EXHIBIT 10.7
SUBLEASE AGREEMENT
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DATED: July 6, 1998
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ARTICLE 1: FUNDAMENTAL SUBLEASE PROVISIONS.
1.1 PARTIES: Sublessor: AUSPEX SYSTEMS, INC., a Delaware corporation
Sublessee: COVAD COMMUNICATIONS GROUP, INC., a Delaware
corporation
1.2 MASTER LEASE: (Article 3): Sublessor, as tenant, is leasing from Master
Lessor (set forth below), as landlord, approximately 171,382 feet of leasable
area consisting of three (3) two (2) story buildings located on the Central
Expressway in the City of Santa Xxxxx, State California (the "Premises") on the
terms and subject to the conditions of that certain lease and amendments thereto
(if any) dated JANUARY 14, 1997 collectively, the "Master Lease"). A copy of the
Master Lease is attached hereto as EXHIBIT A. The Premises are located within a
complex which consists of multiple buildings (including the Premises), together
with related driveways, parking areas and related fixtures and improvements
(collectively, the "Complex").
Master Lessor: SOUTH BAY/SAN XXXXX ASSOCIATES,
a California general partnership
1.3 SUBLEASE PREMISES: (Article 2): The Sublease Premises constitutes a part
of the Premises, contains approximately 62,504 square feet of leasable area and
is commonly known as 0000 XXXXXXX XXXXXXXXXX, XXXXX XXXXX, XXXXXXXXXX (the
"Sublease Premises"). The Sublease Premises is further described on the drawing
attached hereto as EXHIBIT B.
1.4 SUBLEASE TERM: (Article 4): Approximately FORTY-EIGHT (48) months,
beginning on the Commencement Date and ending on the Termination Date described
below, unless commenced later or terminated earlier pursuant to the terms of
this Sublease.
1.5 COMMENCEMENT DATE: (Article 4.1): JULY 15, 1998
1.6 TERMINATION DATE: (Article 4.1): JULY 14, 2002
1.7 SUBLESSEE'S PRO RATA SHARE: (Article 5.3): 36.47% (62,504/171,382)
1.8 RENTAL COMMENCEMENT DATE: (Article 5.2): JULY 15, 1998
1.9 MINIMUM MONTHLY RENT: (Article 5.2):
Dates (inclusive) NNN/sf/month NNN/total/month
---------------- ------------ ---------------
July 15, 1998- June 30, 1999 2.00 $125,008.00
July 1, 1999- June 30, 2000 2.05 $128,133.20
July 1, 2000- June 30, 2001 2.10 $131,258.40
July 1, 2001- July 14, 2002 2.15 $134,383.60
1.10 PREPAID RENT: (Article 5.4): $750,048.00
1.11 SECURITY DEPOSIT: (Article 6): $125,000.00
1.12 PERMITTED USE: (Article 7): SUBJECT TO THE LIMITATIONS SET FORTH IN
ARTICLE 7, GENERAL OFFICE, ENGINEERING, RESEARCH AND DEVELOPMENT, LIGHT
ASSEMBLY, WAREHOUSING AND RELATED LAWFUL USES
1.13 GUARANTOR: N/A
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1.14 ADDRESSES FOR NOTICES: (Article 11):
Master Lessor: SOUTH BAY DEVELOPMENT COMPANY, INC.
000 XXXXXXXX XXXXXX
XXXXXXXX, XX 00000
ATTN: XXXXX XXXXXX
FAX NO.: (000) 000-0000
SUBLESSOR: AUSPEX SYSTEMS, INC.
0000 XXXXXXX XXXXXXXXXX
XXXXX XXXXX, XX 00000
ATTN: XXXXXXXXX XXXXXX
FAX NO.: (000) 000-0000
SUBLESSEE: COVAD COMMUNICATIONS GROUP, INC
0000 XXXXXX XXXXXX, XXXXX XXXXX, XX 00000
ATTN: XXXX XXXXXXX, VP H.R. AND ADMINISTRATION
Fax No.: (000) 000-0000
1.15 SUBLESSOR'S BROKER: (Article 24.4): XXXXX XXXXXX AND XXXX XXXXX,
XXXXXX/XXXXX*CRESA
1.16 SUBLESSEE'S BROKER: (Article 24.4): XXX XXXXXXXX AND XXXXX XXXXXX,
XXXXXX/XXXXX*CRESA
1.17 EXHIBITS AND ADDENDA: The following exhibits and any addenda are
annexed to this Sublease:
Exhibit A -- Master Lease
Exhibit B -- Description of Sublease Premises
Exhibit C -- Cafeteria Use Agreement
Exhibit D -- Furniture Inventory
Each reference in this Sublease Agreement ("Sublease") to any provision in
Article 1 shall be construed to incorporate all of the terms of each such
provision. In the event of any conflict between this Article 1 and the balance
of the Sublease, the balance of the Sublease shall control.
ARTICLE 2: SUBLEASE PREMISES.
2.1 SUBLEASE. Sublessor hereby subleases to Sublessee and Sublessee hereby
subleases from Sublessor for the Sublease Term (hereinafter defined), at the
Rent and upon the terms and conditions hereinafter set forth, the Sublease
Premises, and all common areas related thereto. Sublessee acknowledges that the
leasable area of the Premises as specified in Article 1 is an estimate and that
Sublessor does not warrant the exact leasable area of the Premises. By taking
possession of the Premises, Sublessee accepts the leasable area of the Premises
as that specified in Article 1.
2.2 CONDITION OF THE SUBLEASE PREMISES. Sublessee shall accept possession of
the Sublease Premises on the Commencement Date in its "As Is" condition;
provided, however, Sublessor shall professionally clean the Sublease Premises
prior to delivery thereof to Sublessee and , to the extent provided in the
Master Lease, Sublessee shall receive the benefit of any warranties applicable
to the Sublease Premises. Sublessee acknowledges that except as expressly
stated in this Sublease, (i) Sublessor makes no warranties or representations
regarding the physical condition of the Sublease Premises; (ii) Sublessee has
had an opportunity to inspect the Sublease Premises, including the roof and
structural components of the building; the electrical, plumbing, HVAC, and other
building systems serving the Sublease Premises; and the environmental condition
of the Sublease Premises and related common areas; and to hire experts to
conduct such inspections on its behalf; and (iii) Sublessee is leasing the
Sublease Premises based on its own inspection of the Sublease Premises and those
of its agents, and is not relying on any statements, representations or
warranties of Sublessor regarding the physical condition of the Sublease
Premises. Sublessee's taking of possession of the Sublease Premises shall
constitute conclusive evidence that the Sublease Premises are in good, clean and
tenantable condition.
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ARTICLE 3: TERMS OF THE MASTER LEASE.
3.1 SUBLEASE SUBORDINATE. This Sublease is subordinate and subject to all of
the terms and conditions of the Master Lease. If the Master Lease terminates
for any reason whatsoever, this Sublease shall terminate concurrently, and the
parties hereto shall be relieved of any liability thereafter accruing under this
Sublease, except for the liabilities of Sublessee which by the terms of this
Sublease survive the expiration or earlier termination of this Sublease.
3.2 ASSUMPTION OF OBLIGATIONS. To the extent applicable to the Sublease
Premises and Sublessee's use of the common areas, Sublessee hereby expressly
assumes and agrees to perform and discharge, as and when required by the Master
Lease, all debts, duties and obligations to be paid, performed or discharged by
Sublessor under the terms, covenants and conditions of the Master Lease from and
after the Commencement Date, except as specifically set forth in this Sublease.
Sublessee shall not commit or suffer at any time any act or omission that would
violate any provision of the Master Lease. So long as Sublessee complies with
all of its obligations under this Sublease, Sublessor shall not commit any act
or omission during the Sublease Term which would lead to the termination of the
Master Lease by Master Lessor. Notwithstanding the foregoing, if Sublessee
fails to comply with any of its obligations under this Sublease, and does not
cure such failure within the applicable cure period, then Sublessor shall have
no obligation to Sublessee to maintain the Master Lease for Sublessee's benefit.
3.3 MASTER LESSOR'S OBLIGATIONS. Sublessor shall not be responsible to
Sublessee for furnishing any service, maintenance or repairs to the Sublease
Premises which are the obligation of the Master Lessor under the Master Lease,
it being understood that Sublessee shall look solely to Master Lessor for
performance of any such service, maintenance or repairs. However, if Master
Lessor shall fail to perform its obligations under the Masters Lease, Sublessor,
upon receipt of written notice from Sublessee, shall use commercially reasonable
efforts to attempt to enforce the obligations of Master Lessor under the Master
Lease; provided, however, that Sublessor shall not be required to incur any
costs or expenses in connection therewith unless Sublessee agrees to reimburse
Sublessor for any such costs and expenses as Additional Rent hereunder.
3.4 SUBLESSOR'S OBLIGATIONS. Notwithstanding anything to the contrary
contained in this Sublease, Sublessor shall keep and maintain, at the sole cost
of Sublessee as provided in Article 5.3, the Sublease Premises (including
appurtenances) to the extent required of the "Tenant" by the Master Lease;
provided, however, Sublessee shall, at its sole cost and expense, provide for
customary janitorial services for the Sublease Premises. Sublessor shall have no
obligation to perform under this paragraph until a reasonable time after receipt
of written notice from Sublessee of such need.
3.5 SUBLESSOR'S RIGHTS AND REMEDIES. In addition to all the rights and
remedies provided to Sublessor at law or in equity, (a) if Sublessee fails,
within any applicable grace periods provided herein, to perform any act on its
part to be performed pursuant to the requirements of the Master Lease or as
otherwise required by this Sublease, then Sublessor may, but shall not be
obligated to, enter the Sublease Premises to perform such act, and all costs and
expenses incurred by Sublessor in doing so shall be deemed Additional Rent
payable by Sublessee to Sublessor upon demand; and (b) in the event of any
breach by Sublessee of any of its obligations under this Sublease, Sublessor
shall have all of the rights with respect to such default which are available to
Master Lessor under the Master Lease.
ARTICLE 4: SUBLEASE TERM.
4.1 COMMENCEMENT AND TERMINATION DATES. The term of this Sublease ("Sublease
Term") shall be for the period of time commencing on the commencement date
described in Article 1 (the "Commencement Date") and ending on the termination
date described in Article 1 or on such earlier date of termination as provided
herein (the "Termination Date").
4.2 DELAY IN COMMENCEMENT. If for any reason possession of the Sublease
Premises has not been delivered to Sublessee by the scheduled Commencement Date
or any other date, Sublessor shall not be liable to Sublessee or any other
person or entity for any loss or damage resulting therefrom. In the event of
such delay, the Commencement Date shall be delayed until possession of the
Sublease Premises is delivered to Sublessee, but the Termination Date shall not
be extended. If Sublessor is unable to deliver possession of the Sublease
Premises to Sublessee within thirty (30) days after the Commencement Date, then
Sublessee may terminate this Sublease by giving written notice to Sublessor at
any time after that date, and the parties shall have no further liability
thereafter accruing
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under this Sublease; provided, however, that if Sublessor tenders possession to
Sublessee within five (5) days after receipt of Sublessee's notice of
termination, such notice shall be void.
4.3 EARLY OCCUPANCY. Sublessee shall be permitted to occupy the Sublease
Premises prior to the Rental Commencement Date for the purpose of planning its
relocation and installing its personal property and equipment; provided,
however, such occupancy shall be subject to all of the provisions of this
Sublease, except for the payment of Minimum Monthly Rent. Early occupancy of
the Sublease Premises shall not advance the Termination Date. Sublessee shall,
prior to entering the Sublease Premises, deliver to Sublessor certificates of
insurance evidencing the policies required of Sublessee under this Sublease.
ARTICLE 5: RENT AND ADDITIONAL EXPENSES.
5.1 PAYMENT OF RENT. All monies payable by Sublessee under this Sublease
shall constitute "Rent." All Rent shall be paid in lawful money of the United
States, without any deduction or offset, to Sublessor at the address of
Sublessor specified in Article 1 or such other place as Sublessor may designate
in writing. No payment by Sublessee of a lesser amount than the Rent herein
stipulated shall be deemed to be other than on account of the earliest
stipulated Rent, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment of Rent be deemed an accord and
satisfaction, and Sublessor may accept such check or payment without prejudice
to its right to recover the balance of such Rent or to pursue any other remedy.
Rent for any partial calendar months at the beginning or end of the Sublease
Term shall be prorated based on a thirty (30) day month.
5.2 MINIMUM MONTHLY RENT. Sublessee shall pay to Sublessor the sums set forth
in Article 1 hereof as Minimum Monthly Rent, in advance, on the first day of
each calendar month throughout the Sublease Term, commencing on the Rental
Commencement Date.
5.3 ADDITIONAL RENT. In addition to Minimum Monthly Rent, Sublessee shall pay
to Sublessor from time to time upon demand, the amount of real property taxes,
maintenance, insurance, utilities and other charges to the extent applicable to
the Sublease Premises and Sublessee's Pro Rata Share (as specified in Article 1)
of all costs incurred by Sublessor with respect to the operation, protection,
maintenance, repair and replacement of the common areas, and the responsibility
of or payable by Sublessor under the Master Lease. Notwithstanding the
foregoing, Sublessee shall pay promptly, as the same become due, for utilities,
materials or services which are furnished and billed directly to Sublessee. It
is the parties' intent that this Sublease shall be an absolute net-net-net
sublease, and Sublessee agrees that any and all charges, fees, impositions and
payments of any kind whatsoever attributable to the Sublease Premises and due or
owing by or to be performed by Sublessor under the Master Lease shall be passed
through to Sublessee as Additional Rent hereunder. To the extent that real
property taxes are not separately assessed, Sublessee shall pay Sublessee's Pro
Rata Share of real property taxes assessed against the Complex.
5.4 PREPAID RENT. Concurrently with Sublessee's execution of this Sublease,
Sublessee shall pay to Sublessor the first month's Minimum Monthly Rent due
under the Sublease equal to $125,008. Upon approval of the Sublease by Master
Lessor, Sublessee shall pay to Sublessor the balance of the Prepaid Rent
specified in Article 1 in the amount of $625,040 which shall be applied to the
installments of Minimum Monthly Rent for months 2 through 6 of the Sublease
Term.
5.5 LATE CHARGE. If Sublessee fails to pay any Rent due hereunder within five
(5) days after Sublessor notifies Sublessee that such amount is past due, then
Sublessee shall pay Sublessor a late charge equal to six percent (6%) of such
delinquent amount as liquidated damages for Sublessee's failure to make timely
payment. Any notice given by Sublessor pursuant to any statute governing
unlawful detainer actions shall be deemed to be concurrent with, and not in
addition to, the notice required herein. This provision for a late charge shall
not be deemed to grant Sublessee a grace period or extension of time for
performance. If any Rent remains delinquent for a period in excess of thirty
(30) days then, in addition to such late charge, Sublessee shall pay to
Sublessor interest on the delinquent amount from the end of such thirty (30) day
period until paid, at the rate of ten percent (10%) per annum or the maximum
rate permitted by law.
ARTICLE 6: SECURITY DEPOSIT. Upon execution of this Sublease, Sublessee shall
deposit with Sublessor in cash the sum specified in Article 1 hereof as a
"Security Deposit." The Security Deposit shall be held by Sublessor as security
for Sublessee's faithful performance under this Sublease. If Sublessee fails to
pay any Rent as and when due under this Sublease or otherwise fails to perform
its
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obligations hereunder, then Sublessor may, at its option and without prejudice
to any other remedy which Sublessor may have, apply, use or retain all or any
portion of the Security Deposit toward the payment of delinquent Rent or for any
loss or damage sustained by Sublessor due to such failure by Sublessee.
Sublessee shall upon demand restore the Security Deposit to the original sum
deposited. The Security Deposit shall not bear interest nor shall Sublessor be
required to keep such sum separate from its general funds. To the extent not
otherwise applied by Sublessor as provided herein, the Security Deposit shall be
returned to Sublessee within thirty (30) days after the Termination Date. In the
event of bankruptcy or other debtor-creditor proceedings filed by or against
Sublessee, such Security Deposit shall be deemed to be applied first to the
payment of Rent due Sublessor for the period immediately prior to the filing of
such proceedings.
ARTICLE 7: USE.
7.1 USE OF THE SUBLEASE PREMISES. Sublessee shall use the Sublease Premises
solely for the purposes specified in Article 1 in strict conformance with the
applicable requirements of the Master Lease, and for no other purpose
whatsoever.
7.2 SUITABILITY. Sublessee acknowledges that neither Sublessor nor any agent
of Sublessor has made any representation or warranty with respect to the
Sublease Premises, the permitted uses that can be made of the Sublease Premises
under existing laws, or the suitability of the Sublease Premises for the conduct
of Sublessee's business, nor has Sublessor agreed to undertake any modification,
alteration or improvement to the Sublease Premises.
7.3 HAZARDOUS MATERIALS.
7.3.1 DEFINITIONS. As used herein, the term "Hazardous Material Law"
shall mean any statute, law, ordinance, or regulation of any governmental body
or agency which regulates the use, storage, generation, discharge, treatment,
transportation, release, or disposal of any Hazardous Material (as defined in
the Master Lease).
7.3.2 USE RESTRICTION. Sublessee shall not cause or permit any Hazardous
Material to be used, stored, generated, discharged, treated, transported to or
from, released or disposed of in, on, over, through, or about the Sublease
Premises, or any other land or improvements in the vicinity of the Sublease
Premises, without the prior written consent of Master Lessor and Sublessor,
which consent may be withheld in the sole and absolute discretion of Master
Lessor and/or Sublessor. Without limiting the generality of the foregoing, (a)
any use, storage, generation, discharge, treatment, transportation, release, or
disposal of Hazardous Material by Sublessee shall strictly comply with all
applicable Hazardous Material Laws, and (b) if the presence of Hazardous
Material on the Sublease Premises caused or permitted by Sublessee or its
agents, employees, invitees, visitors or contractors results in contamination of
the Sublease Premises or any soil, air, ground or surface waters under, through,
over, on, in or about the Sublease Premises, Sublessee, at its expense, shall
promptly take all actions necessary to return the Sublease Premises to the
condition existing prior to the existence of such Hazardous Material.
ARTICLE 8: SURRENDER. Upon the expiration or earlier termination of this
Sublease, Sublessee shall surrender the Sublease Premises in the same condition
and repair as the Sublease Premises were delivered to Sublessee on the
Commencement Date, excepting only ordinary wear and tear and damage by fire,
earthquake, act of God or the elements and all alterations, improvements or
additions which Sublessee is not required to remove pursuant to the terms of
this Sublease. Sublessee shall professionally clean the Sublease Premises prior
to surrender thereof to Sublessor. Sublessee agrees to repair any damage to the
Sublease Premises, or the building of which the Sublease Premises are a part,
caused by or related to the removal of any articles of personal property,
business or trade fixtures, machinery, equipment, cabinetwork, signs, furniture,
movable partitions or permanent improvements or additions which Sublessor allows
or requires Sublessee to remove, including, without limitation, repairing the
floor and patching and/or painting the walls where required by Sublessor to the
reasonable satisfaction of Sublessor and/or Master Lessor, all at Sublessee's
sole cost and expense. Sublessee shall indemnify Sublessor against any loss or
liability resulting from delay by Sublessee in so surrendering the Sublease
Premises, including, without limitation, any claims made by the Master Lessor
and/or any succeeding tenant founded on such delay. Such indemnity obligation
shall survive the expiration or earlier termination of this Sublease.
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ARTICLE 9: CONSENT. Whenever the consent or approval of Master Lessor is
required pursuant to the terms of the Master Lease, for the purposes of this
Sublease, Sublessee, in each such instance, shall be required to obtain the
written consent or approval of both Master Lessor and Sublessor. If Master
Lessor refuses to grant its consent or approval, Sublessor may withhold its
consent or approval and Sublessee agrees that such action by Sublessor shall be
deemed reasonable. Unless otherwise provided in this Sublease, Sublessor's
consent shall not be unreasonably withheld or delayed.
ARTICLE 10: INSURANCE. All insurance policies required to be carried by
Sublessor under the Master Lease shall be maintained by Sublessee pursuant to
the terms of the Master Lease, and shall name Sublessor and Master Lessor (and
such other lenders, persons, firms, or corporations as are designated by
Sublessor or Master Lessor) as additional insureds by endorsement. All policies
shall be written as primary policies with respect to the interests of Master
Lessor and Sublessor and such other additional insureds and shall provide that
any insurance carried by Master Lessor or Sublessor or such other additional
insureds is excess and not contributing insurance with respect to the insurance
required hereunder. All policies shall also contain "cross liability" or
"severability of interest" provisions, shall insure the performance of the
indemnity set forth in Article 14 of this Sublease, and shall contain a waiver
of subrogation provision in favor of Sublessor. Sublessee shall provide Master
Lessor and Sublessor with copies or certificates of all policies, including in
each instance an endorsement providing that such insurance shall not be
cancelled or amended except after thirty (30) days prior written notice to
Master Lessor and Sublessor. All deductibles, if any, under any such insurance
policies shall be subject to the prior reasonable approval of Sublessor, and all
certificates delivered to Master Lessor and Sublessor shall specify the limits
of the policy and all deductibles thereunder.
ARTICLE 11: NOTICES.
11.1 NOTICE REQUIREMENTS. All notices, demands, consents, and approvals which
may or are required to be given by either party to the other under this Sublease
shall be in writing and may be personally delivered or given or made by
overnight courier such as Federal Express, by facsimile transmission or made by
United States registered or certified mail addressed as shown in Article 1. Any
notice or demand so given shall be deemed to be delivered or made on the date
personal service is effected or, on the next business day if sent by overnight
courier, or the same day as given if sent by facsimile transmission and received
by 5:00 p.m. Pacific time or on the second business day after the same is
deposited in the United States Mail as registered or certified and addressed as
above provided with postage thereon fully prepaid. Either party hereto may
change its address at any time by giving written notice of such change to the
other party in the manner provided herein at least ten (10) calendar days prior
to the date such change is desired to be effective.
11.2 NOTICES FROM MASTER LESSOR. Each party shall provide to the other party a
copy of any notice or demand received from or delivered to Master Lessor within
twenty four (24) hours of receiving or delivering such notice or demand.
ARTICLE 12: DAMAGE, DESTRUCTION, CONDEMNATION. To the extent that the Master
Lease gives Sublessor any rights following the occurrence of any damage,
destruction or condemnation to terminate the Master Lease, to repair or restore
the Sublease Premises, to contribute toward such repair or restoration costs to
avoid termination, to obtain and utilize insurance or condemnation proceeds to
repair or restore the Sublease Premises, or any similar rights, such rights
shall be reserved to and exercisable solely by Sublessor, in its sole and
absolute discretion, and not by Sublessee. The exercise of any such right by
Sublessor shall under no circumstances constitute a default or breach under this
Sublease or subject Sublessor to any liability therefor.
ARTICLE 13: INSPECTION OF THE SUBLEASE PREMISES. Sublessee shall permit
Sublessor and its agents to enter the Sublease Premises at any reasonable time
for the purpose of inspecting the same or posting a notice of non-responsibility
for alterations, additions or repairs, provided that Sublessor provides at least
twenty-four (24) hours prior notice (except in the case of emergency).
ARTICLE 14: INDEMNITY; EXEMPTION OF SUBLESSOR FROM LIABILITY.
14.1 SUBLESSEE INDEMNITY. Except in connection with damage or injury caused by
the gross negligence or willful misconduct of Sublessor or its authorized
agents, Sublessee shall indemnify, defend (with counsel reasonably satisfactory
to Sublessor), protect and hold harmless Sublessor and its agents, employees,
contractors, stockholders, officers, directors, successors and assigns from and
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against any and all claims, demands, actions, suits, proceedings, liabilities,
obligations, losses, damages, judgments, costs, penalties, fines, and expenses
(including, but not limited to, attorneys', consultants' and expert witness
fees) arising out of, resulting from, or related to (i) any injury or death to
any person or injury or damage to property caused by, arising out of, or
involving (A) Sublessee's use of the Sublease Premises, the conduct of
Sublessee's business therein, or any activity, work or thing done, permitted or
suffered by Sublessee in or about the Sublease Premises or the common areas, (B)
a breach by Sublessee in the performance in a timely manner of any obligation of
Sublessee to be performed under this Sublease, or (C) the negligence or
intentional acts of Sublessee or Sublessee's agents, contractors, employees,
subtenants, licensees, or invitees, and/or (ii) the storage, use, generation,
discharge, treatment, transportation, release or disposal of Hazardous Material
by Sublessee or its agents, employees, invitees, visitors or contractors in, on,
over, through, from, about, or beneath the Sublease Premises or any nearby
premises. This indemnity shall survive the expiration or earlier termination of
this Sublease.
14.2 SUBLESSEE WAIVER. Sublessee, as a material part of the consideration to
Sublessor, hereby assumes all risk of damage to property or injury to persons
in, upon or about the Sublease Premises arising from any cause and Sublessee
hereby waives all claims in respect thereof against Sublessor, except in
connection with damage or injury caused solely by the gross negligence or
willful misconduct of Sublessor or its authorized agents; provided, however,
that in no event shall Sublessor be liable for any loss of profits or any
special, indirect, incidental, consequential or punitive damages, however caused
and on any theory of liability. This waiver shall survive the expiration or
earlier termination of this Sublease.
14.3 MUTUAL WAIVER OF SUBROGATION. Each party (the "First Party") hereby
releases the other party (the "Second Party"), and its partners, officers,
agents, employees, and servants, from any and all claims, demands, loss,
expense, or injury to the Sublease Premises or to the furnishings, fixtures,
equipment, inventory, or other property in, about, or upon the Sublease
Premises, which is caused by or results from perils, events, or happenings which
are the subject of fire or other casualty insurance carried by the First Party
at the time of such loss or which would have been in force had the First Party
carried the insurance required hereunder or by the Master Lease (collectively,
the "Effective Coverage") irrespective of any negligence on the part of the
Second Party that may have contributed to or caused such loss; subject to the
following limitations: (i) the Second Party shall not be released from any
liability to the extent that such damages are not covered by the insurance
recovery under the Effective Coverage or are the result of willful acts by the
Second Party, and (ii) the Second Party shall be responsible for reimbursing the
First Party for any deductible owed as a result of such damages. Each party
shall use commercially reasonable efforts to obtain, if needed, appropriate
endorsements to its policies of insurance with respect to the foregoing
releases; provided, however, that failure to obtain such endorsements shall not
affect the releases hereinabove given.
ARTICLE 15: ASSIGNMENT AND SUBLETTING.
15.1 RESTRICTION ON ASSIGNMENT, SUBLETTING AND TRANSFER. Sublessee shall not
voluntarily or by operation of law assign this Sublease or enter into license or
concession agreement, sublet all or any part of the Sublease Premises, or
otherwise transfer, mortgage, pledge, hypothecate or encumber all or any part of
Sublessee's interest in this Sublease or in the Sublease Premises or any part
thereof, without the prior written consent of Master Lessor (pursuant to the
terms of the Master Lease) and Sublessor. Any attempt to do so without such
consent being first had and obtained shall be wholly void and shall constitute a
default by Sublessee under this Sublease. Sublessee hereby irrevocably assigns
to Sublessor all Rent and other sums or consideration in any form, from any such
subletting or assignment, and agrees that Sublessor, as assignee and as
attorney-in-fact for Sublessee, or a receiver for Sublessee appointed upon
Sublessor's application, may collect such Rent and other sums and apply the same
against amounts owing to Sublessor in the event of Sublessee's default;
provided, however, that until the occurrence of any act of default by Sublessee
or Sublessee's subtenant, Sublessee shall have the right to collect such sums,
provided that all sums in excess of the Minimum Monthly Rent set forth herein
(the "Excess") which any subtenant covenants to pay shall be paid as follows:
twenty-five percent (25%) of the Excess to Sublessee and the balance of the
Excess to Sublessor as Additional Rent (of which, twenty-five percent (25%) of
the Excess shall be retained by Sublessor and fifty percent (50%) of the Excess
shall be delivered to Master Lessor pursuant to the terms of the Master Lease.)
