EXHIBIT 10.23
LEASE AGREEMENT
BETWEEN
PACKETEER, INC.
AND
NMSBPCSLDHB, A CALIFORNIA LIMITED PARTNERSHIP
1. PARTIES. THIS LEASE is entered into effective July 15, 2002 between
NMSBPCSLDHB, a California Limited Partnership and Packeteer, Inc. hereinafter
called, respectively, "Landlord" and Tenant".
2. PREMISES. Landlord hereby leases to Tenant, and Tenant leases from
Landlord, those certain Premises with the appurtenances, situated in the City of
Cupertino, County of Santa Xxxxx, State of California, more particularly
described as follows, to-wit:
That certain real property located at 00000 Xxxxx XxXxxx
Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxxxx (the "Building") and consisting of the
entirety of the first two floors ( including the exclusive use of the
DeAnza entrance and DeAnza lobby) and also the exclusive use of the
courtyard/atrium except for the proportionate share of the emergency
stairways, main electrical room ( as well as the exclusive use of the
two UPS systems and 100 KVA generator) , passenger elevator and
equipment room and the rear lobby shared by the third floor tenants and
containing 69,015 square feet as generally outlined on Exhibit " A "
attached hereto and incorporated herein by reference ("Premises").
3. USE. Tenant shall use the Premises for office, research and
development , engineering, marketing, sales, distribution, warehousing and all
other legal uses in conformity with the municipal zoning requirements of the
City of Cupertino. Tenant shall grant access to the Main Electrical Room on the
first floor by Landlord on an as needed basis, if ever. Additionally, Tenant
shall share the rear lobby, which is across form the parking structure, with the
tenant(s) on the third floor. Doors accessible to the Premises from the rear
lobby shall be secured and controlled by Tenant.
4. TERM AND RENTAL. The term ("the Lease Term") shall commence on the
date which is the later of ( i ) the date Tenant Improvements are deemed
Substantially Complete (as defined in Section 9 below) or ( ii ) December 15,
2002 ( the `Commencement Date') and ending sixty months thereafter rounded up to
the end of the month if the Commencement Date is on any other day other than the
first of the month. In addition to all other sums payable by Tenant under this
Lease, Tenant shall pay as base monthly rent (the "Base Monthly Rent") for the
Premises as set forth in the Rental Exhibit, the ( `Rental Exhibit') as attached
hereto. The Base Monthly Rent shall then be due on or before the first day of
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each calendar month. The Base Monthly Rental shall be increased by ( *** ) every
twelve months thereafter as provided in the Rental Exhibit. All sums payable by
Tenant under this Lease shall be paid in lawful money of the United States of
America, without offset or deduction except as set forth in this Lease, and
shall be paid to Landlord at such place or places as may be designated from time
to time in writing by Landlord. Base Monthly Rent for any period less than a
calendar month shall be prorated based on the actual number of days in that
particular month.
5. SECURITY DEPOSIT. Within three days of execution of the Lease Tenant
shall deposit a cash Security Deposit with Landlord in the amount of *** ($***).
Landlord may utilize the Security Deposit to cure any defaults by Tenant or
reimburse Landlord for any sums required to be spent to satisfy the covenants
and obligations of the Tenant. In the event of any transfer by Landlord of their
interest in the Premises the Security Deposits herein shall likewise be
transferred to the succeeding owner of the fee title. Within ten ( 10 ) days
after the expiration or termination of this Lease, Landlord shall return the
Security Deposit ( or unapplied portion thereof) to Tenant.
6. LATE CHARGES. Tenant hereby acknowledges that late payment by Tenant
to Landlord of rent and other sums due hereunder will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
administrative, processing, accounting charges, and late charges, which may be
imposed on Landlord by the terms of any contract, revolving credit, mortgage or
trust deed covering the Premises. Accordingly, if any installment of rent or any
other sum due form Tenant shall not be received by Landlord or Landlord's
designee within Five (5) days after the date on which such payment was due,
Tenant shall pay to Landlord a late change equal to Five percent (5%) of such
overdue amount, which late charge shall be due and payable on the same date that
the overdue amount question was due. The parties hereby agree that such late
charge represents a fair and reasonable estimate of the costs Landlord will
incur by reason of late payment by Tenant. Acceptance of such late charge by
Landlord shall in no event constitute a waiver of Tenant's default with respect
to such overdue amount nor prevent Landlord form exercising any of the other
rights and remedies granted hereunder. In the event that a late charge is
payable hereunder, whether or not collected, for three (3) installments of Base
Monthly Rent, then rent shall automatically become due and payable quarterly in
advance, rather than monthly, notwithstanding any provision of this Lease to the
contrary.
7. CONSTRUCTION AND POSSESSION.
A. DEFINITIONS. As used in this Paragraph 7, the following terms shall
have the following meanings.
1. ARCHITECT/TENANT'S BUILDING CONSULTANT. The term `Architect'
shall mean the firm of Xxxxxx Xxxxx and Associates, AIA . The term
`Tenant's Building Consultant' shall mean that person designated as such
by the Tenant.
2. BUILDING SHELL. The term "Building Shell" shall
----------------
*** Material has been omitted pursuant to a request for confidential treatment
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934. Such material has
been filed separately with the Commission.
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mean (1) the foundation, exterior concrete walls, exterior glazing, roof
structure, floor slab and roofing, all parking areas, driveways,
sidewalks, utility installations to the perimeter of the building,
exterior lighting, irrigation systems, landscaping and other outside
area improvements.
3. FINAL TENANT IMPROVEMENT PLANS. The term "Final Tenant
Improvement Plans" shall mean those plans, specifications and working
drawings for the Tenant Improvements prepared and approved by the
parties in accordance with this Paragraph.
4. PRELIMINARY TENANT IMPROVEMENT PLANS. The term "Preliminary
Tenant Improvement Plans" shall mean those plans and specifications for
the Tenant Improvements prepared and approved by the parties in
accordance with this Paragraph.
5. REGULAR TENANT IMPROVEMENTS/TENANT IMPROVEMENTS. The term
"Tenant Improvements" shall mean both Regular Tenant Improvements and
Special Tenant Improvements. The term "Regular Tenant Improvement",
(`RTI'), shall mean those items as set forth in the `REGULAR TENANT
IMPROVEMENT EXHIBIT' as attached hereto.following with respect to the
entirety of the Premises:
6. SPECIAL TENANT IMPROVEMENTS: The term "Special Tenant
Improvements", (`STI'), shall mean those items as set forth in the
`SPECIAL TENANT IMPROVEMENT EXHIBIT' attached hereto and made a part
hereof.
7. REGULAR TENANT IMPROVEMENT COSTS. The term "Regular Tenant
Improvement Costs" or "RTI Costs" shall mean the sum of all costs
associated with the installation and provision of the RTI, including,
but not limited to, the following:
(a) payments to third party contractors, subcontractors
and materialmen and other third parties for the construction of
the RTI ; (b) fees paid to Architect and design / build
engineers employed by any selected subcontractor (other than
employees of Landlord or any affiliate of Landlord ) for
services required in connection with the design and construction
of the RTI; (c) electrical utility power required during the
course of construction and metering charges incurred by
Landlord; (d) permit and license fees paid for use and occupancy
and construction permits required for Tenant to occupy the
Premises and/or install the RTI; (e) the amounts paid to
governmental authorities or agencies for inspections and
issuance of building permits and approvals for the Tenant
Improvements and (f) third party contractor's general
conditions, overhead, profit or other fees.
(g) payment for Landlord's onsite superintendent
(h) clean up costs and costs necessary to ready the
building for occupancy that may not have been included in any of
the subcontractors proposals and contracts. (i) items excluded
or not covered by subcontractors as evidenced by their contract
and/ or an examination of the Final Tenant Improvement Plans.
8. SPECIAL TENANT IMPROVEMENT COSTS: The term
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"Special Tenant Improvement Costs" or "STI Costs" shall mean the sum of
all costs associated with the installation and provision of the STI.
9. SUBSTANTIAL COMPLETION. The term "Substantial Completion" and
"Substantially Complete" shall mean that (a) governmental approval for
occupancy ( including temporary occupancy pending satisfaction of `punch
list' items and other requirements which would not materially impact the
functionality of the Premises )of the Building has been obtained (b)
construction of the Premises has been substantially completed in
accordance with the Final Tenant Improvement Plans approved by Tenant to
an extent that would permit Tenant to use the Premises for its intended
purpose; (c) the Premises are in a "broom" clean" finished condition;
(d) all utilities to be supplied to the Premises are hooked up and
available for use by Tenant; (e) all incomplete or defective
construction which interferes with Tenant's use of the Premises has been
remedied and repaired, subject only to the completion of minor "punch
list" items not interfering with Tenant's use of the Premises; (f)
Landlord has offered to deliver possession of the Premises to Tenant;
and (g) Tenant's Building Consultant has deemed the Tenant Improvements
to be substantially complete.
B.PRELIMINARY PLANS FOR TENANT IMPROVEMENTS. As soon as reasonably
possible Tenant with the assistance of the Landlord and Architect as the case
may be shall have submitted a preliminary space plan for the Tenant
Improvements, for Landlord's approval, which approval shall not be unreasonably
withheld. If Landlord fails to approve or disapprove the proposed space plan
within One (1) day following delivery of the proposed plan to Landlord, the
space plan proposed by Tenant shall be deemed to be the approved Preliminary
Tenant Improvement Plans for the purposes of this Paragraph. If Landlord
disapproves the proposed space plan in any respect, it shall deliver to Tenant
its written proposal for required changes and the parties shall negotiate
immediately in good faith to reach agreement on the Preliminary Tenant
Improvement Plans.
C. FINAL TENANT IMPROVEMENT PLANS: As soon as is reasonably possible
after approval by both parities of the Preliminary Tenant Improvement Plans,
Landlord shall cause the Architect to prepare and deliver to Landlord proposed
final plans, specifications and working drawings for the Tenant Improvements.
Tenant shall submit any reasonable objections to the proposed final plans,
specifications and working drawings to Landlord in writing within the time
period specified in the Time Performance Exhibit. If Tenant proposes changes to
the proposed final plans for the Tenant Improvements, Landlord shall not
unreasonably withhold its approvals for such change and the parties shall confer
and negotiate in good faith to reach agreement on specific required
modifications to the proposed final plans as a consequence of such change.
D. APPLICATION FOR APPROVALS. As soon as the Final Tenant Improvement
Plans are approved by Landlord and Tenant, Landlord shall submit the approved
Final Tenant Improvement Plans to all appropriate governmental agencies for
their approval and issuance of all required permits. Landlord shall use
reasonable efforts to obtain all governmental approvals and permits necessary
for construction of the Tenant Improvements in accordance with the Final Tenant
Improvement Plans as soon as possible following approval of the Final Tenant
Improvement Plans. Landlord and Tenant shall initial the Final Tenant
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Improvement Plans immediately after all governmental approvals and permits have
been obtained and shall append the approved Final Tenant Improvement Plans to
this Lease.
E. CHANGES TO PLANS. After the Final Tenant Improvement Plans have been
approved by Landlord and Tenant as provided above, neither party shall have the
right to require extra work or make any modifications with respect to the
construction of the Tenant Improvements, without the prior written consent of
the other party as to (a) the change, (b) any estimated delay in the scheduled
completion date of the Premises caused by the change, and (c) modification to
the Regular Tenant Improvement Cost or the Special Tenant Improvement Costs as a
consequence of the change. Landlord shall not unreasonably withhold or delay its
consent to changes or extra work proposed by Tenant with respect to the Tenant
Improvements. Tenant may withhold its consent, in its discretion, to any change
in the Final Tenant Improvement Plans except for changes required by
governmental authorities.
F. GENERAL CONTRACTOR. Landlord and Tenant shall select a General
Contractor (or Landlord ) and/or subcontractors licensed in the State of
California to perform the construction of the RTI and STI. Landlord and Tenant
shall jointly evaluate the proposals submitted and decide upon the
contractor(s), scope of work and costs as to the STI work. Due to the remodel
nature, timing and inability to define the salvage value, cost effectiveness and
reusability of the existing and extensive tenant improvements and Building
infrastructure it will be desirable to engage contractors and/or subcontractors
and others on a `not to exceed' basis. Landlord shall submit their
recommendation and Tenant shall approve or direct Landlord to pursue
alternatives until such time as Tenant is satisfied with the contracts and
proposals for the STI. Tenant shall not unreasonably withhold or delay such
approvals. Notwithstanding Tenant's and Landlord's right to approve the
subcontractors, each subcontractor is a contractor only of the General
Contractor and/or Landlord and Tenant shall have no liability to the General
Contractor or Landlord ( if Landlord elects to act as the general contractor) or
subcontractor under any subcontract or otherwise with respect to the Building.
