EXHIBIT 10.10
LEASE
Between
LOS ALTOS - EL CAMINO ASSOCIATES, LLC,
a California limited liability company
LANDLORD
and
RAMBUS INC.,
a Delaware corporation
TENANT
DATED: August 27, 0000
Xxx Xxxxx, Xxxxxxxxxx
LEASE SUMMARY
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Parties:
Landlord: Los Altos - El Camino Associates,
a California limited liability company
Tenant: Rambus Inc., a Delaware corporation
Premises: 0000-0000 Xx Xxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx
(address subject to change)
Floor Area: Approximately 96,000 rentable square feet
Scheduled Term Commencement
Date: Date of Landlord's acquisition of title to
Premises
Expiration Date: Ten (10) years after Rent Commencement Date,
subject to Tenant's right to extend term for up
to two (2) periods of five (5) years each
Rent Commencement Date: Sooner of (i) ninety (90) days after Substantial
Completion of Landlord's Work, and (ii)
Substantial Completion of Tenant Improvements and
receipt by Tenant of occupancy permit
Rent: Initially $3.35 per square foot per month,
increased annually by 3% of preceding year's Base
Rent
Security Deposit: Letter of Credit initially in the amount of
$2,500,000, subject to reduction to $1,200,000
upon first anniversary of Rent Commencement Date,
and subject to further reduction to $600,000 upon
second anniversary of Rent Commencement Date
Option(s) to Extend: Two (2) options to extend for five (5) years each
TABLE OF CONTENTS
PAGE
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1. Premises............................................................... 1
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2. Term and Delivery of Possession........................................ 3
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3. Rent................................................................... 4
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4. Security Deposit....................................................... 8
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5. Taxes.................................................................. 9
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6. Use.................................................................... 11
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7. Operating Expenses..................................................... 15
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8. Maintenance and Repairs................................................ 17
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9. Alterations............................................................ 18
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10. Mechanics' Liens....................................................... 20
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11. Utilities.............................................................. 20
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12. Indemnity.............................................................. 20
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13. Waiver of Claims....................................................... 21
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14. Insurance.............................................................. 21
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15. Damage or Destruction.................................................. 23
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16. Condemnation........................................................... 25
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17. Assignment and Subletting.............................................. 26
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18. Default by Tenant...................................................... 28
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19. Default by Landlord.................................................... 30
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20. Advertisements and Signs............................................... 30
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21. Entry by Landlord...................................................... 30
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22. Subordination and Attornment........................................... 31
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23. Estoppel Certificates and Financial Statements......................... 32
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24. Notices................................................................ 32
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25. Waiver................................................................. 32
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26. No Accord and Satisfaction............................................. 32
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27. Attorney's Fees........................................................ 32
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28. Surrender.............................................................. 33
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29. Holding Over........................................................... 33
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30. Transfer of Premises by Landlord....................................... 33
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31. Rules and Regulations of Building...................................... 33
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32. General Provisions..................................................... 34
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EXHIBITS
Exhibit "A-1" -------- Site Plan of Original Parcel
Exhibit "A-2" -------- Legal Description of Original Parcel
Exhibit "A-3" -------- Plan of Parking Garage Showing Portion of
First Level of Parking Garage for Exclusive
Use of Tenant, and Showing Second Level
Exhibit "B" -------- Landlord's Work and Tenant Improvements
Exhibit "B-1" -------- Description of Landlord's Work
Exhibit "B-2" -------- List of Certain Tenant Improvements Items
Exhibit "B-2" -------- Approved Tenant Improvements Plans
Exhibit "C" -------- Baseline Environmental Reports
Exhibit "D" -------- Tenant Improvements Depreciable by Landlord
(to be attached)
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LEASE
This Lease is made and entered into as of August 27, 1999 (the "Effective
Date"), by and between LOS ALTOS - EL CAMINO ASSOCIATES, LLC, a California
limited liability company ("Landlord"), whose address is c/o Sand Hill Property
Company, 00 Xxxx 0xx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, and RAMBUS INC., a
Delaware corporation ("Tenant"), whose present address is 0000 Xxxxxx Xxxxxx,
Xxxxxxxx Xxxx, Xxxxxxxxxx and whose address from and after the Rent Commencement
Date (as defined below) for purposes of notices shall be the address assigned by
the U.S. Postal Office to the Premises.
Landlord and Tenant agree to the provisions of this Lease, as follows:
1. Premises.
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1.1 Lease of Premises. Subject to the provisions set forth below,
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Landlord hereby leases to Tenant and Tenant hereby leases from Landlord for the
term, at the rental, and upon all of the other terms, covenants and conditions
set forth herein, that certain 3-story building (the "Building") containing
approximately 96,000 square feet of floor space to be constructed within the
area of land encompassed by the parcel of land comprising an aggregate of
approximately 2.9 acres of land situated in the City of Los Altos, County of
Santa Xxxxx, State of California, shown on the site plan attached as Exhibit "A-
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1" hereto and more particularly described in the legal description attached as
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Exhibit "A-2" hereto (the "Original Parcel"). The Building shall be constructed
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in approximately the location shown on Exhibit "A-1" attached hereto. As of the
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Effective Date, Landlord does not own the Original Parcel, but Landlord's
acquisition of the Original Parcel shall be a condition to the continued
effectiveness of the Lease as more particularly set forth in Paragraph 2.2
below. Concurrently with Landlord's acquisition of the Original Parcel,
Landlord intends to acquire that certain parcel of land (the "Second Parcel")
located to the southwest of the Original Parcel and separated from the Original
Parcel by an approximately 80 foot strip of land, which Second Parcel and strip
of land are also shown on Exhibit "A-1" attached hereto. Subsequent to the
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Effective Date, Landlord intends to subdivide the Original Parcel to accommodate
development of the Building on a single parcel which comprises only a portion of
the Original Parcel (the "Office Parcel") and development of other buildings
which may include a hotel on one or more separate parcels comprising a portion
of the Original Parcel (collectively, the "Remainder Parcel") and the Second
Parcel. As of the Effective Date, Landlord anticipates that the Office Parcel
will consist of approximately 1.44 acres of the Original Parcel, but Landlord
shall be entitled to subdivide the Original Parcel in such a fashion that the
Office Parcel is the minimum size for development of the Building thereon which
the City of Los Altos is willing to permit, or alternatively if Landlord so
chooses in its sole and absolute discretion the Office Parcel is any greater
area of land permitted by the City of Los Altos. In all events, Landlord shall
not construct on the Office Parcel any buildings other than the Building, except
for the Parking Garage (defined below). Effective concurrently with recordation
of a final subdivision map or parcel map creating the Office Parcel, or upon
approval by the City of Los Altos of a lot line adjustment modifying the
existing lot lines separating the Original Parcel from the Second Parcel to
create the Office Parcel and recordation thereof in the Official Records of
Santa Xxxxx County, the parcel of land on which the Building is constructed
shall be deemed reduced to only the Office Parcel. The portion of the Office
Parcel which, after construction of the Building and subdivision of the Original
Parcel into the Office Parcel and the Remainder Parcel, is not covered by the
Building is hereinafter called the "Outside Areas." The parties acknowledge
that this Lease is (i) a build to suit lease and that as of the Effective Date,
the Building, the Parking Garage, and related improvements on the Office Parcel
do not yet exist, but will be constructed prior to the Rent Commencement Date as
provided in this Lease, and (ii) a lease of the Building only, and not a lease
of any land underlying or surrounding the same or of the Parking Garage
(although Tenant shall have certain rights to use the Outside Areas and Parking
Garage as set forth in Paragraph 1.3 below). Landlord and Tenant shall work
together in trying to obtain a permanent address for the Building which address
is suitable to Tenant from among the choices, if any, therefor made available by
the governmental entity (e.g. U.S. Post Office) in charge of assigning addresses
for the improvements developed on the Original Parcel and the Second Parcel.
Landlord acknowledges that Tenant desires the address of 0000 Xx Xxxxxx Xxxx if
such choice is available.
1.2 Building Square Feet. The number of square feet in the Building
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(the "Building Square Feet") shall be determined promptly after Substantial
Completion of Landlord's Work (as defined in Exhibit "B").
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The Building Square Feet, for purposes of this Lease, shall be equal to the
gross square feet of floor area on all floors within the Building, measured from
the exterior surface of the exterior walls of the Building for each such floor.
Such measurement shall not include within Building Square Feet the area outside
the exterior walls of the Building situated within balconies or under roof
overhangs, but shall include (i) the entire floor plate for each floor of the
Building measured as though the floor plate for such floor is a horizontal plane
encompassing the entire area bounded by the exterior surfaces of the exterior
walls of the Building, with absolutely no exclusions from Building Square Feet
for any interior areas whatsoever including without limitation mechanical rooms,
electrical rooms, interior elevators, stairwells, or other vertical
penetrations, and (ii) the area within recessed areas on the exterior of the
Building such as windows, entryways and doorways. Landlord shall cause its
architect for Landlord's Work to determine and certify to Tenant and Landlord in
writing the total Building Square Feet promptly upon Substantial Completion of
Landlord's Work. The number of Building Square Feet so determined shall be
deemed conclusively to be the number of Building Square Feet for all purposes
under this Lease, provided that such number shall be no less than 91,000 square
feet and no more than 101,000 square feet as provided in Exhibit "B."
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1.3 Outside Areas, Driveways, and Parking Garage. During the Term,
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and subject to the provisions of this Lease, Tenant shall have the exclusive
right to use all portions of the Outside Areas, including all surface level
parking areas within the Outside Areas. Notwithstanding the preceding sentence,
and regardless whether the same are situated not only on the Office Parcel but
also on any portion of the Remainder Parcel and the Second Parcel, during the
Term (i) Tenant shall have a nonexclusive right to use the "north" driveway
providing access from El Camino Real to the Parking Garage to be situated
approximately as shown on Exhibit "A-1", and an exclusive right to use the ramp
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leading from such driveway into the Parking Garage, and (ii) Tenant shall have a
nonexclusive right to use the "south" driveway providing access from El Camino
Real to the Parking Garage situated as shown on Exhibit "A-1." Furthermore, in
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the event the patio area shown on Exhibit "A-1" (the "Patio Area") is built,
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during the Term Tenant shall have an exclusive right to use the same even though
the Patio Area may be situated on the Remainder Parcel rather than the Office
Parcel. Subject to the provisions of Exhibit "B", Landlord shall construct a
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two-level underground parking garage situated under some or all of the Office
Parcel and under some or all of the Remainder Parcel in approximately the
location shown on Exhibit "A-1" (the "Parking Garage"). Subject to the
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provisions of this Lease, Tenant and its employees and customers shall also have
exclusive rights to park in the following portions of the Parking Garage: (i) a
portion of the top or first underground level of the Parking Garage as shown on
Exhibit "A-3", and (ii) the entire bottom or second underground level of the
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Parking Garage. Tenant shall have the nonexclusive right to use the ramps and
vehicle circulation areas of both levels of such parking garage. The
nonexclusive rights referred to in this paragraph shall be in common with the
rights of Landlord, tenants and other occupants of improvements from time to
time existing on the Remainder Parcel and the Second Parcel, and their
respective employees, agents, and other invitees, and further shall be subject
to such rights as the local fire department and other governmental agencies may
require with respect to use thereof. Tenant and its employees and other invitees
shall not park in any portions of the Parking Garage except the portion with
respect to which Tenant has exclusive parking rights as set forth above.
Landlord shall not be obligated to tow cars or otherwise enforce Tenant's
exclusive use and/or parking rights in the Outside Areas, the Patio Area, or the
Parking Garage, and Tenant shall be solely responsible for enforcing the same.
Except for Landlord's grant of parking rights to Tenant and its employees and
customers as set forth in this paragraph, and except as required by Laws (e.g.,
with respect to the fire department and police), Landlord shall not grant to any
entities rights to park in the Outside Areas or in the portion of the Parking
Garage which is subject to Tenant's exclusive parking rights. Landlord in its
sole discretion shall be entitled to establish the precise location, size, and
configuration of such driveways, the Parking Garage, the Outside Areas, and the
Patio Area, and to change the size, configuration, and improvements within the
Outside Areas and the Patio Area from time to time, and to replace, remove, and
or add to landscaping therein. Landlord shall be entitled from time to time
temporarily to prevent public access to all or any portion of the Outside Areas,
such driveways, and the Parking Garage in order to prevent a public dedication
thereof, and in connection therewith shall use reasonable efforts to minimize
any disruption of Tenant's use of such facilities. Additional provisions
regarding Tenant's use of the Outside Areas, such driveways, the Patio Area and
the Parking Garage are set forth in Paragraph 6.1(b) below. Nothing in this
paragraph shall be construed to obligate Landlord to build the Patio Area.
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2. Term and Delivery of Possession.
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2.1 Term. The term of this Lease (the "Term") shall commence on the
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date (the "Commencement Date") Landlord acquires fee title to the Original
Parcel as evidenced by recordation of a deed conveying fee simple title to
Landlord in the Official Records of Santa Xxxxx County, and shall continue
thereafter until the date which is ten (10) years after the Rent Commencement
Date (as defined in Paragraph 3.1 below) (the "Initial Term"), unless extended
pursuant to Paragraph 2.3 or sooner terminated pursuant to the provisions of
this Lease or Laws. Landlord shall deliver possession of the Premises to Tenant
upon Substantial Completion of Landlord's Work in order to permit Tenant to
construct and install the Tenant Improvements in accordance with Exhibit "B".
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Prior to Substantial Completion of Landlord's Work, Tenant shall be entitled to
enter onto the Premises to take measurements and to inspect the same subject to
coordination with Landlord as to the timing of such entries to prevent any
interruption or delay of Landlord's Work, and subject to the following sentences
shall not enter onto the Premises for any other purpose. If prior to
Substantial Completion of Landlord's Work Landlord determines in its reasonable
discretion that Tenant's construction of the Tenant Improvements will not
interfere with Landlord's schedule for completion of Landlord's Work, Landlord
shall notify Tenant thereof. Tenant shall thereupon be entitled to commence and
pursue construction of the Tenant Improvements (or such components thereof as
Landlord expressly permits) in the Premises even though Substantial Completion
of Landlord's Work has not yet occurred, provided that Tenant coordinates its
construction work with Landlord so as to avoid interference with Landlord's Work
remaining to be performed. In conjunction with any such early entry onto the
Premises by Tenant to conduct Tenant Improvements work, Tenant shall use union
labor for all of its work (other than with respect to customary Tenant
contracted outfitting vendors such as furniture installers) prior to Substantial
Completion of Landlord's Work if Landlord is using union labor so as to avoid
labor disputes (and similarly shall use nonunion labor if all of Landlord's work
force for Landlord's Work is nonunion labor). Tenant shall not occupy the
Premises for purposes of conducting its regular business thereon until (i)
Substantial Completion of the Tenant Improvements has been achieved, and (ii)
Tenant has obtained all permits and approvals required by applicable
governmental authorities permitting Tenant to use and occupy the Premises.
Promptly after the Rent Commencement Date has occurred, Landlord and Tenant
shall sign a written acknowledgment of the Commencement Date and the Rent
Commencement Date and the scheduled expiration date of the Initial Term ten (10)
years after the Rent Commencement Date. Upon any exercise by Tenant of an
Option to extend the Term, Landlord and Tenant shall again sign a written
acknowledgment of the then scheduled expiration date of the Term (as so
extended). The failure of Landlord or Tenant to sign any such acknowledgments
shall not affect the validity of this Lease or the commencement or expiration
dates of the Term.
2.2 Outside Dates for Commencement and Substantial Completion of
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Landlord's Work. Landlord shall use its best efforts to acquire fee simple
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title to the Original Parcel and to commence construction of Landlord's Work on
or before the date which is ninety (90) days after the Effective Date. In the
event Landlord has not acquired fee simple title to the Original Parcel and
commenced construction of Landlord's Work on or before the date which is ninety
(90) days after the Effective Date, then either Landlord or Tenant may as their
sole remedy in such event, by written notice to the other within five (5) days
after such date, terminate this Lease, in which event Landlord shall return all
sums deposited by Tenant with Landlord and the parties shall be released from
all further obligations hereunder. Said ninety (90) day period of time shall be
extended one day for each day of delay due to force majeure causes as provided
in Paragraph 32.14 below. Landlord's acquisition of fee simple title to the
Original Parcel shall be evidenced by recordation of a deed conveying to
Landlord such title in the Official Records of Santa Xxxxx County. Commencement
of construction of Landlord's Work shall be deemed to occur when Landlord
commences physical grading of the Original Parcel. In the event Landlord has
not achieved Substantial Completion of Landlord's Work by November 15, 2000,
Tenant shall be entitled to elect to terminate this Lease subject to the
following. Tenant shall make such election, if at all, by delivery to Landlord
of written notice to Landlord by November 20, 2000, specifying in detail the
respects in which Substantial Completion of Landlord's Work has failed to occur.
Time is of the essence with respect to the delivery of such notice. Upon actual
receipt of such notice, Landlord shall have one hundred eighty (180) days within
which to achieve Substantial Completion of Landlord's Work. If Landlord
achieves Substantial Completion of Landlord's Work within such period of time,
then the prior election to terminate shall be deemed rescinded and of no force
or effect, and Tenant shall sign such documentation as Landlord may reasonably
request (including an estoppel certificate) stating the same. If after receipt
of such notice of Tenant's election to terminate Landlord does not achieve
Substantial Completion of Landlord's Work
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within one hundred eighty (180) days, then as of the date which is the end of
such one hundred eighty (180) day period of time, this Lease shall be deemed
terminated, and the parties thereupon shall be released from all further
obligations hereunder except to the extent such obligations have accrued under
this Lease prior to such termination (e.g., indemnification obligations). The
dates set forth above in this paragraph shall be deemed extended one day for
each day of delay caused by force majeure causes as provided in Paragraph 32.14
below; provided that, whether or not force majeure causes continue to delay
Substantial Completion of Landlord's Work, in no event shall such dates be so
extended for more than 120 days by force majeure causes.
2.3 Options to Extend Term. Subject to the remaining provisions of
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this Paragraph 2.3 and Paragraph 3.7 below, Tenant shall have two (2) options
(each such option herein called an "Option") to extend the Term for a period of
five (5) years (each such five year period herein called an "Extended Term").
Each Option shall be exercised by Tenant, if at all, by delivery to Landlord of
notice of such election to extend no later than three hundred sixty five (365)
days prior to the then scheduled expiration date of the Term. Time is of the
essence with respect to the date of exercise of each Option. Any exercise by
Tenant of an Option, once made, shall be irrevocable, and Tenant shall have no
right to rescind or revoke such Option exercise. At Landlord's sole and
absolute election, to be exercised if at all by delivery of notice to Tenant
that the Option exercise is invalid by the date which is no more than ninety
(90) days after Tenant delivers notice to Landlord that Tenant is exercising the
Option, a purported exercise by Tenant of an Option shall have no force or
effect if: (a) an Event of Default exists at the time of the purported Option
exercise, (b) Tenant is attempting to exercise the second Option, but the first
Option has not been exercised, or (c) two or more Events of Default have
occurred within the three (3) year period of time immediately preceding Tenant's
purported exercise of the Option. Each Extended Term shall be upon all of the
terms and conditions of this Lease, except that the monthly Base Rent for such
Extended Term shall be determined in accordance with Paragraph 3.7, and except
that in no event shall there be more than the two Extended Terms provided in
this Paragraph 2.3 (i.e., the Term shall not be extended to exceed an aggregate
of twenty (20) years from the Rent Commencement Date). Upon commencement of any
Extended Term, all references herein to the "Term" of this Lease shall be deemed
to include such Extended Term.
3. Rent.
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3.1 Initial Base Rent.
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(a) Commencing on the Rent Commencement Date, and continuing
thereafter during the Term, Tenant shall pay to Landlord for each calendar month
of the Term of this Lease, monthly base rent (hereafter called "Base Rent"). The
monthly Base Rent initially shall be equal to the product of Three Dollars and
Thirty Five Cents ($3.35) multiplied by the Building Square Feet, as determined
pursuant to Paragraph 1.2 above. Base Rent shall be subject to annual adjustment
by increasing the same by 3% each year all as more particularly set forth in
Paragraph 3.2. Tenant shall pay to Landlord upon Landlord's acquisition of title
to the Original Parcel (as evidenced by recordation of a grant deed showing fee
simple title in Landlord's name) estimated Base Rent for the first month after
the Rent Commencement Date in the amount of Three Hundred Twenty One Thousand
Six Hundred Dollars ($321,600) which sum shall be applied to the first sums of
Base Rent payable by Tenant from and after the Rent Commencement Date.
(b) The "Rent Commencement Date" shall mean the sooner of the
following dates: (1) ninety (90) days after the date of Substantial Completion
of Landlord's Work (as defined in Exhibit "B"), (2) the first date on which both
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Substantial Completion of the Tenant Improvements has occurred and Tenant has
obtained a certificate of occupancy or its equivalent from the City of Los Altos
authorizing Tenant's use and occupancy of the Premises, or (3) the date on which
Tenant first occupies the Building for purposes of conducting its business
therein. "Substantial Completion of the Tenant Improvements" shall mean
substantial completion of construction of the Tenant Improvements subject only
to punchlist items which will not unreasonably interfere with Tenant's use and
occupancy of the Premises for the conduct of its business therein.
3.2 Rental Adjustment. During the Initial Term, the amount of
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monthly Base Rent shall be increased as of the first and each succeeding annual
anniversary of the Rent Commencement Date (each such date herein called a "Rent
Adjustment Date"). The amount of monthly Base Rent shall be increased to an
amount equal
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to one hundred three percent (103%) of the amount of the Base Rent in effect for
the month immediately preceding such Rent Adjustment Date, as the same may
previously have been adjusted pursuant to this Paragraph 3.2. In the event
Tenant exercises any Option to extend the Term pursuant to Paragraph 2.3 above,
then the amount of monthly Base Rent determined to be applicable as of the
commencement of the Extended Term pursuant to Paragraph 3.7 shall be increased
in accordance with the Base Rent Adjustment Mechanism determined to be
applicable in accordance with Paragraph 3.7. For purposes of all rent
adjustments pursuant to this Paragraph 3.2 or Paragraph 3.7, whether during the
Initial Term or during any Extended Term, the amount of the Base Rent in effect
for the month immediately preceding any increase in the amount of Base Rent
shall not be reduced by the amount of any temporary rent abatement in the
aftermath of damage and destruction of the Premises, or by the amount of any
other rent abatement which may then be in effect other than any permanent rent
abatement which may then be in effect in the aftermath of a partial Taking of
the Premises pursuant to the condemnation provisions of this Lease.
3.3 Manner of Payment. Tenant shall pay to Landlord the Base Rent
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calculated as set forth above in advance on the first day of each calendar month
of the Term occurring on or after the Rent Commencement Date. All Base Rent and
Additional Rent shall be payable without deduction, offset, or abatement, and
without prior notice or demand, in lawful money of the United States to Landlord
at the address stated in the preamble paragraph to this Lease or to such other
places as Landlord may from time to time designate in writing. Tenant's
obligation to pay Base Rent for any partial month shall be prorated based on the
actual number of days in such month.
3.4 Late Payment Charge. If any installment of Base Rent or other
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amount due from Tenant is not received by Landlord within seven (7) days after
the date such amount is due hereunder, Tenant shall pay to Landlord an
additional sum equal to six percent (6%) of the amount overdue. The seven (7)
day period of time referred to in the preceding sentence shall be reduced to
five (5) days if any late charge applicable to Landlord under any loan documents
respecting all or any portion of the Office Parcel entitle the lender thereunder
to a late charge in the event payments are not made thereunder within five (5)
days or less after the due date thereunder. Such sum shall represent liquidated
damages for, and a reasonable estimate of, Landlord's administrative costs of
collection and costs and penalties which may be incurred by Landlord for late
payment in connection with its loan encumbering the Premises, the exact amount
of which would be extremely difficult or impractical to fix. Such late charge
shall be in addition to interest which shall accrue on any such overdue Base
Rent or other sums as provided in Paragraph 18.4 or elsewhere in this Lease.
