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EXHIBIT 10.11
LEASE
BY AND BETWEEN
525 ALMANOR LLC,
A CALIFORNIA LIMITED LIABILITY COMPANY
AS LANDLORD
AND
SIMPLEX SOLUTIONS, INC.,
A DELAWARE CORPORATION
AS TENANT
MARCH 21, 1997
LEASE OF SPACE AT 521 ALMANOR, SUNNYVALE, CA
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TABLE OF CONTENTS
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ARTICLE 1 REFERENCE................................................................. 1
1.1 References................................................................ 1
ARTICLE 2 LEASED PREMISES, TERM AND POSSESSION...................................... 4
2.1 Demise Of Leased Premises................................................. 4
2.2 Right To Use Outside Areas................................................ 4
2.3 Lease Commencement Date And Lease Term.................................... 4
2.4 Delivery Of Possession.................................................... 4
2.5 Performance Of Improvement Work; Acceptance Of Possession................. 5
2.6 Surrender Of Possession................................................... 6
ARTICLE 3 RENT, LATE CHARGES AND SECURITY DEPOSITS.................................. 7
3.1 Base Monthly Rent......................................................... 7
3.2 Additional Rent........................................................... 7
3.3 Year-End Adjustments...................................................... 8
3.4 Late Charge, And Interest On Rent In Default.............................. 8
3.5 Payment Of Rent........................................................... 9
3.6 Prepaid Rent.............................................................. 9
3.7 Security Deposit.......................................................... 9
3.8 Warrant................................................................... 10
ARTICLE 4 USE OF LEASED PREMISES AND OUTSIDE AREA................................... 10
4.1 Permitted Use............................................................. 10
4.2 General Limitations On Use................................................ 10
4.3 Noise And Emissions....................................................... 11
4.4 Trash Disposal............................................................ 11
4.5 Parking................................................................... 11
4.6 Signs..................................................................... 11
4.7 Compliance With Laws And Private Restrictions............................. 12
4.8 Compliance With Insurance Requirements.................................... 13
4.9 Landlord's Right To Enter................................................. 13
4.10 Use Of Outside Areas...................................................... 13
4.11 Environmental Protection.................................................. 14
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4.12 Rules And Regulations..................................................... 14
ARTICLE 5 REPAIRS, MAINTENANCE, SERVICES AND UTILITIES.............................. 14
5.1 Repair And Maintenance.................................................... 14
(a) Tenant's Obligations.................................................. 14
(b) Landlord's Obligation................................................. 15
5.2 Utilities................................................................. 15
5.3 Security.................................................................. 15
5.4 Energy And Resource Consumption........................................... 15
5.5 Limitation Of Landlord's Liability........................................ 16
ARTICLE 6 ALTERATIONS AND IMPROVEMENTS.............................................. 16
6.1 By Tenant................................................................. 16
6.2 Ownership Of Improvements................................................. 17
6.3 Alterations Required By Law............................................... 17
6.4 Liens..................................................................... 18
ARTICLE 7 ASSIGNMENT AND SUBLETTING BY TENANT....................................... 18
7.1 By Tenant................................................................. 18
7.2 Merger Or Reorganization.................................................. 19
7.3 Landlord's Election....................................................... 19
7.4 Conditions To Landlord's Consent.......................................... 20
7.5 Assignment Consideration And Excess Rentals Defined....................... 21
7.6 Payments.................................................................. 21
7.7 Good Faith................................................................ 21
7.8 Effect Of Landlord's Consent.............................................. 22
7.9 Permitted Transfers Without Landlord's Consent............................ 22
ARTICLE 8 LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY.......................... 23
8.1 Limitation On Landlord's Liability And Release............................ 23
8.2 Tenant's Indemnification Of Landlord...................................... 23
ARTICLE 9 INSURANCE................................................................. 24
9.1 Tenant's Insurance........................................................ 24
9.2 Landlord's Insurance...................................................... 25
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9.3 Mutual Waiver Of Subrogation.............................................. 26
ARTICLE 10 DAMAGE TO LEASED PREMISES................................................. 26
10.1 Landlord's Duty To Restore................................................ 26
10.2 Insurance Proceeds........................................................ 27
10.3 Landlord's Right To Terminate............................................. 27
10.4 Tenant's Right To Terminate............................................... 27
10.5 Tenant's Waiver........................................................... 28
10.6 Abatement Of Rent......................................................... 28
ARTICLE 11 CONDEMNATION.............................................................. 28
11.1 Tenant's Right To Terminate............................................... 28
11.2 Landlord's Right To Terminate............................................. 28
11.3 Restoration............................................................... 28
11.4 Temporary Taking.......................................................... 29
11.5 Division Of Condemnation Award............................................ 29
11.6 Abatement Of Rent......................................................... 29
11.7 Taking Defined............................................................ 29
ARTICLE 12 DEFAULT AND REMEDIES...................................................... 29
12.1 Events Of Tenant's Default................................................ 29
12.2 Landlord's Remedies....................................................... 30
12.3 Landlord's Default And Tenant's Remedies.................................. 32
12.4 Limitation Of Tenant's Recourse........................................... 32
12.5 Tenant's Waiver........................................................... 33
ARTICLE 13 GENERAL PROVISIONS........................................................ 33
13.1 Taxes On Tenant's Property................................................ 33
13.2 Holding Over.............................................................. 34
13.3 Subordination To Mortgages................................................ 34
13.4 Tenant's Attornment Upon Foreclosure...................................... 34
13.5 Mortgagee Protection...................................................... 34
13.6 Estoppel Certificate...................................................... 35
13.7 Tenant's Financial Information............................................ 35
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13.8 Transfer By Landlord...................................................... 35
13.9 Force Majeure............................................................. 36
13.10 Notices................................................................... 36
13.11 Attorneys' Fees........................................................... 36
13.12 Definitions............................................................... 37
(a) Real Property Taxes................................................... 37
(b) Landlord's Insurance Costs............................................ 37
(c) Property Maintenance Costs............................................ 38
(d) Property Operating Expenses........................................... 38
(e) Law................................................................... 38
(f) Lender................................................................ 38
(g) Private Restrictions.................................................. 38
(h) Rent.................................................................. 39
13.13 General Waivers........................................................... 39
13.14 Miscellaneous............................................................. 39
ARTICLE 14 CORPORATE AUTHORITY BROKERS AND ENTIRE AGREEMENT.......................... 40
14.1 Corporate Authority....................................................... 40
14.2 Brokerage Commissions..................................................... 40
14.3 Entire Agreement.......................................................... 40
14.4 Landlord's Representations................................................ 40
ARTICLE 15 OPTIONS TO EXTEND......................................................... 40
ARTICLE 16 OPTIONS TO EXPAND......................................................... 43
16.1 Right of First Offer...................................................... 43
16.2 Termination of Right of First Offer....................................... 44
ARTICLE 17 TELEPHONE SERVICE......................................................... 44
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LEASE
THIS LEASE, dated March 21, 1997 for reference purposes only, is made by
and between 525 ALMANOR LLC, a California limited liability company ("Landlord")
and Simplex Solutions, Inc., a Delaware corporation ("Tenant"), to be effective
and binding upon the parties as of the date the last of the designated
signatories to this Lease shall have executed this Lease (the "Effective Date of
this Lease").
ARTICLE 1
REFERENCE
1.1 REFERENCES. All references in this Lease (subject to any further
clarifications contained in this Lease) to the following terms shall have the
following meaning or refer to the respective address, person, date, time period,
amount, percentage, calendar year or fiscal year as below set forth:
Tenant's Address for Notice: Simplex Solutions, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Tenant's Representative: Xx. Xxxx Xxxxx
Landlord's Address for Notices: c/o Menlo Equities LLC
0000 Xxxx Xxxx Xxxx
Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Landlord's Representative: Xxxxx Xxxxxxx/Xxxxxxx Xxxxxxxxx
Phone Number: (000) 000-0000
Intended Commencement Date: May 15, 1997
Intended Term: Sixty (60) months
Lease Expiration Date: May 31, 2002, unless earlier
terminated by Landlord in accordance
with the terms of this Lease, or
extended pursuant to the terms of
this Lease.
Options to Renew: One option to renew, for a term of
five (5) years.
First Month's Prepaid Rent: $24,593.10
Tenant's Security Deposit: $301,908.60 (See Section 3.7)
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Tenant's Share: 16.74% for Initial Premises
17.5% for Additional Space
65.76% for Expansion Space
Late Charge Amount: Five Percent (5%) of the Delinquent
Amount
Tenant's Required Liability
Coverage: $3,000,000 Combined Single Limit
Broker(s): Colliers Xxxxxxx International, Inc.
Property: That certain real property situated
in the City of Sunnyvale, County of
Santa Xxxxx, State of California, as
presently improved with one building
(the "Building"), which real property
is shown on the Site Plan attached
hereto as Exhibit "A" and is commonly
known as or otherwise described as
follows: 000 Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxx, 00000.
Building: That certain Building within
the Property in which the
Leased Premises are located,
which Building is shown on
Exhibit "A" hereto,
consisting of approximately
85,680 square feet.
Outside Areas: The "Outside Areas" shall mean all
areas within the Property which are
located outside the Building, such as
pedestrian walkways, parking areas,
landscaped area, open areas and
enclosed trash disposal areas,
excluding, however, the existing
water tank located thereon, for which
Tenant shall have no responsibility
of any kind.
Leased Premises: That portion of the interior space
within the Building, consisting of
approximately 29,340 square feet (and
for purposes of this Lease, agreed to
contain said number of square feet)
shown on Exhibit A. The Leased
Premises are comprised of two parts;
the Initial Premises and the
Additional Space (both defined
below).
Initial Premises: The portion of the Leased Premises
containing 14,340 square feet and
delineated
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on Exhibit A, which Tenant will
occupy at the inception of the Lease
Term.
Additional Space: The portion of the Leased Premises
containing 15,000 square feet and
also delineated on Exhibit A, which
Tenant will occupy upon substantial
completion of the Improvement Work in
accordance with the Work Letter.
Expansion Space: The portion of the Building, as
defined in Section 16.1, below.
Base Monthly Rent: The term "Base Monthly Rent" shall
mean the following:
$24,593.10 per month from the Lease
Commencement Date until Landlord
delivers the Additional Space to
Tenant in accordance with the terms
of this Lease. Upon the earlier of
July 14, 1997 or substantial
completion of the tenant improvements
to the Additional Space in accordance
with the Work Letter, the Base
Monthly Rent shall increase to
$50,318.10, through the twelfth month
of the Lease Term. Base Monthly Rent
shall be increased in the following
manner for the periods described
below:
Months 13-24: $52,078.50
Months 25-36: $53,838.90
Months 37-48: $55,892.70
Months 49-60: $57,653.10
Warrant: That certain warrant to purchase
20,000 shares of Tenant's Series D
preferred shares at $3.36 per share,
exercisable at any time up through
and including May 31, 2002, as
described in Section 3.8, in the form
attached hereto as Exhibit D.
Parking: Nonexclusive use of 114 spaces.
Use: Office, research and development,
storage.
Exhibits: The term "Exhibits" shall mean the
Exhibits of this Lease which are
described as follows:
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Exhibit "A" - Site Plan showing the
Property and delineating the Building
in which the Leased Premises are
located, the Initial Premises and the
Additional Space.
Exhibit "B" - Floor Plan outlining
the Leased Premises
Exhibit "C" - Work Letter
Exhibit "D" - Form of Warrant
ARTICLE 2
LEASED PREMISES, TERM AND POSSESSION
2.1 DEMISE OF LEASED PREMISES. Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord for Tenant's own use in the conduct of
Tenant's business and not for purposes of speculating in real estate, for the
Lease Term and upon the terms and subject to the conditions of this Lease, that
certain interior space described in Article 1 as the Leased Premises, reserving
and excepting to Landlord the right to fifty percent (50%) of all assignment
consideration and excess rentals as provided in Article 7 below. Tenant's lease
of the Leased Premises, together with the appurtenant right to use the Outside
Areas as described in Paragraph 2.2 below, shall be conditioned upon and be
subject to the continuing compliance by Tenant with (i) all the terms and
conditions of this Lease, (ii) all Laws governing the use of the Leased Premises
and the Property, (iii) all Private Restrictions, easements and other matters
now of public record respecting the use of the Leased Premises and Property, and
(iv) all reasonable rules and regulations from time to time established by
Landlord.
2.2 RIGHT TO USE OUTSIDE AREAS. As an appurtenant right to Tenant's
right to the use and occupancy of the Leased Premises, Tenant shall have the
right to use the Outside Areas in conjunction with its use of the Leased
Premises solely for the purposes for which they were designated and intended and
for no other purposes whatsoever, such right to in common with other tenants of
the Building. Tenant's right to so use the Outside Areas shall be subject to the
limitations on such use as set forth in Article 1 and shall terminate
concurrently with any termination of this Lease.
2.3 LEASE COMMENCEMENT DATE AND LEASE TERM. Subject to Paragraph 2.4
below, the term of this Lease shall begin, and the Lease Commencement Date shall
be deemed to have occurred, on the Intended Commencement Date, as set forth in
Article 1 (the "Lease Commencement Date"). The term of this Lease shall in all
events end on the Lease Expiration Date (as set forth in Article 1). The Lease
Term shall be that period of time commencing on the Lease Commencement Date and
ending on the Lease Expiration Date (the "Lease Term").
2.4 DELIVERY OF POSSESSION.
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(a) Landlord shall deliver possession of the Initial Premises to
Tenant upon vacation of the Initial Premises by the current tenant, which is
anticipated to be no later than May 12, 1997.
(b) Landlord shall deliver possession of the Additional Space to
Tenant at such time as the Improvement Work (as defined in Paragraph 2.5 below)
is substantially completed pursuant to the Work Letter.
(c) If Landlord is unable to deliver possession of the Initial
Space to Tenant by May 12, 1997, or the Additional Space, in the agreed
condition, to Tenant by July 14, 1997, Landlord shall not be in default under
this Lease, nor shall this Lease be void, voidable or cancelable by Tenant until
October 15, 1997 (the "delivery grace period"); however, if Landlord's inability
to so deliver the Leased Premises to Tenant is caused by the existing tenant's
hold over in the Leased Premises beyond the term of its current lease or by
Landlord's gross negligence or willful misconduct, the Lease Commencement Date
shall not be deemed to have occurred until the actual date of delivery.
Additionally, the delivery grace period above set forth shall be extended for
such number of days as Landlord may be delayed in delivering possession of the
Leased Premises, or any portion thereof, to Tenant by reason of Force Majeure or
the action or inaction of Tenant. If Landlord is unable to deliver possession of
the Leased Premises in the agreed condition to Tenant within the described
delivery grace period (including any extension thereof by reason of Force
Majeure or the actions or inactions of Tenant), then Tenant's sole remedy shall
be to terminate this Lease, and in no event shall Landlord be liable in damages
to Tenant for such delay. Tenant may not terminate this Lease at any time after
the date Landlord notifies Tenant that the Leased Premises have been put into
the agreed condition and are available for delivery to Tenant, unless Landlord's
notice is not given in good faith.
2.5 PERFORMANCE OF IMPROVEMENT WORK; ACCEPTANCE OF POSSESSION.
(a) Tenant acknowledges that Landlord has not agreed to perform any
improvement work in the Initial Premises, and that upon delivery of the Initial
Premises to Tenant, Tenant shall be deemed to have accepted the Initial Premises
in their then current "as-is" condition, subject to Landlord's obligation to
deliver in good working order the roof surface and all existing plumbing,
lighting, heating, ventilating and air conditioning systems within the Leased
Premises. If, within thirty (30) days of delivery of the Initial Premises, or
within thirty (30) days of delivery of the Additional Space, any building system
is not in the condition required by the foregoing sentence, Tenant shall so
notify Landlord, and Landlord shall have the system repaired at no cost to
Tenant.
(b) Landlord shall, pursuant to the work letter attached to and
made a part of this Lease (the "Work Letter"), perform the work and make the
installations in the Additional Space substantially as set forth in the Work
Letter (such work and installations hereinafter referred to as the "Improvement
Work"). Without limiting the foregoing, Landlord agrees to deliver in good
working order the roof surface and all existing plumbing, lighting, heating,
ventilating and air conditioning systems within the Additional Space. If any
dispute arises as to whether the Additional Space is substantially completed and
ready for Tenant's occupancy, a certificate furnished by the Construction
Manager (as defined in the Work Letter) certifying the date of substantial
completion shall be conclusive of that fact and date and binding upon
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Landlord and Tenant. It is agreed that by occupying the Additional Space, Tenant
formally accepts same and acknowledges that the Additional Space is in the
condition called for hereunder, subject to normal punchlist items specified by
Tenant to Landlord in writing within ten (10) days of such occupancy, which
punchlist items Landlord shall repair at no cots to Tenant.