15.2 CONSENT TO ASSIGNMENT AND SUBLETTING. Sublessor's consent to an
assignment or sublease of all or part of the Sublease Premises shall not be
unreasonably withheld or delayed; provided, however, such consent shall be
subject to the prior approval of Master Lessor and shall be conditioned upon
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Sublessee's compliance with all terms, conditions, approvals and requirements
applicable to such assignment or sublease as set forth in the Master Lease and
all conditions imposed by Master Lessor. Subject to the terms of the preceding
sentence, Sublessor shall deliver its consent within five (5) business days
after receipt of Master Lessor's written consent to an assignment or sublease by
Sublessee.
15.3 CONSENT TO OTHER TRANSFERS. Sublessor's consent to a transfer, mortgage,
pledge, hypothecation or encumbrance of all or any part of Sublessee's interest
in this Sublease or in the Sublease Premises or any part thereof may be withheld
in Sublessor's sole discretion.
ARTICLE 16: DELIVERY OF DOCUMENTS. Sublessee shall execute and deliver any
document or other instrument required by Master Lessor or Sublessor pursuant to
the Master Lease within five (5) days following receipt of a written request
from Master Lessor or Sublessor. Failure to comply with this provision shall
constitute a default by Sublessee under this Sublease.
ARTICLE 17: HOLDING OVER. Any holding over by Sublessee after the Termination
Date, without the prior written consent of Master Lessor and Sublessor, shall
not constitute a renewal or extension of this Sublease or give Sublessee any
rights in or to the Sublease Premises. Any holding over by Sublessee after the
Termination Date, with the prior written consent of Master Lessor and Sublessor,
shall be construed as a month-to-month tenancy on the same terms and conditions
as specified in this Sublease, except that Sublessee shall pay to Sublessor as
Minimum Monthly Rent during such tenancy an amount equal to One Hundred Fifty
Percent (150%) of the most recent applicable Minimum Monthly Rent amount.
ARTICLE 18: OPTIONS. Any right of Sublessor to extend or renew the term of the
Master Lease or to expand the Premises (if any), shall be reserved to and
exercisable solely by Sublessor, in its sole discretion, and not by Sublessee.
Sublessor agrees to exercise such rights to extend or renew the Master Lease
only to the extent necessary to fulfill its obligations under this Sublease.
ARTICLE 19: RIGHT OF FIRST OFFER.
19.1 ONE-TIME OFFER TO LEASE EXPANSION SPACE. If at any time during the
Sublease Term, Sublessor desires to lease one or more complete floors located
within Premises (the "Expansion Space") to other than an affiliated third party,
then Sublessor shall give Sublessee written notice ("Lease Notice") of all
material terms pursuant to which Sublessor would be willing to lease such
Expansion Space. Sublessee shall have the first right, by giving written notice
to Sublessor within five (5) business days after receipt of Sublessor's Lease
Notice, to lease the Expansion Space pursuant to the terms contained in the
Lease Notice. For purposes of this paragraph, an "affiliated third party" shall
mean any corporation or entity with which Sublessee may merge or consolidate or
become affiliated as a parent, subsidiary, holding company or otherwise, or any
corporation or entity with which Sublessee has a strategic business
relationship.
19.2 ACCEPTANCE OF EXPANSION SPACE BY SUBLESSEE. If Sublessee exercises its
right by giving notice within the five (5) business day period described above,
Sublessor and Sublessee shall, within ten (10) business days thereafter, enter
into an amendment to the Sublease incorporating the Expansion Space as part of
the Sublease Premises, amended to set forth all of the terms provided in the
Lease Notice. The lease of the Expansion Space shall be subject to the approval
of the Master Lessor as provided in the Master Lease.
19.3 SUBLESSEE'S REJECTION OF EXPANSION SPACE. If Sublessee rejects the
Expansion Space, or fails to give notice of its intention to exercise its right
of first offer within the requisite five (5) business day period, then Landlord
may lease the Expansion Space to any prospective tenant, provided, however, that
the net present value of the Rent and other economic terms, is not,
collectively, greater than ten percent (10%) more favorable to the prospective
tenant than the terms in Sublessor's Expansion Notice. If such terms are
greater than ten percent (10%) more favorable to the prospective tenant than
those terms contained in Sublessor's Expansion Notice, then Sublessor shall send
Sublessee another Expansion Notice containing such terms, conditions, and
covenants, and this Article 19 shall again apply.
19.4 TERMINATION OF RIGHT OF FIRST OFFER. The right of first offer set forth in
this Article 19 to lease Expansion Space is a one-time offer. Upon the
execution of a lease of the Expansion Space between Sublessor and Sublessee or
another tenant, or if Sublessee rejects the Expansion Space, or fails to give
Page 8 of 11
notice of its intention to exercise its right of first offer within the
requisite time period, then Sublessee shall no longer have the right of first
offer, and this Article 19 shall be of no further force or effect
ARTICLE 20: PARKING. Subject to reasonable Rules and Regulations that may be
promulgated by Master Lessor and/or Sublessor from time to time, Sublessee shall
have the non-exclusive right in common with other tenants and occupants of the
Complex to use, free of a monthly fee during the term of the Sublease, two
hundred fifty (250) parking spaces located in the Complex that are appurtenant
to the Sublease Premises. Of the two hundred fifty (250) parking spaces,
Sublessee shall have the right to designate and xxxx up to twelve (12) visitor
parking spaces, subject to the prior approval of Master Lessor and Sublessor.
Sublessee shall not, at any time, park, or permit to be parked, any trucks or
vehicles adjacent to the loading areas so as to interfere in any way with the
use of such areas, nor shall Sublessee at any time park, or permit the parking
of Sublessee's trucks or other vehicles or the trucks or other vehicles of
Sublessee's suppliers or others, in any portion of the Complex not designated by
Sublessor for such use by Sublessee. Sublessee shall not park nor permit to be
parked, any inoperative vehicles or equipment on any portion of the parking area
or outside areas of the Complex, or use the same for storage. Sublessee agrees
to assume responsibility for compliance by its employees with the parking
provisions contained herein.
ARTICLE 21: SIGNAGE. Subject to the prior approval of all applicable
governmental agencies, Master Lessor and Sublessor, Sublessee shall have the
right to the following signage:
1. Building facade signage on the upper portion of the Sublease Premises
facing the San Xxxxx Expressway;
2. Shared monument signage on the driveway entrance along San Xxxxx
Expressway;
3. Signage on the glass entry doors to the Sublease Premises;
4. Directional signage; and
5. Lobby signage.
Upon expiration or other sooner termination of this Sublease, Sublessee at
Sublessee's sole cost and expense shall remove the foregoing signs and repair
all damage in such a manner as to restore all aspects of the appearance of the
Sublease Premises to the condition prior to the placement of said signs.
ARTICLE 22: CAFETERIA USE AGREEMENT. Sublessee shall have the right to use the
cafeteria located in the Complex in accordance with the Cafeteria Use Agreement,
a copy of which is attached hereto as EXHIBIT C.
ARTICLE 23: FURNITURE. Prior to the Commencement Date, the parties agree to
attach an inventory of furniture (the "Furniture") to the Sublease as EXHIBIT D.
The furniture is owned by Sublessor and may be used by Sublessee during the
Sublease Term without rental charge. Sublessee agrees, at its sole cost and
expense, to maintain the Furniture in good condition and repair, allowing for
reasonable wear and tear. In the event that the Furniture is damaged during the
Sublease Term, Sublessee shall, at Sublessor's option, either repair or replace
such damaged Furniture at Sublessee's sole cost and expense. Any installations,
replacements, and substitutions of parts or accessories with respect to any of
the Furniture shall constitute accessions and shall become part of the Furniture
and shall be owned by Sublessor. Sublessor shall not be under any liability or
obligation in any manner to provide service, maintenance, or repairs for the
Furniture. Upon the expiration or earlier termination of this Sublease,
Sublessee shall return the Furniture in the same condition and repair as the
Furniture was delivered to Sublessee on the Commencement Date, excepting only
ordinary wear and tear.
ARTICLE 24: GENERAL PROVISIONS.
24.1 SEVERABILITY. If any term or provision of this Sublease shall, to any
extent, be determined by a court of competent jurisdiction to be invalid or
unenforceable, the remainder of this Sublease shall not be affected thereby, and
each term and provision of this Sublease shall be valid and enforceable to the
fullest extent permitted by law.
24.2 ATTORNEYS' FEES; COSTS OF SUIT. If Sublessee or Sublessor shall bring any
action for any relief against the other, declaratory or otherwise, arising out
of this Sublease, including any suit by Sublessor for the recovery of Rent or
possession of the Sublease Premises or upon appeal, the prevailing party shall
be entitled to recover its reasonable attorneys' fees and costs of suit.
Page 9 of 11
24.3 WAIVER. No covenant, term or condition or the breach thereof shall be
deemed waived, except by written consent of the party against whom the waiver is
claimed, and any waiver of the breach of any covenant, term or condition shall
not be deemed to be a waiver of any other covenant, term or condition.
Acceptance by Sublessor of any performance by Sublessee after the time the same
shall have become due shall not constitute a waiver by Sublessor of the breach
or default of any covenant, term or condition unless otherwise expressly agreed
to by Sublessor in writing.
24.4 BROKERAGE COMMISSIONS. The parties represent and warrant to each other
that they have dealt with no brokers, finders, agents or other person in
connection with the transaction contemplated hereby to whom a brokerage or other
commission or fee may be payable, except for the brokers named in Article 1.
Each party shall indemnify, defend and hold the other harmless from any claims
arising from any breach by the indemnifying party of the representation and
warranty in this paragraph.
24.5 BINDING EFFECT. Preparation of this Sublease by Sublessor or Sublessor's
agent and submission of the same to Sublessee shall not be deemed an offer to
lease. This Sublease shall become binding upon Sublessor and Sublessee only
when fully executed by Sublessor and Sublessee and approved in writing by Master
Lessor. If Master Lessor fails to approve this Sublease within 30 days
following its submission to Master Lessor, then either Sublessor or Sublessee
may terminate this Sublease by giving written notice to the other party prior to
the date that Master Lessor approve this Sublease in writing. In the event that
this Sublease is terminated under this paragraph, the parties shall have no
further liability thereafter accruing under this Sublease.
24.6 ENTIRE AGREEMENT. This instrument, along with any exhibits and addenda
hereto, constitutes the entire agreement between Sublessor and Sublessee
relative to the Sublease Premises. This Sublease may be altered, amended or
revoked only by an instrument in writing signed by both Sublessor and Sublessee.
There are no oral agreements or representations between the parties affecting
this Sublease, and this Sublease supersedes and cancels any and all previous
negotiations, arrangements, brochures, agreements, representations and
understandings, if any, between the parties hereto.
24.7 EXECUTION. This Sublease may be executed in one or more counterparts,
each of which shall be considered an original counterpart, and all of which
together shall constitute one and the same instrument. Each person executing
this Sublease represents that the execution of this Sublease has been duly
authorized by the party on whose behalf the person is executing this Sublease.
24.8 WAIVER TO TRIAL BY JURY. To the full extent permitted by law, Sublessee
hereby waives the right to trial by jury in any action, proceeding or
counterclaim brought by Sublessee on any matter whatsoever arising out of or in
any way connected with this Sublease, the relationship of Sublessee and
Sublessor, Sublessee's use or occupancy of the Sublease Premises and/or any
claim of injury or damage.
ARTICLE 25: OPTION TO EXTEND.
25.1 DEFINITIONS. The phrase "Sublease Term" as used in this Article shall
mean the Sublease Term and any Extension Period (as defined below) for which
Sublessee has exercised its extension rights pursuant to this Article 25, and
the expiration date of the Sublease Term shall be the expiration date of such
Extension Period.
25.2 OPTION TO EXTEND. Subject to the terms and conditions set forth below,
Sublessee shall have the option to extend the Sublease Term for two additional
periods of one (1) year each ("Extension Periods"). The Extension Periods shall
commence upon the expiration of the Sublease Term. The option to extend shall
be personal to Sublessee, and shall not be transferable or assignable to any
other person or entity. Sublessee's option to extend shall be subject to the
following conditions:
i. Sublessee shall not have committed an uncured breach of the Sublease
either at the time it gives Sublessor notice of its intent to extend or at the
commencement of the Extension Period;
ii. Sublessee shall be operating in the Sublease Premises in a manner
consistent in all respects with the Sublease;
Page 10 of 11
iii. Sublessee shall have exercised all prior options to extend the
term of the Sublease;
iv. Sublessee shall give Sublessor unconditional written notice of the
exercise of its option at least nine (9) months prior to the expiration of the
Sublease Term, time being strictly of the essence, and any failure to give said
notice within the required time period shall be deemed an election by Sublessee
not to extend the term of the Sublease for the Extension Period; and
v. Within sixty (60) days after Sublessor receives Sublessee's notice
of its intent to exercise the option to extend, Sublessor shall give Sublessee
written notice of its consent or disapproval of such option. Sublessor's consent
to such option may be withheld in Sublessor's sole and absolute discretion.
25.3 TERMS OF THE EXTENSION PERIOD. The Extension Periods shall be upon the
same terms and conditions as are contained in the Sublease, except that
Sublessee shall not have any further options to extend the Sublease beyond the
Extension Periods and the Minimum Monthly Rent for the Extension Periods shall
be as follows:
Dates (inclusive) NNN/sf/month NNN/total/month
----------------- ------------ ---------------
July 15, 2002- July 14, 2003 $2.20 $137,508.80
July 15, 2003- July 14, 2004 $2.25 $140,634.00
ARTICLE 26: ALTERATIONS AND ADDITIONS. Sublessee shall not make, or suffer to
be made, any alteration, improvement or addition to the Sublease Premises, or
any part thereof, without the prior written consent of Sublessor and Master
Lessor (pursuant to the terms of the Master Lease) and without a valid building
permit issued by the appropriate governmental authority. Sublessor's consent
shall not be unreasonably withheld or delayed; provided, however, such consent
may be conditioned upon the requirement that Sublessee remove any such
alteration, addition or improvement at the expiration or earlier termination of
the Sublease. Sublessor shall notify Sublessee concurrently with its consent to
any such alteration, addition or improvement whether or not removal of such
alteration, addition or improvement will be required at the expiration or
earlier termination of the Sublease.
"SUBLESSOR"
AUSPEX SYSTEMS, INC.,
A DELAWARE CORPORATION
By: /s/ X. Xxxxxxxx Case
-------------------------------
Name: X. Xxxxxxxx Case
------------------------------
Its: VP & CFO
-------------------------------
"SUBLESSEE"
COVAD COMMUNICATIONS GROUP, INC.,
A DELAWARE CORPORATION
By: /s/ Xxxxxxx Xxxxx
--------------------------------
Name: Xxxxxxx Xxxxx 7/6/98
------------------------------
Its: CFO
-------------------------------
Page 11 of 11
LEASE AGREEMENT
BY AND BETWEEN
SOUTH BAY/SAN XXXXX ASSOCIATES
AND
AUSPEX SYSTEMS, INC.
DATED AS OF JANUARY 14, 1997
TABLE OF CONTENTS
Page
----
1. Parties..................................................................1
2. Demise of Premises.......................................................1
3. Lease Term...............................................................1
A. Lease Term.........................................................1
B. Commencement Date..................................................1
C. Commencement Date Memorandum.......................................2
X. Xxxxx in Completion of Buildings...................................2
E. Options to Extend..................................................2
F. Early Entry........................................................3
4. Rent.....................................................................3
A. Time of Payment....................................................3
B. Monthly Installment................................................4
C. Tenant Improvement Allowance.......................................5
D. Late Charge........................................................6
E. Additional Rent....................................................6
F. Place of Payment...................................................7
G. Advance Payment....................................................7
5. Security Deposit.........................................................7
6. Use of Premises..........................................................8
A. Restrictions on Use................................................8
B. Initial Occupancy..................................................8
7. Taxes and Assessments....................................................8
A. Tenant's Property..................................................8
B. Property Taxes.....................................................8
C. Property Taxes Defined.............................................9
D. Other Taxes........................................................9
E. Tenant's Right to Contest..........................................9
8. Insurance...............................................................10
A. Indemnity.........................................................10
B. Liability Insurance...............................................10
C. Property Insurance................................................11
D. Tenant's Property Insurance.......................................11
E. Mutual Waiver of Subrogation......................................11
9. Utilities...............................................................12
-i-
10. Repairs and Maintenance.................................................12
A. Landlord's Repairs................................................12
B. Tenant's Repairs..................................................13
11. Alterations.............................................................15
A. Limitations.......................................................15
B. Tenant's Rights...................................................15
C. Alterations Required by Law.......................................15
12. Acceptance of the Premises..............................................16
13. Default.................................................................16
A. Events of Default.................................................16
B. Remedies..........................................................17
C. Waivers...........................................................19
14. Destruction.............................................................19
A. Landlord's Duty to Restore........................................19
B. Landlord's Right to Terminate.....................................20
C. Tenant's Right to Terminate.......................................20
D. Abatement of Rent.................................................21
15. Condemnation............................................................22
A. Definition of Terms...............................................22
B. Rights............................................................22
C. Total Taking......................................................22
D. Partial Taking....................................................22
16. Mechanics' Lien.........................................................22
17. Inspection of the Premises..............................................23
18. Compliance with Laws....................................................23
19. Subordination...........................................................23
A. Priority..........................................................23
B. Subsequent Security Instruments...................................24
C. Documents.........................................................24
D. Tenant's Attornment...............................................24
20. Holding Over............................................................24
21. Notices.................................................................25
-ii-
22. Attorneys' Fees.........................................................25
23. Subleasing and Assignment...............................................26
A. Landlord's Consent Required.......................................26
B. Transferee Information Required...................................26
C. Landlord's Rights.................................................26
D. Permitted Transfers...............................................27
24. Successors..............................................................28
25. Mortgagee Protection....................................................28
26. Estoppel Certificate....................................................28
27. Surrender of Lease Not Merger...........................................28
28. Waiver..................................................................29
29. General.................................................................29
A. Captions..........................................................29
B. Definition of Landlord............................................29
C. Time of Essence...................................................29
D. Severability......................................................29
E. Quiet Enjoyment...................................................29
F. Law...............................................................30
G. Agent.............................................................30
H. Lender............................................................30
I. Force Majeure.....................................................30
30. Sign....................................................................30
31. Interest on Past Due Obligations........................................30
32. Surrender of the Premises...............................................31
33. Authority...............................................................31
34. CC&Rs...................................................................31
35. Brokers.................................................................31
36. Limitation on Landlord's Liability......................................32
-iii-
37. Hazardous Material......................................................32
A. Definitions.......................................................32
B. Landlord's Obligation.............................................33
C. Permitted Use.....................................................33
D. Hazardous Materials Management Plan...............................34
E. Use Restriction...................................................34
F. Tenant Indemnity..................................................35
G. Compliance........................................................35
H. Assignment and Subletting.........................................36
I. Surrender.........................................................36
J. Right to Appoint Consultant.......................................36
K. Holding Over......................................................36
L. Existing Environmental Reports....................................37
M. Provisions Survive Termination....................................37
N. Controlling Provisions............................................37
38. Landlord's Default......................................................37
39. Condition to Effectiveness..............................................38
-iv-
LIST OF EXHIBITS
Exhibit "A" - Legal Description of Parcel..................................40
Exhibit "B" - Site Plan....................................................42
Exhibit "C" - Improvement Agreement........................................43
Exhibit "D" - Commencement Date Memorandum.................................60
Exhibit "E" - List of Hazardous Materials Tenant Will Use on The Premises..61
Exhibit "F" - Description of Existing Environmental Reports................62
Exhibit "G" - Preliminary Title Report.....................................67
Exhibit "H" - CCR's and Excluded Obligations...............................78
-v-
LEASE AGREEMENT
---------------
1. Parties. This Lease, dated for reference purposes as of January 14,
-------
1997, is made by and between South Bay/San Xxxxx Associates, a California
general partnership ("LANDLORD"), and Auspex Systems, Inc., a Delaware
--------
corporation ("TENANT").
------
2. Demise of Premises. Landlord hereby leases to Tenant and Tenant
------------------
hereby leases from Landlord, upon the terms and conditions hereinafter set
forth, those certain premises (the" PREMISES") situated in the City of Santa
--------
Xxxxx, County of Santa Xxxxx, State of California, described as follows:
A. That Parcel of real property more particularly described in
Exhibit "A"attached hereto (the "PARCEL");
----------- ------
B. Three (3) buildings two (2) stories high to be constructed by
Landlord and located on the Parcel as shown on the site plan attached hereto
as Exhibit "B" containing approximately one hundred seventy one thousand three
----------
hundred eighty two (171,382) square feet (collectively, the "BUILDINGS" and
---------
individually,"BUILDING").
--------
C. The shells and the associated site improvements for all Buildings
(the "BUILDING SHELLS") to be constructed by Landlord in accordance with the
---------------
provisions of the Improvement Agreement attached hereto as Exhibit "C" (the
-----------
"IMPROVEMENT AGREEMENT").
----------------------
D. The improvements (the "TENANT IMPROVEMENTS") to be constructed by
-------------------
Landlord in and about the Buildings in accordance with the provisions of the
Improvement Agreement. The Building Shells and the Tenant Improvements are
collectively referred to in this Lease as the "IMPROVEMENTS".
------------
3. Lease Term.
----------
A. Lease Term. The term of this Lease (the "INITIAL LEASE TERM")
---------- ------------------
shall be for twelve (12) years commencing on the Commencement Date (as defined
below) and ending twelve (12) years thereafter unless sooner terminated
pursuant to any provision hereof.
B. Commencement Date. As used in this Lease, the term "COMMENCEMENT
----------------- ------------
DATE" shall mean the later of March 1, 1998, or the date when all of the
----
following have occurred with respect to the Improvements :
(i) The construction of all of the Improvements has been
substantially completed in accordance with the provisions of the Improvement
Agreement attached hereto and the Final Plans therefor (except for minor
punchlist items which do not substantially interfere with Tenant's use of the
Premises), and all utilities are connected and available for Tenant's use;
-1-
(ii) A certificate of occupancy or its equivalent (including a
final building inspection) with respect to the Improvements has been issued by
the City of Santa Xxxxx; and
(iii) Landlord has given Tenant written notice that the events
described in (i) and (ii) above have occurred.
C. Commencement Date Memorandum. Within thirty (30) days following
----------------------------
the Commencement Date, Tenant shall execute and deliver to Landlord a
Commencement Date Memorandum in the form attached hereto as Exhibit "D"
-----------
acknowledging the actual Commencement Date, the Expiration Date and the initial
Monthly Installment (as defined in Subparagraph 4.A. hereof) of rent.
X. Xxxxx in Completion of Buildings. Notwithstanding the
--------------------------------
Commencement Date set forth in Subparagraph 3.B. above, if the construction of
the Improvements to the Buildings have not been substantially completed in
accordance with the provisions of the Improvement Agreement attached hereto
and the Final Plans therefor (except for minor punchlist items which do not
substantially interfere with Tenant's use of the Premises) by the later of (i)
January 31, 1998, or (ii) eleven (11) months following the issuance of all
required building permits for the construction of the Improvements to the
Building (provided such time periods in (i) and (ii) shall be extended by
force majeure delays and Tenant Delays as defined in Exhibit "C" hereto)
-----------
(the "BUILDING COMPLETION DATE"), Tenant shall have the option to terminate
------------------------
this Lease (which shall be Tenant's sole remedy for such an event), which
option may be exercised only by delivery to Landlord of a written notice of
election to terminate within fifteen (15) days after the Building Completion
Date and prior to substantial completion of the Improvements to the Buildings.
E. Options to Extend.
-----------------
(i) Tenant shall have three (3) successive options (the
"OPTIONS") the Initial Lease Term for successive terms of sixty (60) months each
-------
(collectively, the "EXTENDED TERMS" and individually, the "FIRST EXTENDED
-------------- --------------
TERM", the "SECOND EXTENDED TERM" and the "THIRD EXTENDED TERM"). The
---- -------------------- -------------------
Initial Term as may be extended by Tenant shall be referred to herein as the
"LEASE TERM."
----------
(ii) Tenant shall exercise each Option, if at all, by giving
Landlord notice of Tenant's intention to do so at least two hundred seventy
(270) days prior to the expiration of the then existing Lease Term. In no
event shall any purported exercise of the Option by Tenant be effective if (a)
an Event of Default (as defined in Subparagraph 13.A. hereof) exists at the
time of such exercise or at the time such Extended Term would otherwise have
commenced, or (b) Tenant had not timely exercised each previous Option(s) to
extend the Lease. The Extended Terms shall be upon all of the terms and
conditions hereof, except that the
-2-
Monthly Installment and method of rental adjustment for each Extended Term shall
be determined as set forth in Subparagraph 4.B.(iii) hereof. Unless expressly
mentioned and approved in the written consent of Landlord referred to in
Paragraph 23 hereof, the option rights of Tenant under this paragraph are
granted for Tenant's personal benefit and may not be assigned or transferred by
Tenant.
F. Early Entry. Tenant may enter the Premises prior to the
-----------
Commencement Date to install fixtures and equipment therein, provided Tenant
first obtains the prior written approval of Landlord for such entry, which
approval shall not be unreasonably withheld but which Landlord may withhold if
Landlord determines in its reasonable discretion that such entry will delay
completion of construction of the Improvements which Landlord is required to
construct pursuant to Exhibit "C". If Landlord permits Tenant to so enter upon
-----------
the Premises, such entry shall be subject to all of the terms and conditions
of this Lease, excepting only the obligation to pay the Monthly Installment of
rent or Additional Rent (as defined in Subparagraph 4.E. below), and the duty
to pay utility consumption costs and insurance. Tenant shall coordinate its
entry onto the Premises with Landlord and the contractors and other personnel
employed by Landlord. At all times during Tenant's right of entry, Landlord
and Tenant shall reasonably cooperate to refrain from interfering with the
construction activities of the other party's personnel; provided, Landlord
shall not be required to cooperate with Tenant if such cooperation results in
a delay in completing the Improvements. In any case, Tenant shall repair any
damage to the Improvements constructed by Landlord resulting from the entry
upon the Premises by Tenant or Tenant's Agents (as that term is defined in
Subparagraph 29.G.) prior to the Commencement Date or caused by the
installation of fixtures and equipment by Tenant or Tenant's Agents. If the
entry by Tenant or Tenant's Agents upon the Premises prior to the Commencement
Date interferes with Landlord's construction activities, then Landlord shall
give Tenant written notice requesting that Tenant cease such interference. If
Tenant does not immediately comply with such notice from Landlord requesting
that Tenant cease interference with Landlord's construction activities, and if
such failure to comply causes a delay in completing the construction of the
Improvements, then the Commencement Date shall be deemed to have occurred on
the date the Improvements would have been completed had there been no such
delay caused by Tenant or its Agents.