Landlord's acceptance of such late charge shall not excuse any default by Tenant
hereunder, and shall not preclude Landlord from pursuing any other rights and
remedies it may have relating to such default.
3.5 Additional Rent.
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(a) Tenant shall pay to Landlord from and after the Rent
Commencement Date, in addition to the Base Rent, as additional rent ("Additional
Rent"): (i) all Operating Expenses, as described in Paragraph 7; and (ii) all
charges, costs and expenses which Tenant is required to pay hereunder, together
with all late charges, interest, costs and expenses including attorneys' fees,
that may accrue thereon in the event of Tenant's failure to pay such amounts,
and all damages, reasonable costs and expenses which Landlord may incur by
reason of Tenant's default or breach of this Lease.
(b) In the event of nonpayment by Tenant of Additional Rent,
Landlord shall have all the rights and remedies with respect thereto as Landlord
has for nonpayment of Base Rent.
3.6 Amounts Payable on Landlord's Acquisition of Title to Original
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Parcel. Tenant shall pay the following amount to Landlord and deposit the
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letter of credit specified below upon Landlord's acquisition of title to the
Original Parcel (as evidenced by recordation of a grant deed showing fee simple
title in Landlord's name):
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(a) Estimated first month's Base Rent $ 321,600.00
(b) Letter of Credit security deposit as set
forth in Paragraph 4 $2,500,000.00
3.7 Base Rent During Any Extended Term.
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(a) In the event Tenant delivers to Landlord a notice exercising
an Option pursuant to Paragraph 2.3 above, then by the date which is one hundred
twenty (120) days before the date the Term would expire but for the exercise of
such Option, Landlord shall deliver to Tenant a proposal setting forth the
initial monthly Base Rent for the upcoming Extended Term based upon Landlord's
determination of the fair market rental for the Premises in the condition in
which Tenant is required to surrender the Premises upon termination of the Term,
which proposal shall also specify the Base Rent Adjustment Mechanism (as defined
below) which Landlord believes should be applicable during such Extended Term.
If Tenant within twenty (20) days after receipt of such proposal agrees to such
proposal, or fails to notify Landlord of its acceptance or rejection of such
proposal (in which event Tenant shall be deemed to have agreed thereto), the
amount of monthly Base Rent and the Base Rent Adjustment Mechanism set forth in
such proposal shall be binding on Landlord and Tenant. Should Tenant object in
writing to Landlord's proposal within twenty (20) days after receipt thereof,
then during the twenty (20) day period following Tenant's objection to
Landlord's proposal, Landlord and Tenant shall negotiate in good faith for the
purpose of reaching an agreement regarding the amount of the monthly Base Rent
and any applicable Base Rent Adjustment Mechanism during the Extended Term. In
the event the parties fail to agree in a written instrument signed by both
parties upon the amount of the initial monthly Base Rent and Base Rent
Adjustment Mechanism for the Extended Term within such twenty (20) day period,
the initial monthly Base Rent and Base Rent Adjustment Mechanism for the
Extended Term shall be determined by arbitration in the manner hereafter set
forth.
(b) Each rental adjustment mechanism ("Base Rent Adjustment
Mechanism") proposed by either party or selected by any arbiter appointed as set
forth in this Paragraph 3.7 shall be applicable for an entire Extended Term, and
shall contemplate an increase in the absolute amount of monthly Base Rent
payable over time during such Extended Term based on market conditions as of the
beginning of such Extended Term given the proposed starting rent for such
Extended Term (for example, among numerous other possibilities: (i) periodic
(e.g. annual) fixed increases; (ii) periodic increases based on Consumer Price
Index increases; and (iii) periodic minimum and maximum percentage increases).
In no event shall any Base Rent Adjustment Mechanism result in a decrease or in
no increase in the absolute amount of monthly Base Rent payable over time during
any Extended Term.
(c) In the event it becomes necessary under Paragraph 3.2(a) to
determine the initial fair market monthly Base Rent and Base Rent Adjustment
Mechanism for any Extended Term by arbitration, the following procedures shall
be utilized. Landlord and Tenant shall each appoint an arbiter within ten (10)
days after the end of the twenty (20) day negotiation period referred to in the
immediately preceding paragraph. Except as otherwise expressly provided in this
paragraph, each arbiter appointed by Landlord and Tenant or any other entities
pursuant to this paragraph shall be an individual person (not a corporation or
other entity) who (i) is licensed in California as a real estate broker or real
estate salesperson, (ii) has at least ten years (10) years of experience in
leasing office space in Los Altos and Mountain View, California (the "Comparable
Office Area"), and (iii) has during the twenty four (24) month period
immediately preceding appointment of such person been the listing or cooperating
broker or salesperson on leases (not including subleases or assignments of
leases) entered into for premises within the Comparable Office Area which
premises aggregate at least 50,000 square feet of space. Each arbiter so
appointed by Landlord and Tenant shall determine the fair market monthly Base
Rent for the Premises for the entire five (5) years of such Extended Term (i.e.,
an initial Base Rent amount, as well as a Base Rent Adjustment Mechanism which
is appropriate to apply to such initial Base Rent amount during such Extended
Term). Such initial fair market monthly Base Rent and Base Rent Adjustment
Mechanism for such Extended Term shall be determined based upon estimated
prevailing comparable rentals during the Extended Term within a similar class of
office buildings within the Comparable Office Area assuming the Premises are in
the condition in which Tenant will be required to surrender the same to Landlord
at the end of the Term, and further assuming for such purposes that Tenant shall
be required to leave on the Premises any improvements therein which Tenant has
made
6
which are not equipment, furnishings, or movable personal property of Tenant to
the extent the same add value to the Premises for successor tenants of the
Premises and that all other improvements will be required to be removed from the
Premises at the end of the Term. Such arbiters shall, within twenty one (21)
business days after their appointment, make their determinations of the initial
fair market monthly Base Rent and appropriate Base Rent Adjustment Mechanism for
the Base Rent during the Extended Term and submit their written reports thereof
to Landlord and Tenant. If only one report is submitted to Landlord and Tenant
(e.g., because only one arbiter has been appointed), or if the initial Base Rent
and Base Rent Adjustment Mechanism of the two arbiters are identical, then the
determination set forth in such report(s) shall be final and binding on the
parties as the initial Base Rent amount and applicable Base Rent Adjustment
Mechanism. If the Base Rent Adjustment Mechanism of the two arbiters is
identical, but the initial Base Rent amount differs by no more than five percent
(5%), then the two Base Rent amounts shall be averaged and such averaged Base
Rent amount together with such Base Rent Adjustment Mechanism shall be final and
binding on the parties as the initial Base Rent amount and applicable Base Rent
Adjustment Mechanism. Subject to the preceding sentence, if two reports are
submitted and either the initial Base Rent amount or the Base Rent Adjustment
Mechanism set forth in either report differs from that set forth in the other
report, then the two arbiters, within ten (10) days after submission of the last
report to both Landlord and Tenant, shall appoint a third arbiter meeting the
qualifications set forth above. The role of the third arbiter shall be to
select, within twenty (20) business days after his appointment, which of the two
proposed initial Base Rent and Base Rent Adjustment Mechanisms determined by the
first two arbiters most closely approximates the third arbiter's determination
of initial Base Rent and Base Rent Adjustment Mechanism for the Extended Term
taking into account the same factors and using the same assumptions referred to
above which are applicable to the determinations made by the first two arbiters.
The third arbiter shall have no right to propose a middle ground or any
modification of either of the determinations made by the first two arbiters. The
determination of initial Base Rent and Base Rent Adjustment Mechanism chosen by
the third arbiter as most closely approximating his determination shall
constitute the decision of the arbiters and be final and binding upon the
parties, and not subject to appeal of any kind.
(d) If either Landlord or Tenant fails to appoint an arbiter, or
if an arbiter appointed by either of them fails, after his appointment, to
submit his report within the required period in accordance with the foregoing,
the report submitted by the arbiter properly appointed and timely submitting his
report shall be controlling. If the two arbiters appointed by Landlord and
Tenant are unable to agree upon a third arbiter within the required period in
accordance with the foregoing, application shall be made within thirty (30) days
thereafter by either Landlord or Tenant to the Appraisal Institute ("AI"), which
shall appoint a member of said institute willing to serve as arbiter who has at
least five (5) consecutive years experience during the five (5) years
immediately preceding his appointment in appraising rental values for office
space within the Comparable Office Area, or if such institute does not so
appoint an arbiter, then either Landlord or Tenant may petition any California
state court having jurisdiction for appointment of a suitable arbiter having a
least five (5) consecutive years experience during the five (5) years
immediately preceding his appointment in leasing (as a broker or salesperson) or
appraising office space in the Comparable Office Area. Any third arbiter chosen
by the first two arbiters or appointed by the AI or by court shall not have
worked before in any capacity for either Landlord or Tenant, or for any of their
respective general partners, managing members, officers, directors, shareholders
having more than a 5% interest in any class of voting stock, real estate
consultants, real estate brokers, and real estate attorneys, it being the
intention of the parties that such third arbiter be independent of the parties
so as to ensure an objective report. Each party shall pay the fee and expenses
of its respective arbiter, and both shall share equally the fee and expenses of
the third arbiter, if any. If at the time of any report required or desired
hereunder the AI no longer exists, then any appraiser licensed or certified by
its successor organization, or if there is no successor organization, then by
any other nationally recognized appraisal institute, which appraiser otherwise
meets the qualifications set forth above for an appraiser appointed as the third
arbiter may be appointed and hired under this paragraph and shall be deemed an
appropriate arbiter for purposes of this paragraph.
(e) The parties intend that Landlord have the benefit of a floor
Base Rent for any given Extended Term which floor is no less than the monthly
Base Rent payable during the last year immediately preceding such Extended Term.
Accordingly, notwithstanding anything to the contrary contained in this Lease,
after the initial Base Rent amount and Base Rent Adjustment Mechanism for any
Extended Term is determined pursuant to the foregoing provisions (i.e., whether
by Tenant accepting Landlord's proposal, or by Tenant and
7
Landlord reaching agreement after negotiation, or by the arbitration process set
forth above), Landlord shall be entitled to elect in its sole discretion to
substitute in place thereof during such Extended Term the Base Rent Adjustment
Mechanism so determined applied to the following initial Base Rent amount: (i)
for the first Extended Term, an initial monthly Base Rent of Four Dollars and
Thirty Seven Cents ($4.37) multiplied by the Building Square Feet (based on
$3.35 psf escalated by 3% per year through the last year of the Initial Term),
and (ii) for the second Extended Term, an initial monthly Base Rent equal to the
last monthly Base Rent amount applicable during the first Extended Term.
Landlord shall make such election, if at all, by notice thereof to Tenant within
ten (10) days after the Base Rent and Base Rent Adjustment Mechanism is finally
determined pursuant to any of the processes referred to above. If Landlord makes
such an election with respect to the first Extended Term, then the initial Base
Rent for the first Extended Term shall be Four Dollars and Thirty Seven Cents
($4.37) multiplied by the Building Square Feet, and such Base Rent shall
thereafter be increased in accordance with the applicable Base Rent Adjustment
Mechanism for the first Extended Term. If Landlord makes such an election with
respect to the second Extended Term, then the initial Base Rent for the second
Extended Term shall be the monthly Base Rent applicable during the last month of
the first Extended Term, and such Base Rent shall thereafter be increased in
accordance with the applicable Base Rent Adjustment Mechanism for the second
Extended Term.
4. Security Deposit. Concurrently with Landlord's acquisition of title
----------------
to the Original Parcel (as evidenced by recordation of a grant deed showing fee
simple title in Landlord's name), Tenant shall deposit with Landlord as security
for the faithful performance by Tenant of all of its obligations hereunder an
unconditional irrevocable standby letter of credit (the "Letter of Credit").
The Letter of Credit shall be in the amount of Two Million Five Hundred Thousand
Dollars ($2,500,000), subject to later reduction as set forth in this paragraph.
The Letter of Credit shall be in form reasonably satisfactory to Landlord. In
all events, such form shall provide that Landlord may draw upon the Letter of
Credit solely upon making demand to the issuing bank for the amount specified by
Landlord in its demand, by certifying to the issuing bank that based on
Landlord's best information and belief Landlord is entitled under the Lease to
draw such amount, and by presenting evidence to the issuing bank of the identity
of Landlord. Landlord shall not be required to satisfy any conditions in order
to draw upon the Letter of Credit, it being understood that the Letter of Credit
shall be unconditional and irrevocable. However, Landlord shall have access to
the funds represented by the Letter of Credit only for the purposes and under
the conditions set forth herein, and shall not make any such demand for a draw
unless Landlord is entitled under this Paragraph 4 to draw upon the Letter of
Credit. Tenant shall cause the Letter of Credit to be renewed on an annual
basis and shall renew the same at least thirty (30) days prior to the scheduled
maturity thereof each year (and deliver evidence thereof to Landlord promptly
after such renewal). In the event Tenant fails timely to so renew the Letter of
Credit, and continues to so fail to renew the Letter of Credit within five (5)
days after written notice of such failure from Landlord, Landlord shall be
entitled to draw the full amount of the Letter of Credit before expiration
thereof, whereupon Landlord shall hold the same as a cash security deposit and
shall be entitled to apply sums therefrom on the same basis as Landlord would
otherwise have been entitled to draw sums from the Letter of Credit had the
Letter of Credit been renewed; provided that, if Tenant thereafter obtains a new
letter of credit satisfying the requirements of this paragraph, such new letter
of credit shall be deemed the Letter of Credit hereunder, and promptly after
such new Letter of Credit is issued to Landlord and Landlord is notified
thereof, Landlord shall return such cash security deposit to Tenant. The
preceding sentence shall not be deemed a limitation of Landlord's remedies for
any such failure by Tenant to observe its obligations under this paragraph.
Tenant shall cause the Letter of Credit, as the same may be renewed from time to
time, to remain in effect until the later of ten (10) days after the expiration
of the Term, or ten (10) days after Tenant has vacated the Premises. In the
event Tenant fails to cause the Letter of Credit to remain in effect for such
ten (10) day period following expiration of the Term or Tenant's vacation of the
Premises, whichever later occurs, Landlord shall be entitled to draw the full
amount of the Letter of Credit before expiration thereof without any obligation
to give Tenant notice thereof, whereupon Landlord shall hold the same as a cash
security deposit and shall be entitled to apply sums therefrom on the same basis
as Landlord would otherwise have been entitled to draw sums from the Letter of
Credit had the Letter of Credit remained in effect for such period of time. If
Tenant fails to pay as and when due Base Rent or any other sums payable by
Tenant hereunder and continues to fail to pay the same for five (5) business
days after delivery to Tenant of notice thereof , or otherwise fails to perform
any other obligation of Tenant under this Lease as and when obligated to perform
the same and continues to fail to perform the same for five (5) business days
after delivery to Tenant of notice thereof (except to the extent different
notice periods or no notice periods are expressly specified pursuant to the
preceding sentences of this paragraph), Landlord may draw from the Letter of
Credit and use, apply
8
or retain the proceeds therefrom to the extent (and only to the extent) applied
(i) to the payment of such sum which has not been paid, or (ii) to compensate
Landlord for the payment of any other sum which Landlord incurs or becomes
obligated to spend as a result of Tenant's failure to so perform its obligations
and/or Landlord's cure of such failure by Tenant, or (iii) to compensate
Landlord for any expenditures, loss or damage which Landlord may suffer thereby.
The intent of the preceding sentence is to limit the amount of draws by Landlord
against the Letter of Credit to sums actually applied pursuant to clauses (i)
through (iii) of the preceding sentence. Landlord may draw and use, apply or
retain such amounts without prejudice to any other remedy Landlord may have by
reason of Tenant's failure to perform its obligations hereunder. If Landlord so
draws all or any portion of the Letter of Credit, Tenant shall, within twenty
(20) days after demand in writing therefor, obtain and deposit with Landlord a
new letter of credit on the terms specified above applicable to the Letter of
Credit but only in the amount of the amount so drawn, and thereafter such new
letter of credit together with the remaining undrawn balance of any one or more
prior letters of credit constituting the Letter of Credit shall collectively
herein be deemed the "Letter of Credit." Landlord shall not be required to keep
any amounts drawn from the Letter of Credit separate from its general funds, and
shall not be deemed a trustee with respect to such amounts. On the first
anniversary of the Rent Commencement Date, and provided no Event of Default has
occurred and is continuing as of such first anniversary of the Rent Commencement
Date, Tenant shall be entitled to cause the amount of the Letter of Credit to be
reduced to One Million Two Hundred Thousand Dollars ($1,200,000). On the second
anniversary of the Rent Commencement Date, and provided no Event of Default has
occurred and is continuing as of such second anniversary of the Rent
Commencement Date, Tenant shall be entitled to cause the amount of the Letter of
Credit to be reduced to Six Hundred Thousand Dollars ($600,000).
5. Taxes.
-----
5.1 Tenant's Personal Property. Tenant shall pay directly to the
--------------------------
charging authority prior to delinquency all taxes assessed against and levied
upon Tenant's leasehold improvements (including the Tenant Improvements defined
in Exhibit "B"), trade fixtures, furnishings, equipment and all other personal
-----------
property and merchandise of Tenant situated in or about the Premises.
5.2 Real Property Taxes.
-------------------
(a) From and after the Rent Commencement Date, in the event any
lender who has provided Landlord a loan respecting the Premises requires
impounding of real estate taxes, and Landlord so notifies Tenant of such
impounding requirement, Tenant shall pay to Landlord as part of Operating
Expenses pursuant to Paragraph 7 below Tenant's Share of all Real Property Taxes
(as hereafter defined) levied with respect to the Taxable Property. The "Taxable
Property" shall mean the Office Parcel and all improvements from time to time
situated thereon, the Patio Area, the driveways described in Paragraph 1.3 and
the ramps leading therefrom to the Parking Garage (which driveways and ramps for
purposes of this Paragraph 5.2 only shall be deemed part of the Parking Garage),
and the Parking Garage. Tenant's Share of Real Property Taxes levied with
respect to the Office Parcel and all improvements from time to time situated
thereon shall be 100%. Tenant's Share of Real Property Taxes levied with respect
to the Patio Area and all improvements from time to time situated thereon shall
be 100%. Tenant's Share of Real Property Taxes levied with respect to the
Parking Garage shall be a fraction the numerator of which is the square footage
of the portions of the Parking Garage with respect to which Tenant has exclusive
parking rights, and the denominator of which is the square footage of the entire
Parking Garage, with such square footage measurements made in the same fashion
as Building Square Feet are determined pursuant to Paragraph 1.2.
Notwithstanding the preceding sentence, Tenant's Share of Real Property Taxes
respecting the driveways referred to above shall be 50%, and respecting the
north ramp referred to above shall be 100%. From and after the Rent Commencement
Date, during any period of time during the Term that impounding is not so
required, Tenant shall pay Tenant's Share of all such Real Property Taxes
directly to the taxing authority (and not as part of Operating Expenses) no
later than the later of: (i) thirty (30) days before the same become delinquent,
or (ii) if tax statements are sent to Landlord as the owner of the Premises
instead of directly by the taxing authority to Tenant, fifteen (15) days after
Landlord delivers to Tenant the tax xxxx or other written statement setting
forth the amount to be paid by Tenant. Tenant shall deliver to Landlord
reasonable evidence of the payment of any such Real Property Taxes paid directly
to the taxing authority within five (5) days after payment thereof. Tenant shall
pay Tenant's Share of all such Real Property Taxes for periods of time within
the Term.
9
(b) The term "Real Property Taxes" as used herein shall mean (i)
all taxes, assessments, levies, and other charges of any kind or nature
whatsoever, general and special, foreseen and unforeseen (including all
installments of principal and interest required to pay for any general or
special assessments for public improvements, services, or benefits and any
increases resulting from reassessments caused by any change in ownership, new
construction, or change in valuation), now or hereafter imposed by any
governmental or quasi-governmental authority or special district having the
direct or indirect power to tax or levy assessments, which are levied or
assessed against or with respect to (a) the value, occupancy or use of the
Taxable Property, (b) the fixtures, equipment, and other real or personal
property of Landlord that are an integral part of the Taxable Property, (c) the
gross receipts, income, and rentals from the Taxable Property, or (d) the use of
the Taxable Property, public utilities, or energy within the improvements
comprising the Taxable Property; (ii) all new excise, transaction, sales,
privilege or other taxes now or hereafter imposed upon Landlord as a result of
this Lease; and (iii) all costs and fees (including reasonable attorneys' fees)
incurred by Landlord in contesting any Real Property Taxes and in negotiating
with public authorities as to any Real Property Taxes to the extent such costs
and fees do not exceed the anticipated monetary savings which would accrue to
Tenant's benefit as a result thereof as reasonably determined by Landlord. If at
any time during the Term the taxation or assessment of the Taxable Property and
improvements thereon prevailing as of the Effective Date shall be altered so
that in lieu of or in addition to any Real Property Taxes described above there
shall be levied, assessed or imposed (whether by reason of a change in the
method of taxation or assessment, creation of a new tax or charge, or any other
cause) an alternate, substitute, or additional tax or charge (i) on the value,
use or occupancy of the Taxable Property or any portion thereto, (ii) on or
measured by the gross receipts, income, or rentals from the Taxable Property or
any portion thereof, or on Landlord's business of leasing the Taxable Property
or any portion thereof, or (iii) computed in any manner with respect to the
operation of the Taxable Property or any portion thereof, then any such tax or
charge, however designated, shall be included within the meaning of the term
"Real Property Taxes" for purposes of the Lease. Notwithstanding the foregoing,
the term "Real Property Taxes" shall not include the state, inheritance,
transfer, gift, franchise, or net income taxes of Landlord, and further shall
not include any taxes assessed against the Remainder Parcel or the Second Parcel
(except as expressly provided in Paragraph 5.2(a) above with respect to the
driveways referred to in Paragraph 3.1, the ramp leading from the north driveway
into the Parking Garage, the Patio Area, and the Parking Garage), or the
business activities of the occupants thereof . For purposes of this paragraph,
Taxable Property shall include all improvements within the Office Parcel, Patio
Area, and the Parking Garage (including such driveways and ramp referred to
above) as now constructed or as may at any time hereinafter be constructed,
altered, or otherwise changed.
(c) Real Property Taxes shall be prorated on the basis of a 365-
day year to account for any fractional portion of a fiscal tax year included in
the Term at the commencement or expiration of the Term.
(d) Landlord shall use reasonable efforts to cause the real
estate tax assessor for Santa Xxxxx County to separately assess the Parking
Garage. In the event the Parking Garage is not separately assessed, the Real
Property Taxes for the Parking Garage shall be an equitable portion of the taxes
assessed against the property of which the Parking Garage is deemed a part, as
reasonably determined by Landlord. The Real Property Taxes for the Patio Area
and the driveways and north ramp shall be an equitable portion of the taxes
assessed against the property of which such areas are deemed a part, as
reasonably determined by Landlord.
(e) Tenant at its cost shall have the right, at any time, to
contest with the applicable taxing authority any amount of Real Property Taxes
which has been paid by Tenant. Landlord shall not be required to join in any
contest brought by Tenant unless the provisions of any law require that the
contest be brought by or in the name of Landlord or any owner of the Premises,
in which case Landlord shall join in the contest or permit it to be brought in
Landlord's name as long as Landlord is not required to bear any cost. In the
event any sum is awarded to Landlord as a result of Tenant's contest, Landlord
shall reimburse the same to Tenant to the extent such sum represents overpaid
Real Estate Taxes previously paid by Tenant.
