EXHIBIT 10.18
MENLO BUSINESS PARK
STANDARD FORM
LEASE
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by and between
MENLO BUSINESS PARK and PATRICIAN ASSOCIATES, INC.
("Landlord")
and
RAYCHEM CORPORATION,
a Delaware corporation
("Tenant")
LEASE
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Table of Contents
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PARAGRAPH PAGE
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1. PARTIES............................................................. 1
2. PREMISES............................................................ 1
3. DEFINITIONS......................................................... 1
(a) Alterations................................................... 1
(b) INTENTIONALLY OMITTED......................................... 1
(c) Building...................................................... 1
(d) Building Expenses............................................. 1
(e) CC&R's........................................................ 1
(f) City.......................................................... 1
(g) Commencement Date............................................. 1
(h) Common Areas.................................................. 2
(i) County........................................................ 2
(j) HVAC.......................................................... 2
(k) Interest Rate................................................. 2
(l) Landlord's Agents............................................. 2
(m) Lot 15........................................................ 2
(n) Monthly Rent.................................................. 2
(o) Premises...................................................... 2
(p) Project....................................................... 2
(q) Project Expenses.............................................. 2
(r) Real Property Taxes........................................... 2
(s) Rent.......................................................... 3
(t) INTENTIONALLY OMITTED......................................... 3
(u) Sublease...................................................... 3
(v) Subrent....................................................... 3
(w) Subtenant..................................................... 3
(x) Tenant Improvements........................................... 3
(y) Tenant Improvements Allowance................................. 3
(z) Tenant's Personal Property.................................... 3
(aa) INTENTIONALLY OMITTED......................................... 3
(bb) Tenant's Proportionate Share of
Project Expenses.............................................. 3
(cc) Term.......................................................... 4
(dd) Termination Date.............................................. 4
4. LEASE TERM.......................................................... 4
(a) Term........................................................... 4
(b) Commencement Date.............................................. 4
(c) Commencement Date Memorandum................................... 4
(d) Right of Termination........................................... 4
5. RENT................................................................ 4
(a) Monthly Rent................................................... 4
(b) Adjustments.................................................... 5
(c) Additional Rent................................................ 5
(d) Prorations..................................................... 5
6. LATE PAYMENT CHARGES................................................ 6
7. INTENTIONALLY OMITTED............................................... 6
8. HOLDING OVER........................................................ 6
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PARAGRAPH PAGE
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9. TENANT IMPROVEMENTS................................................. 7
10. CONDITION OF PREMISES............................................... 7
ll. USE OF THE PREMISES................................................. 7
(a) Tenant's Use................................................... 7
(b) CC&R's......................................................... 8
(c) Compliance..................................................... 8
12. QUIET ENJOYMENT..................................................... 10
13. ALTERATIONS......................................................... 10
(a) Permitted Alterations.......................................... 10
(b) Notice......................................................... 11
(c) Fixtures....................................................... 11
14. SURRENDER OF THE PREMISES........................................... 11
15. REAL AND PERSONAL PROPERTY TAXES.................................... 12
(a) Payment by Tenant.............................................. 12
(b) Tax on Improvements............................................ 12
(c) Proration...................................................... 12
(d) Payment upon Expiration of Term................................ 13
(e) Personal Property Taxes........................................ 13
(f) Failure to Pay................................................. 13
(g) Real Property Tax Increases.................................... 13
16. UTILITIES AND SERVICES.............................................. 13
17. BUILDING EXPENSES................................................... 14
(a) Definition..................................................... 14
(b) Payment........................................................ 15
(c) Tenant's Repairs and Maintenance............................... 16
(d) Landlord's Repairs and Maintenance............................. 16
18. PROJECT EXPENSES.................................................... 16
(a) Common Areas................................................... 16
(b) Use of Common Areas............................................ 17
(c) Specific Provisions re: Vehicle Parking........................ 17
(d) Maintenance of Common Areas.................................... 17
(e) Tenant's Share and Payment..................................... 18
19. PARKING............................................................. 19
20. LANDLORD'S RIGHT TO ENTER THE PREMISES.............................. 19
21. SIGNS............................................................... 19
22. INSURANCE........................................................... 20
(a) Indemnification................................................ 20
(b) Tenant's Insurance............................................. 20
(c) Landlord's Insurance........................................... 21
(d) Deductibles.................................................... 21
(e) Additional Insured; Certificates............................... 21
(f) Self Insurance................................................. 21
(g) Co-Insurer..................................................... 21
(h) Sufficiency of Coverage........................................ 21
(i) Insurance Requirements......................................... 21
(j) Landlord's Disclaimer.......................................... 22
(k) Failure to Pay................................................. 22
(l) No Other Insurance............................................. 22
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PARAGRAPH PAGE
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23. WAIVER OF SUBROGATION............................................... 22
24. DAMAGE OR DESTRUCTION............................................... 22
(a) Landlord's Obligation to Rebuild............................... 22
(b) Right to Terminate............................................. 23
(c) Limited Obligation to Repair................................... 24
(d) Abatement of Rent.............................................. 24
(e) Replacement Cost............................................... 24
25. CONDEMNATION........................................................ 24
(a) Total Taking - Termination..................................... 24
(b) Partial Taking................................................. 24
(c) No Apportionment of Award...................................... 25
(d) Temporary Taking............................................... 25
(e) Sale Under Threat of Condemnation.............................. 25
26. SUBLEASE............................................................ 25
(a) Landlord's Consent............................................. 25
(b) Sublease Form.................................................. 25
(c) No waiver...................................................... 25
(d) Information to be Furnished.................................... 26
(e) Sublease During Initial Term................................... 26
(f) Landlord's Alternatives During Option Terms.................... 26
(g) Proration...................................................... 26
(h) Executed Original.............................................. 26
(i) Transfer of Purchaser.......................................... 27
27. DEFAULT............................................................. 27
(a) Tenant's Default............................................... 27
(b) Remedies....................................................... 26
(c) Landlord's Default............................................. 29
28. SUBORDINATION....................................................... 29
29. NOTICES............................................................. 30
30. ATTORNEYS' FEES..................................................... 30
31. ESTOPPEL CERTIFICATE................................................ 31
32. TRANSFER OF THE PREMISES BY LANDLORD................................ 31
33. RIGHT TO PERFORM OTHER PARTY'S COVENANTS............................ 32
34. TENANT'S REMEDY..................................................... 32
35. MORTGAGE PROTECTION................................................. 33
36. BROKERS............................................................. 33
37. ACCEPTANCE.......................................................... 34
38. RECORDING........................................................... 34
39. QUITCLAIM........................................................... 34
40. MODIFICATIONS FOR LENDER............................................ 34
41. SEWER FEES.......................................................... 34
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PARAGRAPH PAGE
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42. OPTIONS TO EXTEND.................................................. 34
(a) Grant of Option............................................... 34
(b) Option Rent................................................... 35
43. RIGHT OF FIRST OFFER............................................... 36
44. OPTION TO PURCHASE................................................. 36
45. GENERAL............................................................ 37
(a) Captions...................................................... 37
(b) Executed Copy................................................. 37
(c) Time.......................................................... 38
(d) Separability.................................................. 38
(e) Choice of Law................................................. 38
(f) Gender; Singular, Plural...................................... 38
(g) Binding Effect................................................ 38
(h) Waiver........................................................ 38
(i) Entire Agreement.............................................. 38
(j) Authority..................................................... 38
(k) Exhibits...................................................... 38
(1) Lease Summary................................................. 39
SIGNATURE PAGE
TENANT............................................................. 39
LANDLORD........................................................... 39
TABLE OF EXHIBITS
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Exhibit A-1 The Premises
Exhibit A-2 Project
Exhibit B Work Letter Agreement
Exhibit C Commencement Date Memorandum
Exhibit D List of Personal Property and Removable Improvements
Exhibit E List of Tenants with Prior Options or Rights of
First Offer
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LEASE SUMMARY
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Lease Date: March 1, 1990
Landlord: Menlo Business Park and Patrician
Associates, Inc.
For Menlo 00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxx: Xxxxx 000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
With a copy to: The Xxxxx & Xxxxxxx Company
X.X. Xxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Xx.
For Patrician Bankers Life Building
Associates, Inc.: 000 Xxxx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxxxx, Xxxx 00000
Tenant: Raychem Corporation
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Contact: Corporate Real Estate Construction
and Facilities
Telephone: (000) 000-0000
Premises: Building No. 15 of Menlo Business
Park, consisting of approximately
55,257 square feet (of which
approximately 38,524 square feet are
located on the ground floor,
approximately 8,595 square feet are
located on the existing mezzanine
level, and approximately 8,138
square feet shall be located on a
mezzanine to be constructed by
Landlord)
Building Address: 0000 Xxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Square Footage of 55,257 sq. ft.
