlord.
38. Option to Extend.
----------------
A. Option Periods. Provided that Tenant is not in default of any
--------------
material obligation hereunder beyond any applicable notice and cure or grace
period granted to Tenant by this Lease, either at the time of exercise or at the
time the extended Term commences, Tenant shall have the option to extend the
initial seven (7) year Term of this Lease for two (2) additional periods of
three (3) years each (each, an"Option Period") on the same terms, covenants and
conditions provided herein, except that upon such renewal the Monthly Rent due
hereunder shall be determined pursuant to Paragraph 38.B. Tenant shall exercise
its option by giving Landlord written notice ("Option Notice") at least one
hundred twenty (120) days but not more than one hundred eighty (180) days prior
to the expiration of the initial Term of this Lease or the first Option Period,
as applicable.
B. Option Period Monthly Rent. The Monthly Rent for each Option
--------------------------
Period shall be determined as follows:
(i) The parties shall have thirty (30) days after Landlord
receives the Option Notice within which to agree on the Monthly Rent for the
first year of the Option Period based upon the then fair market rental value of
the Premises as defined in Paragraph 38.B.(ii). If the
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parties agree on the Monthly Rent for the first year of the Option Period within
thirty (30) days, they shall immediately execute an amendment to this Lease
stating the Monthly Rent for the first year of the Option Period and the
increases in Monthly Rent during such Option Period which shall be calculated as
provided in Paragraph 38.C. If the parties are unable to agree on the Monthly
Rent for the first year of the Option Period within thirty (30) days, then, the
Monthly Rent for the first year of the Option Period shall be the then current
fair market rental value of the Premises as determined in accordance with
Paragraph 38.B.(iii).
(ii) The "then fair market rental value of the Premises" shall
be defined to mean the fair market rental value of the Premises as of the
commencement of the Option Period, taking into consideration Tenant's obligation
to pay additional rent and expenses, the uses permitted under this Lease, the
quality, size, design, age and location of the Premises, the rent for comparable
buildings located in Sunnyvale, including any economic incentives such as free
rent and tenant improvement allowances. In no event shall the fair market
monthly rental value of the Premises for the first year of the Option Period be
less than the Monthly Rent last payable under the Lease.
(iii) Within thirty (30) days after the expiration of the thirty
(30) day period set forth in Paragraph 38.B.(i), each party, at its cost and by
giving notice to the other party, shall appoint a real estate appraiser with at
least five (5) years' full-time commercial appraisal experience in the area in
which the Premises are located to appraise and set the Monthly Rent. If a party
does not appoint an appraiser within such 30-day period, the single appraiser
appointed shall be the sole appraiser and shall set the Monthly Rent. If the two
(2) appraisers are appointed by the parties as stated in this paragraph, they
shall meet promptly and attempt to set the Monthly Rent. If they are unable to
agree within thirty (30) days after the second appraiser has been appointed,
they shall attempt to elect a third appraiser meeting the qualifications stated
in this paragraph within fifteen (15) days after the last day the two (2)
appraisers are given to set the Monthly Rent. If they are unable to agree on the
third appraiser, either of the parties to this Lease, by giving ten (10) days'
notice to the other party, can apply to the then Presiding Judge of the Santa
Clara County Superior Court, for the selection of a third appraiser who meets
the qualifications stated in this paragraph. Each of the parties shall bear one-
half ( 1/2) of the cost of appointing the third appraiser and of paying the
third appraiser's fee. The third appraiser, however selected, shall be a person
who has not previously acted in any capacity for either party.
Within thirty (30) days after the selection of the third appraiser, a
majority of the appraisers shall set the Monthly Rent. If a majority of the
appraisers are unable to set the Monthly Rent within the stipulated period of
time, the three (3) appraisals for either unresolved item shall be added
together and their total divided by three (3); the resulting quotient shall be
the Monthly Rent. If, however, the low appraisal and/or the high appraisal
are/is more than ten percent (10%) lower and/or higher than the middle
appraisal, the low appraisal and/or the high appraisal shall be disregarded. If
only one appraisal is disregarded, the remaining two (2) appraisals shall be
added together and their total divided by two (2); the resulting quotient shall
be the Monthly Rent. If both the low appraisal and the high appraisal are
disregarded as stated in this paragraph, then only the middle appraisal shall be
used as the result of the appraisal. After the Monthly Rent has been set, the
appraisers shall immediately notify the parties and the parties shall amend this
Lease to set forth such amount.
