California-Santa Clara-2890 De La Cruz Boulevard-Building A Lease - ATP Associates LP and United Defense LP
LEASE
BY AND BETWEEN
ATP ASSOCIATES L.P.
a Delaware limited partnership, as Landlord
and
UNITED DEFENSE L.P.,
a Delaware limited partnership,
as Tenant
for
BUILDING A
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LEASE
(Building A)
This Lease, dated April ___,1999 for reference purposes only, is made by
and between ATP Associates L.P., a Delaware limited partnership ("Landlord"),
and United Defense L.P., a Delaware limited partnership ("Tenant").
Recitals
A. The Equitable Life Assurance Society of the United States("Equitable")
and FMC Corporation ("FMC") entered into a lease dated June 1, 1989 (the
"Original Lease"), for the Premises (as defined below);
B. On or about August 11, 1995, Landlord acquired the fee simple interest
in certain real property, including the Premises, from Equitable and succeeded
to the interest of Equitable as Landlord under the Lease;
C. Tenant is now occupying the Premises pursuant to the Original Lease,
as if the Original Lease had been assigned by FMC to Tenant; and
D. Landlord and Tenant have agreed to enter into this new Lease instead
of extending the Old Lease, and Tenant has agreed to assume the obligations
under the Original Lease as if the Original Lease had been assigned to Tenant
and the term extended.
Agreement
Now Therefore, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:
ARTICLE 1
Definitions
1.1 Commencement Date. The term "Commencement Date" shall mean November 1,
1999.
1.2 Rent Start Date. The term "Rent Start Date" shall mean November 1,
1999 provided, however, that if the Landlord is unable to so deliver possession
of the Leased Premises to Tenant in the agreed condition on or before the
Commencement Date, rent shall not commence and Landlord shall not be in default
under this Lease, nor shall this Lease be void, voidable or cancelable by Tenant
until the lapse of ninety (90) days after the Commencement Date.
1.3 Lease Term. The Lease Term shall commence on the Commencement Date and
shall continue until the fourth (4th) anniversary of the Rent Start Date (unless
the Lease Term is extended pursuant to paragraph 2.4 hereof).
1.4 Property. The term "Property" shall mean that real property shown on
the site plan attached hereto as Exhibit "A" and all improvements now or
hereafter located thereon, including, without limitation, the five (5) buildings
presently located thereon, the aggregate gross leaseable area of which is
approximately 295,271 square feet (the "Property Gross Leaseable Area"),
allocated among the five buildings as shown on the attached Exhibit "A";
provided, however, that Landlord may change the boundaries and composition of
the Property by removing or adding land and/or buildings and thereafter the term
"Property" shall refer to such real property so enlarged or reduced and the
amount of the "Property Gross Leaseable Area" shall be appropriately adjusted.
1.
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1.5 Premises. The term "Premises" shall mean the building structure
situated on the Property commonly known as Building A of Airport Technology
Park, 2890 De La Cruz Boulevard, Santa Clara, California, containing
approximately 68,708 square feet of gross leaseable area (the "Premises Gross
Leaseable Area") located as shown on Exhibit "A". Landlord and Tenant agree that
(i) all measurements of gross leaseable area contained in this lease are
conclusively agreed to be correct and binding upon the parties, even if a
subsequent measurement of any one of these areas determines that it is more or
less than the amount of area reflected in this Lease; and (ii) any such
subsequent determination that the area is more or less than shown in this Lease
shall not result in a change in any of the computations of rent, improvement
allowances, or other matters described in this Lease where gross leaseable area
is a factor.
1.6 Permitted Use. The term "Permitted Use" shall mean the use of the
Premises for (i) research and development, production, sales, and general
administrative offices and other legal uses incidental thereto, and (ii) any
other legal use first approved in writing by Landlord.
1.7 Tenant's Minimum Liability Insurance Coverage. The term "Tenant's
Minimum Liability Insurance Coverage" shall mean Two Million Five Hundred
Thousand Dollars ($2,500,000).
1.8 Tenant's Allocated Parking Stalls. The term "Tenant's Allocated
Parking Stalls" shall mean 267 parking stalls for the non-exclusive use of
Tenant.
1.9 Retained Real Estate Brokers. The term "Retained Real Estate Brokers"
shall mean Thomas Smith of CB Richard Ellis and Richard Kimball of Colliers
Parrish.
1.10 Address for Notices. The term "Address for Notices" shall mean
the following:
A. In the case of Landlord, such term shall mean c/o Menlo Equities
LLC, 525 University Avenue, Suite 100, Palo Alto, California 94301, Attention:
Henry D. Bullock/Richard J. Holmstrom.
B. In the case of Tenant, such term shall mean the address of the
Premises which is 2830 De La Cruz Boulevard, Santa Clara, California 95050.
1.11 Lease. The term "Lease" shall mean this printed lease, Exhibits "A"
(site plan), "B" (Approved Plans for Interior Improvements), "C" (Interior
Improvement Agreement), "D" (form of subordination agreement), all of which are
attached hereto and incorporated herein by this reference.
1.12 Building C Lease. The term "Building C Lease" shall mean that lease
dated as of April __, 1999 between Landlord and Tenant, pursuant to which Tenant
leases from Landlord that certain building identified as Building C on the site
plan attached hereto as Exhibit "A' and which contains approximately 86,785
square feet, the address of which is 2830 De La Cruz Boulevard, Santa Clara,
California.
1.13 Tenant's Allocated Share. The term "Tenant's Allocated Share" shall
mean one hundred percent (100%).
1.14 Continuing Tenant Default. A "Continuing Tenant Default" shall be
deemed to exist when an "Event of Tenant's Default" (as defined in paragraph
13.1) has occurred, and the underlying default or breach by Tenant of its
obligations which resulted in such Event of Tenant's Default has not been
completely cured.
1.15 Additional Definitions. As used in this Lease or any addendum or
amendment thereto, the following terms shall have the meanings set forth in
paragraph 15.12: "Agreed Interest Rate", "Common Area", "Law", "Leasehold
Improvements", "Lender", "Private Restrictions" and "Trade Fixtures".
2.
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ARTICLE 2
Demise And Acceptance
2.1 Demise of Premises. Landlord hereby leases to Tenant, and Tenant
leases from Landlord, for the Lease Term upon the terms and conditions of this
Lease, the Premises together with (i) the non-exclusive right to use no more
than the number of Tenant's Allocated Parking Stalls within the Common Area
(subject to the limitations set forth in paragraph 4.7), and (ii) the non-
exclusive right to use the Common Area for ingress to and egress from the
Premises. Tenant's lease of the Premises shall be subject to (i) all Laws, (ii)
all Private Restrictions, easements, and other matters of public record, and
(iii) the reasonable and non-discriminatory rules and regulations from time to
time promulgated by Landlord pursuant to paragraph 4.6.
2.2 Delivery and Acceptance of Possession. Landlord shall deliver to
Tenant possession of the Premises on the Commencement Data in their presently
existing condition, broom clean. Tenant shall accept possession of the Premises
in its presently existing condition, "as-is" (except for latent defects in the
structural elements of the Premises), acknowledging that Tenant intends to do
renovation work and construct interior improvements pursuant to paragraph 2.3
hereof and the Interior Improvement Agreement attached as Exhibit "C".
2.3 Construction of Interior Improvements. Tenant shall construct certain
improvements for Tenant's use in the Premises pursuant to the terms of the
Interior Improvement Agreement executed concurrently with this Lease by Landlord
and Tenant and attached hereto an Exhibit "C".
2.4 Options to Extend Lease Term. Landlord hereby grants to Tenant one (1)
option (the "Option") to extend the Lease Term for a three (3) year period (the
"Option Term"), on the following terms and conditions:
A. Tenant must give Landlord notice in writing of its exercise of the
Option before the later to occur of (i) the two hundred fortieth (240th) day
before the date the initial Lease Term would and but for said exercise, or (ii)
the seventh (7th) day following the establishment of the fair market rent for
the Premises by appraisal pursuant to subparagraph 2.4F if such appraisal
process is commenced pursuant to subparagraphs 2.4E and 2.4F.
B. Tenant may not exercise the option at any time that either of the
following is true: (i) a Continuing Tenant Default exists under this Lease
(unless caused by a subtenant of the original Tenant under this Lease and such
original Tenant is using reasonable efforts to cause such default to be cured);
or (ii) a Continuing Tenant Default exists under the Building C Lease (unless
caused by a subtenant or assignee of the original Tenant under this Lease and
such original Tenant is using reasonable efforts to cause such default to be
cured) and the same person or entity is the owner of record of both the Premises
and the real property leased pursuant to the Building C Lease.
C. All terms and conditions of this Lease shall apply during the
Option Term, except that the Base Monthly Rent for the Option Term shall be
determined as provided in subparagraph 2.4D below.
D. The Base Monthly Rent for the Option Term with respect to the
Premises shall be the ninety-five percent (95%) of the fair market rent for the
Premises for the Option Term on the terms contained in this Lease as of the
commencement of the Option Term, determined pursuant to subparagraphs 2.4E and
2.4F. For purposes of this Lease, the term "fair market rent for the Premises"
shall mean the projected going market rent for the Premises as of the
commencement of the Option Term in question, including a provision for periodic
increases of such rent during the Option Term (which increases shall be
established as part of such fair market rent), taking into account the value of
all improvements in the Premises, regardless of whether made by Landlord or
Tenant (except for those Leasehold Improvements that Tenant has the right to
remove at the expiration of the Lease Term) but in no event shall fair market
rent be less than the rent in effect during the immediately prior period.
E. Tenant may not exercise the Option in question unless Tenant has
delivered to Landlord a written request (a "Rent Quote Request") that Landlord
state in writing Landlord's opinion of the fair market rent
3.
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for the Premises for the upcoming Option Term in question, which Rent Quote
Request may only be delivered and shall only be effective if delivered (i) no
sooner than fifteen (15) months before the expiration of the Lease Term, and
(ii) no later than thirteen (13) months prior to the expiration of the Lease
Term. After receipt of a Rent Quote Request and no later than twelve (12) months
prior to the expiration of the Lease Term, Landlord shall deliver to Tenant a
written statement setting forth Landlord's opinion of the fair market rent for
the Premises for the Option Term in question (a "Landlord's Rent Quote"). For a
period of thirty (30) days following delivery to Tenant of Landlord's Rent Quote
(the "Negotiation Period"), Landlord and Tenant shall confer to attempt to reach
agreement upon the fair market rent for the Premises for the Option Term in
question. If Landlord and Tenant are unable to reach agreement in writing within
the Negotiation Period, for purposes of establishing the Base Monthly Rent for
the Option Term in question, the fair market rent for the Premises shall be
deemed to be the amount stated in Landlord's Rent Quote unless Tenant delivers
to Landlord during the Negotiation Period a written notice which states the
following: (i) Tenant requires that the fair market rent for the Premises for
the option Term in question be established by the appraisal process described in
subparagraph 2.4F; and (ii) the name, address, and qualifications of the
appraiser selected by Tenant for purposes of the appraisal process described in
subparagraph 2.4F ("Tenant's Appraisal Demand"). If Tenant so timely delivers to
Landlord a Tenant's Appraisal Demand, the Base Monthly Rent for the Option Term
in question shall be established based on the result of the appraisal process
described in subparagraph 2.4F.
F. If Tenant delivers to Landlord a Tenant's Appraisal Demand during
the Negotiation Period, then the fair market rent for the Premises shall be
determined by three (3) real estate appraisers, all of whom shall be members of
the American Institute of Real Estate Appraisers with not less than five (5)
years experience appraising real property (other than residential or
agricultural property) located in Santa Clara County, California, in accordance
with the following procedures:
(1) One of the appraisers shall be the appraiser identified in
Tenant's Appraisal Demand. Within ten (10) days of receipt of Tenant's Appraisal
Demand, Landlord shall select its appraiser and notify Tenant, in writing, of
the name, address and qualifications of an appraiser selected by it. Failure by
Landlord to select a qualified appraiser within said ten (10) day period shall
be deemed a waiver of its right to select a second appraiser on its own behalf
and Tenant shall select a second appraiser on behalf of Landlord within five (5)
days after the expiration of said ten (10) day period. Within ten (10) days from
the date the second appraiser shall have been appointed, the two (2) appraisers
selected by the parties shall appoint a third appraiser. If the two appraisers
fail to select a third qualified appraiser, the third appraiser shall be
selected by the American Arbitration Association at the request of either party
or, if there is then no American Arbitration Association or if it refuses to
perform this function, then at the request of either Landlord or Tenant, the
third appraiser shall be appointed by the then Presiding Judge of the Superior
Court of the State of California for the County of Santa Clara.
(2) The three (3) appraisers so selected shall meet in San Jose,
California, not later than twenty (20) days following the selection of the third
appraiser. At said meeting the appraisers shall attempt to determine the fair
market rent for the Premises for the Option Term in question.
(3) If the appraisers are unable to complete their
determinations in one meeting, they may continue to consult at such times as
they deem necessary for a fifteen (15) day period from the date of their first
meeting, in an attempt to have at least two (2) of them agree. If, at the
initial meeting or at any time during said fifteen (15) day period, two (2) or
more of the appraisers agree on the fair market rent for the Premises, such
agreement shall be determinative and binding on the parties hereto, and the
agreeing appraisers shall, in simple letter form executed by the agreeing
appraisers, forthwith notify both Landlord and Tenant of the amount set by such
agreement.
(4) If two (2) or more appraisers do not agree within said
fifteen (15) day period as set forth above, then each appraiser shall, within
five (5) days after the expiration of said fifteen (15) day period, submit his
independent appraisal in simple letter form to Landlord and Tenant stating his
determination of the fair market rent for the Premises for the Option Term in
question. Landlord and Tenant shall then determine the fair market rent for the
Premises for the Option Term by determining the average of the fair market rent
set by each of the appraisers; provided, however, if the lowest appraisal is
less than eighty-five percent (85%) of the middle appraisal then such lowest
appraisal shall be disregarded, and/or if the highest appraisal is greater than
one hundred
4.
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fifteen percent (115%) of the middle appraisal then such highest appraisal shall
be disregarded. If any appraisal in disregarded, then the average shall be
determined by computing the average set by the other appraisals that have not
been disregarded. For purposes of determining the relative amount of the
appraisals to implement the provisions of this subparagraph requiring that an
appraisal be disregarded if it is too high or too low, the amount of an
appraisal that calls for periodic rent increases based upon an index (e.g., the
Consumer Price Index) shall be determined by assuming that such index will
increase at the same average annual rate during the option period in question
that such index increased on an average annual basis during the five (5) year
period preceding the commencement of the option period in question.
(5) Each party shall bear the fees and expenses of the
appraisers selected by or for it, and the fees and expenses of the third
appraiser shall be borne fifty percent (50%) by Landlord and fifty percent (50%)
by Tenant.
ARTICLE 3
Rent
3.1 Base Monthly Rent. Commencing on the Rent Start Date and continuing
thereafter throughout the initial Lease Term, Tenant shall pay to Landlord a
monthly rent (which rent is referred to as the "Base Monthly Rent"), which shall
be the following:
A. The Base Monthly Rent for the period beginning on the Rent Start
Date and ending on the last day of the twelfth (12th) month of the Lease Term is
Ninety-Eight Thousand Nine Hundred Forty Dollars ($98,940) (i.e., $1.44 per
square foot per month).
B. The Base Monthly Rent for the period beginning on the first day of
the thirteenth (13th) month of the Lease Term and ending on the last day of the
twenty-fourth (24th) month of the Lease Term is One Hundred Two Thousand Three
Hundred Seventy-Five Dollars ($102,375) (i.e., $1.49 per square foot per month).
C. The Base Monthly Rent for the period beginning an the first day of
the twenty-fifth (25th) month of the Lease Term and ending on the last day of
the thirty-sixth (36th) month of the Lease Term is One Hundred Five Thousand
Eight Hundred Ten Dollars ($105,810) (i.e., $1.54 per square foot per month).
D. The Base Monthly Rent for the period beginning on the first day of
the thirty-seventh (37th) month of the Lease Term and ending on the last day of
the forty-eighth (48th) month of the Lease Term is One Hundred Nine Thousand
Dollars Two Hundred Forty-Six Dollars ($109,246) (i.e., $1.59 per square foot
per month).
E. For purposes of applying the provisions of this paragraph 3.1, the
term "month of the Lease Term" shall mean that period which begins on that day
of the calendar month in question which corresponds to the Rent Start Date and
which continues for thirty (30) or thirty-one (31) days until the day of the
next calendar month which precedes the day in that calendar month which
corresponds to the Rent Start Date. By way of example only, if it is assumed
that the Rent Start Date is November 1, 1999, then for purposes of this
paragraph 3.1 (i) the first month of the Lease Term would commence November 1
and end on November 30, 1999.
3.2 Additional Rent. Commencing on the Rent Start Date and continuing
thereafter throughout the Lease Term, Tenant shall pay, as additional rent (the
"Additional Rent"), (i) Tenant's share of Common Operating Expenses as required
by paragraph 6.3, (ii) Tenant's share of Real Property Taxes as required by
paragraph 8.2, (iii) Landlord's share of the net consideration received by
Tenant upon certain assignments and sublettings as required by paragraph 14.1,
(iv) any late charges or interest due Landlord pursuant to paragraph 3.4, (v)
Tenant's share of the amortized cost of certain additional improvements as
provided in paragraph 5.4, and (vi) any other charges due Landlord pursuant to
this Lease.