Building No. 15:
Square Footage of 2,060,693
all leasable Lots
within the Project:
Tenant's Proportionate Share 5.18%
of Project Expenses:
Commencement Date: June 1, 1990
Term: Sixty (60) months, with two 5-year
options to extend
Monthly Rent $47,521.02 per month, triple net,
subject to adjustments pursuant to
Paragraph 5(b)
Signage: One monument sign located on Lot
No. 15, per Menlo Park Signage
Ordinance
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LEASE
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1. Parties. THIS LEASE (the "Lease"), dated March 1, 1990, is entered into
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by and between MENLO BUSINESS PARK, a California general partnership, whose
address is 00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx Xxxxx, Xxxxxxxxxx,
00000, and PATRICIAN ASSOCIATES, INC., a California corporation, whose address
is Bankers Life Building, 000 Xxxx Xxxxxx, Xxxxx Xxxxx, Xxx Xxxxxx, Xxxx 00000
(collectively, "Landlord") and RAYCHEM CORPORATION, whose address is 000
Xxxxxxxxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000 ("Tenant").
2. Premises. Landlord hereby leases to Tenant and Tenant hereby leases
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from Landlord those certain premises (the "Premises') consisting of the entirety
of that certain building ("Building") commonly known as Xxxxxxxx Xx. 00, Xxxxx
Xxxx, Xxxxxxxxxx. which Building (following construction by Landlord of an
additional "shell" mezzanine) shall contain approximately 55,257 square feet,
all as shown on Exhibit "A-1" attached hereto, together with the right to use
the driveways and walkways for access to such Building. Tenant shall have the
right, at no additional cost to Tenant, to use the parking areas located on Lot
15, and shown on Exhibit A-1 hereto, and the Common Areas located within the
Outside Areas of the Project, as such terms are hereafter defined, subject to
the terms of this Lease.
3. Definitions. The following terms shall have the following meanings in
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this Lease:
(a) "Alterations" shall mean any alterations, decorations, additions
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or improvements made in, on or about the Building or the Premises after the
Commencement Date, including, but not limited to, lighting, heating,
ventilating, air conditioning and electrical fixtures, pipes and conduits,
partitioning, cabinetry, ceiling tile, fixtures and carpentry
installations.
(b) [INTENTIONALLY OMITTED.]
(c) "Building" shall mean that certain building located on Lot 15 (as
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defined in Paragraph 3(m) below), as shown on Exhibit "A-l". It shall be
understood that the term "Building" and the term "Premises" (as defined in
Paragraph 3(o), below) shall be used interchangeably.
(d) "Building Expenses" shall mean those expenses related to the
-----------------
Building as defined in Paragraph 17 of the Lease.
(e) "CC&R's" shall mean those certain covenants, conditions and
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restrictions recorded August 14, 1985, as Instrument No. 85082618, Records
of San Mateo County, California, as the same are amended from time to time.
(f) "City" shall mean the City of Menlo Park, State of California.
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(g) "Commencement Date" shall mean the first day of the term of this
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Lease as determined in accordance with Paragraph 4(b).
(h) "Common Areas" shall mean those areas defined in Paragraph 18 of
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this Lease.
(i) "County" shall mean the County of San Mateo, State of California.
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(j) "HVAC" shall mean the heating, ventilating and air conditioning
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system serving the Premises.
(k) "Interest Rate" shall mean fifteen percent (15%) per annum, but in
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no event greater than the maximum rate of interest permitted by law.
(l) "Landlord's Agents" shall mean Landlord's authorized agents,
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contractors, partners, subsidiaries, directors, officers and employees.
(m) "Lot 15" shall mean the legal lot containing 106,722 square feet
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of land area upon which the Building is situated.
(n) "Monthly Rent" shall mean the rent payable pursuant to Paragraph
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5(a), as adjusted from time to time pursuant to the terms of this Lease.
(o) "Premises" shall mean the Building and the 154 parking spaces
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located on Lot 15, all of which shall be for the exclusive use of Tenant,
as shown on Exhibit "A-1" attached hereto. It shall be understood that the
term "Building" and the term "Premises" shall be used interchangeably.
(p) "Project" shall mean that certain real property, and all
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improvements thereon, including the Building, other buildings, if any, and
related improvements, as shown on Exhibit "A-2" hereto, and known as "Menlo
Business Park".
(q) "Project Expenses" shall mean those expenses related to the
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Project as defined in Paragraph 18(d) of the Lease.
(r) "Real Property Taxes" shall mean any form of tax, assessment,
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license, fee, rent tax, levy, penalty (if assessed as a result of Tenant's
delinquency), real property or other tax (other than Landlord's net income,
estate, succession, inheritance, or franchise taxes) identifying the
Building (by address), now or hereafter imposed by any authority having the
direct or indirect power to tax, or by any city, county, state or federal
government or any improvement district or other district or division
thereof, to the extent that such tax or any portion thereof: (i) is
determined by the area of the Premises or any part thereof or the rent and
other sums payable hereunder by Tenant or by other tenants of the Project,
including, but not limited to, any gross income or excise tax levied by any
of the foregoing authorities with respect to receipt of such rent or other
sums due under this Lease; (ii) levied or assessed in lieu of, in
substitution for, or in addition to, existing or additional taxes with
respect to the Project whether or not now customary or within the
contemplation of the parties; (iii) is based upon any legal or equitable
interest of Landlord in the Project or the Premises or any part thereof; or
(iv) is collected by, or remitted (either directly or indirectly) to the
City, County (or any subdivisions thereof).
-2-
(s) "Rent" shall mean Monthly Rent plus the Additional Rent (as
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defined in Paragraph 5(c)).
(t) [INTENTIONALLY OMITTED]
(u) "Sublease" shall mean any transfer, sublease, assignment, license
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or concession agreement, encumbrance of hypothecation of this Lease or the
Tenant's interest in the Lease or in and to all or any portion of the
Premises; provided, however, a transfer or assignment of this Lease, or a
sublease of all or any portion of the Premises shall not be deemed a
Sublease, if such transfer, assignment or sublease is made to (i) any
entity which controls, is controlled, or is under common control with
Tenant, (ii) an entity which results from a merger or consolidation
involving Tenant. (iii) an entity which acquires all or substantially all
of the assets of Tenant, as a going concern, with respect to the business
that is being conducted within the Premises, and (iv) an entity engaged in
a joint venture with Tenant (the entities described in subparts (i) and
(iv) being hereafter referred to as "Affiliates"). If Tenant is a
partnership, a withdrawal or change of partners owning more than a fifty
percent (50%) interest in such partnership, or if Tenant is a corporation,
any transfer of more than fifty percent (50%) of its stock (with a
corresponding change in the management personnel of Tenant within six [6]
months of such transfer), shall constitute a transfer herein (unless
Landlord is granted (i) the right to review the financial condition of
Tenant following such transfer, and (ii) all other rights described in
Paragraph 26(i) below).
(v) "Subrent" shall mean consideration of any kind received, or to be
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received, by Tenant from a Subtenant if such sums are related to Tenant's
interest in this Lease or in the Premises, including, but not limited to,
bonus money and payments (in excess of book value) for Tenant's assets,
including its trade fixtures, equipment and other personal property,
goodwill, general intangibles, and any capital stock or other equity
ownership of Tenant.
(w) "Subtenant" shall mean the person or entity with whom a Sublease
---------
agreement is proposed to be or is made.
(x) "Tenant Improvements" shall mean those certain improvements to the
-------------------
Premises which shall be constructed by Tenant in accordance with Exhibit
"B" attached to this Lease and incorporated herein by this reference.
(y) "Tenant Improvements Allowance" shall mean the allowance provided
-----------------------------
by Landlord, if any, for the construction of the Tenant Improvements as
described in said Exhibit "B" of this Lease.
(z) "Tenant's Personal Property" shall mean all improvements described
--------------------------
in Exhibit "D" (attached hereto and incorporated herein by this reference),
-----------
as such may be updated by the parties from time to time, which improvements
Tenant shall remove upon expiration or earlier termination of this Lease,
and all of Tenant's furniture, equipment and other personal property in the
Premises.
(aa) [INTENTIONALLY OMITTED]
(bb) "Tenant/Proportionate Share of Project Expenses" shall mean
----------------------------------------------
the square footage of Lot 15 (106,722) divided by the square footage of the
leaseable lots in the Project (2,060,693) which equals 5.18%.
-3-
(cc) "Term" shall mean the term of this Lease set forth in
----
Paragraph 4(a), as it may be extended pursuant to the proper exercise of
the Options to Extend (as defined in Paragraph 42, below).
(dd) "Termination Date" shall mean the last day of the sixtieth
----------------
(60) month following the Commencement Date, subject to extension as
provided in Paragraph 42, below.
4. Lease Term.
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(a) Term. The Term of this Lease shall be for a period of five (5)
----
years commencing on the Commencement Date.
