<PAGE>
Exhibit 10.1
LEASE AGREEMENT
BETWEEN
Sobrato Interests
a California
Limited Partnership
and
Broadcom Corporation
a California corporation
November 20, 2000
<PAGE>
LEASE BETWEEN
SOBRATO INTERESTS AND BROADCOM CORPORATION
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SECTION..........................................................................PAGE
#
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Parties...............................................................................1
Premises..............................................................................1
Use...................................................................................1
Permitted
Uses.....................................................................1
Uses
Prohibited....................................................................2
Advertisements
and
Signs...........................................................2
Covenants,
Conditions and
Restrictions.............................................2
Parking............................................................................2
Term and
Rental.......................................................................2
Base Monthly
Rent..................................................................2
Late
Charges.......................................................................3
Security
Deposit...................................................................4
Construction..........................................................................4
Landlord's
Obligations.............................................................4
Tenant
Improvement
Plans...........................................................5
Tenant
Improvement
Costs...........................................................5
Construction.......................................................................6
Insurance..........................................................................6
Punch List &
Warranty..............................................................6
Other Work by
Tenant...............................................................6
Acceptance of Possession and Covenants to
Surrender...................................6
Delivery and
Acceptance............................................................6
Condition Upon
Surrender...........................................................6
Failure to
Surrender...............................................................7
Alterations and
Additions.............................................................7
Tenant's
Alterations...............................................................7
Free From
Liens....................................................................8
Compliance With
Governmental
Regulations...........................................8
Back-Up
Generator..................................................................8
Communications
and Power Conduits and
Equipment....................................9
Maintenance of
Premises..............................................................10
Landlord's
Obligations............................................................10
Tenant's
Obligations..............................................................10
Landlord and
Tenant's Obligations Regarding Reimbursable Operating
Costs..........11
Reimbursable
Operating
Costs......................................................11
Tenant's
Allocable
Share..........................................................12
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Waiver of
Liability...............................................................13
Audit
Rights......................................................................13
Hazard
Insurance.....................................................................13
Tenant's
Use......................................................................13
Landlord's
Insurance..............................................................14
Tenant's
Insurance................................................................14
Waiver............................................................................14
Taxes................................................................................14
Utilities............................................................................15
Toxic Waste and Environmental
Damage.................................................15
Tenant's
Responsibility...........................................................15
Tenant's
Indemnity Regarding Hazardous
Materials..................................16
Actual Release
by
Tenant..........................................................16
Environmental
Monitoring..........................................................17
Landlord's
Indemnity Regarding Hazardous
Materials................................17
Tenant's
Default.....................................................................18
Remedies..........................................................................18
Right to
Re-enter.................................................................19
Abandonment.......................................................................19
No
Termination....................................................................19
Non-Waiver........................................................................19
Performance by
Landlord...........................................................20
Habitual
Default..................................................................20
Landlord's
Liability................................................................20
Limitation on
Landlord's
Liability................................................20
Limitation on
Tenant's
Recourse...................................................21
Indemnification
of
Landlord.......................................................21
Destruction of
Premises..............................................................21
Landlord's
Obligation to
Restore..................................................21
Limitations on
Landlord's Restoration
Obligation..................................21
Condemnation.........................................................................22
Assignment or
Sublease...............................................................22
Consent by
Landlord...............................................................22
Assignment or
Subletting
Consideration............................................23
No
Release........................................................................23
Reorganization
of
Tenant..........................................................24
Permitted
Transfers...............................................................24
Effect of
Default.................................................................24
Effects of
Conveyance.............................................................25
Successors and
Assigns............................................................25
Customer
Equipment................................................................25
Option to Extend the Lease
Term......................................................25
Grant and
Exercise of
Option......................................................25
Determination of
Fair Market
Rental...............................................26
Resolution of a
Disagreement over the Fair Market
Rental..........................26
Personal to
Tenant................................................................27
General
Provisions...................................................................27
Attorney's
Fees...................................................................27
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Authority of
Parties..............................................................27
Brokers...........................................................................27
Choice of
Law.....................................................................27
Dispute
Resolution................................................................27
Entire
Agreement..................................................................29
Entry by
Landlord.................................................................29
Estoppel
Certificates.............................................................29
Exhibits..........................................................................29
Interest..........................................................................29
Modifications
Required by
Lender..................................................30
No Presumption
Against
Drafter....................................................30
Notices...........................................................................30
Property
Management...............................................................30
Rent..............................................................................30
Representations...................................................................30
Rights and
Remedies...............................................................30
Severability......................................................................31
Submission of
Lease...............................................................31
Subordination.....................................................................31
Survival of
Indemnities...........................................................31
Time..............................................................................31
Transportation
Demand Management
Programs.........................................31
Waiver of Right
to Jury
Trial.....................................................32
General
Provisions...................................................................32
Grant.............................................................................32
Exclusions........................................................................32
Nortel
Sublease...................................................................33
EXHIBIT A - Premises, Building &
Project.............................................35
EXHIBIT B - Draft Letter of
Credit...................................................36
EXHIBIT C - Therma Mechanical
Report.................................................37
EXHIBIT D - Nortel Sublease
Space....................................................38
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1. PARTIES: THIS LEASE, is entered into on this 20th day of
November 2000,
("Effective Date") between Sobrato Interests, a California Limited
Partnership,
whose address is 10600 North De Anza Boulevard, Suite 200,
Cupertino, CA 95014,
and Broadcom Corporation, a California Corporation, whose address
is 16215 Alton
Parkway, Irvine, California, 92618, hereinafter called respectively
Landlord and
Tenant.
2. PREMISES: Landlord hereby leases to Tenant, and Tenant hires
from Landlord
those certain Premises with the appurtenances, situated in the City
of Santa
Clara, County of Santa Clara, State of California, commonly known
and designated
as 2451-2465 Mission College Boulevard consisting of a three story
building of
136,708 rentable square feet ("Building") as outlined in red on
Exhibit "A"
attached hereto, and all improvements located therein including but
not limited
to parking areas and structures, landscaping, loading docks,
sidewalks, service
areas and other facilities. The Building is situated within a
project site
shared with three additional buildings owned by Landlord as
outlined in green on
Exhibit "A" ("Project"). Tenant shall be entitled to use (on a
non-assigned
basis) its Allocable Share (as defined in Lease section 8.E. below)
of the
parking stalls within the project, which shall not be less than 460
parking
spaces. Notwithstanding the foregoing, Tenant shall be allowed to
designate
approximately 35 parking stalls for Tenant's exclusive use near the
lobby of the
Building in the location depicted on Exhibit "A". Tenant
acknowledges Landlord's
right to and hereby consents to construction of additional
building(s) within
the Project or on adjacent land owned by Landlord. The Building has
the address
and contains the square footage specified above; provided, however,
that any
statement of square footage set forth in this Lease, or that may
have been used
in calculating any of the economic terms hereof is an approximation
which
Landlord and Tenant agree is reasonable and no economic terms based
thereon
shall be subject to revision whether or not the actual square
footage is more or
less.
Tenant's leasehold interest in the Premises, which is the entire
Building,
includes, without limitation, the utility raceways and risers and
the rooftop of
such Building. Notwithstanding the foregoing, Tenant agrees and
acknowledges
that Landlord shall have non-exclusive access to and use of any and
all
mechanical, electrical, telephone and similar rooms, janitor
closets, elevators,
pipe and other vertical shafts and ducts, flues and stairwells of
the Building,
to the extent that such access and use is required (A) to comply
with Landlord's
obligations under this Lease, (B) to enforce Landlord's rights
under this Lease
and (C) to otherwise protect Landlord's interest in the Building.
In connection
with any of the foregoing activities of Landlord, Landlord shall
use reasonable
efforts while conducting such activities to minimize any
interference with
Tenant's use and occupancy of the Premises.
3. USE:
A.
PERMITTED USES: Tenant shall use the Premises as permitted
under
applicable zoning laws only for the following purposes and shall
not change the
use of the Premises without the prior written consent of Landlord:
Office,
research and development, marketing, light manufacturing,
incidental warehouse,
ancillary storage, electronics labs, and other incidental
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uses. Tenant shall use only the number of parking spaces allocated
to Tenant
under this Lease. All commercial trucks and delivery vehicles shall
(i) be
parked at the rear of the Building, (ii) loaded and unloaded in a
manner which
does not interfere with the businesses of other occupants of the
Project, and
(iii) permitted to remain within the Project only so long as is
reasonably
necessary to complete the loading and unloading. Landlord makes
no
representation or warranty that any specific use of the Premises
desired by
Tenant is permitted pursuant to any Laws.
B.
USES PROHIBITED: Tenant shall not commit or suffer to be committed
on
the Premises any waste, nuisance, or other act or thing which may
disturb the
quiet enjoyment of any other tenant in or around the Premises, nor
allow any
sale by auction or any other use of the Premises for an unlawful
purpose. Tenant
shall not (i) damage or overload the electrical, mechanical or
plumbing systems
of the Premises, (ii) attach, hang or suspend anything from the
ceiling, walls
or columns of the building (except for decorations and wall
hangings typically
found in buildings with similar permitted uses) or set any load on
the floor in
excess of the load limits for which such items are designed, or
(iii) generate
dust, fumes or waste products which create a fire or health hazard
or damage the
Premises or any portion of the Project, including without
limitation the soils
or ground water in or around the Project. No materials, supplies,
equipment,
finished products or semi-finished products, raw materials or
articles of any
nature, or any waste materials, refuse, scrap or debris, shall be
stored upon or
permitted to remain on any portion of the Premises outside of the
Building
without Landlord's prior approval, which approval may be withheld
in its sole
discretion.
C.
ADVERTISEMENTS AND SIGNS: Tenant will not place or permit to be
placed,
in, upon or about the Premises any signs not approved by the city
and other
governing authority having jurisdiction. Tenant will not place or
permit to be
placed upon the Premises any signs, advertisements or notices
without the
written consent of Landlord as to type, size, design, lettering,
coloring and
location, which consent will not be unreasonably withheld,
conditioned or
delayed; provided, however, that Tenant shall have the exclusive
right to place
signs on the exterior of the Building, and the non-exclusive right
to place
signs on monuments of the Project, subject to Landlord's consent as
provided
herein. Any sign placed on the Premises shall be removed by Tenant,
at its sole
cost, prior to the Expiration Date or promptly following the
earlier termination
of the Lease, and Tenant shall repair, at its sole cost, any damage
or injury to
the Premises caused thereby, and if not so removed, then Landlord
may have same
so removed at Tenant's expense.
D.
COVENANTS, CONDITIONS AND RESTRICTIONS: This Lease is subject to
the
effect of (i) any covenants, conditions, restrictions, easements,
mortgages or
deeds of trust, ground leases, rights of way of record and any
other matters or
documents of record; and (ii) any zoning laws of the city, county
and state
where the Building is situated (collectively referred to herein
as
"Restrictions") and Tenant will conform to and will not violate the
terms of any
such Restrictions.
E.
PARKING:: No charge or fee (other than rent payable hereunder,
and
except as required by law) shall be imposed in exchange for the
right of Tenant
and its employees, invitees and contractors to have access to or
from, or to
park in, the parking areas of the Project during the Term of this
Lease.
4. TERM AND
RENTAL:
A.
BASE MONTHLY RENT: The term ("Lease Term") shall be for ninety six
(96)
months, commencing on March 1, 2001 (the "Commencement Date") and
ending on
February 28, 2009, ("Expiration Date"). Notwithstanding the
parties' agreement
that the Lease Term begins on the Commencement Date, this Lease and
all of the
obligations of Landlord and Tenant shall be binding and in full
force and effect
from and after the Effective Date. In addition to all other sums
payable by
Tenant
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under this Lease, Tenant shall pay base monthly rent ("Base Monthly
Rent") for
the Premises according to the following schedule:
Months 01-12: $751,894.00 per month $5.50 psf
Months 13-24: $781,969.76 per month $5.72 psf
Months 25-36: $813,412.60 per month $5.95 psf
Months 37-48: $846,222.52 per month $6.19 psf
Months 49-60: $879,032.44 per month $6.43 psf
Months 61-72: $914,576.52 per month $6.69 psf
Months 73-84: $951,487.68 per month $6.96 psf
Months 85-96: $989,765.92 per month $7.24 psf
Base Monthly Rent shall be due in advance on or before the first
day of each
calendar month during the Lease Term. All sums payable by Tenant
under this
Lease shall be paid to Landlord in lawful money of the United
States of America,
without offset or deduction and without prior notice or demand, at
the address
specified in Section 1 of this Lease or at such place or places as
may be
designated in writing by Landlord during the Lease Term. Base
Monthly Rent for
any period less than a calendar month shall be a pro rata portion
of the monthly
installment. Concurrently with Tenant's execution of this Lease,
Tenant shall
pay to Landlord the sum of Seven Hundred Fifty One Thousand Eight
Hundred Ninety
Four and No/100 Dollars ($751,894.00) as prepaid rent for the first
month of the
Lease.