2.6 SURRENDER OF POSSESSION. Immediately prior to the expiration or upon
the sooner termination of this Lease, Tenant shall remove all of Tenant's signs
from the exterior of the Building and shall remove all of Tenant's equipment,
trade fixtures, furniture, supplies, wall decorations and other personal
property from within the Leased Premises, the Building and the Outside Areas,
and shall vacate and surrender the Leased Premises, the Building, the Outside
Areas and the Property to Landlord in the same condition, broom clean, as
existed at the Lease Commencement Date, reasonable wear and tear, acts of God,
condemnation, Excluded Hazardous Materials (defined in Section 4.7, below), and
alterations with respect to which Landlord has not reserved the right to require
removal excepted. Tenant shall repair all damage to the Leased Premises, the
exterior of the Building and the Outside Areas caused by Tenant's removal of
Tenant's property. Tenant shall patch and refinish, to Landlord's reasonable
satisfaction, all penetrations made by Tenant or its employees to the floor,
walls or ceiling of the Leased Premises, whether such penetrations were made
with Landlord's approval or not. Tenant shall repair or replace all stained or
damaged ceiling tiles, wall coverings and floor coverings to the reasonable
satisfaction of Landlord. Tenant shall repair all damage caused by Tenant to the
exterior surface of the Building and, the paved surfaces of the Outside Areas
and, where necessary and subject to the provisions of Section 13.12(c), pay
Tenant's Share of the costs to replace or resurface same. In addition, if
directed to do so by Landlord at the time Tenant requests Landlord's consent to
any improvements constructed or installed by or on behalf of Tenant (including
without limitation the improvements contemplated by the Work Letter) Tenant
shall, upon the expiration or sooner termination of the Lease, remove any such
improvements constructed or installed by Tenant and repair all damage caused by
such removal. It is understood and agreed that unless Tenant's request for
consent includes the following statement in bold type, Landlord shall be deemed
to have reserved its right to require removal at the end of the term: "PURSUANT
TO SECTION 2.6 OF OUR LEASE, UNLESS YOU, THE LANDLORD, STATE IN RESPONSE TO THIS
REQUEST FOR CONSENT TO OUR INSTALLATION OF IMPROVEMENTS THAT YOU WILL REQUIRE
REMOVAL OF SUCH IMPROVEMENTS AT THE END OF THE LEASE, YOU WILL BE DEEMED TO HAVE
WAIVED YOUR ABILITY TO REQUIRE SUCH REMOVAL." If the Leased Premises, the
Building, the Outside Areas and the Property are not surrendered to Landlord in
the condition required by this paragraph at the expiration or sooner termination
of this Lease, Landlord may, at Tenant's expense, so remove Tenant's signs,
property and/or improvements not so removed and make such repairs and
replacements not so made or hire, at Tenant's expense, independent contractors
to perform such work. Tenant shall be liable to Landlord for all costs incurred
by Landlord in returning the Leased Premises, the Building and the Outside Areas
to the required condition, together with interest on all costs so incurred from
the date paid by Landlord at the then maximum rate of interest not prohibited or
made usurious by law until paid. Tenant shall pay to Landlord the amount of all
costs so incurred plus such interest thereon, within twenty (20) days of
Landlord's billing Tenant for same. Tenant shall indemnify Landlord against loss
or liability resulting from delay by Tenant in surrendering the Leased Premises,
including, without limitation, any claims made by any succeeding Tenant or any
losses to Landlord with respect to lost opportunities to lease to succeeding
tenants.
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ARTICLE 3
RENT, LATE CHARGES AND SECURITY DEPOSITS
3.1 BASE MONTHLY RENT. Commencing on the Lease Commencement Date (as
determined pursuant to Paragraph 2.3 above) and continuing throughout the Lease
Term, Tenant shall pay to Landlord, without prior demand therefor, in advance on
the first day of each calendar month, the amounts set forth as "Base Monthly
Rent" in Article 1 (the "Base Monthly Rent").
3.2 ADDITIONAL RENT. Commencing on the Lease Commencement Date (as
determined pursuant to Paragraph 2.3 above) and continuing throughout the Lease
Term, in addition to the Base Monthly Rent and to the extent not required by
Landlord to be contracted for and paid directly by Tenant, Tenant shall pay to
Landlord as additional rent (the "Additional Rent") the following amounts:
(a) An amount equal to Tenant's Share of all Property Operating
Expenses (as defined in Article 13) incurred by Landlord. It is understood and
acknowledged that so long as only the Initial Premises has been delivered to
Tenant, Tenant's Share shall be 16.74%. When the Additional Space is delivered
to Tenant, Tenant's Share shall be increased to 34.24%, and if Tenant exercises
its right to take the Expansion Space, when the Expansion Space is delivered to
Tenant, Tenant's Share shall be increased to 100%. Payment shall be made by
whichever of the following methods (or combination of methods) is (are) from
time to time designated by Landlord:
(i) Landlord may forward invoices or bills for such expenses
to Tenant, and Tenant shall, no later than ten (10) days prior to the due date,
pay such invoices or bills and deliver satisfactory evidence of such payment to
Landlord, and/or
(ii) Landlord may xxxx to Tenant, on a periodic basis not
more frequently than monthly, Tenant's Share of the amount of such expenses (or
group of expenses) as paid or incurred by Landlord, and Tenant shall pay to
Landlord Tenant's Share of the amount of such expenses within twenty (20) days
after receipt of a written xxxx therefor from Landlord, and/or
(iii) Landlord may deliver to Tenant Landlord's reasonable
estimate of any given expense (such as Landlord's Insurance Costs or Real
Property Taxes), or group of expenses, which it anticipates will be paid or
incurred for the ensuing calendar or fiscal year, as Landlord may determine, and
Tenant shall pay to Landlord an amount equal to Tenant's Share of the estimated
amount of such expenses for such year in equal monthly installments during such
year with the installments of Base Monthly Rent.
Landlord reserves the right to change from time to time the methods of billing
Tenant for any given expense or group of expenses or the periodic basis on which
such expenses are billed.
(b) Landlord's share of the consideration received by Tenant upon
certain assignments and sublettings as required by Article 7.
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(c) Any legal fees and costs that Tenant is obligated to pay or
reimburse to Landlord pursuant to Article 13; and
(d) Any other charges or reimbursements due Landlord from Tenant
pursuant to the terms of this Lease.
3.3 YEAR-END ADJUSTMENTS. If Landlord shall have elected to xxxx Tenant
for Tenant's Share of Property Operating Expenses (or any group of such
expenses) on an estimated basis in accordance with the provisions of Paragraph
3.2(a)(iii) above, Landlord shall furnish to Tenant within three months
following the end of the applicable calendar or fiscal year, as the case may be,
a statement setting forth (i) the amount of such expenses paid or incurred
during the just ended calendar or fiscal year, as appropriate, and (ii) the
amount that Tenant has paid to Landlord for credit against such expenses for
such period. If Tenant shall have paid more than its obligation for such
expenses for the stated period, Landlord shall, at its election, either (i)
credit the amount of such overpayment toward the next ensuing payment or
payments of Additional Rent that would otherwise be due or (ii) refund in cash
to Tenant the amount of such overpayment. If such year-end statement shall show
that Tenant did not pay its obligation for such expenses in full, then Tenant
shall pay to Landlord the amount of such underpayment within twenty (20) days
from Landlord's billing of same to Tenant. Within thirty (30) days after receipt
of Landlord's statement setting forth actual Property Operating Expenses (the
"Statement"), Tenant shall have the right to audit at Landlord's local offices,
at Tenant's expense, Landlord's accounts and records relating to Property
Operating Expenses. Such audit shall be conducted by a certified public
accountant approved by Landlord, which approval shall not be unreasonably
withheld or delayed. If such audit reveals that Landlord has overcharged Tenant,
the amount overcharged shall be paid to Tenant within thirty (30) days after the
audit is concluded. If Tenant fails to exercises its right to audit within the
time period described above, the Statement shall be deemed correct. The
provisions of this Paragraph shall survive the expiration or sooner termination
of this Lease.
3.4 LATE CHARGE, AND INTEREST ON RENT IN DEFAULT. Tenant acknowledges
that the late payment by Tenant of any monthly installment of Base Monthly Rent
or any Additional Rent will cause Landlord to incur certain costs and expenses
not contemplated under this Lease, the exact amounts of which are extremely
difficult or impractical to fix. Such costs and expenses will include without
limitation, administration and collection costs and processing and accounting
expenses. Therefor, if any installment of Base Monthly Rent is not received by
Landlord from Tenant within ten calendar days after the same becomes due, Tenant
shall immediately pay to Landlord a late charge in an amount equal to the amount
set forth in Article 1 as the "Late Charge Amount," and if any Additional Rent
is not received by Landlord within ten calendar days after same becomes due,
Tenant shall immediately pay to Landlord a late charge in an amount equal to 5%
of the Additional Rent not so paid. Landlord and Tenant agree that this late
charge represents a reasonable estimate of such costs and expenses and is fair
compensation to Landlord for the anticipated loss Landlord would suffer by
reason of Tenant's failure to make timely payment. In no event shall this
provision for a late charge be deemed to grant to Tenant a grace period or
extension of time within which to pay any rental installment or prevent Landlord
from exercising any right or remedy available to Landlord upon Tenant's failure
to pay each rental installment due under this Lease when due, including the
right to terminate this Lease. If any rent remains delinquent for a period in
excess of 10 calendar days, then, in addition to such
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late charge, Tenant shall pay to Landlord interest on any rent that is not so
paid from said tenth day at the then maximum rate of interest not prohibited or
made usurious by Law until paid.
3.5 PAYMENT OF RENT. Except as specifically provided otherwise in this
Lease, all rent shall be paid in lawful money of the United States, without any
abatement, reduction or offset for any reason whatsoever, to Landlord at such
address as Landlord may designate from time to time. Tenant's obligation to pay
Base Monthly Rent and all Additional Rent shall be appropriately prorated at the
commencement and expiration of the Lease Term. The failure by Tenant to pay any
Additional Rent as required pursuant to this Lease when due shall be treated the
same as a failure by Tenant to pay Base Monthly Rent when due, and Landlord
shall have the same rights and remedies against Tenant as Landlord would have
had Tenant failed to pay the Base Monthly Rent when due.
3.6 PREPAID RENT. Tenant shall, upon execution of this Lease, pay to
Landlord the amount set forth in Article 1 as "First Month's Prepaid Rent" as
prepayment of rent for credit against the first payment of Base Monthly Rent due
hereunder.
3.7 SECURITY DEPOSIT. Tenant has deposited with Landlord the amount set
forth in Article 1 as the "Security Deposit", either in cash or in the form of
an irrevocable unconditional letter of credit in form and substance satisfactory
to Landlord, as security for the performance by Tenant of the terms of this
Lease to be performed by Tenant, and not as prepayment of rent. Landlord may
apply such portion or portions of the Security Deposit as are reasonably
necessary for the following purposes: (i) to remedy any default by Tenant in the
payment of Base Monthly Rent or Additional Rent or a late charge or interest on
defaulted rent, or any other monetary payment obligation of Tenant under this
Lease; (ii) to repair damage to the Leased Premises, the Building or the Outside
Areas caused or permitted to occur by Tenant; (iii) to clean and restore and
repair the Leased Premises, the Building or the Outside Areas following their
surrender to Landlord if not surrendered in the condition required pursuant to
the provisions of Article 2, and (iv) to remedy any other default of Tenant to
the extent permitted by Law including, without limitation, paying in full on
Tenant's behalf any sums claimed by materialmen or contractors of Tenant to be
owing to them by Tenant for work done or improvements made at Tenant's request
to the Leased Premises. In this regard, Tenant hereby waives any restriction on
the uses to which the Security Deposit may be applied as contained in Section
1950.7(c) of the California Civil Code and/or any successor statute. In the
event the Security Deposit or any portion thereof is so used, Tenant shall pay
to Landlord, promptly upon demand, an amount in cash sufficient to restore the
Security Deposit to the full original sum. If Tenant fails to promptly restore
the Security Deposit and if Tenant shall have paid to Landlord any sums as "Last
Month's Prepaid Rent," Landlord may, in addition to any other remedy Landlord
may have under this Lease, reduce the amount of Tenant's Last Month's Prepaid
Rent by transferring all or portions of such Last Month's Prepaid Rent to
Tenant's Security Deposit until such Security Deposit is restored to the amount
set forth in Article 1. Landlord shall not be deemed a trustee of the Security
Deposit. Landlord may use the Security Deposit in Landlord's ordinary business
and shall not be required to segregate it from Landlord's general accounts.
Tenant shall not be entitled to any interest on the Security Deposit. If
Landlord transfers the Building or the Property during the Lease Term, Landlord
may pay the Security Deposit to any subsequent owner in conformity with the
provisions of Section 1950.7 of the California Civil Code and/or any successor
statute, in which event the transferring landlord shall be released from all
liability for the return of the
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Security Deposit. Tenant specifically grants to Landlord (and Tenant hereby
waives the provisions of California Civil Code Section 1950.7 to the contrary) a
period of ninety days following a surrender of the Leased Premises by Tenant to
Landlord within which to inspect the Leased Premises, make required restorations
and repairs, receive and verify workmen's xxxxxxxx therefor, and prepare a final
accounting with respect to the Security Deposit. In no event shall the Security
Deposit or any portion thereof, be considered prepaid rent.
3.8 WARRANT. As additional consideration, and in order to induce
Landlord to enter into this Lease, Tenant agrees to deliver to Landlord,
concurrently with the delivery to Landlord of this executed Lease, a warrant
permitting Landlord to purchase 20,000 shares of Tenant's Series D preferred
shares, at an exercise price of $3.36, at any time up through and including May
31, 2002, such warrant to be in the form attached hereto as Exhibit D.
ARTICLE 4
USE OF LEASED PREMISES AND OUTSIDE AREA
4.1 PERMITTED USE. Tenant shall be entitled to use the Leased Premises
solely for the "Permitted Use" as set forth in Article 1 and for no other
purpose whatsoever. Tenant shall continuously and without interruption use the
Leased Premises for such purpose for the entire Lease Term. Any discontinuance
of such use for a period of sixty consecutive calendar days shall be, at
Landlord's election, a default by Tenant under the terms of this Lease. Tenant
shall have the right to use the Outside Areas, in common with other tenants of
the Building, in conjunction with its Permitted Use of the Leased Premises
solely for the purposes for which they were designed and intended and for no
other purposes whatsoever.
4.2 GENERAL LIMITATIONS ON USE. Tenant shall not do or permit anything
to be done in or about the Leased Premises, the Building, the Outside Areas or
the Property which does or could (i) jeopardize the structural integrity of the
Building, (ii) cause damage to any part of the Leased Premises, the Building,
the Outside Areas or the Property, or (iii) interfere with the rights of other
tenants of the Building. Tenant shall not operate any equipment within the
Leased Premises which does or could (i) injure, vibrate or shake the Leased
Premises or the Building, (ii) damage, overload or impair the efficient
operation of any electrical, plumbing, heating, ventilating or air conditioning
systems within or servicing the Leased Premises or the Building, or (iii) damage
or impair the efficient operation of the sprinkler system (if any) within or
servicing the Leased Premises or the Building. Tenant shall not install any
equipment or antennas on or make any penetrations of the exterior walls or roof
of the Building. Tenant shall not affix any equipment to or make any
penetrations or cuts in the floor, ceiling, walls or roof of the Leased
Premises. Tenant shall not place any loads upon the floors, walls, ceiling or
roof systems which could endanger the structural integrity of the Building or
damage its floors, foundations or supporting structural components. Tenant shall
not place any explosive, flammable, hazardous, toxic or harmful substances or
materials in the drainage systems of the Leased Premises, the Building, the
Outside Areas or the Property. Tenant shall not drain or discharge any fluids in
the landscaped areas or across the paved areas of the Property. Tenant shall not
use any of the Outside Areas for the storage of its materials, supplies,
inventory or equipment and all such materials, supplies, inventory or equipment
shall at all times be stored
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within the Leased Premises. Tenant shall not commit nor permit to be committed
any waste in or about the Leased Premises, the Building, the Outside Areas or
the Property.
4.3 NOISE AND EMISSIONS. All noise generated by Tenant in its use of the
Leased Premises shall be confined or muffled so that it does not interfere with
the businesses of or annoy the occupants and/or users of other portions of the
Building or adjacent properties. All dust, fumes, odors and other emissions
generated by Tenant's use of the Leased Premises shall be sufficiently
dissipated in accordance with sound environmental practice and exhausted from
the Leased Premises in such a manner so as not to interfere with the businesses
of or annoy the occupants and/or users of other portions of the Building or
adjacent properties, or cause any damage to the Leased Premises, the Building,
the Outside Areas or the Property or any component part thereof or the property
of adjacent property owners.
4.4 TRASH DISPOSAL. Tenant shall provide trash bins or other adequate
garbage disposal facilities within the trash enclosure areas provided or
permitted by Landlord outside the Leased Premises sufficient for the interim
disposal of all of its trash, garbage and waste. All such trash, garbage and
waste temporarily stored in such areas shall be stored in such a manner so that
it is not visible from outside of such areas, and Tenant shall cause such trash,
garbage and waste to be regularly removed from the Property in a clean, safe and
neat condition free and clear of all trash, garbage, waste and/or boxes, pallets
and containers containing same at all times.
4.5 PARKING. Tenant shall not, at any time, park or permit to be parked
any recreational vehicles, inoperative vehicles or equipment in the Outside
Areas or on any portion of the Property. Tenant agrees to assume responsibility
for compliance by its employees and invitees with the parking provisions
contained herein. If Tenant or its employees park any vehicle within the
Property in violation of these provisions, then Landlord may, upon prior written
notice to Tenant giving Tenant one (1) day (or any applicable statutory notice
period, if longer than one (1) day) to remove such vehicle(s), in addition to
any other remedies Landlord may have under this Lease, charge Tenant, as
Additional Rent, and Tenant agrees to pay, as Additional Rent, One Hundred
Dollars ($100) per day for each day or partial day that each such vehicle is so
parked within the Property. Tenant acknowledges that Landlord reserves the right
from time to time to reconfigure the parking areas so long as such
reconfiguration is in compliance with applicable laws and does not decrease the
number of parking spaces allocated to Tenant, unless the total number of parking
spaces on the Property is diminished as a result of Landlord's obligation to
comply with applicable law or as a result of condemnation and such reduction is
allocated proportionally among all tenants of the Property.
4.6 SIGNS. Tenant shall not place or install on or within any portion of
the Leased Premises, the exterior of the Building, the Outside Areas or the
Property any sign, advertisement, banner, placard, or picture which is visible
from the exterior of the Leased Premises. Tenant shall not place or install on
or within any portion of the Leased Premises, the exterior of the Building, the
Outside Areas or the Property any business identification sign which is visible
from the exterior of the Leased Premises until Landlord shall have approved in
writing and in its sole reasonable discretion the location, size, content,
design, method of attachment and material to be used in the making of such sign.