(b) Commencement Date. The Commencement Date shall be the earlier
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of the following dates:
(i) The date Tenant commences its business operations within the
Premises; or
(ii) Sixty (60) days after Landlord delivers to Tenant possession
of the Premises (following completion of the "Base building work" [as
such term is defined in Paragraph 1 of Exhibit "B" to this Lease]).
(c) Commencement Date Memorandum. When the actual Commencement Date is
----------------------------
determined, the parties shall execute a Commencement Date Memorandum
setting forth such date in the form shown in Exhibit "C".
(d) Right of Termination. Tenant shall have the right (the
----------------------
"Termination Right") to terminate this Lease effective as of the first day
of the thirty-seventh (37th) month of the initial Term of this Lease, or at
anytime thereafter. In order to exercise the Termination Right, Tenant must
(i) not be in default with respect to any of the terms, covenants or
conditions of this Lease; (ii) provide Landlord with written notice of
Tenant's intention to terminate this Lease at least six (6) months prior to
the effective date of the termination; and (iii) make timely payment of the
Termination Fee (as hereinafter defined). As used herein, "Termination Fee"
shall mean a payment from Tenant to Landlord delivered concurrently with
Tenant's written notice of termination, which payment shall be an amount
equal to Monthly Rent at the time of delivery of the termination notice,
multiplied by three (3), plus the total of all payments by Landlord
resulting from excess "Costs" (as described in Subparagraph 5(b)(ii),
below).
5. Rent.
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(a) Monthly Rent. Tenant shall pay to Landlord, in lawful money of
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the United States, for each calendar month of the Term, Monthly Rent in the
amount of Forty-Seven Thousand Five Hundred Twenty-One and 02/100 Dollars
($47,521.02) (based upon a rental rate of Zero and 86/100 Dollars [$0.86]
per rentable square foot within the Premises), subject to adjustment as
provided in Paragraph 5(b) below. All such payments of Monthly Rent shall
be made in advance, on the first day of each calendar month of the Term,
without abatement, deduction, claim, offset, prior notice or demand, at the
offices of Landlord c/o The Xxxxx & Xxxxxxx Company, X.X. Xxx 0XX Xxx
Xxxxx, Xxxxxxxxxx 00000, Attn: Xx. Xxxxxx X. Xxxxxxx, Xx.
-4-
(b) Adjustments.
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(i) The Monthly Rent as set forth hereinabove shall be increased
effective on the first day of both the twenty-fifth (25th) and forty-
ninth (49th) calendar months of the Term of this Lease (individually,
an "Adjustment Date", and collectively, the "Adjustment Dates") in
accordance with the applicable percentage increases, if any, in the
Consumer Price Index - All Urban Consumers (San Francisco-Oakland-San
Xxxx Area; Base: 1982-1984=100) ("Index"), as published by the United
States Department of Labor, Bureau of Labor Statistics, for the
immediately preceding twenty-four (24) month period. The Monthly Rent
payable on each Adjustment Date shall be increased by multiplying the
Monthly Rent payable pursuant to Paragraph 5(a) by a fraction, the
numerator of which is the Index published for the third calendar month
prior to the applicable Adjustment Date and the denominator of which
shall be the Index published for the third calendar month prior to the
Commencement Date, and the Monthly Rent (as increased in accordance
herewith) shall be paid thereafter in accordance with the terms of
Paragraph 5(a), above. In no event, however, shall the Monthly Rent be
increased at a rate which is (A) less than three percent (3%) per
annum (non-compounded), or (B) greater than six percent (6%) per annum
(non-compounded). Should the Bureau discontinue the publication of the
above Index, or publish the same less frequently, or vary the method
of calculation of same, or alter the same in some other manner, then
Landlord shall adopt, at its sole discretion, a substitute index or
substitute procedure which reasonably reflects and monitors consumer
prices.
(ii) In the event the total "Costs" exceed the "Allowance" (as
such terms are defined in Exhibit "B" to this Lease), subject to the
provisions of Paragraph 5 said Exhibit "B", Tenant shall pay such
excess Costs, within five (5) days of request by Landlord; provided,
however, at Tenant's request, Landlord shall pay such excess "Costs"
(up to a total amount of Ten Dollars [$10.00] per square foot within
the Premises), conditioned upon Tenant's execution of an amendment to
this Lease evidencing the increase of Monthly Rent by an amount
calculated to amortize such excess "Costs" (together with interest
thereon at the rate of twelve [12%] per annum) over the initial Term
of this Lease. If any portion of the Allowance remains unused
following completion of the Tenant Improvements, Tenant shall have the
right to cause such unused portion to be applied to its obligations to
pay Monthly Rent (first payable hereunder) until said unused portion
is fully expended.
(c) Additional Rent. All monies required to be paid by Tenant under
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this Lease, including, without limitation, Real Property Taxes payable
pursuant to Paragraph 15 hereof, repair and maintenance charges payable
pursuant to Paragraph 17 hereof and insurance premiums payable pursuant to
Paragraph 22 hereof shall constitute Additional Rent.
(d) Prorations. If, for any reason, the Commencement Date or the
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Termination Date of this Lease is not the first or last day of a month,
respectively, a prorated installment of Monthly Rent based on a thirty (30)
day month shall be paid for the fractional month during which this Lease
commences or terminates, as applicable.
-5-
6. Late Payment Charges. Tenant acknowledges that late payment by Tenant
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to Landlord of Rent and other charges provided for under this Lease will cause
Landlord to incur costs not contemplated by this Lease, the exact amount of such
costs being extremely difficult or impracticable to fix. Such costs include, but
are not limited to, processing and accounting charges and late charges that may
be imposed on Landlord by the terms of any encumbrance and notes secured by any
encumbrance covering the Premises, or late charges and penalties due to late
payment of Real Property Taxes due on the Premises. Therefore, if any
installment of Rent or any other charge due from Tenant is not received by
Landlord within five (5) days after written notice from Landlord that such
payment is due (the "Grace Period"), Tenant shall pay to Landlord an additional
sum equal to five percent (5%) of the amount overdue as a late charge for every
month or portion thereof that the Rent or other charges remain unpaid; it being
understood that said Grace Period (and the requirement that Landlord give Tenant
notice that Rent is due) shall only apply with respect to one (1) occurrence of
the late payment of Rent (or other sums due to Landlord under this Lease) in any
twelve (12) month period, thereafter, any additional occurrences of the late
payment of Rent (or other sums due to Landlord) in the same twelve (12) month
period shall constitute a material default under this Lease, and Landlord shall
be entitled to the late charge (described hereinabove) as of the date such Rent
payment (or other sum) was due, without the necessity of any notice to Tenant.
The parties agree that this late charge represents a fair and reasonable
estimate of the costs that Landlord will incur by reason of the late payment by
Tenant. Acceptance of any late charge shall not constitute a waiver by Landlord
of Tenant's default with respect to the overdue amount, and shall not prevent
Landlord from exercising any of the other rights and remedies available to
Landlord for any other breach of Tenant under this Lease.
Initials: /s/Jff /s/ MTE
-------- -------------------------------- ------------------------
Landlord Tenant
7. [INTENTIONALLY OMITTED.]
8. Holding Over. If Tenant remains in possession of all or any part of the
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Premises after the Termination Date (other than pursuant to the Options to
Extend (as defined in Paragraph 42(a) below)), without the prior written consent
of Landlord, such possession shall constitute a month-to-month tenancy only and
shall not constitute a renewal or extension for any further term. In such event,
Monthly Rent shall be increased to an amount equal to one hundred twenty percent
(120%) of the Monthly Rent payable during the last month of the then-current
Term; provided, however, if Tenant gives Landlord at least four (4) months'
prior written notice of Tenant's intention to so remain in the Premises, Monthly
Rent for the first month following the Termination Date shall be equal to
Monthly Rent payable for the last month of the Term, and thereafter, Monthly
Rent (during the remainder of such month-to-month tenancy) shall be increased to
one hundred twenty percent (120%) of the Monthly Rent last-payable during the
Term, as aforesaid. It shall be expressly understood that during such month-to-
month tenancy any other sums due hereunder shall be payable in the amount and at
the times specified in this Lease. Further, such month-to-month tenancy shall be
subject to every other term, condition, and covenant contained herein.
-6-
9. Tenant Improvements. The Tenant Improvements to the Premises shall be
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constructed by Tenant in accordance with the terms of the Work Letter Agreement
attached hereto as Exhibit "B".
10. Condition of Premises.
---------------------
(a) Subject to Landlord's representations in Paragraphs 10(b) and
11(c)(iii), below, and except for any latent defects in the Base Building
work (as defined in Exhibit "B"), by taking possession of the Premises,
Tenant shall be deemed to have accepted the Premises in a good, clean and
completed condition and repair, in compliance with all applicable laws,
codes and ordinances. Subject to the foregoing, Tenant hereby accepts the
Premises in its "as is" condition. Tenant acknowledges that neither
Landlord nor Landlord's Agents has made any representations or warranties
as to the suitability or fitness of the Premises for the conduct of
Tenant's business or for any other purpose, and that neither Landlord nor
Landlord's Agents has agreed to undertake any Alterations or construct any
Tenant Improvements to the Premises except as expressly provided in this
Lease.