Notwithstanding the Commencement Date, Tenant shall have the right,
but not the
obligation, upon Tenant's receipt of a temporary certificate of
occupancy (or
its legal equivalent), to take early occupancy before the
Commencement Date, of
all or any portion of the Premises for the Permitted Use and to
enable Tenant
and its contractors to install the Initial Improvements described
in Section 5
below, equipment, trade fixtures, furnishings and decorations in
the Premises
("Early Occupancy"). Such Early Occupancy shall not change the Term
Commencement
Date or Term Expiration Date. Tenant's occupancy of the Premises
under this
Section 3(b) shall be upon all the terms, covenants and conditions
contained in
the Lease, except that Tenant shall only be obligated to pay Base
Monthly Rent
and Tenant's Allocable Share of Reimbursable Operating Costs during
any Early
Occupancy based on that portion of the Premises that Tenant is
actually
occupying for the conduct of Tenant's business.
B.
LATE CHARGES: Tenant hereby acknowledges that late payment by
Tenant to
Landlord of Base Monthly Rent and other sums due hereunder will
cause Landlord
to incur costs not contemplated by this Lease, the exact amount of
which is
extremely difficult to ascertain. Such costs include but are not
limited to:
administrative, processing, accounting, and late charges which may
be imposed on
Landlord by the terms of any contract, revolving credit, mortgage,
or trust deed
covering the Premises. Accordingly, if any installment of Base
Monthly Rent or
other sum due from Tenant shall not be received by Landlord or its
designee
within five (5) business days after the date the rent is due,
Tenant shall pay
to Landlord a late charge equal to five (5%) percent of such
overdue amount,
which late charge shall be due and payable on the same date that
the overdue
amount was due. The parties agree that such late charge represents
a fair and
reasonable estimate of the costs Landlord will incur by reason of
late payment
by Tenant, excluding interest and attorneys fees and costs.
Notwithstanding the
foregoing, upon the first failure of Tenant to make timely payment
in any
calendar year of the Term, Tenant shall not be liable for such late
charge if
Tenant pays such overdue amount to Landlord within three (3)
business days after
receipt of written notice that such amount was not received when
due. If any
rent or other sum due from Tenant remains delinquent for a period
in excess of
thirty (30) days then, in addition to such late charge, Tenant
shall pay to
Landlord interest on any rent that is not paid when due at the
Agreed Interest
Rate specified in Section 19.J following the date such amount
became due until
paid. Acceptance by Landlord of such late charge shall not
constitute a waiver
of Tenant's default with respect to such overdue amount nor prevent
Landlord
from exercising any of the other rights and remedies granted
hereunder. In the
event that a late charge is payable hereunder, whether or not
collected, for
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three (3) consecutive installments of Base Monthly Rent, then the
Base Monthly
Rent shall automatically become due and payable quarterly in
advance, rather
than monthly, notwithstanding any provision of this Lease to the
contrary.
C.
SECURITY DEPOSIT: Prior to March 1, 2005, Tenant shall deposit
with
Landlord the sum of Seven Hundred Fifty One Thousand Eight Hundred
Ninety Four
and No/100 Dollars ($751,894.00) ("Security "Deposit"). Landlord
shall not be
deemed a trustee of the Security Deposit, may use the Security
Deposit in
business, and shall not be required to segregate it from its
general accounts.
Tenant shall not be entitled to interest on the Security Deposit.
If Tenant
defaults with respect to any provisions of the Lease, including but
not limited
to the provisions relating to payment of Base Monthly Rent or other
charges,
Landlord may, after the expiration of all applicable notice and
cure periods, to
the extent reasonably necessary to remedy Tenant's default, use any
or all of
the Security Deposit towards payment of the following: (i) Base
Monthly Rent or
other charges in default; (ii) any other amount which Landlord may
spend or
become obligated to spend by reason of Tenant's default including,
but not
limited to Tenant's failure to restore or clean the Premises
following vacation
thereof. If any portion of the Security Deposit is so used or
applied, Tenant
shall, within ten (10) business days after written demand from
Landlord, deposit
cash with Landlord in an amount sufficient to restore the Security
Deposit to
its full original amount, and shall pay to Landlord such other sums
as necessary
to reimburse Landlord for any sums paid by Landlord. If Tenant
shall default
more than three (3) times in any twelve (12) month period,
irrespective of
whether or not such default is cured, then the Security Deposit
shall, within
ten (10) days after demand by Landlord, be increased by Tenant to
an amount
equal to three (3) times the Base Monthly Rent. Tenant may not
assign or
encumber the Security Deposit without the consent of Landlord. Any
attempt to do
so shall be void and shall not be binding on Landlord. The Security
Deposit
shall be returned to Tenant within thirty (30) days after the
Expiration Date
and surrender of the Premises to Landlord, less any amount deducted
in
accordance with this Section, together with Landlord's written
notice itemizing
the amounts and purposes for such deduction. In the event of
termination of
Landlord's interest in this Lease, Landlord may deliver or credit
the Security
Deposit to Landlord's successor in interest in the Premises and
thereupon be
relieved of further responsibility with respect to the Security
Deposit provided
such successor assumes, in writing, Landlord's obligations with
respect to such
Security Deposit.
Landlord agrees that in lieu of a cash Security Deposit, Tenant may
deposit a
letter of credit ("Letter of Credit") substantially in the form
attached hereto
as Exhibit "B". Landlord shall be entitled to draw against the
Letter of Credit
at any time provided only that Landlord certifies to the issuer of
the Letter of
Credit that Tenant is in default under the Lease. Tenant shall keep
the letter
of credit in effect during the entire Lease Term, as the same may
be extended,
plus a period of four (4) weeks after expiration of the Lease Term.
At least
thirty (30) days prior to expiration of any Letter of Credit, the
term thereof
shall be renewed or extended for a period of at least one (1) year.
Tenant's
failure to so renew or extend the Letter of Credit shall be a
material default
of this Lease by Tenant. In the event Landlord draws against the
Letter of
Credit, Tenant shall replenish the existing Letter of Credit or
cause a new
Letter of Credit to be issued such that the aggregate amount of
letters of
credit available to Landlord at all times during the Lease Term is
the amount of
the Security Deposit originally required.
5.
CONSTRUCTION:
A.
LANDLORD'S OBLIGATIONS: Landlord shall ensure that the existing
Building
systems are in good operating condition and repair including the
plumbing,
sprinklers, electrical (including panels and outlets), and doors
(both shipping
and personnel) With regard to the HVAC systems, Landlord agrees
perform the work
specified in the inspection report issued by
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Therma Mechanical dated July 20, 2000 and attached as Exhibit "C"
necessary to
put such systems into good condition and repair.
B. TENANT IMPROVEMENT PLANS: Tenant, at Tenant's sole cost and
expense, shall
retain an interior architect ("Architect") to prepare plans and
outline
specifications to be attached as Exhibit "C" ("Tenant Improvement
Plans and
Specifications") with respect to the construction of initial
interior
improvements to the Premises ("Tenant Improvements"). The Tenant
Improvement
Plans and Specifications shall be completed for all aspects of the
work (either
in one package or in phases as provided below) by June 30, 2001
with all detail
necessary for submittal to the city, within three (3) days
thereafter, for
issuance of building permits and for construction, and shall
include any
information required by the relevant agencies regarding Tenant's
use of
Hazardous Materials if applicable. The Tenant Improvements shall:
(i) be
reasonably compatible with (and not damaging to) the structural,
mechanical,
electrical, plumbing and other systems of the Building, (ii) not
materially
adversely impact (in Landlord's reasonable judgment) the exterior
appearance or
operations of the Building, the currently existing interior
improvements in the
Building, or the appearance or operations of the public areas of
the Building
and (iii) comply with all any law, statute, ordinance, order, rule,
regulation
or requirement of any governmental or quasi-governmental authority.
All Tenant
Improvements shall be subject to Landlord's reasonable approval,
which shall not
be unreasonably withheld or delayed beyond five (5) business days
following
receipt of Tenant's Plans and Specifications, provided the above
conditions are
met. Landlord's failure to approve, or reasonably disapprove, the
Tenant
Improvement Plans and Specifications (or revised Plans and
Specifications)
within five (5) business days following Landlord's receipt thereof
shall be
deemed Landlord's approval. The Tenant Improvement Plans and
Specifications
shall include all detail required by the City of Santa Clara
necessary to obtain
a Certificate of Occupancy. Construction of the Tenant Improvements
shall be
performed by a general contractor ("General Contractor") selected
by Tenant,
subject to Landlord's reasonable approval. Tenant shall not be
required to use
union labor as a condition of receiving Landlord's approval
hereunder. The
Tenant Improvement Plans and Specifications shall be prepared in
sufficient
detail to allow General Contractor to construct the Tenant
Improvements. The
Tenant shall contract directly with General Contractor for
construction of the
Tenant Improvements and shall cause the General Contractor to
construct the
Tenant Improvements in accordance with all Tenant Improvement Plans
and
Specifications. Tenant shall have no obligation to remove the
Tenant
Improvements at the expiration or earlier termination of the Lease.
The Tenant
Improvements (other than Tenant's trade fixtures, equipment and
furnishings and
other personal property of Tenant that can be removed without
permanent damage
to the Premises) shall not be removed or altered by Tenant without
the prior
written consent of Landlord as provided in Section 7. Tenant shall
have the
right to depreciate and claim and collect any investment tax
credits in the
Tenant Improvements during the Lease Term. Upon expiration of the
Lease Term or
any earlier termination of the Lease, the Tenant Improvements
(other than
Tenant's trade fixtures, equipment and furnishings and other
personal property
of Tenant that can be removed without permanent damage to the
Premises) shall
become the property of Landlord and shall remain upon and be
surrendered with
the Premises, and title thereto shall automatically vest in
Landlord without any
payment therefore.
C.
TENANT IMPROVEMENT COSTS: Tenant shall pay all costs associated
with the
Tenant Improvements. The cost of Tenant Improvements shall include
the following
to the extent actually incurred by Tenant or General Contractor in
connection
with the construction of Tenant Improvements: architectural design
fees,
construction costs, all permit fees, and construction taxes or
other costs
imposed by governmental authorities related to the Tenant
Improvements. Landlord
shall not charge
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Tenant any fee of any kind for its involvement in the construction
or design of
the Tenant Improvement, other than the out-of-pocket costs paid to
professional
consultants for review of the Tenant Improvement Plans and
Specifications, and
any revisions thereto. Tenant shall pay directly to the General
Contractor all
amounts due pursuant to the construction of Tenant
Improvements.
D.
CONSTRUCTION: Tenant shall diligently supervise the construction
of
Tenant Improvements until they are substantially complete as
hereinafter
defined. The Tenant Improvements shall be deemed substantially
complete
("Substantially Complete" or "Substantial Completion") when the
Tenant
Improvements have been substantially completed in accordance with
the Tenant
Improvement Plans and Specifications, as evidenced by the
completion of a final
inspection or the issuance of a certificate of occupancy or its
equivalent by
the appropriate governmental authority, and the issuance of a
certificate by the
Architect certifying that the Tenant Improvements have been
completed in
accordance with the plans. Installation of Tenant's data and phone
cabling and
furniture shall not be required in order to deem the Premises
Substantially
Complete.
E.
INSURANCE: General Contractor shall procure builder's risk
insurance for
the full replacement cost of the Tenant Improvements while the
Tenant
Improvements are under construction, up until the date that the
casualty
insurance policy described in Section 9 is in full force and
effect.
F.
PUNCH LIST & WARRANTY: After the Tenant Improvements are
Substantially
Complete, Tenant shall cause the General Contractor to immediately
correct any
construction defects or other "punch list" items which require
attention. The
General Contractor shall provide a standard contractor's warranty
with respect
to the Tenant Improvements for one (1) year from the Commencement
Date. Such
warranty shall exclude routine maintenance, damage caused by
Tenant's negligence
or misuse, and acts of God.
G.