10
6. Use.
---
6.1 Permitted Uses.
--------------
(a) Tenant shall use the Building solely for general offices and
lawful uses related thereto, and for no other use. In no event shall Tenant use
the Premises or permit the Premises to be used for any use which would increase
the number of parking spaces required to be made available for parking for the
Premises beyond 4 per 1,000 square feet of Building Square Feet.
(a) Tenant's parking rights respecting the Outside Areas and the
Parking Garage as set forth in Paragraph 1.3 above shall be subject to the
provisions of this paragraph. Tenant shall use such parking areas solely for
purposes of parking vehicles used by its employees, clients, and contractors
only for such period of time as such entities are working within the Premises or
Outside Areas, or working for Tenant outside of the Premises. Tenant shall not
permit any employees, clients, contractors or other entities within its control
to use such parking areas for any purposes inconsistent with the preceding
sentence. Neither Tenant nor its employees, clients, or contractors shall be
obligated to pay any parking charge or fee for parking within such parking areas
(subject to Tenant's obligation to pay for maintenance and operation of such
parking areas as an Operating Expense pursuant to other provisions of this
Lease). Notwithstanding the foregoing, and subject to applicable Laws, Tenant
shall be entitled to use parking spaces in the Parking Garage within the portion
of the Parking Garage available for Tenant's exclusive use for purposes of
storing containers, provided that (i) such storage area is fenced and secured in
a fashion suitable to Landlord in its reasonable judgment, (ii) the location of
the parking spaces so utilized for storage is approved by Landlord which
approval shall not unreasonably be withheld, (iii) Tenant maintains such spaces,
and is solely responsible for all security relating thereto, (iv) the property
and liability insurance required to be carried by Tenant under this Lease covers
such storage area, (v) such use of parking spaces for storage does not reduce
the number of parking spaces available for Tenant's exclusive use to below the
minimum number of parking spaces required by the City of Los Altos to be made
available for Tenant's parking and does not otherwise violate any Laws, and (vi)
upon expiration or sooner termination of the Term, Tenant shall unless otherwise
directed by Landlord in writing remove the fencing for such storage area and
repair any damage to the Parking Garage resulting from such fencing such that
the areas so affected are restored to their original condition subject only to
reasonable wear and tear. Subject to applicable Laws, Tenant at its cost shall
be entitled to purchase and install an electronic reader at the security gate
installed as part of Landlord's Work at the entrance to the portion of the
Parking Garage containing the parking spaces Tenant is entitled to use, provided
that (i) the design, materials, location thereof and all other aspects thereof
are approved by Landlord in advance of installation thereof, which approval
shall not unreasonably be withheld, (ii) installation thereof is performed by a
contractor and in a location and in a fashion satisfactory to Landlord in its
reasonable discretion, and the timing of such installation is coordinated with
Landlord so as not to interrupt any Landlord's Work or other work by Landlord on
or about the Original Parcel and/or the Second Parcel, (iii) after installation
thereof, Tenant maintains the same at its sole cost, and (iv) immediately upon
installation thereof such reader shall be deemed the property of Landlord and
Tenant shall have no right to remove the same. Tenant shall deliver to Landlord
such keys, card, tokens, or other access devices as shall permit unobstructed
access at all times by Landlord and Landlord's employees, contractors, agents to
the Parking Garage. Tenant shall comply with and observe any reasonable rules
and regulations from time to time promulgated by Landlord respecting the use of
such parking areas and the Patio Area. Tenant shall comply with and observe the
reasonable requirements and restrictions of any conditions, covenants,
restrictions, and easements respecting the "north" and "south" driveways
referred to in Paragraph 3.1 and recorded against title to any one or more of
the Office Parcel, any parcels within the Remainder Parcel, and the Second
Parcel. Tenant shall be entitled to place chairs and tables in the Patio Area
which are of first class quality subject to Landlord's advance approval thereof
which shall not unreasonably be withheld or delayed. Subject to the restrictions
hereinafter set forth, Tenant and its employees shall be entitled to use the
Patio Area solely for purposes of eating food from the cafeteria which Tenant
anticipates will be situated in the Building immediately adjacent to the Patio
Area and for social gatherings. Tenant shall comply with any and all
requirements of any lender or insurer respecting the Remainder Parcel regarding
Tenant's use of the Patio Area, including without limitation insurance naming
the owner of the Remainder Parcel and such lender and insurers as additional
insureds with respect to use of the Patio Area. Tenant acknowledges that the
Patio Area will abut the contemplated development on the Remainder Parcel
situated adjacent thereto, and that such development may entail hotel or other
residential uses, and accordingly agrees not to create or generate in or
11
from the Patio Area unreasonably loud noises at any time taking into
consideration the contemplated residential use immediately adjacent thereto, or
any significant noise whatsoever prior to 10:00 A.M. or after 8:00 P.M. Monday
through Sunday. Tenant shall keep the Patio Area in a clean and trash free
sanitary condition, with all garbage removed therefrom and all chairs and tables
therein kept in good and safe condition and repair.
6.2 Compliance with Laws.
--------------------
(a) Landlord warrants to Tenant that, as of the date of
Substantial Completion of Landlord's Work, all improvements constructed by
Landlord as part of Landlord's Work (specifically excluding any work performed
by Tenant in the Premises prior to Substantial Completion of Landlord's Work)
shall comply with all applicable laws, ordinances, codes, rules, orders,
directions and regulations of lawful governmental authority (collectively,
"Laws") regulating the condition of the Premises and in effect as of the date of
Substantial Completion of Landlord's Work and shall not have any latent defects
respecting materials or workmanship. The warranty set forth in the preceding
sentence shall only be effective with respect to any written claim of a breach
thereof delivered by Tenant to Landlord within one year from the date of
Substantial Completion of Landlord's Work. For purposes of the preceding
sentence, no claim shall be deemed effective unless it specifically identifies
the Law which has not been complied with and each component(s) of Landlord's
Work which is the subject of such noncompliance.
(b) Landlord shall have no obligation to make any alterations,
improvements, or repairs to the Premises unless otherwise expressly required in
this Lease. Tenant acknowledges that its possession and use of the Premises is
subject to all Laws regulating the use and occupancy of the Premises. Subject to
Landlord's warranty set forth in Paragraph 6.2(a), Tenant, at Tenant's sole
expense, shall promptly comply with all Laws and restrictive covenants of public
record as may now or hereafter be in effect relating to or affecting the
condition, use or occupancy of the Premises, including without limitation the
obligation to make structural or nonstructural Alterations to the extent
required to comply therewith. Notwithstanding the preceding sentence, if any
structural Alterations to the Premises are required as a result of a change in
Laws existing on the date of Substantial Completion of Landlord's Work or as a
result of additional Laws enacted after the date of Substantial Completion of
Landlord's Work which changed or additional Laws are applicable to buildings
generally (including the Building) and are not applicable to the Premises
because of Tenant's particular use of the Premises for general office use or any
Tenant Improvements therein or Alterations thereto by Tenant, then Landlord
shall cause such Alterations to be made, and the Amortized Portion (as defined
below in Paragraph 6.2(c)) of such cost shall be deemed an Operating Expense
under Paragraph 7.
(c) The "Amortized Portion" of costs of items, as reasonably
determined by Landlord, shall mean an amount equal to a fraction of the cost of
such item the numerator of which is the lesser of (i) the number of years
remaining in the Term, and (ii) the number of years of the estimated useful life
of such item as reasonably determined by Landlord, and the denominator of which
is the number of years of the estimated useful life of such item as reasonably
determined by Landlord, with such amount amortized monthly over the remainder of
the Term as of the date such cost is incurred assuming an interest rate (the
"Assumed Interest Rate") equal to the rate of interest on any loan obtained by
Landlord to pay for such item, or if Landlord does not obtain a loan to pay for
such item, then assuming an interest rate equal to the rate of interest Landlord
would have to pay if Landlord were to borrow such funds, as reasonably
determined by Landlord. If Tenant later exercises any Option to extend the Term,
upon commencement of each such Extended Term, Operating Expenses shall, if such
item was not previously fully amortized pursuant to the preceding sentence,
include an additional Amortized Portion of the cost of such item equal to a
fraction the numerator of which is the lesser of (i) five, or (ii) the same
number of years of the estimated useful life of such item as originally
determined by Landlord as reduced by the number of years represented in the
numerator determined pursuant to the preceding sentence, and the denominator of
which is the same number of years of the estimated useful life of such item as
originally determined by Landlord (with no reduction in such number reflecting
any time which has passed since the item was made), with such portion amortized
monthly over the five year Extended Term assuming interest thereon over such
period at the Assumed Interest Rate.
12
6.3 Hazardous Materials.
-------------------
(a) As used herein, "Hazardous Materials" means any hazardous,
toxic, environmentally damaging or radioactive materials, substances or wastes,
including, but not limited to, those materials, substances or wastes: (1)
defined or listed as hazardous or extremely hazardous materials or wastes
pursuant to Title 22, Division 4.5, Chapter 10 et seq., of the California Code
of Regulations, as may be amended; (2) defined or listed as hazardous substances
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. (S) 9601, et seq. and regulations promulgated thereunder, as may
------
be amended; (3) defined or listed as hazardous or acutely hazardous wastes
pursuant to the Resource Conservation and Recovery Act, 42 U.S.C. (S) 6901,
et seq. and regulations promulgated thereunder, as may be amended; and/or (4)
------
which consists in whole or part of petroleum, petroleum fractions, petroleum
products or petroleum distillates.
(b) Tenant shall not cause or permit to be discharged from or
about the Building and Outside Areas any Hazardous Materials. Without limiting
the foregoing, Tenant shall not cause or permit to be discharged any Hazardous
Materials into the groundwater or soils underlying or adjacent to the Office
Parcel. Tenant shall provide Landlord with at least five (5) days prior written
notice before bringing, using, or storing any Hazardous Materials on the
Premises except for minor amounts thereof commonly used for office purposes (for
example: white-out for correcting typing mistakes, toner in printers, and office
cleaning supplies). Tenant shall not use, store, handle, or generate in, on, or
about the Premises any Hazardous Materials except for minor amounts thereof
commonly used for office purposes (for example: white-out for correcting typing
mistakes, toner in printers, and office cleaning supplies), and then only to the
extent such usage strictly complies with applicable Laws.
(c) Tenant, at its sole expense shall comply with all applicable
Laws respecting Hazardous Materials in connection with Tenant's activities and
the activities of its agents, employees, contractors and invitees on or about
the Premises. Tenant, at its sole cost, shall perform all investigations, clean-
up and other response actions which may be required by any governmental
authority respecting Hazardous Materials in, on, or about the Building, the
Outside Areas, or the Parking Garage or the soils or groundwater underlying any
one or more of the same resulting from or caused to exist by Tenant's activities
and/or the activities of its agents, employees, contractors and invitees. Except
as provided in the preceding sentence, Landlord, at its sole cost (and not as a
cost passed through to Tenant as an Operating Expense), shall perform all
investigations, clean-up and other response actions which may be required by any
governmental authority in, on, or about the Premises respecting Hazardous
Materials migrating from offsite onto the Office Parcel or into the soils or
groundwater underlying the same or underlying the Parking Garage whether or not
caused to exist by the activities of Landlord and/or the activities of
Landlord's agents, employees, contractors and invitees.
(d) Tenant shall indemnify, protect, defend (by legal counsel
subject to Landlord's approval, which shall not unreasonably be withheld) and
hold harmless Landlord from and against all costs (including, but not limited
to, environmental response costs), expenses, claims, judgments, losses, demands,
liabilities, causes of action, governmental directives, proceedings or hearings,
including Landlord's attorneys' and experts' fees and costs, relating to the
use, handling, generation, storage, transportation, release or disposal of
Hazardous Materials by Tenant, its employees, agents, invitees or contractors
on, in, beneath, about or from, the Building, the Outside Areas, the Parking
Garage, or in the groundwater or land underlying the Building, Outside Areas,
Parking Garage, or, in, on, or about any groundwater or land adjacent to, on, in
the vicinity of the Building, Outside Areas, or Parking Garage, and/or relating
to the breach of any of Tenant's obligations under this Paragraph 6.3. The
foregoing indemnity shall include an obligation for Tenant to indemnify,
protect, defend, and hold harmless Landlord from and against the cost of
environmental consultants, attorneys, and other consultants as Landlord
determines are appropriate to assist Landlord in (1) investigating the source,
extent, and composition of such Hazardous Materials, (2) cleaning up or
otherwise remediating the same, (3) dealing with any potential or actual
liability of Landlord and/or Tenant respecting such Hazardous Materials, and (4)
otherwise dealing with such Hazardous Materials. Tenant shall reimburse Landlord
for (i) losses in or reductions to rental income resulting from Tenant's use,
handling, generation, storage, transportation, release or disposal of Hazardous
Materials; (ii) all costs of clean-up or other alterations to the Building,
Outside Areas, and Parking Garage necessitated by Tenant's use, handling,
generation, storage, transportation, release or disposal of Hazardous Materials;
and (iii) any diminution in the fair market value of the Office Parcel,
Remainder Parcel, and Second Parcel and any
13
improvements thereon caused by Tenant's use, handling, generation, storage,
transportation, release or disposal of Hazardous Materials.
(e) Tenant shall notify Landlord in writing, immediately upon
becoming aware of: (1) any environmental investigation, clean-up or other
environmental response action requested, demanded, instituted or to be
instituted by any person, including but not limited to a governmental entity,
relating to any release or migration of Hazardous Materials on, in, beneath, to
or adjacent to the Office Parcel; (2) any environmental investigation, cleanup
or other environmental response action requested, demanded, instituted or to be
instituted by any person, including a governmental entity, relating to the use,
handling, generation, storage, transportation, release or disposal of Hazardous
Materials on, in, beneath, about or from the Building and Outside Areas; (3) any
claim or demand made or threatened by any person, including but not limited to a
governmental entity, against Landlord or Tenant, or the Building and/or Outside
Areas relating to damages, contribution, cost recovery, compensation, loss or
injury relating to or claimed to result from any Hazardous Materials that have
come to be located on or about the Building or Outside Areas; or (4) any data,
workplans, proposals or reports submitted to any governmental entity arising out
of or in connection with any Hazardous Materials on or about the Building or
Outside Areas, including but not limited to any complaints, notices, warnings or
asserted violations in connection therewith.
(f) Landlord shall have the right, but not the obligation, in
its sole discretion, to conduct from time to time an inspection of the Building
and Outside Areas regarding Hazardous Materials on, in, beneath or about same.
Landlord shall give Tenant forty-eight (48) hours advance notice of any such
inspection, except in the event of an emergency situation in which event no
notice shall be required. When conducting any such inspections, Landlord shall
avoid unreasonably disrupting Tenant's activities. Tenant shall provide Landlord
with reasonable cooperation to facilitate any such inspection by Landlord, its
agents or representatives.
(g) Under no circumstances shall Tenant install, temporarily or
permanently, any underground or below-floor tanks relating to the use, storage
or disposal of Hazardous Materials.
(h) Prior to the expiration or termination of the Term, Tenant
shall decontaminate, remove or close any equipment, improvements or facilities
used by Tenant at the Premises in connection with Hazardous Materials, in full
compliance with applicable Laws.
(i) Landlord shall indemnify, protect, defend and hold harmless
Tenant from and against all costs (including, but not limited to, environmental
response costs), expenses, claims, judgments, losses, demands, liabilities,
causes of action, governmental directives, proceedings or hearings, including
Tenant's attorneys' and experts' fees and costs (collectively, a "Claim"),
incurred to investigate and/or remediate any Hazardous Materials contamination
in the soils or groundwater under the surface of the Premises which
investigation or remediation is required by written mandate of lawful
governmental authority having jurisdiction over such Hazardous Materials
contamination, and only to the extent of Hazardous Materials situated in the
soils or groundwater underlying the Premises (i) as of the Effective Date, or
(ii) caused to exist by the actions of Landlord or its employees, agents, or
contractors in connection with Landlord's Work or otherwise. In satisfying its
defense obligation pursuant to this paragraph, Landlord shall have the right in
its sole discretion to select and control defense counsel. Landlord's
indemnification and defense obligations under this paragraph shall not apply to
the extent a subject Claim is based on Hazardous Materials contamination on or
about the Premises caused by Tenant or any agent, contractor, or invitee of
Tenant. Landlord warrants and represents that to the actual knowledge of Xxxxx
Xxx, without any duty to inspect, there are no Hazardous Materials in the soils
or groundwater under the surface of the Premises other than as is set forth in
the environmental reports listed on Exhibit "C" hereto.
----------
(j) To the extent any of the provisions of this Lease conflict
with the provisions of Paragraph 6.3, the provisions of Paragraph 6.3 shall be
controlling. The obligations of Tenant and Landlord under this Paragraph 6.3
shall survive the expiration of the Term.
6.4 Restrictions on Use. Tenant shall not use or permit the use of
-------------------
the Premises in any manner that will tend to create waste on the Premises or
constitute a nuisance to any neighboring building. Tenant shall not
14
use any apparatus, machinery or other equipment in or about the Premises that
may cause substantial noise or vibration or overload existing electrical
systems, or otherwise place any unusual loads upon the floors, walls, or
ceilings of the Building which may overload the Building or jeopardize the
structural integrity of the Building or any part thereof, or the Parking Garage
underneath the Building. Tenant shall not make any penetrations of the roof or
exterior of the Building without the prior written approval of Landlord which
shall not unreasonably be withheld; provided that, if so required by Landlord,
all such work shall be performed by the roofing contractor who initially
installed the roof of the Building in order to prevent voidance of any warranty
obtained by Landlord from such roofing contractor with respect to labor and/or
materials respecting the roof. No materials or articles of any nature shall be
stored upon any portion of the Outside Areas unless located within an enclosure
approved by Landlord. Tenant understands that Landlord desires to prevent
unauthorized use of the parking facilities for the Premises given that parking
spaces are in high demand in the vicinity of the Premises, and thus Tenant
agrees not to use or permit any employees, agents, contractors, or other persons
within its control to use the Parking Garage or any surface level parking areas
within the Office Parcel for any purpose other than parking for the period of
time that such person is working in the Premises or for Tenant off of the
Premises. Without limiting the generality of the preceding sentence, Tenant
shall not permit long term parking by persons within its control, except for
valid business reasons which are directly related to the primary business
conducted by Tenant on the Premises, and shall not grant rights to use such
parking facilities to any persons other than its employees, agents, contractors,
customers and other invitees involved in Tenant's primary business conducted on
the Premises.
6.5 Satellite Dish. Tenant shall be entitled to install one or more
--------------
satellite dishes on the roof of the Building provided that as to each such dish:
(i) the size, weight, height and other dimensions and features of such dish are
approved by Landlord in writing prior to installation thereof, which approval
shall not be unreasonably withheld; (ii) the installation and operation of such
dish shall be in compliance with all Laws, (iii) Tenant at its expense shall pay
for screening of such dish from view from all points at ground level by a screen
of a weight, dimensions, and material that is reasonably satisfactory to
Landlord, (iv) installation of the dish shall be performed at Tenant's expense
by Landlord's roofing contractor who initially installed the roof so as not to
invalidate any roof warranty benefitting Landlord, and (v) the cost of such
dishes and installation thereof and roof work relating thereto shall not be
deemed a Tenant Improvement Cost the cost of which is payable out of the
Tenant's Improvement Allowance. Tenant shall be entitled to use such satellite
dishes only for its normal and regular business operations from the Premises
(e.g., no such dish shall operate as a repeater station which is part of a
cellular network for which revenues can be or are obtained by Tenant for either
such repeater station or cellular network).
7. Operating Expenses. Commencing on the Rent Commencement Date, Tenant
------------------
shall pay to Landlord as Additional Rent hereunder Tenant's Share of Operating
Expenses as may be paid or incurred by Landlord during the Term. "Tenant's Share
of Operating Expenses" shall mean: (i) 100% as to Operating Expenses for the
Building and Outside Areas; (ii) 100% as to Operating Expenses for the Parking
Garage which are segregated from Operating Expenses for the balance of the
Parking Garage and allocated solely to the portion thereof in which Tenant has
exclusive parking rights, (iii) 50% as to Operating Expenses for the Patio Area,
and (iv) a fraction of all other Operating Expenses for the Parking Garage
(i.e., those Operating Expenses which cannot be segregated as provided in clause
(ii) above), the numerator of which is the square footage of the portions of the
Parking Garage with respect to which Tenant has exclusive parking rights, and
the denominator of which is the square footage of the entire Parking Garage,
with such square footage measurements made in the same fashion as Building
Square Feet are determined pursuant to Paragraph 1.2, and (iv) notwithstanding
the foregoing, 50% as to Operating Expenses relating solely to either of the two
driveways referred to in Paragraph 3.1, 0% as to Operating Expenses for the ramp
leading from the south driveway into the Parking Garage, and 100% of Operating
Expenses for the north ramp leading from the north driveway to the Parking
Garage.
7.1 Definition. Subject to the exclusions therefrom set forth
----------
below, the term "Operating Expenses" shall mean all costs and disbursements
which Landlord shall pay or become obligated to pay in connection with
maintaining, repairing, managing and operating the Premises, Outside Areas,
Patio Area, the north and south driveways described in Paragraph 1.3 and the
ramps leading therefrom into the Parking Garage (which driveways and ramps for
purposes of this Paragraph 7.1 only shall be deemed a part of the Parking
Garage), and Parking Garage, including, without limitation (i) Real Property
Taxes (as defined in Paragraph 5.2(b)) to the extent not paid directly by Tenant
pursuant to Paragraph 5.2 above, (ii) the insurance premiums and deductibles for
insurance which
15
Landlord is required or entitled to maintain with respect to the Premises,
Outside Areas, Patio Area and Parking Garage as described below in Xxxxxxxxx 00,
(xxx) the maintenance, repair and operation of the Premises, Outside Areas,
Patio Area and Parking Garage including, but not limited to all labor,
materials, supplies and services, and the cost of all maintenance contracts,
used or consumed in performing Landlord's maintenance and repair obligations
hereunder, (iv) landscaping maintenance and replacement (but not initial
landscaping which is part of Landlord's Work), sign maintenance, restriping,
reasphalting and patching costs related to the Outside Areas, Patio Area and
Parking Garage, (v) wages and fees of all employees, contractors, agents, or
other persons performing services in, on or about the Premises, Outside Areas,
Patio Area or Parking Garage to the extent relating to the operation and
maintenance of the Premises, Outside Areas, Patio Area and Parking Garage,
including taxes, insurance and benefits relating thereto, (vi) the cost of all
replacements of the HVAC system and roof membrane of the Building, and the
Amortized Portion (as defined in Paragraph 6.2) of any other replacements, (vii)
the Amortized Portion of Alterations or capital improvements to the Premises,
Outside Areas, Patio Area and Parking Garage to the extent the same are required
to be made by applicable Laws, and (viii) any costs for security personnel or
security systems, if any, provided for the Parking Garage. Additionally,
Operating Expenses shall include a management fee for management, operation and
administration of the Premises, Outside Areas, Patio Area and Parking Garage
whether performed by Landlord or a third party property manager, equal to 2% of
the Base Rent payable for the period of time for which such Operating Expenses
are payable. All costs payable by Tenant under this paragraph shall be payable
by Tenant as part of Operating Expenses under Paragraph 7.