Any sign, once approved by Landlord, shall be installed at Tenant's sole cost
and expense and only in strict compliance with Landlord's approval, using a
person approved by Landlord to install same. Landlord may remove any signs
(which have not
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been approved in writing by Landlord), advertisements, banners, placards or
pictures so placed by Tenant on or within the Leased Premises, the exterior of
the Building, the Outside Areas or the Property and charge to Tenant the cost of
such removal, together with any costs incurred by Landlord to repair any damage
caused thereby, including any cost incurred to restore the surface (upon which
such sign was so affixed) to its original condition. Tenant shall remove all of
Tenant's signs, repair any damage caused thereby, and restore the surface upon
which the sign was affixed to its original condition, all to Landlord's
reasonable satisfaction, upon the termination of this Lease.
4.7 COMPLIANCE WITH LAWS AND PRIVATE RESTRICTIONS. Tenant shall not
store, use or dispose of any Hazardous Materials on the Leased Premises, except
for normal office and cleaning products in amounts customary for the type of use
permitted by this Lease, and used in compliance with all applicable laws.
Tenant shall abide by and shall promptly observe and comply with, at its
sole cost and expense, all Laws and Private Restrictions respecting Tenant's use
and occupancy of the Leased Premises, the Building, the Outside Areas or the
Property including, without limitation, all Laws governing Hazardous Materials
(except Excluded Hazardous Materials), and shall defend with competent counsel,
indemnify and hold Landlord harmless from any claims, damages or liability
resulting from Tenant's failure to so abide, observe, or comply.
For the purposes of this Lease, "Hazardous Materials" shall be defined,
collectively, as oil, flammable explosives, asbestos, radioactive materials,
hazardous wastes, toxic or contaminated substances or similar materials,
including, without limitation, (a) any substance defined as a "hazardous
substance", "hazardous material", "hazardous waste", "toxic substance", or "air
pollutant" in the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. 9601, et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. 1801, et seq., the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. 6901, et seq., the Federal Water Pollution
Control Act ("FWPCA"), 33 U.S.C. 1251 et seq., the Clean Air Act ("CAA"), 42
U.S.C. 7401 et seq., or the Toxic Substances Control Act ("TSCA"), 15 U.S.C.
2601, et seq., all as previously amended and amended hereafter; and (b) any
hazardous substance, hazardous waste, toxic substance, toxic waste, air
pollutant, hazardous material, waste, chemical, or compound described in any
other federal, state, or local statute, ordinance, code, rule, regulation,
order, decree or other law now or at any time hereafter in effect regulating,
relating to or imposing liability or standards of conduct concerning any
hazardous, toxic, or dangerous substance, chemical, material, compound or waste.
Tenant releases Landlord from any liability for, waives all claims
against Landlord and shall indemnify, defend and hold harmless Landlord, its
employees, members and partners, against any and all claims, suits, loss, costs
(including costs of investigation, clean up, monitoring, restoration and
reasonable attorney fees), damage or liability, by reason of property damage,
personal injury or death directly arising from or related to Hazardous Materials
released, manufactured, discharged, disposed, used or stored on, in, or under
the Leased Premises, the Building, the Outside Areas or the Property during the
Term and any extensions of this Lease, regardless of who caused the same, except
for the following (which shall be referred to herein as "Excluded Hazardous
Materials") (i) (A) originating on property which is not leased, owned or
otherwise used or controlled by Tenant and (B) which migrates through the air,
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groundwater or otherwise to Leased Premises, the Building, the Outside Areas or
the Property from a site which is not leased, owned or otherwise controlled by
Tenant, or (ii) which was present on Leased Premises, the Building, the Outside
Areas or the Property immediately prior to the Commencement Date and was not
caused by Tenant, its contractors, employees, invitees, subtenants, agents,
assignees, licensees or servants.
Any costs and expenses relating to Excluded Hazardous Materials shall be
excluded from Property Operating Expenses and Landlord shall not seek to recover
from Tenant any cost or expense incurred by Landlord in connection with any
Excluded Hazardous Materials.
The provisions of this Tenant Indemnity regarding Hazardous Materials
shall survive the termination of the Lease.
4.8 COMPLIANCE WITH INSURANCE REQUIREMENTS. With respect to any
insurance policies required or permitted to be carried by Landlord in accordance
with the provision of this Lease, copies of which have been or will, upon
Tenant's written request therefor, be provided to Tenant, Tenant shall not
conduct nor permit any other person to conduct any activities nor keep, store or
use (or allow any other person to keep, store or use) any item or thing within
the Leased Premises, the Building, the Outside Areas or the Property which (i)
is prohibited under the terms of any such policies, (ii) could result in the
termination of the coverage afforded under any of such policies, (iii) could
give to the insurance carrier the right to cancel any of such policies, or (iv)
could cause an increase in the rates (over standard rates) charged for the
coverage afforded under any of such policies. Tenant shall comply with all
requirements of any insurance company, insurance underwriter, or Board of Fire
Underwriters which are necessary to maintain, at standard rates, the insurance
coverages carried by either Landlord or Tenant pursuant to this Lease.
4.9 LANDLORD'S RIGHT TO ENTER. Landlord and its agents shall have the
right to enter the Leased Premises during normal business hours after giving
Tenant reasonable notice and subject to Tenant's reasonable security measures
for the purpose of (i) inspecting the same; (ii) showing the Leased Premises to
prospective purchasers, mortgagees or tenants; (iii) making necessary
alterations, additions or repairs; and (iv) performing any of Tenant's
obligations when Tenant has failed to do so. Landlord shall have the right to
enter the Leased premises during normal business hours (or as otherwise agreed),
for purposes of supplying any maintenance or services agreed to be supplied by
Landlord. Landlord shall have the right to enter the Outside Areas during normal
business hours for purposes of (i) inspecting the exterior of the Building and
the Outside Areas; (ii) posting notices of nonresponsibility (and for such
purposes Tenant shall provide Landlord at least thirty days' prior written
notice of any work to be performed on the Leased Premises); and (iii) supplying
any services to be provided by Landlord. Any entry into the Leased Premises or
the Outside Areas obtained by Landlord in accordance with this paragraph shall
not under any circumstances be construed or deemed to be a forcible or unlawful
entry into, or a detainer of, the Leased Premises, or an eviction, actual or
constructive of Tenant from the Leased Premises or any portion thereof.
4.10 USE OF OUTSIDE AREAS. Tenant, in its use of the Outside Areas,
shall at all times keep the Outside Areas in a safe condition free and clear of
all materials, equipment, debris, trash (except within existing enclosed trash
areas), inoperable vehicles, and other items which are not
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specifically permitted by Landlord to be stored or located thereon by Tenant.
If, in the opinion of Landlord, unauthorized persons are using any of the
Outside Areas by reason of, or under claim of, the express or implied authority
or consent of Tenant, then Tenant, upon demand of Landlord, shall restrain, to
the fullest extent then allowed by Law, such unauthorized use, and shall
initiate such appropriate proceedings as may be required to so restrain such
use.
4.11 ENVIRONMENTAL PROTECTION. Landlord may voluntarily cooperate in a
reasonable manner with the efforts of all governmental agencies in reducing
actual or potential environmental damage. Tenant shall not be entitled to
terminate this Lease or to any reduction in or abatement of rent by reason of
such compliance or cooperation. Tenant agrees at all times to cooperate fully
with the requirements and recommendations of governmental agencies regulating,
or otherwise involved in, the protection of the environment.
4.12 RULES AND REGULATIONS. Landlord shall have the right from time to
time to establish reasonable rules and regulations and/or amendments or
additions thereto respecting the use of the Building, Leased Premises and the
Outside Areas for the care and orderly management of the Property. Upon delivery
to Tenant of a copy of such rules and regulations or any amendments or additions
thereto, Tenant shall comply with such rules and regulations. A violation by
Tenant of any of such rules and regulations shall constitute a default by Tenant
under this Lease. If there is a conflict between the rules and regulations and
any of the provisions of this Lease, the provisions of this Lease shall prevail.
Landlord shall not be responsible or liable to Tenant for the violation of such
rules and regulations by any other tenant of the Property. Landlord shall apply
such rules and regulations fairly.
ARTICLE 5
REPAIRS, MAINTENANCE, SERVICES AND UTILITIES
5.1 REPAIR AND MAINTENANCE. Except in the case of damage to or
destruction of the Leased Premises, the Building, the Outside Areas or the
Property caused by an act of God or other peril, in which case the provisions of
Article 10 shall control, the parties shall have the following obligations and
responsibilities with respect to the repair and maintenance of the Leased
Premises, the Building, the Outside Areas, and the Property.
(a) TENANT'S OBLIGATIONS. Tenant shall, at all times during the
Lease Term and at its sole cost and expense, regularly clean and continuously
keep and maintain in good order, condition and repair the Leased Premises and
every part thereof including, without limiting the generality of the foregoing,
(i) all interior walls, floors and ceilings, (ii) all windows, doors and
skylights, (iii) all electrical wiring, conduits, connectors and fixtures, (iv)
all plumbing, pipes, sinks, toilets, faucets and drains, (v) all lighting
fixtures, bulbs and lamps and all heating, ventilating and air conditioning
equipment, and (vi) all entranceways to the Leased Premises. Tenant shall, at
its sole cost and expense, repair all damage to the Leased Premises, the
Building, the Outside Areas or the Property caused by the activities of Tenant,
its employees, invitees or contractors promptly following written notice from
Landlord to so repair such damages. If Tenant shall fail to perform the required
maintenance or fail to make repairs required of it pursuant to this paragraph
within a reasonable period of time following notice from Landlord to do so, then
Landlord may, at its election and without waiving any other remedy it
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may otherwise have under this Lease or at law, perform such maintenance or make
such repairs and charge to Tenant, as Additional Rent, the costs so incurred by
Landlord for same. All glass within or a part of the Leased Premises, both
interior and exterior, is at the sole risk of Tenant and any broken glass shall
promptly be replaced by Tenant at Tenant's expense with glass of the same kind,
size and quality.
(b) LANDLORD'S OBLIGATION. Landlord shall, at all times during the
Lease Term, maintain in good condition and repair the foundation, roof
structure, load-bearing and exterior walls of the Building, and shall
periodically sweep and clean the driveways and parking areas. Landlord shall
cause a licensed heating, ventilating and air conditioning contractor to
regularly and periodically (not less frequently than every two months) inspect
and perform required maintenance on the heating, ventilating and air
conditioning equipment and systems serving the Leased Premises, and charge to
Tenant, as Additional Rent, the cost thereof, or Tenant's Share thereof if the
equipment and systems serve the whole Building. Landlord shall cause a licensed
roofing contractor to regularly and periodically (not less frequently than every
two months) inspect and perform required maintenance on the roof of the Leased
Premises and the Building and charge to Tenant, as Additional Rent, Tenant's
Share of the cost thereof. The provisions of this subparagraph (b) shall in no
way limit the right of Landlord to charge to Tenant, as Additional Rent pursuant
to Article 3 (to the extent permitted pursuant to Article 3), the costs incurred
by Landlord in performing such maintenance and/or making such repairs.
5.2 UTILITIES. Tenant shall arrange at its sole cost and expense and in
its own name, for the supply of gas and electricity to the Leased Premises. In
the event that such services are not separately metered, Tenant shall, at its
sole expense, cause such meters to be installed. Landlord shall maintain the
water meter(s) in its own name; provided, however, that if at any time during
the Lease Term Landlord shall require Tenant to put the water service in
Tenant's name, Tenant shall do so at Tenant's sole cost. Tenant shall be
responsible for determining if the local supplier of water, gas and electricity
can supply the needs of Tenant and whether or not the existing water, gas and
electrical distribution systems within the Building and the Leased Premises are
adequate for Tenant's needs. Tenant shall be responsible for determining if the
existing sanitary and storm sewer systems now servicing the Leased Premises and
the Property are adequate for Tenant's needs. Tenant shall pay all charges for
water, gas, electricity and storm and sanitary sewer services as so supplied to
the Leased Premises, irrespective of whether or not the services are maintained
in Landlord's or Tenant's name.
5.3 SECURITY. Tenant acknowledges that Landlord has not undertaken any
duty whatsoever to provide security for the Leased Premises, the Building, the
Outside Areas or the Property and, accordingly, Landlord is not responsible for
the security of same or the protection of Tenant's property or Tenant's
employees, invitees or contractors. To the extent Tenant determines that such
security or protection services are advisable or necessary, Tenant shall arrange
for and pay the costs of providing same.
5.4 ENERGY AND RESOURCE CONSUMPTION. Landlord may voluntarily cooperate
in a reasonable manner with the efforts of governmental agencies and/or utility
suppliers in reducing energy or other resource consumption within the Property.
Tenant shall not be entitled to terminate this Lease or to any reduction in or
abatement of rent by reason of such compliance or cooperation. Tenant agrees at
all times to cooperate fully with Landlord and to abide by all
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reasonable rules established by Landlord (i) in order to maximize the efficient
operation of the electrical, heating, ventilating and air conditioning systems
and all other energy or other resource consumption systems with the Property
and/or (ii) in order to comply with the requirements and recommendations of
utility suppliers and governmental agencies regulating the consumption of energy
and/or other resources.
5.5 LIMITATION OF LANDLORD'S LIABILITY. Landlord shall not be liable to
Tenant for injury to Tenant, its employees, agents, invitees or contractors,
damage to Tenant's property or loss of Tenant's business or profits, nor shall
Tenant be entitled to terminate this Lease or to any reduction in or abatement
of rent by reason of (i) Landlord's failure to provide security services or
systems within the Property for the protection of the Leased Premises, the
Building or the Outside Areas, or the protection of Tenant's property or
Tenant's employees, invitees, agents or contractors, or (ii) Landlord's failure
to perform any maintenance or repairs to the Leased Premises, the Building, the
Outside Areas or the Property until Tenant shall have first notified Landlord,
in writing, of the need for such maintenance or repairs, and then only after
Landlord shall have had a reasonable period of time following its receipt of
such notice within which to perform such maintenance or repairs, or (iii) any
failure, interruption, rationing or other curtailment in the supply of water,
electric current, gas or other utility service to the Leased Premises, the
Building, the Outside Areas or the Property from whatever cause (other than
Landlord's sole active negligence or willful misconduct or that of Landlord's
agents, employees or contractors), or (iv) the unauthorized intrusion or entry
into the Leased Premises by third parties (other than Landlord).
ARTICLE 6
ALTERATIONS AND IMPROVEMENTS
6.1 BY TENANT. Tenant shall not make any alterations to or modifications
of the Leased Premises or construct any improvements within the Leased Premises
until Landlord shall have first approved, in writing, the plans and
specifications therefor, which approval may be withheld in Landlord's sole but
reasonable discretion. All such modifications, alterations or improvements, once
so approved, shall be made, constructed or installed by Tenant at Tenant's
expense (including all permit fees and governmental charges related thereto),
using a licensed contractor first approved by Landlord (which approval shall not
be unreasonably withheld or delayed), in substantial compliance with the
Landlord-approved plans and specifications therefor. All work undertaken by
Tenant shall be done in accordance with all Laws and in a good and workmanlike
manner using new materials of good quality. Tenant shall not commence the making
of any such modifications or alterations or the construction of any such
improvements until (i) all required governmental approvals and permits shall
have been obtained, (ii) all requirements regarding insurance imposed by this
Lease have been satisfied, (iii) Tenant shall have given Landlord at lease five
business days prior written notice of its intention to commence such work so
that Landlord may post and file notices of non-responsibility, and (iv) if
requested by Landlord, Tenant shall have obtained contingent liability and broad
form builder's risk insurance in an amount satisfactory to Landlord in its
reasonable discretion to cover any perils relating to the proposed work not
covered by insurance carried by Tenant pursuant to Article 9. In no event shall
Tenant make any modification, alterations or improvements whatsoever to the
Outside Areas or the exterior or structural components of the
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Building including, without limitation, any cuts or penetrations in the floor,
roof or exterior walls of the Leased Premises. As used in this Article, the term
"modifications, alterations and/or improvements" shall include, without
limitation, the installation of additional electrical outlets, overhead lighting
fixtures, drains, sinks, partitions, doorways, or the like. Notwithstanding the
foregoing, Tenant, without Landlord's prior written consent, shall be permitted
to make non-structural alterations to the Building, provided that: (a) such
alterations do not exceed $10,000 individually or $100,000 in the aggregate, (b)
Tenant shall timely provide Landlord the notice required pursuant to Paragraph
4.9 above, (c) Tenant shall notify Landlord in writing within thirty (30) days
of completion of the alteration and deliver to Landlord a set of the plans and
specifications therefor, either "as built" or marked to show construction
changes made, and (d) Tenant shall, upon Landlord's request, remove the
alteration at the termination of the Lease and restore the Leased Premises to
their condition prior to such alteration.
6.2 OWNERSHIP OF IMPROVEMENTS. All modifications, alterations and
improvements made or added to the Leased Premises by Tenant (other than Tenant's
inventory, equipment, movable furniture, wall decorations and trade fixtures)
shall be deemed real property and a part of the Leased Premises, but shall
remain the property of Tenant during the Lease. Any such modifications,
alterations or improvements, once completed, shall not be altered or removed
from the Leased Premises during the Lease Term without Landlord's written
approval first obtained in accordance with the provisions of Paragraph 6.1
above. At the expiration or sooner termination of this Lease, all such
modifications, alterations and improvements other than Tenant's inventory,
equipment, movable furniture, wall decorations and trade fixtures, shall
automatically become the property of Landlord and shall be surrendered to
Landlord as part of the Leased Premises as required pursuant to Article 2,
unless Landlord shall require Tenant to remove any of such modifications,
alterations or improvements in accordance with the provisions of Article 2, in
which case Tenant shall so remove same. Landlord shall have no obligations to
reimburse Tenant for all or any portion of the cost or value of any such
modifications, alterations or improvements so surrendered to Landlord. All
modifications, alterations or improvements which are installed or constructed on
or attached to the Leased Premises by Landlord and/or at Landlord's expense
shall be deemed real property and a part of the Leased Premises and shall be
property of Landlord. All lighting, plumbing, electrical, heating, ventilating
and air conditioning fixtures, partitioning, window coverings, wall coverings
and floor coverings installed by Tenant shall be deemed improvements to the
Leased Premises and not trade fixtures of Tenant.