(b) Landlord represents to Tenant that the Building was constructed in
accordance with the CC&R's and all applicable codes, ordinances and
regulations in effect as of the date of issuance of the building permit for
the Building. Further, Landlord represents to Tenant that the Premises
(including the roof and Building systems) are structurally sound for
Tenant's uses as set forth in Paragraph 11(a) below, and shall be delivered
to Tenant (including all mechanical equipment presently located therein) in
good working order, condition and repair, subject to any damage caused by
Tenant in connection with construction of the Tenant Improvements. Landlord
and Tenant shall conduct a joint inspection of the Premises prior to
Tenant's commencement of construction activities in order to develop a
basis for determining each party's respective compliance with the terms of
this Paragraph. In the event of a breach of any of the foregoing
representations, Landlord shall, at its sole cost, cause appropriate
reparations to occur as soon as reasonably possible following discovery of
the non-conforming item; it being understood, however, that Landlord shall
be given a reasonable opportunity to enforce any warranties then in effect
from third parties with respect to such non-conforming items. Tenant
represents to Landlord that the Tenant Improvements shall be free of
construction defects in either material or workmanship and shall be
constructed in accordance with the CC&R's and all applicable codes in
effect as of the Commencement Date.
11. Use of the Premises.
-------------------
(a) Tenant's Use. Tenant shall use the Premises solely for light
------------
manufacturing, research and development, warehousing, and related office
uses permitted by applicable law (the physical characteristics of the
Building shall be considered in determining if a proposed use is lawful)
and shall not use the Premises for any other purpose without obtaining the
prior written consent of Landlord. Use of the Common Areas of the Project
shall be nonexclusive, except for walkways appurtenant to the Building
which are designed for the exclusive use of Tenant.
-7-
(b) CC&R's. Tenant agrees that this Lease is subject and subordinate
------
to the CC&R's. Tenant acknowledges that it has read the CC&R's and knows
the contents thereof. Throughout the Term, Tenant shall faithfully and
timely perform all acts required by, and otherwise comply with, the CC&R's
and any modification or amendments thereof (provided that Tenant shall
receive a copy of such modifications and amendments), including the payment
by Tenant of any periodic or special dues or assessments charged against
the Premises. Tenant shall hold Landlord, Landlord's Agents and Premises
harmless and indemnify Landlord and Landlord's Agents against any loss,
expense, damage, attorneys' fees and costs or liability arising out of or
in connection with the failure of Tenant to so perform or comply with the
CC&R's.
(c) Compliance.
----------
(i) Tenant shall not use the Premises or suffer or permit
anything to be done in or about the Premises which will in any way
conflict with any law, statute, zoning restriction, ordinance or
governmental law, rule, regulation, or requirement of any duly
constituted public authority having jurisdiction over the Premises now
in force or which may hereafter be in force, or the requirements of
the Board of Fire Underwriters or other similar body now or hereafter
constituted relating to or affecting the condition, use or occupancy
of the Premises. Tenant shall not commit any public or private
nuisance or any other act or thing which might or would disturb the
quiet enjoyment of any other tenant of Landlord or any occupant of
nearby property. Tenant shall place no loads upon the floors, walls or
ceilings in excess of the maximum designed load specified by Landlord
or which may damage the Building or Common Areas; nor place any
harmful liquids in the drainage systems in violation of any applicable
laws, codes or ordinances; nor dump or store waste materials, refuse
or other materials or allow such to remain outside the Building
proper, except in the enclosed trash areas provided.
(ii) In particular, Tenant, at its sole cost, shall comply with
all laws relating to the storage, use and disposal by Tenant of
hazardous, toxic or radioactive matter, including those materials
identified in Sections 66680 through 66685 of Title 22 of the
California Administrative Code, Division 4, Chapter 30 ("Title 22") as
amended from time to time (collectively "Toxic Materials"). Tenant
agrees that it shall advise Landlord, within thirty (30) days of
Landlord's request, concerning the nature of Tenant's use, storage and
disposal of Toxic Materials in, on or about the Premises or Project.
In addition, Tenant shall promptly notify Landlord of any spills or
contaminations with respect to Toxic Materials as soon as reasonably
possible following Tenant's discovery of same. In the event Tenant
utilizes any corrosive chemicals, it shall, at the request of
Landlord, install polypropylene "FUSEAL" drain piping to allow for the
proper disposal of such chemicals. Tenant shall be solely responsible
for and shall defend, indemnify and hold Landlord and Landlord's
Agents harmless from and against all claims, costs and liabilities,
including attorneys' fees and costs, arising out of or in connection
with its storage, use and disposal of Toxic Materials, Tenant shall
-8-
further be solely responsible for and shall defend, indemnify and hold
Landlord, Landlord's Agents and the Premises harmless from and against
all claims, costs, and liabilities, including attorneys' fees and
costs, arising out of or in connection with the removal, clean-up and
restoration work and materials necessary to return the Premises to
their condition existing prior to Tenant's introduction of the Toxic
Materials on the Premises. In the event that Toxic Materials are
introduced, stored or disposed of in or around the Premises by a party
other than the Tenant (or a party brought onto the Project by Tenant)
at any time during the Term, Landlord shall defend, indemnify and hold
Tenant harmless from and against any resultant claims, costs and
liabilities from any governmental entity or other third party (other
than Tenant's Agents, employees or guests), provided that Tenant shall
promptly notify Landlord in writing following the date upon which
Tenant becomes aware of such Toxic Materials. Landlord's and Tenant's
obligations hereunder shall survive the termination of this Lease.
(iii) Landlord represents and warrants that it has not used,
generated, stored, transferred or disposed of any Toxic Materials in
or around the Premises during its ownership of the Project. Further,
to Landlord's knowledge, no previous owner or occupant has used,
generated, stored, transferred or disposed of any Toxic Materials in
or around the Premises. Landlord shall be responsible for and shall
defend, indemnify and hold Tenant harmless from and against all
claims, costs and liabilities including attorneys' fees and costs,
arising out of, or in connection with, Landlord's use, generation,
storage, transfer or disposal of Toxic Materials in or around the
Premises. Landlord's indemnification of claims, costs and liabilities
hereunder shall include the cost of removal, cleanup and restoration
work and materials necessary to return the Premises to their condition
prior to the appearance of such Toxic Materials on the Premises.
Notwithstanding the provisions of Subparagraph 11(c)(ii), above, in no
event shall Tenant be responsible for the removal or clean-up of any
Toxic Materials which are shown to have existed in or around the
Premises prior to the Commencement Date of which otherwise have come
to be located in, on or around the Premises other than due to Tenant's
generation, storage, transferral, transportation or use thereof.
Landlord shall protect, defend, indemnify and hold Tenant harmless
from and against all claims, costs and liabilities, including
attorneys' fees and costs, arising out of, or in connection with any
contamination of the Premises or the underlying soil or ground water
by any Toxic Materials, except to the extent such contamination is
caused by Tenant, its employees, agents, licensees, and invitees.
Landlord's obligations hereunder shall survive the termination of this
Lease.
(iv) Landlord hereby represents to Tenant that core samples and
ground water studies have been conducted for the Premises by Kaldveer
and Associates, and copies of the complete results of such studies
have been furnished to Tenant. Tenant hereby acknowledges receipt of
such results and further acknowledges its approval of the same.
-9-
12. Quiet Enjoyment. Landlord covenants that Tenant, upon performing the
---------------
terms, conditions and covenants of this Lease, shall have quiet and peaceful
possession of the Premises as against any person claiming the same by, through
or under Landlord. Within three (3) months of the execution of this Lease,
Landlord shall provide Tenant with commercially reasonable non-disturbance
agreements from any ground lessors, mortgage holders or lien holders of Landlord
in existence at the time of execution of this Lease, which agreements shall
include the following provision:
"As long as Tenant performs its obligations under this Lease, no
foreclosure of, deed given in lieu of foreclosure of, or sale under the
encumbrance, and no steps or procedures taken under the encumbrance, shall
materially affect Tenant's rights hereunder."
In addition, Landlord shall provide Tenant with said agreements as soon as
reasonably possible from ground lessors, mortgage holders or lien holders of
Landlord who later come into existence at anytime during the Term of the Lease.
13. Alterations.
-----------
(a) Permitted Alterations. After the Commencement Date, Tenant shall
---------------------
not make or permit, without the prior written consent of Landlord, which
consent shall not be unreasonably withheld, any Alterations in, on or about
the Premises, except for non-structural Alterations which (A) do not
penetrate the roof, or affect the foundations or the mezzanine, (B) are not
visible from the exterior of the Building, and (C) do not exceed Twenty-
Five Thousand Dollars ($25,000.00) per occurrence ("Minor Alterations").