4. Rent.
----
A. Time of Payment. Tenant shall pay to Landlord as rent for the
---------------
Premises the respective sums specified in Subparagraph 4.B. below (the
"MONTHLY INSTALLMENT") each month in advance on the first day of each calendar
-------------------
month, without deduction or offset, prior notice or demand, commencing on the
Commencement Date and continuing through the Lease Term, together with such
additional rents as are payable by Tenant to Landlord under the terms of this
Lease. The Monthly Installment for any period during the Lease Term which is
less than one (1) full month shall be a pro rata portion of the Monthly
Installment based upon a thirty (30) day month.
-3-
B. Monthly Installment.
-------------------
(i) The Monthly Installment of rent for the first thirty (30)
months following the Commencement Date shall be Two Hundred Sixty Five
Thousand Six Hundred Forty Two and 10/100 Dollars ($265,642.10).
(ii) Rental Adjustment. The Monthly Installment shall be
-----------------
adjusted at the beginning of the thirty-first (31st) month following the
Commencement Date and every thirty (30) months thereafter during the Initial
Lease Term (the "RENTAL ADJUSTMENT DATES"), to reflect any increase in the cost
-----------------------
of living. The adjustment or adjustments, if any, shall be calculated upon the
basis of the United States Department of Labor, Bureau of Labor Statistics
Consumer Price Index for All-Urban Consumers, for San Francisco-Oakland-San
Xxxx (1982 - 1984 = 100), hereafter referred to as the "INDEX." The last
-----
published Index in effect on the Commencement Date shall be considered the
"BASE". On each Rental Adjustment Date, the Monthly Installment then in effect
----
shall be increased to an amount equal to the Monthly Installment in effect as
of the first full month of the Lease Term multiplied by a fraction, the
numerator of which is the Index as of such Rental Adjustment Date, and the
denominator of which is the "Base"; provided, the Monthly Installment shall
not increase by less than three percent (3%) per annum compounded annually or
greater than seven percent (7%) per annum compounded annually on each Rental
Adjustment Date. When the adjusted Monthly Installment is determined upon each
Rental Adjustment Date, Landlord shall give Tenant written notice to that
effect indicating how the new Monthly Installment figure was computed in
accordance with this Subparagraph 4.B.(ii). If the Index does not exist on any
Rental Adjustment Date in the same format as referred to in this paragraph,
Landlord shall substitute (using conversion factors, as appropriate) in lieu
thereof the index most nearly comparable to the Index then published by the
Bureau of Labor Statistics, or successor or similar governmental agency, or if
no governmental agency then publishes an index, Landlord shall substitute
therefor the most nearly comparable index then published by a reputable
private organization.
(iii) Extended Term Rent.
------------------
(a) As of the commencement of each Extended Term, the
Monthly Installment and the method of rental adjustment (including the timing
of adjustments and the basis for calculating the adjustments) for each
Extended Term shall be the fair market rental, as of the commencement date of
the Extended Term, for the Premises, as improved, and a method and timing of
rental adjustments consistent with rental adjustment practices then prevailing
in the marketplace for comparably sized projects designed for similar uses
within a three (3) mile radius of the Premises. In the event the parties fail
to agree upon the amount of the Monthly Installment and the method of rental
adjustment for any of the Extended Terms within thirty (30) days after
Landlord's receipt of Tenant's notice exercising the Option for such Extended
Term, the Monthly Installment and the method of rental adjustment for such
Extended Term shall be determined by appraisal in the manner hereafter set
forth.
-4-
(b) In the event it becomes necessary under this
Subparagraph 4.B.(iii)(b) to determine the fair market rent to be used as the
Monthly Installment and the method and timing of rental adjustments of the
Premises by appraisal, Landlord and Tenant each shall appoint a real estate
appraiser who shall be a member of The Appraisal Institute ("TAI") and who
shall have a minimum of five (5) years of commercial appraisal experience in
Santa Xxxxx County and such appraisers shall each determine the fair market
rent for the Premises, and the method and timing of rental adjustments taking
into account the value of the Premises (excluding Tenant's Property (as
defined below) which Tenant shall be allowed to remove upon the expiration of
this Lease), the amenities provided and prevailing comparable rentals and
rental adjustment practices then prevailing in the marketplace for comparably
sized projects designed for similar uses within a three (3) mile radius of the
Premises. Such appraisers shall, within twenty (20) business days after their
appointment, complete their appraisals and submit their appraisal reports to
Landlord and Tenant. If the fair market rent of the Premises established in
the two (2) appraisals varies by five percent (5%) or less of the higher
rental, the average of the two shall be controlling. If said fair market rent
varies by more than five percent (5%) of the higher rental, said appraisers,
within ten (10) days after submission of the last appraisal, shall appoint a
third appraiser who shall be a member of TAI and who shall have a minimum of
five (5) years of commercial appraisal experience in Santa Xxxxx County. Such
third appraiser shall, within twenty (20) business days after his appointment,
determine by appraisal the fair market rent of the Premises, taking into
account the same factors referred to above, and submit his appraisal report to
Landlord and Tenant. The fair market rent determined by the third appraiser
for the Premises shall be averaged with the fair market rent determined by the
one o the initial two appraisers that is closest to that of the third
appraiser, unless the third appraiser's determination of the rent is less than
that set forth in the lower appraisal previously obtained, in which case the
value set forth in said lower appraisal shall be controlling, or unless it is
greater than that set forth in the higher appraisal previously obtained, in
which case the rental set forth in said higher appraisal shall be controlling.
The method of adjusting rental periodically, including the manner and timing
of such adjustments, shall be as determined by the initial two appraisers, if
they agree on a single method; otherwise, it shall be as determined by the
third appraiser. If either Landlord or Tenant fails to appoint an appraiser,
or if an appraiser appointed by either of them fails, after his appointment,
to submit his appraisal within the required period in accordance with the
foregoing, the appraisal submitted by the appraiser properly appointed and
timely submitting his appraisal shall be controlling. If the two appraisers
appointed by Landlord and Tenant are unable to agree upon a third appraiser
within the required period in accordance with the foregoing, application shall
be made within twenty (20) days thereafter by either Landlord or Tenant to
TAI, which shall appoint a member of said institute willing to serve as
appraiser. Each party shall bear the cost of their own appraiser and the cost
of the third appraiser under this Subparagraph shall be borne equally by
Landlord and Tenant.
C. Tenant Improvement Allowance.
----------------------------
(i) Landlord shall make available for the payment of all TI
Costs (as defined in the Improvement Agreement) an amount equal to Four
Million Two Hundred Eighty
-5-
Four Thousand Five Hundred Fifty Dollars ($4,284,550) (the "TI ALLOWANCE"). To
------------
the extent that TI Costs exceed the total TI Allowance, Tenant shall pay the
amount of such excess (with such excess referred to herein as "TENANT'S TI
-----------
CONTRIBUTION"). After Landlord has expended the total TI Allowance, Tenant's TI
------------
Contribution shall be paid by Tenant to Landlord in installments as and when
needed by Landlord to pay TI Costs that have been incurred by Landlord for the
Buildings, with each installment to be paid within five (5) days after Landlord
notifies Tenant that a progress payment toward TI Costs is to be made and
supplies to Tenant an appropriate accounting of all TI Costs incurred by
Landlord and such other documentation as a construction lender might reasonably
request. Such progress payments shall not be requested any more frequently than
every thirty (30) days.
(ii) Prior to the commencement of construction of the Tenant
Improvements, Tenant shall, if requested to do so by Landlord, provide
reasonable assurances to Landlord's Lender (as that term is defined in
Subparagraph 29.H.) that the funds necessary to pay Tenant's TI Contribution
will be immediately available to Landlord as and when needed to pay all TI Costs
after Landlord has expended the TI Allowance, which assurances shall be
reasonably satisfactory to Landlord and Landlord's Lender.
D. Late Charge. Tenant acknowledges that late payment by Tenant to
-----------
Landlord of rent and other sums due hereunder will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed on
Landlord by the terms of any mortgage or deed of trust covering the Premises.
Accordingly, if any Monthly Installment, Additional Rent or any other sum due
from Tenant shall not be received by Landlord within ten (10) days after
Landlord's delivery to Tenant of written notice stating that such amount has
not been paid when due, then Tenant shall pay to Landlord, as additional rent,
a late charge equal to six percent (6%) of such overdue amount. The parties
hereby agree that such late charge represents a fair and reasonable estimate
of the costs Landlord will incur by reason of late payment by Tenant.
Acceptance of such late charge by Landlord without payment of the overdue
amount shall in no event constitute a waiver of Tenant's default with respect
to such overdue amount, nor prevent Landlord from exercising any of its other
rights and remedies granted hereunder.
E. Additional Rent. All taxes, insurance premiums, late charges,
---------------
costs, expenses and other sums which Tenant is required to pay under this
Lease, together with all interest and penalties that may accrue thereon in the
event of Tenant's failure to pay such amounts, and all reasonable damages,
costs, and attorneys' fees and expenses which Landlord may incur by reason of
any default of Tenant or failure on Tenant's part to comply with the terms of
this Lease, shall be deemed to be additional rent ("ADDITIONAL RENT") and
---------------
shall be paid in addition to the Monthly Installment of rent, and, in the
event of nonpayment by Tenant, Landlord shall have all of the rights and
remedies with respect thereto as Landlord has for the nonpayment of the
Monthly Installment of rent. All items of Additional Rent, but excluding such
taxes and assessment, utilities and insurance costs which are to be paid
directly by Tenant or reimbursed by
-6-
Tenant to Landlord, shall include an additional two percent (2%) of the actual
expenditure or amount due in order to compensate Landlord for accounting,
management and processing services.
F. Place of Payment. Rent shall be payable in lawful money of the
----------------
United States of America to Landlord at 000 Xxxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxx 00000 or to such other person(s) or at such other place(s) as
Landlord may designate in writing.
G. Advance Payment. Concurrently with the execution of this Lease,
---------------
Tenant shall pay to Landlord the sum of Two Hundred Sixty Five Thousand Six
Hundred Forty Two and 10/100 Dollars ($265,642.10) to be applied to the
Monthly Installment of rent first accruing under this Lease.
5. Security Deposit. Concurrently with the execution of this Lease,
----------------
Tenant shall pay to Landlord the sum of Two Hundred Sixty Five Thousand Six
Hundred Forty Two and 10/100 Dollars ($265,642.10) (the "SECURITY DEPOSIT") to
----------------
secure the faithful performance by Tenant of each term, covenant and condition
of this Lease. If Tenant shall at any time fail to make any payment or fail to
keep or perform any term, covenant or condition on its part to be made or
performed or kept under this Lease, Landlord may, but shall not be obligated
to and without waiving or releasing Tenant from any obligation under this
Lease, use, apply or retain the whole or any part of the Security Deposit (A)
to the extent of any sum due to Landlord; (B) to make any required payment on
Tenant's behalf; or (C) to compensate Landlord for any loss, damages,
attorneys' fees or expense sustained by Landlord due to Tenant's default. In
such event, Tenant shall, within five (5) days of written demand by Landlord,
remit to Landlord sufficient funds to restore the Security Deposit to its
original sum. No interest shall accrue on the Security Deposit. Landlord shall
not be required to keep the Security Deposit separate from its general funds.
The Security Deposit, less any sums owing to Landlord or which Landlord is
otherwise entitled to retain, shall be returned to Tenant within thirty (30)
days after the termination of this Lease and vacancy of the Premises by
Tenant.
-7-
6. Use of Premises.
---------------
A. Restrictions on Use. Tenant shall use the Premises only in
-------------------
conformance with applicable governmental laws, for general office,
engineering, research and development, light assembly, testing, warehousing
and related lawful uses, and for no other purpose without the consent of
Landlord. Tenant shall indemnify, defend and hold Landlord harmless against
any loss, expense, damage, attorneys' fees or liabilities to the extent the
foregoing arises out of the failure of Tenant to comply with any Law (as
defined in Subparagraph 29.F.) applicable to Tenant's use and occupancy of the
Premises. Tenant shall not commit or suffer to be committed, any waste upon
the Premises, or any nuisance, or other acts or things which may disturb the
quiet enjoyment of any other occupant of buildings adjacent to the Premises,
or allow any sale by auction upon the Premises, or allow the Premises to be
used for any unlawful purpose, or place any loads upon the floor, walls or
ceiling which would endanger the structure, or place any harmful liquids in
the drainage system of the Premises. No waste materials or refuse shall be
dumped upon or permitted to remain upon any part of the Premises outside of
the Buildings, except in trash containers placed inside exterior enclosures
designated for that purpose by Landlord and except in compliance with all
applicable Law. No materials, supplies, equipment, finished products or
semifinished products, raw materials or articles of any nature shall be stored
upon or permitted to remain on any portion of the Parcel outside of the
Buildings. Tenant shall strictly comply with the provisions of Paragraph 37
below.
B. Initial Occupancy. Tenant shall be obligated to take possession
-----------------
and enter into occupancy of two (2) of the three (3) Buildings of the Premises
within thirty (30) days following the Commencement Date.
7. Taxes and Assessments.
---------------------
A. Tenant's Property. Tenant shall pay before delinquency any and
-----------------
all taxes and assessments, license fees and public charges levied, assessed or
imposed upon or against Tenant's fixtures, equipment, furnishings, furniture,
appliances and personal property installed or located on or within the
Premises ("Tenant's Property"). Tenant shall use its best efforts to cause all
Tenant's Property to be assessed and billed separately from the real property
of Landlord. If any of Tenant's Property shall be assessed with the Premises,
Tenant shall pay Landlord the taxes attributable to Tenant within ten (10)
days after receipt of a written statement from Landlord setting forth the
taxes applicable to Tenant's Property.
B. Property Taxes. Tenant shall pay, as Additional Rent, one
--------------
hundred percent (100%) of all property taxes (as defined in Subparagraph 7.C.
below) levied or assessed with respect to the Premises which are attributable
to the Lease Term. Tenant shall pay such Property Taxes to Landlord not later
than (i) ten (10) days prior to the delinquency date of such Property Taxes,
or (ii) twenty (20) days after receipt of billing, whichever is later. If
Tenant fails to do so, Tenant shall reimburse Landlord, on demand, for all
interest, late fees and penalties that the taxing authority charges Landlord.
In the event Landlord's Lender requires an impound for
-8-
Property Taxes, then on the first day of each month during the Lease Term,
Tenant shall pay Landlord one twelfth (1/12) of the annual Property Taxes.
Tenant's liability hereunder shall be prorated to reflect the commencement and
termination dates of this Lease.
C. Property Taxes Defined. For the purpose of this Lease,
----------------------
"PROPERTY TAXES" means and includes all taxes, assessments (including, but not
--------------
limited to, assessments for public improvements or benefits), taxes based on
vehicles utilizing parking areas, taxes based or measured by the rent paid,
payable or received under this Lease, taxes on the value, use, or occupancy of
the Premises, the Buildings and/or the Parcel, and all other governmental
impositions and charges of every kind and nature whatsoever, whether or not
customary or within the contemplation of the parties hereto and regardless of
whether the same shall be extraordinary or ordinary, general or special,
unforeseen or foreseen, or similar or dissimilar to any of the foregoing which,
at any time during the Lease Term, shall be applicable to the Premises, the
Buildings and/or the Parcel or assessed, levied or imposed upon the Premises,
the Buildings and/or the Parcel, or become due and payable and a lien or charge
upon the Premises, the Buildings and/or the Parcel, or any part thereof, under
or by virtue of any present or future laws, statutes, ordinances, regulations or
other requirements of any governmental authority whatsoever. The term "Property
Taxes" shall not include any federal, state or local net income, documentary
transfer (unrelated to any transfer made of Tenant's interest under this Lease),
franchise (unrelated to Tenant's operations), estate, gift or inheritance tax
imposed on Landlord (the "PROPERTY TAX EXCLUSIONS").
-----------------------
D. Other Taxes. Tenant shall, as Additional Rent, pay or reimburse
-----------
Landlord for any tax based upon, allocable to, or measured by the area of the
Premises or the Buildings or the Parcel; or by the rent paid, payable or
received under this Lease; any tax upon or with respect to the possession,
leasing, operation, management, maintenance, alteration, repair, use or
occupancy of the Premises or any portion thereof; any privilege tax, excise tax,
business and occupation tax, gross receipts tax, sales and/or use tax, water
tax, sewer tax, employee tax, occupational license tax imposed upon Landlord or
Tenant with respect to the Premises; any tax upon this transaction or any
document to which Tenant is a party creating or transferring any of Tenant's
interest or estate in the Premises; provided, however that nothing in this
Subparagraph shall require Tenant to pay any Property Tax Exclusions.
E. Tenant's Right to Contest. Tenant shall have the right, by
-------------------------
appropriate proceedings, to protest or contest any assessment, reassessment or
allocation of Property Taxes or any change therein. In the contest or
proceedings, Tenant may act in its own name and/or the name of Landlord and
Landlord will, at Tenant's request and expense, cooperate with Tenant in any way
Tenant may reasonably require in connection with such contest. Tenant must pay
all Property Taxes as and when required by Subparagraph 7.B., even those which
are the subject of such protest or contest, but Tenant may xxx to recover
overpayments or Property Taxes as part of any such contest. With respect to any
contest of Property Taxes, Tenant shall indemnify and hold Landlord and the
Premises harmless from any liens or damage arising out of such protest or
contest and shall pay any judgment that may be rendered for which Tenant would
otherwise be
-9-
liable under this Lease without such contest or protest. Any contest conducted
by Tenant under this paragraph shall be at Tenant's expense and if interest or
late charges become payable as a result of such contest or protest, Tenant shall
pay the same. Any tax assessments reimbursed to Landlord as a consequence of
such contest shall be reimbursed to Tenant, to the extent originally paid by
Tenant under the terms of this Lease.
8. Insurance.
---------
A. Indemnity. Tenant agrees to indemnify, protect and defend
---------
Landlord against and hold Landlord harmless from any and all claims, causes of
action, judgments, obligations or liabilities, and all reasonable expenses
incurred in investigating or resisting the same (including reasonable attorneys'
fees), to the extent they arise out of, the operation, maintenance, use or
occupancy of the Premises by Tenant and/or its Agents (except to the extent they
arise from the negligence or willful misconduct of Landlord or its Agents). This
Lease is made on the express understanding that Landlord shall not be liable
for, or suffer loss by reason of, injury to person or property, from whatever
cause (except to the extent it arises from the negligence or willful misconduct
of Landlord or its Agents), which in any way may be connected with the
operation, maintenance, use or occupancy of the Premises by Tenant and/or its
Agents specifically including, without limitation, any liability for injury to
the person or property of Tenant or its Agents.
B. Liability Insurance. Tenant shall, at Tenant's expense, obtain
-------------------
and keep in force during the term of this Lease a policy of commercial general
liability insurance insuring Landlord and Tenant against claims and liabilities
arising out of the operation, maintenance, use, or occupancy of the Premises.
Such insurance shall provide combined single limit coverage of not less than
Five Million Dollars ($5,000,000.00) per occurrence. Landlord shall have the
right to require Tenant to increase the amount of coverage of such public
liability insurance to the extent reasonably necessary to bring such insurance
coverage into conformity with the level of coverage commonly carried by similar
businesses in California leasing comparable buildings in the vicinity of the
Premises, which right Landlord may exercise no more frequently than once every
two (2) years during the Lease Term. The insurance shall be provided by
companies (i) admitted to issue insurance in California and (ii) having a
general policyholders' rating of at least "A" and a financial rating of at least
"VIII" as set forth in the most current issue of Best's Insurance Guide. Tenant
shall deliver to Landlord, prior to possession, and at least thirty (30) days
prior to the expiration of any insurance policy required hereby, a certificate
of insurance evidencing the existence of such policy and the certificate shall
certify that the policy (1) names Landlord as an additional insured, (2) shall
not be canceled or altered without thirty (30) days prior written notice to
Landlord, (3) insures performance of the indemnity set forth in Subparagraph
8.A. above, (4) the coverage is primary and any coverage by Landlord is in
excess thereto and (5) contains a cross-liability endorsement.
Landlord may maintain a policy or policies of commercial general liability
insurance insuring Landlord (and such others as are designated by Landlord),
against liability for personal
-10-
injury, bodily injury, death and damage to property occurring or resulting from
an occurrence in, on or about the Premises, with such limits of coverage as
Landlord may from time to time determine are reasonably necessary for its
protection. Tenant shall, as Additional Rent, reimburse Landlord for the cost of
any such insurance policy within ten (10) days after receipt of billing.
C. Property Insurance. Landlord shall, at Tenant's expense, obtain
------------------
and keep in force during the Lease Term a policy of insurance covering loss or
damage to the Improvements, in the amount of the full replacement value thereof
with an Agreed Amount Endorsement, providing protection against those perils
included within the classification of "special form" insurance, plus a policy of
----
rental income insurance in the amount of one hundred percent (100%) of twelve
(12) months' rent (including, without limitation, sums payable as Additional
Rent), together with such additional coverages (such as earthquake and/or flood
insurance) which Landlord may elect to maintain from time to time or which may
be required from time to time by Landlord's Lender or by Tenant. Tenant shall
have no interest in nor any right to the proceeds of any insurance procured by
Landlord on the Buildings and Tenant Improvements. Tenant shall pay to Landlord,
as Additional Rent, the cost of such insurance procured and maintained by
Landlord on an annual basis within ten (10) days after receipt of demand
therefore from Landlord. Tenant's liability for the cost of such insurance shall
be prorated as of the commencement and termination of the Lease Term. Tenant
acknowledges that such insurance procured by Landlord shall contain a deductible
which reduces Tenant's cost for such insurance and, in the event of loss or
damage, Tenant shall be required to pay to Landlord the amount of such
deductible; provided, Tenant's liability for such deductible shall not exceed
Twenty Five Thousand Dollars ($25,000), except Tenant's liability for the
deductible on Landlord's earthquake insurance shall not exceed ten percent (10%)
of the policy amount.
D. Tenant's Property Insurance. Tenant acknowledges that the
---------------------------
insurance to be maintained Landlord on the Premises pursuant to Paragraph 8.C.
above will not insure any of Tenant's Property. Accordingly, Tenant, at Tenant's
own expense, shall maintain in full force and effect on all of Tenant's Property
in the Premises, a policy of "special form" coverage insurance to the extent of
at least ninety percent (90%) of insurable value of such property.
E. Mutual Waiver of Subrogation. Notwithstanding anything to the
----------------------------
contrary contained in this Lease, Tenant and Landlord hereby mutually waive
their respective rights of recovery against each other of any loss of or damage
to the property of either party, to the extent such loss or damage is insured by
either party at the time of such loss or damage or required to be insured
pursuant to this Lease by the party having the right of recovery against the
other party for such loss or damage. Each party shall obtain any special
endorsements, if required by the insurer, whereby the insurer waives its right
of subrogation against the other party hereto. The provisions of this
Subparagraph 8.E. shall not apply in those instances in which the waiver of
subrogation would cause either party's insurance coverage to be voided or
otherwise made uncollectible; provided, such party has afforded the other party
at least thirty (30) days prior written notice of such fact and a period of at
least thirty (30) days has elapsed after delivery of
-11-
such notice without identification of alternative, reasonably equivalent
insurance that can be obtained without a voiding provision based on this waiver
of subrogation.
9. Utilities. Tenant shall pay for all water, gas, light, heat, power,
---------
electricity, telephone, trash pick-up, sewer charges, and all other services
supplied to or consumed on the Premises, and all taxes and surcharges thereon.
10. Repairs and Maintenance.
-----------------------
A. Landlord's Repairs. Subject to the provisions of Paragraphs 14
------------------
and 15 and the Improvement Agreement, Landlord, at its expense, shall keep and
maintain the exterior walls and the structural elements of the Buildings in good
order and repair. Landlord shall not, however, be required to maintain, repair
or replace the interior surface of exterior walls, nor shall Landlord be
required to maintain, repair or replace windows, doors, skylights or plate
glass. Landlord shall not be in default because it fails to make repairs under
this Subparagraph 10.A. until a reasonable time after receipt of written notice
from Tenant of the need for such repairs. Notwithstanding the foregoing but
subject to Subparagraph 8.E., Tenant shall reimburse Landlord, as Additional
Rent, within fifteen (15) days after receipt of billing, for the cost of
maintenance and repairs of the exterior walls and structural elements of the
Buildings to the extent such maintenance or repair is required because of the
negligence or willful misconduct of Tenant or its Agents, except as otherwise
provided in Subparagraph 8.E. As used herein, the term "STRUCTURAL ELEMENTS OF
----------------------
THE BUILDINGS" shall mean and be limited to the foundations, footings, floor
-------------
slab (but not flooring), roof structure (but not roofing or roof membrane), load
bearing walls and structural portion of any second floor. If (a) repairs are
required to be made by Landlord pursuant to this Subparagraph 10.A., (b) the
failure to immediately make such repairs poses a threat of imminent danger to
people or property, and (c) after Landlord's receipt of notice from Tenant for
the need to make such repairs, Landlord does not immediately make such repairs,
then Tenant shall be allowed to make such repairs and Landlord shall
----
reimburse Tenant for the reasonable third party costs incurred by Tenant upon
receipt of written invoices for such repairs, lien releases from the third party
making such repairs and inspection of the repairs made by Tenant.
-12-
B. Tenant's Repairs.
------------------
(i) Except as expressly provided in Subparagraphs 8.E. and 10.A.
above, Paragraphs 14 and 15 below and the Improvement Agreement, Tenant shall,
at its sole cost, keep and maintain the entire Premises and every part thereof,
including without limitation, the windows, window frames, plate glass, glazing,
skylights, truck doors, doors and all door hardware, the interior walls and
partitions, interior surfaces of exterior walls, carpets, flooring, roofing,
roof membrane, gutters, down spouts, the electrical, plumbing, lighting,
heating, ventilating and air conditioning systems and equipment, and all areas
outside the Buildings (including all landscaping, irrigation systems, paving,
driveways, parking areas, sidewalks, fences, signs and exterior lighting) in
good order, condition and repair. The term "repair" shall include replacements,
restorations and/or renewals when necessary as well as painting. Except as
expressly provided in Subparagraphs 8.E. and 10.A. above, Paragraphs 14 and 15
below and the Improvement Agreement, Tenant's obligation shall extend to all
alterations, additions and improvements to the Premises, and all fixtures and
appurtenances therein and thereto. Tenant shall, at all times during the Lease
Term, have in effect a service contract for the maintenance of the heating,
ventilating and air conditioning ("HVAC") equipment with an HVAC repair and
----
maintenance contractor reasonably approved by Landlord. The HVAC service
contract shall provide for periodic inspection and servicing at least once every
three (3) months during the Lease Term, and Tenant shall provide Landlord with a
copy of such contract and all periodic service reports. Landlord shall assign to
Tenant for the Lease Term the benefit of all warranties available to Landlord
which would reduce the cost of performing the obligations of Tenant to make
repairs under this Subparagraph 10.B. Landlord shall cooperate with Tenant in
the enforcement of such warranties. Notwithstanding anything to the contrary in
this Lease, Tenant shall have no responsibility to perform or construct, any
repair, maintenance or improvement that Landlord is required to perform pursuant
to any other term of this Lease or the Improvement Agreement.
(ii) Should Tenant fail to commence to make repairs required of
Tenant hereunder within ten (10) days after written notice from Landlord or
should Tenant fail thereafter to diligently complete the repairs, Landlord, in
addition to all other remedies available hereunder or by Law and without waiving
any alternative remedies, may make the same, and in that event, Tenant shall
reimburse Landlord as Additional Rent for the cost of such maintenance or
repairs within ten (10) days of written demand by Landlord.