Notwithstanding anything to the contrary contained in this Paragraph 7, it is
expressly understood that Operating Expenses do not include (i) amounts due
under loans encumbering the Premises, or payments of rent under ground leases of
the Premises, (ii) depreciation of the Building or of any building service
equipment, (iii) brokerage commissions incurred in connection with leasing all
or any portion of the Building, (iv) attorneys' fees, accounting costs, and
other costs directly related to leasing space in the Building, except for
reasonable fees therefor in the context of reviewing, negotiating, and/or
drafting of any assignment or sublease proposed by Tenant; (v) physical damage
to property caused by the active negligence or wilful misconduct of Landlord or
its employees, agents, or contractors, (vi) expenses related to repairing
construction defects in the Building shell or the breach of Landlord's warranty
set forth in Paragraph 6.2(a) above, (vii) all costs incurred by Landlord to
maintain, repair, and replace all or any portion of the exterior walls of the
Building, the foundation, the structural components of the roof (but not
including the roof membrane), and all other structural components of the
Building, except to the extent required to comply with new or changed Laws
pursuant to Paragraph 6.2(b) the Amortized Portion of which shall be included
within Operating Expenses, (viii) all costs incurred by Landlord to investigate
or remediate Hazardous Materials to the extent Landlord is not otherwise
indemnified against such costs pursuant to Paragraph 6.3(d) above, (ix) costs
incurred by Landlord for repairing damage which costs are actually recovered
from insurance proceeds (or if Landlord fails to carry the insurance which it is
required to carry under this Lease, the costs that would have been recovered
from insurance proceeds had Landlord carried such insurance) or condemnation
awards, (x) Landlord's overhead and administrative costs to the extent exceeding
the management fee charge permitted pursuant to the provisions of this Paragraph
7.1,and (xi) to the extent recovered by Landlord, costs attributable to
repairing or maintaining items which are covered by warranties, other contracts,
or insurance maintained by Landlord.
7.2 Payment of Tenant's Share. On or prior to the Rent Commencement
-------------------------
Date, and thereafter within ninety (90) days after January 1 of each calendar
year during the Term, Landlord shall notify Tenant of Tenant's Share of
Operating Expenses reasonably estimated by Landlord for the following calendar
year. Commencing on the Rent Commencement Date, and on the first day of every
month thereafter, Tenant shall pay to Landlord, as Additional Rent, one-twelfth
(1/12th) of such estimated Tenant's Share of Operating Expenses for the
following calendar year. If at any time during any such period, Landlord
concludes that Operating Expenses for such period will vary from Landlord's
estimate, Landlord may, by written notice to Tenant, revise its estimate for
such period and Operating Expense payments by Tenant for such period shall
thereafter be based upon such revised estimate.
7.3 Statement of Operating Expenses. On or before the end of the
-------------------------------
ninety (90) day period following January 1 of each calendar year or portion
thereof for which Tenant has made estimated payments of or is liable for any
Operating Expenses, Landlord shall furnish Tenant a statement with respect to
such year showing Tenant's Share of Operating Expenses, and the total payments
made by Tenant. Unless Tenant raises any
16
objections to Landlord's statement within two (2) years after receipt of the
same, such statement shall conclusively be deemed correct and Tenant shall have
no right thereafter to dispute such statement or any item therein or the
computation of Operating Expenses or Tenant's Share of Operating Expenses in
such statement. Any amounts due Landlord or Tenant shall be paid in the manner
set forth below. Landlord shall keep at Landlord's headquarters or at its
property manager's office accurate and separate books of account and records for
Operating Expenses. Tenant may, upon ten (10) days advance notice to Landlord,
and no more than twice each calendar year during business hours and on the
day(s) specified by Landlord, inspect such books and records at Tenant's sole
cost.
7.4 Annual Reconciliation. If Tenant's Share of Operating Expenses
---------------------
for the year as finally determined exceeds the total payments made by Tenant
based on Landlord's estimate, Tenant shall pay Landlord the deficiency within
thirty (30) days after Tenant's receipt of Landlord's statement. If the total
payments made by Tenant based on Landlord's estimate exceed the amount properly
payable by Tenant, Landlord shall credit the excess amount to the next Operating
Expenses payment due under this Lease, or upon expiration of the Term pay Tenant
such excess amount within thirty (30) days after Tenant's receipt of Landlord's
statement. Notwithstanding the preceding sentence, if Tenant's Share of Real
Estate Taxes are paid as part of Operating Expenses, then any excess portion of
Operating Expenses attributable to estimated Tenant's Share of Real Estate Taxes
shall not be refunded at the time of such annual reconciliations unless and
until such amounts are determined truly to be excess payments after reassessment
(or supplemental assessment) of the Taxable Property following Landlord's
acquisition thereof and completion of construction of Landlord's Work and the
Tenant Improvements. To the extent any amounts collected as part of Operating
Expenses for payment of Real Estate Taxes are placed in an interest bearing
account, then any interest earned thereon while in such account shall be deemed
earned by Tenant and at such time as such amounts are applied to Real Estate
Taxes or returned to Tenant, as the case may be, shall be paid to Tenant. The
provisions of this paragraph shall survive expiration of the Term.
7.5 Prorations and End of Term. For any partial calendar year at
--------------------------
the commencement or termination of the Term, Tenant's Share of Operating
Expenses for such year shall be prorated on the basis of a 365-day year.
Notwithstanding the termination of this Lease, within thirty (30) days after
Tenant's receipt of Landlord's statement regarding the determination of Tenant's
Share of Operating Expenses for the calendar year in which the Term ends, Tenant
shall pay to Landlord or Landlord shall pay to Tenant, as the case may be, an
amount equal to the difference between Tenant's Share of Operating Expenses for
such year, as finally determined, and the amount previously paid by Tenant
toward such Operating Expenses. The provisions of this paragraph shall survive
expiration or sooner termination of the Term.
8. Maintenance and Repairs.
-----------------------
8.1 Landlord's Obligations. Except as provided in Paragraph 8.2
----------------------
below, Landlord shall keep in good and safe condition, order and repair, and
replace as and if necessary the following items: (i) the roof structure and
membrane, exterior walls, and foundation of the Building, (ii) the Outside Areas
including without limitation all parking, landscaping, driveway, and other
improvements and facilities in the Outside Areas, and (iii) the Parking Garage.
Landlord shall exercise reasonable diligence in performing such maintenance and
repairs as it is required to perform under this paragraph; provided that,
Landlord shall have no obligation to make repairs under this Paragraph 8.1 until
a reasonable time after Landlord's receipt of notice from Tenant of the need for
such repairs or Landlord otherwise actually receives notice of the need for such
repairs. In connection with all of Landlord's activities under this paragraph,
Landlord shall make a reasonable effort to minimize any disruption of Tenant's
business, provided that Landlord shall not be obligated to incur overtime costs
to employ workers who work after normal business hours and on weekends. Except
as otherwise specifically provided in Paragraph 15.5 below (damage and
destruction), there shall be no abatement of rent or other sums payable by
Tenant prior to or during any repairs by Tenant or Landlord, and Tenant waives
all claims for loss of business or lost profits relating to any such repairs.
All costs incurred by Landlord under this paragraph shall be deemed Operating
Expenses payable by Tenant pursuant to Paragraph 7; provided that, all costs
incurred by Landlord to maintain, repair, and replace all or any portion of the
exterior walls of the Building, the foundation, the structural components of the
roof (but not including the roof membrane), and all other structural components
of the Building shall be borne by Landlord at its sole cost and expense and
shall not be included in Operating Expenses. Tenant hereby waives the benefit
of any statute now or hereafter in effect which would otherwise afford Tenant
the right to make repairs at Landlord's
17
expense or to terminate this Lease because of Landlord's failure to keep the
Premises in good condition, order and repair. Tenant specifically waives all
rights it may have under Sections 1932(1), 1941, and 1942 of the California
Civil Code, and any similar or successor statute or law.
8.2 Tenant's Obligations. Commencing on the date of Substantial
--------------------
Completion of Landlord's Work, Tenant shall, at Tenant's expense, keep in good
condition, order and repair all of the following: (i) interior walls, interior
surfaces of exterior walls, floors, ceilings, windows, doors, entrances, and all
glass (including plate glass) located within the Premises; (ii) all plumbing,
heating, air conditioning, ventilating, fire sprinklers, electrical, gas,
sanitary sewer, lighting, and other Building facilities and systems (including
underground conduits to the extent exclusively serving the Building and portions
thereof within the walls or foundation of the Building or on the roof of the
Building); and (iv) all other portions of the Premises other than the foundation
of the Building, the roof structure of the Building, the roof membrane (subject
to Tenant's obligation to obtain maintenance contracts respecting the same
pursuant to this paragraph), the exterior walls of the Building, and other
structural components of the Building. Tenant shall also maintain at its sole
expense in good condition, order and repair its personal property and equipment
located within the Premises. Notwithstanding anything to the contrary contained
in this Lease, Tenant shall repair at its sole expense any damage caused to the
Premises by Tenant or its agents, contractors, or invitees; provided that,
subject to the requirements of the loan documents executed by Landlord and
benefitting any lender having a lien against all or any portion of the Premises,
Landlord shall make available to Tenant any insurance proceeds collected by
Landlord (net of Landlord's costs of collecting the same) arising from any
policy of property insurance carried by Landlord respecting such damage to the
Premises. Tenant shall at its sole expense hire contractors who shall perform
(i) periodic (no less frequently than once every six months) performance of
routine inspection and preventative maintenance of the following components of
the Building: the roof membrane; life safety system; elevators; and heating,
ventilation, and air conditioning system; and (ii) periodic (no less frequently
than once every year) washing of all windows of the Premises (both interior and
exterior surfaces). Such contractors shall be selected from a list of
contractors reasonably acceptable to Landlord based on their experience,
reputation, and quality of performance, all of whom shall carry appropriate
liability insurance naming Landlord and Tenant as additional insureds. The
contract between Tenant and such contractor(s) shall be in a form and substance
reasonably acceptable to Landlord. Tenant shall arrange and pay for such
janitorial service to the Premises as Tenant desires, and for any security
personnel for the Premises as Tenant desires.
9. Alterations.
-----------
9.1 Landlord's Consent Required. Subject to the following
---------------------------
provisions, Tenant shall not, without first obtaining Landlord's prior written
consent which consent shall not unreasonably be withheld, make any alterations,
improvements (including the Tenant Improvements), additions, or utility
installations (collectively called "Alterations") in, on or about the Premises.
As used in this Paragraph 9.1, the term "utility installation" means power
panels, wiring, fluorescent fixtures, space heaters, conduits, air conditioning
and plumbing equipment, lines, and materials. Notwithstanding anything to the
contrary contained in this Lease, Tenant shall not make any Alteration which
increases or reduces the Building Square Feet, and Landlord shall have no
obligation to consent to any such Alteration. Tenant at its sole cost shall
cause to be prepared by an architect or design engineer detailed plans and
specifications respecting any proposed Alterations that Tenant desires to make
to the Premises. Whether or not Landlord's consent thereto is required before
Tenant can make such Alterations, Tenant shall deliver a copy of such plans and
specifications to Landlord at least ten (10) days before commencing such
Alterations. Landlord shall not unreasonably withhold any requested consent to
proposed Alterations or delay giving its consent to or disapproval of proposed
Alterations more than ten (10) days after submission by Tenant to Landlord of
such detailed plans and specifications and a written request by Tenant for
Landlord's consent to such Alterations. Notwithstanding the foregoing, Tenant
shall not be obligated to obtain Landlord's prior written consent for
Alterations which do not (i) affect the structural components of the Building,
(ii) entail any penetration of the roof membrane, or (iii) affect the elevator
or the electrical, gas, plumbing, fire sprinklering or HVAC systems of the
Building. Prior to construction or installation of any Alterations, Landlord may
require Tenant to provide Landlord, at Tenant's expense, a lien and completion
bond in an amount equal to one and one-half times the estimated cost of such
Alterations, to insure Landlord against any liability resulting from the
construction of any such Alterations, including mechanic's and materialmen's
liens, and to insure completion of the work. Should Tenant make any Alterations
requiring the prior written consent of Landlord without obtaining such consent,
then
18
in addition to any other remedies Landlord may have under this Lease for
Tenant's breach of its obligations hereunder, Landlord shall be entitled to
require Tenant immediately to remove the same at Tenant's expense upon demand by
Landlord and to repair any damage to the Premises occasioned by such removal.
Notwithstanding any consent that Landlord may give with respect to proposed
Alterations, such consent shall not imply that Landlord has checked or insures
compliance thereof with applicable Laws, nor that Landlord approves the design
thereof, and as between Tenant and Landlord, Tenant alone shall have sole
responsibility and liability for ensuring compliance thereof with Laws and the
safety of the design thereof. Tenant shall give Landlord notice of the
commencement of construction of any Alterations concurrently with or immediately
prior to such commencement so that Landlord may post notices of
nonresponsibility relating thereto within ten (10) days after such commencement
of construction.
9.2 Permits and As-Built Plans. Tenant shall not make any
--------------------------
Alteration until Tenant first acquires all permits required to make such
Alteration from all appropriate governmental agencies and furnishes a copy
thereof to Landlord prior to commencement of the work. Tenant shall comply with
all conditions of said permits in a prompt and expeditious manner, all at
Tenant's sole expense. Upon completion of any Alteration, Tenant, at Tenant's
sole cost, shall immediately deliver to Landlord "as-built" plans and
specifications therefor.
9.3 Construction Work Done by Tenant. All construction work
--------------------------------
required or permitted to be done by Tenant shall be performed by a contractor
licensed to do business in California and the County of Santa Xxxxx in a prompt,
diligent, and good and workmanlike manner, and shall not diminish the value of
the Building. Furthermore, all such construction work shall conform in quality
and design with the Premises existing as of the time such work is performed. In
addition, all such construction work shall be performed in compliance with all
applicable statutes, ordinances, regulations, codes and orders of governmental
authorities and insurers of the Premises. Tenant or its agents shall obtain and
pay for all licenses and permits necessary therefor. Tenant shall give Landlord
notice of the date of commencement of any work in the Premises not less than ten
(10) days prior thereto, and Landlord shall have the right to post notices of
non-responsibility or similar notices in or on the Premises in connection
therewith.
9.4 Roof Repairs. All installation of air conditioning equipment
------------
and duct work requiring penetration of the roof shall be properly flashed and
caulked. Any electrical or refrigeration conduits or other piping or materials
installed by Tenant in the Building shall be installed beneath the surface of
the roof (and not on the surface of the roof), and Tenant shall thereafter
repair and re-roof the affected portions of the roof surface. Notwithstanding
the foregoing, any conduits and other equipment placed by Tenant on the roof
shall be elevated and supported by Tenant so as not to inhibit drainage or
Landlord's repair of the roof pursuant to Paragraph 8.1. Nothing in this
paragraph shall be construed to allow Tenant or any of its employees, agents,
contractors, or invitees to go upon the roof of the Building, which is strictly
prohibited without the prior written consent of Landlord; except that, Tenant's
General Contractor pursuant to Exhibit "B" of this Lease and its subcontractors
-----------
shall be entitled to go upon the roof of the Building solely for purposes of
construction of the Tenant Improvements and subsequent performance of warranty
work in connection with repairs or curing defects in construction of the Tenant
Improvements; and further except that, Tenant's contractors hired for routine
inspection and maintenance of the roof membrane pursuant to Paragraph 8.2 above
shall be entitled to go upon the roof solely for purposes of performing such
inspection and maintenance. Notwithstanding anything to the contrary contained
in this Lease, Tenant shall obtain Landlord's prior approval of the location and
size of any penetrations (of any depth) made by Tenant or its contractors into
or through the roof of the Building, shall if so required by Landlord have such
penetrations performed by the roofing contractor who initially installed the
roof of the Building so as not to void any warranty obtained by Landlord for
labor and/or materials in connection therewith, and shall at Tenant's sole
expense repair any damage to the roof (including loss of structural integrity)
occasioned thereby to the reasonable satisfaction of Landlord.
9.5 Title to Alterations. Any Alterations which may be made on the
--------------------
Premises shall remain upon and be surrendered with the Premises at the
expiration or sooner termination of the Term, and shall become the property of
Landlord at that time. Without limiting the generality of the foregoing, all
heating, lighting, electrical (including all wiring, conduits, main and
subpanels), air conditioning, immovable partitioning (i.e. affixed to ceiling or
walls), drapery, and carpet installations made by Tenant, regardless of how
affixed to the Premises, together with all other Alterations that have become an
integral part of the Premises, shall not be deemed trade
19
fixtures or Tenant's equipment, and shall remain upon and be surrendered with
the Premises at the expiration or sooner termination of this Lease, and shall
become the property of the Landlord at that time. Notwithstanding the provisions
of this Paragraph 9.5, Tenant's furnishings, movable partitioning (i.e. not
affixed to ceilings or walls), and computers shall remain the property of Tenant
and may be removed by Tenant at any time during the Term provided Tenant at
Tenant's expense immediately after removal repairs any damage to the Premises
caused thereby. Notwithstanding anything to the contrary contained in this
Paragraph 9.5, title to the Tenant Improvements specified on Exhibit "D" (which
-----------
items are allocable to Tenant's Improvement Allowance paid by Landlord) shall
belong to Landlord from the time such Tenant Improvements are constructed or
installed on the Premises, regardless whether Tenant has any obligation to
maintain the same during the Term and/or to restore the same in the event of
damage or destruction of the Premises, it being the intention of the parties
that Landlord, and not Tenant, has all rights to depreciate such items for
income tax purposes. The parties acknowledge that Exhibit "D" is not available
-----------
as of the Effective Date. Landlord and Tenant shall attach such exhibit to this
Lease when Tenant has prepared the Approved Plans as specified in Exhibit "B,"
------------
and prior to Tenant starting construction of the Tenant Improvements. In no
event shall Tenant commence construction of the Tenant Improvements before
Exhibit "D" is agreed to by both Landlord and Tenant and attached as an exhibit
-----------
to this Lease. Such exhibit shall specify Tenant Improvements the allocable
Tenant Improvement Costs for which in the aggregate are no less than the
Tenant's Improvement Allowance. In the event estimated Tenant Improvement Costs
are in excess of the Tenant's Improvement Allowance, and Tenant and Landlord
disagree as to what should be included on said exhibit, Landlord shall choose
the items to be so listed based on its reasonable determination of the items
most likely to be reusable by a successor tenant. Landlord and Tenant shall use
their best efforts to reach agreement on the contents of such exhibit so as not
to delay Tenant's commencement of construction of the Tenant Improvements.
10. Mechanics' Liens. Tenant shall keep the Premises free from any liens
----------------
arising out of any work performed, materials furnished or obligations incurred
by Tenant. In the event that Tenant shall not, within thirty (30) days following
the imposition of any such lien, cause the same to be released of record,
Landlord shall have, in addition to all other remedies provided herein and by
law, the right, but no obligation, to cause the same to be released by such
means as Landlord shall deem proper, including payment of the claim giving rise
to such lien. All sums paid by Landlord for such purpose, and all expenses
incurred by it in connection therewith, shall be payable to Landlord by Tenant
on demand with interest at the rate of fifteen percent (15%) per annum, or the
maximum rate permitted by law, whichever is less.
11. Utilities. Tenant shall pay when due directly to the charging
---------
authority all charges for water, gas, electricity, telephone, internet, cable,
refuse pickup, janitorial services, and all other utilities and services
supplied or furnished to the Building or Outside Areas during the Term, together
with any taxes thereon. In no event shall Landlord be liable to Tenant for
failure or interruption of any such utilities or services, unless caused by the
willful misconduct of Landlord, and no such failure or interruption shall
entitle Tenant to terminate this Lease or to withhold rent or other sums due
hereunder. Landlord shall not be responsible for providing security guards or
other security protection for all or any portion of the Premises, the Outside
Areas, or the Parking Garage, and Tenant shall at its own expense provide or
obtain such security services as Tenant shall desire to insure the safety of
thereof (provided that, if Landlord does provide such services, then such
services shall be an Operating Expense pursuant to Paragraph 7). Tenant shall
hire such janitorial services as it desires, and Landlord shall have no
responsibility or liability relating to janitorial services for the Premises.
12. Indemnity. Tenant shall indemnify, protect, defend, and hold
---------
harmless Landlord from and against any and all claims, damages, loss,
proceedings, causes of action, costs, expense or liability due to, but not
limited to, bodily injury, including death resulting at any time therefrom,
and/or property damage, now or hereafter arising from any act, work or things
done or permitted to be done or otherwise suffered, or any omission in or about
the Premises, the Outside Areas, and the Parking Garage by Tenant or by any of
Tenant's agents, employees, contractors, or invitees, or from any breach or
default by Tenant in the performance of any obligation on the part of Tenant to
be performed under the terms of this Lease, except to the extent such damage,
loss, expense or liability is caused by the willful misconduct of Landlord or
its agents, employees, or contractors. Tenant shall also indemnify Landlord from
and against all damage, loss, expense (including without limitation, attorneys'
fees, costs of investigation, and expert witness fees), and liability incurred
or suffered by Landlord in the defense of or arising out of or resulting from
any claim or any action or proceeding brought thereon. In the event any action
or proceeding
20
shall be brought against Landlord by reason of any such claim, Tenant upon
notice from Landlord shall defend the same at Tenant's expense with counsel
reasonably satisfactory to Landlord. The obligations of Tenant contained in this
paragraph shall survive the expiration or sooner termination of this Lease.
13. Waiver of Claims. Except to the extent caused by Landlord's wilful
----------------
misconduct, Tenant hereby waives any claims against Landlord for injury to
Tenant's business or any loss of income therefrom or for damage to the goods,
wares, merchandise or other property of Tenant, or for injury or death of
Tenant's agents, employees, invitees, or any other person in or about the
Premises, the Outside Areas, and the Parking Garage from any cause whatsoever,
regardless of whether the same results from conditions existing thereupon or
from other sources or places, and regardless of whether the cause of such damage
or injury or the means of repairing the same is inaccessible to Tenant.
Notwithstanding the foregoing, Tenant waives all claims against Landlord for
loss of business or other consequential damages regardless of the cause thereof,
including without limitation Landlord's negligence or wilful misconduct.
14. Insurance.
---------
14.1 Tenant's Liability Insurance. Commencing on the date of
----------------------------
Substantial Completion of Landlord's Work, or if Tenant enters onto the Premises
to construct Tenant Improvements prior to such date then on the date Tenant so
enters onto the Premises to construct Tenant Improvements, and continuing
thereafter through the entire Term, Tenant shall, at its sole cost and expense,
obtain and keep in force either comprehensive general liability insurance or
commercial general liability insurance applying to the condition, use,
occupancy, and maintenance of the Premises and the business operated by Tenant,
or any other occupant, on the Premises and applying to the use of the Outside
Areas and the portion of the Parking Garage used by Tenant. Such insurance
shall include broad form contractual liability insurance coverage insuring all
of Tenant's indemnity obligations under this Lease. Such coverage shall have a
minimum combined single limit of liability of at least Five Million Dollars
($5,000,000). All such policies shall be written to apply to all bodily injury,
property damage, personal injury and other covered loss, however occasioned.
All such policies shall be endorsed to add Landlord and any lender or other
party named by Landlord as an additional insured and to provide that any
insurance maintained by Landlord shall be excess insurance only. Such coverage
shall also contain endorsements: (i) including employees as additional
insureds; and (ii) providing for coverage of employer's automobile non-ownership
liability. All such insurance shall provide for severability of interests;
shall provide that an act or omission of one of the named insureds shall not
reduce or avoid coverage to the other named insureds; and shall afford coverage
for all claims based on acts, omissions, injury and damage, which claims
occurred or arose (or the onset of which occurred or arose) in whole or in part
during the policy period. Tenant shall also maintain Workers' Compensation
insurance in accordance with California law, and employers liability insurance
with a limit no less than One Million Dollars ($1,000,000) per employee and One
Million Dollars ($1,000,000) per occurrence. The limits of all insurance
described in this Paragraph 14.1 shall not, however, limit the liability of
Tenant hereunder. Not more frequently than once each calendar year, if any
lender of Landlord who has provided financing to Landlord respecting the
Premises requires the amount of insurance required hereunder to be increased,
Tenant shall increase said insurance coverage as so required by such lender;
provided that, in no event shall any such increase result in an increase in the
premium therefor of greater than twenty five percent (25%) of the amount of the
premium during the preceding year of the term of this Lease. The failure of
Landlord to require any additional insurance coverage at any time shall not
relieve Tenant from the obligation to provide increased coverage at any later
time or relieve Tenant from any other obligations under this Lease.