OTHER WORK BY TENANT: All work not described in the Tenant
Improvement
Plans and Specifications, such as furniture, telephone equipment,
telephone
wiring and office equipment work, shall be furnished and installed
by Tenant at
Tenant' cost. Prior to Substantial Completion, Tenant shall be
obligated to
contract with a firm to monitor the fire system.
6. ACCEPTANCE OF
POSSESSION AND COVENANTS TO SURRENDER:
A.
DELIVERY AND ACCEPTANCE: On the Commencement Date, Landlord
shall
deliver and Tenant shall accept possession of the Premises and
enter into
occupancy of the Premises on the Commencement Date. Tenant
acknowledges that it
has had an opportunity to conduct, and has conducted, such
inspections of the
Premises as it deems necessary to evaluate its condition. Except as
otherwise
specifically provided herein, Tenant agrees to accept possession of
the Premises
in its then existing condition, subject to all Restrictions and
without
representation or warranty by Landlord.
B.
CONDITION UPON SURRENDER: Tenant further agrees on the Expiration
Date
or on the sooner termination of this Lease, to surrender the
Premises to
Landlord in good condition and repair, normal wear and tear
excepted. In this
regard, "normal wear and tear" shall be construed to mean wear and
tear caused
to the Premises by the natural aging process which occurs in spite
of prudent
application of the best commercially reasonable standards for
maintenance,
repair replacement, and janitorial practices, and does not include
items of
neglected or deferred maintenance. In any event, Tenant shall cause
the
following to be done prior to the Expiration Date or sooner
termination of this
Lease: (i) all interior walls shall be repaired, patched, cleaned,
and otherwise
made paint-ready, (ii) all tiled floors shall be cleaned and waxed,
(iii) all
carpets shall be cleaned and shampooed, (iv) all broken, marred,
stained or
nonconforming acoustical
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ceiling tiles shall be replaced except to the extent such staining
or
discoloration is attributable to Landlord's failure to maintain the
Building to
the extent required by Section 8.A. of this Lease, (v) all cabling
placed above
the ceiling by Tenant or Tenant's contractors shall be removed
unless such
cabling has been properly suspended in accordance with applicable
code and is
not weighing on the ceiling, (vi) all windows shall be washed;
(vii) the HVAC
system shall be serviced by a reputable and licensed service firm
and left in
"good operating condition and repair" as so certified by such firm,
(viii) the
plumbing and electrical systems and lighting shall be placed in
good order and
repair (including replacement of any burned out, discolored or
broken light
bulbs, ballasts, or lenses. On or before the Expiration Date or
sooner
termination of this Lease, Tenant shall remove all its personal
property and
trade fixtures from the Premises. All property and fixtures not so
removed shall
be deemed as abandoned by Tenant. Tenant shall ascertain from
Landlord within
ninety (90) days before the Expiration Date whether Landlord
desires to have any
Alterations made by Tenant (as defined in Section 7) removed and
the Premises or
any parts thereof restored to a standard open office plan with
materials and
finishes consistent with the other open office areas with the
Premises, or to
cause Tenant to surrender all Alterations in place to Landlord. If
Landlord
shall so desire, Tenant shall, at Tenant's sole cost and expense,
remove such
Alterations as Landlord requires and shall repair and restore said
Premises or
such parts thereof before the Expiration Date. Such repair and
restoration shall
include causing the Premises to be brought into compliance with all
applicable
building codes and laws in effect at the time of the removal to the
extent such
compliance is necessitated by the repair and restoration work.
C.
FAILURE TO SURRENDER: If the Premises are not surrendered at
the
Expiration Date or sooner termination of this Lease in the
condition required by
this Section 6, Tenant shall be deemed in a holdover tenancy
pursuant to this
Section 6.C and Tenant shall indemnify, defend, and hold Landlord
harmless
against loss or liability resulting from delay by Tenant in so
surrendering the
Premises including, without limitation, any claims made by any
succeeding tenant
founded on such delay and costs incurred by Landlord in returning
the Premises
to the required condition, plus interest at the Agreed Interest
Rate. Any
holding over after the termination or Expiration Date with
Landlord's express
written consent, shall be construed as month-to-month tenancy,
terminable on
thirty (30) days written notice from either party, and Tenant shall
pay as Base
Monthly Rent to Landlord a rate equal to one hundred twenty five
percent (125%)
of the Base Monthly Rent due in the month preceding the termination
or
Expiration Date, plus all other amounts payable by Tenant under
this Lease. Any
holding over shall otherwise be on the terms and conditions herein
specified,
except those provisions relating to the Lease Term and any options
to extend or
renew, which provisions shall be of no further force and effect
following the
expiration of the applicable exercise period. If Tenant remains in
possession of
the Premises after the Expiration Date or sooner termination of
this Lease
without Landlord's consent, Tenant's continued possession shall be
on the basis
of a tenancy at sufferance and Tenant shall pay as rent during the
holdover
period an amount equal to one hundred fifty percent (150%) of the
Base Monthly
Rent due in the month preceding the termination or Expiration Date,
plus all
other amounts payable by Tenant under this Lease. This provision
shall survive
the termination or expiration of the Lease.
7. ALTERATIONS
AND ADDITIONS:
A.
TENANT'S ALTERATIONS: Tenant shall not make, or suffer to be made,
any
alteration or addition to the Premises ("Alterations"), or any part
thereof,
without obtaining Landlord's prior written consent and delivering
to Landlord
the proposed architectural and structural plans for all such
Alterations at
least fifteen (15) days prior to the start of construction. If such
Alterations
affect the structure of the Building, Tenant additionally agrees to
reimburse
Landlord its reasonable out-of-pocket costs incurred in reviewing
Tenant's
plans. After
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obtaining Landlord's consent, which consent shall state whether or
not Landlord
will require Tenant to remove such Alteration at the expiration or
earlier
termination of this Lease, Tenant shall not proceed to make such
Alterations
until Tenant has obtained all required governmental approvals and
permits, and
provides Landlord reasonable security, in form reasonably approved
by Landlord,
to protect Landlord against mechanics' lien claims. Tenant agrees
to provide
Landlord (i) written notice of the anticipated and actual
start-date of the
work, (ii) a complete set of half-size (15" X 21") vellum as-built
drawings, and
(iii) a certificate of occupancy for the work upon completion of
the
Alterations. All Alterations shall be constructed in compliance
with all
applicable building codes and laws including, without limitation,
the Americans
with Disabilities Act of 1990 as amended from time to time. Upon
the Expiration
Date, all Alterations, except movable furniture and trade fixtures,
shall become
a part of the realty and belong to Landlord but shall nevertheless
be subject to
removal by Tenant as provided in Section 6 above. Alterations which
are not
deemed as trade fixtures include heating, lighting, electrical
systems, air
conditioning, walls, carpeting, or any other installation which has
become an
integral part of the Premises. Landlord approves Tenant's right to
finance and
to secure under the California Uniform Commercial Code, Tenant's
trade fixtures,
equipment and other personal property which may be affixed to the
Premises, and
Landlord shall reasonably cooperate with the requests of any
lessors of, or
lenders holding a security interest in, such trade fixtures and
equipment,
provided that such cooperation does not materially affect
Landlord's rights
under this Lease. All Alterations shall be maintained, replaced or
repaired by
Tenant at its sole cost and expense.
Notwithstanding the foregoing, Tenant shall be entitled, without
obtaining
Landlord's consent, to make Alterations which do not affect the
structure of the
Building and which do not cost more than Fifty Thousand Dollars
($50,000.00) per
Alteration ("Permitted Alterations"); provided, however, that: (i)
Tenant shall
still be required to comply with all other provisions of this
paragraph; and
(ii) such Permitted Alterations are subject to removal by Tenant at
Landlord's
election pursuant to Section 6.B. above at the expiration or
earlier termination
of the Lease.
B.
FREE FROM LIENS: Tenant shall keep the Premises free from all
liens
arising out of work performed, materials furnished, or obligations
incurred by
Tenant or claimed to have been performed for Tenant. In the event
Tenant fails
to discharge any such lien within ten (10) days after receiving
notice of the
filing, Landlord shall be entitled to discharge the lien at
Tenant's expense and
all resulting costs incurred by Landlord, including attorney's fees
shall be due
from Tenant as additional rent.
C.
COMPLIANCE WITH GOVERNMENTAL REGULATIONS: The term Laws or
Governmental
Regulations shall include all federal, state, county, city or
governmental
agency laws, statutes, ordinances, standards, rules, requirements,
or orders now
in force or hereafter enacted, promulgated, or issued. The term
also includes
government measures regulating or enforcing public access, traffic
mitigation,
occupational, health, or safety standards for employers, employees,
landlords,
or tenants. Tenant, at Tenant's sole expense shall make all
repairs,
replacements, alterations, or improvements to the Premises (other
than repairs,
replacements, Alterations or improvements to the structural
portions of the
Building and the Common Areas of the Project unless such are
required due to
Tenant's specific use, occupancy or Alterations) needed to comply
with all
Governmental Regulations. The judgment of any court of competent
jurisdiction or
the admission of Tenant in any action or proceeding against Tenant
(whether
Landlord be a party thereto or not) that Tenant has violated any
such law,
regulation or other requirement in its use of the Premises shall be
conclusive
of that fact as between Landlord and Tenant.
D.
BACK-UP GENERATOR: Tenant shall have the right, subject to
Landlord's
prior written
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consent (which consent shall be subject to the terms in this
Section 7.C. but
which shall not otherwise be unreasonably withheld, conditioned or
delayed) to
install one 300 KW back-up electrical generator, together with
reasonably
necessary connections from the location of such generator to the
Premises and
related above-ground diesel fuel storage tanks (collectively,
"Generator"),
either in the parking lot area of the Common Area or on the roof of
the Building
in a location reasonably designated by Landlord and reasonably
acceptable to
Tenant. Without otherwise limiting the criteria upon which Landlord
may withhold
its consent to any proposed Generator, withholding of consent shall
be
presumptively reasonable if Landlord withholds its consent due to
concerns
regarding the appearance of the Generator, its impact on structural
aspects of
the Building or Common Area improvements, ventilation concerns, or
actual or
potential loss of any parking spaces or areas for the Project due
to
installation of the Generator, provided that if Tenant agrees to
take steps (at
Tenant's expense) to mitigate any such concerns raised by Landlord
in a manner
reasonably satisfactory to Landlord, Landlord shall grant its
consent to the
Generator subject to such mitigation. All locations or areas on the
Building
roof or within the Common Area where the Generator is located shall
be provided
by Landlord without additional rent. Tenant shall install the
Generator at its
sole expense and with components reasonably acceptable to Landlord,
and shall be
responsible for maintenance of the Generator, for compliance with
all applicable
Laws with respect to the Generator, and for any damage caused by
the
installation of the Generator or related to the Generator. At the
end of the
Term, Tenant shall remove the Generator from the Project and
restore those
affected areas of the Premises to their condition prior to the
installation of
the Generator.
E.