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C. Adjustments to Option Period Rent. The Monthly Rent payable
---------------------------------
during the Option Period shall increase by four percent (4%) every twelve (12)
months during the Option Period.
39. General.
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A. Captions. The captions and headings used in this Lease are for
--------
the purpose of convenience only and shall not be construed to limit or extend
the meaning of any part of this Lease.
B. Executed Copy. Any fully executed copy of an original of this
-------------
Lease shall be deemed an original for all purposes.
C. Time. Time is of the essence for the performance of each term,
----
condition and covenant of this Lease.
D. Separability. If one or more of the provisions contained herein,
------------
except for the payment of Rent, is for any reason held invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision of this Lease, but this Lease shall be
construed as if such invalid, illegal or unenforceable provision had not been
contained herein.
E. Choice of Law. This Lease shall be construed and enforced in
-------------
accordance with the Laws of the State of California. The language in all parts
of this Lease shall in all cases be construed as a whole according to its fair
meaning and not strictly for or against either Landlord or Tenant.
F. Gender; Singular, Plural. When the context of this Lease
------------------------
requires, the neuter gender includes the masculine, the feminine, a partnership
or corporation or joint venture, and the singular includes the plural.
G. Binding Effect. The covenants and agreement contained in this
--------------
Lease shall be binding on the parties hereto and on their respective successors
and assigns to the extent this Lease is assignable.
H. Waiver. The waiver by Landlord of any breach of any term,
------
condition or covenant, of this Lease shall not be deemed to be a waiver of such
provision or any subsequent breach of the same or any other term, condition or
covenant of this Lease. The subsequent acceptance of Rent hereunder by Landlord
shall not be deemed to be a waiver of any preceding breach at the time of
acceptance of such payment. No covenant, term or condition of this Lease shall
be deemed to have been waived by Landlord unless such waiver is in writing
signed by Landlord.
I. Building Area. Landlord and Tenant agree that each has had an
-------------
opportunity to determine to its satisfaction the actual area of the Building.
All measurements of area contained in this Lease are conclusively agreed to be
correct and binding on the parties, even if a subsequent
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measurement of one of these areas determines that it is more or less than the
area reflected in this Lease. Any such subsequent determination that the area is
more or less than the area shown in this Lease shall not result in a change in
any of the computations of Rent or any other matters described in this Lease
where area is a factor.
J. Approvals. Whenever this Lease requires an approval, consent,
---------
designation, determination or judgment by either Landlord or Tenant, such
approval, consent, designation, determination or judgment shall be reasonable
(unless another standard is expressly stated), shall not be unreasonably
withheld or delayed and, in exercising any right or remedy hereunder, each party
shall at all times act reasonably and in good faith.
K. Reasonable Expenditures. Any expenditure by a party permitted or
-----------------------
required under this Lease for which such party is entitled to demand and does
demand reimbursement from the other party, shall be reasonably incurred and
shall be substantiated by documentary evidence available for inspection and
review by the other party or its authorized representative during normal
business hours.
L. Rules and Regulations. Any rules and regulations adopted by
---------------------
Landlord shall be reasonable and shall not unreasonably interfere with Tenant's
use of or access to the Premises or Tenant's parking rights hereunder nor shall
they materially increase Tenant's obligations or decrease Tenant's rights under
this Lease.
M. Entire Agreement. This Lease is the entire agreement between the
----------------
parties, and there are no agreements or representations between the parties
except as expressed herein. Except as otherwise provided herein, no subsequent
change or addition to this Lease shall be binding unless in writing and signed
by the parties hereto.
