California-Sunnyvale-945 Stewart Drive Sublease - Applied Materials Inc. and Vitria Technology Inc.
SUBLEASE
OAKMEAD WEST BUILDINGS PROJECT
BUILDING C
945 STEWART DRIVE
Between
APPLIED MATERIALS, INC.
(Sublandlord)
And
VITRIA TECHNOLOGY, INC.
(Subtenant)
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Table Of Contents
Page
1. Sublease Agreement........................................ 3
2. Rent...................................................... 4
3. Construction Of Interior Improvements And Possession...... 8
4. Services And Utilities.................................... 9
5. Alterations............................................... 9
6. Use Of Premises........................................... 12
7. Governmental Requirements And Building Rules.............. 14
8. Repair And Maintenance.................................... 14
9. Waiver Of Claims; Indemnification; Insurance.............. 15
10. Fire And Other Casualty................................... 18
11. Eminent Domain............................................ 19
12. Rights Reserved To Landlord And Sublandlord............... 19
13. Subtenant's Default....................................... 21
14. Sublandlord Remedies...................................... 21
15. Surrender................................................. 23
16. Holdover.................................................. 24
17. Subordination To Ground Leases And Mortgages.............. 24
18. Assignment And Sublease................................... 25
19. Conveyance By Sublandlord Or Landlord..................... 27
20. Estoppel Certificate...................................... 27
21. Financial Statements...................................... 27
22. Lease Deposit............................................. 28
23. Force Majeure............................................. 28
24. Notices................................................... 28
25. Quiet Possession.......................................... 29
26. Real Estate Broker........................................ 29
27. Miscellaneous............................................. 30
28. Unrelated Business Income................................. 32
29. Hazardous Substances...................................... 32
30. Exculpation............................................... 34
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Table Of Contents
(Continued)
Page
31. Sublandlord Obligations................................... 34
32. Sublandlord's Representations And Warranties.............. 34
33. Subtenant Cure Right...................................... 35
34. Landlord Consent.......................................... 35
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SUBLEASE
This Sublease (the "Sublease") is made as of April 6th, 1999 (dated for
reference purposes only and referred to herein as the "Effective Date") between
Applied Materials, Inc., a Delaware corporation (the "Sublandlord") and Vitria
Technology, Inc., a California corporation ("Subtenant"). The term "Project"
means the seven (7) buildings ("Buildings") and other improvements commonly
known as the "Oakmead West" located on the land (the "Land") in Sunnyvale,
California, as more particularly described on EXHIBIT A. "Premises" or
"Building" means the building designated 945 Stewart Drive or Building C.
Sublandlord is lessee of the Project pursuant to the Lease dated September
9, 1997 ("Master Lease") between Sublandlord as Tenant and CarrAmerica Realty
Corporation as Landlord.
The following schedule (the "Schedule") is an integral part of this
Sublease. Terms defined in this Schedule shall have the same meaning throughout
the Sublease.
Schedule
1. Subtenant: Vitria Technology, Inc.
2. Premises: Building C (the "Building"), 945 Stewart Drive, Sunnyvale,
California, as described in EXHIBIT A attached hereto.
3. Rentable Square Footage of the Premises: 63,781 sq. ft.
4. Subtenant's Proportionate Share: 100% for Operating Costs and Taxes
allocated to the Building and 14.97% for Operating Costs and Taxes charged to
the Project but not allocated to specific Buildings by Landlord.
5. Lease Deposit: $83,135.10 due upon execution of this Sublease,
representing advance payment of the first month's rent ("Advance Rent Deposit"),
plus a security deposit in cash in the amount of twice the last month's rent
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($283,773.10) ("Security Deposit").
6. Permitted Use: Office; storage and shipping of equipment and parts;
assembly (using parts manufactured elsewhere), repair and testing of machinery
and equipment; research, testing and demonstration laboratory; and ancillary
uses permitted under applicable laws.
7. Subtenant's Real Estate Broker for this Lease: CB Richard Ellis
8. Sublandlord's Real Estate Broker for this Lease: Wayne Mascia
Associates
9. Tenant Improvement Allowance: $1,594,525.00 Base Allowance plus an
Additional Allowance of up to $446,467.
10. Commencement Date: Approximately August 1, 1999; See Paragraph 1.A.
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11. Term: Commencing on the Commencement Date and expiring August 31, 2003
("Termination Date").
12. Guarantor: None
13. Base Rent:
Monthly/Square
Foot prior to Monthly
Months Amortization Base Rent
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1-6 $ 1.85 * ** $ 85,135.50* **
6-12 1.85** 129,130.35**
13-24 1.90** 132,319.40**
25-36 1.95** 135,508.45**
37-48 2.00** 138,697.50**
49 2.05** 141,886.55**
* Base Rent for months one (1) - six (6) is calculated upon 40,000
sq.ft. of the Premises.
** The total monthly Base Rent reflects $7.00 per square foot of the
Additional Allowance utilized for Tenant Improvements (amortized at
ten percent (10%) over 49 months). The portion of the monthly Base
Rent in the amount of $11,135.50 to amortize the Additional Allowance
is charged to the actual square footage of the Premises in months 1-6.
14. Master Lease: Lease dated September 9, 1997 between Applied Materials,
Inc. as Tenant and CarrAmerica Realty Corporation as Landlord
15. Landlord or Master Landlord: CarrAmerica Realty Corporation
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1. Sublease Agreement. On the terms stated in this Sublease, Sublandlord
subleases the Premises to Subtenant, and Subtenant leases the Premises from
Sublandlord, for the Term beginning on the Commencement Date and ending on the
Termination Date unless sooner terminated pursuant to this Sublease.
A. Commencement Date. The Commencement Date shall the date
established pursuant to this section, and the Sublease shall expire on the
Termination Date set forth in the Schedule. Subject to Section 1B below, the
Commencement Date shall be the earliest occurring of the following:
(i) The date of Substantial Completion of the Tenant
Improvements, as such term is defined in the Work Letter Agreement attached
hereto as EXHIBIT C ("Work Letter Agreement"); or
(ii) August 1, 1999.
B. Subtenant Delays. If the Commencement Date has not occurred on or
before August 1, 1999 due to Subtenant delays, the Commencement Date shall be
the date on which the Commencement Date would have occurred but for Subtenant
Delays. Subtenant agrees that if Sublandlord is unable to deliver possession of
the Premises to Subtenant by August 1, 1999 (the anticipated Commencement Date
of the Sublease term), this Sublease shall not be void or voidable, nor shall
Sublandlord be liable to Subtenant for any loss or damage resulting therefrom,
but in such event the obligation to pay Rent shall be suspended from the
anticipated Commencement Date until the actual Commencement Date except to the
extent such delay is due to the fault of Subtenant. Delays "due to the fault of
Subtenant" shall be as set forth in Paragraph 15 of the Work Letter Agreement
and shall also include interference with Sublandlord's work caused by Subtenant
or Subtenants employees or contractors. If the Commencement Date has not
occurred on or before November 1, 1999 ("First Termination Date"), Subtenant may
terminate this Sublease by written notice to Sublandlord on or before November
15, 1999; provided, however, that the First Termination Date shall be extended
by a period of time equal to any delays due to the fault of Subtenant or due to
causes beyond the reasonable control of Sublandlord ("force majeure") such as
rain, flooding, fire or other casualty, labor disputes, civil disturbance, war,
war-like operations, invasions, rebellion, hostilities, sabotage, governmental
regulations or control, inability to obtain materials, services or governmental
permits despite diligent efforts to do so, or acts of God. If the Commencement
Date has not occurred by February 1, 2000 ("Final Delivery Date"), through no
fault of the terminating party, either party may terminate this Sublease by
written notice to the other on or before February 15, 2000. If this Sublease is
terminated pursuant to either of the two (2) preceding sentences, Sublandlord
shall return the Advance Rent Deposit and the Security Deposit within ten (10)
business days.
C. Early Occupancy. During the period beginning thirty (30) days
prior to the anticipated Commencement Date (the "Early Occupancy Period"),
provided that Subtenant's occupancy does not interfere with or cause delays to
Sublandlord's construction obligations, Subtenant shall be permitted to enter
the Building upon reasonable notice to Sublandlord and its general contractor
for the sole purpose of installation of its benchwork, equipment calibration,
network cabling, telecommunications, furniture systems, and other installations
necessary for the conduct of Subtenant's business and use adjacent parking and
loading areas in connection
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therewith. Notwithstanding any other provision herein to the contrary,
Subtenant's occupancy of the Building during the Early Occupancy Period shall be
subject to all of the terms, covenants and conditions of this Sublease
(including Subtenant's obligations regarding indemnity and insurance), provided,
however, that Subtenant's obligation to pay Rent during the Early Occupancy
Period shall be waived. In any event, Subtenant shall be responsible for any
additional utility charges incurred by Landlord or Sublandlord which is caused
by Subtenant's use of the Building during the Early Occupancy Period.
2. Rent.
A. Types of Rent. Subtenant shall pay the following Rent in the form
of a check (or via wire transfer) to Sublandlord pursuant to instructions to be
given by Sublandlord to Subtenant prior to the Commencement Date.
(1) Base Rent in monthly installments in advance, the first
monthly installment due on or prior to the first day of the second (2nd) month
following the Commencement Date (the Advance Rent Deposit shall be applied
against the first month's Base Rent), and thereafter on or before the first day
of each month of the Term in the amount set forth on the Schedule, as adjusted.
(2) Operating Costs Share Rent in an amount equal to (a)
$4,800.00 annual management fee charged by Sublandlord, plus (b) Subtenant's
Proportionate Share of the Landlord Operating Costs for the applicable fiscal
year of the Sublease, charged to Sublandlord by Landlord ("Landlord Operating
Costs"). Operating Costs Share Rent shall be due monthly in advance in an
estimated amount commencing with the Commencement Date, and thereafter on or
before the first day of each month of the Term. Definitions of Landlord's
Operating Costs and Subtenant's Proportionate Share, and the method for billing
and payment of Operating Costs Share Rent are set forth in Sections 2B, 2C and
2D.
(3) Tax Share Rent in an amount equal to Taxes for the
applicable fiscal year of this Sublease allocated to the Premises, paid semi-
annually as set forth in Section 2B(1) below. A definition of Taxes and the
method for billing and payment of Tax Share Rent are set forth in Sections 2B,
2C and 2D.
(4) Additional Rent in the amount of all costs, expenses,
liabilities, and amounts which Subtenant is required to pay under this Sublease,
excluding Base Rent, Operating Costs Share Rent, and Tax Share Rent, but
including any interest for late payment of any item of Rent.
(5) Rent as used in this Sublease means Base Rent, Operating
Costs Share Rent, Tax Share Rent, and Additional Rent. Subtenant's agreement to
pay Rent is an independent covenant, with no right of setoff, deduction or
counterclaim of any kind.
B. Payment of Operating Costs Share Rent and Tax Share Rent.
(1) Payment of Estimated Operating Costs Share Rent and Tax
Share Rent. Pursuant to the Master Lease, Landlord shall estimate the Landlord
Operating Costs and Taxes (defined in Section 2A(2) by reference to the term
"Operating Costs" defined in
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the Master Lease, which definition shall be used hereinafter) by April 1 of each
fiscal year, or as soon as reasonably possible thereafter. Landlord may revise
these estimates whenever it obtains more accurate information, such as an
increase in utility or maintenance costs for the Project common areas; provided
in no event shall the estimate be revised more than once in any calendar year.
Sublandlord shall deliver such estimates to Subtenant promptly upon receipt from
Landlord. Within ten (10) days after receiving the original or revised estimate
from Sublandlord, Subtenant shall pay Sublandlord one-twelfth (1/12th) of
Subtenant's Proportionate Share of this estimate, multiplied by the number of
months that have elapsed in the applicable fiscal year to the date of such
payment including the current month, minus payments previously made by Subtenant
for the months elapsed. On the first day of each month thereafter, Subtenant
shall pay Sublandlord one-twelfth (1/12th) of Subtenant's Proportionate Share of
this estimate, until a new estimate becomes applicable. Notwithstanding the
foregoing, Landlord's estimate excludes the portion of the Taxes payable semi-
annually to the County of Santa Clara pursuant to property tax bills for the
Project (the "Property Tax Bills"). With respect to Taxes payable in connection
with Property Tax Bills, Sublandlord shall deliver copies of such bills to
Subtenant at least thirty (30) days prior to the Delinquency Date set forth
therein, and Subtenant shall pay to Sublandlord, at least fifteen (15) days
prior to the Delinquency Date, Subtenant's Proportionate Share of the amount
payable thereunder. Any interest or penalties payable by Sublandlord as a result
of Subtenant's failure to timely pay such Taxes to Sublandlord shall be deemed
Additional Rent payable by Subtenant hereunder.
(2) Correction of Operating Costs Share Rent. Sublandlord shall
deliver to Subtenant a report for the previous fiscal year (the "Operating Costs
Report") promptly after receipt from Landlord, which pursuant to the Master
Lease shall be April 1 of each year, or as soon as reasonably possible
thereafter, setting forth (a) the actual Operating Costs incurred and charged to
Sublandlord, (b) the amount of Operating Costs Share Rent due from Subtenant,
and (c) the amount of Operating Costs Share Rent paid by Subtenant. Within
thirty (30) days after such delivery, Subtenant shall pay to Sublandlord the
amount due minus the amount paid. If the amount paid exceeds the amount due
(including credit for any refunds from Landlord to Sublandlord as correction of
Operating Costs Share Rent), Sublandlord shall apply the excess to Subtenant's
payments of Operating Costs Share Rent next coming due.
(3) Correction of Tax Share Rent. Sublandlord shall deliver to
Subtenant a report for the previous fiscal year (the "Tax Report") by April 1 of
each year, or as soon as reasonably possible thereafter, setting forth (a) the
actual Taxes, (b) the amount of Tax Share Rent due from Subtenant, and (c) the
amount of Tax Share Rent paid by Subtenant. Within thirty (30) days after such
delivery, Subtenant shall pay to Sublandlord the amount due from Subtenant minus
the amount paid by Subtenant. If the amount paid exceeds the amount due,
Sublandlord shall apply any excess as a credit against Subtenant's payments of
Tax Share Rent next coming due.
C. Definitions.
(1) Included Operating Costs. "Landlord Operating Costs" means
all Operating Costs as defined in the Master Lease.
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(2) Taxes. "Taxes" means any and all taxes, assessments and
charges of any kind, general or special, ordinary or extraordinary, levied
against the Project, which Landlord or Sublandlord shall pay or become obligated
to pay in connection with the ownership, leasing, renting, management, use,
occupancy, control or operation of the Project or of the personal property,
fixtures, machinery, equipment, systems and apparatus used in connection
therewith. Taxes shall include real estate taxes, personal property taxes, sewer
rents, water rents, special or general assessments, transit taxes, ad valorem
taxes, and any tax levied on the rents hereunder or the interest of Landlord or
Sublandlord under this Sublease (the "Rent Tax"). Taxes shall also include all
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fees and other costs and expenses paid by Landlord in seeking a refund or
reduction of any Taxes, whether or not the Landlord is ultimately successful;
provided that the amount paid by Landlord in any calendar year shall not exceed
the greater of (i) $5,000, or (ii) thirty five percent (35%) of the annual
savings achieved during that taxable year as a result of such refund or
reassessment. Taxes shall also include any assessments or fees paid to any
business park owners association, or similar entity, which are imposed against
the Project pursuant to any Covenants, Conditions and Restrictions ("CC&R's")
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recorded against the Land and any installments of principal and interest
required to pay annual debt service for any existing or future general or
special assessments for public improvements, services or benefits, and any
increases resulting from reassessments imposed in connection with any change in
ownership or new construction.
For any year, the amount to be included in Taxes (a) from taxes or
assessments payable in installments, shall be the amount of the installments
(with any interest) due and payable during such year, and (b) from all other
Taxes, shall at Landlord's election be the amount accrued, assessed, or
otherwise imposed for such year or the amount due and payable in such year. Any
refund or other adjustment to any Taxes by the taxing authority shall apply
during the year in which the adjustment is made. Taxes shall not include any
net income (except Rent Tax), capital, stock, succession, transfer, franchise,
gift, estate or inheritance tax, except to the extent that such tax shall be
imposed in lieu of any portion of Taxes.
(4) Lease Year. "Lease Year" means each consecutive twelve-month
period beginning with the Commencement Date, prorated for partial years.
(5) Fiscal Year. "Fiscal Year" means the calendar year, except
that the first fiscal year and the last fiscal year of the Term may be a partial
calendar year.
