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EXHIBIT 10.33.1
LEASE AGREEMENT
THIS LEASE AGREEMENT (this "Lease") is entered into effective as of the
22nd day of September, 1999, by and between 99 AF PETALUMA, L.L.C., a Delaware
limited liability company, having its principal office at 00000 Xxxxxx Xxxxxxx,
Xxxxx 000, Xxxxxx, Xxxxx 00000 ("Landlord"), and ADVANCED FIBRE COMMUNICATIONS,
INC., a Delaware corporation, having its principal office at #0 Xxxxxx Xxxxx
Xxxxx, Xxxxxxxx, Xxxxxxxxxx 00000 ("Tenant").
FOR AND IN CONSIDERATION OF the rents and provisions herein stipulated to
be paid and performed, Landlord and Tenant, intending to be legally bound,
hereby covenant and agree as follows:
1. Certain Definitions.
"Additional Rent" shall mean all amounts, costs, expenses, liabilities
and obligations which Tenant is required to pay pursuant to the terms of this
Lease other than Basic Rent.
"Adjoining Property" shall mean all streets and public roadways,
sidewalks, curbs, gores and vault spaces adjoining any of the Leased Premises.
"Alteration" or "Alterations" shall mean any or all changes, additions
(whether or not adjacent to or abutting any then existing buildings), expansions
(whether or not adjacent to or abutting any then existing buildings),
improvements, reconstructions, removals or replacements of any of the
Improvements or Equipment, both interior or exterior, and ordinary and
extraordinary.
"Basic Rent" shall mean Basic Rent as defined in Paragraph 4.
"Basic Rent Payment Dates" shall mean the Basic Rent Payment Dates as
defined in Paragraph 4.
"Commencement Date" shall mean the Commencement Date as defined in
Paragraph 3.
"Deed of Trust" shall mean a first priority deed of trust or similar
security instrument hereafter executed covering the Leased Premises from
Landlord to Lender.
"Default Rate" shall mean an annual rate of interest equal to (i) the
highest rate of interest which may be lawfully charged on amounts past due with
respect to the Loan or (ii), if no Loan is then in effect, fifteen percent
(15%); provided, that in no event shall the Default Rate exceed the highest
lawful rate of interest which may be charged on past due Basic Rent under this
Lease.
"Equipment" shall mean the Equipment as defined in Paragraph 2.
"Event of Default" shall mean an Event of Default as defined in
Paragraph 20(a).
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"Impositions" shall mean the Impositions as defined in Paragraph 8.
"Improvements" shall mean the Improvements as defined in Paragraph 2.
"Initial Term" shall mean the Initial Term as defined in Paragraph 3.
"Insurance Requirement" or "Insurance Requirements" shall mean, as the
case may be, any one or more of the terms of each insurance policy required to
be carried by Tenant under this Lease and the requirements of the issuer of such
policy, and whenever Tenant shall be engaged in making any Alteration or
Alterations, repairs or construction work of any kind (collectively, "Work"),
the term "Insurance Requirement" or "Insurance Requirements" shall be deemed to
include a requirement that Tenant obtain or cause its contractor to obtain
completed value builder's risk insurance when the estimated cost of the Work in
any one instance exceeds the sum of One Hundred Thousand and No/100 Dollars
($100,000.00) and that Tenant or its contractor shall obtain worker's
compensation insurance or other adequate insurance coverage covering all persons
employed in connection with the Work, whether by Tenant, its contractors or
subcontractors and with respect to whom death or bodily injury claims could be
asserted against Tenant or Landlord.
"Land" shall mean the Land as defined in Paragraph 2.
"Law" shall mean any constitution, statute, code, ordinance,
regulation, judicial or administrative decision or other rule of law.
"Leased Premises" shall mean the Leased Premises as defined in
Paragraph 2.
"Legal Requirement" or "Legal Requirements" shall mean, as the case
may be, any one or more of all present and future Laws, codes, ordinances,
orders, judgments, decrees, injunctions, rules, regulations and requirements,
even if unforeseen or extraordinary, of every duly constituted governmental
authority or agency (but excluding those which by their terms are not applicable
to and do not impose any obligation on Tenant, Landlord or the Leased Premises)
and all covenants, restrictions and conditions now of record which may be
applicable to Tenant, Landlord (with respect to the Leased Premises) or to all
or any part of or interest in Leased Premises, or to the use, manner of use,
occupancy, possession, operation, maintenance, alteration, repair or
reconstruction of the Leased Premises, even if compliance therewith (i)
necessitates structural changes or improvements (including changes required to
comply with the "Americans with Disabilities Act") or results in interference
with the use or enjoyment of the Leased Premises or (ii) requires Tenant to
carry insurance other than as required by the provisions of this Lease.
"Lender" shall mean any entity identified as such in writing to Tenant
which makes a Loan to Landlord, secured by a Deed of Trust and evidenced by a
Note or Notes or which is the holder of the Deed of Trust and Note or Notes as a
result of an assignment or purchase thereof. As of the date hereof, Tenant
acknowledges that Lender is: Greenwich Capital Financial Products, Inc., 000
Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000.
"Loan" shall mean a loan made by a Lender to Landlord secured by a
Deed of Trust and evidenced by a Note or Notes.
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"Net Proceeds" shall mean the entire proceeds of any insurance
required under clauses (i), (iv), (v) or (vi) of Paragraph 15(a), less any
actual and reasonable expenses incurred by Landlord in collecting such proceeds.
"Note" or "Notes" shall mean a Promissory Note or Notes executed by
Landlord and payable to Lender, which Note or Notes will be secured by a Deed of
Trust and an assignment of leases and rents.
"Permitted Encumbrances" shall mean Impositions, Legal Requirements,
any matters consented to by Tenant, those covenants, restrictions, reservations,
liens, conditions, encroachments, easements, encumbrances and other matters of
title that affect the Leased Premises as of the date of this Lease or due to the
acts or omissions of Landlord after the date hereof.
"Replaced Equipment" or "Replacement Equipment" shall mean the
Replaced Equipment and Replacement Equipment, respectively, as defined in
Paragraph 12(d).
"Restoration" shall mean the restoration of the Leased Premises after
any damage by fire or other casualty, as nearly as possible to their value,
condition and character prior to such damage and in accordance with the repair
and maintenance standards and obligations of this Lease.
"Security Deposit Letter of Credit" shall mean the Security Deposit
Letter of Credit as defined in Paragraph 4.
"State" shall mean the State of California.
"Tenant Improvement Letter of Credit" shall mean the Tenant
Improvement Letter of Credit as defined in the Leasehold Improvements Agreement
attached hereto as Exhibit D.
"Term" shall mean the Term as defined in Paragraph 3.
"Trade Fixtures" shall mean all fixtures, equipment and other items of
personal property (whether or not attached to the Improvements) which are owned
by Tenant and used in the operation of the business conducted on the Leased
Premises, including, without limitation, signage of Tenant.
2. Demise of Premises. Landlord hereby leases, demises and lets to Tenant
and Tenant hereby takes and leases from Landlord for the Term and upon the
provisions hereinafter specified the following described property (collectively,
the "Leased Premises"): (i) the lot or parcel of land described in Exhibit A-1
attached hereto and made a part hereof (the "Land"); (ii) the right to use all
easements and parking described in Exhibit A-2 attached hereto and made a part
hereof attributable to Parcel 1 [as identified in the Willow Brook North CC&R's
(hereinafter defined)]; (iii) the approximately 140,448 square foot building and
related improvements and any other buildings, structures and other improvements
now existing or hereafter constructed or reconstructed on the
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Land (collectively, the "Improvements"); and (iv) the machinery and equipment
which is attached to the Improvements in such a manner as to become fixtures
under applicable law, together with all additions and accessions thereto,
substitutions therefor and replacements thereof permitted by this Lease
(collectively, the "Equipment"), excepting therefrom the Trade Fixtures.
3. Term.
(a) Subject to the provisions hereof, Tenant shall have and hold the
Leased Premises for an Initial Term (herein so called) of fifteen (15)
years commencing on September 22, 1999 (the "Commencement Date"), and
ending on September 22, 2014 (the "Expiration Date"), unless earlier
terminated as provided herein. As used herein, the "Term" of this Lease
shall mean the Initial Term and any Renewal Term (as hereinafter defined)
which becomes effective hereunder.
(b) Provided this Lease shall not have been terminated pursuant to
the provisions hereof and no Event of Default has occurred hereunder,
Tenant shall have the right to renew and extend the term of this Lease for
up to four (4) consecutive renewal terms (each, a "Renewal Term") of five
(5) years each upon and subject to the terms and conditions set forth in
Exhibit B attached hereto and made a part hereof.
4. Rent; Security Deposit Letter of Credit.
(a) Tenant shall pay to Landlord as minimum annual rent for the
Leased Premises during the Initial Term, the annual amounts set forth on
Exhibit C attached hereto and made a part hereof (the "Basic Rent"),
commencing on the Commencement Date. Basic Rent shall be due and payable
monthly in advance in the monthly amounts set forth on Exhibit C on or
before the first (1st) day of each calendar month during the Initial Term
(the said days being called the "Basic Rent Payment Dates"), and Tenant
shall pay the same at Landlord's address set forth in the first paragraph
of this Lease, or at such other place as Landlord from time to time may
designate to Tenant in writing, in funds which at the time of such payment
shall be legal tender for the payment of public or private debts in the
United States of America. If the Commencement Date commences or the Term
ends on other than the first or last day of a calendar month, the Basic
Rent for the partial month shall be prorated on the basis of number of days
during the month for which the Term was in effect.
(b) If any installment of Basic Rent is not tendered within five (5)
days after written notice is given by Landlord to Tenant that the same is
due, Tenant shall pay to Landlord on demand, as Additional Rent, a late
charge equal to five percent (5%) on such overdue installment of Basic
Rent.
(c) Tenant shall pay and discharge before the imposition of any fine,
lien, interest or penalty may be added thereto for late payment thereof, as
Additional Rent, all other amounts and obligations which Tenant assumes or
agrees to pay or discharge pursuant to this
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Lease, together with every fine, penalty, interest and cost which may be
added by the party to whom such payment is due for nonpayment or late
payment thereof. In the event of any failure by Tenant to pay or discharge
any of the foregoing, Landlord shall have all rights, powers and remedies
provided herein, by law or otherwise, in the event of nonpayment of Basic
Rent.
(d) Each party shall reflect the transactions represented by this
Lease in all applicable books, records and reports (including, without
limitation, income tax filings) in a manner consistent with "true lease"
treatment rather than "financing" treatment.
(e) Concurrently with its execution of this Lease, Tenant shall
deposit with Landlord (or Lender) an irrevocable, unconditional,
transferable letter of credit (the "Security Deposit Letter of Credit") in
an amount equal to One Million and No/100 Dollars ($1,000,000.00) and in
form and substance satisfactory to Landlord from a financial institution
acceptable to Landlord to be issued to and naming Landlord (or Lender) as
the beneficiary. The Security Deposit Letter of Credit shall be for a term
of not less than one year and shall not expire prior to the first
anniversary of the Commencement Date. The Security Deposit Letter of Credit
shall be held by Landlord (or Lender) as security for the performance by
Tenant of its obligations under this Lease. The Security Deposit Letter of
Credit is not an advance payment of Basic Rent or the full measure of
liquidated damages for a default by Tenant under this Lease. If an Event of
Default (as hereinafter defined) shall occur under this Lease, Landlord (or
Lender) shall have the right to immediately present the Security Deposit
Letter of Credit for payment. In the event Landlord (or Lender) presents
the Security Deposit Letter of Credit for payment, Landlord (or Lender)
shall be entitled to apply such proceeds, or any part thereof, to
compensate Landlord (or Lender) for any and all losses, costs, damages or
expenses sustained due to such default and Landlord (or Lender) shall be
entitled to continue to apply such proceeds over the Term of this Lease to
such amounts until the original Expiration Date, at which time if any
proceeds remain and all of such losses, costs, damages and expenses have
been fully liquidated, the balance of such proceeds shall be returned to
Tenant. On or prior to thirty (30) days before the expiration date of the
Security Deposit Letter of Credit and on or before thirty (30) days prior
to the expiration date of any subsequent letters of credit issued in
extension or replacement thereof, Tenant shall cause the Security Deposit
Letter of Credit to be extended for no less than an additional twelve (12)
months after the expiration date of the Security Deposit Letter of Credit
in question. In the event Tenant fails or refuses to deliver to Landlord
(or Lender) an amendment to the then existing Security Deposit Letter of
Credit or a new Security Deposit Letter of Credit satisfying the
requirements set forth herein reflecting the extended twelve (12) month
expiration date on or before thirty (30) days prior to the expiration of
the Security Deposit Letter of Credit in question, an Event of Default
shall be deemed to have occurred hereunder and Landlord (or Lender) shall
have the right to present the Security Deposit Letter of Credit for
immediate payment thereafter. Any amendments to the Security Deposit Letter
of Credit in question must be signed by Landlord (or Lender, if Lender is
the beneficiary), Tenant, and the financial institution issuing such Letter
of Credit. Provided that
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no Event of Default has occurred prior to the expiration of the thirtieth
(30th) month after the Commencement Date, Tenant may, commencing in the
thirty-first (31st) month of the Lease, elect to reduce the amount of the
Security Deposit Letter of Credit to an amount equal to Five Hundred
Thousand and No/100 Dollars ($500,000.00) by sending notice of such
election to Landlord (or Lender) in writing. In such event, Landlord (or
Lender) agrees to execute an amendment to the Security Deposit Letter of
Credit with Tenant and the financial institution issuing such letter of
credit to reflect such reduction. Provided that no Event of Default has
occurred prior to the expiration of the sixtieth (60th) month after the
Commencement Date, Tenant's obligation to renew the Security Deposit Letter
of Credit shall terminate in the sixty-first (61st) month of the Lease and
Landlord (or Lender) shall return the Security Deposit Letter of Credit to
Tenant. In any event, Tenant shall be obligated to renew the Security
Deposit Letter of Credit from time to time so that the Security Deposit
Letter of Credit or any extensions or replacements thereof do not expire
prior to the expiration of the sixty-first (61st) month after the
Commencement Date. Landlord (or Lender) may deliver the Security Deposit
Letter of Credit to any purchaser of or successor to Landlord's (or
Lender's) interest in this Lease or the Leased Premises, and thereupon
Landlord (or Lender) shall be discharged from all obligation or liability
with respect to such deposit.
5. Net Lease; No Landlord Services; Non-Terminability.
(a) This is a net lease and Basic Rent, Additional Rent and all other
sums payable hereunder by Tenant shall be paid without notice, demand,
setoff, counterclaim, recoupment, abatement, suspension, deferment,
diminution, deduction, reduction or defense. It is intended that the Basic
Rent provided for in this Lease shall be absolutely net to Landlord
throughout the Term, and accordingly, Tenant covenants and agrees to pay,
as they become due and payable and before they become delinquent, all
operating and capital expenses in connection with the operation,
maintenance, repair, Restoration, use or occupation of the Leased Premises
including, without limitation, the costs, charges and assessments related
to Impositions, utilities and insurance. Tenant acknowledges and agrees
that Landlord shall not be required to provide any services to Tenant or
the Leased Premises.