G. LANDLORD'S OBLIGATION TO CONSTRUCT. As soon as the Final Tenant
Improvement Plans have been approved, all necessary governmental approvals and
permits have been obtained, and the bids have been accepted, Landlord shall
cause construction to commence on the Tenant Improvements and to diligently
prosecute to completion, so that the Premises will be Substantially Complete as
soon as reasonably possible.
H. GOVERNMENTAL SUBMITTALS: Landlord shall submit the approved plans as
soon as available from the Tenant and Architect and together with the Architect
monitor the status with the City of Cupertino until the Building Permit is
obtained.
I. DELIVERY OF POSSESSION. When the Premises are Substantially Complete,
Landlord shall deliver possession of the Premises to Tenant.
J. LANDLORD'S AND TENANT'S OBLIGATION FOR RTI AND STI COSTS: Landlord
shall be responsible for the entirety of the of the RTI Costs and Tenant shall
pay to Landlord at Lease Commencement in addition to any other sums then due,
the sum of
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*** ($***), the "Tenant's Contribution" as Tenant's contribution for the RTI
Costs.
Tenant shall be responsible for all of the STI Costs and will be paid as
incurred and billed by Landlord during the course of construction. Tenant shall
covenant to pay to Landlord Tenant's Cost Obligation no later than ten (10) days
after receipt of a statement and reasonable and satisfactory documentation of
the STI Costs from Landlord and as approved by the Tenant's Building Consultant.
Tenant shall be entitled to all investment tax credit, depreciation, and other
tax attributes relating to the Tenant Improvements paid for by Tenant( i.e. the
Tenant Contribution and the STI Costs. At the Expiration Date or sooner
termination of the Lease, all Tenant Improvements shall be surrendered to
Landlord in accordance with the terms of the Lease.
K. TENANT'S RIGHT TO ENTER. Tenant and its authorized contractors and
representatives shall have the right to enter the Building at all reasonable
times for the purpose of inspecting the progress of the construction of the
Tenant Improvements and installing Tenant's trade fixtures and equipment.
Landlord shall give Tenant at least Thirty (30) days prior written notice of its
estimated date for Substantial Completion of the Premises. Any such
fixturization by Tenant will be preformed in a manner that will not materially
interfere with the orderly construction and completion of the Tenant
Improvements nor delay the issuance of a occupancy permit by the City of
Cupertino. No Base Monthly Rental or additional rent shall be payable with
respect to Tenant's early entry right.
L. CONSTRUCTION WARRANTY FOR THE BUILDING. Notwithstanding anything to
the contrary in the Lease, effective upon delivery of the Premises to Tenant,
Landlord does hereby warrant (a) that the Building Shell, RTI and STI and
Premises, upon such delivery, fully comply with all applicable covenants,
conditions or restrictions and the rules, regulations, codes, statutes,
ordinances, and laws of all governmental and quasi-governmental authorities
having jurisdiction over the Premises; (b) that the Tenant Improvements are
constructed in accordance with the Final Tenant Improvement Plans and in a good
and workmanlike manner; (c) that the roof and roof membrane of the Building are
in good condition and repair; (d) that the heating, ventilation and air
condition system of the Building and all other systems are in good operating
condition and repair; (f) that all new material and equipment installed at the
Premises conform to the Final Tenant Improvement Plans and are new and of good
quality ( except where Landlord has been able to reuse existing materials
without compromising the appearance or functionality). Notwithstanding anything
to the contrary contained in the Lease, Tenant's acceptance of the Premises
shall not be deemed a waiver of the foregoing warranty or any other warranty of
Landlord under the Lease, and Landlord shall promptly repair all violations of
the warranty set forth in this paragraph at its sole cost and expense.
Landlord's obligations with respect to the correction of such defects shall be
limited to the cost to correct the defective work and Landlord shall not be
liable for any consequential damages or other loss incurred by Tenant.
----------------
*** Material has been omitted pursuant to a request for confidential treatment
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934. Such material has
been filed separately with the Commission.
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M. RISK OF LOSS. Risk of loss of the Premises prior to the Commencement
Date of the Lease shall be borne by Landlord. At all times prior to the
Commencement Date, Landlord at its sole cost and expense shall maintain
so-called contingent liability and broad form "builders risk" insurance with
coverage in an amount equal to the replacement cost of the Building Shell plus
the Regular Tenant Improvement Cost and the Special Tenant Improvement Costs.
The insurance policy (a) shall be in a form reasonable satisfactory to Tenant,
(b) shall be carried with a company reasonably acceptable to Tenant, and (c)
shall provide that such policy shall not be subject to cancellation or change
except after at least Ten (10) days prior written notice to Tenant. If the
Building is damaged or destroyed and provided sufficient insurance proceeds
exist to rebuild the Building Shell and Tenant Improvements, Landlord shall
promptly and diligently complete construction of the Building and Tenant
Improvements in accordance with this Lease and all insurance proceeds with
respect to the loss shall be paid to an independent depository reasonably
acceptable to Landlord and Tenant, for disbursement to the contractors
completing the Building and Tenant Improvements as the work progresses in
accordance with customary institutional lending practices.
N. ACCOUNTING. Landlord shall submit to Tenant on a monthly basis an
accounting of all Special Tenant Improvement Costs, certified as true and
correct by Landlord. Tenant shall have the right to audit the books, records and
supporting documents of Landlord during normal business hours, after giving
Landlord notice to the extent reasonably necessary to determine the accuracy of
any accounting. Within Forty Five (45) days after Substantial Completion,
Landlord shall render to Tenant a final and detailed accounting of all Special
Tenant Improvement Costs paid by Landlord and Tenant, certified as true and
correct by Landlord. Tenant shall have the same audit rights as set forth above
with respect to the monthly accountings.
O. TENANT DELAYS. For purposes of this Lease, the foregoing shall be
deemed "Tenant Delays": any delays in the construction of the Tenant
Improvements or otherwise achieving Substantial Completion arising in whole or
part from: (a) Tenant's failure to submit plans and information or timely review
and approve information as set forth in this Paragraph 7P. including the Time
Performance Exhibit (`TIME PERFORMANCE EXHIBIT') attached hereto(b) as a result
of written change orders made by Tenant pursuant to the terms of this Paragraph
7 after final approval of the Final Tenant Improvement Plans, to the extent
specified in any written change order approved by Tenant in writing; or (c) any
other acts or omissions of Tenant, its employees, agents, contractors or
invitees. As a result of these delays , if any, Tenant shall determine in good
faith any obligation they might have as such a result to otherwise begin paying
rent to the Landlord prior to the actual completion as a result of such delays,
if any. Time is of the essence for all parties and all parties shall endeavor to
have the Premises ready for occupancy as soon as is reasonably possible.
Landlord should not be placed in the position of incurring additional costs as a
result of untimely decisions or delays.
P. COMMENCEMENT DATE / EXTENSION OF TIME. As set forth in paragraph 4
the Lease Term shall not commence shall commence until the later of ( i ) the
date Tenant Improvements are deemed Substantially Complete or ( ii ) December
15, 2002 ( the `Commencement Date'). If Landlord, for any reason whatsoever,
cannot Substantially Complete the Premises by December 15,2002 this Lease shall
not be void or voidable nor shall Landlord be liable to Tenant for any loss or
damage resulting therefrom. *** ;
----------------
*** Material has been omitted pursuant to a request for confidential treatment
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934. Such material has
been filed separately with the Commission.
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further, in such event the commencement and termination dates of the Lease and
all other dates affected thereby shall be revised to conform to the Commencement
Date. Landlord and Tenant shall execute a confirmation of the Commencement Date
promptly following the occurrence thereof. The date of December 15, 2002 and
Landlord's obligation to meet that date shall be extended for Force Majeure
events (as set forth in this Lease) including inaction by the governmental
agencies, weather, acts of god or unavailability of materials and for each day,
if any, that Tenant delays in approving the preliminary plan or, after
approving, modifies it's specifications or design concept provided such changes
or modifications delay the completion of the Final Tenant Improvement Plans.
Additionally, the obligation of Landlord to meet such deadline shall be extended
for any extension in time required to accommodate any subsequent changes
requested by Tenant during construction to the Final Tenant Improvement Plans.
The dates and items which must be adhered to by Tenant are as set forth in the
Time Performance Exhibit.
8. ACCEPTANCE OF PREMISES AND COVENANTS TO SURRENDER.
A. ACCEPTANCE. As soon as Landlord reasonably believes that the Premises
are Substantially Complete, as defined in Paragraph 7 hereof, Landlord and
Tenant shall together walk through and inspect the work and prepare a written
"punch list" of incomplete or defective construction to present to the General
Contractor. Landlord shall use its reasonable efforts to cause the General
Contractor to complete and/or repair any items on the "punch list" within Thirty
(30) days after the parties have prepared the "punch list" or as soon thereafter
as practical in the exercise of due diligence. After completion of the "punch
list", Tenant shall be deemed to have accepted the Premises.
B. CORRECTION OF DEFECT. Notwithstanding anything to the contrary in the
Lease, Tenant's acceptance of the Premises or submission of a "punch list" shall
not be deemed a waiver of Tenant's right to have defects in the Tenant
Improvements and the Premises repaired at Landlord's sole expense. Tenant shall
give notice to Landlord whenever any such defect becomes reasonably apparent,
and Landlord shall repair such defect as soon as reasonably practical. Landlord
also hereby assigns to Tenant all warranties with respect to the Premises, which
would reduce Tenant's maintenance obligations hereunder and shall cooperate,
with Tenant to enforce all such warranties.
C. SURRENDER. Tenant agrees on the last day of the Lease Term, or
promptly following any sooner termination, to surrender the Premises to Landlord
in the condition received by Tenant, reasonable wear and tear, acts of God,
casualties, condemnation, Hazardous Materials as defined in Paragraph 17 hereof
(other than those stored, used, generated, or disposed of by Tenant, its
employees, agents, contractors and invitees in or about the Premises in
violation of "Law" as defined in Paragraph 11), and Alterations as defined in
Paragraph 10 made by Tenant which Landlord has indicated that Tenant shall not
be required to remove, excepted. Tenant agrees to provide plans and connection
diagrams complete with termination and initiation points for all phone and
communication connections, including but not limited to, network connections and
labeling systems for all wiring and cabling of Tenant which is to remain in the
Premises at the end of the Lease Term. Tenant shall ascertain from Landlord
within one hundred twenty ( 120 ) days before the Expiration Date (or promptly
following any sooner termination of this Lease) whether Landlord will require
Tenant to remove any Alternations made by Tenant at the Premises; If Landlord
shall so require, then Tenant shall remove such Alterations as Landlord may
designate and shall repair any damage to the Premises occasioned by the removal
before the Expiration Date or promptly following any sooner
----------------
*** Material has been omitted pursuant to a request for confidential treatment
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934. Such material has
been filed separately with the Commission.
8
termination at Tenant's sole cost and expense. On or before the end of the Lease
Term or promptly following any sooner termination, Tenant shall remove all of
its personal property and trade fixtures form the Premises, and all property and
fixtures not so removed shall be deemed to be abandoned by Tenant. If the
Premises are not surrendered at the end of the Lease Term or sooner termination
of this Lease in the condition required by this paragraph, Tenant shall
indemnify, defend and hold harmless Landlord against loss or liability resulting
from delay by Tenant in so surrendering the Premises including, without
limitation, any claims made by any succeeding tenant founded on such delay.
9. USE PROHIBITED. Tenant shall not (a) commit, or suffer to be
committed, any waste or nuisance upon the Premises, or (b) allow any sale by
auction upon the Premises, or (c) allow the Premises to be used for any unlawful
purpose, or (d) place any loads upon the floor, walls, or ceiling which endanger
the structure, or (e) use any machinery or apparatus which will vibrate or shake
the Premises or the Building so as to damage the Premises other than ordinary
wear and tear or otherwise in violation of applicable Law, (f) place any harmful
liquids, waste materials, or Hazardous Materials in the drainage system of, or
upon or in the soils surrounding, the Building in violation of applicable Law.