6.3 ALTERATIONS REQUIRED BY LAW. Tenant shall make all modifications,
alterations and improvements to the Leased Premises, at its sole cost, that are
required by any Law because of (i) Tenant's use or occupancy of the Leased
Premises, the Building, the Outside Areas or the Property, (ii) Tenant's
application for any permit or governmental approval, or (iii) Tenant's making of
any modifications, alterations or improvements to or within the Leased Premises.
If Landlord shall, at any time during the Lease Term, be required by any
governmental authority to make any modifications, alterations or improvements to
the Building or the Property, the cost incurred by Landlord in making such
modifications, alterations or improvements, including interest at a rate equal
to the greater of (a) 12%, or (b) the sum of that rate quoted by Xxxxx Fargo
Bank, N.T. & S.A. from time to time as its prime rate, plus two percent (2%)
("Xxxxx Prime Plus Two"), shall be amortized by Landlord over the useful life of
such modifications, alterations or improvements, as determined in accordance
with generally accepted accounting principles, and
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the monthly amortized cost of such modifications, alterations and improvements
as so amortized shall be considered a Property Maintenance Cost (as defined in
Section 13.12).
6.4 LIENS. Tenant shall keep the Property and every part thereof free
from any lien, and shall pay when due all bills arising out of any work
performed, materials furnished, or obligations incurred by Tenant, its agents,
employees or contractors relating to the Property. If any such claim of lien is
recorded against Tenant's interest in this Lease, the Property or any part
thereof, Tenant shall bond against, discharge or otherwise cause such lien to be
entirely released within ten days after the same has been recorded. Tenant's
failure to do so shall be conclusively deemed a material default under the terms
of this Lease.
ARTICLE 7
ASSIGNMENT AND SUBLETTING BY TENANT
7.1 BY TENANT. Tenant shall not sublet the Leased Premises or any
portion thereof or assign its interest in this Lease, whether voluntarily or by
operation of Law, without Landlord's prior written consent which shall not be
unreasonably withheld or delayed. Any attempted subletting or assignment without
Landlord's prior written consent, at Landlord's election, shall constitute a
default by Tenant under the terms of this Lease. The acceptance of rent by
Landlord from any person or entity other than Tenant, or the acceptance of rent
by Landlord from Tenant with knowledge of a violation of the provisions of this
paragraph, shall not be deemed to be a waiver by Landlord of any provision of
this Article or this Lease or to be a consent to any subletting by Tenant or any
assignment of Tenant's interest in this Lease. Without limiting the
circumstances in which it may be reasonable for Landlord to withhold its consent
to an assignment or subletting, Landlord and Tenant acknowledge that it shall be
reasonable for Landlord to withhold its consent in the following instances:
(a) the proposed assignee or sublessee is a governmental agency;
(b) in Landlord's reasonable judgment, the use of the Premises by
the proposed assignee or sublessee would involve occupancy by other than
primarily general office or software engineering personnel, would entail any
alterations which would lessen the value of the leasehold improvements in the
Leased Premises, or would require increased services by Landlord;
(c) in Landlord's reasonable judgment, the financial worth of the
proposed assignee or sublessee is less than that of Tenant or does not meet the
credit standards applied by Landlord;
(d) the proposed assignee or sublessee has been in material default
under a lease, has been in litigation with a previous landlord, or in the ten
years prior to the assignment or sublease has filed for bankruptcy protection,
has been the subject of an involuntary bankruptcy, or has been adjudged
insolvent;
(e) Landlord has experienced a previous default by or is in
litigation with the proposed assignee or sublessee;
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(f) in Landlord's reasonable judgment, the Leased Premises, or the
relevant part thereof, will be used in a manner that will violate any negative
covenant as to use contained in this Lease;
(g) the use of the Leased Premises by the proposed assignee or
sublessee will violate any applicable law, ordinance or regulation;
(h) the proposed assignee or sublessee is, as of the date of this
Lease, a tenant in the Building;
(i) the proposed assignment or sublease fails to include all of the
terms and provisions required to be included therein pursuant to this Article 7;
(j) Tenant is in default of any obligation of Tenant under this
Lease, or Tenant has defaulted under this Lease on three or more occasions
during the 12 months preceding the date that Tenant shall request consent; or
(k) in the case of a subletting of less than the entire Premises,
if the subletting would result in the division of the Premises into more than
two subparcels or would require improvements to be made outside of the Leased
Premises.
7.2 MERGER OR REORGANIZATION. If Tenant is a corporation, any
dissolution, merger, consolidation or other reorganization of Tenant, or the
sale or other transfer in the aggregate over the Lease Term of a controlling
percentage of the capital stock of Tenant, shall be deemed a voluntary
assignment of Tenant's interest in this Lease. The phrase "controlling
percentage" means the ownership of and the right to vote stock possessing more
than fifty percent of the total combined voting power of all classes of Tenant's
capital stock issued, outstanding and entitled to vote for the election of
directors. If Tenant is a partnership, a withdrawal or change, voluntary,
involuntary or by operation of Law, of any general partner, or the dissolution
of the partnership, shall be deemed a voluntary assignment of Tenant's interest
in this Lease.
7.3 LANDLORD'S ELECTION. If Tenant shall desire to assign its interest
under the Lease or to sublet the Leased Premises, Tenant must first notify
Landlord, in writing, of its intent to so assign or sublet, at least thirty (30)
days in advance of the date it intends to so assign its interest in this Lease
or sublet the Leased Premises but not sooner than one hundred eighty days in
advance of such date, specifying in detail the terms of such proposed assignment
or subletting, including the name of the proposed assignee or sublessee, the
property assignee's or sublessee's intended use of the Leased Premises, current
financial statements (including a balance sheet, income statement and statement
of cash flow, all prepared in accordance with generally accepted accounting
principles) of such proposed assignee or sublessee, the form of documents to be
used in effectuating such assignment or subletting and such other information as
Landlord may reasonably request. Landlord shall have a period of ten (10)
business days following receipt of such notice and the required information
within which to do one of the following: (i) consent to such requested
assignment or subletting subject to Tenant's compliance with the conditions set
forth in Paragraph 7.4 below, or (ii) refuse to so consent to such requested
assignment or subletting, provided that such consent shall not be unreasonably
refused, or (iii) terminate this Lease as to the portion (including all) of the
Leased Premises that is the subject of the proposed assignment or subletting.
During such ten (10) business day period, Tenant covenants and agrees
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to supply to Landlord, upon request, all necessary or relevant information which
Landlord may reasonably request respecting such proposed assignment or
subletting and/or the proposed assignee or sublessee.
7.4 CONDITIONS TO LANDLORD'S CONSENT. If Landlord elects to consent, or
shall have been ordered to so consent by a court of competent jurisdiction, to
such requested assignment or subletting, such consent shall be expressly
conditioned upon the occurrence of each of the conditions below set forth, and
any purported assignment or subletting made or ordered prior to the full and
complete satisfaction of each of the following conditions shall be void and, at
the election of Landlord, which election may be exercised at any time following
such a purported assignment or subletting but prior to the satisfaction of each
of the stated conditions, shall constitute a material default by Tenant under
this Lease until cured by satisfying in full each such condition by the assignee
or sublessee. The conditions are as follows:
(a) Landlord having approved in form and substance the assignment
or sublease agreement and any ancillary documents, which approval shall not be
unreasonably withheld by Landlord if the requirements of this Article 7 are
otherwise complied with.
(b) Each such sublessee or assignee having agreed, in writing
satisfactory to Landlord and its counsel and for the benefit of Landlord, to
assume, to be bound by, and to perform the obligations of this Lease to be
performed by Tenant which relate to space being subleased.
(c) Tenant having fully and completely performed all of its
obligations under the terms of this Lease through and including the date of such
assignment or subletting.
(d) Tenant having reimbursed to Landlord all reasonable costs and
reasonable attorneys' fees incurred by Landlord in conjunction with the
processing and documentation of any such requested subletting or assignment.
(e) Tenant having delivered to Landlord a complete and
fully-executed duplicate original of such sublease agreement or assignment
agreement (as applicable) and all related agreements.
(f) Tenant having paid, or having agreed in writing to pay as to
future payments, to Landlord fifty percent (50%) of all assignment consideration
or excess rentals to be paid to Tenant or to any other on Tenant's behalf or for
Tenant's benefit for such assignment or subletting as follows:
(i) If Tenant assigns its interest under this Lease and if
all or a portion of the consideration for such assignment is to be paid by the
assignee at the time of the assignment, that Tenant shall have paid to Landlord
and Landlord shall have received an amount equal to fifty percent (50%) of the
assignment consideration so paid or to be paid (whichever is the greater) at the
time of the assignment by the assignee; or
(ii) If Tenant assigns its interest under this Lease and if
Tenant is to receive all or a portion of the consideration for such assignment
in future installments, that Tenant and Tenant's assignee shall have entered
into a written agreement with and for the benefit
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of Landlord satisfactory to Landlord and its counsel whereby Tenant and Tenant's
assignee jointly agree to pay to Landlord an amount equal to fifty percent (50%)
of all such future assignment consideration installments to be paid by such
assignee as and when such assignment consideration is so paid.
(iii) If Tenant subleases the Leased Premises, that Tenant
and Tenant's sublessee shall have entered into a written agreement with and for
the benefit of Landlord satisfactory to Landlord and its counsel whereby Tenant
and Tenant's sublessee jointly agree to pay to Landlord fifty percent (50%) of
all excess rentals to be paid by such sublessee as and when such excess rentals
are so paid.
7.5 ASSIGNMENT CONSIDERATION AND EXCESS RENTALS DEFINED. For purposes of
this Article, including any amendment to this Article by way of addendum or
other writing, the term "assignment consideration" shall mean all consideration
to be paid by the assignee to Tenant or to any other party on Tenant's behalf or
for Tenant's benefit as consideration for such assignment, without deduction for
any commissions paid by Tenant or any other costs or expenses (including,
without limitation, tenant improvements, capital improvements, building
upgrades, permit fees, attorneys' fees, and other consultants' fees) incurred by
Tenant in connection with such assignment, and the term "excess rentals" shall
mean all consideration to be paid by the sublessee to Tenant or to any other
party on Tenant's behalf or for Tenant's benefit for the sublease of the Leased
Premises in excess of the rent due to Landlord under the terms of this Lease for
the same period, without deduction for any commissions paid by Tenant or any
other costs or expenses (including, without limitation, tenant improvements,
capital improvements, building upgrades, permit fees, attorneys' fees, and other
consultants' fees) incurred by Tenant in connection with such sublease. Tenant
agrees that the portion of any assignment consideration and/or excess rentals
arising from any assignment or subletting by Tenant which is to be paid to
Landlord pursuant to this Article now is and shall then be the property of
Landlord and not the property of Tenant.
7.6 PAYMENTS. All payments required by this Article to be made to
Landlord shall be made in cash in full as and when they become due. At the time
Tenant, Tenant's assignee or sublessee makes each such payment to Landlord,
Tenant or Tenant's assignee or sublessee, as the case may be, shall deliver to
Landlord an itemized statement in reasonable detail showing the method by which
the amount due Landlord was calculated and certified by the party making such
payment as true and correct.
7.7 GOOD FAITH. The rights granted to Tenant by this Article are granted
in consideration of Tenant's express covenant that all pertinent allocations
which are made by Tenant between the rental value of the Leased Premises and the
value of any of Tenant's personal property which may be conveyed or leased
generally concurrently with and which may reasonably be considered a part of the
same transaction as the permitted assignment or subletting shall be made fairly,
honestly and in good faith. If Tenant shall breach this covenant, Landlord may
immediately declare Tenant to be in default under the terms of this Lease and
terminate this Lease and/or exercise any other rights and remedies Landlord
would have under the terms of this Lease in the case of a material default by
Tenant under this Lease.
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7.8 EFFECT OF LANDLORD'S CONSENT. No subletting or assignment, even with
the consent of Landlord, shall relieve Tenant of its personal and primary
obligation to pay rent and to perform all of the other obligations to be
performed by Tenant hereunder. Consent by Landlord to one or more assignments of
Tenant's interest in this Lease or to one or more sublettings of the Leased
Premises shall not be deemed to be a consent to any subsequent assignment or
subletting. If Landlord shall have been ordered by a court of competent
jurisdiction to consent to a requested assignment or subletting, or such an
assignment or subletting shall have been ordered by a court of competent
jurisdiction over the objection of Landlord, such assignment or subletting shall
not be binding between the assignee (or sublessee) and Landlord until such time
as all conditions set forth in Paragraph 7.4 above have been fully satisfied (to
the extent not then satisfied) by the assignee or sublessee, including, without
limitation, the payment to Landlord of all agreed assignment considerations
and/or excess rentals then due Landlord.
7.9 PERMITTED TRANSFERS WITHOUT LANDLORD'S CONSENT. Notwithstanding
anything to the contrary contained in this Lease, no consent of Landlord shall
be required for an assignment or subletting to an entity which will have,
following the assignment or subletting, a market capitalization of not less than
$100,000,000, and cash or cash equivalents of not less than $10,000,000.
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ARTICLE 8
LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY
8.1 LIMITATION ON LANDLORD'S LIABILITY AND RELEASE. Landlord shall not
be liable to Tenant for, and Tenant hereby releases Landlord and its partners,
principals, members, officers, agents, employees, lenders, attorneys, and
consultants from, any and all liability, whether in contract, tort or on any
other basis, for any injury to or any damage sustained by Tenant, Tenant's
agents, employees, contractors or invitees, any damage to Tenant's property, or
any loss to Tenant's business, loss of Tenant's profits or other financial loss
of Tenant resulting from or attributable to the condition of, the management of,
the repair or maintenance of, the protection of, the supply of services or
utilities to, the damage in or destruction of the Leased Premises, the Building,
the Property or the Outside Areas, including without limitation (i) the failure,
interruption, rationing or other curtailment or cessation in the supply of
electricity, water, gas or other utility service to the Property, the Building
or the Leased Premises; (ii) the vandalism or forcible entry into the Building
or the Leased Premises; (iii) the penetration of water into or onto any portion
of the Leased Premises; (iv) the failure to provide security and/or adequate
lighting in or about the Property, the Building or the Leased Premises, (v) the
existence of any design or construction defects within the Property, the
Building or the Leased Premises; (vi) the failure of any mechanical systems to
function properly (such as the HVAC systems); (vii) the blockage of access to
any portion of the Property, the Building or the Leased Premises, except that
Tenant does not so release Landlord from such liability to the extent such
damage was proximately caused by Landlord's sole active negligence or willful
misconduct (or that of its agents, employees or contractors), or Landlord's
failure to perform an obligation expressly undertaken pursuant to this Lease
after a reasonable period of time shall have lapsed following receipt of written
notice from Tenant to so perform such obligation. In this regard, Tenant
acknowledges that it is fully apprised of the provisions of Law relating to
releases, and particularly to those provisions contained in Section 1542 of the
California Civil Code which reads as follows:
"A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor."
Notwithstanding such statutory provision, and for the purpose of implementing a
full and complete release and discharge, Tenant hereby (i) waives the benefit of
such statutory provision and (ii) acknowledges that, subject to the exceptions
specifically set forth herein, the release and discharge set forth in this
paragraph is a full and complete settlement and release and discharge of all
claims and is intended to include in its effect, without limitation, all claims
which Tenant, as of the date hereof, does not know of or suspect to exist in its
favor.
8.2 TENANT'S INDEMNIFICATION OF LANDLORD. Tenant shall defend with
competent counsel satisfactory to Landlord any claims made or legal actions
filed or threatened against Landlord with respect to the violation of any Law,
or the death, bodily injury, personal injury, property damage, or interference
with contractual or property rights suffered by any third party occurring within
the Leased Premises or resulting from Tenant's use or occupancy of the Leased
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Premises, the Building or the Outside Areas, or resulting from Tenant's
activities in or about the Leased Premises, the Building, the Outside Areas or
the Property, and Tenant shall indemnify and hold Landlord, Landlord's partners,
principals, members, employees, agents and contractors harmless from any loss
liability, penalties, or expense whatsoever (including any loss attributable to
vacant space which otherwise would have been leased, but for such activities)
resulting therefrom, except to the extent proximately caused by the active
negligence or willful misconduct of Landlord, its agents employees or
contractors. This indemnity agreement shall survive until the latter to occur of
(i) the date of the expiration, or sooner termination, of this Lease, or (ii)
the date Tenant actually vacates the Leased Premises.
ARTICLE 9
INSURANCE
9.1 TENANT'S INSURANCE. Tenant shall maintain insurance complying with
all of the following:
(a) Tenant shall procure, pay for and keep in full force and
effect, at all times during the Lease Term, the following:
(i) Comprehensive general liability insurance insuring
Tenant against liability for personal injury, bodily injury, death and damage to
property occurring within the Leased Premises, or resulting from Tenant's use or
occupancy of the Leased Premises, the Building, the Outside Areas or the
Property, or resulting from Tenant's activities in or about the Leased Premises
or the Property, with coverage in an amount equal to Tenant's Required Liability
Coverage (as set forth in Article 1), which insurance shall contain a "broad
form liability" endorsement insuring Tenant's performance of Tenant's
obligations to indemnify Landlord as contained in this Lease.
