CHESTNUT BAY LLC,
a California limited liability company
and
HEARTPORT, INC.,
a Delaware corporation
INDUSTRIAL BUILD-TO-SUIT LEASE
Dated
September 19, 1997
INDUSTRIAL BUILD-TO-SUIT LEASE
Schedule of Exhibits and Exhibit Document ................................ ii
Basic Lease Information .................................................. iii
Section 1. Premises ..................................................... 1
Section 2. Term ......................................................... 1
Section 3. Rent ......................................................... 5
Section 4. Utilities .................................................... 5
Section 5. Taxes ........................................................ 6
Section 6. Net Lease; Common Areas; Audit Rights ........................ 8
Section 7. Insurance and Indemnity ...................................... 11
Section 8. Repairs and Maintenance ...................................... 14
Section 9. Alterations .................................................. 16
Section 10. Use .......................................................... 18
Section 11. Environmental Provisions ..................................... 19
Section 12. Damage and Destruction ....................................... 27
Section 13. Eminent Domain ............................................... 29
Section 14. Default ...................................................... 30
Section 15. Assignment and Subletting .................................... 32
Section 16. Estoppel ..................................................... 34
Section 17. Attornment ................................................... 34
Section 18. Subordination ................................................ 34
Section 19. Entry ........................................................ 35
Section 20. Late Charges and Interest .................................... 35
Section 21. Security ..................................................... 35
Section 22. Entire Agreement ............................................. 36
Section 23. Time of Essence .............................................. 36
Section 24. Attorney Fees ................................................ 36
Section 25. Severable .................................................... 37
Section 26. Governing Law ................................................ 37
Section 27. No Option .................................................... 37
Section 28. Successors and Assigns ....................................... 37
Section 29. No Third-Party Beneficiaries ................................. 37
Section 30. Memorandum of Lease and Quitclaim ............................ 37
Section 31. No Agency, Partnership, or Joint Venture ..................... 38
Section 32. No Merger .................................................... 38
Section 33. Signs ........................................................ 38
Section 34. No Waiver .................................................... 38
Section 35. Financial Statements ......................................... 39
Section 36. Limitation of Liability ...................................... 39
Section 37. Notices ...................................................... 39
Section 38. Brokerage Commission ......................................... 40
Section 39. Authorization ................................................ 40
Section 40. Extension Option ............................................. 40
Section 41. Holding Over ................................................. 43
Section 42. Tenant Right to Terminate .................................... 43
Section 43. Surrender .................................................... 43
Section 44. Mortgagee Protection ......................................... 43
Section 45. Right of First Lease Offer ................................... 44
Section 46. Joint and Several ............................................ 45
Section 47. Covenants and Conditions ..................................... 45
i
Schedule of Exhibits and Exhibit Document
The Exhibits listed below are set forth in the document entitled
"CHESTNUT BAY LLC, a California limited liability company and HEARTPORT, INC.,
a Delaware corporation INDUSTRIAL BUILD-TO-SUIT LEASE EXHIBIT DOCUMENT", (the
"Exhibit Document") of even date herewith, which Exhibit Document is
incorporated into this Lease as though permanently attached hereto and any
interpretation of any term of this Lease referencing any one or more of the
Exhibits listed below shall reference the documents attached to the Exhibit
Document.
Schedule of Exhibits
Exhibit A. Real Property Description, Adjacent Real Property Description,
Common Areas, Roadway Easement
Exhibit B. Site Plan
Exhibit C. Work Letter
Exhibit D. Commencement Date Memorandum
Exhibit G. Schedule of Known Contaminants
Exhibit I. Environmental Documents
Exhibit I-1. R&H Landlord Redacted Purchase Agreement
Exhibit I-2 R&H Access Agreement
Exhibit J. Estoppel Certificate
Exhibit J-1. R&H SAND
Exhibit K. Landlord's Completion Certificate
Exhibit L. Short Form Memorandum
ii
Basic Lease Information
Effective Date: September 19, 1997
Landlord: Chestnut Bay LLC, a California limited liability company
Landlord's Address For Notice ("Landlord's Address"): c/o The Xxxxxxxxx
Company, 00 Xxxxxxxx Xxxx, Xxxxxxxx, XX 00000 Attn: Xxxxxxx Xxxxxx
Tenant: Heartport, Inc., a Delaware corporation
Tenant's Address For Notice ("Tenant's Address"): Heartport Building, Woodside
Technology Center, 000 Xxxxxxxx Xxxxxx, Xxxxxxx Xxxx, XX 00000
Real Property ("Real Property"): the approximately 5.98 acre parcel of land
situated in the City of Redwood City, County of San Mateo, State of
California, described in attached Exhibit A which shows the intended lot line
adjustment between the Real Property and Adjacent Real Property. In the event
the lot line adjustment is not accomplished prior to the Commencement Date,
the Real Property will be considered to be fifty-one and four tenths percent
(51.4%) of the total square footage of the combined 11.64 acres of the
combined Real Property and Adjacent Real Property parcels (as shown in Exhibit
A) until such time as the lot line adjustment is accomplished in substantial
accordance with Exhibit A.
Adjacent Real Property ("Adjacent Real Property"): the approximately 5.66 acre
parcel of land situated adjacent to the Real Property in the City of Redwood
City, County of San Mateo, State of California, described in attached Exhibit
A. which shows the intended lot line adjustment between the Real Property and
Adjacent Real Property. In the event the lot line adjustment is not
accomplished prior to the Commencement Date, the Adjacent Real Property will
be considered to be forty-eight and six tenths percent (48.6%) of the total
square footage of the combined 11.64 acres of the combined Real Property and
Adjacent Real Property parcels (as shown in Exhibit A) until such time as the
lot line adjustment is accomplished in substantial accordance with Exhibit A.
Premises ("Premises"): all that rentable area contained within and including
the Shell Improvements, together with Tenant's rights under this Lease to use
and enjoy the parking, landscaping and facilities on the Common Area.
Approved Reciprocal Easement Agreement ("AREA"): Any agreement(s) placed upon
the Real Property and the Adjacent Property and approved in writing by Tenant
(which approval shall not be unreasonably withheld or delayed), and any
amendments, additions or supplements thereto so approved, which provides for
reciprocal easements and/or covenants, conditions and restrictions pertaining
to the common areas located on the Real Property and the Adjacent Real
Property, which agreements shall not materially interfere with Xxxxxx's rights
under this Lease or with Tenant's access to the Premises (collectively
"AREA"). If a conflict between any such AREA and this Lease occurs, the
provisions of the AREA shall prevail provided that the AREA is
iii
recorded in the Official Records of the County of San Mateo and is binding
upon the Adjacent Real Property as well as the Real Property.
Common Area ("Common Area"): The area shown on Exhibit A hereto, located on
the Real Property to be improved by Landlord for parking and landscaping
purposes including without limitation parking areas which include the minimum
number of parking spaces required by the City of Redwood City for Tenant's use
of the Premises. The terms of any AREA may modify the Common Area to include
areas covered by the AREA, in which event Tenant shall be entitled to the
greater of a) the minimum number of parking spaces required by the City of
Redwood City for Tenant's use of the Premises, or (b) a share of the total
parking spaces in the Common Area proportionate to the minimum number of
parking spaces required by the City of Redwood City for each tenant's use of
the Project. Until execution of an AREA, the Common Area shall include the
Roadway Easement.
Exhibit Document ("Exhibit Document"): The document of Exhibits listed in the
Schedule of Exhibits above, of even date herewith, which with each Exhibit
attached thereto is incorporated into this Lease by this reference.
Project ("Project"): Woodside Technology Center located on the Real Property
and the Adjacent Real Property.
Shell Improvements ("Shell Improvements"): a two story office and light
industrial building shell, to be constructed by Landlord as provided in this
Lease, and to contain approximately 132,726 rentable square feet and other
improvements as shown on the Site Plan attached as Exhibit B.
Roadway Easement ("Roadway Easement"): a ten foot (10') wide strip of land
located along the eastern border of the Real Property and contained within the
Adjacent Real Property for the non-exclusive ingress and egress of Tenant for
the Term of this Lease as shown in Exhibit A.
Term ("Term"): Twelve (12) years, subject to extension as provided in this
Lease.
Estimated Shell Substantial Completion Date ("Estimated Shell Substantial
Completion Date"): July 15, 1998
Initial Base Rent Per Month ("Base Rent"): $1.56 per rentable square foot per
month.
Security Deposit ("Security Deposit"): Two Hundred Eighty-Six Thousand Dollars
($286,000.00).
Security ("Security"): Additional collateral in the form of: a cash deposit
to be held in an escrow account under instructions affording Landlord the
absolute right to withdraw funds on Landlord's sworn statement of, and in the
amount of, any Tenant default; or if required by Xxxxxxxx's senior lender for
the loan selected by Landlord, an irrevocable letter of credit issued by a
bank reasonably acceptable to Landlord and Landlord's lender and naming
Landlord as beneficiary.
iv
The maximum amount of the Security and an agreement for reductions in such
amount upon Xxxxxx's achievement of certain financial milestones, is set forth
in that certain confidential letter agreement ("Confidential Letter
Agreement") executed between Landlord and Tenant of even date herewith and
incorporated herein by reference.
Broker ("Broker"): CB Commercial Real Estate Group, Inc.
Lease Year ("Lease Year"): During the Term, each period of approximately 365
days. The first period will commence on the Commencement Date and end on the
day prior to the first anniversary of that period and each successive period,
unless Landlord and Tenant agree to some other period.
Permitted Use ("Permitted Use"): Uses typical to a high technology research
and development light industrial park and related ancillary office uses. No
other uses are permitted without the Landlord's prior written consent, which
shall not be unreasonably withheld, delayed or conditioned.
The terms and provisions in the Basic Lease Information above and the
incorporated Exhibit Document and the Confidential Letter Agreement") are a
part of the following Lease. The definitions in the Basic Lease Information
apply to all references in this Lease to those terms and provisions. If this
Lease and the Basic Lease Information contain conflicting definitions, the
Basic Lease Information definition will control.
Landlord (______landlord's initials) and Tenant (______tenant's initials)
agree.
v
LEASE
This Industrial Build-to-Suit Lease ("Lease") dated as of September 19,
1997, is entered into between Chestnut Bay LLC, a California limited liability
company ("Landlord") and Heartport, Inc., a Delaware corporation ("Tenant").
Section 1. Premises.
Landlord leases to Tenant the Premises. The Real Property will be improved
with the Shell Improvements to be constructed by Landlord. The Shell
Improvements are described in the Work Letter, attached as Exhibit C. The
building rentable area within and the Shell Improvements shall be determined
by Landlord's architect as of the Commencement Date and provided to Tenant in
writing (including the detail of Landlord's architects calculations) within
ten (10) days of the Commencement Date. The term "Building Rentable Area"
shall mean the floor area with measurements from the line identified in
Exhibit A along the outside of the exterior walls of the Shell Improvements as
the "Building Rentable Area Boundary" and shall include Tenant's exclusive
covered loading dock bays. Tenant shall have the right for thirty (30) days
after the receipt of Landlord's architects calculations, to have Xxxxxx's
architect measure the square footage of the Building Rentable Area within the
Premises and to confirm Landlord's architects calculations. If Tenant elects
to measure the Premises and delivers to Landlord a notice stating that Xxxxxx
disagrees with Xxxxxxxx's architect's measurement of the Building Rentable
Area of the Premises, Landlord and Tenant and their architects shall meet
within ten (10) days following Xxxxxxxx's receipt of such notice and attempt
to resolve the dispute. If the parties are unable to resolve such dispute
within such ten (10) day period, Xxxxxxxx's and Tenant's architects shall
select a neutral architect, not previously employed in any capacity by either
party or their respective architects, who is qualified and licensed to make
such measurement and calculation, which neutral architect shall be mutually
acceptable to Landlord and Tenant, in their reasonable judgment and Landlord
and Tenant shall make available to the neutral architect all information,
including without limitation CAD drawings, requested by the neutral architect,
and shall cause such neutral architect to measure the Building Rentable Area
of the Premises, measured as set forth above, as soon as practicable. Such
neutral architect's measurement shall be the final determination of the
Building Rentable Area of the Premises. The cost of the measurement by the
neutral architect shall be shared equally by the parties, unless either
party's initial measurement differs from the final measurement by more than
five percent (5%) of the final measurement, in which event such cost shall be
paid by the party whose initial measurement is furthest from the final
measurement.
Section 2. Term.
(a) Commencement Date. The Term of this Lease will commence ("Commencement
Date") on the earliest of the following dates: (i) the date of Shell
Substantial Completion (defined in Exhibit C); or (ii) the date which would
have been the date of Shell Substantial Completion but for Tenant Delays
(defined in Exhibit C). The Term of the Lease will continue for the period of
1
time specified as the Term or until this Lease is terminated as otherwise
provided for in the Lease.
(b) Rental Commencement Date: The payment of Rent shall commence ("Rental
Commencement Date") on the earliest of the following dates: (i) One Hundred
Twenty (120) days following the Commencement Date, plus any Landlord Delay as
defined in Exhibit C (the "Outside Rental Commencement Date"); or (ii) the
date Tenant occupies the Premises for the conduct of business. Determination
of the Rental Commencement Date shall not affect the parties' rights to Rent
or Rent credit pursuant to 2(d) below.
(c) Commencement Date Memorandum. Following the Rental Commencement Date,
Tenant will execute and deliver to Landlord a memorandum of the Commencement
Date and Rental Commencement Date in the form of attached Exhibit D
("Commencement Date Memorandum"). The Commencement Date Memorandum must
acknowledge: (i) the Commencement Date; (ii) the Rental Commencement Date;
(iii) the final square footage of the Premises; and (iv) Tenant's acceptance
of the Premises subject to completion of any punch list items.
(d) Delays. If Shell Substantial Completion has not occurred on the Estimated
Shell Substantial Completion Date, as it may be extended by any Unavoidable
Delays (defined in Exhibit C) and Tenant Delays, this Lease will not terminate
but Tenant shall receive a Rent credit of one day free rent for each day of
delay until the earlier to occur of: thirty (30) days following the Estimated
Shell Substantial Completion Date; or the Shell Substantial Completion Date.
If Shell Substantial Completion has not occurred for thirty (30) days after
the Estimated Shell Substantial Completion Date, as it may be extended by any
Unavoidable Delays and Tenant Delays, this Lease will not terminate but Tenant
shall receive a Rent credit of two days free rent for each day of delay
following the thirtieth day of delay until Shell Substantial Completion. The
Rent credits provided in this Section 2(d) and Tenant's rights under Section
2(f) shall serve as Tenant's sole and exclusive remedy for any delay of Shell
Substantial Completion.
(e) Early Entry. With the prior written consent of Landlord, not to be
unreasonably withheld, delayed or conditioned, Tenant may, at Tenant's own
risk, enter the Shell Improvements prior to the date of Shell Substantial
Completion. The entry may be made solely to install the Tenant Improvements,
Tenant's trade fixtures and equipment and shall be subject to the following
terms and conditions: (i) Tenant's early entry may not interfere with the
construction of any Shell Improvements or cause labor difficulties; (ii)
Tenant's early entry must be on all the terms and conditions of this Lease,
other than the obligation to pay Base Rent; (iii) Tenant must provide evidence
of insurance that is satisfactory to Landlord; (iv) Tenant must indemnify,
defend, and hold harmless Landlord and Landlord's agents, employees, and
contractors against all claims, liability, and damages arising from the early
entry; (v) Tenant's early entry does not constitute the commencement of the
Lease; and (vi) Tenant must pay utility charges reasonably allocated by
Landlord. The date which Tenant enters the Premises for the commencement of
construction of Tenant Improvements (other than work relating to utilities or
other matters under or affecting the slab to be installed by Landlord) shall
be identified in Landlord's approval as the "Early Entry Date."
2
(f) Outside Shell Completion Date and Tenant Purchase Option. Notwithstanding
anything to the contrary in this Lease, if Shell Substantial Completion has
not occurred by April 30, 1999, plus any delays that are Tenant Delays, either
Landlord or Tenant shall have the right by written notice to the other party,
with a copy to Landlord's construction lender, within thirty (30) days
thereafter to terminate this Lease and this Lease shall thereupon terminate,
provided, however, that notice terminating this Lease shall be ineffective if
within thirty (30) days after such termination notice Landlord's construction
lender gives Tenant written notice that Landlord's construction lender elects
in writing to cause the construction of the Shell Improvements to be
completed, by foreclosure on the Real Property or otherwise, and thereafter
promptly proceeds with such completion and Shell Substantial Completion occurs
no later than July 31, 1999, plus any delays that are Unavoidable Delays or
Tenant Delays.
(i) In the event of a Landlord election to terminate this Lease pursuant
to this subsection 2(f), Tenant shall have the right, for a period of thirty
(30) days following Landlord's termination notice, to purchase the Real
Property and completed Common Area improvements and Shell Improvements (the
"Option Property") at their then Fair Market Purchase Price (defined herein).