N. Authority. If Tenant is a corporation or a partnership, Tenant
---------
represents and warrants that each individual executing this Lease on behalf of
said corporation or partnership, as the case may be, is duly authorized to
execute and deliver this Lease on behalf of said entity in accordance with its
corporate bylaws, statement of partnership or certificate of limited
partnership, as the case may be, and that this Lease is binding upon said entity
in accordance with its terms. Landlord, at its option, may require a copy of
such written authorization to enter into this Lease.
O. Exhibits. All exhibits, amendments, riders and addendums
--------
attached hereto are hereby incorporated herein and made a part hereof.
-30-
<PAGE>
P. Lease Summary. The Lease Summary attached to this Lease is
-------------
intended to provide general information only. In the event of any inconsistency
between the Lease Summary and the specific provisions of this Lease, the
specific provisions of this Lease shall prevail.
THIS LEASE is effective as of the date the last signatory necessary to
execute the Lease shall have executed this Lease.
TENANT:
Dated 6-17-97 Artisan Components, Inc., a
-------------------- California corporation
By /s/ Mark R. Templeton
----------------------------
Mark Templeton,
President and CEO
LANDLORD:
Dated 6-17-97 /s/ Richard V. Bowling, Jr.
-------------------- -----------------------------------
Richard V. Bowling, Jr., Trustee of
the Bowling Revocable Trust
/s/ Kathleen S. Bowling
-----------------------------------
Kathleen S. Bowling, Trustee of the
Bowling Revocable Trust
-31-
<PAGE>
THE PREMISES
------------
[to be attached]
EXHIBIT A
---------
<PAGE>
WORK LETTER AGREEMENT
---------------------
In connection with the Demolition Work, the Exterior ADA Work, the
Seismic Work and the Tenant Improvements to be performed or installed in the
Premises the parties hereby agree as follows:
1. Demolition, Exterior ADA Work and Seismic Work. In addition, to
----------------------------------------------
the Tenant Improvements to the Premises to be constructed by Tenant as provided
herein, Tenant shall (i) remove and/or demolish the existing interior
improvements in the Building so that the Building is in shell condition (the
"Demolition Work"), (ii) complete any alterations and improvements to the
Outside Area of the Premises that are required to comply with applicable
provisions of the Americans with Disabilities Act of 1990 (the "Exterior ADA
Work"), and (iii) construct such improvements to the Building shell as may be
necessary to meet the most current seismic standards of the Uniform Building
Code for single-story buildings of similar construction (the "Seismic Work").
The cost of the Demolition Work, the Exterior ADA Work and the Seismic Work
shall be paid by Landlord as provided in Paragraph 6 below. Landlord shall have
the right to review and approve the scope of the Demolition Work, the Exterior
ADA Work and the Seismic Work and to approve the contractor or contractors
selected by Tenant to perform the Demolition Work, the Exterior ADA Work and
the Seismic Work, which approvals shall not be unreasonably withheld or delayed.
2. Plans and Specifications.
------------------------
(a) Exterior ADA Work and Seismic Work. Tenant shall retain a
----------------------------------
licensed architect reasonably acceptable to Landlord for the completion of final
working architectural and engineering plans and specifications for the Seismic
Work (the "Seismic Plans") and, to the extent applicable, final working
architectural and engineering plans and specifications for the Exterior ADA
Work, or if not required, a detailed description and accompanying site drawings
outlining in reasonable detail the scope of the Exterior ADA Work (the "Exterior
ADA Plans"). Landlord hereby approves of Malesardi Design Group as Tenant's
architect for preparation of the Seismic Plans and the Exterior ADA Plans.