No materials, supplies, equipment, finished products or semi-finished products,
raw materials or articles of any nature or any waste materials, refuse, scrap or
debris shall be stored upon or permitted to remain on any portion of the
Premises outside of the Building except in waste containers.
10. ALTERATIONS AND ADDITIONS.
A. CONSTRUCTION OF ALTERATIONS. Tenant may construct non-structural
alterations, additions and improvements ("Alterations") in the Premises without
Landlord' s prior approval, if the aggregate cost of the Alteration in question
does not exceed Twenty Five Thousand and no/l00ths Dollars ($25,000.00) provided
that Tenant first notify Landlord of such proposed improvements and provide
Landlord at all times with an updated set of drawings relative to the Premises.
If Tenant desires to make nonstructural Alterations costing more than Twenty
Five Thousand and no/100ths Dollars ($25,000.00) or structural Alterations,
Tenant shall first obtain Landlord' s consent, which consent shall not be
unreasonably withheld, and, if Landlord does not notify Tenant in writing of its
reasonable disapproval of such Alteration within Three (3) days following
Tenant's written request for approval and delivery to Landlord of the proposed
plans, then Landlord shall be deemed to have approved the proposed Alternation.
Upon the request of Tenant, Landlord shall within the above-stated Three (3) day
period advise Tenant in writing as to whether Landlord shall require removal of
any Alteration in question upon the Expiration Date or earlier termination of
the Lease Term. Tenant agrees that it will not proceed to make any Alterations
until (a) Tenant has obtained all required governmental approvals and permits,
and (b) Tenant has provided Landlord reasonable security, in form reasonably
approved by Landlord , to protect Landlord against mechanics' lien claims.
Tenant further agrees to provide Landlord (a) written notice of the anticipated
start date and the actual start date of the work, and (b) a complete set of
as-built drawings upon completion of the work. All Alterations shall be (a)
performed in compliance with all applicable Laws and (b) maintained, replaced or
repaired by Tenant at Tenant's sole costs and expense. Furthermore, Tenant shall
provide Landlord with updated floor plans depicting any changes in the open
office landscape portion of the facility to include the cubicle layout and open
office stations and wiring configurations and plans within ninety (90) days
after such modifications occur.
B. OWNERSHIP OF ALTERNATIONS. All Alterations, trade fixtures and
personal property installed in the Premises at Tenant's expense ("Tenant's
Property") shall at all times remain Tenant's property and Tenant shall be
entitled to all depreciation, amortization and other tax benefits with respect
thereto. Except for Alterations which can not be
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removed without structural injury to the Premises, Tenant may remove Tenant's
Property from the Premises at any time, provided Tenant, at its expense, repairs
any damage caused by such removal. Landlord shall have no lien or other interest
whatsoever in any item of Tenant's Property located in the Premises or
elsewhere, and Landlord hereby waives all such liens and interest. Within Ten
(10) days following Tenant's request, Landlord shall execute documents in
reasonable form to evidence Landlord's waiver of any right, title, lien or
interest in Tenant's Property located in the Premises. Notwithstanding the
above, it is agreed that all open office landscape furniture and cubicles
present at the Commencement Date of the Lease and subsequently acquired and
installed during the term of the Lease shall remain in place including the
electrical and communication wiring and related plans and become the property of
the Landlord upon Lease termination.
11. MAINTENANCE AND OPERATION OF PREMISES AND BUILDING.
A. TENANT MAINTENANCE AND SERVICE CONTRACTS. The Landlord has a
principal and primary interest in ascertaining that all systems and functions of
the Building operation are suitably maintained and that services are provided in
accordance with their requirements. Landlord shall control the Building systems,
services and maintenance and Landlord shall xxxx Tenant for Tenant's pro rata
costs associated with these services. Landlord shall contract and administer all
Building elements and services required to be provided to the Building. These
would include, but not limited to, landscape maintenance, parking lot sweeping,
water, gas , electric power, fountain maintenance, elevator maintenance, monthly
service for air conditioning, window washing, security ( this is for the
Building entry at the rear lobby and exterior patrol, if any), fire monitoring
service, and trash and refuse disposal. Landlord shall then xxxx Tenant for
Tenant's pro rata share as set forth in the Building Services Exhibit (`BUILDING
SERVICES EXHIBIT'). Additionally, it is agreed that Tenant shall be responsible
for its pro rata share of routine HVAC and roof membrane maintenance and
repairs. Landlord shall be responsible for necessary capital improvements to
these Building systems. Furthermore, Landlord has and does warrant that at the
Commencement Date and for six months thereafter the Landlord does warrant the
Building shall be in good working order and condition, including, but not
limited to, landscaping, landscaping sprinklers, exterior lighting, fountains,
roof membrane, plumbing, electrical (including panels and outlets) freight
elevator and passenger elevator, fire sprinklers, interior lighting, ceiling
tiles, window coverings, parking lot, HVAC systems and plumbing. Subject to
Landlord's obligations as set forth in this paragraph and the Building Services
Exhibit, Tenant shall pay its pro rata costs to keep and maintain, repair and
replace ( except for capital improvements), the Premises and appurtenances and
every part hereof, including but not limited to, the interior non-load bearing
walls, the roof membrane, the sidewalks, the parking areas, the landscape areas,
the elevator, the plumbing, electrical and HVAC systems, and the Tenant
Improvements in good and sanitary order, condition, and repair. Notwithstanding
the foregoing, Landlord shall repair and maintain in good condition, at
Landlord's sole cost, the structural portions of the Premises at all times
during the Lease Term, including the foundation, footings, exterior walls,
load-bearing walls, floor slab and the roof structure. Landlord shall have a
monthly service contract between Landlord and (a) Therma Inc. , a licensed
air-conditioning and heating contractor and (b) a licensed elevator maintenance
contractor. Landlord shall also contract with a licensed roof contractor to
inspect the roof membrane at least every Six (6) months, with the first
inspection due Six (6) months after the Commencement Date, and (b) Landlord
shall cause all routine preventive maintenance recommendations made by such
contractor within a reasonable time after such recommendations are made. Such
preventive maintenance might include acts such as clearing storm
10
gutters and drains, removing debris from the roof membrane, trimming trees
overhanging the roof membrane, applying coating materials to seal roof
penetrations, repairing blisters, and other routine measures. Upon Tenant's
advance written request, Landlord shall provide to Tenant a copy of such
preventive maintenance contracts and paid invoices for the recommended work for
which Tenant is responsible. Subject to Landlord's obligations hereunder and to
the amortization of capital items set forth below, Tenant further agrees to pay
its pro rata expenses related to watering , maintaining and replacing, when
necessary, any shrubbery and landscaping. These costs shall be billed and paid
monthly within ten days of receipt of the billing and appropriate backup from
Landlord.
B. EXCLUDED COSTS. Notwithstanding anything to the contrary in this
Lease, in no event shall Tenant have any obligations to perform or to pay
directly, or to reimburse Landlord for, all or any portion of the following
repairs, maintenance, improvements, replacements, premiums, claims, losses,
fees, charges, costs and expense (collectively "Costs") nor shall any portion of
the Special Tenant Improvement Costs (as defined in Paragraph 7) consist of the
following items, all of which shall be the responsibility of Landlord:
1. LOSSES CAUSED BY OTHERS. Costs occasioned by acts, omission
or violation of any covenants, statutes, laws, orders, rules,
underwriter's requirements, regulations, private restrictions, building
codes or ordinances (collectively, "Law"), a misrepresentation, or
breach of this Lease, by Landlord or its agents, employees, contractors,
subcontractors, tenant, or invitees.
2. CASUALTIES AND CONDEMNATIONS. Costs occasioned by fire, acts
of God, or other casualties or by the exercise of the power of eminent
domain, provided that Tenant will pay insurance deductibles for
Landlord's all risk, fire and extended coverage but only to the extent
they do not exceed Ten Thousand Dollars ($10,000) approved by Tenant in
writing in accordance with Paragraph 12 of this Lease and only for their
pro rata portion which would be 34.29% as generally set forth in the
Building Services Exhibit.
3. REIMBURSABLE EXPENSES. Costs for which Landlord has a right
of reimbursement from others or for which Landlord actually receives
reimbursement.
4. CONSTRUCTION DEFECTS AND COMPLIANCE WITH LAW. Costs (a)
relating to construction defects; or (b) required to conform the
Premises to the Final Tenant Improvement Plans.
5. HAZARDOUS MATERIALS. Except to the extent caused by the
disposal, release, emission generation, or storage of the Hazardous
Material in question by Tenant, its agents, employees, invitees or
contractors in violation of Law, Costs incurred to investigate the
presence of any Hazardous Materials, Costs to respond to any claim
Hazardous Material contamination or damage, Costs to remove any
Hazardous Material in, on, about or under the Premises, judgements or
other Costs incurred in connection with any Hazardous Materials exposure
or releases, or any other Cost associated with a Hazardous Material.
6. CAPITALIZED CONSTRUCTION COSTS: Costs in particular related
to the HVAC system and roof membrane and other capital costs wherein the
expenditure is necessitated by the replacement of the equipment or roof
due to exhaustion of the useful life of the item in question.
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C. SITE AREA COSTS. Tenant agrees to pay the pro rata costs directly
related to the "Site Area Costs". The term Site Area Costs shall mean all costs
and expenses related to the (a) site utilities, including water and power; (b)
site maintenance including without limitations, landscape maintenance, alarm and
security services, maintenance, repair and replacement (excluding capital costs)
of the sidewalks, waterscape, parking areas, driveways and service areas.
Likewise , these costs shall be shared pro rata with the Landlord who will be
responsible for 34.29% as more fully set forth in the Building Services Exhibit.
12. INSURANCE.
A. TENANT'S USE. Tenant shall not use, or permit the Premises, or any
part thereof, to be used for any unlawful purpose and no use shall be made or
permitted to be made of the Premises, nor acts done, which will cause an
increase in premiums for the insurance to be maintained by Landlord (unless
Tenant pays for the cost of such increase) or a cancellation of any insurance
policy covering the Premises. Tenant shall, at its sole cost and expense, comply
with any and all reasonable requirements pertaining to said Premises of any
insurance organization or company necessary for the maintenance of reasonable
fire and public liability insurance covering the Premises, excluding structural
improvements or alterations not related to Tenant's specific and particular use.
B. LANDLORD'S INSURANCE. Landlord agrees to purchase and keep in force
Landlord's liability, loss of rents, and fire and extended coverage insurance in
an "all risk" form covering the Premises and all of the Tenant Improvements in
the amount of their full replacement value. Tenant agrees to pay to the Landlord
as additional rent the cost of such insurance as set forth in the Rental
Exhibit. The amounts set forth in the Real Estate Property Tax and Insurance
Exhibit do not include earthquake insurance as Landlord has not elected to
obtain such insurance at this time. Tenant's obligation under this paragraph
will be prorated to reflect the commencement and termination dates of this
Lease. In the event that Landlord, in its sole discretion, elects to purchase
earthquake insurance, Tenant's obligation to pay for the cost of any earthquake
insurance premiums shall be limited to an amount equal to or less than Two (2)
times (provided it is no greater than $*** during the first year of the Lease
AND INCREASING BY *** % FOR EACH SUCCESSIVE YEAR) the cost of the fire and
extended coverage premiums. If the Project is located in a flood zone, Landlord
shall also maintain flood insurance insuring the Building and Tenant
Improvements paid for by Landlord for their full replacement value, and Tenant
shall pay for flood insurance premiums in the manner set forth herein. Tenant
shall have no obligation with respect to the payment of insurance policy
premiums as set forth above to the extent such premiums are attributable to any
time period prior to the date on which payments of Base Monthly Rent commence
pursuant to Paragraph 4 hereof.