(6) "Project Common Areas" means the areas and facilities within
the Project, exclusive of the Buildings and their interiors, provided and
designated by Landlord for the general use of the tenants of the Project,
including plazas, benches, landscape areas, parking areas, sidewalks, service
areas, and trash disposal facilities, subject to the reasonable rules and
regulations promulgated from time to time by Landlord.
D. Computation of Base Rent and Rent Adjustments.
(1) Prorations. If this Sublease begins on a day other than the
first day of a month, the Base Rent, Operating Costs Share Rent and Tax Share
Rent shall be prorated for such partial month based on the actual number of days
in such month. If this Sublease begins
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on a day other than the first day, or ends on a day other than the last day, of
the fiscal year, Operating Costs Share Rent and Tax Share Rent shall be prorated
for the applicable fiscal year.
(2) Default Interest. Any sum due from Subtenant to Sublandlord
or Landlord not paid when due shall bear interest from the date due until paid
at a rate ("Interest Rate") equal to the lesser of twelve percent (12%) per
annum or the maximum rate permitted by law.
(3) Rent Adjustments. The square footage of the Building set
forth in the Schedule is conclusively deemed to be the actual square footage
thereof, without regard to any subsequent remeasurement of the Building. If any
Operating Costs paid in one fiscal year relates to more than one fiscal year,
Landlord may proportionately allocate such Operating Costs among the related
fiscal years.
(4) Books and Records. Pursuant to the Master Lease, Landlord
shall maintain books and records reflecting the Operating Costs and Taxes in
accordance with sound accounting and management practices. Sublandlord shall
maintain books and records reflecting the Landlord Operating Costs and Taxes
charged to and paid by Sublandlord. Subtenant and its certified public
accountant shall have the right to inspect Sublandlord's books and records
regarding such matters at Sublandlord's offices in Santa Clara, California
during the ninety (90) days following the delivery of the Operating Costs
Report. If Sublandlord makes such inspection of Landlord's books and records at
Subtenant's request, Subtenant shall reimburse Sublandlord for its out-of-pocket
costs in connection therewith within thirty (30) days after invoice therefor.
Sublandlord may, at its sole discretion, and upon reasonable request from
Subtenant shall, exercise any right Sublandlord may have to inspect Landlord's
books and records under the Master Lease. Subtenant shall use good faith,
reasonable efforts and due diligence to keep confidential the results of any
such inspection of which Subtenant is informed. Unless Subtenant sends to
Sublandlord any written exception to either such report within thirty (30) days
prior to expiration of said ninety (90) day period, such report shall be deemed
final and accepted by Subtenant. Subtenant shall pay the amount shown on both
reports in the manner prescribed in this Sublease, whether or not Subtenant
takes any such written exception, without any prejudice to such exception. If
Subtenant makes a timely exception, Sublandlord, on behalf of Subtenant, shall
exercise its right, with Landlord, to choose an independent certified public
accountant or another firm with at least five (5) years of experience in
auditing the books and records of commercial office projects to issue a final
and conclusive resolution of Subtenant's exception. Subtenant shall pay the cost
of such certification unless Landlord is required to pay such cost pursuant to
the Master Lease.
(5) Miscellaneous. So long as Subtenant is in default of any
obligation under this Sublease, Subtenant shall not be entitled to any refund of
any amount from Sublandlord or Landlord. If this Sublease is terminated for any
reason prior to the annual determination of Operating Costs Share Rent or Tax
Share Rent, either party shall pay the full amount due to the other within
fifteen (15) days after Sublandlord's notice to Subtenant of the amount when it
is determined (including credit for any refunds from Landlord to Sublandlord as
correction of Operating Costs Share Rent). Sublandlord may commingle any
payments made with respect to Operating Costs Share Rent or Tax Share Rent,
without payment of interest. Any costs charged to Sublandlord pursuant to
Section 8A of the Master Lease due to the negligence,
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willful misconduct or breach of the Master Lease by Sublandlord or for damage
caused in the performance of any work by Sublandlord, shall not be included in
Operating Costs charged to Subtenant.
3. Construction Of Interior Improvements And Possession.
A. Building Shell. As of the date hereof, Subtenant has received and
approved final drawings, plans and specifications (the "Shell Final Plans") for
the Building and the improvements described in 3.A.(1) below (the "Shell Upgrade
Plans").
(1) The "Building Shell" shall mean the Building structure,
exterior walls, glass, floor slab, utilities (phone, gas, electric, plumbing,
fire, and water) to the Building, and roof, and shall include the parking lot,
landscaping and the base for the street monument sign. Landlord is responsible
for bringing phone, electrical, gas and plumbing service to the Building (i.e.,
stubbed but not distributed) and for installing the main fire sprinkler trunks
(i.e., installed but not distributed or "dropped"). The Building Shell does not
include any elevators, stairs, HVAC, roof screens or thermal insulation.
Notwithstanding the foregoing, Landlord has installed all elevators, and
Sublandlord has installed the improvements listed on EXHIBIT E (the "Shell
Upgrades").
(2) Sublandlord represents that:
i. The Building Shell (including the related landscaping
and hard scape), elevator, and the Shell Upgrades have been constructed in
accordance the Shell Final Plans and Shell Upgrade Plans delivered to and
approved by Subtenant.
ii. The Building Shell and elevator and Shell Upgrades have
been designed and constructed in accordance with applicable Building codes and
laws, including the Americans With Disabilities Act ("ADA") as interpreted by
the applicable governmental authority which issues the building permit.
iii. The Building Shell and elevator and Shell Upgrades have
been constructed in a good and workmanlike manner, and of materials in
accordance with specifications delivered to and approved by Subtenant.
iv. To the best of Sublandlord's actual knowledge, the
Building and its in-place operating systems are in good working order and
condition.
Notwithstanding anything to the contrary herein, Sublandlord's warranties
in (i) through (iii) herein with respect to the Building Shell and elevator are
not warranties independent from Landlord's warranties under the Master Lease,
and Sublandlord's sole obligation under this section, and Subtenant's sole
remedy for breach of such warranties, shall be that Sublandlord shall diligently
pursue its remedies against Landlord for breach of its warranties under the
Master Lease and shall provide to Subtenant any benefit of recovery from
Landlord. Sublandlord shall cooperate with Subtenant in enforcing for
Subtenant's benefit any warranties available to Sublandlord covering the Tenant
Improvements, Building Shell, elevators, and Shell Upgrades.
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B. Construction of Interior Improvements. Except for Sublandlord's
obligation to install the Tenant Improvements in accordance with the Work Letter
Agreement, Sublandlord is leasing the Premises to Subtenant "as is" and subject
to the warranties set forth in Section 3A(2) above, without any obligation to
alter, remodel, improve, or decorate any part of the Premises or Project.
Sublandlord shall cause the Tenant Improvements to be completed in accordance
with the terms, conditions and limitations set forth in the Work Letter
Agreement. The Tenant Improvement Allowance shall be in the amount stated in
the Schedule, subject to all terms and conditions of the Work Letter Agreement.
C. Subtenant's Possession/Condition of Premises and Project.
Sublandlord shall deliver the Premises on the Commencement Date broom-clean and
free of debris or construction materials. Subtenant's taking possession of any
portion of the Premises shall be conclusive evidence that the Premises were in
good order, repair and condition, subject only to those "punch list items" noted
in writing to Sublandlord within the thirty (30) day period immediately
following the date on which Subtenant takes possession of such portion of the
Premises.
4. Services And Utilities. As of the Commencement Date (and, if
applicable, during the Early Occupancy Period), Subtenant 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 and services furnished
directly to or used by Subtenant on or about the Premises during the Term,
including without limitation, (i) meter, use and/or connection fees, hook-up
fees, or standby fees (excluding any connection fees or hook-up fees which
relate to making the existing electrical, gas, and water service available to
the Premises as of the Commencement Date), and (ii) penalties for discontinued
interrupted service. If any utility service is not separately metered to the
Premises, then Subtenant shall pay Subtenant's proportionate share of the cost
of such utility service with all others served by the service not separately
metered. However, if Sublandlord or Landlord reasonably determine that
Subtenant is using a disproportionate amount of any utility service not
separately metered, then Landlord or Sublandlord at its election may (i)
periodically charge Subtenant, as Additional Rent, a sum equal to Landlord's or
Sublandlord's reasonable estimate of the cost of Subtenant's excess use of such
utility service, or (ii) install, at Subtenant's expense, a separate meter to
measure the utility service supplied to the Premises. Any interruption or
cessation of utilities resulting from any causes, including any entry for
repairs pursuant to this Sublease, and any renovation, redecoration or
rehabilitation of any area of the Project shall not render Sublandlord or
Landlord liable for damages to either person or property or for interruption or
loss to Subtenant's business, nor be construed as an eviction of Subtenant, nor
work an abatement of any portion of Rent, nor relieve Subtenant from fulfillment
of any covenant or agreement hereof; provided, however, in the event that an
interruption of the Project services causes the Premises to be untenantable for
a period of at least ten (10) consecutive business days, monthly Rent shall be
abated proportionately.
5. Alterations.
A. Landlord's Consent and Conditions. Subtenant shall not make any
improvements or alterations to the Premises (the "Work") without in each
instance submitting plans and specifications for the Work to Landlord and
Sublandlord and obtaining Landlord's and Sublandlord's prior written consent,
which shall not be unreasonably withheld, unless (a) the
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cost thereof is less than $50,000 per occurrence, (b) such Work does not impact
the base structural components or systems of the Building, (c) such Work will
not impact any other tenant's premises, and (d) such Work is not visible from
outside the Building. Provided that Sublandlord receives all necessary
information and plans from Subtenant, Sublandlord agrees to respond to
Subtenant's request for Sublandlord's prior written consent to such alterations
within seven (7) business days in the case of Work costing between $50,000 and
$100,000, and within ten (10) business days for Work costing over $100,000. For
purposes of the $50,000 and $100,000 thresholds, Subtenant may exclude costs
associated with performing alterations which are solely cosmetic in nature, such
as recarpeting and repainting the Premises. However, even if Sublandlord's or
Landlord's prior written consent is not required, Subtenant shall provide
Sublandlord and Landlord with prior written notice at least seven (7) days in
advance of commencing the Work so that Sublandlord and Landlord may post and
record a notice of nonresponsibility or other notices deemed appropriate before
the commencement of such Work. Subtenant shall pay Landlord's and Sublandlord's
actual out-of-pocket costs incurred for reviewing of all of the plans and all
other items submitted by Subtenant. Landlord and/or Sublandlord will be deemed
to be acting reasonably in withholding its consent for any Work which (a)
impacts the base structural components or systems of the Building, and (b)
impacts any other tenant's premises.
Subtenant shall pay for the cost of all Work, including the cost of any and
all approvals, permits, fees and other charges which may be required as a
condition of performing such Work. Upon completion all Work shall become the
property of Landlord, except for Subtenant's trade fixtures and for items which
Landlord requires Subtenant to remove at Subtenant's cost at the termination of
the Sublease pursuant to Section 5E.
The following requirements shall apply to all Work:
(1) Prior to commencement, Subtenant shall furnish to Sublandlord and
Landlord building permits, certificates of insurance satisfactory to Landlord
and Sublandlord, and, at Landlord's and Sublandlord's reasonable request,
security for payment of all costs.
(2) Subtenant shall perform all Work so as to maintain peace and
harmony among other contractors serving the Project and shall avoid interference
with other work to be performed or services to be rendered in the Project.
(3) The Work shall be performed in a good and workmanlike manner,
meeting the standard for construction and quality of materials in the Building,
and shall comply with all insurance requirements and all applicable governmental
laws, ordinances and regulations ("Governmental Requirements").
(4) Subtenant shall perform all Work so as to minimize or prevent
disruption to other tenants of the Project, and Subtenant shall comply with all
reasonable requests of Landlord or Sublandlord in response to complaints from
other tenants.
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(5) Subtenant shall perform all Work in compliance with any
"Policies, Rules and Procedures for Construction Projects" which may be in
effect at the time the Work is performed.
(6) Subtenant shall permit Landlord and Sublandlord to observe
all Work.
(7) Upon completion, Subtenant shall furnish Landlord and
Sublandlord with contractor's affidavits and full and final statutory waivers of
liens covering all labor and materials, as-built plans and specifications, and
all other close-out documentation related to the Work, including any other
information required under any "Policies, Rules and Procedures for Construction
Projects" which may be in effect at such time.
B. Damage to Systems. If any part of the mechanical, electrical or
other systems in the Premises (e.g., HVAC, life safety or automatic fire
extinguisher/sprinkler system) shall be damaged during the performance of the
Work, Subtenant shall promptly notify Sublandlord, and Sublandlord, or Landlord
at its election, shall repair such damage at Subtenant's expense. Landlord may
also at any reasonable time make any repairs or alterations which Landlord deems
necessary for the safety or protection of the Project, or which Landlord is
required to make by any court or pursuant to any Governmental Requirement. The
cost of any repairs made by Landlord or Sublandlord on account of Subtenant's
default, or on account of the mis-use or neglect by Subtenant or its invitees,
contractors or agents anywhere in the Project, shall become Additional Rent
payable by Subtenant on demand.
C. No Liens. Subtenant has no authority to cause or permit any lien
or encumbrance of any kind to affect Landlord's or Sublandlord's interests in
the Building or the Project; any such lien or encumbrance shall attach to
Subtenant's interest only. If any mechanic's lien shall be filed or claim of
lien made for work or materials furnished to Subtenant, then Subtenant shall at
its expense within ten (10) days thereafter either discharge or contest the lien
or claim. If Subtenant contests the lien or claim, then Subtenant shall (i)
within such ten (10) day period, provide Landlord or Sublandlord adequate
security for the lien or claim, (ii) contest the lien or claim in good faith by
appropriate proceedings that operate to stay its enforcement, and (iii) pay
promptly any final adverse judgment entered in any such proceeding. If
Subtenant does not comply with these requirements, Landlord or Sublandlord may
discharge the lien or claim, and the amount paid, as well as attorney's fees and
other expenses incurred by Landlord or Sublandlord, as the case may be, shall
become Additional Rent payable by Subtenant on demand.
D. Ownership of Improvements. All Work as defined in this Section 5,
Building hardware, equipment and machinery serving the Premises, and all other
improvements and all fixtures except trade fixtures, constructed in the Premises
by either Landlord, Sublandlord or Subtenant, (i) shall become Landlord's
property upon installation without compensation to Subtenant, unless Landlord
consents otherwise in writing, and (ii) shall at Landlord's option (which shall
be stated at the time Landlord and Sublandlord consent to such Work) either (a)
be surrendered to Landlord with the Premises at the termination of the Sublease
or of Subtenant's right to possession, or (b) be removed in accordance with
Subsection 5E below (unless Landlord and Sublandlord at the time each gives its
consent to the performance of such construction
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expressly waives in writing the right to require such removal). Notwithstanding
the foregoing, all Tenant Improvements installed by Sublandlord and financed in
whole or in part by Landlord or Sublandlord from the Improvement Allowance
described in the Schedule shall be the property of Landlord, Sublandlord, and
Subtenant during the term of this Sublease in the proportions that each has
financed the cost thereof, and shall become the property of Landlord upon
expiration of this Sublease. In the event that this Sublease is terminated prior
to the scheduled expiration date due to a default by Subtenant, Sublandlord
shall have the right to remove all Work, other than the Tenant Improvements to
be constructed in accordance with the Work Letter Agreement ("Initial Tenant
Improvements") at Subtenant's expense.
E. Removal Upon Termination. Upon the termination of this Sublease
or Subtenant's right of possession, Subtenant shall remove from the Premises its
trade fixtures, furniture, moveable equipment and other personal property, any
improvements which Landlord or Sublandlord elects shall be removed by Subtenant
pursuant to Section 5D, and any improvements to any portion of the Project other
than the Premises made by or on behalf of Subtenant. If Subtenant does not
timely remove such property, then Subtenant shall be conclusively presumed to
have, at Sublandlord's election (i) conveyed such property to Sublandlord
without compensation or (ii) abandoned such property, and Sublandlord may
dispose of or store any part thereof in any manner at Subtenant's sole cost,
without waiving Sublandlord's right to claim from Subtenant all expenses arising
out of Subtenant's failure to remove the property, and without liability to
Subtenant or any other person. Neither Landlord nor Sublandlord shall have any
duty to be a bailee of any such personal property. If Sublandlord elects
abandonment, Subtenant shall pay to Sublandlord, upon demand, any expenses
incurred for disposition. Notwithstanding the foregoing, Subtenant shall have no
obligation to remove the Initial Tenant Improvements.