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3.3 Payment of Rent. All rent required to be paid in monthly installments
shall be paid in advance on the first day of each calendar month during the
Lease Term. All rent shall be paid in lawful money of the United States, without
any abatement, deduction or offset whatsoever (except as permitted by paragraphs
11.4 and 12.2), and without any prior demand therefor, to Landlord at its
address set forth above or at such other place as Landlord may designate from
time to time. Tenant's obligation to pay rent shall be prorated as of the Rent
Start Date and at expiration or earlier termination of the Lease Term such that
Tenant shall not be required to pay Base Monthly Rent or Additional Rent for any
period preceding the Rent Start Date or following the expiration or earlier
termination of the Lease Term (except in the case of a termination of this Lease
an a result of an Event of Tenant's Default).
3.4 Late Charge and Interest on Rent in Default. Tenant acknowledges that
the late payment by Tenant of any monthly installment of Base Monthly Rent or
any Additional Rent will cause Landlord to incur certain costs and expenses not
contemplated under this Lease, the exact amount of which are extremely difficult
or impractical to fix. Such costs and expenses will include, without limitation,
administration and collection costs and processing and accounting expenses.
Therefore, if any such Base Monthly Rent or Additional Rent is not received by
Landlord from Tenant within five (5) days after Landlord delivers written notice
to Tenant that such amount is delinquent, Tenant shall immediately pay to
Landlord a late charge equal to five percent (5%) of such delinquent rent.
Landlord and Tenant agree that this late charge represents a reasonable estimate
of such costs and expenses and is fair compensation to Landlord for its loss
suffered by Tenant's failure to make timely payment. In no event shall this
provision for a late charge be deemed to grant to Tenant a grace period or
extension of time within which to pay any rent or prevent Landlord from
exercising any right or remedy available to Landlord upon Tenant's failure to
pay any rent due under this Lease in a timely fashion, including the right to
terminate this Lease. If any rent remains delinquent for a period in excess of
thirty (30) days after Landlord delivers written notice to Tenant that such
amount is delinquent, in addition to such late charge, Tenant shall pay to
Landlord interest on any rent that is not paid when due at the Agreed Interest
Rate following the date such amount became due until paid.
ARTICLE 4
Use Of Premises
4.1 Limitation on Type. Tenant shall use the Premises solely for the
Permitted Use (as described in paragraph 1.6). Tenant shall not do or permit
anything to be done in or about the Premises or Common Area which will (i)
interfere with the rights of other occupants of the Property, (ii) cause
structural damage to the Premises and Tenant fails to promptly commence and
diligently pursue to completion the repair of such damage, or (iii) cause damage
to any part of the Premises or Property except to the extent reasonably
necessary for the installation of Tenant's equipment and trade fixtures and
Tenant fails to promptly commence and diligently pursue to completion the repair
of such damage. Tenant shall not operate any equipment within the Premises which
will (i) injure, vibrate or shake the Premises, (ii) overload existing
electrical system or other mechanical equipment servicing the Premises, or (iii)
impair the efficient operation of the sprinkler system or the heating,
ventilating or air conditioning ("HVAC") equipment servicing the Premises, or
(iv) damage, overload or corrode the sanitary sewer system. Tenant shall not
attach, hang or suspend anything from the ceiling, roof, walls or columns of the
Premises or set any load on the floor in excess of approved structural limits as
defined by Landlord's architect. Any dust, fumes, or waste products generated by
Tenant's use of the Premises shall be contained and disposed so that they do not
(i) create a fire or health hazard, (ii) damage the Premises, or (iii) interfere
with the businesses of other tenants of the Property. All noise or odors
generated by Tenant's use of the Premises shall be contained or muffled so that
they do not interfere with the businesses of other tenants of the Property.
Tenant shall not (i) change the exterior of the Premises (subject to Tenant's
right to install signs pursuant to paragraph 4.5), or (ii) install any equipment
or antennas on or make any penetrations of the exterior or roof of the Premises
without the prior written consent of Landlord. Tenant shall not commit nor
permit to be committed any waste in or about the Premises, and Tenant shall keep
the Premises in a neat, clean, attractive and orderly condition, free of any
objectionable noises, odors, dust or nuisances which may disturb the quiet
enjoyment of other tenants or occupants of the Property. Notwithstanding the
foregoing restrictions, the parties agree as follows:
A. Tenant may bring military fighting vehicles onto the first floor
of the Premises so long an (i) Tenant puts into place such reinforcing as is
reasonably necessary to upgrade the floor load capacity so that it will
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accept such fighting vehicles; and (ii) Tenant repairs any damage to the
Premises caused by the entry of such vehicles.
B. Tenant may install antennas, radio "dishes" or other electronic
equipment reasonably necessary for the conduct of Tenant's business upon the
roof of the Premises so long as (i) such installations are done in compliance
with all Laws and Private Restrictions; (ii) such installations are accomplished
in a manner which does not compromise the watertight integrity of the roof;
(iii) all damage to the Premises caused by such installation is repaired by
Tenant; and (iv) any such equipment is properly and effectively screened from
view in a manner reasonably acceptable to Landlord.
C. In the event Tenant desires to operate equipment within the
Premises that will or may overload existing mechanical, electrical, or other
systems, Tenant may do so only if it first installs, at its sole cost, all
necessary modifications, repairs or upgrades of existing systems so that such
equipment may be operated without overloading such systems as so modified by
Tenant.
4.2 Compliance with Laws and Private Restrictions. Tenant shall not use or
permit any person to use the Premises in any manner which violates any Laws or
Private Restrictions. Tenant shall abide by and promptly observe and comply with
all Laws and Private Restrictions and shall indemnify and hold Landlord harmless
from any liability resulting from Tenant's failure to do so.
4.3 Insurance Requirements. Tenant shall not use or permit any person to
use the Premises or Common Area in any manner which will cause a cancellation of
any Insurance policy covering the Premises. Tenant shall not sell, or permit to
be kept, used, or sold in or about the Premises any article which may be
prohibited by the standard form of fire insurance policy; provided, however,
that Tenant may bring military fighting vehicles onto the first floor of the
Premises as permitted pursuant to subparagraph 4.1A. Tenant shall comply with
all reasonable requirements of any insurance company, insurance underwriter, or
Board of Fire Underwriters which are necessary to maintain, at reasonable rates,
the insurance coverage carried by Landlord pursuant to this Lease.
4.4 Outside Areas. No materials, supplies, storage tanks or containers,
equipment, finished products or semi-finished products, raw materials,
inoperable vehicles or articles of any nature shall be stored upon or permitted
to remain outside of the Premises except in fully fenced and screened areas
outside the Premises which have been designed for such purpose and have been
approved in writing by Landlord for such use by Tenant; provided, however, that
Tenant may bring military fighting vehicles onto the first floor of the Premises
as permitted pursuant to subparagraph 4.1A.
4.5 Signs. Tenant shall not place on any portion of the Premises or the
Property any sign, placard, lettering in or on windows, banner, displays or
other advertising or communicative material which is visible from the exterior
of the Premises without the prior written approval of Landlord. All such
approved signs shall strictly conform to all Laws and Private Restrictions and
shall be installed at the expense of Tenant. If Landlord so elects, Tenant
shall, at the expiration or sooner termination of this Lease, remove all signs
installed by it and repair any damage caused by such removal. Tenant shall at
all times maintain such signs in good condition and repair. Upon Tenant's
written request and at Tenant's cost and expense, Landlord shall remove both of
the Airport Technology Park monument signs located on De La Cruz Boulevard.
Subject to Landlord's prior written approval of Tenant's specific design plan,
(i) Tenant shall have the right to install a monument sign at the entrance to
the Premises, and at the two entrances to Airport Technology Park, and (ii)
Tenant shall have the right to install signs on the exterior of the Premises.
Approved signs installed by Tenant may be illuminated in compliance with the
provisions of applicable Laws and Private Restriction.
4.6 Rules and Regulations. Landlord may from time to time promulgate
reasonable and nondiscriminatory rules and regulations applicable to all
occupants of the Property for the care and orderly management of the Property
and the safety of its tenants and invitees. Such rules and regulations shall be
binding upon Tenant upon delivery of a copy thereof to Tenant, and Tenant agrees
to abide by such rules and regulations. If there in a conflict between the rules
and regulations and any of the provisions of this Lease, the provisions of this
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Lease shall prevail. Landlord shall not be responsible for the violation by any
other tenant of the Property of any such rules and regulations.
4.7 Parking. Tenant is allocated and shall have the non-exclusive right to
use (without charge in addition to the Base Monthly Rent) no more than the
number of parking spaces contained within the Property described in paragraph
2.1 for its use and the use of its employees and invitees, the location of which
may be designated from time to time by Landlord but shall be on the Property and
within reasonable proximity to the Premises. Tenant shall not at any time use or
permit its employees or invitees to use more parking spaces than the number so
allocated to Tenant or to park or permit the parking of its vehicles or the
vehicles of others in any portion of the Property not designated by Landlord as
a non-exclusive parking area. Landlord shall not oversubscribe the parking
within the Property, and shall assure that the total number of spaces committed
to the non-exclusive use of all tenants of the Property shall not exceed the
total number of spaces within the Common Area. Of the parking spaces allotted to
Tenant pursuant to paragraph 2.1, Tenant shall have the right to designate a
reasonable number of such spaces as reserved spaces for its executives, which
shall not exceed ten percent (10%) of the total of spaces and which shall be in
immediate proximity to the Premises. If Landlord grants to any other tenant the
exclusive right to use any particular parking space(s), neither Tenant nor its
employees or invitees shall use such spaces. Within ten (10) business days after
written request therefor from Landlord, Tenant shall furnish Landlord with a
list of its and its employees vehicle license numbers and Tenant shall
thereafter notify Landlord of any change in such list within five (5) days after
each such change occurs. Tenant shall have the right, at Tenant's option, to
provide its employees with stickers or other identification markers or tags to
be affixed to or on the employees' automobiles or other vehicles, evidencing the
right of such employees to use the parking areas. Such stickers shall be subject
to prior review and approval by Landlord, which shall not be unreasonably
withheld or delayed. Tenant shall furnish to Landlord a list of identifying
numbers for the stickers distributed from time to time by Tenant to its
employees. If Tenant elects to use such stickers as provided herein, Tenant
shall not be obligated to furnish Landlord with a list of vehicle license
numbers for its employees, for as long as Tenant maintains such sticker system
of identification. Landlord reserves the right, after having given Tenant
reasonable notice, to have any vehicles owned by Tenant or its employees or
invitees utilizing parking spaces in excess of the parking spaces allowed for
Tenant's use to be towed away at Tenant's cost. All trucks and delivery vehicles
shall be (i) parked at the rear of the Premises, (ii) loaded and unloaded in a
manner which does not interfere with the businesses of other occupants of the
Property, and (iii) permitted to remain on the Property only so long as is
reasonably necessary to complete loading and unloading. In the event Landlord
elects or is required by any Law to limit or control parking in the Property,
whether by validation of parking tickets or any other method of assessment,
Tenant agrees to participate in such validation or assessment program under such
reasonable rules and regulations as are from time to time established by
Landlord, so long as such participation does not result in any increase in costs
to Tenant.
4.8 Window Coverings. To the extent Tenant elects to use window coverings
visible from the exterior of the Premises, Tenant shall use the same window
covering to cover all windows Tenant so elects to cover in the Premises to
maintain a consistent and uniform exterior appearance.
4.9 Outside Sales. Tenant shall not conduct or permit to be conducted on
any portion of the Common Area any sale of any kind, including (i) any public or
private auction, fire sale, going-out-of-business sale, distress sale or other
liquidation sale, or (ii) any so-called "flea market", open-air market or any
other similar activity. Notwithstanding the foregoing, Tenant shall be allowed
to conduct occasional sales outside of the Premises on that part of the Common
Area that is in close proximity to the Premises so long as each of the following
conditions is satisfied with respect to each such sale: (i) Landlord is given at
least two (2) business days prior written notice of the date of any such sale;
(ii) such sale does not violate any Laws; (iii) such sale is conducted in a
manner that does not interfere with the rights of other occupants of the
Property; (iv) Tenant provides all necessary security, cleans up all debris, and
repairs any damage caused by such sale; and (v) the purpose of such sale is to
permit employees of Tenant to purchase or to receive free of charge property of
Tenant.
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ARTICLE 5
Trade Fixtures And Leasehold Improvements.
5.1 Trade Fixtures. Throughout the Lease Term, Tenant shall provide,
install, and maintain in good condition all Trade Fixtures required in the
conduct of its business in the Premises. All Trade Fixtures shall remain
Tenant's property.
5.2 Leasehold Improvements. The following provisions govern Leasehold
Improvements constructed by Tenant:
A. Tenant shall not construct any Leasehold Improvements or otherwise
alter the Premises without Landlord's prior approval if such action results in
the demolition, removal, or material alteration of existing Improvements
(including partitions, wall and floor coverings, ceilings, lighting fixtures or
other utility installations) and if the cost of such construction or alteration
exceeds Fifteen Thousand Dollars ($15,000) per work of improvement or if the
cost of Leasehold Improvements done, under construction, or for which approval
is sought during any calendar quarter exceeds Twenty-Five Thousand Dollars
($25,000). With respect to any Leasehold Improvements which must be approved by
Landlord pursuant to the immediately preceding sentence, Tenant shall not
commence construction of such Leasehold Improvements until Landlord shall have
first approved the plans and specifications therefor, which approval shall be
deemed given if not denied in writing within ten (10) working days after
Landlord shall have received Tenant's request for such approval. In no event
shall Tenant make any alterations to the Premises which could significantly
affect the structural integrity or the exterior design of the Premises without
Landlord's prior approval.
B. All Leasehold Improvements requiring Landlord's approval shall be
installed by Tenant in substantial compliance with the approved plans and
specifications therefor. All construction undertaken by Tenant shall be done in
accordance with all Laws and in a good and workmanlike manner using materials of
good quality. Tenant shall not commence construction of any Leasehold
Improvements until (i) all required governmental approvals and permits shall
have been obtained, (ii) all requirements regarding insurance imposed by this
Lease have been satisfied, and (iii) if reasonably requested by Landlord, Tenant
shall have obtained contingent liability and broad form builders risk insurance
in an amount reasonably satisfactory to Landlord if there are any perils
relating to the proposed construction not covered by insurance carried pursuant
to Article 9. If Landlord so requests in writing with respect to Leasehold
Improvements requiring Landlord's prior approval, Tenant shall inform Landlord
of Tenant's scheduled date for commencement of construction at least five (5)
days prior to such date of commencement.
C. At all times during the Lease Term, (i) Tenant shall maintain all
plans and change orders prepared in connection with the construction of any
Leasehold Improvements which required a building permit or other governmental
approval, and (ii) Tenant shall provide to Landlord copies of such plans and
change orders (and, to the extent Tenant causes such to be prepared for its own
use, "As-Built" plans) at any time that Landlord requests copies thereof.
D. All Leasehold Improvements shall remain the property of Tenant
during the Lease Term. Tenant shall have the right to remove only the following
kinds of Leasehold Improvements so long as it repairs all damage caused by the
installation thereof and returns the Premises to the condition existing prior to
the installation of such Leasehold Improvements: (i) built-in cabinets, file
drawers and bookcases; (ii) computer room air conditioning; (iii) canteen
equipment; (iv) office cubicle systems; and (v) ornamental statues. At the
expiration or sooner termination of the Lease Term, all Leasehold Improvements
that Tenant does not remove shall be surrendered to Landlord as a part of the
realty and shall then become Landlord's property, and Landlord shall have no
obligation to reimburse Tenant for all or any portion of the value or cost
thereof. However, if Landlord so requires, at the expiration or earlier
termination of the Lease Term, Tenant shall remove any Leasehold Improvements
designated for removal by Landlord and shall restore the Premises to the
condition existing prior to the installation of such Leasehold Improvements to
the extent necessary to return the Premises to substantially the
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same condition that existed on the completion of the Interior Improvements
constructed pursuant to Exhibit "C", ordinary wear and tear excepted.
Notwithstanding the foregoing:
(1) Tenant shall only be required to remove Leasehold Improvements
for which either of the following is true: (i) such Leasehold Improvements were
not approved in writing by Landlord; or (ii) at the time approval was given by
Landlord, Landlord informed Tenant in writing that Landlord would require that
such Leasehold Improvements be removed at the termination of the Lease Term.
(2) Tenant my cause interior partitions to be moved, reconfigured,
or removed altogether, or cause interior offices to be deleted or added, all
without the obligation to restore such partitions or interior offices to any
prior condition upon expiration or termination of the Lease.
5.3 Alterations Required by Law. Tenant shall make any alteration,
addition or change of any sort, whether structural or otherwise, to the Premises
that is required by any Law because of (i) a specific use or change of use made
of the Premises by Tenant (which alteration, addition or change is not generally
required to be made by owners or tenants of other properties similar to the
Premises), (ii) Tenant's application for any permit or governmental approval, or
(iii) Tenant's construction or installation of any Leasehold Improvements or
Trade Fixtures.
5.4 Landlord's Improvements. All fixtures, improvements or equipment which
are installed, constructed on or attached to the Property by Landlord at its
expense shall become a part of the realty and belong to Landlord. Tenant shall
pay additional rent in the event Landlord, in its sole discretion, elects to
make any of the following kinds of capital improvements to the Property: (i)
capital improvements required to be constructed in order to comply with any Law
not in affect or applicable to the Property as of the Commencement Date; (ii)
modification of existing or construction of additional capital improvements or
building service equipment for the purpose of reducing the consumption of
utility services or Common Operating Expenses of the Property; (iii) replacement
of capital improvements or building service equipment existing as of the
Commencement Date when required because of normal wear and tear; and (iv) the
amount of "deductibles" paid by Landlord for the restoration of any part of the
Property that has been damaged to the extent such "deductible" is not included
within Common Operating Expenses. With respect to any expenditure in excess of
Fifty Thousand Dollars ($50,000) for which Landlord seeks contribution pursuant
to this paragraph 5.4 from Tenant, prior to incurring such expense, Landlord
shall notify Tenant of the nature and estimated amount of such expenditure and,
if Tenant so requests, shall provide Tenant with such information upon which
such cost estimate is based for Tenant's approval. The amount of additional rent
Tenant is to pay with respect to each such capital improvement shall be
determined as follows:
A. Tenant shall have the option to pay in cash an amount equal to
Tenant's Allocated Share of all costs paid by Landlord to construct the
improvements in question fairly allocable to the Premises (including financing
costs) in cash within thirty (30) days after the improvement has been
substantially completed and Landlord has notified Tenant of the cost of such
improvement and the amount of Tenant's required contribution. If Tenant does not
exercise such option to pay such amount in cash, then the provisions of
subparagraph 5.4B shall apply.