C. TENANT'S INSURANCE. Tenant, at its sole cost, agrees to insure
Tenant's Property in an amount Tenant deems appropriate for its protection and
to obtain worker's compensation as required by Law. Tenant, at its sole cost,
shall also maintain commercial general liability insurance for occurrences
within the Premises of $3,000,000 combined single limit for bodily injury and
property damage. Tenant shall name Landlord as an additional insured under such
commercial general liability policy, and shall deliver a certificate of
insurance to Landlord prior to Landlord prior to the Commencement Date and upon
----------------
*** Material has been omitted pursuant to a request for confidential treatment
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934. Such material has
been filed separately with the Commission.
12
any renewal of such policy. Tenant's commercial general liability policy shall
provide for Thirty (30) days' prior written notice to Landlord of any
cancellation or termination or reduction in coverage. Landlord's obligation for
the contribution towards this insurance is for the additional costs incurred as
a result of naming Landlord as additional insured. This amount shall be deducted
from the monthly payments due as set forth in the Real Estate Property Tax and
Insurance Exhibit.
D. INSURANCE DEDUCTIBLES. As a result of the payment agreement as set
forth in item '12E' below, the Tenant will not have the right to select the
deductible which Landlord intends and agrees to maintain at Ten Thousand Dollars
($10,000).
E. WAIVER. Notwithstanding anything to the contrary in this Lease,
Landlord and Tenant hereby waive any rights each may have against the other on
account of any loss or damage that is caused or results from a risk which is
actually insured against, which is required to be insured against under this
Lease, or which would normally be covered by a standard form full replacement
value "all risk extended coverage" policy of casualty insurance, regardless of
whether such loss or damage is due to the negligence of Landlord or Tenant or of
their respective agents, employees, subtenants, contractors, assignees, invitees
or any other cause. Each party shall use its reasonable efforts to obtain from
their respective insurance companies a waiver of any right of subrogation, which
said insurance company may have against the Landlord or the Tenant, as the case
may be. If, after such reasonable efforts, such insurance policy cannot be
obtained with such waiver of subrogation, or it such waiver of subrogation is
only available at additional cost and the party for whose benefit the waiver is
not obtained does not pay such additional cost, then the party obtaining such
insurance shall immediately notify the other party of that fact and shall be
relieved of pursuing the waiver further. Notwithstanding anything to the
contrary contained herein in Paragraph 12 or Paragraph 13 the Insurance and Real
Estate Property Taxes shall be paid in accordance with the Property Tax and
Insurance Exhibit (`REAL ESTATE PROPERTY TAX AND INSURANCE EXHIBIT') attached
hereto. The insurance costs set forth herein shall be billed monthly.
13. TAXES. Tenant shall be liable for, and shall pay prior to
delinquency, all taxes and assessments levied against Tenant's Property.
Tenant's sole obligation for real estate taxes and assessment installments
(special or general) or other impositions or charges which may be levied with
respect to the Premises excluding real estate tax increases due to a sale or
other transfer of the Premises is limited to the amount set forth in the Real
Estate Property Tax and Insurance Exhibit. Tenant shall not be required to pay
any portion of any tax or assessment: (a) levied on Landlord's rental income,
unless such tax or assessment is imposed in lieu of real property taxes; (b) in
excess of the amount which would be payable if such tax or assessment were paid
in installments over the longest possible term; (c) imposed on land and
improvements other than the Premises; (d) attributable to Landlord's net income,
inheritance, gift, transfer, franchise or estate taxes, or (e) imposed with
respect to Hazardous Materials unless Tenant caused such Hazardous Materials.
The real estate property taxes and the costs as setforth in the Real Estate
Property Tax and Insurance Exhibit shall be billed monthly.
14. UTILITIES. Tenant shall pay directly to Landlord their pro rata
costs associated with the providing utility for all water, gas, heat, light,
power, telephone ( by Landlord) and other utilities supplied to the Premises and
site. Landlord shall not be liable for a loss of or injury to property, however
occurring, though or in connection with or incidental to furnishing or failure
to furnish nay of utilities to the Premises and Tenant shall not be entitled to
abatement or reduction of
13
any portion of the rent so long as any failure to provide and furnish the
utilities to the Premises is not due to the negligence, or willful misconduct of
Landlord, its agents, employees or contractors. Notwithstanding the foregoing,
if utilities are not available to the Premises for a period of Thirty (30)
consecutive days or more and such failure does not result from the acts or
omissions of Tenant, its employees, agents, contractor or invitees, Tenant shall
be entitled to an abatement of rent to the extent of the interference with
Tenant's use of the Premises occasioned hereby, which abatement shall commence
on the Thirty First (31st) consecutive day of such interference and continue
until the affected services are restored so that the Premises are reasonably
suitable for Tenant's intended use, and if such interference is not corrected so
that the Premises are reasonably suitable for Tenant's intended use within One
Hundred Eighty (180) days following the interference or interruption, then
Landlord or Tenant shall be entitled to terminate this Lease.
15. FREE FROM LIENS. Tenant shall keep the Premises free from any liens
arising out of any work performed for Tenant, provided, however, that if Tenant,
in good faith, elects to contest such lien, Tenant shall furnish and maintain a
bond or other security reasonably acceptable to Landlord and Tenant shall not
then be deemed in default under this Lease. In the event Tenant fails to
discharge any such lien within Ten (10) days after receiving notice of the
filing, Landlord shall be entitled to discharge such lien at Tenant's expense
and any work performed, materials furnished, or obligations incurred by Tenant
or claimed to have been all resulting costs incurred by Landlord, including
attorney's fees, shall be due from Tenant as additional rent.
16. COMPLIANCE WITH GOVERNMENTAL REGULATIONS. Tenant shall, at its sole
cost and expense, comply with the requirements of all Laws now in force, or
which may hereafter be in force, either (a) pertaining to Tenant's specific and
particular use of the Premises or (b) arising because of an Alteration made by
Tenant, and shall faithfully observe in the use of the Premises all Laws now in
force or which may hereafter be in force. The judgement of any court of
competent jurisdiction, or the admission of Tenant in any action or proceeding
against Tenant, whether Landlord be a party thereto or not, that Tenant has
violated any such ordinance or statute in Tenant's use of the Premises, shall be
conclusive of that fact as between Landlord and Tenant. At the Commencement
Date, the Premises shall conform to all requirements of covenants, conditions,
restrictions and encumbrances ("CC & R's), all underwriter's requirements, and
all Laws applicable thereto. Tenant shall not be required to construct or pay
the cost of complying with any CC & R' s, underwriters requirements or Law
requiring construction of improvements in the Premises unless (a) such
compliance is necessitated solely because of Tenant's particular and specific
use of the Premises or (b) such compliance is necessitated because of
Alternations made by Tenant. Any structural requirements or Costs necessitated
by CC & R' s, underwriters' requirements or Laws which are imposed on buildings
or real estate generally (as opposed to the Premises because of Tenant's
specific and particular use) shall be performed by Landlord and the cost of such
item or improvement shall be allocated as follows: Landlord and Tenant shall
establish the useful life of the improvement based upon generally accepted
accounting principles. Tenant shall pay a proportion of the actual cost equal to
the cost of such improvement or item paid by Landlord to the third party
contractor performing the maintenance or furnishing the replacement times a
fraction, the numerator of which is the number months remaining in the initial
Lease Term, and the denominator of which is the useful life of the improvement
in months. Tenant shall make such payment to Landlord within Five (5) days after
written demand by Landlord.
17. TOXIC WASTE AND ENVIRONMENTAL DAMAGE.
A. TENANT'S RESPONSIBILITY. Tenant shall not bring, allow, or use upon
the Premises, or generate, create, emit, release or dispose
14
from the Premises, any chemicals, toxic or hazardous gaseous, liquid or solid
materials or waste, including without limitation, material or substance having
characteristics of ignitability, corrosivity, reactivity, or extraction
procedure toxicity or substances or materials which are listed on any of the
Environmental Protection Agency's list of hazardous wastes or which are
identified in Sections 66680 through 66685 of Title 22 of the California
Administrative Code as the same may be amended form time to time (which are
referred to in this Lease as "Hazardous Materials") in violation of Laws nor
shall Tenant permit any of the same in violation of Laws. Tenant shall comply,
at its sole cost, with all Laws pertaining to, and shall indemnify and hold
Landlord harmless from any claims, damages, losses, liabilities, costs or
expenses incurred or suffered by Landlord arising from such bringing, allowing,
using, generating, creating, emitting, releasing, or disposing of any such
Hazardous Materials by Tenant, its employees, agents, contractors or invitees.
Tenant's indemnification and hold harmless obligations as herein before
specified include, without limitation, (a) claims, liability, costs or expenses
resulting from or based upon administrative, judicial (civil or criminal) or
other action, legal or equitable, brought by any private or public person under
common law or under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), the Resource Conservation and Recovery Act of
1980 ("RCRA") or any other federal, state, county or municipal law , ordinance
or regulation, (b) claims, liabilities, costs or expenses pertaining to the
cleanup or containment of wastes, the identification of the pollutants in the
waste, the identification of scope of any environmental contamination, the
removal of pollutants from the soils, riverbeds or aquifers, the provision of an
alternative public drinking water source, or the monitoring of ground water and
surface waters, all to the extent required by applicable law, and (c) all costs
of defending such claims. Tenant further agrees to properly close the facility
with regard to Hazardous Materials and obtain a Closure Certificate from the
local administering agency for any Hazardous Material used, generated, emitted
or disposed of by Tenant, its employees, agents, contractors or invitees in or
about the Premises if so required by Law upon the Expiration Date or earlier
termination of the Lease. Landlord may employ, at Tenant's expense, an
independent engineer or consultant to periodically inspect Tenant's operation to
verify that Tenant is complying with its obligation under this paragraph.
B. NO RESPONSIBILITY. Notwithstanding the foregoing or anything in this
Lease, Tenant shall have no responsibility to Landlord, Landlord' s employees,
contractors, officers, agents or partners or to any third party for any
Hazardous Material which was not released, stored, disposed of, emitted, or
discharged by Tenant, its agents, invitees, employees and contractors in or
about the Premises and which is or comes to be, present on or about the
Premises, or the soil or groundwater thereof, at any time. Landlord, at its sole
expense, shall promptly comply with all Laws, orders, injunctions, judgements,
mandates and directives of any applicable governmental authority concerning the
investigation, removals, monitoring or remediation of any Hazardous Materials
present on the Premises or the groundwater thereof, except to the extent that
the Hazardous Material in question was released, stored, disposed of, emitted or
discharged by Tenant or its employees, invitees, agents, or contractors.
Landlord hereby waives all claims, liabilities, costs, expenses or obligations,
known or unknown, against Tenant with respect to Hazardous Material present on
the Premises prior to or after the Commencement Date, except to the extent that
the presence of the Hazardous Materials in question was due to any act or
omission of Tenant or its employees, agents, contractors or invitees.
C. LANDLORD'S REPRESENTATION AND INDEMNITY. Landlord hereby represents
and warrants to Tenant, that to Landlord's actual knowledge: (a) the Premises
and all operations conducted thereon prior to the Commencement Date are in
compliance with all Laws regarding Hazardous Materials ("Hazardous Material
Laws") and (b) any handling,
15
transportation, storage, treatment, disposal, release or use of Hazardous
Materials that has occurred on or about the Premises prior to the Commencement
Date has been in compliance with all Hazardous Materials Laws. Landlord further
represents and warrants that to Landlord's actual knowledge no litigation has
been brought or threatened, nor any settlements reached with any governmental or
private party, concerning the actual or alleged presence of Hazardous Materials
on or about the Premises, nor has Landlord received any notice of any violation,
or any alleged violation of any Hazardous Materials Laws, pending claims or
pending investigations with respect to the presence of Hazardous Materials on or
about the Premises. Except to the extent that the presence of the Hazardous
Material in question was due to any act or omission of Tenant, or its agents,
employees, invitees and contractors, Landlord shall indemnify, protect, defend
and hold harmless Tenant and its employees, officers, directors, successors and
assigns arising from or in connection with (a) any claim, remediation
obligation, investigation, liability, cause of action, penalty, attorney's fee,
cost, expense or damage owing or alleged to be owing by Tenant to any third
party with respect to any Hazardous Material present on or about the Premises,
or the soil, groundwater or surface water thereof, or (b) the removal
investigation, monitoring or remediation of any Hazardous Material present on or
about the Premises or the soil, groundwater or surface water thereof, in any of
the foregoing cases without regard to whether the Hazardous Materials were
present on the Premises as of the Commencement Date or whether the presence of
the Hazardous Materials was caused by Landlord. In no event shall Landlord be
liable for any consequential damages suffered or incurred by Tenant as a result
of any such contamination.