COMMUNICATIONS AND POWER CONDUITS AND EQUIPMENT: Notwithstanding
the
provisions of Section 7.A above, Tenant shall have the right, at
its sole cost
and expense, to trench in any exterior area within the boundaries
of the Project
reasonably approved by Landlord (which approval may be denied if
such trenching
adversely affects other Tenant's in the Project) for the purposes
of "hard
wiring" voice, data and power transmissions to the Building
("Conduit"),
pursuant to reasonable specifications which have been approved in
writing by
Landlord and Tenant. At the end of the Term hereof, Tenant shall
not be required
to remove any properly installed underground Conduit. Tenant shall
also have the
exclusive right, at its sole cost and expense, to construct,
maintain, operate
and repair an equipment area outside of the Building, including,
without
limitation, the rooftop of the Building, which area shall include,
without
limitation, the following equipment and systems: UPS battery
systems (the "Power
Systems"), and antennae, satellite dishes and other communications
systems and
equipment ("Communications Systems"). All permits, application
fees, and all
costs associated with the Power and Communications Systems shall be
Tenant's
responsibility. Tenant, at its sole cost and expense, shall have
the exclusive
right to install, maintain, and from time to time replace all or a
portion of
the Power and Communications Systems on the roof of the Building,
provided that
prior to commencing any installation or maintenance, Tenant shall
(i) obtain
Landlord's prior approval (which approval shall not be unreasonably
withheld,
conditioned or delayed) of the proposed size, weight and location
of such Power
and Communications Systems and method for fastening such Power
and
Communications Systems to the roof, (ii) such installation and/or
replacement
shall comply strictly with all Laws and the conditions of any bond
or warranty
maintained by Landlord on the roof, and (iii) obtain, at Tenant's
sole cost and
expense, any necessary federal, state, and municipal permits,
licenses and
approvals, and deliver copies thereof to Landlord. Landlord may
supervise any
roof penetration related to the installation of any Power or
Communications
Systems, and Landlord may charge Landlord's reasonable
out-of-pocket costs of
any such supervision performed by a third-party consultant to
Tenant. Tenant
agrees that all installation, construction and maintenance shall be
performed in
a neat,
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responsible, and workmanlike manner, using generally acceptable
construction
standards, consistent with such reasonable requirements as shall be
imposed by
Landlord. Tenant shall repair any damage to the Building caused by
Tenant's
installation, maintenance, replacement, use or removal of the Power
and
Communications Systems. The Power and Communications Systems shall
be considered
Tenant's Trade Fixtures (as defined below) and shall remain the
property of
Tenant, and Tenant may remove the Power and Communications Systems
at its cost
at any time during the Term. Tenant shall remove the Communications
Systems at
Tenant's cost and expense upon the expiration or termination of
this Lease and
shall restore the Building and Premises to their condition prior to
the
installation of the Communications Systems. Landlord makes no
warranty or
representation that the Building or any portions thereof are
suitable for the
use of the Power or Communications Systems, it being assumed that
Tenant has
satisfied itself thereof. Tenant shall protect, defend, indemnify
and hold
harmless Landlord and Landlord's Agents from and against claims,
damages,
liabilities, costs and expenses of every kind and nature, including
attorneys'
fees, incurred by or asserted against Landlord arising out of
Tenant's
installation, maintenance, replacement, use or removal of the Power
and
Communications Systems.
8. MAINTENANCE
OF PREMISES:
A.
LANDLORD'S OBLIGATIONS: Landlord at its sole cost and expense,
shall
maintain in good condition, order, and repair, and replace as and
when
necessary, the foundation, footings, poured concrete floors,
exterior walls,
load bearing walls, and roof structure of the Building.
Notwithstanding the foregoing, during the initial Term of this
Lease, Landlord
shall be obligated to perform and pay for the work of replacement
of the roof
membrane at the end of its useful life (as determined in accordance
with
Landlord's reasonable judgement and consistent with prudent
standards for
building owners in the San Jose area) at Landlord's sole cost and
expense. If
Landlord fails to reasonably act to perform its repair obligations
of this
Paragraph 8.A, and such failure materially affects Tenant's ability
to use and
occupy the Premises for the purposes permitted herein, Tenant shall
have the
right, but not the obligation, to perform such repairs and/or
maintenance if
such failure continues for more than ten (10) business days after
written notice
from Tenant; provided, however, that if the nature of the repairs
and/or
maintenance to be completed by Landlord is such that more than 10
business days
are required to complete such repairs and/or maintenance, Landlord
shall have
such additional time as is reasonably necessary to complete such
repairs and/or
maintenance and thereafter diligently pursue such repairs and/or
maintenance to
completion. In such event, Landlord shall reimburse Tenant for the
reasonable
costs incurred by Tenant to complete such repairs and/or
maintenance within
thirty (30) days after receipt of Tenant's written demand
therefore, together
with copies of the paid invoices evidencing the costs incurred by
Tenant. Any
repairs and/or maintenance permitted herein shall be performed in a
good and
workmanlike manner by licensed contractors. If Landlord objects to
the repairs
and/or maintenance performed or the expenses incurred by Tenant in
performing
such work, Landlord shall deliver a written notice of Landlord's
objection to
Tenant within thirty (30) days after Landlord's receipt of Tenant's
invoice
evidencing the expenses incurred by Tenant. Landlord's notice shall
set forth in
reasonable detail Landlord's reasons for its claim that such
repairs and/or
maintenance were not required or were not Landlord's obligations in
the terms of
this lease and/or the reasons for Landlord's dispute of the
expenses incurred by
Tenant in performing such work. If Landlord and Tenant fail to
resolve any such
dispute within said thirty (30) day period, after Landlord has
notified Tenant
of Landlord's objections, the matter shall be resolved pursuant to
Section 19.E.
below.
B.
TENANT'S OBLIGATIONS: Except those items for which Landlord is
obligated
pursuant to Section 8.A. above, Tenant shall clean,
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maintain, repair and replace when necessary the Premises and every
part thereof
through regular inspections and servicing, including but not
limited to: (i) all
plumbing and sewage facilities, (ii) all heating ventilating and
air
conditioning facilities and equipment, (iii) all fixtures, interior
walls
floors, carpets and ceilings, (iv) all windows, door entrances,
plate glass and
glazing systems including caulking, and skylights, (v) all
electrical facilities
and equipment, (vi) all automatic fire extinguisher equipment,
(vii) the parking
lot and all underground utility facilities servicing the Premises,
(viii) all
elevator equipment, (ix) the roof membrane system, and (x) all
waterscape,
landscaping and shrubbery. All wall surfaces and floor tile are to
be maintained
in an as good a condition as when Tenant took possession free of
holes, gouges,
or defacements. With respect to items (ii), (viii) and (ix) above,
Tenant shall
provide Landlord a copy of a service contract between Tenant and a
licensed
service contractor providing for periodic maintenance of all such
systems or
equipment in conformance with the manufacturer's recommendations.
Tenant shall
provide Landlord a copy of such preventive maintenance contracts
and paid
invoices for the recommended work if requested in writing by
Landlord.
C.
LANDLORD AND TENANT'S OBLIGATIONS REGARDING REIMBURSABLE
OPERATING
COSTS: In addition to the direct payment by Tenant of expenses as
provided in
Sections 8.B, 9, 10 and 11 of this Lease, Tenant agrees to
reimburse Landlord
for Tenant's Allocable Share (as defined in Section 8.E below) of
Reimbursable
Operating Costs (as defined in Section 8.D below) resulting from
Landlord
payment of expenses related to the Building or Project which are
not otherwise
paid by Tenant directly. Tenant agrees to pay its Allocable Share
of the
Reimbursable Operating Costs as additional rental within ten (10)
business days
of written invoice from Landlord.
D.
REIMBURSABLE OPERATING COSTS: For purposes of calculating
Tenant's
Allocable Share of Building and Project Costs, the term
"Reimbursable Operating
Costs" is defined as all costs and expenses of the nature
hereinafter described
which are incurred by Landlord in connection with ownership and
operation of the
Building or the Project in which the Premises are located
(excluding any costs
allocable to any other occupant of the Project), together with such
additional
facilities as may be determined by Landlord to be reasonably
desirable or
necessary to the ownership and operation of the Building and/or
Project. All
costs and expenses shall be determined in accordance with generally
accepted
accounting principles which shall be consistently applied (with
accruals
appropriate to Landlord's business), including but not limited to
the following:
(i) Common Area utilities, including water, power, telephone,
heating, lighting,
air conditioning, ventilating, and Building utilities to the extent
not
separately metered; (ii) Common Area maintenance and service
agreements for the
Building and/or Project and the equipment therein, including
without limitation,
common area janitorial services, alarm and security services,
exterior window
cleaning, and maintenance of the sidewalks, landscaping,
waterscape, roof
membrane of the Building (except as provided in Section 8.A.),
parking areas,
driveways, service areas, mechanical rooms, elevators, and the
Building
exterior; (iii) insurance premiums and costs, including without
limitation, the
premiums and cost of fire, casualty and liability coverage and
rental abatement
and, if elected by Landlord, earthquake insurance applicable to the
Building or
Project; (iv) repairs, replacements and general maintenance
(excluding repairs
and general maintenance paid by proceeds of insurance or by Tenant
or other
third parties, and repairs or alterations attributable solely to
tenants of the
Building or Project other than Tenant); and (v) all Taxes which may
be levied on
the Building or Project, upon the occupancy of the Building or
Project and
including any substitute or additional charges which may be imposed
during, or
applicable to the Lease Term including real estate tax increases
due to a sale,
transfer or other change of ownership of the Building or Project,
as such Taxes
are levied or appear on the City and County tax bills and
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<PAGE>
assessment rolls. Landlord shall have no obligation to provide
guard services or
other security measures for the benefit of the Project. Tenant
assumes all
responsibility for the protection of Tenant and Tenant's Agents
from acts of
third parties; provided, however, that nothing contained herein
shall prevent
Landlord, at its sole option, from providing security measures for
the Project.
This is a "Net" Lease, meaning that Base Monthly Rent is paid to
Landlord
absolutely net of all costs and expenses. The provision for payment
of
Reimbursable Operating Costs by means of periodic payment of
Tenant's Allocable
Share of Building and/or Project Costs is intended to pass on to
Tenant and
reimburse Landlord for all costs of operating and managing the
Building and/or
Project.
Notwithstanding anything to the contrary contained in this Lease,
the following
shall not be included within Reimbursable Operating Costs: (i)
leasing
commissions, attorneys' fees, costs, disbursements, and other
expenses incurred
in connection with negotiations or disputes with tenants or in
connection with
leasing, renovating, or improving space for tenants or other
occupants or
prospective tenants or other occupants of the Building or the
Project; (ii) the
cost of any service sold to any tenant (including Tenant) or other
occupant for
which Landlord is entitled to be reimbursed as an additional charge
or rental
over and above the basic rent and escalations payable under the
lease with that
tenant; (iii) any depreciation on the Building or the Project; (iv)
expenses in
connection with services or other benefits of a type that are not
provided to
Tenant but which are provided another tenant or occupant of the
Building or
Project; (v) costs incurred due to Landlord's violation of any
terms or
conditions of this Lease or any other lease relating to the
Building or Project;
(vi) overhead profit increments paid to Landlord's subsidiaries or
affiliates
for services on or to the Building or Project or for supplies or
other materials
to the extent that the cost of the services, supplies, or materials
exceeds the
cost that would have been paid had the services, supplies, or
materials been
provided by unaffiliated parties on a competitive basis; (vii) all
interest,
loan fees, and other carrying costs related to any mortgage or deed
of trust or
related to any capital item, and all rental and other payable due
under any
ground or underlying lease, or any lease for any equipment
ordinarily considered
to be of a capital nature (except janitorial equipment which is not
affixed to
the Building); (viii) any compensation paid to clerks, attendants,
or other
persons in commercial concessions operated by Landlord; (ix)
advertising and
promotional expenditures; (x) costs of repairs and other work
occasioned by
fire, windstorm, or other casualty of an insurable nature and
intended to be
covered by insurance required to be carried by Landlord; (xi) any
costs, fines,
or penalties incurred due to violations by Landlord of any
governmental rule or
authority, this Lease or any other lease in the Project, or due to
Landlord's
negligence or willful misconduct; (xii) costs for sculpture,
paintings, or other
objects of art (nor insurance thereon or extraordinary security in
connection
therewith); (xiii) wages, salaries, or other compensation paid to
any executive
employees above the grade of building manager; (xiv) the cost of
correcting any
building code or other violations which were violations prior to
the
Commencement Date; (xv) the cost of containing, removing, or
otherwise
remediating any contamination of the Project (including the
underlying land and
ground water) by any toxic or hazardous materials where such
contamination was
not caused by Tenant or its agents, invitees, employees, or
suppliers; (xvi)
reserves for any Reimbursable Operating Costs; (xvii) repairs and
maintenance to
buildings of the Project in which Tenant is not an occupant, and
(xviii) any
property management or similar fee in excess of three percent (3%)
of the Base
Monthly Rent.
E.
TENANT'S ALLOCABLE SHARE: For purposes of prorating
Reimbursable
Operating Costs which Tenant shall pay, Tenant's Allocable Share of
Reimbursable
Operating Costs shall be computed by multiplying the Reimbursable
Operating
Costs by a fraction, the numerator of which is the rentable square
footage of
the Premises and the denominator of
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which is either the total rentable square footage of the Building
if the service
or cost is allocable only to the Building, or the total square
footage of the
Project if the service or cost is allocable to the entire Project.
Tenant's
obligation to share in Reimbursable Operating Costs shall be
adjusted to reflect
the Lease Commencement Date and Expiration Date of this Lease and
is subject to
recalculation in the event of expansion of the Building or Project.
Tenant's
Allocable Share of the Project is 32.6%
F.