(ii) Fire and property damage insurance in so-called "fire
and extended coverage" form insuring Tenant against loss from physical damage to
Tenant's personal property, inventory, trade fixtures and improvements within
the Leased Premises with coverage for the full actual replacement cost thereof;
(iii) Plate glass insurance, at actual replacement cost;
(iv) Pressure vessel insurance, if applicable;
(v) Product liability insurance, if applicable;
(vi) Workers' compensation insurance and any other employee
benefit insurance sufficient to comply with all laws; and
(vii) With respect to making of alterations or the
construction of improvements or the like undertaken by Tenant, contingent
liability and builder's risk insurance, in an amount and with coverage
reasonably satisfactory to Landlord.
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(b) Each policy of liability insurance required to be carried by
Tenant pursuant to this paragraph or actually carried by Tenant with respect to
the Leased Premises or the Property: (i) shall, except with respect to insurance
required by subparagraph (a)(vi) above, name Landlord, and such others as are
designated by Landlord, as additional insureds; (ii) shall be primary insurance
providing 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 declaration of
coverage, without the right of contribution from or prior payment by any other
insurance coverage of Landlord; (iii) shall be in a form satisfactory to
Landlord; (iv) shall be carried with companies reasonably acceptable to Landlord
with Best's ratings of at least A and XI; (v) shall provide that such policy
shall not be subject to cancellation, lapse or change except after at least
thirty days prior written notice to Landlord, and (vi) shall contain a so-called
"severability" or "cross liability" endorsement. Each policy of property
insurance maintained by Tenant with respect to the Leased Premises or the
Property or any property therein (i) shall provide that such policy shall not be
subject to cancellation, lapse or change except after at least thirty days prior
written notice to Landlord and (ii) shall contain a waiver and/or a permission
to waive by the insurer of any right of subrogation against Landlord, its
partners, principals, members, officers, employees, agents and contractors,
which might arise by reason of any payment under such policy or by reason of any
act or omission of Landlord, its partners, principals, members, officers,
employees, agents and contractors.
(c) Prior to the time Tenant or any of its contractors enters the
Leased Premises, Tenant shall deliver to Landlord, with respect to each policy
of insurance required to be carried by Tenant pursuant to this Article, a copy
of such policy (appropriately authenticated by the insurer as having been
issued, premium paid) or a certificate of the insurer certifying in form
reasonably satisfactory to Landlord that a policy has been issued, premium paid,
providing the coverage required by this Paragraph and containing the provisions
specified herein. With respect to each renewal or replacement of any such
insurance, the requirements of this Paragraph must be complied with not less
than thirty days prior to the expiration or cancellation of the policies being
renewed or replaced. Landlord may, at any time and from time to time, inspect
and/or copy any and all insurance policies required to be carried by Tenant
pursuant to this Article. If Landlord's Lender, insurance broker, advisor or
counsel reasonably determines at any time that the amount of coverage set forth
in Paragraph 9.1(a) for any policy of insurance Tenant is required to carry
pursuant to this Article is not adequate, then Tenant shall increase the amount
of coverage for such insurance to such greater amount as Landlord's Lender,
insurance broker, advisor or counsel reasonably deems adequate.
9.2 LANDLORD'S INSURANCE. With respect to insurance maintained by
Landlord:
(a) Landlord shall maintain, as the minimum coverage required of it
by this Lease, fire and property damage insurance in so-called "fire and
extended coverage" form insuring Landlord (and such others as Landlord may
designate) against loss from physical damage to the Building with coverage of
not less than one hundred percent (100%) of the full actual replacement cost
thereof and against loss of rents for a period of not less than six months. Such
fire and property damage insurance, at Landlord's election but without any
requirements on Landlord's behalf to do so, (i) may be written in so-called "all
risk" form, excluding only those perils commonly excluded from such coverage by
Landlord's then property damage insurer; (ii) may provide coverage for physical
damage to the improvements so insured for up to the
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entire full actual replacement cost thereof; (iii) may be endorsed to cover loss
or damage caused by any additional perils against which Landlord may elect to
insure, including earthquake and/or flood; and/or (iv) may provide coverage for
loss of rents for a period of up to twelve months. Landlord shall not be
required to cause such insurance to cover any of Tenant's personal property,
inventory, and trade fixtures, or any modifications, alterations or improvements
made or constructed by Tenant to or within the Leased Premises. Landlord shall
use commercially reasonable efforts to obtain such insurance at competitive
rates.
(b) Landlord shall maintain comprehensive general liability
insurance insuring Landlord (and such others as are designated by Landlord)
against liability for personal injury, bodily injury, death, and damage to
property occurring in, on or about, or resulting from the use or occupancy of
the Property, or any portion thereof, with combined single limit coverage of at
least Three Million Dollars ($3,000,000). Landlord may carry such greater
coverage as Landlord or Landlord's Lender, insurance broker, advisor or counsel
may from time to time determine is reasonably necessary for the adequate
protection of Landlord and the Property.
(c) Landlord may maintain any other insurance which in the opinion
of its insurance broker, advisor or legal counsel is prudent in carry under the
given circumstances, provided such insurance is commonly carried by owners of
property similarly situated and operating under similar circumstances.
9.3 MUTUAL WAIVER OF SUBROGATION. Landlord hereby releases Tenant, and
Tenant hereby releases Landlord and its respective partners, principals,
members, officers, agents, employees and servants, from any and all liability
for loss, damage or injury to the property of the other in or about the Leased
Premises or the Property which is caused by or results from a peril or event or
happening which is covered by insurance actually carried and in force at the
time of the loss by the party sustaining such loss; provided, however, that such
waiver shall be effective only to the extent permitted by the insurance covering
such loss and to the extent such insurance is not prejudiced thereby.
ARTICLE 10
DAMAGE TO LEASED PREMISES
10.1 LANDLORD'S DUTY TO RESTORE. If the Leased Premises, the Building or
the Outside Area are damaged by any peril after the Effective Date of this
Lease, Landlord shall restore the same, as and when required by this paragraph,
unless this Lease is terminated by Landlord pursuant to Paragraph 10.3 or by
Tenant pursuant to Paragraph 10.4. If this Lease is not so terminated, then upon
the issuance of all necessary governmental permits, Landlord shall commence and
diligently prosecute to completion the restoration of the Leased Premises, the
Building or the Outside Area, as the case may be, to the extent then allowed by
law, to substantially the same condition in which it existed as of the Lease
Commencement Date. Landlord's obligation to restore shall be limited to actual
receipt of insurance proceeds and to the improvements constructed by Landlord.
Landlord shall have no obligation to restore any Improvements made by Tenant to
the Leased Premises or any of Tenant's personal property, inventory or trade
fixtures. Upon completion of the restoration by Landlord, Tenant shall
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forthwith replace or fully repair all of Tenant's personal property, inventory,
trade fixtures and other improvements constructed by Tenant to like or similar
conditions as existed at the time immediately prior to such damage or
destruction.
10.2 INSURANCE PROCEEDS. All insurance proceeds available from the fire
and property damage insurance carried by Landlord shall be paid to and become
the property of Landlord. If this Lease is terminated pursuant to either
Paragraph 10.3 or 10.4, all insurance proceeds available from insurance carried
by Tenant which cover loss of property that is Landlord's property or would
become Landlord's property on termination of this Lease shall be paid to and
become the property of Landlord, and the remainder of such proceeds shall be
paid to and become the property of Tenant. If this Lease is not terminated
pursuant to either Paragraph 10.3 or 10.4, all insurance proceeds available from
insurance carried by Tenant which cover loss to property that is Landlord's
property shall be paid to and become the property of Landlord, and all proceeds
available from such insurance which cover loss to property which would only
become the property of Landlord upon the termination of this Lease shall be paid
to and remain the property of Tenant. The determination of Landlord's property
and Tenant's property shall be made pursuant to Paragraph 6.2.
10.3 LANDLORD'S RIGHT TO TERMINATE. Landlord shall have the option to
terminate this Lease in the event any of the following occurs, which option may
be exercised only by delivery to Tenant of a written notice of election to
terminate within thirty days after the date of such damage or destruction:
(a) The Building is damaged by any peril covered by valid and
collectible insurance actually carried by Landlord and in force at the time of
such damage or destruction (an "insured peril") to such an extent that the
estimated cost to restore the Building exceeds the lesser of (i) the insurance
proceeds available from insurance actually carried by Landlord, or (ii) fifty
percent of the then actual replacement cost thereof;
(b) The Building is damaged by an uninsured peril, which peril
Landlord was not required to insure against pursuant to the provisions of
Article 9 of this Lease.
(c) The Building is damaged by any peril and, because of the laws
then in force, the Building (i) cannot be restored at reasonable cost or (ii) if
restored, cannot be used for the same use being made thereof before such damage.
10.4 TENANT'S RIGHT TO TERMINATE. If the Leased Premises, the Building
or the Outside Area are damaged by any peril and Landlord does not elect to
terminate this Lease or is not entitled to terminate this Lease pursuant to this
Article, then as soon as reasonably practicable, Landlord shall furnish Tenant
with the written opinion of Landlord's architect or construction consultant as
to when the restoration work required of Landlord may be complete. Tenant shall
have the option to terminate this Lease in the event any of the following
occurs, which option may be exercised only by delivery to Landlord of a written
notice of election to terminate within seven days after Tenant receives from
Landlord the estimate of the time needed to complete such restoration:
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(a) If the time estimated to substantially complete the restoration
exceeds six months from and after the date the architect's or construction
consultant's written opinion is delivered; or
(b) If the damage occurred within twelve months of the last day of
the Lease Term and the time estimated to substantially complete the restoration
exceeds one hundred eighty days from and after the date such restoration is
commenced.
10.5 TENANT'S WAIVER. Landlord and Tenant agree that the provisions of
Paragraph 10.4 above, captioned "Tenant's Right To Terminate", are intended to
supersede and replace the provisions contained in California Civil Code, Section
1932, Subdivision 2, and California Civil Code, Section 1934, and accordingly,
Tenant hereby waives the provisions of such Civil Code Sections and the
provisions of any successor Civil Code Sections or similar laws hereinafter
enacted.
10.6 ABATEMENT OF RENT. In the event of damage to the Leased Premises
which does not result in the termination of this Lease, the Base Monthly Rent
(and any Additional Rent) shall be temporarily abated during the period of
restoration in proportion in the degree to which Tenant's use of the Leased
Premises is materially impaired by such damage.
ARTICLE 11
CONDEMNATION
11.1 TENANT'S RIGHT TO TERMINATE. Except as otherwise provided in
Paragraph 11.4 below regarding temporary takings, Tenant shall have the option
to terminate this Lease if, as a result of any taking, (i) all of the Leased
Premises is taken, or (ii) twenty-five percent (25%) or more of the Leased
Premises is taken and the part of the Leased Premises that remains cannot,
within a reasonable period of time, be made reasonably suitable for the
continued operation of Tenant's business. Tenant must exercise such option
within a reasonable period of time, to be effective on the later to occur of (i)
the date that possession of that portion of the Leased Premises that is
condemned is taken by the condemnor or (ii) the date Tenant vacated the Leased
Premises.
11.2 LANDLORD'S RIGHT TO TERMINATE. Except as otherwise provided in
Paragraph 11.4 below regarding temporary takings, Landlord shall have the option
to terminate this Lease if, as a result of any taking, (i) all of the Leased
Premises is taken, (ii) twenty-five percent (25%) or more of the Leased Premises
is taken and the part of the Leased Premises that remains cannot, within a
reasonable period of time, be made reasonably suitable for the continued
operation of Tenant's business, or (iii) because of the laws then in force, the
Leased Premises may not be used for the same use being made before such taking,
whether or not restored as required by Paragraph 11.3 below. Any such option to
terminate by Landlord must be exercised within a reasonable period of time, to
be effective as of the date possession is taken by the condemnor.
11.3 RESTORATION. If any part of the Leased Premises or the Building is
taken and this Lease is not terminated, then Landlord shall, to the extent not
prohibited by laws then in force, repair any damage occasioned thereby to the
remainder thereof to a condition reasonably suitable
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for Tenant's continued operations and otherwise, to the extent practicable, in
the manner and to the extent provided in Paragraph 10.1.
11.4 TEMPORARY TAKING. If a portion of the Leased Premises is
temporarily taken for a period of one year or less and such period does not
extend beyond the Lease Expiration Date, this Lease shall remain in effect. If
any portion of the Leased Premises is temporarily taken for a period which
exceeds one year or which extends beyond the Lease Expiration Date, then the
rights of Landlord and Tenant shall be determined in accordance with Paragraphs
11.1 and 11.2 above.
11.5 DIVISION OF CONDEMNATION AWARD. Any award made for any taking of
the Property, the Building, or the Leased Premises, or any portion thereof,
shall belong to and be paid to Landlord, and Tenant hereby assigns to Landlord
all of its right, title and interest in any such award; provided, however, that
Tenant shall be entitled to receive any portion of the award that is made
specifically (i) for the taking of personal property, inventory or trade
fixtures belonging to Tenant, (ii) for the interruption of Tenant's business or
its moving costs, or (iii) for the value of any leasehold improvements installed
and paid for by Tenant. The rights of Landlord and Tenant regarding any
condemnation shall be determined as provided in this Article, and each party
hereby waives the provisions of Section 1265.130 of the California Code of Civil
Procedure, and the provisions of any similar law hereinafter enacted, allowing
either party to petition the Supreme Court to terminate this Lease and/or
otherwise allocate condemnation awards between Landlord and Tenant in the event
of a taking of the Leased Premises.
11.6 ABATEMENT OF RENT. In the event of a taking of the Leased Premises
which does not result in a termination of this Lease (other than a temporary
taking), then, as of the date possession is taken by the condemning authority,
the Base Monthly Rent shall be reduced in the same proportion that the area of
that part of the Leased Premises so taken (less any addition to the area of the
Leased Premises by reason of any reconstruction) bears to the area of the Leased
Premises immediately prior to such taking.
11.7 TAKING DEFINED. The term "taking" or "taken" as used in this
Article 11 shall mean any transfer or conveyance of all or any portion of the
Property to a public or quasi-public agency or other entity having the power of
eminent domain pursuant to or as a result of the exercise of such power by such
an agency, including any inverse condemnation and/or any sale or transfer by
Landlord of all or any portion of the Property to such an agency under threat of
condemnation or the exercise of such power.
ARTICLE 12
DEFAULT AND REMEDIES
12.1 EVENTS OF TENANT'S DEFAULT. Tenant shall be in default of its
obligations under this Lease if any of the following events occur:
(a) Tenant shall have failed to pay Base Monthly Rent or any
Additional Rent when due or shall have failed to deliver the Warrant or honor
the terms of the Warrant; or
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(b) Tenant shall have done or permitted to be done any act, use or
thing in its use, occupancy or possession of the Leased Premises or the Building
or the Outside Areas which is prohibited by the terms of this Lease; or
(c) Tenant shall have failed to perform any term, covenant or
condition of this Lease (except those requiring the payment of Base Monthly Rent
or Additional Rent or relating to the Warrant, which failures shall be governed
by subparagraph (a) above) within thirty (30) days after written notice from
Landlord to Tenant specifying the nature of such failure and requesting Tenant
to perform same; or
(d) Tenant shall have sublet the Leased Premises or assigned or
encumbered its interest in this Lease in violation of the provisions contained
in Article 7, whether voluntarily or by operation of law; or
(e) Tenant shall have abandoned the Leased Premises; or
(f) Tenant or any Guarantor of this Lease shall have permitted or
suffered the sequestration or attachment of, or execution on, or the appointment
of a custodian or receiver with respect to, all or any substantial part of the
property or assets of Tenant (or such Guarantor) or any property or asset
essential to the conduct of Tenant's (or such Guarantor's) business, and Tenant
(or such Guarantor) shall have failed to obtain a return or release of the same
within thirty days thereafter, or prior to sale pursuant to such sequestration,
attachment or levy, whichever is earlier; or
(g) Tenant or any Guarantor of this Lease shall have made a general
assignment of all or a substantial part of its assets for the benefit of its
creditors; or
(h) Tenant or any Guarantor of this Lease shall have allowed (or
sought) to have entered against it a decree or order which: (i) grants or
constitutes an order for relief, appointment of a trustee, or condemnation or a
reorganization plan under the bankruptcy laws of the United States; (ii)
approves as properly filed a petition seeking liquidation or reorganization
under said bankruptcy laws or any other debtor's relief law or similar statute
of the United States or any state thereof; or (iii) otherwise directs the
winding up or liquidation of Tenant; provided, however, if any decree or order
was entered without Tenant's consent or over Tenant's objection, Landlord may
not terminate this Lease pursuant to this Subparagraph if such decree or order
is rescinded or reversed within thirty days after its original entry; or
(i) Tenant or any Guarantor of this Lease shall have availed itself
of the protection of any debtor's relief law, moratorium law or other similar
law which does not require the prior entry of a decree or order.
12.2 LANDLORD'S REMEDIES. In the event of any default by Tenant, and
without limiting Landlord's right to indemnification as provided in Article 8.2,
Landlord shall have the following remedies, in addition to all other rights and
remedies provided by law or otherwise provided in this Lease, to which Landlord
may resort cumulatively, or in the alternative:
(a) Landlord may, at Landlord's election, keep this Lease in effect
and enforce, by an action at law or in equity, all of its rights and remedies
under this Lease including,
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without limitation, (i) the right to recover the rent and other sums as they
become due by appropriate legal action, (ii) the right to make payments required
by Tenant, or perform Tenant's obligations and be reimbursed by Tenant for the
cost thereof with interest at the then maximum rate of interest not prohibited
by law from the date the sum is paid by Landlord until Landlord is reimbursed by
Tenant, and (iii) the remedies of injunctive relief and specific performance to
prevent Tenant from violating the terms of this Lease and/or to compel Tenant to
perform its obligations under this Lease, as the case may be.