D. ACTUAL RELEASE BY TENANT. Tenant agrees to notify Landlord of any
lawsuits against Tenant which relate to, or orders with respect to Tenant which
relate to the remedying of, the actual release of Hazardous Materials on or into
the Building , Premises, or soils or groundwater at or under the Premises.
Tenant shall also provide to Landlord all notices required by Section 25359.7(b)
of the Health and Safety Code and all other notices required by law to be given
to Landlord in connection with Hazardous Materials. Without limiting the
foregoing, Tenant shall also deliver to Landlord, within Twenty (20) days after
receipt thereof, any written notices from any governmental agency alleging a
material violation of, or material failure to comply with Hazardous Materials
Laws which poses a foreseeable and material risk of contamination of the
groundwater or injury to humans (other than injury solely to Tenant, its agents
and employees within the Improvements on the Property).
In the event of any release on or into the the Building, Premises, or
soils or groundwater at or under the Premises of any Hazardous Materials used,
treated, stored or disposed of by Tenant, Tenant agrees to comply, at its sole
cost and expense, with all laws, regulations, ordinances and orders of any
federal, state or local agency relating to the monitoring or remediation of such
Hazardous Materials. In the event of any such release of Hazardous Materials,
Tenant agrees to meet and confer with Landlord and its Lender to attempt to
eliminate and mitigate any financial exposure to such Lender and resultant
exposure to Landlord under California Code of Civil Procedure Section 736(b) as
a result of such release and promptly to take reasonable monitoring, cleanup and
remedial steps given, inter alia, the historical uses to which the Property has
and continues to be used, the risks to public health posed by the release, the
then available technology and the costs of remediation, cleanup and monitoring,
consistent with acceptable customary practices for the type and severity of such
contamination and all applicable laws. Tenant shall provide Landlord prompt
written notice of Tenant's monitoring, cleanup and remedial steps.
In the absence of an order of any federal, state or local governmental
or quasi-governmental agency relating to the cleanup, remediation or other
response action required by applicable law, any
16
dispute arising between Landlord and Tenant concerning Tenant's obligation to
Landlord under this Paragraph D. concerning the level, method, and manner of
cleanup, remediation or response action required in connection with such a
release of Hazardous Materials shall be resolved by mediation and/or arbitration
pursuant to the provisions of Paragraph 40 of this Lease.
18. INDEMNITY. As a material part of the consideration to be rendered to
Landlord, Tenant hereby waives all claims against Landlord for damages to goods,
wares and merchandise, and all other personal property in, upon or about said
Premises and for injuries to persons in or about said Premises, from any cause
arising at any time, and Tenant shall indemnify and hold Landlord exempt and
harmless from any damage or injury to any person, or to the goods, wares and
merchandise and all other personal property of any person, arising from the use
of the Premises, the Building by Tenant, its employees, agents, contractors or
invitees, or from the failure of Tenant to keep the Premises in good condition
and repair, as herein provided. Further, in the event Landlord is made a party
to any litigation due to the acts or omission of Tenant, its employees,
contractors, agents, or invitees, Tenant will indemnify and hold Landlord
harmless from any such claim or liability including Landlord costs and expenses
and reasonable attorney's fees incurred in defending such claims except to the
extent of the negligence or willful misconduct of Landlord or its agents,
employees, contractors, subcontractors, or a breach of this Lease by Landlord.
Notwithstanding anything to the contrary in this Lease, Tenant shall neither
release Landlord from, nor indemnify or defend Landlord with respect to: (a) the
negligence or willful misconduct of Landlord, or its agents, employees,
contractors, subcontractors or invitees; (b) a breach of Landlord' s obligations
or representations under this Lease; or (c) any Hazardous Material which was not
released, emitted, or discharged by Tenant, its agents, employees and
contractors and which is or comes to be, present on or about the Premises, or
the soil or groundwater thereof, at any time. Landlord shall indemnify, defend
and hold harmless Tenant from all damages, costs, liabilities, judgments,
actions, attorneys' fees, consultants' fees, investigative cost, remediation
expense, and all other costs and expenses arising from (a) the negligence or
willful misconduct of Landlord or its employees, agents, contractors or
invitees; or (b) the breach of Landlord's obligations or representations under
this Lease. The obligations imposed on the parties pursuant to this Paragraph 18
are only imposed to the extent permitted by Law and are not intended to exceed
the limits of California Civil Code Section 1668.
19. ADVERTISEMENT AND SIGNS. Tenant will be granted exclusive sign
rights to the Building including parapet signage and the exterior landscaped
area related to the Building and the parcel(s) upon which it is constructed such
that no other tenant shall be permitted to place any sign anywhere upon the
exterior of the Building (including monument signage on DeAnza Blvd. or upon the
land on which the is situated nor within the windows of the Building such that
it could be visible from the outside during the evening or daytime. Any other
tenant of the Building shall be limited to directory signage in the rear lobby
of the Building and monument signage along Lazeneo Drive.. Tenant shall not
require Landlord's approval for such signage. Any signs placed upon the Premises
or Building shall be removed by Tenant at its expense prior to the Expiration
Date or promptly following any earlier termination of the Lease Term, and repair
any damage or injury to the Premises caused thereby, and if not so removed by
Tenant then Landlord may have same so removed at Tenant's expense. Landlord
shall cooperate with and assist Tenant in acquiring permits for the signage;
provided, however, that Landlord shall not be required to incur any
out-of-pocket costs in connection therewith.
20.ATTORNEYS' FEES. In case a suit or alternative form of dispute
resolution should be brought for the possession of the Premises, for the
recovery of any sum due hereunder, or because of the breach of any other
17
covenant herein, the losing party shall pay to the prevailing party a reasonable
attorneys fee as part of its costs which shall be deemed to have accrued on the
commencement of such action and shall be enforceable whether or not such action
is prosecuted to judgement. In addition, the prevailing party shall be entitled
to recover all costs and expenses including reasonable attorney's fees incurred
by the prevailing party in enforcing any judgment or reward against the other
party. The foregoing provision relating to post-judgment costs is intended to be
severable from all other provisions of this Lease.
21. TENANT'S DEFAULT. The occurrence of any of the following shall
constitute a material default and breach of this Lease by Tenant: (a) Any
failure by Tenant to pay any rent under this Lease on or before the date such
rent is due under this Lease or to restore the Security Deposits to the amounts
required within the periods provided in the Lease after receipt of written
notice thereof; (b) a failure by Tenant to observe and perform any other
provision of this Lease to be observed or performed by Tenant, where such
failure continues for Thirty (30) days after written notice thereof by Landlord
to Tenant; provided, however, that if the nature of such default is such that
the same cannot reasonably be cured within such Thirty (30) day period Tenant
shall not be in default if Tenant shall within such period commence such cure
and thereafter diligently prosecute the same to completion; (c) the making by
Tenant of any general assignment for the benefit of creditors; the filing by or
against Tenant of a petition filed against Tenant, the same is not dismissed
within Sixty (60) days after the filing; the appointment of a trustee or
receiver to take possession of substantially all of Tenant's assets located at
the Premises or of Tenant's interest in this Lease, where possession is not
restored to Tenant within Sixty (60) days; or the attachment, execution or other
judicial seizure of substantially all of Tenant's assets located at the Premises
or of Tenant's interest in this Lease, where such seizure is not discharged
within Sixty (60) days. The notice requirements set forth herein are in lieu of
and not in addition to the notices required by California Code of Civil
Procedure Section 1161, provided that such notices are given in the manner
required by such statute. Any notice given by Landlord to Tenant pursuant to
California Civil Code Section 1161 with respect to any failure by Tenant to pay
rent under this Lease on or before the date the rent is due under this Lease
shall provide Tenant with a period of no less than Ten (10) days to pay such
rent or quit.
A. REMEDIES. In the event of any such default by Tenant, then in
addition to any other remedies available to Landlord at law or in equity,
Landlord shall have the immediate option to terminate this Lease and all rights
of Tenant hereunder by giving written notice of such intention to terminate. In
the event that Landlord shall elect to so terminate this Lease then Landlord may
recover form Tenant: (a) the worth at the time of award of any unpaid rent which
had been earned at the time of such termination; plus (b) the worth at the time
of award of the amount by which the unpaid rent which xxxx have been earned
after termination until the time of award exceeds the amount of such rental loss
for the same period Tenant proves could have been reasonably avoided; plus (c)
the worth at the time of award of the amount by which the unpaid rent for the
balance of the Lease Term after the time of award exceeds the amount of such
rental loss for the same period that Tenant proves could be reasonably avoided;
plus (d) any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations under this
Lease or which in the ordinary course of things xxxx be likely to result
therefrom. The term "rent", as used herein, shall be deemed to be and to mean
the minimum monthly installments of Base Monthly Rent and all other sums
required to be paid by Tenant pursuant to the terms of this Lease, all other
sums being deemed to be additional rent due hereunder. As used in (a) and (b)
above, the "worth at the time of the award" is to be computed by allowing
interest at the rate of the discount rate of the Federal Reserve Bank of San
Francisco plus Five (5%) percent per annum. As used in (c) above, the "worth at
the time of award" is to be computed
18
by discounting such amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of award plus Zero (0 %) percent.
B. RIGHT TO RE-ENTER. In the event of any such default by Tenant, that
results in the termination of the Lease, Landlord shall also have the right to
re-enter the Premises and remove all persons and property from the Premises;
such property may be removed and stored in a public warehouse or elsewhere at
the cost of and for the account of Tenant and disposed of by Landlord in any
manner permitted by law.
C. ABANDONMENT. If Landlord shall take possession of the Premises
pursuant to legal proceeding or pursuant to any notice provide by law, then if
Landlord does not elect to terminate this Lease as provided in Paragraph 21 (A)
above, then the provisions of California Civil Code Section 1951.4 (Landlord may
continue the Lease in effect after Tenant's breach and abandonment and recover
rent as it becomes due, if Tenant has aright to sublet or assign only to
reasonable limitations), as amended from time to time, shall apply and Landlord
may form time to time, recover all rental as it becomes due.
22. SURRENDER OF LEASE. The voluntary or other surrender of this Lease
by Tenant, or a mutual cancellation thereof, shall not automatically effect a
merger of the Lease with Landlord's ownership of the Premises. Instead, at the
option of Landlord, Tenant's surrender may terminate all or any existing
sublease or subtenants, or may operate as an assignment to Landlord of any or
all such subleases or subtenants, or may operate as an assignment to Landlord of
any or all such subleases or subtenants thereby creating a direct relationship
between Landlord and any subtenants.
23. LANDLORD'S DEFAULT. In the event of Landlord' s failure to perform
any of its covenants or agreements under this Lease, Tenant shall give Landlord
written notice of such failure and shall give Thirty (30) days or such longer
time as may be reasonably required by Landlord to cure said failure in the
exercise of reasonable diligence provided Landlord commences the cure within
said Thirty (30) day period and thereafter diligently prosecutes such cure to
completion. If Landlord so fails to perform its obligations under this Lease,
then, and only then, will Landlord be in default under the Lease, and, in
addition to its other rights and remedies, Tenant shall have the right to cure
Landlord's default and (a) to recover from Landlord the cost of the cure
together with interest thereon at the prime rate as is then in use by the
predominance of the banks in the United States, plus five percent (5%) from the
date of the expenditure until the date of the repayment. In addition, upon any
such failure by Landlord, Tenant shall give notice by registered or certified
mail to any person or entity with a security interest in the Premises
("Mortgagee") that has delivered Tenant written notice of its interest in the
Premises, and shall provide such Mortgagee a reasonable opportunity to cure such
failure, including such time to obtain possession of the Premises by power of
sale or judicial foreclosure, if such should prove necessary to effectuate a
cure. Tenant agrees that each of the Mortgagees to whom this Lease has been
assigned is an expressed third party beneficiary hereof. Tenant shall not make
any prepayment of rent more than One (1) month in advance without the prior
written consent of such Mortgagee. Tenant waives any right under California
Civil Code Section 1950.7 or any other present or future law to the collection
of any payment or deposit from such Mortgagee or any purchaser at a foreclosure
sale of such Mortgagee's interest unless such Mortgagee or such purchaser shall
have received and not refunded the applicable payment or deposit.