B. All costs paid by Landlord to construct such improvement
(including financing costs) shall be amortized on a straight line basis over the
useful life of such improvement (determined in accordance with generally
accepted accounting principles) with interest on the unamortized balance at the
then prevailing market rate Landlord would pay if it borrowed funds to construct
such improvement from an institutional lender, and Landlord shall inform Tenant
of the monthly amortization payment required to so amortize such costs, and
shall also provide Tenant with the information upon which such determination is
made. As additional rent, Tenant shall pay an amount equal to Tenant's Allocated
Share of that portion of such monthly amortization payment fairly allocable to
the Promises (as reasonably determined by Landlord) for each month after such
improvement is completed until the first to occur of (i) the expiration of the
Lease Term (as the same may be extended), or (ii) the end of the term over which
such costs were amortized, which amount shall be due at the same time the Base
Monthly Rent is due.
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C. Notwithstanding anything contained in this paragraph 5.4, the
additional rent Tenant is to pay with respect to any modification of existing or
construction of additional capital improvements or building service equipment
for the purpose of reducing the consumption of utility expenses or Common
Operating Expenses of the Property shall not for any period exceed the actual
amount of savings in Additional Rent realized by Tenant as a result of such
modification or construction.
5.5 Liens. Tenant shall keep the Premises and the Property free from any
liens and shall pay when due all bills arising out of any work performed,
materials furnished, or obligations incurred by Tenant, its agents, employees or
contractors relating to the Premises. If any claim of lien is recorded, Tenant
shall bond against or discharge the same within thirty (30) days after the same
has been recorded against the Premises and/or the Property. Should any lien be
filed against the Premises or any action commenced affecting title to the
Premises, the party receiving notice of such lien or action shall immediately
give the other party written notice thereof.
ARTICLE 6
Repair And Maintenance
6.1 Tenant's Obligation to Maintain. Except as otherwise provided in
paragraph 6.2 and in Article 11 regarding the restoration of damage caused by
fire and other perils, Tenant shall, at all times during the Lease Term, clean,
keep, and maintain in good order, condition, and repair the Premises and every
part thereof, through regular inspections and servicing, including, but not
limited to, (i) all plumbing and sewage facilities (including all sinks,
toilets, faucets and drains), and all ducts, pipes, vents or other parts of the
HVAC or plumbing system, (ii) all fixtures, interior walls, floors, carpets and
ceilings, (iii) all windows, doors, entrances, plate glass, showcases and
skylights (including cleaning both interior and exterior surfaces), (iv) all
electrical facilities and all HVAC equipment and other mechanical systems
(including all lighting fixtures, lamps, bulbs, tubes, fans, vents, exhaust
equipment and systems), (v) any automatic fire extinguisher equipment in the
Premises, and (vi) the roof membrane (including any necessary resurfacing or
patching to preserve the membrane or to repair leaks except that Tenant shall
not be required to make any repair to the extent such repair is required because
of Landlord's repair or maintenance of the structural roof system). Tenant shall
replace any damaged or broken glass in the Premises (including all interior and
exterior doors and windows) with glass of the same kind, size and quality.
Tenant shall repair any damage to the Premises (including exterior doors and
windows) caused by vandalism or any unauthorized entry. Tenant shall maintain
continuously throughout the Lease Term a service contract for the maintenance of
all HVAC equipment serving the Premises with a licensed HVAC repair and
maintenance contractor, which contract provides for the periodic inspection and
servicing of the HVAC equipment at least once every sixty (60) days during the
Lease Term. Tenant shall also maintain continuously throughout the Lease Term a
service contract for the washing of all windows (both interior and exterior
surfaces) in the Premises with a contractor, which contract provides for the
periodic washing of all such windows on such basis as shall keep the exterior
appearance of the Premises in first class condition, but no less frequently than
once, every calendar year. If and when Landlord so requests in writing, Tenant
shall furnish Landlord with copies of all such service contracts. All repairs
and replacements required of Tenant shall be promptly made with materials of
good quality. If the work affects the structural parts of the Premises or if the
estimated cost of any item of repair or replacement is in excess of Fifteen
Thousand Dollars ($15,000), then Tenant shall first obtain Landlord's written
approval of the scope of work, plans therefor, and materials to be used, except
in the case of emergency in which event Tenant shall within a reasonable period
of time after performing the work, notify Landlord of the scope of the work
performed and the materials used, and shall furnish Landlord with the plans
therefor.
6.2 Landlord's Obligation to Maintain. Landlord, at its cost without right
of reimbursement from Tenant, shall be responsible for the maintenance, repair,
and replacement of the structural parts of the Premises (i.e., foundation, first
and second story floor slab and second story floor deck, load-bearing walls, and
structural roof system, but excluding roof membrane) except to the extent that
(i) the same is necessitated by the wrongful or negligent act or omission of
Tenant, its subtenants, or their respective agents, employees, contractors, or
invitees, or (ii) reimbursement is permitted pursuant to paragraph 5.4 hereof.
Landlord at its cost without right of reimbursement from Tenant, shall repair
damage to interior improvements and Leasehold Improvements that have been
approved by Landlord pursuant to the terms hereof, or damage to the roof
membrane of the Premises if caused by the maintenance work required to be
performed by Landlord pursuant to the provisions of this paragraph.
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Landlord shall repair, maintain, operate and replace when necessary the Common
Area, with such right of reimbursement from Tenant as is specified in paragraphs
5.4 and 6.3. The parties acknowledge that the air-conditioning units located on
the roof of the Premises were installed when the Building was constructed and
subsequently have not operated. Landlord agrees to make any repairs necessary to
put such units in good operating condition, if within the six month period
following the Commencement Date, Tenant notifies Landlord in writing of the need
for such repairs. Landlord shall not be responsible for repairs required by an
accident, fire or other peril except as otherwise required by Article 11, or for
damage caused to any part of the Property by any act, negligence or omission of
Tenant or its agents, contractors, employees or invitees. Landlord may engage
contractors of its choice to perform the obligations required of it by this
Article, and the necessity of any expenditure to perform such obligations shall
be at the sole discretion of Landlord.
6.3 Tenant's Obligation to Reimburse. As additional rent, commencing on
the Rent Start Date and continuing throughout the remainder of the Lease Term,
Tenant shall pay Tenant's Allocated Share of all Common Operating Expenses
fairly allocable to the Premises including (i) all Common Operating Expenses
paid with respect to the maintenance, repair, replacement and use of the
Premises and (ii) a proportionate share (based on the Premises Gross Leaseable
Area as a percentage of the Property Gross Leaseable Area) of all Common Area
Expenses which relate to Property in general and are not fairly allocable to any
one building on the Property. Landlord agrees that it shall not recover from all
tenants of the Property more than one hundred percent (100%) of the actual
Common Operating Expenses incurred by Landlord for the period in question. As
provided in paragraph 3.3, Tenant's obligation to pay Tenant's Allocated Share
of Common Operating Expenses fairly allocable to the Premises shall be prorated
as of the Rent Start Date and at the expiration or earlier termination of the
Lease Term, and if Tenant has paid any amount on account of Common Operating
Expenses relating to a period that is not within the Lease Term (e.g.,
prepayment of insurance premiums for one year), such amount shall be reimbursed
to Tenant in connection with such proration. Payment shall be made by whichever
of the following methods is from time to time designated by Landlord, and
Landlord may change the method of payment at any time so long as (i) Landlord
gives Tenant at least sixty (60) days prior written notice, and (ii) the method
is not changed more than once in any calendar year. Tenant shall pay such share
of the actual Common Operating Expenses incurred or paid by Landlord but not
theretofore billed to Tenant within thirty (30) days after receipt of a written
bill therefor from Landlord, on such periodic basis as Landlord shall designate,
but in no event more frequently than once a month. Alternatively, (i) Landlord
shall deliver to Tenant Landlord's reasonable estimate of the Common Operating
Expenses it anticipates will be paid or incurred for the calendar year in
question, (ii) during such calendar year, Tenant shall pay such share of the
estimated Common Operating Expenses in advance in monthly installments as
required by Landlord due with the installments of Base Monthly Rent, and (iii)
within ninety (90) days after the end of each calendar year, Landlord shall
furnish to Tenant a statement in reasonable detail of the actual Common
Operating Expenses paid or incurred by Landlord during the just ending calendar
year and thereupon there shall be an adjustment between Landlord and Tenant,
with payment to Landlord or credit by Landlord against the next installment of
Base Monthly Rent, as the case may require, within thirty (30) days after
delivery by Landlord to Tenant of said statement, so that Landlord shall receive
the entire amount of Tenant's share of all Common Operating Expenses for such
calendar year and no more. Tenant and its agents (including accountants) shall
have the right at its expense, exercisable upon reasonable prior written notice
to Landlord, to inspect at Landlord's office during normal business hours
Landlord's books and records as they relate to Common Operating Expenses. Such
inspection must be made within one hundred eighty (180) days of Tenant's receipt
of Landlord's annual statement for the same, and shall be limited to
verification of the charges contained in such statement. Tenant may not withhold
payment of such bill pending completion of such inspection.
6.4 Common Operating Expenses Defined. The term "Common Operating
Expenses" shall mean the sum of the following:
A. All costs and expenses paid or incurred by Landlord in doing the
following (including payments to independent contractors providing services
related to the performance of the following): (i) maintaining, cleaning, and
repairing the exterior surfaces (including painting of exterior surfaces of
buildings not more than once every 5 years) of all buildings located on the
Property; (ii) maintenance of the liability, fire and property damage insurance
covering the Property carried by Landlord pursuant to paragraph 9.2 (including
the payment of commercially reasonable "deductibles" and the prepayment of
premiums for coverage of up to one year); (iii) maintaining, repairing,
operating and replacing when necessary HVAC equipment, utility facilities and
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other building service equipment; (iv) providing utilities to the Common Area
(including lighting, trash removal and water for landscaping irrigation); (v)
complying with all applicable Laws and Private Restrictions; (vi) operating,
maintaining, repairing, cleaning, painting, restriping and resurfacing the
Common Area; (vii) replacement or installation of lighting fixtures, directional
or other signs and signals, irrigation systems, tress, shrubs, ground cover and
other plant materials, and all landscaping in the Common Area; and (viii)
depreciation and financing costs on maintenance and operating machinery and
equipment (if owned) and rental paid for such machinery and equipment (if
rented);
B. All additional costs and expenses incurred by Landlord with
respect to the operation, protection, maintenance, repair and replacement of the
Property which pursuant to generally accepted accounting principles would be
considered a current expense and not a capital expenditure;
C. That portion of all compensation (including benefits and premium
for workers' compensation and other insurance) paid to or on behalf of employees
of Landlord but only to the extent they are involved in the performance of the
work described by subparagraphs A and B above and that is fairly allocable to
the Property;
D. An additional amount equal to a commercially reasonable and
competitive management fee that would be charged by an independent third party
property manager for the management of the Property (except that Tenant's
Allocated Share of such management fee for any period shall not exceed two
percent (2%)of the Base Monthly Rent and Additional Rent payable by Tenant for
the same period); and
E. Notwithstanding anything contained herein, the term "Common
Operating Expenses" shall not include any of the following: (i) mortgage
principle payments; (ii) ground rent and other payments made pursuant to any
ground lease affecting the Property; (iii) the cost of refinancing any loan
Secured by the Property; (iv) interest and penalties imposed against Landlord
for late payments by Landlord; (v) legal fees incurred by Landlord in connection
with the negotiation or enforcement of, or litigation in connection with, any
lease affecting the Property; (vi) the cost of any paintings, sculptures, or
other art objects installed on the Property; (vii) any costs reimbursed to
Landlord by insurance or other third party payments that are not reimbursements
by tenants for their share of Common Operating Expenses; (viii) brokerage
commissions or other costs related to the leasing of space within the Property;
(ix) the cost of any tenant improvements installed for the exclusive use of any
other tenant of the Property.
6.5 Control of Common Area. Landlord shall at all times have exclusive
control of the Common Area. Landlord shall have the right, without the same
constituting an actual or constructive eviction and without entitling Tenant to
any abatement of rent, to: (i) close any part of the Common Area to the minimum
extent reasonably necessary in the reasonable opinion of Landlord's counsel to
prevent a dedication thereof or the accrual of any prescriptive rights therein;
(ii) temporarily close the Common Area to perform maintenance or for any other
reason deemed sufficient by Landlord; (iii) designate other property outside the
boundaries of the Property to become part of the Property; (iv) construct multi-
deck parking structures in any part of the Common Area; (v) change the shape,
size, location, number and extent of improvements on the Common Area; (vi)
select a third party to maintain and operate any of the Common Area at any time
Landlord determines that the best interests of the Property will be served by
having the Common Area maintained and operated by that third party so long as
the fees and charges of such third party are reasonable and competitive with the
fees of others in the marketplace providing the same services; (vii) make
changes to the Common Area including, without limitation, changes in the
location of driveways, parking spaces, parking areas, sidewalks or the direction
of the flow of traffic and the site of the Common Area; and/or (viii)
voluntarily change the address of the Property. Landlord agrees not to change
the name of Airport Technology Park without the prior consent of Tenant. The use
of the Common Area shall be subject to such reasonable regulation and changes
therein as Landlord shall make from time to time. Landlord shall not exercise
its rights to control the Common Area in a manner that would materially
interfere with Tenant's use of the Premises without first obtaining Tenant's
approval. Tenant shall keep the Common Area free and clear of all obstructions
created or permitted by Tenant. If in the opinion of Landlord unauthorized
persons are using any of the Common Area by reason of the presence of Tenant in
the Premises, Tenant, upon demand of Landlord, shall restrain such unauthorized
use by appropriate proceedings. Nothing herein shall affect the right of
Landlord at any time to remove such unauthorized person from the Common Area nor
to prohibit the use of the Common Area by
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unauthorized persons. In exercising any such rights described in this paragraph
6.5 regarding the Common Area, Landlord shall make a reasonable effort to
minimize any disruption to Tenant's business.
6.6 Tenant's Negligence. Anything in this Lease to the contrary
notwithstanding, Tenant shall pay for all damage to the Premises or the Property
caused by the negligent act or omission of Tenant, its employees, contractors,
or invitees, or by the failure of Tenant to discharge promptly its obligations
under this Lease, or to comply with the terms of this Lease, but only to the
extent such damage is not covered by insurance proceeds actually recovered by
Landlord. Tenant shall make payment within thirty (30) days after demand
therefor by Landlord.
ARTICLE 7
Waste Disposal And Utilities
7.1 Waste Disposal. Tenant shall store its waste either inside the
Premises or within outside trash enclosures that are (i) fully fenced and
screened in compliance with all Private Restrictions, (ii) designed for such
purpose to be used either exclusively by Tenant or in common with other
occupants of the Property, as designated by Landlord, and (iii) first approved
by Landlord. All entrances to such outside trash enclosures shall be kept
closed, and waste shall be stored in such manner as not to be visible from the
exterior of such outside enclosures. Tenant shall cause all of its waste to be
regularly removed from the Property at Tenant's sole cost. Tenant shall keep all
fire corridors and mechanical equipment rooms in the Premises free and clear of
all obstructions at all times.
7.2 Hazardous Materials. Landlord and Tenant agree as follows with respect
to the existence or use of Hazardous Materials on the Property:
A. Landlord hereby makes the following representations to Tenant,
each of which is made to the best of Landlord's knowledge as of the Commencement
Date:
(1) The soil and ground water on or under the Property does not
contain Hazardous Materials in amounts which violate any Hazardous Materials
Laws to the extent that any governmental entity could require either Landlord or
Tenant to take any remedial action or impose any penalties with respect to such
Hazardous Materials.
(2) During Landlord's period of ownership, no litigation or any
administrative proceeding has been brought or threatened, nor any settlements
reached with any governmental or private party, concerning the actual or alleged
presence of Hazardous Materials on or about the Property or any disposal,
release or threatened release of Hazardous Materials in or about the Property.
(3) During the time that Landlord has owned the Property, Landlord
has received no notice of (i) any violation, or alleged violation, of any
Hazardous Material Law that has not been corrected to the satisfaction of the
appropriate authority, (ii) any pending claims relating to the presence of
Hazardous Material on the Property, or (iii) any pending investigation by any
governmental agency concerning the Property relating to Hazardous Materials.
(4) The Property does not contain any (i) equipment containing
PCBs, or (ii) underground storage tanks.
B. Any handling, transportation, storage, treatment, disposal or use
of Hazardous Materials by Tenant and Tenant's agents, employees, contractors,
invitees or subtenants after the Commencement Date in or about the Property
shall strictly comply with all applicable Hazardous Materials Laws. Tenant shall
indemnify, defend upon demand with counsel reasonably acceptable to Landlord,
and hold harmless Landlord from and against any and all liabilities, losses,
claims, damages, interest, penalties, fines, monetary sanctions, attorneys'
fees, experts' fees, court costs, remediation costs, investigation costs, and
other expenses which result from or arise in any manner whatsoever out of the
use, storage, treatment, transportation, release, or disposal of Hazardous
Materials on or about
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the Property by Tenant or Tenant's agents, employees, contractors, invitees or
subtenants after the Commencement Date.