Tenant shall exercise such right by delivering to Landlord during said
thirty day period Tenant's proposed purchase contract which shall include
reasonable and customary terms for the acquisition of similarly situated real
property and improvements (which at a minimum shall provide for close of
escrow no later than forty-five days following the date of execution of the
agreement and shall relieve Landlord of all liability with respect to the
Option Property following close of escrow) (the "Purchase Agreement") and
shall state Tenant's proposed Fair Market Value Purchase Price (collectively,
"Tenant's Purchase Notice"). As used in this Section, "Fair Market Purchase
Price" shall be deemed to mean the arm's length purchase price between
parties of equal bargaining position for real property and improvements of a
similar type, design, and quality as the Real Property, Common Area
improvements and Shell Improvements, in the same or similar-quality
geographic area in the mid Peninsula, Highway 101 corridor market area in
which the Premises are situated under market conditions existing at that time
in the mid Peninsula, Highway 101 corridor market area. In determining the
Fair Market Purchase Price the parties or their appraiser(s) shall consider
cost replacement analysis, income analysis as well as sales of comparable
real property and improvements analysis for light industrial and office
purposes comparable in size, location, and type of building, age, quality,
layout and condition of the Shell Improvements and Real Property, with
comparable parking rights and landscaping. Sales of comparable property that
are not arms-length negotiated transactions (as with a tenant that owns
equity in a building) shall not be considered in determining the Fair Market
Purchase Price. The Fair Market Purchase Price shall not include any amount
attributable to Tenant's Tenant Improvements, Tenant's Alterations (defined
herein), or other improvements made or paid for by Tenant (whether by
amortization during the initial Lease Term or otherwise), and the Fair Market
Purchase Price shall take into account whether there is any brokerage
commission payable by Landlord upon sale. If the parties cannot agree on the
Fair Market Purchase Price of the Option Property within thirty (30) days of
Tenant's purchase notice, each party, at its cost and by giving notice to the
other party, shall, within ten (10) days thereafter, appoint a real estate
appraiser with at least five (5) years' full-time commercial appraisal
experience in the geographic area in which the Option Property is located, to
appraise and determine the then Fair Market Purchase Price and the Fair
Market Purchase Price shall be conclusively determined as
3
follows:
(ii) If one party does not appoint an appraiser within the time period
in Section 2(f)(i), the appraiser appointed by the other party shall be the
sole appraiser and shall determine the Fair Market Purchase Price.
Notwithstanding this Section, either party shall have the right to appoint a
replacement appraiser if the appraiser originally selected becomes unable to
perform as required hereunder.
(iii) If the two (2) appraisers are so appointed by the parties, they
shall meet promptly and attempt to appraise and determine the Fair Market
Purchase Price. If they are unable to agree within thirty (30) days after
the second appraiser has been appointed, they shall attempt to select a third
appraiser who meets the qualifications stated in Section 2(f)(i) within ten
(10) days after the last day the two appraisers are given to determine the
Fair Market Purchase Price. If they are unable to agree on a third
appraiser, either of the parties to this Lease, by giving ten (10) days'
notice to the other party, can apply to the presiding judge of the Superior
Court for the county in which the Premises are located for the selection of a
third appraiser who meets the qualifications stated in Section 2(f)(i). Each
of the parties shall bear one-half (1/2) of the cost of appointing the third
appraiser and of the third appraiser's fee. The third appraiser, however
selected, shall be a person who has not previously acted in any capacity for
either party.
(iv) Within twenty (20) days after appointment of the third appraiser,
each party's appraiser shall submit to the third appraiser a written
statement of such appraisers determination of the Fair Market Purchase Price
of the Option Property, determined as provided in this Lease, together with
written information relating to comparable transactions and adjustments,
replacement cost estimates, income analysis and other relevant information
used in making such determination, and a copy of such submission shall be
provided to the other party. Within five (5) days thereafter , each party
shall have the right to submit a response to the other party's submission.
Within ten (10) days after the last of such responses are received, the third
appraiser shall select either the Fair Market Purchase Price determined by
Landlord's appraiser or the Fair Market Purchase Price determined by Tenant's
appraiser as the Fair Market Purchase. If the third party appraiser
considers information not submitted by either party in making such
determination, the third party appraiser shall advise each of the parties'
appraisers and permit them to comment on such information before making such
determination. The third appraiser may not determine a Fair Market Purchase
Price other than a Fair Market Purchase Price submitted by one of the
parties. The Fair Market Purchase Price chosen by the third appraiser shall
be the Fair Market Price for the sale of the Real Property and Shell
Improvements to Tenant.
(g) After the Fair Market Price is determined, Landlord and Tenant shall
execute a Purchase Agreement reflecting the Fair Market Purchase Price. If
the parties cannot agree on the terms of the Purchase Agreement within one
hundred sixty (160) days of Tenant's Purchase Notice despite diligent good
faith efforts at negotiating such contract and the determination of a Fair
Market Purchase Price, Landlord shall provide Tenant with Landlord's good
faith final counter offer which may be rejected or accepted by Tenant within
ten (10) days' of receipt from Landlord. In the event Tenant rejects or fails
to respond to Xxxxxxxx's final counter offer within
4
said ten day period this Lease shall terminate and the parties shall have no
further obligation to each other hereunder except as specifically set forth
herein.
Section 3. Rent.
(a) Initial Base Rent. Tenant will pay to Landlord, at any address that
Landlord may designate in writing to Tenant (which, on request of Tenant,
shall be a bank account to which Tenant may make wire transfers), the Base
Rent. The rent must be paid, without the need for notice, demand, offset, or
deduction, commencing on the Rent Commencement Date and continuing thereafter
on the first day of each calendar month during the Term. If the Term
commences or ends on a date other than the first or last day of a month,
Tenant must pay on the Rent Commencement Date or the first day of the last
month a Base Rent prorated on a per diem basis with respect to the portion of
the month within the Term. All sums other than Base Rent that Tenant is
obligated to pay under this Lease will be deemed to be additional rent due,
regardless of whether those sums are designated as "additional rent." The term
"Rent" means the Base Rent and all additional rent payable under this Lease.
(b) Scheduled Base Rent Increases. The Base Rent shall be subject to
adjustment on each anniversary of the Commencement Date during the initial
term (the "Adjustment Date(s)") by the annual percentage increase of the
Consumer Price Index, All Urban Consumers (CPI-U), San Francisco-Oakland-San
Xxxx Area, All items (standard reference base period 1982-84 = 100) published
by the United States Department of Labor, Bureau of Labor Statistics (the
"Index") for the twelve month period preceding the month of the Adjustment
Date in question. In no case shall the Base Rent increase less than three
percent (3%) nor more than six percent (6%) on any Adjustment Date. If the
Index is changed so that the base year differs from that in effect when the
term commences, the Index shall be converted in accordance with the conversion
factor published by the United States Department of Labor, Bureau of Labor
Statistics. If the Index is discontinued or revised during the term, such
other government index or computation with which it is replaced shall be used
in order to obtain substantially the same result as would be obtained if the
Index had not been discontinued or revised.
(c) Shell Upgrade Costs. Tenant may incur Shell Upgrade Costs which shall be
amortized and included in Base Rent by amendment to this Lease pursuant to
Section 5(c) of Exhibit C hereto.
Section 4. Utilities.
Landlord shall, at its expense, provide connections for utilities in
accordance with the Building Shell Definition (defined in and attached to
Exhibit C hereto) and Approved Working Drawings (defined in Exhibit C).
Tenant will make all arrangements and pay all charges for water, sewer,
telephone, gas, electricity, and other utilities supplied to or used on the
Premises including, without limitation, paying any meter deposits and fees for
the connection of Tenant's service through the utility connections provided by
Landlord in accordance with the Building Shell Definition. Commencing on the
Commencement Date, Tenant will arrange for service in its
5
name and pay all charges for water, sewer, telephone, gas, electricity, and
other utilities supplied to or used on the Premises. Landlord will not be
liable to Tenant for any interruption in or curtailment of any utility
service, nor will any interruption or curtailment constitute constructive
eviction or grounds for abatement of rent.
Section 5. Taxes.
(a) Real Property Taxes. Landlord will pay to the proper taxing authorities,
as they become due, all Real Property Taxes applicable to the Real Property
and the Adjacent Real Property, and commencing one hundred twenty (120) days
following the Early Entry Date, plus any Landlord Delays or any days that
Tenant's work on Xxxxxx's Improvements is voluntarily interrupted by Landlord
pursuant to Section 2(e)(i) (and in any case no later than the Rent
Commencement Date), Tenant will reimburse Landlord for Real Property Taxes
imposed on the Real Property during the Lease Term, as it may be extended, as
provided in clause (b) below. The term "Real Property Taxes" includes the
following to the extent that they are imposed by or payable to a governmental
or quasi governmental entity, are a lien or assessment on, are measured by the
value of or income from, or are imposed on account of the ownership or
operation of, the Real Property and improvements or any interest therein: (i)
real property taxes; (ii) possessory interest taxes; (iii) business, license,
or use fees, (iv) excises; (v) transit charges; (vi) housing fund assessments;
(vii) open space charges; (viii) childcare fees; (ix) school fees; (x) any
other assessments, levies, fees, or charges, general and special, ordinary and
extraordinary, unforeseen and foreseen (including fees "in-lieu" of any tax or
assessment) that are assessed, levied, charged, confirmed, or imposed by any
public authority upon the Real Property (including the Premises thereon) or
its operations; (xi) all taxes, assessments, or other fees imposed by any
public authority on or measured by any Rent or other charges payable under
this Lease, including any gross income tax or excise tax levied by the local
government authority, the federal government, or any other governmental body
with respect to receipt of rent, or upon, with respect to, or by reason of,
the possession, leasing, operation, management, maintenance, Tenant
improvement, post Commencement Date alteration, repair, use, or occupancy by
Tenant of the Premises or any portion of the Real Property, or on this
transaction or any document to which Tenant is a party creating or
transferring an interest in the Premises or Real Property; and (xii) any tax
imposed in substitution, partially or totally, of any tax previously included
within the definition or any additional tax, the nature of which was
previously included within the definition, together with the costs and
expenses (including attorney fees) of changing any taxes or seeking the
reduction in or abatement, redemption, or return of any Real Property Taxes
imposed on the Real Property during the Term, as it may be extended, but only
to the extent of any reduction, abatement, redemption, or return.
Notwithstanding any other Lease provision, nothing contained in this Lease
will require Tenant to pay (s) any franchise, corporate, succession, estate,
or inheritance, transfer, sales, or use tax of Landlord; (t) any income,
profits, or revenue tax or charge on or measured by the general or net income
of Landlord (as opposed to rents, receipts, or income attributable to
operation or ownership of the Real Property); (u) any pre-Commencement Date
imposition, fee, cost, expense or payment (whether paid prior to the
Commencement Date or imposed prior to the Commencement Date and paid through
ongoing installments during the Term), required to obtain the entitlements
necessary for the subdivision or resubdivision of the
6
Real Property or Adjacent Real Property, the initial construction or financing
of the Shell Improvements or improvements to the Real Property or the Common
Area, including those relating to or arising under any development agreement,
any government permit, or other approval or agreement, specifically including
payment of costs made in connection with any traffic demand management
programs or transportation impact mitigation fees imposed prior to the
Commencement Date; (v) any Real Property Taxes applicable to the Adjacent Real
Property (except as modified by the AREA); (w) any Real Property Taxes
applicable to periods not within the Term, as it may be extended; or (x) any
interest or penalties imposed in connection with Landlord's failure to pay
such taxes, assessments, levies and other charges prior to delinquency (and
not caused by a default of Tenant hereunder).
(b) Tax Reimbursements. During the Lease Term, as it may be extended, Tenant
will pay to Landlord an amount equal to the Real Property Taxes on the Real
Property then due within fifteen (15) days after delivery to Tenant by
Landlord of an invoice (or, as to real property taxes, no later than twenty
(20) days prior to delinquency, if later). Landlord may, at Xxxxxxxx's
option, deliver statements from different taxing authorities at different
times or deliver all statements at one time. If Tenant has previously
defaulted in payment of any Real Property Tax, or in the event of Tenant's
transfer of all or more than fifty percent (50%) by area of its interest in
this Lease, other than to an Affiliate (defined herein), or as to any
transferee of Tenant of any part of the Premises (other than an Affiliate)
Landlord may elect to collect Real Property Taxes from Tenant in advance, on a
monthly or quarterly basis, based upon Landlord's reasonable estimate of the
Real Property Taxes. In such event, if the amount of monthly or quarterly
payments for estimated Real Property Taxes received by Landlord from Tenant
are more or less than the actual Real Property Taxes due, an itemized
statement of which (together with receipted tax bills for all items) shall be
delivered to Tenant by Landlord within sixty (60) days after close of each
fiscal tax year during the Lease Term, or as soon as reasonably possible
thereafter, and an appropriate adjustment will be made by Landlord and Tenant
and any balance due paid or refunded within thirty (30) days after such
reconciliation. Landlord may also elect to have Real Property Tax invoices
sent directly by the taxing authority to Tenant if the Premises are the sole
rentable Improvements on the Real Property, in which case Tenant shall pay
such invoices in full and in a timely manner to avoid penalty with a copy of
evidence of payment to Landlord. Real Property Taxes for partial tax fiscal
years, if any, falling within the Term, will be prorated per diem, based on
the amount of any Real Property Tax applicable during the Term, as it may be
extended. Tenant's obligations for Real Property Taxes for the last full or
partial year of the Term will survive the expiration or earlier termination of
this Lease. If Landlord voluntarily prepays any assessment or Real Property
Tax that would otherwise have been payable in installments during the Term, as
it may be extended, Tenant shall nevertheless have the right to pay such
assessment or Real Property Tax in installments when and as it would have been
due absent such prepayment.
(c) Contesting Real Property Taxes. Landlord shall promptly provide Tenant
with copies of all current Real Property Tax bills and assessments upon
receipt or upon Xxxxxx's request. Tenant shall have the right to contest in
good faith any material increase in any Real Property Tax or assessment with
the appropriate government authorities, provided that Xxxxxx takes appropriate
measure to protect Landlord's property from liens relating to such disputed
tax and has
7
reimbursed Landlord for any such tax actually paid by Landlord as set forth
above. Xxxxxxxx agrees to cooperate with Xxxxxx in prosecuting any appeal
taken by Xxxxxx as a result of such increase, at no cost or expense to
Landlord, and shall promptly pay to Tenant any refund or reduction received by
Landlord (less any cost to Landlord in securing the refund or reduction) that
was previously paid or reimbursed to Landlord by Xxxxxx.
(d) Re-Appraisal on Transfer. Real Property Taxes include any increase in
Real Property Taxes attributable to a reappraisal of the Real Property on
account of a sale, foreclosure, or other financing (including without
limitation ground leases) or change of ownership of the Real Property
(including, without limitation, transfers of ownership interests in Landlord)
by Landlord within the meaning of Article XIIIA of the California Constitution
and applicable law ("Transfer Re-Appraisal Increase"). The foregoing
notwithstanding, Landlord shall be obligated to pay, at Landlord's expense, a
portion of any such Transfer Re-Appraisal Increase for any transfer which
occurs after the fifth (5th) Lease Year. The portion of the Transfer
Re-Appraisal Increase to be paid by Landlord shall be equal to eighty percent
(80%) of the Transfer Re-Appraisal Increase due and paid for the first
12-month period after such increase, sixty percent (60%) of the Transfer
Re-Appraisal Increase due and paid for the second 12-month period after such
increase, forty percent (40%) of the Transfer Re-Appraisal Increase due and
paid for the third 12-month period after such increase and twenty percent
(20%) of the Transfer Re-Appraisal Increase due and paid for the fourth
12-month period after such increase. Following the fourth 12-month period
after such increase, all of the Transfer Re-Appraisal Increase shall be
included in annual Real Property Taxes paid by Tenant under this Lease.
(e) Personal Property Taxes. During the Term, as it may be extended, and prior
to delinquency, Tenant will pay all taxes and assessments levied on trade
fixtures, Alterations, additions, improvements, inventories, and other
personal property located or installed on the Premises by Xxxxxx. Tenant will
also provide Landlord copies of receipts for payment of all those taxes and
assessments. To the extent any taxes are not separately assessed or billed to
Tenant, Tenant will pay the amount as invoiced by Landlord. Tenant's
obligations for Personal Property Taxes for the last full or partial year of
the Term will survive the expiration or earlier termination of this Lease
Section 6. Net Lease; Common Areas; Audit Rights.