(b) Tenant shall pay directly to the proper authorities charged with
the collection thereof all charges for water, sewer, gas, oil, electricity,
telephone and other utilities or services used or consumed on the Leased
Premises during the Term, whether designated as a charge, tax, assessment,
fee or otherwise, including, without limitation, water and sewer use
charges and taxes, if any, all such charges to be paid as the same from
time to time become due. It is understood and agreed that Tenant shall make
its own arrangements for the installation or provision of all such
utilities and that Landlord shall be under no obligation to furnish any
utilities to the Leased Premises and shall not be liable for any
interruption or failure in the supply of any such utilities to the Leased
Premises.
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(c) This Lease shall not terminate (except as otherwise expressly
provided in Paragraphs 14 and 20(b) of this Lease), and Tenant shall not
have any right to terminate this Lease (except as expressly provided in
Paragraph 14), during the Term. Tenant shall not be entitled to any setoff,
counterclaim, recoupment, abatement, suspension, deferment, diminution,
deduction, reduction or defense of or to Basic Rent, Additional Rent or any
other sums payable under this Lease; and the obligations of Tenant under
this Lease shall not be affected by any interference with Tenant's use of
any of the Leased Premises for any reason, including but not limited to the
following: (i) any damage to or destruction of any of the Leased Premises
by any cause whatsoever, (ii) any Condemnation (except as otherwise
expressly provided in Paragraph 14), (iii) the prohibition, limitation or
restriction of Tenant's use of any of the Leased Premises, (iv) Tenant's
acquisition of ownership of any of the Leased Premises other than pursuant
to an express provision of this Lease, (v) any latent or other defect in,
or any theft or loss of any of the Leased Premises, (vi) the breach of any
warranty of any seller or manufacturer of any of the Equipment, or (vii)
any violation of Paragraph 7 (c) by Landlord. It is the intention of the
parties hereto that the obligations of Tenant under this Lease shall be
separate and independent covenants and agreements, and that Basic Rent,
Additional Rent and all other sums payable by Tenant hereunder shall
continue to be payable in all events (or, in lieu thereof, Tenant shall pay
amounts equal thereto), and that the obligations of Tenant under this Lease
shall continue unaffected, unless this Lease shall have been terminated
pursuant to Paragraphs 14 or 20(b) of this Lease.
(d) This Lease is the absolute and unconditional obligation of
Tenant. Tenant waives all rights which are not expressly stated in this
Lease but which may now or hereafter otherwise be conferred by law (i) to
quit, terminate or surrender this Lease or any of the Leased Premises, (ii)
to any setoff, counterclaim, recoupment, abatement, suspension, deferment,
diminution, deduction, reduction or defense of or to Basic Rent, Additional
Rent or any other sums payable under this Lease, and (iii) for any
statutory lien or offset right against Landlord or its property.
6. Title and Condition.
(a) The Leased Premises are demised and let subject to (i) the
Permitted Encumbrances, (ii) all Legal Requirements and Insurance
Requirements, including any existing violation of any thereof, and (iii)
the condition of the Leased Premises as of the commencement of the Term;
without representation or warranty by Landlord; it being understood and
agreed, however, that the recital of the Permitted Encumbrances herein
shall not be construed as a revival of any thereof which for any reason may
have expired.
(b) LANDLORD LEASES AND WILL LEASE AND TENANT TAKES AND WILL TAKE THE
LEASED PREMISES "AS IS" AND "WITH ALL FAULTS", AND TENANT ACKNOWLEDGES THAT
LANDLORD (WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY)
HAS NOT MADE AND WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE,
ANY
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WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE
LEASED PREMISES, INCLUDING ANY WARRANTY OR REPRESENTATION AS TO ITS
HABITABILITY, ITS FITNESS FOR USE OR PURPOSE, DESIGN OR CONDITION FOR ANY
PARTICULAR USE OR PURPOSE, AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP
THEREIN, LATENT OR PATENT, AS TO LANDLORD'S TITLE THERETO, OR AS TO VALUE,
COMPLIANCE WITH SPECIFICATIONS, LOCATION, USE, CONDITION, MERCHANTABILITY,
QUALITY, DESCRIPTION, DURABILITY OR OPERATION, IT BEING AGREED THAT ALL
RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT
THE LEASED PREMISES ARE OF ITS SELECTION AND TO ITS SPECIFICATIONS, AND
THAT THE LEASED PREMISES HAVE BEEN INSPECTED BY TENANT AND ARE SATISFACTORY
TO IT. TENANT SHALL NOT HAVE THE RIGHT TO TERMINATE THIS LEASE DUE TO ANY
CONDITION OF OR ANY LATENT OR OTHER DEFECT IN ANY OF THE LEASED PREMISES.
IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF THE LEASED PREMISES OF
ANY NATURE, WHETHER PATENT OR LATENT, LANDLORD SHALL NOT HAVE ANY
RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY IN TORT). THE PROVISIONS
OF THIS PARAGRAPH 6(b) HAVE BEEN NEGOTIATED, AND THE FOREGOING PROVISIONS
ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY WARRANTIES BY
LANDLORD, EXPRESS OR IMPLIED INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
HABITABILITY, WITH RESPECT TO ANY OF THE LEASED PREMISES, ARISING PURSUANT
TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT
OR OTHERWISE.
(c) Landlord hereby assigns, without recourse or warranty whatsoever
and without representation or warranty of any kind or nature, to Tenant,
all warranties, guaranties and indemnities, express or implied, and similar
rights which Landlord may have against any manufacturer, seller, engineer,
contractor or builder in respect of any of the Leased Premises, including,
but not limited to, any rights and remedies existing under contract or
pursuant to the Uniform Commercial Code (collectively, the "guaranties").
Such assignment shall remain in effect until the termination of this Lease.
Landlord shall also retain the right to enforce any guaranties assigned in
the name of Tenant upon the occurrence of an Event of Default. Landlord
hereby agrees to execute and deliver at Tenant's expense such further
documents as Tenant may reasonably request in order that Tenant may have
the full benefit of the assignment effected or intended to be effected by
this Paragraph 3(d). Upon the termination of this Lease, the guaranties
shall automatically revert to Landlord. The foregoing provision of
reversion shall be self-operative and no further instrument of reassignment
shall be required. In confirmation of such reassignment Tenant shall
execute and deliver promptly any certificate or other instrument which
Landlord may request.
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7. Use of Leased Premises; Quiet Enjoyment.
(a) Tenant may use the Leased Premises for general office,
electrical/mechanical engineering, and research and development purposes or
for any other lawful purpose so long as such other lawful purpose would not
(i) have a material adverse effect on the value of the Leased Premises
based upon its primary use as an office building, (ii) materially increase
(when compared to use as an office building) the likelihood that Tenant,
Landlord or Lender would incur liability under any provisions of the Act
referred to in Paragraph 27 of this Lease, or (iii) result in or give rise
to any material environmental deterioration or degradation of the Leased
Premises. In no event shall the Leased Premises be used for any purpose
which would constitute a public or private nuisance or waste or which would
violate any of the provisions of any Permitted Encumbrance, any Legal
Requirements, any Insurance Requirements or any covenants or restrictions
applicable to the Leased Premises. Tenant agrees that with respect to the
Permitted Encumbrances and any such covenants or restrictions, Tenant shall
observe, perform and comply with and carry out the provisions thereof
required therein to be observed and performed by Landlord.
(b) Tenant shall not permit any unlawful occupation, business or
trade to be conducted on the Leased Premises or any use to be made thereof
contrary to applicable Legal Requirements or Insurance Requirements. Tenant
shall not use, occupy or permit any of the Leased Premises to be used or
occupied, nor do or permit anything to be done in or on any of the Leased
Premises, in a manner which would (i) make void or voidable any insurance
which Tenant is required hereunder to maintain then in force with respect
to any of the Leased Premises, (ii) affect the ability of Tenant to obtain
any insurance which Tenant is required to furnish hereunder, or (iii) cause
any injury or damage to any of the Improvements unless pursuant to
Alterations permitted under Paragraph 13 hereof.
(c) Subject to all of the provisions of this Lease, so long as no
Event of Default exists hereunder, Landlord covenants to do no act to
disturb the peaceful and quiet occupation and enjoyment of the Leased
Premises by Tenant, provided that Landlord and Lender may enter upon and
examine any of the Leased Premises at reasonable times after reasonable
notice and during business hours and exercise any rights and privileges
granted to Landlord under the provisions of this Lease.
8. Payment of Impositions; Compliance with Legal Requirements and
Insurance Requirements.
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(a) (i) Subject to the provisions of Paragraph 19 hereof relating to
contests, Tenant shall, before delinquent or interest or penalties are due
thereon, pay and discharge (all of the following being herein collectively
called the "Impositions"): all taxes of every kind and nature (including
real, ad valorem, personal property, gross income, franchise, withholding,
profits and gross receipts taxes) on or with respect to the Leased Premises
(including, without limitation, any Impositions assessed against any real
property other than the Leased Premises which is included within the tax
parcel which includes the Leased Premises); all charges and/or taxes
imposed by any governmental body for any easement or agreement maintained
for the benefit of the Leased Premises; all general and special
assessments, including, without limitation, all assessments under those
certain Redwood Business Park 3, Special Assessment District No. 23 Bonds,
Series No. 1995-A (Limited Obligation), levies, permits, inspection and
license fees on or with respect to the Leased Premises; all water and sewer
rents and other utility charges on or with respect to the Leased Premises;
and all other public charges and/or taxes whether of a like or different
nature, even if unforeseen or extraordinary, imposed or assessed upon or
with respect to the Leased Premises, prior to or during the Term, against
Landlord, Tenant or any of the Leased Premises as a result of or arising in
respect of the occupancy, leasing, use, maintenance, operation, management,
repair or possession thereof, or any activity conducted on the Leased
Premises, or the Basic Rent or Additional Rent, including without
limitation, any gross income tax, sales tax, occupancy tax or excise tax
levied by any governmental body on or with respect to such Basic Rent or
Additional Rent. If received by Landlord, Landlord shall promptly deliver
to Tenant any xxxx or invoice with respect to any Imposition.
(ii) Nothing herein shall obligate Tenant to pay, and the term
"Impositions" shall exclude, federal, state or local (A) transfer taxes as
the result of a conveyance by (or suffered by) Landlord, (B) franchise,
capital stock or similar taxes if any, of Landlord, (C) income, excess
profits or other taxes, if any, of Landlord, determined on the basis of or
measured by its net income, or (D) any estate, inheritance, succession,
gift, capital levy or similar taxes, unless the taxes referred to in
clauses (B) and (C) above are in lieu of or a substitute for any other tax
or assessment upon or with respect to any of the Leased Premises which, if
such other tax or assessment were in effect at the commencement of the
Term, would be payable by Tenant. In the event that any assessment against
any of the Leased Premises may be paid in installments, Tenant shall have
the option to pay such assessment in installments; and in such event,
Tenant shall be liable only for those installments which become due and
payable during the Term. Tenant shall prepare and file all tax reports
required by governmental authorities which relate to the Impositions.
Tenant shall deliver to Landlord copies of all settlements and notices
pertaining to the Impositions which may be issued by any governmental
authority and receipts for payments of all Impositions made during each
calendar year of the Term, within ten (10) days after payment thereof.
(b) Subject to the provisions of Paragraph 19 hereof, Tenant shall
promptly comply with and conform to all of the Legal Requirements and
Insurance Requirements.
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9. Installation of Improvements; ADA Compliance. Tenant is hereby
obligated to install or cause to be installed in the Leased Premises, at its
sole cost and expense, all improvements specified in the Leasehold Improvements
Agreement attached hereto as Exhibit D and made a part hereof pursuant to the
terms and conditions thereof; and without limiting the generality of the
foregoing sentence, Tenant will assure that the plans and specifications for its
improvements, as well as its business operations within the Leased Premises,
comply with the Americans With Disabilities Act of 1990, as amended, and all
related state and local laws. Landlord shall have no obligation to pay or
reimburse Tenant for any tenant improvements within the Leased Premises.
Concurrently with its execution of this Lease, Tenant shall deposit with
Landlord the Tenant Improvement Letter of Credit pursuant to the terms and
conditions of the Leasehold Improvements Agreement.
10. Liens and Title.
(a) Subject to the provisions of Paragraph 19 hereof, Tenant shall
not, directly or indirectly, create or permit to be created or to remain,
and shall promptly discharge, any lien on the Leased Premises, on the Basic
Rent, Additional Rent or on any other sums payable by Tenant under this
Lease, other than the Deed of Trust, the Permitted Encumbrances and any
mortgage, lien, encumbrance or other charge created by or resulting from
any act or omission by Landlord or those claiming by, through or under
Landlord (except Tenant). Notice is hereby given that Landlord shall not be
liable for any labor, services or materials furnished or to be furnished to
Tenant, or to anyone holding any of the Leased Premises through or under
Tenant, and that no mechanic's or other liens for any such labor, services
or materials shall attach to or affect the interest of Landlord in and to
any of the Leased Premises.
(b) Nothing in this Lease and no action or inaction by Landlord shall
be deemed or construed to mean that Landlord has granted to Tenant any
right, power or permission to do any act or to make any agreement which may
create, give rise to, or be the foundation for, any right, title, interest
or lien in or upon the estate of Landlord in any of the Leased Premises.
11. Indemnification.
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(a) Tenant agrees to defend, pay, protect, indemnify, save and hold
harmless Landlord from and against any and all liabilities, losses,
damages, penalties, costs, expenses (including reasonable attorneys' fees),
causes of action, suits, claims, demands or judgments of any nature
whatsoever, howsoever caused, arising from the Leased Premises or the use,
non-use, occupancy, condition, design, construction, maintenance, repair or
rebuilding of the Leased Premises, and any injury to or death of any person
or persons or any loss of or damage to any property, real or personal, in
any manner arising therefrom connected therewith or occurring thereon,
whether or not Landlord or Lender has or should have knowledge or notice of
the defect or conditions, if any, causing or contributing to said injury,
death, loss, damage or other claim; except to the extent that any such
liability, loss, damage, penalty, cost, expense, cause of action, suit,
claim, demand or judgment is the result of the gross negligence of Landlord
or the intentional wrongful act of Landlord. In case any action or
proceeding is brought against Landlord or Lender by reason of any such
claim against which Tenant has agreed to defend, pay, protect, indemnify,
save and hold harmless pursuant to the preceding sentence, Tenant covenants
upon notice from Landlord or Lender to resist or defend Landlord and Lender
in such action, with the expenses of such defense paid by Tenant, and
Landlord will cooperate and assist in the defense of such action or
proceeding if reasonably requested so to do by Tenant.
(b) The obligations of Tenant under this Paragraph 11 shall survive
any termination of this Lease.
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12. Maintenance and Repair.