6. Use Of Premises .
A. Limitation on Use. Subtenant shall use the Premises only for the
Permitted Use stated in the Schedule. Subtenant shall not allow any use of the
Premises which will negatively affect the cost of coverage of Landlord's or
Sublandlord's insurance on the Project, unless Subtenant pays any additional
premiums as a result of such use. Subtenant shall not allow any inflammable or
explosive liquids or materials to be kept on the Premises, other than those
materials reasonably required for Subtenant's Permitted Use under this Lease;
provided that such materials are handled in strict accordance with all
applicable governmental requirements. Subtenant shall not allow any use of the
Premises which would cause the value or utility of any part of the Premises to
diminish or would interfere with any other tenant or with the operation of the
Project by Landlord or Sublandlord. Subtenant shall not permit any nuisance or
waste upon the Premises, or allow any offensive noise or odor in or around the
Premises. At the end of each business day, or more frequently if necessary,
Subtenant shall deposit all garbage and other trash (excluding any inflammable,
explosive and/or hazardous materials) in trash bins or containers approved by
Landlord in locations designated by Landlord from time to time. If any
governmental authority shall deem the Premises to be a "place of public
accommodation" under the Americans with Disabilities Act or any other comparable
law as a result of Subtenant's peculiar use, Subtenant shall either modify its
use to cause such authority to rescind its designation or be responsible for any
alterations, structural or otherwise, required to be made to the Building under
such laws.
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B. Signs. Subtenant shall not place on any portion of the Premises
any sign, placard, lettering, banner, displays or other advertising or
communicative material which is visible from the exterior of the Building
without the prior written approval of Landlord or Sublandlord. Sublandlord
hereby agrees that so long as Subtenant leases one-hundred percent (100%) of the
leasable space in the Building that Subtenant shall have the right (i) to place
its standard name and logo sign on a Landlord-installed street monument base (as
described in the Shell Final Plans) in front of the Building and, subject to
Landlord's and Sublandlord's reasonable approval, (ii) to place its name and
divisional occupant in an appropriate location on the Building. Any approved
signs shall strictly conform to all Governmental Requirements, any CC&R's
recorded against the Project, and any sign criteria which may be established by
Landlord and in effect at the time, and shall be installed (and removed upon the
Termination Date) at Subtenant's expense. Subtenant, at its sole cost and
expense, shall maintain such signs in good condition and repair, including the
repair of any damage caused to the Building and/or Project upon the removal of
such signs).
C. Parking. Subtenant shall have the non-exclusive use of two
hundred fifty-five (255) parking spaces in the Project's parking facilities upon
terms and conditions as may from time to time be established by Landlord.
Subtenant agrees not to overburden the parking facilities (i.e., use more than
its pro rata share of the unallocated parking stalls available) and agrees to
cooperate with Landlord and other tenants in the Project in the use of the
parking facilities. Under the Master Lease, Landlord has reserved the right in
its discretion to determine whether the parking facilities are becoming crowded
and to allocate and assign parking spaces among Subtenant and the other tenants
in the Project. Neither Landlord nor Sublandlord shall be liable to Subtenant,
nor shall this Sublease be affected, if any parking is impaired by moratorium,
initiative, referendum, law, ordinance, regulation or order passed, issued or
made by any governmental or quasi-governmental body.
D. Prohibition Against Use of Roof and Structure of Building.
Subtenant shall be prohibited from using any all or any portion of the roof of
the Building or any portion of the structure of the Building during the Term of
this Sublease for any purposes (including without limitation for the
installation, maintenance and repair of a satellite dish and/or other
telecommunications equipment), without the prior written consent of Landlord and
Sublandlord, which consent Landlord and Sublandlord may withhold in their
reasonable discretion. Notwithstanding the foregoing, Subtenant shall have the
right to penetrate the roof, subject to all of the requirements for Work as set
forth in Section 5A (e.g., submission of plans for Landlord's and Sublandlord's
prior written consent), and to install antennae or satellite dishes for
communication purposes, subject to Landlord's and Sublandlord's reasonable
consent and Subtenant's compliance with all applicable Governmental Requirements
and any reasonable installation and screening requirements imposed by Landlord
or Sublandlord. Subtenant shall be solely responsible for repairing any damage
to the roof and or Building caused by Subtenant's installation, operation or
removal of such communications equipment. Upon the termination of this Sublease
for any reason, Subtenant, at its sole cost and expense, shall remove the
communications equipment from the Building and repair any damage cause to the
roof or Building during such removal.
E. Outside Area. Subject to Landlord's approval of location and
design and ancillary Work requirements, Subtenant may install outside tables and
chairs, the materials and
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design of which are consistent with design and materials of the Project, outside
the Building on the side opposite the main entrance on Stewart Drive; this
installation may involve rearrangement of landscaping, hardscape, and parking.
7. Governmental Requirements And Building Rules. Subtenant shall comply
with all Governmental Requirements applying to its use of the Premises.
Subtenant shall also comply with all reasonable rules for the Project which may
be established and amended from time to time by Landlord or Sublandlord. The
present rules and regulations promulgated by Landlord are contained in EXHIBIT
B. Failure by another tenant to comply with the rules or failure by Landlord or
Sublandlord to enforce them shall not relieve Subtenant of its obligation to
comply with the rules or make Landlord or Sublandlord responsible to Subtenant
in any way. Sublandlord shall use reasonable efforts to cause Landlord to apply
the rules and regulations uniformly with respect to Subtenant and tenants in the
Project. In the event of alterations and repairs performed by Subtenant,
Subtenant shall comply with the provisions of Section 5 of this Sublease and any
applicable "Policies, Rules and Regulations for Construction Projects" which may
be established by Landlord and in effect at the time.
8. Repair And Maintenance.
A. Landlord's Obligations. Pursuant to the terms of the Master
Lease, Landlord is obligated to keep in good order, condition and repair (i) the
structural parts of the Building, which structural parts include only the
foundation and subflooring of the Building and the structural condition of the
roof (including the roof membrane), and the exterior walls of the Building (but
excluding the interior surfaces of exterior walls and exterior and interior of
all windows, doors, ceiling and plateglass which shall be maintained and
repaired by Subtenant), (ii) the Building elevator, and (iii) the Project Common
Areas, including all utilities and related utility lines and pipes outside of
the Building ("Landlord's Maintenance Obligations"), and the costs incurred by
Landlord to perform the foregoing obligations with respect to the Building to
the extent they are deemed "Operating Costs" (as defined in Section 2C) shall be
passed through to Subtenant, except that any damage to any of the foregoing
caused by the negligence or willful acts or omissions of Subtenant or of
Subtenant's agents, employees or invitees, or by reason of the failure of
Subtenant to perform or comply with any terms of this Sublease, or caused by
Subtenant or Subtenant's agents, employees or contractors during the performance
of any work may be repaired by Sublandlord, solely at Subtenant's expense, or at
Sublandlord's election, such repairs shall be made by Subtenant, at Subtenant's
expense, with contractors approved by Landlord and Sublandlord. As between
Sublandlord and Subtenant, Sublandlord shall be responsible for performance of
Landlord's Maintenance Obligations if Landlord fails to do so and shall be
entitled to charge Subtenant the cost of such work to the same extent as
Landlord under the Master Lease and on the terms and conditions of this
Sublease. At Sublandlord's election, except in case of roof repairs, which shall
be commenced within five (5) days after notice to Sublandlord, or emergency
repairs which shall be commenced immediately, Sublandlord may first demand in
writing that Landlord perform any work required to be done by Landlord with
respect to Landlord's Maintenance Obligations, and use reasonable efforts to
obtain Landlord performance. Subtenant agrees to exercise reasonable efforts to
give Landlord and Sublandlord prompt notification of the need for any repairs or
maintenance; provided that such notification shall not affect Landlord's
obligation to perform periodic inspections of the Project during the Lease Term.
Subtenant waives the provisions of Sections 1941 and 1942 of
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the California Civil Code and any similar or successor law regarding Subtenant's
right to make repairs and deduct the expenses of such repairs from the Rent due
under this Sublease.
B. Subtenant's Obligations. Subtenant shall at all times and at its
own expense clean, keep and maintain in good order, condition and repair every
part of the Premises (including Subtenant's trade fixtures and personal
property) which is not within Landlord's Maintenance Obligation pursuant to
Section 8A. Subtenant's repair and maintenance obligations shall include,
without limitation, all plumbing and sewage facilities within the Premises,
fixtures, interior walls and ceiling, floors, windows (including repairing,
resealing, cleaning and replacing, as necessary, of exterior windows), doors,
entrances, plateglass, showcases, skylights, all electrical facilities and
equipment, including lighting fixtures, lamps, fans and any exhaust equipment
and systems, electrical motors and all other appliances and equipment of every
kind and nature located in, upon or about the Premises. Subtenant shall also be
responsible for all pest control within the Premises and for all trash removal
for the Premises. Subtenant shall obtain at its expense HVAC systems preventive
maintenance contracts with bimonthly or monthly service in accordance with
manufacturer recommendations, which shall be subject to the reasonable prior
written approval of Landlord, and which shall provide for and include
replacement of filters, oiling and lubricating of machinery, parts replacement,
adjustment of drive belts, oil changes and other preventive maintenance,
including annual maintenance of duct work, interior unit drains and caulking at
sheet metal, and recaulking of jacks and vents on an annual basis. Subtenant
shall have the benefit of all warranties available to Landlord or Sublandlord
regarding the equipment in such HVAC systems. Alternatively, Landlord may elect
to perform all repairs and maintenance itself, at Subtenant's expense, to the
Building's mechanical, electrical or other systems in the Premises (e.g., HVAC,
life safety and automatic fire extinguisher/sprinkler systems). Landlord or
Sublandlord may also perform any maintenance or repairs, at Subtenant's expense,
to the extent Subtenant fails to perform such maintenance or repairs, after
notice and opportunity to cure such failure, as required herein.
9. Waiver Of Claims; Indemnification; Insurance.
A. Waiver of Claims. To the extent permitted by law, Subtenant
waives any claims it may have against Sublandlord or their officers, directors,
employees or agents for business interruption or damage to property sustained by
Subtenant as the result of any act or omission of Sublandlord, its agents,
employees or invitees. To the extent permitted by law, Sublandlord waives any
claims it may have against Subtenant or its officers, directors, employees or
agents for loss of rents or damage to property sustained by Sublandlord as the
result of any act or omission of Subtenant, its agents, employees or invitees.
Notwithstanding anything to the contrary in this Sublease, except for
obligations arising under Section 9B below, Sublandlord and Subtenant hereby
release each other from any claims against the other for injury or death to
persons or damage to property occurring in, on or about the Premises or the
Project, and to the fixtures, personal property, improvements, and alterations
of either Sublandlord or Subtenant in or on the Premises or the Project that are
caused by or result from any risks coverable by insurance policies required by
this Sublease or that are actually covered by insurance carried by either party,
regardless of the negligence of the party causing the harm. Each party shall
notify the carrier of its insurance of the existence of this waiver and shall
cause each insurance policy obtained by it to provide that the carrier waives
all right of recovery by way of subrogation against the other party in
connection with any damage covered by any policy.
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B. Indemnification. Subtenant shall indemnify, defend and hold
harmless Sublandlord and Landlord and their officers, directors, employees and
agents against any claim by any third party for injury to any person or damage
to or loss of any property occurring in the Project and arising from the use of
the Premises or from any other act or omission or negligence of Subtenant, its
employees, agents or invitees, or Subtenant's breach of its obligations under
this Sublease, provided that Subtenant's obligations under this paragraph shall
not apply to a claim to the extent it is due to the negligence or intentional
misconduct of Landlord or Landlord's breach of its obligations under the Master
Lease or due to Sublandlord's negligence or willful misconduct or breach of this
Sublease. Subtenant's obligations under this section shall survive the
termination of this Sublease.
Sublandlord shall indemnify, defend and hold harmless Subtenant and its
officers, directors, employees and agents against any claim by any third party
for injury to any person or damage to or loss of any property occurring in the
Project caused by the negligence or intentional misconduct of Sublandlord or any
of Sublandlord's employees or agents, or Sublandlord's breach of its obligations
under this Sublease, provided that Sublandlord's obligation under this paragraph
shall not apply to a claim to the extent it is due to Subtenants's negligence or
willful misconduct or breach of this Sublease. Subtenant's obligations under
this section shall survive the termination of this Sublease.
C. Subtenant's Insurance. Subtenant shall maintain insurance as
follows, with such other terms, coverages and insurers, as Landlord or
Sublandlord shall reasonably require from time to time:
(1) Commercial general liability insurance, with (a) contractual
liability including the indemnification provisions contained in this Sublease,
(b) a severability of interest endorsement, (c) limits of not less than Two
Million Dollars ($2,000,000) combined single limit per occurrence and not less
than Two Million Dollars ($2,000,000) in the aggregate for bodily injury,
sickness or death, and property damage, and umbrella coverage of not less than
Five Million Dollars ($5,000,000).
(2) Property Insurance against "All Risks" of physical loss
covering the replacement cost of the Tenant Improvements and all other
improvements and fixtures installed by Subtenant and personal property.
Subtenant waives all rights of subrogation, and Subtenant's property insurance
shall include a waiver of subrogation in favor of Landlord and Sublandlord.
(3) Workers' compensation or similar insurance in form and
amounts required by law, and Employer's Liability with not less than the
following limits:
Each Accident $1,000,000
Disease--Policy Limit $1,000,000
Disease--Each Employee $1,000,000
Such insurance shall contain a waiver of subrogation provision in favor of
Landlord and Sublandlord and their agents.
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Subtenant's insurance shall be primary and not contributory to that carried
by Sublandlord, or Landlord, its agents, or mortgagee, if any. Sublandlord its
building manager or agent, Landlord, Landlord's building manager or agent,
mortgagee and ground lessor shall be named as additional insureds as respects to
insurance required of the Subtenant in Sections 9C(1) and 9C(2) (under Section
9C(2) with respect only to Tenant Improvements). The company or companies
writing any insurance which Subtenant is required to maintain under this
Sublease, as well as the form of such insurance, shall at all times be subject
to Landlord's written approval. Such insurance companies shall have a A.M.
Best rating of A VI or better.
(4) Subtenant shall cause any general contractor of Subtenant
performing Work on the Premises to maintain insurance as follows, with such
other terms, coverages and insurers, as Landlord shall reasonably require from
time to time:
a. Commercial General Liability Insurance,
including contractor's liability coverage, contractual liability coverage,
completed operations coverage, broad form property damage endorsement, and
contractor's protective liability coverage, to afford protection with limits,
for each occurrence, of not less than One Million Dollars ($1,000,000) with
respect to personal injury, death or property damage. Such policy or policies
shall also cover any Work which is performed by subcontractors hired by the
general contractor.
b. Workers' compensation or similar insurance in
form and amounts required by law, and Employer's Liability with not less than
the following limits:
Each Accident $ 1,000,000
Disease--Policy Limit $ 1,000,000
Disease--Each Employee $ 1,000,000
Such insurance shall contain a waiver of subrogation provision in favor of
Sublandlord, Landlord and their agents.
Subtenant's contractor's insurance shall be primary and not contributory to
that carried by Subtenant, Sublandlord, or Landlord, its agents or mortgagees.
Subtenant, Sublandlord and Landlord, and if any, Landlord's building manager or
agent, mortgagee or ground lessor shall be named as additional insured on
Subtenant's contractor's insurance policies.
D. Insurance Certificates. Subtenant shall deliver to Landlord and
Sublandlord certificates evidencing all insurance required to be maintained by
Subtenant by the earlier of (a) Subtenant's entry of the Building pursuant to
Section 1C, or (b) five (5) days prior to the Commencement Date, and thereafter
five (5) days prior to the renewal date for such policies thereafter. Each
certificate will provide for thirty (30) days prior written notice of
cancellation to Landlord, Sublandlord and Subtenant.
E. Landlord's Insurance. Pursuant to the Master Lease, Landlord
shall maintain "All-Risk" property insurance at full replacement cost, including
loss of rents for twelve (12) months (including taxes and insurance), on the
Building, and commercial general liability insurance policies of not less that
Five Million Dollars ($5,000,000.00) covering the
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common areas of the Project, each with such terms, coverages and conditions as
are normally carried by reasonably prudent owners of properties similar to the
Project, including coverage for personal injury, property damage and contractual
liability endorsement.