(a) Net Lease. This is a "net lease" and the Rent will be paid by Tenant and
be received by Landlord without any deduction or offset whatsoever by Tenant,
foreseeable or unforeseeable. Except as expressly provided to the contrary in
this Lease, Landlord will not be required to make any expenditure, incur any
obligation, or incur any liability of any kind in connection with this Lease
or the maintenance, operation, or repair of the Premises during the Term.
Nothing in this Lease shall obligate Tenant to pay or reimburse Landlord for
Landlord's costs incurred in the development, construction, or financing of
the Property except as expressly set forth herein.
(b) Common Areas.
(i) Landlord covenants that the Common Areas shall be available without
further charge to
8
Tenant for the nonexclusive use (as defined in Section 6(b)(iv) of Tenant
during the full Term of this Lease or any extension of the Term, provided that
the condemnation or other taking by any public authority, or sale in lieu of
condemnation, of any of the Common Areas shall not constitute a violation of
this covenant. Landlord shall also provide up to ten (10) parking spaces in a
number and location reasonably adjacent to the Building as reasonably
designated by Landlord which shall be signed as reserved exclusively for
Tenant's visitors to the Premises. Landlord specifically reserves the right
to change the location, size, configuration, design, layout, and any other
aspects of the parking provided such changes do not reduce the number of
spaces below the minimum number of parking spaces provided in the definition
of "Common Area" nor materially impair Tenant's ability to use the Premises as
set forth in Section 10. Landlord may temporarily close off or restrict
access to parking from time to time as necessary to enable construction,
environmental remediation, alteration, or improvements, without incurring any
liability to Tenant and without any abatement of Rent under this Lease
provided any such temporary access restriction shall be so accomplished as to
minimize inconvenience to Tenant and the least possible interference with
Xxxxxx's truck access to the Premises. Xxxxxx's continued right to use the
parking spaces is conditioned on Tenant's abiding by all rules and regulations
prescribed from time to time for the orderly operation and use of the Project
parking. Tenant shall use all reasonable efforts to ensure that Tenant's
employees and visitors also comply with such rules and regulations. This
Lease shall be subordinate to those items listed as Exceptions 1 through 12 of
that Title Policy for the Real Property dated as of April 29, 1997 and any
subsequently executed AREA.
(ii) Landlord shall keep or cause to be kept all Common Areas in a neat,
clean, orderly and well maintained condition, properly lighted and landscaped,
and shall promptly repair any damage to their facilities, but all expenses in
connection with the Common Areas ("Common Area Expenses ") shall be charged in
the manner set forth in Section 6(b)(iii). Common Area Expenses shall include
but shall not be limited to all sums expended by Landlord in connection with
the Common Areas for all general maintenance and repairs, resurfacing,
painting, restriping, cleaning, sweeping, and janitorial services; refuse
removal; competitively priced management fees, which shall not exceed five
percent (5%) of the Common Area Expenses; planting and landscaping; lighting
and other utilities; directional signs and other markers and bumpers;
personnel to implement these services and to police the Common Areas; required
fees or charges levied pursuant to any governmental requirements; public
liability and property damage insurance on the Common Areas, which shall be
carried and maintained by Landlord with limits as reasonably determined by
Landlord; and, where charged to Landlord, all expenses in Sections 5, 7, and
8, provided that no expense excluded from Tenant's reimbursement obligations
under Section 5(a) or any other provision of this Lease shall be included and
provided further that no expense paid by Landlord shall be double counted for
Tenant reimbursement purposes, and Real Property Taxes shall be determined and
paid as provided in Section 5. Landlord shall exercise reasonable diligence
to obtain reasonable prices for all sums expended by Landlord for Common Area
Expenses.
(iii) In December of each calendar year, or as soon as reasonably possible
thereafter, Landlord shall send Tenant an itemized statement, setting forth in
reasonable detail Landlord's reasonable estimate of Tenant's Common Area
Expenses for the following calendar year on a monthly or
9
quarterly basis, at Landlord's option and Xxxxxx agrees to pay Landlord
Xxxxxx's Common Area Expenses then due within fifteen (15) days after receipt
of the statement and to make monthly or quarterly payments of Xxxxxx's share
of Common Area Expenses thereafter. Any Common Area Expenses for the year in
which this Lease commences or ends shall be apportioned and adjusted based
upon the number of months or portions of months in which Tenant occupies the
Premises, commencing one hundred twenty (120) days following the Early Entry
Date, provided that Xxxxxx's work on the Tenant Improvements has not been
interrupted or delayed by Landlord Delays or any days that Xxxxxx's work on
Tenant's Improvements is voluntarily interrupted by Landlord pursuant to
Section 2(e)(i) (and in any case no later than the Rent Commencement Date)
and, provided Xxxxxx is not in default hereunder, expiring when Tenant vacates
the Premises (and otherwise upon expiration of the Term), disregarding any
changes in such charges attributable to a period before or after the Lease
Term. If the amount of monthly or quarterly payments for Common Area Expenses
received by Landlord from Tenant are more or less than the actual Common Area
Expenses due for any Calendar Year, an itemized statement of which shall be
delivered to Tenant by Landlord within one hundred twenty (120) days following
the end of each Calendar Year, or a soon as reasonably possible thereafter, an
appropriate adjustment will be made by Landlord and Tenant and any balance due
paid or refunded within thirty (30) days after such reconciliation. All
charges in Section 6 for Common Area Expenses may be superseded and governed
by any AREA adopted for the Real Property and Adjacent Real Property.
(iv) For the use and benefit of Tenant, Tenant's agents, employees, customers,
licensees, and subtenants shall have the nonexclusive right in common with
Landlord's representatives, agents employees, customers and contractors
performing Landlord's obligations under this Lease, and other present and
future owners and tenants of the Real Property (and, to the extent set forth
in any AREA recorded for the Adjacent Real Property), and their agents,
employees, customers, licensees, and subtenants, to use the Common Areas
during the entire Term of this Lease, or any extension of the Term, for
ingress and egress, roadway, sidewalk, and automobile parking, provided that
Tenant and Tenant's employees shall park their automobiles in those areas
reasonably designated by Landlord from time to time (in consultation with
Tenant) for Tenant parking. To the extent practicable and within Landlord's
reasonable control, and except as may be set forth above or in any AREA,
Tenant shall at all times have 24-hour vehicular access to the Premises
including, without limitation, truck access.
(v) Tenant, in the use of the Common Areas, agrees to comply with the
reasonable rules and regulations as Landlord may adopt from time to time for
the orderly and proper operation of the Common Areas, which rules and
regulations shall not be inconsistent with this Lease and shall not interfere
with Xxxxxx's right of vehicular and truck access to the Premises or Tenant's
other rights under this Lease.
(vi) Unless Landlord elects to provide trash collection as a part of the
Common Area maintenance, Tenant shall at Tenant's expense arrange for the
collection of trash in the Common Areas located on the Real Property, in which
event Landlord shall not charge Tenant for any costs of trash removal on the
Real Property and Adjacent Real Property.
10
(vii) Landlord grants Tenant a non-exclusive access Ad for ingress and egress
over the Roadway Easement for the Term of this Lease, as it may be extended,
or until such time as an AREA is executed for the Real Property and Adjacent
Real Property granting Tenant similar access over the Roadway Easement. For
purposes of this Lease, and until superseded by an AREA, the Roadway Easement
shall be considered part of the Common Area under this Lease, provided,
however that Landlord may include no more than fifty-one and four tenths
percent (51.4%) of the common area expenses (as defined in 6(b)(ii)), of such
Roadway Easement in Common Area Expenses and no more fifty-one and four tenths
percent (51.4%) of Real Property Taxes (as defined in 5(a)) of such Roadway
Easement in Real Property Taxes. Upon completion of improvements to the
Adjacent Real Property, Xxxxxx's contribution to Common Area Expenses and Real
Property Taxes for the Roadway Easement shall be equitably reduced, eliminated
or reciprocated by the occupants of the Adjacent Real Property.
(c) Tenant's Audit Rights. Landlord shall maintain accurate books and records
showing all costs and expenditures relating to the Real Property, the
Premises, and the Common Area, for a period of not less than three (3) years
following each applicable calendar year. Following Landlord's delivery of
Xxxxxxxx's statement of such costs for the previous calendar year Tenant shall
have the right, by written request to Landlord given no later than ninety (90)
days following the delivery of Landlord's statement, at Xxxxxx's sole cost and
expense, to examine, to copy and to have an audit conducted of all books and
records of Landlord pertaining to Common Area Expenses and Real Estate Taxes
for the preceding three year period as they apply to Tenant's review of the
current Landlord statement only. Any audit shall be conducted by an
independent auditing firm, reasonably and timely approved by Landlord and
retained by Xxxxxx on a non-contingency fee basis. All expenses of the audit
shall be borne by Tenant unless such audit discloses an overstatement of
Tenant's share of Common Area Expenses or Real Estate Taxes of five percent
(5%) or more, in which case Landlord shall within thirty (30) days reimburse
Tenant for the reasonable cost of the audit. If the auditing firm determines
that Tenant has made an underpayment or overpayment, an appropriate adjustment
will be made by Landlord and Tenant and any balance due paid or refunded
within thirty (30) days after such determination. Absent a timely Tenant
request and audit, or in the event any such audit is not completed and
presented to Landlord within one hundred twenty (120) days of delivery of
Landlord's statement, Xxxxxxxx's statement shall be deemed conclusively
binding between the parties.
Section 7. Insurance and Indemnity.
(a) Tenant's Obligations. Tenant will, at Xxxxxx's expense, obtain and keep in
force at all times the following insurance:
(i)Trade Fixtures, Personal Property and Equipment. Casualty insurance
insuring all Tenant trade fixtures, personal property, furniture and
equipment, ("Tenant's Property") against fire, and extended coverage
(including "all risk", expediting expense, business interruption and law and
ordinance coverage), for the full replacement cost of Tenant's Property,
including electronic data processing equipment, (new without deduction for
depreciation) including boiler and machinery comprehensive form, if
applicable, covering damage to or loss of any equipment of Tenant with
11
deductibles and the form and endorsements of the coverage as selected by
Xxxxxx and reasonably and timely approved by Landlord, together with, at
Landlord's option, business income insurance against loss of business income
in an amount equal to the amount of business income for a period of twelve
(12) months commencing on the date of loss. The parties acknowledge that
Tenant, and not Landlord, shall be responsible for providing such insurance
coverage for Tenant's trade fixtures which may otherwise be Alterations
hereunder. If the property of Xxxxxx's invitees is to be kept in the
Premises, the insurance should include warehouser's legal liability or bailee
customers' insurance for the full replacement cost of the property belonging
to invitees and located in the Premises.
(ii) General Liability Insurance. A policy or policies of commercial general
liability insurance (occurrence form) having a combined single limit of not
less than Five Million Dollars ($5,000,000) per occurrence and aggregate,
providing coverage for, among other things, blanket contractual liability,
premises, products and completed operations, and personal and advertising
injury coverage.
(iii) Workers' Compensation and Employer's Liability Insurance. Workers'
compensation insurance having limits not less than those required by state
statute and federal statute, if applicable, and covering all persons employed
by Tenant in the conduct of Tenant's operations on the Premises. This must
include the all states endorsement and, if applicable, the volunteer's
endorsement, together with employer's liability insurance coverage in the
amount of at least One Million Dollars ($1,000,000).
(b) Shell Improvements, Tenant Improvements, Common Area Improvements,
Alterations and Additional Insurance. Landlord shall maintain fire and
extended coverage (including "all risk", expediting expense coverage and law
and ordinance coverage), and at Landlord's option, earthquake insurance,
throughout the Term in an amount equal to the full replacement cost of the
Shell Improvements, Tenant Improvements, Common Area Improvements and
Alterations (new without deduction for depreciation), rental interruption or
equivalent loss of use insurance against loss of Rent in an amount equal to
the amount of Rent for a period of twelve (12) months commencing on the date
of loss, together with other insurance as may be required by Landlord's
lender, in its reasonable discretion, or by any governmental agency. The
parties acknowledge that Tenant, and not Landlord, shall be responsible for
insuring Xxxxxx's trade fixtures which are otherwise Alterations hereunder.
Tenant will pay to Landlord an amount equal to the premiums due on insurance
within fifteen (15) days after delivery to Tenant by Landlord of an invoice
for any premiums. If Tenant has previously defaulted in payment of any
insurance premiums, or in the event of Tenant's transfer of all or more than
fifty percent (50%) by area of its interest in this Lease, other than to an
Affiliate (defined herein), or as to any transferee of Tenant of any part of
the Premises (other than an Affiliate) Landlord may, at Landlord's option,
elect to collect the premiums from Tenant in advance, on a monthly or
quarterly basis, based on Landlord's reasonable estimate of the premiums. If
the amount of monthly or quarterly payments for estimated premiums received by
Landlord from Tenant are more or less than the actual premiums due, an
appropriate adjustment will be made promptly by Landlord and Tenant. Landlord
shall exercise reasonable diligence to obtain competitively priced insurance
coverage for all insurance to be reimbursed by Xxxxxx.
12
(c) General Insurance Provisions.
(i) Insurance Companies. Insurance required to be maintained by Tenant and
Landlord will be written by companies licensed to do business in the state in
which the Premises are located and having a "General Policyholders Rating" of
at least A and financial standing of VIII, or a higher rating if required by a
lender having the first lien on the Premises, as set forth in the most current
issue of "Best's Insurance Guide."
(ii) Certificates of Insurance. Tenant and Landlord will deliver to the other
party certificates of insurance for all insurance required to be maintained by
Tenant or Landlord no later than seven (7) days prior to the date of
possession of the Premises. Each party will, at least five (5) days prior to
expiration of the policy required under this Lease, furnish the other party
with certificates of renewal or "binders." Each certificate will expressly
provide that the policies are not cancelable except after thirty (30) days'
prior written notice to Landlord and Tenant and any parties named as
additional insureds in this Lease. However, in the case of cancellation for
nonpayment of premium, the cancellation will not take effect until at least
(10) days' notice has been given to Landlord and Tenant. If Landlord or Tenant
fails to maintain any insurance required in this Lease, such party will be
liable for all losses and costs resulting from that failure, the other party
(the "Curing Party") will have the right, but not the obligation, to obtain
insurance on behalf of the party obligated to carry such insurance. In the
event Landlord is the Curing Party, Tenant will immediately on demand pay
Landlord the premiums on the insurance; and Landlord may declare a default
under this Lease. In the event Tenant is the Curing Party, premiums paid by
Tenant will be credited toward premiums due Landlord under this Section.
(iii) Additional Insureds. Landlord, any lender designated by Landlord in
writing and any property management company of Landlord for the Premises must
be named as additional insureds under all of the policies required by Section
7(a)(ii). which must provide for severability of interest. Tenant shall be
named as an additional insured under all policies required under Section 7(b).
(iv) Primary Coverage. All insurance to be maintained by Tenant must, except
for workers' compensation and employer's liability insurance, be primary,
without right of contribution from insurance of Landlord and any umbrella
liability policy or excess liability policy must provide primary insurance.
All insurance maintained by Landlord must be primary, without right of
contribution from insurance of Tenant. The limits of insurance maintained by
Landlord or Tenant will not limit Landlord's or Tenant's liability under this
Lease.
(v) Waiver of Subrogation. Tenant waives any right of recovery from the
Landlord, Landlord's officers and employees, and Landlord waives any right of
recovery from Tenant, Tenant's officers or employees, for any loss or damage
(including consequential loss) resulting from any of the perils insured
against under insurance required to be or actually carried by either party
under this Lease. This fully waives, for the benefit of Landlord and Tenant,
any rights and claims that might give rise to a right of subrogation in favor
of any insurance carrier. The coverage obtained by Landlord and Tenant
pursuant to this Lease must include, without limitation, a waiver of
subrogation endorsement.
13
(d) Indemnification by Xxxxxx. Landlord will not be liable for any loss or
damage to person or property caused by theft, fire, acts of God, acts of a
public enemy, riot, strike, insurrection, war, court order, requisition, or
order of government body or authority, or for any damage or inconvenience that
may arise through repair or alteration of any part of the Premises or failure
to make any repair, unless such damage or inconvenience is due to the gross
negligence or willful misconduct of Landlord. Tenant will indemnify and defend
Landlord, by counsel acceptable to Landlord, against any liabilities,
including reasonable attorney fees and court costs, arising out of or relating
to the following:
(i) claims of injury to or death of persons or, except to the extent covered
by Landlord's insurance, damage to property occurring or resulting directly or
indirectly from the use or occupancy of the Premises, or from activities of
Tenant, Xxxxxx's invitees, or anyone about the Premises, or from any other
cause, except to the extent caused by Landlord's gross negligence or willful
misconduct;
(ii) claims for work or labor performed, or for materials or supplies
furnished to or at the request of Tenant in connection with performance of any
work done for the account of Tenant within the Premises; and
(iii) claims arising from any breach or default on the part of Tenant in the
performance of any covenant contained in this Lease.