(a) Tenant shall at all times, at Tenant's sole cost and expense,
put, keep and maintain the Leased Premises (including, without limitation,
the parking areas, roof, footings, foundations, interior and exterior walls
and structural components of the Leased Premises) and the Equipment in a
first class condition and order of repair, except for ordinary wear and
tear, and shall promptly make all repairs and replacements of every kind
and nature, whether foreseen or unforseen, which may be required to be made
upon or in connection with the Leased Premises in order to keep and
maintain the Leased Premises in the order and condition required by this
Paragraph 12(a). Tenant shall do or cause others to do all shoring of the
Leased Premises or of foundations and walls of the Improvements and every
other act necessary or appropriate for preservation and safety thereof, by
reason of or in connection with any excavation or other building operation
upon any of the Leased Premises, whether or not Landlord shall, by reason
of any Legal Requirements or Insurance Requirements, be required to take
such action or be liable for failure to do so. Landlord shall not be
required to make any repair, whether foreseen or unforeseen, or to maintain
any of the Leased Premises or Adjoining Property in any way, and Tenant
hereby expressly waives the right to make repairs at the expense of the
Landlord, which right may be provided for in any Law now or hereafter in
effect. Without limiting the generality of the foregoing sentence, Tenant
expressly waives the benefits of any statute, including without limitation,
California Civil Code Sections 1941 and 1942, which would afford Tenant the
right to make repairs at Landlord's expense or to terminate this Lease due
to Landlord's failure to keep the Leased Premises in good order, condition
or repair (Landlord having no obligation under this Lease to do so).
Nothing in the preceding sentence shall be deemed to preclude Tenant from
being entitled to insurance proceeds for Restoration pursuant to Paragraph
15(g) of this Lease. Tenant shall, in all events, make all repairs for
which it is responsible hereunder promptly, and all repairs shall be in a
good, proper and workmanlike manner.
(b) In the event that any Improvement shall violate any Legal
Requirements or Insurance Requirements and as a result of such violation
enforcement action is threatened or commenced against Tenant or with
respect to the Leased Premises, then Tenant, at the request of Landlord,
shall either (i) obtain valid and effective waivers or settlements of all
claims, liabilities and damages resulting from each such violation, whether
the same shall affect Landlord, Tenant or both, or (ii) take such action as
shall be necessary to remove such violation, including, if necessary, any
Alteration. Any such repair or Alteration shall be made in conformity with
the provisions of Paragraph 13.
(c) If Tenant shall be in default under any of the provisions of this
Paragraph 12, Landlord may (but without any obligation to do so) after
thirty (30) days written notice given to Tenant and failure of Tenant to
cure during said period, but without notice in the event of an emergency,
do whatever is necessary to cure such default as may be appropriate under
the circumstances for the account of and at the expense of Tenant. In the
event of an emergency, Landlord shall make reasonable efforts to notify
Tenant of the situation by phone or other
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available communication before taking any action to cure such default. All
reasonable sums so paid by Landlord and all reasonable costs and expenses
(including, without limitation, attorneys' fees and expenses) so incurred,
together with interest thereon at the Default Rate from the date of payment
or incurring the expense, shall constitute Additional Rent payable by
Tenant under this Lease and shall be paid by Tenant to Landlord on demand.
(d) Tenant shall from time to time replace with other operational
equipment or parts (the "Replacement Equipment") any of the Equipment (the
"Replaced Equipment") which shall have become worn out or unusable for the
purpose for which it is intended, or been lost, stolen, damaged or
destroyed as provided in Paragraph 15. Tenant shall repair at its sole cost
and expense all damage to the Leased Premises caused by the removal of
Equipment or Replaced Equipment or other personal property of Tenant or the
installation of Replacement Equipment. All Replacement Equipment shall
become the property of Landlord, shall be free and clear of all liens and
rights of others and shall become a part of the Equipment as if originally
demised herein.
13. Alterations.
(a) Tenant shall not make any Alterations which would impair the
structural integrity of the Leased Premises. Subject to the restrictions
and limitations of the preceding sentence of this Paragraph 13(a), Tenant
may make any non-structural interior Alterations without the prior written
consent of the Landlord provided such Alterations comply with all of the
provisions of Paragraph 13(b) hereof.
(b) In the event that Landlord gives its prior written consent to any
Alterations, or if such consent is not required, Tenant agrees that in
connection with any Alteration: (i) the fair market value of the Leased
Premises shall not be lessened in any material respect after the completion
of any such Alteration, or its structural integrity impaired; (ii) the
Alteration and any Alteration theretofore made or thereafter to be made
shall not in the aggregate reduce the gross floor area of the Improvements;
(iii) all such Alterations shall be performed in a good and workmanlike
manner, and shall be expeditiously completed in compliance with all Legal
Requirements; (iv) all work done in connection with any such Alteration
shall comply with all Insurance Requirements; (v) Tenant shall promptly pay
all costs and expenses of any such Alteration, and shall (subject to the
provisions of Paragraph 19 hereof) discharge all liens filed against any of
the Leased Premises arising out of the same; (vi) Tenant shall procure and
pay for all permits and licenses required in connection with any such
Alteration; (vii) all such Alterations shall be the property of Landlord
and shall be subject to this Lease; and (viii) all Alterations shall be
made in the case of any Alteration the estimated cost of which in any one
instance exceeds One Million and No/100 Dollars ($1,000,000.00) under the
supervision of an architect or engineer and, in accordance with plans and
specifications which shall be submitted to Landlord for approval prior to
the commencement of the Alterations. Such approval not to be unreasonably
withheld and any disapproval must be in writing and state all reasons for
any such disapproval.
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(c) Tenant hereby grants, conveys and transfers to Landlord all of
Tenant's right, title and interest in and to the Improvements (whether now
existing or hereafter constructed), and Tenant agrees that any and all
Improvements of whatever nature at any time constructed, placed or
maintained upon any part of the Land shall be and remain the property of
Landlord, subject to Tenant's rights under this Lease. Tenant agrees to
execute, acknowledge, deliver and file all documents necessary or
appropriate to effect the purposes of this Paragraph 13(c).
14. Condemnation. If all of the Leased Premises, or at least ten
percent (10%) of the Improvements constructed on the Land, the loss of which
would materially and adversely interfere with Tenant's use of the remainder,
shall be taken or condemned for any public use or purpose by right of eminent
domain, with or without litigation, or be transferred by agreement in connection
with or in lieu of or under threat of condemnation, then the Term of this Lease
and the leasehold estate created hereby shall terminate as of the date title
shall vest in the condemnor or transferee. Landlord shall receive the entire
award from any taking or condemnation (or the entire compensation paid because
of any transfer by agreement), and Tenant shall have no claim thereto.
Notwithstanding the foregoing, Tenant does not waive or release any claims for
an award to compensate Tenant for moving expenses, inconvenience or business
interruption related to a condemnation of the Leased Premises, but any such
claim shall be asserted, if at all, in a proceeding independent of Landlord's
primary condemnation suit.
15. Insurance.
(a) Tenant shall maintain, at its sole cost and expense, the
following insurance on the Leased Premises:
(i) Insurance against loss or damage to the Improvements and
Equipment under a fire and broad form of all risk extended coverage
insurance policy including, without limitation, earthquake insurance,
and insurance against loss or damage to the Improvements and Equipment
from flooding, in the maximum amount provided for by FEMA under its
Flood Loss Insurance Program. Such insurance shall be in amounts not
less than the actual replacement cost of the Improvements and
Equipment as determined from time to time at Landlord's request but
not more frequently than once in any 12-month period, by agreement of
Landlord and Tenant, or if not so agreed, at Tenant's expense, by the
insurer or insurers or by an appraiser approved by Landlord. Such
insurance policies may contain reasonable exclusions and deductible
amounts.
(ii) Contractual and comprehensive general liability insurance
against claims for bodily injury, death or property damage occurring
on, in or about the Leased Premises, which insurance shall be written
on a so-called "Occurrence Basis," and shall provide minimum
protection with a combined single limit in an amount not less than the
greater of (x) Five Million and No/100 Dollars ($5,000,000.00) (or in
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such increased limits from time to time to reflect declines in the
purchasing power of the dollar as Landlord may reasonably request) or
(y) the aggregate amount of such insurance carried by Tenant, for
bodily injury, death and property damage in any one occurrence.
(iii) Worker's compensation insurance covering all persons
employed by Tenant on the Leased Premises in connection with any work
done on or about any of the Leased Premises for which claims for death
or bodily injury could be asserted against Landlord, Tenant or the
Leased Premises.
(iv) Insurance against loss or damage from explosion of any steam
or pressure boilers or similar apparatus located in or about the
Improvements in an amount not less than the actual replacement cost of
the Improvements and Equipment.
(v) Whenever Tenant shall be engaged in making any Alteration or
Alterations, repairs or construction work of any kind ("Work"), Tenant
shall obtain or cause its contractor to obtain completed value
builder's risk insurance when the estimated cost of the Work in any
one instance exceeds the sum of One Hundred Thousand and No/100
Dollars ($100,000.00) and Tenant or its contractor shall obtain
worker's compensation insurance or other adequate insurance coverage
covering all persons employed in connection with the Work, whether by
Tenant, its contractors or subcontractors and with respect to whom
death or bodily injury claims could be asserted against Tenant or
Landlord.
(vi) Such additional and/or other insurance with respect to the
Improvements located on the Leased Premises and in such amounts as at
the time is customarily carried by prudent owners or tenants with
respect to improvements similar in character, location and use and
occupancy to the Improvements located on the Leased Premises.
(b) Except as otherwise provided in Paragraph 15(b), the insurance
required by Paragraph 15(a) shall be written by companies having a claims
paying ability rating by Standard & Poors of not less than A-, and all such
companies shall be authorized to do an insurance business in the State, or
otherwise agreed to by Landlord. The insurance policies (i) shall be in
amounts sufficient at all times to satisfy any coinsurance requirements
thereof, and (ii) shall (except for the worker's compensation insurance
referred to in Paragraph 15(a)(iii) hereof) name Landlord, Tenant and any
Lender as additional insured parties, as their respective interests may
appear. If said insurance or any part thereof shall expire, be withdrawn,
become void by breach of any condition thereof by Tenant or become void or
unsafe by reason of the failure or impairment of the capital of any
insurer, Tenant shall immediately obtain new or additional insurance
reasonably satisfactory to Landlord.
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(c) Each insurance policy referred to in clauses (i), (iv), (v) and
(vi) of Paragraph 15(a), shall contain standard non-contributory mortgagee
clauses in favor of any Lender which holds a Deed of Trust on the Leased
Premises. Each policy shall provide that it may not be canceled except
after thirty (30) days prior notice to Landlord and any Lender. Each policy
shall also provide that any losses otherwise payable thereunder shall be
payable notwithstanding (i) any act or omission of Landlord or Tenant which
might, absent such provision, result in a forfeiture of all or a part of
such insurance payment, or (ii) the occupation or use of any of the Leased
Premises for purposes more hazardous than permitted by the provisions of
such policy.
(d) Tenant shall pay as they become due all premiums for the
insurance required by this Paragraph 15, shall renew or replace each
policy, and shall deliver to Landlord and Lender a certificate or other
evidence (reasonably satisfactory to Lender and Landlord) of the existing
policy and such renewal or replacement policy at least ten (10) days prior
to the Insurance Expiration Date (as hereinafter defined) of each policy.
Each such policy shall provide that it shall not expire until the Landlord
and Lender shall receive a notice from the insurer to the effect that a
policy will expire on a date (the "Insurance Expiration Date") which shall
be thirty (30) days following the date of the receipt by Landlord and
Lender of such notice. In the event of Tenant's failure to comply with any
of the foregoing requirements of this Paragraph 15 within five (5) business
days of the giving of written notice by Landlord to Tenant, Landlord shall
be entitled to procure such insurance. Any sums expended by Landlord in
procuring such insurance shall be Additional Rent and shall be repaid by
Tenant, together with interest thereon at the Default Rate, from the time
of payment by Landlord until fully paid by Tenant immediately upon written
demand therefor by Landlord.
(e) Anything in this Paragraph 15 to the contrary notwithstanding,
any insurance which Tenant is required to obtain pursuant to Paragraph
15(a) may be carried under a "blanket" policy or policies covering other
properties or liabilities of Tenant, provided that such "blanket" policy or
policies otherwise comply with the provisions of this Paragraph 15. In the
event any such insurance is carried under a blanket policy, Tenant shall
deliver to Landlord and Lender evidence of the issuance and effectiveness
of the policy, the amount and character of the coverage with respect to the
Leased Premises and the presence in the policy of provisions of the
character required in the above sections of this Paragraph 15.
(f) In the event of any casualty loss exceeding One Hundred Thousand
and No/100 Dollars ($100,000.00), Tenant shall give Landlord immediate
notice thereof. Tenant shall adjust, collect and compromise any and all
claims, with the consent of Lender and Landlord, and Landlord and Lender
shall have the right to join with Tenant therein. If the estimated cost of
Restoration or repair shall be One Hundred Thousand and No/100 Dollars
($100,000.00) or less, all proceeds of any insurance required under clauses
(i), (iv), (v) and (vi) of Paragraph 15(a) shall be payable to Tenant,
provided that Tenant at such time shall have a tangible net worth of not
less than Two Hundred Million and No/100 Dollars
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($200,000,000.00) as determined in accordance with generally accepted
accounting principles, consistently applied, and in all other events to a
Trustee which shall be a federally insured bank or other financial
institution, selected by Landlord and Tenant and reasonably satisfactory to
Lender (the "Trustee"). If the Leased Premises shall be covered by a Deed
of Trust, Lender, if it so desires, shall be the Trustee. Each insurer is
hereby authorized and directed to make payment under said policies directly
to such Trustee instead of to Landlord and Tenant jointly; and Tenant and
Landlord each hereby appoints such Trustee as its attorney-in-fact to
endorse any draft therefor for the purposes set forth in this Lease after
approval by Tenant of such Trustee, if Trustee is other than Lender. In the
event of any casualty (whether or not insured against) by any cause
whatsoever resulting in damage to or destruction of the Leased Premises or
any part thereof, Tenant shall not have the right to terminate this Lease,
this Lease shall not terminate, the Term shall nevertheless continue and
there shall be no abatement or reduction of Basic Rent, Additional Rent or
any other sums payable by Tenant hereunder. The provisions of California
Civil Code Sections 1932(2) and 1933(4), and any successor statutes, are
inapplicable with respect to any destruction of the Leased Premises, such
sections providing that a lease terminates upon the destruction of the
Leased Premises unless otherwise agreed between the parties to the
contrary. The Net Proceeds of such insurance payment shall be retained by
the Trustee and, promptly after such casualty, Tenant, as required in
Paragraphs 12(a) and 13, shall commence and diligently continue to perform
the Restoration to the Leased Premises. Upon payment to the Trustee of such
Net Proceeds, the Trustee shall, to the extent available, make the Net
Proceeds available to Tenant for Restoration, in accordance with the
provisions of Paragraph 16. Tenant shall, whether or not the Net Proceeds
are sufficient for the purpose, promptly repair, rebuild or replace the
Improvements and Equipment in accordance with the provisions of Paragraph
12(a) and the Net Proceeds of such loss shall thereupon be payable to
Tenant, subject to the provisions of Paragraph 16 hereof. In the event that
any damage or destruction shall occur at such time as Tenant shall not have
maintained third-party insurance in accordance with Paragraph 15(a) (i),
(iv), (v) or (vi), Tenant shall pay to the Trustee the amount of the
proceeds that would have been payable had such insurance program been in
effect (the "Tenant Insurance Payment").