(iii) Notwithstanding anything to the contrary in this Lease, any
capital replacements to the Premises which are otherwise found to be the
obligation of Tenant under this Lease, whether or not required by law, which are
required by generally accepted accounting principles ("GAAP") to be capitalized
----
("CAPITAL REPLACEMENTS") shall be made by and paid for by the parties in
--------------------
accordance with the following:
(a) Tenant shall promptly undertake and diligently
complete,
-13-
and Tenant shall be solely responsible for the cost of, all Capital Replacements
that have a cost less than Three Hundred Thousand Dollars ($300,000).
(b) Upon Tenant's written notice to Landlord for the need
of any Capital Replacement which Landlord is required to make pursuant to this
Subparagraph 10.B.(iii)(b), Landlord shall promptly undertake and diligently
complete all Capital Replacements having a cost in excess of Three Hundred
Thousand Dollars ($300,000) ("LANDLORD'S CAPITAL REPLACEMENTS"). The cost of
-------------------------------
Landlord's Capital Replacements shall be borne by the parties as follows:
(1) Tenant shall reimburse Landlord for Tenant's
Share of the Cost of Landlord's Capital Replacement within ten (10) days
following delivery to Tenant of reasonable documentation of the amount owing by
Tenant for completed work, which payments may be demanded by Landlord of Tenant
on a monthly basis as the work progresses. The " TENANT'S SHARE OF THE COST OF
-----------------------------
LANDLORD'S CAPITAL REPLACEMENT," shall be equal to the total cost reasonably
------------------------------
incurred by Landlord to construct, permit and/or plan a Landlord's Capital
Replacement (the "CAPITAL COST") times a fraction, the numerator of which is
------------
equal to the number of unexpired months in the then existing Lease Term (without
any consideration of Extended Terms that have not commenced), and the
denominator of which is equal to the useful life (expressed in months) of such
Landlord's Capital Replacement. The remainder of such cost shall be borne by
Landlord, subject to Subparagraphs 10.B.(iii)(b)(2) and 10.B.(iii)(b)(3), below.
(2) If the Lease Term is extended by Tenant as herein
permitted, then as a condition to each such extension and within ten (10) days
following Landlord's written demand therefor, Tenant shall make an additional
reimbursement of the Capital Cost of Landlord's Capital Replacement in an amount
equal to the Capital Cost times a fraction, the numerator of which is equal to
the lesser of (A) the useful life (expressed in months) of such Landlord's
Capital Replacement not subject to reimbursement under Subparagraph
10.B.(iii)(b)(1) above and not subject to reimbursement under this Subparagraph
10.B.(iii)(b)(2) with respect to a prior extension of the Lease Term, or (B) the
number of months in the extension period, and the denominator of which is equal
to the total useful life (expressed in months) of such Landlord's Capital
Replacement.
(3) If Landlord terminates this Lease on account of
an Event of Default by Tenant, as permitted by Section 13.B.(ii) below, then in
addition to Landlord's other remedies, Tenant shall pay to Landlord upon demand
so much of the Capital Cost of Landlord's Capital Replacement, which has not
been theretofore reimbursed by Tenant to Landlord.
(iv) Landlord shall have no maintenance or repair obligations
whatsoever with respect to the Premises except as expressly provided in this
Lease and the Improvement Agreement. Tenant hereby expressly waives the
provisions of Subsection 1 of Section 1932 and Sections 1941 and 1942 of the
Civil Code of California and all rights to make
-14-
repairs at the expense of Landlord as provided in Section 1942 of said Civil
Code; provided, Tenant shall have the right to cure Landlord's defaults pursuant
to the terms and conditions of Paragraph 38 hereof.
11. Alterations.
-----------
A. Limitations. Tenant shall not make, or suffer to be made, any
-----------
alterations, improvements or additions in, on, about or to the Premises or any
part thereof, without the prior written consent of Landlord (which consent shall
not be unreasonably withheld) and without a valid building permit issued by the
appropriate governmental authority; provided, however, Landlord's consent shall
not be required for interior non-structural alterations which (i) cost less than
Twenty Thousand Dollars ($20,000.00) per work of improvement and (ii) cost less
than Seventy Five Thousand Dollars ($75,000.00) for all alterations made in any
twelve (12) month period. As a condition to, and concurrently with, the giving
of such consent Landlord may require that Tenant agree to remove any such
alterations, improvements or additions at the termination of this Lease, and to
restore the Premises to their prior condition. Unless Landlord requires that
Tenant remove any such alteration, improvement or addition at the time that
Landlord provides its consent thereto, any alteration, addition or improvement
to the Premises, except movable furniture and trade fixtures not affixed to the
Premises, shall become the property of Landlord upon termination of the Lease
and shall remain upon and be surrendered with the Premises at the termination of
this Lease. Without limiting the generality of the foregoing, all heating,
lighting, electrical (including all wiring, conduit, outlets, drops, xxxx ducts,
main and subpanels), air conditioning, partitioning, drapery, and carpet
installations made by Tenant regardless of how affixed to the Premises, together
with all other additions, alterations and improvements that have become an
integral part of any of the Buildings, shall be and become the property of the
Landlord upon termination of the Lease, and shall not be deemed trade fixtures,
and shall remain upon and be surrendered with the Premises at the termination of
this Lease.
B. Tenant's Rights. All trade fixtures, movable furniture and
---------------
personal property installed in the Premises at Tenant's expense (collectively,
"TENANT'S PROPERTY") shall at all times remain Tenant's property and Tenant
-----------------
shall be entitled to all depreciation, amortization and other tax benefits with
respect thereto, except for Tenant's Property which cannot be removed without
structural injury to the Premises. At any time during the Lease Term, Tenant may
remove Tenant's Property from the Premises, provided Tenant repairs all damage
caused by such removal. Landlord shall have no lien or other interest whatsoever
in any item of Tenant's Property or any portion thereof or interest therein,
located in the Premises or elsewhere, and Landlord hereby waives all such liens
and interests. Within ten (10) days following Tenant's written request, Landlord
shall execute documents in form reasonably acceptable to Tenant and Landlord to
evidence Landlord's waiver of any right, title, lien or interest in Tenant's
Property located in the Premises.
C. Alterations Required by Law. If, during the Lease Term, any
---------------------------
alteration,
-15-
addition or change of any sort to all or any portion of the Premises is required
by Law, Tenant shall promptly make the same at its sole cost and expense;
provided, Tenant shall only be obligated to make alterations, additions or
changes required by Law to the "structural elements of the Buildings" (as
defined in Subparagraph 10.A. above), if such requirement is triggered by (i)
Tenant's particular use of the Premises, or (ii) Tenant's alterations,
improvements or additions in, on, about or to the Premises or any part thereof;
and if Landlord has performed its obligations under this Lease with respect to
the structural elements of the Buildings.
12. Acceptance of the Premises. By entry and taking possession of the
--------------------------
Premises pursuant to this Lease, Tenant accepts the Premises as being in good
and sanitary order, condition and repair and accepts the Premises in their
condition existing as of the date of such entry and Tenant further accepts the
Tenant Improvements to be constructed by Landlord, if any, as being completed in
accordance with the plans and specifications for such Tenant Improvements,
except for punch list items, and any express warranties by and obligations of
Landlord set forth in this Lease. Tenant acknowledges that neither the Landlord
nor Landlord's agents has made any representation or warranty as to the
suitability of the Premises to the conduct of Tenant's business. Any agreements,
warranties or representations not expressly contained herein shall in no way
bind either Landlord or Tenant, and Landlord and Tenant expressly waive all
claims for damages by reason of any statement, representation, warranty, promise
or agreement not contained in this Lease. This Lease constitutes the entire
understanding between the parties hereto and no addition to, or modification of,
any term or provision of this Lease shall be effective until set forth in a
writing signed by both Landlord and Tenant.
13. Default.
-------
A. Events of Default. A breach of this Lease by Tenant shall exist
-----------------
if any of the following events (hereinafter referred to as "EVENT OF DEFAULT")
----------------
shall occur:
(i) Default in the payment when due of any installment of rent
or other payment required to be made by Tenant hereunder, where such default
shall not have been cured within five (5) days after written notice of such
default is given to Tenant;
(ii) Tenant's failure to perform any other term, covenant or
condition contained in this Lease where such failure shall have continued for
twenty (20) days after written notice of such failure is given to Tenant;
provided, however, Tenant shall not be deemed in default if Tenant commences to
cure such failure within said twenty (20) day period and thereafter diligently
prosecutes such cure to completion;
(iii) Tenant vacates the Premises for sixty (60) consecutive days
and upon the expiration of such sixty (60) day period, Tenant has failed to
perform any term, covenant or condition contained in this Lease (under such
circumstances Tenant shall have no right to cure the default and Landlord shall
have no requirement to notify Tenant of the default
-16-
except as required by law);
(iv) Tenant's assignment of its assets for the benefit of its
creditors;
(v) The sequestration of, attachment of, or execution on, any
substantial part of the property of Tenant or on any property essential to the
conduct of Tenant's business, shall have occurred and Tenant shall have failed
to obtain a return or release of such property within thirty (30) days
thereafter, or prior to sale pursuant to such sequestration, attachment or levy,
whichever is earlier;
(vi) Tenant or any guarantor of Tenant's obligations hereunder
shall commence any case, proceeding or other action seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it or its
debts under any Law relating to bankruptcy, insolvency, reorganization or relief
of debtors, or seek appointment of a receiver, trustee, custodian, or other
similar official for it or for all or any substantial part of its property; or
(vii) Any case, proceeding or other action against Tenant or any
guarantor of Tenant's obligations hereunder shall be commenced seeking to have
an order for relief entered against it as debtor, or seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it or its
debts under any Law relating to bankruptcy, insolvency, reorganization or relief
of debtors, or seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its property, and
such case, proceeding or other action (i) results in the entry of an order for
relief against it which is not fully stayed within seven (7) business days after
the entry thereof or (ii) remains undismissed for a period of sixty (60) days.
Any notice given by Landlord in order to satisfy the requirements of this
Subparagraph 13.B. shall also satisfy the notice requirements of California Code
of Civil Procedure Section 1161 and all similar statutes regarding unlawful
detainer proceedings.
B. Remedies. Upon any Event of Default, Landlord shall have the
--------
following remedies, in addition to all other rights and remedies provided by
law, to which Landlord may resort cumulatively, or in the alternative:
(i) Recovery of Rent. Landlord shall be entitled to keep this
----------------
Lease in full force and effect (whether or not Tenant shall have abandoned the
Premises) and to enforce all of its rights and remedies under this Lease,
including the right to recover rent and other sums as they become due, plus
interest at the Permitted Rate (as defined in Paragraph 31 below) as therein
provided.
(ii) Termination. Landlord may terminate this Lease by giving
-----------
Tenant written notice of termination in accordance with applicable law. On the
giving of the notice all of Tenant's rights in the Premises shall terminate.
Upon the giving of the notice of termination,
-17-
Tenant shall surrender and vacate the Premises in the condition required by
Paragraph 32, and Landlord may re-enter and take possession of the Premises and
all the remaining improvements or property and eject Tenant or any of Tenant's
subtenants, assignees or other person or persons claiming any right under or
through Tenant or eject some and not others or eject none. This Lease may also
be terminated by a judgment specifically providing for termination. Any
termination under this paragraph shall not release Tenant from the payment of
any sum then due Landlord or from any claim for damages or rent previously
accrued or then accruing against Tenant. In no event shall any one or more of
the following actions by Landlord constitute a termination of this Lease:
(a) maintenance and preservation of the Premises;
(b) efforts to relet the Premises;
(c) appointment of a receiver in order to protect
Landlord's interest hereunder;
(d) consent to any subletting of the Premises or assignment
of this Lease by Tenant, whether pursuant to provisions hereof concerning
subletting and assignment or otherwise; or
(e) any other action by Landlord or Landlord's agents
intended to mitigate the adverse effects from any breach of this Lease by
Tenant.
(iii) Damages. In the event this Lease is terminated pursuant to
-------
Subparagraph 13.B.(ii) above, or otherwise, Landlord shall be entitled to
damages in the following sums:
(a) the worth at the time of award of the unpaid rent which
has been earned at the time of termination; plus
(b) the worth at the 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 that Tenant proves could have been
reasonably avoided; plus
(c) the worth at the time of award of the amount by which
the unpaid rent for the balance of the term after the time of award exceeds the
amount of such rental loss that Tenant proves could be reasonably avoided; and
(d) any other amount necessary to compensate Landlord for
all detriment proximately caused by Tenant's failure to perform Tenant's
obligations under this Lease, or which in the ordinary course of things would be
likely to result therefrom including, without limitation, the following: (i)
reasonable expenses for cleaning, repairing or restoring the
-18-
Premises to surrender condition; (ii) real estate broker's fees, advertising
costs and other expenses of reletting the Premises which are reasonably incurred
by Landlord and applicable to the period after termination of this Lease; (iii)
reasonable costs of carrying the Premises such as taxes and insurance premiums
thereon, utilities and security precautions not otherwise included in Additional
Rent; (iv) expenses in retaking possession of the Premises; and (v) reasonable
attorneys' fees and court costs.
(e) The "worth at the time of award" of the amounts
referred to in Subparagraphs (a) and (b) of this Subparagraph 13.B.(iii), is
computed by allowing interest at the Permitted Rate. The "worth at the time of
award" of the amounts referred to in Subparagraph (c) of this Subparagraph
13.B.(iii) is computed by discounting such amount at the discount rate of the
Federal Reserve Board of San Francisco at the time of award plus one percent
(1%). The term "rent" as used in this Paragraph 13 shall include all sums
required to be paid by Tenant to Landlord pursuant to the terms of this Lease.
C. Waivers. Tenant hereby waives any right of redemption or relief
-------
from forfeiture under the laws of the State of California, or under any other
present or future law, including the provisions of Sections 1174 and 1179 of the
California Code of Civil Procedure.
14. Destruction.
-----------
A. Landlord's Duty to Restore. If the Improvements are damaged by
--------------------------
any peril after the Commencement Date of this Lease, Landlord shall restore the
Premises unless the Lease is terminated by Landlord pursuant to Subparagraph
14.B. or by Tenant pursuant to Subparagraph 14.C. All insurance proceeds
available from the property damage insurance carried by Landlord pursuant to
Subparagraph 8.C. shall be paid to and become the property of Landlord and shall
be used for the restoration of the Premises, unless this Lease is terminated
pursuant to Subparagraphs 14.B. or 14.C. or as otherwise required by Landlord's
Lender. If this Lease is terminated pursuant to either Subparagraphs 14.B. or
14.C., then all insurance proceeds available from the insurance required to be
carried by Tenant which covers loss to property that is Landlord's property or
would become Landlord's property on the termination of this Lease shall be paid
to and become the property of Landlord. If this Lease is not so terminated, then
Landlord shall be entitled to all such insurance proceeds and upon receipt of
such insurance proceeds (if the loss is covered by insurance) and the issuance
of all necessary governmental permits, Landlord shall commence and diligently
prosecute to completion the restoration of the Premises, to the extent then
allowed by Law, to substantially the same condition in which the Premises were
immediately prior to such damage. Landlord's obligation to restore shall be
limited to the Buildings and Tenant Improvements constructed by Landlord as they
existed as of the Commencement Date and to the extent Landlord receives
insurance proceeds, any Tenant Improvements as they existed as of the
Commencement Date which were paid for by Tenant, excluding any Tenant's Property
or Tenant Improvements paid for by Tenant to the extent Landlord does not
receive insurance proceeds for such Tenant Improvements.
-19-
B. Landlord's Right to Terminate. Landlord shall have the option to
-----------------------------
terminate this Lease in the event any of the following occurs, which option may
be exercised only by delivery to Tenant of a written notice of election to
terminate within thirty (30) days after the date of such damage:
(i) The Improvements are damaged by any peril either (i) covered
by the type of insurance Landlord is required to carry pursuant to Subparagraph
8.C. or (ii) covered by valid and collectible insurance actually carried by
Landlord and in force at the time of such damage or destruction, to such an
extent that the estimated restoration cost exceeds fifty percent (50%) of the
then actual replacement cost thereof.
(ii) The Improvements are damaged by any peril both (i) not
covered by the type of insurance Landlord is required to carry pursuant to
Subparagraph 8.C. and (ii) not covered by valid and collectible insurance
actually carried by Landlord and in force at the time of such damage or
destruction, to such an extent that the estimated restoration cost exceeds five
percent (5%) of the then actual replacement cost of the Improvements; provided,
however, that Landlord may not terminate this Lease pursuant to this
Subparagraph 14.B.(ii) if Tenant agrees in writing to pay the amount by which
the restoration cost exceed five percent (5%) of the replacement cost of the
Improvements and deposits with Landlord or provides other reasonable assurances
of payment (which assurances must be approved by Landlord's Lender) of an amount
equal to the estimated amount of such excess within thirty (30) days after
Landlord has notified Tenant with its election to terminate this Lease pursuant
to this Subparagraph 14.B.(ii).
(iii) The Improvements are damaged by any peril during the last
twelve (12) months of the Lease Term to such an extent that the estimated cost
to restore equals or exceeds an amount equal to six (6) times the Monthly
Installment of rent then due; provided, however, that Landlord may not terminate
this Lease pursuant to this Subparagraph 14.B.(iii) if Tenant, at the time of
such damage, has an express written option to further extend the term of this
Lease and Tenant exercises such option to so further extend the Lease Term
within fifteen (15) days following notice of Landlord's termination of this
Lease.
(iv) The Improvements are damaged by any peril and, because of
the Laws then in force, may not be restored at a cost less than or equal to the
available insurance proceeds and any amounts Tenant is required by this Lease to
pay or Tenant otherwise elects to pay, to substantially the same condition in
which it was prior to such damage.
C. Tenant's Right to Terminate. If the Improvements are damaged by
---------------------------
any peril and Landlord does not elect to terminate this Lease or is not entitled
to terminate this Lease pursuant to Subparagraph 14.B., then as soon as
reasonably practicable, Landlord shall furnish Tenant with the written opinion
of Landlord's architect or construction consultant as to when the restoration
work required of Tenant may be completed and the permits required for such work
can be obtained. Tenant shall have the option to terminate this Lease in whole
or in part as specified below in the event any of the following occurs, which
option may be exercised only by
-20-
delivery to Landlord of a written notice of election to terminate within fifteen
(15) days after Tenant receives from Landlord the estimate of the time needed to
complete such restoration:
(i) If any Building is damaged by any peril and, in the
reasonable opinion of Landlord's architect or construction consultant, the
restoration of such Building cannot be substantially completed within two
hundred seventy (270) days after the date of the damage, then Tenant may
terminate the Lease as to such damaged Building only.
(ii) If any Building is damaged by any peril and all permits
required for the commencement of restoration are not obtained within sixty (60)
days beyond the time estimated by Landlord's architect or construction
consultant, or if following receipt of such permits the restoration is not
completed within sixty (60) days beyond the time estimated by Landlord's
architect or construction consultant as the required restoration time (provided
such time periods shall be extended by force majeure delays), then Tenant may
terminate this Lease with respect only to such damaged Building for which
permits are not timely obtained or which are not timely restored.
(iii) If any Building is damaged by any peril within twelve (12)
months of the last day of the Lease Term, and, in the reasonable opinion of
Landlord's architect or construction consultant, the restoration of the Premises
cannot be substantially completed within ninety (90) days after the date of such
damage, then Tenant may term inate this Lease with respect only to such damaged
Building.
(iv) If two (2) of the three (3) Buildings are damaged by any
peril and, in the reasonable opinion of Landlord's architect or construction
consultant, the restoration of all Buildings cannot be substantially completed
within two hundred seventy (270) days after the date of the damage, Tenant may
terminate the entire Lease.
D. Abatement of Rent. In the event of damage to the Premises which
-----------------
does not result in the termination of this Lease, the Monthly Installment of
rent and Additional Rent shall be temporarily abated from the date of inception
of the loss until the damaged Building(s) are restored, in proportion to the
degree to which Tenant's use of the Premises is impaired by such damage. Tenant
shall not be entitled to any compensation from Landlord for loss of Tenant's
property or loss to Tenant's business caused by such damage or restoration.
Tenant hereby waives the provisions of Section 1932, Subdivision 2, and Section
1933, Subdivision 4, of the California Civil Code, and the provisions of any
similar law, hereinafter enacted.
-21-
15. Condemnation.
------------
A. Definition of Terms. For the purposes of this Lease, the term (1)
-------------------
"TAKING" means a taking of the Premises or damage to the Premises related to
------
the exercise of the power of eminent domain and includes a voluntary conveyance,
in lieu of court proceedings, to any agency, authority, public utility, person
or corporate entity empowered to condemn property; (2) "TOTAL TAKING" means the
------------
taking of the entire Premises or so much of the Premises as to prevent or
substantially impair the use thereof by Tenant for the uses herein specified;
(3) "PARTIAL TAKING" means a Taking which does not constitute a Total Taking;
--------------
(4) "DATE OF TAKING" means the date upon which the title to the Premises, or a
--------------
portion thereof, passes to and vests in the condemnor or the effective date of
any order for possession if issued prior to the date title vests in the
condemnor; and (5) "AWARD" means the amount of any award made, consideration
-----
paid, or damages ordered as a result of a Taking.
B. Rights. The parties agree that in the event of a Taking all
------
rights (as between them) in and to an Award shall be as set forth herein and
Tenant shall have no right to any Award except as set forth herein; provided,
however, that Tenant shall be entitled to any award for the taking of Tenant's
Property.
C. Total Taking. In the event of a Total Taking during the Lease
------------
Term (1) the rights of Tenant under the Lease and the leasehold estate of Tenant
in and to the Premises shall cease and terminate as of the Date of Taking; (2)
Landlord shall refund to Tenant any prepaid rent and any unapplied security
deposit; (3) Tenant shall pay Landlord any unpaid rent or charges due Landlord
under the Lease, each prorated as of the Date of Taking; (4) Tenant shall
receive from the Award those portions of the Award attributable to Tenant's
Property and for moving expenses of Tenant; and (5) the remainder of the Award
shall be paid to and be the property of Landlord.
D. Partial Taking. In the event of a Partial Taking during the Lease
--------------
Term (1) the rights of Tenant under the Lease and the leasehold estate of Tenant
in and to the portion of the Premises taken shall cease and terminate as of the
Date of Taking; (2) Landlord shall refund to Tenant any prepaid rent and any
unapplied security deposit relating to the portion of the Premises taken based
on a square footage basis; (3) Tenant shall pay Landlord any unpaid rent or
charges due Landlord under the Lease for the portion of the Premises taken, each
prorated as of the Date of Taking; (4) from and after the Date of Taking the
Monthly Installment of rent shall be an amount equal to the product obtained by
multiplying the Monthly Installment of rent immediately prior to the Taking by a
fraction, the numerator of which is the number of square feet contained in the
Building after the Taking and the denominator of which is the number of square
feet contained in the Building prior to the Taking; (5) Tenant shall receive
from the Award those portions of the Award attributable to Tenant's Property and
for moving expenses of Tenant; and (6) the remainder of the Award shall be paid
to and be the property of Landlord.
16. Mechanics' Lien. Tenant shall (A) pay for all labor and services
---------------
performed for,
-22-
materials used by or furnished to, Tenant or any contractor employed by Tenant
with respect to the Premises; (B) indemnify, defend, protect and hold Landlord
and the Premises harmless and free from any liens, claims, liabilities, demands,
encumbrances, or judgments created or suffered by reason of any labor or
services performed for, materials used by or furnished to, Tenant or any
contractor employed by Tenant with respect to the Premises; (C) give notice to
Landlord in writing five (5) days prior to employing any laborer or contractor
to perform services related to, or receiving materials for use upon the
Premises; and (D) permit Landlord to post a notice of nonresponsibility in
accordance with the statutory requirements of California Civil Code Section 3094
or any amendment thereof. In the event Tenant is required to post an
improvement bond with a public agency in connection with the above, Tenant
agrees to include Landlord as an additional obligee.
17. Inspection of the Premises. Tenant shall permit Landlord and its
--------------------------
agents to enter the Premises at any reasonable time for the purpose of
inspecting the same, performing Landlord's maintenance and repair
responsibilities (upon 24 hour prior notice except in an emergency), posting a
notice of non-responsibility for alterations, additions or repairs and at any
time within two hundred seventy (270) days prior to expiration of this Lease, to
place upon the Premises, ordinary "For Lease" or "For Sale" signs.
18. Compliance with Laws. Tenant shall, at its own cost, comply with all
--------------------
of the requirements of all municipal, county, state and federal authorities now
in force, or which may hereafter be in force, pertaining to Tenant's use and
occupancy of the Premises, and shall faithfully observe all municipal, county,
state and federal law, statutes or ordinances now in force or which may
hereafter be in force pertaining to Tenant's use and occupancy of the Premises.
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 ordinance or statute in the use and
occupancy of the Premises shall be conclusive of the fact that such violation by
Tenant has occurred. Tenant shall indemnify, protect, defend, and hold Landlord
harmless against any loss, expense, damage, attorneys' fees or liability to the
extent arising out of the failure of Tenant to comply with any applicable law,
except to the extent such failure of Tenant to comply with any applicable law is
caused by the negligence or willful misconduct of Landlord or its Agents.
19. Subordination. The following provisions shall govern the relationship
-------------
of this Lease to any underlying lease, mortgage or deed of trust which now or
hereafter affects the Premises or Landlord's interest or estate therein and any
renewal, modification, consolidation, replacement, or extension thereof (a
"SECURITY INSTRUMENT").
-------------------
A. Priority. This Lease is subject and subordinate to all Security
--------
Instruments existing as of the Commencement Date. However, if any Lender so
requires, this Lease shall become prior and superior to any such Security
Instrument. Landlord, as a condition to Tenant's obligations under this Lease,
shall obtain a recognition and non-disturbance agreement from all existing
lienholders in form reasonably acceptable to Tenant and Landlord's Lender.
-23-
B. Subsequent Security Instruments. At Landlord's election, this
-------------------------------
Lease shall become subject and subordinate to any Security Instrument created
after the Commencement Date, provided that the Lender holding such Security
Agreement agrees that in the event of foreclosure of the Security Instrument in
question, such Lender shall recognize the tenancy of Tenant on the terms and
conditions contained in this Lease so long as no Event of Default (as defined in
Paragraph 13.A. hereof) exists on the date such person acquires the Premises.
Notwithstanding such subordination, Tenant's right to quiet possession of the
Premises shall not be disturbed so long as no Event of Default exists on the
date such person acquires the Premises, unless this Lease is otherwise
terminated pursuant to its terms.
C. Documents. Tenant shall execute any reasonable document or
---------
instrument required by Landlord or any Lender to make this Lease either prior or
subordinate to a Security Instrument, which may include such other matters as
the Lender customarily and reasonably requires in connection with such
agreements, including provisions that the Lender not be liable for (1) the
return of the Security Deposit unless the Lender receives it from Landlord, and
(2) any defaults on the part of Landlord occurring prior to the time that the
Lender takes possession of the Premises in connection with the enforcement of
its Security Instrument. Tenant's failure to execute any such document or
instrument within ten (10) days after written demand therefor shall constitute a
default by Tenant. Tenant's obligation to execute and deliver any subordination
agreement to any future Lender shall be conditioned upon such Lender agreeing
that in the event of foreclosure of the mortgage or termination of the ground
lease in question, such Lender shall recognize the tenancy of Tenant on the
terms and conditions contained in this Lease as long as no Event of Default
exists on the date such person acquires the Premises.