F. Waiver of Subrogation. With respect to property and worker's
compensation insurance, Sublandlord and Subtenant mutually waive all rights of
subrogation, and the respective "All-Risk" coverage property insurance policies
and worker's compensation carried by Sublandlord and Subtenant shall contain
enforceable waiver of subrogation endorsements.
10. Fire And Other Casualty.
A. Termination. If a fire or other casualty causes substantial
damage to the Building, pursuant to the terms of the Master Lease, Landlord
shall engage a registered architect to certify within one (1) month of the
casualty to both Landlord and Sublandlord the amount of time needed to restore
the Building to tenantability, using standard working methods without the
payment of overtime and other premiums. Sublandlord shall deliver a copy of
such notice to Subtenant upon receipt. If the time needed exceeds twelve (12)
months from the beginning of the restoration, or two (2) months therefrom if the
restoration would begin during the last twelve (12) months of the Sublease, then
either Sublandlord or Subtenant may terminate this Sublease by notice to the
other party within ten (10) days after the notifying party's receipt of the
architect's certificate. If sufficient insurance proceeds will not be available
to Landlord to cover the cost of any restoration to the Building or the
Premises, because (i) the casualty was not required to be insured against by the
Master Lease and was not actually insured, or (ii) of insolvency or financial
condition of Landlord's insurance carrier, Landlord may terminate the Master
Lease and this Sublease by written notice to Sublandlord. Any termination
pursuant to this Section 10A shall be effective thirty (30) days from the date
of such termination notice and Rent shall be paid by Subtenant to that date,
with an abatement for any portion of the space which has been untenantable after
the casualty.
B. Restoration. If a casualty causes damage to the Building but this
Sublease is not terminated for any reason, then subject to the rights of any
mortgagees or ground lessors, pursuant to the Master Lease, Landlord shall
obtain the applicable insurance proceeds and diligently restore the Building
subject to current Governmental Requirements. Landlord's obligation, should it
elect or be obligated to repair or rebuild, shall be limited to the Building
Shell, and provided the Building Shell has been substantially completed no later
than one hundred eighty (180) days after the casualty, Subtenant shall, at
Subtenant's expense, replace or fully repair its damaged improvements (including
any Tenant Improvements constructed within the Building Shell), personal
property and fixtures. Subtenant may terminate this Sublease if the Building
Shell Repair is not substantially complete within one hundred eighty (180) days.
Rent shall be abated on a per diem basis during the restoration for any portion
of the Premises which is untenantable. Subtenant shall not be entitled to any
compensation or damages from Landlord or Sublandlord for loss of the use of the
Premises, damage to Subtenant's personal property and trade fixtures or any
inconvenience occasioned by such damage, repair or restoration. Subtenant 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.
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11. Eminent Domain. If a part of the Project is taken by eminent domain
or deed in lieu thereof which is so substantial that the Building cannot
reasonably be used by Subtenant for the operation of its business, then either
party may terminate this Sublease effective as of the date of the taking. Rent
shall abate from the date of the taking in proportion to any part of the
Premises taken. If there is a temporary taking of a part of the Project which
is so substantial that the Building cannot reasonably be used by Subtenant for
the operation of its business, then Rent shall abate from the date of the taking
in proportion to any part of the Premises taken. The entire award for a taking
of any kind shall be paid to Landlord, and Subtenant shall have no right to
share in the award, except (i) for the portion of any award based on the value
of the Tenant Improvements financed by Subtenant in excess of the Tenant
Improvement Allowance; provided, however, that nothing contained herein shall be
deemed to give Landlord or Sublandlord any interest in or require Subtenant to
assign to Landlord or Sublandlord any separate award made to Subtenant for the
taking of Subtenant's personal property and trade fixtures, or its relocation
costs, and (ii) in the event of a temporary taking in which there was no Rent
abatement under this Sublease, then Subtenant shall be entitled to any portion
of the award which was intended to compensate Sublandlord for lost rent during
the period of the temporary taking. All obligations accrued to the date of the
taking shall be performed by each party.
12. Rights Reserved To Landlord And Sublandlord. Landlord and
Sublandlord may exercise at any time any of the following rights respecting the
operation of the Project without liability to Subtenant of any kind:
A. Name. To change the name of the Building or the Project;
provided, however, that so long as Subtenant occupies more than fifty percent
(50%) of the Building, then Sublandlord may not change, and will not consent to
a change of, the name of such Building without Subtenant's prior consent, which
consent shall not be unreasonably withheld or delayed.
B. Signs. To install, modify and/or maintain necessary and
appropriate signs on the exterior and in the interior of the Building or on the
Project, and to approve prior to installation, any of Subtenant's signs in the
Premises visible from the exterior of the Building, provided that such
installation by Sublandlord shall not diminish the signage permitted Subtenant
by this Sublease.
C. Window Treatments. To approve, at its discretion, prior to
installation, any shades, blinds, ventilators or window treatments of any kind,
as well as any lighting within the Premises that may be visible from the
exterior of the Building.
D. Keys. To retain and use passkeys to enter the Premises or any
door within the Premises in accordance with Section 12E. Subtenant shall not
alter or add any lock or bolt.
E. Access. To have access to the Premises with twenty four hour
prior notice and in accordance with Subtenant's reasonable security program
procedures (except in the case of an emergency in which case Landlord shall have
the right to immediate access) to inspect the Premises, and to perform its
obligations, or make repairs, alterations, additions or improvements, as
permitted by the Master Lease or this Sublease.
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F. Preparation for Reoccupancy. To decorate, remodel, repair, alter
or otherwise prepare the Premises for reoccupancy at any time after Subtenant
abandons the Premises in default of this Sublease, without relieving Subtenant
of any obligation to pay Rent.
G. Heavy Articles. To approve the weight, size, placement and time
and manner of movement within the Building of any safe, central filing system or
other heavy article of Subtenant's property. Subtenant shall move its property
entirely at its own risk.
H. Show Premises. To show the Premises to prospective purchasers,
lenders, mortgagees, investors, or rating agencies at any reasonable time, or
prospective tenants during the last twelve (12) months of the Term; provided
that Landlord or Sublandlord, as the case may be, gives prior notice to
Subtenant, does not materially interfere with Subtenant's use of the Premises,
and complies with Subtenant's security program.
I. Use of Lockbox. To designate a lockbox collection agent for
collections of amounts due Landlord or Sublandlord. In that case, the date of
payment of Rent or other sums shall be the date of the agent's receipt of such
payment or the date of actual collection if payment is made in the form of a
negotiable instrument thereafter dishonored upon presentment. However, if
Subtenant is in default beyond any applicable cure period, Sublandlord may
reject any payment for all purposes as of the date of receipt or actual
collection by mailing to Subtenant within 21 days after such receipt or
collection a check equal to the amount sent by Subtenant.
J. Repairs and Alterations. To make repairs or alterations to the
Project and in doing so transport any required material through the Premises, to
close entrances, doors, corridors, elevator and other facilities in the Project,
to open any ceiling in the Premises, or to temporarily suspend services or use
of common areas in the Building, provided in the case of Sublandlord, it uses
reasonable efforts to avoid unreasonable interference with Subtenant's use.
Without limiting the foregoing, Sublandlord shall have the right to access the
Building for the installation and/or alteration of the conduit connections among
the Buildings within the Project. Landlord or Sublandlord, as the case may be,
may perform any such repairs or alterations during ordinary business hours,
except that Subtenant may require any work in the Premises to be done after
business hours if Subtenant pays Landlord or Sublandlord, as the case may be,
for overtime and any other additional expenses incurred. Landlord may do or
permit any work on any nearby building, land, street, alley or way.
K. Sublandlord's Agents. If Subtenant is in default under this
Sublease, possession of Subtenant's funds or negotiation of Subtenant's
negotiable instrument by any of Sublandlord's agents shall not waive any breach
by Subtenant or any remedies of Sublandlord under this Sublease.
L. CC&R's. At any time when Subtenant is not occupying all of the
Buildings in the Project, Landlord may promulgate and record a set of CC&R's
which will govern the access, parking, design, signage and other rights of the
tenants in the Project, so long as such CC&R's do not impose any new payment
obligation on Subtenant (i.e., a dues requirement) or require Subtenant to
modify any of the then existing improvements.
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13. Subtenant's Default. Any of the following shall constitute an Event
of Default by Subtenant:
A. Rent Default. Subtenant fails to pay any Rent within five (5) days
after notice that such payment was not paid when due, provided that Subtenant
acknowledges that such notice shall be in lieu of and not in addition to any
notice required to be given by Sublandlord to commence an unlawful detainer
action (or similar eviction proceeding) under the then applicable law;
B. Assignment/Sublease or Hazardous Substances Default. Subtenant
defaults in its obligations under Section 18 Assignment and Sublease or Section
29 Hazardous Substances;
C. Other Performance Default. Subtenant fails to perform any other
obligation to Sublandlord under this Sublease or commits any act, or fails to
perform any act, which commission or failure would constitute or cause a breach
of the Master Lease, and this failure continues for thirty (30) days after
written notice from Landlord or Sublandlord, except that if Subtenant begins to
cure its failure within the thirty (30) day period but cannot reasonably
complete its cure within such period, then, so long as Subtenant continues to
diligently attempt to cure its failure, the thirty (30) day period shall be
extended to one hundred twenty (120) days, or such lesser period as is
reasonably necessary to complete the cure;
D. Credit Default. One of the following credit defaults occurs:
(1) Subtenant commences any proceeding under any law relating to
bankruptcy, insolvency, reorganization or relief of debts, or seeks appointment
of a receiver, trustee, custodian or other similar official for the Subtenant or
for any substantial part of its property, or any such proceeding is commenced
against Subtenant and either remains undismissed for a period of sixty (60) days
or results in the entry of an order for relief against Subtenant which is not
fully stayed within seven (7) days after entry;
(2) Subtenant becomes insolvent or bankrupt, does not generally
pay its debts as they become due, or admits in writing its inability to pay its
debts, or makes a general assignment for the benefit of creditors;
(3) Any third party obtains a levy or attachment under process of
law against Subtenant's leasehold interest; and
E. Abandonment Default. Subtenant abandons the Premises.
14. Sublandlord Remedies. Upon an Event of Default, Sublandlord shall
have the following remedies, in addition to all other rights and remedies
provided by law or otherwise provided in this Sublease, to which Sublandlord may
resort cumulatively or in the alternative:
A. Sublandlord may continue this Sublease in full force and effect,
and this Sublease shall continue in full force and effect as long as Sublandlord
does not terminate this Sublease, and Sublandlord shall have the right to
collect Rent when due.
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B. Sublandlord may enter the Premises or any part thereof and release
them or any part thereof to third parties for Subtenant's account for any
period, whether shorter or longer than the remaining Term. Subtenant shall be
liable immediately to Sublandlord for all costs Sublandlord incurs in reletting
the Premises or any part thereof, including, without limitation, broker's
commissions, expenses of cleaning and redecorating the Premises required by the
reletting and like costs. Subtenant shall pay to Sublandlord the Rent and other
sums due under this Sublease on the date the Rent is due, less the rent and
other sums received by Sublandlord from any releasing. No act by Sublandlord
other than giving written notice to Subtenant shall terminate this Sublease.
Acts of maintenance, efforts to relet the Premises or the appointment of a
receiver on Sublandlord's initiative to protect Sublandlord's interest under
this Sublease shall not constitute a termination of Subtenant's right to
possession.
C. Sublandlord may terminate this Sublease by giving Subtenant written
notice of termination, in which event this Sublease shall terminate on the date
for termination set forth in such notice. Subtenant shall immediately vacate the
Premises and deliver possession to Sublandlord, and Sublandlord may repossess
the Premises and may, at Subtenant's sole cost, remove any of Subtenant's signs
and any of its other property, without relinquishing its right to receive Rent
or any other right against Subtenant. On termination, Sublandlord has the right
to recover from Subtenant as damages:
(1) The worth at the time of award of unpaid Rent and other sums
due and payable which had been earned at the time of termination; plus
(2) The worth at the time of award of the amount by which the
unpaid Rent and other sums due and payable which after termination until the
time of award exceeds the amount of such Rent loss that Subtenant proves could
have been reasonably avoided; plus
(3) The worth at the time of award of the amount by which the
unpaid Rent and other sums due and payable for the balance of the Term after the
time of award exceeds the amount of such Rent loss that Subtenant proves could
be reasonably avoided; plus
(4) Any other amount necessary to compensate Sublandlord for all
the detriment proximately caused by Subtenant's failure to perform Subtenant's
obligations under this Sublease, or which, in the ordinary course of things,
would be likely to result therefrom, including, without limitation, any costs or
expenses incurred by Sublandlord: (i) in retaking possession of the Premises;
(ii) in maintaining, repairing, preserving, restoring, replacing, cleaning,
altering or rehabilitating the Premises or any portion thereof, including such
acts for reletting to a new tenant or tenants; (iii) for leasing commissions; or
(iv) for any other costs necessary or appropriate to relet the Premises; plus
(5) At Sublandlord's election, such other amounts in addition to or
in lieu of the foregoing as may be permitted from time to time by the laws of
the State of California.
The "worth at the time of award" of the amounts referred to in Sections
14C(1) and 14C(2) is computed by allowing interest at the maximum rate permitted
by law on the unpaid rent and other sums due and payable from the termination
date through the date of award. The
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"worth at the time of award" of the amount referred to in Section 14C(3) is
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%). Subtenant
waives redemption or relief from forfeiture under California Code of Civil
Procedure Sections 1174 and 1179, or under any other present or future law, in
the event Subtenant is evicted or Landlord takes possession of the Premises by
reason of any default of Subtenant hereunder.
D. Sublandlord's Remedies Cumulative. All of Sublandlord's remedies
under this Sublease shall be in addition to all other remedies Sublandlord may
have at law or in equity. Waiver by Sublandlord of any breach of any obligation
by Subtenant shall be effective only if it is in writing, and shall not be
deemed a waiver of any other breach, or any subsequent breach of the same
obligation. Sublandlord's acceptance of payment by Subtenant beyond any
applicable cure period shall not constitute a waiver of any breach by Subtenant,
and if the acceptance occurs after Sublandlord's notice to Subtenant and
expiration of any applicable cure period, or termination of the Sublease or of
Subtenant's right to possession, the acceptance shall not affect such notice or
termination. Acceptance of payment by Sublandlord after commencement of a legal
proceeding or final judgment shall not affect such proceeding or judgment.
Sublandlord may advance such monies and take such other actions for Subtenant's
account as reasonably may be required to cure or mitigate any default by
Subtenant. Subtenant shall immediately reimburse Sublandlord for any such
advance, and such sums shall bear interest at the default interest rate until
paid.
E. WAIVER OF TRIAL BY JURY. EACH PARTY WAIVES TRIAL BY JURY IN THE
EVENT OF ANY LEGAL PROCEEDING BROUGHT BY THE OTHER IN CONNECTION WITH THIS
SUBLEASE. EACH PARTY SHALL BRING ANY ACTION AGAINST THE OTHER IN CONNECTION WITH
THIS SUBLEASE IN A FEDERAL OR STATE COURT LOCATED IN CALIFORNIA, CONSENTS TO THE
JURISDICTION OF SUCH COURTS, AND WAIVES ANY RIGHT TO HAVE ANY PROCEEDING
TRANSFERRED FROM SUCH COURTS ON THE GROUND OF IMPROPER VENUE OR INCONVENIENT
FORUM.
F. Litigation Costs. If either party commences litigation to enforce
or interpret any provision of this Sublease, the prevailing party shall recover
from the non-prevailing party its reasonable attorneys' fees and court costs.
15. Surrender. Upon the expiration or earlier termination of this
Sublease for any reason, Subtenant shall surrender the Premises to Sublandlord
in its condition existing as of the Commencement Date (including the Initial
Tenant Improvements even if not completed as of the Commencement Date) but
subject to the provisions of Section 5, normal wear and tear and damage by fire
or other casualty or condemnation or repairs which are the responsibility of
Landlord excepted, with all interior walls repaired and repainted if marked or
damaged, all carpets shampooed and cleaned, all broken, marred or nonconforming
acoustical ceiling tiles replaced, all windows washed, the plumbing and
electrical systems and lighting in good order and repair, including replacement
of any burned out or broken light bulb or ballasts, the HVAC equipment serviced
and repaired by a reputable and licensed service firm acceptable to Landlord,
and all floors cleaned and waxed, all to the reasonable satisfaction of
Landlord. Subtenant shall remove from the Premises all Subtenant's personal
property and all of Subtenant's alterations
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required to be removed pursuant to Sections 5D and 5E (but not the Initial
Tenant Improvements), and restore the Premises to its condition prior to their
installation. If Subtenant fails to remove any alterations and/or Subtenant's
personal property, and such failure continues after the termination of this
Sublease, Landlord or Sublandlord may retain or dispose of such property and all
rights of Subtenant with respect to it shall cease, or Sublandlord may place all
or any portion of such property in public storage for Subtenant's account.