Notwithstanding the foregoing Tenant shall not, without the prior written
consent of Landlord, make any:
(i) Alterations to the exterior of the Building;
(ii) Alterations to or penetrations of the structural portions of
the Building including, without limitation, the roof, or which will
interfere with the proper functioning of any mechanical facilities or
equipment located in the Building or Project; and
(iii) Alterations visible from outside the Building to which
Landlord may withhold consent based on wholly aesthetic grounds.
All Alterations shall be installed at Tenant's sole expense, in compliance
with all applicable laws and the CC&R's, by a licensed contractor. The work
shall be done in a good and workmanlike manner conforming in quality and
design with the Premises existing as of the Commencement Date, and shall
not diminish the value of either the Building or the Project. With respect
to any Alteration which is not exempted as a "Minor Alteration", Landlord
and Tenant shall determine whether the same constitutes personal property
as defined in
-10-
Subparagraph (z) on page 3 and if so, Exhibit "D" shall be modified
-----------
accordingly. Further, all Minor Alterations shall be deemed to be personal
property which Tenant may remove or leave in the Premises at its election
subject to Landlord's right within thirty (30) days prior to the end of the
term of the Lease to require Tenant to remove. Notwithstanding any other
provision of this Lease, Tenant shall be solely responsible for the
maintenance and repair of any and all Alterations made by it to the
Premises.
(b) Notice. Tenant shall give Landlord written notice of Tenant's
------
intention to perform work on the Premises which might result in any claim
of lien at least ten (10) days prior to the commencement of such work to
enable Landlord to post and record a Notice of Nonresponsibility or other
notice Landlord deems proper prior to the commencement of any such work.
Tenant shall not permit any mechanic's, materialmen's or other liens to be
filed against the property of which the Premises are a part. If Tenant
fails to remove any lien(s) filed against the Premises or all or any
portion of the Project in connection with any work performed or any work
claimed to have been performed by or at the direction of Tenant within ten
(10) days from the date of the lien filing(s), then Landlord may remove
such liens(s) at Tenant's expense and Tenant shall reimburse Landlord for
all costs incurred by Landlord in connection with the removal of the
lien(s), which amount shall be deemed Additional Rent, and shall include,
without limitation, all sums disbursed, incurred or deposited by Landlord,
including Landlord's costs, expenses and attorneys' fees with interest
thereon at the Interest Rate; provided, however, that Landlord shall not
have the right to remove such lien, at Tenant's expense, if (i) Tenant is
then contesting in good faith the validity of such lien, and (ii) Tenant
provides security reasonably satisfactory to Landlord against the
enforcement of such lien.
(c) Fixtures. Tenant shall, at its own expense, provide, install and
--------
maintain in good condition all its Personal Property required in the
conduct of its business in the Premises.
14. Surrender of the Premises. Upon the expiration or earlier termination
-------------------------
of this Lease, Tenant shall surrender the Premises to Landlord in good condition
and repair, normal wear and tear and acts of God excepted, with all interior
walls in good repair, all carpets shampooed and cleaned, all floors cleaned and
waxed, and the HVAC equipment in good working condition, all to the reasonable
satisfaction of Landlord. Tenant may remove any of Tenant's Alterations and
Tenant shall remove from the Premises such of Tenant's Alterations to the extent
that removal was a requirement of Landlord's approval of such Alterations, as
communicated to Tenant within fifteen (15) business days after Tenant's request
for approval of such Alterations, and all Tenant's Personal Property; and Tenant
may remove any or all of the Tenant Improvements installed in the Premises
(other than those Tenant Improvements which are denoted on the "Final Plans"
described in Exhibit "B" as elements of the Tenant Improvements which may not be
-----------
removed by Tenant at the end
-11-
of the term of the Lease) and shall repair any damage and perform any
restoration work caused by such removal; provided, however if Tenant is then in
default, Landlord shall have all of the rights with respect to Tenant's Personal
Property set forth in California Civil Code (S)(S) 1980-1991, inclusive. If
Tenant fails to remove such Alterations and Tenant's Personal Property which
Tenant is authorized and obligated to remove pursuant to the above, and such
failure continues after the termination of this Lease, Landlord may retain such
property and all rights of Tenant with respect to it shall cease, or Landlord
may assert its rights under the California Civil Code as described above. Tenant
shall pay to Landlord, upon demand, the costs of removal of any such Alterations
and Tenant's Personal Property and storage and transportation costs of same, and
the cost of repairing and restoring the Premises, together with interest at the
Interest Rate from the date of expenditure by Landlord. If the Premises are not
so surrendered at the termination of this Lease, Tenant hereby agrees to
indemnify Landlord and its Agents against all loss or liability resulting from
delay by Tenant in so surrendering the Premises, including, without limitation,
any claims made by any succeeding tenant, losses to Landlord due to lost
opportunities to lease to succeeding tenants, and attorneys' fees and costs.
15. Real and Personal Property Taxes.
--------------------------------
(a) Payment by Tenant. The Building Expenses, as defined in Paragraph
-----------------
17 below, includes all Real Property Taxes levied against the Building.
Landlord agrees to forward to Tenant a copy of all notices and tax bills
pertaining to the Premises promptly upon Landlord's receipt of same. If
Tenant shall fail to pay such Real Property Taxes prior to any penalty or
delinquency (and provided Tenant shall have received the applicable tax
xxxx at least thirty (30) days prior to such delinquency), Landlord shall
have the right but not the obligation, to: (i) pay the same, in which case
Tenant shall immediately repay such amount to Landlord including interest
at the Interest Rate from the date paid by Landlord until the date of
payment by Tenant; and (ii) exercise any and all remedies available to
Landlord pursuant to Paragraph 27. Tenant may contest the amount or
validity of any Real Property Taxes by appropriate proceeding; provided
that Tenant shall promptly pay such taxes unless such proceeding shall
operate to prevent or stay the collection of the tax so contested. Landlord
shall join in any such proceeding if any law shall so require, providing
that Tenant shall indemnify Landlord against any liability, cost or expense
in connection therewith, including, without limitation, attorneys' fees and
costs.
(b) Tax on Improvements. Tenant shall pay all of any increase in Real
-------------------
Property Taxes attributable to any Alterations and Tenant Improvements of
any kind whatsoever placed within the Premises for the benefit of, at the
request of, or by Tenant.
(c) Proration. Tenant's liability to pay Real Property Taxes (and
---------
Tenant's right to a refund of any overpayment of Real Property Taxes, which
shall be refunded within thirty (30) days of Landlord's receipt of same)
shall be prorated on the basis of a 365-day year to account for any
fractional portion of a fiscal tax year included at the commencement or
expiration of the Term. With respect to any assessments which may be levied
against or upon the Premises, or which under the laws then in force may be
evidenced by improvements or other bonds or may be paid in annual
-12-
installments, only the amount of such annual installment
(with appropriate proration for any partial year) and interest due thereon
shall be included within the computation of the annual Real Property Taxes
levied against the Premises.
(d) Payment on Expiration of Term. If this Lease terminates on a date
-----------------------------
earlier than the end of a fiscal tax year, Landlord shall deliver to Tenant
a statement setting forth the amount of Real Property Taxes to be paid by
Tenant prorated to the date of termination. Tenant shall pay to Landlord
such prorated amount within thirty (30) calendar days of Tenant's receipt
of the statement. Landlord shall promptly return to Tenant any overpayments
of real property taxes effective within thirty (30) days following the end
of the term of the Lease.
(e) Personal Property Taxes. Tenant shall pay prior to delinquency all
-----------------------
taxes assessed or levied against Tenant's Personal Property in, on or about
the Premises. When possible, Tenant shall cause its Personal Property to be
assessed and billed separately from the real or personal property of
Landlord.
(f) Failure to Pay. Tenant's failure to pay any of the charges (other
--------------
than Tenant's Personal Property taxes) required to be paid under this
Paragraph shall constitute a material default under this Lease.
(g) Real Property Tax Increases. For the purposes of the initial Term
---------------------------
of this Lease, the term "Real Property Taxes" shall not include any
increases in taxes resulting from any assessment or reassessment of the
Building or the real property on which the Building is located, payable
with respect to the initial Term of this Lease, to the extent that any such
increase arises out of or results from:
(i) the sale or transfer of ownership of possession of all or any
part of the Building or any part of the real property on which the
Building is located, or
(ii) the refinancing or placement of any debt related to or
secured by all or any part of the Building or any part of the real
property on which the Building is located.
During the "Option Terms" (as such terms are defined in Paragraph
42, below) of this Lease, the term "Real Property Taxes" shall include
increases in taxes which may result from the events listed above.