WAIVER OF LIABILITY: Failure by Landlord to perform any defined
services, or any cessation thereof, when such failure is caused by
accident,
breakage, repairs, strikes, lockout or other labor disturbances or
labor
disputes of any character or by any other cause, similar or
dissimilar, shall
not render Landlord liable to Tenant in any respect, including
damages to either
person or property, nor be construed as an eviction of Tenant, nor
cause an
abatement of rent, nor relieve Tenant from fulfillment of any
covenant or
agreement hereof. Should any equipment or machinery utilized in
supplying the
services listed herein break down or for any cause cease to
function properly,
upon receipt of written notice from Tenant of any deficiency or
failure of any
services, Landlord shall use reasonable diligence to repair the
same promptly,
but Tenant shall have no right to terminate this Lease and shall
have no claim
for rebate of rent or damages on account of any interruptions in
service
occasioned thereby or resulting therefrom. Tenant waives the
provisions of
California Civil Code Sections 1941 and 1942 concerning the
Landlord's
obligation of tenantability and Tenant's right to make repairs and
deduct the
cost of such repairs from the rent. Landlord shall not be liable
for a loss of
or injury to person or property, however occurring, through or in
connection
with or incidental to furnishing, or its failure to furnish, any of
the
foregoing.
G.
AUDIT RIGHTS: Tenant shall have the right, at Tenant's sole cost
and
expense, provided Tenant utilizes a Certified Public Accountant
(the "CPA"),
upon at least thirty (30) days prior notice to Landlord at any time
during
regular business hours, and no more frequently than twice per
calendar year, to
audit Landlord's records pertaining to Operating Expenses for the
immediately
previous calendar year only, which shall be maintained in the State
of
California. Any disputes between Landlord and Tenant concerning
Landlord's
accounting of Additional Rent shall be resolved using generally
accepted
accounting principles ("GAAP"). If it is determined from Tenant's
audit of such
operating expenses that Tenant was overcharged by more than three
percent (3%),
such overcharge shall entitle Tenant to credit against its next
payment of
Reimbursable Operations Costs the amount of the overcharge and the
costs
associated with the audit (and, if such credit occurs following the
expiration
of the Term, Landlord shall pay the amount of such credit to Tenant
within
thirty (30) days after Landlord's receipt of an invoice from
Tenant). If the
audit determines that the Tenant was overcharged less than three
percent (3%),
such overcharge shall entitle Tenant to credit against its next
payment of
Reimbursable Operations Costs the amount of the overcharge and
Tenant shall pay
for all costs associated with the audit. If the audit shall
determine that
Tenant was undercharged for the Reimbursable Operations Costs,
Tenant shall
promptly pay the amount of such undercharge to Landlord and Tenant
shall pay for
all costs associated with the audit. Permitted Assignees of Tenant
may only
audit periods for which they occupy the Leased Premises and
subtenants of Tenant
are not entitled to any audit rights. Tenant agrees to keep all
information
thereby obtained by Tenant confidential.
9. HAZARD
INSURANCE:
A.
TENANT'S USE: Tenant shall not use or permit the Premises, or any
part
thereof, to be used for any purpose other than that for which the
Premises are
hereby leased; and no use of the Premises shall be made or
permitted, nor acts
done, which will cause any permanent increase in premiums or a
cancellation of
any insurance policy covering the Premises or any part thereof, nor
shall Tenant
sell or permit to be sold, kept, or used in or about the Premises,
any
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article prohibited by the standard form of fire insurance policies,
unless such
use is covered by an endorsement to such policies. Tenant shall, at
its sole
cost, comply with all requirements of any insurance company or
organization
necessary for the maintenance of reasonable fire and public
liability insurance
covering the Premises and appurtenances.
B.
LANDLORD'S INSURANCE: Landlord agrees to purchase and keep in
force
fire, extended coverage insurance in an amount equal to the
replacement cost of
the Building (not including Tenant's Alterations, the Tenant
Improvements or
Tenant's Trade Fixtures) as determined by Landlord's insurance
company's
appraisers. At Landlord's election, such fire and property damage
insurance may
be endorsed to cover loss caused by such additional perils against
which
Landlord may elect to insure, including earthquake and/or flood,
and shall
contain reasonable deductibles. Additionally Landlord may maintain
a policy of
(i) commercial general liability insurance insuring Landlord (and
such others
with an insurable interest in the Premises designated in writing by
Landlord)
against liability for personal injury, bodily injury, death and
damage to
property occurring or resulting from an occurrence in, on or about
the Premises
or Project in an amount as Landlord determines is reasonably
necessary for its
protection, and (ii) rental loss insurance covering a twelve (12)
month period.
All insurance procured by Landlord pursuant to this Section shall
be at
commercially reasonable rates. Tenant agrees to pay Landlord as
additional rent,
on demand, the full cost of said insurance as evidenced by
insurance billings to
Landlord, and in the event of damage covered by said insurance, the
amount of
any deductible under such policy. Payment shall be due to Landlord
within ten
(10) days after written invoice to Tenant. It is understood and
agreed that
Tenant's obligation under this Section will be prorated to reflect
the Lease
Commencement and Expiration Dates.
C.
TENANT'S INSURANCE: Tenant agrees, at its sole cost, to insure
its
personal property, Tenant Improvements, and Alterations for their
full
replacement value (without depreciation) and to obtain worker's
compensation and
public liability and property damage insurance for occurrences
within the
Premises with a combined single limit of not less than Five Million
Dollars
($5,000,000.00). Tenant's liability insurance shall be primary
insurance
containing a cross-liability endorsement, and shall provide
coverage on an
"occurrence" rather than on a "claims made" basis. Tenant shall
name Landlord
and any Landlord's lender designated in writing as an additional
insured and
shall deliver certificates of insurance and renewal certificates to
Landlord.
All such policies shall provide for thirty (30) days' prior written
notice to
Landlord of any cancellation, termination, or reduction in
coverage.
D.
WAIVER: Landlord and Tenant hereby waive all rights each may
have
against the other on account of any loss or damage sustained by
Landlord or
Tenant, as the case may be, or to the Premises or its contents,
which may arise
from any risk covered by their respective insurance policies (or
which would
have been covered had such insurance policies been maintained in
accordance with
this Lease) as set forth above. The Parties shall use their
reasonable efforts
to obtain from their respective insurance companies a waiver of any
right of
subrogation which said insurance company may have against Landlord
or Tenant, as
the case may be.
10. TAXES: Tenant shall be liable for and shall pay as additional
rental, prior
to delinquency, (provided Tenant receives a tax bill at least 30
days prior to
the delinquency date) the following (collectively referred to
herein as
"Taxes"): (i) all taxes and assessments levied against Tenant's
personal
property and trade or business fixtures; (ii) all real estate taxes
and
assessment installments or other impositions or charges which may
be levied on
the Premises or upon the occupancy of the Premises, including any
substitute or
additional charges which may be imposed applicable to the Lease
Term; and (iii)
real estate tax increases due to an increase in assessed value
resulting from a
sale, transfer or other change of ownership of the Premises as it
appears on the
City and County tax bills during
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the Lease Term (other than a change of ownership within the
existing partnership
structure resulting in a reassessment). All real estate taxes shall
be prorated
to reflect the Lease Commencement and Expiration Dates. If, at any
time during
the Lease Term a tax, excise on rents, business license tax or any
other tax,
however described, is levied or assessed against Landlord as a
substitute or
addition, in whole or in part, for taxes assessed or imposed on
land or
Buildings, Tenant shall pay and discharge its pro rata share of
such tax or
excise on rents or other tax before it becomes delinquent; except
that this
provision is not intended to cover net income taxes, franchise
inheritance, gift
or estate tax imposed upon Landlord. In the event that a tax is
placed, levied,
or assessed against Landlord and the taxing authority takes the
position that
Tenant cannot pay and discharge its pro rata share of such tax on
behalf of
Landlord, then at Landlord's sole election, Landlord may increase
the Base
Monthly Rent by the exact amount of such tax and Tenant shall pay
such increase.
If by virtue of any application or proceeding brought by Landlord,
there results
a reduction in the assessed value of the Premises during the Lease
Term, Tenant
agrees to pay Landlord a fee consistent with reasonable fees
typically charged
by a third party appeal firm for such services. Property Taxes also
shall not
include any tax or assessment expense: (i) levied on Landlord's
rental income
unless such tax or assessment expense is imposed in lieu of real
property taxes;
(ii) in excess of the amount which would be payable if such tax or
assessment
expense were paid in installments over the longest possible term;
or (iii)
imposed on land and improvements other than the land upon which the
Building is
situated. Tenant, at its sole cost, shall have the right, by
appropriate
proceeding, to contest or protest any change in Taxes in its own
name, and/or
the name of Landlord if Landlord does not elect to contest such
change. If a
reduction in Taxes is obtained for any year in which Tenant paid
such Taxes,
then Tenant shall receive a credit or a refund of Tenant's over
payment along
with Tenant's pro-rata share of interest corresponding to such
amount to the
extent received from the taxing authority.
11. UTILITIES: Tenant shall pay directly to the providing utility
all water,
gas, electric, telephone, and other utilities supplied to the
Premises. Landlord
shall not be liable for loss of or injury to person or property,
however
occurring, through or in connection with or incidental to
furnishing or the
utility company's failure to furnish utilities to the Premises, and
in such
event Tenant shall not be entitled to abatement or reduction of any
portion of
Base Monthly Rent or any other amount payable under this Lease
unless utility
services to the Premises are interrupted and such interruption is
due to the
active negligence or willful misconduct of Landlord, in which case
Tenant shall
be entitled to an abatement of rent unless such Utility or
Utilities are
restored within three (3) business days thereafter.
12. TOXIC WASTE AND
ENVIRONMENTAL DAMAGE:
A.
TENANT'S RESPONSIBILITY: Without the prior written consent of
Landlord,
Tenant or Tenant's agents, employees, contractors and invitees
("Tenant's
Agents") shall not bring, use, or permit upon the Premises, or
generate, create,
release, emit, or dispose (nor permit any of the same) from the
Premises any
chemicals, toxic or hazardous gaseous, liquid or solid materials or
waste,
including without limitation, material or substance having
characteristics of
ignitability, corrosivity, reactivity, or toxicity or substances or
materials
which are listed on any of the Environmental Protection Agency's
lists of
hazardous wastes or which are identified in Division 22 Title 26 of
the
California Code of Regulations as the same may be amended from time
to time or
any wastes, materials or substances which are or may become
regulated by or
under the authority of any applicable local, state or federal laws,
judgments,
ordinances, orders, rules, regulations, codes or other
governmental
restrictions, guidelines or requirements. ("Hazardous Materials")
except for
those substances customary in typical office uses and the other
Permitted Uses
and fuel and other supplies for the operation and maintenance of
Tenant's
emergency
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<PAGE>
generator(s), if any, and the Building Systems to be maintained by
Tenant, for
which no consent shall be required. In order to obtain consent,
Tenant shall
deliver to Landlord its written proposal describing the toxic
material to be
brought onto the Premises, measures to be taken for storage and
disposal
thereof, safety measures to be employed to prevent pollution of the
air, ground,
surface and ground water. Landlord's approval may be withheld in
its reasonable
judgment. In the event Landlord consents to Tenant's use of
Hazardous Materials
on the Premises or such consent is not required, Tenant represents
and warrants
that it shall comply with all Governmental Regulations applicable
to Hazardous
Materials including doing the following: (i) adhere to all
reporting and
inspection requirements imposed by Federal, State, County or
Municipal laws,
ordinances or regulations and will provide Landlord a copy of any
such reports
or agency inspections; (ii) obtain and provide Landlord copies of
all necessary
permits required for the use and handling of Hazardous Materials on
the
Premises; (iii) enforce Hazardous Materials handling and disposal
practices
consistent with industry standards; (iv) surrender the Premises
free from any
Hazardous Materials arising from Tenant's bringing, using,
permitting,
generating, creating, releasing, emitting or disposing of Hazardous
Materials;
and (v) properly close the facility with regard to Hazardous
Materials including
the removal or decontamination of any process piping, mechanical
ducting,
storage tanks, containers, or trenches which have come into contact
with
Hazardous Materials as a result of Tenant's acts, and only if
required, obtain a
closure certificate from the local administering agency prior to
the Expiration
Date.
B.