24. NOTICE. All notices, demand, requests, or consents required or
permitted to be in writing and given under this Lease shall be personally
delivered, telecopied, delivered by reputable commercial overnight courier, or
sent by prepaid certified first class mail, return receipt requested to the
parties at the following addresses, or such
19
other addresses as the parties shall designate by Three (3) days' prior written
notice to the other party:
If to Tenant:
Packeteer, Inc.
Att: Chief Financial Officer
00000 XxXxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
or 00000 XxXxxx Xxxx if before the
Commencement Date
With a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx, L.L.P.
Att: Xxxxxxx XxxXxxxxx
Xxx Xxxxxx, Xxxxx Xxxxxx Xxxxx
Xxx Xxxxxxxxx, Xx 00000
If to Landlord:
Xxxxxx Partners
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxxxxx 00000
Notices given by personal delivery shall be deemed effective upon signed
acknowledgment of receipt or, if delivered by courier, One (1) day after deposit
with the courier, or if mailed, 48 hours from the time of mailing, or if
telecopied when transmitted and confirmed.
25. ENTRY BY LANDLORD. Upon Twenty-Four (24) hours advance notice to
Tenant (except in the event of an emergency where no such prior notice shall be
required) and provided that Landlord does not unreasonably interfere with
Tenant's use of the Premises, Tenant shall permit Landlord and his agents to
enter upon the Premises at all reasonable times subject to any reasonable safety
and/or security regulations of Tenant for the purposed of inspecting the same,
maintaining the Premises, or making repairs or alterations as may be required to
fulfill Landlord's obligations hereunder without any abatement or reduction of
rent or without any liability to Tenant for any loss of occupation or quiet
enjoyment of the Premises thereby occasioned; and Tenant shall permit Landlord
and his agents, at any time within One Hundred Eighty (180) days prior to the
Expiration Date (or any time during the Lease if Tenant is in default
hereunder), to place upon said Premises any "For Lease" signs and exhibit the
Premises to real estate brokers and prospective tenants at reasonable hours upon
reasonable prior notice.
26. DESTRUCTION OF PREMISES.
A. OBLIGATION TO RESTORE. In the event of damage or destruction to the
Building or Premises or any portion thereof by any casualty during the Lease
Term, Landlord shall forthwith repair the same to the condition the Building or
Premises were in immediately before the destruction (to the extent permitted by
Laws), provided such casualty is (a) of a type required to be insured against by
Landlord under the terms of this Lease and for which Landlord has actually
received insurance proceeds sufficient to repair the damage or destruction or
(b) is actually insured against by Landlord and for which Landlord has actually
received insurance proceeds sufficient to repair the damage or destruction
(herein collectively referred to as an "Insured Casualty"). In the event of
damage or destruction of the Premises by a casualty of a type which is not
required to be insured against by Landlord under this
20
Lease, and which is not actually insured against by Landlord (herein referred to
as an "Uninsured Casualty"), Landlord shall restore the Premises to the same
condition as they were in immediately before such destruction (to the extent
permitted by Laws) and this Lease shall not terminate; provided, that if in the
case of such Uninsured Casualty the cost of restoration exceeds Five (5% )
percent of the then replacement cost of the Building, Landlord may elect to
terminate this Lease by giving written notice to Tenant within Fifteen (15) days
after determining the replacement cost and furnishing reasonable evidence
thereof to Tenant. If Landlord so elects to terminate this Lease, Tenant, with
Fifteen (15) days after receiving Landlord's notice to terminate, can elect to
pay to Landlord at the time Tenant notifies Landlord of its election, the
difference between Five (5%) percent of the replacement cost of the Building and
the actual cost of restoration, in which case Landlord shall restore the
Premises and this Lease shall not terminate. If Landlord so elects to terminate
this lease and Tenant does not elect to contribute the cost of restoration as
provided herein, this Lease shall terminate. In all events Landlord shall not be
required to restore or replace Tenant's Alternations or replace Tenant's
Property unless Landlord receives insurance proceeds which cover such losses.
Provided the damage is not due to the negligence or willful misconduct of
Tenant, its employees, agents, contractors or invitees, Tenant shall be entitled
to a proportionate reduction of Base Monthly Rent during the period of damage
and restoration, such proportionate reduction to be based upon the extent to
which the damage and making of repairs shall interfere with Tenant's use of
the Premises.
B. TENANT'S RIGHT TO TERMINATE. In the event of damage or destruction to
the Premises, Landlord shall furnish to Tenant a good faith written estimate
from Landlord's architect or construction consultant of the time period needed
to restore the Premises, within Thirty (30) days after the date of the damage or
destruction in question. If such estimate indicates that the repair or
restoration of the Premises cannot be made within One Hundred Eight (180) days
after the date of the damage or destruction, and Landlord has not terminated the
Lease pursuant to Paragraph 27 (A) above, Tenant may, at its option, terminate
this Lease by giving written notice to Landlord of such election within Fifteen
(15) days after receipt of Landlord's estimate. Tenant shall also have the right
to terminate this Lease if the actual restoration of the Premises is not
effectuated within Two Hundred Seventy (270) days after the date of the
casualty. Further, Tenant shall have the right to terminate this Lease if the
Building is damaged by any peril within Twelve (12) months of the last day of
the Lease Term to such an extent that more than Thirty (30%) percent of the
floor area of the Premises is rendered unusable by Tenant for a period of more
than Sixty (60) days. The provision of Section 1932, Subdivision 2, and of
Section 1933, Subdivision 4, of the Civil Code of the State of California and
any other similarly enacted statute are waived by Tenant and the provisions of
this Paragraph 26 shall govern in the case of such destruction.
27. ASSIGNMENT OR SUBLEASE.
A. CONSENT BY LANDLORD. IN the event Tenant desires to assign this
Lease or any interest therein including, without limitation, a pledge, mortgage
or other hypothecation, or sublet the Premises or any part thereof except as set
forth above with respect to "Permitted Transferees", Tenant shall deliver to
Landlord copies of the proposed agreement, the financial statements of the
assignee or subtenant, and any additional information as reasonably required by
Landlord. Landlord shall then have a period of Fourteen (14) days following
receipt of such notice, documents and information within which to notify Tenant
in writing that Landlord elects (a) to permit Tenant to assign or sublet such
space to the name assignee/subtenant, or (b) to refuse consent, provided
Landlord shall not unreasonably refuse such consent. If Landlord should fail to
notify Tenant in writing of such election within said Fourteen (14) day period,
Landlord shall be deemed to have elected
21
to permit the assignment or sublease in question. No assignment or subletting by
Tenant shall relieve Tenant or any guarantor of any obligations under this Lease
or any guaranty. Landlord's consent to the proposed assignment or sublease shall
not be unreasonably withheld or delayed, provided and upon condition that (a)
the proposed uses will not violate this Lease or any Laws; (b) the proposed
assignee or subtenant has sufficient financial worth to undertake the
responsibility involved, and Landlord has been furnished with reasonable proof,
thereof; and (c) the proposed assignment or sublease shall be in a form
reasonably satisfactory to Landlord. Whether or not Landlord grants its consent
to the proposed sublease or assignment, Tenant agrees to reimburse Landlord for
all reasonable attorneys' fees and costs incurred by Landlord in connection with
the review of the proposed sublease or assignment. Notwithstanding anything to
the contrary the Tenant may , with prior written notice but without Landlord's
prior written consent, sublet the premises or assign the Lease to any of the
following entities, each a "Permitted Transferee": (i) a subsidiary, affiliate,
division or corporation which controls, is controlled by, or is under common
control with Tenant; (ii) a successor corporation related to Tenant by merger,
consolidation or reorganization; (iii) a purchaser of substantially all of
Tenant's assets, provided said entity agrees to accept the Lease in its then
current condition. A sale of the Tenant's capital stock through any public
exchange shall not be deemed an assignment, subletting , or any other transfer
of the premises. In the event of an assignment or sublet of a portion of the
Premises of more than one floor to an unrelated entity that is not a Permitted
Transferee, the Landlord shall have the option of terminating the Lease with
respect to such space and entering into a direct Lease with such entity.
Additionally, in the event of any assignment or sublet of at least an entire
floor to an unrelated entity, the options shall not apply. Additionally, if such
options have been exercised but the Tenant is not yet in the option period, the
option period shall not be sublet or assigned unless to a Permitted Transferee.
B. ASSIGNMENT OR SUBLETTING CONSIDERATION. Any rent or lump sum
consideration received for an assignment actually or constructively received by
Tenant under any assignment or any sublease (other than to a Permitted
Transferee)in excess of the Base Monthly Rent as adjusted from time to time per
net square foot, shall be shared with the Landlord in the ratio of Fifty percent
to the Landlord and Fifty percent to the Tenant. Landlord's right to the
allocation of bonus rent is an independently negotiated term of the Lease,
constitutes a material inducement for the Landlord to enter into the Lease, and
is agreed as between the parities to be commercially reasonable. Tenant shall be
permitted to recover all leasing costs associated with such sublet prior to
sharing in excess rent with Landlord, which leasing costs shall include but not
be limited to , leasing commissions, tenant improvement costs and other
associated costs.
C. NO RELEASE. Any assignment or sublease shall be made only if, and
shall not be effective until, the assignee or subtenant shall execute,
acknowledge and deliver to Landlord an agreement, in form and substance
reasonably satisfactory to Landlord, whereby the assignee or subtenant shall
assume all of the obligations of this Lease on the part of Tenant to be
performed or observed and shall be subject to all of the covenants, agreements,
terms, provisions and conditions contained in this Lease. Notwithstanding any
sublease or assignment and the acceptance of rent or additional rent by Landlord
from any subtenant or assignee, Tenant and any guarantor shall and will remain
fully liable for the payment of the rent and additional rent due, and to become
due hereunder, for the performance of all of the covenants, agreements, terms,
provisions and conditions contained in the Lease on the part of Tenant to be
performed and for all acts and omissions of any licensee, subtenant, assignee or
any other person claiming under or through any subtenant or assignee that shall
be in violation of any of the terms and conditions of this Lease, and any such
violation shall be deemed to be a violation by Tenant hereunder. Tenant shall
further indemnify, defend and hold
22
Landlord harmless form and against any and all losses, liabilities, damages,
costs and expenses(including reasonable attorney fees) resulting form any claims
that may be made against Landlord by any party to the proposed assignment or
sublease.
D. EFFECT OF DEFAULT. In the event of Tenant's default, Tenant hereby
assigns all rents due from any assignment or subletting to Landlord as security
for performance of its obligations under this Lease and Landlord may collect
such rents as Tenant's' attorney- in-fact, except that Tenant may collect such
rents unless a default occurs as described in Paragraph 21 above. The
termination of this Lease due to Tenant's default shall not automatically
terminate any assignment or sublease then in existence; at the election of
Landlord such assignment or sublease shall survive the termination of this Lease
and, upon such election, the assignee or subtenant shall attorn to Landlord and
Landlord shall undertake the obligations of the Tenant under the sublease or
assignment; provided the Landlord shall not be liable for prepaid rent, security
deposits or other defaults of the Tenant to the subtenant or assignee, or any
acts or omission s of Tenant, its agents, employees, contractors and invitees.
28. CONDEMNATION. If any part of the Premises shall be taken for any
public or quasi-public use, under any statute or by right of eminent domain or
private purchase in lieu thereof, and a apart thereof remains which is
susceptible of occupation hereunder, this Lease shall as to the part so taken,
terminate as of the date title shall vest in the condemnor or purchaser, and the
Base Monthly Rent payable hereunder shall be adjusted so that Tenant shall be
required to pay for the remainder of the Lease Term only such portion of the
rent as the value of the part remaining after such taking bears to the value of
the entire Premises prior to such taking; but in such event Tenant shall have
the option to terminate this Lease as of the date when title to the part taken
vests in the condemnor or purchaser if the taking or condemnation of the
Premises is such that the remaining space unaffected by the taking or
condemnation is not reasonably suitable for Tenant's use or the conduct of
Tenant's business. If a part or all of the Premises are taken all compensation
awarded upon such taking shall go to Landlord and the Tenant shall have no claim
thereto; provided, however, that nothing contained herein shall be deemed to
waive or release Tenant's interest in any separate award for (a) loss of or
damage to Tenant's trade fixtures, Alterations, or personal property; (b)
interruption of Tenant's business; (c) Tenant's loss of goodwill; (d) Tenant's
moving cost; (e) Tenant's interest in any Tenant Improvements, (f) or any
separate award made to Tenant for whatever purpose. In the event of condemnation
then this Lease shall not terminate and Landlord shall, to the extent the
condemnation award has included sums for such purpose, repair any damage to the
Premises caused by such condemnation. Tenant hereby waives the provisions of
California Code of Civil Procedures Section 1265.130 or any similar statue now
or hereafter enacted.