Subtenant shall be liable to Sublandlord for costs of removal of any such
alterations and Subtenant's personal property and storage and transportation
costs of same, and the cost of repairing and restoring the Premises, together
with interest at the Interest Rate from the date of expenditure by Sublandlord.
If the Premises are not so surrendered at the termination of this Sublease,
Subtenant shall indemnify Sublandlord against all loss or liability, including
attorneys' fees and costs, resulting from delay by Subtenant in so surrendering
the Premises.
16. Holdover. Subtenant shall have no right to holdover possession of the
Premises after the expiration or termination of this Sublease without
Sublandlord's prior written consent which Sublandlord may withhold in its sole
and absolute discretion. If, however, Subtenant retains possession of any part
of the Premises after the Term, Subtenant shall become a month-to-month tenant
for the entire Premises upon all of the terms of this Sublease as might be
applicable to such month-to-month tenancy, except that Subtenant shall pay all
of Base Rent at one hundred fifty percent (150%) of the rate in effect
immediately prior to such holdover, plus Operating Costs Share Rent and Tax
Share Rent, computed on a monthly basis for each full or partial month Subtenant
remains in possession. Subtenant shall also pay Sublandlord all of Sublandlord's
direct and consequential damages resulting from Subtenant's holdover. No
acceptance of Rent or other payments by Sublandlord under these holdover
provisions shall operate as a waiver of Sublandlord's right to regain possession
or any other of Landlord's remedies.
17. Subordination To Ground Leases And Mortgages.
A. Subordination. Landlord and Sublandlord shall have the right to
cause this Sublease to be subordinate to any future ground lease or mortgage
respecting Landlord's interest in the Project, and any amendments to such ground
lease or mortgage, at the election of the ground lessor or mortgagee as the case
may be. Subtenant shall execute and deliver, within thirty (30) days after
receipt of written demand by Sublandlord or Landlord and in the form requested
by Landlord or Sublandlord, provided that such form is reasonably acceptable to
Subtenant, any additional documents evidencing the priority or subordination of
this Sublease with respect to any such mortgage or deed of trust.
B. Termination of Ground Lease or Foreclosure of Mortgage. If any
ground lease is terminated or mortgage foreclosed or deed in lieu of foreclosure
given and the ground lessor, mortgagee, or purchaser at a foreclosure sale shall
thereby become the owner of the Project, the ground lessor or mortgagee or
purchaser shall be liable as Landlord only during the time such ground lessor or
mortgagee or purchaser is the owner of the Project.
C. Notice and Right to Cure. The Project is subject to any ground
lease and mortgage identified with name and address of ground lessor or
mortgagee in EXHIBIT D to this Sublease (as the same may be amended from time to
time by written notice to Subtenant).
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Subtenant agrees to send by registered or certified mail to any ground lessor or
mortgagee identified either in such Exhibit or in any later notice from Landlord
to Subtenant a copy of any notice of default sent by Subtenant to Landlord or
Sublandlord. If Landlord or Sublandlord fails to cure such default within the
required time period under this Sublease, but ground lessor or mortgagee begins
to cure within ten (10) days after such period and proceeds diligently to
complete such cure, then ground lessor or mortgagee shall have such additional
time as is necessary to complete such cure, including any time necessary to
obtain possession if possession is necessary to cure, and Subtenant shall not
begin to enforce its remedies so long as the cure is being diligently pursued.
D. Definitions. As used in this Section 17, "mortgage" shall include
"trust deed" and "deed of trust", and "mortgagee" shall include "trustee",
"beneficiary" and the mortgagee of any ground lessee, and "ground lessor,"
"mortgagee," and "purchaser at a foreclosure sale" shall include, in each case,
all of its successors and assigns, however remote.
18. Assignment And Sublease.
A. In General. Except as permitted by Section 18F below, Subtenant
shall not, without the prior consent of Landlord and Sublandlord in each case,
(i) make or allow any assignment or transfer, by operation of law or otherwise,
of any part of Subtenant's interest in this Sublease, (ii) grant or allow any
lien or encumbrance, by operation of law or otherwise, upon any part of
Subtenant's interest in this Sublease, (iii) sublet any part of the Premises, or
(iv) permit anyone other than Subtenant and its employees to occupy any part of
the Premises. Subtenant shall remain primarily liable for all of its obligations
under this Sublease, notwithstanding any assignment or transfer. No consent
granted by Landlord and Sublandlord shall be deemed to be a consent to any
subsequent assignment or transfer, lien or encumbrance, sublease or occupancy.
Subtenant shall pay all of Landlord's and Sublandlord's attorneys' fees and
other expenses incurred in connection with any consent requested by Subtenant or
in reviewing any proposed assignment or subletting. Any assignment or transfer,
grant of lien or encumbrance, or sublease or occupancy without Landlord's or
Sublandlord's prior written consent shall be void.
B. Sublandlord's Consent. Sublandlord will not unreasonably withhold
its consent to any proposed assignment or subletting. It shall be reasonable for
Landlord or Sublandlord to withhold its consent to any assignment or sublease if
(i) Subtenant is in default under this Sublease, (ii) on the part of Landlord,
the proposed assignee or sublessee is a tenant in the Project or an affiliate of
such a tenant or a party that Landlord has identified as a prospective tenant in
the Project, (iii) the financial responsibility, nature of business, and
character of the proposed assignee or subtenant are not all reasonably
satisfactory to Landlord or Sublandlord, (iv) in the reasonable judgment of
Landlord or Sublandlord the purpose for which the assignee or subtenant intends
to use the Premises (or a portion thereof) is inconsistent with the character of
the Project as a first class business park or would violate the terms of this
Sublease or the Master Lease, or (v) the proposed assignee or subtenant is a
government entity. The foregoing shall not exclude any other reasonable basis
for Landlord or Sublandlord to withhold its consent.
C. Procedure. Subtenant shall notify Landlord and Sublandlord of any
proposed assignment or sub-sublease at least thirty (30) days prior to its
proposed effective date.
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The notice shall include the name and address of the proposed assignee or sub-
subtenant, its corporate affiliates in the case of a corporation and its
partners in a case of a partnership, and sufficient information to permit
Landlord and Sublandlord to determine the financial responsibility and character
of the proposed assignee or sub-subtenant. As a condition to any effective
assignment of this Sublease, the assignee shall execute and deliver in form
satisfactory to Sublandlord prior to the effective date of the assignment, an
assumption of all of the obligations of Subtenant under this Sublease. As a
condition to any effective sub-sublease, sub-subtenant shall execute and deliver
in form satisfactory to Sublandlord prior to the effective date of the sublease,
an agreement to comply with all of Subtenant's applicable obligations under this
Sublease, and at Sublandlord's option, an agreement (except for the economic
obligations which sub-subtenant will undertake directly to Subtenant) to attorn
to Sublandlord under the terms of the sublease in the event this Sublease
terminates before the sub-sublease expires.
D. Excess Payments. If Subtenant shall assign this Sublease or sub-
sublet any part of the Premises for consideration in excess of the pro-rata
portion of Rent applicable to the space subject to the assignment or sub-sublet,
then Subtenant shall pay to Sublandlord as Additional Rent fifty percent (50%)
of any such excess immediately upon receipt; provided that Subtenant shall be
first entitled to recover the reasonable costs actually incurred by Subtenant in
connection with the sub-sublet for leasing commissions, interior improvements
and attorneys' fees.
E. Recapture Rights.
(1) If at any time during the Term of this Sublease, Subtenant
desires to sub-sublease all or a portion of the Premises consisting of one floor
or more in the Building (the "Proposed Sub-Sublease Space") to an entity other
than a Subtenant Affiliate as defined in Section 18F, Subtenant shall notify
Sublandlord of its intention ("Subtenant's Notice"), including proposed terms
and conditions for such sub-sublease if such Subtenant's Notice is given
pursuant to Section 18E.3 of this Sublease.
(2) If such proposed sub-sublease is for substantially the balance
of the term of this Sublease, Sublandlord shall have seven (7) days after
receipt of Subtenant's Notice to notify Subtenant in writing of Sublandlord's
election to terminate this Sublease with respect to the Proposed Sub-Sublease
Space. If, however, Sublandlord fails to notify Subtenant of Sublandlord's
election to terminate this Sublease, Sublandlord shall be deemed to have waived
its right to recapture the Proposed Sub-Sublease Space at such time and
Subtenant shall have the right to lease the Proposed Sub-Sublease Space to the
third party without further notice to Sublandlord. For purposes of this
provision, for "substantially the balance of the term of this Sublease" shall
mean that less than six (6) months remain of the term of the Sublease after
expiration of the sub-sublease. If Sublandlord gives notice of its election to
terminate this Sublease with respect to such Sub-Sublease Space, Subtenant shall
have three (3) days to give notice revoking the Subtenant Notice.
(3) If the Proposed Sub-sublease Space is not subject to
"recapture" under 18.E.2, Sublandlord shall have seven (7) days after receipt of
Subtenant's Notice to notify Subtenant in writing of Sublandlord's election to
lease the Proposed Sub-Sublease Space on the terms stated in Subtenant's Notice.
If Sublandlord notifies Subtenant within such seven-day
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period of Sublandlord's desire to lease the Proposed Sub-Sublease Space,
Subtenant and Sublandlord shall enter into a lease on the proposed terms an
conditions stated in Subtenant's Notice. If, however, Sublandlord fails to
notify Subtenant of Sublandlord's election to lease the Proposed Sub-Sublease
Space within such seven-day period or, if Subtenant and Sublandlord, through no
fault of Subtenant, fail to execute a lease within thirty (30) days after the
date of Sublandlord's notice to Subtenant, Sublandlord shall be deemed to have
waived its right to lease the Proposed Sub-Sublease Space at such time and
Subtenant shall have the right to lease the Proposed Sub-Sublease Space to the
third party on substantially the terms stated in Subtenant's Notice without
further notice to Sublandlord.
F. Assignments to Affiliates. If no default on the part of Subtenant
has occurred and is continuing, Subtenant may assign this Sublease or sub-sublet
any portion of the Premises to a parent or subsidiary of Subtenant, or to an
entity into which Subtenant is merged or consolidated or to an entity to which
substantially all of Subtenant's assets are transferred (collectively,
"Subtenant Affiliate"), without first obtaining Sublandlord's written consent,
if Subtenant notifies Sublandlord at least ten (10) business days prior to the
proposed transaction, providing information satisfactory to Sublandlord in order
to determine the net worth both of the successor entity and of Subtenant
immediately prior to such assignment, and showing the creditworthiness of the
successor to be, in the reasonable judgment of Sublandlord's treasury
department, adequate to support its obligations under this Sublease.
19. Conveyance By Sublandlord Or Landlord. If Landlord or Sublandlord
shall at any time transfer its interest in the Project or this Sublease,
Landlord or Sublandlord, as the case may be, shall be released of any
obligations occurring after such transfer, except the obligation to return to
Subtenant any security deposit not delivered to its transferee, and Subtenant
shall look solely to Landlord's or Sublandlord's successors, as the case may be,
for performance of such obligations. This Sublease shall not be affected by any
such transfer.
20. Estoppel Certificate. Each party shall, within ten (10) days of
receiving a request from the other party, execute, acknowledge in recordable
form, and deliver to the other party or its designee a certificate stating,
subject to a specific statement of any applicable exceptions, that the Sublease
as amended to date is in full force and effect, that the Subtenant is paying
Rent and other charges on a current basis, and that to the best of the knowledge
of the certifying party, the other party has committed no uncured defaults and
has no offsets or claims. The certifying party may also be required to state the
date of commencement of payment of Rent, the Commencement Date, the Termination
Date, the Base Rent, the current Operating Costs Share Rent and Tax Share Rent
estimates, the status of any improvements required to be completed by
Sublandlord, and the amount of any security deposit. Failure to deliver such
statement within the time required shall be conclusive evidence against the non-
certifying party that this Sublease, with any amendments identified by the
requesting party, is in full force and effect, that there are no uncured
defaults by the requesting party, that not more than one month's Rent has been
paid in advance, and that the non-certifying party has no claims or offsets
against the requesting party.
21. Financial Statements. Within ten (10) days after Sublandlord's
written request therefor, Subtenant shall deliver to Sublandlord copies of
Subtenant's most recent financial statements. Sublandlord shall keep
confidential any such information which is not
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public. Unless Subtenant is then in default under this Sublease, Sublandlord
shall not have the right to request such data more than two times per year.
22. Lease Deposit.
A. Advance Rent Deposit. Subtenant shall deposit with Sublandlord on
the date Subtenant executes and delivers this Sublease to Sublandlord the cash
sum of Eighty-Five Thousand One Hundred Thirty-Five and 50/100ths Dollars
($85,135.50) ("Advance Rent Deposit"). The Advance Rent Deposit shall be applied
by Sublandlord against the first month's Base Rent payable hereunder.
B. Security Deposit. Upon execution of this Sublease, Subtenant shall
deposit with Sublandlord the cash sum of two times the last month's rent (Two
Hundred Eighty-Three Thousand Seven Hundred Seventy-Three and 10/100ths Dollars
($283,773.10) (the "Security Deposit"). The Security Deposit shall be security
for Subtenant's faithful performance of Subtenant's obligations hereunder. If
Subtenant fails to pay Rent or other charges due hereunder, or otherwise
defaults with respect to any provision of this Sublease beyond any applicable
cure periods, Sublandlord may use, apply or retain all or any portion of the
Security Deposit for the payment of any Rent or other charge in default beyond
any applicable cure periods or for the payment of any other sum to which
Sublandlord may become obligated by reason of Subtenant's default beyond any
applicable cure periods, or to compensate Sublandlord for any loss or damage
which Sublandlord may suffer thereby. If Sublandlord so uses or applies all or
any portion of the Security Deposit, Subtenant shall within ten (10) days after
written demand therefor deposit cash with Sublandlord in an amount sufficient to
restore the Security Deposit to the full amount hereinabove stated and
Subtenant's failure to do so shall be a breach of this Sublease. Sublandlord
shall not be required to keep the Security Deposit separate from its general
accounts. If Subtenant performs all of Subtenant's obligations hereunder, said
deposit or so much thereof as had not theretofore been applied by Sublandlord,
shall be returned without payment of interest for its use, to Subtenant (or, at
Sublandlord's option, to the last assignee, if any, of Subtenant's interest
hereunder) within ten (10) days after the expiration of the term hereof or ten
(10) days after the date Subtenant has vacated the Premises, whichever is later.
23. Force Majeure. Neither Sublandlord or Subtenant shall be in default
under this Sublease to the extent that party is unable to perform any of its
obligations on account of any strike or labor problem, equipment, material,
supplies or energy shortages (i.e., such items cannot be obtained at normal
costs within a reasonable time because of limited availability), governmental
pre-emption or prescription, national emergency, or any other cause of any kind
beyond the reasonable control of the party required to act (provided that the
foregoing shall not apply to any monetary obligation) ("Force Majeure").
24. Notices. All notices, consents, approvals and similar communications
to be given by one party to the other under this Sublease, shall be given in
writing, mailed or personally delivered as follows:
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A. Sublandlord. To Sublandlord as follows:
Applied Materials, Inc.
Global Real Estate and Facilities
3050 Bowers Avenue, M/S 2753
Santa Clara, California 95054
Attention: Real Estate Manager
or to such other person at such other address as Sublandlord may designate by
notice to Subtenant.
B. Subtenant. To Subtenant as follows:
After Commencement Date Before Commencement Date
----------------------- ------------------------
Vitria Technology, Inc. Vitria Technology, Inc.
945 Stewart Drive, Suite B 500 Ellis Street
Sunnyvale, CA 94086 Mountain View, CA 94043
Attn: Chief Financial Officer Attn: Chief Financial Officer
or to such other person at such other address as Subtenant may designate by
notice to Sublandlord.
Mailed notices shall be sent by United States certified or registered mail,
or by a reputable national overnight courier service, postage prepaid. Mailed
notices shall be deemed to have been given on the earlier of actual delivery or
three (3) business days after posting in the United States mail in the case of
registered or certified mail, and one business day in the case of overnight
courier.
Sublandlord shall provide copies of any notices to or from Landlord
alleging defaults under the Master Lease, promptly after transmission or
receipt, as the case may be.