14.2 Landlord's Liability Insurance. Landlord shall maintain a
------------------------------
policy or policies of comprehensive general liability insurance insuring
Landlord (and such other persons as may be designated by Landlord) against
liability for personal injury, bodily injury or death and damage to property
occurring or resulting from an occurrence in, on, or about the Premises with a
combined single limit of not less than Five Million Dollars ($5,000,000), or
such greater coverage as Landlord may from time to time determine is reasonably
necessary for its protection. Landlord shall also maintain a policy or policies
of comprehensive general liability insurance insuring Landlord (and such other
persons as may be designated by Landlord) and naming Tenant as an additional
insured, and insuring against liability for personal injury, bodily injury or
death and damage to property occurring or resulting from an occurrence in, on,
or about the Outside Areas and the Parking Garage with a combined single limit
of not
21
less than Five Million Dollars ($5,000,000), or such greater coverage as
Landlord may from time to time determine is reasonably necessary for its
protection.
14.3 Property Insurance.
------------------
(a) Landlord shall obtain and keep in force during the term of
this Lease a policy or policies of insurance covering loss or damage to the
Premises, but excluding coverage of the Tenant Improvements and other
Alterations of Tenant, and excluding coverage of merchandise, fixtures, and
equipment of Tenant, in the amount of the full replacement value thereof,
providing protection against all perils included within the classification of
fire, extended coverage, vandalism, malicious mischief, special extended perils
(all risk), including boiler and machinery coverage and an inflation
endorsement, cost of code compliance, fire sprinkler leakage, and at Landlord's
election (or if otherwise required by any loan documents executed by Landlord
and benefitting a lender holding a lien against all or any portion of the
Premises) of flood and/or earthquake. In addition, Landlord shall obtain and
keep in force, during the term of this Lease, a policy of rental loss insurance
covering a period of one year, commencing on the date of loss, with proceeds
payable to Landlord, which insurance may also cover all Operating Expenses and
other sums payable by Tenant to Landlord hereunder for said period. Tenant shall
have no interest in or right to the proceeds of any such insurance carried by
Landlord.
(b) Commencing on the date of substantial completion of the
Tenant Improvements, Tenant shall, at Tenant's sole expense, obtain and keep in
force during the term of this Lease, a policy of fire and extended coverage
insurance including a standard "all risk" endorsement, and a sprinkler leakage
endorsement (if the Premises shall be sprinklered), insuring the Tenant
Improvements and any other Alterations of Tenant within the Premises for the
full replacement value thereof, as the same may increase from time to time due
to inflation or otherwise. During the period of time that Tenant is constructing
Tenant Improvements, Tenant shall at its sole cost and expense obtain and carry
course of construction insurance covering the full replacement cost of all
Tenant Improvements in place as of the date of occurrence of damage and insuring
against fire and other perils included within extended coverage insurance which
includes a standard "all risk" endorsement and an earthquake endorsement if
Landlord then carries earthquake insurance pursuant to Paragraph 14.3 above. The
proceeds from any of such policies shall be used for the repair or replacement
of such items so insured and, provided such insurance proceeds are used for such
repair and replacement, Landlord shall have no interest in such insurance
proceeds.
14.4 Payment. The cost of premiums and deductibles for insurance
-------
obtained by Landlord pursuant to Paragraphs 14.2 and 14.3(a) shall be included
within Operating Expenses payable by Tenant pursuant to Paragraph 7. Landlord
may obtain liability insurance and property insurance for the Premises, Outside
Areas, and Parking Garage separately, or together with other buildings and
improvements under blanket policies of insurance. In the latter case Operating
Expenses shall include only such portion of the premiums for such blanket
policies as are allocable to the Premises, Outside Areas, and Parking Garage as
reasonably determined by the insurer or Landlord. If the Term does not commence
or expire concurrently with the commencement or expiration, respectively, of the
period covered by such insurance, the premiums shall be prorated on an annual
basis and only such prorated portion shall be included in Operating Expenses.
14.5 Insurance Policies. The insurance required to be obtained by
------------------
Tenant pursuant to Paragraphs 14.1 and 14.3(b) shall be primary insurance and
(a) shall provide that the insurer shall be liable for the full amount of the
loss up to and including the total amount of liability set forth in the
declarations without the right of contribution from any other insurance coverage
of Landlord, (b) as to any liability insurance, shall contain a deductible
amount no greater than Twenty Five Thousand Dollars ($25,000), (c) shall be
carried with companies licensed to do business in the State of California with a
general policyholder's rating of not less than "A-" and a financing rating of
not less than Class "X," as rated by the most current available "Bests"
Insurance Reports (or a comparable rating designated by Landlord if Bests no
longer issues such ratings), and (d) shall specifically provide that such
policies shall not be subject to cancellation, reduction of coverage or other
change except after at least thirty (30) days prior written notice to Landlord.
The policy or policies, or duly executed certificates for them, together with
satisfactory evidence of payment of the premium thereon, shall be deposited with
Landlord on or prior to the date of Substantial Completion of Landlord's Work,
and in all events before Tenant enters onto the Premises
22
to construct or install Tenant Improvements or for any other purpose, and upon
each renewal of such policies, which shall be effected not less than thirty (30)
days prior to the expiration date of the term of such coverage. Tenant shall not
do or permit to be done anything which invalidates any of the insurance policies
referred to in Paragraphs 14.1, 14.2, and 14.3.
14.6 Waiver of Subrogation. Tenant and Landlord each hereby waives
---------------------
any and all rights of recovery against the other, or against the officers,
employees, agents and representatives of the other, for loss of or damage to the
property of the waiving party or the property of others under its control, to
the extent such loss or damage is insured against under any insurance policy
carried by Landlord or Tenant and in force at the time of such loss or damage.
Tenant and Landlord shall, upon obtaining the policies of insurance required
hereunder, give notice to the insurance carrier or carriers that the foregoing
mutual waiver of subrogation is contained in this Lease.
14.7 No Limitation of Liability. Landlord makes no representation
--------------------------
that the limits of liability for insurance specified to be carried by Tenant or
Landlord under the terms of this Lease are adequate to protect any party. If
Tenant believes that the insurance coverage required under this Lease is
insufficient to adequately protect Tenant, Tenant shall provide, at its own
expense, such additional insurance as Tenant deems adequate.
15. Damage or Destruction.
---------------------
15.1 Partial Damage-Insured. If at any time during the Term the
----------------------
Premises are damaged to the extent that the Estimated Restoration Time (as
defined below) is one hundred eighty (180) days or less, and if such damage was
caused by an act or casualty covered under an insurance policy required to be
maintained pursuant to Paragraph 14.3(a), and if the proceeds of such insurance
received by Landlord are sufficient to repair the damage, and if Landlord is
permitted, under all applicable Laws, to restore the Premises to their prior
condition, Landlord shall at Landlord's expense repair such damage as soon as
reasonably possible and this Lease shall continue in full force and effect.
15.2 Partial Damage-Uninsured. Subject to the provisions of
------------------------
Paragraph 15.3, if at any time during the Term the Premises (other than the
Tenant Improvements and other Alterations) are damaged and the insurance
proceeds received by Landlord are not sufficient to repair such damage, or such
damage was caused by an act or casualty not covered under an insurance policy
required to be maintained by Landlord pursuant to Paragraph 14.3(a), Landlord
may at Landlord's option either (a) repair such damage as soon as reasonably
possible at Landlord's expense, in which event this Lease shall continue in full
force and effect, or (b) give written notice of termination of this Lease to
Tenant within thirty (30) days after the date of the occurrence of such damage,
with the effective date of such termination to be the date of the occurrence of
such damage. In the event Landlord gives such notice of termination of this
Lease, Tenant shall have the right, within twenty (20) days after receipt of
such notice, to agree in writing on a basis satisfactory to Landlord to pay for
the entire cost of repairing such damage less only the amount of insurance
proceeds, if any, received by Landlord, in which event the notice of termination
shall be ineffective and this Lease shall continue in full force and effect, and
Landlord shall proceed to make such repairs as soon as reasonably possible. If
Tenant does not give such notice within such twenty (20) day period this Lease
shall be terminated pursuant to such notice of termination by Landlord.
Landlord shall have no further obligation to repair such damage from and after
the date of any such notice of termination by Tenant.
15.3 Total Destruction. If at any time during the Term the Premises
-----------------
are destroyed to the extent that the Estimated Restoration Time is more than one
hundred eighty (180) days from any cause whether or not covered by the insurance
maintained by Landlord pursuant to Paragraph 14.3(a), or if, regardless of the
extent of the damage, Landlord is not permitted under all applicable Laws to
restore the Premises to the condition which existed prior to the casualty, this
Lease shall at the option of Landlord terminate as of the date of such
destruction. Landlord shall exercise its right to terminate this Lease by
delivery of notice of termination to Tenant within thirty (30) days after the
date that Tenant notifies Landlord of the occurrence of such damage. If
Landlord does not terminate this Lease pursuant to the foregoing provisions of
this Paragraph 15.3, then at Landlord's sole expense Landlord shall commence the
repair of such damage as soon as reasonably possible after expiration of the
thirty (30) day period of time during which Landlord can terminate this Lease
pursuant to the foregoing provisions of this Paragraph 15.3, and thereafter
diligently continue such repair work until completion thereof, and this Lease
shall
23
continue in full force and effect. Landlord shall have no further obligation to
repair such damage from and after the date of any such notice of termination by
Tenant. In the event Landlord gives notice of termination of this Lease pursuant
to the preceding provisions of this Paragraph 15.3, and restoration of the
Premises to the condition existing prior to the casualty is permitted under all
applicable Laws, then notwithstanding such notice of termination, Tenant shall
have the right, within twenty (20) days after receipt of such notice, to agree
in writing on a basis satisfactory to Landlord to pay for the entire cost of
repairing such damage less only the amount of insurance proceeds, if any,
received by Landlord, in which event (i) the notice of termination from Landlord
shall be ineffective, (ii) this Lease shall continue in full force and effect,
and (iii) Landlord shall proceed to make such repairs as soon as reasonably
possible. If Tenant does not give such notice within such twenty (20) day period
this Lease shall be terminated pursuant to such notice of termination by
Landlord.
15.4 Damage Near End of Term. Notwithstanding anything to the
-----------------------
contrary in Paragraph 15, if the Premises (exclusive of Tenant's trade fixtures,
equipment, merchandise, Tenant Improvements and other Alterations) are destroyed
or damaged in whole or in part to the extent that the estimated cost of
restoration thereof, as reasonably determined by Landlord, is Two Hundred Fifty
Thousand Dollars ($250,000) or more, whether such damage is caused by an insured
or uninsured casualty, and which damage occurs during the last year of the Term,
then either Landlord or Tenant may terminate this Lease as of the date of
occurrence of such damage by delivering written notice to the other party of its
election to do so within thirty (30) days after the date of occurrence of such
damage.
15.5 Abatement of Rent. If the Premises are partially damaged and
-----------------
Landlord repairs or restores them pursuant to the provisions of this Paragraph
15, then Base Rent, Operating Expenses, and Real Estate Taxes (if paid
separately from Operating Expenses) payable hereunder for the period commencing
on the occurrence of such damage and ending upon completion of such repair or
restoration shall be abated in proportion to the extent to which Tenant's use of
the Premises is impaired starting on the date of damage and continuing until
completion of the repair or restoration; provided that the aggregate amount of
the rent abatement shall not exceed (i) if Landlord carries the rental loss
insurance it is obligated to carry pursuant to Paragraph 14.3(a) above, the
aggregate amount of rental loss insurance proceeds which are paid to Landlord in
connection with such damage, or (ii) if Landlord fails to obtain the rental loss
insurance it is obligated to carry pursuant to Paragraph 14.3(a) above, then one
year of Base Rent, Operating Expenses, and Real Estate Taxes (if paid separately
from Operating Expenses) at the rate for each such item in effect as of the date
of damage. Except for such abatement, if any, Tenant shall have no claim
against Landlord for any damage suffered by reason of any such damage,
destruction, repair or restoration.
15.6 Waiver. Tenant waives the provisions of California Civil Code
------
Sections 1932(2) and 1933(4), and any similar or successor statutes relating to
termination of leases when the thing leased is substantially or entirely
destroyed, and agrees that any such occurrence shall instead be governed by the
terms of this Lease.
15.7 Tenant's Property. Landlord's obligation to rebuild or restore
-----------------
shall not include restoration of Tenant's trade fixtures, equipment,
merchandise, or the Tenant Improvements, or any other Alterations made by Tenant
to the Premises. Promptly after completion by Landlord of any restoration work
Landlord performs pursuant to this Paragraph 15.7, Tenant at its expense shall
restore all such items.
15.8 Notice of Damage. Tenant shall notify Landlord within five (5)
----------------
days after the occurrence thereof of any damage to all or any portion of the
Premises. In no event shall Landlord have any obligation to repair or restore
the Premises pursuant to this Paragraph 15 until a reasonable period of time
after Landlord's receipt of notice of the nature and scope of any damage to the
Premises, and a reasonable period of time to collect insurance proceeds arising
from such damage (unless such damage is clearly not covered by insurance then in
effect covering the Premises).
15.9 Restoration Time. Landlord's good faith estimation of the
----------------
period of time to repair all damage and destruction to the Premises other than
damage to Tenant's trade fixtures, equipment, merchandise, Tenant Improvements
or other Alterations, including the estimated period of time to obtain insurance
proceeds and all governmental permits necessary to perform such repairs, is
herein called the "Estimated Restoration Time."
24
Landlord's determination of the Estimated Restoration Time shall be made in good
faith and shall be conclusive for purposes of this Paragraph 15.
16. Condemnation.
------------
16.1 Partial Taking. Subject to Paragraph 16.5, if part of the
--------------
Building or a portion of the parking area within the Outside Areas or Parking
Garage is taken for any public or quasi-public use, under any statute or right
of eminent domain (collectively a "taking"), and such taking is not deemed a
total taking pursuant to Paragraph 16.2 below, then this Lease shall, as to the
part so taken, terminate as of the date the condemnor or purchaser takes
possession of the property being taken, and the monthly Base Rent payable
hereunder shall be reduced in the same proportion that the floor area of the
portion of the Building so taken (measured in the same fashion as the Building
Square Feet are measured pursuant to Paragraph 1.2 above) bears to the Building
Square Feet immediately prior to such taking. Landlord shall, to the extent
funds therefor are made available from the condemnation award allocable to
severance costs, make all necessary repairs or alterations to the Building in
order to make the portion of the Building not taken a complete architectural
unit. Each party hereto waives the provisions of California Code of Civil
Procedure Section 1265.130 allowing either party to petition the superior court
to terminate this Lease in the event of a partial taking of the Premises.
16.2 Total Taking. Subject to Paragraph 16.5, if all of the Premises
------------
are taken, or if part of the Building is taken so that Tenant is not able to use
at least ninety five percent (95%) of the floor area of the Building in
substantially the same manner as before the taking, or if there is a taking of
more than the greater of five percent (5%) of the aggregate parking area in the
Outside Areas and Parking Garage existing immediately prior to such taking, or a
portion of such parking areas which would leave less than the minimum parking
area required by applicable Laws to permit continued occupancy and use of the
entire Building in substantially the same manner as before the taking, such
taking shall at the election of Tenant or Landlord be treated as a total taking
and this Lease shall terminate upon the date possession shall be taken by the
condemning authority. Each party shall make such election, if at all, by
delivery of notice thereof to the other within thirty (30) days after the date
of such taking.
16.3 Distribution of Award. All compensation awarded upon a taking
---------------------
governed by Paragraph 16.1 or Paragraph 16.2 shall belong to and be paid to
Landlord, except that Tenant shall be entitled to petition for a separate award
from the condemning authority, so long as such separate award does not in any
way reduce the compensation awarded to Landlord, for (i) the unamortized cost of
Tenant's Alterations and Tenant Improvements (based on an amortization period of
10 years) to the extent such Alterations or Tenant Improvements are made to the
Premises by Tenant at Tenant's sole expense (i.e., not paid for by the Tenant's
Improvement Allowance) in accordance with this Lease, or, (ii) if Tenant elects
to and is entitled to remove any such Alterations made to the Premises at
Tenant's expense, for reasonable removal and relocation costs thereof not to
exceed the market value of such Alterations on the date possession of the
Premises is taken.
16.4 Sale Under Threat of Condemnation. A sale by Landlord to any
---------------------------------
authority having the power of eminent domain, either under threat of
condemnation or while condemnation proceedings are pending, shall be deemed a
taking under the power of eminent domain for purposes of this Paragraph 16.
16.5 Temporary Taking. If all or any part of the Premises is
----------------
occupied, taken, or appropriated by military or other public or quasi-public use
or other governmental authority for less than thirty (30) consecutive days, it
shall not constitute a taking of the Premises which would be governed by
Paragraph 16.1 or Paragraph 16.2. In such event, during such a "temporary
taking," all of the provisions of this Lease shall remain in force and effect,
except that the monthly Base Rent and Operating Expenses payable during such
temporary taking shall be reduced in the same proportion that the floor area of
the portion of the Building so occupied, taken, or appropriated bears to the
floor area of the Premises immediately prior to such occupation. Any award that
may be paid in connection with such a temporary taking shall be paid to
Landlord. In the event a taking which appears, at its commencement, to be only
a temporary taking nevertheless continues for thirty (30) consecutive days or
more, a partial or total taking, as the case may be, shall be deemed to have
occurred on the thirtieth (30th) consecutive day of such taking, and shall be
governed by the provisions of either Paragraph 16.1 or Paragraph 16.2 as the
case may be.
25
17. Assignment and Subletting.
-------------------------
17.1 Consent Required Except for Permitted Transfers.
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(a) Except as provided in Paragraph 17.1(b) with respect to
Permitted Transfers, Tenant shall not assign this Lease, or any interest
therein, voluntarily or involuntarily, and shall not sublet the Premises or any
part thereof, or any right or privilege appurtenant thereto, or suffer any other
person (the agents and employees of Tenant excepted) to occupy or use the
Premises, or any portion thereof, without the prior written consent of Landlord
in each instance pursuant to the terms and conditions set forth below, which
consent shall not unreasonably be withheld. All of the following shall be deemed
an assignment within the meaning of this Paragraph 17: (i) any transfer
resulting from the merger, consolidation or other reorganization of Tenant, or
transfer to any Affiliate (as defined below) of Tenant, (ii) any transfer
resulting from the sale or other transfer of all or substantially all of
Tenant's assets, and (iii) if Tenant is a partnership, trust or unincorporated
association, the sale, issuance or transfer of a controlling interest therein,
or the transfer of a majority interest in or a change in the voting control of
any partnership, trust, unincorporated association which is an Affiliate of
Tenant, or the transfer of any portion of any general partnership or managing
interest in Tenant or in any such Affiliate. "Affiliate" shall mean any Entity
controlled by, under common control with, or controlling, Tenant. "Entity" shall
mean any person, corporation, partnership (general or limited), limited
liability company, joint venture, association, joint stock company, trust or
other business entity or organization. For purposes of this paragraph, "control"
shall mean (i) with respect to a corporation, the direct or indirect ownership
of more than fifty percent (50%) of any class of voting shares, (ii) with
respect to a partnership, the ownership of a general partnership interest, or
entitlement to more than fifty percent (50%) of the partnership interests in
profits or capital, (iii) with respect to any other Entity, the ownership of a
majority of the voting rights thereof, or the ability to direct its management
decisions. Tenant shall have no right to transfer any rights respecting the
Outside Areas or Parking Garage independently of its rights to the Premises, and
as to any sublease, shall transfer only a prorata share of parking rights in the
Outside Areas and Parking Garage based on the ratio between the Building Square
Feet so subleased and the total Building Square Feet.
(b) Notwithstanding Paragraph 17.1(a), Tenant shall be entitled
to assign this Lease or sublet the Premises or any portion thereof, without
Landlord's consent, to any Affiliate and any Entity which results from a merger
or consolidation with or other reorganization of Tenant, or to any Entity which
acquires substantially all of the stock or assets of Tenant as a going concern
with respect to the business that is being conducted in the Premises (each a
"Permitted Transfer"), provided that as to each Permitted Transfer either (i)
Tenant is the only surviving entity in the aftermath of such transaction and
remains fully and primarily liable under this Lease for the performance of all
of Tenant's obligations hereunder, or (ii) if Tenant is not a surviving entity
(for example, it merges into another corporation), then the net worth of such
assignee on the effective date of such assignment, excluding good will and other
intangible assets, is no less than the net worth of Tenant (as so calculated) on
the Effective Date.
17.2 Documentation. Prior to any assignment or sublease which Tenant
-------------
desires to make, Tenant shall provide to Landlord the name and address of the
proposed assignee or sublessee, a statement of the proposed use of the Premises
by the assignee or sublessee (including an indication of the extent to and
manner in which Hazardous Materials [as defined in Paragraph 6.3(a)] will be
utilized), and true and complete copies of all documents relating to Tenant's
prospective agreement to assign or sublease, and shall specify all consideration
to be received by Tenant for such assignment or sublease in the form of lump sum
payments, installments of rent, or otherwise. For purposes of this Paragraph
17, the term "consideration" shall include, without limitation, all monies or
other consideration of any kind, to the extent such sums are related to Tenant's
interest in this Lease or in the Premises, including but not limited to any and
all of the following items to the extent related to Tenant's interest in this
Lease or in the Premises: bonus money, payments (in excess of book value
thereof) for Tenant's tangible assets, and any payments for intangible assets
relating solely to the Premises. Within ten (10) business days after the
receipt of such written notice, Landlord shall either consent in writing to such
proposed assignment or sublease subject to the terms and conditions hereinafter
set forth, or notify Tenant in writing that Landlord refuses such consent,
specifying reasonable grounds for such refusal.
26
17.3 Terms and Conditions. As a condition to Landlord's granting its
--------------------
consent to any assignment or sublease, Landlord may require that (i) Tenant pay
to Landlord fifty percent (50%) of the amount of any excess of such
consideration payable to Tenant in connection with said assignment or subletting
over and above the rental amount fixed by this Lease and payable by Tenant to
Landlord (prorated to reflect the rent allocable to the portion of the Premises
subject to any sublease) after Tenant first deducts from such excess
consideration its amortized Costs of Transfer (as hereinafter defined) as
provided below, and (ii) Tenant and the proposed assignee or sublessee
demonstrate to Landlord's reasonable satisfaction that the assignee or sublessee
is financially responsible and proposes to use the Premises for the uses
permitted in this Lease. Tenant's "Costs of Transfer" shall mean only the
following amounts of money: (i) real estate brokerage commissions reasonably
incurred by Tenant in connection with said assignment or subletting, up to but
not exceeding Seven Dollars and Fifty Cents ($7.50) per square foot of space
subleased or assigned; and (ii) the cost of any Alterations made by Tenant
within sixty (60) days before or ninety (90) days after the effective date of
such assignment or subletting for the benefit of such assignee or sublessee, up
to but not exceeding Ten Dollars ($10) per square foot of space within the
assigned or sublet premises; provided that such Ten Dollar ($10) amount shall be
changed by the same percentage change in the United States Department of Labor,
Bureau of Labor Statistics Consumer Price Index for All Urban Consumers, for San
Francisco-Oakland-San Xxxx (1982-84=100) during the period of time between the
date of Substantial Completion of Landlord's Work and the date of any such
assignment or subletting. Nothing in clause (ii) of the preceding sentence
shall be construed to mean that Landlord must approve any proposed Alterations
desired by any assignee or sublessee; the provisions of Paragraph 9 regarding
Alterations and Landlord's right to approve or disapprove any proposed
Alterations shall not be affected in any way by said clause (ii). In the event
Tenant enters into more than one assignment or sublease respecting all or any
portion of the Premises during the Term, then for purposes of calculating the
amount of Costs of Transfer which can first be deducted by Tenant from excess
consideration before giving Landlord fifty percent (50%) of the remainder
thereof, Tenant shall reduce the amount of the Costs of Transfer by the amounts
deductible by Tenant in connection with prior assignments or subleases allocable
to costs listed in clause (ii) in the definition of Costs of Transfer set forth
above. All square footage measurements specified in this paragraph shall be
made in the same fashion as is set forth in Paragraph 1.2. Each assignment or
sublease agreement, regardless whether Landlord's consent thereto is required to
be obtained and/or is obtained, shall be an instrument in writing (and if
Landlord's consent thereto is required to be obtained, shall be in form
satisfactory to Landlord), and shall be executed by both Tenant and the assignee
or sublessee, as the case may be. Each such assignment or sublease agreement
shall recite that it is and shall be subject and subordinate to the provisions
of this Lease, that the assignee or sublessee accepts such assignment or
sublease and agrees to perform all of the obligations of Tenant hereunder, and
that the termination of this Lease shall, at Landlord's sole election,
constitute a termination of every such assignment or sublease. Notwithstanding
any assignment or sublease, Tenant shall remain primarily liable for all
obligations and liabilities of Tenant under this Lease, including but not
limited to the payment of Base Rent and Operating Expenses. Tenant agrees to
reimburse Landlord upon demand for reasonable attorneys' fees incurred by
Landlord in connection with the negotiation, review, and documentation of any
such requested assignment or subleasing. Tenant hereby stipulates that the
foregoing terms and conditions are reasonable.