16. Utilities and Services. Tenant shall be responsible for and shall pay
----------------------
promptly all charges for water, gas, electricity, telephone, refuse pickup,
janitorial service and all other utilities, materials and services furnished
directly to or used by Tenant in, on or about the Premises during the Term,
together with any taxes thereon. Subject to the reciprocal indemnity set forth
in Paragraph 22(a), below, Landlord shall not be liable in damages, or
otherwise, for any failure or interruption of any utility service or other
service furnished to the Premises, unless such failure or interruption is caused
by Landlord's willful misconduct. Subject to the Landlord indemnification
provisions of Paragraph 22 below, no such failure or interruption shall entitle
Tenant to terminate this Lease or withhold or xxxxx Rent or other sums due
hereunder.
-13-
17. Building Expenses.
-----------------
(a) Definition. Tenant shall pay from time to time during the term of
------------
this Lease, within thirty (30) days of presentation of invoice therefor
from Landlord, the Building Expenses, which in this Lease shall mean and
refer to (i) Real Property Taxes relative to the Building or Lot 15 as a
whole as defined in Paragraph 3(r) of this Lease, and (ii) the "Costs of
Operation and Maintenance" of the Building. "Costs of Operation and
Maintenance" as used in this Lease shall be deemed to mean and refer to
those expenses incurred by Landlord with respect to the operation and
maintenance of the Building and Lot 15 which, in accordance with accepted
principles of sound accounting practice as applied to the operation,
maintenance and security of a first class light manufacturing/research and
development building, are properly chargeable to the operation and
maintenance of the Building and Lot 15, which costs shall include without
limitation, the minor and incidental non-capital costs of repair and
maintenance to the structural portions of the roof and the exterior walls
of the Building, landscape services, heating, ventilation and air
conditioning maintenance contracts, supplies, compensation and all fringe
benefits, workers' compensation insurance premiums and payroll taxes paid
to, for or with respect to all persons engaged in the operating,
maintaining or cleaning of the Building or Lot 15, costs of Building
security, depreciation or rental of personal property used in such
maintenance, the insurance required to be carried by Landlord with respect
to the Building as set forth in this Lease, and all other charges directly
related to the operation and maintenance of the Building and Lot 15, or
which are more economically handled by Landlord. Costs of Operation and
Maintenance shall specifically exclude any leasing commissions, advertising
and promotion expenditures, legal and auditing fees (other than reasonable
legal and auditing fees necessarily incurred in connection with the
maintenance and operation of the Building and Lot 15) and all expenses for
which Landlord is compensated through proceeds from insurance.
Notwithstanding anything to the contrary contained in this Paragraph 17(a),
or in Paragraph 18(d) below, (1) Costs of Operation and Maintenance and (2)
Project Expenses shall not include the following (and for purposes hereof
all references to the "Project" shall be deemed to include the Common
Areas):
(i) Leasing commissions, attorneys' fees, costs, disbursements,
and other expenses incurred in connection with negotiations or
disputes with tenants, or in connection with leasing, renovating, or
improving space for tenants or other occupants or prospective tenants
or other occupants of the Project;
(ii) The cost of any service sold to any tenant (including
Tenant) or other occupant for which Landlord is entitled to be
reimbursed as an additional charge or rental over and above the basic
rent and escalations payable under the lease with that tenant;
(iii) Any depreciation on the Building or Project;
(iv) Expenses in connection with services or other benefits of a
type that are not provided to Tenant but which are provided to another
tenant or occupant of the Project;
-14-
(v) Costs incurred due to Landlord's violation of any terms
or conditions of this Lease or any other lease relating to the
Building or Project;
(vi) Overhead profit increments paid to Landlord's
subsidiaries or affiliates for management or other services on or to
the building or for supplies or other materials to the extent that the
cost of the services, supplies, or materials exceeds the cost that
would have been paid had the services, supplies, or materials been
provided by unaffiliated parties on a competitive basis;
(vii) All principal, interest and loan fees relating to any
mortgage or deed of trust or relating to any capital item which is
specifically excluded from Costs of Operation and Maintenance or
Project Expenses pursuant to another provision of this Lease, and all
rental and other sums payable under any ground or underlying lease, or
any lease for any equipment ordinarily considered to be of a capital
nature (except janitorial equipment which is not affixed to the
Building);
(viii) Any compensation paid to clerks, attendants, or other
persons in commercial concessions operated by Landlord;
(ix) Advertising and promotional expenditures;
(x) Any costs, fines, or penalties incurred due to violations
by Landlord of any governmental rule or authority;
(xi) Costs for sculpture, paintings, or other objects of art
(nor insurance thereon or extraordinary security in connection
therewith);
(xii) Wages, salaries, or other compensation paid to any
executive employees above the grade of building manager;
(xiii) The cost of correcting any breach of any of Landlord's
warranties under this Lease; and
(xiv) Costs of capital repairs (except as specifically
permitted herein), capital improvements and equipment; except for
those (1) required by laws enacted on or after the Commencement Date
(amortized over the useful life of the improvement and/or equipment),
together with interest at the actual interest rate incurred by
Landlord in connection with such capital improvements, and (2)
acquired to reduce Costs of Operation and Maintenance (amortized at an
annual rate reasonably calculated to equal the amount of such Costs to
be saved in each calendar year throughout the Term [as determined at
the time Landlord elected to proceed with the capital improvement or
acquisition of the capital equipment to reduce said costs]), together
with interest at the actual interest rate incurred by Landlord; it
being understood that the costs of constructing the day care center to
be located within the Project shall not be made a part of Costs of
Operation and Maintenance.
(b) Payment. Tenant's payment of the Building Expenses shall
-------
constitute Additional Rent payable by Tenant under this Lease.
-15-
(c) Tenant's Repairs and Maintenance. In addition to the payments to
--------------------------------
be made by Tenant pursuant to the provisions set forth above, and subject
to the provisions of Paragraphs 10, 24 and 25 of this Lease, Tenant shall,
at Tenant's sole cost and expense, keep and maintain the Premises (except
as specified in Subparagraph 17(d) below), including without limitation,
non-structural portions of the roof and the exterior walls of the Building,
all floors, subfloors, floor coverings, windows, ceilings, interior walls,
fixtures, doors, electrical and lighting equipment, plumbing, heating, air
conditioning, ventilating systems, immediately loading areas and Tenant's
signs, in all respects in good repair and in clean and safe condition,
reasonable wear and tear excepted, and if impractical to repair then the
foregoing items shall be replaced; provided, however, Landlord shall
enforce, for the benefit of Tenant, any and all warranties received by
Landlord during the initial construction of the Building (including the
"shell mezzanine" to be constructed pursuant to Exhibit "B" to this Lease)
-----------
to the extent such warranties cover items of repair for which Tenant shall
be responsible. Such warranties may cover, for example, repairs
necessitated by the ordinary and reasonable use of the roof surface of the
Building. In addition to the foregoing, Tenant shall, at Tenant's sole cost
and expense, replace, immediately upon breakage, all glass in the Premises
that may be broken during the term of this Lease with glass at least equal
to the specification and quality of the glass so replaced. Notwithstanding
the foregoing, Landlord shall have the option, after providing Tenant
written notice thirty (30) days to cure, to assume any or all of the
foregoing maintenance and repair responsibilities, and to require Tenant to
reimburse Landlord as Additional Rent, for the cost of all such services,
together with an accounting and management services fee of five percent
(5%) of the cost of such services.
(d) Landlord's Repairs and Maintenance. Landlord shall be responsible
----------------------------------
for maintaining and making non-minor repairs (or replacements), at its sole
cost, to the structural portions of the Building, including the roof and
the load-bearing walls; provided, however, if such repairs (or
replacements) are necessitated by the acts or omissions of Tenant
(negligent, willful or otherwise), Tenant, at its expense, shall be solely
responsible for effectuating said repairs. Notwithstanding the foregoing,
in no event shall Landlord be responsible for any repairs (or replacements)
to the roof or exterior walls (structural or otherwise) in connection with
a casualty not covered by insurance carried by Landlord pursuant to
Paragraph 22(c), below.
18. Project Expenses.
----------------
(a) Common Areas. As used in this Lease, "Common Areas" shall mean the
------------
Recreational Area depicted on Exhibit "A-2", the Streetscape, which is a
ten-foot strip of planted area located throughout the Project, and all
other areas within the Project which are available for the common use of
tenants of the Project and which are not leased or held for the exclusive
use of Tenant or other tenants including, but not limited to, sidewalks,
access roads, landscaping and planted areas. Landlord may from time to time
change the size, location, nature and use of any of the Common Areas,
including converting Common Areas into leasable areas, constructing
additional parking facilities (including parking structures) in the Common
Areas, and increasing or decreasing
-16-
Common Area land and/or facilities, and Tenant's Proportionate Share of
Project Expenses will be appropriately amended, to the extent that the
square footage of the land in the Project available for lease is changed
from the total set forth in Exhibit "A-2" to this Lease, which total is
2,060,693 square feet, based upon which total square footage Tenant's
Proportionate Share of Project Expenses is calculated at 106,722 square
feet [which is the land area for Building No. 15] divided by 2,060,693
equals 5.18%. Tenant acknowledges that the exercise by Landlord of its
right to change the size, location, nature and use of the Common Areas may
result in occasional inconvenience to Tenant from time to time. Such
activities and changes shall be expressly permitted if they do not
materially affect Tenant's use of the Premises. Notwithstanding anything to
the contrary contained in this Paragraph, Landlord's exercise of its rights
hereunder shall not materially increase Tenant's obligations (including,
without limitation, its rental obligations) or materially decrease its
rights under this Lease, or negatively impact the quality of the Project.