25. Quiet Possession. So long as Subtenant shall perform all of its
obligations under this Sublease, Subtenant shall enjoy peaceful and quiet
possession of the Premises, subject to all of the terms of this Sublease.
26. Real Estate Broker. Subtenant and Sublandlord each represent that it
has not dealt with any real estate broker with respect to this Sublease except
for the brokers listed in the Schedule, and no other broker is in any way
entitled to any broker's fee or other payment in connection with this Sublease.
Subtenant and Sublandlord shall each indemnify and defend the other against any
claims by any other broker or third party for any payment of any kind in
connection with this Sublease whose claim is based upon the acts or agreements
of the indemnifying party. Sublandlord shall pay the brokers identified in the
Schedule a commission pursuant to a separate agreement to be entered into
between Sublandlord and such brokers.
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27. Miscellaneous.
A. Successors and Assigns. Subject to the limits on Subtenant's
assignment contained in Section 18, the provisions of this Sublease shall be
binding upon and inure to the benefit of all successors and assigns of
Sublandlord and Subtenant.
B. Date Payments Are Due. Except for payments to be made by Subtenant
under this Sublease which are due upon demand, Subtenant shall pay to
Sublandlord any amount for which Sublandlord renders a statement of account
within thirty (30) days of Subtenant's receipt of Sublandlord's statement.
C. Meaning of "Sublandlord," "Landlord", "Re-Entry," "including" and
"Affiliate". The term "Sublandlord" means only the owner of the Sublandlord's
interest in this Sublease from time to time. The term "Landlord" means only the
owner of the Project and the lessor's interest in the Master Lease from time to
time. The words "re-entry" and "re-enter" are not restricted to their technical
legal meaning. The words "including" and similar words shall mean "without
limitation." The word "affiliate" shall mean a person or entity controlling,
controlled by or under common control with the applicable entity. "Control"
shall mean the power directly or indirectly, by contract or otherwise, to direct
the management and policies of the applicable entity.
D. Time of the Essence. Time is of the essence of each provision of
this Sublease.
E. No Option. This document shall not be effective for any purpose
until it has been executed and delivered by both parties.
F. Severability. The unenforceability of any provision of this
Sublease shall not affect any other provision.
G. Governing Law. This Sublease shall be governed in all respects by
the laws of the state in which the Project is located, without regard to the
principles of conflicts of laws.
H. No Oral Modification. No modification of this Sublease shall be
effective unless it is a written modification signed by both parties.
I. Sublandlord's Right to Cure. If Sublandlord breaches any of its
obligations under this Sublease, Subtenant shall notify Sublandlord in writing
and shall take no action respecting such breach so long as Sublandlord promptly
begins to cure the breach and diligently pursues such cure to its completion.
Sublandlord may cure any default by Subtenant; any expenses incurred shall
become Additional Rent due from Subtenant on demand by Sublandlord.
J. Captions. The captions used in this Sublease shall have no effect
on the construction of this Sublease.
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K. Authority. Sublandlord and Subtenant each represents to the other
that it has full power and authority to execute and perform this Sublease.
L. Sublandlord's Enforcement of Remedies. Sublandlord may enforce any
of its remedies under this Sublease either in its own name or through an agent.
M. Entire Agreement. This Sublease, together with all Exhibits,
constitutes the entire agreement between the parties. No representations or
agreements of any kind have been made by either party which are not contained in
this Sublease.
N. Sublandlord's Title. Landlord's title and Sublandlord's interest
under the Master Lease shall always be paramount to the interest of Subtenant,
and nothing in this Sublease shall empower Subtenant to do anything which might
in any way impair Landlord's title or Sublandlord's interest under the Master
Lease.
O. Light and Air Rights. Neither Landlord nor Sublandlord has granted
by this Sublease any rights to light and air in connection with Project.
P. Singular and Plural. Wherever appropriate in this Sublease, a
singular term shall be construed to mean the plural where necessary, and a
plural term the singular. For example, if at any time two parties shall
constitute Sublandlord or Subtenant, then the relevant term shall refer to both
parties together.
Q. Exclusivity. Sublandlord does not grant to Subtenant in this
Sublease any exclusive right except the right to occupy its Premises.
R. No Construction Against Drafting Party. The rule of construction
that ambiguities are resolved against the drafting party shall not apply to this
Sublease.
S. Survival. All obligations of Sublandlord and Subtenant under this
Sublease shall survive the termination of this Sublease.
T. Rent Not Based on Income. No Rent or other payment in respect of
the Premises shall be based in any way upon net income or profits from the
Premises. Subtenant may not enter into or permit any sublease or license or
other agreement in connection with the Premises which provides for a rental or
other payment based on net income or profit.
U. Building Manager and Service Providers. Sublandlord may perform any
of its obligations under this Sublease through its employees or third parties
hired by the Sublandlord.
V. Late Charge and Interest on Late Payments. Without limiting the
provisions of Section 13A, if Subtenant fails to pay any installment of Rent or
other charge to be paid by Subtenant pursuant to this Sublease within five (5)
business days after the same became due and payable (collectively referred to
herein as a "Late Payment"), then Subtenant shall pay a late charge equal to the
greater of five percent (5%) of the amount of such Late Payment or $250 ("Late
Charge"). In addition, interest shall be paid by Subtenant to Sublandlord on any
Late Payments of Rent from the date due until paid at the rate provided in
Section 2D(2) ("Late
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Interest"). Such Late Charge and Late Interest shall constitute Additional Rent
due and payable by Subtenant to Sublandlord upon the date of payment of the Late
Payment. Notwithstanding the foregoing, Subtenant shall not be liable for any
Late Charge or Late Interest for the first two (2) Late Payments during any
calendar year so long as Sublandlord receives such Late Payment within five (5)
days of Subtenant's receipt of Sublandlord's written notice for the same. If
Sublandlord does not receive Subtenant's Late Payment within such five (5) day
period, then Subtenant shall also be liable for the Late Charge and Late
Interest as described above.
W. Consents and Approvals. Any consent or approval provided for in
this Sublease by Sublandlord or Subtenant shall not be unreasonably withheld,
conditioned, or delayed.
28. Unrelated Business Income. If Landlord is advised by its counsel at
any time that any part of the payments by Subtenant to Landlord under this
Sublease may be characterized as unrelated business income under the United
States Internal Revenue Code and its regulations, then Subtenant shall enter
into any amendment proposed by Landlord to avoid such income, so long as the
amendment does not require Subtenant to make more payments or accept fewer
services from Landlord than this Sublease provides.
29. Hazardous Substances.
A. Subtenant's Environmental Indemnity. Subtenant shall not cause or
permit any Hazardous Substances to be brought upon, stored, or used in, on or
under the Project other than such quantities of Hazardous Substances as are
customary and reasonably necessary for the conduct of the Permitted Uses listed
in the Schedule to this Sublease, and which are listed in the Hazardous
Materials Inventory Sheets (collectively, the "HMIS") to be attached hereto as
EXHIBIT F after approval by Landlord and Sublandlord, unless Landlord and
Sublandlord have consented in writing to the storage or use of such Hazardous
Substances, which consent shall not be unreasonably withheld by Sublandlord.
Subtenant shall also provide Landlord and Sublandlord with copies of all
documents or information provided to or documents, information or permits
received from applicable governmental agencies to the extent they relate to the
use, transportation, disposal or storage of Hazardous Substances at the
Premises, including any HMIS's, Material Safety Data Sheets, discharge permits,
Hazardous Materials Management Plans and transportation manifests. Subtenant
shall not cause or permit any Hazardous Substances to be produced, discharged or
disposed of in, on or under the Project by Subtenant, its agents, employees,
contractors, or invitees. Any handling, transportation, storage, treatment,
disposal or use of any Hazardous Substances in or about the Project by
Subtenant, its agents, employees, contractors or invitees shall strictly comply
with all applicable Governmental Requirements. Subtenant shall indemnify, defend
and hold Landlord and Sublandlord harmless from and against any liabilities,
claims, damages, penalties, fines, attorneys' fees and court costs, remediation
costs, investigation costs and any other expenses which result from or arise out
of the use, storage, treatment, transportation, release, or disposal of any
Hazardous Substances on or about the Project by Subtenant, its agents,
employees, contractors or invitees. Sublandlord shall notify Subtenant in
writing promptly upon receipt of notice of any claim to which the
indemnification set forth herein may apply. Sublandlord shall reasonably
cooperate with Subtenant in the course of Subtenant's defense and
indemnification as provided hereunder.
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Subtenant shall have the right to settle any claim to which this paragraph may
apply, subject to Sublandlord's consent, which shall not be unreasonably
withheld.
B. "Hazardous Substances" means any hazardous or toxic substances,
materials or waste which are or become regulated by any local government
authority, the state in which the Project is located or the United States
government, including those substances described in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Section 9601 et seq., the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901 et seq., any other applicable federal, state or
local law, and the regulations adopted under these laws.
C. Pre-existing Contamination. Subtenant hereby acknowledges that
Sublandlord has informed Subtenant that certain chlorinated volatile organic
compounds are present in the groundwater under the Land as of the date of this
Sublease. Subtenant hereby covenants for the benefit of Landlord and Sublandlord
that it will not use or store any chlorinated volatile organic compounds on the
Premises or within the Project.
Subtenant agrees and acknowledges that: (i) neither Sublandlord nor any of
Sublandlord's representatives have made any representations or warranties about
the environmental condition of the Land or the accuracy or completeness of any
environmental reports made available to Subtenant regarding the Land; (ii) it
has had ample time and access to the Land, to review the environmental condition
of the Land and to conduct any tests which Subtenant may deem desirable in
connection with this Sublease; (iii) it is sophisticated, knowledgeable and
experienced in the analysis of environmental matters and that Subtenant has
entered into this Sublease with the intention of making and relying upon its own
(or its experts') investigation of the environmental condition of the Land; and
(iv) Subtenant is not relying upon any representations or warranties purportedly
made by Sublandlord or anyone acting or claiming to act on Landlord's behalf
concerning the Land.
D. Sublandlord's Environmental Indemnity. Subject to the terms,
conditions and limitations set forth below and except to the extent such
contamination was caused, exacerbated, or contributed to by Subtenant, or
Subtenant's employees, agents, contractors or invitees, Sublandlord shall
indemnify Subtenant from and against (a) any liability, claims, damages,
penalties, fines, attorneys' fees and costs, remediation costs, investigation
costs and other expenses arising from any use, storage, treatment,
transportation, release or disposal of Hazardous Substances on or about the
Project by Sublandlord, its agents, contractors, employees or invitees, and (b)
all costs ("Response Costs") to respond to any order of any applicable state or
federal agencies relating to the remediation, removal, disposal or monitoring
("Compliance Order" relating to any contamination) (i) of the soil or
groundwater of the Project existing as of the Effective Date (the "Pre-existing
Contamination"), or (ii) any hydraulic oil released to the Land during the Term
as a direct result of the installation, maintenance or operation of the elevator
in the Building. For purposes of the preceding sentence, the term "Sublandlord's
contractors" excludes Landlord under the Master Lease. Sublandlord's liability
under the foregoing indemnity (i) is personal to Subtenant and Subtenant
Affiliates (after assignment to such Subtenant Affiliate) and may not be
assigned to or relied upon by any other third party without Sublandlord's prior
written consent, which may be withheld in Sublandlord's sole and absolute
discretion, (ii) is limited to Subtenant's actual, out of pocket costs incurred
in
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complying with any Compliance Order, and to reasonable consultants fees and
costs and reasonable attorneys' fees and costs incurred in defending against a
proposed Compliance Order, so long as Sublandlord may select the attorney to
defend Subtenant and have sole authority to make all settlement and other
decisions in regard to the proceedings, including the decision whether to
challenge the Compliance Order (and any related order or action) by appeal or
court challenge, and (iii) specifically excludes any claims, costs, damages or
losses for personal injury, property damage, punitive damages, damage to
business, lost profits or consequential damages incurred by Subtenant or any
third party. Sublandlord shall have no liability under the foregoing indemnity
with respect to the Pre-existing Contamination if Subtenant causes or permits
the use, storage, handling, or disposal of chlorinated volatile organic
compounds on, in or under the Project.
30. Exculpation. Landlord shall have no personal liability under this
Sublease. Sublandlord's liability under this Sublease; limited to the greater of
(1) its interest in the Master Lease and subleases pursuant thereto, or (2) Five
Million Dollars ($5,000,000.00). In no event shall any officer, director,
employee, agent, shareholder, partner, member or beneficiary of Landlord or
Sublandlord be personally liable for any of Landlord's or Sublandlord's
obligations hereunder. The foregoing limitation shall not limit Sublandlord's
liability pursuant to the indemnity obligation under Sections 9B and 29D
(collectively the "Indemnity Obligations").
31. Sublandlord Obligations. Sublandlord shall use commercially reasonably
efforts to cause Landlord under the Master Lease to perform all of the
obligations of Landlord thereunder to the extent said obligations apply to the
Premises and Subtenant's use of the Project Common Areas. Sublandlord shall not,
without Subtenant's prior written consent, which shall not be unreasonably
withheld, amend, modify, revise or terminate the Master Lease in any way that
would either materially negatively affect Subtenant's rights or position under
the Sublease or materially increase Subtenant's duties or obligations under the
Sublease.
In addition, Sublandlord shall not waive any provisions under the Master
Lease or make any elections, exercise any right or remedy or give any consent or
approval under the Master Lease which would either materially and negatively
affect Subtenant's rights or position under this Sublease or materially increase
Subtenant's duties or obligations under this Sublease without, in each instance,
Subtenant's prior written consent, which shall not be unreasonably withheld.
32. Sublandlord's Representations And Warranties. Sublandlord represents
and warrants with respect to the Premises that: (a) the Master Lease is in full
force and effect, and there exists under the Master Lease no default or event of
default by either Landlord or Sublandlord, nor has there occurred any event
which, with the giving of notice or passage of time or both, could constitute
such a default or event of default; (b) the copy of the Master Lease attached
hereto as EXHIBIT H is a true and complete copy of the Master Lease, and the
Master Lease has not been amended except as set forth therein; (c) Sublandlord
has not received any notice of pending or threatened actions, suits or
proceedings before any court or administrative agency against Sublandlord or
against Landlord or third parties which could, in the aggregate, adversely
affect the Premises or any part thereof; and (d) Sublandlord has not received
any notice of pending condemnation or similar proceeding affecting the Project
or any portion thereof, and Sublandlord has no knowledge that any such action is
contemplated.
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33. Subtenant Cure Right. In the event that Sublandlord fails to perform
or observe any of Sublandlord's obligations under the Master Lease or fails to
perform Sublandlord's stated obligations under this Sublease, then Subtenant may
give Sublandlord notice specifying in what manner Sublandlord has defaulted, and
if such default shall not be cured by Sublandlord within thirty (30) days
thereafter (except that if such default cannot be cured within such thirty (30)
day period, this period shall be extended for an additional reasonable time,
provided that Sublandlord commences to cure such default within such thirty (30)
day period and proceeds diligently thereafter to effect such cure as quickly as
practicable), then Subtenant shall be entitled to cure such default and
Subtenant's reasonable expenses in so doing shall be due upon demand. Subtenant
shall not be required, however, to wait the entire cure period described herein
if earlier action is required to comply with the Master Lease or with any
governmental regulations.
34. Landlord Consent. This Sublease and Sublandlord's and Subtenant's
obligations hereunder are conditioned upon the written consent of Landlord.
Sublandlord shall use diligent efforts to obtain the consent from Landlord as
soon as practicable. If Sublandlord fails to obtain the consent within thirty
(30) days after execution of this Sublease by Subtenant, then either party may
terminate this Sublease by giving the other party written notice thereof at any
time prior to Subtenant's receipt of the consent, and Sublandlord shall promptly
return the Lease Deposit to Subtenant.
In Witness Whereof, the parties hereto have executed this Sublease.
SUBTENANT: SUBLANDLORD:
VITRIA TECHNOLOGY, INC., APPLIED MATERIALS, INC.,
A CALIFORNIA CORPORATION A DELAWARE CORPORATION
By: /s/ Paul R. Auvil By: /s/ Thomas M. _________
-------------------------- ----------------------------
Print Name: Paul R. Auvil Print Name: Thomas M. ________
------------------ --------------------
Print Title: Chief Financial Officer Print Title:
------------------------
By: /s/ Jo Mei Chang By:
----------------- ---------------------------------
Print Name: Jo Mei Chang Print Name:
------------------------- -------------------------
Print Title: President CEO Print Title:
------------------------
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<PAGE>
Exhibit A
DESCRIPTION OF PROJECT AND PREMISES/BUILDINGS
(attach diagram of Project and approximate footprint of Buildings)
<PAGE>
Exhibit B
RULES AND REGULATIONS
I. Tenant shall not place anything, or allow anything to be placed near the
glass of any window, door, partition or wall which may, in Landlord's judgment,
appear unsightly from outside of the Project.