(g) Tenant hereby waives and releases Landlord of and from any and
all rights of recovery, claim, action or cause of action against Landlord,
its agents, officers, directors, partners and employees, for any loss or
damage that may occur to the Leased Premises or any personal property,
including building contents, within the Leased Premises, by reason of fire
or the elements of nature or other events to the extent covered by
insurance coverage required to be carried by Tenant under this Lease.
Tenant shall immediately give written notice of the terms of the waivers
contained herein to its insurance company which has issued policies of
insurance covering such property damage, and shall have the insurance
policies properly endorsed to reflect the insurance company's
acknowledgment of such waiver and the absence of any subrogation rights.
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16. Restoration. Net Proceeds and Tenant Insurance Payment (the aggregate
of which being herein defined as the "Restoration Fund") shall be disbursed by
the Trustee in accordance with the following conditions:
(a) If the cost of Restoration will exceed Five Hundred Thousand and
No/100 Dollars ($500,000.00), prior to commencement of the Restoration the
architects, general contractor(s), and plans and specifications for the
Restoration shall be approved by Landlord, and which approval shall be
granted to the extent that the plans and specifications depict a
Restoration which is substantially similar to the Improvements and
Equipment which existed prior to the occurrence of the casualty.
(b) At the time of any disbursement, no Event of Default shall exist
and no mechanics' or materialmen's liens shall have been filed and remain
undischarged or unbonded.
(c) Disbursements shall be made from time to time in an amount not
exceeding the hard and soft cost of the work and costs incurred since the
last disbursement upon receipt of (1) satisfactory evidence, including
architects' certificates of the stage of completion, of the estimated cost
of completion and of performance of the work to date in a good and
workmanlike manner in accordance with the contracts, plans and
specifications, (2) partial releases of liens, and (3) other reasonable
evidence of cost and payment so that Landlord can verify that the amounts
disbursed from time to time are represented by work that is completed in
place or delivered to the site and free and clear of mechanics' lien
claims.
(d) Each request for disbursement shall be accompanied by a
certificate of Tenant describing the work, materials or other costs or
expenses, for which payment is requested, stating the cost incurred in
connection therewith and stating that Tenant has not previously received
payment for such work or expense and the certificate to be delivered by
Tenant upon completion of the work shall, in addition, state that the work
has been substantially completed and complies with the applicable
requirements of this Lease.
(e) The Trustee may retain twenty percent (20%) of the Restoration
Fund until the Restoration is at least fifty percent (50%) complete, and
thereafter ten percent (10%) until the Restoration is substantially
complete.
(f) The Restoration Fund shall be kept in a separate interest-bearing
federally insured account by the Trustee or by Lender.
(g) At all times the undisbursed balance of the Restoration Fund held
by Trustee plus any funds contributed thereto by Tenant, at its option,
shall be not less than the cost of completing the Restoration, free and
clear of all liens.
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(h) Prior to commencement of Restoration and at any time during
Restoration, if the estimated cost of Restoration, as reasonably determined
by Landlord, exceeds the amount of the Net Proceeds and Tenant Insurance
Payment available for such Restoration, the amount of such excess shall be
paid by Tenant to the Trustee to be added to the Restoration Fund or Tenant
shall fund at its own expense the costs of such Restoration until the
remaining Restoration Fund is sufficient for the completion of the
Restoration. Any sum in the Restoration Fund which remains in the
Restoration Fund upon the completion of Restoration shall be paid to
Landlord.
17. Subordination to Financing.
(a) (i) Subject to the provisions of Paragraph 17 (a)(ii), Tenant
agrees that this Lease shall at all times be subject and subordinate to the
lien of any Deed of Trust, and Tenant agrees, upon demand, without cost, to
execute instruments as may be required to further effectuate or confirm
such subordination.
(ii) Except as expressly provided in this Lease by reason of the
occurrence of an Event of Default, Tenant's tenancy and Tenant's rights
under this Lease shall not be disturbed, terminated or otherwise adversely
affected, nor shall this Lease be affected, by any default under any Deed
of Trust, and in the event of a foreclosure or other enforcement of any
Deed of Trust, or sale in lieu thereof, the purchaser at such foreclosure
sale shall be bound to Tenant for the Term of this Lease and any Renewal
Term, the rights of Tenant under this Lease shall expressly survive, and
this Lease shall in all respects continue in full force and effect so long
as no Event of Default has occurred and is continuing.
(b) Notwithstanding the provisions of Paragraph 17(a), the holder of
any Deed of Trust to which this Lease is subject and subordinate shall have
the right, at its sole option, at any time, to subordinate and subject the
Deed of Trust, in whole or in part, to this Lease by recording a unilateral
declaration to such effect.
(c) At any time prior to the expiration of the Term, Tenant agrees,
at the election and upon demand of any owner of the Leased Premises, or of
a Lender who has granted non-disturbance to Tenant pursuant to Paragraph
17(a) above, to attorn, from time to time, to any such owner or Lender,
upon the terms and conditions of this Lease, for the remainder of the Term.
The provisions of this Paragraph 17(c) shall inure to the benefit of any
such owner or Lender, shall apply notwithstanding that, as a matter of law,
this Lease may terminate upon the foreclosure of the Deed of Trust, shall
be self-operative upon any such demand, and no further instrument shall be
required to give effect to said provisions.
(d) Each of Tenant, any owner and Lender, however, upon demand of the
other, hereby agrees to execute, from time to time, instruments in
confirmation of the foregoing provisions of Paragraphs 17(a) and 17(c),
reasonably satisfactory to the requesting party
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acknowledging such subordination, non-disturbance and attornment as are
provided in such subsections and setting forth the terms and conditions of
its tenancy.
(e) Each of Tenant and Landlord agrees that, if requested by the
other, each shall, without charge, enter into a subordination,
non-disturbance and attornment agreement in the form attached hereto as
Exhibit E and made a part hereof for all purposes.
18. Assignment, Subleasing.
(a) The Leased Premises shall not be sublet in whole or in part
without the prior written consent of Landlord, which shall not be
unreasonably withheld. Subject to the terms and conditions of this
Xxxxxxxxx 00, Xxxxxxxx hereby approves a sublease of all or a portion of
the Leased Premises by Tenant to Advanced Fibre Communications North
America, Inc., a Delaware corporation. Except as expressly permitted below,
Tenant shall not assign its interest in this Lease without the prior
written consent of Landlord. The assignment of this Lease by Tenant named
herein to any purchaser of all or substantially all of the assets of Tenant
shall not require the prior written consent of Landlord. Assignment of this
Lease by Tenant to a parent, subsidiary or affiliate of Tenant shall not
require the consent of Landlord. An "affiliate" of Tenant shall mean any
corporation, partnership or other business entity which controls or is
controlled by, or is under common control with Tenant. The word "control"
(including "controlled by," "under common control with" and "controlling")
as used with respect to any corporation, partnership or other business
entity, shall mean the possession of the power to direct or cause the
direction of the management and policies of such corporation, partnership
or other business entity, whether through the ownership of voting
securities or contract.
(b) Each sublease of the Leased Premises or any part thereof shall be
subject and subordinate to the provisions of this Lease. No assignment or
sublease shall affect or reduce any of the obligations of Tenant hereunder,
and all such obligations shall continue in full force and effect as
obligations of a principal and not as obligations of a guarantor, as if no
assignment or sublease had been made. Notwithstanding any assignment or
subletting, Tenant shall continue to remain liable and responsible for the
payment of the Basic Rent and Additional Rent and the performance of all
its other obligations under this Lease. No assignment or sublease shall
impose any obligations on Landlord under this Lease except as otherwise
provided in this Lease. Tenant agrees that in the case of an assignment of
the Lease, Tenant shall, within fifteen (15) days after the execution and
delivery of any such assignment, deliver to Landlord (i) a duplicate
original of such assignment in recordable form and (ii) an agreement
executed and acknowledged by the assignee in recordable form wherein the
assignee shall agree to assume and agree to observe and perform all of the
terms and provisions of this Lease on the part of the Tenant to be observed
and performed from and after the date of such assignment. In the case of
all subleases, Tenant shall, immediately upon request of Landlord after the
occurrence of an Event of Default, deliver to Landlord and Lender a
duplicate original or certified copy of all such subleases.
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(c) Tenant agrees with Landlord that, if the rent or other
consideration due by a subtenant exceeds the Basic Rent for the Leased
Premises, then Tenant shall pay Landlord as Additional Rent hereunder fifty
percent (50%) of the amount of all such excess rent and other consideration
immediately upon Tenant's receipt thereof.
19. Permitted Contests.
(a) After prior written notice to Landlord, Tenant shall not be
required to (i) pay any Imposition, (ii) comply with any Legal Requirement,
(iii) discharge or remove any lien referred to in Paragraphs 10 or 13, or
(iv) take any action with respect to any violation referred to in Paragraph
12(b) so long as Tenant shall contest, in good faith and at its expense,
the existence, the amount or the validity thereof, the amount of the
damages caused thereby, or the extent of its or Landlord's liability
therefor, by appropriate proceedings which shall operate during the
pendency thereof to prevent (A) the collection of, or other realization
upon, the Imposition or lien so contested, (B) the sale, forfeiture or loss
of any of the Leased Premises, any Basic Rent or any Additional Rent to
satisfy the same or to pay any damages caused by the violation of any such
Legal Requirement or by any such violation, (C) any interference with the
use or occupancy of any of the Leased Premises, (D) any interference with
the payment of any Basic Rent or any Additional Rent, and (E) the
cancellation of any fire or other insurance policy.
(b) In no event shall Tenant pursue any contest with respect to any
Imposition, Legal Requirement, lien, or violation, referred to above in
such manner that exposes Landlord or Lender to (i) criminal liability,
penalty or sanction, (ii) any civil liability, penalty or sanction for
which Tenant has not made provisions reasonably acceptable to Landlord and
Lender or (iii) defeasance of its interest the Leased Premises.
(c) Tenant agrees that each such contest shall be promptly and
diligently prosecuted to a final conclusion, except that Tenant shall, have
the right to attempt to settle or compromise such contest through
negotiations. Tenant shall indemnify and hold Lender and Landlord harmless
against any and all losses, judgments, decrees and costs (including all
attorneys' fees and expenses) in connection with any such contest and
shall, promptly after the final determination of such contest, fully pay
and discharge the amounts which shall be levied, assessed, charged or
imposed or be determined to be payable therein or in connection therewith,
together with all penalties, fines, interest, costs and expenses thereof or
in connection therewith, and perform all acts the performance of which
shall be ordered or decreed as a result thereof.
20. Default Provisions; Remedies.
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(a) The occurrence of any one or more of the following events (any
such event being specified herein as a "failure" or "default") shall
constitute an Event of Default under this Lease: (i) a failure by Tenant to
make (regardless of the pendency of any bankruptcy, reorganization,
receivership, insolvency or other proceedings, in law, in equity or before
any administrative tribunal which had or might have the effect of
preventing Tenant from complying with the provisions of this Lease): (x)
any payment of Basic Rent on the due date thereof and the continuation of
such failure for a period of three (3) business days after Landlord has
notified Tenant in writing of such failure or refusal; provided, however,
that in no event shall Landlord be obligated to furnish more than two (2)
notices of such failure in any calendar year; or if Landlord is not then
required to notify Tenant of such failure, then the failure by Tenant to
make any payment of Basic Rent on the due date thereof, or (y) any payment
of Additional Rent or other sum herein required to be paid by Tenant which
continues unremedied for a period of five (5) business days after written
notice thereof is given to Tenant by Landlord; (ii) failure by Tenant to
perform and observe, or a violation or breach of, any other provision in
this Lease and such default shall continue for a period of thirty (30) days
after written notice thereof is given by Landlord to Tenant or if such
default is of such a nature that it cannot reasonably be cured within such
period of thirty (30) days, such period shall be extended for such longer
time as is reasonably necessary (but in any event not to exceed a total of
ninety (90) days) provided that Tenant has commenced to cure such default
within said period of thirty (30) days, and is actively, diligently and in
good faith proceeding with continuity to remedy such default and provided
that any delay in curing such default shall not result in a material
adverse effect on the value of the Leased Premises; (iii) Tenant shall (A)
voluntarily be adjudicated a bankrupt or insolvent, (B) or voluntarily
consent to the appointment of a receiver or trustee for itself or for any
of the Leased Premises, (C) voluntarily file a petition seeking relief
under the bankruptcy or other similar laws of the United States, any state
or any jurisdiction, or (D) voluntarily file a general assignment for the
benefit of creditors; (iv) a court shall enter an order, judgment or decree
appointing, with the voluntary consent of Tenant, a receiver or trustee for
Tenant or for the Leased Premises or approving a petition filed against
Tenant which seeks relief under the bankruptcy or other similar laws of the
United States or any state, and such order, judgment or decree shall remain
in force, undischarged or unstayed, ninety (90) days after it is entered;
(v) Tenant shall in any insolvency proceedings be liquidated or dissolved
or shall voluntarily commence proceedings towards its liquidation or
dissolution; (vi) the estate or interest of Tenant in the Leased Premises
shall be levied upon or attached in any proceeding and such estate or
interest is about to be sold or transferred or such process shall not be
vacated or discharged within ninety (90) days after such levy or
attachment; or (vii) failure by Tenant to carry or maintain in full force
and effect any insurance required hereunder, and such failure shall
continue for a period of five (5) business days after written notice
thereof is given to Tenant by Landlord.
(b) If an Event of Default shall have occurred, Landlord shall have
the rights and remedies set forth in this Paragraph 20 and all other rights
and remedies set forth in this
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Lease or now or hereafter allowed by Law, whether legal or equitable, and
all rights and remedies of Landlord shall be cumulative and none shall
exclude any other right or remedy.