(b) Landlord may, at Landlord's election, terminate this Lease by
giving Tenant written notice of termination, in which event this Lease shall
terminate on the date set forth for termination in such notice. Any termination
under this subparagraph shall not relieve Tenant from its obligation to pay to
Landlord all Base Monthly Rent and Additional Rent then or thereafter due, or
any other sums due or thereafter accruing to Landlord, or from any claim against
Tenant for damages previously accrued or then or thereafter accruing. In no
event shall any one or more of the following actions by Landlord, in the absence
of a written election by Landlord to terminate this Lease constitute a
termination of this Lease:
(i) Appointment of a receiver or keeper in order to protect
Landlord's interest hereunder;
(ii) Consent to any subletting of the Leased Premises or
assignment of this Lease by Tenant, whether pursuant to the provisions hereof or
otherwise; or
(iii) Any action taken by Landlord or its partners,
principals, members, officers, agents, employees, or servants, which is 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
Leased Premises on any action taken to relet the Leased Premises or any portion
thereof for the account at Tenant and in the name of Tenant.
(c) In the event Tenant breaches this Lease and abandons the Leased
Premises, Landlord may terminate this Lease, but this Lease shall not terminate
unless Landlord gives Tenant written notice of termination. If Landlord does not
terminate this Lease by giving written notice of termination, Landlord may
enforce all its rights and remedies under this Lease, including the right and
remedies provided by California Civil Code Section 1951.4 ("lessor may continue
lease in effect after lessee's breach and abandonment and recover rent as it
becomes due, if lessee has right to sublet or assign, subject only to reasonable
limitations"), as in effect on the Effective Date of this Lease.
(d) In the event Landlord terminates this Lease, Landlord shall be
entitled, at Landlord's election, to the rights and remedies provided in
California Civil Code Section 1951.2, as in effect on the Effective Date of this
Lease. For purposes of computing damages pursuant to Section 1951.2, an interest
rate equal to the maximum rate of interest then not prohibited by law shall be
used where permitted. Such damages shall include, without limitation:
(i) The worth at the time of award of the amount by which
the unpaid rent for the balance of the term after the time of award exceeds the
amount of such rental loss that Tenant proves could be reasonably avoided,
computed by discounting such amount at the
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discount rate of the Federal Reserve Bank of San Francisco, at the time of award
plus one percent; and
(ii) Any other amount necessary to compensate Landlord for
all detriment proximately caused by Tenant's failure to perform Tenant's
obligations under this Lease, or which in the ordinary course of things would be
likely to result therefrom, including without limitation, the following: (i)
expenses for cleaning, repairing or restoring the Leased Premises, (ii) expenses
for altering, remodeling or otherwise improving the Leased Premises for the
purpose of reletting, including removal of existing leasehold improvements
and/or installation of additional leasehold improvements (regardless of how the
same is funded, including reduction of rent, a direct payment or allowance to a
new tenant, or otherwise), (iii) broker's fees allocable to the remainder of the
term of this Lease, advertising costs and other expenses of reletting the Leased
Premises; (iv) costs of carrying and maintaining the Leased Premises, such as
taxes, insurance premiums, utility charges and security precautions, (v)
expenses incurred in removing, disposing of and/or storing any of Tenant's
personal property, inventory or trade fixtures remaining therein; (vi)
reasonable attorney's fees, expert witness fees, court costs and other
reasonable expenses incurred by Landlord (but not limited to taxable costs) in
retaking possession of the Leased Premises, establishing damages hereunder, and
releasing the Leased Premises; and (vii) any other expenses, costs or damages
otherwise incurred or suffered as a result of Tenant's default.
12.3 LANDLORD'S DEFAULT AND TENANT'S REMEDIES. In the event Landlord
fails to perform its obligations under this Lease, Landlord shall nevertheless
not be in default under the terms of this Lease until such time as Tenant shall
have first given Landlord written notice specifying the nature of such failure
to perform its obligations, and then only after Landlord shall have had thirty
(30) days following its receipt of such notice within which to perform such
obligations; provided that, if longer than thirty (30) days is reasonably
required in order to perform such obligations, Landlord shall have such longer
period. In the event of Landlord's default as above set forth, then, and only
then, Tenant may then proceed in equity or at law to compel Landlord to perform
its obligations and/or to recover damages proximately caused by such failure to
perform (except as and to the extent Tenant has waived its right to damages as
provided in this Lease).
12.4 LIMITATION OF TENANT'S RECOURSE. Tenant's recourse shall be limited
to Landlord's interest in the Property. In addition, if Landlord is a
corporation, trust, partnership, joint venture, limited liability company,
unincorporated association, or other form of business entity, Tenant agrees that
(i) the obligations of Landlord under this Lease shall not constitute personal
obligations of the officers, directors, trustees, partners, joint venturers,
members, owners, stockholders, or other principals of such business entity, and
(ii) Tenant shall have no recourse to the assets of such officers, directors,
trustees, partners, joint venturers, members, owners, stockholders or
principals. Additionally, if Landlord is a partnership or limited liability
company, then Tenant covenants and agrees:
(a) No partner or member of Landlord shall be sued or named as a
party in any suit or action brought by Tenant with respect to any alleged breach
of this Lease (except to the extent necessary to secure jurisdiction over the
partnership and then only for that sole purpose);
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(b) No service of process shall be made against any partner or
member of Landlord except for the sole purpose of securing jurisdiction over the
partnership; and
(c) No writ of execution will ever be levied against the assets of
any partner or member of Landlord other than to the extent of his or her
interest in the assets of the partnership or limited liability company
constituting Landlord.
Tenant further agrees that each of the foregoing covenants and agreements shall
be enforceable by Landlord and by any partner or member of Landlord and shall be
applicable to any actual or alleged misrepresentation or nondisclosure made
regarding this Lease or the Leased Premises or any actual or alleged failure,
default or breach of any covenant or agreement either expressly or implicitly
contained in this Lease or imposed by statute or at common law.
12.5 TENANT'S WAIVER. Landlord and Tenant agree that the provisions of
Paragraph 12.3 above are intended to supersede and replace the provisions of
California Civil Code Sections 1932(1), 1941 and 1942, and accordingly, Tenant
hereby waives the provisions of California Civil Code Sections 1932(1), 1941 and
1942 and/or any similar or successor law regarding Tenant's right to terminate
this Lease or to make repairs and deduct the expenses of such repairs from the
rent due under this Lease.
ARTICLE 13
GENERAL PROVISIONS
13.1 TAXES ON TENANT'S PROPERTY. Tenant shall pay before delinquency any
and all taxes, assessments, license fees, use fees, permit fees and public
charges of whatever nature or description levied, assessed or imposed against
Tenant or Landlord by a governmental agency arising out of, caused by reason of
or based upon Tenant's estate in this Lease, Tenant's ownership of property,
improvements made by Tenant to the Leased Premises or the Outside Areas,
improvements made by Landlord for Tenant's use within the Leased Premises or the
Outside Areas, Tenant's use (or estimated use) of public facilities or services
or Tenant's consumption (or estimated consumption) of public utilities, energy,
water or other resources (collectively, "Tenant's Interest"). Upon demand by
Landlord, Tenant shall furnish Landlord with satisfactory evidence of these
payments. If any such taxes, assessments, fees or public charges are levied
against Landlord, Landlord's property, the Building or the Property, or if the
assessed value of the Building or the Property is increased by the inclusion
therein of a value placed upon Tenant's Interest, regardless of the validity
thereof, Landlord shall have the right to require Tenant to pay such taxes, and
if not paid and satisfactory evidence of payment delivered to Landlord at least
ten days prior to delinquency, then Landlord shall have the right to pay such
taxes on Tenant's behalf and to invoice Tenant for the same. Tenant shall,
within the earlier to occur of (a) thirty (30) days of the date it receives an
invoice from Landlord setting forth the amount of such taxes, assessments, fees,
or public charge so levied, or (b) the due date of such invoice, pay to
Landlord, as Additional Rent, the amount set forth in such invoice. Failure by
Tenant to pay the amount so invoiced within such time period shall be
conclusively deemed a default by Tenant under this Lease. Tenant shall have the
right to bring suit in any court of competent jurisdiction to recover from the
taxing authority the amount of any such taxes, assessments, fees or public
charges so paid.
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13.2 HOLDING OVER. This Lease shall terminate without further notice on
the Lease Expiration Date (as set forth in Article 1). Any holding over by
Tenant after expiration of the Lease Term shall neither constitute a renewal nor
extension of this Lease nor give Tenant any rights in or to the Leased Premises
except as expressly provided in this Paragraph. Any such holding over to which
Landlord has consented shall be construed to be a tenancy from month to month,
on the same terms and conditions herein specified insofar as applicable, except
that the Base Monthly Rent shall be increased to an amount equal to one hundred
fifty percent (150%) of the Base Monthly Rent payable during the last full month
immediately preceding such holding over.
13.3 SUBORDINATION TO MORTGAGES. This Lease is subject to and
subordinate to all ground leases, mortgages and deeds of trust which affect the
Building or the Property and which are of public record as of the Effective Date
of this Lease, and to all renewals, modifications, consolidations, replacements
and extensions thereof. However, if the lessor under any such ground lease or
any lender holding any such mortgage or deed of trust shall advise Landlord that
it desires or requires this Lease to be made prior and superior thereto, then,
upon written request of Landlord to Tenant, Tenant shall promptly execute,
acknowledge and deliver any and all customary or reasonable documents or
instruments which Landlord and such lessor or lender deems necessary or
desirable to make this Lease prior thereto. Tenant hereby consents to Landlord's
ground leasing the land underlying the Building or the Property and/or
encumbering the Building or the Property as security for future loans on such
terms as Landlord shall desire, all of which future ground leases, mortgages or
deeds of trust shall be subject to and subordinate to this Lease. However, if
any lessor under any such future ground lease or any lender holding such future
mortgage or deed of trust shall desire or require that this Lease be made
subject to and subordinate to such future ground lease, mortgage or deed of
trust, then Tenant agrees, within ten days after Landlord's written request
therefor, to execute, acknowledge and deliver to Landlord any and all documents
or instruments requested by Landlord or by such lessor or lender as may be
necessary or proper to assure the subordination of this Lease to such future
ground lease, mortgage or deed of trust. Landlord agrees to use reasonable
efforts to obtain from such lessor or lender an agreement to recognize Tenant's
rights under this Lease and not to disturb Tenant's quiet possession of the
Leased Premises so long as Tenant is not in default under this Lease. If
Landlord assigns the Lease as security for a loan, Tenant agrees to execute such
documents as are reasonably requested by the lender and to provide reasonable
provisions in the Lease protecting such lender's security interest which are
customarily required by institutional lenders making loans secured by a deed of
trust.
13.4 TENANT'S ATTORNMENT UPON FORECLOSURE. Tenant shall attorn (i) to
any purchaser of the Building or the Property at any foreclosure sale or private
sale conducted pursuant to any security instruments encumbering the Building or
the Property, (ii) to any grantee or transferee designated in any deed given in
lieu of foreclosure of any security interest encumbering the Building or the
Property, or (iii) to the lessor under an underlying ground lease of the land
underlying the Building or the Property, should such ground lease be terminated.
13.5 MORTGAGEE PROTECTION. In the event of any default on the part of
Landlord, Tenant will give notice by registered mail to any Lender or lessor
under any underlying ground lease who shall have requested, in writing, to
Tenant that it be provided with such notice, and Tenant shall offer such Lender
or lessor a reasonable opportunity to cure the default, including
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time to obtain possession of the Leased Premises by power of sale or judicial
foreclosure or other appropriate legal proceedings if reasonably necessary to
effect a cure.
13.6 ESTOPPEL CERTIFICATE. Tenant will, following any request by
Landlord, promptly execute and deliver to Landlord an estoppel certificate (i)
certifying that this Lease is unmodified and in full force and effect, or, if
modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in full force and effect, (ii) stating the date to
which the rent and other charges are paid in advance, if any, (iii)
acknowledging that there are not, to Tenant's knowledge, any uncured defaults on
the part of Landlord hereunder, or specifying such defaults if any are claimed,
and (iv) certifying such other information about this Lease as may be reasonably
requested by Landlord, its Lender or prospective lenders, investors or
purchasers of the Building or the Property. Tenant's failure to execute and
deliver such estoppel certificate within ten days after receipt of Landlord's
request therefor shall be a material default by Tenant under this Lease, and
Landlord shall have all of the rights and remedies available to Landlord as
Landlord would otherwise have in the case of any other material default by
Tenant, including the right to terminate this Lease and xxx for damages
proximately caused thereby, it being agreed and understood by Tenant that
Tenant's failure to so deliver such estoppel certificate in a timely manner
could result in Landlord being unable to perform committed obligations to other
third parties which were made by Landlord in reliance upon this covenant of
Tenant. Landlord and Tenant intend that any statement delivered pursuant to this
paragraph may be relied upon by any Lender or purchaser or prospective Lender or
purchaser of the Building, the Property, or any interest in them.
13.7 TENANT'S FINANCIAL INFORMATION. Tenant shall, within twenty (20)
business days after Landlord's request therefor, deliver to Landlord a copy of
Tenant's (and any guarantor's) most current quarterly and fiscal year financial
statements (including a balance sheet, income statement and statement of cash
flow, all prepared in accordance with generally accepted accounting principles)
and any such other information reasonably requested by Landlord regarding
Tenant's financial condition. Landlord shall be entitled to disclose such
financial statements or other information to its Lender, to any present or
prospective principal of or investor in Landlord, or to any prospective Lender
or purchaser of the Building, the Property, or any portion thereof or interest
therein. Any such financial statement or other information which is marked
"confidential" or "company secrets" (or is otherwise similarly marked by Tenant)
shall be confidential and shall not be disclosed by Landlord to any third party
except as specifically provided in this paragraph, unless the same becomes a
part of the public domain without the fault of Landlord.
13.8 TRANSFER BY LANDLORD. Landlord and its successors in interest shall
have the right to transfer their interest in the Building, the Property, or any
portion thereof at any time and to any person or entity. In the event of any
such transfer, the Landlord originally named herein (and in the case of any
subsequent transfer, the transferor), from the date of such transfer, (i) shall
be automatically relieved, without any further act by any person or entity, of
all liability for the performance of the obligations of the Landlord hereunder
which may accrue after the date of such transfer and (ii) shall be relieved of
all liability for the performance of the obligations of the Landlord hereunder
which have accrued before the date of transfer if its transferee agrees to
assume and perform all such prior obligations of the Landlord hereunder. Upon
such transfer, this Lease shall continue in full force and effect, and Tenant
shall attorn to any such transferee.
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After the date of any such transfer, the term "Landlord" as used herein shall
mean the transferee of such interest in the Building or the Property.
13.9 FORCE MAJEURE. The obligations of each of the parties under this
Lease (other than the obligations to pay money) shall be temporarily excused if
such party is prevented or delayed in performing such obligations by reason of
any strikes, lockouts or labor disputes; government restrictions, regulations,
controls, action or inaction; civil commotion; or extraordinary weather, fire or
other acts of God.
13.10 NOTICES. Any notice required or desired to be given by a party
regarding this Lease shall be in writing and shall be personally served, or in
lieu of personal service may be given by reputable overnight courier service,
postage prepaid, addressed to the other party as follows:
IF TO LANDLORD: 525 Almanor LLC
c/o Menlo Equities LLC
0000 Xxxx Xxxx Xxxx
Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx/ Xxxxxxx
Xxxxxxxxx
with a copy to: Xxxxxx Godward LLP
Xxx Xxxxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxxx
IF TO TENANT: Simplex Solutions, Inc.
000 Xxxxxxx
Xxxxxxxxx, XX 00000
Attention: Xx. Xxxx Xxxxx,
Vice President of Finance
with a copy to: General Counsel Associates LLP
0000 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Any notice given in accordance with the foregoing shall be deemed received upon
actual receipt or refusal to accept delivery.
13.11 ATTORNEYS' FEES. In the event any party shall bring any action,
arbitration proceeding or legal proceeding alleging a breach of any provision of
this Lease, to recover rent, to terminate this Lease, or to enforce, protect,
determine or establish any term or covenant of this Lease or the Warrant, or
rights or duties hereunder of either party, the prevailing party shall be
entitled to recover from the non-prevailing party as a part of such action or
proceeding, or in a separate action for that purpose brought within one year
from the determination of such
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proceeding, reasonable attorneys' fees, expert witness fees, court costs and
other reasonable expenses incurred by the prevailing party.