II. The Project directory, if any, shall be used by Landlord to display names
and locations of tenants in the Project. No tenant shall use or make any changes
to such directories without Landlord's prior written consent.
III. The sidewalks, halls, passages, exits, entrances, elevator and stairways
shall not be obstructed by Tenant or used by Tenant for any purposes other than
for ingress to and egress from the Premises, unless Tenant is the sole occupant
of the Building. Tenant shall lend its full cooperation to keep such areas free
from all obstruction and in a clean and sightly condition and shall move all
supplies, furniture and equipment as soon as received directly to the Premises
and move all such items and waste being taken from the Premises (other than
waste customarily removed by employees of the Building) directly to the shipping
platform at or about the time arranged for removal therefrom. Neither Tenant nor
any employee or invitee of Tenant shall go upon the roof of the Project.
IV. The toilet rooms, urinals, wash bowls and other apparatuses shall not be
used for any purposes other than that for which they were constructed, and no
foreign substance of any kind whatsoever shall be thrown therein, and to the
extent caused by Tenant or its employees or invitees, the expense of any
breakage, stoppage or damage resulting from the violation of this rule shall be
borne by Tenant.
V. Tenant shall not install or operate any refrigerating, heating or air
conditioning apparatus, or carry on any mechanical business without the prior
written consent of Landlord; use the Premises for housing, lodging or sleeping
purposes. Tenant shall not occupy or use the Premises or permit the Premises to
be occupied or used for any purpose, act or thing which is in violation of any
Governmental Requirement or which may be dangerous to persons or property.
VI. Tenant shall not use any method of heating or air conditioning other than
that supplied or approved by Landlord.
VII. Without the prior written consent of Landlord, Tenant shall not use the
name of the Project or any exterior picture of the Project in connection with,
or in promoting or advertising the business of, Tenant, except Tenant may use
the address of the Project as the address of its business.
VIII. Tenant assumes full responsibility for protecting the Premises from
theft, robbery and pilferage, which may arise from a cause other than Landlord's
negligence, which includes keeping doors locked and other means of entry to the
Premises closed and secured.
IX. No bicycle (except in those areas which may be designated for bicycles by
Landlord) or other vehicle and no animals or pets shall be allowed in the
Premises, halls, freight docks, or any
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other parts of the Building except that blind persons may be accompanied by
"seeing eye" dogs. Unless Tenant is the sole occupant of the Building, Tenant
shall not make or permit any noise, vibration or odor to emanate from the
Premises, or do anything therein tending to create, or maintain, a nuisance, or
do any act tending to injure the reputation of the Building.
X. Tenant shall not do or permit the manufacture or sale of any fermented,
intoxicating or alcoholic beverages without obtaining written consent of
Landlord.
XI. Tenant shall not disturb the quiet enjoyment of any other tenant, if any,
in the Building and/or Project.
XII. No equipment, mechanical ventilators, awnings, special shades or other
forms of window covering shall be permitted outside the windows of the Premises
without the prior written consent of Landlord, and then only at the expense and
risk of Tenant, and they shall be of such shape, color, material, quality,
design and make as may be approved by Landlord.
XIII. Tenant shall not during the term of this Sublease canvas or solicit other
tenants of the Building for any purpose.
XIV. Tenant shall not install or operate any phonograph, musical or sound-
producing instrument or device, radio receiver or transmitter, TV receiver or
transmitter, or similar device, without in each instance the prior written
approval of Landlord. The use thereof, if permitted, shall be subject to control
by Landlord to the end that others shall not be disturbed.
XV. Tenant shall promptly remove all rubbish and waste from the Premises.
XVI. Tenant shall not exhibit, sell or offer for sale, rent or exchange in the
Premises or at the Project any article, thing or service, except those
ordinarily embraced within the Permitted Uses of the Premises specified in the
Schedule of this Sublease, without the prior written consent of Landlord.
XVII. Tenant shall not overload any floors in the Premises or any public
corridors or elevator in the Building.
XVIII. Whenever Landlord's consent, approval or satisfaction is required under
these Rules, then unless otherwise stated, any such consent, approval or
satisfaction must be obtained in advance, such consent or approval may be
granted or withheld in Landlord's reasonable discretion, and Landlord's
satisfaction shall be determined in its reasonable judgment.
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<PAGE>
Exhibit C
WORK LETTER AGREEMENT
This Exhibit C Work Letter Agreement ("Work Letter") is attached to and
made a part of that certain Sublease (the "Sublease") between Applied Materials,
Inc. a Delaware corporation ("Sublandlord) and Vitria Technology, Inc., a
California corporation ("Subtenant"). Terms used in this Work Letter that are
defined in the Sublease shall have the same meaning as provided in the Sublease.
The purpose of this Work Letter is to set forth the agreement between
Sublandlord and Subtenant with respect to the construction and installation of
the Tenant Improvements to be installed on the Premises.
1. Improvement. Sublandlord shall improve the Premises in accordance with
plans and specifications approved by Landlord, Sublandlord, and Subtenant (such
improvements are referred to herein as the "Tenant Improvements") and in
accordance with this Work Letter and subject to the requirements of the Lease
between Landlord and Sublandlord and its Exhibit C Tenant Improvement Agreement
("Master Lease").
2. Tenant Improvements. For purposes of this Work Letter and the Sublease,
Tenant Improvements shall not include the Building Shell and Sublandlord
Upgrades as defined in the Sublease. The Tenant Improvements shall include, but
not be limited to, the following:
a. sprinkler drops and heads below drop ceiling;
b. roof mounted HVAC, including main trunk lines, secondary distribution
lines and controls;
c. ceilings;
d. lighting;
e. building insulation;
f. interior walls and partitions;
g. plumbing
h. painting;
i. floor covering;
j. interior doors;
k. all venting, including exhaust lines and hoods;
l. electrical secondary system from transformer (including underground
pull section and conductors), panels, main switchboard, switches, and
distributions;
<PAGE>
m. gas distribution;
n. telephone switch room, panel, distribution system;
o. electrical rooms, phone, rooms, and mechanical rooms;
p. Building common area improvements (including lobbies, corridors,
bathrooms, janitorial closet, base HVAC system and secondary concrete and steel
exit stairs;)
q. emergency generators;
r. window coverings;
s. interior and exterior signage; and
t. special data and communications systems.
3. Schematic Plan. Sublandlord and Subtenant have each approved the schematic
space plans for the Premises dated April 2, 1999 (the "Schematic Plan") prepared
by Liz Gibbons of CAS Architects ("Sublandlord's Space Planner").
4. Design Development Drawings. On or before April 9, 1999, Subtenant shall
provide Sublandlord's Space Planner or Architect with all information reasonably
required in order to prepare design development drawings and specifications (the
"Design Development Drawings") showing the specific Tenant Improvements which
Subtenant desires to have Sublandlord construct in the Premises in order to
complete. Subtenant shall contract directly for design of interior finishes and
details ("Upgrade Finish Designs"). The Design Development Drawings shall be
based upon the Schematic Plan. The information which Subtenant is to convey to
Sublandlord's Space Planner within the five (5) business day period shall
include all information regarding Subtenant's proposed use of the Premises and
the character of the Tenant Improvements necessary to develop the Design
Development Drawings, including such general information as number and general
size and types of offices, computer rooms, conference rooms, storage areas
office equipment rooms, lunch or break rooms, laboratories, lobby size and
layout, and specific information, including upgrades from Building Standards
(defined in Paragraph 8), and shall, without limitation, including the
following:
a. type of all partitions;
b. type of all doors, including hardware;
c. type of glass partitions, windows and doors, including framing;
d. requirements and type of Subtenant's telephone equipment, including
Subtenant's telephone company approval and, if required, all governmental
approvals therefor,
e. requirements and type of electrical outlets (including, without
limitation, floor monuments), switches, telephone outlets and lighting;
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(f) requirements and type of special electrical outlets for Subtenant's
equipment with special electrical requirements, including manufacturer's
specifications for use and operation;
(g) weight per square foot and description of any equipment exceeding fifty
(50) pounds per square foot;
(h) all special air conditioning or ventilation requirements;
(i) floor covering types and colors;
(j) wall covering and base types and colors;
(k) paint types and colors;
(l) requirement and type of plumbing and kitchen equipment;
(m) all millwork and built-in equipment with size, hook-up requirements and
finishes approved by Subtenant;
(n) all bracing and support of special walls and dimensions;
(o) height and type of ceiling, if different from Building Standard;
(p) special purpose rooms including, without limitation, computer rooms,
kitchens, and laboratories, and notation if services of special technical
consultants will be required;
(q) any special fire sprinkler equipment and its location;
(r) Subtenant's security requirements;
(s) special cabling, data, and communication equipment requirements; and
(t) such other detail as Sublandlord's Space Planner shall reasonably
request.
All Design Development Drawings shall be subject to Sublandlord's written
approval which approval shall not be unreasonably withheld so long as such
Design Development Drawings are consistent with and represent a logical
evolution of the Schematic Plan. If Sublandlord disapproves Subtenant's Design
Development Drawings, Sublandlord shall promptly inform Subtenant of such
disapproval and the grounds therefor. Subtenant shall have three (3) business
days thereafter to deliver to Sublandlord's Space Planner any information
necessary to revise the Design Development Drawings. Subtenant shall have three
(3) business days after receipt to notify Sublandlord of its approval or
disapproval of the Design Development Drawings. If Subtenant fails to disapprove
the proposed Design Development Drawings within such three (3) business day
period, Subtenant shall be deemed to have approved such proposed Design
Development Drawings. If Subtenant disapproves the proposed Design Development
Drawings, it shall concurrently deliver to Sublandlord its written proposal for
required changes and the parties shall negotiate in good faith to reach
agreement on the Design Development Drawings.
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<PAGE>
5. Work Cost Estimate. Following approval of the Design Development Drawings,
Sublandlord shall submit to Subtenant a written estimate of the costs of the
Tenant Improvements work (the "Work Cost Estimate"). Within two (2) business
days after receipt of such estimate, Subtenant shall either approve the Work
Cost Estimate, or disapprove specific items and submit to Sublandlord's Space
Planner information necessary to prepare revisions of the Design Development
Drawings to reflect the deletion of and/or substitution of such disapproved
items. Any such deletions and/or substitutions shall be subject to Sublandlord's
approval as hereinabove required. Following approval of the revised Design
Development Drawings, Sublandlord shall submit to Subtenant a revised Work Cost
Estimate. Failure of Subtenant to disapprove any items on a Work Cost Estimate
within two (2) business days after receipt shall be deemed approval of such Work
Cost Estimate by Subtenant. Subtenant acknowledges that the Work Cost Estimate
is an estimate of the Tenant Improvement Costs, and that the contingency amount
specified therein may not be sufficient to provide for all changes in the
Tenant improvements and/or other unforeseen costs and expenses arising after
Subtenant's approval thereof. Subtenant acknowledges that any request by
Subtenant for above-standard improvements, as well as all change orders, will,
more likely than not, result in the Tenant Improvements Costs exceeding the
Improvements Allowance.
6. Construction Drawings. Following approval of the Schematic Plan and Work
Cost Estimate, CAS Architects ("Landlord's Architect")shall prepare detailed
drawings sufficient for construction of the Tenant Improvements ("Construction
Drawings"). Subtenant shall contract directly for design of the plumbing,
electrical, and HVAC systems on a "design/build" basis and Finish Upgrade
Designs, and the Construction Drawings may include only specifications for these
systems. Sublandlord shall also deliver to Subtenant with the Construction
Drawings an updated Work Cost Estimate ("Updated Work Cost Estimate") based upon
the Construction Drawings. Subtenant shall have three (3) business days after
receipt of the Construction Drawings and Updated Work Cost Estimate to approve
or disapprove the Construction Drawings and Updated Work Cost Estimate. If
Subtenant disapproves the Construction Drawings or updated Work Cost Estimate,
Subtenant and Sublandlord shall have two (2) business days to resolve the
disapproval.
7. Time Schedule. Preparation and approval of the Design Development Drawings
and Construction Documents shall proceed as indicated below and each action
completed by Subtenant on or before the date herein specified.
Action Due Date
------ --------
A: By Subtenant:
a) Submission of information to Five (5) business days after approval of
Sublandlord's Space Planner. Schematic Plan.
b) Submission, if necessary, of Three (3) business days after receipt of
information to redesign Design Sublandlord's notice of disapproval.
Development Drawings.
c) Delivery of written notice Three (3) business days after receipt.
approving or
4
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disapproving Design Development Drawings.
(d) Delivery of written notice Two (2) business days after receipt.
approving or disapproving Work Cost
Estimate.
(e) Delivery of written notice Three (3) business days after receipt.
approving or disapproving Construction
Drawings.
(f) Resolution of any disapproval of Two (2) business days after Subtenant
Construction Drawings. Disapproval.
(g) Delivery of design criteria for On or before April 6, 1999.
plumbing, Electrical, and HVAC systems.
(h) Delivery of Final Plans and On or before April 19, 1999.
Specifications for plumbing,
electrical, and HVAC systems and Final
Upgrade Finish Designs.
B: By: Sublandlord:
(a) Delivery of written notice Within five (5) days after delivery of
approving or disapproving Final Plans Final Plans for plumbing, electrical,
and Specifications and Final Upgrade and HVAC system and Final Upgrade
Finish Designs plans for plumbing, Finish Designs.
electrical, and HVAC systems.
8. Construction. Following approval of the Construction Drawings,
Sublandlord shall enter into a contract with South Bay Construction Company
("Contractor") for construction of the Tenant Improvements ("Construction
Contract"). The Construction Contract be a guaranteed maximum price contract in
the amount of the approved Updated Work Cost Estimate, with allowances for the
design/build systems. The Construction Contract shall require that Contractor
provide a minimum warranty of one year with respect to the Tenant Improvements
and require that the Contractor provide a replacement warranty with the same
coverage for any existing warranty covering the Building Shell or other
improvements invalidated by work performed by the Contractor. Except as
specified in the Construction Drawings, the Tenant Improvements will be
constructed using Building-standard materials and procedures ("Building
Standards") as more particularly described in Schedule "1" attached hereto and
incorporated herein by reference.
All Tenant Improvements shall be completed in a good and workmanlike
manner and in compliance with the Master Lease. All materials and equipment
incorporated into the Tenant Improvements (i) will be new and free of defects,
(ii) will conform to all applicable codes, (iii) will conform to the approved
final Construction Drawings approved by Sublandlord and Subtenant, including all
changes or modifications thereto approved by Sublandlord and Subtenant, and (iv)
comply with requirements of the Master Lease.
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Sublandlord shall be responsible for obtaining all necessary permits and
approvals (including the building and occupancy permits) and other
authorizations from governmental agencies needed in connection with the Tenant
Improvements. The costs of all such permits and approvals required in connection
with the Tenant Improvements, including inspection and other building fees
required to obtain the permits for the Tenant Improvements, shall be included as
part of the costs of the Tenant Improvements.
9. Project Management. Sublandlord shall enter into a contract with South Bay
Construction ("Project Manager") for project management for the design
preparation and construction process.
10. Change Orders. Any changes to the Construction Drawings subsequent to
Sublandlord's and Subtenant's approval thereof which are requested by Subtenant,
required by any governmental agency, or proposed for any other reason whatsoever
shall be incorporated into the work only by means of a change order ("Change
Order"). All proposed Change Orders shall be forwarded to Sublandlord for
approval and costing. Sublandlord shall have two (2) business days for approval
or disapproval. Sublandlord shall not unreasonably withhold or delay consent to
any Change Order proposed by Subtenant, and Subtenant shall not unreasonably
withhold or delay consent to a Change Order proposed by Sublandlord. Subtenant
shall be given a written cost estimate and time required for the completion of
such Change Order, and Subtenant shall have two (2) business days for approval
or disapproval. The cost of any Change Order which would not otherwise be
covered by the Improvements Allowance shall be paid by Subtenant in full with
the next subsequent installment of Subtenant's Construction Cost Share (defined
in Section 11 below). No revisions to the approved Construction Drawings shall
be made by either Sublandlord or Subtenant unless approved in writing by both
parties. Sublandlord or Subtenant agrees to make all changes required by any
public agency to conform with governmental regulations. Any costs related to
such changes shall be added to the Tenant Improvements Cost. Costs related to
changes shall include, without limitation, any architectural or design fees, and
the Contractor's price for effecting the change.