(b) Use of Common Areas. Tenant shall have the nonexclusive right (in
-------------------
common with other tenants and all others to whom Landlord has granted or
may grant such rights) to use the Common Areas for the purposes intended,
subject to such reasonable rules and regulations as Landlord may establish
from time to time. Tenant shall abide by such rules and regulations and
shall use its best effort to cause others who use the Common Areas with
Tenant's express or implied permission to abide by Landlord's rules and
regulations. Upon reasonable prior notice, Landlord may close any Common
Areas to perform any acts in and to the Common Areas as, in Landlord's
judgment, may be desirable to improve the Project. Tenant shall not, at any
time, interfere with the rights of Landlord, other tenants, or any other
person entitled to use the Common Areas. Notwithstanding the provisions of
Paragraph 18(a) and this Paragraph 18(b), Landlord shall use reasonable
efforts to exercise its rights under such Paragraphs in a manner which
shall minimize any interference with Tenant's use and occupancy of the
Premises and the Common Areas.
(c) Specific Provisions re: Vehicle Parking. Tenant shall not cause
---------------------------------------
large trucks or other large vehicles to be parked within the Project or on
the adjacent public streets. Temporary parking of large delivery vehicles
in the Project may be permitted by the rules and regulations established by
Landlord. Subject to Paragraph 19 below, and except where specific
permission is granted by the tenant of another lot of the Project, vehicles
shall be parked only in striped parking spaces on Lot 15 and not in
driveways, loading areas or other locations not specifically designated for
parking. If Tenant parks its vehicles in any areas of the Project other
than the parking lot located on Lot 15, such conduct shall be a material
breach of the Lease. In addition to Landlord's other remedies under the
Lease, Tenant shall pay a reasonable daily charge for each such incorrectly
parked vehicle.
(d) Maintenance of Common Areas. Notwithstanding anything in this
---------------------------
Lease to the contrary, Landlord shall maintain the Common Areas in good
order, condition and repair and shall operate the Project, in Landlord's
sole discretion, as a first class industrial/commercial real property
-17-
development, subject to the exclusions listed in Paragraph 17(a), above,
Tenant shall pay Tenant's Proportionate Share of Project Expenses, which
shall include all costs incurred by Landlord for the operation and
maintenance of the Common Areas. Common Area costs include, but are not
limited to, costs and expenses for the following: gardening and
landscaping; utilities, water and sewage charges; maintenance of signs
(other than Tenant's signs); premiums for liability, property damage, fire
and other types of casualty insurance on the Common Areas, and Worker's
Compensation Insurance; compensation and all fringe benefits and payroll
taxes paid to, for or with respect to all persons engaged in the operating,
maintaining, or cleaning of the Building or the Project; all real property
taxes and assessments levied on or attributable to the Common Areas and all
Common Area improvements; all personal property taxes levied on or
attributable to personal property used in connection with the Common Areas;
straight line depreciation on personal property owned By Landlord which is
consumed in the operation or maintenance of the Common Areas; rental or
lease payments paid by Landlord for rented or leased personal property used
in the operation or maintenance of the Common Areas; fees for required
licenses and permits; repairing, resurfacing, minor patching and repaving,
maintaining, painting, lighting, cleaning, refuse removal, security and
similar items; exterior painting and other appropriate reserves; a fee for
Landlord's supervision of the Common Areas in the amount of five percent
(5%) of the total of all other Common Area costs for the calendar year; and
other charges directly related to the operation and maintenance of the
Building and the Project which are more economically handled by Landlord.
Landlord may cause any or all of such services to be provided by third
parties. Common Area costs shall not include depreciation of real property
which forms part of the Common Areas. Regardless of actual occupancy of the
Project, for the purpose of this Paragraph, the variable costs for the
operation and maintenance of the Common Areas (i.e., those which directly
increase based solely upon increased occupancy) will be extrapolated as
though the Project were 100% leased and occupied. Landlord may, at
Landlord's election, estimate in advance and charge to Tenant monthly its
Common Area costs, all Real Property Taxes and insurance premiums for which
Tenant is liable under the Lease.
(e) Tenant's Share and Payment. Tenant shall pay Tenant's
--------------------------
Proportionate Share of Project Expenses, in advance, in monthly
installments on the first day of each month during the Lease Term (prorated
for any fractional month). Landlord may adjust such estimates at any time
and from time to time based upon Landlord's experience and reasonable
anticipation of costs. Such adjustments shall be effective as of the next
rent payment date after notice to Tenant. Within thirty (30) days after the
end of each calendar year of the Lease Term, Landlord shall deliver to
Tenant a statement prepared in accordance with generally accepted
accounting principles setting forth, in reasonable detail, the actual
Common Area costs (i.e., Project Expenses) paid or incurred by Landlord
during the preceding calendar year and Tenant's pro rata share. Upon
receipt of such statement, there shall be an adjustment between Landlord
and Tenant with payment to or credit given by Landlord (as the case may be)
so that Landlord shall receive the entire amount of Tenant's share of such
costs and expenses for such period; provided, however, if any credit due to
Tenant may not be exhausted by one months' payment of Tenant's
Proportionate Share of Project
-18-
Expenses, the unapplied credit shall be returned to Tenant). Any changes in
the Common Area costs and/or the aggregate area leased or held for lease
for the exclusive use of all tenants of the Project during the Lease Term
shall be effective on the first day of the month after such change occurs.
19. Parking. Landlord hereby grants to Tenant during the term of this
-------
Lease, the exclusive right, and Tenant agrees to the obligation, to park only in
those one hundred fifty-four (154) parking spaces located on Lot 15, and those
forty (40) parking spaces located on Lot 2, respectively, which are highlighted
on Exhibit "A-l(a)" to this Lease. Tenant shall use reasonable efforts to ensure
that none of its employees, invitees, agents or contractors park other than in
such allocated spaces. In addition, Landlord hereby agrees to construct, within
ninety (90) days of Tenant's request given at any time during the Term, forty
(40) additional parking spaces within the "parking reserve area" of the Project.
Tenant, however, acknowledges that its use of said forty (40) additional parking
spaces shall be conditioned upon its payment to Landlord of a monthly parking
fee in the amount of Forty Dollars ($40.00) per space.
20. Landlord's Right to Enter the Premises. Tenant shall permit Landlord
--------------------------------------
and Landlord's Agents to enter the Premises at all reasonable times upon not
less than forty-eight (48) hours notice, except for emergencies in which case no
notice shall be required, to inspect the same, to post Notices of
Nonresponsibility and similar notices and signs indicating the availability of
Premises for sale or lease, to show the Premises to interested parties such as
prospective lenders and purchasers, to make necessary Alterations or repairs, to
discharge Tenant's obligations hereunder when Tenant has failed to do so within
a reasonable time after written notice from Landlord, and no sooner than one
hundred and eighty (180) days prior to the expiration of the Term, to place upon
the Premises such reasonable signs indicating the availability of Premises for
sale or lease and to show the Premises to prospective tenants and purchasers.
The above rights are subject to reasonable security regulations of Tenant, and
to the requirement that Landlord shall at all times act in a manner to cause the
least possible interference with Tenant's business.
21. Signs. Landlord hereby grants Tenant the right to install and
-----
maintain appropriate corporate signage (i) on the monument sign located on Lot
15, and (ii) Landlord approved signage on the glass at the entrance to the
Premises. Tenant shall have no right to maintain a Tenant identification sign in
any other location in, on or about the Premises and shall not display or erect
any other sign, display or other advertising material that is visible from the
exterior of the Building. The size, design, color and other physical aspects of
permitted signs shall be subject to Landlord's written approval prior to
installation, which shall not be unreasonably withheld, and shall be subject to
the Menlo Park Signage Ordinance and the Monument Signage Plan for Menlo
Business Park as approved by the City. The cost of any signage, including the
installation, maintenance and removal thereof shall be at Tenant's sole cost and
expense. If Tenant fails to maintain its signage, or if Tenant fails to remove
same upon termination of this Lease, Landlord may do so at Tenant's expense.
Tenant shall reimburse Landlord for all costs reasonably incurred by Landlord to
effect such removal, which amounts shall be deemed Additional Rent, and shall
include, without limitation, all sums disbursed, incurred or deposited by
Landlord including Landlord's costs, expenses and reasonable attorneys' fees
with interest thereon at the Interest Rate.