13.12 DEFINITIONS. Any term that is given a special meaning by any
provision in this Lease shall, unless otherwise specifically stated, have such
meaning wherever used in this Lease or in any Addenda or amendment hereto. In
addition to the terms defined in Article 1, the following terms shall have the
following meanings:
(a) REAL PROPERTY TAXES. The term "Real Property Tax" or "Real
Property Taxes" shall each mean (i) all taxes, assessments, levies and other
charges of any kind or nature whatsoever, general and special, foreseen and
unforeseen (including all instruments of principal and interest required to pay
any general or special assessments for public improvements and any increases
resulting from reassessments caused by any change in ownership or new
construction), 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 for whatever
reason against the Property or any portion thereof, or Landlord's interest
herein, or the fixtures, equipment and other property of Landlord that is an
integral part of the Property and located thereon, or Landlord's business of
owning, leasing or managing the Property or the gross receipts, income or
rentals from the Property, (ii) all charges, levies or fees imposed by any
governmental authority against Landlord by reason of or based upon the use of or
number of parking spaces within the Property, the amount of public services or
public utilities used or consumed (e.g. water, gas, electricity, sewage or waste
water disposal) at the Property, the number of person employed by tenants of the
Property, the size (whether measured in area, volume, number of tenants or
whatever) or the value of the Property, or the type of use or uses conducted
within the Property, and all costs and fees (including attorneys' fees)
reasonably incurred by Landlord in contesting any Real Property Tax and in
negotiating with public authorities as to any Real Property Tax. If, at any time
during the Lease Term, the taxation or assessment of the Property prevailing as
of the Effective Date of this Lease shall be altered so that in lieu of or in
addition to any the Real Property Tax described above there shall be levied,
awarded 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 use or charge (i) on the value, size, use or occupancy
of the Property or Landlord's interest therein or (ii) on or measured by the
gross receipts, income or rentals from the Property, or on Landlord's business
of owning, leasing or managing the Property or (iii) computed in any manner with
respect to the operation of the Property, then any such tax or charge, however
designated, shall be included within the meaning of the terms "Real Property
Tax" or "Real Property Taxes" for purposes of this Lease. If any Real Property
Tax is partly based upon property or rents unrelated to the Property, then only
that part of such Real Property Tax that is fairly allocable to the Property
shall be included within the meaning of the terms "Real Property Tax" or "Real
Property Taxes." Notwithstanding the foregoing, the terms "Real Property Tax" or
"Real Property Taxes" shall not include estate, inheritance, transfer, gift or
franchise taxes of Landlord or the federal or state income tax imposed on
Landlord's income from all sources.
(b) LANDLORD'S INSURANCE COSTS. The term "Landlord's Insurance
Costs" shall mean the costs to Landlord to carry and maintain the policies of
fire and property damage insurance for the Building and the Property and general
liability and any other insurance required
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or permitted to be carried by Landlord pursuant to Article 9, together with any
deductible amounts paid by Landlord upon the occurrence of any insured casualty
or loss.
(c) PROPERTY MAINTENANCE COSTS. The term "Property Maintenance
Costs" shall mean all costs and expenses (except Landlord's Insurance Costs and
Real Property Taxes) paid or incurred by Landlord in protecting, operating,
maintaining, repairing and preserving the Property and all parts thereof,
including without limitation, (i) market rate professional management fees, (ii)
the amortizing portion of any costs incurred by Landlord in the making of any
modifications, alterations or improvements required by any governmental
authority as set forth in Article 6, which are so amortized during the Lease
Term, and (iii) such other costs as may be paid or incurred with respect to
operating, maintaining, and preserving the Property, such as repairing and
resurfacing the exterior surfaces of the Building (including roofs), repairing
and resurfacing paved areas, repairing and replacing structural parts of the
Building, and repairing and replacing, when necessary, electrical, plumbing,
heating, ventilating and air conditioning systems serving the Building.
Notwithstanding anything to the contrary contained in this Lease,
"Property Maintenance Costs" shall not include costs incurred to investigate,
monitor, remove, remediate or otherwise remedy the presence of any Excluded
Hazardous Materials. In addition, any capital expenditure made during the term
of this Lease (as it may be extended), such as, without limitation, capital
expenditures in connection with the Building's roof, HVAC system, plumbing,
electrical system, parking lot, landscaping, life safety systems or the
Building's structure (unless such capital expenditure is made necessary as a
result of Tenant's act or omission or as a result of Tenant's particular use of
the Leased Premises) shall be paid for by Landlord and amortized over the useful
life of the capital improvements in accordance with generally accepted
accounting principles, and Tenant shall pay Tenant's Share of such amortized
costs to Landlord on a money basis during the remainder of the Term (as
extended).
(d) PROPERTY OPERATING EXPENSES. The term "Property Operating
Expenses" shall mean and include all Real Property Taxes, plus all Landlord's
Insurance Costs, plus all Property Operating Costs.
(e) LAW. The term "Law" shall mean any judicial decisions and any
statute, constitution, ordinance, resolution, regulation, rule, administrative
order, or other requirements of any municipal, county, state, federal, or other
governmental agency or authority having jurisdiction over the parties to this
Lease, the Leased Premises, the Building or the Property, or any of them, in
effect either at the Effective Date of this Lease or at any time during the
Lease Term, including, without limitation, any regulation, order, or policy of
any quasi-official entity or body (e.g. a board of fire examiners or a public
utility or special district).
(f) LENDER. The term "Lender" shall mean the holder of any
promissory note or other evidence of indebtedness secured by the Property or any
portion thereof.
(g) PRIVATE RESTRICTIONS. The term "Private Restrictions" shall
mean (as they may exist from time to time) any and all covenants, conditions and
restrictions, private agreements, easements, and any other recorded documents or
instruments affecting the use of the Property, the Building, the Leased
Premises, or the Outside Areas.
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(h) RENT. The term "Rent" shall mean collectively Base Monthly Rent
and all Additional Rent.
13.13 GENERAL WAIVERS. One party's consent to or approval of any act by
the other party requiring the first party's consent or approval shall not be
deemed to waive or render unnecessary the first party's consent to or approval
of any subsequent similar act by the other party. No waiver of any provision
hereof, or any waiver of any breach of any provision hereof, shall be effective
unless in writing and signed by the waiving party. The receipt by Landlord of
any rent or payment with or without knowledge of the breach of any other
provision hereof shall not be deemed a waiver of any such breach. No waiver of
any provision of this Lease shall be deemed a continuing waiver unless such
waiver specifically states so in writing and is signed by both Landlord and
Tenant. No delay or omission in the exercise of any right or remedy accruing to
either party upon any breach by the other party under this Lease shall impair
such right or remedy or be construed as a waiver of any such breach theretofore
or thereafter occurring. The waiver by either party of any breach of any
provision of this Lease shall not be deemed to be a waiver of any subsequent
breach of the same or any other provisions herein contained.
13.14 MISCELLANEOUS. Should any provisions of this Lease prove to be
invalid or illegal, such invalidity or illegality shall in no way affect, impair
or invalidate any other provisions hereof, and such remaining provisions shall
remain in full force and effect. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor. Any copy of this Lease which is executed by the parties shall be deemed
an original for all purposes. This Lease shall, subject to the provisions
regarding assignment, apply to and bind the respective heirs, successors,
executors, administrators and assigns of Landlord and Tenant. The term "party"
shall mean Landlord or Tenant as the context implies. If Tenant consists of more
than one person or entity, then all members of Tenant shall be jointly and
severally liable hereunder. This Lease shall be construed and enforced in
accordance with the Laws of the State in which the Leased Premises are located.
The captions in this Lease are for convenience only and shall not be construed
in the construction or interpretation of any provision hereof. When the context
of this Lease requires, the neuter gender includes the masculine, the feminine,
a partnership, corporation, limited liability company, joint venture, or other
form of business entity, and the singular includes the plural. The terms "must,"
"shall," "will," and "agree" are mandatory. The term "may" is permissive. When a
party is required to do something by this Lease, it shall do so at its sole cost
and expense without right of reimbursement from the other party unless specific
provision is made therefor. Where Landlord's consent is required hereunder, the
consent of any Lender shall also be required. Landlord and Tenant shall both be
deemed to have drafted this Lease, and the rule of construction that a document
is to be construed against the drafting party shall not be employed in the
construction or interpretation of this Lease. Where Tenant is obligated not to
perform any act or is not permitted to perform any act, Tenant is also obligated
to restrain any others reasonably within its control, including agents,
invitees, contractors, subcontractors and employees, from performing such act.
Landlord shall not become or be deemed a partner or a joint venturer with Tenant
by reason of any of the provisions of this Lease.
ARTICLE 14
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CORPORATE AUTHORITY
BROKERS AND ENTIRE AGREEMENT
14.1 CORPORATE AUTHORITY. If Tenant is a corporation, each individual
executing this Lease on behalf of such corporation represents and warrants that
Tenant is validly formed and duly authorized and existing, that Tenant is
qualified to do business in the State in which the Leased Premises are located,
that Tenant has the full right and legal authority to enter into this Lease, and
that he or she is duly authorized to execute and deliver this Lease on behalf of
Tenant in accordance with its terms. Tenant shall, within thirty days after
execution of this Lease, deliver to Landlord a certified copy of the resolution
of its board of directors authorizing or ratifying the execution of this Lease
and if Tenant fails to do so, Landlord at its sole election may elect to
terminate this Lease.
14.2 BROKERAGE COMMISSIONS. Tenant represents, warrants and agrees that
it has not had any dealings with any real estate broker(s), leasing agent(s),
finder(s) or salesmen, other than the Brokers (as named in Article 1) with
respect to the lease by it of the Leased Premises pursuant to this Lease, and
that it will indemnify, defend with competent counsel, and hold Landlord
harmless from any liability for the payment of any real estate brokerage
commissions, leasing commissions or finder's fees claimed by any other real
estate broker(s), leasing agent(s), finder(s), or salesmen to be earned or due
and payable by reason of Tenant's agreement or promise (implied or otherwise) to
pay (or to have Landlord pay) such a commission or finder's fee by reason of its
leasing the Leased Premises pursuant to this Lease. Upon execution of this
Lease, Landlord agrees to pay a commission to Broker in accordance with a
separate agreement between Landlord and Broker.
14.3 ENTIRE AGREEMENT. This Lease and the Exhibits (as described in
Article 1), which Exhibits are by this reference incorporated herein, constitute
the entire agreement between the parties, and there are no other agreements,
understandings or representations between the parties relating to the lease by
Landlord of the Leased Premises to Tenant, except as expressed herein. No
subsequent changes, modifications or additions to this Lease shall be binding
upon the parties unless in writing and signed by both Landlord and Tenant.
14.4 LANDLORD'S REPRESENTATIONS. Tenant acknowledges that neither
Landlord nor any of its agents made any representations or warranties respecting
the Property, the Building or the Leased Premises, upon which Tenant relied in
entering into the Lease, which are not expressly set forth in this Lease. Tenant
further acknowledges that neither Landlord nor any of its agents made any
representations as to (i) whether the Leased Premises may be used for Tenant's
intended use under existing Law, or (ii) the suitability of the Leased Premises
for the conduct of Tenant's business, or (iii) the exact square footage of the
Leased Premises, and that Tenant relies solely upon its own investigations with
respect to such matters. Tenant expressly waives any and all claims for damage
by reason of any statement, representation, warranty, promise or other agreement
of Landlord or Landlord's agent(s), if any, not contained in this Lease or in
any Exhibit attached hereto.
ARTICLE 15
OPTIONS TO EXTEND
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15.1 So long as Simplex Solutions, Inc. is the Tenant hereunder and
occupies the entirety of the Leased Premises, and subject to the condition set
forth in clause (b) below, Tenant shall have one option to extend the term of
this Lease with respect to the entirety of the Leased Premises, for a period of
sixty (60) months from the expiration initial Lease Term (the "Extension
Period"), subject to the following conditions:
(a) the option to extend shall be exercised, if at all, by notice
of exercise given to Landlord by Tenant not more than two hundred seventy (270)
days nor less than two hundred and ten days prior to the expiration of the Lease
Term;
(b) Anything herein to the contrary notwithstanding, if Tenant is
in default under any of the terms, covenants or conditions of this Lease, either
at the time Tenant exercises the extension option or on the commencement date of
the Extension Period, Landlord shall have, in addition to all of Landlord's
other rights and remedies provided in this Lease, the right to terminate such
option to extend upon notice to Tenant.
15.2 In the event the option is exercised in a timely fashion, the Lease
shall be extended for the term of the Extension Period upon all of the terms and
conditions of this Lease, provided that the Base Monthly Rent for each extension
period shall be the "Fair Market Rent" for the Leased Premises. For purposes
hereof, "Fair Market Rent" shall mean the Base Monthly Rent determined pursuant
to the process described below. In no event, however, shall any adjustment of
Base Monthly Rent pursuant to this paragraph result in a decrease of the Base
Monthly Rent for the Leased Premises below the amount due from Tenant for the
preceding portion of the initial Lease Term for which Base Monthly Rent had been
fixed.
15.3 Within 30 days after receipt of Tenant's notice of exercise,
Landlord shall notify Tenant in writing of Landlord's estimate of the Base
Monthly Rent for the Extension Period, based on the provisions of Paragraph 15.2
above. Within 30 days after receipt of such notice from Landlord, Tenant shall
have the right either to (i) accept Landlord's statement of Base Monthly Rent as
the Base Monthly Rent for the Extension Period; or (ii) elect to arbitrate
Landlord's estimate of Fair Market Rent, such arbitration to be conducted
pursuant to the provisions hereof. Failure on the part of Tenant to require
arbitration of Fair Market Rent within such 30-day period shall constitute
acceptance of the Base Monthly Rent for the applicable extension period as
calculated by Landlord. If Tenant elects arbitration, the arbitration shall be
concluded within 90 days after the date of Tenant's election, subject to
extension for an additional 30-day period if a third arbitrator is required and
does not act in a timely manner. To the extent that arbitration has not been
completed prior to the expiration of any preceding period for which Base Monthly
Rent has been determined, Tenant shall pay Base Monthly Rent at the rate
calculated by Landlord, with the potential for an adjustment to be made once
Fair Market Rent is ultimately determined by arbitration.
15.4 In the event of arbitration, the judgment or the award rendered in
any such arbitration may be entered in any court having jurisdiction and shall
be final and binding between the parties. The arbitration shall be conducted and
determined in the location determined by Landlord in accordance with the then
prevailing rules of the American Arbitration Association or its successor for
arbitration of commercial disputes except to the extent that the procedures
mandated by such rules shall be modified as follows:
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(a) Tenant shall make demand for arbitration in writing within 30
days after service of Landlord's determination of Fair Market Rent given under
Paragraph 15.3 above, specifying therein the name and address of the person to
act as the arbitrator on its behalf. The arbitrator shall be qualified as a real
estate appraiser familiar with the Fair Market Rent of similar industrial,
research and development, or office space in the Silicon Valley area who would
qualify as an expert witness over objection to give opinion testimony addressed
to the issue in a court of competent jurisdiction. Failure on the part of Tenant
to make a proper demand in a timely manner for such arbitration shall constitute
a waiver of the right thereto. Within 15 days after the service of the demand
for arbitration, Landlord shall give notice to Tenant, specifying the name and
address of the person designated by Landlord to act as arbitrator on its behalf
who shall be similarly qualified. If Landlord fails to notify Tenant of the
appointment of its arbitrator, within or by the time above specified, then the
arbitrator appointed by Tenant shall be the arbitrator to determine the issue.
(b) In the event that two arbitrators are chosen pursuant to
Paragraph 15.4(a) above, the arbitrators so chosen shall, within 15 days after
the second arbitrator is appointed determine the Fair Market Rent. If the two
arbitrators shall be unable to agree upon a determination of Fair Market Rent
within such 15-day period, they, themselves, shall appoint a third arbitrator,
who shall be a competent and impartial person with qualifications similar to
those required of the first two arbitrators pursuant to Paragraph 15.4(a). In
the event they are unable to agree upon such appointment within seven days after
expiration of such 15-day period, the third arbitrator shall be selected by the
parties themselves, if they can agree thereon, within a further period of 15
days. If the parties do not so agree, then either party, on behalf of both, may
request appointment of such a qualified person by the then Chief Judge of the
United States District Court having jurisdiction over the County of Santa Xxxxx,
acting in his private and not in his official capacity, and the other party
shall not raise any question as to such Judge's full power and jurisdiction to
entertain the application for and make the appointment. The three arbitrators
shall decide the dispute if it has not previously been resolved by following the
procedure set forth below.
(c) Where an issue cannot be resolved by agreement between the two
arbitrators selected by Landlord and Tenant or settlement between the parties
during the course of arbitration, the issue shall be resolved by the three
arbitrators within 15 days of the appointment of the third arbitrator in
accordance with the following procedure. The arbitrator selected by each of the
parties shall state in writing his determination of the Fair Market Rent
supported by the reasons therefor with counterpart copies to each party. The
arbitrators shall arrange for a simultaneous exchange of such proposed
resolutions. The role of the third arbitrator shall be to select which of the
two proposed resolutions most closely approximates his determination of Fair
Market Rent. The third arbitrator shall have no right to propose a middle ground
or any modification of either of the two proposed resolutions. The resolution he
chooses as most closely approximating his determination shall constitute the
decision of the arbitrators and be final and binding upon the parties.
(d) In the event of a failure, refusal or inability of any
arbitrator to act, his successor shall be appointed by him, but in the case of
the third arbitrator, his successor shall be appointed in the same manner as
provided for appointment of the third arbitrator. The arbitrators shall decide
the issue within 15 days after the appointment of the third arbitrator. Any
decision
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in which the arbitrator appointed by Landlord and the arbitrator appointed by
Tenant concur shall be binding and conclusive upon the parties. Each party shall
pay the fee and expenses of its respective arbitrator and both shall share the
fee and expenses of the third arbitrator, if any, and the attorneys' fees and
expenses of counsel for the respective parties and of witnesses shall be paid by
the respective party engaging such counsel or calling such witnesses.
(e) The arbitrators shall have the right to consult experts and
competent authorities to obtain factual information or evidence pertaining to a
determination of Fair Market Rent, but any such consultation shall be made in
the presence of both parties with full right on their part to cross-examine. The
arbitrators shall render their decision and award in writing with counterpart
copies to each party. The arbitrators shall have no power to modify the
provisions of this Lease.
ARTICLE 16
OPTIONS TO EXPAND
16.1 RIGHT OF FIRST OFFER. So long as Simplex Solutions, Inc. is the
Tenant hereunder and occupies the entirety of the Leased Premises, and subject
to the conditions set forth in this Article, Tenant shall have the right of
first offer to lease (the "First Offer Right") the 56,340 square feet delineated
on Exhibit A (the "Expansion Space");
(a) Upon the expiration or earlier termination of the lease
pursuant to which the current Tenant leases the Expansion Space, Landlord shall
give written notice to Tenant that the Expansion Space will be available
("Landlord's Expansion Space Notice").