D. Tenant's Attornment. Subject to the recognition obligations under
-------------------
Subparagraphs 19.B. and 19.C. above, Tenant shall attorn (1) to any purchaser of
the Premises at any foreclosure sale or private sale conducted pursuant to any
Security Instrument encumbering the Premises; (2) to any grantee or transferee
designated in any deed given in lieu of foreclosure; or (3) to the lessor under
any underlying ground lease should such ground lease be terminated.
20. Holding Over. This Lease shall terminate without further notice at
------------
the expiration of the Lease Term. Any holding over by Tenant after expiration
shall not constitute a renewal or extension or give Tenant any rights in or to
the Premises except as expressly provided in this Lease. Any holding over after
the expiration without the consent of Landlord shall be construed to be a
tenancy from month to month, at one hundred fifty percent (150%) of the monthly
rent for the last month of the Lease Term, and shall otherwise be on the terms
and conditions herein specified insofar as applicable.
-24-
21. Notices. Any notice required or desired to be given under this Lease
-------
shall be in writing with copies directed as indicated below and shall be
personally served or given by facsimile (with receipt confirmed by telephone),
personal delivery, mail or by prepaid next-business day courier. Personal
delivery, mail and facsimile transmittal shall be effective when received or
delivery is refused by the party. Any notice given by courier shall be deemed to
have been given on the next business day after the time such notice was sent,
addressed to the party to be served with a copy as indicated herein at the last
address given by that party to the other party under the provisions of this
paragraph. At the date of execution of this Lease, the address of Landlord is:
South Bay Development Company, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxx Xxxxxx
With a copy to:
South Bay/San Xxxxx Associates
c/o AEW Real Estate Advisors, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xx. Xxxxxxxxxxx Xxxxxxxx
and the address of Tenant is:
Auspex Systems, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: General Counsel
After the Commencement Date, the address of Tenant will be at the Premises.
22. Attorneys' Fees. In the event either party shall bring any action or
---------------
legal proceeding for damages for any alleged breach of any provision of this
Lease, to recover rent or possession of the Premises, to terminate this Lease,
or to enforce, protect or establish any term or covenant of this Lease or right
or remedy of either party, the prevailing party shall be entitled to recover as
a part of such action or proceeding, reasonable attorneys' fees and court costs,
including attorneys' fees and costs for appeal, as may be fixed by the court or
jury. The term "prevailing party" shall mean the party who received
substantially the relief requested, whether by settlement, dismissal, summary
judgment, judgment, or otherwise.
-25-
23. Subleasing and Assignment.
-------------------------
A. Landlord's Consent Required. Tenant's interest in this Lease is
---------------------------
not assignable, by operation of Law or otherwise, nor shall Tenant have the
right to sublet the Premises, transfer any interest of Tenant therein or permit
any use of the Premises by another party, without the prior written consent of
Landlord to each such assignment, subletting, transfer or use, which consent
Landlord agrees not to withhold unreasonably subject to the provisions of
Subparagraph 23.C. below. A consent to one assignment, subletting, occupancy or
use by another party shall not be deemed to be a consent to any subsequent
assignment, subletting, occupancy or use by another party. Any assignment or
subletting without such consent shall be void and shall, at the option of
Landlord, terminate this Lease. Landlord's waiver or consent to any assignment
or subletting hereunder shall not relieve Tenant from any obligation under this
Lease unless the consent shall so provide.
B. Transferee Information Required. If Tenant desires to assign its
-------------------------------
interest in this Lease or sublet the Premises, or transfer any interest of
Tenant therein, or permit the use of the Premises by another party (hereinafter
collectively referred to as a "TRANSFER"), Tenant shall give Landlord at least
--------
twenty (20) business days prior written notice of the proposed Transfer and of
the terms of such proposed Transfer, including, but not limited to, the name and
legal composition of the proposed transferee, a financial statement of the
proposed transferee, the nature of the proposed transferee's business to be
carried on in the Premises (including a list of the type and quantities of all
Hazardous Materials to be used by the transferee on the Premises), the payment
to be made or other consideration to be given to Tenant on account of the
Transfer, and such other pertinent information as may be reasonably requested by
Landlord, all in sufficient detail to enable Landlord to evaluate the proposed
Transfer and the prospective transferee.
C. Landlord's Rights. It is the intent of the parties hereto that
-----------------
this Lease shall confer upon Tenant only the right to use and occupy the
Premises, and to exercise such other rights as are conferred upon Tenant by this
Lease. The parties agree that this Lease is not intended to have a bonus value
nor to serve as a vehicle whereby Tenant may profit by a future Transfer of this
Lease or the right to use or occupy the Premises as a result of any favorable
terms contained herein, or future changes in the market for leased space. It is
the intent of the parties that any such bonus value that may attach to this
Lease shall be and remain the exclusive property of Landlord, except as provided
in Subparagraph 23.C.(ii) below. In the event Tenant seeks to Transfer its
interest in this Lease or the Premises, Landlord shall have the following
options, which shall be exercised by Landlord, within twenty (20) business days
of Landlord receiving all of the information regarding the Transfer that is
required under Subparagraph 23.B., at Landlord's sole choice without limiting
Landlord in the exercise of any other right or remedy which Landlord may have by
reason of such proposed Transfer:
(i) In the event of a Transfer constituting either an assignment
of the entire Lease or a sublease of substantially all of the Premises for all
or substantially all of the
-26-
balance of the Lease Term, Landlord may elect to terminate this Lease effective
as of the proposed effective date of the proposed Transfer and release Tenant
from any further liability hereunder accruing after such termination date by
giving Tenant written notice of such termination within fifteen (15) days after
receipt by Landlord of Tenant's notice of intent to Transfer as provided above.
If Landlord makes such election to terminate this Lease, Tenant shall surrender
the Premises, in accordance with Paragraph 32, on or before the effective
termination date; or
(ii) Landlord may consent to the proposed Transfer on the
condition that Tenant agrees to pay to Landlord, as additional rent, fifty
percent (50%) of any and all rents or other consideration (including key money)
received by Tenant from the transferee by reason of such Transfer in excess of
the rent payable by Tenant to Landlord under this Lease (after reimbursement to
Tenant of any brokerage commissions, attorneys' fees and advertising expenses
incurred by Tenant in connection with the Transfer, and any tenant improvement
costs related to such Transfer that are incurred by Tenant). Tenant expressly
agrees that the foregoing is a reasonable condition for obtaining Landlord's
consent to any Transfer;
(iii) Landlord may consent to the proposed Transfer on the
condition that if such Transfer is an assignment that Landlord in its sole and
absolute discretion shall determine whether such Transfer shall include the
right to exercise the Options to extend the Lease Term;
(iv) Landlord may withhold its consent in its sole and absolute
discretion to the proposed Transfer if the Transfer is a sublease and the term
of the such sublease extends beyond the then existing Lease Term (the "then
existing Lease Term" shall not include any unexercised options to extend the
Lease Term); or
(v) Landlord may reasonably withhold its consent to the proposed
Transfer.
If Landlord agrees to consent to the proposed Transfer pursuant to Subparagraphs
23.C.(ii) or 23.C.(iii), Landlord shall provide such consent on Landlord's form
within ten (10) business days of Landlord electing such option and receiving the
final version of the document evidencing the Transfer.
D. Permitted Transfers. Notwithstanding the foregoing, Tenant may,
-------------------
without Landlord's prior written consent and without providing to Landlord the
option described in Subparagraph 23.C.(i) above, assign its interest in the
Lease or sublet the Premises or a portion thereof to (i) a subsidiary,
affiliate, division or corporation controlled by or under common control with
Tenant; (ii) a successor corporation related to Tenant by merger, consolidation,
non-bankruptcy reorganization or government action; or (iii) a purchaser of
substantially all of the Tenant's assets; provided that, in each instance
described above, (a) each assignee assumes the obligations of Tenant under this
Lease and each sublessee agrees to abide by this Lease in a
-27-
written instrument delivered to Landlord; (b) Tenant as transferor remains
liable as a primary obligor for the obligations of the tenant under this Lease;
and (c) the financial strength of the transferee tenant is no less than Tenant's
financial strength as of the Commencement Date or the date of such Transfer,
whichever is greater. Additionally, Tenant may, without Landlord's prior written
consent, sublease one (1) of the Buildings prior to taking occupancy thereof,
provided that (x) the sublessee agrees to abide by the obligations of Tenant
under this Lease in a written instrument delivered to Landlord; (y) Tenant as
transferor remains liable as a primary obligor for the obligations of the tenant
under this Lease; and (z) the term of the sublease does not exceed thirty-six
(36) months from the Commencement Date.
24. Successors. The covenants and agreements contained in this Lease
----------
shall be binding on and inure to the benefit of the parties hereto and on their
respective heirs, successors and assigns (to the extent the Lease is
assignable).
25. Mortgagee Protection. In the event of any default on the part of
--------------------
Landlord, Tenant will give notice by registered or certified mail to any
beneficiary of a deed of trust or mortgagee of a mortgage encumbering the
Premises, whose address shall have been previously furnished to Tenant in
writing by Landlord. Such beneficiary or mortgagee shall have the right to cure
Landlord's default and so long as such beneficiary or mortgagee is making
reasonable efforts to cure Landlord's default, including, but not limited to,
obtaining possession of the Premises by power of sale or judicial foreclosure,
if such should prove necessary to effect a cure, Tenant shall not have the right
to terminate this Lease.
26. Estoppel Certificate. Tenant and Landlord agree within ten (10) days
--------------------
following request by the other party to (A) execute and deliver to other party
any documents, including estoppel certificates presented to a party by the other
party, (1) certifying that this Lease is unmodified, or if modified, indicating
the modifications, and in full force and effect and the date to which the rent
and other charges are paid in advance, if any, and (2) acknowledging that there
are not, to such party's knowledge, any uncured defaults on the part of other
party hereunder, or specifying the defaults, if any, and (3) evidencing the
status of the Lease as may be reasonably required either by a lender making a
loan to Landlord or to Tenant to be secured by a deed of trust or mortgage
covering the Premises or a purchaser of the Premises from Landlord, and (B)
Tenant agrees to deliver to Landlord the financial statement of Tenant with an
opinion of a certified public accountant, including a balance sheet and profit
and loss statement, for the last completed fiscal year all prepared in
accordance with generally accepted accounting principles consistently applied.
Tenant's failure to deliver an estoppel certificate within ten (10) days
following a request by Landlord shall be an Event of Default under this Lease.
Landlord's failure to deliver an estoppel certificate within ten (10) days
following a request by Tenant shall be an event of default under this Lease.
27. Surrender of Lease Not Merger. The voluntary or other surrender of
-----------------------------
this Lease by Tenant, or a mutual cancellation thereof, shall not work a merger
and shall, at the option of Landlord, terminate all or any existing subleases or
subtenants, or operate as an assignment to
-28-
Landlord of any or all such subleases or subtenants.
28. Waiver. The waiver by Landlord or Tenant of any breach of any term,
------
covenant or condition herein contained shall not be deemed to be a waiver of
such term, covenant or condition or any subsequent breach of the same or any
other term, covenant or condition herein contained. Any waiver shall be in
writing and signed by both Landlord and Tenant.
29. General.
-------
A. Captions. The captions and paragraph headings used in this Lease
--------
are for the purposes of convenience only. They shall not be construed to limit
or extend the meaning of any part of this Lease, or be used to interpret
specific sections. The word(s) enclosed in quotation marks shall be construed as
defined terms for purposes of this Lease. As used in this Lease, the masculine,
feminine and neuter and the singular or plural number shall each be deemed to
include the other whenever the context so requires.
B. Definition of Landlord. The term Landlord as used in this Lease,
----------------------
so far as the covenants or obligations on the part of Landlord are concerned,
shall be limited to mean and include only the owner at the time in question of
the fee title of the Premises, and in the event of any transfer or transfers of
the title of such fee, the Landlord herein named (and in case of any subsequent
transfers or conveyances, the then grantor) shall be automatically freed and
relieved of all liability with respect to performance of any covenants or
obligations on the part of Landlord contained in this Lease to be performed
after the date of such transfer or conveyance which are assumed in writing by
the transferee; provided that any funds in the hands of Landlord or the then
grantor at the time of such transfer, in which Tenant has an interest, shall be
turned over to the grantee. It is intended that the covenants and obligations
contained in this Lease on the part of Landlord shall, subject as aforesaid, be
binding upon each Landlord, its heirs, personal representatives, successors and
assigns only with respect to the obligations of Landlord arising during its
respective period of ownership.
C. Time of Essence. Time is of the essence for the performance of
---------------
each term, covenant and condition of this Lease.
D. Severability. In case any one or more of the provisions contained
------------
herein, except for the payment of rent, shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Lease, but this
Lease shall be construed as if such invalid, illegal or unenforceable provision
had not been contained herein. This Lease shall be construed and enforced in
accordance with the laws of the State of California.
E. Quiet Enjoyment. Upon Tenant paying the rent for the Premises and
---------------
observing and performing all of the covenants, conditions and provisions on
Tenant's part to be observed and performed hereunder, Tenant shall have quiet
possession of the Premises for the
-29-
entire term hereof subject to all of the provisions of this Lease.
F. Law. As used in this Lease, the term "LAW" or "LAWS" shall mean
--- --- ----
any judicial decision, statute, constitution, ordinance, resolution, regulation,
rule, administrative order, or other requirement of any government agency or
authority having jurisdiction over the parties to this Lease or the Premises or
both, in effect at the Commencement Date of this Lease or any time during the
Lease Term, including, without limitation, any regulation, order, or policy of
any quasi-official entity or body (e.g., board of fire examiners, public utility
----
or special district).
G. Agent. As used in this Lease, the term "AGENT" shall mean, with
----- -----
respect to either Landlord or Tenant, its respective agents, employees,
contractors (and their subcontractors), and invitees (and in the case of Tenant,
its subtenants).
H. Lender. As used in this Lease, the term "LENDER" shall mean any
------ ------
beneficiary, mortgagee, secured party or other holder of any deed of trust,
mortgage or other written security device or agreement affecting Landlord's
interest in the Premises.
I. Force Majeure. Any prevention, delay or stoppage due to strikes,
-------------
lock-outs, inclement weather, labor disputes, inability to obtain labor,
materials, fuels or reasonable substitutes therefor, governmental restrictions,
regulations, controls, action or inaction, civil commotion, fire or other acts
of God, and other causes beyond the reasonable control of the party obligated to
perform (except financial inability) shall excuse the performance, for a period
equal to the period of any said prevention, delay or stoppage, or any obligation
hereunder except the obligation of Tenant to pay rent or any other sums due
hereunder.
30. Sign. Tenant shall not place or permit to be placed any sign or
----
decoration on the Parcel or the exterior of any of the Buildings without the
prior written consent of Landlord, which consent shall not be unreasonably
withheld or delayed. Tenant, upon written notice by Landlord, shall immediately
remove any sign or decoration that Tenant has placed or permitted to be placed
on the Parcel or the exterior of any of the Buildings without the prior written
consent of Landlord, and if Tenant fails to so remove such sign or decoration
within five (5) days after Landlord's written notice, Landlord may enter upon
the Premises and remove said sign or decoration and Tenant agrees to pay
Landlord, as additional rent upon demand, the cost of such removal. At the
termination of this Lease, Tenant shall remove any sign which it has placed on
the Parcel or any of the Buildings and shall repair any damage caused by the
installation or removal of such sign.
31. Interest on Past Due Obligations. Any Monthly Installment of rent due
--------------------------------
from Tenant, or any other sum due under this Lease from Tenant, which is
received by Landlord after the date ten (10) days following the date written
notice is given by Landlord to Tenant that such sum has not been paid when due,
shall bear interest from said due date until paid, at an annual rate equal to
the lower of (the "PERMITTED RATE"): (1) twelve percent (12%); or (2) five
--------------
percent
-30-
(5%) plus the rate established by the Federal Reserve Bank of San Francisco,
as of the twenty-fifth (25th) day of the month immediately preceding the due
date, on advances to member banks under Sections 13 and 13(a) of the Federal
Reserve Act, as now in effect or hereafter from time to time amended. Payment
of such interest shall not excuse or cure any default by Tenant. In addition,
Tenant shall pay all costs and attorneys' fees reasonably incurred by Landlord
in collection of such amounts.
32. Surrender of the Premises. On the last day of the term hereof, or on
-------------------------
the sooner termination of this Lease, Tenant shall surrender the Premises to
Landlord in their condition existing as of the Commencement Date of this Lease,
except for (A) ordinary wear and tear; (B) acts of God; (C) condemnation; (D)
Hazardous Materials which Tenant is not responsible for pursuant to this Lease;
and (E) all alterations, improvements or additions which Tenant is not required
to remove pursuant to this Lease. Tenant shall surrender the Premises with all
originally painted interior walls washed, and other interior walls cleaned, and
repaired or replaced, the air conditioning and heating equipment serviced and
repaired by a reputable and licensed service firm as required by Paragraph 10.B.
hereof, all floors cleaned and waxed, all to the reasonable satisfaction of
Landlord. Tenant shall remove all of Tenant's Property from the Premises, and
all property not so removed shall be deemed abandoned by Tenant. Tenant, at its
sole cost, shall repair any damage to the Premises caused by the removal of
Tenant's Property, which repair shall include, without limitation, the patching
and filling of holes and repair of structural damage. If the Premises are not so
surrendered at the termination of this Lease, Tenant shall indemnify, defend,
protect and hold Landlord harmless from and against loss or liability resulting
from delay by Tenant in so surrendering the Premises including without
limitation, any claims made by any succeeding tenant or losses to Landlord due
to lost opportunities to lease to succeeding tenants.
33. Authority. The undersigned parties hereby warrant that they have
---------
proper authority and are empowered to execute this Lease on behalf of Landlord
and Tenant, respectively.
34. CC&Rs. This Lease is made subject to all matters of public record
-----
affecting title to the property of which the Premises are a part as described in
the Preliminary Title Report dated October 2, 1996, prepared by Santa Xxxxx Land
Title Company, Order No. 00121233, a copy of which is attached hereto as Exhibit
-------
"G" (the "TITLE REPORT"). Tenant shall abide by and comply with all private
--- ------------
conditions, covenants and restrictions of public record now or hereafter
affecting the Premises as described on Exhibit "H" with reference to the Title
-----------
Report ("CC&RS"), except as may be otherwise provided in Exhibit "H". Landlord
----- -----------
represents and warrants that to its actual knowledge no violation of the CC&Rs
exists as of the date of this Lease. During the Lease Term, Landlord shall
promptly notify Tenant of any modification to the CC&Rs.
35. Brokers. The parties represent and warrant to each other that they
------
have not dealt with any broker respecting this transaction other than
Xxxxxx/Xxxxx Corporate Real Estate Services (the "BROKER") and hereby agree to
------
indemnify and hold each other harmless from and
-31-
against any brokerage commission or fee, obligation, claim or damage (including
attorneys' fees) paid or incurred respecting any broker claiming through the
other party or with which/whom the other party has dealt. Landlord shall pay
commission owing to the Broker pursuant to a separate agreement between Landlord
and the Broker.
36. Limitation on Landlord's Liability. Tenant, for itself and its
----------------------------------
successors and assigns (to the extent this Lease is assignable), hereby agrees
that in the event of any actual, or alleged, breach or default by Landlord under
this Lease that:
A. Tenant's sole and exclusive remedy and recourse against
Landlord shall be as against Landlord's interest in the Premises and this Lease;
B. No partner of Landlord shall be sued or named as a party in a
suit or action (except as may be necessary to secure jurisdiction of the
partnership) for the breach of any obligation of Landlord or the act or omission
of Landlord or its Agents;
C. No service of process shall be made against any partner of
Landlord with respect to any claim arising under or out of this Lease (except as
may be necessary to secure jurisdiction of the partnership);
D. No partner of Landlord shall be required to answer or otherwise
plead to any service of process with respect to any claim arising under or out
of this Lease (except as may be necessary to secure jurisdiction of the
partnership);
E. No judgment will be taken against any partner of Landlord for
the breach of any obligation of Landlord or the act or omission of Landlord or
its Agents; F. Any such judgment taken against any partner of Landlord may be
vacated and set aside at any time nunc pro tunc;
G. No writ of execution will ever be levied against the assets of
any partner of Landlord for a judgment based on any breach of a Landlord's
obligations under this Lease or any act or omission of Landlord; and
H. The covenants and agreements of Tenant set forth in this
Paragraph 36 shall be enforceable by Landlord and any partner of Landlord.
37. Hazardous Material.
------------------
A. Definitions. As used herein, the term "HAZARDOUS MATERIAL"
----------- ------------------
shall mean any substance: (i) the presence of which requires investigation or
remediation under any federal, state or local statute, regulation, ordinance,
order, action, policy or common law; (ii) which is or becomes defined as a
"hazardous waste," "hazardous substance," pollutant or contaminant under
-32-
any federal, state or local statute, regulation, rule or ordinance or amendments
thereto including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) and/or the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.); (iii)
which is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic, or otherwise hazardous and is or becomes regulated by
any governmental authority, agency, department, commission, board, agency or
instrumentality of the United States, the State of California or any political
subdivision thereof; (iv) the presence of which on the Premises causes or
threatens to cause a nuisance upon the Premises or to adjacent properties or
poses or threatens to pose a hazard to the health or safety of persons on or
about the Premises; (v) the presence of which on adjacent properties could
constitute a trespass by Landlord or Tenant; (vi) without limitation which
contains gasoline, diesel fuel or other petroleum hydrocarbons; (vii) without
limitation which contains polychlorinated biphenyls (PCBs), asbestos or urea
formaldehyde foam insulation; or (viii) without limitation radon gas.
B. Landlord's Obligation. Except for the Existing Environmental
---------------------
Condition (as defined in Subparagraph 37.L. hereof), Landlord has no actual
knowledge, without any duty to make investigation, of any Hazardous Materials
present in the soil or groundwater of the Parcel. Landlord, at its sole cost,
shall comply with all Laws which impose liability or responsibility upon either
Landlord or Tenant to investigate, remediate or otherwise take any action with
respect to the Existing Environmental Condition; provided, however, that this
covenant shall not require Landlord to perform any obligation Tenant has under
this Paragraph 37. Subject to Subparagraph 8.E., Landlord shall indemnify,
defend, protect and hold Tenant harmless from and against all liabilities,
claims, penalties, fines, response costs and other expenses (including
reasonable attorneys' fees) which result from Landlord's failure to timely
perform the obligation stated in the immediate preceding sentence.
C. Permitted Use. Subject to the compliance by Tenant with the
-------------
provisions of Subparagraphs D, E, F, G, I, J and K below, Tenant shall be
permitted to use and store on the Premises those Hazardous Materials listed in
Exhibit "E" attached hereto, in the quantities set forth in Exhibit "E" and
----------- -----------
such other Hazardous Materials approved by Landlord in writing.
-33-
D. Hazardous Materials Management Plan.
-----------------------------------
(i) Prior to Tenant or its subtenant using, handling,
transporting or storing any Hazardous Material at or about the Premises
(including, without limitation, those listed in Exhibit "E" other than customary
-----------
quantities of janitorial and office supplies), Tenant shall submit to Landlord a
Hazardous Materials Management Plan ("HMMP") for Landlord's review and
----
approval, which approval shall not be unreasonably withheld. The HMMP shall
describe: (aa) the quantities of each material to be used, (bb) the purpose for
which each material is to be used, (cc) the method of storage of each material,
(dd) the method of transporting each material to and from the Premises and
within the Premises, (ee) the methods Tenant will employ to monitor the use of
the material and to detect any leaks or potential hazards, and (ff) any other
information any department of any governmental entity (city, state or federal)
requires prior to the issuance of any required permit for the Premises or during
Tenant's occupancy of the Premises. Landlord may, but shall have no obligation
to review and approve the foregoing information and HMMP, and such review and
approval or failure to review and approve shall not act as an estoppel or
otherwise waive Landlord's rights under this Lease or relieve Tenant of its
obligations under this Lease; provided that a failure to review and approve
within a reasonable time shall not be deemed a disapproval. If Landlord
determines in good faith by inspection of the Premises or review of the HMMP
that the methods in use or described by Tenant are not adequate in Landlord's
good faith judgment to prevent or eliminate the existence of environmental
hazards, then Tenant shall not use, handle, transport, or store such Hazardous
Materials at or about the Premises unless and until such methods are approved by
Landlord in good faith and added to an approved HMMP. Once approved by Landlord,
Tenant shall strictly comply with the HMMP and shall not change its use,
operations or procedures with respect to Hazardous Materials without submitting
an amended HMMP for Landlord's review and approval as provided above.
(ii) Tenant shall pay to Landlord when Tenant submits an HMMP
(or amended HMMP) the amount reasonably determined by Landlord to cover all
Landlord's costs and expenses reasonably incurred in connection with Landlord's
review of the HMMP which costs and expenses shall include, among other things,
all reasonable out-of-pocket fees of attorneys, architects, or other consultants
incurred by Landlord in connection with Landlord's review of the HMMP. Landlord
shall have no obligation to consider a request for consent to a proposed HMMP
unless and until Tenant has paid to Landlord its reasonable estimate of all such
costs and expenses to Landlord, and Tenant shall pay all such costs and expenses
to Landlord irrespective of whether Landlord consents to such proposed HMMP.
Tenant shall pay to Landlord on demand the excess, if any, of such costs and
expenses actually incurred by Landlord over the amount of such costs and
expenses actually paid by Tenant, and Landlord shall promptly refund to Tenant
the excess, if any, of such costs and expenses actually paid by Tenant over the
amount of such costs and expenses actually incurred by Landlord.
E. Use Restriction. Except as specifically allowed in
---------------
Subparagraph C above, Tenant shall not cause or permit any Hazardous Material to
be used, stored, generated,
-34-
discharged, transported to or from, or disposed of in or about the Premises, or
any other land or improvements in the vicinity of the Premises. Without limiting
the generality of the foregoing, Tenant, at its sole cost, shall comply with all
Laws relating to the storage, use, generation, transport, discharge and disposal
by Tenant or its Agents of any Hazardous Material. If the presence of any
Hazardous Material on the Premises (other than an Existing Environmental
Condition) caused or permitted by Tenant or its Agents results in contamination
of the Premises or any soil, air, ground or surface waters under, through, over,
on, in or about the Premises, Tenant, at its expense, shall promptly take all
actions necessary to return the Premises and/or the surrounding real property to
the condition existing prior to the appearance of such Hazardous Material to the
extent feasible and in all events, to a condition which complies with applicable
Environmental Law. In the event there is a release, discharge or disposal of or
contamination of the Premises by a Hazardous Material which is of the type that
has been stored, handled, transported or otherwise used or permitted by Tenant
or its Agents on or about the Premises (other than an Existing Environmental
Condition), Tenant shall have the burden of proving that such release,
discharge, disposal or contamination is not the result of the acts or omissions
of Tenant or its Agents.