C. If the presence of Hazardous Materials on the Property caused or
permitted by Tenant or Tenant's agents, employees, contractors, invitees or
subtenants after the Commencement Date results in contamination or deterioration
of water or soil resulting in a level of contamination greater than the levels
established, is acceptable by any governmental agency having Jurisdiction over
such contamination, then Tenant shall promptly take any and all action necessary
to clean up such contamination if required by Law or as a condition to the
issuance or continuing effectiveness of any governmental approval which relates
to the use of the Property or any part thereof. Tenant shall further be solely
responsible for, and shall defend, indemnify and hold Landlord and its agents
harmless from and against, all claims, costs and liabilities, including
attorneys' fees and costs, arising out of or in connection with any removal,
clean-up and restoration work and materials required hereunder to return the
Property to its condition existing prior to the appearance of such Hazardous
Materials.
D. Landlord and Tenant shall each give written notice to the other as
soon as reasonably practicable of (i) any communication received from any
governmental authority concerning Hazardous Materials which relates to the
Property, and (ii) any contamination of the Property by Hazardous Materials
which constitutes a violation of any Hazardous Materials Law. Landlord and
Tenant each agree to keep such information confidential, except for (i)
disclosures that are approved by the other party, (ii) disclosures required by
Law or court order, (iii) disclosures to any environmental consultant, lender,
purchaser, prospective purchaser, attorneys for either Landlord or Tenant, or
brokers for either Landlord or Tenant, so long as an agreement of
confidentiality is obtained from a party to whom the disclosure is to be made,
and (iv) disclosures in connection with any litigation or administrative
proceeding in which either Landlord or Tenant is involved. Tenant and Tenant's
agents, employees, contractors, invitees or subtenants shall not bring Hazardous
Materials onto the Property without first obtaining the written consent of
Landlord; provided, however, Tenant may, without being required to obtain the
prior written consent of Landlord, use at the Premises in small quantities
office supplies, cleaning materials and other maintenance materials that are
customarily used in business offices, even though such supplies and materials
may fall within the definition of Hazardous Materials. At any time during the
Lease Term, Tenant shall, within five days after written request therefor
received from Landlord, disclose in writing all Hazardous Materials that are
being used by Tenant on the Property, the nature of such use, and the manner of
storage and disposal.
E. Landlord may cause testing wells to be installed on the Property,
and may cause the ground water to be tested to detect the presence of Hazardous
Material by the use of such tests as are then customarily used for such
purposes. Any such installation of wells or tests shall be done in a manner
which minimizes the interference with Tenant's use of the Premises. If Tenant so
requests, Landlord shall supply Tenant with copies of such test results. The
cost of such tests and of the installation, maintenance, repair and replacement
of such wells shall be paid by Tenant if such tests disclose the existence of
facts which give rise to liability of Tenant pursuant to its indemnity given in
subparagraph 7.2B or 7.2C, and Tenant's liability is established in a judicial
or administrative proceeding, or in an action for declaratory relief brought by
Landlord.
F. Landlord, at its sole cost, shall comply with all Hazardous
Materials Laws affecting the Property (without right of reimbursement from
Tenant) to the extent that (i) Landlord is legally obligated to do so by such
Laws, and (ii) such compliance (or the cost of such compliance) is not made the
responsibility of Tenant pursuant to subparagraph 7.2B or subparagraph 7.2C.
Landlord shall indemnify, defend upon demand with competent counsel, and hold
harmless Tenant from and against any and all liability for response costs
imposed upon Tenant by any governmental agency pursuant to the federal Law known
as "CERCLA" (more particularly identified in subparagraph 7.2G) and the
comparable California statute (commonly known as the Carpenter-Presley-Tanner
Hazardous Substances Account Act, California Health and Safety Code Section
25300 et seq.) that results from the presence of Hazardous Materials on the
Property not caused or contributed to by the use, storage, treatment, release or
disposal of Hazardous Materials on or about the Property by Tenant, its
subtenants, or their respective agents, employees, contractors, or invitees.
Notwithstanding the foregoing, the indemnity given by Landlord in the
immediately preceding sentence shall not apply with respect to liability caused
by any contamination of the Property by a Hazardous Material that is or has been
used, stored, treated, released or disposed of on the Property by Tenant, its
subtenants, or their respective agents, employees, contractors, or invitees
unless Tenant can prove such contamination was not caused or contributed to by
any of such parties.
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G. As used herein, the term "Hazardous Material," means any hazardous
or toxic substance, material or waste which is or becomes regulated by any local
governmental authority, the State of California or the United States Government.
The term "Hazardous Material," includes, without limitation, asbestos, PCB's,
petroleum and petroleum products, and any material or substance which in (i)
listed under Article 9 or defined as hazardous or extremely hazardous pursuant
to Article 11 of Title 22 of the California Administrative Code, Division 4,
Chapter 20, (ii) defined as a "hazardous waste" pursuant to Section 1004 of the
Federal Resource Conservation and Recovery Act, 42 U.S.C. (S)6901 et seq. (42
U.S.C. (S)6903), or (iii) defined as a "hazardous substance" pursuant to Section
101 of the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. (S)9601 et seq. (42 U.S.C. 19601). As used herein, the
term "Hazardous Material Law" shall mean any statute, law, ordinance, or
regulation of any governmental body or agency (including the U.S. Environmental
Protection Agency, the California Regional Water Quality Control Board, and the
California Department of Health Services) which regulates the use, storage,
release or disposal of any Hazardous Material.
H. The obligations of Landlord and Tenant under this paragraph 7.2
shall survive the expiration or earlier termination of the Lease Term. The
rights and obligations of Landlord and Tenant with respect to issues relating to
Hazardous Materials are exclusively established by this paragraph 7.2. In the
event of any inconsistency between any other part of this Lease and this
paragraph 7.2, the terms of this paragraph 7.2 shall control.
7.3 Utilities. Tenant shall promptly pay, as the same become due, all
charges for water, gas, electricity, telephone, sewer service, waste pick-up and
any other utilities, materials or services furnished directly to or used by
Tenant on or about the Premises during the Lease Term, including, without
limitation, (i) meter, use and/or connection fees, hook-up fees, standby fees,
and (ii) penalties for discontinued or interrupted service.
7.4 Compliance with Governmental Regulations. Landlord and Tenant shall
comply with all rules, regulations and requirements promulgated by national,
state or local governmental agencies or utility suppliers concerning the use of
utility services, including any rationing, limitation or other control. Landlord
may voluntarily cooperate in a reasonable manner with the efforts of all
governmental agencies or utility suppliers in reducing energy or other resource
consumption. Tenant shall not be entitled to terminate this Lease nor to any
abatement in rent by reason of such compliance or cooperation. Tenant agrees at
all times to cooperate fully with Landlord and to abide by all rules,
regulations and requirements which Landlord may prescribe in order to maximize
the efficient operation of the HVAC system and all other utility systems.
ARTICLE 8
Real Property Taxes
8.1 Real Property Taxes Defined. The term "Real Property Taxes" as used
herein shall mean (i) all taxes, assessments, levies, and other charges of any
kind or nature whatsoever, general and special, foreseen and unforeseen
(including all installments of principal and interest required to pay any
existing or future general or special assessments for public improvements,
services or benefits, and any increases resulting from reassessments or
resulting from a change in ownership or any other cause), now or hereafter
imposed by any governmental or quasi-governmental authority or special district
having the direct or indirect power to tax or levy assessments, which are levied
or assessed against, or with respect to the value, occupancy or use of, all or
any portion of the Property (as now constructed or as may at any time hereafter
be constructed, altered, or otherwise changed) or Landlord's interest therein,
the fixtures, equipment and other property of Landlord, real or personal, that
are an integral part of and located on the Property, the gross receipts, income,
or rentals from the Property, or the use of parking areas, public utilities, or
energy within the Property, (ii) all charges, levies or fees imposed by reason
of environmental regulation or other governmental control of the Property
(excluding costs and expenses for which Landlord is responsible pursuant to
subparagraph 7.2F), and (iii) all costs and fees (including attorneys' fees)
incurred by Landlord in contesting any Real Property Tax and in negotiating with
public authorities as to any Real Property Tax. If at any time during the Lease
Term the method of taxation or assessment of the Property prevailing as of the
Commencement Date shall be altered so that in lieu of or in addition to any Real
Property Tax described above there shall be levied, assessed or imposed (whether
by reason of a change in the method of taxation or assessment, creation of a new
tax or charge, or any other cause) an alternate or additional tax or charge (i)
on the value, use or
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occupancy of the Property, (ii) on or measured by the gross receipts, income, or
rentals from the Property, (iii) on Landlord's business of leasing the Property,
or (iv) computed in any manner with respect to the operation of the Property,
then any such tax or charge, however designated, shall be included within the
meaning of the term "Real Property Taxes" for purposes of this Lease. If any
Real Property Tax is based upon property or rents unrelated to the Property,
then only that part of such Real Property Tax that is fairly allocable to the
Property shall be included within the meaning of the term "Real Property Taxes".
Notwithstanding the foregoing, the term "Real Property Taxes" shall not include
estate, inheritance, transfer, gift or franchise taxes of Landlord or the
federal or state net income tax imposed on Landlord's income from all sources.
8.2 Tenant's Obligation to Reimburse. As Additional Rent, Tenant shall pay
to Landlord Tenant's Allocated Share of all Real Property Taxes which become due
after the Rent Start Date and during the Lease Term which are fairly allocable
to the Premises, which include (i) all Real Property Taxes assessed with respect
to the value, use or occupancy of the Premises and the land beneath it, and (ii)
a proportionate share (based on the Premises Gross Leaseable Area as a
percentage of the Property Gross Leaseable Area) of all Real Property Taxes
assessed with respect to the Common Area or with respect to the Property in
general which are not fairly allocable to any one building on the Property.
Tenant shall pay its share of Real Property Taxes (i) within thirty (30) days
after being billed for the same by Landlord, or (ii) no later than ten (10) days
before such Real Property Tax becomes delinquent, whichever last occurs. If
requested by Tenant in writing within one year from receipt of a bill for
Tenant's Allocated Share of Real Property Taxes, Landlord shall furnish Tenant
with such evidence as is reasonably available to Landlord with respect to the
amount of any Real Property Tax which is part of such bill. Tenant may not
withhold payment of such bill pending receipt and/or review of such evidence.
Upon Landlord's election or if any Lender requires Landlord to impound Real
Property Taxes on a periodic basis during the Lease Term, then Tenant, on notice
from Landlord indicating this requirement, shall pay a sum of money toward its
liability under this Article to Landlord on the same periodic basis in
accordance with the Lender's requirements (if any). Landlord shall impound the
Real Property Tax payments received from Tenant in accordance with the
requirements of the Lender (if any). If any assessments are levied against the
Property, Landlord may elect either to pay the amount in full or to allow the
assessment to go to bond. If Landlord pays the assessment in full, Tenant shall
pay to Landlord each time payment of Real Property Taxes is made a sum equal to
that which would have been payable (as both principal and interest) had Landlord
allowed the assessment to go to bond. Notwithstanding anything to the contrary
contained in paragraphs 8.1 and 8.2, if there is an increase in Real Property
Taxes resulting from a "change in ownership" (as that term is defined in
California Revenue and Taxation Code Section 60 et seq.) which occurs prior to
the fourth (4th) anniversary of the Commencement Date, then Tenant shall not be
obligated to pay any such increase that results from such "change of ownership".
8.3 Taxes on Tenant's Property. Tenant shall pay before delinquency any
and all taxes, assessments, license fees and public charges levied, assessed or
imposed against Tenant or Tenant's estate in this Lease or the property of
Tenant situated within the Premises which become due during the Lease Term.
Tenant shall furnish Landlord with satisfactory evidence of these payments
within thirty (30) days after receipt of written request therefor from Landlord.
ARTICLE 9
Insurance
9.1 Tenant's Insurance. Tenant shall maintain insurance complying with all
of the following:
A. Tenant shall procure, pay for and keep in full force and affect
the following:
(1) Commercial general liability insurance, including property
damage, against liability for personal injury, bodily injury, death and damage
to property occurring in or about, or resulting from an occurrence in or about,
the Premises with combined single limit coverage of not less than the amount of
Tenant's Minimum Liability Insurance Coverage set forth in paragraph 1.8, which
insurance shall contain a "contractual liability" endorsement insuring Tenant's
performance of Tenant's obligation to indemnify Landlord contained in paragraph
10.3;
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(2) Plate-glass insurance, at actual replacement cost; and
(3) Fire and property damage insurance against loss caused by
fire, extended coverage perils including steam boiler insurance, sprinkler
leakage, if applicable, vandalism, malicious mischief and such other additional
perils as now are or hereafter may be included in a standard extended coverage
endorsement from time to time in general use in the county in which, the
Property is located, insuring Tenant's personal property, inventory, Trade
Fixtures and Leasehold Improvements within the Premises for the full actual
replacement cost thereof.
B. Where applicable and required by Landlord, each policy of
insurance required to be carried by Tenant pursuant to this paragraph (i) shall
name Landlord and such other parties in interest as Landlord designates as
additional insureds; (ii) shall be primary insurance which provides that the
insurer shall be liable for the full amount of the loss up to and including the
total amount of liability set forth in the declarations without the right of
contribution from any other insurance coverage of Landlord; (iii) shall be in a
form satisfactory to Landlord; (iv) shall be carried with companies reasonably
acceptable to Landlord; (v) shall provide that such policy shall not be subject
to cancellation, lapse or change except after at least thirty (30) days prior
written notice to Landlord; (vi) shall not have a "deductible" in excess of
$500,000 or such greater amount as is approved by Landlord; (vii) shall (to the
extent available) contain a waiver by the insurer of any right to subrogation
against Landlord, its agents, employees and contractors which might arise by
reason of any payment under such policy or by reason of any act or omission of
Landlord, its agents, employees or contractors; and (viii) shall contain a
"severability" clause. If Tenant has in force and affect a blanket policy of
liability insurance with the same coverage for the Premises as described above,
as well as other coverage of other premises and properties of Tenant, or in
which Tenant has some interest, such blanket insurance shall satisfy the
requirements hereof.
C. A certificate of each paid-up policy evidencing the insurance
requited to be carried by Tenant pursuant to this paragraph (appropriately
authenticated by the insurer), certifying that such policy has been issued,
providing the coverage required by this paragraph, and containing the provisions
specified herein, shall be delivered to Landlord prior to the time Tenant or any
of its contractors enters the Premises and upon renewal of such policies, but
not less than five (5) days prior to the expiration of the term of such
coverage. If Landlord's insurance advisor reasonably determines at any time that
the amount of coverage required for any policy of insurance Tenant is to obtain
pursuant to this paragraph is not adequate, then Tenant shall increase such
coverage for such insurance to such amount as Landlord's insurance advisor
reasonably deems adequate, not to exceed the level of coverage commonly carried
by comparable businesses similarly situated for such insurance; provided,
however, that Landlord may not require an adjustment pursuant to this sentence
more frequently than once every two (2) years during the Lease Term.
9.2 Landlord's Insurance. Landlord shall have the following obligations
and options regarding insurance:
A. Landlord shall maintain a policy or policies of fire and property
damage insurance in so-called "all risk" form insuring Landlord (and such others
as Landlord may designate) against loss of rents for a period of not less than
six, (6) months and from physical damage to the Premises with coverage of not
less than the full replacement cost of (i) the building of which the Premises
are a part, including the structural elements thereof and all electrical,
mechanical, plumbing, and other systems, and (ii) all Interior Improvements
constructed pursuant to the Interior Improvement Agreement attached as Exhibit
"C". Landlord may so insure the Premises separately, or may insure the Premises
with other buildings and improvements within the Property and/or other property
owned by Landlord which Landlord elects to insure together under the same policy
or policies. Such fire and property damage insurance, at Landlord's election,
(i) may be endorsed to cover loss caused by such additional perils against which
Landlord may elect to insure, including earthquake and/or flood, (ii) shall
contain commercially reasonable "deductibles" which, in the case of earthquake
and flood insurance, may be up to ten percent (10%) of the replacement value of
the property insured or such higher amount as is then commercially reasonable,
(iii) may provide coverage for loss of rents for a period of up to twelve (12)
months, and (iv) may contain additional endorsements or coverage reasonably
required by Landlord or any Lender, including an "agreed amount" endorsement,
demolition insurance (covering the cost of demolishing damaged improvements or
improvements required by Law to be demolished), and difference in condition
coverage. Landlord shall not be required to cause
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such insurance to cover any Trade Fixtures, Leasehold Improvements or any
inventory or other personal property of Tenant.
B. Landlord may maintain a policy or policies of commercial general
liability insurance insuring Landlord (and such others as are designated by
Landlord) against liability for personal injury, bodily injury, death and damage
to property occurring or resulting from an occurrence in, on or about the
Property, with combined single limit coverage in such amount as Landlord may
from time to time determine is reasonably necessary for its protection and with
commercially reasonable deductibles.
9.3 Tenant's Obligation to Reimburse. The cost of the insurance carried by
Landlord pursuant to paragraph 9.2 (and any commercially reasonable "deductible"
amount paid by Landlord in connection with the restoration of any lose and
excluded from the coverage of such insurance) shall be a Common Operating
Expense and Tenant shall pay its share thereof as provided in paragraph 6.3.
However, if Landlord's insurance rates for the Premises are increased at any
time during the Lease Term as a result of the nature of Tenant's use of the
Premises, Tenant shall reimburse Landlord for the full amount of such increase
immediately upon receipt of a bill from Landlord therefor.