Tenant shall submit the Seismic Plans to Landlord by June 30, 1997 and the
Exterior ADA Plans to Landlord by June 30, 1997. Within five (5) business days
after Landlord's receipt of the Seismic Plans and the Exterior ADA Plans,
Landlord shall notify Tenant of Landlord's approval or disapproval thereof,
specifying in reasonable detail the basis for Landlord's disapproval, if
applicable. Landlord shall not unreasonably withhold or delay its consent to
the Exterior ADA Plans or the Seismic Plans. If Landlord fails to notify Tenant
of its approval or disapproval, specifying in reasonable detail the basis for
any disapproval, within such 5-day period, Tenant may again request approval of
the Exterior ADA Plans and/or the Seismic Plans, as applicable, in writing. If
Landlord fails to notify Tenant of Landlord's approval or disapproval of the
applicable plans within three (3) business days after Landlord's receipt of
Tenant's second notice, then Landlord shall be deemed to have approved the
applicable plans. If Landlord reasonably disapproves the Exterior ADA Plans
and/or the Seismic Plans, Tenant shall re-submit revised plans to Landlord for
Landlord's review and approval within fifteen (15) business days thereafter.
Landlord shall have three (3) business days after receipt of the revised plans
to approve or disapprove the revised plans. This process shall continue until
Landlord has approved the plans or fails to timely
EXHIBIT B
---------
Page 1 of 5
<PAGE>
disapprove such plans as provided herein. No material revisions to the approved
Seismic Plans and/or the approved Exterior ADA Plans shall be made by Tenant
unless approved in writing by Landlord, which approval shall not be unreasonably
withheld or delayed. If any revisions to the Exterior ADA Plans and/or the
Seismic Plans are required by any governmental agency to comply with applicable
Laws or to obtain any necessary permits, Landlord shall consent to such
revisions.
(b) Tenant Improvements. Landlord hereby approves Tenant's
-------------------
preliminary space plan for the Tenant Improvements, a copy of which is attached
as Exhibit B-1. Tenant shall prepare and submit to Landlord for Landlord's
-----------
review and approval a final space plan for Tenant's proposed Tenant Improvements
to the Premises by June 30, 1997. Within five (5) business days after receipt
of Tenant's space plan, Landlord shall notify Tenant of Landlord's approval or
disapproval thereof, specifying in reasonable detail the basis for Landlord's
disapproval, if applicable. Tenant shall retain a licensed architect for the
completion of final working architectural and engineering plans and
specifications for the interior improvements based upon the approved space plan
("Tenant Improvement Plans"). Landlord hereby approves of Malesardi Design
Group as Tenant's architect for preparation of the Tenant Improvement Plans.
Tenant shall submit the Tenant Improvement Plans to Landlord by July 15, 1997.
Within five (5) business days after Landlord's receipt of the Tenant
Improvement Plans, Landlord shall notify Tenant of Landlord's approval or
disapproval thereof, specifying in reasonable detail the basis for Landlord's
disapproval, if applicable. Landlord shall not unreasonably withhold or delay
its consent to the Tenant Improvement Plans. If Landlord fails to notify Tenant
of its approval or disapproval, specifying in reasonable detail the basis for
any disapproval, within such 5-day period, Tenant may again request approval of
the Tenant Improvement Plans in writing. If Landlord fails to notify Tenant of
Landlord's approval or disapproval of the Tenant Improvement Plans within three
(3) business days after Landlord's receipt of Tenant's second notice, then
Landlord shall be deemed to have approved the Tenant Improvement Plans. If
Landlord reasonably disapproves the Tenant Improvement Plans, Tenant shall re-
submit revised plans to Landlord for Landlord's review and approval within
fifteen (15) business days thereafter. Landlord shall have three (3) business
days after receipt of the revised Tenant Improvement Plans to approve or
disapprove the revised plans. This process shall continue until Landlord has
approved the Tenant Improvement Plans or fails to timely disapprove such plans
as provided herein. No material revisions to the approved Tenant Improvement
Plans shall be made by Tenant unless approved in writing by Landlord, which
approval shall not be unreasonably withheld. If any revisions to the Tenant
Improvement Plans are required by any governmental agency to comply with
applicable Laws or to obtain any necessary permits, Landlord shall consent to
such revisions.