(c) With respect to an Event of Default, at any time Landlord may
terminate Tenant's right to possession by written notice to Tenant stating
such election. Any written notice required pursuant to this Paragraph 20(c)
shall constitute notice of unlawful detainer pursuant to California Code of
Civil Procedure Section 1161 if, at Landlord's sole discretion, it states
Landlord's election that Tenant's right to possession is terminated after
expiration of any period required by Law. Upon the expiration of the period
stated in Landlord's written notice of termination, Tenant's right to
possession shall terminate and this Lease shall terminate, and Tenant shall
remain liable as hereinafter provided. Upon such termination in writing of
Tenant's right to possession, Landlord shall have the right, subject to
applicable Law, to reenter the Leased Premises and dispossess Tenant and
the legal representatives of Tenant and all other occupants of the Leased
Premises by unlawful detainer or other summary proceedings, or otherwise as
permitted by Law, regain possession of the Leased Premises and remove their
property (including their trade fixtures, personal property and those
tenant improvements that are alterations which Tenant is required or
permitted to remove under this Lease), but Landlord shall not be obligated
to effect such removal, and such property may, at Landlord's option, be
stored elsewhere, sold or otherwise dealt with as permitted by Law, at the
risk of, expense of and for the account of Tenant, and the proceeds of any
sale shall be applied pursuant to Law. Landlord shall in no event be
responsible for the value, preservation or safekeeping of any such
property. Tenant hereby waives all claims for damages that may be caused by
Landlord's removing or storing Tenant's personal property pursuant to this
Paragraph, and Tenant hereby indemnifies, and agrees to defend, protect and
hold harmless, Landlord from any and all loss, claims, demands, actions,
expenses, liability and cost (including attorneys' fees and expenses)
arising out of or in any way related to such removal or storage. Upon such
written termination of Tenant's right to possession and this Lease,
Landlord shall have the right to recover damages for Tenant's default as
provided herein or by Law, including the following damages provided by
California Civil Code Section 1951.2:
(i) the worth at the time of award of the unpaid Basic Rent
which had been earned at the time of termination;
(ii) the worth at the time of award of the amount by which the
unpaid Basic Rent which would have been earned after termination until
the time of award exceeds the amount of such Basic Rent loss that
Tenant proves could reasonably have been avoided;
(iii) the worth at the time of award of the amount by which the
unpaid Basic Rent for the balance of the term of this Lease after the
time of award exceeds the amount of such Basic Rent loss that Tenant
proves could be reasonably avoided; and
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(iv) any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things
would be likely to result therefrom, including, without limitation,
Landlord's unamortized costs of tenant improvements, leasing
commissions and legal fees incurred in connection with entering into
this Lease. The word "rent" as used in this Paragraph 20(c) shall have
the same meaning as the defined term Basic Rent in this Lease. The
"worth at the time of award" of the amount referred to in clauses (i)
and (ii) above is computed by allowing interest at the Default Rate.
The worth at the time of award of the amount referred to in clause
(iii) above is computed by discounting such amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of award
plus one percent (1%). For the purpose of determining unpaid Basic
Rent under clause (iii) above, the monthly Basic Rent reserved in this
Lease shall be deemed to be the sum of the monthly Basic Rent, and the
amounts last payable by Tenant as Additional Rent for the calendar
year in which Landlord terminated this Lease.
(d) Even if an Event of Default has occurred, this Lease shall
continue in effect for so long as Landlord does not terminate Tenant's
right to possession by written notice as provided in Paragraph 20(c) above,
and Landlord may enforce all its rights and remedies under this Lease,
including the right to recover Basic Rent as it becomes due under this
Lease. In such event, Landlord shall have all of the rights and remedies of
a landlord under California Civil Code Section 1951.4 (lessor may continue
Lease in effect after Tenant's Event of Default and abandonment and recover
Basic Rent as it becomes due, if Tenant has the right to sublet or assign,
subject only to reasonable limitations), or any successor statute. During
such time as an Event of Default exists, if Landlord has not terminated
this Lease by written notice and if Tenant requests Landlord's consent to
an assignment of this Lease or a sublease of the Leased Premises, Landlord
shall not unreasonably withhold its consent to such assignment or sublease.
Tenant acknowledges and agrees that the provisions of Paragraph 18 shall be
deemed to constitute reasonable limitations of Tenant's right to assign or
sublet. Tenant acknowledges and agrees that in the absence of written
notice pursuant to Paragraph 20(c) above terminating Tenant's right to
possession, no other act of Landlord shall constitute a termination of
Tenant's right to possession or an acceptance of Tenant's surrender of the
Leased Premises, including acts of maintenance or preservation or efforts
to relet the Leased Premises or the appointment of a receiver upon
initiative of Landlord to protect Landlord's interest under this Lease or
the withholding of consent to a subletting or assignment, or terminating a
subletting or assignment, if in accordance with other provisions of this
Lease.
(e) Tenant hereby waives any and all rights to relief from
forfeiture, redemption or reinstatement granted by Law (including
California Civil Code of Procedure Sections 1174 and 1179) in the event of
Tenant being evicted or dispossessed or in the event of Landlord obtaining
possession of the Leased Premises.
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(f) Notwithstanding any other provision of this Lease, a notice to
Tenant given under this Paragraph 20 or given pursuant to California Code
of Civil Procedure Section 1161, and any notice served by mail shall be
deemed served, and the requisite waiting period deemed to begin under said
Code of Civil Procedure Section upon mailing, without any additional
waiting requirement under Code of Civil Procedure Section 1011 et seq. or
by other Law. For purposes of Code of Civil Procedure Section 1162,
Tenant's "place of residence", "usual place of business", "the property"
and "the place where the property is situated" shall mean and be the Leased
Premises, whether or not Tenant has vacated same at the time of service.
(g) No delay or omission in the exercise of any right or remedy of
Landlord upon any default by Tenant, and no exercise by Landlord of its
rights under this Lease to perform any duty which Tenant fails timely to
perform, shall impair any right or remedy or be construed as a waiver,
unless such waiver is in writing signed by Landlord. The waiver by Landlord
of any breach of this Lease shall not be deemed a waiver of any subsequent
breach of the same or any other provision of this Lease.
21. Additional Rights of Landlord and Tenant.
(a) No right or remedy conferred upon or reserved to Landlord in this
Lease is intended to be exclusive of any other right or remedy; and each
and every right and remedy shall be cumulative and in addition to any other
right or remedy contained in this Lease. No delay or failure by Landlord or
Tenant to enforce its rights under this Lease shall be construed as a
waiver, modification or relinquishment thereof. In addition to the other
remedies provided in this Lease, Landlord and Tenant shall be entitled, to
the extent permitted by applicable Law, to injunctive relief in case of the
violation or attempted or threatened violation of any of the provisions of
this Lease, or to specific performance of any of the provisions of this
Lease.
(b) Tenant hereby waives and surrenders for itself and all those
claiming under it, including creditors of all kinds, any right and
privilege which it or any of them may have under any present or future law
to redeem any of the Leased Premises or to have a continuance of this Lease
after termination of this Lease or of Tenant's right of occupancy or
possession pursuant to any court order or any provision hereof.
(c) Each of Tenant and Landlord (herein called "Paying Party") agrees
to pay to the other party (herein called "Demanding Party") any and all
reasonable costs and expenses incurred by the Demanding Party in connection
with any litigation or other action instituted by the Demanding Party to
enforce the obligations of the Paying Party under this Lease, to the extent
that the Demanding Party has prevailed in any such litigation or other
action. Any amount payable by Tenant to Landlord pursuant to this Paragraph
21(c) shall be due and payable by Tenant to Landlord as Additional Rent. No
sum payable by Landlord to Tenant
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under this subparagraph will be payable or recoverable from any sums
pledged or assigned (or intended to have been pledged or assigned) by
Landlord to Lender, Tenant's right to recover such sums from Landlord being
subordinate to the rights of Lender, such sums only being recoverable after
payment to Lender in full of the Loan.
22. Notices. All notices, demands, requests, consents, approvals,
offers, statements and other instruments or communications required or permitted
to be given pursuant to the provisions of this Lease (collectively "Notice" or
"Notices") shall be in writing and shall be deemed to have been given for all
purposes (i) three (3) business days after having been sent by United States
mail, by registered or certified mail, return receipt requested, postage
prepaid, addressed to the other party at its address as stated below, or (ii)
one (1) business day after having been sent by Federal Express or other
nationally recognized air courier service.
To the Addresses stated below:
If to Landlord:
c/o NLP-Net Lease Properties
00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: G. Xxxx Xxxxxxxx
Telephone No.: 972/000-0000
Facsimile No.: 972/361-5905
With a copy to:
Xxxxxxx & XxXxxxxx, P.C.
00000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. XxXxxxxx, Esq.
Telephone No.: 214/000-0000
Facsimile No.: 214/265-0615
If to Tenant:
Advanced Fibre Communications, Inc.
#0 Xxxxxx Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxx -- AP Manager
Telephone No.: 707/000-0000
Facsimile No.: 707/794-7511
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If any Lender shall have advised Tenant by Notice in the manner aforesaid that
it is the holder of a Deed of Trust and states in said Notice its address for
the receipt of Notices, then simultaneously with the giving of any Notice by
Tenant to Landlord, Tenant shall send a copy of such Notice to Lender in the
manner aforesaid. For the purposes of this Paragraph 22, any party may
substitute its address by giving fifteen (15) days' notice to the other party in
the manner provided above. Any Notice may be given on behalf of any party by its
counsel.
23. Estoppel Certificates. Landlord and Tenant shall at any time and
from time to time, upon not less than twenty (20) days' prior written request by
the other, execute, acknowledge and deliver to the other a statement in writing,
certifying (i) that this Lease is unmodified and in full effect (or, if there
have been modifications, that this Lease is in full effect as modified, setting
forth such modifications), (ii) the dates to which Basic Rent payable hereunder
has been paid, (iii) that to the knowledge of the signer of such certificate no
default by either Landlord or Tenant exists hereunder or specifying each such
default of which the signer may have knowledge, (iv) the remaining Term hereof,
(v) with respect to a certificate signed on behalf of Tenant, (A) that to the
knowledge of the signer of such certificate, there are no proceedings pending or
threatened against Tenant before or by any court or administrative agency which
if adversely decided would materially and adversely affect the financial
condition and operations of Tenant or if any such proceedings are pending or
threatened to said signer's knowledge, specifying and describing the same, and
(B) that the Tenant has no claims of offset, abatement or deduction of Basic
Rent, Additional Rent or other amounts payable hereunder, and (vii) such other
matters as may reasonably be requested by the party requesting the certificate.
It is intended that any such statements may be relied upon by Lender, the
recipient of such statements or their assignees or by any prospective purchaser,
assignee or subtenant of the Leased Premises.
24. Surrender and Holding Over.
(a) Upon the expiration or earlier termination of this Lease, Tenant
shall peaceably leave and surrender the Leased Premises (except as to any
portion thereof with respect to which this Lease has previously terminated)
to Landlord. Tenant shall remove from the Leased Premises on or prior to
such expiration or earlier termination the Trade Fixtures and personal
property which is owned by Tenant or third parties other than Landlord, and
Tenant at its expense shall, on or prior to such expiration or earlier
Termination, repair any damage caused by such removal. Trade Fixtures and
personal property not so removed at the end of the Term or within thirty
(30) days after the earlier termination of the Term for any reason
whatsoever shall become the property of Landlord, and Landlord may
thereafter cause such property to be removed from the Leased Premises. The
cost of removing and disposing of such property and repairing any damage to
any of the Leased Premises caused by such removal shall be borne by Tenant.
Landlord shall not in any manner or to any extent be obligated to reimburse
Tenant for any property which becomes the property of Landlord as a result
of such expiration or earlier termination.
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(b) Any holding over by Tenant of the Leased Premises after the
expiration or earlier termination of the Initial Term of this Lease or any
Renewal Terms, with the consent of Landlord, shall operate and be construed
as a tenancy from month to month only, at one hundred fifty percent (150%)
of the Basic Rent reserved herein and otherwise upon the same terms and
conditions as contained in this Lease except that Tenant shall have no
right to renew or extend the Term of this Lease. Notwithstanding the
foregoing, any holding over without Landlord's consent shall entitle
Landlord, in addition to collecting Basic Rent at a rate of one hundred
fifty percent (150%) thereof, to exercise all rights and remedies provided
by law or in equity, including the remedies of Paragraph 20(b).
25. No Merger of Title. There shall be no merger of this Lease nor of the
leasehold estate created by this Lease with the fee estate in or ownership of
any of the Leased Premises by reason of the fact that the same person,
corporation, firm or other entity may acquire or hold or own, directly or
indirectly, (a) this Lease or the leasehold estate created by this Lease or any
interest in this Lease or in such leasehold estate and (b) the fee estate or
ownership of any of the Leased Premises or any interest in such fee estate or
ownership. No such merger shall occur unless and until all persons,
corporations, firms and other entities having any interest in (i) this Lease or
the leasehold estate created by this Lease and (ii) the fee estate in or
ownership of the Leased Premises or any part thereof sought to be merged shall
join in a written instrument effecting such merger and shall duly record the
same.
26. Definition of Landlord.
(a) Anything contained herein to the contrary notwithstanding, any
claim based on or in respect of any liability of Landlord under this Lease
shall be enforced only against the Landlord's interest in the Leased
Premises and shall not be enforced against the Landlord individually or
personally.
(b) The term "Landlord" as used in this Lease so far as covenants or
obligations on the part of Landlord are concerned, shall be limited to mean
and include only the owner or owners of the Leased Premises or holder of
the Deed of Trust in possession at the time in question of the Leased
Premises and in the event of any transfer or transfers of the title of the
Leased Premises, the Landlord herein named (and in case of any subsequent
transfers or conveyances, the then grantor) shall be automatically freed
and relieved from and after the date of such transfer and conveyance of all
personal liability as respects the performance of any covenants or
obligations on the part of Landlord contained in this Lease thereafter to
be performed.
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27. Hazardous Substances.
(a) Tenant agrees that it will not on, about, or under the Leased
Premises, make, treat or dispose of any "hazardous substances" as that term
is defined in the Comprehensive Environmental Response, Compensation and
Liability Act, and the rules and regulations promulgated pursuant thereto,
as from time to time amended, 42 U.S.C. Section 9601 et seq. (the "Act");
but the foregoing shall not prevent the use of any hazardous substances in
accordance with applicable laws and regulations. Tenant covenants that it
will at all times comply with the Act and any other federal, state or local
laws, rules or regulations governing "Hazardous Materials". "Hazardous
Materials" as used herein shall mean all chemicals, petroleum, crude oil or
any fraction thereof, hydrocarbons, polychlorinated biphenyls (PCBs),
asbestos, asbestos-containing materials and/or products, urea formaldehyde,
or any substances which are classified as "hazardous" or "toxic" under the
Act; hazardous waste as defined under the Solid Waste Disposal Act, as
amended 42 U.S.C. Section 6901; air pollutants regulated under the Clean
Air Act, as amended, 42 U.S.C. Section 7401, et seq.; pollutants as defined
under the Clean Water Act, as amended, 33 U.S.C. Section 1251, et seq., any
pesticide as defined by Federal Insecticide, Fungicide, and Rodenticide
Act, as amended, 7 U.S.C. Section 136, et seq., any hazardous chemical
substance or mixture or imminently hazardous substance or mixture regulated
by the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601, et
Seq., any substance listed in the United States Department of
Transportation Table at 45 CFR l72.101; any chemicals included in
regulations promulgated under the above listed statutes; any explosives,
radioactive material, and any chemical or other hazardous substance
regulated by state statutes similar to the federal statutes listed above
and regulations promulgated under such state statutes.