(b) Within five (5) days following the giving of Landlord's
Expansion Space Notice, Tenant shall give written notice to Landlord, exercising
its First Offer Right and indicating that Tenant wishes to rent the Expansion
Space on the same terms as contained in this Lease (with the exception of rent
and term), and describing the rent Tenant is willing to pay, and the proposed
length of the proposed term. Tenant shall not offer to rent the Expansion Space
for less than the then current rental rate for the Leased Premises nor for a
term of less than sixty (60) months. Tenant's notice of election to exercise
shall also contain Tenant's certification and supporting material that it has a
market capitalization of not less than $100,000,000, and cash or cash
equivalents of not less than $10,000,000, along with such evidence as Landlord
may require in connection with Tenant's credit history and financial condition.
(c) Landlord and Tenant shall have thirty (30) days following
Landlord's receipt of Tenant's election to exercise its First Offer Right within
which to agree upon the terms upon which Landlord is willing to lease to Tenant
and Tenant is willing to take from Landlord the Expansion Space and to execute
an amendment to this Lease adding the Expansion Space to the Leased Premises and
setting forth the agreed upon rent and term.
(d) In the event that the parties fail to reach agreement and
execute a lease for the Expansion Space within such thirty (30) day period,
Tenant shall have no further rights with respect to such Expansion Space.
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16.2 TERMINATION OF RIGHT OF FIRST OFFER. Anything herein to the
contrary notwithstanding, if Tenant is in default under any of the terms,
covenants or conditions of this Lease, either at the time Tenant exercises its
First Offer Right or during the thirty (30) day negotiation period, Landlord
shall have, in addition to all of Landlord's other rights and remedies provided
in this Lease, the right to terminate such First Offer Right upon notice to
Tenant.
ARTICLE 17
TELEPHONE SERVICE
17.1 Notwithstanding any other provision of this Lease to the contrary:
Landlord shall in its sole discretion have the right, by written notice
to Tenant, to elect to assume limited responsibility for intra-building network
cable ("INC"), as provided below, and upon such assumption of responsibility by
Landlord, this Article shall apply prospectively.
(a) Landlord shall provide Tenant access to such quantity of pairs
in the INC as is determined to be available by Landlord in its reasonable
discretion. Tenant's access to the INC shall be solely by arrangements made by
Tenant, as Tenant may elect, directly with Pacific Xxxx or Landlord (or such
vendor as Landlord may designate), and Tenant shall pay all reasonable charges
as may be imposed in connection therewith. Pacific Xxxx'x charges shall be
deemed to be reasonable. Subject to the foregoing, Landlord shall have no
responsibility for providing to Tenant any telephone equipment, including
wiring, within the Leased Premises or for providing telephone service or
connections from the utility to the Leased Premises, except as required by law.
(b) Tenant shall not alter, modify, add to or disturb any telephone
wiring in the Leased Premises or elsewhere in the Building without the
Landlord's prior written consent, which shall not be unreasonably withheld or
delayed. Tenant shall be liable to Landlord for any damage to the telephone
wiring in the Building due to the act, negligent or otherwise, of Tenant or any
employee, contractor or other agent of Tenant. Tenant shall have no access to
the telephone closets within the Building, except in the manner and under
procedures established by Landlord. Tenant shall promptly notify Landlord of any
actual or suspected failure of telephone service to the Leased Premises.
(c) All costs incurred by Landlord for the installation,
maintenance, repair and replacement of telephone wiring in the Building shall be
a Property Maintenance Cost.
(d) Landlord makes no warranty as to the quality, continuity or
availability of the telecommunications services in the Building, and Tenant
hereby waives any claim against Landlord for any actual or consequential damages
(including damages for loss of business) in the event Tenant's
telecommunications services in any way are interrupted, damaged or rendered less
effective, except to the extent caused by the grossly negligent or willful act
or omission by Landlord, its agents or employees. Tenant acknowledges that
Landlord meets its duty of care to Tenant with respect to the Building INC by
contracting with a reliable third party vendor to assume responsibility for the
maintenance and repair thereof (which contract shall contain provisions
requiring such vendor to inspect the INC periodically (the frequency of such
inspections to be determined by such vendor based on its experience and
professional judgment),
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and requiring such vendor to meet local and federal requirements for
telecommunications material and workmanship). Subject to the foregoing, Landlord
shall not be liable to Tenant and Tenant waives all claims against Landlord
whatsoever, whether for personal injury, property damage, loss of use of the
Leased Premises, or otherwise, due to the interruption or failure of telephone
services to the Leased Premises. Tenant hereby holds Landlord harmless and
agrees to indemnify, protect and defend Landlord from and against any liability
for any damage, loss or expense due to any failure or interruption of telephone
service to the Leased Premises for any reason. Tenant agrees to obtain loss of
rental insurance adequate to cover any damage, loss or expense occasioned by the
interruption of telephone service.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the respective dates below set forth with the intent to be legally bound thereby
as of the Effective Date of this Lease first above set forth.
LANDLORD:
525 ALMANOR LLC,
a California limited liability company
By: Menlo Equities LLC, a
California limited liability company,
its Managing Member
By: Menlo Equities, Inc., its Managing
Member
Dated: By: [ILLEGIBLE]
----------------------------- -----------------------------------
Name:
---------------------------------
Its: President
---------------------------------
TENANT:
SIMPLEX SOLUTIONS, INC.,
a California corporation
Dated: By: [ILLEGIBLE]
----------------------------- -----------------------------------
Name:
---------------------------------
Title: Director of Finance
---------------------------------
Dated: By:
----------------------------- -----------------------------------
Name:
---------------------------------
Title:
---------------------------------
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EXHIBIT A
SITE PLAN
[SHOW INITIAL PREMISES, ADDITIONAL SPACE AND EXPANSION SPACE]
A-1
53
EXHIBIT B
FLOOR PLAN
B-1
54
EXHIBIT C
WORK LETTER
THIS WORK LETTER, dated March 21, 1997, is entered into by and between
521 ALMANOR LLC, a California limited liability company ("Landlord") and SIMPLEX
SOLUTIONS, INC., a Delaware corporation ("Tenant"). On or about the date hereof,
Landlord and Tenant entered into that certain Lease (the "Lease") for certain
premises (the "Leased Premises") 000 Xxxxxxx Xxxxxx in Sunnyvale, California
(the "Building"). This Work Letter sets forth the agreement of Landlord and
Tenant with respect to the improvements to be constructed in the portion of the
Leased Premises known as the Additional Space. All defined terms used herein
shall have the meaning set forth in the Lease, unless otherwise defined in this
Work Letter.
1. CONSTRUCTION OF TENANT IMPROVEMENTS. Landlord shall, through its
general contractor (the "Contractor"), furnish and install within the Additional
Space, substantially in accordance with the plans and specifications to be
approved by Landlord and Tenant pursuant to paragraph 2 below, certain items of
general construction (the "Tenant Improvements"). The quantities, character and
manner of installation of all of the Tenant Improvements shall be subject to the
limitations imposed by any applicable governmental regulations relating to
conservation of energy and by applicable building codes and regulations. In
addition, Tenant agrees that Landlord shall not be required to perform work
which would (i) require changes to structural components of the Building or the
exterior design of the Building; (ii) require any material modification to the
Building's mechanical or electrical systems; (iii) be incompatible with the
Building plans filed with the City of Sunnyvale; or (iv) delay the completion of
the Additional Space beyond the Intended Commencement Date.
2. SPACE PLANNING.
(a) Landlord and Tenant acknowledge and agree that Tenant will
prepare for Landlord's approval comprehensive space planning documents (once
approved by Landlord, the "Space Planning Documents"). Tenant agrees that such
space planning documents are or, after revisions requested by Landlord, shall be
sufficient to enable Landlord's architect and engineers to prepare the Working
Drawings (as defined below).
(b) All planning and interior design services relating to furniture
and equipment, such as selection of colors, finishes, fixtures, furnishings or
floor coverings, will be included in the cost of the Tenant Improvements, shall
be subject to prior written approval of Landlord, and shall be timely delivered
so as not to impede the design and construction of the Tenant Improvements.
(c) Upon execution of the Lease and this Work Letter by Tenant and
receipt by Landlord of the Space Planning Documents, Landlord shall be
authorized to cause its architect and engineers to prepare the Working Drawings.
3. APPROVAL OF WORKING DRAWINGS.
(a) Landlord and Tenant acknowledge that Landlord shall retain an
architect and engineers to prepare all architectural and engineering plans and
specifications required for
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the construction of the Tenant Improvements in conformance with the base
building and tenant improvement standard specifications of the Building (the
"Working Drawings"), and to prepare drawings and specifications for Changes (as
defined below), if any, requested or required pursuant to paragraph 5 below.
(b) Landlord shall submit the completed Working Drawings to Tenant
for Tenant's approval. Tenant will provide written approval of the Working
Drawings within five days after such submission. If Tenant disapproves any part
of the submission, the disapproval shall include written instructions adequate
for Landlord's architect and engineers to revise the Working Drawings. Such
revisions shall be subject to Landlord's approval, which shall not be
unreasonably withheld or delayed. Tenant will finally approve the revised
Working Drawings within two business days after submission thereof to Tenant. If
Tenant's instructions necessitate (i) revisions to the Working Drawings (as
originally submitted) which do not conform with the Space Planning Documents, or
(ii) a change of scope relative to the Space Planning Documents, the costs
incurred by Landlord as a result of such instructions (including, without
limitation, the cost of revising the Working Drawings) shall be promptly borne
and paid by Tenant upon demand by Landlord.
(c) If Tenant fails to approve the Working Drawings or the required
Working Drawings within the applicable periods set forth in subparagraph 3(b)
above, then (A) Landlord shall not be obligated to commence construction of the
Tenant Improvements, (B) Tenant shall be responsible for any resulting delay,
and the cost of such delay, in Landlord's completion of the Tenant Improvements
and delivery of the Additional Space, and (C) any such delay shall be deemed a
Tenant Delay (as defined below).
(d) Upon Tenant's approval of the Working Drawings, Landlord shall
be authorized to cause the Contractor to proceed with the construction of the
Tenant Improvements in accordance with the Working Drawings.
4. COST OF TENANT IMPROVEMENTS. It is anticipated that the cost of the
Tenant Improvements shall be approximately $400,000 (which cost shall include,
without limitation, the costs of construction, the cost of permits and permit
expediting, and all architectural and engineering services obtained by Landlord
in connection with the Tenant Improvements, the contractor's fees, and
Landlord's fee for construction administration in an amount equal to the amount
charged by any construction manager retained by Landlord). Landlord shall pay
the first $100,000 incurred in connection with the construction of the Tenant
Improvements and a portion of the remaining costs to complete the Tenant
Improvements in accordance with the following provisions, but in no event shall
Landlord be responsible for paying more than a total of $300,000 in connection
with the Tenant Improvements (the "Tenant Improvement Allowance").
Once Landlord has paid $100,000 toward the costs of the Tenant
Improvements, subsequent costs of constructing the Tenant Improvements shall be
borne two thirds by Landlord and one third by Tenant, until Landlord has
expended the total $300,000 Tenant Improvement Allowance.
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Tenant shall bear and pay the cost of the Tenant Improvements in excess
of the $300,000 Tenant Improvement Allowance, if any. The cost of the Tenant
Improvements shall exclude the cost of furniture, fixtures and inventory and
other items of Tenant's Work (as defined below).
5. CHANGES.
(a) Any request by Tenant for a change in the Tenant Improvements
after approval of the Working Drawings (a "Change") shall be accompanied by all
information necessary to clearly identify and explain the proposed Change. As
soon as practicable after receipt of such an estimate request form, Landlord
shall notify Tenant of the estimated cost of such Change as well as the
estimated increase in construction time caused by the Change, if any. Tenant
shall approve in writing such estimates within two days after receipt of
Landlord's notice. Upon receipt of such written request, Landlord shall be
authorized to cause the Contractor to proceed with the implementation of the
requested Change.
(b) The increased cost and time, as reasonably determined by
Landlord, of all Changes, including the cost of architectural and engineering
services required to revise the Working Drawings to reflect such Changes, the
Contractor's overhead and fee, and Landlord's fee for construction
administration services, shall be treated as costs of the Tenant Improvements,
and shall be as reasonably determined by Landlord upon completion of the Tenant
Improvements, subject only to Landlord's furnishing to Tenant appropriate
back-up information from the Contractor concerning the increased costs and
increased construction time.
6. TENANT'S WORK. Landlord and Tenant acknowledge and agree that certain
work required for Tenant's occupancy of the Additional Space, including but not
limited to the procurement and installation of furniture, fixtures, equipment,
artwork and interior signage are beyond the scope of the Tenant Improvements and
shall be performed by Tenant or its contractors at Tenant's sole cost and
expense. All such work ("Tenant's Work") shall be subject to Landlord's prior
written approval. Tenant shall adopt a construction schedule for Tenant's Work
in conformance with the Contractor's schedule, and shall perform Tenant's Work
in such a way as not to hinder or delay the operations of Landlord or the
Contractor in the Building. Any costs incurred by Landlord as a result of any
interference with Landlord's operations by Tenant or its contractors shall be
promptly paid by Tenant to Landlord upon demand. Landlord shall make all
reasonable efforts to notify Tenant of any such interference of which Landlord
has actual knowledge, but failure to provide such notice shall in no way limit
Landlord's right to demand payment for such costs. Tenant's contractors shall be
subject to Landlord's prior written approval, and to the administrative
supervision of the Contractor. Tenant's Work shall comply with all of the
following requirements:
(a) Tenant's Work shall not proceed until Landlord has approved in
writing: (i) Tenant's contractors (which approval shall not be unreasonably
withheld or delayed), (ii) proof of the amount and coverage of public liability
and property damage insurance carried by Tenant's contractors in the form of an
endorsed insurance certificate naming Landlord, the Contractor, and the agents
of Landlord and the Contractor as additional insureds, in an amount not less
than two million dollars, and (iii) complete and detailed plans and
specifications for Tenant's Work.
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(b) Tenant's Work shall be performed in conformity with a valid
permit when required, a copy of which shall be furnished to Landlord before such
work is commenced. In any event, all Tenant's Work shall comply with all
applicable laws, codes and ordinances of any governmental entity having
jurisdiction over the Building. Landlord shall have no responsibility for
Tenant's failure to comply with such applicable laws. Any and all delay in
obtaining a certificate of occupancy due to Tenant's vendors is the
responsibility of Tenant and shall be a Tenant Delay.
(c) Tenant shall promptly pay Landlord upon demand for any extra
expense incurred by Landlord by reason of faulty work done by Tenant or its
contractors, by reason of damage to existing work caused by Tenant or its
contractors, or by reason of inadequate cleanup by Tenant or its contractors.
7. COMPLETION; TENANT DELAY.
(a) Upon the earlier to occur of (i) Landlord's delivery to Tenant
of a certificate of occupancy issued by the City of Sunnyvale for the Additional
Space, (ii) Tenant's occupancy of all or part of the Additional Space, (iii) the
date that Landlord's architect furnishes a certificate of substantial completion
confirming that the Tenant Improvements have been substantially completed,
subject to minor details of construction, decoration or mechanical adjustment
which do not unreasonably affect Tenant's ability to do business in the
Additional Space, or (iv) the date upon which Tenant opens for business in the
Additional Space, but in no event (other than Force Majeure) later than July 14,
1997, the Tenant Improvements shall be deemed complete and possession of the
Additional Space shall be deemed delivered to Tenant for all purposes under the
Lease.
(b) If Landlord shall be delayed in substantially completing the
Tenant Improvements as a result of:
(i) Tenant's failure to furnish the information,
instructions and plans required in paragraph 3 or approve the Working Drawings,
within the applicable time periods specified in paragraph 3; or
(ii) Any changes in the scope of the Tenant Improvements
from that set forth in the Space Planning Documents, or any Changes to the
Working Drawings requested by Tenant after approval thereof pursuant to
paragraph 5 (including without limitation Tenant Changes which are requested but
not subsequently approved by Tenant pursuant to paragraph 5); or
(iii) Any interruption or interference in Landlord's
construction of the Tenant Improvements caused by Tenant, its contractors or its
vendors; or
(iv) Tenant's failure to timely pay any amounts which Tenant
is obligated to pay under this Work Letter; or
(v) Any other act, neglect, failure or omission of Tenant,
its agents, employees or contractors (items (i) through (v) above being
collectively referred to as "Tenant Delays");
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then the date upon which the payment of rental under the Lease, shall commence
shall be advanced by the cumulative duration of such Tenant Delays.
(c) Within thirty (30) days of delivery of the Additional Space to
Tenant, Tenant shall have the right to submit a written "punchlist" to Landlord,
setting forth any defective item of construction, and Landlord shall submit such
list to the contractor who shall cause such item to be corrected. Landlord shall
have no obligation to pay for any such correction if to do so would cause
Landlord to pay more than $300,000 toward the costs of the Tenant Improvements.
Landlord hereby assigns to Tenant all warranties obtained by Landlord in
connection with the construction of the Tenant Improvements, and agrees to allow
Tenant to enforce such warranties in cooperation with Landlord.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Work Letter
as of the respective dates set forth below.
LANDLORD:
525 ALMANOR LLC,
a California limited liability company
By: Menlo Equities LLC, a
California limited liability company,
its Managing Member
By: Menlo Equities, Inc., its Managing
Member
Dated: By: [ILLEGIBLE]
----------------------------- -----------------------------------
Name:
---------------------------------
Its: President
---------------------------------
TENANT:
SIMPLEX SOLUTIONS, INC.,
a California corporation
Dated: By: [ILLEGIBLE]
----------------------------- -----------------------------------
Name:
---------------------------------
Title: Director of Finance
---------------------------------
Dated: By:
----------------------------- -----------------------------------
Name:
---------------------------------
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Title:
---------------------------------
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60
EXHIBIT D
FORM OF WARRANT
D-1