TENANT'S INDEMNITY REGARDING HAZARDOUS MATERIALS: Tenant shall, at
its
sole cost and expense, comply with all laws pertaining to, and
shall with
counsel reasonably acceptable to Landlord, indemnify, defend and
hold harmless
Landlord and Landlord's trustees, shareholders, directors,
officers, employees,
partners, affiliates, and agents from, any claims, liabilities,
costs or
expenses incurred or suffered arising from the bringing, using,
permitting,
generating, emitting or disposing of Hazardous Materials by Tenant,
Tenant's
Agents or a third party (other than adjoining landowners or
occupants of
adjacent properties) through the surface soils of the Premises
during the Lease
Term or the violation of any Governmental Regulation or
environmental law, by
Tenant or Tenant's Agents. Tenant's indemnification, defense, and
hold harmless
obligations include, without limitation, the following to the
extent relating to
Tenant's indemnification obligations under the preceding sentence:
(i) claims,
liability, costs or expenses resulting from or based upon
administrative,
judicial (civil or criminal) or other action, legal or equitable,
brought by any
private or public person under common law or under the
Comprehensive
Environmental Response, Compensation and Liability Act of 1980 as
amended
("CERCLA"), the Resource Conservation and Recovery Act of 1980
("RCRA") or any
other Federal, State, County or Municipal law, ordinance or
regulation now or
hereafter in effect; (ii) claims, liabilities, costs or expenses
pertaining to
the identification, monitoring, cleanup, containment, or removal of
Hazardous
Materials from soils, riverbeds or aquifers including the provision
of an
alternative public drinking water source; (iii) all costs of
defending such
claims; (iv) losses attributable to diminution in the value of the
Premises or
the Building; (v) loss or restriction of use of rentable space in
the Building;
(vi) Adverse effect on the marketing of any space in the Building;
and (vi) all
other liabilities, obligations, penalties, fines, claims, actions
(including
remedial or enforcement actions of any kind and administrative or
judicial
proceedings, orders or judgments), damages (including consequential
and punitive
damages), and costs (including attorney, consultant, and expert
fees and
expenses) resulting from the release or violation. This Section
12.B shall
survive the expiration or termination o this Lease.
C.
ACTUAL RELEASE BY TENANT: Tenant agrees to notify Landlord of
any
lawsuits or orders which relate to the remedying of or
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<PAGE>
actual release of Hazardous Materials on or into the soils or
ground water at or
under the Premises of which Tenant is aware or responsible for.
Tenant shall
also provide Landlord all notices required by Section 25359.7(b) of
the Health
and Safety Code and all other notices required by law to be given
to Landlord in
connection with Hazardous Materials. Without limiting the
foregoing, Tenant
shall also deliver to Landlord, within twenty (20) days after
receipt thereof,
any written notices from any governmental agency alleging a
material violation
of, or material failure to comply with, any laws, regulations,
ordinances or
orders, the violation of which or failure to comply with poses a
foreseeable and
material risk of contamination of the ground water or injury to
humans (other
than injury solely to Tenant or Tenant's Agents.
In
the event of any release on or into the Premises or into the soil
or
ground water under the Premises, the Building or the Project of any
Hazardous
Materials used, treated, stored or disposed of by Tenant or
Tenant's Agents,
Tenant agrees to comply, at its sole cost, with all laws,
regulations,
ordinances and orders of any federal, state or local agency
relating to the
monitoring or remediation of such Hazardous Materials. In the event
of any such
release of Hazardous Materials Tenant shall immediately give verbal
and
follow-up written notice of the release to Landlord, and Tenant
agrees to meet
and confer with Landlord and its lender to attempt to eliminate and
mitigate any
financial exposure to such lender and resultant exposure to
Landlord under
California Code of Civil Procedure Section 736(b) as a result of
such release,
and promptly to take reasonable monitoring, cleanup and remedial
steps given,
inter alia, the historical commercial uses to which the Property
has and
continues to be used, the risks to public health posed by the
release, the then
available technology and the costs of remediation, cleanup and
monitoring,
consistent with acceptable customary practices for the type and
severity of such
contamination and all applicable laws. Nothing in the preceding
sentence shall
eliminate, modify or reduce the obligation of Tenant under 12.B of
this Lease to
indemnify, defend and hold Landlord harmless from any claims
liabilities, costs
or expenses incurred or suffered by Landlord. Tenant shall provide
Landlord
prompt written notice of Tenant's monitoring, cleanup and remedial
steps.
In
the absence of an order of any federal, state or local governmental
or
quasi-governmental agency relating to the cleanup, remediation or
other response
action required by applicable law, any dispute arising between
Landlord and
Tenant concerning Tenant's obligation to Landlord under this
Section 12.C
concerning the level, method, and manner of cleanup, remediation or
response
action required in connection with such a release of Hazardous
Materials shall
be resolved by mediation and/or arbitration pursuant to this
Lease.
D.
ENVIRONMENTAL MONITORING: Landlord and its agents shall have the
right
to inspect, investigate, sample and monitor the Premises including
any air,
soil, water, ground water or other sampling or any other testing,
digging,
drilling or analysis to determine whether Tenant is complying with
the terms of
this Section 12. If Landlord discovers that Tenant is not in
compliance with the
terms of this Section 12, any such costs incurred by Landlord,
including
attorneys' and consultants' fees, shall be due and payable by
Tenant to Landlord
within ten (10) business days following Landlord's written demand
therefore.
E.
LANDLORD'S INDEMNITY REGARDING HAZARDOUS MATERIALS: Landlord
represents
and warrants, to the best of its knowledge, that as of the
Commencement Date,
there do not exist any Hazardous Materials in the Building,
Premises or the
Project. Landlord shall indemnify and hold Tenant harmless from any
claims,
liabilities, costs or expenses incurred or suffered by Tenant
related to the
removal, investigation, monitoring or remediation of Hazardous
Materials which
are present or which come to be present on the Premises except to
the extent the
presence of such Hazardous Materials is caused by Tenant or by
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<PAGE>
Tenant's failure to prevent a third party from dumping Hazardous
Materials
through the surface of the Premises. Landlord's indemnification and
hold
harmless obligations include, without limitation, (i) claims,
liability, costs
or expenses resulting from or based upon administrative, judicial
(civil or
criminal) or other action, legal or equitable, brought by any
private or public
person under common law or under the Comprehensive Environmental
Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Resource
Conservation and
Recovery Act of 1980 ("RCRA") or any other Federal, State, County
or Municipal
law, ordinance or regulation, (ii) claims, liabilities, costs or
expenses
pertaining to the identification, monitoring, cleanup, containment,
or removal
of Hazardous Materials from soils, riverbeds or aquifers including
the provision
of an alternative public drinking water source, and (iii) all costs
of defending
such claims. In no event shall Landlord be liable for any
consequential damages
suffered or incurred by Tenant as a result of any such
contamination.
13. TENANT'S DEFAULT: The occurrence of any of the following shall
constitute a
material default and breach of this Lease by Tenant: (i) Tenant's
failure to pay
the Base Monthly Rent including additional rent or any other
payment due under
this Lease by the date such amount is due, where such failure
continues for
three (3) business days beyond written notice from Landlord that
such amount was
not received by the due date, (ii) the abandonment or vacation of
the Premises
by Tenant; (iii) Tenant's failure to observe and perform any other
required
provision of this Lease, where such failure continues for thirty
(30) days after
written notice from Landlord provided, however, that if the nature
of the
Default is such that it cannot reasonably be cured within thirty
(30) days,
Tenant shall not be in Default if Tenant commences within such
thirty (30) day
period to cure and thereafter diligently prosecutes the same to
completion; (iv)
Tenant's making of any general assignment for the benefit of
creditors; (v) the
filing by or against Tenant of a petition to have Tenant adjudged a
bankrupt or
of a petition for reorganization or arrangement under any law
relating to
bankruptcy (unless, in the case of a petition filed against Tenant,
the same is
dismissed after the filing); (vi) the appointment of a trustee or
receiver to
take possession of substantially all of Tenant's assets located at
the Premises
or of Tenant's interest in this Lease, where possession is not
restored to
Tenant within thirty (30) days; or (vii) the attachment, execution
or other
judicial seizure of substantially all of Tenant's assets located at
the Premises
or of Tenant's interest in this Lease, where such seizure is not
discharged
within thirty (30) days.
A.
REMEDIES: In the event of any such default by Tenant, then in
addition
to other remedies available to Landlord at law or in equity,
Landlord shall have
the immediate option to terminate this Lease and all rights of
Tenant hereunder
by giving written notice of such intention to terminate. In the
event Landlord
elects to so terminate this Lease, Landlord may recover from Tenant
all the
following: (i) the worth at time of award of any unpaid rent which
had been
earned at the time of such termination; (ii) the worth at time of
award of the
amount by which the unpaid rent which would have been earned after
termination
until the time of award exceeds the amount of such rental loss for
the same
period that Tenant proves could have been reasonably avoided; (iii)
the worth at
time of award of the amount by which the unpaid rent for the
balance of the
Lease Term after the time of award exceeds the amount of such
rental loss that
Tenant proves could be reasonably avoided; (iv) any other amount
necessary to
compensate Landlord for all detriment proximately caused by
Tenant's failure to
perform its obligations under this Lease, or which in the ordinary
course of
things would be likely to result therefrom; including the
following: (x)
expenses for repairing the Premises to the condition required upon
surrender of
this Lease for purposes of reletting, (y) broker's fees,
advertising costs or
other expenses of reletting the Premises, and (z) costs of carrying
the Premises
such as taxes, insurance premiums, utilities and security
precautions; and (v)
at Landlord's election, such other amounts in
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<PAGE>
addition to or in lieu of the foregoing as may be permitted by
applicable
California law. The term "rent", as used herein, is defined as the
minimum
monthly installments of Base Monthly Rent and all other sums
required to be paid
by Tenant pursuant to this Lease, all such other sums being deemed
as additional
rent due hereunder. As used in (i) and (ii) above, "worth at the
time of award"
shall be computed by allowing interest at a rate equal to the
discount rate of
the Federal Reserve Bank of San Francisco plus five (5%) percent
per annum. As
used in (iii) above, "worth at the time of award" shall be 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%).
B.
RIGHT TO RE-ENTER: In the event of any such default by Tenant,
Landlord
shall have the right, after terminating this Lease, as permitted by
law, to
re-enter the Premises and remove all persons and property. Such
property may be
removed and stored in a public warehouse or elsewhere at the cost
of and for the
account of Tenant, and disposed of by Landlord in any manner
permitted by law.
C.
ABANDONMENT: If Landlord does not elect to terminate this Lease
as
provided in Section 13.A or 13.B above, then the provisions of
California Civil
Code Section 1951.4, (Landlord may continue the lease in effect
after Tenant's
breach and abandonment and recover rent as it becomes due if Tenant
has a right
to sublet and assign, subject only to reasonable limitations) as
amended from
time to time, shall apply and Landlord may from time to time,
without
terminating this Lease, either recover all rental as it becomes due
or relet the
Premises or any part thereof for such term or terms and at such
rental or
rentals and upon such other terms and conditions as Landlord in its
sole
discretion may deem advisable, with the right to make alterations
and repairs to
the Premises. In the event that Landlord elects to so relet,
rentals received by
Landlord from such reletting shall be applied in the following
order to: (i) the
payment of any indebtedness other than Base Monthly Rent due
hereunder from
Tenant to Landlord; (ii) the payment of any cost of such reletting;
(iii) the
payment of the cost of any alterations and repairs to the Premises;
and (iv) the
payment of Base Monthly Rent due and unpaid hereunder. The residual
rentals, if
any, shall be held by Landlord and applied in payment of future
Base Monthly
Rent as the same may become due and payable hereunder. Landlord
shall have the
obligation to market the space but shall have no obligation to
relet the
Premises following a default if Landlord has other comparable
available space
within the Building or Project. In the event the portion of rentals
received
from such reletting which is applied to the payment of rent
hereunder during any
month be less than the rent payable during that month by Tenant
hereunder, then
Tenant shall pay such deficiency to Landlord immediately upon
demand. Such
deficiency shall be calculated and paid monthly. Tenant shall also
pay to
Landlord, as soon as ascertained, any costs and expenses incurred
by Landlord in
such reletting or in making such alterations and repairs not
covered by the
rentals received from such reletting.
D.
NO TERMINATION: Landlord's re-entry or taking possession of the
Premises
pursuant to 13.B or 13.C shall not be construed as an election to
terminate this
Lease unless written notice of such intention is given to Tenant or
unless the
termination is decreed by a court of competent jurisdiction.
Notwithstanding any
reletting without termination by Landlord because of any default by
Tenant,
Landlord may at any time after such reletting elect to terminate
this Lease for
any such default.
E.