The provisions of this Section 7(d) will survive the expiration or termination
of this Lease with respect to any claims or liability occurring prior to the
expiration or termination.
Section 8. Repairs and Maintenance.
(a) Landlord's Obligations. Subject to the terms of this Section, Landlord
shall, at its expense not to be reimbursed by Tenant under any provision of
this Lease, maintain all structural portions of the Shell Improvements,
including without limitation the structural portions of the roof, foundation,
and load-bearing portions of walls of the Shell Improvements, (excluding wall
coverings, painting, glass, and doors), and all structural portions of
improvements to the Common Area, including without limitation underground
utilities serving the Premises (excluding utilities in the floor beneath the
Shell Improvements other than the sewer trunk line) or the Common Area, and
soil compaction and subgrade preparation for the Common Area. Landlord will
not be required to make any repair resulting from:
(i) any alteration or modification to the Shell Improvements or to mechanical
equipment within the Shell Improvements performed after the Commencement Date
by, for, or because of Tenant or to special equipment or systems installed by,
for, or because of Tenant;
(ii) the installation, use, or operation of Tenant's Property, systems and
equipment within the Shell Improvements;
14
(iii) the moving of Tenant's Property in or out of the Shell Improvements or
in and about the Premises;
(iv) Tenant's use or occupancy of the Premises in violation of Section 10 of
this Lease;
(v) the acts or omissions of Tenant and Xxxxxx's employees, agents, invitees,
subtenants, licensees, or contractors;
(vi) fire and other casualty, except as provided by Section 12 of this Lease;
or
(vii) condemnation, except as provided in Section 13 of this Lease.
(vii) any cause, other than latent defects in the Shell Improvements, in any
floor quadrant (as shown in attached Exhibit B) in which Tenant has conducted
boring or drilling completely through the floor following the Commencement
Date.
Landlord shall have no obligation to make repairs under this Section until a
reasonable time after receipt of written notice from Tenant of the need for
repairs. Landlord shall diligently commence and continuously pursue such
repairs under this Section, subject only to Unavoidable Delays or Tenant
Delays as defined in Exhibit C. Tenant waives any right to repair at the
expense of Landlord under any applicable governmental laws, ordinances,
statutes, orders, or regulations now or later in effect. The foregoing
notwithstanding, in the event Landlord has not commenced any repair
specifically identified to Landlord by Tenant's written notice within ten (10)
business days following Tenant's notice, Tenant shall have the right following
five (5) business days additional notice to Landlord specifying the actions to
be taken by Tenant, to commence any such repair at Tenant's expense (subject
to Tenant's right to seek recovery of such expense as provided in the
following sentence), and provided further that if the repair is identified in
Xxxxxx's notice to Landlord as an emergency repair posing an immediate and
serious threat to life safety or a material breach of the security of the
building Tenant shall have the right to commence temporary emergency repairs
at Tenant's expense (subject to Xxxxxx's right to seek recovery of such
expense as provided in the following sentence) if Landlord has not commenced
such repairs within six (6) hours after receipt of Tenant's notice. Tenant
shall not have the right to deduct the cost of repair from Rent due hereunder
but shall otherwise have all remedies available to Tenant in law and equity to
recover the cost of any such repair. In addition to the foregoing, Landlord
shall have the obligation at Landlord's sole expense to seed and maintain in a
clean and sightly condition the Adjacent Real Property in the event that
construction has not commenced on the Adjacent Real Property prior to June 1,
1998.
(b) Tenant's Obligations. Except for the portions of the Premises expressly
required to be maintained by Landlord under Section 8(a) Section 8(c), Tenant,
at Tenant's expense, will maintain the Premises in good order including,
without limitation roof membrane, floor coverings, walls and wall coverings,
mechanical, electrical, and plumbing systems, doors, windows, truck aprons,
gutters, and downspouts and any signage. Tenant will enter into preventive
maintenance and service contracts with maintenance contractors for regularly
scheduled maintenance that are reasonably acceptable to Landlord for servicing
all hot water,
15
heating, and air-conditioning systems and equipment in the Premises. If Xxxxxx
fails, in the reasonable judgment of Landlord, to maintain the Premises in
good order after written notice from Landlord demanding that Tenant do so and
specifying in reasonable detail Tenant's failure, Landlord may perform the
maintenance, repairs, refurnishing, or repairing at Tenant's expense. Tenant
shall be responsible for replacement of the roof membrane, at Tenant's sole
cost and expense, when required by the condition of the roof.
(c) Warranties and Defective Work. Landlord shall obtain commercially
reasonable or standard warranties from all contractors engaged in constructing
the Shell Improvements and Common Areas. Tenant shall not be responsible for
the repair of any work that is covered by such warranties. Tenant shall give
Landlord written notice of any repairs described in this Section 8(c).
Landlord shall promptly and diligently seek to cause Landlord's contractors to
repair or replace any such defective work. Tenant waives any claims against
Landlord for work covered by such contractor warranties. Upon written request
by Xxxxxx, Landlord shall assign to Tenant, on a non-exclusive basis and
without detriment to Landlord's right to enforce such claim, Landlord's
contractor warranty for any specific repair sought by Tenant covered by such
warranty and Tenant shall thereafter be responsible for the enforcement of
such warranty repair claim against contractor.
Section 9. Alterations.
(a) Trade Fixtures and Alterations. Following the completion of Xxxxxx's
initial Tenant Improvements, Tenant will not make or allow any additions,
alterations, installations, or improvements in or to the Premises
(collectively, "Alterations") in excess of Fifty Thousand Dollars ($50,000) in
any twelve (12) month period without the prior written consent of Landlord,
which will not be unreasonably withheld, delayed or conditioned. Unless
Landlord has waived this requirement in writing, with respect to any
Alteration, (including the initial Tenant Improvements) Tenant must submit
details about design concept, plans and specifications, names of proposed
contractors, and financial and other pertinent information about any
contractors (including, without limitation, the labor organization affiliation
or lack of affiliation of any contractors as reasonably required by Landlord
to avoid an actual conflict of labor for work Landlord is conducting on the
Real Property or Adjacent Real Property), certificates of insurance to be
maintained by Xxxxxx's contractors, hours of construction, and information
promptly and reasonably requested by Xxxxxxxx regarding proposed construction
methods, and details about the quality of the proposed work. If Landlord
reasonably believes that the cost of the work may exceed Xxxxxx's ability to
perform its obligations hereunder to keep title to the Real Property free of
liens arising from such work, Landlord may require evidence of security (such
as payment and performance bonds) to assure timely completion of the work by
the contractor and payment by the contractor of all costs of the work. For
any Alteration that is visible from outside the Premises, the proposed
Alteration must, in the reasonable opinion of Landlord, also be
architecturally and aesthetically harmonious with the remainder of the
Project. If a Notice of Completion is required for the work, Tenant must file
it and provide Landlord with a copy. Tenant must provide Landlord with a set
of "as-built" drawings for any work.
16
(b) Complex Alterations. Tenant shall seek Landlord's approval, which
approval shall not be unreasonably withheld, delayed or conditioned, of
Tenant's architects and engineers who design any Alteration which by the
nature of its volume or complexity may adversely affect the Shell
Improvements. If Xxxxxx's architect or engineer is not approved by Landlord,
for any such Alteration, Tenant may nevertheless employ such architect or
engineer for such purpose, and Landlord within Landlord's reasonable judgment,
may consult with an independent architect, engineer, or other consultant with
respect to such alteration and Tenant will reimburse Landlord for the
reasonable fees and expenses incurred by Landlord. If any Alteration will
affect the basic mechanical, electrical, or plumbing systems of the
Improvements, Landlord may require that the work be reviewed by consultants
designated by Landlord at Tenant's reasonable expense.
(c) Standard of Work. All work to be performed by or for Tenant pursuant to
the Lease will be performed diligently, in a first-class manner, and in
compliance with all applicable laws, ordinances, regulations, and rules of any
public authority having jurisdiction over the Premises and Tenant and (if
applicable) Landlord's insurance carriers. Landlord will have the right, but
not the obligation, to periodically inspect the work on the Premises and, if
any work fails to conform to approved plans and specifications, may require
changes in the method or quality of the work to conform to such approved plans
and specifications.
(d) Damage and Removal. Tenant assumes the risk of damage to any of Tenant's
Improvements and Alterations except to the extent directly caused by the gross
negligence of Landlord or its contractors. Tenant will repair all damage to
the Premises caused by the installation or removal of these items. Upon the
termination of this Lease, Tenant will remove any Alterations not approved by
Landlord, trade fixtures, personal property, equipment made or installed by
Tenant and restore the Premises to their condition existing prior to the
construction of these items, reasonable wear and tear and any casualty which
is covered by Section 12 excluded. Tenant shall also remove those Alterations
approved by Landlord which Landlord has specified in writing at the time of
Landlord's approval of such Alteration must be removed at the expiration of
the Term. Tenant shall not be obligated to remove the initial Tenant
Improvements, but Tenant shall have the right to remove any Tenant personal
property, equipment or trade fixtures included in such initial Tenant
Improvements provided Tenant repairs, at Tenant's cost and to Landlord's
reasonable satisfaction, any damage caused by such removal. Landlord may
require, upon written notice to Tenant given no later than ninety (90) days
prior to expiration of the Lease Term, that Tenant not remove any Alterations
and improvements Tenant is so obligated to remove (excluding any Tenant
personal property, equipment or trade fixtures). In that case, such items
will be the property of Landlord when the Lease terminates. All removals and
restoration will be accomplished in a good manner so as not to cause any
damage to the Premises.
(e) Liens. Tenant will promptly pay and discharge all claims for labor
performed, supplies furnished, and services rendered at the request of Tenant
and will keep the Premises free from all mechanics' and materialmen's liens.
Tenant will provide at least ten (10) days' prior written notice to Landlord
before any labor is performed, supplies are furnished, or services are
rendered at the Premises, and Landlord will have the right to post notices of
nonresponsibility on the Premises. If any lien is filed and Xxxxxx fails to
timely bond over the lien or otherwise cause it to be promptly removed,
Landlord may take any necessary action to remove the lien, and Tenant
17
will pay Landlord any amounts expended by Landlord, together with interest at
the Applicable Interest Rate from the date of expenditure.
Section 10. Use.
The Premises will be used only for the Permitted Use and for no other uses.
The use will be otherwise consistent with any applicable governmental laws,
ordinances, statutes, orders, and regulations and any AREA or any supplement
to the AREA (approved by Tenant) that has been or will be recorded in any
official or public records concerning the Real Property or any portion of it,
including, but not limited to, all provisions of the Americans with
Disabilities Act [42 USC sections 12183 and 12204] (collectively "Legal
Requirements"). The foregoing notwithstanding, Landlord and Tenant acknowledge
that where improvements or alterations are initiated after the Commencement
Date by one party, that party shall be individually obligated for any
alterations or improvements to the Premises and/or Shell Improvements
resulting from Legal Requirements caused by the improvements or alterations
initiated by that party, whether such alterations or improvements are work to
be done by that party pursuant to this Lease, or are necessitated by defects
in the construction of Shell Improvements (as to Landlord's work), the Tenant
Improvements (as to Tenant's work) or other improvements installed by that
party. Legal requirements imposed subsequent to the completion and government
permitting or approval of improvements which are imposed and not the result of
either parties' initiation of improvements or alterations shall be the
obligation of Landlord with respect to the Shell Improvements and Common Area
Improvements, and the obligation of Tenant with respect to the Tenant
Improvements. The judgment of any court of competent jurisdiction, or the
admission of Tenant or Landlord in any action or proceeding, regardless of
whether the Landlord or Tenant is a party, that Tenant or Landlord, as the
case may be, has violated any Legal Requirement in the condition, use, or
occupancy of the Premises or the Shell Improvements, will be conclusive of
that fact as between Landlord and Tenant. Tenant will not commit waste,
overload the floors or structure of the Premises, subject the Premises or the
Project to any use that would cause damage or violate any insurance coverage,
permit any unreasonable and obnoxious odors, smoke, dust, gas, substances,
noise, or vibrations to emanate from the Premises, take any action that would
constitute a nuisance or would disturb, obstruct, or endanger any other
tenants of the Project, take any action that would abrogate any warranties, or
use or allow the Premises to be used for any unlawful purpose. Landlord will
not be liable to Tenant nor will this Lease be affected if any parking is
impaired by moratorium, initiative, referendum, or regulation (provided that
Tenant shall have such rights to any award in condemnation as may be afforded
under Section 13). Landlord will not be responsible for noncompliance by any
other Tenant or occupant of the Project with any of the AREA or any other
terms or provisions of that tenant's or occupant's lease, provided that
Landlord has made reasonable efforts (excluding litigation), on Xxxxxx's
written request, to enforce such provisions. Tenant will promptly comply with
the reasonable requirements of any board of fire insurance underwriters or
other similar body now or later constituted.
18
Section 11. Environmental Provisions.
(a) Definitions. As used in this Section, the following terms have the
following definitions:
"Access Agreement" means that Access Agreement dated as of April 29, 1997
between R&H and Landlord, a copy of which is attached hereto as Exhibit I-2
"Agencies" means any federal, state, or local governmental authorities,
agencies, or other administrative bodies with jurisdiction over Landlord,
Tenant or the Premises, the Real Property, or the Adjacent Real Property.
"Costs" shall have the same definition as the word "Costs" as set forth in
Section 9.1(a) of the R&H Indemnity (defined herein).
"Environmental Documents" means the studies, tests and reports listed in
Exhibit I.
"Environmental Laws" means any federal, state, or local environmental, health,
or safety-related laws, regulations, standards, court decisions, ordinances,
rules, codes, orders, decrees, directives, guidelines, permits, or permit
conditions, currently existing and as amended, enacted, issued, or adopted in
the future that are or become applicable to Tenant or the Premises.
"Existing Environmental Conditions" means the presence of Hazardous Materials
at, on, in, under or from the Property (including in soil, surface, or
groundwater) on or before the date on which this Lease is signed, including
without limitation the conditions disclosed in the reports set forth in the
Environmental Documents.
"Hazardous Materials" shall have the same definition as the word term
"Hazardous Materials" as set forth in Section 9.1(a) of the R&H Indemnity.
"Schedule of Known Contaminants" means the schedule of Prohibited Known
Contaminants, Permitted Known Contaminants, and Volume Constrained
Contaminants identified in attached Exhibit G.
"Landlord Parties" means Landlord's employees, agents, customers, visitors,
invitees, licensees, contractors, designees, or tenants.
"Remediation Order" means California Regional Water Quality Control Board
("CRWQCB") Order No. 93-004 and any amendments thereto.
"Remediation Work" means all environmental activities necessary in order for
R&H (or any other responsible party other than Tenant) to comply with the
Remediation Order and any subsequent order of any governmental agency
respecting the Existing Environmental Conditions which may include the removal
of contaminated soil, groundwater and installation, operation, maintenance,
repair, replacement and removal of xxxxx, pumps, pipes, tanks and related
facilities and equipment for testing and monitoring environmental
contamination and effecting the
19
correction, reduction or elimination of environmental contamination.
"R&H" means Rohm & Xxxx Company, prior owner of the Real Property and
responsible party for the Remediation Work and R&H Indemnity.
"R&H Indemnity" means that certain assignable indemnification by R&H of
Landlord with respect to Existing Environmental Conditions as set forth in
Article IX of that certain Purchase and Sale Agreement executed between
Landlord and R&H and dated February 10, 1997 (the "Purchase and Sale
Agreement") a redacted copy of which is attached hereto and incorporated
herein as Exhibit I-1. Landlord represents that, to the best of Landlord's
knowledge, the R&H Indemnity is in full force and effect.
"Tenant's Parties" means Tenant's employees, agents, customers, visitors,
invitees, licensees, contractors, designees, or subtenants.
(b) Disclosure, Remediation and Indemnification Regarding Existing Conditions.
(i) Environmental Disclosure. In accordance with Section 25359.7 of the
California Health and Safety Code, Landlord hereby gives notice to Tenant (i)
that releases of Hazardous Materials have come to be located on or beneath the
Real Property and (ii) of the matters set forth in the Environmental
Documents.
(ii) Ongoing Remediation. Tenant acknowledges that the Remediation Work
is being conducted on the Real Property and Landlord represents, warrants, and
agrees that the Remediation Work will be conducted at no direct cost to Tenant
during the Lease Term, and that no part of the direct or indirect costs of
such Remediation Work shall be reimbursed by Tenant to Landlord or any other
person under this Lease or otherwise. All parties conducting the Remediation
Work shall have the right to use the Real Property for the purposes of
performing the Remediation Work pursuant to the terms and conditions of the
Purchase and Sale Agreement and the Access Agreement until the Remediation
Work has been completed, provided, however, that Tenant shall have the right
to request, and (to the extent set forth in the Purchase and Sale Agreement
and Access Agreement) to require, that the Remediation Work be performed in a
manner that reduces to the maximum practicable extent any inconvenience to
Tenant and its use of the Premises and Common Area, and that does not
interfere with Tenant's access to the Premises, provided further, however,
that such right of Tenant is limited by the requirement that Tenant shall not
interfere with the conduct of the Remediation Work in a manner that is
contrary to the rights of R&H under the Purchase and Sale Agreement and the
Access Agreement.