(b) To the extent required by the Act and/or any federal, state or
local laws, rules or regulations governing Hazardous Materials, Tenant
shall remove any hazardous substances (as defined in the Act) and Hazardous
Materials (as defined above) whether now or hereafter existing on the
Leased Premises and whether or not arising out of or in any manner
connected with Tenant's use or occupancy (including, without limitation,
use for purposes of the construction of leasehold improvements) of the
Leased Premises from and after the date of this Lease and continuing
through the end of the Term. Tenant shall and hereby does agree to defend,
indemnify and hold Lender and Landlord, their officers, directors,
shareholders, beneficial owners, partners, members, and employees, harmless
from and against any and all causes of actions, suits, demands or judgments
of any nature whatsoever, losses, damages, penalties, expenses, fees,
claims, costs (including response and remedial costs), and liabilities,
including, but not limited to, reasonable attorneys' fees and costs of
litigation, arising out of or in any manner connected with (i) the
violation of any applicable federal, state or local environmental law with
respect to the Leased Premises, and/or (ii) the "release" or "threatened
release" of or failure to remove, as required by this Paragraph 27,
"hazardous substances" (as defined in the Act) and Hazardous Materials (as
defined above) from the Leased Premises or any portion or portions thereof,
now of hereafter existing during the Initial Term and any Renewal Term
whether or not arising out of or in
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any manner connected with Tenant's occupancy of the Leased Premises during
the Initial Term or any Renewal Term. This indemnification shall survive
the expiration or earlier termination of this Lease.
(c) The Tenant agrees that it will not install any underground
storage tank at the Leased Premises. The Tenant agrees that it will not
store combustible or flammable materials on the Leased Premises in
violation of the Act or any other federal, state or local laws, rules or
regulations governing Hazardous Materials.
28. Entry by Landlord. Landlord and its authorized representatives shall
have the right upon reasonable notice to enter the Leased Premises at all
reasonable business hours (and at all other times in the event of an emergency):
(a) for the purpose of inspecting the same or for the purpose of doing any work
under Paragraph 12(c), and may take all such action thereon as may be necessary
or appropriate for any such purpose (but nothing contained in this Lease or
otherwise shall create or imply any duty upon the part of Landlord to make any
such inspection or do any such work), and (b) for the purpose of showing the
Leased Premises to prospective purchasers and mortgagees and, at any time within
twelve (12) months prior to the expiration of the Term of this Lease for the
purpose of showing the same to prospective tenants. No such entry shall
constitute an eviction of Tenant but any such entry shall be done by Landlord in
such reasonable manner as to minimize any disruption of Tenant's business
operation.
29. Statements. Tenant shall submit to Landlord and Lender, or its
designee, (a) any financial statements of Tenant which are provided by Tenant to
its lenders at the times such statements are provided by Tenant to its lenders,
and (b) the annual audited financial report and quarterly audited or unaudited
financial reports within one hundred twenty (120) days following the close of
each fiscal year (in the case of annual reports) or forty-five (45) days
following the close of each fiscal quarter (in the case of quarterly reports) of
Tenant. The obligations of Tenant named herein shall continue whether or not
this Lease shall have been assigned.
30. No Usury. The intention of the parties being to conform strictly to
the applicable usury laws, whenever any provision herein provides for payment by
Tenant to Landlord of interest at a rate in excess of the legal rate permitted
to be charged, such rate herein provided to be paid shall be deemed reduced to
such legal rate.
31. Separability. Each and every covenant and agreement contained in this
Lease is, and shall be construed to be, a separate and independent covenant and
agreement, and the breach of any such covenant or agreement by Landlord shall
not discharge or relieve Tenant from its obligation to perform the same. If any
term or provision of this Lease or the application thereof to any provision of
this Lease or the application thereof to any person or circumstances shall to
any extent be invalid and unenforceable, the remainder of this Lease, or the
application of such term or provision to person or circumstances other than
those as to which it is invalid or unenforceable, shall not be affected thereby,
and each term and provision of this Lease shall be valid and shall be enforced
to the extent permitted by law.
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32. Compliance with CC&Rs. Tenant agrees that Tenant is obligated to and
shall perform all obligations of the owner of the Leased Premises and pay all
assessments and other expenses which the owner of the Leased Premises may be
required to pay in accordance with any reciprocal easement agreement, any
covenants, conditions and restrictions, or any other agreement or document of
record now affecting the Leased Premises, including, without limitation, that
certain Declaration of Covenants, Conditions and Restrictions of Redwood
Business Park 2, recorded on August 13, 1990, as Instrument No. 00-0000000 in
the Official Records of Sonoma County, California, as amended from time to time,
and that certain Declaration of Covenants, Conditions and Restrictions of Willow
Brook Center North recorded on August 13, 1999, as Instrument No. 0000 0000000
in the Official Records of Sonoma County, California (as amended from time to
time, the "Willow Brook North CC&Rs") (herein referred to collectively as the
"CC&Rs") and that Tenant shall comply with all of the terms and conditions of
the CC&Rs during the Term of this Lease. Without limiting the foregoing, Tenant
shall pay on or before the due date thereof any and all assessments required to
be paid under the CC&Rs by the owner of the Leased Premises including, without
limitation, all regular assessments, regional assessments and enforcement
assessments as such terms are used in the Willow Brook North CC&Rs. Tenant
further covenants and agrees to indemnify, defend and hold harmless Landlord and
Lender against any claim, loss or damage suffered by Landlord or Lender by
reason of Tenant's failure to perform any obligations or pay any expenses as
required under any CC&Rs or comply with the terms and conditions of any CC&Rs as
hereinabove provided during the Term.
33. Miscellaneous.
(a) The paragraph headings in this Lease are used only for
convenience in finding the subject matters and are not part of this Lease
or to be used in determining the intent of the parties or otherwise
interpreting this Lease.
(b) As used in this Lease the singular shall include the plural as
the context requires and the following words and phrases shall have the
following meanings: (i) "including" shall mean "including but not limited
to"; (ii) "provisions" shall mean "provisions, terms, agreements, covenants
and/or conditions"; (iii) "lien" shall mean "lien, charge, encumbrance;
title retention agreement, pledge, security interest, mortgage and/or deed
of trust"; and (iv) "obligation" shall mean "obligation, duty, agreement,
liability, covenant or condition".
(c) Any act which Landlord is permitted to perform under this Lease
may be performed at any time and from time to time by Landlord or any
person or entity designated by Landlord. Any act which Tenant is required
to perform under this Lease shall be performed at Tenant's sole cost and
expense.
(d) This Lease may be modified, amended, discharged or waived only by
an agreement in writing signed by the party against whom enforcement of any
such modification, amendment, discharge or waiver is sought.
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(e) The covenants of this Lease shall run with the Land and bind
Tenant, the successors and assigns of Tenant and all present and subsequent
encumbrances and subtenants of any of the Leased Premises, and shall inure
to the benefit of and bind Landlord, its successors and assigns.
(f) This Lease will be simultaneously executed in several
counterparts, each of which when so executed and delivered shall constitute
an original, fully enforceable counterpart for all purposes.
(g) This Lease shall be governed by and construed according to the
Laws of the State in which the Leased Premises is located.
(h) Nothing contained herein shall be deemed to limit Landlord's
right to sell, assign or otherwise transfer the Leased Premises and this
Lease.
(i) All references to "business days" contained herein are references
to normal working business days, i.e., Monday through Friday of each
calendar week, exclusive of federal and national bank holidays. In the
event that any event hereunder is to occur, or a time period is to expire,
on a date which is not a business day, such event shall occur or such time
period shall expire on the next succeeding business day.
(j) Whenever in this Lease the consent of the Landlord is required,
such consent shall not be unreasonably withheld or delayed.
(k) Time is of the essence with respect to this Lease.
34. Special Provision. Tenant acknowledges that pursuant to the terms
and conditions of that certain Agreement of Purchase and Sale dated effective
July 23, 1999, executed by and between G&W/Xxxxxx Redwood Business Park, L.P., a
California limited partnership ("Seller"), and Landlord (as amended from time to
time, the "Purchase Agreement"), at Landlord's option, Seller is obligated to
prepare and file with the City of Petaluma, California, an application for lot
line adjustment to reconfigure the boundaries of the Land so that the Land shall
include a portion of the common area parcel described in the Willow Brook North
CC&Rs and if granted, to cause the Willow Brook North Association, a California
non-profit member benefit corporation (the "Association") to convey a portion of
such common area parcel to Landlord. Provided that such lot line adjustment is
consummated, Tenant acknowledges that the Willow Brook North CC&Rs shall be
terminated and be released of record and that the Association, after conveying
such portion of the common area parcel to Landlord, shall be dissolved and
Landlord and Seller shall grant to each other reciprocal easements over and
under each of their respective reconfigured lots for, among other others,
ingress, egress, parking, utilities and the use of the recreation area located
on the common area parcel (the "Substitute REA"). Tenant hereby agrees to
cooperate with Seller and Landlord in processing such application for lot line
adjustment with the City of Petaluma, California, including
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without limitation, the provision of any necessary consents, approvals, or
subordinations by Tenant. In the event the lot line adjustment is consummated
and a portion of the common area parcel is conveyed to Landlord, Tenant consents
to the termination of the Willow Brook North CC&Rs and the replacement of such
CC&Rs with the Substitute REA and agrees that the Substitute REA shall be
included within the definition of CC&Rs pursuant to Paragraph 32 hereof for all
purposes of this Lease and Tenant shall be obligated to and shall perform all
obligations and pay all assessments and other expenses which the owner of the
Leased Premises is required to perform and/or pay thereunder. Additionally,
Tenant agrees that from and after the date the lot line adjustment is
consummated, the Land shall include the portion of the common area parcel
conveyed to Landlord for all purposes of this Lease and the Premises shall
include the right to use all easements (including the recreational area) granted
for the benefit the owner of the Land. Tenant agrees that it shall not be
necessary to amend this Lease in writing for the following provisions to be
effective but Tenant shall, upon request of Landlord, enter into an amendment of
this Lease to evidence such amendments.
IN WITNESS WHEREOF, Landlord and Tenant have caused this instrument to be
executed effective as of the day and year first above written.
LANDLORD:
99 AF PETALUMA, L.L.C.,
a Delaware limited liability company
By: NLP Finance, L.P.,
a Delaware limited partnership,
its sole member
By: Wolverine Net Lease GP Company,
a Texas corporation,
its administrator
By: /s/ A. Xxxxxx Xxxxx
----------------------------
A. Xxxxx Xxxxx,
Vice President
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TENANT:
ADVANCED FIBRE COMMUNICATIONS, INC.,
a Delaware corporation
By: /s/ Xxxx Xxxxxxxxx
------------------------------------
Name: Xxxx Xxxxxxxxx
------------------------------
Title: CEO, President
-----------------------------
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EXHIBIT A-1
LEGAL DESCRIPTION
Parcel One as shown and designated on that certain Parcel Map No. 321 of
Redwood Business Park, filed for record August 31, 1999, in Book 596 of Maps, at
Pages 15 and 16, Official Records of Sonoma County.
37
EXHIBIT A-2
LEGAL DESCRIPTION
A non-exclusive right to use the easements for right of access, parking and
incidental purposes over Parcel Four of Parcel Map 321 of Redwood Business Park,
upon the terms, conditions and provisions as contained in that certain
Declaration of Covenants, Conditions and Restrictions of Willow Brook Center
North recorded August 13, 1999, as Instrument No. 0000 0000000, Official Records
of Sonoma County.
38
EXHIBIT B
RENEWAL OPTIONS
Provided that Tenant, both at the time of giving the applicable renewal
notice set forth herein and at the time of the commencement of the Renewal Term
(as hereinafter defined) in question, is not in default under any term or
provision contained in this Lease and no condition exists which with the passage
of time or the giving of notice or both would constitute an Event of Default
pursuant to this Lease, Tenant (but not any assignee or subtenant of Tenant)
shall have, and is hereby given, four (4) options (each, a "Renewal Option") to
renew and to extend the term of this Lease, each Renewal Option to follow
consecutively upon the expiration of the Initial Term of this Lease (or the
immediately preceding Renewal Term [hereinafter defined], if applicable). Each
Renewal Option shall be for a term of five (5) years (a "Renewal Term") and
shall be exercised, if at all, by Tenant giving written notice thereof to
Landlord at least nine (9) months prior to (but not more than twelve (12) months
prior to) the expiration date of the Initial Term or the then current Renewal
Term, as the case may be. The renewal and extension of this Lease for any
Renewal Term shall be under the same terms, conditions and covenants contained
in the Lease, except that (a) the Basic Rent for each of the years of the
applicable Renewal Term shall be equal to the following respective amounts at
the time of the commencement of the Renewal Term in question:
Renewal Term Year Annual Basic Rent Monthly Basic Rent
------------ ---- ----------------- ------------------
First Renewal Term 16 $ 2,817,082 $ 234,757
17 2,877,649 239,804
18 2,939,519 244,960
19 3,002,718 250,227
20 3,067,277 255,606
Second Renewal Term 21 $ 3,133,223 $ 261,102
22 3,200,587 266,716
23 3,269,400 272,450
24 3,339,692 278,308
25 3,411,496 284,291
Third Renewal Term 26 Greater of (x) Prevailing Market Rent (hereinafter defined)
or (y) $3,411,496
27 An amount equal to 102.15% of immediately preceding year's Annual Basic Rent
28 An amount equal to 102.15% of immediately preceding year's Annual Basic Rent
29 An amount equal to 102.15% of immediately preceding year's Annual Basic Rent
30 An amount equal to 102.15% of immediately preceding year's Annual Basic Rent
Fourth Renewal Term 31 An amount equal to 102.15% of immediately preceding year's Annual Basic Rent
32 An amount equal to 102.15% of immediately preceding year's Annual Basic Rent
39
33 An amount equal to 102.15% of immediately preceding year's Annual Basic Rent
34 An amount equal to 102.15% of immediately preceding year's Annual Basic Rent
35 An amount equal to 102.15% of immediately preceding year's Annual Basic Rent
(b) Tenant shall have no option to renew this Lease beyond the expiration of the
fourth Renewal Term (provided that Tenant exercised its option with respect to
the first, second and third Renewal Terms and has otherwise satisfied the
requirements of this Exhibit); and (c) all leasehold improvements within the
Leased Premises shall be provided in their then existing condition (on an
"as-is" basis) at the time the Renewal Term in question commences. Failure by
Tenant to notify Landlord in writing of Tenant's election to exercise the
Renewal Options herein granted within the time limits set forth for such
exercise shall constitute a waiver and termination of such Renewal Option and
any and all subsequent Renewal Options.
As used herein, the term "Prevailing Market Rent" means the prevailing
market rental rate (stated in the form of a dollar amount per rentable square
foot) which would be charged under a comparable lease to a tenant comparable in
size and credit standing to Tenant for all of the Leased Premises for a term of
similar duration. The determination of such Prevailing Market Rent shall, for
all applications in this Lease, be made using the following procedure:
1. Whenever, pursuant to the terms of this Lease, a determination must be
made of Prevailing Market Rent, Landlord shall provide to Tenant in
writing Landlord's reasonable determination of such Prevailing Market
Rent within fifteen (15) days after receipt of Tenant's written
exercise of the Renewal Option in question. If Tenant accepts such
determination by Landlord in writing, or if Tenant shall not have
notified Landlord of its objection to such determination in writing,
both within fifteen (15) days following Tenant's receipt of such
determination, then such determination by Landlord of the Prevailing
Market Rent for that applicable portion of the Lease shall irrevocably
become the Prevailing Market Rent.