9.4 Release and Waiver of Subrogation. The parties hereto release each
other, and their respective agents and employees, from any liability for injury
to any person or damage to property that is caused by or results from any risk
insured against under any valid and collectible insurance policy carried by
either of the parties which contains a waiver of subrogation by the insurer and
is in force at the time of such injury or damage, subject to the following
limitations: (i) the foregoing provisions shall not apply to the commercial
general liability insurance described by subparagraph 9.1A and 9.1B; and (ii)
such release shall apply to liability resulting from any risk insured against or
covered by self-insurance maintained or provided by Tenant to satisfy the
requirements of paragraph 9.1. This release shall be in effect only so long as
the applicable insurance policy contains a clause to the effect that this
release shall not affect the right of the insured to recover under such policy.
Each party shall use reasonable efforts to cause each insurance policy obtained
by it to provide that the insurer waives all right of recovery by way of
subrogation against the other party and its agents and employees in connection
with any injury or damage covered by such policy. However, if any insurance
policy cannot be obtained with such a waiver of subrogation, or if such waiver
of subrogation is only available at additional cost and the party for whose
benefit the waiver is to be obtained does not pay such additional cost, then the
party obtaining such insurance shall notify the other party of that fact and
thereupon shall be relieved of the obligation to obtain such waiver of
subrogation rights from the insurer with respect to the particular insurance
involved.
ARTICLE 10
Limitation On Landlord's Liability And Indemnity
10.1 Limitation on Landlord's Liability. Landlord shall not be liable to
Tenant, nor shall Tenant be entitled to terminate this Lease or to any abatement
of rent, for any injury to Tenant, its agents, employees, contractors or
invitees, damage to Tenant's property, or loss to Tenant's business resulting
from any cause, including without limitation any (i) failure, interruption or
installation of any HVAC or other utility system or service; (ii) failure to
furnish or delay in furnishing any utilities or services when such failure or
delay is caused by Acts of God or the elements, labor disturbances of any
character, any other accidents or other conditions beyond the reasonable control
of Landlord; (iii) limitation, curtailment, rationing or restriction on the use
of water or electricity, gas or any other form of energy or any services or
utility serving the Premises; (iv) vandalism or forcible entry by unauthorized
persons; or (v) penetration of water into or onto any portion of the Premises or
the Common Area through roof leaks or otherwise. Notwithstanding the foregoing:
A. Subject to paragraph 9.4, Landlord shall be liable for any such
injury, damage or loss which is proximately caused by Landlord's gross
negligence or willful misconduct, of which Landlord has actual notice and a
reasonable opportunity to cure but which it fails to so cure.
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B. Tenant shall have the option to terminate this Lease upon the
occurrence of the following: (i) water, electricity, or other utility service
essential to the conduct of Tenant's business in the Premises is interrupted or
substantially impaired for a period of more than two hundred seventy (270)
consecutive days during which time the Premises are rendered substantially
unusable for the conduct of Tenant's business (a "Material Interruption"); and
(ii) the Material Interruption is not caused by the act or omission of Tenant,
its agents, employees or contractors.
10.2 Limitation on Tenant's Recourse. So long as the Landlord is a
corporation, trust, partnership, joint venture, unincorporated association or
other form of business entity, (i) the obligations of Landlord shall not
constitute personal obligations of the officers, directors, trustees, partners,
joint venturers, members, owners, stockholders, or other principals or
representatives of such business entity, and (ii) Tenant shall have recourse
only to the assets of such business entity for the satisfaction of such
obligations and not against the assets of such officers, directors, trustees,
partners, joint venturers, members, owners, stockholders, principals or
representatives, except to the extent of their interests in the entity that is
Landlord. If Landlord is a natural person or persons, Tenant shall have recourse
only to the interest of such natural persons in the Property for the
satisfaction of the obligations of Landlord and shall not have recourse to any
other assets of such natural persons for the satisfaction of such obligations.
10.3 Indemnification of Landlord . Tenant shall hold harmless, indemnify
and defend Landlord, and Its employees, agents and contractors, with competent
counsel, from all liability, penalties, losses, damages, costs, expenses, causes
of action, claims and/or judgments arising by reason of any death, bodily
injury, personal injury or property damage (i) resulting from any cause or
causes whatsoever (other than the negligence or willful misconduct of Landlord
of which Landlord has had notice and a reasonable time to cure, but which
Landlord has failed to cure) occurring in or about or resulting from an
occurrence in or about the Premises, or (ii) resulting from the negligence or
willful misconduct of Tenant, its agents, employees and contractors, wherever
the same may occur, or (iii) resulting from an Event of Tenant's Default. The
provisions of this paragraph shall survive the expiration or sooner termination
of this Lease.
ARTICLE 11
Damage To Premises
11.1 Landlord's Duty to Restore. If the Premises are damaged by any peril
after the Commencement Date of this Lease, Landlord shall restore the Premises
unless the Lease is terminated by Landlord pursuant to paragraph 11.2 or by
Tenant pursuant to paragraph 11.3. All insurance proceeds available from the
fire and property damage insurance carried by Landlord pursuant to paragraph 9.2
shall be paid to and become the property of Landlord. If this Lease is
terminated pursuant to either paragraphs 11.2 or 11.3, then all insurance
proceeds available from insurance carried by Tenant which covers loss to
property that is Landlord's property or would become Landlord's property on
termination of this Lease shall be paid to and become the property of Landlord.
If this Lease is not so terminated, then upon receipt of the insurance proceeds
(if the loss is covered by insurance) and the issuance of all necessary
governmental permits, Landlord shall commence and diligently prosecute to
completion the restoration of the Premises, to the extent then allowed by Law,
to substantially the same condition in which the Premises were immediately prior
to such damage. Landlord's obligation to restore shall be limited to the
Premises and interior improvements constructed by Tenant but financed by
Landlord pursuant to the Interior Improvement Agreement as such improvements
existed upon completion thereof excluding any Leasehold Improvements, Trade
Fixtures and/or personal property constructed or installed by Tenant in the
Premises. To the extent that insurance proceeds recovered by Landlord from the
Insurance carried pursuant to paragraph 9.2A exceed the amount needed by
Landlord to discharge its restoration obligation pursuant to the immediately
preceding sentence, Landlord shall make such excess insurance proceeds available
to Tenant for the purpose of restoring interior improvements that were
constructed by Tenant and financed by Tenant pursuant to the Interior
Improvement Agreement, so that such improvements may be restored to
substantially the same condition existing as of the date such improvements were
initially completed.
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11.2 Landlord's Right to Terminate. Landlord shall have the right to
terminate this Lease in the event any of the following occurs, which right may
be exercised only by delivery to Tenant of a written notice of election to
terminate within thirty (30) days after the date of such damage:
A. Either the Property or the Premises is damaged by an Insured
Peril to such an extent that the estimated cost to restore equals or exceeds
eighty percent (80%) of the then actual replacement cost thereof and there
remains less than three (3) years in the Lease Term; provided, however, that
Landlord may not terminate this Lease pursuant to this subparagraph 11.2A if
Tenant at the time of such damage has a then valid written option to extend the
Lease Term and Tenant exercises such option to extend the Lease Term within
fifteen (15) days after Tenant receives Landlord's notice of election to
terminate and such action results in there being more than three (3) years
remaining in the Lease Term (as it has been extended by the exercise of such
option);
B. Either the Property or the Premises is damaged by an Uninsured
Peril to such an extent that the estimated cost to restore exceeds two percent
(2%) of the actual replacement cost thereof; provided, however, that Landlord
may not terminate this Lease pursuant to this paragraph 11.2B if one or more
tenants of the Property agree in writing to pay the amount by which the cost to
restore the damage exceeds such amount and subsequently deposit such amount with
Landlord within thirty (30) days after Landlord has notified Tenant of its
election to terminate this Lease;
C. The Premises are damaged by any peril within twelve (12) months of
the last day of the Lease Term to such an extent that the estimated cost to
restore equals or exceeds an amount equal to six (6) times the Base Monthly Rent
then due; provided, however, that Landlord may not terminate this Lease pursuant
to this subparagraph 11.2C if Tenant, at the time of such damage, has a then
valid express written option to extend the Lease Term and Tenant exercises such
option to extend the Lease Term within fifteen (15) days following the date of
such damage; or
D. As used herein, the following terms shall have the following
meanings: (i) the term "Insured Peril" shall mean a peril actually insured
against for which the insurance proceeds paid or made available to Landlord are
sufficient (except for any "deductible" amount specified by such insurance) to
restore the Property under the then existing building codes to the condition
existing immediately prior to the damage; and (ii) the term "Uninsured Peril"
shall mean and include any peril not actually insured against, any peril
actually insured against but for which the insurance proceeds paid or made
available to Landlord are for any reason (except for any "deductible" amount
specified by such insurance) insufficient to restore the Property under then
existing building codes to the condition existing immediately prior to the
damage, and any peril actually insured against but for which the insurance
proceeds are not paid or made available to Landlord.
11.3 Tenant's Right to Terminate. If the Premises are damaged by any peril
and Landlord does not elect to terminate this Lease or is not entitled to
terminate this Lease pursuant to paragraph 11.2, then as soon as reasonably
practicable, Landlord shall furnish Tenant with the written opinion of
Landlord's architect or construction consultant as to when the restoration work
required of Landlord may be completed. Tenant shall have the right to terminate
this Lease in the event any of the following occurs, which right may be
exercised only by delivery to Landlord of a written notice of election to
terminate within thirty (30) days after Tenant receives from Landlord the
estimate of the time needed to complete such restoration:
A. The Premises are damaged by any peril and, in the reasonable
opinion of Landlord's architect or construction consultant, the restoration of
the Premises cannot be substantially completed within two hundred seventy (270)
days after the date of such damage; or
B. The Premises are damaged by any peril within twelve (12) months of
the last day of the Lease Term and in the reasonable opinion of Landlord's
architect or construction consultant the restoration of the Premises cannot be
substantially completed within ninety (90) days after the date of such damage;
or
C. The Premises are not restored within eighteen (18) months
following the date of such damage; provided, however, that if at the time
restoration of the "shell" of the building in which the Premises are
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located is substantially completed (excluding Interior Improvements) Landlord
reasonably estimates that Landlord will not be able to complete restoration of
the Premises within such eighteen (18) month period, then at that time Landlord
may offer in writing to Tenant the option to terminate this Lease, and if Tenant
does not exercise such option to terminate the Lease so offered to Tenant by
Landlord, then Tenant may not thereafter elect to terminate this Lease pursuant
to this subparagraph 11.3C.
11.4 Abatement of Rent. In the event of damage to the Premises which does
not result in the termination of this Lease, the Base Monthly Rent and the
Additional Rent shall be temporarily abated commencing on the date of damage and
continuing through the period of restoration in proportion to the degree to
which Tenant's use of the Premises is impaired by such damage. Tenant shall not
be entitled to any compensation or damages from Landlord for loss of Tenant's
business or property or for any inconvenience or annoyance caused by such damage
or restoration. 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.
ARTICLE 12
Condemnation
12.1 Tenant's Termination Right. Tenant shall have the right to terminate
this Lease if, as a result of any taking by means of the exercise of the power
of eminent domain (including any voluntary sale or transfer by Landlord to any
condemnor under threat of condemnation), (i) ten percent (10%) or more of the
Premises is so taken, or (ii) there is a taking affecting the Common Area and,
as a result of such taking, Landlord cannot provide parking spaces within
reasonable walking distance of the Premises equal in number to at least ninety
percent (90%) of the number of spaces allocated to Tenant by paragraph 2.1,
whether by rearrangement of the remaining parking areas in the Common Area
(including construction of multi-dock parking structures or restriping for
compact cars where permitted by Law) or by alternative parking facilities on
other land. Tenant must exercise such right within a reasonable period of time,
to be effective on the date that possession of that portion of the Premises or
Common Area that is condemned is taken by the condemnor.
12.2 Restoration and Abatement of Rent. If any part of the Premises or the
Common Area is taken by condemnation and this Lease is not terminated, then
Landlord shall restore the remaining portion of the Premises and Common Area to
substantially the same condition in which the Premises and Common Area were
immediately prior to such taking, excluding any Leasehold Improvements, Trade
Fixtures and/or personal property constructed or installed by Tenant; provided,
however, that Landlord shall not be obligated to spend more for such restoration
than the amount of any condemnation award recovered by or pursuant to paragraph
12.3. Thereafter, except in the case of a temporary taking, (i) as of the date
possession is taken the Base Monthly Rent (but not any Additional Rent) shall be
reduced in the same proportion that the floor area of that part of the Premises
so taken (less any addition thereto by reason of any reconstruction) bears to
the original floor area of the Premises, and (ii) to the extent that Landlord is
obligated to undertake any restoration work as a result of such condemnation,
the Base Monthly Rent shall be further abated in proportion to the extent to
which such restoration work interferes with Tenant's ability to use that part of
the Premises which remains after the condemnation.
12.3 Temporary Taking. If any portion of the Premises is temporarily taken
for six (6) months or less, this Lease shall remain in effect and Tenant shall
be entitled to recover any condemnation award that is made for such taking and
shall be responsible for restoring the Premises to the condition existing
immediately prior to such temporary taking. If any portion of the Premises is
temporarily taken by condemnation for a period which exceeds six (6) months or
which extends beyond the natural expiration of the Lease Term, and such taking
materially and adversely affects Tenant's ability to use the Premises for the
Permitted Use, then Tenant shall have the right to terminate this Lease,
effective on the date possession is taken by the condemnor.
12.4 Division of Condemnation Award. Any award made as a result of any
condemnation of the Premises or the Common Area shall belong to and be paid to
Landlord, and Tenant hereby assigns to Landlord all of its right, title and
interest in any such award; provided, however, that Tenant shall be entitled to
recover out of any condemnation award made for a taking of all or part of the
Premises an amount equal to the unamortized cost of all interior improvements
paid for by Tenant constructed pursuant to the Interior Improvement Agreement
and all
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Leasehold Improvements constructed by Tenant (amortized on a straight line basis
over the initial Lease Term for Interior Improvements, and over the period from
completion of construction until expiration of the Lease Term for Leasehold
Improvements); and provided further that Tenant shall be entitled to receive any
condemnation award that is made directly to Tenant for the following so long as
the award made to Landlord is not thereby reduced: (i) for the taking of
personal property or Trade Fixtures belonging to Tenant, (ii) for the
interruption of Tenant's business or its moving costs, (iii) for loss of
Tenant's goodwill, or (iv) for any temporary taking where this Lease is not
terminated as a result of such taking. The rights of Landlord and Tenant
regarding any condemnation shall be determined as provided in this Article, and
each party hereby waives the provisions of Section 1265.130 of the California
Code of Civil Procedure and the provisions of any similar law hereinafter
enacted allowing either party to petition the Superior Court to terminate this
Lease in the event of a partial taking of the Premises.
ARTICLE 13
Default And Remedies
13.1 Events of Tenant's Default. Tenant shall be in default of its
obligations under this Lease if any of the following events occurs (an "Event of
Tenant's Default"):
A. Tenant shall have failed to pay Base Monthly Rent or any
Additional Rent when due and such failure is not cured within ten (10) days
after delivery of written notice from Landlord specifying such failure to pay;
or
B. Tenant shall have failed to perform any term, covenant, or
condition of this Lease except those requiring the payment of Base Monthly Rent
or Additional Rent, and Tenant shall have failed to cure such breach within
thirty (30) days after written notice from Landlord specifying the nature of
such breach, or if such breach could not reasonably be cured within said thirty
(30) day period, Tenant shall have failed to commence such cure within said
thirty (30) day period and thereafter continue with due diligence to prosecute
such cure to completion within such time period as is reasonably needed; or
C. Tenant shall have made a general assignment of its assets for the
benefit of its creditors; or
D. Tenant shall have sublet the Premises or assigned its interest in
the Lease in violation of the provisions contained in Article 14, whether
voluntarily or by operation of law; Landlord shall have notified Tenant in
writing that such Transfer constitutes a violation of the provisions contained
in Article 14, and Tenant does not cause such Transfer to be rescinded or
terminated and possession of the Premises affected by the Transfer recovered
from the Transferee within ninety (90) days after receipt of such notice; or
E. Tenant shall have permitted the sequestration or attachment of, or
execution on, or the appointment of a custodian or receiver with respect to, all
or any substantial part of the property of Tenant or any property essential to
the conduct of Tenant's business, and Tenant shall have failed to obtain a
return or release of such property within ninety (90) days thereafter or prior
to sale pursuant to such sequestration, attachment or levy, whichever is
earlier; or
F. A court shall have made or entered any decree or order with
respect to Tenant, or Tenant shall have submitted to or sought a decree or order
(or a petition or pleading shall have been filed in connection therewith) which:
(i) grants or constitutes (or seeks) an order for relief, appointment of a
trustee, or confirmation of a reorganization plan under the bankruptcy laws of
the United States; (ii) approves as properly filed (or seeks such approval of) a
petition seeking liquidation or reorganization under said bankruptcy laws or any
other debtor's relief law or statute of the United States or any state thereof;
or (iii) otherwise directs (or seeks) the winding up or liquidation of Tenant;
and such petition, decree or order shall have continued in effect for a period
of ninety (90) or more days; or
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G. Tenant shall have failed to deliver documents as required of it
pursuant to paragraph 15.4 or 15.7 within the time periods specified therein and
Tenant shall have failed to cure such default within ten (10) days after
Landlord has delivered to Tenant written notice that Tenant is in default of its
obligations to deliver such documents pursuant to either paragraph 15.4 or 15.7;
or;
H. An Event of Tenant's Default has occurred under the Building C
Lease (unless caused by a subtenant or assignee of the original Tenant under
this Lease and such original Tenant is using reasonable efforts to cause such
default to be cured) and, at the time Tenant is so in default, the Premises and
the real property leased to Tenant pursuant to the Building C Lease are both
owned of record by the same person or entity.