(iii) Assignment of R&H Indemnification. Pursuant to Section 9.2(b)
thereto, Landlord hereby irrevocably assigns to Tenant, without in any way
limiting the indemnity as it applies to Landlord and the Landlord Indemnitees,
on a non-exclusive basis to the fullest extent possible, all rights provided
under the R&H Indemnity, it being the intention of the parties that Tenant
shall have rights to enforce the R&H Indemnity obligations as if Tenant were a
direct party to the R&H Indemnity, provided, however, that in no event shall
Tenant have any direct or indirect obligation or responsibility arising under
or with respect to the R&H Indemnity or any agreement
20
of which it is a part or to which it relates.
(c) Tenant Use of Hazardous Materials. Tenant will not use or allow the use of
the Premises in a manner that causes Hazardous Materials to be released or to
become present on, under, or about the Premises or other properties in the
vicinity of the Premises. Notwithstanding any other provision to the contrary
in this Lease or any other agreement, nothing in this Lease shall be construed
as imposing upon Tenant any obligation, liability or responsibility with
respect to any Existing Condition or any other release of Hazardous Materials
that: (i) occurred before execution of this Lease from any cause; or (ii) that
occurred after execution of this Lease except to the extent caused by
contributed to or exacerbated by Tenant or Tenant's Parties.
(d) Tenant Compliance Obligations
(i) Tenant and Xxxxxx's Parties will not, at any time during the Term,
cause any Prohibited Known Contaminants listed in the Schedule of Known
Contaminants to be brought upon, stored, manufactured, generated, blended,
handled, recycled, treated, disposed, or used on, under, or about the Premises
or the Real Property for any purpose. Tenant and Xxxxxx's Parties will not,
at any time during the Term, cause any Permitted Known Contaminants listed in
the Schedule of Known Contaminants to be brought upon, stored, manufactured,
generated, blended, handled, recycled, treated, disposed, or used on, under,
or about the Premises or the Real Property for any purpose without the prior
written approval of Landlord which approval shall not be unreasonably
withheld, conditioned or delayed. Tenant and Tenant's Parties will not, at any
time during the Term, cause any Volume Constrained Known Contaminants listed
in the Schedule of Known Contaminants to be brought upon, stored,
manufactured, generated, blended, handled, recycled, treated, disposed, or
used on, under, or about the Premises or the Real Property for any purpose in
excess of the volumes set forth in the Schedule of Contaminants without the
prior written approval of Landlord which approval shall not be unreasonably
withheld, conditioned or delayed.
(ii) Tenant and Xxxxxx's Parties will not, at any time during the Term,
cause any Hazardous Materials to be brought upon, stored, manufactured,
generated, blended, handled, recycled, treated, disposed, or used on, under,
or about the Premises or the Real Property for any purpose, except in full
compliance with Environmental Laws.
(iii) During the Term, if Tenant has knowledge of the need for such
steps, or if requested by Landlord, Tenant will take reasonable steps to
protect against intentional or negligent acts or omissions of third parties
that might result directly or indirectly in the release, disposal, or other
placement of Hazardous Materials on or under the Premises or interfere with
the Remediation Work.
(iv) No asbestos-containing materials will be manufactured or installed
for any purposes on or as part of the Premises, whether as part of Tenant's or
Tenant's Parties' business operations or as tenant improvements, unless
specifically approved in advance in writing by Landlord, whose approval will
not be unreasonably withheld, delayed or conditioned.
21
(v) Subject to Landlord's obligations under k(ii) herein, Tenant will
keep, operate, and maintain the Premises in compliance with all, and will not
cause or knowingly permit the Premises to be in violation of any,
Environmental Laws due to the acts or omissions of Tenant and Xxxxxx's
Parties.
(vi) Neither Tenant nor any of Tenant's Parties will install or use any
underground storage tanks on the Premises.
(e) Landlord's Right of Entry and Testing. Landlord and Landlord's designees
and representatives have the right, but not the obligation, at any reasonable
time to enter onto and to inspect the Premises and to conduct reasonable
testing and analysis to determine if Hazardous Materials are present on,
under, or about the Premises and to review and copy any documents, materials,
data, inventories, financial data, or notices or correspondence to or from
private parties or governmental authorities pertaining to the use or release
of Hazardous Materials in the Premises (collectively, "Inspection"), provided,
however, that (i) Tenant shall have the opportunity to accompany Landlord at
all times, (ii) any testing (including drilling or destructive or intrusive
testing) shall be done in a manner to minimize any inconvenience to Tenant
(iii) no drilling, destructive or intrusive testing shall be done unless there
are reasonable grounds for believing that a release of Hazardous Materials may
have occurred, (iv) copies of the results of any testing shall promptly be
provided to Tenant, (v) Landlord's right of inspection shall not extend to
confidential proprietary information of Tenant previously identified in
writing to Landlord, and (vi) Landlord shall keep strictly confidential any
documents copied pursuant to any Inspection, except only to the extent
Landlord is legally required to report such information to an Agency, and in
such event Landlord shall give Tenant no less than fifteen (15) days advance
notice of its intention to make such a report so that Tenant shall have the
right to seek judicial or other relief if Tenant disagrees with Landlord's
right or obligation to take such action. If the Investigation indicates the
presence of any environmental condition that occurred during the Term as a
result of Xxxxxx's or Tenant's Parties' activities, or failure to act where
Xxxxxx had a duty to act, in connection with the Premises, Xxxxxx will
reimburse Landlord for the cost of conducting the tests.
(f) Environmental Assessment. Landlord may retain, at Xxxxxxxx's expense
(except as set forth below), a duly licensed environmental consultant that
will perform an environmental compliance audit of the Premises and Tenant's
and Tenant's Parties' business activities and compliance with the provisions
of Section 11. Landlord will provide a copy of the report from the consultant
to Tenant upon receipt, and upon request must provide to Tenant a copy of all
data, documents, and other information prepared or gathered in connection with
the report. In the event such audit reveals that Tenant or Xxxxxx's Parties'
are not in substantial compliance with Section 11, Tenant shall reimburse
Landlord for the cost of such audit upon thirty (30) days' invoice. Tenant
acknowledges that Xxxxxx has been provided an adequate opportunity to conduct
Xxxxxx's own environmental investigation of the Premises with independent
environmental experts and consultants.
(g) Notification.
22
(i) Tenant must give prompt written notice to Landlord of:
(A) any enforcement, remediation, or other regulatory action or order, taken
or threatened, by any Agency regarding, or in connection with, the presence,
release, or threat of release of any Hazardous Material on, under, about, or
from the Premises resulting from Xxxxxx's use of the Premises;
(B) all demands or claims made or threatened by any third party against Tenant
or Xxxxxx's Parties or the Premises relating to any liability, loss, damage,
or injury resulting from the presence, release, or threat of release of any
Hazardous Materials on, under, about, or from the Premises resulting from
Xxxxxx's use of the Premises;
(C) any significant spill, release, or discharge of a Hazardous Material on,
under, about, or from the Premises resulting from Tenant's use of the
Premises, including, without limitation, any spill, release, or discharge
required to be reported to any Agency under applicable Environmental Laws; and
(D) all incidents or matters where Xxxxxx and Xxxxxx's Parties are required to
give notice to any Agency pursuant to applicable Environmental Laws.
(F) copies of all Hazardous Materials Business Plans, Hazardous Waste
Management Plans, Chemical Hygiene Plans and any and all other plans or
reports, and any and all required periodic or special updates to such reports,
which Tenant is required to file with governmental agencies regulating
Tenant's use of Hazardous Materials on the Premises.
(ii) Tenant must promptly provide to Landlord copies of all materials,
reports, technical data, Agency inspection reports, notices and
correspondence, and other information or documents relating to incidents or
matters subject to notification under Section 11(g)(i). Also, Tenant must
promptly furnish to Landlord copies of all permits, approvals, and
registrations Tenant receives or submits with respect to Tenant's operations
on the Premises, including, without limitation, installation permits, and
closure permits.
(iii) Landlord must give prompt written notice to Tenant of:
(A) any enforcement, remediation, or other regulatory action or order, taken
or threatened, by any Agency regarding, or in connection with, the presence,
release, or threat of release of any Hazardous Material on, under, about, or
from the Premises;
(B) all demands or claims made or threatened by any third party against
Landlord or Xxxxxxxx's Parties or the Premises relating to any liability,
loss, damage, or injury resulting from the presence, release, or threat of
release of any Hazardous Materials on, under, about, or from the Premises;
(C) any significant spill, release, or discharge of a Hazardous Material on,
under, about, or from the Premises, whether originating on or off of the
Premises, including, without limitation, any
23
spill, release, or discharge required to be reported to any Agency under
applicable Environmental Laws; and
(D) all incidents or matters where Landlord and Landlord's Parties are
required to give notice to any Agency pursuant to applicable Environmental
Laws.
(iv) Landlord shall arrange with R&H to continue to receive, and shall
promptly after receipt deliver to Tenant, the following:
(A) copies of reports to any Agency or other information on the progress of
the Remediation Work,
(B) all monitoring data relating to the presence of Hazardous Materials in the
soils, ground water, or air on or about the Premises and the Real Property or
Adjacent Real Property,
(C) any amendments to the Remediation Order or communications from the CRWQCB
or other Agency regarding the Remediation Work or the presence or release of
Hazardous Materials on or about the Premises, Real Property, or Adjacent Real
Property.
(iv) In the event that Landlord is required to and does submit to the CRWQCB
or any other agency a Health and Safety Plan in connection with any proposal
to perform any grading, excavation, or construction of the Adjacent Real
Property, Landlord will promptly (and in any event no less than ten (10)
business days) prior to commencement of such work) provide Tenant with a copy
of such Health and Safety Plan and shall contractually require Xxxxxxxx's
general contractor to comply with such Health and Safety Plan to the extent
required by applicable law.
(h) Remediation due to Tenant's Activities.
(i) If any Hazardous Materials are released or found on, under, or about the
Premises caused by, contributed to or exacerbated by Xxxxxx's or Tenant's
parties activities, or failure to act where Xxxxxx had a duty to act, in
connection with the Premises, Tenant must promptly take all actions, at
Xxxxxx's sole expense (except to the extent Tenant may seek reimbursement
under the R&H Indemnity or contribution from any other potentially responsible
party), necessary to investigate and remediate the release or presence of such
Hazardous Materials, to the extent caused, contributed to or exacerbated by
Xxxxxx and Xxxxxx's Parties or as required of Tenant by any governmental
agency, on, under, or about the Premises in accordance with Environmental
Laws and the requirements of all Agencies. However, unless an emergency
situation exists that requires immediate action, Xxxxxxxx's written approval
of these actions will first be obtained, and the approval will not be
unreasonably withheld, delayed or conditioned. Xxxxxxxx has the right, but not
the obligation, to assume control of any required remediation on the Premises
at Tenant's expense if Tenant fails to notify Landlord and obtain Landlord's
approvals as required under Section 11(h). Within thirty (30) days after
Xxxxxx's completion of any remediation of the Premises, Tenant must deliver to
Landlord a letter from the applicable Agency stating that the remediation was
undertaken in accordance with all applicable Environmental Laws and that any
residual contamination remaining after the remediation does not pose a threat
to human health or
24
the environment.
(ii) If Tenant or Tenant's Parties have caused a release of Hazardous
Materials that results in or threatens to result in Hazardous Materials
becoming present on, under, or about the Premises, threatens public health or
safety or the environment, or is in noncompliance with any applicable
Environmental Laws or requirements of Section 11, Landlord may demand that
Tenant promptly take action in accordance with Section 11(h)(i). If Tenant
does not respond within thirty (30) days (unless there is an emergency, in
which case Tenant must respond as soon as practicable, but not less than three
(3) business days), Landlord has the right, but not the obligation, to enter
onto the Premises and take all actions reasonably necessary to investigate and
fully remediate the release or noncompliance at Tenant's sole expense
(provided Tenant may seek reimbursement under the R&H Indemnity or
contribution from any other potentially responsible party) which sums will be
immediately due and payable upon receipt of an invoice and will constitute
additional rent under this Lease.
(j) Expiration and Termination Procedures. Upon expiration or termination of
this Lease and upon the request of Landlord, Tenant will perform: all
corrective, remedial, repair, or other work necessary to correct any
violations of Environmental Laws, deficiencies, or hazards caused by Tenant
and if applicable, in accordance with any remediation or clean up order by
any environmental governmental agency; and all steps necessary to terminate,
close, or transfer all environmental permits, licenses, and other approvals or
authorizations for the Premises obtained by Tenant or for Tenant activities,
equipment, or conditions on the Premises, in accordance with all Environmental
Laws.
(k) Liability.
(i) Tenant's Indemnification of Landlord. Subject to the limitation on
Tenant's liability stated in Section 11(b), Tenant will indemnify, protect,
defend, and hold harmless Landlord and Landlord's partners, directors,
officers, employees, shareholders, lenders, agents, contractors, and each of
their respective successors and assigns (individually and collectively
"Landlord Indemnitees") from all claims, judgments, causes of action, damages,
penalties, fines, taxes, costs, liabilities, losses, and expenses caused
(directly or indirectly), contributed to or exacerbated by (a) Tenant's or
Tenant's Parties' breach of any prohibition or provision of Section 11, to the
extent of such cause, contribution or exacerbation, or (bb) the presence of
any Hazardous Materials on or under the Premises during the Term or any
Hazardous Materials that migrate from the Premises to other properties, caused
(directly or indirectly), contributed to or exacerbated by Xxxxxx's or
Xxxxxx's Parties' activities, or failure to act where Tenant had a duty to act
to the extent of such cause, contribution or exacerbation.
This obligation by Tenant to indemnify, protect, defend, and hold harmless
Landlord Indemnitees includes, without limitation, costs and expenses incurred
for or in connection with any investigation, cleanup, remediation, monitoring,
removal, restoration, or closure work required by the Agencies because of any
Hazardous Materials present on, under, or about the Premises for causes
described in the immediately preceding subsection; the costs and expenses of
restoring, replacing, or acquiring the equivalent of damaged natural resources
if required under
25
any Environmental Law; all foreseeable consequential damages; all reasonable
damages for the loss or restriction on use of rentable or usable space or of
any amenity of the Premises; all reasonable sums paid in settlement of claims;
reasonable attorney fees; litigation, arbitration, and administrative
proceeding costs; and reasonable expert, consultant, and laboratory fees.
Neither the written consent of Landlord to the presence of Hazardous Materials
on or under the Premises, nor the strict compliance by Tenant with all
Environmental Laws, will excuse Tenant from the indemnification obligation.
This indemnity will survive the expiration or termination of this Lease.
Further, if Landlord detects a deficiency in Xxxxxx's performance under this
indemnity and Tenant fails to correct the deficiency within thirty (30) days
after receipt of written notice from Landlord, Xxxxxxxx has the right to join
and participate in any legal proceedings or actions affecting the Premises
that are initiated in connection with any Environmental Laws. However, if the
correction of the deficiency takes longer than thirty (30) days, Landlord may
join and participate if Tenant fails to commence corrective action within the
thirty (30) day period and after that diligently proceeds to correct the
deficiency.
(ii) Landlord's Indemnification of Tenant. Landlord will indemnify, protect,
defend, and hold harmless Tenant and Xxxxxx's partners, directors, officers,
employees, shareholders, lenders, agents, contractors, and each of their
respective successors and assigns (individually and collectively "Tenant
Indemnitees") against all claims, judgments, causes of action, damages,
penalties, fines, taxes, costs, liabilities, losses, and expenses caused
(directly or indirectly) by or in connection with (aa) any Existing
Environmental Condition, or (bb) the presence of any Hazardous Materials on
the Real Property or the Adjacent Real Property during the Term or any
Hazardous Materials that migrate from the Real Property or Adjacent Real
Property to other properties, caused (directly or indirectly) by Landlord or
Landlord's Parties' activities, or failure to act where Landlord had a duty to
act. This obligation by Landlord to indemnify, protect, defend, and hold
harmless Tenant Indemnitees includes, without limitation, costs and expenses
incurred for or in connection with any investigation, cleanup, remediation,
monitoring, removal, restoration, or closure work required by the Agencies
because of any Hazardous Materials present on the Premises, the Real Property
or the Adjacent Real Property; the costs and expenses of restoring, replacing,
or acquiring the equivalent of damaged natural resources if required under any
Environmental Law; all foreseeable consequential damages; all reasonable
damages for the loss or restriction on use of rentable or usable space or of
any amenity of the Premises, or the Real Property (and to the extent provided
for under any AREA, the Adjacent Real Property); all reasonable sums paid in
settlement of claims; reasonable attorney fees; litigation, arbitration, and
administrative proceeding costs; and reasonable expert, consultant, and
laboratory fees. The strict compliance by Landlord with all Environmental Laws
will not excuse Landlord from the indemnification obligation. This indemnity
will survive the expiration or termination of this Lease. If Tenant detects a
deficiency in Xxxxxxxx's performance under this indemnity and Landlord fails
to correct the deficiency within thirty (30) days after receipt of written
notice from Tenant, Xxxxxx will have the right to join and participate in any
legal proceedings or actions affecting the Premises initiated in connection
with any Environmental Laws. However, if the correction of the deficiency
takes longer than thirty (30) days, Xxxxxx will have the right to join and
participate if Landlord fails to commence corrective action within the thirty
(30) day period and after that diligently proceeds to correct the deficiency.