17.4 Landlord's Remedies. Any assignment or sublease made in
-------------------
violation of any of the provisions of Paragraph 17 shall at Landlord's election
be void, and shall constitute an Event of Default. The consent by Landlord to
any assignment or sublease shall not constitute a waiver of the provisions of
this Paragraph 17, including the requirement of Landlord's prior written
consent, with respect to any subsequent assignment or sublease. If Tenant shall
purport to assign this Lease, or sublease all or any portion of the Premises, or
permit any person or persons other than Tenant to occupy the Premises, without
Landlord's prior written consent, Landlord may collect rent from the person or
persons then or thereafter occupying the Premises and apply the net amount
collected to the rent reserved herein, but no such collection shall be deemed a
waiver of Landlord's rights and remedies under this Paragraph 17, or the
acceptance of any such purported assignee, sublessee or occupant, or a release
of Tenant from the further performance by Tenant of covenants on the part of
Tenant herein contained.
17.5 Encumbrances, Licenses and Concession Agreements. Tenant shall
------------------------------------------------
not encumber its interest under this Lease or any rights of Tenant hereunder, or
enter into any license or concession agreement respecting all or any portion of
the Premises, without Landlord's prior written consent which consent shall not
27
unreasonably be withheld subject to the terms and conditions referred to in
Paragraph 17.2 above, and Tenant's granting of any such encumbrance, license, or
concession agreement shall constitute an assignment (or a sublease if it relates
to less than all of the Premises) for purposes of this Paragraph 17.
18. Default by Tenant.
-----------------
18.1 Event of Default. The occurrence of any one or more of the
----------------
following events (an "Event of Default") shall constitute a default and breach
of this Lease by Tenant.
(a) The failure by Tenant to make any payment of rent or any
other payment requited to be made by Tenant hereunder, as and when due, and such
failure shall not have been cured within seven (7) days after written notice
thereof from Landlord. Any such notice shall constitute the notice required
under Section 1161 of the California Code of Civil Procedure (and/or any related
or successor statutes regarding unlawful detainer actions), provided such notice
is given in accordance with the requirements of such statute.
(b) Tenant's failure to obtain the liability insurance required
to be obtained by Tenant under this Lease, to provide the Letter of Credit in
the full amount required under this Lease, and/or to provide any subordination
or attornment agreement or estoppel certificate as and when required by this
Lease, and such failure shall have continued for seven (7) days after written
notice of such failure is given to Tenant;
(c) Tenant's assignment of this Lease or any interests herein or
sublease of all or any portion of the Premises without Landlord's prior written
consent where such consent is required by the provisions of Paragraph 17.
(d) Tenant's failure to perform any of its material obligations
under this Lease other than those referenced in Paragraphs 18.1(a), (b), or (c)
above or to observe or comply with any other requirement of this Lease and such
failure shall have continued for thirty (30) days after written notice of such
failure is given to Tenant; or in the event such failure is curable but cannot
reasonably be cured within said thirty (30) day period, Tenant fails to commence
such cure within said thirty (30) day period and thereafter diligently continue
to pursue all reasonable efforts to complete said cure until completion thereof.
(e) Tenant's failure to regularly conduct its business in the
Premises for a period of more than ten (10) consecutive days, or Tenant's
removal of all or substantially all of its equipment and other possessions from
the Premises;
(f) Tenant's assignment of its assets for the benefit of its
creditors;
(g) 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 on the Premises, and Tenant shall have failed to
obtain a return or release on such property within thirty (30) days thereafter,
or prior to sale pursuant to such sequestration, attachment or execution,
whichever is earlier;
(h) An entry of any of the following orders by a court having
jurisdiction, and such order shall have continued for a period of thirty (30)
days: (1) an order for relief in any proceeding under Title 11 of the United
States Code, or an order adjudicating Tenant to be bankrupt or insolvent; (2) an
order appointing a receiver, trustee or assignee of Tenant's property in
bankruptcy or any other proceeding; or (3) an order directing the winding up or
liquidation of Tenant; or
(i) The filing of a petition to commence against Tenant an
involuntary proceeding under Title 11 of the United States Code, and Tenant
shall fail to cause such petition to be dismissed within thirty (30) days
thereafter.
18.2 Remedies. Upon any Event of Default, Landlord shall have the
--------
following remedies, in addition to all other rights and remedies provided by law
or equity:
28
(a) Landlord shall be entitled to keep this Lease in full force
and effect for so long as Landlord does not terminate Tenant's right to
possession (whether or not Tenant shall have abandoned the Premises) and
Landlord may enforce all of its rights and remedies under this Lease, including
the right to recover rent and other sums as they become due under this Lease,
plus interest at the lesser of fifteen percent (15%) per annum or the highest
rate then allowed by law, from the due date of each installment of rent or other
sum until paid; or
(b) Landlord may terminate Tenant's right to possession by
delivery to Tenant of written notice of termination. Upon delivery of such
notice, this Lease and all of Tenant's rights in the Premises shall terminate.
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 the event this Lease is terminated
pursuant to this Paragraph 18.2(b), Landlord may recover from Tenant: (1) the
worth at the time of award of the unpaid rent which had been earned at the time
of termination; plus (2) the worth at the time of award of the amount by which
the unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss for the same period that Tenant
proves could have been reasonably avoided; plus (3) 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 for the same period
that Tenant proves could be reasonably avoided; plus (4) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant's failure to perform Tenant's obligations under this Lease, or which in
the ordinary course of things would be likely to result therefrom, including
without limitation, the following: (i) expenses for cleaning, repairing or
restoring the Premises; (ii) expenses for altering, remodeling or otherwise
improving the Premises for the purpose of reletting, including installation of
leasehold improvements (whether such installation be funded by a reduction of
rent payable by a new tenant, direct payment or allowance to a new tenant, or
otherwise); (iii) real estate leasing commissions for any new lease allocable to
the period of time commensurate with the portion of the Term which would have
remained had the Lease not been terminated (based on the leasing commission
schedule of the broker if such commission is based on a varying percentage of
rents over time, and otherwise based on straight line amortization of such costs
over the term of the new lease assuming a rate of interest equal to Landlord's
normal costs of financing at such time, exclusive of options to extend such
term), less any amount recovered by Landlord as damages pursuant to clause
(viii) below; (iv) advertising costs and other expenses of reletting the
Premises; (v) costs incurred as owner of the Premises including without
limitation taxes and insurance premiums thereon, utilities and building
security; (vi) expenses in retaking possession of the Premises; (vii) attorneys'
fees and court costs; and (viii) any unamortized lease commission paid in
connection with this Lease. The "worth at the time of award" of the amounts
referred to in clauses (1) and (2) of this Paragraph 18.2(b) shall be computed
by allowing interest at the lower of fifteen percent (15%) per annum, or the
maximum rate then permitted by law. The "worth at the time of award" of the
amount referred to in subparagraph (3) of this paragraph shall be 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 "time of award"
as used in clauses (1), (2), and (3) of this paragraph shall mean the date of
entry of a judgment or award against Tenant in an action or proceeding arising
out of Tenant's breach of this Lease. The term "rent" as used in this paragraph
shall include all Base Rent and Additional Rent.
(c) This Lease may be terminated by a judgment specifically
providing for termination, or by Landlord's delivery to Tenant of written notice
specifically terminating this Lease. In no event shall any one or more of the
following actions by Landlord, in the absence of a written election by Landlord
to terminate this Lease, constitute a termination of this Lease or a waiver of
Landlord's right to recover damages under this Paragraph 18: (1) appointment of
a receiver in order to protect Landlord's interest hereunder; (2) consent to any
subletting of the Premises or assignment of this Lease by Tenant, whether
pursuant to provisions hereof concerning subletting and assignment or otherwise;
or (3) any other action by Landlord or Landlord's agents intended to mitigate
the adverse effects of any breach of this Lease by Tenant, including without
limitation any action taken to maintain and preserve the Premises, or any action
taken to relet the Premises or any portion thereof for the account of Tenant and
in the name of Tenant.
18.3 Landlord's Right to Perform Tenant's Obligations. If
------------------------------------------------
Tenant at any time shall fail to make any payment or perform any other act
required to be made or performed by Tenant under this Lease, then Landlord may,
but shall not be obligated to, make such payment or perform such other act to
the extent Landlord may deem
29
desirable, and may, in connection therewith, pay any and all expenses incidental
thereto and employ counsel. No such action by Landlord shall be deemed a waiver
by Landlord of any rights or remedies Landlord may have as a result of such
failure by Tenant, or a release of Tenant from performance of such obligation.
All sums so paid by Landlord, including without limitation all penalties,
interest and costs in connection therewith, shall be due and payable by Tenant
to Landlord on the day immediately following any such payment by Landlord.
Landlord shall have the same rights and remedies for the nonpayment of any such
sums as Landlord may be entitled to in the case of default by Tenant in the
payment of rent.
18.4 Interest on Past Due Obligations. Any amount due to Landlord
--------------------------------
hereunder not paid when due shall bear interest at the lower of fifteen percent
(15%) per annum, or the highest rate then allowed by law, from the date due
until paid in full. Payment of such interest shall not excuse or cure any
default by Tenant under this Lease.
18.5 Additional Rent. All sums payable by Tenant to Landlord or to
---------------
third parties under this Lease in addition to such sums payable pursuant to
Paragraphs 3.1 and 3.2 hereof shall be payable as Additional Rent. For purposes
of any unlawful detainer action by Landlord against Tenant pursuant to
California Code of Civil Procedure Sections 1161-1174, or any similar or
successor statutes, Landlord shall be entitled to recover as rent not only such
sums specified in Paragraph 3 as may then be overdue, but also all such
Additional Rent as may then be overdue.
18.6 Remedies Not Exclusive. No remedy or election hereunder shall
----------------------
be deemed exclusive but shall, wherever possible, be cumulative with all other
remedies herein provided or permitted at law or in equity.
19. Default by Landlord.
-------------------
19.1 Cure Period. Landlord shall not be deemed to be in default in
-----------
the performance of any obligation required to be performed by it hereunder
unless and until it has failed to perform such obligation within the period of
time specifically provided herein, or if no period of time has been provided,
then within thirty (30) days after receipt of written notice by Tenant to
Landlord specifying wherein Landlord has failed to perform such obligation;
provided, however, that if the nature of Landlord's obligation is such that more
than thirty (30) days are reasonably required for its performance, then Landlord
shall not be deemed to be in default if it shall commence such performance
within such thirty (30) day period and thereafter diligently prosecute the same
to completion.
19.2 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 furnished to Tenant, and before Tenant
shall have any right to terminate this Lease Tenant shall grant such beneficiary
or mortgagee a reasonable period within which to cure the default, including a
reasonable period to obtain possession of the Premises by power of sale or
judicial foreclosure, if such action is necessary to effect a cure.
20. Advertisements and Signs. Tenant shall be entitled to place its name
------------------------
on a sign located on the exterior of the Building, and on any monument sign in
the Outside Areas that Tenant erects, provided that Tenant first obtains all
necessary approvals and permits required therefor by the City of Los Altos and
any other applicable Laws, and provided further that Tenant first obtains
Landlord's consent thereto as to the color, size, style, character, and location
of each such sign, which consent shall not unreasonably be withheld or delayed.
Upon termination of this Lease, Tenant shall remove any sign which it has placed
on or about the Premises, and shall repair any damage caused by the installation
or removal of such sign. Tenant at its sole expense shall bear all costs of
making and erecting such signage, obtaining all consents and permits required to
erect or place the same, and removing the same and repairing damage occasioned
by such removal.
21. Entry by Landlord. Landlord and its agents shall be entitled to enter
-----------------
into and upon the Premises at all reasonable times, upon reasonable notice
(except in the case of an emergency, in which event no notice shall be
required), for the following purposes: (a) to inspect or make repairs,
alterations or additions to all or any portion of the Premises which Landlord
may deem appropriate (i) to comply with any laws, ordinances, rules,
regulations, or
30
policies of any governmental authority or Landlord's insurance carrier(s), or
(ii) to prevent waste or deterioration of the Premises, or (iii) to promote the
general welfare and safety of occupants of the Premises, or (iv) to perform
construction work in the Building or in the Outside Areas, including the
erection and maintenance of such scaffolding, canopies, fences and props as may
be required; (b) to post notices of non-responsibility for Alterations; or (c)
to show the Premises to prospective purchasers or lenders and their appraisers
and other representatives; and, during the one hundred eighty (180) day period
prior to the expiration of this Lease, or upon any Event of Default, to place
upon the Premises any usual or ordinary "for lease" signs and exhibit the
Premises to prospective tenants at reasonable hours. Landlord's rights of entry
as set forth in this Paragraph 21 shall be subject to the reasonable security
regulations of Tenant, and to the requirement that Landlord shall use reasonable
efforts to minimize interference with Tenant's business activities on the
Premises. If Tenant so requests in connection with any work being performed by
Landlord the costs of which are deemed Operating Expenses under this Lease,
Landlord shall use reasonable efforts to perform such work during Tenant's non-
business hours; nothing in this sentence shall be construed to otherwise
obligated Landlord to use overtime labor or perform any work or other activities
during Tenant's non-business hours. Landlord shall be entitled to exercise the
foregoing rights of entry without any abatement of rent and without liability to
Tenant for any injury or inconvenience to or interference with Tenant's
business, quiet enjoyment of the Premises, or any other loss occasioned thereby;
provided that, Tenant shall have the right to bring claims against Landlord for
compensatory damages (but not lost profits or other consequential damages) to
the extent arising from damage to property or injury or death to persons caused
by the wilful misconduct of Landlord occurring in or about the Premises and
relating to Landlord's exercise of the foregoing rights.
22. Subordination and Attornment.
----------------------------
22.1 Subordination. Except with respect to any existing deeds of
-------------
trust or other liens encumbering the Premises or any portion thereof as of the
Effective Date (which the parties acknowledge are prior to this Lease), this
Lease shall not be subject to or subordinate to any ground or underlying lease
or to any lien, mortgage, deed of trust, or security interest now or hereafter
affecting the Premises, nor shall Tenant be required to execute any documents
subordinating this Lease, unless the ground lessor, lender, or other holder of
the interest to which this Lease shall be subordinated (collectively, the
"lender") agrees to execute a recognition and non-disturbance agreement on
commercially reasonable terms providing that this Lease shall not be terminated
so long as Tenant is not in default under this Lease. "Commercially reasonable
terms" for purposes of Paragraphs 22.1 and 22.2 shall be deemed to include
without limitation provisions exculpating such lender from any liability for any
default of Landlord occurring prior to the date such entity acquires title to
the Premises except to the extent such default continues after the date such
entity acquires title to the Premises, for any prepaid rent in excess of one
month's installment of Base Rent and Operating Expenses, and for any sums drawn
on the Letter of Credit prior to the date such entity acquires title to the
Premises, and provisions under which the loan document provisions relating to
insurance and condemnation supercede inconsistent provisions of this Lease.
Tenant shall execute and return to Landlord the written agreement and any other
documents required to accomplish the purposes of this paragraph within seven (7)
business days after delivery thereof to Tenant, and the failure of Tenant to
execute and return any such instruments shall constitute an Event of Default
hereunder. Notwithstanding anything to the contrary set forth above, any such
ground lessor, lender, or other interest holder may at any time subordinate its
ground lease, deed of trust, mortgage, or other security interest to this Lease,
without any need to obtain Tenant's consent, by execution of a written document
subordinating the same to this Lease and thereupon this Lease shall be deemed
prior thereto without regard to their respective dates of execution, delivery
and/or recording.
22.2 Attornment. Upon request by such acquiring entity, Tenant shall
----------
attorn to any third party purchasing or otherwise acquiring the Premises at any
sale or other proceeding, or pursuant to the exercise of any rights, powers or
remedies under any mortgages or deeds of trust or ground leases now or hereafter
encumbering all or any part of the Premises, as if such third party had been
named as Landlord under this Lease. Such attornment shall be effectuated by
Tenant's execution of such attornment documentation as such acquiring entity
requests Tenant to execute. Tenant shall execute a new lease with such new
Landlord on the same terms of this Lease if so required by such new Landlord,
but only with respect to the then remaining balance of the Term, and including
Tenant's rights to extend the Term to the extent Tenant then has any remaining
Options to extend the Term.
31
23. Estoppel Certificates and Financial Statements. Tenant shall within
----------------------------------------------
fifteen (15) days following request by Landlord: (a) execute and deliver to
Landlord any documents, including estoppel certificates, in the form presented
to Tenant by Landlord (1) certifying that this Lease has not been modified and
is in full force and effect or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full force
and effect, (2) stating the date to which the rent and other charges are paid in
advance, if at all, (3) acknowledging that there are not, to Tenant's knowledge,
any uncured defaults on the part of Landlord hereunder, or if there are uncured
defaults on the part of Landlord, stating the nature of such uncured defaults,
and (4) certifying any other information relating to this Lease as may be
required either by a lender making a loan to Landlord to be secured by a deed of
trust or mortgage encumbering the Premises or a purchaser of the Premises from
Landlord; and (b) deliver to Landlord the best available current financial
statements of Tenant, including a balance sheet and profit and loss statement
for the then current fiscal year, and the two (2) immediately prior fiscal years
(if available), all prepared in accordance with generally accepted accounting
principles (GAAP) consistently applied. Tenant's failure to deliver any such
documents, including an estoppel certificate, or any such financial statements
within fifteen (15) days following such request shall be an Event of Default
under this Lease.
24. Notices. Any notice, approval, proposal, request, demand, consent or
-------
other communication (collectively "notice") required or desired to be given or
made under this Lease shall be in writing and shall be personally delivered by
commercial courier (including process servers) or United States mail, registered
or certified, postage prepaid, and addressed to the party to be served at the
last address given by that party to the other party under the provisions of this
paragraph. As of the Effective Date, the addresses of Landlord and Tenant are
as set forth above in the preamble to this Lease. Either party may change its
address by notice to the other party. Any notice delivered in accordance with
the foregoing by commercial courier shall be deemed delivered on the date of
actual receipt (as evidenced by signed receipt), or upon refusal of receipt, or
if delivered by United States mail on the date of receipt evidenced by the
return receipt. No notice shall be deemed effective under this Lease unless
delivered in compliance with the provisions of this Paragraph 24.
25. Waiver. The waiver by either party 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. The subsequent acceptance
of rent hereunder by Landlord shall not be deemed to be a waiver of any
preceding breach by Tenant of any term, covenant or condition of this Lease,
other than the failure of Tenant to pay the particular rental so accepted,
regardless of Landlord's knowledge of such preceding breach at the time of
acceptance of such rent. No term, covenant or condition shall be deemed to have
been waived by either party unless such waiver is in writing and signed by the
party making such waiver.
26. No Accord and Satisfaction. No payment by Tenant, or receipt by
--------------------------
Landlord, of an amount which is less than the full amount of rent and all other
sums payable by Tenant hereunder at such time shall be deemed to be other than
on account of (a) the earliest of such other sums due and payable, and
thereafter (b) to the earliest rent due and payable hereunder. No endorsement
or statement on any check or any letter accompanying any payment of rent or such
other sums shall be deemed an accord and satisfaction, and Landlord may accept
any such check or payment without prejudice to Landlord's right to receive
payment of the balance of such rent and/or the other sums, or Landlord's right
to pursue any remedies to which Landlord may be entitled to recover such
balance.
27. Attorney's Fees. If any action or proceeding at law or in equity, or
---------------
an arbitration proceeding (collectively an "action"), shall be brought to
recover any rent or other sum payable under this Lease, or resulting from the
failure by either party to perform any of its other obligations under this
Lease, or to enforce or interpret any of the terms, covenants, or conditions of
this Lease, or for the recovery of possession of the Premises, the prevailing
party shall be entitled to recover from the other party as a part of such
action, or in a separate action brought for that purpose, its reasonable
attorney's fees and costs and expenses (including expert witness fees, court
costs) incurred in connection with the prosecution or defense of such action,
and any appeal therefrom. "Prevailing party" within the meaning of this
paragraph shall include, without limitation, a party who brings an action
against the other after the other is in breach or default, if such action is
dismissed upon the other's payment of the sums allegedly due or upon the other's
performance of the covenants allegedly breached, or if the party commencing such
32
action or proceeding obtains substantially the relief sought by it in such
action, whether or not such action proceeds to a final judgment or
determination.
28. Surrender. Tenant shall, upon expiration or sooner termination of
---------
this Lease, surrender the Premises to Landlord in the same condition as existed
on the date Tenant originally took possession thereof (reasonable wear and tear
and damage due to causes beyond the reasonable control of Tenant excepted, and
as improved with Tenant Improvements and other Alterations) with all holes in
walls repaired, all carpets shampooed and cleaned, all HVAC equipment in
operating order and in good repair, and all floors cleaned and waxed, all to the
reasonable satisfaction of Landlord. Tenant shall at such time also surrender
to Landlord all Tenant Improvements and Alterations (as defined in Paragraph 9).
Tenant, on or before the expiration or sooner termination of this Lease, shall
remove all of its personal property and trade fixtures from the Premises, and
any such items not removed by Tenant shall be deemed abandoned. Tenant shall be
liable to Landlord for costs of removal of any such abandoned personal property
and trade fixtures of Tenant, together with the cost of repairing any damage to
the Premises occasioned by removal thereof and/or occasioned by any removal of
items removed by Tenant which damage Tenant has failed to repair, and the
transportation and storage costs of all trade fixtures and personal property of
Tenant so removed by Landlord. All keys to the Premises or any part thereof
shall be surrendered to Landlord upon expiration or sooner termination of the
Lease term.
29. Holding Over. This Lease shall terminate without further notice at
------------
the expiration of the Term. Any holding over by Tenant after expiration shall
not constitute a renewal or extension of the Term or give Tenant any rights in
or to the Premises unless otherwise expressly provided in this Lease. Any
holding over after expiration of the Term with the express written consent of
Landlord shall be construed to be a tenancy from month to month, at one hundred
twenty-five percent (125%) of the monthly Base Rent for the last month of the
Term, and shall otherwise be on the terms and conditions herein specified
insofar as applicable, unless otherwise mutually agreed in writing by the
parties.