11. Improvements Allowance. Sublandlord shall provide an allowance for the
planning and construction of the Tenant Improvements in the amount of One
Million Five Hundred Ninety-Four Thousand Five Hundred Twenty-Five Dollars
($1,594,525.00) ("Base Allowance"). In addition, Sublandlord shall provide an
additional improvement allowance (Additional Allowance") of Seven Dollars
($7.00) per square foot of the Premises for a total Additional Allowance of up
to Four Hundred Sixty-Six Thousand Four Hundred Sixty-Seven Dollars
($446,467.00). The Additional Allowance shall be fully amortized over the term
of the Sublease at an interest rate of ten percent (10%) per annum as an element
of Base Rent. The Base Allowance and the Additional Allowance shall be referred
to collectively as the "Improvements Allowance". The Improvements Allowance
shall be the maximum contribution by Sublandlord for the Tenant Improvements
Cost, as defined in Paragraph 12. If the Tenant improvements Cost as specified
in the Construction Contract exceeds the Improvements Allowance, Subtenant shall
pay the amount by which the Tenant Improvements Cost exceeds the Improvements
Allowance ("Subtenant's Construction Cost Share). Subtenant shall deliver to
Sublandlord in cash twenty-five percent (25%) of any Subtenant's Construction
Cost Share prior to commencement of construction. Subtenant shall pay the
balance of Subtenant's Construction Cost Share in two (2) monthly installments
of twenty-five percent (25%) each, and a final installment upon Substantial
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<PAGE>
Completion. Sublandlord shall bill Subtenant for such installments plus any
excess of the cost of the plumbing, electrical, and HVAC systems in excess of
the allowances in the Construction Contract, and payment shall be due ten (10)
days after Sublandlord's billing therefor. Any unpaid amount shall bear interest
from the date due at the Interest Rate specified in the Sublease. The
Improvements Allowance shall not be used for payment of any costs of procuring,
constructing or installing in the Premises any of Subtenant's personal property,
including furnishings, fixtures, and equipment.
12. Improvements Cost. The improvement cost ("Tenant Improvements Cost") to be
paid by Sublandlord from the Improvements Allowance shall include, but not be
limited to:
(a) All costs, including all Sublandlord's Architect and Space Planner
fees, of the Schematic Plan, Design Development Drawings, Construction Drawings
and specifications for the Tenant Improvements, including as-built drawings, and
engineering costs for mechanical, electrical and plumbing design and for State
of California energy utilization calculations under title 24 legislation,
including any fees resulting from Change Orders requested by Subtenant or
required by any government agency;
(b) All costs of obtaining building permits and other necessary
authorizations from the City of Sunnyvale and other governmental agencies;
(c) All costs of constructing and installing the Tenant Improvements paid
to Contractor pursuant to the Construction Contract, including, but not limited
to, the construction fee for overhead and profit and the cost of all on-site
project management, supervisory and administrative staff, office, equipment and
temporary services rendered by the Contractor in connection with construction of
the Tenant Improvements;
(d) Sewer, water, or other utility or municipal connection fees, in
accordance with Section 4 of the Sublease;
(e) The fee for the Project Manager as provided in Paragraph 9; and
(f) The fee for Subtenant's design contractor for the plumbing, electrical,
and HVAC systems and Finish Upgrade Designs.
The Tenant Improvements Cost shall not include nor shall any portion of the
Improvements Allowance be used for (i) charges and expenses for Change Orders
that have not been approved by Subtenant, (ii) costs resulting from any breach
of contract by Contractor or any of its subcontractors or by Architect or any
design or construction defects, (iii) costs for which Sublandlord received
reimbursement from others (including, without limitation, insurers and
warrantors), (iv) the cost of bringing the exterior of the Premises and
surrounding area into compliance with applicable Governmental Regulations, and
(v) costs resulting from a casualty or act of God.
13. Termination. If the Sublease is terminated prior to the Commencement Date
due to the default of Subtenant pursuant to this agreement or the Sublease,
Subtenant shall pay to Sublandlord, within thirty (30) days of receipt of a
statement therefor, any costs incurred by Sublandlord through the date of
termination in connection with the Tenant Improvements. Any
7
<PAGE>
extra costs incurred due to the casualty shall not be included as part of the
Tenant Improvements Cost.
14. Rink of Loss. The risk of loss of the Premises before the Commencement Date
(as defined in the Sublease) shall be borne by Sublandlord. At all times prior
to the Commencement Date, Sublandlord, at its sole cost and expense, shall
maintain contingent liability and broad form "builder's risk" insurance with
coverage in an amount equal to the replacement cost of the Tenant Improvements.
If the Premises are damaged or destroyed prior to the Commencement Date, and if
the Premises, in the reasonable opinion of Sublandlord's Architect, cannot be
substantially completed prior to February 1,2000, Subtenant shall have the right
to terminate the Sublease. If the Premises are damaged or destroyed and the
Sublease is not terminated pursuant to the tam of the Sublease, then Sublandlord
shall promptly and diligently complete construction of the Tenant Improvements
in accordance with the Lease and this Work Letter.
15. Commencement Date Determination. "Substantial Completion" shall mean the
state of completion existing when (i) the Tenant Improvements (exclusive of
custom features, such as entrance stair, water feature, and boardroom upgrades)
have been completed in accordance with the approved final Construction Drawings,
as certified by Sublandlord's Architect and Sublandlord's Contractor, (ii) all
utilities are hooked up and available for use, and (iii) Subtenant may lawfully
occupy the Premises. Substantial Completion shall be deemed to have occurred
notwithstanding a requirement on the part of Sublandlord to complete "punch
list" or similar corrective work. The date of Substantial Completion of the
Tenant Improvements shall be fixed by Sublandlord's Project Manager.
The Commencement Date shall be the earlier of: (a) the date of Substantial
Completion of the Tenant Improvements, or (b) August 1, 1999.
If Substantial Completion of the Tenant Improvements is delayed as a result
of:
a. Subtenant's failure to submit the information necessary for the
preparation of the Design Development Drawings or Construction Drawings within
the time periods called for;
b. Subtenant's failure to deliver preliminary or final plans and
specifications for the plumbing, electrical, and HVAC systems or Finish Upgrade
Designs;
c. Subtenant's change(s) in the Construction Drawings after such dates;
d. Subtenant's failure to either approve the Design Development Drawings,
Work Cost Estimate, Construction Drawings, or Updated Work Cost Estimate, or
Change Orders, to submit revisions, or to resolve disapproval within the times
prescribed;
e. Subtenant's specification of materials other than Building Standard
materials or relocation of Building Core from Building Standard location, which
increase the construction period or result in delay;
f. special permit requirements for Subtenant's operations and improvements;
8
<PAGE>
(g) Subtenant's failure to deliver the twenty-five percent (25%) of
Subtenant's share of Tenant Improvement Cost prior to the scheduled date for
commencement of work or to timely pay any other installment of Subtenant's
Construction Cost Share; and
(h) any other delays requested or caused by the acts or omissions of
Subtenant, its agents, employees, consultants or designers, including
Subtenant's activities in the Premises during the Early Occupancy Period
provided for in Section 1 of the Sublease.
(all of the foregoing being referred to herein collectively as "Subtenant's
Delay"),
or as a result of:
x. Sublandlord's failure to approve or disapprove a Change Order within
the time prescribed; or
y. Sublandlord's failure to approve or disapprove Final Plans and
specifications for the plumbing, electrical, and HVAC systems or Finish Upgrade
Designs prepared by Subtenant's designer within the times prescribed (the
foregoing being referred to collectively as "Sublandlord Delay")
then the Commencement Date shall be the earlier of:
(1) August 1, 1999 plus the number of days equal to the days of Sublandlord
Delay less the number of days equal to the days of Subtenant Delay; or
(2) the date upon which Subtenant commences business operations in the
Premises.
In calculating days of Subtenant Delay or Sublandlord Delay, credit shall
be given (i.e., deduction made) for subsequent actions or approvals faster than
the schedule requires and which regain time lost due to previous delay. For
example, if Subtenant is responsible for three days of delay on an occasion, but
on a subsequent occasion takes only one day when two is allowed and one day of
schedule is regained, then the number of days of Subtenant Delay would be two
(2) days.
16. Acceptance of Possession. As soon as the Tenant Improvements are
Substantially Complete (exclusive of custom features, such as entrance stair,
water feature, and boardroom upgrades) and Sublandlord has given Subtenant
reasonable prior written notice of the time and date therefor, Sublandlord and
Subtenant shall together walk through and inspect the Premises. After such
inspection has been completed, each party shall sign an acceptance agreement,
which shall (i) include a list of all "punch list" items which the parties agree
are to be corrected by Sublandlord, and (ii) shall state the Commencement Date
as provided above. Sublandlord shall use reasonable efforts to complete and/or
repair such "punch list" items within thirty (30) days after executing the
acceptance agreement. After completion of the custom features, Sublandlord and
Subtenant shall prepare a punch list for these elements. The parties'
preparation of such a "punch list" and execution of an acceptance agreement
shall be deemed an acceptance by Subtenant of the Premises as complete and free
from defects except as noted in the punch list, but shall not in any way affect
the following warranty obligations of Sublandlord: Notwithstanding anything to
the contrary in the Sublease, effective upon delivery of the Premises to
Subtenant, Sublandlord does hereby warrant (i) that the Tenant Improvements were
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<PAGE>
constructed in accordance with all applicable Governmental Requirements, (ii)
that the Tenant Improvements were constructed in accordance with the approved
final Construction Drawings and in a good and workmanlike manner, (iii) that all
material and equipment installed in the Premises conformed to the approved final
Construction Drawings, was new and otherwise of good quality and was installed
in accordance with all vendor's and manufacturer's specifications, instructions
and requirements, and (iv) that all material and equipment installed in the
Premises has been paid for and is free of liens, security interests or chattel
mortgages. All construction, product and equipment warranties and guarantees
obtained by Sublandlord shall, to the extent obtainable, provide that such
warranties and guarantees shall also run to the benefit of Subtenant and its
successors and assigns. Subtenant shall have the benefit of any construction,
product and equipment warranties and guarantees in favor of Sublandlord that
would assist Subtenant in correcting defects and in discharging any of
Subtenant's obligations regarding the repair and maintenance of the Premises.
Upon written request by Subtenant, Sublandlord shall inform Subtenant of all
written construction, product and equipment warranties and guarantees in favor
of Sublandlord which affect the Premises. Notwithstanding anything to the
contrary contained in the Sublease, Subtenant's acceptance of the Premises shall
not be deemed a waiver of the foregoing warranty, and Sublandlord shall promptly
repair all violations of the warranty set forth in this paragraph at its sole
cost and expense.
SUBTENANT: SUBLANDLORD:
Vitria Technology, Inc., Applied Materials, Inc.,
a California corporation a Delaware corporation
By: /s/ Paul R. Auvil By: /s/ Thomas R. ----------
-------------------------------- ---------------------------------
Name: Paul R. Auvil Name: Thomas R. --------
------------------------------ -------------------------------
Title: Chief Financial Officer Title:
----------------------------- -------------------------------
By: /s/ Jo Mei Chang By:
-------------------------------- ---------------------------------
Print Name: Jo Mei Chang Print Name:
------------------------ -------------------------
Title: President & CEO Title:
----------------------------- ------------------------------
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Schedule "1" to Exhibit C
BUILDING STANDARD IMPROVEMENTS
Unless otherwise agreed by both Subtenant and Sublandlord, the following
materials, or comparable substitute materials, shall be used by Sublandlord in
completing the Improvements for the Premises.
Drywall Partitions: Building-standard interior partitions to consist
of 3 5/8" metal studs, with one layer 5/8"
gypsum board each side. All partitions to be
taped and prepared for light texture paint
finish.
Door: Interior door assembly to be paint grade wood-
veneer, solid-core doors, 3 feet wide by 7'
height.
Door Frame: Hollow metal knock-down, painted building-
standard color.
Door Hardware: Chrome lever handle latchset, three pair butt
hinges.
Entry Door Assembly: Door assembly to be determined, frame and
lockset included.
Ceiling Grid System: Mechanically suspended, 2' x 4' Armstrong
"Prelude" building-standard grid throughout the
Premises.
Ceiling Tiles: Armstrong 2' x 4' mineral-fiber acoustical lay-
in "Cortega" tiles.
Light Fixtures, Recessed, ceiling-mounted, 2' x 4' fluorescent
fixture with three lamps and prismatic lens,
installed in building-standard acoustic ceiling.
Wall Switches: Switching to be dual rocker switch to meet Title
24 requirements, controlling building standard
fixtures.
Wall Duplex Outlet: Duplex power receptacle mounted at standard
Height (18" A.F.F. mounted vertically) in
drywall partition with normal circuiting from
core low voltage panel.
Wall Telephone Data Outlet: Telephone/data outlet to be dry-wall ring
mounted at standard height (18"A.F.F. mounted
vertically) in drywall partition with pull
string to above ceiling.
Paint: Building-standard paint to consist of one coat
of stipple acrylic latex selected from building
color samples.
Base: Building-standard base 4" high, resilient rubber
selected from building sample colors.
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Resilient Tile: Building-standard resilient tile will be
provided in lieu of carpeting where required,
selected from building sample colors.
Carpet: Building-standard carpet, 26 ounces per square
yard, selected from building sample colors.
Window Treatment: Building-standard horizontal mini-blinds typical
at all exterior windows.
HVAC: Individual, custom-designed, roof mounted
package or heat-pump unit with one thermostatic
control per zone.
Sprinkler System: Semi-recessed sprinkler heads in white
escutcheon, installed in building-standard
ceiling tiles.
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Exhibit D
MORTGAGES CURRENTLY AFFECTING THE PROJECT
[None]
<PAGE>
Exhibit E
SHELL UPGRADES
AMAT AMAT
Approved Date
CQ# Description Status Cost Approved Remarks
--- ----------- ------ -------- -------- -------
1004 toilet mm blk outs completed 7,200 2/4/98 Installed as requested
1005 undgr drainage sewer completed 107,467 2/4/98 Scope incl vending/janitor closet,
add't sewer undrg, clean outs
1006 reception desk comm conduit completed 3,739 12/19/98 Communication and electrical
conduit to reception desks
1009 ungr comm conduit completed 71,601 12/19/98 Scope incl. 6-4" addtl conduit
w/jnct box to DeGuine N&S Campus
1011 upgrd rf joists for mech. eqmt. completed 8,964 12/19/98 Upgrades roof joist sizes within
mechanical screen area
1014 elevator oil leak monitoring completed 7,578 4/3/98 AMAT requirement
1020 second flr infills Bldgs A&D completed 64,987 4/3/98 Changed lobby locations for Bldgs
A&D
1025 elevator eqpmt (7) bldg completed 530,428 4/3/98 Installed elevators per HPC core
plans, incls. Machine Rooms, sound
deading, secondary machinery
containment, & ventilation
1026 add't stairs - 2 per building completed 183,036 4/3/98 Scope for 14 stairs incl stringers,
treads, infill, temporary handrail
steel handrails per drawings left
in each building for future use
1028 infrastr for grease interceptor completed 15,516 2/4/98 Install additional underground
sewer south and east of Bldg G
1030 site conduit for 4000amp completed 27,638 2/4/98 Install 2 additional 6" conduits on
north side of North Campus for
future upgrade of electrical
service to 4,000 amps per bldg.
1033 blk out slab at Bldg F for CET completed 9,078 1/7/98 Included pour of concrete if not
clean rooms and Bldg G for Kitchen left open
1039 extr dr panic hardware completed 41,039 4/1/98 Per discussions with Tobbi Beck
from Security
1040 power assist drs at main entries completed 40,513 4/1/98 Per discussions with Tobbi Beck
from Security
1051 site security upgrades completed 40,393 4/1/98 Per discussions with Tobbi Beck
from Security
1055 electrical room 7 bldgs completed 20,987 4/3/98 Enclose all Elect. Rms, per code.
Split costs with CarrAmerica
CarrA addit A/E fees for shell & site completed 14,250 4/3/98 Additional services for all shell
changes and site changes requested by AMAT
Total Change Order Costs 1,194,414
<PAGE>
Exhibit F
LIST OF HAZARDOUS SUBSTANCES AND QUANTITIES USED BY TENANT
Customary types and quantities of office supplies and cleaning materials.
<PAGE>
Exhibit G
MASTER LEASE
[To Be Attached]