(c) Landlord's Review of Plans. Landlord's review of the Exterior ADA
--------------------------
Plans, the Seismic Plans and the Tenant Improvement Plans shall be for
Landlord's sole purpose and shall not imply Landlord's review of the same, nor
obligate Landlord to review the same, for quality, design, compliance with Laws
or other like matters. Accordingly, notwithstanding that the Exterior ADA
Plans, Seismic Plans and/or Tenant Improvement Plans are reviewed by Landlord or
its space planner, architect, engineers or consultants, Landlord shall have no
liability whatsoever in connection therewith and shall not be responsible for
any omissions or errors contained in the Exterior ADA Plans, Seismic Plans
and/or Tenant Improvement Plans.
EXHIBIT B
---------
Page 2 of 5
<PAGE>
3. Permits and Approvals. Tenant shall be responsible for obtaining
---------------------
all necessary permits and approvals (including the building and occupancy
permits) and other authorizations from the City of Sunnyvale or other
governmental agencies in connection with the Demolition Work and the
construction of the Exterior ADA Work, the Seismic Work, and the Tenant
Improvements. The cost of all such permits and approvals, including inspection,
outside plan check, and other building fees required to obtain any such permits,
shall be paid by Tenant.
4. Construction and Work Quality. The general contractor and/or
-----------------------------
contractors selected by Tenant for Demolition Work and construction of the
Exterior ADA Improvements, the Seismic Work and the Tenant Improvements shall be
subject to Landlord's approval, which shall not be unreasonably withheld or
delayed. Tenant shall complete construction of the Exterior ADA Work, the
Seismic Work and the Tenant Improvements in a good and workmanlike manner with
new materials of good quality, in accordance with the respective plans and
specifications therefor which have been approved by Landlord, and in compliance
with all applicable Laws. Tenant shall keep Landlord fully informed of the
progress and shall allow representatives of Landlord to observe, inspect and
monitor the construction at Landlord's sole cost and expense. Tenant shall
arrange for the Exterior ADA Work, the Seismic Work and the Tenant Improvements
to be fully warranted (labor and materials) by the general contractor, sub-
contractor, or appropriate supplier, as the case may be, for a period of one (1)
year after the completion thereof. Prior to commencement of construction of the
Exterior ADA Work, the Seismic Work and the Tenant Improvements Tenant shall
deliver to Landlord a certification by the general contractor listing all
contractors, subcontractors and suppliers to be employed in connection with such
work. Tenant shall deliver to Landlord a copy of the building permit obtained
by Tenant for the Exterior ADA Work, the Seismic Improvements, and the Tenant
Improvements upon receipt of the permit(s) from the City of Sunnyvale. Tenant
may, at Tenant's election, commence and complete the Demolition Work prior to
obtaining Landlord's approval of the Tenant Improvement Plans.
5. Tenant Improvements Cost. All costs of designing and
------------------------
constructing the Tenant Improvements shall be paid by Tenant without
contribution by Landlord. The Tenant Improvements cost shall include the
following: (a) all costs of preliminary and final architectural and engineering
plans and specifications for the Tenant Improvements, and engineering costs
associated with completion of the State of California energy utilization
calculations under Title 24 legislation; (b) all costs of obtaining building
permits and other necessary authorizations from the City of Sunnyvale; (c) all
costs of interior design and finish schedule plans and specifications including
as-built drawings to be delivered to Landlord upon completion of the Tenant
Improvements; (d) all direct and indirect costs of procuring, constructing and
installing the Tenant Improvements in the Premises.