2. If Tenant notifies Landlord, within fifteen (15) days following its
receipt of Landlord's determination of Prevailing Market Rent, that it
objects to such determination as not accurately reflecting such
Prevailing Market Rent ("Tenant's Notice of Objection"), then
Landlord's determination of Prevailing Market Rent referred to in
paragraph 1 above shall thereafter not be effective, and instead the
following procedure shall be implemented to determine Prevailing
Market Rent:
(a) Within fifteen (15) days following Landlord's receipt of Tenant's
Notice of Objection, Landlord shall select and notify Tenant of
its selection of, an independent senior real estate broker from a
recognized commercial real estate brokerage firm knowledgeable in
the commercial real estate market of the San Francisco,
California Metroplex (the "Landlord's Market Broker"). Within
fifteen (15) days following Landlord's selection of Landlord's
Market Broker, Landlord shall cause such broker to analyze the
then-existing market conditions, prepare and deliver to Landlord
and Tenant such broker's
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determination of the Prevailing Market Rent for the Leased
Premises. If Tenant accepts in writing such determination of
Prevailing Market Rent presented by Landlord's Market Broker, or
if Tenant shall not have notified Landlord of its objection to
such determination, in writing, both within fifteen (15) days
following Tenant's receipt of such determination by Landlord's
Market Broker, then such determination by Landlord's Market
Broker of the Prevailing Market Rent shall irrevocably become the
Prevailing Market Rent.
(b) If Tenant notifies Landlord, within fifteen (15) days following
its receipt of Landlord's Market Broker's determination of the
Prevailing Market Rent, that it objects to such determination as
not accurately reflecting such Prevailing Market Rent ("Tenant's
Notice of Objection to Landlord's Market Broker's
Determination"), then the following procedure shall be
implemented to determine Prevailing Market Rent:
(i) Within fifteen (15) days following Tenant's giving or
delivering to Landlord the Tenant's Notice of Objection to
Landlord's Market Broker's Determination, Tenant shall
select, and notify Landlord of its selection of, an
independent senior real estate broker from a recognized
commercial real estate brokerage firm knowledgeable in the
commercial real estate market of the San Francisco,
California Metroplex (the "Tenant's Market Broker"). Within
fifteen (15) days following Tenant's selection of Tenant's
Market Broker, Tenant shall cause such broker to analyze the
then-existing market conditions, and prepare and deliver to
Landlord and Tenant such broker's determination of the
Prevailing Market Rent for the Leased Premises. If Landlord
accepts in writing such determination of Prevailing Market
Rent presented by Tenant's Market Broker, or if Landlord
shall not have notified Tenant of its objection to such
determination, in writing, both within fifteen (15) days
following Landlord's receipt of such determination by
Tenant's Market Broker, then such determination by Tenant's
Market Broker of the Prevailing Market Rent shall
irrevocably become the Prevailing Market Rent.
(ii) If Landlord notifies Tenant, within fifteen (15) days
following its receipt of Tenant's Market Broker's
determination of the Prevailing Market Rent, that it objects
to such determination as not accurately reflecting such
Prevailing Market Rent ("Landlord's Notice of Objection to
Tenant's Market Broker's Determination"), then Landlord
shall, within five (5) days thereafter, direct both
Landlord's Market Broker and Tenant's Market Broker to
select within ten (10) days thereafter, and notify Landlord
and Tenant of their selection of,
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a third independent senior real estate broker from a
recognized commercial real estate brokerage firm
knowledgeable in the commercial real estate market of the
San Francisco, California Metroplex (the "Third Market
Broker"). Within fifteen (15) days following such selection
of the Third Market Broker, such broker shall analyze the
then-existing market conditions, prepare and deliver to
Landlord, Tenant, Landlord's Market Broker, and Tenant's
Market Broker such Third Market Broker's determination of
the Prevailing Market Rent for the Leased Premises. If the
Third Market Broker's determination of Prevailing Market
Rent is a number between (x) the rental rate determined by
Landlord's Market Broker, augmented five percent (5%) both
higher and lower from such rental rate, and (y) the rental
rate determined by Tenant's Market Broker, augmented five
percent (5%) both higher and lower from such rental rate,
then such Third Market Broker's determination of Prevailing
Market Rent shall be irrevocably binding upon both Landlord
and Tenant. However, if the Third Market Broker's
determination of Prevailing Market Rent is a number not
between (x) and (y) from the previous sentence, then the
final, irrevocable determination of Prevailing Market Rent
which shall be binding upon both Landlord and Tenant, will
be calculated by adding together the two closest appraisals
of the three determinations from the three brokers, and
dividing such sum by two. Both Landlord and Tenant
acknowledge that the determination of Prevailing Market Rent
which is derived from such procedure shall be irrevocably
binding upon both Landlord and Tenant.
(c) Notwithstanding any provisions elsewhere in this Lease allocating
the payment of expenses, Landlord agrees to pay the expenses
associated with the services of Landlord's Market Broker, Tenant
agrees to pay the expenses associated with the services of
Tenant's Market Broker, and both Landlord and Tenant agree to
jointly and equally pay the expenses associated with the services
of the Third Market Broker. As used herein, a "senior real estate
broker" shall be deemed to be a real estate broker with at least
ten (10) years of commercial real estate experience with one or
more recognized commercial real estate brokerage firms.
Upon exercise of a Renewal Option by Tenant and subject to the conditions
set forth hereinabove, this Lease shall be extended for the period of such
applicable Renewal Term without the necessity of the execution of any further
instrument or document, although if requested by either party, Landlord and
Tenant shall enter into a written agreement modifying and supplementing the
Lease in accordance with the provisions hereof. Any termination of this Lease
during the Initial Term shall terminate all renewal rights hereunder and any
termination of the Lease during the first Renewal Term shall terminate all
rights to the second, third and fourth Renewal Options, any
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termination of this Lease during the second Renewal Term shall terminate all
rights to the third and fourth Renewal Term and any termination of this Lease
during the third Renewal Term shall terminate all rights to the fourth Renewal
Term. The renewal rights of Tenant hereunder shall not be severable from this
Lease, nor may such rights be assigned or otherwise conveyed in connection with
any permitted assignment or sublease of this Lease. Landlord's consent to any
assignment or sublease of this Lease shall not be construed as allowing an
assignment of such rights to any assignee or subtenant.
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EXHIBIT C
INITIAL TERM BASIC RENT
YEAR ANNUAL BASIC RENT MONTHLY BASIC RENT
---- ----------------- ------------------
1 $2,047,500 $170,625
2 $2,091,521 $174,293
3 $2,136,489 $178,041
4 $2,182,423 $181,869
5 $2,229,346 $185,779
6 $2,277,277 $189,773
7 $2,326,238 $193,853
8 $2,376,252 $198,021
9 $2,427,341 $202,278
10 $2,479,529 $206,627
11 $2,532,839 $211,070
12 $2,587,295 $215,608
13 $2,642,922 $220,244
14 $2,699,745 $224,979
15 $2,757,789 $229,816
44
EXHIBIT D
LEASEHOLD IMPROVEMENTS AGREEMENT
ARTICLE I
LEASEHOLD IMPROVEMENT OBLIGATIONS OF TENANT
1.1 On or before the first (1st) anniversary of the Commencement Date,
Tenant shall (a) substantially install or cause to be substantially installed on
the second floor of the Leased Premises, at its sole cost and expense, the
leasehold improvements (the "Leasehold Improvements") generally depicted on the
Second Floor Reference Plan attached hereto as Schedule 1.1 in accordance with
Tenant's Drawings (hereinafter defined), all which shall be consistent with
Tenant's leasehold improvements on the first floor of the Leased Premises, and
(b) deliver to Landlord evidence reasonably satisfactory to Landlord that Tenant
has paid at least One Million and No/100 Dollars ($1,000,000.00) in direct
out-of-pocket costs to non-affiliated third parties for materials and labor
incurred in installing the Leasehold Improvements (collectively, the "Leasehold
Improvements Obligations"). On or before the tenth (10th) day after the end of
each calendar month commencing with the first month after the month in which the
Commencement Date occurs and continuing through and including the month in which
the first (1st) anniversary of the Commencement Date occurs, Tenant shall
deliver to Landlord a written summary of all of such out-of-pocket expenses paid
by Tenant in the preceding month for labor and materials in connection with the
installation of the Leasehold Improvements.
1.2 Concurrently with its execution of this Lease, Tenant shall deposit
with Landlord an irrevocable, unconditional, transferable letter of credit (the
"Tenant Improvement Letter of Credit") in an amount equal to One Million and
No/100 Dollars ($1,000,000.00) and in form and substance satisfactory to
Landlord from a financial institution acceptable to Landlord to be issued to and
naming Landlord as the beneficiary. The Tenant Improvement Letter of Credit
shall be for a term of not less than thirteen (13) months after the Commencement
Date. The Tenant Improvement Letter of Credit shall be held by Landlord as
security for the performance by Tenant of its obligations under this Leasehold
Improvements Agreement. If (a) Tenant shall fail or refuse to timely perform the
Leasehold Improvement Obligations pursuant to Section 1.1 hereof, or (b) an
Event of Default shall occur under this Lease and Landlord has elected to
terminate Tenant's possession of the Premises pursuant to Paragraph 20 of this
Lease, without limiting or impairing Landlord's other rights and remedies under
this Lease, Landlord shall have the right to immediately present the Tenant
Improvement Letter of Credit for payment. In the event Landlord presents the
Tenant Improvement Letter of Credit for payment, Landlord shall be entitled to
retain an aggregate amount of the proceeds from such letter of credit equal to
the positive difference obtained by (x) subtracting the amount of out-of-pocket
third party costs actually incurred and paid for by Tenant in connection with
labor and materials relating to the installation of the Leasehold Improvements
(as determined in Landlord's reasonable discretion based upon the aforementioned
monthly summaries of expenses incurred by Tenant) through the date of the
occurrence of the Event of Default in question from (y) One Million and No/100
Dollars ($1,000,000.00). The remaining balance of such proceeds shall be
returned by Landlord to Tenant. For example, if at the time an
45
Event of Default occurs, Tenant has provided evidence to Landlord that Tenant
has actually paid for Three Hundred Fifty Thousand and No/100 Dollars ($350,000)
of labor and materials relating to the installation of the Leasehold
Improvements, then Landlord shall be entitled to retain Six Hundred Fifty
Thousand and No/100 Dollars ($650,000) and shall deliver Three Hundred Fifty
Thousand and No/100 Dollars ($350,000) to Tenant. Landlord may deliver the
Tenant Improvement Letter of Credit to any purchaser of or successor to
Landlord's interest in this Lease or the Leased Premises, and thereupon Landlord
shall be discharged from all obligation or liability with respect to such letter
of credit.
1.3 In the event Tenant fails to complete the Leasehold Improvements or
fails to provide Landlord with evidence that Tenant has paid invoices of not
less than One Million and No/100 Dollars ($1,000,000.00) in respect of the
installation of such Tenant Improvements pursuant to the requirements of
Paragraph 1.1 hereof on or before the first (1st) anniversary of the
Commencement Date, an Event of Default shall be deemed to have occurred
hereunder and Landlord, without limiting or impairing Landlord's other rights
and remedies under this Lease, shall have the right to present the Tenant
Improvement Letter of Credit for immediate payment thereafter.
ARTICLE II
CONTRACTS AND PERMITS
2.1 Tenant is responsible for letting all contracts relating to the
construction and installation of the Leasehold Improvements, supervision and
completion of the Leasehold Improvements and payment therefor, procurement of
all permits and permissions related to the Leasehold Improvements, compliance
with the requirements of all authorities having jurisdiction over the Leasehold
Improvements, and with conditions contained herein, and payment of all fees and
charges incurred in connection therewith.
ARTICLE III
TENANT'S DRAWINGS
3.1 On or before ninety (90) days after the Commencement Date, Tenant
shall prepare and furnish to Landlord, at Tenant's cost and expense, in
compliance with applicable laws, statutes, ordinances and codes, a complete set
of interior finish working drawings (the "Tenant's Drawings") for the Leasehold
Improvements. Tenant's Drawings will be full and complete in all respects.
3.2 After Tenant submits Tenant's Drawings to Landlord, Landlord will have
fifteen (15) days to approve or disapprove Tenant's Drawings, which approval
shall not be unreasonably withheld. In the event Landlord does not approve the
Tenant's Drawings, Landlord will advise Tenant of Landlord's comments to
Tenant's Drawings. Failure by Landlord to approve or disapprove Tenant's
Drawings within the time limits prescribed herein will constitute an approval by
Landlord. In the event Landlord disapproves Tenant's Drawings, Tenant will
incorporate
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Landlord's comments into Tenant's Drawings within ten (10) days from receipt
thereof and resubmit the same to Landlord, who will have ten (10) days to
approve or disapprove the revised Tenant's Drawings. In the event Landlord does
not approve the same, the procedures set forth herein will be followed until
such time as Landlord has approved the revised Tenant's Drawings.
3.3 In the event Tenant desires to modify or change Tenant's Drawings
after the same have been approved in the manner provided above, Tenant will
submit such modifications or changes to Landlord for review and consideration
and the procedures governing approval of Tenant's Drawings will apply to any
such modifications or changes.
3.4 Any approval by Landlord of any of Tenant's Drawings will not in any
way be construed or operated to constitute a representation or warranty of
Landlord as to the adequacy or sufficiency of Tenant's Drawings, or the
Leasehold Improvements to which they relate, for any reason, purpose or
condition, but such approval will merely be the consent of Landlord, as may be
required hereunder, in connection with performance of the installation of the
Leasehold Improvements in accordance with Tenant's Drawings.
ARTICLE IV
TENANT'S WORK
4.1 At its own expense, Tenant will provide all design, engineering,
plans, specifications, drawings, permits, fees, work, labor, skill and equipment
required to complete the second floor of the Leased Premises for occupancy, and
will construct the Leasehold Improvements in accordance with Tenant's Drawings,
approved in the manner set forth herein.
4.2 All approved modifications to the existing second floor shell building
heating, cooling, ventilating, exhaust, control, electrical distribution, life
safety and other systems may be carried out by Tenant's contractor at Tenant's
expense subject to the requirements of Section 4.3 below.
4.3 Modifications to the shell building systems set forth in Section 4.2
and special requirements of Tenant can be considered by Landlord only if applied
for at the time Tenant's Drawings are submitted for approval and if they are
compatible with the capacity and character of the Leased Premises. Landlord will
not be required to grant its consent to allow Tenant's contractor to perform
such work unless Tenant agrees to obtain from the subcontractor(s) originally
responsible for the installation of such shell building systems written
statements in form satisfactory to Landlord specifically affirming the continued
validity of any and all warranties and guaranties in effect prior to
commencement of Tenant's installation of the Leasehold Improvements from each
such shell building systems subcontractor. Restrictions on mechanical and
electrical connections by Tenant may be imposed as reasonably necessary by
Landlord to ensure that no warranty or guarantee pertaining to the shell
building is lost or jeopardized.
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4.4 No construction work will be undertaken or commenced by Tenant until:
(a) Tenant's Drawings have been submitted to and approved by
Landlord, and
(b) all necessary building permits and required insurance coverages
have been secured and certificates of insurance delivered to Landlord.