26
Section 12. Damage and Destruction.
(a) Casualty. If the Premises are damaged or destroyed by fire or other
casualty, Tenant will give prompt written notice to Landlord. Within thirty
(30) days after receipt, Landlord will notify Tenant whether repairs can
reasonably be made (1) within two hundred seventy (270) days or (2) if the
Premises are so damaged as to constitute total destruction as defined in
Section 12(a)(iv), or (3) if the damage is in the final Lease Year, within
sixty (60) days, from the date of such notice.
(i) Less Than 270 Days. If the Premises are damaged only to the extent that
rebuilding or repairs can be reasonably completed within two hundred seventy
(270) days after notice, this Lease will not terminate and, unless sufficient
insurance proceeds are not available to repair the Premises damage (and Tenant
elects not to pay any difference), Landlord will repair the Premises. However,
Landlord will not be required to rebuild, repair, or replace any of Tenant's
Property that may have been placed on the Premises for Tenant. The Rent will
be abated proportionately from the date Tenant vacates the Premises only to
the extent the Premises are unfit for Tenant's use.
(ii) Greater Than 270 Days. If the Premises are so damaged that rebuilding or
repairs cannot be completed within two hundred seventy (270) days after
Xxxxxx's notice, either Landlord or Tenant may terminate by giving written
notice within thirty (30) days after such notice regarding the time period of
repair.
(aa) If neither party elects to terminate this Lease, Landlord will promptly
commence and diligently prosecute to completion the repairs to the Premises,
unless insurance proceeds are not available to repair the Premises damage (and
Tenant elects not to pay any difference). However, Landlord will not be
required to rebuild, repair, or replace any Tenant Property that may have been
placed on the Premises for the Tenant. During the time when Landlord is
prosecuting repairs to completion, the Rent will be abated proportionately
from the date Tenant vacates the Premises, only to the extent and only during
the period that the Premises are unfit for Tenant's use of the Premises.
(bb) If Landlord elects to terminate this Lease pursuant to this subsection
12(a)(ii) this Lease and the Rent shall be abated from the date Tenant vacates
the Premises, and Landlord shall provide Tenant with any insurance proceeds
actually received by Landlord allocable to the damaged Tenant Improvements and
Alterations, provided however, that if: (i) the damage or destruction occurs
after the expiration of the fifth Lease Year; (ii) Tenant elects to renew the
Lease for a minimum of ten (10) years from the date of the damage and
destruction under the same terms and conditions as an extension of the Term
under Section 40; and (iii) Tenant is not otherwise in default under the terms
of this Lease; then Tenant shall have the additional right upon written notice
to Landlord given with thirty (30) days following Xxxxxxxx's notice of
termination, to repair the Premises at Tenant's expense. Tenant's election
may be subject to the condition that insurance proceeds are available for such
repairs provided such condition is removed or Tenant's election withdrawn no
later than sixty (60) days following Tenant's notice of repair to Landlord.
In the event Tenant elects to make such repairs, Tenant shall provide Landlord
a schedule of Tenant's intended construction within thirty (30)
27
days following Tenant's notice of its intent to repair. Any such repair by
Tenant shall be conducted in as expeditious a manner as reasonably possible
and shall comply with all of the requirements of Section 9. Landlord shall
reasonably cooperate with Tenant in the conduct of Xxxxxx's repairs at no cost
to Landlord. In the event of such election by Xxxxxx, Landlord shall make
available to Tenant, subject to the rights of Landlord's lender, such
insurance proceeds as may be available to Landlord pursuant to the damage or
destruction of the Premises. Rent will be abated proportionately from the date
Tenant vacates the Premises only to the extent of rental abatement insurance
received by Landlord and only during the period that the Premises are unfit
for Tenant's use, provided, however, that such abatement shall not exceed a
period equal to the sum of twelve (12 ) months, whether or not the Premises
are fully repaired at the expiration of such period.
(iii) Damage in Final Lease Year. If the Premises or Tenant Improvements are
so damaged by casualty occurring in the final Lease Year that rebuilding or
repairs cannot be completed within sixty (60) days after notice, Landlord or
Tenant may terminate by giving written notice within thirty (30) days after
notice regarding the time period of repair, provided, however, that this
Section 12(a)(iii) shall be inapplicable if within such thirty (30) day period
for giving notice Tenant gives Landlord written notice exercising any right of
Tenant to extend the Lease Term as provided in Paragraph 40 below, which
Tenant shall have the right to do even if such exercise notice would otherwise
be premature under Paragraph 40 below. In the event, of termination under
this Section 12(a)(iii), this Lease and the Rent will be abated from the date
Tenant vacates the Premises. If neither party so elects to terminate this
Lease when this Subparagraph 12(a)(iii) is applicable, then the Premises shall
be repaired as provided in Subparagraph 12(a)(ii).
(iv) Total Destruction. If the Shell Improvements are so damaged that
rebuilding or repairs cannot be completed within one (1) year of the damage or
destruction, or the Premises are greater than fifty percent (50%) destroyed
either in terms of reconstruction cost to fair market value or total square
footage, either Landlord or Tenant may terminate this Lease by giving written
notice within thirty (30) days after such destruction, Rent will be abated
from the date Tenant vacates the Premises, Landlord shall provide Tenant with
any insurance proceeds actually received by Landlord allocable to the damaged
Tenant Improvements and Alterations and all rights and obligations will then
cease and terminate under this Lease. Tenant shall have no rights to rebuild
the Premises in the event of Landlord termination under this subsection
12(a)(iv). In the event neither party terminates the Lease due to a total
destruction, the Premises shall be repaired as provided in 12(a)(ii).
(b) Uninsured Casualty. Tenant is responsible for and will pay to Landlord any
deductible amount under the property insurance for the Premises up to a
maximum of Ten Thousand Dollars ($10,000). If any portion of the Premises is
damaged and is not fully covered by insurance proceeds received by Landlord
for any reason other than Landlord's failure to obtain insurance as required
under Section 7(b) (and Tenant elects not to pay any difference) or if the
holder of any indebtedness secured by the Premises requires that Xxxxxxxx's
insurance proceeds be applied to the indebtedness, Landlord will have the
right to terminate this Lease by delivering written notice of termination to
Tenant within thirty (30) days after the date of Xxxxxx's notice to Landlord
under 12(a). All rights and obligations will then cease and terminate under
this Lease, provided, however, that, (i) Landlord shall provide Tenant with
any insurance proceeds actually received
28
by Landlord (or received by any Landlord lender with senior lien rights to
this Lease) allocable to the damaged Tenant Improvements and Alterations; and
(ii) subject to the rights of any Landlord lender with senior lien rights to
this Lease, Tenant shall have the right to exercise any right to rebuild the
Premises at Tenant's cost, and without the contribution of insurance proceeds,
to the extent that Tenant would otherwise maintain such right under
12(a)(ii)(bb) above.
(c) Waiver. With respect to any damage or destruction that Landlord is
obligated to repair or may elect to repair, Landlord and Tenant waive all
rights to terminate this Lease pursuant to rights otherwise presently or later
accorded by law.
Section 13. Eminent Domain.
(a) Total Condemnation. If all of the Premises are condemned by eminent
domain, inversely condemned, or sold in lieu of condemnation for any public or
quasi-public use or purpose, this Lease will terminate as of the earlier of
the date that possession is taken of the Premises or the date of title vesting
in the acquiring agency and the Rent will be abated from the date of
termination.
(b) Partial Condemnation. If any portion of the Premises is condemned by
eminent domain, inversely condemned, or sold in lieu of condemnation for any
public or quasi-public use or purpose and the partial condemnation renders the
Premises unusable for Tenant's business, this Lease will terminate as of the
earlier of the date that possession is taken of the Premises or the date of
title vesting in the acquiring agency and the Rent will be abated to the date
of termination. If the partial condemnation does not render the Premises
unusable for the business of Tenant and less than a substantial portion of the
Premises is condemned, Landlord must promptly restore the Premises to the
extent of any condemnation proceeds recovered by Landlord, excluding the
portion lost in the condemnation, and this Lease will continue in full force,
except that after the date of the title vesting, the Rent will be reduced as
follows: if the partial condemnation affects only the Premises and not the
Common Area, Rent shall be reduced proportionately to the area of the Premises
taken, or if any portion of the Common Area is taken then the Rent and any
Common Area Expenses shall be equitably reduced, as reasonably determined by
Landlord. If the condemnation of Common Area reduces the number of parking
spaces available to Tenant below the minimum number of spaces required by the
City of Redwood City for the Premises, unless Landlord provides reasonably
satisfactory alternate parking for the lost spaces, Tenant's annual rent shall
be reduced, to compensate for such loss, in an amount equal to the award paid
by the condemning authority for that number of parking spaces below the
minimum number of spaces required by the City of Redwood City which are taken,
amortized over a thirty (30) year period using a nine percent (9%) interest
rate.
(c) Award. If the Premises are wholly or partially condemned, Landlord will be
entitled to the entire award paid for the condemnation of the Real Property
and Shell Improvements. Tenant shall be entitled to recover from the
condemning authority any award for the taking of the unamortized or
undepreciated value of the Tenant Improvements, Alterations and Tenant's trade
fixtures and equipment owned by Tenant, paid for by Tenant and not removed
from the
29
Premises. Tenant will also have the right to recover from the condemning
authority the value of any compensation that may be separately awarded to
Tenant in connection with costs in removing Tenant's Alterations, trade
fixtures, equipment, merchandise and furniture to a new location, loss of
goodwill and relocation costs under Government Code section 7262.
(d) Temporary Condemnation. In the event of a temporary condemnation, this
Lease will remain in effect, Xxxxxx will continue to pay Rent, and Xxxxxx will
receive any award made for the condemnation. If a temporary condemnation
remains in effect at the expiration or earlier termination of this Lease,
Tenant will pay Landlord the reasonable cost of performing any obligations
required of Tenant with respect to the surrender of the Premises. If a
temporary condemnation is for a period that extends beyond the Lease Term,
this Lease will terminate as of the date of occupancy by the condemning
authority (unless the taking is for a period shorter than the remaining
extension of the Lease Term and Tenant elects to exercise the remaining
extension), and any award will be distributed in accordance with Section 13(c).
Section 14. Default.
(a) Events of Default. The occurrence of any of the following events will, at
Landlord's option, constitute an event of default ("Event of Default"):
(i) failure to pay Rent on the date when due, the failure continuing for a
period of five (5) days after written notice to Tenant (given as provided in
this Lease) that payment is due; which five-day notice shall be in lieu of and
satisfy the requirements of the notice otherwise required by Code of Civil
Procedure section 1161 or any similar successor statute;
(ii) abandonment of the Premises as defined under California Civil Code
Section 1951.3;
(iii) failure to perform Tenant's covenants under this Lease (except default
in the payment of Rent); provided that if this default is susceptible of cure
and Tenant has promptly commenced the cure of this default and is diligently
prosecuting the cure to completion, then the default must remain uncured for
thirty (30) days after written notice from Landlord;
(iv) the making of a general assignment by Xxxxxx for the benefit of
creditors, the filing of a voluntary petition by Xxxxxx, or the filing of an
involuntary petition by any of Tenant's creditors seeking the rehabilitation,
liquidation, or reorganization of Tenant under any law relating to bankruptcy,
insolvency, or other relief of debtors and, in the case of an involuntary
action, the failure to remove or discharge the petition within sixty (60) days
of the filing, the appointment of a receiver or other custodian to take
possession of substantially all of Tenant's assets or this leasehold, Xxxxxx's
insolvency or inability to pay Tenant's debts or failure generally to pay
Xxxxxx's debts when due, any court entering a decree or order directing the
winding up or liquidation of Tenant or substantially all of Tenant's assets,
Xxxxxx taking any action toward the dissolution or winding up of Tenant's
affairs, or the attachment, execution, or other judicial seizure of
substantially all of Tenant's assets or this leasehold; or
30
(v) the knowing or intentional making of any material misrepresentation or
omission by Tenant in any materials delivered by or on behalf of Tenant to
Landlord pursuant to this Lease.
(b) Remedies.
(i) Termination. In the event of the occurrence of any Event of Default,
Landlord will have the right to give a written termination notice to Tenant
and, on the date specified in that notice, this Lease will terminate unless on
or before that date all arrears of Rent and all other sums payable by Tenant
under this Lease and all costs and expenses incurred by or on behalf of
Landlord have been paid by Xxxxxx and all other Events of Default at the time
existing have been fully cured to the satisfaction of Landlord.
(A) Repossession. Following termination, without prejudice to other remedies
Landlord may have, Landlord may (1) peaceably re-enter the Premises on
voluntary surrender by Xxxxxx; (2) remove Tenant and any other persons
occupying the Premises, using any legal proceedings that may be available; (3)
repossess the Premises or relet the Premises or any part of them for any term
(which may be for a term extending beyond the Term), at any rental and on any
other terms and conditions that Landlord in Landlord's sole discretion may
determine, with the right to make reasonable alterations and repairs to the
Premises; and (4) remove all personal property.
(B) Unpaid Rent. Landlord will have all the rights and remedies of a landlord
provided by applicable law, including the right to recover from Tenant (1) the
worth, at the time of award of the unpaid Rent that had been earned at the
time of termination; (2) the worth, at the time of award, of the amount by
which the unpaid Rent that would have been earned after the date of
termination until the time of award exceeds the amount of loss of rent that
Tenant proves could have been reasonably avoided; (3) the worth, at the time
of award, of the amount by which the unpaid Rent for the balance of the Term
after the time of award exceeds the amount of the loss of rent that Tenant
proves could have been reasonably avoided; and (4) any other amount, and court
costs, necessary to compensate Landlord for all detriment proximately caused
by Xxxxxx's default (including reasonable attorneys fees and costs). The
phrase "worth, at the time of award," as used in clauses (1) and (2) above,
will be computed at the greater of ten percent (10%) per annum or five percent
(5%) per annum plus the federal discount rate on advances to member banks in
effect at the Federal Reserve Bank of San Francisco on the 25th day of the
month preceding the date of the Lease, and as used in clause (3) above, will
be computed by discounting that amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1%).
(ii) Continuation. Even though an Event of Default may have occurred, this
Lease will continue in effect for so long as Landlord does not terminate
Tenant's right to possession. Also, Landlord may enforce all of Landlord's
rights and remedies under this Lease, including the right to recover Rent as
it becomes due, and Landlord, without terminating this Lease, may, during the
period Tenant is in default, enter the Premises and relet them, or any portion
of them, to third parties for Tenant's account. Tenant will be liable to
Landlord for all costs Landlord incurs in reletting the Premises, including,
without limitation, brokers' commissions, expenses of remodeling the Premises,
and similar costs. Reletting may be for a period shorter or longer than the
remaining
31
Term. Tenant will continue to pay the Rent on the date that it is due. No act
by Landlord under this Lease, including acts of maintenance, preservation, or
efforts to lease the Premises or the appointment of a receiver on application
of Landlord to protect Landlord's interest under this Lease, will terminate
this Lease unless Landlord notifies Tenant that Landlord elects to terminate
this Lease. In the event that Landlord elects to relet the Premises, the rent
that Landlord receives from reletting will be applied to pay the following in
the order listed:
(A) any indebtedness from Tenant to Landlord other than Base Rent, Real
Property Taxes, and other amounts owing to Landlord under this Lease;
(B) all costs, including maintenance, incurred by Landlord in reletting and
payable by Xxxxxx xxxxxxxxx; and
(C) Base Rent, Real Property Taxes, and other amounts owing to Landlord under
this Lease.