6. Demolition, Exterior ADA and Seismic Work Costs.
-----------------------------------------------
(a) The cost of the Demolition Work, the Exterior ADA Work and
the Seismic Work shall be paid by Landlord at its sole cost and expense, without
contribution by Tenant, subject to the following limitations: (i) the scope of
the Demolition Work, the Exterior ADA Work and the Seismic Work shall be subject
to Landlord's reasonable approval as provided in Paragraph 1 above; (ii) Tenant
shall obtain competitive bids from three (3) licensed general contractors
EXHIBIT B
---------
Page 3 of 5
<PAGE>
reasonably approved by Landlord for each of the Demolition Work, the Exterior
ADA Work and the Seismic Work; (iii) the general contractor(s) selected by
Tenant for completion of the Demolition Work, the Exterior ADA Work and the
Seismic Work shall be subject to Landlord's reasonable approval; (iv) any
architectural and engineering fees incurred by Tenant in connection with the
Demolition Work, the Exterior ADA Work, and the Seismic Work shall be paid by
Tenant; and (v) in no event shall Landlord be required to spend in excess of (A)
Fifty Thousand and no/100ths Dollars ($50,000.00) for completion of the
Demolition Work, (B) One Thousand Nine Hundred Forty and no/100ths Dollars
($1,940.00) for completion of the Exterior ADA Work, and (C) Twenty-Five
Thousand and no/100ths Dollars ($25,000.00) for completion of the Seismic Work.
(b) The cost of the Demolition Work, the Exterior ADA Work and
the Seismic Work shall be paid by Landlord on a progress payment basis within
ten (10) business days after Landlord's receipt of (i) a description of the work
completed to date, the cost of the work completed and a list of the contractors,
subcontractors and suppliers to be paid at such time; and (ii) appropriate lien
releases for the work completed from each of the contractors, subcontractors and
suppliers to be paid. A ten percent (10%) retainage shall be withheld from each
progress payment. The remaining ten percent (10%) due shall be paid to Tenant
within ten (10) business days after a Notice of Completion has been recorded for
the Exterior ADA Work and the Seismic Work, as applicable, and Landlord has
received all of the following: (i) an unconditional waiver and release upon
final payment from Tenant's general contractor and each subcontractor and
supplier; (ii) a letter executed by Tenant's architect certifying that the
Exterior ADA Work and the Seismic Work have been completed in accordance with
the Exterior ADA Plans and the Seismic Plans, respectively; and (iii) evidence
that the Exterior ADA Work and the Seismic Work have been inspected and approved
by the building department of the City of Sunnyvale.
(c) If Landlord fails to make any progress payment to Tenant in
connection with the Demolition Work, the Exterior ADA Work or the Seismic Work
within such 10-day period, then Tenant may again request payment of the
applicable costs in writing. If Landlord fails to pay any such costs within
five (5) business days after receipt of Tenant's second request for payment,
and Landlord's failure to pay such costs is not due to Tenant's failure to
submit any of the information required under Paragraph 6(b), then Tenant may
stop construction of all work and the Commencement Date of this Lease, and
Tenant's obligation to pay Rent or Landlord's out-of-pocket costs, as
applicable, shall be extended by one (1) day for each day that Landlord fails to
make the required progress payment. If Landlord fails to make any progress
payment within sixty (60) days after Tenant's request therefor and Landlord's
failure to pay such costs is not due to Tenant's failure to submit any of the
information required under Paragraph 6(b), then Landlord shall be in breach of
this Lease. In such event, Tenant shall be entitled to terminate this Lease
and/or sue Landlord for all damages proximately caused by such breach,
including, without limitation, all amounts owed under any construction contract
for the Demolition Work, the Exterior ADA Work, the Seismic Work and the Tenant
Improvements.
7. Change Requests. No material revisions to the approved Tenant
---------------
Improvement Plans, Exterior ADA Plans or Seismic Plans shall be made by either
Landlord or Tenant unless approved in writing by both parties. Tenant agrees to
make all changes required by any public agency to conform with governmental
regulations, or reasonably requested in writing by Landlord.
EXHIBIT B
---------
Page 4 of 5
<PAGE>
Any costs related to changes to the Tenant Improvement Plans, the Exterior ADA
Plans and/or the Seismic Plans that are required by any public agency to conform
with governmental regulations shall be paid for by Tenant. Any costs related to
changes to the Exterior ADA Plans or the Seismic Plans that are requested by
Landlord and any changes to the Tenant Improvement Plans that are requested by
Landlord after the same have been approved by Landlord shall be paid for by
Landlord.
8. Insurance. During demolition of the existing interior
---------
improvements and construction of the Exterior ADA Work, the Seismic Work and the
Tenant Improvements, Tenant shall be required to carry (or cause its contractor
to carry) workers' compensation insurance in the statutory limits, builder's
all-risk insurance, and liability insurance satisfying the requirements of
Paragraphs 21.B.(i) and 21.F. of the Lease.