F. Tenant Indemnity. Tenant shall defend, protect, hold harmless
----------------
and indemnify Landlord and its Agents and Lenders with respect to all actions,
claims, losses (including, diminution in value of the Premises), fines,
penalties, fees (including, but not limited to, attorneys' and consultants'
fees) costs, damages, liabilities, remediation costs, investigation costs,
response costs and other expenses arising out of, resulting from, or caused by
(i) any Hazardous Material used, generated, discharged, transported to or from,
stored, or disposed of by Tenant or its Agents in, on, under, over, through or
about the Premises and/or the surrounding real property or (ii) any disposal or
release of any Hazardous Material on the surface of the Premises occurring after
the Commencement Date and prior to the termination of this Lease that is not the
result of the negligent acts or willful misconduct of Landlord or its Agents;
provided that in no event shall the foregoing create any liability in Tenant for
an Existing Environmental Condition. Tenant shall not suffer any lien to be
recorded against the Premises as a consequence of the disposal of any Hazardous
Material on the Premises by Tenant or its Agents, including any so called state,
federal or local "super fund" lien related to the "clean up" of any such
Hazardous Material in, over, on, under, through, or about the Premises.
G. Compliance. Tenant shall immediately notify Landlord, and
----------
Landlord shall notify Tenant, of any inquiry, test, investigation, enforcement
proceeding by or against Tenant or the Premises concerning contamination of the
Premises caused by any Hazardous Material. Any remediation plan prepared by or
on behalf of Tenant must be submitted to Landlord prior to conducting any work
pursuant to such plan and prior to submittal to any applicable government
authority and shall be subject to Landlord's consent which consent shall not be
unreasonably withheld or delayed. Tenant acknowledges that Landlord, as the
owner of the Property, at its election, shall have the sole right to negotiate,
defend, approve and appeal any action taken or order issued with regard to any
Hazardous Material by any applicable governmental authority.
-35-
H. Assignment and Subletting. It shall not be unreasonable for
-------------------------
Landlord to withhold its consent to any proposed assignment or subletting if (i)
the proposed assignee's or subtenant's anticipated use of the Premises involves
the storage, generation, discharge, transport, use or disposal of any Hazardous
Material (other than reasonable quantities of office supplies, warehouse
supplies and janitorial supplies that may contain Hazardous Materials) in a
manner which represents a risk to the health and safety of persons on or about
the Premises, and in Landlord's opinion, that risk is a material risk; (ii) if
the proposed assignee or subtenant has been required by any prior landlord,
lender or governmental authority to "clean up" or remediate any Hazardous
Material resulting from the negligence or affirmative actions of the proposed
assignee or subtenant within the last five (5) years; (iii) if the proposed
assignee or subtenant is subject to investigation or enforcement order or
proceeding by any governmental authority in connection with the use, generation,
discharge, transport, disposal or storage of any Hazardous Material resulting
from the negligence or affirmative actions of the proposed assignee or subtenant
within the last five (5) years.
I. Surrender. Upon the expiration or earlier termination of the
---------
Lease, Tenant, at its sole cost, shall remove all Hazardous Materials from the
Premises that Tenant or its Agents introduced to the Premises. If Tenant fails
to so surrender the Premises, Tenant shall indemnify, protect, defend and hold
Landlord harmless from and against all damages to the extent resulting from
Tenant's failure to surrender the Premises as required by this Paragraph,
including, without limitation, any actions, claims, losses, liabilities, fees
(including, but not limited to, attorneys' and consultants' fees), fines, costs,
penalties, or damages in connection with the condition of the Premises
including, without limitation, damages occasioned by the inability to relet the
Premises or a reduction in the fair market and/or rental value of the Premises
by reason of the existence of any Hazardous Material that Tenant or its Agents
introduced in, on, over, under, through or around the Premises.
J. Right to Appoint Consultant. If Tenant or its Agents have used
---------------------------
Hazardous Materials (other than customary quantities of janitorial or office
supplies), Landlord shall have the right to appoint a consultant, at Tenant's
expense, to conduct an investigation to determine whether any Hazardous Material
is being used, generated, discharged, transported to or from, stored or disposed
of in, on, over, through, or about the Premises, in an inappropriate or unlawful
manner. If Tenant has violated any Law or covenant in this Lease regarding the
use, storage or disposal of Hazardous Materials on or about the Premises, Tenant
shall reimburse Landlord for the cost of such investigation. Tenant, at its
expense, shall comply with all reasonable recommendations of the consultant or
take other steps approved by Landlord required to conform Tenant's use, storage
or disposal of Hazardous Materials to the requirements of applicable Law or to
fulfill the obligations of Tenant hereunder.
K. Holding Over. If during the Lease Term, Tenant or any of its
------------
Agents is required to take any action of any kind required or requested to be
taken by any governmental authority to clean-up, remove, remediate or monitor
any Hazardous Material (the presence of
-36-
which is the result of the acts or omissions of Tenant or its Agents and other
than an Existing Environmental Condition) and such action is not completed prior
to the expiration or earlier termination of the Lease, Tenant shall be deemed to
have impermissibly held over until such time as such required action is
completed, and Landlord shall be entitled to all damages directly or indirectly
incurred in connection with such holding over, including without limitation,
damages occasioned by the inability to re-let the Premises or a reduction of the
fair market and/or rental value of the Premises.
L. Existing Environmental Reports. Tenant hereby acknowledges
------------------------------
that it has received, read and reviewed the reports and test results described
in Exhibit "F" attached hereto and made a part hereof (the "EXISTING
----------- --------
ENVIRONMENTAL REPORTS"). The Hazardous Materials currently present in, on or
---------------------
under the Premises or the soil, groundwater, surface water or air thereof, or
in, on, or under any property in the vicinity of the Premises, or the soil,
groundwater, surface water or air thereof, as described in the Existing
Environmental Reports are referred to herein as the "EXISTING ENVIRONMENTAL
----------------------
CONDITION". Tenant shall keep the Existing Environmental Reports
----------
and all information contained therein confidential, except Tenant shall be
allowed to disclose such information to Tenant's consultants and attorneys
provided such parties agree to keep the information confidential.
M. Provisions Survive Termination. The provisions of this
------------------------------
Paragraph 37 shall survive the expiration or termination of this Lease.
N. Controlling Provisions. The provisions of this Paragraph 37
----------------------
are intended to govern the rights and liabilities of the Landlord and Tenant
under this Lease respecting Hazardous Materials to the exclusion of any other
provisions in this Lease that might otherwise be deemed applicable. The
provisions of this Paragraph 37 shall be controlling with respect to any
provisions in this Lease that are inconsistent with this Paragraph 37.
38. Landlord's Default.
------------------
A. If Tenant believes Landlord has failed to perform or provide
any service or pay any sum which Tenant in good faith believes Landlord is
obligated to provide, perform or pay under this Lease, Tenant shall provide
Landlord with written notice thereof. If Landlord does not perform or provide
the required service or make such required payment within thirty (30) days after
receipt of Tenant's notice (or if such failure cannot be cured within such
thirty (30) day period, if Landlord does not promptly commence to provide or
cure the same and diligently pursue the same to completion), Tenant shall have
the right to provide, perform or pay the same. If Tenant, after such notice,
provides and performs such service or makes such payment and sends to Landlord a
written statement reflecting the reasonable costs for providing the same or the
amount paid and Landlord fails to pay the same within twenty (20) days after
receipt of such notice, Tenant shall have the right to seek and obtain damages
from Landlord.
B. In the event of any default by Landlord, Tenant's exclusive
remedies shall
-37-
be an action for specific performance or an action for damages. Tenant hereby
waives the benefit of any laws granting it the right to terminate this Lease or
withhold rent on account of any Landlord default. Tenant waives the provisions
of Sections 1932(l), 1941 and 1942 of the California Civil Code and any similar
or successor law regarding Tenant's right to terminate this Lease or to make
repairs and deduct the expenses of such repairs from the rent due under this
Lease.
39. Condition to Effectiveness. The effectiveness of this Lease is
--------------------------
conditioned upon Landlord obtaining architectural approval by April 1, 1997 from
the City of Santa Xxxxx for the construction of the ninety eight thousand four
hundred thirty (98,430) square foot building described in the Lease Agreement
between Landlord and Tenant dated concurrently with this Lease. This condition
is for the benefit of Tenant and Tenant may waive this condition by written
notice to Landlord on or before April 1, 1997. If on or before April 1, 1997
this condition is neither fulfilled nor waived by Tenant, then this Lease shall
automatically terminate, Landlord shall return the Security Deposit to Tenant
and the parties shall have no further rights or obligations hereunder. If this
condition is fulfilled or waived by Tenant on or before April 1, 1997, then this
Lease shall continue in full force and effect. Landlord shall use good faith and
all reasonable efforts to obtain the architectural approval by April 1, 1997.
-38-
IN WITNESS WHEREOF, the parties have executed this Agreement on the dates
set forth below.
LANDLORD TENANT
South Bay/San Xxxxx Associates, Auspex Systems, Inc.,
a California general partnership a Delaware corporation
By: CIIF Associates II Limited By: _____________________
partnership, a Delaware limited
partnership, its general partner Its: VP & CFO
By: AEW Advisors, Inc.,
a Massachusetts corporation,
its managing general partner
By: /s/ Xxxxxxxxxxx Xxxxxxxx
Its: Vice President
-39-
EXHIBIT "A"
Legal Description of Parcel
---------------------------
All that certain real property situate in the City of Santa Xxxxx, County of
Santa Xxxxx, State of California, described as follows:
PARCEL ONE:
Parcel 1, as shown on that certain Parcel Map filed for record in the Office of
the Recorder of the County of Santa Xxxxx State of California on May 13, 1993 in
Book 646 of Maps, Pages 46 thru 49.
RESERVING THEREFROM an easement for ingress and egress and for Emergency Vehicle
Ingress and Egress for the benefit of Parcel 2, as shown and designated P.I.E.E.
and E.V.I.E.E. established herein to benefit Parcel 2 on the map hereinabove
referred to.
Reserving therefrom an easement for Landscape purposes for the benefit of Parcel
2, as shown and designated as P.L.E. established herein to benefit Parcel 2 on
the map herein above referred to.
PARCEL TWO
An easement for ingress and egress over Parcel 1, of Parcel Map filed for record
on September 19, 1990 in Book 618 of Maps, Pages 36, 37 and 38, shown as
Ingress-Egress over Parcel 1 for the benefit of Parcel 2, as reserved in the
Deed recorded October 156, 1990 in Book L 508, Page 283, Official Records.
PARCEL THREE
An easement for storm drain over all those portions of Parcel 2, designated "10'
S.D.E. Established hereon To Benefit Parcel 1", as shown on the Parcel Map filed
for record in the Office of the Recorder of the County of Santa Xxxxx, State of
California on May 13, 1993 in Book 646 of Maps, Pages 46 thru 49, pursuant to
that certain Declaration of Covenants, Conditions, Restrictions and Easements
recorded May 13, 1993 in Book M 775, Page 1281, Official Records
PARCEL FOUR
An easement for sanitary sewer over that portion of Parcel 4, designated "15' x
438.12' P.S.S.E. Established Hereon To Benefit Parcels 1 and 2", as shown on the
Parcel Map filed for record in the Office of the Recorder of the County of Santa
Xxxxx, State of California on May 13, 1993 in
-40-
Book 646 of Maps, Pages 46 thru 49, pursuant to that certain Declaration of
Covenants, Conditions, Restrictions and Easements recorded May 13, 1993 in Book
M 775, Page 1281, Official Records
PARCEL FIVE
An easement for sanitary sewer over all those portions of Parcel 2, designated
P.S.S.E. Established Hereon to Benefit Parcel 1", as shown on the Parcel Map
filed for record in the Office of the Recorder of the County of Santa Xxxxx,
State of California on May 13, 1993 in Book 646 of Maps, Pages 46 thru 49,
pursuant to that certain Declaration of Covenants, Conditions, Restrictions and
Easements recorded May 13, 1993 in Book M 775, Page 1281, Official Records.
ARB No: 000-00-000
-41-
EXHIBIT "B"
Site Plan
---------
[Diagram showing an area of approximately one hundred seventy one thousand
three hundred eighty two (171,382) square feet consisting of three (3) two (2)
story buildings located on the Central Expressway in the city of Santa Xxxxx,
State of California, together with related driveways, parking areas, and nearby
buildings.]
-42-
EXHIBIT "C"
Improvement Agreement
---------------------
THIS IMPROVEMENT AGREEMENT by and between SOUTH BAY/SAN XXXXX ASSOCIATES
("Landlord") and AUSPEX SYSTEMS, INC. ("Tenant"), dated January, 1997, is made
part of that Lease (the "Lease"), between Landlord and Tenant, dated
concurrently herewith. Landlord and Tenant agree that the following terms are
part of the lease:
1. Definitions: Except as defined below, capitalized terms in this
-----------
Improvement Agreement shall have the meanings given those terms in the Lease.
(a) Architect shall collectively mean all architects, structural
---------
engineers, mechanical engineers, and other design professionals retained by
Landlord and needed to design the Tenant Improvements.
(b) Applicable Laws and Restrictions shall mean all laws
--------------------------------
(including without limitation the Americans With Disabilities Act), building
codes, ordinances, regulations, title covenants, conditions and restrictions.
(c) Approved Plans shall mean the Final Tenant Improvement Plans,
--------------
as the same may be modified by a Change Order issued in accordance with this
Improvement Agreement.
(d) Building shall mean each Building Shell and the Tenant
--------
Improvements therein.
(e) Buildings shall mean all of the Building Shells and all of the
---------
Tenant Improvements.
(f) Building Shell shall mean each (concrete or two story tilt-up
--------------
R&D building), having the general specifications described on attached Exhibit
-------
1, which shall be constructed by Landlord for Tenant generally in the
-
location and configuration shown on Exhibit B to the Lease.
(g) Construction Documents shall mean the Final Tenant Improvement
----------------------
Plans, and any and all bid packages, contracts with Contractors and agreement
with the Architect.
(h) Contractor(s) shall mean South Bay Construction and
-------------
Development Company and all other contractors, design-build contractors,
subcontractors, and material supplies who provide labor and material for
construction of the Tenant Improvements. To the extent required by Applicable
Laws and Restrictions, each Contractor shall be duly licensed by the State of
California.
-43-
(i) Construction Schedule shall mean the schedule for the
---------------------
commencement, prosecution and Substantial Completion of the Tenant Improvements,
which shall be in substantially the form of attached Exhibit 2, and which shall
---------
be approved by the parties pursuant to this Improvement Agreement and, when
agreed upon attached hereto in replacement of Exhibit 2 and incorporated
---------
herein by this reference.
(j) Final Tenant Improvement Plans shall mean those plans,
------------------------------
specifications and working drawings for the Tenant Improvements, which shall be
prepared, approved and identified in Exhibit 3 when approved in writing by
---------
Landlord and Tenant, and thereafter incorporated herein by this reference.
(k) Force Majeure shall mean any prevention, delay or stoppage due
-------------
to strikes, lock-outs, inclement weather, labor disputes, inability to obtain
labor, materials, fuels or reasonable substitutes therefor, governmental
restrictions, regulations, controls, action or inaction, civil commotion, fire
or other acts of God, and other causes beyond the reasonable control of the
party obligated to perform (except financial inability) shall excuse the
performance, for a period equal to the period of any said prevention, delay or
stoppage, or any obligation hereunder except the obligation of Tenant to pay any
sums due hereunder.
(l) Landlord's Representative shall mean Xxxxx Xxxxxx, whose
-------------------------
telephone number is (000) 000-0000, whose facsimile number is (000) 000-0000,
and whose address for delivered notice is South Bay Development Company, Inc.,
000 Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, or such other person as
Landlord shall designate in writing to Tenant as its authorized representative
for the proposes of administering this Improvement Agreement. Landlord's
Representative may change its numbers and address by deliver of three (3)
business days notice to Tenant's Representative.
(m) Planning Schedule shall mean the schedule for the preparation,
-----------------
approval and permitting of the Approved Plans for the Tenant Improvements
attached hereto as Exhibit 4, and incorporated herein by this reference.
---------
(n) Permits shall mean all of the permits, inspections, approvals
-------
and consents of governmental authorities.
(o) Substantial Completion shall mean that (i) the Tenant
----------------------
Improvements have been completed in accordance with the provisions of this
Improvement Agreement and the Final Tenant Improvement Plans therefor (except
for minor punchlist items which do not substantially interfere with Tenant's use
of the Premises), (ii) all utilities are connected and available for Tenant's
use, and (iii) all necessary governmental approvals for occupancy of the
Buildings have been obtained (including, if applicable, a certificate of
occupancy); provided, however that, to the extent that Substantial Completion of
the Buildings is delayed because of a Tenant Delay, the Substantial Completion
Date shall be deemed to be the date the Buildings would have otherwise
-44-
been Substantially Completed, absent the Tenant Delay.
(p) Tenant Delay shall mean any delay in the Substantial
------------
Completion of the Tenant Improvements as a consequence of (i) Tenant's failure
to promptly review and approve or properly disapprove plans for the Tenant
Improvements in accordance with this Improvement Agreement and within the time
permitted by the Planning Schedule; (ii) Tenant's request for special materials,
finishes, or installations which are not readily available, provided the length
of Tenant Delay due to such unavailability shall not exceed the amount of delay
approved by Tenant when such materials, components, finish, or improvements were
requested by Tenant; (iii) Change Orders requested by Tenant and approved by
Landlord, provided that the amount of Tenant Delay as a consequence of any
Change Order may not exceed the amount of delay specified in the Change Order;
(iv) Tenant's failure to complete any of its own improvement work identified in
the Construction Schedule as being necessary for the Substantial Completion of
the Tenant Improvements by the date specified in the Construction Schedule for
completion of such work; (v) interference with Landlord's work caused by Tenant
or Tenant's contractors or subcontractors.
(q) Tenant Improvements shall mean those improvements that
-------------------
Landlord is obligated to construct in the Premises pursuant to Final Tenant
Improvement Plans.
(r) TI Allowance shall mean an amount equal to Four Million Two
------------
Hundred Eighty Four Thousand Five Hundred Fifty Dollars ($4,284,550), which
allowance is already reflected in the Monthly Installment amount set forth in
Subparagraph 4.B. of the Lease.
(s) TI Costs shall mean all sums (i) paid to Contractors for labor
--------
and materials furnished in connection with construction of the Tenant
Improvements; (ii) all costs, expenses, payments, fees, and charges whatsoever
paid or incurred by Landlord to or at the direction of any city, county, or
other governmental authority or agency which are required to be paid by Landlord
in order to obtain all necessary governmental permits, licenses, inspections and
approvals relating to the construction of the Tenant Improvements and the use
and occupancy of the Premises, including without limitation all in lieu fees and
utility fees; (iii) engineering and architectural fees for services required in
connection with the design and construction of the Tenant Improvements; and (iv)
premiums, if any, for course of construction insurance and for payment and
completion bonds relating only to construction of the Tenant Improvements. In no
event shall TI Costs include any of the following, all of which shall be the
sole obligation of Landlord: (a) any cost attributable to the Building Shell,
including without limitation the cost to design, permit, or construct the
Building Shell improvements described on Exhibit 1 to this Exhibit "C", (b)
--------- -----------
charges and expenses for changes to the Construction Documents which have not
been approved in writing by Tenant, except for those changes to the Construction
Documents required by governmental authority, (c) wages, labor and overhead for
overtime and premium time, unless approved in writing by Tenant; (d) additional
costs and expenses incurred by Landlord on account of any Contractors' or
Architects' default or construction defects in the Improvements; (e) interest
and fees for construction financing; (f) labor and overhead costs for
-45-
Landlord's employees and office; and (g) bond premiums.
(t) TI Cost Estimate shall mean the total estimated cost of
----------------
constructing the Tenant Improvements prepared and approved by Landlord and
Tenant in accordance with this Improvement Agreement, as modified by change
orders issued in accordance with this Improvement Agreement.
2. Designation of Representative. Landlord and Tenant hereby
-----------------------------
respectively appoint Landlord's Representative and Tenant's Representative as
its sole representative for the purposes of this Improvement Agreement. Until
replaced by written notice, Landlord's Representative and Tenant's
Representative shall have the full authority and responsibility to act on behalf
of Landlord and Tenant, respectively, as required in this Improvement Agreement.
3. Preparation and Approval of Plans.
---------------------------------
(a) Retention of Architect(s). Tenant shall retain the
-------------------------
Architect(s) to prepare the plans and specifications for the Tenant
Improvements, subject to Landlord's reasonable approval.
(b) Tenant Improvement Plans.
------------------------
(i) To facilitate timely commencement and Substantial
Completion of the Tenant Improvements, within the time specified in the Planning
Schedule, Tenant shall prepare and submit to Landlord for Landlord's approval
the Tenant's design requirements for the Tenant Improvements. At such time as
Landlord has approved the Tenant's design requirements and within the time
provided in the Planning Schedule, Landlord shall cause the Architect to proceed
with the preparation of preliminary plans and specifications, and a preliminary
cost estimate for the Tenant Improvements and shall notify Tenant of any
revisions that may need to be made to the previously approved construction
schedule. Tenant shall review and approve or disapprove of such items and any
changes in the Construction Schedule within the time permitted by the Planning
Schedule. If Tenant does not approve any preliminary plan or specification, the
preliminary cost estimate, or a construction schedule change, Tenant and
Landlord shall work with the Architect and negotiate in good faith to reach
agreement on all such items within the time permitted by the Planning Schedule.
(ii) When the preliminary space plans, elevations, preliminary
cost estimate and any Construction Schedule changes have been approved by
Tenant, Landlord shall cause the Architect to prepare and deliver to Tenant by
the date specified in the Planning Schedule (i) proposed final plans,
specifications and working drawings for the Tenant Improvements, (ii) a proposed
final TI Cost Estimate, and (iii) a proposed final Construction Schedule for the
Improvements substantially in the form of attached Exhibit 2, all of which
---------
shall be consistent with, and logical evolutions of the preliminary plans and
elevations approved by Tenant pursuant to the foregoing, the terms of this
Improvement Agreement and the Construction
-46-
Schedule and the changes thereto previously approved by the parties. Tenant
shall review and approve the proposed final plans, specifications, and working
drawings for the Tenant Improvements, the proposed TI Cost Estimate, or the
proposed final Construction Schedule within the time permitted by the Planning
Schedule. If Tenant reasonably disapproves of the plans, specifications or
working drawings for the Tenant Improvements (which disapproval can only be
based upon whether such plans, specification or working drawings are consistent
with the preliminary plans), the proposed TI Cost Estimate, and/or the proposed
final Construction Schedule, then Landlord and Tenant shall negotiate in good
faith, using all reasonable efforts to reach agreement on such items within the
time specified in the Planning Schedule; provided, however, that Landlord shall
not unreasonably withhold its approval of such change requested by Tenant to the
Tenant Improvements which does not materially delay the Scheduled Completion
Date for the Tenant Improvements nor materially increase the cost that will be
incurred by Landlord in constructing the Tenant Improvements. If Tenant
believes that the cost estimate is incorrect, it may require that all or any
portion of the work be submitted for competitive bids, in which case the amount
for the rebid work included in the TI Cost Estimate shall not exceed the lowest
responsible bid(s) from responsible Contractor(s) and Supplier(s) for such work.
The plans, specifications, and working drawings for the Tenant Improvements, the
final TI Cost Estimate, and the Construction Schedule approved by Tenant and
Landlord pursuant to this Section, shall be the "Final Tenant Improvement
Plans," "TI Cost Estimate" and "Construction Schedule" for the purposes of this
Improvement Agreement.
(c) Disapprovals and Failures to Respond. Any disapproval by
------------------------------------
Tenant of a preliminary plan, space plan, elevation final plan, specification,
cost estimate, or construction schedule item submitted for its approval shall be
communicated only by a writing, which is delivered to Landlord within the time
permitted by the Planning Schedule and which specifies the disapproved item(s),
the reason(s) for the disapproval, and the changes required to make the item
acceptable to Tenant. If Tenant's disapproval of any item requiring its approval
under this Construction Agreement is not delivered in accordance with the
procedures and time limits specified in this Improvement Agreement, then Tenant
shall be deemed to have given its approval to such item.
(d) Changes to Plans, Cost Estimate and Construction Schedule.
---------------------------------------------------------
When the Final Tenant Improvement Plans, the TI Cost Estimate and Construction
Schedule have been approved by Landlord and Tenant as provided above, the
description of said plans and the Construction Schedule shall be initialed by
the parties and attached to this Agreement as Exhibits 2 and 3, respectively.
---------- -
Once the Final Tenant Improvement Plans, the TI Cost Estimate, and the
Construction Schedule (including, without limitation, the Scheduled Completion
Date specified therein) are approved by Landlord and Tenant as provided above,
neither party shall thereafter have the right to order extra work or change
orders, nor will the Construction Schedule or the TI Cost Estimate be modified,
except by a written "Change Order" approved by Landlord and Tenant, which
approval shall not be unreasonably withheld, except as expressly stated to the
contrary below. The Change Order shall clearly describe (i) the change, (ii) the
party required to perform the change, (iii) any modification of the Approved
Plans, (iv) the amount of delay or the
-47-
time saved resulting therefrom and any revision of the Construction Schedule and
Scheduled Completion Date occasioned by the change, (v) any added or reduced TI
Cost resulting from the Change, (vi) any other cost, and the manner of payment
of such costs which Tenant may be required to pay with respect to a Change
requested by Tenant, or Landlord may be required to reimburse to Tenant as a
consequence of a change requested by Landlord.
(e) Application for Permits. As soon as the Final Tenant
-----------------------
Improvement Plans are approved by Landlord and Tenant, Landlord shall submit
said plans to all appropriate governmental agencies and private parties from
whom Permits are required for the construction and use of the Tenant
Improvements. Landlord shall notify Tenant of any changes required by any
governmental agencies, and Tenant shall have seven (7) days thereafter to
indicate its approval thereof. All such changes required by governmental
agencies shall be deemed acceptable to Tenant unless Tenant's use of the
Premises is materially impaired thereby. The final plans, specifications and
working drawings as approved, and all change orders specifically permitted
pursuant to Subparagraph (c) below, shall be referred to herein as the "Approved
Plans."
4. Construction.
------------
(a) General Contractor. South Bay Development and Construction
------------------
Company shall serve as the general Contractor. Contractor's fee as general
Contractor for the Tenant Improvements shall be calculated as follows and shall
be included in the TI Cost Estimate: five percent (5%) of the TI Costs not
including such Contractor's fee.
(b) Subcontracts and Materials. Prior to issuance of any
--------------------------
subcontract relating to Tenant Improvements, Landlord shall submit for Tenant's
approval (which approval shall not be unreasonably withheld) a list of the
Contractors and Suppliers for the Tenant Improvement work. At Tenant's request,
all labor and materials for the Tenant Improvements shall be competitively bid
by at least two (2) Contractors or Suppliers. Landlord may also bid on such
work. If Tenant so desires, Tenant may also select a Contractor or Supplier,
reasonably acceptable to Landlord, to bid the work. All bids shall be opened
simultaneously. Landlord shall have the right to select the Contractor or
Supplier to perform the work. Notwithstanding Tenant's right to approve the
Contractors and Suppliers, the Contractors and Suppliers are a contractor only
for Landlord, and Tenant shall have no liability to any Contractor or Supplier
under any Construction Document or otherwise with respect to the Tenant
Improvements; provided, Tenant shall be required to reimburse Landlord for its
portion of the TI Costs pursuant to this Improvement Agreement.
(c) Commencement and Completion of Improvements. As soon as (i)
-------------------------------------------
the Approved Plans have been developed as provided above, and (ii) all necessary
Permits for commencement of construction of the Tenant Improvements have been
obtained, Landlord shall cause its Contractor(s) to commence and to thereafter
diligently prosecute to completion the construction of the Tenant Improvements
in accordance with the Approved Plans by the
-48-
Scheduled Completion Dates therefor contained in the Construction Schedule;
provided, however, Landlord shall not be liable for delay in the Substantial
Completion Date for any Building to the extent reasonably attributable to a
Force Majeure Delay, except as specifically provided in this Lease.