13.2 Landlord's Remedies. If an Event of Tenant's Default occurs, Landlord
shall have the following remedies, in addition to all other rights and remedies
provided by any Law or otherwise provided in this Lease, to which Landlord may
resort cumulatively or in the alternative:
A. Landlord may, at Landlord's election, keep this Lease in effect
and enforce by an action at law or in equity all of its rights and remedies
under this Lease, including (i) the right to recover the rent and other sums as
they become due by appropriate legal action, (ii) the right to make payments
required of Tenant or perform Tenant's obligations and be reimbursed by Tenant
for the cost thereof with interest at the Agreed Interest Rate from the date the
sum is paid by Landlord until Landlord is reimbursed by Tenant, and (iii) the
remedies of injunctive relief and specific performance to compel Tenant to
perform its obligations under this Lease.
B. Landlord may, at Landlord's election, terminate this Lease by
giving Tenant written notice of termination, in which event this Lease shall
terminate on the date set forth for termination in such notice. Any termination
under this subparagraph shall not relieve Tenant from its obligation to pay sums
then due Landlord or from any claim against Tenant for damages or rent
previously accrued or then accruing. In no event shall any one or more of the
following actions by Landlord, in the absence of a written election by Landlord
to terminate this Lease, constitute a termination of this Lease:
(1) Appointment of a receiver or keeper in order to protect
Landlord's interest hereunder;
(2) Consent to any subletting of the Premises or assignment of
this Lease by Tenant, whether pursuant to the provisions hereof or otherwise; or
(3) Any other action by Landlord or Landlord's agents intended to
mitigate the adverse effects of any breach of this Lease by Tenant, including,
without limitation, any action taken to maintain and preserve the Premises or
any action taken to relet the Premises or any portions thereof, for the account
of Tenant and in the name of Tenant.
C. In the event Tenant breaches this Lease and abandons the
Premises, this Lease shall not terminate unless Landlord gives Tenant written
notice of its election to so terminate this Lease. No act by or on behalf of
Landlord intended to mitigate the adverse effect of such breach, including those
described by subparagraphs 13.2B(1), (2) and (3) immediately preceding, shall
constitute a termination of Tenant's right to possession unless Landlord gives
Tenant written notice of termination. Should Landlord not terminate this Lease
by giving Tenant written notice, Landlord may enforce all its rights and
remedies under this Lease, including the right to recover the rent as it becomes
duo under the Lease as provided in California Civil Code Section 1951.4 as in
effect on the Commencement Date of this Lease.
D. In the event Landlord terminates this Lease, Landlord shall be
entitled, at Landlord's election, to damages in an amount as set forth in
California Civil Code Section 1951.2 as in effect on the Commencement Date of
this Lease. For purposes of computing damages pursuant to Section 1951.2, (i) an
interest rate equal to the Agreed Interest Rate shall be used where permitted
and (ii) the term "rent" includes Base Monthly Rent and Additional Rent. Such
damages shall include without limitation:
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(1) The worth at the time of award of the amount by which the
unpaid rent for the balance of the term after the time of award exceeds the
amount of such rental loss that Tenant proves could be reasonably avoided,
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%); and
(2) Any other amount necessary to compensate Landlord for all
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, the following: (i) expenses for
cleaning, repairing or restoring the Premises; (ii) expenses for altering,
remodeling or otherwise improving the Premises for the purpose of reletting,
including installation of leasehold improvements (whether such installation be
funded by a reduction of rent, direct payment or allowance to a new tenant, or
otherwise); (iii) broker's fees, advertising costs and other expenses of
reletting the Premises; (iv) costs of carrying the Premises, such as taxes,
insurance premiums, utilities and security precautions; (v) expenses in retaking
possession of the Premises; and (vi) attorneys' fees and court costs incurred by
Landlord in retaking possession of the Premises and in releasing the Premises or
otherwise incurred as a result of Tenant's default.
E. Nothing in this paragraph shall limit Landlord's right to
indemnification from Tenant as provided in paragraph 7.2 and paragraph 10.3.
Any notice given by Landlord in order to satisfy the requirements of
subparagraphs 13.1A or B above shall also satisfy the notice requirements of
California Code of Civil Procedure Section 1161 regarding unlawful detainer
proceedings.
13.3 Waiver by Tenant of Certain Remedies. Tenant waives the provisions of
Sections 1932(1), 1941 and 1942 of the California Civil Code and/or any similar
or successor law regarding Tenant's right to terminate this Lease or to make
repairs and deduct the expenses of such repairs from the rent due under the
Lease.
13.4 Waiver. One party's consent to or approval of any act by the other
party requiring the first party's consent or approval shall not be deemed to
waive or render unnecessary the first party's consent to or approval of any
subsequent similar act by the other party. The receipt by Landlord of any rent
or payment with or without knowledge of the breach of any other provision hereof
shall not be deemed a waiver of any such breach unless such waiver is in writing
and signed by Landlord. No delay or omission in the exercise of any right or
remedy accruing to either party upon any breach by the other party under this
Lease shall impair such right or remedy or be construed as a waiver of any such
breach theretofore or thereafter occurring. The waiver by either party of any
breach of any provision of this Lease shall not be deemed to be a waiver of any
subsequent breach of the same or of any other provisions herein contained.
13.5 Limitation on Exercise of Rights. At any time that an Event of
Tenant's Default has occurred and remains uncured, (i) it shall not be
unreasonable for Landlord to deny or withhold any consent or approval requested
of it by Tenant which Landlord would otherwise be obligated to give, and (ii)
Tenant may not exercise any option to extend, right to terminate this Lease, or
other right granted to it by this Lease which would otherwise be available to
it.
ARTICLE 14
Assignment And Subletting
14.1 By Tenant. The following provisions shall apply to any assignment,
subletting or other transfer by Tenant or any subtenant or assignee or other
successor in interest of the original Tenant (collectively referred to in this
paragraph as "Tenant"):
A. Tenant shall not do any of the following (collectively referred
to herein as a "Transfer"), whether voluntarily, involuntarily or by operation
of laws, without the prior written consent of Landlord, which consent shall not
be unreasonably withheld or delayed: (i) sublet all or any part of the Premises
or allow it to be sublet, occupied or used by any person or entity other than
Tenant; (ii) assign its interest in this Lease; (iii) transfer any right
appurtenant to this Lease or the Premises; (iv) mortgage or encumber the Lease
(or otherwise use the Lease
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as a security device) in any manner; or (v) terminate or materially amend or
modify an assignment, sublease or other transfer that has been previously
approved by Landlord. Any Transfer so approved by Landlord shall not be
effective until Tenant has delivered to Landlord an executed counterpart of the
document evidencing the Transfer which (i) is in form approved by Landlord, (ii)
contains the same terms and conditions as stated in Tenant's notice given to
Landlord pursuant to subparagraph 14.1B, and (iii) contains the agreement of the
proposed transferee to assume all obligations of Tenant related to the Transfer
arising after the effective date of such Transfer and to remain jointly and
severally liable therefor with Tenant. Any attempted Transfer without Landlord's
consent shall be voidable at Landlord's option. Landlord's consent to any one
Transfer shall not constitute a waiver of the provisions of this paragraph 14.1
as to any subsequent Transfer nor a consent to any subsequent Transfer. No
Transfer, even with the consent of Landlord, shall relieve Tenant of its
personal and primary obligation to pay the rent and to perform all of the other
obligations to be performed by Tenant hereunder. The acceptance of rent by
Landlord from any person shall not be deemed to be a waiver by Landlord of any
provision of this Lease nor to be a consent to any Transfer.
B. Tenant shall give Landlord at least fifteen (15) days prior
written notice of any desired Transfer and of the proposed terms of such
Transfer including but not limited to (i) the name and legal composition of the
proposed transferee; (ii) a current financial statement of the transferee,
financial statements of the transferee covering the preceding three years if the
same exist, and (if available) an audited financial statement of the transferee
for a period ending not more than one year prior to the proposed effective date
of the Transfer, all of which statements are prepared in accordance with
generally accepted accounting principles; (iii) the nature of the proposed
transferee's business to be carried on in the Premises; (iv) all consideration
to be given on account of the Transfer; (v) a current financial statement of
Tenant; and (vi) such other information as may be reasonably requested by
Landlord. Tenant's notice shall not be deemed to have been served or given
until such time as Tenant has provided Landlord with all information reasonably
requested by Landlord pursuant to this subparagraph 14.1B. Tenant shall
immediately notify Landlord of any modification to the proposed terms of such
Transfer.
C. In the event that Tenant seeks to make any Transfer, then
Landlord, by giving Tenant written notice of its election within fifteen (15)
days after Tenant's notice of intent to Transfer has been deemed given to
Landlord, shall have the right to elect (i) to withhold its consent to such
Transfer, as permitted pursuant to subparagraph 14.1A, or (ii) to permit Tenant
to so assign the Lease or sublease such part of the Premises, in which event
Tenant may do so, but without being released of its liability for the
performance of all of its obligations under the Lease, and the following shall
apply:
(1) Subject to subparagraph 14.1C(5), if Tenant assigns its
interest in this Lease in accordance with this subparagraph 14.1C, then Tenant
shall pay to Landlord fifty percent (50%) of all consideration received by
Tenant over and above (i) the assignee's agreement to assume the obligations of
Tenant under this Lease and (ii) all Permitted Transfer Costs related to such
assignment.
(2) Subject to subparagraph 14.1C(5), if Tenant sublets all or
part of the Premises, then Tenant shall pay to Landlord fifty percent (50%) of
the positive difference, if any, between (i) all rent and other consideration
paid by the subtenant to Tenant, less (ii) all rent paid by Tenant to Landlord
pursuant to this Lease which is allocable to the area so sublet and all
Permitted Transfer Costs related to such sublease. Such amount shall be paid to
Landlord on the same basis, whether periodic or in lump sum, that such rent and
other consideration is paid to Tenant by its subtenant, within seven (7) days
after it is received by Tenant.
(3) Tenant's obligations under this subparagraph shall survive
any assignment or sublease. At the time Tenant makes any payment to Landlord
required by this subparagraph, Tenant shall deliver an itemized statement of the
method by which the amount to which Landlord is entitled was calculated,
certified by Tenant as true and correct. Landlord shall have the right to
inspect Tenant's books and records relating to the payments due pursuant to this
subparagraph. Upon request therefor, Tenant shall deliver to Landlord copies of
all bills, invoices or other documents upon which its calculations are based.
Landlord may condition its approval of any Transfer upon obtaining a
certification from both Tenant and the proposed transferee of all amounts that
are to be paid to Tenant in connection with such Transfer.
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(4) As used herein, the term "consideration' shall mean any
consideration of any kind received, or to be received, by Tenant as a result of
the Transfer, if such sums are related to Tenant's interest in this Lease or in
the Premises, including payments (in excess of the fair market value thereof)
for Tenant's assets, fixtures, leasehold improvements, inventory, accounts,
goodwill, equipment, furniture, general intangibles and any capital stock or
other equity ownership interest in Tenant. As used in this subparagraph, the
term "Permitted Transfer Costs" shall mean (i) all reasonable leasing
commissions paid to third parties not affiliated with Tenant in order to obtain
the Transfer in question, (ii) all reasonable attorneys' fees incurred by Tenant
with respect to the Transfer in question, (iii) the cost of tenant improvements
installed for the use of the subtenant or assignee to the extent required by
such party as a condition to the Transfer, and (iv) any payments made by Tenant
to the transferee to induce it to enter into the Transfer (e.g., payment of
moving expenses).
(5) Notwithstanding anything to the contrary contained in the
foregoing, Landlord shall not participate in excess consideration received by
Tenant from an assignee or subtenant as provided for in subparagraphs 14.1C(1)
and 14.1C(2) unless such assignment or sublease occurs during an Option Term or,
in the case of a sublease, extends into an Option Term (in which latter event
Landlord shall be entitled to its share of the excess consideration paid during
the Option Term).
D. If Tenant is a corporation, any dissolution, merger,
consolidation or other reorganization of Tenant, or the sale or transfer in the
aggregate over the Lease Term of a controlling percentage of the capital stock
of Tenant, shall be deemed a voluntary assignment of Tenant's interest in this
Lease; provided, however, that the foregoing shall not apply to corporations the
capital stock of which is publicly traded. The phrase "controlling percentage"
means the ownership of and the right to vote stock possessing more than fifty
percent (50%) of the total combined voting power of all classes of Tenant's
capital stock issued, outstanding and entitled to vote for the election of
directors. If Tenant is a partnership, any withdrawal or substitution (whether
voluntary, involuntary or by operation of law, and whether occurring at one time
or over a period of time) of any partner(s) owning twenty-five percent (25%) or
more (cumulatively) of any interest in the capital or profits of the partnership
or the dissolution of the partnership, shall be deemed a voluntary assignment of
Tenant's interest in this Lease.
E. Notwithstanding anything contained in this paragraph 14.1, so
long as Tenant otherwise complies with the provisions of paragraph 14.1 Tenant
may enter into any one of the following transfers (a "Permitted Transfer")
without Landlord's prior written consent, and Landlord shall not be entitled to
receive any part of any excess rentals or other consideration resulting
therefrom that would otherwise be due to it pursuant to paragraph 14.C:
(1) Tenant may sublease all or part of the Premises or assign its
interest in this Lease to any corporation which controls, is controlled by, or
is under common control with the original Tenant to this Lease by means of an
ownership interest of more than fifty percent (50%);
(2) Tenant may assign its interest in the Lease to a corporation
which results from a merger, consolidation or other reorganization in which
Tenant is not the surviving corporation, so long as (i) Tenant demonstrates to
Landlord's reasonable satisfaction that the surviving corporation will have
sufficient creditworthiness to provide adequate assurance of future performance
of all of Tenant's obligations under this Lease, or (ii) the surviving
corporation has a net worth at the time of such assignment that is equal to or
greater than the net worth of Tenant immediately prior to such transaction; and
(3) Tenant may assign this Lease to a corporation which purchases
or otherwise acquires all or substantially all of the assets of Tenant, so long
as (i) Tenant demonstrates to Landlord's reasonable satisfaction that the
acquiring corporation will have sufficient creditworthiness to provide adequate
assurance of future performance of all of Tenant's obligations under this Lease,
or (ii) such acquiring corporation has a net worth at the time of such
assignment that is equal to or greater than the net worth of Tenant immediately
prior to such transaction.
14.2 By Landlord. Landlord and its successors in interest shall have the
right to transfer their interest in the Premises and the Property at any time
and to any person or entity. In the event of any such transfer, the
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Landlord originally named herein (and, in the case of any subsequent transfer,
the transferor) from the date of such transfer, (i) shall be automatically
relieved, without any further act by any person or entity, of all liability for
the performance of the obligations of the Landlord hereunder which may accrue
after the date of such transfer, and (ii) shall be relieved of all liability for
the performance of the obligations of the Landlord hereunder which have accrued
before the date of transfer if its transferee agrees to assume and perform all
such obligations of the Landlord hereunder. After the date of any such transfer,
the term "Landlord" as used herein shall mean the transferee of such interest in
the Premises and the Property.
ARTICLE 15
General Provisions
15.1 Landlord's Right to Enter. Landlord and its agents may enter the
Premises immediately in case of emergency and otherwise only at such time as is
approved by Tenant which time of entry shall be within seven (7) days after
Landlord delivers written notice to Tenant requesting approval of a time to
enter, and Landlord may thereafter continue such entry for such reasonable
period of time as is necessary to accomplish Landlord's permitted purpose for
such entry. Landlord may so enter the Premises for the following purposes: (i)
inspecting the same; (ii) posting notices of non-responsibility, (iii) supplying
any service to be provided by Landlord to Tenant, (iv) showing the Premises to
prospective purchasers or mortgagees, (v) making necessary alterations,
additions or repairs, (vi) performing Tenant's obligations when Tenant has
failed to do so after written notice from Landlord, (vii) placing upon the
Premises ordinary "for sale" signs, (viii) responding to an emergency, and/or
(ix) during the last six (6) months of the Lease Term or at any time when there
is a Continuing Tenant Default, showing the Premises to prospective tenants and
placing upon the Premises ordinary "for lease" signs. For each of the aforesaid
purposes, Landlord may enter the Premises by means of a master key, and Landlord
shall have the right to use any and all means Landlord may deem necessary and
proper to open the doors of the Premises in an emergency. Any entry into the
Premises or portions thereof obtained by Landlord by any of said means or
otherwise shall not under any circumstances be construed or deemed to be a
forcible or unlawful entry into, or a detainer of, the Premises, or an eviction,
actual or constructive, of Tenant from the Premises or any portion thereof.
15.2 Surrender of the Premises. Immediately prior to the expiration or
upon the sooner termination of this Lease, Tenant shall remove all Tenant's
Trade Fixtures and other personal property, and shall vacate and surrender the
Premises to Landlord in the same condition as existed at the Commencement Date,
except for (i) reasonable wear and tear, (ii) damage caused by any peril or
condemnation, and (iii) contamination by Hazardous Materials for which Tenant is
not responsible pursuant to subparagraphs 7.2B or 7.2C. In this regard
reasonable wear and tear shall be construed to mean wear and tear caused to the
Premises by the natural aging process which occurs in spite of prudent
application of reasonable standards for maintenance, repair and janitorial
practices, and does not include items of neglected or deferred maintenance. If
Landlord so requests, Tenant shall, prior to the expiration or sooner
termination of this Lease, remove any Leasehold Improvements designated by
Landlord and repair all damage caused by such removal if such removal is
required pursuant to paragraph 5.2. If the Premises are not so surrendered at
the termination of this Lease, Tenant shall be liable to Landlord for all costs
incurred by Landlord in returning the Premises to the required condition, plus
interest on all costs incurred at the Agreed Interest Rate.