After deducting the payments referred to above, any sum remaining from the
rental Landlord receives from reletting will be held by Landlord and applied
in payment of future Rent as Rent becomes due under this Lease. In no event
will Tenant be entitled to any excess rent received by Landlord. If, on the
date Rent is due under this Lease, the rent received from the reletting is
less than the Rent due on that date, Tenant will pay to Landlord, in addition
to the remaining Rent due, all costs, including maintenance, that Landlord
incurred in reletting that remain after applying the rent received from
reletting. So long as this Lease is not terminated, Landlord will have the
right to remedy any default of Tenant, to maintain or improve the Premises, to
cause a receiver to be appointed to administer the Premises and new or
existing subleases, and to add to the Rent all of Landlord's reasonable costs
in so doing, with interest at the Applicable Interest Rate from the date of
the expenditure.
(c) Cumulative. Each right and remedy of Landlord provided for in this Lease
or now or later existing at law, in equity, by statute, or otherwise, will be
cumulative and will not preclude Landlord from exercising any other rights or
remedies provided for in this Lease or now or later existing at law or in
equity, by statute, or otherwise. No payment by Tenant of a lesser amount than
the Rent, or any endorsement on any check or letter accompanying any check or
payment as Rent, will be deemed an accord and satisfaction of full payment of
Rent. However, Landlord may accept this payment without prejudice to
Landlord's right to recover the balance of Rent or to pursue other remedies.
Section 15. Assignment and Subletting.
(a) Tenant will not assign the Lease or sublet, whether voluntarily or
involuntarily or by operation of law, the Premises or any part of the Premises
without Landlord's prior written approval, which will not be unreasonably
withheld, delayed or conditioned. If Tenant desires to assign this Lease or
sublet any or all of the Premises, Tenant must, as soon as reasonably
possible, and in any event no less than twenty (20) days prior to the
anticipated effective date transfer, give Landlord written notice of the
anticipated effective date of the assignment or
32
sublease. Landlord will have a period of ten (10) business days following
receipt of notice from Tenant requesting Xxxxxxxx's approval (and providing to
Landlord copies ) of all related documents and agreements associated with the
assignment or sublease, including, without limitation, the financial
statements of any proposed assignee or subtenant, to notify Tenant in writing
that Landlord elects (a) to permit Tenant to assign this Lease or sublet
space, subject however to Landlord's prior written approval (not to be
unreasonably withheld, delayed or conditioned) of the proposed assignee or
subtenant and of any related documents or agreements associated with the
assignment or sublease received by Landlord or reasonably requested by
Landlord; or (b) to disapprove the proposed assignment or subletting. If
Xxxxxx's notice requesting approval of such documents contained a prominent
statement in solid capital letters stating, in substance, "WARNING: FAILURE TO
RESPOND TO THIS NOTICE WITHIN TEN (10) BUSINESS DAYS OF RECEIPT SHALL RESULT
IN DEEMED APPROVAL OF ASSIGNMENT OR SUBLETTING", and Xxxxxx has written
evidence of receipt of such notice by the acting President or agent for
service of process of Landlord, and Landlord fails to notify Tenant in writing
of the election within ten (10) business days of such receipted notice,
Landlord will be deemed to have elected option (a); if Xxxxxxxx's notice
contained no such statement Landlord will be deemed to have elected option
(b). It shall be reasonable for Landlord to object to any transferee due to
the transferee's intended use of the Premises if such use would impose
additional burdens on the Project with respect to traffic, Hazardous Materials
or vocal public opposition. In any analysis of the financial statements of a
proposed subtenant, Landlord shall take into account the fact that Tenant
shall remain liable under the Lease following the subletting. This Lease may
not be assigned by operation of law. Any purported assignment or subletting
contrary to the provisions of this Lease will be void. If Tenant receives rent
or other consideration for any transfer in excess of the Rent, or in case of
the sublease of a portion of the Premises, in excess of the Rent that is
proportionately allocable to that portion based on the area of such portion
and the Premises, after appropriate adjustments to assure that all other
required payments are appropriately taken into account, Tenant will pay
Landlord fifty percent (50%) of the difference between each payment of rent or
other consideration and the required Rent (such payments to commence only
after recovery by Xxxxxx, from such excess, of reasonable brokerage fees or
alterations costs paid by Tenant in connection with such assignment or
subletting). Landlord may, without waiving any rights or remedies, collect
rent from the assignee, (and in the event of any Tenant default, from any
subtenant, or occupant), and apply the net amount collected to the Rent
reserved here and apportion any excess rent collected in accordance with the
terms of the preceding sentence. Tenant will continue to be liable as a
principal and not as a guarantor or surety to the same extent as though no
assignment or subletting had been made. No permitted transfer will be
effective until there has been delivered to Landlord a counterpart of the
transfer instrument in which the transferee agrees that such transfer is
subject to all of the terms and conditions of this Lease and acknowledging the
right of Landlord hereunder to collect rent directly from such transferee as
provided herein. Tenant will not do any act that will in any way encumber the
title of Landlord to the Premises or the Project.
(b) Notwithstanding any other provision of this Lease to the contrary,
Xxxxxxxx's consent shall not be required for any assignment of the Lease or
subletting of the Premises to an Affiliate (as defined below) of Tenant,
provided that Landlord is given advance written notice of the assignment or
subletting and there has been delivered to Landlord a counterpart of the
instrument
33
in which the subtenant or assignee agrees to be and remain jointly and
severally liable with Tenant for the payment of Rent pertaining to the space
transferred for the term of the transfer and for the performance of all the
terms and provisions of this Lease arising under the sublease or on or after
the date of the assignment. An Affiliate shall be any entity that controls,
is controlled by, or is under common control with Tenant, or which results
from the transfer of all or substantially all of Tenant's assets or stock, or
results from the merger or consolidation of Tenant with another entity.
Control means the direct or indirect ownership of more than 25% of the voting
securities or management rights of an entity if its securities are publicly
traded, and 50% of the voting securities or management rights of an entity if
its securities are not publicly traded. No merger or consolidation of Tenant
with another entity or transfer of any less than a controlling portion of
ownership interests, securities or stock in Tenant shall be deemed to be an
assignment of this Lease.
Section 16. Estoppel.
Within ten (10) days after request by Xxxxxxxx, Xxxxxx will deliver an
estoppel certificate duly executed (and acknowledged, if required by any
lender) in the form of attached Exhibit J, noting any exceptions to the
statements contained therein, to any proposed mortgagee, purchaser, or
Landlord. Xxxxxx's failure to deliver this statement in that time period will
be an Event of Default under this Lease and it will be conclusive on Tenant
that (a) this Lease is in full force and effect, without modification except
as may be represented by Landlord; (b) there are no uncured defaults in
Landlord's performance and Tenant has no right of offset, counterclaim, or
deduction against Rent; and (c) no more than one period's Base Rent has been
paid in advance. Landlord reserves the right to substitute a different form of
estoppel certificate requiring substantially the same information from Tenant
on the request of any proposed mortgagee or purchaser.
Section 17. Attornment.
In the event of a foreclosure proceeding, the exercise of the power of sale
under any mortgage or deed of trust or the termination of a ground lease,
Tenant will, if requested, attorn to the purchaser and recognize that
purchaser as Landlord under this Lease. However, Xxxxxx's obligation to attorn
to the purchaser will be conditioned on Xxxxxx's receipt of a reasonable and
customary nondisturbance agreement.
Section 18. Subordination.
Tenant agrees to enter into financing industry standard Subordination,
Attornment and Non-Disturbance agreements required for this Lease to be made
subject and subordinate to the lien of all mortgages and deeds of trust that
hereafter affect the Premises or the Real Property. This Lease is subject to
those liens, ground leases or exceptions to title listed as Exceptions 1
through 12 in that Title Policy for the Real Property dated April 29, 1997,
and to all subdivision maps of the Project and any AREA on the Project.
Xxxxxxxx agrees and shall reasonably assure that none
34
of such Exceptions 1 through 12 or such maps or AREA shall materially
interfere with the proposed use of the Real Property and the Premises as shown
on the Preliminary Plans (defined in Exhibit C) and as provided in this Lease,
including, without limitation, Tenant's parking and access rights under this
Lease. Tenant will execute such standard documentation as may be required to
further effect the provision of this paragraph provided such documentation
provides that, so long as Tenant is not in default hereunder, Xxxxxx's right
to occupy the Premises under this Lease shall not be disturbed. Landlord
represents that there are no existing ground lessors of the Premises, or
holders of liens on the Real Property or Adjacent Real Property as of the date
of this Lease except R&H. For the benefit of Tenant, within twenty (20) days
after execution of this Lease, a fully executed Subordination and
Non-Disturbance Agreement between Tenant and R&H ("R&H SAND") regarding the
senior lien against the Real Property, in form reasonably satisfactory to
Landlord and Tenant, shall be attached hereto as Exhibit J-1.
Section 19. Entry.
Landlord reserves the right to enter the Premises upon reasonable advance
notice to Tenant (except in case of an emergency, in which case no notice
would be required) to inspect the Premises or the performance by Tenant of the
terms and conditions of this Lease, and, during the last twelve (12) months of
the Term, show the Premises to prospective tenants.) Tenant shall have the
reasonable opportunity to accompany Landlord at all times during any entry,
and such entry shall be in a manner to minimize the inconvenience on Tenant's
business in the Premises and to reasonably preserve the confidentiality of
Tenant's proprietary information.
Section 20. Late Charges and Interest.
The late payment of any Rent will cause Landlord to incur additional costs,
including administration and collection costs, processing and accounting
expenses, and increased debt service. If Landlord has not received any
installment of Rent within five (5) days after that amount is due, Tenant must
pay five percent (5%) of the delinquent amount, which is agreed to represent a
reasonable estimate of the cost incurred by Landlord. In addition, all
delinquent amounts will bear interest from the date the amount was due until
paid in full at a rate per annum ("Applicable Interest Rate") equal to the
greater of (a) five percent (5%) per annum plus the then federal discount rate
on advances to member banks in effect at the Federal Reserve Bank of San
Francisco on the 25th day of the month preceding the date of this Lease or (b)
ten percent (10%). However, in no event will the Applicable Interest Rate
exceed the maximum interest rate permitted by law that may be charged under
the circumstances. Landlord and Xxxxxx recognize that the damage that Landlord
will suffer in the event of Xxxxxx's failure to pay these amounts is difficult
to ascertain and the late charge and interest are the best estimate of the
damage that Landlord will suffer in the event of late payment.
Section 21. Security
35
(a) Security Deposit. Upon the execution of this Lease, Xxxxxx will pay to
Landlord the Security Deposit. The Security Deposit will secure the full and
faithful performance of each provision of this Lease to be performed by
Xxxxxx. Landlord may use and commingle the Security Deposit with other funds
of Landlord. The Security Deposit shall be returned to Tenant at the
expiration of the Lease Term, provided that if Tenant fails to perform any of
Tenant's obligations under this Lease, Landlord may apply all or any portion
of the Security Deposit toward fulfillment of Xxxxxx's unperformed
obligations. If Landlord does apply the Security Deposit, Tenant must
immediately pay Landlord sufficient cash to restore the Security Deposit to
the full original amount. The Security Deposit will not bear interest. If
Landlord disposes of its interest in the Premises, Landlord may deliver or
credit the Security Deposit to Xxxxxxxx's successor in interest in the
Premises and thereupon be relieved of further responsibility with respect to
the Security Deposit.
(b) Security. Upon execution of this Lease, Tenant shall provide Landlord
with the Security. The Security will secure the full and faithful performance
of each provision of this Lease to be performed by Xxxxxx. If Tenant fails to
perform any of Tenant's obligations under this Lease, Landlord may draw down
that portion of the Security under the terms set forth therein to fulfill
Tenant's unperformed obligations. If Landlord does apply the Security, Tenant
must within thirty (30) days thereafter replenish the Security to the amount
required to be maintained at the time of the drawdown. The maximum amount,
and terms for reduction of the amount of the Security are set forth in that
certain confidential letter agreement executed between Landlord and Tenant of
even date herewith and incorporated herein by reference.
Section 22. Entire Agreement.
This Lease, all Exhibits hereto contained in the Exhibit Document of even date
herewith and the confidential side letter executed between Landlord and Tenant
of even date herewith set forth all the agreements between Landlord and Tenant
concerning the Premises, and there are no other agreements, either oral or
written, other than as set forth in this Lease.
Section 23. Time of Essence.
Time is of the essence in this Lease.
Section 24. Attorney Fees.
In any action that either party brings to enforce rights under this Lease, the
unsuccessful party will pay all costs incurred by the prevailing party,
including reasonable attorney fees (including costs and expert fees), to be
fixed by the court. Those costs and attorney fees will be considered a part of
the judgment in that action.
36
Section 25. Severable.
If any provision of this Lease or the application of any provision is held by
a court of competent jurisdiction to be invalid, void, or unenforceable to any
extent, the remaining provisions of this Lease and the application of it will
remain in full force and will not be affected, impaired, or invalidated.
Section 26. Governing Law.
This Lease will be construed and enforced in accordance with the laws of the
state in which the Premises are located.
Section 27. No Option.
Submission of this Lease to Tenant for examination or negotiation does not
constitute an option to lease, offer to lease, or a reservation of, or option
for, the Premises. This document will become effective and binding only upon
the execution and delivery of the document by Xxxxxxxx and Xxxxxx.
Section 28. Successors and Assigns.
This Lease will be binding on and inure to the benefit of the successors and
assigns of Landlord and, to the extent assignment is approved by Landlord,
Tenant.
Section 29. No Third-Party Beneficiaries.
Nothing in this Lease is intended to create any third-party benefit.
Section 30. Memorandum of Lease and Quitclaim.
Prior to recordation of any trust deed, mortgage lien or ground lease on the
Property except the existing trust deed in favor of R&H, Landlord shall record
a short form memorandum of this Lease, in form attached as Exhibit L, to
which Exhibit A shall be attached. Upon the expiration or earlier termination
of this Lease, Tenant shall provide Landlord with a duly executed and
acknowledged quitclaim of all of Tenant's rights in and to the Premises in
form satisfactory for recording in the county in which the Premises are
located.
37
Section 31. No Agency, Partnership, or Joint Venture.
Nothing contained in this Lease will be deemed or construed by the parties, or
by any third party, as creating the relationship of principal and agent,
partnership, or joint venture by the parties. It is understood and agreed that
no provision contained in this Lease or any acts of the parties will be deemed
to create any relationship other than the relationship of landlord and tenant.
Section 32. No Merger.
The voluntary or other surrender of this Lease by Tenant or a mutual
cancellation of the Lease or a termination by Landlord will not work a merger
and will, at the option of Landlord, unless otherwise agreed with Tenant,
terminate all of any existing subtenancies or may, at the option of Landlord,
operate as an assignment to Landlord of any subtenancies.
Section 33. Signs.
Landlord shall prepare a signage program for the Real Property which
reasonably addresses input from Tenant and which shall apply to the Real
Property. Tenant shall prepare a signage program for the Premises for
presentation to Landlord for approval upon execution of this Lease. Tenant's
signage program shall conform to Landlord's signage program. Xxxxxxxx's
approval of Xxxxxx's signage program shall not be unreasonably withheld,
delayed or conditioned. Subject to Tenant acquiring all governmental permits
and approvals required by all applicable governmental laws, ordinances, and
regulations, Tenant shall have the right, at Tenant's sole cost and expense,
to install company identification signs on, and a monument sign adjacent to,
the exterior of the Shell Improvements. All signs and graphics of every kind
visible from public view, corridors, or the exterior of the Premises will be
in compliance with Landlord's and Tenant's approved signage program and
otherwise subject to Landlord's prior written approval and will be subject to
any applicable governmental laws, ordinances, and regulations. Tenant must
remove all signs and graphics prior to the termination of this Lease.
Installations and removals must be made in a manner so as to avoid injury or
defacement of the Premises. Tenant must repair any injury or defacement,
including, without limitation, if reasonably possible discoloration caused by
installation or removal.
Section 34. No Waiver.
No waiver of any default or breach under this Lease will be implied from any
omission to take action on account of this Lease, regardless of any custom and
practice or course of dealing. No waiver will affect any default other than
the default specified in the waiver, and then the waiver will be operative
only for the time and to the extent stated in the Lease. Waivers of any
covenant will not be construed as a waiver of any subsequent breach of the
same covenant. No waiver by either party of any provision under this Lease
will be effective unless in writing and signed by
38
that party.
Section 35. Financial Statements.
Tenant will provide to any lender, purchaser, or Landlord, within ten (10)
days after request, a current, accurate, certified financial statement for
Tenant and Xxxxxx's business prepared under generally accepted accounting
principles consistently applied and any other certified financial information
or tax returns as may be reasonably required by Landlord, purchaser, or any
lender of either. Tenant may satisfy this requirement by providing Landlord
with a copy of Tenant's current Form 10K or Form 10Q as required to be filed
with the Securities and Exchange Commission.
Section 36. Limitation of Liability.