30. Transfer of Premises by 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 to the Premises. In the event of any transfer of such
fee title, the Landlord herein named (and in case of any subsequent transfer or
conveyance, the then grantor) shall after the date of such transfer or
conveyance 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 thereafter to be performed; 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. Tenant shall cause the Letter of
Credit to be reissued in the name of such grantee on the sooner of: (i) the date
of such transfer, (ii) ten (10) days after Tenant receives notice of such
transfer. The covenants and obligations contained in this Lease on the part of
Landlord shall, subject to the foregoing, be binding upon each Landlord
hereunder only during its respective period of ownership.
31. Rules and Regulations of Building.
---------------------------------
31.1 The sash doors, sashes, lights, and skylights that reflect or
admit light into the halls or other places of the Building shall not be covered
or obstructed. The toilets and urinals shall not be used for any purpose other
than those for which they were constructed, and no rubbish, newspapers or other
substances of any kind shall be thrown into them. Waste and excessive or
unusual use of water shall not be allowed. Tenant shall not deface the walls,
ceilings, partitions, floors, wood, stone or iron work. The expense of any
breakage, stoppage or damage resulting from a violation of this rule shall be
borne by Tenant.
31.2 No additional lock or locks shall be placed by Tenant on any
door in the Building unless written consent of Landlord shall have first been
obtained which consent shall not unreasonably be withheld. All keys shall be
surrendered to Landlord upon termination of the tenancy. At all times during the
Lease, Tenant shall provide Landlord with current working copies of keys and any
other applicable means of access (e.g. an access card for a security card
system) to all areas of the Premises for purposes of emergency access by
Landlord.
33
31.3 Tenant and its guests and employees shall not bring into or keep
within the Building any motorcycle or other vehicle.
31.4 No awnings are allowed. Any window covering in Building windows
desired by Tenant shall be installed at its expense and must be of such uniform
shape, color, material and make as may first be approved by Landlord which
approval shall not unreasonably be withheld or delayed.
31.5 Neither Tenant nor its employees, contractors or invitees shall
go upon the roof of the Building except to the extent otherwise expressly
permitted in this Lease.
31.6 Tenant shall not use or keep in the Building any kerosene,
gasoline or inflammable or combustible fluid or material.
31.7 Landlord shall have the right to prohibit any advertising by
Tenant which, in Landlord's reasonable opinion, tends to impair the reputation
of the Premises, and upon written notice from Landlord, Tenant shall refrain
from or discontinue such advertising.
32. General Provisions.
------------------
32.1 Entire Agreement. This instrument including Exhibits X-0, X-0,
---------------- ------------------
X-0, X, X-0, X-0, C , and D (when attached) attached hereto contains all of the
-------------------------------------------
agreements and conditions made between the parties hereto and may not be
modified orally or in any manner other than by an agreement in writing signed by
all of the parties hereto or their respective successors in interest. Any
executed copy of this Lease shall be deemed an original for all purposes.
32.2 Time. Time is of the essence with respect to the performance of
----
each and every provision of this Lease in which time of performance is a factor.
All references to days contained in this Lease shall be deemed to mean calendar
days, unless otherwise specifically stated.
32.3 Captions. The captions and headings of the numbered paragraphs
--------
of this Lease are inserted solely for the convenience of the parties hereto, and
are not a part of this Lease and shall have no effect upon the construction or
interpretation of any part hereof.
32.4 California Law. This Lease shall be construed and interpreted
--------------
in accordance with the laws of the State of California. The language in all
parts of this Lease shall in all cases be construed as a whole according to its
fair meaning and not strictly for or against either Landlord or Tenant, and
without regard to which party prepared this Lease.
32.5 Gender; Singular and Plural. When required by the context of
---------------------------
this Lease, the neuter includes the masculine, the feminine, a partnership, a
corporation, a limited liability company, or a joint venture, and the singular
shall include the plural.
32.6 Partial Invalidity. If any provision of this Lease is held by a
------------------
court of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the provisions hereof shall nonetheless continue in full force and
effect and shall in no way be affected, impaired, or invalidated thereby.
32.7 No Implied Warranties. No agreements, warranties or
---------------------
representations not expressly contained herein shall 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, if any, not
expressly contained in this Lease.
32.8 Joint and Several Liability. If Tenant is more than one person
---------------------------
or entity, each such person or entity shall be jointly and severally liable for
the obligations of Tenant hereunder.
34
32.9 Successors and Assigns. The covenants and conditions herein
----------------------
contained, subject to the provisions as to assignment, shall inure to the
benefit of and bind the heirs, executors, administrators, assigns, and any other
person or entity succeeding lawfully, and pursuant to the provisions of this
Lease, to the rights or obligations of the respective parties hereto.
32.10 Rules and Regulations and CC&R's. Landlord may from time to
--------------------------------
time promulgate reasonable rules and regulations in addition to those set forth
in Paragraph 31 above respecting the Building, Outside Areas, and Parking
Garage. Landlord may also from time to time by declaration or enter into
reasonable agreements creating conditions, covenants, restrictions and/or
reciprocal access and parking easements (collectively, "CC&R's") respecting the
driveways referred to in Paragraph 1.3 and the Parking Garage, all to the extent
relating to the use, safety, care and cleanliness of such driveways and the
Parking Garage, and the preservation of good order thereon, but which shall not
conflict with any other term of this Lease. Such reasonable rules and
regulations shall be binding upon Tenant upon delivery of a copy thereof to
Tenant, and any such CC&R's shall be binding upon Tenant upon recordation
thereof in the public records and delivery of a copy thereof to Tenant. Tenant
shall abide by all such reasonable rules and regulations and CC&R's.
32.11 Authority. The individuals signing this Lease hereby represent
---------
and warrant that they have all necessary power and authority to execute and
deliver this Lease on behalf of Landlord and Tenant, respectively.
32.12 Memorandum of Lease. Neither Landlord nor Tenant shall record
-------------------
in the records of Santa Xxxxx County this Lease or a short form memorandum
hereof without the prior written consent of the other, which consent shall not
unreasonably be withheld or delayed.
32.13 Merger. The voluntary or other surrender of this Lease, or a
------
mutual cancellation thereof, shall not work an automatic merger, but shall, at
the sole option of Landlord, either terminate all or any existing subleases or
subtenancies, or operate as an assignment to Landlord of any or all of such
subleases or subtenancies.
32.14 Force Majeure. Any prevention of or delay in the performance by
-------------
a party hereto of its obligations under this Lease caused by inclement weather,
labor disputes (including strikes and lockouts, but not including any labor
strikes precipitated by Landlord's use of non-union labor), inability to obtain
materials or reasonable substitutes therefor, governmental restrictions,
regulations, controls, action or inaction, civil commotion, fire or other
causes beyond the reasonable control of the party obligated to perform (except
financial inability), shall excuse the performance by such party of its
obligations hereunder (except the obligation of Tenant to pay rent and other
sums hereunder) for a period of one day for each such day of delay.
32.15 Real Estate Brokers. Except for Cornish and Xxxxx Commercial
-------------------
Real Estate - Oncor International ("Broker"), whose commission or fee shall be
paid by Landlord in accordance with the provisions of a separate commission
agreement, each party represents to the other that it has not had any dealings
with any real estate broker, finder, or other person, with respect to this
Lease, and each party shall indemnify and hold harmless the other party from all
damages, expenses, and liabilities resulting from any claims that may be
asserted against the indemnified party by any broker, finder, or other person
other than Broker with whom the indemnifying party has or purportedly has dealt.
[TEXT CONTINUED ON NEXT PAGE]
35
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the date
first above specified. Delivery of this Lease to Landlord, duly executed by
Tenant, constitutes an offer by Tenant to lease the Premises as herein set
forth, and under no circumstances shall such delivery be deemed to create an
option or reservation to lease the Premises for the benefit of Tenant. This
Lease shall only become effective and binding upon execution of this Lease by
Landlord and delivery of a signed copy to Tenant.
1.1
1.2 "TENANT"
1.3
1.4 RAMBUS INC.
1.5 a Delaware corporation
1.6
1.7 By /s/ Xx Xxxxxx
----------------------------
1.8 Its VICE PRESIDENT
---------------------------
1.9
1.10 By /s/ Xxxx Xxxxxx
----------------------------
1.11 Its VP & CEO
---------------------------
1.12
1.13
1.14 "LANDLORD"
1.15
LOS ALTOS - EL CAMINO ASSOCIATES, LLC,
a California limited liability company
By /s/ Xxxxx Xxx
---------------------------------
Xxxxx Xxx, managing member
36
SCHEDULE OF EXHIBITS
Exhibit "A-1" ------- Site Plan of Original Parcel
Exhibit "A-2" ------- Legal Description of Original Parcel
Exhibit "A-3" ------- Plan of Parking Garage Showing Portion of First Level of
Parking Garage for Exclusive Use of Tenant and Showing
Second Level
Exhibit "B" ------- Landlord's Work and Tenant Improvements
Exhibit "B-1" ------- Description of Landlord's Work
Exhibit "B-2" ------- List of Certain Tenant Improvement Items
Exhibit "B-3" ------- Approved Tenant Improvements Plans
Exhibit "C" ------- Baseline Hazardous Materials reports
Exhibit "D" ------- Tenant Improvements paid for by Tenant's Improvement
Allowance and Depreciable by Landlord (to be attached)
37
EXHIBIT "A-1"
[FLOOR PLAN APPEARS HERE]
EXHIBIT "A-1"
[FLOOR PLAN APPEARS HERE]
EXHIBIT "A-1"
[FLOOR PLAN APPEARS HERE]
Page No. 11
File No. 99003161-001-A GP
LEGAL DESCRIPTION
All that certain real property situate in the City of Los Altos, County of Santa
Xxxxx, State of California, described as follows:
PARCEL ONE:
All of Parcels 1 and 2, as said Parcels are shown upon that certain Map
entitled, "Record of Survey of Property of Xxxx X. Xxxxx", which Map was filed
for record in the Office of the Recorder of the County of Santa Xxxxx, State of
California on September 2, 1960 in Book 125 of Maps, at page 3
EXCEPTING THEREFROM all that portion thereof granted to the City of Los Altos, a
municipal corporation, by Deed dated February 7, 1968, recorded March 1, 1968.
Book 8042, Page 189, Series No. 3376401, Official Records, and more particularly
described as follows:
A strip of land of the uniform width of 10 feet situate in the City of Los
Altos, County of Santa Xxxxx, State of California, more particularly described
as follows:
BEGINNING at the most Northerly corner of Parcel 1, as said Parcel is delineated
and so designated upon that certain Map entitled, "Record of Survey of property
of Xxxx X. Xxxxx, being a portion of Rancho Xxxxxx de San Francisquito, City of
Los Altos, County of Santa Clara, California", which Map was filed for record in
the office of the Recorder of the County of Santa Xxxxx, State of California on
September 2, 1960 in Book 125 of Maps, at page 3, said point of beginning also
being located on the Southwesterly line of El Camino Real distant thereon South
42 degrees 13' 30" East 653.49 feet from the centerline of Los Altos Avenue;
thence from said point of beginning and continuing along said Southwesterly line
of El Camino Real South 42 degrees 13' 30" East 333.25 feet; thence continuing
along said Southwesterly line of El Camino Real on a tangent curve to the left
with a radius of 2050 feet from a central angel of 2 degrees 26' 27" an arc
length of 87.33 feet; thence South 21 degrees 53' 38" West, 10.90 feet; thence
Northwesterly along a curve to the right from a tangent bearing North 44 degrees
47' 11" West and running parallel with and 10 feet Westerly of measured radially
to said Southwesterly line of El Camino Real with a radius of 2060 feet through
a central angle of 2 degrees 33' 41" an arc length of 92.09 feet; thence North
42 degrees 13' 30" West 330.81 feet; thence North 34 degrees 01' 00" East 10.29
feet to the point of beginning.
EXHIBIT "A-2"
EXHIBIT A-3
----
[PLAN APPEARS HERE]
PARKING LEVEL ONE
EXHIBIT A-3
----
[PLAN APPEARS HERE]
PARKING LEVEL TWO
EXHIBIT "B"
LANDLORD'S WORK AND TENANT IMPROVEMENTS
1. Landlord's Work.
---------------
1.1 Definition. "Landlord's Work" shall mean all the work described on
----------
Exhibit "B-1" attached hereto, including to the extent described on Exhibit "B-
------------- ----------
1" construction and installation of (i) the foundation, exterior walls, roof,
--
and structural supports of the Building, (ii) fire sprinkling, gas, electrical,
water, and heating ventilating and air conditioning systems for the Building
shell and core, (iii) parking areas, driveways, sidewalks, and landscaping in
the Outside Areas, and (iv) the Parking Garage.
1.2 Landlord's Work Plans. Promptly after the Commencement Date, Landlord
---------------------
shall prepare working plans and specifications for Landlord's Work (the
"Landlord's Work Plans"). Landlord's Work Plans shall mean the plans and
specifications dated August 14, 1998 prepared by Xxxxxx and Associates and
certain other design consultants hired by Landlord (or the predecessor owner of
the Original Parcel), subject to modification and supplementation of the same to
reflect plan check comments from the City of Los Altos and other requirements of
lawful governmental authority, and to reflect such other modifications as
Landlord shall from time to time determine are appropriate in its sole
discretion provided that such plans shall reflect aggregate square footage of
the Building (measured as described in Paragraph 1.2 of the Lease) when
constructed of no less than 91,000 square feet and no more than 101,000 square
feet, and provided further that any such other modifications required by
Landlord shall be consistent with the Building being a first class (Class A)
office building. Prior to commencement of Landlord's Work, Tenant shall have
the right to request that Landlord make changes to the Landlord's Work Plans
concerning the core features thereof, such as bathroom and stairwell location.
Tenant shall make such request, if at all, by notice to Landlord specifying in
detail the changes required. Landlord shall make such changes if in Landlord's
reasonable judgment such changes do not materially change the cost of
construction of Landlord's Work and do not increase the period of time required
to construct Landlord's Work. Tenant shall pay all architect, engineering, and
other costs of Landlord related to making such changes. Before Landlord makes
any changes to the Landlord's Work Plans to reflect such requested changes, and
in all events within three (3) days after demand by Landlord, Tenant shall pay
to Landlord in cash (and not out of the Tenant's Improvement Allowance) the
estimated costs of architects and engineers employed by Landlord to reflect such
changes in the Landlord's Work Plans, and upon completion of such changes shall
pay any shortfall in the actual cost or receive a refund from Landlord as to any
excess paid by Tenant.
1.3 Construction of Landlord's Work. Commencing promptly after the
-------------------------------
Commencement Date and finalization of the Landlord's Work Plans described below,
and provided Tenant has deposited with Landlord both the Letter of Credit and
the estimated first month's Base Rent, Landlord shall begin construction of
Landlord's Work, or if it has already begun the same then Landlord shall
diligently continue construction of Landlord's Work, until Substantial
Completion of Landlord's Work. Construction of Landlord's Work shall be
performed substantially in accordance with the Landlord's Work Plans in a good
and workmanlike manner, with materials that conform to said plans and that are
new and otherwise of good quality. Landlord shall ensure that each warranty
obtained by Landlord respecting the roof membrane and HVAC system of the
Building is issued to both Tenant and Landlord. Landlords shall obtain a
warranty for all mechanical and electrical systems installed as part of
Landlord's Work, including without limitation for the rooftop HVAC system and
elevators.
1.4 Substantial Completion of Landlord's Work. Within ten (10) days after
-----------------------------------------
Landlord notifies Tenant that Landlord's Work is substantially completed,
Landlord and Tenant shall together walk through and inspect Landlord's Work
using their best efforts to discover all incomplete or defective construction
("punchlist items"). After such inspection has been completed, a list of
punchlist items shall be prepared by Landlord and Tenant. Landlord shall use
its best efforts to complete and/or repair such punchlist items within thirty
(30) days, and in all events shall diligently continue to complete and/or repair
such punchlist items until completion and/or repair thereof is achieved. On the
date that Substantial Completion of Landlord's Work (as defined below) occurs,
Tenant shall accept possession of the Premises and shall thereupon be deemed to
have accepted Landlord's Work as complete subject only to Landlord's completion
and/or correction of punchlist items, and any claims which Tenant is expressly
Exhibit B -- Page 1
entitled to bring against Landlord under Paragraph 6.2(a) of this Lease. Tenant
shall not commence construction of the Tenant Improvements until Substantial
Completion of Landlord's Work except to the extent otherwise provided for early
entry pursuant to Paragraph 2.1 of the Lease. "Substantial Completion of
Landlord's Work" shall mean the date on which all of the following have
occurred: (i) Landlord certifies that all Landlord's Work has been completed in
accordance with the Landlord's Work Plans, subject only to normal and customary
punchlist items relating to minor defective or incomplete construction which
will not materially interfere with Tenant's use of the Premises or the
construction of Tenant Improvements therein, (ii) all utilities, if any, called
for by the Landlord's Work Plans servicing the Premises have been installed to
the extent specified by the Landlord's Work Plans, and (iii) Landlord has
tendered possession of the Premises to Tenant and Tenant has substantially
unrestricted access to the Premises for purposes of constructing the Tenant
Improvements.
1.5 Payment of Cost of Landlord's Work. All Landlord's Work shall be
----------------------------------
performed and paid for by Landlord, and the costs thereof shall not be part of
Tenant Improvement Costs or passed through to Tenant as Operating Expenses.
1.6 Recreational Facilities. Landlord has no obligation to provide
-----------------------
recreational facilities to Tenant. If recreational facilities are in the future
constructed on the Remainder Parcel and/or the Second Parcel, Landlord has no
objection, and will not raise any objections, to Tenant attempting to arrange
with the then owner and/or operator of such facilities the right for Tenant and
its employees to use such facilities.
2. Tenant Improvements.
-------------------
2.1 Definitions.
-----------
(a) The term "Tenant Improvements" shall mean those improvements
which are to be constructed in the Building by Tenant pursuant to plans and
specifications developed therefor in accordance with Paragraph 2.2(a). Tenant
Improvements shall include all improvements necessary to build out all space
within the Building over and above Landlord's Work in order for Tenant to use
and occupy the Premises, and shall include, but not be limited to, all items
specified on Exhibit "B-2."
-------------
(b) The term "Tenant Improvement Costs" shall mean all sums (1) paid
to contractors for labor and materials furnished in connection with construction
of the Tenant Improvements pursuant to Paragraph 2.2 below; (2) all costs,
expenses, payments, fees, and charges whatsoever paid or incurred by Tenant to
or at the direction of any city, county, or other governmental authority or
agency which are required to be paid 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; and (3) engineering and architectural fees for services required in
connection with the design and construction of the Tenant Improvements.
(c) The term "Tenant's Improvement Allowance" shall mean the maximum
dollar amount Landlord is required to spend toward the payment of Tenant
Improvement Costs, which amount is Twenty Five Dollars ($25.00) multiplied by
the Building Square Feet.
2.2 Procedure and Time Schedules.
----------------------------
(a) Approval of Tenant Improvements Plans. Within ninety (90) days
-------------------------------------
after Landlord's acquisition of the Original Parcel, Landlord shall deliver to
Tenant electrical and mechanical drawings for the shell of the Building together
with a space layout package which includes design criteria for the Building (the
"Design Criteria"). On or before the date which is ninety (90) days after
Landlord delivers the same to Tenant, Tenant shall deliver to Landlord for
Landlord's review and approval one (1) set of reproducible prints of design
drawings showing Tenant's intended design character and finishing of the
Building (the "Design Drawings"). The Design Drawings, and all other drawings,
plans and specifications prepared by Tenant pursuant to this Exhibit "B", shall
-----------
be prepared by both an architect and an engineer hired by Tenant and both of
whom are licensed and/or registered to practice in the State of California and
specialize in design of tenant improvements for multistory office buildings.
The Design Drawings shall comply with the Design Criteria and shall set forth
all design requirements of Tenant within the
Exhibit B -- Page 2
Building. The Design Drawings shall include at a minimum the following: (i)
architectural design of all interior space within the Building, including floor
plans, reflected ceiling plans, and interior elevations, and materials
selections and finishes including color and material sample boards; (ii)
mechanical systems, including basic equipment to be used and its position and
capacity, duct distribution system and diffuser locations, projected mechanical
load and temperature control; and (iii) the electrical system, including floor
and reflected ceiling plans showing outlets, type of lighting fixtures, other
electrical equipment contemplated and location of panelboard(s), switchboard(s)
and projected electrical loads. After Landlord's review of the Design Drawings,
Landlord shall return to Tenant one (1) set of prints of design drawings with
Landlord's modifications and/or approval. If the Design Drawings are returned to
Tenant with modifications, but without Landlord's approval, Tenant shall revise
the same to reflect such modifications and resubmit the same to Landlord for
review and approval within fifteen (15) days after receipt of the modified
Design Drawings from Landlord. Landlord and Tenant shall continue such process
of review, modification, revision and resubmission until Landlord approves the
Design Drawings, and in all events the parties shall use their best efforts to
reach agreement so that such plans may be submitted for governmental approval as
soon as reasonably practicable. On or before the date which is sixty (60) days
after Landlord approves the Design Drawings, Tenant shall prepare and submit for
plan check with the City of Los Altos plans, specifications and working drawings
for the Tenant Improvements which are suitable for plan check by the City of Los
Altos and obtaining a building permit from the City of Los Altos for the Tenant
Improvements and which are in strict compliance with the Design Criteria and
strictly adhere to the Design Drawings approved by Landlord and shall deliver
one (1) set of prints and one (1) set of reproducible prints thereof to Landlord
for its review and approval, which approval shall not be unreasonably withheld
or delayed. Landlord and Tenant shall indicate their approval of all plans,
specifications, and working drawings prepared pursuant to this Exhibit "B" by
-----------
initialing and dating the same. If required by the City of Los Altos plan check
in order to obtain a building permit for the Tenant Improvements, Tenant shall
resubmit the final plans, specifications and working drawings to the City of Los
Altos for approval. Tenant shall submit for review and approval such final
plans, specifications and working drawings to all other governmental authorities
(if any) whose approval is required or from whom a permit must be obtained to
construct the Tenant Improvements. Tenant will notify Landlord of any changes
required by any such governmental authorities, and Landlord shall have five (5)
days thereafter to indicate its approval thereof. All such changes required by
such governmental authorities shall be deemed acceptable to both Tenant and
Landlord unless Tenant's use of the Premises is significantly impaired thereby.
The final plans, specifications and working drawings as approved by Landlord and
Tenant and as approved by all such governmental authorities, and all change
orders specifically permitted pursuant to Paragraph 2.2(c) below, shall be
referred to herein as the "Approved Tenant Improvements Plans," a copy of each
of which shall be attached hereto as Exhibit "B-3." Landlord's approval of any
------------
plans, specifications and drawings pursuant to this exhibit, including without
limitation the Design Drawings and the Approved Tenant Improvements Plans, shall
not mean Landlord assumes liability for any aspect thereof, including without
limitation any liability for compliance thereof with applicable Laws, the
accuracy or sufficiency thereof, the adequacy thereof for Tenant's intended use,
or the safety of the Tenant Improvements, and Tenant shall be solely liable for
all aspects relating to the design of the Tenant Improvements. Tenant hereby
agrees to indemnify, protect, defend, and hold Landlord harmless from and
against all claims, liability, damage, costs, and expense (including without
limitation attorneys' fee, court costs, and expert witness fees) relating to the
design of the Tenant Improvements.
(b) Contractors.
-----------
(i) Tenant and Landlord agree that Xxxxxx Construction is a
general contractor who is suitable to both Tenant and Landlord for Tenant's
hiring for construction of the Tenant Improvements. Provided Tenant selects such
entity as the general contractor for construction of the Tenant Improvements,
the provisions of Paragraph 2.2(b)(ii) below shall have no force or effect.
(ii) Promptly after approval by Landlord and Tenant of the
Approved Tenant Improvements Plans, Tenant shall deliver to Landlord a list of
general contractors who Tenant would like to construct the Tenant Improvements.