15.3 Holding Over. This Lease shall terminate without further notice at
the expiration of the Lease Term. Any holding over by Tenant after expiration of
the Lease Term shall not constitute a renewal or extension of the Lease or give
Tenant any rights in or to the Premises except as expressly provided in this
Lease. Any holding over after such expiration with the consent of Landlord shall
be construed to be a tenancy from month to month on the same terms and
conditions herein specified insofar as applicable except that Base Monthly Rent
shall be increased to an amount equal to one hundred twenty-five percent (125%)
of the Base Monthly Rent required during the last month of the Lease Term.
15.4 Subordination. The following provisions shall govern the relationship
of this Lease to any underlying lease, mortgage or dead of trust which now or
hereafter affects the Property, and any renewal, modification, consolidation,
replacement or extension thereof (a "Security Instrument"):
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A. This Lease is subject and subordinate to all Security Instruments
existing as of the Commencement Date. However, if any Lender so requires, this
Lease shall become prior and superior to any such Security Instrument.
B. At Landlord's election, this Lease shall become subject and
subordinate to any Security Instrument created after the Commencement Date.
Notwithstanding such subordination, Tenant's right to quiet possession of the
Premises shall not be disturbed and the terms of this Lease shall not be
modified so long so Tenant in not in default and performs all of its obligations
under this Lease, unless this Lease is otherwise terminated pursuant to its
terms.
C. No subordination of this Lease to a Security Instrument pursuant
to subparagraphs 15.4A or 15.4B shall be effective until the holder of a
Security Instrument executes a subordination and non-disturbance agreement in
favor of Tenant by which the Lender agrees to be bound by the immediately
preceding sentence.
D. Tenant shall execute any document or instrument required by
Landlord or any Lender to make this Lease either prior or subordinate to a
Security Instrument, which may include such other matters as the Lender
customarily requires in connection with such agreements, including provisions
that (i) the Lender not be liable for any defaults on the part of Landlord
occurring prior to the time the Lender takes possession of the Premises in
connection with the enforcement of its Security Instrument; (ii) the Lender not
be liable for the performance of any obligations contained in the Interior
Improvement Agreement, for the completion of any improvements under construction
or required to be constructed by Landlord; (iii) recourse against the Lender is
limited to its interest in the Premises; (iv) any notices given by Tenant to
Landlord should also be delivered to the Lender; (v) Tenant shall attorn to any
purchaser at a foreclosure sale or a grantee designated in a deed in lieu of
foreclosure; (vi) the Lender shall not be bound by any rent which Tenant might
have paid in advance to any prior Landlord for a period in excess of one mouth;
(vii) the Lender shall not be bound by any agreement or modification of the
Lease made without the written consent of the Lender; and (viii) upon request,
Tenant shall enter into a new lease with Lender of the Premises upon the same
term and conditions as the Lease between Landlord and Tenant, which lease shall
cover any unexpired term of the Lease existing prior to a foreclosure, trustee's
sale, or conveyance in lieu of foreclosure. Tenant's failure to execute any
such document or instrument within ten (10) days after written demand therefor
shall constitute a default by Tenant. Tenant approves as reasonable the form of
subordination and non-disturbance agreement attached to this Lease as Exhibit
"D".
15.5 Tenant shall attorn (i) to any purchaser of the Premises or Property
at any foreclosure sale or private sale conducted pursuant to any security
instrument encumbering the Premises or the Property; (ii) to any grantee or
transferee designated in any deed given in lieu of foreclosure; or (iii) to the
lessor under any underlying ground lease should such ground lease be terminated.
15.6 Mortgagee Protection. In the event of any default on the part of the
Landlord, Tenant will give notice by registered mail to any Lender or lessor
under any underlying ground lease whose name has been provided to Tenant and
shall offer such Lender or lessor a reasonable opportunity to cure the default,
not to exceed thirty (30) days from the expiration of the time period granted to
Landlord to cure such default; provided, however, that if such Lender requires
additional time to cure a default on the part of Landlord or to obtain
possession of the Premises by power of sale or judicial foreclosure or other
appropriate legal proceedings if obtaining possession is necessary to effect a
cure, the Lender shall be granted such opportunity, provided that the Lender
gives reasonable assurances to Tenant that such default will be cured.
15.7 Estoppel Certificates and Financial Statements. At all times during
the Lease Term, Tenant agrees, following any request by Landlord, promptly to
execute and deliver to Landlord an estoppel certificate, (i) 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, (ii) stating the date to which the rent and other
charges are paid in advance, if any, (iii) acknowledging that there are not, to
Tenant's knowledge, any uncured defaults on the part of Landlord hereunder or,
if there are uncured defaults, specifying the nature of such defaults and (iv)
certifying such other information about the Lease as may be reasonably required
by Landlord. Tenant's failure to deliver an estoppel certificate within ten (10)
days after delivery of Landlord's request therefor
29.
<PAGE>
shall be a conclusive admission by Tenant that, as of the date of the request
for such statement, (i) this Lease is unmodified except as may be represented by
Landlord in said request and is in full force and effect, (ii) there are no
uncured defaults in Landlord's performance, and (iii) no rent has been paid in
advance. At any time during the Lease Term Tenant shall, upon ten (10) days'
prior written notice from Landlord, provide Tenant's most recent financial
statement and financial statements covering the twenty-four (24) month period
prior to the date of such most recent financial statement to any existing Lender
or to any potential Lender or buyer of the Property; provided, however, that if
Tenant is a corporation whose stock is publicly traded, Tenant may satisfy the
foregoing requirement by delivering to the appropriate parties copies of its
most recent annual report prepared to satisfy requirements of the federal
securities laws. Such statements shall be prepared in accordance with generally
accepted accounting principles and, if such is the normal practice of Tenant
shall be audited by an independent certified public accountant.
15.8 Force Majeure. Any prevention, delay or stoppage due to strikes,
lockouts, inclement weather, labor disputes, inability to obtain labor,
materials, fuels or reasonable substitutes therefor, governmental restrictions,
regulations, controls, action or inaction, civil commotion, fire or other acts
of God, and other causes beyond the reasonable control of the party obligated to
perform (except financial inability) shall excuse the performance, for a period
equal to the period of any said prevention, delay, or stoppage, of any
obligation hereunder except the obligation of Tenant to pay rent or any other
sums due hereunder.
15.9 Notices. Any notice required or desired to be given regarding this
Lease shall be in writing and may be given by personal delivery, by facsimile
telecopy, by courier service, or by mail. A notice shall be deemed to have been
given (i) on the third (3rd) business day after mailing if such notice was
deposited in the United States mail, certified or registered, postage prepaid,
addressed to the party to be served at its address first above set forth, (ii)
when delivered if given by personal delivery, and (iii) in all other cases when
actually received. Either party may change its address by giving notice of same
in accordance with this paragraph.
15.10 Obligation to Act Reasonably. Whenever the consent or approval of a
party to this Lease is required to be obtained before the other party to this
Lease may take an action, such consent or approval shall not be unreasonably
withheld or delayed.
15.11 Corporate Authority. If Tenant is a corporation (or a partnership),
each individual executing this Lease on behalf of said corporation (or
partnership) represents and warrants that he is duly authorized to execute and
deliver this Lease on behalf of said corporation in accordance with the bylaws
of said corporation (or partnership in accordance with the partnership agreement
of said partnership) and that this Lease is binding upon said corporation (or
partnership) in accordance with its terms. If Tenant is a corporation, each of
the persons executing this Lease on behalf of Tenant does hereby covenant and
warrant that Tenant is a duly authorized and existing corporation, that Tenant
is qualified to do business in California and that the corporation has full
right and authority to enter into this Lease.
15.12 Additional Definitions. Any term that is given a special meaning by
a provision in this Lease shall have such meaning when used in this Lease or any
addendum or amendment hereto. As used herein, the following terms shall have the
following meanings:
A. Agreed Interest Rate. The term "Agreed Interest Rate" shall mean
that interest rate determined as of the time it is to be applied that is equal
to the lessor of (i) two percent (2%) in excess of the "prime rate", "reference
rate", or "base rate" established by Bank of America (or if Bank of America
shall cease to exist, by the commercial bank with its headquarters in California
that has the greatest net worth among commercial banks headquartered in
California) as it may be adjusted from time to time, or (ii) the maximum
interest rate permitted by law.
B. Common Area. The term "Common Area" shall mean all areas and
facilities within the Property that are not designated by Landlord for the
exclusive use of Tenant or any other lessee or other occupant of the Property,
including the parking areas, access and perimeter roads, pedestrian sidewalk,
landscaped areas, trash enclosures, recreation areas and the like.
30.
<PAGE>
C. Law. The term "Law" shall mean any judicial decision, statute,
constitution, ordinance, resolution, regulation, rule, administrative order, or
other requirement of any municipal, county, state, federal or other government
agency or authority having jurisdiction over the parties to this Lease or the
Premises, or both, in effect either at the Commencement Date of this Lease or
any time during the Lease Term, including, without limitation, any regulation,
order or policy of any quasi-official entity or body (e.g., board of fire
examiners, public utilities or special district).
D. Leasehold Improvements. The term "Leasehold Improvements" shall
mean all improvements, additions, alterations and fixtures installed in the
Premises by Tenant at its expense which are not Trade Fixtures.
E. Lender. The term "Lender" shall mean any beneficiary, mortgagee,
secured party, lessor, or other holder of any Security Instrument.
F. Private Restrictions. The term "Private Restrictions" shall mean
all recorded covenants, conditions and restrictions, reciprocal easement
agreements, and any other recorded instruments affecting the use of the Premises
as they may exist from time to time.
G. Trade Fixtures. The term "Trade Fixtures" shall mean anything
affixed to the Premises by Tenant at its expense for purposes of trade,
manufacture, ornament or domestic use (except replacement of similar work or
material originally installed by Landlord) which can be removed without injury
to the Premises unless such thing has, by the manner in which it is affixed,
become an integral part of the Premises; provided, however, that all of Tenant's
signs shall be Trade Fixtures regardless of how affixed to the Premises.
15.13 Miscellaneous. Should any provision of this Lease prove to be
invalid or illegal, such invalidity or illegality shall in no way affect, impair
or invalidate any other provision hereof, and such remaining provisions shall
remain in full force and effect. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor. The captions used in this Lease are for convenience only and shall not
be considered in the construction or interpretation of any provision hereof. Any
executed copy of this Lease shall be deemed an original for all purposes. This
Lease shall, subject to the provisions regarding assignment, apply to and bind
the respective heirs, successors, executors, administrators and assigns of
Landlord and Tenant. "Party" shall mean Landlord or Tenant, as the context
implies. If Tenant consists of more than one person or entity, then all members
of Tenant shall be jointly and severally liable hereunder. 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. 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. The terms "shall", "will" and
"agree" are mandatory. The term "may" is permissive. When a party is required to
do something by this Lease, it shall do so at its sole cost and expense without
right of reimbursement from the other party unless specific provision is made
therefor. Where Tenant is obligated not to perform any act, Tenant is also
obligated to use reasonable efforts to restrain any others within its control
from performing said act, including Agents, invitees, contractors, and
subcontractors. Landlord shall not become or be deemed a partner nor a joint
venturer with Tenant by reason of the provisions of this Lease.
15.14 Termination by Exercise of Right. If this Lease is terminated
pursuant to its terms by the proper exercise of a right to terminate
specifically granted to Landlord or Tenant by this Lease, then this Lease shall
terminate thirty (30) days after the date the right to terminate is properly
exercised (unless another date is specified in that part of the Lease creating
the right, in which event the date so specified for termination shall prevail),
the rent and all other charges due hereunder shall be prorated as of the date of
termination, and neither Landlord nor Tenant shall have any further rights or
obligations under this Lease except for those that have accrued prior to the
date of termination. This paragraph does not apply to a termination of this
Lease by Landlord as a result of a default by Tenant.
31.
<PAGE>
15.15 Brokerage Commissions. Tenant warrants that is has not had any
dealings with any real estate brokers, leasing agents or salesmen, or incurred
any obligations for the payment of real estate brokerage commissions or finder's
fees which would be earned or due and payable by reason of the execution of this
Lease other than to the Retained Real Estate Brokers. Landlord shall be
responsible for the payment of any commission owed pursuant to a separate
written commission agreement between Landlord and Retained Real Estate Brokers
for the payment of the commission as a result of the execution of this Lease.
15.16 Entire Agreement. This Lease constitutes the entire agreement
between the parties, and there are no binding agreements or representations
between the parties except as expressed herein. Tenant acknowledges that neither
Landlord nor Landlord's agent(s) has made any representation or warranty as to
(i) whether the Premises may be used for Tenant's intended use under existing
Law or (ii) the suitability of the Premises or the Common Area for the conduct
of Tenant's business or the condition of any improvements located thereon.
Tenant expressly waives all claims for damage by reason of any statement,
representation, warranty, promise or other agreement of Landlord or Landlord's
agent(a), if any, not contained in this Lease or in any addendum or amendment
hereto. No subsequent change or addition to this Lease shall be binding unless
in writing and signed by the parties hereto.
15.17 Old Lease; Assumption. In consideration for Landlord's agreement to
enter into this Lease with Tenant in substantially the same form as the Original
Lease, Tenant hereby assumes FMC's obligations under the Original Lease,
including, without limitation, the obligation to restore the Premises pursuant
Section 5.6 of the Original Lease.
32.
<PAGE>
In Witness Whereof, Landlord and Tenant have executed this Lease with the
intent to be legally bound thereby, to be effective as of the Commencement Date
of this Lease.
LANDLORD: TENANT:
ATP Associates, L.P., a Delaware limited partnership United Defense L.P.,
a Delaware limited partnership
By: Menlo Equities Associates III Inc., a Delaware By: UDLP Holdings Corp., a Delaware corporation, its
corporation, Its General Partner General Partner
By: /s/ Henry D. Bullock By: /s/ Peter C. Woglom
-------------------------------- -----------------------------------------------
Its: President Printed
-------------------------------- Name: Peter C. Woglom
----------------------------------------------
Title: Vice-President and General Manager,
---------------------------------------------
Ground Systems Division-UDLP
----------------------------------------------------
33.
<PAGE>
Exhibit "A"
1.
<PAGE>
Exhibit "B"
PLANS AND SPECIFICATIONS
FOR BUILDING "A"
[Intentionally Deleted]
1.
<PAGE>
Exhibit C
INTERIOR IMPROVEMENT AGREEMENT
(Building A)
This Interior Improvement Agreement is made part of that Lease dated for
reference purposes only April __, 1999 (the "Lease"), by and between ATP
Associates L.P., a Delaware limited partnership ("Landlord") and United Defense
L.P., a Delaware limited partnership ("Tenant") of approximately 68,708 square
feet of gross leaseable area located in that building commonly known as Building
A of Airport Technology Park, 2890 De La Cruz Boulevard, Santa Clara,
California.
Landlord and Tenant agree that the following terms are hereby added to the
Lease:
1. Definitions. As used herein and in the Lease, the following terms
shall have the following meanings:
A. Approved Plans. The term "Approved Plans" shall mean those final
plans, specifications and working drawings to be approved by Landlord.
B. Interior Improvements. The term "Interior Improvements" shall
mean those improvements described by the Approved Plans that Tenant has the
right to construct in the Premises pursuant to paragraph 2 hereof.
C. Interior Improvement Costs. The term "Interior Improvement
Costs" shall mean the following: (i) the total amount due pursuant to the
construction contract entered into by Tenant pursuant to subparagraph 2B hereof
to construct the Interior Improvements; (ii) the cost of all governmental
approvals, permits and fees required as a condition to the construction of the
Interior Improvements; (iii) all utility connection or use fees; (iv) fees of
architects, designers, or engineers for services rendered in connection with the
design and construction of the Interior Improvements; (v) Tenant's moving and
relocation costs incurred in connection with the consolidation of its employees
at the Premises over the twelve (12) months prior to the date hereof ("Tenant's
Relocation Costs") and (vi) the cost of payment and performance bonds obtained
to assure completion of the Interior Improvements. There shall be excluded from
Interior Improvement Costs the following, to the extent not included in the
construction contract with the Prime Contractor referred to in subparagraph 2B
hereof: (i) any fee for Landlord's review of Tenant's plans for the Interior
Improvements; (ii) temporary electricity used during the construction period in
connection with the construction of the Interior Improvements; and (iii) any
fees charged by Tenant or its agents or employees for supervising/reviewing the
construction of the Interior Improvements (excluding overhead and profits of
prime contractor).
D. Landlord's Interior improvement Allowance. The term "Landlord's
Interior Improvement Allowance" shall mean the maximum amount Landlord is
required to spend toward the payment of the Interior Improvement Costs, which
amount is equal to Three Hundred Ten Thousand Dollars ($310,000).
E. Substantially Completed. The Interior Improvements shall be
deemed to be "Substantially Completed" when (i) Prime Contractor has issued its
written certificate stating that such improvements have been substantially
completed in accordance with the Approved Plans therefor, (ii) electrified
office partitions are installed, and (iii) the Building Department of the City
of Santa Clara has completed its final inspection of such improvements and has
"signed off" the building inspection card approving such work as complete.
F. Prime Contractor. The term "Prime Contractor" shall mean _______.
2. Construction Of Interior improvements. Tenant shall have the right to
construct the Interior Improvements in accordance with the following:
1.
<PAGE>
A. Tenant warrants that the Interior Improvements shall be
constructed in a good and workmanlike manner substantially in accordance with
the Approved Plans (as modified by any change orders approved by Landlord and
Tenant pursuant to paragraph 3 hereof) and all Laws. All materials and
equipment furnished shall be fully paid for and be free of liens, chattel
mortgages, and security interests of any kind.