NON-WAIVER: Landlord may accept Tenant's payments without waiving
any
rights under this Lease, including rights under a previously served
notice of
default. No payment by Tenant or receipt by Landlord of a lesser
amount than any
installment of rent due shall be deemed as other than payment on
account of the
amount due. If Landlord accepts payments after serving a notice of
default,
Landlord may nevertheless commence and pursue an action to enforce
rights and
remedies under the previously served notice of default without
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<PAGE>
giving Tenant any further notice or demand. Furthermore, the
Landlord's
acceptance of rent from the Tenant when the Tenant is holding over
without
express written consent does not convert Tenant's Tenancy from a
tenancy at
sufferance to a month to month tenancy. No waiver of any provision
of this Lease
shall be implied by any failure of Landlord to enforce any remedy
for the
violation of that provision, even if that violation continues or is
repeated.
Any waiver by Landlord of any provision of this Lease must be in
writing. Such
waiver shall affect only the provision specified and only for the
time and in
the manner stated in the writing. No delay or omission in the
exercise of any
right or remedy by Landlord shall impair such right or remedy or be
construed as
a waiver thereof by Landlord. No act or conduct of Landlord,
including, without
limitation, the acceptance of keys to the Premises, shall
constitute acceptance
of the surrender of the Premises by Tenant before the Expiration
Date. Only
written notice from Landlord to Tenant of acceptance shall
constitute such
acceptance of surrender of the Premises. Landlord's consent to or
approval of
any act by Tenant which requires Landlord's consent or approvals
shall not be
deemed to waive or render unnecessary Landlord's consent to or
approval of any
subsequent act by Tenant.
F.
PERFORMANCE BY LANDLORD: If Tenant fails to perform any
obligation
required under this Lease or by law or governmental regulation,
Landlord in its
sole discretion may, without notice, without waiving any rights or
remedies and
without releasing Tenant from its obligations hereunder, perform
such
obligation, in which event Tenant shall pay Landlord as additional
rent all
reasonable sums paid by Landlord in connection with such substitute
performance,
including interest at the Agreed Interest Rate (as defined in
Section 19.J)
within ten (10) business days of Landlord's written notice for such
payment.
G.
HABITUAL DEFAULT: The provisions of Section 13 notwithstanding,
the
Parties agree that if Tenant shall have defaulted in the
performance of any (but
not necessarily the same) monetary term or condition of this Lease
for three or
more times during any twelve (12) month period during the Lease
Term, then such
conduct shall, at the election of the Landlord, represent a
separate event of
default which cannot be cured by Tenant ("Habitual Default").
Tenant
acknowledges that the purpose of this provision is to prevent
repetitive
defaults by Tenant, which work a hardship upon Landlord and deprive
Landlord of
Tenant's timely performance under this Lease.
14. LANDLORD'S
LIABILITY:
A.
LIMITATION ON LANDLORD'S LIABILITY: In the event of Landlord's
failure to
perform any of its covenants or agreements under this Lease, Tenant
shall give
Landlord written notice of such failure and shall give Landlord
thirty (30) days
to cure or commence to cure such failure prior to any claim for
breach or
resultant damages, provided, however, that if the nature of the
default is such
that it cannot reasonably be cured within the 30-day period,
Landlord shall not
be deemed in default if it commences within such period to cure,
and thereafter
diligently prosecutes the same to completion. In addition, upon any
such failure
by Landlord, Tenant shall give notice by registered or certified
mail to any
person or entity with a security interest in the Premises
("Mortgagee") that has
provided Tenant with notice of its interest in the Premises, and
shall provide
Mortgagee a reasonable opportunity to cure such failure, including
such time to
obtain possession of the Premises by power of sale or judicial
foreclosure, if
such should prove necessary to effectuate a cure. Tenant agrees
that each of the
Mortgagees to whom this Lease has been assigned is an expressed
third-party
beneficiary hereof. Tenant waives any right under California Civil
Code Section
1950.7 or any other present or future law to the collection of any
payment or
deposit from Mortgagee or any purchaser at a foreclosure sale of
Mortgagee's
interest unless Mortgagee or such purchaser shall have actually
received and not
refunded the applicable payment or deposit. Tenant Further waives
any right to
terminate this Lease and to vacate the Premises on Landlord's
default under this
Lease. Tenant's
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sole remedy on Landlord's default is an action for damages or
injunctive or
declaratory relief.
B.
LIMITATION ON TENANT'S RECOURSE: If Landlord is a corporation,
trust,
partnership, joint venture, unincorporated association or other
form of business
entity, then (i) the obligations of Landlord shall not constitute
personal
obligations of the officers, directors, trustees, partners, joint
venturers,
members, owners, stockholders, or other principals or
representatives except to
the extent of their interest in the Premises. Tenant shall have
recourse only to
the interest of Landlord in the Premises or for the satisfaction of
the
obligations of Landlord and shall not have recourse to any other
assets of
Landlord for the satisfaction of such obligations.
C.
INDEMNIFICATION OF LANDLORD: As a material part of the
consideration
rendered to Landlord, Tenant hereby waives all claims against
Landlord for
damages to goods, wares and merchandise, and all other personal
property in,
upon or about said Premises and for injuries to persons in or about
said
Premises, from any cause (except due to the gross negligence or
willful
misconduct of Landlord) arising at any time to the fullest extent
permitted by
law, and Tenant shall indemnify, defend with counsel reasonably
acceptable to
Landlord and hold Landlord, and their shareholders, directors,
officers,
trustees, employees, partners, affiliates and agents from any
claims,
liabilities, costs or expenses incurred or suffered arising from
the use of
occupancy of the Premises or any part of the Project by Tenant or
Tenant's
Agents, the acts or omissions of Tenant or Tenant's Agents,
Tenant's breach of
this Lease, or any damage or injury to person or property from any
cause, except
to the extent caused by the willful misconduct or active negligence
of Landlord
or from the failure of Tenant to keep the Premises in good
condition and repair
as herein provided, except to the extent due to the gross
negligence or willful
misconduct of Landlord. Further, in the event Landlord is made
party to any
litigation due to the acts or omission of Tenant and Tenant's
Agents, Tenant
will indemnify, defend (with counsel reasonably acceptable to
Landlord) and hold
Landlord harmless from any such claim or liability including
Landlord's costs
and expenses and reasonable attorney's fees incurred in defending
such claims
except to the extent due to the gross negligence or willful
misconduct of
Landlord.
15. DESTRUCTION OF PREMISES:
A.
LANDLORD'S OBLIGATION TO RESTORE: In the event of a destruction of
the
Premises during the Lease Term Landlord shall repair the same to a
similar
condition to that which existed prior to such destruction. Such
destruction
shall not annul or void this Lease; however, Tenant shall be
entitled to a
proportionate reduction of Base Monthly Rent while repairs are
being made, such
proportionate reduction to be based upon the extent to which the
repairs
interfere with Tenant's business in the Premises, as reasonably
determined by
Landlord and Tenant. In no event shall Landlord be required to
replace or
restore Alterations, Tenant Improvements paid for by Tenant from
sources other
than the Work Allowance or Tenant's fixtures or personal property.
With respect
to a destruction which Landlord is obligated to repair or may elect
to repair
under the terms of this Section, Tenant waives the provisions of
Section 1932,
and Section 1933, Subdivision 4, of the Civil Code of the State of
California,
and any other similarly enacted statute, and the provisions of this
Section 15
shall govern in the case of such destruction.
B.
LIMITATIONS ON LANDLORD'S RESTORATION OBLIGATION: Notwithstanding
the
provisions of Section 15.A, Landlord shall have no obligation to
repair, or
restore the Premises if any of the following occur: (i) if the
repairs cannot be
made in one hundred eighty (180) days from the date of receipt of
all
governmental approvals necessary under the laws and regulations of
State,
Federal, County or Municipal authorities, as reasonably determined
by Landlord,
(ii) if the holder of the first deed of trust or mortgage
encumbering the
Building elects not to permit the insurance proceeds payable upon
damage or
destruction to be used for such repair or restoration (unless
Tenant, within 45
days after the casualty, agrees in writing to pay all costs
associated with
rebuilding), (iii) the damage or destruction is not fully covered
by the
insurance maintained by Landlord (unless Tenant, within 45 days
after
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the casualty, agrees in writing to contribute any shortfall), (iv)
the damage or
destruction occurs in the last eighteen (18) months of the Lease
Term unless
Tenant has exercised or promptly exercises an option to extend the
Lease Term,
(v) Tenant is in default pursuant to the provisions of Section 13,
or (vi)
Tenant has vacated the Premises for more than ninety (90) days
without payment
of rent. In any such event Landlord may elect either to complete
the repair or
restoration, or terminate this Lease by providing Tenant written
notice of its
election within sixty (60) days following the damage or
destruction. Tenant
shall also have the right to terminate this Lease in the event of
either (i) or
(iv) above, by providing Landlord with written notice of its
election to do so
within sixty (60) days following the damage or destruction.
16. CONDEMNATION: If any part of the Premises shall be taken for
any public or
quasi-public use, under any statute or by right of eminent domain
or private
purchase in lieu thereof, and only a part thereof remains which is
susceptible
of occupation hereunder, this Lease shall, as to the part so taken,
terminate as
of the day before title vests in the condemnor or purchaser
("Vesting Date") and
Base Monthly Rent payable hereunder shall be adjusted so that
Tenant is required
to pay for the remainder of the Lease Term only such portion of
Base Monthly
Rent as the value of the part remaining after such taking bears to
the value of
the entire Premises prior to such taking. Further, in the event of
such partial
taking in excess of 25% of the Premises, either Tenant or Landlord
shall have
the option to terminate this Lease as of the Vesting Date. If all
of the
Premises or such part thereof be taken so that there does not
remain a portion
susceptible for the operation of Tenant's business as such business
was
performed in the Premises prior to the Vesting Date, this Lease
shall terminate
on the Vesting Date. If part or all of the Premises be taken, all
compensation
awarded upon such taking shall go to Landlord, and Tenant shall
have no claim
thereto; except Landlord shall cooperate with Tenant, without cost
to Landlord,
to recover compensation for damage to or taking of any Alterations,
Tenant
Improvements paid for by Tenant, or for Tenant's moving costs.
Tenant hereby
waives the provisions of California Code of Civil Procedures
Section 1265.130
and any other similarly enacted statue, and the provisions of this
Section 16
shall govern in the case of a taking but not Government Code
Section 7262 with
respect to those claims which Tenant may pursue by separate
action.
17. ASSIGNMENT OR SUBLEASE:
A. CONSENT BY
LANDLORD: Except as specifically provided in Section 17.E,
Tenant may not assign, sublet, hypothecate, or allow a third party
to use the
Premises without the express written consent of Landlord which
consent shall not
be unreasonably withheld, conditioned or delayed. In the event
Tenant desires to
assign this Lease or any interest herein or sublet the Premises or
any part
thereof, Tenant shall deliver to Landlord (i) executed counterparts
of any
agreement and of all ancillary agreements with the proposed
assignee/subtenant,
(ii) current financial statements of the transferee covering the
preceding year,
(iii) the nature of the proposed transferee's business to be
carried on in the
Premises, (iv) a statement outlining all consideration to be given
on account of
the Transfer, and (v) a current financial statement of Tenant.