The obligations of Landlord under this Lease are not personal obligations of
the individual members, partners, directors, officers, shareholders, agents,
or employees of Landlord. Tenant shall look solely to the Premises and Real
Property, and to any insurance proceeds from insurance actually carried under
this Lease for satisfaction of any liability or for property damage and may
not look to other assets of Landlord or seek recourse against the assets of
the individual members, partners, directors, officers, shareholders, agents,
or employees of Landlord. Landlord agrees that any future leases of the
Adjacent Real Property shall contain similar provisions limiting Landlord's
liability to tenants of the Adjacent Real Property to that tenant's premises
and the Adjacent Real Property to the exclusion of the Real Property unless
otherwise equitably provided in any AREA. Except as provided in Paragraph 21,
whenever Landlord transfers Landlord's interest, Landlord will be
automatically released from further performance under this Lease and from all
further liabilities and expenses under this Lease (excepting only unperformed
obligations arising prior to such transfer, as to which Landlord shall
continue to be liable for claims made no more than six (6) months following
such transfer and only to the extent of the actual proceeds from sale or
transfer of the Premises) and Landlord shall cause the transferee of
Landlord's interest to agree in writing to assume all liabilities and
obligations of Landlord under this Lease from the date of the transfer. The
foregoing notwithstanding, nothing herein shall limit Landlord's liability for
Landlord's fraudulent misappropriation of insurance proceeds or all or any
portion of the Security or Security Deposit.
Section 37. Notices.
All notices to be given under this Lease will be in writing and mailed,
postage prepaid, by certified or registered mail, return receipt requested, or
delivered by personal or courier delivery, or sent by telecopy (immediately
followed by one of the preceding methods), to Landlord's Address and Xxxxxx's
Address, or to any other place that Landlord or Tenant may designate in a
written notice given to the other party. Notices will be deemed served on the
earlier of receipt or three (3) days after the date of mailing.
39
Section 38. Brokerage Commission.
Xxxxxxxx will pay a brokerage commission to Broker in accordance with a
separate agreement between Landlord and Broker. Tenant warrants to Landlord
that Xxxxxx's sole contact with Landlord or with the Premises in connection
with this transaction has been directly with Landlord and Broker, and that no
other broker or finder can properly claim a right to a commission or a
finder's fee based on contacts between the claimant and Tenant other than Tory
Corporate Real Estate Advisors (d.b.a. The Staubach Company) who are to be
paid by Xxxxxx from the commission paid by Landlord to Broker. Tenant and
Landlord, respectively, will each indemnify, defend by counsel acceptable to
the other, protect, and hold each other harmless from any loss, cost, or
expense, including, but not limited to, attorney fees and cost, resulting from
any claim for a fee or commission by any broker or finder in connection with
the Premises and this Lease other than Broker.
Section 39. Authorization.
Tenant will furnish to Landlord, within thirty (30) days after written
request, evidence satisfactory to Landlord that the person who executed this
Lease on behalf of Xxxxxx was duly authorized to do so. Each individual
executing this Lease on behalf of Tenant represents and warrants that she or
he is duly authorized to execute and deliver this Lease on behalf of Tenant
and that the execution is binding upon Tenant. Landlord will furnish to
Tenant, within thirty (30) days after written request, evidence satisfactory
to Tenant that the person who executed this Lease on behalf of Landlord was
duly authorized to do so. Each individual executing this Lease on behalf of
Landlord represents and warrants that she or he is duly authorized to execute
and deliver this Lease on behalf of Landlord and that the execution is binding
upon Landlord.
Section 40. Extension Option.
(a) Landlord grants to Tenant two (2) options to renew the Lease for a period
of five (5) years (each an "Extension Period"). Xxxxxx's privilege to
exercise this option is expressly conditioned upon there being no Tenant Event
of Default at the time the option is exercised, and there being no Tenant
Event of Default between the time the option is exercised and the start of the
Extension Period.
(b) Provided there is no Tenant Event of Default, Tenant shall have the right
to extend the Term upon tendering written notice ("Extension Notice") to
Landlord no later than ten (10) months prior to the expiration of the Term.
All terms and conditions of this Lease shall continue during the Extension
Period, provided that during the Extension Period, the Monthly Rent shall be
adjusted to the Fair Market Rent as of the start of the Extension Period.
(c) As used in this Lease, "Fair Market Rent" shall be deemed to mean the base
amount of rental
40
that would typically be paid by a tenant under a net lease (exclusive of all
other sums payable by Tenant under a net lease such as taxes, insurance
premiums, common area maintenance charges, utilities, repair and restoration
costs, and similar charges) for premises of a similar type, design, and
quality as the Shell Improvements, in the same or similar-quality geographic
area in the mid Peninsula, Highway 101 corridor market area in which the
Premises are situated under market leasing conditions existing at that time in
the mid Peninsula, Highway 101 corridor market area and taking into account
the presence, if any, of other escalation provisions and other Tenant payment
provisions in this Lease, and Landlord's obligations, or limitations on same,
in this Lease. In determining the Fair Market Rent for the Premises as of the
commencement of the extension term, the parties or the appraiser(s) shall
consider leases of comparable Shell Improvements for light industrial and
office purposes, which shall be leases of comparable length for space that is
comparable in size, location, and type of building, and is comparable to the
age, quality, layout and condition of the Shell Improvements, with comparable
parking rights and landscaping. Leases of comparable space that are not
arms-length negotiated leases (as with a tenant that owns equity in a
building) or are subleases shall not be considered in determining the Fair
Market Rent. The Fair Market Rent for the Premises shall not include any rent
attributable to Tenant's Tenant Improvements, Tenant's Alterations, or Shell
Upgrades the amortized value of which have been added to Base Rent or any
other improvements theretofore made or paid for by Tenant (whether by
amortization during the initial Lease Term or otherwise), and the rent shall
take into account whether there is any brokerage commission payable by
Landlord upon the lease extension. If necessary to determine a comparable
rental, the parties or the appraiser(s) shall appropriately adjust rentals in
comparable leases to back out leasehold improvements or allowances, rental
abatements or other Landlord concessions, and any other factors that bear on
comparability of such comparable lease to this Lease of the Shell
Improvements, to arrive at a rental as comparable as possible for an "as is"
lease of the Shell Improvements in their then condition (excluding all
improvements paid for by Tenant including Shell Upgrades) for a five (5) year
term without leasehold improvements or other concessions by Landlord.
(d) If Landlord and Tenant cannot agree on the Fair Market Rent within thirty
(60) days after the date of the Extension Notice (but in any case no earlier
than eight (8) months prior to the expiration of the Term), the Monthly Rent
payable during the Extension Period shall be conclusively determined as
follows:
(i) Within thirty (30) days after Tenant's Extension Notice, Landlord
shall give Tenant written notice of the date by which each party must appoint
an appraiser under this Section, which shall be (10) days after the later of
(A) expiration of the sixty (60) day period in Section 40(d) or (B) the date
eight (8) months prior to the expiration of the Term. By the date stated in
Xxxxxxxx's notice, each party, at its cost and by giving notice to the other
party, shall appoint a real estate appraiser with at least five (5) years'
full-time commercial appraisal experience in the geographic area in which the
Premises are located, to appraise and determine the then Fair Market Rent as
described in Section 40(c).
(ii) If one party does not appoint an appraiser within the time period in
Section 40(d)(i), the appraiser appointed by the other party shall be the sole
appraiser and shall determine the Fair Market Rent. Notwithstanding this
Section, either party shall have the right to appoint a
41
replacement appraiser if the appraiser originally selected becomes unable to
perform as required hereunder.
(iii) If neither party appoints an appraiser within the time period set
forth in Section 40(d)(i), the Minimum Monthly Rent during the Extension
Period shall be increased five percent (5%) over the Monthly Rent payable in
the last full month immediately preceding the Rent Determination Date.
(iv) If the two (2) appraisers are so appointed by the parties, they
shall meet promptly and attempt to appraise and determine the Fair Market
Rent. If they are unable to agree within thirty (30) days after the second
appraiser has been appointed, they shall attempt to select a third appraiser
who meets the qualifications stated in Section 40(d)(i) within thirty (30)
days after the last day the two appraisers are given to determine the Fair
Market Rent. If they are unable to agree on a third appraiser, either of the
parties to this Lease, by giving ten (10) days' notice to the other party, can
apply to the presiding judge of the Superior Court for the county in which the
Premises are located for the selection of a third appraiser who meets the
qualifications stated in Section 40(d)(i). Each of the parties shall bear
one-half (1/2) of the cost of appointing the third appraiser and of the third
appraiser's fees, provided, however, that if the parties' respective
determinations of Fair Rental Value differ by more than five percent (5%) of
the lower value, the party whose determination is rejected by the third
appraiser shall pay or reimburse the other party for the third appraiser's
fees and costs. The third appraiser, however selected, shall be a person who
has not previously acted in any capacity for either party.
(v) Within thirty (30) days after appointment of the third appraiser,
each party's appraiser shall submit to the third appraiser a written statement
of such appraisers determination of the Fair Market Rent of the Shell
Improvements, determined as provided in this Lease, together with written
information relating to comparable transactions and adjustments thereto used
in making such determination, and a copy of such submission shall be provided
to the other party. Within fifteen (15) days thereafter , each party shall
have the right to submit a response to the other party's submission. Within
thirty (30) days after the last of such responses are received, the third
appraiser shall select either the Fair Market Rent determined by Landlord's
appraiser or the Fair Market Rent determined by Tenant's appraiser as the
Fair Market Rent. If the third party appraiser considers information not
submitted by either party in making such determination, the third party
appraiser shall advise each of the parties' appraisers and permit them to
comment on such information before making such determination. The third
appraiser may not determine a Fair Market Rent other than a Fair Market Rent
submitted by one of the parties. The Fair Market Rent chosen by the third
appraiser shall be the Fair Market Rent during the Term of the extension.
(e) After the Fair Market Rent is determined, Landlord and Tenant shall
execute an Amendment to this Lease setting forth the Fair Market Rent. The
Amendment shall provide for the addition of unamortized Shell Upgrade Costs to
the determined Fair Market Rent pursuant to Section 3(c) and Section 5(c) of
Exhibit C hereto.
42
Section 41. Holding Over.
If Xxxxxx holds over the Premises or any part of the Premises after expiration
of the Term, the holding over will constitute a month-to-month tenancy, at a
rent equal to the Rent in effect immediately prior to the holding over plus
fifty percent (50%) of the Rent. This paragraph will not be construed as
Landlord's permission for Tenant to hold over. Acceptance of Rent by Landlord
following expiration or termination would not constitute a renewal of this
Lease nor limit Landlord's remedies for actual and consequential damages
resulting from Xxxxxx's hold over. The foregoing notwithstanding, Tenant
shall only be liable to Landlord for any consequential damages resulting from
a Tenant hold over if Landlord advises Tenant by written notice that a third
party tenant intends to occupy the Premises upon the expiration of the Term.
Such notice must be provided at least sixty (60) days prior to Tenant's
required departure if Tenant is to vacate upon expiration of the Term and must
be provided at least thirty (30) days prior to Tenant's required departure if
Tenant is to vacate after the expiration of the Term.
Section 42. Tenant Right to Terminate.
Prior to Landlord's commencement of construction of the Shell Improvements,
Tenant shall have the right to terminate this Lease in the event Landlord has
not completed any of the following conditions on or before the date shown: (i)
Receipt by October 1, 1997 of required zoning and planning approvals necessary
to construct the Shell Improvements from the Planning Department of the City
of Redwood City; (ii) Receipt by November 1, 1997 of a binding lender
commitment for permanent financing of the Premises; (iii) Landlord's good
faith commencement of construction by November 15, 1997.
Section 43. Surrender.
Upon the termination of this Lease or Xxxxxx's right to possession of the
Premises, Xxxxxx will surrender the Premises, together with all keys, in good
condition and repair, reasonable wear and tear, and casualty or condemnation,
or repairs that are Landlord's responsibility excepted. Conditions existing
because of Tenant's failure to perform maintenance, repairs, or replacements
as required under this Lease will not be deemed "reasonable wear and tear.
Section 44. Mortgagee Protection.
Tenant acknowledges that Landlord will seek financing to complete the Project
from a lender ("Mortgagee"). Tenant will reasonably cooperate with Landlord
to obtain such financing, including timely provision of the Security, current
financial reports, subordination, attornment and non-disturbance agreements,
estoppel certificates and such other documents and instruments as Mortgagee or
Landlord may reasonably require which do not materially or adversely affect
Tenant's rights or interests under this Lease. Tenant further covenants that:
43
(a) Tenant will not unreasonably withhold, delay or condition its consent to
Lease amendments reasonably requested by a prospective Mortgagee of Landlord,
as long as the request do not change the rent to be paid by Tenant and do not
materially or adversely affect the Tenant's rights or interests under this
Lease or in the Premises or Common Area.
(b) If Landlord or any Mortgagee shall have delivered to Tenant prior written
notice of the address of any Mortgagee, Tenant will mail to such Mortgagee a
copy of any notice or other communication from Tenant to Landlord under this
Lease at the time of giving such notice or communication to Landlord and no
termination of this Lease or termination of Tenant's obligations under this
Lease predicated on the giving of any notice shall be effective unless Tenant
gives to such Mortgagee written notice or a copy of its notice to Landlord of
such default or termination, as the case may be and reasonable opportunity to
cure any Landlord default permitting such termination.
(c) In the event of any default by Landlord under the provisions of this
Lease, any Mortgagee will have the same rights granted Landlord for remedying
such default or causing it to be remedied, plus, in each case, an additional
period of thirty (30) days (or in the event of a cure which reasonably
requires in excess of thirty days to cure, for such time as Mortgagee is
diligently prosecuting such cure to completion , including, if necessary,
sufficient time to secure rights to the Premises through appointment of a
receiver) after the expiration of the initial period or after Xxxxxx has
served a notice or a copy of a notice of such default upon the Mortgagee,
whichever is later.
(d) No surrender (except a surrender upon the expiration of the term of this
Lease) by Tenant to Landlord of this Lease, or of the Premises, or any part
thereof, or of any interest therein, and no termination of this Lease by
Landlord or Tenant shall be valid or effective, and neither this Lease nor any
of the terms of this Lease may be amended, modified, changed or canceled
without the prior written consent of any Mortgagee who shall have been
previously identified to Tenant in writing by Landlord as having such rights
with respect to this Lease.
Section 45. Right of First Lease Offer.
Landlord hereby grants to Tenant a right of first offer to lease, on the terms
and conditions herein set forth, on all the rentable area located within any
building located or to be constructed on the Adjacent Real Property (the
"First Offer Area"). If, during the term of this Lease, Landlord reasonably
expects that any portion of the First Offer Area shall become available for
lease (as hereinafter defined), and if there is then no Tenant Event of
Default, Landlord shall offer to lease such area to Tenant at the then
prevailing rental rate and terms and conditions (including, without
limitation, allowances for leasehold improvements, or Landlord may quote an
"as is" rental) then offered by Landlord for new leases of comparable space
within such building for a term ending at the expiration of the Lease Term, as
follows: Landlord shall give Tenant written notice describing the additional
area available for lease and stating the terms and conditions (including
anticipated availability date) upon which the First Offer Area is offered for
lease to Tenant. Within ten (10) days after such notice is given, Landlord
shall be available to negotiate with
44
Tenant toward mutually acceptable terms for a lease of the First Offer Area,
and within such time Tenant shall also have the right (provided there is then
no Tenant Event of Default) to accept the offer set forth in Landlord's notice
by written notice to Landlord. If Tenant so exercises its first offer right,
the end of the term of the lease for the First Offer Area shall coincide with
the end of the term of this Lease. The First Offer Area, or any part thereof,
shall be deemed to become available upon expiration or other termination of a
lease to another tenant covering the First Offer Area or any part of it,
taking into account any renewals or extensions of such lease or rights of any
other Tenant of the Adjacent Real Property to such space. Any part of the
First Offer Area which is not leased to another tenant upon execution of this
lease shall not be subject to this right of first refusal upon the initial
lease of such area to another tenant, it being understood that this right of
first refusal shall apply only after such area has been leased to another
tenant and thereafter becomes available as defined above. Landlord and Xxxxxx
shall execute a mutually agreeable "Amendment to Lease" to incorporate the
First Offer Area into the Premises.
Section 46. Joint and Several.
If Tenant consists of more than one person, the obligation of all those
persons will be joint and several.
Section 47. Covenants and Conditions.
Each provision to be performed by Landlord or Tenant under this Lease will be
deemed to be both a covenant and a condition.
In Witness Whereof, the parties have executed this Lease as of the date set
forth above.
"Landlord": CHESTNUT BAY LLC
___________________________________________________________
Xxxx Xxxxxx, President
Date: September 19, 1997
"Tenant": HEARTPORT, INC.
___________________________________________________________
Xxxxx Xxxxxxx Vice President of Manufacturing
Date: September 19, 1997
45