29. EFFECTS OF CONVEYANCE. The term "Landlord" as used in this Lease,
means only the owner for the time being of the Premises, so that, in the event
of any sale or other conveyance of the Premises, the transferor shall be and
hereby is entirely freed and relieved of all covenants and obligations of the
"Landlord" hereunder accruing after the date of the conveyance. Notwithstanding
the foregoing, the transferor shall not be relieved of its obligations under
this Lease, unless and until it transfers the cash security deposit to its
successor and the successor assumes in writing the obligations of Landlord
accruing on and after the effective date of the transfer. Furthermore, the
transferor shall not be relieved of it obligations hereunder accruing after the
date of the transfer unless the assignee or successor in question has a net
worth reasonably sufficient to assure performance of the obligations of Landlord
hereunder, and Landlord furnishes reasonable evidence thereof to Tenant.
30. SUBORDINATION. In the event Landlord notifies Tenant in
23
writing, this Lease shall be subordinate to any ground lease, deed of trust, or
other hypothecation for security now or hereafter placed upon the Premises and
to any and all advances made on the security thereof and to renewals,
modifications, replacements and extensions thereof. Tenant agrees to promptly
execute and deliver any reasonable documents, which may be required to
effectuate such subordination within Ten (10) business days following Landlord's
request. Notwithstanding such subordination but subject to the terms and
conditions of this Lease, Tenant's right to quiet possession of the Premises
shall not be disturbed so long as Tenant is not in default hereunder.
Notwithstanding anything to the contrary in the Lease, subordination of Tenant's
leasehold interest to a mortgage, deed of trust, ground lease or instrument of
security, and Tenant's attornment to any party is conditioned upon (a) Tenant's
concurrent receipt from the lender or ground lessor in question of an express
written agreement in form reasonably satisfactory to Tenant providing for
recognition of all of the terms and conditions of this Lease and providing for
continuation of this Lease upon foreclosure of the deed of trust, mortgage or
security interest or termination of the ground lease; and (b) the written
agreement by such successor to perform all of the obligations to be performed by
Landlord under the Lease on and after the date of the foreclosure or termination
of the ground lease excepting the environmental indemnity contained in Paragraph
17 (C) which shall be a continuing obligation of Landlord. Landlord shall use
its `best efforts' to obtain a nondisturbance agreement from its existing lender
within thirty (30) days from execution of the Lease.
31. WAIVER. The waiver by Landlord or Tenant of any breach of any term,
covenant or condition herein contained shall not be deemed to be a waiver of any
subsequent breach of the same or any other term, covenant or condition herein
contained. The subsequent acceptance of rent hereunder by Landlord ( or the
payment thereof by Tenant) shall not be deemed to be a waiver of any preceding
breach by Landlord or Tenant of any term, covenant or condition of this Lease,
other than the failure of Tenant to pay the particular rental accepted by
Landlord, regardless of the party's knowledge of such preceding breach at the
time acceptance of such preceding breach at the time of acceptance of rent. No
delay or omission in the exercise of any right or remedy by Landlord shall
impair such right or remedy or be construed as a waiver thereof by Landlord. No
act or conduct Landlord, including, without limitation, the acceptance of keys
to the Premises, shall constitute acceptance of the surrender of the Premises by
Tenant before the Expiration Date. Landlord's consent to or approval of any act
by Tenant which require Landlord's consent or approval shall not be deemed to
waive or render unnecessary Landlord's consent to or approval of any subsequent
act by Tenant.
32. HOLDING OVER. Any holding over after the Expiration Date or sooner
termination of the Lease shall be construed to be a tenancy from month-to-month,
terminable on Thirty (30) days written notice form either party, and Tenant
shall pay rent to Landlord at a rate equal to One Hundred Fifty (150%) percent
of the greater of the current asking rents for similar space or Base Monthly
Rental installment due in the month preceding the termination or Expiration Date
plus all other amounts payable by Tenant under this Lease. Any holding over
shall otherwise be on the terms and conditions herein specified, except those
provisions relating to the Lease Term and any options to extend or renew, which
provisions shall be of no further force and effect following the expiration of
the applicable exercise period. Tenant shall indemnify, defend and hold landlord
harmless form all loss or liability (including, without limitation, any loss or
liability resulted from any claim against Landlord made by any succeeding
tenant) founded on or resulting from Tenant's failure to timely surrender the
Premises to Landlord and losses to Landlord due to lost opportunities to lease
the Premises to succeeding tenants.
33. SUCCESSORS AND ASSIGNS. The covenants and conditions herein
24
contained shall, subject to the provisions of Paragraph 27 above, apply to and
bind the heirs, successors, executors, administrators and assigns of all the
parties hereto.
34. ESTOPPEL CERTIFICATES. Each party shall at any time during the Lease
Term, within Ten (10) business days following written notice from the other
party, execute and deliver a statement in writing certifying that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
such modification) and the date to which any rent and other charges have been
paid in advance and acknowledging that there are not, to the party's knowledge,
any uncured defaults on the part of the other party hereunder or specifying such
defaults fi they are claimed. Any such statement may be conclusively relied upon
by any prospective purchaser or encumbrancer on the Premises or a purchaser of
Tenant's assets or leasehold interest. Landlord's or Tenant's failure to deliver
such statement within such time shall be conclusive upon the party not providing
the statement that: (a) this Lease is in full force and effect, without
modification except as may be represented by the requesting party; (b) there are
not uncured defaults in the requesting party's performance. Upon the advance
written request of Landlord's, Tenant shall furnish Landlord with Tenant's most
recent available financial statements, subject to the following: (a) Landlord
shall only require such statement in connection with Landlord's proposed sale or
refinance of the Premises and (b) Landlord and any person or entity to whom such
financial statements are provided shall agree in writing to hold such statements
in the confidence unless such statements are otherwise available to the public.
35. OPTION TO EXTEND THE LEASE TERM. Landlord hereby grants to Tenant
(and not their assignee or sublessee that is not a Permitted Transferee, unless
such option is at Fair Market Value), upon and subject to the terms and
conditions set forth in this Paragraph 35, Two (2) options to extend the term of
the Lease for an additional term (the "Option Term") of Three (3) years each
provided Tenant has not been in default after expiration of the applicable
notice and cure period within twelve months of (a) the date of exercise of the
Option, or (b) at the commencement of the Option Term. The Option shall be
exercised, if at all, by written notice to Landlord on or before the date that
is Eight (8) months prior to the expiration of the Lease Term. If Tenant
exercise the Option, each of the terms, covenants and conditions of this Lease
shall apply during the Option Term, except that the Base Monthly Rent payable by
Tenant during the Option Term shall be at the Fair Market Rental rate as
determined by three brokers, one selected by the Tenant, one by the Landlord and
a third ( the `Neutral Broker') by the two brokers who have been selected. The
brokers selected by the Landlord and Tenant shall meet and confer and if they
are within 5% of each other on any of the quantitative decisions ( i.e annual
increases, management fees, monthly rentals etc.) the averages shall be utilized
for that category. If they are more than 5% apart the Neutral Broker shall
select that number from either party which is closest to the Neutral Broker's
determination. The Brokers shall be selected sixty days prior to Lease
termination, the Neutral broker within 50 days of Lease termination and they
shall meet and confer within 40 days of Lease termination and arrive at a
decision within 7 days thereafter.
36. QUIET ENJOYMENT. Upon performing the terms, convents and conditions
of this Lease and except as otherwise provided in this Lease, Tenant shall
quietly have and hold the Premises for the Lease Term and any extensions thereof
without interference by Landlord or any party claiming by or through Landlord.
37. BROKERS. Landlord and Tenant each represent that they have not
utilized or contracted a real estate broker or finder with respect
25
to this Lease other than Colliers International ("Broker"). Tenant and Landlord
each agree to indemnify and hold the other harmless against any claim, cost,
liability or cause of action asserted by any other broker or finder claiming
through the acts or conduct of the indemnifying party. Landlord shall pay the
commission to Broker as agreed between Landlord and Broker pursuant to a
separate agreement between Landlord and Broker without contribution by Tenant.
38. AUTHORITY OF PARTIES.
A. CORPORATE AUTHORITY. If Tenant is a corporation, each individual
executing this Lease on behalf of said corporation represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of said
corporation, in accordance with a duly adopted resolution of the Board of
Directors of said corporation or in accordance with the bylaws of said
corporation and that this Lease is binding upon said corporation in accordance
with its terms.
B. LANDLORD'S AUTHORITY. The individual executing this Lease on
Landlord's behalf represents and warrants that they have the requisite authority
to sign this Lease and that this Lease is binding on Landlord. Landlord
represents that it owns the Premises and is duly empowered to sign the Lease and
that the consent of no other party is required to make this Lease binding on
Landlord.
39. LANDLORD'S LIABILITY. If Tenant should recover a money judgement
against Landlord arising in connection with this Lease, the judgement shall be
satisfied only out of Landlord's interest in the Premises including the
improvements and real property and neither Landlord nor any of its partners,
officers, directors, agents, shareholders, trustees or employees shall be liable
personally for any deficiency. The foregoing limitation on Landlord's liability
shall not apply to Landlord's liability for Toxic Materials pursuant to
Paragraph 17 of this Lease.
40. DISPUTE RESOLUTION. Any controversy, dispute, or claim of whatever
nature arising out of, in connection with, or in relation to the interpretation,
performance or breach of this agreement, including any claim based on contact,
tort, or statute, shall be resolved at the request of any party to this
agreement through a two-step dispute resolution process administered by JAMS or
another judicial and mediation service mutually acceptable to the parties
involving first mediation, followed, if necessary, by the formal judicial
process with the prevailing party to be reimbursed for any and all reasonable
legal fees and costs incurred.
41. FIRST RIGHT OF REFUSAL ON ADJACENT SPACE/CONDITIONS ON LANDLORD FOR
SUBSEQUENT LEASE OF THIRD FLOOR. Landlord hereby grants to Tenant, the right to
lease all or a portion of the third floor on a first right of refusal basis on
terms and conditions then offered by Landlord. In the event Tenant declines and
Landlord modifies such terms or asking price or any other proposal by more than
five percent (5%) the offer shall first be resubmitted to Tenant who shall have
five business days to respond. Additionally, Landlord agrees to have any
subsequent lease for all or any portion of the third floor expire no later than
the expiration of the Tenant's lease term and further to not encumber the third
floor with any option rights granted to any other tenant or party unless and
until Tenant fails to extend its option for an extended term. Tenant shall have
the right to approve the tenant(s) for the third floor provided such approval is
not unreasonably withheld. Approval shall be deemed to have occurred if there is
not written objection within three business days of submittal by Landlord for
such approval.
42. FORCE MAJEURE. The term Force Majeure shall mean any delay in the in
the completion of the Tenant Improvements which is attributable to any: (1)
actual delay or failure to perform attributable to any strike, lockout or other
labor or industrial disturbance (whether or not on the part of the employees of
26
Landlord), civil disturbance, future order claiming jurisdiction, act of a
public enemy, war, riot, sabotage, blockade, embargo, inability to secure
customary materials, supplies or labor through ordinary sources by reason of
regulation or order of any government or regulatory body; (2) delay attributable
to the inability of Landlord to secure building permits and governmental
approvals within the same period that normally prevailed for obtaining such
permits at the time the Lease was negotiated; (3) delay in completing final
plans or indoor construction of improvements because of changes in any
applicable law, building plans or building requirements or the interpretation
thereof; (4) delay attributable to building moratoriums, permit processing or
regulatory delays; or (5) delay attributable to lighting, earthquake, fire
storm, hurricane, tornado, flood, washout, explosion or any other similar
industry wide or building wide cause beyond the reasonable control of Landlord
or any of its contractors or other representations. Any prevention, delay or
stoppage due to Force Majeure shall excuse the performance of Landlord for a
period of time equal to any such prevention, delay or stoppage.