Each such general contractor identified on said list shall be licensed to do
business in the State of California and County of Santa Xxxxx, bonded (or
bondable), and experienced in construction of interior improvements in
multistory office buildings. Tenant shall not obtain bids from or hire for
construction of the Tenant Improvements any general contractors on such list who
Landlord reasonably disapproves by delivery of
Exhibit B -- Page 3
notice thereof to Tenant within five (5) business days after receipt of such
list by Landlord. Tenant shall obtain bids for the fee and general conditions
component of construction of the Tenant Improvements from at least three general
contractors on said list who have not been disapproved by Landlord. After
obtaining such bids and delivering a copy of each of such bids to Landlord,
Tenant shall select one of such general contractors to construct the Tenant
Improvements.
(iii) The contractor selected by Tenant to construct the Tenant
Improvements shall herein be called the "General Contractor." Upon selection of
the General Contractor, Tenant shall enter into a construction agreement with
such general contractor for construction of the Tenant Improvements. Tenant
shall deliver to Landlord a complete copy of such construction agreement,
together with any amendments thereto, within five (5) days after executing any
of the same. Subcontractors for the mechanical, electrical, and fire sprinkler
systems shall be chosen by Tenant and the General Contractor without any
requirement for competitive bidding. All other subcontractors for Tenant
Improvements work costing in excess of Twenty Thousand Dollars ($20,000) for
such line item of work shall be selected by the General Contractor based upon
competitive bidding. Each subcontractor shall be licensed to do business in the
State of California and County of Santa Xxxxx. The construction contract with
the General Contractor and all subcontracts shall provide for a retention from
invoiced amounts of no less than 10% which retention shall not be paid until
completion of all work by such contractor.
(c) Changes To Approved Tenant Improvements Plans. Once the Approved
---------------------------------------------
Tenant Improvements Plans have been finally approved by Landlord and Tenant as
provided above, then Tenant shall not materially change such plans without the
prior written consent of Landlord, which consent shall not be unreasonably
withheld or delayed. Any changes so consented to by Landlord shall become
effective and a part of the Approved Tenant Improvements Plans upon and only
upon Landlord's giving such consent.
(d) Commencement and Completion of the Tenant Improvements. Tenant
------------------------------------------------------
shall commence construction of the Tenant Improvements as soon as all of the
following have occurred (and not before such time): (1) the Approved Tenant
Improvements Plans have been developed as provided above, (2) all necessary
governmental approvals to construct the Tenant Improvements have been obtained,
and (3) Landlord has achieved Substantial Completion of Landlord's Work, or
Landlord has permitted Tenant to enter the Premises prior thereto for purposes
of constructing Tenant Improvements pursuant to Paragraph 2.1 of the Lease. Once
Tenant has commenced construction of the Tenant Improvements, Tenant thereafter
shall diligently prosecute such construction to completion. The Tenant
Improvements shall be constructed by Tenant (i) using only new materials of
first class quality, (ii) in a first class workmanlike manner, (iii) in strict
accordance with the Approved Tenant Improvements Plans, (iv) in compliance with
all applicable Laws including without limitation any requirements of the
Americans with Disabilities Act, and (v) at Tenant's sole expense, subject to
the provisions of this exhibit regarding reimbursement of a portion of Tenant
Improvement Costs in connection with Tenant's Improvement Allowance. Except to
the extent permitted by applicable Laws in connection with performing work prior
to actual issuance of the permit therefor, Tenant shall not construct any Tenant
Improvements until Tenant first acquires all permits required to construct the
same from all appropriate governmental agencies and furnishes a copy thereof to
Landlord prior to commencement of such work. Whether or not Tenant obtains such
any such permit before actually commencing the work to be performed under such
permit, such work shall be performed in compliance with and subject to the
provisions of such permit. Tenant shall comply with all conditions of said
permits in a prompt and expeditious manner. All installation of air conditioning
equipment and duct work requiring penetration of the roof of the Building shall
be properly flashed and caulked, and shall be coordinated with and performed by
the roofing contractor who installed the Building roof in order to prevent any
warranty respecting the roof obtained by Landlord from being rendered void. Any
electrical or refrigeration conduits or other piping or materials installed in
the Building shall be installed beneath the surface of the roof (and not on the
surface of the roof), and Tenant shall thereafter repair and re-roof the
affected portions of the roof surface (again using such roofing contractor who
installed the roof so as not to void any roof warranties). Any equipment placed
on the roof shall be elevated and supported so as not to inhibit drainage or
Landlord's repair of the roof pursuant to Paragraph 8.1 of the Lease. The
preceding provisions regarding work on the roof shall not be construed to mean
that Tenant is required to install the core HVAC system as more particularly set
forth in Exhibit B-1. Upon completion of the Tenant Improvements, Tenant shall
-----------
deliver to Landlord, at Tenant's cost, "as-built" plans and specifications
therefor as provided in Paragraph 2.4 below.
Exhibit B -- Page 4
(e) Payment of Tenant Improvement Costs. Tenant shall initially pay
-----------------------------------
all Tenant Improvement Costs. Before Landlord has any obligation to pay any
portion of the Tenant's Improvement Allowance to Tenant, Tenant shall
demonstrate to Landlord's reasonable satisfaction that the estimated Tenant
Improvement Costs are at least equal to the Tenant's Improvement Allowance.
Provided that the Tenant Improvement Costs are at least equal to the Tenant's
Improvement Allowance, Landlord shall reimburse to Tenant an amount equal to the
Tenant's Improvement Allowance. Such reimbursement shall be in three stages,
each of which shall not exceed one third of the total Tenant's Improvement
Allowance. Upon completion of each one third (1/3rd) of the Tenant Improvements
work, Tenant shall deliver to Landlord (i) a certificate in form reasonably
satisfactory to Landlord from Tenant's project architect that one third of the
total Tenant Improvement Costs have been incurred (and as to the 2nd and 3rd
stages, that an additional one third of the total Tenant Improvement Costs have
been incurred), and that the work covered by payment of such Tenant Improvement
Costs has been performed (ii) copies of all invoices for such work and
unconditional lien releases from each contractor performing work or supplying
materials covered by such invoices. Within thirty (30) days after receipt
thereof, Landlord shall pay to Tenant an amount equal to one third of the
Tenant's Improvement Allowance; provided that, as to Landlord's payment of the
last one third of the Tenant's Improvement Allowance, Landlord shall not be
obligated to pay the same to Tenant until Landlord issues the Certificate of
Acceptance set forth in Paragraph 2.4 below. In no event shall Landlord be
required to pay any amounts for Tenant Improvement Costs which are in excess of
the Tenant's Improvement Allowance. For purposes of this paragraph, the amount
of invoiced amounts submitted by Tenant to Landlord in connection with any
request for payment by Landlord of any portion of the Tenant's Improvement
Allowance shall not include the amount of any retention therefrom pending
completion of the Tenant Improvements unless and until such retention is paid by
Tenant. Prior to commencement of construction of the Tenant Improvements, Tenant
shall demonstrate to Landlord's reasonable satisfaction that it has obtained a
loan or otherwise has cash ready and available to pay, and dedicated to payment
of, the entire estimated Tenant Improvement Costs over and above the Tenant's
Improvement Allowance without recourse to the Letter of Credit. Tenant shall
make the same demonstration to Landlord's reasonable satisfaction respecting any
increases in the estimated Tenant Improvement Costs resulting from change
orders.
(f) Tenant shall secure, pay for, and maintain, or cause the General
Contractor and all subcontractors to secure, pay for, and maintain, during the
continuance of all Tenant Improvements work, all of the insurance policies
required in the amounts set forth below, together with such insurance as may
from time to time be required by Laws and any permits and approvals obtained
from lawful governmental authorities. Tenant shall not permit any Tenant
Improvements work to commence until all required insurance has been obtained and
certificates of such insurance have been delivered to Landlord. All insurance
policies shall name as additional insureds Landlord, Landlord's architect,
Landlord's engineer, and Landlord's general contractor for Landlord's Work.
Certificates of insurance shall provide that there shall be no change or
cancellation of such insurance until after notice thereof has been delivered to
Landlord and passage of thirty (30) days after delivery of such notice.
Landlord shall have the right to require Tenant, and Tenant shall have the duty,
to stop work in the Premises immediately if any of the coverages required herein
lapses during the course of the work, in which event Tenant shall not resume any
such work until the required insurance is obtained and satisfactory evidence
thereof is delivered to Landlord. The insurance, minimum amounts of coverage
and minimum limits of liability required at a minimum are:
(i) Worker's Compensation, as required by California law, and
employer's liability insurance with a limit of not less than $2,000,000 (or more
if required by California law), and any insurance required by any employee
benefit act or similar statute applicable in California, as will protect the
contractor and subcontractors from any and all liability under such laws.
(ii) Comprehensive general liability insurance (including
contractor's protective liability) in an amount not less than $2,000,000 per
occurrence whether involving personal injury liability (or death resulting
therefrom) or property damage liability or a combination thereof (combined
single limit coverage) with a minimum aggregate limit of $2,000,000.
(iii) Comprehensive automotive liability insurance, for the
ownership, maintenance, or operation of any automotive equipment, whether owned,
leased, or otherwise held, including employer's
Exhibit B -- Page 5
nonownership and hired car liability endorsements, in an amount not less than
$2,000,000 per occurrence and $2,000,000 aggregate, combined single limit bodily
injury and property damage liability.
All such insurance shall insure the General Contractor and all subcontractors
against any and all claims for personal injury, death, and damage to the
property of others arising from its operations under its construction contract
in connection with construction of the Tenant Improvements, whether such
operations are performed by the General Contractor, any subcontractors, or
subsubcontractors, or by anyone directly or indirectly employed by any of them.
The insurance required in this Paragraph 2.2(f) shall be in addition to any and
all insurance required to be procured and maintained by Tenant under any other
provisions of the Lease.
2.3 Walk Through Inspection and Punch List. Within ten (10) days after
--------------------------------------
Tenant notifies Landlord that the Tenant Improvements are substantially
completed, Landlord and Tenant shall together walk through and inspect the
Tenant Improvements so completed using their best efforts to discover all
incomplete or defective construction ("punchlist items"). After such inspection
has been completed, a list of punchlist items shall be prepared by Landlord and
Tenant. Tenant shall use its best efforts to complete and/or repair such
punchlist items within thirty (30) days, and in all events shall diligently
continue to complete and/or repair such punchlist items until completion and/or
repair thereof is achieved. Landlord shall have no liability or responsibility
whatsoever for the completion of the Tenant Improvements or punchlist items or
for any defects in the construction thereof at any time before or after
completion thereof.
2.4 Certificate of Acceptance. Upon Tenant's completion of the Tenant
-------------------------
Improvements, including the punchlist items, Tenant shall notify Landlord
thereof and shall request that Landlord issue a certificate of acceptance (the
"Certificate of Acceptance"). Tenant shall use its best efforts to cause the
occurrence of all items set forth below which are conditions to Landlord's
issuance of the Certificate of Acceptance within ninety (90) days after Tenant
first occupies the Premises for the conduct of its business therein, and in all
events as soon as reasonably possible after Tenant occupies the Premises for the
conduct of its business therein. Landlord's issuance of the Certificate of
Acceptance shall not (i) confer upon Landlord any liability relating to the
Tenant Improvements, including without limitation liability for their compliance
with Laws or the Approved Tenant Improvements Plans, (ii) constitute an estoppel
with respect to any determinations made by Landlord in connection with issuance
of such certificate or otherwise release or waive any rights or remedies of
Landlord relating to Tenant's obligations under this Lease relating to the
Tenant Improvements, or (iii) be construed as approval by the City of Los Altos
or any other governmental authority relating to completion of the Tenant
Improvements. Landlord shall issue a Certificate of Acceptance to Tenant at
such time, and only when, Landlord in its reasonable judgment determines that
each and all of the following have occurred:
(a) Tenant has completed all of the Tenant Improvements in strict
accordance with the Approved Tenant Improvements Plans and otherwise in
compliance with the provisions of this Exhibit "B". In this connection, Landlord
-----------
may require as reasonable evidence of such completion a certificate issued to
Landlord by Landlord's architect that all such work has been so completed, which
shall not be unreasonably withheld or delayed.
(b) Tenant has delivered to Landlord and Landlord has received copies of
final unconditional lien waivers in such form as may be required by Landlord
from the General Contractor, all subcontractors, and all other persons
performing labor and/or supplying materials in connection with the Tenant
Improvements work showing that all of them have been paid in full and that no
claims are pending. In this connection, Tenant shall pay for an endorsement to
Landlord's policy of title insurance respecting the Premises evidencing that
there are no mechanics liens respecting the Premises (other than any mechanics
liens relating to Landlord's Work).
(c) Tenant has delivered to Landlord and Landlord has received a detailed
breakdown of Tenant's final and total construction costs, and a complete list of
contractors, subcontractors and suppliers, together with receipted invoices
showing payment thereof and thereto.
(d) Tenant has delivered to Landlord and Landlord has received a notebook
including (i) warranties for the benefit of Tenant and Landlord relating to the
workmanship, materials and equipment incorporated into the Premises, and (ii)
operating and maintenance manuals for all equipment.
Exhibit B -- Page 6
(e) Tenant has delivered to Landlord and Landlord has received copies of
all governmental permits and final certificates of occupancy (or comparable
governmental authorization to occupy the Premises), and Tenant's business
license (if any is required by applicable governmental authority) for the
Premises.
(f) One set of mylar reproducible "as built" working plans for the Tenant
Improvements, signed and dated by Tenant and the General Contractor.
2.5 Construction Warranty for the Tenant Improvements. Tenant hereby
-------------------------------------------------
warrants to Landlord that the construction of the Tenant Improvements shall be
performed substantially in accordance with the Approved Tenant Improvements
Plans in a good and workmanlike manner, and that all materials and equipment
furnished shall conform to said plans and be new and otherwise of good quality.
Tenant shall ensure that each warranty obtained by Tenant respecting any
component of the Tenant Improvements is issued to both Tenant and Landlord, and
that the rights thereunder are assignable by Landlord to any successor in
interest to the Premises, including a lender foreclosing any lien held by such
lender against all or any portion of the Premises. Tenant shall also require
the General Contractor to be directly liable to Landlord with respect to any
latent or patent defects in the Tenant Improvements from and after the date
Landlord acquires title to such Tenant Improvements pursuant to this Lease
(e.g., immediately upon completion thereof as to any Tenant Improvements listed
on Exhibit "E", and upon Landlord's acquisition of title thereto pursuant to
-----------
Paragraph 9.5 of the Lease as to other Tenant Improvements).
Exhibit B -- Page 7
EXHIBIT "B-1"
LANDLORD'S WORK
Landlord's Work shall be limited to those items expressly set forth below in
Paragraphs A, B, C, D, and E of this Exhibit "B-1". All other items of work,
-------------
including the purchase and installation of all materials and equipment necessary
for Tenant's use and occupancy of the Premises shall be provided by Tenant at
Tenant's sole cost and expense and shall be deemed Tenant Improvements. Such
Tenant Improvements shall include, but not be limited to, those items identified
in Exhibit "B-2".
-------------
Landlord, at its sole cost and expense, will design, in its sole and absolute
discretion, and undertake the following work, unless provided elsewhere in this
Lease to the contrary, in the Building and Outside Areas:
1. Building: A 3-story commercial office building, including:
1.1 Steel and concrete structure.
1.2 Roof, including roof screens to the extent required by the City of Los
Altos. Landlord may elect to provide ship ladder and hatch for roof access in
lieu of penthouse.
1.3 Exterior walls of glazing, plaster, or GFRC as may be determined by
Landlord's architect.
1.4 Exposed interior face of exterior walls of plaster or GFRC as may be
determined by Landlord's architect. Interior drywall and insulation is not
included.
1.5 Guardrails on all balconies, all balconies to be watertight and
finished.
1.6 All exterior metal surfaces painted or otherwise finished.
1.7 All permits, fees, and special assessments in order to construct
Landlord's Work, including school taxes, sanitary sewer connection fee, storm
district fees, traffic mitigation fees, landscape assessments, and offsite
improvements (but Tenant shall pay any user connection fees normally charged to
the end user, such as PG&E startup fees and charges).
1.8 Landlord to provide one pair of double glass entry doors at ground
floor lobby.
2. Outside Areas: Parking areas (in compliance with ADA requirements), access
roads, delivery areas, drainage systems, walks, ramps, lighting, landscaping and
planting, striping, signage, and other areas, facilities and improvements as
determined by Landlord in the Outside Areas. Shall include exterior lighting on
time clock and photo cell control. Shall also include a monument sign base
(Tenant to provide artwork on top of same the cost of which shall not be
included within Tenant Improvement Costs). Shall also include a trash enclosure
of appropriate size for the Building as reasonably determined by Landlord.
3. Core Areas:
3.1 Elevator shaft and pit and elevator system for three hydraulic
elevators, all in compliance with ADA requirements. Landlord shall install and
make operational the elevator system including fire closures and interior cab
finishes. Landlord and Tenant to agree on the selection of the elevator
equipment.
3.2 Stairwells fully enclosed with drywall and taped but not painted. Such
stairwells shall be in compliance with all ADA requirements and shall include
guardrails, handrails, interior lighting, ceilings, fire sprinklers, and
finishes to the structure and underside of treads.
3.3 Two separate rooftop HVAC units with capacity sufficient for 97,000
square feet of standard office space, with Landlord to stub out mechanical in
shaft locations shown on Landlord's Work Plans and Tenant to connect
Exhibit B-1 -- Page 1
therefrom for its interior distribution. The rooftop units shall be installed
with all structural supports, roof curbs, weatherproofing, electrical service,
and utility feeds (electrical, gas, condensate, and water) in place. The HVAC
system shall be a hot water reheat system. The boiler, pumps, expansion tank,
and controls are all to be installed and operational. In bathroom cores,
Landlord to provide exhaust but Tenant shall provide supply distribution as part
of Tenant Improvements work.
3.4 Primary electrical service with 480-volt 3-phase and 2,000 amps (or
more at Landlord's election), distributed only to the HVAC on the roof, the
elevators, and distribution panels of at least 400 amps in the electrical room
on each of the three floors of the Building. No further distribution shall be
provided. Tenant to furnish and install step down transformers as part of Tenant
Improvements work. The two telephone/electrical rooms on each floor shall be
relocated from stairwell locations to two enlarged rooms adjacent to the
elevator core.
3.5 Fire sprinklers distributed in the shell and core of the Building,
with all horizontal distribution for the shell including "upper heads." All
"upper" and "lower" heads for the improved core areas (i.e., toilet core,
stairways, elevator lobby, and janitor's closet) shall be included. The fire
riser, PIVs, and hose connections in stair cores shall also be provided. No
further branch distribution or drop heads will be provided.
3.6 Plumbing stubbed to each floor but not distributed. Janitor's closets
will be rough plumbed, but not finish plumbed. Landlord to rough plumb and
finish plumb toilets.
3.7 Janitor and electrical/telephone rooms as required on each floor
enclosed with drywall on walls and ceiling and taped but not painted, including
lighting. Concrete floor with no floor finish.
3.8 Elevator lobbies on each floor to receive wall and floor finishes as
determined by Landlord's Architect, or Landlord will provide allowance to Tenant
in lieu thereof. All elevator lobbies shall (i) be in compliance with
applicable fire code regulations of closures, and the control of closures, (ii)
be ventilated and have fire dampers in compliance with applicable codes, and
(iii) have lights and exit signage to the extent required by applicable codes.
All finishes, except paint and floor covering, shall be provided.
3.9 One set of bathroom cores on each floor with (i) standard "Dell"
ceramic floor tile and wall wainscot up to six feet height with color to be
selected by Tenant; (ii) painted gypsum board above wainscot and ceilings; (iii)
corian counter top; (iv) floor mounted metal toilet partitions; (v) full length
mirrors; (vi) wall mounted "American Standard" fixtures and accessories; (vii)
toilet exhaust; (viii) toilet accessories; (ix) fluorescent lighting; and (x)
fire sprinklers.
4. Parking Garage: Subterranean concrete parking structure with lighting, fire
sprinkler, ventilation, striping, wheel stops, emergency duress telephone (if
code required), pedestrian stairways, and handicap parking striped and with
appropriate signage, and security gate or grille. Tenant to provide all
security controls including card reader and camera as part of Tenant Improvement
work.
5. Utility Distribution System to Building:
5.1 On-site water supply mains for domestic and fire protection, with
shut-off valves, backflow preventers, and fire hydrants as required by
applicable code. Interior domestic waterlines shall be taken to each of the
toilet cores and provided with individual shut-off valves at each floor stubbed
at a point to be determined by Landlord.
5.2 Sanitary and storm mains to serve the Building, sanitary lines stubbed
where applicable to a point in Building which is nearest to Landlord's sanitary
sewer system. Sanitary sewers will be cast or ductal iron.
5.3 Incoming telephone feeders to central distribution backboards, at
locations designated by Landlord. Tenant responsible for telephone service to
the Building.
5.4 Natural gas service.
5.5 Exterior lighting on time clock and photo cell control.
Exhibit B-1 -- Page 2
EXHIBIT "B-2"
TENANT IMPROVEMENTS
1. Subject to the next sentence, finishing the interior face of all exterior
walls including insulation, furring or studs as may be required and drywall, all
of which meets all requirements of applicable fire codes and other codes. As
noted in Exhibit "B-1," drywall for the Building core, including the stairway,
------------
elevator, and toilets, shall be part of Landlord's Work, not part of the Tenant
Improvements.
2. Complete mechanical HVAC system including duct distribution system,
diffusers, and complete smoke removal system and framing roof openings as may be
required per code and local jurisdiction approval. Roof patching and
penetrations to the extent required by special HVAC systems required by Tenant
over and above the HVAC systems installed by Landlord as part of Landlord's Work
must be coordinated with and performed by Landlord's roofer so as not to violate
any warranty.
3. Complete electrical system including power distribution and lighting and
emergency power as may be required by applicable codes, including without
limitation interior lighting, 208/110-volt transfers, and secondary
distributions. The Landlord's responsibility for electrical power to the
Building as set forth in Exhibit "B-1" shall not be part of the Tenant
--------------
Improvements.
4. Complete fire protection and fire alarm monitoring system extending from
the core system to be provided by Landlord as part of Landlord's Work in
accordance with Exhibit "B-1." Landlord shall provide minimum code compliance
--------------
system required for building shell, or shall credit Tenant for the cost thereof
in the event Tenant installs its own upgraded system provided Tenant elects to
do so by written notice to Landlord before Landlord installs such minimum code
compliance system. If Tenant so elects to install its own upgraded system, the
obligation to install a complete fire protection and fire alarm monitoring
system extending from the core system shall thereafter be deemed deleted as part
of Landlord's Work and shifted to the Tenant Improvement work.
5. All interior finishes, fixtures and equipment.
6. Compliance with all applicable codes and regulations including, but not
limited to, Title 24, ADA and the approved equivalency concept for this
location.
7. Interior and exterior signage, other than code requirement for the building
shell and core.
8. Flag poles.
9. Case goods and reception desk.
10. Any outdoor staging area must be coordinated with Landlord prior to use.
Exhibit "B-2" -- Page 1
LEASE EXHIBIT "C"
0000-0000 Xx Xxxxxx Xxxx
Xxx Xxxxx
BASELINE ENVIRONMENTAL REPORTS
1. Environmental Site assessment, Phase I
Dated February 14, 1997
Prepared by United Soil Engineering, Inc.
[Omitted.]
2. Phase II Environmental Site Investigation
Soil and Groundwater Testing
Dated May 19, 1997
Prepared by United Soil Engineering, Inc.
[Omitted.]
EXHIBIT "D"
TENANT IMPROVEMENTS DEPRECIABLE BY LANDLORD
Exhibit "D" -- Page 1
EXHIBIT "D"
TENANT IMPROVEMENTS DEPRECIABLE BY LANDLORD
[Omitted.]
Exhibit "D" -- Page 1