Landlord may
condition its approval of any Transfer on receipt of a
certification from both
Tenant and the proposed transferee of all consideration to be paid
to Tenant in
connection with such Transfer. At Landlord's request, Tenant shall
also provide
additional information reasonably required by Landlord to determine
whether it
will consent to the proposed assignment or sublease. Landlord shall
have a ten
(10) business day period following receipt of all the foregoing
within which to
notify Tenant in writing that Landlord elects to: (i) terminate
this Lease in
the event the proposed sublease or assignment is for substantially
all of space
in the Premises provided, however, that Landlord
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shall not have the right to terminate on any sublease or assignment
expiring two
(2) or more years before the Expiration Date; (ii) permit Tenant to
assign or
sublet such space to the named assignee/subtenant on the terms and
conditions
set forth in the notice; or (iii) refuse consent upon conditions
set forth
below. If Landlord should fail to notify Tenant in writing of such
election
within the 10 business-day period, Landlord shall be deemed to have
elected
option (iii) above. In the event Landlord elects option (i) above,
this Lease
shall expire with respect to such part of the Premises on the date
upon which
the proposed sublease or transfer was to commence, and from such
date forward,
Base Monthly Rent and Tenant's Allocable Share of all other costs
and charges
shall be adjusted based upon the proportion that the rentable area
of the
Premises remaining bears to the total rentable area of the
Building. In the
event Landlord elects option (ii) above, Landlord's written consent
to the
proposed assignment or sublease shall not be unreasonably withheld,
conditioned
or delayed, provided and upon the condition that: (i) the proposed
assignee or
subtenant is engaged in a business that is limited to the use
expressly
permitted under this Lease; (ii) the Tenant or the proposed
assignee or
subtenant is a company with sufficient financial worth and
management ability to
undertake the financial obligation of this Lease and Landlord has
been furnished
with reasonable proof thereof; (iii) the proposed assignment or
sublease is in
form reasonably satisfactory to Landlord; (iv) the proposed
sublease will not
result in there being greater than three (3) subtenants within the
Premises at
any time during the Lease Term; (v) Tenant reimburses Landlord on
demand for any
costs that may be incurred by Landlord in connection with said
assignment or
sublease, including the reasonable costs of making investigations
as to the
acceptability of the proposed assignee or subtenant and legal costs
incurred in
connection with the granting of any requested consent, said
reasonable
out-of-pocket costs not to exceed $2,500.00 in total; and (vi)
Tenant shall not
have advertised or publicized in any way the availability of the
Premises
without prior notice to Landlord. In the event all or any one of
the foregoing
conditions are not satisfied, Landlord shall be considered to have
acted
reasonably if it withholds its consent. Failure by Landlord to
either consent to
or disapprove a proposed assignment or sublease within the ten (10)
business day
time period specified above shall be deemed to be Landlord's
approval thereof,
so long as Tenant's request includes the following statement in
capitalized and
boldfaced letters: By failing to respond to this request, you will
be deemed to
have approved the lease assignment or sublease described
herein.
B.
ASSIGNMENT OR SUBLETTING CONSIDERATION: Landlord and Tenant hereby
agree
that Landlord shall receive fifty percent (50%) of any rent or
other economic
consideration (i) realized by Tenant under any sublease or
assignment, or (ii)
realized by any subtenant under any sub-sublease of the Premises,
in excess of
(a) the Base Monthly Rent payable hereunder, (b) reasonable
subletting and
assignment costs incurred by Tenant including lease commissions,
attorneys fees,
costs of demising or otherwise preparing the sublease space for
occupancy, and
(c) the unamortized cost of Tenant Improvements initially installed
by Tenant
provided such Tenant Improvements are specifically utilized by the
subtenant or
assignee. Tenant's obligation to pay over Landlord's portion of
the
consideration constitutes an obligation for additional rent
hereunder. The above
provisions relating to Landlord's right to terminate the Lease and
relating to
the allocation of excess rent are independently negotiated terms of
the Lease
which constitute a material inducement for the Landlord to enter
into the Lease,
and are agreed by the Parties to be commercially reasonable. No
assignment or
subletting by Tenant shall relieve it of any obligation under this
Lease. Any
assignment or subletting which conflicts with the provisions hereof
shall be
void.
C.
NO RELEASE: Any assignment or sublease shall be made only if and
shall
not be effective until the assignee or subtenant shall execute,
acknowledge, and
deliver to Landlord an agreement, in form and substance
reasonably
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satisfactory to Landlord, whereby the assignee or subtenant shall
assume all the
obligations of this Lease on the part of Tenant to be performed or
observed and
shall be subject to all the covenants, agreements, terms,
provisions and
conditions in this Lease. Notwithstanding any such sublease or
assignment and
the acceptance of rent by Landlord from any subtenant or assignee,
Tenant shall
remain fully liable for the payment of Base Monthly Rent and
additional rent
due, and to become due hereunder, for the performance of all the
covenants,
agreements, terms, provisions and conditions contained in this
Lease on the part
of Tenant to be performed and for all acts and omissions of any
licensee,
subtenant, assignee or any other person claiming under or through
any subtenant
or assignee that shall be in violation of any of the terms and
conditions of
this Lease, and any such violation shall be deemed a violation by
Tenant. Tenant
shall indemnify, defend and hold Landlord harmless from and against
all losses,
liabilities, damages, costs and expenses (including reasonable
attorney fees)
resulting from any claims that may be made against Landlord by the
proposed
assignee or subtenant or by any real estate brokers or other
persons claiming
compensation in connection with the proposed assignment or
sublease.
D.
REORGANIZATION OF TENANT: The provisions of this Section 17.D
shall
apply if Tenant is a corporation and: (i) there is a dissolution,
merger,
consolidation, or other reorganization of or affecting Tenant,
where Tenant is
not the surviving corporation, or (ii) there is a sale or transfer
to one person
or entity (or to any group of related persons or entities) of stock
possessing
more than 50% of the total combined voting power of all classes of
Tenant's
capital stock issued, outstanding and entitled to vote for the
election of
directors, and after such sale or transfer of stock Tenant's stock
is no longer
publicly traded. In a transaction under clause (i) the surviving
corporation
shall promptly execute and deliver to Landlord an agreement in form
reasonably
satisfactory to Landlord under which such surviving corporation
assumes the
obligations of Tenant hereunder, and in a transaction under clause
(ii) the
transferee or buyer shall promptly execute and deliver to Landlord
an agreement
in form reasonably satisfactory to Landlord under which such
transferee or buyer
assumes the obligations of Tenant under the Lease.
E.
PERMITTED TRANSFERS: Notwithstanding anything contained in this
Section
17, so long as Tenant otherwise complies with the provisions of
this Article,
Tenant may enter into any of the following transfers (a "Permitted
Transfer")
without Landlord's prior consent, and Landlord shall not be
entitled to
terminate the Lease or to receive any part of any subrent resulting
therefrom
that would otherwise be due pursuant to Sections 17.A and 17.B.
Tenant may
sublease all or part of the Premises or assign its interest in this
Lease to (i)
any corporation which controls, is controlled by, or is under
common control
with the original Tenant to this Lease by means of an ownership
interest of more
than 50%; (ii) a corporation which results from a merger,
consolidation or other
reorganization in which Tenant is not the surviving corporation, so
long as the
surviving corporation has a net worth at the time of such
assignment that is
equal to or greater than the net worth of Tenant immediately prior
to such
transaction; and (iii) a corporation which purchases or otherwise
acquires all
or substantially all of the assets of Tenant so long as such
acquiring
corporation has a net worth at the time of such assignment that is
equal to or
greater than the net worth of Tenant immediately prior to such
transaction.
F.
EFFECT OF DEFAULT: In the event of Tenant's default, Tenant
hereby
assigns all rents due from any assignment or subletting to Landlord
as security
for performance of its obligations under this Lease, and Landlord
may collect
such rents as Tenant's Attorney-in-Fact, except that Tenant may
collect such
rents unless a default occurs as described in Section 13 above. A
termination if
the Lease due to Tenant's default shall not automatically terminate
an
assignment or sublease then in existence; rather at Landlord's
election, such
assignment or sublease shall survive the Lease termination, the
assignee or
subtenant shall
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attorn to Landlord, and Landlord shall undertake the obligations of
Tenant under
the sublease or assignment; except that Landlord shall not be
liable for prepaid
rent, security deposits or other defaults of Tenant to the
subtenant or
assignee, or for any acts or omissions of Tenant and Tenant's
Agents.
G.
CONVEYANCE BY LANDLORD: As used in this Lease, the term "Landlord"
is
defined only as the owner for the time being of the Premises, so
that in the
event of any sale or other conveyance of the Premises or in the
event of a
master lease of the Premises, Landlord shall be entirely freed and
relieved of
all its covenants and obligations hereunder, and it shall be deemed
and
construed, without further agreement between the Parties and the
purchaser at
any such sale or the master tenant of the Premises, that the
purchaser or master
tenant of the Premises has assumed and agreed to carry out any and
all covenants
and obligations of Landlord hereunder. Such transferor shall
transfer and
deliver Tenant's security deposit to the purchaser at any such sale
or the
master tenant of the Premises, and thereupon the transferor shall
be discharged
from any further liability in reference thereto.
H.
SUCCESSORS AND ASSIGNS: Subject to the provisions this Section 17,
the
covenants and conditions of this Lease shall apply to and bind the
heirs,
successors, executors, administrators and assigns of all Parties
hereto; and all
Parties hereto comprising Tenant shall be jointly and severally
liable
hereunder.
I.
CUSTOMER EQUIPMENT: Landlord acknowledges that Tenant's business in
the
Premises may require the installation of certain communications
equipment by
certain licensees and customers of Tenant (collectively,
"Customers") in order
for such Customers to interconnect with Tenant's equipment in the
Premises or to
permit Tenant to manage or operate such Customers' equipment, and
so long as
such Customers are not granted possessory rights to any portion of
the Premises
(whether as assignees, sublessees, licensees, or in any other
capacity), these
contracts with the Customers shall not require Landlord's consent,
and these
Customer contracts do hereby have the Landlord's consent at no
consideration to
Landlord for the limited purpose of permitting the services and
uses described
above and so long as Tenant causes such Customers to comply, and
all such
services and uses are conducted in a manner in compliance with, all
of the terms
and conditions of this Lease.
18. OPTION TO EXTEND
THE LEASE TERM:
A.
GRANT AND EXERCISE OF OPTION: Landlord grants to Tenant, subject to
the
terms and conditions set forth in this Section 18.A, two (2)
options (the
"Options") to extend the Lease Term for an additional term (the
"Option Term").
Each Option Term shall be for a period of sixty (60) months and
shall be
exercised, if at all, by written notice to Landlord no earlier than
fifteen (15)
months prior to the date the Lease Term would expire but for such
exercise but
no later than nine (9) months prior to the date the Lease Term
would expire but
for such exercise, time being of the essence for the giving of such
notice. If
Tenant exercises the Option, all of the terms, covenants and
conditions of this
Lease except for the grant of additional Options pursuant to this
Section,
provided that Base Monthly Rent for the Premises payable by Tenant
during the
Option Term shall be the greater of (i) the Base Monthly Rent
applicable to the
period immediately prior to the commencement of the Option Term,
and (ii) ninety
five percent (95%) of the Fair Market Rental as hereinafter
defined.
Notwithstanding anything herein to the contrary, if Tenant is in
monetary or
material non-monetary default under any of the terms, covenants or
conditions of
this Lease (beyond applicable notice and cure periods) either at
the time Tenant
exercises the Option or at any time thereafter prior to the
commencement date of
the Option Term, then Landlord shall have, in addition to all of
Landlord's
other rights and remedies provided in this Lease, the right to
terminate the
Option upon notice to Tenant, in which event the Lease Term shall
not be
extended pursuant to this Section 18.A. As used herein, the term
"Fair Market
Rental" is defined as the rental and all
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<PAGE>
other monetary payments, including any escalations and adjustments
thereto
(including without limitation Consumer Price Indexing) that
Landlord could
obtain during the Option Term from a third party desiring to lease
the Premises,
based upon the current use and other potential uses of the
Premises, as
determined by the rents then being obtained for new leases of space
comparable
in age and quality to the Premises in the same real estate
submarket as the
Building. The appraisers shall be instructed that the foregoing
five percent
(5%) discount is intended to offset comparable rents that include
the following
costs which Landlord will not incur in the event Tenant exercises
its option (i)
brokerage commissions, (ii) tenant improvement allowances, (iii)
building
improvement costs, and (iv) vacancy costs.
B.
DETERMINATION OF FAIR MARKET RENTAL: If Tenant exercises the
Option,
Landlord shall send Tenant a notice setting forth the Fair Market
Rental for the
Option Term within thirty (30) days following the Exercise Date. If
Tenant
disputes Landlord's determination of Fair Market Rental for the
Option Term,
Tenant shall, within thirty (30) days after the date of Landlord's
notice
setting forth Fair Market Rental for the Option Term, send to
Landlord a notice
stating that Tenant either elects to terminate its exercise of the
Option, in
which event the Option shall lapse and this Lease shall terminate
on the
Expiration Date, or that Tenant disagrees with Landlord's
determination of Fair
Market Rental for the Option Term and elects to resolve the
disagreement as
provided in Section 18.C below. If Tenant does not send Landlord a
notice as
provided in the previous sentence, Landlord's determination of Fair
Market
Rental shall be the Base Monthly Rent payable by Tenant during the
Option Term.
If Tenant elects to resolve the disagreement as provided in Section
18.C and
such procedures are not concluded prior to the commencement date of
the Option
Term, Tenant shall pay to Landlord as Base Monthly Rent the Fair
Market Rental
as determined by Landlord in the manner provided above. If the Fair
Market
Rental as final