EXHIBIT B
---------
Page 5 of 5
<PAGE>
COMMENCEMENT DATE MEMORANDUM
----------------------------
LANDLORD: Richard V. Bowling, Jr. and Kathleen S. Bowling,
Trustees of the Bowling Revocable Trust
TENANT: Artisan Components, Inc.
LEASE DATE: June 16, 1997
PREMISES: 1195 Bordeaux Drive
Sunnyvale, California
Pursuant to Paragraph 4.A. of the above referenced Lease, the
Commencement Date is hereby established as _________________, 1997.
TENANT:
Dated____________________ Artisan Components, Inc., a
California corporation
By____________________________
Mark Templeton,
President and CEO
LANDLORD:
Dated____________________ _______________________________
Richard V. Bowling, Jr., Trustee of
the Bowling Revocable Trust
_______________________________
Kathleen S. Bowling, Trustee of the
Bowling Revocable Trust
EXHIBIT C
---------
<PAGE>
LEASE
-----
(SINGLE-TENANT MODIFIED NET)
by and between
Richard V. Bowling, Jr. and Kathleen S. Bowling,
Trustees of the Bowling Revocable Trust
("Landlord")
and
Artisan Components, Inc.
("Tenant")
For the approximately 32,660 SF Premises at
1195 Bordeaux Drive, Sunnyvale, CA 94089
<PAGE>
LEASE SUMMARY
-------------
Lease Date: June 16, 1997
Landlord: Richard V. Bowling, Jr. and Kathleen S. Bowling,
Trustees of the Bowling Revocable Trust
Address of Landlord: P.O. Box 1085
Danville, CA 94526
Tenant: Artisan Components, Inc.
Address of Tenant: 2077 Gateway Place
San Jose, CA 95110-1016
Contact: Beth Bartel
Telephone: (408)453-1000
Building Address: 1195 Bordeaux Drive
Building Square Footage: approximately 32,660 square feet
Commencement Date: See Paragraph 4.A.
Term: seven (7) years
Monthly Rent:
Months of Term Net Monthly Rent
-------------- ----------------
1 through 12 $35,926.00/month
13 through 24 $37,559.00/month
25 through 36 $39,192.00/month
37 through 48 $40,825.00/month
49 through 60 $42,458.00/month
61 through 72 $44,091.00/month
73 through 84 $45,724.00/month
Security Deposit: $45,724.00
<PAGE>
TABLE OF CONTENTS
-----------------
Article Page
------- ----
1. Parties 1
2. Premises 1
3. Definitions 1
4. Lease Term 3
5. Rent 4
6. Late Payment Charges 5
7. Security Deposit 5
8. Holding Over 6
9. Tenant Improvements 6
10. Condition of Premises 7
11. Use of the Premises 7
12. Quiet Enjoyment 9
13. Alterations 9
14. Surrender of the Premises 10
15. Real Property Taxes 10
16. Utilities and Services 11
17. Repair and Maintenance 12
18. Liens 14
19. Landlord's Right to Enter the Premises 14
20. Signs 15
i
<PAGE>
Article Page
------- ----
21. Insurance 15
22. Waiver of Subrogation 17
23. Damage or Destruction 18
24. Condemnation 19
25. Assignment and Subletting 20
26. Default 21
27. Subordination 24
28. Notices 24
29. Attorneys' Fees 25
30. Estoppel Certificates 25
31. Transfer of the Premises by Landlord 26
32. Landlord's Right to Perform Tenant's Covenants 26
33. Tenant's Remedy 26
34. Mortgagee Protection 26
35. Brokers 27
36. Acceptance 27
37. Parking 27
38. Option to Extend. 27
39. General 29
ii
<PAGE>
TABLE OF EXHIBITS
-----------------
EXHIBIT A The Premises
EXHIBIT B Work Letter Agreement
EXHIBIT C Commencement Date Memorandum
iii