4.5 Tenant will proceed with its work expeditiously, continuously, and
efficiently, and will complete the same in a good and workmanlike manner by the
first (1st) anniversary of the Commencement Date.
4.6 Tenant will ensure that all materials, skill and workmanship in
installing all Leasehold Improvements will be of uniformly high quality, not
less than building standard, and in accordance with the best standards of
practice and any governing codes or regulations. Tenant represents and warrants
that Tenant's Drawings and the improvements contemplated thereby will be in
compliance with applicable building and zoning laws, ordinances, regulations and
any covenants, conditions or restrictions affecting the Leased Premises, and
that the same are in accordance with good engineering and architectural
practice, and that Tenant's Drawings are sufficient for issuance of a building
permit for such work.
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EXHIBIT E
RECORD AND RETURN TO:
XXXXXX & XXXXXXX
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
ATTENTION: Xxxxx X. Xxxxx, Esq.
____________ [SPACE ABOVE LINE FOR RECORDER'S USE ONLY] ____________
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
("MORTGAGEE")
and
ADVANCED FIBRE COMMUNICATIONS, INC.
("LESSEE")
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
September 22, 1999
This instrument affects real property situated, lying and being in the County of
Sonoma, State of California.
49
SUBORDINATION, NON-DISTURBANCE AND
ATTORNMENT AGREEMENT
THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this
"Agreement") is entered into as of September 22, 1999 (the "Effective Date"),
between GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a Delaware corporation,
whose address is 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000 ("Mortgagee"),
and ADVANCED FIBRE COMMUNICATIONS, INC., a Delaware corporation, whose address
is # 0 Xxxxxx Xxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx 00000 ("Lessee"), with reference
to the following facts:
A. 99AF Petaluma L.L.C., a Delaware limited liability company, whose
address is 00000 Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000 ("Lessor"), owns
the real property commonly known as 0000 X. XxXxxxxx Xxxxxxxxx (such real
property, including all buildings, improvements, structures and fixtures located
thereon, the "Leased Premises"), are more particularly described in Schedule A
attached hereto and made a part hereof.
B. Mortgagee has made or will make an acquisition loan to Purchaser (such
loan, as it may be decreased, increased, or otherwise modified, and any
replacement financing in substitution therefor, in whole or in part, the
"Loan").
C. To secure the Loan, Purchaser has encumbered or will encumber the
Leased Premises by entering into that certain Deed of Trust, Indenture of
Mortgage, Assignment of Rents and Leases, Security Agreement and Fixture Filing
dated September 15, 1999, in favor of Mortgagee (as amended, increased, renewed,
extended, spread, consolidated, severed, restated, or otherwise changed from
time to time, the "Mortgage") to be recorded in the Official Records of the
County of Sonoma, State of California (the "Land Records").
D. Pursuant to a Lease Agreement of even date herewith (the "Lease"),
Lessor demised to Lessee the Leased Premises.
E. Lessee and Mortgagee desire to agree upon the relative priorities of
their interests in the Leased Premises and their rights and obligations if
certain events occur.
NOW, THEREFORE, for good and sufficient consideration, Lessee and Mortgagee
agree:
1. DEFINITIONS.
The following terms shall have the following meanings for purposes of this
Agreement.
1.1 Construction-Related Obligation. A "Construction-Related Obligation"
means any obligation of Lessor under the Lease to make, pay for, or reimburse
Lessee for any alterations, demolition, or other improvements or work at the
Leased Premises, including the Leased Premises. "Construction-Related
Obligations" shall not include: (a) reconstruction or repair following fire,
casualty or condemnation; or (b) day-to-day maintenance and repairs.
50
1.2 Foreclosure Event. A "Foreclosure Event" means: (a) foreclosure under
the Mortgage; (b) any other exercise by Mortgagee of rights and remedies
(whether under the Mortgage or under applicable law, including bankruptcy law)
as holder of the Loan and/or the Mortgage, as a result of which Successor Lessor
becomes owner of the Leased Premises; or (c) delivery by Lessor to Mortgagee (or
its designee or nominee) of a deed or other conveyance of Lessor's interest in
the Leased Premises in lieu of any of the foregoing.
1.3 Former Lessor. A "Former Lessor" means Lessor and any other party that
was Lessor under the Lease at any time before the occurrence of any attornment
under this Agreement.
1.4 Offset Right. An "Offset Right" means any right or alleged right of
Lessee to any offset, defense (other than one arising from actual payment and
performance, which payment and performance would bind a Successor Lessor
pursuant to this Agreement), claim, counterclaim, reduction, deduction, or
abatement against Lessee's payment of Rent or performance of Lessee's other
obligations under the Lease, arising (whether under the Lease or under
applicable law) from Lessor's breach or default under the Lease.
1.5 Rent. The "Rent" means any fixed rent, base rent or additional rent
under the Lease.
1.6 Successor Lessor. A "Successor Lessor" means any party that becomes
owner of the Leased Premises as the result of a Foreclosure Event.
1.7 Termination Right. A "Termination Right" means any right of Lessee to
cancel or terminate the Lease or to claim a partial or total eviction arising
(whether under the Lease or under applicable law) from Lessor's breach or
default under the Lease.
2. SUBORDINATION.
The Lease shall be, and shall at all times remain, subject and subordinate
to the Mortgage, the lien imposed by the Mortgage, and all advances made under
the Mortgage.
3. NON-DISTURBANCE, RECOGNITION AND ATTORNMENT.
3.1 No Exercise of Mortgage Remedies Against Lessee. So long as the Lease
has not been terminated on account of Lessee's default that has continued beyond
applicable grace or cure periods (an "Event of Default"), Mortgagee shall not
name or join Lessee as a defendant in any exercise of Mortgagee's rights and
remedies arising upon a default under the Mortgage unless applicable law
requires Lessee to be made a party thereto as a condition to proceeding against
Lessor or prosecuting such rights and remedies. In the latter case, Mortgagee
may join Lessee as a defendant in such action only for such purpose and not to
terminate the Lease or otherwise adversely affect Lessee's rights under the
Lease or this Agreement in such action.
3.2 Non-disturbance and Attornment. If the Lease has not been terminated
on account of an Event of Default by Lessee, then, when Successor Lessor takes
title to the Leased Premises: (a) Successor Lessor shall not terminate or
disturb Lessee's possession of the Leased Premises under
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the Lease, except in accordance with the terms of the Lease and this Agreement;
(b) Successor Lessor shall be bound to Lessee under all the terms and conditions
of the Lease (except as provided in this Agreement); (c) Lessee shall recognize
and attorn to Successor Lessor as Lessee's direct Lessor under the Lease as
affected by this Agreement; and (d) the Lease shall continue in full force and
effect as a direct lease, in accordance with its terms (except as provided in
this Agreement), between Successor Lessor and Lessee.
3.3 Further Documentation. The provisions of this Article shall be
effective and self-operative without any need for Successor Lessor or Lessee to
execute any further documents. Lessee and Successor Lessor shall, however,
confirm the provisions of this Article in writing upon request by either of
them.
4. PROTECTION OF SUCCESSOR LESSOR.
Notwithstanding anything to the contrary in the Lease or the Mortgage,
Successor Lessor shall not be liable for or bound by any of the following
matters:
4.1 Claims Against Former Lessor. Any Offset Right that Lessee may have
against any Former Lessor relating to any event or occurrence before the date of
attornment, including any claim for damages of any kind whatsoever as the result
of any breach by Former Lessor that occurred before the date of attornment. (The
foregoing shall not limit either (a) Lessee's right to exercise against
Successor Lessor any Offset Right otherwise available to Lessee because of
events occurring after the date of attornment or (b) Successor Lessor's
obligation to correct any conditions that existed as of the date of attornment
and violate Successor Lessor's obligations as Lessor under the Lease).
Notwithstanding the foregoing, if Lessee notifies Successor Lessor before a
Foreclosure Event occurs that Former Lessor is in default under the Lease and
Lessee will suffer actual damages as a result of such default, Lessee shall be
entitled to an Offset Right against Rent due and payable to Successor Lessor,
but only to the extent of such actual damages that have accrued after the date
of such notice of default to Successor Lessor. Lessee may continue to make
payments of Rent to Former Lessor until Successor Lessor gives Lessee thirty
(30) days prior written notice that Successor Lessor has become the owner of the
Leased Premises or until Lessee is notified that a receiver has been appointed
to, among other things, collect such Rent.
4.2 Prepayments. Any payment of Rent that Lessee may have made to Former
Lessor more than thirty (30) days before the date such Rent was first due and
payable under the Lease with respect to any period after the date of attornment
other than, and only to the extent that, the Lease expressly required such a
prepayment.
4.3 Payment; Security Deposit. Any obligation: (a) to pay Lessee any
sum(s) that any Former Lessor owed to Lessee or (b) with respect to any security
deposited with Former Lessor, unless such security was actually delivered to
Mortgagee.
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4.4 Modification, Amendment, or Waiver. Any material modification or
material amendment of the Lease, any waiver of any material obligations of
Lessee under the Lease, any consent to assignment or subletting, or any other
action that materially affects the obligations of Lessee under the Lease, made
without Mortgagee's written consent.
4.5 Surrender, Etc. Any consensual or negotiated surrender, cancellation,
or termination of the Lease, in whole or in part, agreed upon between Lessor and
Lessee, unless effected unilaterally by Lessee pursuant to the express terms of
the Lease.
4.6 Construction-Related Obligations. Any Construction-Related Obligation
of Former Lessor.
5. EXCULPATION OF SUCCESSOR LESSOR.
Notwithstanding anything to the contrary in this Agreement or the Lease,
upon any attornment pursuant to this Agreement, the Lease shall be deemed to
have been automatically amended to provide that Successor Lessor's obligations
and liability under the Lease shall never extend beyond Successor Lessor's (or
its successors' or assigns') interest, if any, in the Leased Premises from time
to time, including insurance and condemnation proceeds, Successor Lessor's
interest in the Lease, and the proceeds from any sale or other disposition of
the Leased Premises by Successor Lessor (collectively, "Successor Lessor's
Interest"). Lessee shall look exclusively to Successor Lessor's Interest (or
that of its successors and assigns) for payment or discharge of any obligations
of Successor Lessor under the Lease as affected by this Agreement. If Lessee
obtains any money judgment against Successor Lessor with respect to the Lease or
the relationship between Successor Lessor and Lessee, then Lessee shall look
solely to Successor Lessor's Interest (or that of its successors and assigns) to
collect such judgment. Lessee shall not collect or attempt to collect any such
judgment out of any other assets of Successor Lessor.
6. MORTGAGEE'S RIGHT TO CURE.
6.1 Notice to Mortgagee. Notwithstanding anything to the contrary in the
Lease or this Agreement, before exercising any Termination Right or Offset
Right, Lessee shall provide Mortgagee with notice of the breach or default by
Lessor giving rise to same (the "Default Notice") and, thereafter, the
opportunity to cure such breach or default as provided for below.
6.2 Mortgagee's Cure Period. After Mortgagee receives a Default Notice,
Mortgagee shall have a period of thirty (30) days beyond the time available to
Lessor under the Lease in which to cure the breach or default by Lessor.
Mortgagee shall have no obligation to cure (and shall have no liability or
obligation for not curing) any breach or default by Lessor, except to the extent
that Mortgagee agrees or undertakes otherwise in writing.
6.3 Extended Cure Period. In addition, as to any breach or default by
Lessor the cure of which requires possession and control of the Leased Premises,
provided only that Mortgagee
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undertakes by written notice to Lessee within thirty (30) days after receipt of
the Default Notice to exercise reasonable efforts to cure or cause to be cured
by a receiver such breach or default within the period permitted by this
paragraph, Mortgagee's cure period shall continue for such additional time (the
"Extended Cure Period") as Mortgagee may reasonably require to either (a) obtain
possession and control of the Leased Premises and thereafter cure the breach or
default with reasonable diligence and continuity or (b) obtain the appointment
of a receiver and give such receiver a reasonable period of time in which to
cure the default.
7. MISCELLANEOUS.
7.1 Notices. All notices or other communications required or permitted
under this Agreement shall be in writing and given by certified mail (return
receipt requested) or by nationally recognized overnight courier service that
regularly maintains records of items delivered. Each party's address is as set
forth in the opening paragraph of this Agreement, subject to change by notice
under this paragraph. Notices shall be effective the next business day after
being sent by overnight courier service, and five (5) business days after being
sent by certified mail (return receipt requested).
7.2 Successors and Assigns. This Agreement shall bind and benefit the
parties, their successors and assigns, any Successor Lessor, and its successors
and assigns. If Mortgagee assigns the Mortgage, then upon delivery to Lessee of
written notice thereof accompanied by the assignee's written assumption of all
obligations under this Agreement, all liability of the assignor shall terminate.
7.3 Entire Agreement. This Agreement constitutes the entire agreement
between Mortgagee and Lessee regarding the subordination of the Lease to the
Mortgage and the rights and obligations of Lessee and Mortgagee as to the
subject matter of this Agreement.
7.4 Interaction with Lease and with Mortgage. If this Agreement conflicts
with the Lease, then this Agreement shall govern as between the parties and any
Successor Lessor, including upon any attornment pursuant to this Agreement. This
Agreement supersedes, and constitutes full compliance with, any provisions in
the Lease that provide for subordination of the Lease to, or for delivery of
non-disturbance agreements by the holder of, the Mortgage. Mortgagee confirms
that Mortgagee has consented to Lessor's entering into the Lease.
7.5 Interpretation; Governing Law. The interpretation, validity and
enforcement of this Agreement shall be governed by and construed under the
internal laws of the State where the Leased Premises are located, excluding its
principles of conflict of laws.
7.6 Amendments. This Agreement may be amended, discharged or terminated,
or any of its provisions waived, only by a written instrument executed by the
party to be charged.
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7.7 Execution. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
7.8 Mortgagee's Representation. Mortgagee represents that Mortgagee has
full authority to enter into this Agreement, and Mortgagee's entry into this
Agreement has been duly authorized by all necessary actions.
IN WITNESS WHEREOF, this Agreement has been duly executed by Mortgagee and
Lessee as of the Effective Date.
LESSEE:
---------------------------------------,
a
--------------------------------------
By:
------------------------------------
Name:
------------------------------
Title:
-----------------------------
MORTGAGEE:
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC., a Delaware corporation
By:
------------------------------------
Name:
------------------------------
Title:
-----------------------------
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ACKNOWLEDGMENTS
STATE OF _______________ )
)
COUNTY OF ______________ )
This instrument was acknowledged before me by _______________________,
____________________ of GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a Delaware
corporation on ________________, 199__.
My Commission Expires:
--------------------------------- ----------------------------------------
NOTARY PUBLIC, State of ________________
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56
STATE OF ______________ )
)
COUNTY OF _____________ )
This instrument was acknowledged before me by __________________________,
____________________ of _______________________, a ________________________, on
________________, 199__.
My Commission Expires:
--------------------------------- ----------------------------------------
NOTARY PUBLIC, State of ________________
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