(d) Standard of Construction. Landlord shall cause all work to be
------------------------
constructed in a good and workmanlike manner, free from material design and
workmanship defects in accordance with the Approved Plans, the other
Construction Documents, the Permits, and Applicable Law and Restrictions.
Notwithstanding anything to the contrary in the Lease or this Improvement
Agreement, Tenant's acceptance of the Landlord's Work shall not waive the
foregoing warranty and Landlord shall promptly remedy all violations of the
warranty at its sole cost and expense which occur during the first twelve (12)
months of the Lease Term. Such warranty shall expire and be of no further force
or effect on the date which is twelve (12) months after the Commencement Date.
Tenant shall promptly notify Landlord in writing during the warranty period of
any defect in construction or in the operation of equipment discovered during
such period, and promptly thereafter Landlord shall commence the cure of such
defect and complete such cure with diligence at Landlord's sole cost. After said
twelve (12) month period, Tenant shall conclusively be deemed to have approved
the construction of the Tenant Improvements and accepted them "as is", subject
only to defects claimed as provided above. With respect to defects discovered
after the expiration of said one (1) year period, the parties hereto acknowledge
that it is their intention that Tenant have the benefit of any construction or
equipment warranties existing in favor of Landlord that would assist Tenant in
correcting such construction defects and in discharging its obligations
regarding the repair and maintenance of the Premises. Upon request by Tenant
following the expiration of such twelve (12) month period, Landlord shall inform
Tenant of all written construction and equipment warranties existing in favor of
Landlord which affect the Tenant Improvements. Landlord shall assign such
warranties to Tenant upon request in order that Tenant may enforce the same.
(e) Tenant Fixturing. Landlord shall use all reasonable efforts
----------------
to complete construction of Tenant Improvements of each Building to a point
permitting Tenant's entry for installation of its fixtures and equipment on or
before the date specified in the Construction Schedule. When the construction of
each Building has proceeded to the point where Tenant's installation of its
fixtures and equipment in the Building can be commenced in accordance with good
construction practice, the Landlord shall notify Tenant to that effect and shall
permit Tenant and its authorized representatives and contractors to have access
to the Building for a period of not less than thirty (30) days for the purpose
of installing Tenant's trade fixtures, equipment and other Tenant's Property in
the Building. Landlord and Tenant shall cooperate in good faith to schedule and
coordinate Tenant's fixturing with the Landlord's construction in a manner which
will assure Substantial Completion of the Improvements by the Scheduled
Completion Dates, will reduce each party's cost, and ensure labor harmony. While
performing fixturing, Tenant shall comply, and shall cause its employees,
contractors and suppliers to comply, with the reasonable work rules observed by
Landlord's Contractors and Suppliers.
-49-
(f) Inspection & Punchlist. Tenant's Representative and Tenant's
----------------------
architect, designers and consultants shall have the right to enter on the
Premises at all reasonable times and upon notice to Landlord's Representative
for the purpose of inspecting the progress of the work. Tenant's Representative,
Landlord's Representative and the Architect(s), and such advisers as they shall
desire, shall inspect each Building upon its Substantial Completion using their
best efforts to discover all uncompleted or defective construction. After such
inspection has been completed, a list of "punchlist" items shall be prepared by
Landlord which the parties agree are to be corrected by Landlord. Landlord shall
use its best efforts to complete and/or repair such "punchlist" items within
thirty (30) days. Tenant's taking possession of the Premises shall be deemed to
be an acceptance by Tenant of the Premises as complete and in accordance with
the terms of this Lease, subject to completion of the punchlist items within
said period.
5. Payment of Construction Costs. Landlord and Tenant shall each bear
-----------------------------
their own cost for performance of their respective obligations under this
Improvement Agreement, except that Tenant shall reimburse Landlord for the
amount, if any, by which the TI Cost exceeds the TI Allowance in the following
manner: Landlord shall submit receipted bills and/or lien releases evidencing
Landlord's payment of TI Costs in such amounts and at such times as bills are
submitted to Landlord for the TI Costs by Contractors and Suppliers for Tenant
Improvement work in place prior to the date of the xxxx (a "TI Progress Cost").
On or before the twenty-fifth (25th) day following receipt of the request,
Tenant shall pay to Landlord a sum equal to (i) the TI Progress Cost times a
fraction, the numerator of which shall be equal to the TI Cost Estimate minus
the TI Allowance and the denominator of which shall be equal to the TI Cost
Estimate, minus (ii) the sums previously reimbursed by Tenant to Landlord;
provided, however that in no event shall Tenant be required to reimburse
Landlord (1) for more than 90% of the difference between the TI Cost Estimate
and the TI Allowance prior to the Substantial Completion Date, (2) so long as
Landlord has failed to use the reimbursements previously paid by Tenant to
discharge the obligation of the Landlord to the Contractors and Suppliers, or
(3) so long as Landlord is in default of its obligations under this Improvement
Agreement in any material respect.
6. Delay In Completion Caused By Tenant. The parties hereto
------------------------------------
acknowledge that the date on which Tenant's obligation to pay the Monthly
Installment would otherwise commence could be delayed because of Tenant Delays.
It is the intent of the parties hereto that Tenant's obligation to pay the
Monthly Installments of rent not be delayed by any of such causes or by any
other act of Tenant, and in the event it is so delayed, then Tenant's obligation
to pay the Monthly Installments shall commence as of the date it would otherwise
have commenced absent said Tenant Delay. Tenant Delays in excess of thirty (30)
days for any of the above-mentioned reasons may affect Landlord's financing of
construction of the Premises, and Tenant agrees to pay any reasonable additional
financing costs, including loan fees, incurred by Landlord as a result thereof.
7. Notices. The notices to be delivered to the parties pursuant to
-------
this Improvement Agreement shall be given by personal delivery or by facsimile
(with receipt confirmed) to the
-50-
Tenant's Representative and the Landlord's Representative at the following
address and facsimile number.
Tenant's Representative: [FOLLOWING EXECUTION OF THIS LEASE, TENANT SHALL
PROMPTLY PROVIDE LANDLORD WITH THE NAME, ADDRESS AND FACSIMILE NUMBER FOR
TENANT'S REPRESENTATIVE.]
Address: Auspex Systems, Inc.
0000 Xxxxx Xxxxxxx Xxxx.
Xxxxx Xxxxx, XX 00000
Attn: Xxxxxxxxx Xxxxxx
Facsimile: (000) 000-0000
Landlord's Representative:
Address: South Bay Development Company, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxx Xxxxxx
Facsimile: (000) 000-0000
8. Miscellaneous. Except as otherwise expressly provided in this
-------------
Improvement Agreement, whenever either party's consent, approval, designation,
or advice is required by the other party, such consent, approval, designation,
or advice shall not be unreasonably withheld or delayed. This Improvement
Agreement and the Lease contain the entire agreement between the parties with
respect to the construction of the Tenant Improvements and, in the event of any
conflict between the terms of this Improvement Agreement and the Lease, this
Improvement Agreement shall prevail. This Improvement Agreement may be amended
and the provisions hereof may be waived only by a writing signed by Landlord and
Tenant and the provisions hereof shall be binding upon the successors and
assigns of the parties to the Lease. If any legal action, arbitration or other
proceeding is commenced to interpret or enforce this Improvement Agreement, the
prevailing party in such action, arbitration or proceeding shall be entitled to
recover its reasonable attorneys' fees and costs.
-51-
IN WITNESS WHEREOF, the parties have executed this Agreement on the dates
set forth below.
LANDLORD TENANT
South Bay/San Xxxxx Associates, Auspex Systems, Inc.,
a California general partnership a Delaware corporation
By: CIIF Associates II Limited By:
partnership, a Delaware limited ----------------------------
partnership, its general partner Its: VP & CFO
By: AEW Advisors, Inc.,
a Massachusetts corporation,
its managing general partner
By: /s/ Xxxxxxxxxxx Xxxxxxxx
Its: Vice President
-52-
EXHIBIT 1 TO EXHIBIT C
DEFINITION OF BUILDING SHELLS
The components and systems below shall be included in the design of the new
buildings. All code requirements should be considered minimum beginning
requirements and not the highest level of design. Landlord's cost shall include
all "hard and soft" costs related to the construction of the site and shell,
including architectural and engineering services, permits, utility fees for
connections and meters, etc.
1. BUILDINGS STRUCTURE
(a) All foundations to include footings, piers, caissons, pilings, grade
beams, foundation walls or other building foundation components
required to support the entire building structure.
(b) Columns shall be steel box or pipe columns.
(c) All columns, beams, joists, purlins, headers, or other framing members
to support the roof and roofing membrane.
(d) Five inch (5") thick concrete slab on grade with welded wire mesh and
any other reinforcing or structural connections that may be necessary
or required.
(e) Exterior walls that enclose the perimeter of the building with steel
reinforcing and structural connections that may be necessary or
required.
(f) All exterior glass and glazing with anodized aluminum frames. Glass to
be tinted as appropriate to the aesthetic design of the building. All
exterior doors, door closer and locking devices necessary for proper
functioning.
(g) Wood panel roof system to support roofing membrane.
(h) Three (3) ply built up roofing with cap sheet and all flashings by
Xxxxx-Xxxxxxx, Xxxx Xxxxxxxx, or equal.
(i) Exterior painting of all concrete with Tex-Coat or Kel-Tex textural
paint. All caulking of exterior concrete joints in preparation for
painting.
-53-
(j) The multi-story buildings are to be designed for a minimum of one
elevator per building, the elevator shafts to be a part of Landlord's
shell costs.
(k) The foundation and structural framing should be designed to support a
minimum live load of 100 psf in all areas.
(l) The floor-to-floor height of the buildings shall allow a minimum of
10'-0" interior drop ceiling height.
2. PLUMBING
(a) Underground sanitary sewer laterals connected to the city sewer main in
the street and piped into each building and under the concrete slab on
grade for the length of the buildings. Main waste lines under the slabs
will be in as close proximity as possible to the building rest room
locations.
(b) Domestic water mains connected to the city water main in the street and
stubbed to the buildings. Water mains to each building shall not be
less than 2.5" in size.
(c) Roof drain leaders piped and connected to the site storm drainage
systems.
(d) Gas lines connected to the city public utility mains and gas meters
adjacent to, and in close proximity to each building. Meters supplied
by utility company.
3. ELECTRICAL
(a) All primary electrical service to each building that is complete
including underground conduit and wire feeders from transformer pads
into the building's main switchgear electrical room. The electrical
characteristics of the secondary side of transformers shall be 277/480
Volt. 3 Phase and the rated capacity of the transformers shall be 2,000
amps for each building. All electrical panels and breakers will have
isolated grounds and surge protectors.
(b) Underground pull section, meter, and panel(s), for site lighting and
landscaping.
(c) Underground conduit from the street to the building for telephone
-54-
trunk line service by Pacific Telephone. Conduit to each building
shall not be less than 4".
(d) An electrically operated landscape irrigation controller that is a
complete and functioning system.
(e) Underground conduit from the building to the main fire protection
system, shut off valve (PIV) for installation of security alarm
wiring.
(f) All parking lot and landscaping lighting to include fixtures,
underground conduit, wire, distribution panel and controller. All
exterior lighting shall be a complete and functioning system.
4. FIRE PROTECTION (SPRINKLERS)
(a) A complete and fully functional overhead system distributed throughout
the building. The systems shall be classified ordinary hazard group II
and be distributed throughout the building.
(b) System shall include all sprinkler heads that may be required by
building codes above the ceiling, when ceilings are installed.
(c) Site sprinkler main to be sized adequately to support Tenant's uses
within each building.
5. SITEWORK
(a) All work outside the building perimeter walls shall be considered site
work for the building shell and shall include grading, asphalt
concrete, paving, landscaping (hard and soft), landscape irrigation,
storm drainage, utility service laterals, including conduit for voice
and data connecting the buildings, curbs, gutters, sidewalks, specialty
paving (if required), retaining walls, fencing and gates, trash
enclosures, planters, sign monuments, parking lot and landscape
lighting and other exterior lighting per code.
(b) Paving sections for automobile and truck access shall be according to
the Geological Soils Report.
(c) All parking lot striping to include handicap signage and spaces
(parking ratio: no less than 1 space per 295 gross square feet).
-55-
(d) Underground site storm drainage system shall be connected to the city
storm system main.
-56-
EXHIBIT 2 TO EXHIBIT C
CONSTRUCTION SCHEDULE
[TO BE DETERMINED]
-57-
EXHIBIT 3 TO EXHIBIT C
FINAL TENANT IMPROVEMENT PLANS
[TO BE DETERMINED]
-58-
EXHIBIT 4 TO EXHIBIT C
PLANNING SCHEDULE
[TO BE DETERMINED]
Required Action Last Date for Completion
---------------------------------------------------------------------------------------------------------------
Tenant Improvements Plans and Specifications
---------------------------------------------------------------------------------------------------------------
1. Tenant delivers its design requirements to _________________, 199__
__________.
---------------------------------------------------------------------------------------------------------------
2. Landlord causes the Architect to deliver ______ Days after Task 1 is satisfied
preliminary plans, and a preliminary cost
estimate for the Tenant Improvements and a list
of any expected construction schedule changes
to Tenant for its review.
---------------------------------------------------------------------------------------------------------------
3. Tenant approves or disapproves the items ______ Days after Task 2 is completed
delivered pursuant to Task 8.
---------------------------------------------------------------------------------------------------------------
4. Landlord and Tenant agree upon preliminary _________________, 199__
plans, a cost estimate and any construction
schedule changes for Tenant Improvements.
---------------------------------------------------------------------------------------------------------------
5. Landlord delivers proposed plans, ______ Days after Task 4 is completed
specifications and working drawings, a proposed
final TI Cost Estimate for the Tenant
Improvements, and a final Construction Schedule
to Tenant for its review.
---------------------------------------------------------------------------------------------------------------
6. Tenant approves or disapproves the items ______ Days after Task 5 is completed
delivered pursuant to Task 1.
---------------------------------------------------------------------------------------------------------------
7. Landlord and Tenant agree upon Final Tenant __________________, 199__
Improvement Plans, a final TI Cost Estimate,
and a final Construction Schedule.
---------------------------------------------------------------------------------------------------------------
Permitting & Governmental Approvals
---------------------------------------------------------------------------------------------------------------
8. Landlord submits the Final Tenant ______ days after Task 7 is completed
Improvement Plans to all applicable
governmental authorities for Permits.
---------------------------------------------------------------------------------------------------------------
9. All governmental permits and approvals ___________________, 199__
necessary for the construction of the
Improvements for the Permitted Uses are
obtained.
---------------------------------------------------------------------------------------------------------------
-59-
EXHIBIT "D"
Commencement Date Memorandum
----------------------------
With respect to that certain Lease Agreement ("Lease"), dated January ____,
1997, by and between South Bay/San Xxxxx Associates, a California general
partnership ("LANDLORD"), and Auspex Systems, Inc., a Delaware corporation
--------
("TENANT"), whereby Landlord leased to Tenant and Tenant leased from Landlord
--------
the Premises (as defined in the Lease). All terms not defined herein shall have
the same meaning as set forth for such terms in the Lease. Tenant hereby
acknowledges and certifies to Landlord as follows:
(1) The Lease commenced on ___________________, 19___ ("Commencement
Date");
(2) The Initial Term of the Lease shall expire on ____________________,
______ (the "Expiration Date");
(3) The initial Monthly Installment of Rent for the Premises is
_______________________________ Dollars ($_________________); and
(4) Tenant has accepted [and is currently in possession of] the Premises.
IN WITNESS WHEREOF, this Commencement Date Memorandum is executed this
______ day of __________________, 199____.
"Tenant"
Auspex Systems, Inc., a
Delaware corporation
By: __________________________
Its: _________________________
-60-
EXHIBIT "E"
List of Hazardous Materials
---------------------------
Tenant Will Use on The Premises
-------------------------------
Janitorial Supplies (including handsoaps, detergents, furniture polish, glass
and bowl cleaners, disinfectant cleaners, etc.)
Copier Supplies (including: toners, developers, etc.)
Painting Supplies (wall and trim paints)
-61-
EXHIBIT "F"
Description of Existing Environmental Reports
---------------------------------------------
Environmental Reports & Correspondence
The Former Unisys Site
1. Environmental Baseline Report - Revised October 1989
A. Including the following tables, figures and appendices (359 pages)
Tables
------
1. Tanks and Chemical Storage
2. Previous Tank Storage Summary
3. Groundwater Monitoring Data 10/88
Figures
-------
1. Map
2. Site Map
3. Tank Locations
4. Previous Tank Storage Sites
5. Monitoring Well Locations
Appendices
----------
PCB Information
Asbestos Information
Tank Pull 1/84
Well Destruction Investigation
Hydrogeological Investigation 10/87
Unisys for SFRWQCB; Environmental Baseline Investigation
(Appx 60 pages)
Hydrogeological Investigation 11/88
Soil Gas Survey 5/89
-62-
Semi-Annual Sampling 5/89
Clarifier Removal 10/89
2. Tank Removal - Completed 2/6/90 - Santa Xxxxx Fire Department Permit
3. Internal Memo 3/2/90 Regional Water Quality Control Board/2 pages
4. Letter: 3/5/90 to Unisys from Pacific Environmental Group, Inc./4 pages
5. Table 1: Summary of Current Groundwater Laboratory Results/4 pages.
6. Letter: 6/11/90 to E2C, Inc. from Chips Environmental Consultants/16 pages
7. Letter: 6/28/90 to South Bay Construction and Development Company from E2C,
Inc./3 pages
8. Report: 6/29/90 Level II Environmental Site Assessment prepared by E2C,
Inc., previously forwarded to ASK 3/17/92
9. Television inspection location sheet dated 7/16/90-VCR tape available/2
pages
10. Letter: 7/19/90 to City of Santa Xxxxx from E2C, Inc./1 page
11. Progress report sanitary sewer line video and groundwater analysis dated
8/7/90 prepared by E2C, Inc./44 pages
12. Letter: 8/31/90 to South Bay Construction and Development Company from E2C,
Inc./3 pages
13. Television inspection location sheet dated 8/31/90-VCR tape available/2
pages
14. Letter: 10/19/90 to Prevention Bureau, Santa Xxxxx Fire Department from
Pacific Environmental Group, Inc./22 pages
15. Letter; 10/23/90 to South Bay Construction and Development Company from
Unisys/9 pages
16. Letter: 11/1/90 to South Bay Construction and Development Company from
Unisys/9 pages
17. Letter: 11/1/90 to Prevention Bureau, Santa Xxxxx Fire Department from
Pacific Environmental Group, Inc./8 pages
18. Letter: 11/21/90 to South Bay Construction and Development Company from
E2C, Inc./6 pages
19. Letter: 1/3/91 to South Bay/San Xxxxxx Associates from Unisys/2 pages
20. Memo: 1/29 91 to Xxxxxx Xxxxxxxxxxx from Pacific Environmental group,
Inc./41
-63-
pages
21. Fax: 2/11/91 to Unisys from E2C, Inc./7 pages
22. Final submittals-Xxxxxx Xxxxxxxxxxx-Asbestos/25 pages
23. Letter: 3/15/91 to Pacific Environmental Group from Xxxxxxx Environmental
Consultants/26 pages
24. Letter: 3/19/91 to E2C, Inc., from Pacific Environmental Group, Inc./16
pages
25. Letter: 3/21/91 to South Bay/San Xxxxx Associates from Unisys/16 pages
26. Letter: 3/21/91 to Unisys from Pacific Environmental Group, Inc./12 pages
27. Letter: 3/22/91 to South Bay Development Company from Unisys/2 pages
28. Fax: 4/4/91 to Pacific Environmental Group/1 page
29. Fax: 4/4/91 to Pacific Environmental Group/1 page
30. Fax: 4/8/91 from Pacific Environmental Group-Organic Analysis Data Sheets/8
pages
31. Fax: 4/10/91 from Pacific Environmental Group-Permits Santa Xxxxx Fire
Department/5 pages
32. Letter: 4/12/91 to San Francisco Regional Water Quality Control Board from
Unisys/81 pages
33. Letter: 4/23/91 to South Bay Development Company from Unisys/1 page
34. Letter: 5/21/91 to South Bay Development Company from Unisys/7 pages
35. Uniform Hazardous Waste Manifests 5/22/91/44 pages
36. Letter: 6/5/91 to Unisys from California Regional Water Quality Control
Board/2 pages
37. Report of Abatement Observation and Air Monitoring June 6, 1991 prepared by
Law Associates/66 pages
38. Letter. 6/20/91 to Unisys from Pacific Environmental Group, Inc./18 pages
39. Soil & Groundwater Assessment dated July 11, 1991, prepared by E2C, Inc.
40. Fax: 8/28/91 to SBC&D Co., from E2C, Inc./7 pages
41. Letter: 1/14/92 to California Regional Water Quality Control Board from
Unisys/8 pages
42. Letter: 1/14/92 to Unisys from Pacific Environmental Group, Inc./4 pages
-64-
43. Report: 1/20/92 Second and Third Quarter Split Sampling prepared by E2C,
Inc./121 pages
44. Letter: 2/3/92 from Unisys from California Regional Water Quality Control
Board/2 pages
45. Letter: 3/24/92 to South Bay Construction and Development from E2C, Inc./8
pages
46. Letter: 3/25/92 to Regional Water Quality Control Board from Unisys/12
pages
47. Report: 4/2/92 Installation of B-Zone Well prepared by E2C, Inc./53 pages
48. Report: 8/25/92 Phase I Environmental Assessments Building 14 prepared for
the ASK Companies by Environ Corporation
49. Letter: 11/10/92 to South Bay Development Company from Unisys/9 pages;
Justification for Removal
50. Letter: 12/11/92 to South Bay Construction and Development company from
E2C, Inc./3 pages
51. Letter 12/11/92 to South Bay Construction and Development Company from E2C,
Inc./4 pages
52. Letter: 12/11/92 to Regional Water Quality Control Board from Unisys/8
pages; Table-Unisys Monitoring Well Removal Notification
53. Letter: 12/14/92 to Regional Water Quality Control Board from E2C, Inc./4
pages
54. Letter: 12/21/92 to E2C, Inc. from California Regional Water Quality
Control Board/1 page
55. Letter: 12/28/92 to The ASK Companies from South Bay Construction and
Development Company/1 page
56. Letter: 1/22/93 to Regional Water Quality Control Board from Unisys/1 page
57. Fax: 3/29/93 to South Bay Construction and Development Company from E2C,
Inc./2 pages
58. Letter: 4/1/93 to South Bay/San Xxxxx from E2C, Inc./1 page
59. Letter: 4/8/93 to South Bay Construction and Development Company from E2C,
Inc./8 pages; Well Destruction Report
60. Letter: 6/15/93 to Regional Water Quality Control Board from Unisys/15
pages; Well Abandonment Report
61. Site Investigation Summary by Unisys Corporate Environmental Affairs dated
March 6, 1995
-65-
containing Report, Figures, Tables and Appendices A through D
62. Letter: 6/22/95 to Regional Water Quality Control Board from Unisys/21
pages
63. Letter: 9/11/95 to Regional Water Quality Control Board from Unisys/8 pages
64. Letter: 12/19/95 to South Bay Construction and Development Company from
Unisys/14 pages
65. Letter: 1/26/96 to California Regional Water Quality Control Board from
Unisys/21 pages
66. Fax: 4/10/96 to Xxxxx Xxxxxxxxx from Asbestos Control Center/13 pages
67. Report: 7/19/96 System Installation and Additional Investigation prepared
by Unisys Corporate Environmental Affairs
-66-
EXHIBIT "G"
Preliminary Title Report
------------------------
Santa Xxxxx Land Title Company ESCROW BRANCH:
-------------
PRELIMINARY REPORT 000 XXXXXX XXXXXX
ORDER NO. 00121233 XXX XXXX, XX 00000
(000) 000-0000 FAX (000) 000-0000
ESCROW OFFICER: XXX XXXXXXX
-----------------------------
TITLE & ADMINISTRATIVE SERVICES:
000 XXXXXX XXXXXX, XXX XXXX, XX 00000
(000) 000-0000 FAX (000) 000-0000
TITLE OFFICER: XXX XXXXXXX/MAL
REF. NO:
SOUTH BAY DEVELOPMENT
000 XXXXXXXX XXXXXX PROPERTY ADDRESS:
CAMPBELL, CALIF. 95008
ATTN: XXXXX XXXXXX
In response to the above referenced application for a policy of title insurance,
this Company reports that it is prepared to issue, or cause to be issued, as of
the date hereof, a Policy or Policies of Title Insurance describing the land and
the estate or interest therein hereinafter set forth, insuring against loss
which may be sustained by reason of any defect, lien or lien or encumbrance not
shown or referred to as an Exception herein or not excluded from coverage
pursuant to the printed Schedules, Conditions and Stipulations of said Policy
forms. The printed Exceptions and Exclusions from the coverage of said Policy
or Policies are set forth in Exhibit A attached.
Please read the exceptions shown or referred to below and the Exceptions and
Exclusions set forth in Exhibit A of this report carefully. The exceptions and
exclusions are meant to provide you with notice of matters which are not covered
under the terms of the title insurance policy and should be carefully
considered.
It is important to note that this preliminary report is not a written
representation as to the condition of title and may not list all liens, defects,
and encumbrances affecting title to the land. This report (and any supplements
hereto) is issued solely for the purpose of facilitating the issuance of a
policy of title insurance and no liability is assumed hereby. If it is desired
that liability be assumed prior to the issuance of a policy of title insurance,
a Binder or Commitment should be requested.
The form of policy of title insurance contemplated by this report is:
Dated as of October 2nd, 1996 at 7:30 a.m.
The estate or interest in the land hereinafter described or referred to covered
by this Report is:
A FEE as to Parcel Number(s) One
EASEMENT as to Parcel Number(s) Two, Three, Four and Five
-67-
Title to said estate or interest at the date hereof is vested in:
South Bay/San Xxxxx Associates, a California general partnership
At the date hereof exceptions to coverage in addition to the printed Exceptions
and Exclusions in said policy xxxx be those as shown on the following page.
-68-
1. TAXES for the fiscal year 1996-97, a lien, shown as follows:
1st Installment................... $31,135.14 Open
2nd Installment................... $31,135.14 Open
Assessor's Parcel No. 000-00-000.. Code Area 07-059
Land $5,837,028.00............... IMP NONE PP NONE Exempt NONE
2. The lien of supplemental taxes, if any, assessed pursuant to the provisions
of Chapter 3.5, (commencing with Section 75) to the Revenue and Taxation
Code of the State of California.
3. The fact that the ownership of said land does not include any right of
ingress or egress to or from the highway contiguous thereto, said right
having been relinquished by deed,
From: Memorex Corporation
To: City of Santa Clara, California a municipal corporation
Recorded: January 20, 1970 in Book 8804, Page 535, Official Records
Except: described as follows:
Beginning at point "D" as therein described and running thence from a
tangent bearing S. 73 19' 17" W. on a curve to the right with a radius of
112.81 feet through an angle of 30 50' 40" for a distance of 60.73 feet to
a point.