44. MISCELLANEOUS PROVISIONS.
A. RIGHTS AND REMEDIES. All rights and remedies hereunder are cumulative
and not alternative to the extent permitted by law and are in addition to all
other rights and remedies in law and in equity.
B. SEVERABILITY. If any term or provision of this Lease is held
unenforceable or invalid by a court of competent jurisdiction, the remainder of
the Lease shall not be invalidated thereby; but shall be enforceable in
accordance with its terms, omitting the invalid or unenforceable term.
C. CHOICE OF LAW. This Lease shall be governed by and construed in
accordance with California Law.
D.INTEREST. All sums due hereunder, including rent and additional rent,
if not paid within Thirty (30) days after Tenant's receipt of written notice
from Landlord indicating that Landlord has failed to receive the payment in
question, shall bear interest at the prime rate as is generally understood or as
is charged by the predominance of banks in the United States, plus Five (5%)
percent per annum from time to time or, if lower, at the maximum rate permitted
under California law, accruing form the date due until the date paid.
E. TIME. Time is of the essence hereunder.
F. HEADING. The headings or titles to the paragraphs of this Lease are
not a part of this Lease and shall have no effect upon the construction or
interpretation of any part thereof.
G. ENTIRE AGREEMENT. This instrument contains all of the agreements made
between the parties hereto and may not be modified orally or in any other manner
than by an agreement I writing signed by all of the parties hereto or their
respective successors in interest.
H. PERFORMANCE BY LANDLORD. If Tenant defaults in its performance of any
obligation required under this Lease after expiration of the applicable cure
period, Landlord may, in its sole discretion, without further notice and without
releasing Tenant from its obligations hereunder or waiving any rights or
remedies, perform such obligation, in which event Tenant shall pay Landlord as
additional rent all reasonable sums paid by Landlord in connection with such
substitute performance within Ten (10) days following Landlord's written notice
for such payment including interest from the date of expenditure until paid.
I. REPRESENTATIONS. Tenant acknowledges that except as set forth herein
neither Landlord nor any of its employees, representatives or agents have made
any agreements, representations, warranties or promises with respect to the
Premises or the Building.
27
J. RENT. All monetary sums due form Tenant to Landlord under this Lease
including, without limitation, those referred to as "additional rent", shall be
deemed to be rent. Unless otherwise specified, all rent items shall be due
within Ten (10) days following Landlord's demand.
K. APPROVALS. Whenever the Lease requires an approval, consent,
designation, determination or judgement by either Landlord or Tenant, such
approval, consent, designation, determination or judgement (including, without
limiting that generality of the foregoing, those required in connection with
assignment and subletting) shall not be unreasonably withheld or delayed and in
exercising any right or remedy hereunder, each party shall at all times act
reasonably.
L. REASONABLE EXPENDITURES. Any expenditure by a party permitted or
required under the Lease, for which such party is entitled to demand and does
demand reimbursement from the other party, shall be limited to the fair market
value of the goods and services involved, shall be reasonably incurred and shall
be substantiated by documentary evidence available for inspection and review by
the other party or its representative during normal business hours.
M. SURVIVAL OF INDEMNITIES. All indemnification, defense and hold
harmless obligations of Landlord and Tenant under the Lease shall survive the
expiration or sooner termination of this Lease.
N. EXHIBITS. All Exhibits are incorporated herein by reference.
O. GUARANTEE. None
P. PARKING: Parking in the front of the Building nearest DeAnza will be
restricted to the use of the Tenant and their guests. This will be controlled by
the Tenant, not the Landlord. It is not the intention that this be marked as
such. Landlord will put this notice in each lease for any tenant(s) who
subsequently lease space on the third floor during the term or any extension of
term by this Tenant. Parking in the rear will be for all tenants in the
building. Landlord shall have the right to reserve parking in the rear for
`visitors' to the Building.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease, the
day and year first written above written.
LANDLORD TENANT
NMSBPCSLDHB, a California Packeteer, Inc.
Limited Partnership
By: By:
------------------------- -------------------------
Its: Its:
28
Building Services Exhibit
65.71% 34.29%
Building Service Percentage Percentage Contract Comments
Requirement to be responsibility Responsibility
billed to of Landlord
Tenant
Access Card Reader 65.71% 34.29% Landlord Allows access to the rear
elevator from outside, the
Tenant would control interior
doors to their premises
Elevator Freight 100.00% 00.00% Landlord
Elevator Passenger 65.71% 34.29% Landlord
Emergency
Generator 100.00% 00.00% Tenant 100% Tenant responsibility
Fire Monitoring 65.71% 34.29% Landlord
HVAC Maintenance 65.71% 34.29% Landlord
Landscape
Maintenance 65.71% 34.29% Landlord
Parking Lot
Maintenance 65.71% 34.29% Landlord
Pond Maintenance 100.00% 00.00% Landlord
Security System 100.00% 00.00% Tenant For their space
Security System 65.71% 34.29% Landlord For rear lobby door,
passenger elevator and
exterior stairway doors
Trash Removal 100.00% 00.00% Landlord
UPS System 100.00% 00.00% Tenant
Utilities- 100.00% 00.00% Landlord Their power 100 percent but
Electrical Power then 65.71% for Tenant,
34.29% to Landlord
after third floor
system leased unless
some other system is
required by Tenant
but in no event to
exceed what their
experience in usage
had been -- if
required by Tenant
and feasible,
Landlord will
submeter the third
floor if it appears
usage and allocation
is of significance
Utilities- 65.71% 34.29% Landlord To be submetered
Electrical House
Meter
Utilities -- Gas 65.71% 34.29% Landlord
Utilities - Water 65.71% 34.29% Landlord
Window Cleaning 65.71% 34.29% Landlord
Management Fee 65.71% 34.29% Landlord Tenant's portion of the
management fee will be ***
per month
-------------------------- ----------------------------
Landlord Tenant
----------------
*** Material has been omitted pursuant to a request for confidential treatment
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934. Such material has
been filed separately with the Commission.
29
Regular Tenant Improvement Exhibit
REGULAR TENANT IMPROVEMENTS/TENANT IMPROVEMENTS. The term "Tenant
Improvements" shall mean both Regular Tenant Improvements and Special
Tenant Improvements. The term "Regular Tenant Improvement", (`RTI'),
shall mean the following with respect to the entirety of the Premises:
a) Demolition of all hard walls not needed to accommodate Tenant's
requirements and demolition of the ceiling and any other existing tenant
improvements which require removal to accommodate the Tenant's
requirements in the Premises.
b) All walls and ceilings and normal electrical and normal air conditioning
to accommodate 1) 14 conference rooms 2) a software lab of approximately
3300 square feet with dedicated HVAC (3 tons per 1000 square feet) 3)
one hardware lab consisting of 700 square feet 4) training room of
approximately 600 square feet 5) one server room of approximately 700
square feet with dedicated HVAC (3 tons per 1000 square feet) and
located on the first floor 6) warehouse and storage area of
approximately 1500 to 2000 square feet 7) a lunch room 8) reception area
9) two telecommunication and networking rooms ( `IDF rooms') per floor
complete with optic fiber and 10) copy and utility rooms as designated
by Tenant. The utilization of existing walls and rooms will, where
reasonably possible, will be saved and utilized. The balance of the
first and second floors will be fully improved which shall include, but
not limited to, ceiling system, lighting, carpet, HVAC, electrical power
distributed to all columns, and paint.
c) HVAC ducting and thermostatic controls as required and appropriate.
Existing diffusers and return air grills will be utilized where possible
without compromising the appearance or function.
d) New ceiling grid and ceiling tiles throughout (Xxxxxxxxx `second look'
2x4 tiles) except for the existing hard ceilings which shall be
preserved.
e) Optic fiber distribution and communication wire (Cat 5/6 or similar)
will be installed as a permanent backbone between the main electrical
room and main point of entry and all IDF rooms including the IDF rooms
which will ultimately be installed on the third floor.
f) Above standard electrical distribution with eight each 110/208 service
outlets per circuit and one circuit for every 120 square feet,
electrical distribution to nodal points suitable for easy, convenient,
and adequate electrical connections for an `open-office environment in
all areas not improved with hard walls.
g) Ceiling lighting to consist of deep-well 2X4 parabolic fixtures by
Lithonia or equal all with electronic ballasts and T8 energy efficient
lamps ( existing lighting will be saved and reused where possible )
h) New carpet and flooring throughout
i) Typical fire sprinkler requirements and reinstallation of same as
required by plans and Tenant layout
j) New paint throughout
k) Toilet cores with black granite countertops, new sinks mounted beneath
the slab, soffitted lighting and new chrome fixtures
l) Lobbies upgraded with new granite floors
m) Architect fees and building permit fees which are specific to the RTI
n) exercise room of about 700 square feet
o) There shall be an interconnect capability between the MPOE and server
room and server room and IDF rooms.
p) Security costs as they relate to the third floor tenants
q) Demolition of the existing cable infrastructure used for network cable
30
Special Tenant Improvement Exhibit
Special Tenant Improvements: The term "Special Tenant Improvements", (`STI')
shall mean the following with the exception of the items below:
a) Communication and electrical wiring for the open office environment.
This would consist of all work from the nodal points near columns for
the electrical work associated with the cubicles and related systems and
all work from the IDF rooms to the cubicles and all other areas in the
Premises
b) Any signage including the possible signage on the exterior of the
Building
c) Security systems and card readers (excluding costs associated with the
third floor tenant(s
d) Any specialized electrical or circuitry requirements
e) Any specialized HVAC humidification or cooling requirements
f) Any specialized fire protection requirements such as a `dry system'
g) Any work required to coordinate and utilize the existing UPS systems and
emergency generator
h) Any special plumbing requirements
31
Rental Exhibit
***%
Monthly Rate
First year $ *** NNN
Second year $ *** NNN
Third year $ *** NNN
Fourth year $ *** NNN
Fifth year $ *** NNN
In addition the taxes and insurance shall be paid on a monthly basis as
follows:
***% Monthly
First year $ *** $ ***
Second year $ *** $ ***
Third year $ *** $ ***
Fourth year $ *** $ ***
Fifth year $ *** $ ***
Note:
1) As to the property taxes, included above it is the intention of
the parties that the costs reflected above are `fixed' and
accordingly the billed amounts and amounts due from Tenant will
not change for any reason including, but not limited to a sale
and reassessment of the building.
2) As to the insurance portion of the amounts due and reflected
above there will be a deduction for that cost attributable to
having the Landlord named as an additional insured under the
Tenant's liability policy.
----------------
*** Material has been omitted pursuant to a request for confidential treatment
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934. Such material has
been filed separately with the Commission.
32
Time Performance Exhibit
The following timelines are to be adhered to by Tenant in order for Landlord to
deliver the Premises by the Commencement Date. It is agreed for each day these
dates are delayed by Tenant, Landlord shall be granted one additional day beyond
the Commencement Date for the delivery of the Premises to Tenant.
A.) Completion of Preliminary Plans: August 1, 2002
B.) Approval of Preliminary Plans: August 1, 2002
C.) Submittal of all requirements and specifications for construction of the
Tenant Improvements to include, but not be limited to, dedicated circuit
requirements and location, above ceiling cabling requirements, UPS
connection requirements, heat loads requiring additional HVAC, any other
requirements not identifiable from the Preliminary Plans: August 12,
2002
D.) Completion of Final Plans within 14 days the satisfaction of B and C
above. Landlord responsibility. Final Plans and Architects
responsibility does not include the open office furniture locations and
layout. This shall be by Tenant. Open office locations will be due
within 14 days of satisfaction of B and C above.
E.) Approval of Final Plans by Tenant: 4 business days after completion of D
and submittal to Tenant for approval.
F.) Corrections, if any, and Submittal to the City of Cupertino for plan
check and issuance of the building permit: 3 days after completion of E.
G.) Obtain Building Permit and commence construction: 21 days after
completion of E or sooner if possible.
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Landlord Tenant