B. The Interior Improvements shall be constructed by Prime
Contractor pursuant to a construction contract between Tenant and Prime
Contractor. Landlord shall have the right to review such form of construction
contract before it is executed. Once the construction contract between Prime
Contractor and Tenant has been executed, Tenant shall not materially amend,
modify or alter the responsibilities of Prime Contractor thereunder without
Landlord's written consent, except for change orders approved pursuant to
paragraph 3 hereof. In connection with the execution of such construction
contract, Tenant shall use reasonable efforts to provide that all construction
or equipment warranties or guarantees obtained by Tenant shall, to the extent
obtainable, provide that such warranties and guaranties shall also run for the
benefit of Landlord. Upon reasonable written advance request of Landlord,
Tenant shall inform Landlord of all written construction and equipment
warranties existing in favor of Tenant which affect the Interior Improvements.
Tenant shall cooperate with Landlord in enforcing such warranties and in
bringing any suit that may be necessary to enforce liability with regard to any
defects.
C. Tenant shall use reasonable efforts to commence construction of
the Interior Improvements as soon as reasonably practicable, and shall
thereafter continuously prosecute such construction to completion.
D. Tenant shall properly obtain, comply with and keep in effect all
permits, licenses and other governmental approvals which are required to be
obtained from governmental bodies in order to construct the Interior
Improvements. Upon reasonable written advance request, Tenant shall promptly
deliver copies of all such permits, licenses and approvals to Landlord.
E. Tenant shall be solely responsible for all aspects of the
construction of the Interior Improvements, including the development and design
thereof as set forth in the Approved Plans, the supervision of the work of
construction, the qualification, financial condition, and performance of all
architects, engineers, contractors, material suppliers, consultants, and the
accuracy of all applications for payment and the proper application of all
disbursement. Landlord is not obligated to supervise, inspect or inform Tenant
or any third party of any aspect of the construction of the Interior
Improvements. Any inspection or review by Landlord, is to determine whether
Tenant is properly discharging its obligations to Landlord and may not be relied
upon by Tenant or any third party. Landlord owes no duty of care to Tenant or
any third party to protect against or to inform Tenant or any third party of,
any negligence, faulty, inadequate or defective design or construction of the
Interior Improvements.
3. Changes to Approved Plans for Interior Improvements. Neither Landlord
nor Tenant shall have the right to order extra work or change orders with
respect to the Approved Plans or the construction of the Interior Improvements
without the prior written consent of the other. All extra work or change orders
requested by either Landlord or Tenant shall be made in writing, shall specify
the amount of delay or the time saved resulting therefrom, shall specify any
added or reduced cost resulting therefrom, and shall become effective and a part
of the Approved Plans once approved in writing by both parties. Notwithstanding
the foregoing, Tenant's failure to obtain Landlord's consent to an extra work or
change order shall not be an Event of Tenant's Default if Landlord would have
been required to consent to the change pursuant to the terms hereof.
4. Payment of Interior Improvement Costs. The Interior Improvement Costs
shall be paid as follows:
A. Landlord shall contribute to the payment of all Interior
Improvement Costs up to an amount equal to Landlord's Interior Improvement
Allowance. An amount equal to 40% of the Landlord's Interior Improvement
Allowance shall be applied to Tenant's Relocation Costs (the "Tenant Relocation
Allowance"). If, at the time of completion of all Interior Improvements, (1)
Tenant has not used the entire Tenant Relocation Allowance, Tenant shall receive
the remainder of the Tenant Relocation Allowance as a credit against Base
Monthly Rent for the first month of the Lease Term, or at Tenant's Option,
Tenant can use such amount for the Interior Improvement Costs at Building C and
(2) Tenant has not used the entire Landlord's Interior Improvement
2.
<PAGE>
Allowance (other than the amount allocated to the Tenant Relocation Allowance),
Tenant can use such amount for the Interior Improvement Costs at Building C.
Except as expressly provided in the preceding sentence, if any part of the
Landlord's Interior Improvement Allowance is not used by Tenant, or Tenant does
not qualify for a disbursement pursuant to the provisions of this paragraph 4
with the result that the entire allowance is not disbursed, there shall
nonetheless be no adjustment in the Base Monthly Rent due from Tenant pursuant
to the Lease. If the Interior Improvement Costs exceed the maximum amount of
Landlord's required contribution, then Tenant shall pay the entire amount of
such excess.
B. Landlord and Tenant acknowledge that the construction contract
Tenant will enter into for the construction of the interior Improvements will
provide for progress payments to Prime Contractor in stages as the work is
completed. Landlord shall pay the full amount of each such progress payment
until all of Landlord's Interior Improvement Allowance is expanded. Thereafter,
if the cost of the Interior Improvements exceeds the amount of Landlord's
required contribution for such improvements, then Tenant shall pay the rest of
the progress payments due to Prime Contractor. Landlord shall pay any progress
payment due from Landlord to Prime Contractor within thirty (30) days after
satisfaction of all of the conditions precedent to such progress payment by
Landlord that has been requested by Tenant which are set forth in subparagraph
4D and 4E hereof. If Landlord fails to pay any such amount when due, then
Tenant may (but without the obligation to do so) advance such funds on
Landlord's behalf, and Landlord shall be obligated to reimburse Tenant for the
amount of funds so advanced on its behalf and all costs incurred by Tenant in so
doing, including all interest at the Agreed Interest Rate.
C. If Tenant desires to obtain a disbursement from Landlord from the
Landlord's Interior Improvement Allowance for the purpose of paying Interior
Improvement Costs, Tenant shall submit to Landlord a written itemized statement,
signed by Tenant (an "Application for Payment") setting forth the following:
(i) a description of the construction work performed, materials supplied, and/or
costs incurred or due for which disbursement is requested; and (ii) the total
amount incurred, expended and/or due for each requested item less prior
disbursements; and (iii) the amount due to be paid by Landlord from Landlord's
Interior Improvement Allowance.
D. Landlord shall have no obligation to make any disbursement from
Landlord's Interior Improvement Allowance at any time that there is a Continuing
Tenant Default (as defined in paragraph 1.14 of the Lease), or there has
occurred an event, omission or failure of conditions which would constitute an
Event of Tenant's Default (as defined in paragraph 13.1 of the Lease) after
notice or lapse of time, or both. In addition, Landlord shall have the right to
condition any disbursement from Landlord's Interior Improvement Allowance upon
Landlord's receipt and approval of the following with respect to each
Application for Payment:
(1) The form of Application for Payment and the sufficiency of
the information contained therein;
(2) Bills and invoices and any other documents evidencing the
total amount expended, incurred, or due for any requested contribution to
Interior Improvement Costs;
(3) Evidence of Tenant's use of lien releases acceptable to
Landlord for payments or disbursements to any contractor, subcontractor,
materialmen, supplier, or lien claimant;
(4) Architects, inspectors and/or engineer's periodic
certification and the stage of construction that has been completed and its
conformance to the Approved Plans based upon any such architects, inspectors
and/or engineers periodic, physical inspections of the Premises and Interior
Improvements;
(5) Waivers and releases of mechanics' lien, stop notice claim,
equitable lien claim or other lien claim rights or lien bonds in form and amount
reasonably satisfactory to Landlord;
(6) Evidence of Tenant's compliance with its obligations pursuant
to paragraph 2 hereof;
(7) Any other document, requirement, evidence or information that
Landlord may reasonably request pursuant to any provision of this Interior
Improvement Agreement.
3.
<PAGE>
E. Tenant agrees that all disbursements made to Tenant by Landlord
from Landlord's Interior Improvement Allowance shall be used only for the
payment of Interior Improvement Costs and shall be applied as set forth, and for
the purposes described in, the relevant Application for Payment based upon which
the disbursement is made.
5. Punchlist. Within a reasonable period of time after the Interior
Improvements are Substantially Completed, Landlord, Tenant and Tenant's
architect shall together walk through and inspect such improvements so
completed, using reasonable efforts to discover all uncompleted or defective
construction. After such inspection has been completed. Tenant shall use
reasonable efforts to complete and/or repair all "punch list" items within
thirty (30) days thereafter.
6. Construction Warranty for the Interior Improvements. Tenant warrants
that the construction of the Interior Improvements will be performed in
accordance with the Approved Plans therefor and all Laws in a good and
workmanlike manner, and that all materials and equipment furnished will conform
to said plans and shall be new and otherwise of good quality. Tenant shall
promptly commence the cure of any breach of such warranty and complete such cure
with diligence at Tenant's cost and expense.
7. Ownership of the Interior Improvements. All of the Interior
Improvements which are constructed with funds of Landlord shall become the
property of Landlord upon installation and shall not be removed or altered by
Tenant. Any part of the Interior Improvements which are constructed by Landlord
with funds of Tenant shall become the property of Tenant upon installation and
Tenant shall have the right to depreciate and claim and collect investment tax
credits in such improvements; provided, however, that (i) Tenant shall not
remove or alter such improvements during the term of the Lease; (ii) such
improvements shall be surrendered to Landlord, and title to such improvements
shall vest in Landlord, at the expiration or earlier termination of the Lease
Term; and (iii) in no event shall Landlord have any obligation to pay Tenant for
the cost or value of such improvements. Notwithstanding the foregoing, Tenant
shall have the right to remove only the following kinds of Interior Improvements
so long as it repairs all damage caused by the installation thereof and returns
the Premises to the condition existing prior to the installation of such
Interior Improvements: (i) built-in cabinets, file drawers and bookcases; (ii)
computer room air conditioning; (iii) canteen equipment; (iv) office cubicle
systems; and (v) ornamental statues. If both Landlord and Tenant contribute to
the cost of constructing the Interior Improvements, Landlord and Tenant shall
agree in writing which of such improvements are to be constructed using
Landlord's funds (and therefore are Landlord's property) and which of them are
to be installed with Tenant's funds (and therefore are Tenant's property during
the Lease Term).
8. Documents. Within fifteen (15) days after receiving a written request
from Landlord, Tenant shall deliver to Landlord the most current version of the
following: (i) a complete and correct list showing the name, address and
telephone number of each contractor, subcontractor and principal materials
supplier engaged in connection with the construction of the Interior
Improvements, and the total dollar amount of each contract and subcontract
(including any changes) together with the amounts paid through the date of the
list; (ii) true and correct copies of all executed contracts and subcontracts
identified in the list described in the immediately preceding clause, including
any changes; (iii) a construction progress schedule; and (iv) any update to any
item described in the preceding clauses which Tenant may have previously
delivered to Landlord. Tenant expressly authorizes Landlord to contact any
contractor, subcontractor or materials supplier to verify any information
disclosed in accordance with this paragraph. Within sixty (60) days after the
Interior Improvements have been Substantially Completed, Tenant shall cause the
following to be delivered to Landlord:
A. Statements from Tenant's architect in form reasonably
satisfactory to Landlord certifying that the Interior Improvements have been
completed substantially in accordance with the Approved Plans and all Laws;
B. A copy of all permanent certificates of occupancy and other
governmental approvals which may be received by Tenant with respect to the
construction of the Interior Improvements.
C. One (1) copy of the Approved Plans, one (1) copy of each extra
work or change order, and one (1) copy of any "As-Built" plans and
specifications for the Interior Improvements, which Tenant may have elected to
cause to be prepared;
4
<PAGE>
D. One (1) copy of all warranties, guaranties, and operational
manuals relating to the Interior Improvements;
E. A copy of a recorded notice of completion relating to the
construction of the Interior Improvements.
9. Indemnity. Tenant agrees to indemnify and hold Landlord harmless from
and against all liabilities, claims, actions, damages, costs and expenses
(including attorneys' fees incurred by Landlord in protecting its interest from
the following) arising out of or resulting from construction of the Interior
Improvements, including any mechanics' liens, defective workmanship or materials
and any claim or cause of action of any kind by any party that Landlord is
liable for any act or omission committed or made by Tenant, its agents,
employees, or contractors in connection with the construction of the Interior
Improvements.
10. Effect of Agreement. In the event of any inconsistency between this
Agreement and the Lease, the terms of this Agreement shall prevail.
AS TENANT: AS LANDLORD:
United Defense L.P., ATP Associates, L.P., a Delaware limited partnership
a Delaware limited partnership
By: UDLP Holdings Corp., a Delaware corporation, its By: Menlo Equities Associates III Inc., a Delaware
General Partner corporation, Its General Partner
By: /s/ Peter C. Woglom By: /s/ Henry D. Bullock
--------------------------------------------------- ----------------------------------------
Printed Its: President
Name: Peter C. Woglom --------------------------------------
--------------------------------------------
Title: Vice-President and General Manager, Ground
-------------------------------------------
Systems Division, UDLP
-------------------------------------------
5
<PAGE>
Table of Contents
Page
ARTICLE 1 DEFINITIONS.............................................. 1
1.1 Commencement Date......................................... 1
1.2 Rent Start Date........................................... 1
1.3 Lease Term................................................ 1
1.4 Property.................................................. 1
1.5 Premises.................................................. 1
1.6 Permitted Use............................................. 1
1.7 Tenant's Minimum Liability Insurance Coverage............. 2
1.8 Tenant's Allocated Parking Stalls......................... 2
1.9 Retained Real Estate Brokers.............................. 2
1.10 Address for Notices....................................... 2
1.11 Lease..................................................... 2
1.12 Building C Lease.......................................... 2
1.13 Tenant's Allocated Share.................................. 2
1.14 Continuing Tenant Default................................. 2
1.15 Additional Definitions.................................... 2
ARTICLE 2 DEMISE AND ACCEPTANCE.................................... 3
2.1 Demise of Premises........................................ 3
2.2 Delivery and Acceptance of Possession..................... 3
2.3 Construction of Interior Improvements..................... 3
2.4 Options to Extend Lease Term.............................. 3
ARTICLE 3 RENT..................................................... 6
3.1 Base Monthly Rent......................................... 6
3.2 Additional Rent........................................... 6
3.4 Late Charge and Interest on Rent in Default............... 7
ARTICLE 4 USE OF PREMISES.......................................... 7
4.1 Limitation on Type........................................ 7
4.2 Compliance with Laws and Private Restrictions............. 8
4.3 Insurance Requirements.................................... 8
4.4 Outside Areas............................................. 9
4.5 Signs..................................................... 9
4.6 Rules and Regulations..................................... 9
4.7 Parking................................................... 9
4.8 Window Coverings.......................................... 10
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4.9 Outside Sales............................................. 10
ARTICLE 5 TRADE FIXTURES AND LEASEHOLD IMPROVEMENTS................ 11
5.1 Trade Fixtures............................................ 11
5.2 Leasehold Improvements.................................... 11
5.3 Alterations Required by Law............................... 12
5.4 Landlord's Improvements................................... 12
5.5 Liens..................................................... 13
ARTICLE 6 REPAIR AND MAINTENANCE................................... 14
6.1 Tenant's Obligation to Maintain........................... 14
6.2 Landlord's Obligation to Maintain......................... 14
6.3 Tenant's Obligation to Reimburse.......................... 15
6.4 Common Operating Expenses Defined......................... 16
6.5 Control of Common Area.................................... 17
6.6 Tenant's Negligence....................................... 17
ARTICLE 7 WASTE DISPOSAL AND UTILITIES............................. 18
7.1 Waste Disposal............................................ 18
7.2 Hazardous Materials....................................... 18
7.3 Utilities................................................. 20
7.4 Compliance with Governmental Regulations.................. 21
ARTICLE 8 REAL PROPERTY TAXES...................................... 21
8.1 Real Property Taxes Defined............................... 21
8.2 Tenant's Obligation to Reimburse.......................... 22
8.3 Taxes on Tenant's Property................................ 22
ARTICLE 9 INSURANCE................................................ 22
9.1 Tenant's Insurance........................................ 22
9.2 Landlord's Insurance...................................... 24
9.3 Tenant's Obligation to Reimburse.......................... 24
9.4 Release and Waiver of Subrogation......................... 24
ARTICLE 10 LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY......... 25
10.1 Limitation on Landlord's Liability........................ 25
10.2 Limitation on Tenant's Recourse........................... 26
10.3 Indemnification of Landlord............................... 26
ARTICLE 11 DAMAGE TO PREMISES....................................... 26
11.1 Landlord's Duty to Restore................................ 26
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11.2 Landlord's Right to Terminate............................. 27
11.3 Tenant's Right to Terminate............................... 28
11.4 Abatement of Rent......................................... 28
ARTICLE 12 CONDEMNATION............................................. 28
12.1 Tenant's Termination Right................................ 28
12.2 Restoration and Abatement of Rent......................... 29
12.3 Temporary Taking.......................................... 29
12.4 Division of Condemnation Award............................ 29
ARTICLE 13 DEFAULT AND REMEDIES..................................... 30
13.1 Events of Tenant's Default................................ 30
13.2 Landlord's Remedies....................................... 31
13.3 Waiver by Tenant of Certain Remedies...................... 32
13.4 Waiver.................................................... 33
13.5 Limitation on Exercise of Rights.......................... 33
ARTICLE 14 ASSIGNMENT AND SUBLETTING................................ 33
14.1 By Tenant................................................. 33
14.2 By Landlord............................................... 36
ARTICLE 15 GENERAL PROVISIONS....................................... 36
15.1 Landlord's Right to Enter................................. 36
15.2 Surrender of the Premises................................. 37
15.3 Holding Over.............................................. 37
15.4 Subordination............................................. 37
15.6 Mortgagee Protection...................................... 38
15.7 Estoppel Certificates and Financial Statements............ 38
15.8 Force Majeure............................................. 39
15.9 Notices................................................... 39
15.10 Obligation to Act Reasonably.............................. 39
15.11 Corporate Authority....................................... 39
15.12 Additional Definitions.................................... 39
15.13 Miscellaneous............................................. 40
15.14 Termination by Exercise of Right.......................... 41
15.15 Brokerage Commissions..................................... 41
15.16 Entire Agreement.......................................... 41
15.17 Old Lease; Assumption..................................... 41
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