(Affects a portion of the premises' Central Expressway frontage)
4. An Agreement, affecting said land, for the purposes stated herein and
subject to the terms, covenants, conditions, restrictions, and easements,
if any, contained therein
For: Agreement Regarding Separation of Certain Utilities
Dated: September 11, 1990
Executed by: City of Santa Xxxxx, a California municipal corporation and
Xxxxxx Xxxxxxxxxxx, a Delaware corporation
Recorded: September 19, 1990 in Book L 483, Page 0989, Official Records.
5. Covenants, conditions and restrictions in the deed,
Recorded: October 15, 1990 in Book L 508, Page 283, Official Records
Restrictions, if any, based upon race, color, religion, sex, handicap,
familial status, or national origin are deleted.
Said covenants, conditions and restrictions do not provide for reversion of
title in the event of a breach thereof.
Which provides that a violation thereof shall not defeat or render invalid
the lien of any mortgage or deed of trust made in good faith and for value.
-69-
Reference to the records is hereby made for further particulars.
6. An easement affecting the portion of said land and for the purpose stated
herein and incidental purposes,
In Favor Of: Xxxxxx Xxxxxxxxxxx, a Delaware corporation
For: ingress and egress
Recorded: October 15, 1990 in Book L 508, Page 0283, Official Records
Affects: Over Parcel 2, for the benefit of Parcel 1, as shown on the
Parcel Map filed for record on September 19, 1990 in Book
618 of Maps, Pages 36, 37 and 38.
7. Matters in an instrument which among other things, provided for the
reciprocal exchange of rights and easements, limitations, covenants,
conditions and restrictions,
Executed by: Southbay/San Xxxxx Associates, a California general
partnership and Xxxxxx Xxxxxxxxxxx, a Delaware corporation
Recorded: October 15, 1990 in Book L 508, Page 301, Official Records.
Among other things said instrument, in part, provides for an easement or
easements affecting the portion of said land and for the purpose stated
herein and incidental purposes,
In favor of: Xxxxxx Xxxxxxxxxxx, a Delaware corporation
(A) For: ingress and egress
Affects: That portion designated Ingress and Egress Easement over
Parcel 2 of the benefit of Parcel 1, as shown upon the
Parcel Map filed for record September 19, 1990 in Book 618
of Maps, pages 36 thru 38.
(B) For: Surface water drainage rights
Affects: All of Parcel 2, as shown upon Parcel map filed for record
September 19, 1990 in Book 618 Maps, pages 36 thru 38,
Santa Xxxxx County Records
(Affects Parcel One)
8. An easement affecting the portion of said land and for the purpose stated
herein and incidental purposes, shown or dedicated by the map herein
referred to:
(A) For: Private Ingress and Egress Easement
Affects: as shown upon said Map
(B) For: Private landscape Easement
Affects: as shown upon said Map
(C) For: Light and Air (designated as Building setback line)
Affects: as shown upon said Map
-70-
(D) For: Emergency Vehicle Ingress and Egress Easement
Affects: as shown upon said Map
9. Matters in an instrument which among other things, provides for the
reciprocal exchange of rights and easements, limitations, covenants,
conditions and restrictions,
Executed by: South Bay/San Xxxxx Associates, a California general
partnership
For: Development of the Plan
Recorded: May 13, 1993 in Book M 775, Page 1281, Official Records
10. Rights of parties in possession of said land by reason of unrecorded
leases, or rental agreements, if any.
11. Any facts, rights, interests or claims which a correct survey would show.
12. The requirement that this company be provided with evidence that CIIF
Associates II, Limited Partnership, a Delaware Limited Partnership remains
in existence and is in compliance with the Revised Limited Partnership Act
of the State of California. Whether said partnership has or has not elected
to be governed by said act, a Certificate of Limited Partnership must be
filed in the Office of the Secretary of State as required by said act and
this company requires that a certified copy thereof be recorded in the
Office of the Recorder of the County of Santa Xxxxx.
NOTES:
a. Date last insured: 10/15/1990
b. This report does not reflect requests for notice of default, requests for
notice of delinquency, subsequent transfers of easements, and similar
matters not germane to the issuance of the policy of title insurance
anticipated hereunder.
c. If this company is requested to disburse funds in connection with this
transaction, Chapter 598 of 1989 Mandates of the California Insurance Code
requires hold periods for checks deposited to escrow or sub-escrow
accounts. Such periods vary depending upon the type of check and
anticipated methods of deposit should be discussed with the escrow officer.
d. No endorsement issued in connection with the policy and relating to
covenants, conditions or restrictions provides coverage for environmental
protection.
-71-
e. Title of the vestee herein was acquired by Deed--
Grantor: Xxxxxx Xxxxxxxxxxx, a Delaware corporation
Grantee: South Bay/San Xxxxx Associates, a California general
partnership
Recorded: October 15, 1990 in Book L 508, Page 0283, Official
Records
f. The Records of Santa Xxxxx County Recorder's Office disclose that a
Statement of General Partnership has been recorded as follows--
Name: South Bay/San Xxxxx Association
Recorded: June 7, 1996 in Book P 365, Page 2094, Official Records
General Partners: CIIF Associates II Limited Partnership, a Delaware
limited partnership and CIIF II Holding Corp., a
Massachusetts corporation
-72-
SCHEDULE C
LEGAL DESCRIPTION
All that certain real property situated in the City of Santa Xxxxx, County of
Santa Xxxxx, State of California, described as follows:
PARCEL ONE:
Parcel 1, as shown on that certain Parcel Map filed for record in the Office of
the Recorder of the County of Santa Xxxxx State of California on May 13, 1993 in
Book 646 of Maps, Pages 46 thru 49.
RESERVING THEREFROM an easement for ingress and egress and for Emergency Vehicle
Ingress and Egress for the benefit of Parcel 2, as shown and designated P.I.E.E.
and E.V.I.E.E. established herein to benefit Parcel 2 on the map hereinabove
referred to.
Reserving therefrom an easement for Landscape purposes for the benefit of Parcel
2, as shown and designated as P.L.E. established herein to benefit Parcel 2 on
the map herein above referred to.
PARCEL TWO:
An easement for ingress and egress over Parcel 1, of Parcel Map filed for record
on September 19, 1990 in Book 618 of Maps, Pages 36, 37 and 38, shown as
Ingress-Egress over Parcel 1 for the benefit of Parcel 2, as reserved in the
Deed recorded October 15, 1990 in Book L 508, Page 283, Official Records.
PARCEL THREE:
An easement for storm drain over all those portions of Parcel 2, designated "10'
S.D.E. Established Hereon To Benefit Parcel 1", as shown on the Parcel Map filed
for record in the Office of the Recorder of the County of Santa Xxxxx, State of
California on May 13, 1993 in Book 646 of Maps, Pages 46 thru 49, pursuant to
that certain Declaration of Covenants, Conditions, Restrictions and Easements
recorded May 13, 1993 in Book M 775, Page 1281, Official Records.
PARCEL FOUR:
An easement for sanitary sewer over that portion of Parcel 4, designated "15' x
438.12' P.S.S.E. Established Hereon To Benefit Parcels 1 and 2", as shown on the
Parcel Map filed for record in the Office of the Recorder of the County of Santa
Xxxxx, State of California on May 13, 1993 in Book 646 of Maps, Pages 46 thru
49, pursuant to that certain Declaration of Covenants,
-73-
Conditions, Restrictions and Easements recorded May 13, 1993 in Book M 775, Page
1281, Official Records.
PARCEL FIVE:
An easement for sanitary sewer over all those portions of Parcel 2, designated
P.S.S.E. Established Hereon To Benefit Parcel 1", as shown on the Parcel Map
filed for record in the Office of the Recorder of the County of Santa Xxxxx,
State of California on May 13, 1993 in book 646 of Maps, Pages 46 thru 49,
pursuant to that certain Declaration of Covenants, Conditions, Restrictions and
Easements recorded May 13, 1993 in Book M 775, Page 1281, Official Records.
ARB No: 000-00-000
-74-
PARCEL MAP
----------
Consisting of Four Sheets
Being all of Parcel 2, Book 618, Pages 36 38
Santa Xxxxx County Records and a Portion of
The Northwest Quarter of Section 34
Township 6 South, Range 1 West
Mount Doable Base & Meridian
(and Graphical Depiction of Same)
-75-
EXHIBIT "A"
LIST OF PRINTED EXCEPTIONS AND EXCLUSIONS
--------------------------------------------------------------------------------
NOTE: This Exhibit reflects the matters which are excluded and excepted from
coverage in the 1990 CLTA Standard Coverage Policy and the 1992 ALTA
Extended Coverage Loan Policy with ALTA endorsement Form 1 Coverage. If
the issuance of any other type of policy is anticipated, the escrow
officer should be contacted to determine the applicable exclusions and
exceptions.
--------------------------------------------------------------------------------
1992 AMERICAN LAND TITLE ASSOCIATION EXTENDED COVERAGE LOAN POLICY
WITH ALTA ENDORSEMENT FORM 1 COVERAGE
EXCLUSIONS FROM COVERAGE
1. (a) Any law, ordinance or governmental regulation (including but not
limited to building and zoning laws, ordinances, or regulations)
restricting, regulating, prohibiting or relating to (i) the occupancy,
use, or enjoyment of the land; (ii) the character, dimensions or
locations of any improvement now or hereafter erected on the land;
(iii) a separation in ownership or a change in the dimensions or area
of the land or any parcel of which the land is or was a part; or (iv)
environmental protection, or the effect of any violation of these
laws, ordinances or governmental regulations, except to the extent
that a notice of the enforcement thereof or a notice of a defect, lien
or encumbrance resulting from a violation or alleged violation
affecting the land had been recorded in the public records at Date of
policy.
(b) Any governmental police power not excluded by (a) above, except to the
extent that a notice of the exercise thereof or a notice of a defect,
lien or encumbrance resulting from a violation or alleged violation
affecting the land has been recorded in the public records at date of
policy.
2. Rights of eminent domain unless notice of the exercise thereof has
been recorded in the public records at date of policy, but not
excluding from coverage any taking which has occurred prior to Date of
policy which would be binding on the rights of a purchaser for value
without knowledge.
3. Defects, liens, encumbrances, adverse claims or other matters:
(a) created, suffered, assumed or agreed to by the insured claimant;
(b) not known to the Company, not recorded in the public records at date
of policy, but known to the insured claimant and not disclosed in
writing to the Company by the insured claimant prior to the date the
insured claimant became an insured under this policy;
(c) resulting in no loss or damage to the insured claimant;
(d) attaching or created subsequent to date of policy (except to the
extent that this policy insures the priority of the lien of the
insured mortgage over any statutory liens for services, labor or
materials, or to the extent insurance is afforded herein as to
assessments for street improvements under construction or completed at
date of policy); or
(e) resulting in loss or damage which would not have been sustained if the
insured claimant had paid value for the insured mortgage.
4. Unenforceability of the lien of the insured mortgage because of the
inability or failure of the insured at date of policy, or the
inability or failure of any subsequent owner of the indebtedness, to
comply with applicable doing business laws of the state in which the
land is situated.
5. Invalidity or unenforceability of the lien of the insured mortgage, or
claim thereof, which arises out of the transaction evidenced by the
insured mortgage and is based upon usury or any consumer credit
protection or truth-in-lending law.
6. Any statutory lien for services, labor or materials (or the claim or
priority of any statutory lien for services, labor or materials over
the lien of the insured mortgage) arising from the improvement or work
related to the land which is contracted for and commenced subsequent
to date of policy and is not financed in whole or in part by proceeds
of the indebtedness secured by the insured mortgage which at date of
policy the insured has advanced or is obligated to advance.
7. Any claim, which arises out of the transaction creating the interest
of the mortgagee insured by this policy, by reason of the operation of
federal bankruptcy, state insolvency or similar creditors' rights laws
that is based on
(i) the transaction creating the interest of the insured mortgagee being
deemed a fraudulent conveyance or fraudulent transfer; or
(ii) subordination of the interest of the insured mortgagee as the result
of the application of the doctrine of equitable subordination; or
(iii) the transaction creating the interest of the insured mortgagee being
deemed a preferential transfer accept where the preferential transfer
results from the failure;
(a) to timely record the instrument of transfer; or
(b) of such recordation to impart notice to purchaser for value or a
judgment or lien creditor.
-76-
EXHIBIT "A" CONTINUED
CALIFORNIA LAND TITLE ASSOCIATION STANDARD COVERAGE POLICY 1990
EXCLUSIONS FROM COVERAGE
1. (a) Any law, ordinance or governmental regulation (including but not
limited to building and zoning laws, ordinances, or regulations)
restricting regulating, prohibiting or relating to (i) the occupancy,
use, or enjoyment of the land; (ii) the character, dimensions or
locations of any improvement now or hereafter erected on the land;
(iii) a separation in ownership or a change in the dimensions or area
of the land or any parcel of which the land is or was a part; or (iv)
environmental protection, or the effect of any violation of these
laws, ordinances or governmental regulations, except to the extent
that a notice of the enforcement thereof or a notice of a defect, lien
or encumbrance resulting from a violation or alleged violation
affecting the land had been recorded in the public records at date of
policy.
(b) Any governmental police power not excluded by (a) above, except to the
extent that a notice of the exercise thereof or a notice of a defect,
lien or encumbrance resulting from a violation or alleged violation
affecting the land has been recorded in the public records at date of
policy.
2. Rights of eminent domain unless notice of the exercise thereof has
been recorded in the public records at date of policy, but not
excluding from coverage any taking which has occurred prior to date of
policy which would be binding on the rights of a purchaser for value
without knowledge.
3. Defects, liens, encumbrances, adverse claims or other matters:
(a) whether or not recorded in the public records at date of policy, but
created, suffered, assumed or agreed to by the insured claimant;
(b) not known to the Company, not recorded in the public records at date
of policy, but known to the insured claimant and not disclosed in
writing to the Company by the insured claimant prior to the date the
insured claimant became an insured under this policy;
(c) resulting in no loss or damage to the insured claimant;
(d) attaching or created subsequent to date of policy; or
(e) resulting in loss or damage which would not have been sustained if the
insured claimant had paid value for the insured mortgage or the estate
of interest insured by this policy.
4. Unenforceability of the lien of the insured mortgage because of the
inability or failure of the insured at date of policy, or the
inability or failure of any subsequent owner of the indebtedness, to
comply with applicable doing business laws of the state in which the
land is situated.
5. Invalidity or unenforceability of the lien of the insured mortgage, or
claim thereof, which arises out of the transaction evidenced by the
insured mortgage and is based upon usury or any consumer credit
protection or truth-in-lending law.
6. Any claim, which arises out of the transaction vesting in the insured
the estate or interest insured by this policy or the transaction
creating the interest of the insured lender, by reason of the
operation of federal bankruptcy, state insolvency or similar
creditors' rights laws.
--------------------------------------------------------------------------------
EXCEPTIONS FROM COVERAGE
1. Taxes or assessments which are not shown as existing liens by the
records of any taxing authority that levies taxes or assessments on
real property or by the public records. Proceedings by a public agency
which may result in taxes or assessments, or notices of such
proceedings, whether or not shown by the records of such agency or by
the public records.
2. Any facts, rights, interests or claims which are not shown by the
public records but which could be ascertained by an inspection of the
land or which may be asserted by persons in possession thereof.
3. Easements, liens or encumbrances, or claims thereof, which are not
shown by the public records.
4. Discrepancies, conflicts in boundary lines, shortage in area,
encroachments, or any other facts which a correct survey would
disclose, and which are not shown by the public records.
5. (a) Unpatented mining claims;
(b) reservations or exceptions in patents or in Acts authorizing the
issuance thereof;
(c) water rights, claims or title to water, whether or not the maters
excepted under (a), (b) or (c) are shown by the public records.
-77-
EXHIBIT "H"
CC&R's and Excluded Obligations
Under CC&R's Described in the Title Report
------------------------------------------
The documents referred to in the following specially enumerated exceptions
in the Title Report attached as Exhibit "G" to this Lease constitute the
-----------
"CC&R's" referred to in Paragraph 34 of the Lease. Pursuant to Paragraph 34 of
the Lease, except as otherwise stated below as being obligations of Landlord,
Tenant shall abide by and comply during the Lease Term with the obligations
stated below with respect to the documents listed below to the extent the
obligations arise from the ownership or occupancy of the Premises (and to the
extent they arise from Landlord's ownership of the Premises together with
Landlord's ownership of other property, then to the extent such obligations are
reasonably allocable to the Premises).
Exception No. 4 pertains to an Agreement Regarding Separation of Certain
Utilities between the City of Santa Xxxxx and Xxxxxx Xxxxxxxxxxx. Tenant shall
not be responsible for any obligations thereunder, with any obligations
affecting the Premises to be borne by Landlord.
Exception No. 5 pertains to a Grant Deed with Grant and Reservation of
Easements from Xxxxxx Xxxxxxxxxxx to Landlord. Tenant shall be responsible for
the obligations embodied therein as relate to the use by Tenant of the easements
which are reflected therein as appurtenances to the Premises.
Exception No. 7 pertains to a Declaration of Covenants, Conditions,
Restrictions and Easements between Landlord and Xxxxxx Xxxxxxxxxxx. Tenant
shall be responsible for the obligations thereunder pertaining to maintaining
ingress and egress easement areas located within the boundaries of the Premises
in the manner required by that Declaration and for the obligations not to
unreasonably interfere with the surface water drainage easement in favor of
Unisys over the Premises.
Exception No. 5 pertains to a Grant Deed with Reservation of Easement from
Xxxxxx Xxxxxxxxxxx to Landlord, which grants Xxxxxx Xxxxxxxxxxx certain rights
of access over the Premises associated with the operation of groundwater
monitoring xxxxx on the Property. Paragraph 2(b) of this document indicates
that the rights and obligations of the parties thereunder are set forth in and
are subject to certain terms and conditions in the Agreement of Purchase and
Sale and Escrow Instructions between Landlord and Xxxxxx Xxxxxxxxxxx. Tenant's
only obligation with regard to the easements reserved in this Grant Deed is not
to unreasonably interfere with the access of Unisys to any monitoring xxxxx that
may be hereafter placed upon the Property. Landlord shall be responsible under
this Lease to ensure that if any monitoring xxxxx are to be installed on the
Premises by Unisys, that they shall be installed in a manner which will not
unreasonably interfere with Tenant's use of the Premises and that Unisys
exercises its rights under this Grant Deed in manner not to unreasonably
interfere with Tenant's use of the Premises.
Exception No. 9 pertains to a Declaration of Covenants, Conditions,
Restrictions and Easements executed by Landlord. Tenant shall have the
obligations for maintenance of such easements and utilities as are located
within the boundaries of the Premises as referred to in this Declaration, and
the obligation to contribute the share of expenses (as provided therein) which
is allocable to the Premises associated with the costs of maintenance of the
easement areas on other parcels for the benefit of the Premises. As relates to
easements over, under or across the Premises for the benefit of other parcels,
Tenant shall have the right to obtain reimbursement from the owners of other
parcels for the cost of maintenance of the easements in accordance with the
terms of this Declaration, including recovery from Landlord to the extent it is
at such time the owner of any other parcel which is obligated to share in such
costs under this Declaration. Landlord shall cooperate with Tenant in any
collection efforts from other owners.
-78-
CAFETERIA USE AGREEMENT
THIS CAFETERIA USE AGREEMENT ("Agreement") is made effective as of July
15, 1998, by and between AUSPEX SYSTEMS, INC., a Delaware corporation
("Licensor"), and COVAD COMMUNICATIONS GROUP, INC., a Delaware corporation
("Licensee"), in the context of the following facts and circumstances:
A. Licensor, as tenant, is leasing from South Bay/San Xxxxx Associates, a
California general partnership, approximately 171,382 feet of leasable area
consisting of three (3) two (2) story buildings located on the Central
Expressway in the City of Santa Xxxxx, State California, together with related
driveways, parking areas and related fixtures and improvements (collectively,
the "Complex").
B. Licensor, as sublessor, and Licensee, as sublessee, have entered into a
Sublease Agreement of even date herewith (the "Sublease") for one (1) of the
three (3) buildings located within the Complex containing approximately 62,504
square feet of leasable area and commonly known as 0000 Xxxxxxx Xxxxxxxxxx,
Xxxxx Xxxxx, Xxxxxxxxxx (the "Sublease Premises").
C. Pursuant to the terms and conditions set forth below, Licensor has agreed
to allow Licensee to use the cafeteria located within the Complex.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
1. LICENSE AREA AND LOCATION. Licensor hereby grants to Licensee a non-
assignable, non-transferable right and revocable license to use of that certain
cafeteria (the "Cafeteria"), located on the first floor of the building commonly
referred to as Building A located at 0000 Xxxxxxx Xxxxxxxxxx, Xxxxx Xxxxx,
Xxxxxxxxxx, and shown on the floor plan attached hereto as EXHIBIT A. Licensor
reserves, in its sole and absolute discretion, the right from time to time to
make changes in the shape, size, location, structure, nature and extent of the
Cafeteria and services provided therein and suspend operations from time to time
2. TERM; RIGHT TO TERMINATE. The term of this Agreement (the "License Term")
will commence as of the date Licensee first occupies the Sublease Premises
pursuant to the Sublease (the "Commencement Date"), and will terminate on the
date which the Sublease terminates, unless sooner terminated (the "Termination
Date") pursuant to any of the following provisions:
(a) Licensor may terminate this Agreement by giving three (3) business
days written notice to Licensee if Licensee fails to observe or perform any
term, covenant, or condition of this Agreement or the Sublease.
(b) Licensor may terminate this Agreement by giving three (3) business
days written notice to Licensee if the Cafeteria is damaged or destroyed by
a fire or other casualty that makes it impracticable for Licensor to
continue to allow Licensee to use the Cafeteria.
(c) Licensor may terminate this Agreement by giving thirty (30) days
written notice to Licensee if Licensor, in Licensor's sole discretion,
discontinues operating the Cafeteria.
3. LICENSE FEE. Licensee shall not be required to pay a monthly fee for use
of the Cafeteria. Notwithstanding the foregoing, if at any time during the term
of this Agreement Licensor elects to subsidize the cost of food sold at the
Cafeteria for the benefit of Licensor's employees, such benefit shall not be
provided to Licensee or Licensee's employees who shall be required to pay the
full (unsubsidized) cost for food purchased at the Cafeteria.
4. USE. Licensee shall use the Cafeteria during the License Term only as a
cafeteria, as contemplated by this Agreement, and for no other purpose without
Licensor's prior written approval which may be withheld in Licensor's sole and
absolute discretion. Subject to Licensor's reasonable approval, Licensee may
use the Cafeteria for company meetings on a prescheduled and available basis.
Licensee's use of the Cafeteria shall be subject to rules and regulations
promulgated by Licensor from time to time.
Page 1 of 4
5. RULES OF CONDUCT. Licensee and its employees shall at all times use the
Cafeteria in compliance with the following provisions, which rules Licensor may
change from time to time in Licensor's sole discretion:
(a) Licensee shall at all times conduct its activities in or about the
Building in a professional and proper manner in accordance with Licensor's
rules and regulations.
(b) Licensee shall abide by Licensor's policies and procedures
regarding building access and security, which policies and procedures
Licensor may change from time to time in Licensor's sole discretion.
(c) Licensee shall access the Cafeteria during business hours only,
which shall be established by Licensor in its sole discretion.
6. INDEMNIFICATION OF LICENSOR. Licensee shall, at its sole cost and
expense, indemnify, protect, defend (with counsel acceptable to Licensor) and
hold harmless Licensor, its partners, shareholders, officers, directors,
attorneys, agents, beneficiaries, employees, affiliates, contractors, and
related entities (collectively, "Licensor's Related Parties") from and against
all liabilities, obligations, damages, penalties, claims, costs, charges and
expenses, including reasonable attorneys' fees, which may arise in any manner
out of or in connection with (i) Licensee's use of the Cafeteria; (ii) any act
or omission of Licensee or Licensee's partners, shareholders, officers,
directors, attorneys, agents, beneficiaries, employees, affiliates, contractors,
and related entities (collectively, "Licensee's Related Parties"); and/or (iii)
any breach by Licensee under this Agreement; provided, however, Licensee shall
have no obligation to defend or indemnify Licensor from claims which are caused
by the sole negligence or willful acts of Licensor or Licensor's Related
Parties.
7. WAIVER OF RESPONSIBILITY. Licensor and Licensor's Related Parties shall
not be liable for, and Licensee waives, all claims for loss or damage or injury
to person or property sustained by Licensee or any person claiming by, through,
or under Licensee, resulting from any accident or occurrence in, on or about the
Cafeteria, including, without limitation, claims for loss, theft or damage
resulting from: (i) any furnishings or other equipment or appurtenances being
in disrepair; (ii) any defect in or failure to operate, for whatever reason, any
equipment or facilities in Cafeteria; (iii) any act, omission or negligence of
other licensees, any other users or occupants of the Complex, any of Licensor's
employees, or the public; or (iv) any other cause of any nature. To the maximum
extent permitted by law, Licensee agrees to use the Cafeteria at Licensee's own
risk.
8. WAIVER OF RIGHT OF RECOVERY. Licensee (for itself and its insureds)
hereby releases and waives all right of recovery which it might otherwise have
(including rights of subrogation) against Licensor and Licensor's Related
Parties by reason of any loss or damage resulting from any recovery, claim,
action or cause for damages or injury or other occurrence no matter how caused,
to the extent that the same is covered by Licensee's insurance.
9. DEFAULT. Each party may exercise any remedy available to it at law or in
equity upon the other party's breach or default of this Agreement, and the
rights, remedies, and benefits provided by this Agreement and by law are
cumulative and nonexclusive. In the event of any action or other proceeding to
interpret or enforce this Agreement, the prevailing party shall be entitled to
recover its reasonable attorney's fees from the other party.
10. MISCELLANEOUS PROVISIONS. This Agreement may be modified only in writing
by Licensor and Licensee. This Agreement shall be governed by the laws of the
State of California. This Agreement shall not be strictly construed against the
party preparing it, but shall be construed as if all parties prepared this
Agreement jointly upon the advice of their respective legal counsel. If any
provision in this Agreement is held by any court to be invalid, void or
unenforceable, the remaining provisions shall nevertheless continue in full
force and effect. Waiver by Licensor of any breach of any term, covenant or
condition herein contained shall not be deemed a waiver of any subsequent breach
of the same or any other term, covenant or condition herein contained. Time is
of the essence of this Agreement and of every term, covenant and condition
hereof.
11. DELIVERY BY COUNTERPARTS AND FACSIMILES. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original and which
together shall constitute
Page 2 of 4
one and the same instrument. Each party may execute and deliver this instrument
by facsimile, and facsimiles of signatures shall be deemed original signatures
for all purposes, but each party executing and delivering this instrument by
facsimile shall also send the other party an original of this instrument
containing such party's ink signature.
IN WITNESS WHEREOF, the parties have executed this Agreement on the respective
dates set forth below.
"Licensor"
AUSPEX SYSTEMS, INC.,
a Delaware corporation
By: /s/ X. Xxxxxxxx Case
-------------------------------------
Title: VP & CFO
----------------------------------
Date Signed: 6 July 98
----------------------------
"Licensee"
COVAD COMMUNICATIONS GROUP, INC.,
a Delaware corporation
By: /s/ Xxxxxxx Xxxxx
-------------------------------------
Title: CFO
----------------------------------
Date Signed: 7/6/98
----------------------------
Page 3 of 4
CAFETERIA USE AGREEMENT
Exhibit A
[Diagram showing the floor plan of the first floor of Building A located at 0000
Xxxxxxx Xxxxxxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx and the cafeteria located thereon.]
Page 4 of 4