-19-
22. Insurance.
---------
(a) Indemnification. Each party ("Indemnitor") hereby agrees to
---------------
indemnify, defend and hold harmless the other party and its agents from and
against any and all damage, loss, liability and expense including, without
limitation, attorneys' fees and legal costs incurred directly or by reason
of any claim, suit or judgment brought by or on behalf of any person or
persons for damage, loss or expense due to, but not limited to, bodily
injury or property damage sustained by such person or persons which arise
out of, are occasioned by, or in any way attributable to, the ownership,
management, use or occupancy (as applicable) of the Premises by the
Indemnitor, the acts or omissions of the Indemnitor, its agents, employees
or any contractors brought onto the Premises by such Indemnitor, except to
the extent such bodily injury or property damage is caused by the
negligence or willful misconduct of the other party or its agents. The
parties, however, acknowledge that the provisions of this reciprocal
indemnity shall not relieve any insurance carrier of its obligations under
any policies required to be carried by Landlord or Tenant pursuant to the
provisions of this Lease to the extent that such policies cover the results
of such negligence or willful misconduct. Failure by Landlord or Tenant to
carry any insurance required pursuant to this Paragraph 22 shall
automatically be deemed to be the covenant and agreement by such to self-
insure said required coverage, with full waiver of subrogation. Both
parties agree that their obligations under this Paragraph 22 shall survive
the expiration or earlier termination of this Lease.
(b) Tenant's Insurance. Tenant agrees to maintain in full force and
------------------
effect at all times during the Term, at its own expense, policies of
insurance which afford the following coverages:
(i) Fire and standard extended coverage perils insurance in such
reasonable amounts with such reasonable deductibles as would be
carried by a prudent owner of a similar building in Northern
California, but in no event less than ninety percent (90%) of full
replacement value of the Building, with rental abatement endorsements
covering rent, insurance and taxes payable with respect to the
Building, for a 12-month period. Landlord shall be entitled to receive
any proceeds from such insurance and Landlord shall use such proceeds
in the repair and reconstruction of the Building and Premises to the
extent required pursuant to Paragraph 24 hereof.
(ii) (deleted and intentionally left blank).
(iii) Comprehensive general liability insurance including
blanket contractual liability, broad form property damage, personal
injury, completed operations, and fire damage: not less than Three
Million Dollars ($3,000,000.00) with a combined single limit for both
bodily injury and property damage.
(iv) "All Risk" property insurance (including, vandalism,
malicious mischief, and sprinkler endorsements) on the Premises
including the Tenant Improvements, Alterations and Tenant's Personal
Property located on or in the Premises, which shall be in a form
providing coverage comparable to the coverage provided in the standard
ISO All-Risk form and in an amount equal
-20-
to the full amount of the replacement cost, as the same may from time
to time increase as a result of inflation or otherwise.
(v) Business Interruption insurance covering those risks referred
to in subparagraph (iv) above, in an amount determined by Tenant to
cover its losses due to inability to use and enjoy the Premises due to
such casualties.
(vi) Boiler and machinery insurance including but not limited to
steam pipes, pressure pipes, condensation return pipes and other
pressure vessels and HVAC equipment, with limits per accident of not
less than the replacement cost of all leasehold improvements and of
all boilers, pressure valves, HVAC equipment and miscellaneous
electrical and mechanical equipment in the Premises.
(c) (Deleted and intentionally left blank.)
(d) Deductibles. Any policy of insurance required to be carried by
-----------
Tenant pursuant to this Lease containing a deductible greater than Fifty
Thousand Dollars ($50,000) must be approved in writing by Landlord prior to
the issuance of such policy.
(e) Additional Insured; Certificates. Landlord (and Landlord's lenders
--------------------------------
and Agents if the identities thereof are provided Tenant) shall be named an
additional insured on all policies of insurance required to be carried by
Tenant pursuant to this Lease. Tenant shall deliver to Landlord at least
thirty (30) days prior to the time such insurance is first required to be
carried by Tenant, and thereafter at least thirty (30) days prior to
expiration of each such policy, certificates of insurance evidencing the
above coverage with limits not less than those specified above. The
certificates shall expressly provide that the interest of Landlord therein
shall not be affected by any breach of Tenant of any policy provision for
which such certificates evidence coverage.
(f) Self-Insurance. Notwithstanding anything in this Paragraph 22(f)
--------------
to the contrary, Tenant shall have the right to self-insure up to One
Million Dollars ($1,000,000) of each of the risks described in items (i),
(iii), (vi) and the entirety of the risks described in items (iv) and (v)
above, with full waiver of subrogation.
(g) Co-Insurer. If, on account of the failure of Tenant to comply with
----------
the foregoing provisions, Landlord is adjudged a co-insurer by its
insurance carrier, then any loss or damage Landlord shall sustain by reason
thereof, including attorneys' fees and costs, shall be borne by Tenant and
shall be immediately paid by Tenant upon receipt of a xxxx therefor and
evidence of such loss.
(h) Sufficiency of Coverage. Neither Landlord nor Landlord's Agents
-----------------------
makes any representation that the limits of liability specified to be
carried by Tenant under this Lease are adequate to protect Tenant. If
Tenant believes that any such insurance coverage is insufficient, Tenant
shall provide, at its own expense, such additional insurance as Tenant
deems adequate.
(i) Insurance Requirements. All such insurance shall be carried with
----------------------
companies that have a general Policyholder's rating of not less than "A"
and a financial
-21-
rating of not less than Class "X" in the most current edition of Best's
Insurance Reports; shall provide that such policies shall not be subject to
material alteration or cancellation except after at least thirty (30) days
prior written notice to Landlord. If Tenant fails to procure and maintain
the insurance required hereunder, Landlord upon ten (10) days prior written
notice may, but shall not be required to, order such insurance at Tenant's
expense and Tenant shall reimburse Landlord for all costs incurred by
Landlord with respect thereto. Tenant's reimbursement to Landlord for such
amounts shall be deemed Additional Rent, and shall include all sums
disbursed, incurred or deposited by Landlord including Landlord's costs,
expenses and reasonable attorneys' fees with interest thereon at the
Interest Rate.
(j) Landlord's Disclaimer. Except as set forth in Paragraph 22(a),
---------------------
Landlord and Landlord's Agents shall not be liable for any loss or damage
to persons or property resulting from fire, explosion, falling plaster,
glass, tile or sheetrock, steam, gas, electricity, water or rain which may
leak from any part of the Premises, or from the pipes, appliances or
plumbing works therein or from the roof, street or subsurface or
whatsoever, or any act or omission of Tenant or any other tenant or any
building of which the Premises is a part. Except as set forth in Paragraph
10(b), Landlord and Landlord's Agents shall not be liable for interference
with light or air, or for any latent defect in the Premises. Tenant shall
give prompt written notice to Landlord in case of a casualty, accident or
repair needed to the Premises or Outside Area.
(k) Failure to Pay. The failure of Tenant to obtain and pay for any
--------------
insurance required to be obtained and paid for by it hereunder shall be
deemed a material default under this Lease.
(l) No Other Insurance. Landlord will not carry insurance of any kind
------------------
on Tenant's furniture or furnishings, or on any fixtures, equipment,
improvements or appurtenances of Tenant under this Lease; and Landlord
shall not be obligated to repair any damage thereto or replace the same.
23. Waiver of Subrogation. Landlord and Tenant each hereby waive all
---------------------
rights of recovery against the other on account of loss and damage occasioned to
such waiving party for its property or the property of others under its control
to the extent that such loss or damage is insured against under any insurance
policies which may be in force at the time of such loss or damage. Tenant and
Landlord shall, upon obtaining policies of insurance required hereunder give
notice to the insurance carrier that the foregoing mutual waiver of subrogation
is contained in this Lease, and Tenant and Landlord shall each use commercially
reasonable efforts to cause each insurance policy obtained by such party to
provide that the insurance company waives all right of recovery by way of
subrogation against either Landlord or Tenant in connection with any damage
covered by such policy.
24. Damage or Destruction.
---------------------
(a) Landlord's Obligation to Rebuild. If the Premises are damaged or
--------------------------------
destroyed, Landlord shall promptly and diligently repair the Premises
unless it has the right to terminate this Lease as provided in subparagraph
(b) next below and it elects to so terminate.
-22-
(b) Right to Terminate. Landlord shall have the right to terminate
------------------
this Lease following damage to or destruction of the Premises if any of the
following occurs:
(i) insurance proceeds are not available to Landlord to pay
one hundred percent (100%) of the costs to fully repair the damaged
Premises, excluding the deductible for which Tenant shall be
responsible, or in the event of an uninsured casualty (it being
understood, however, that Landlord may not terminate this Lease as
provided by this Subparagraph 24(b)(i), if Tenant agrees in writing to
fund such repair costs to the extent said insurance proceeds do not
cover one hundred percent (100%) of the repair costs or in the event
of an uninsured casualty);
(ii) Landlord's contractor certifies to the parties that the
Premises cannot be fully repaired within One Hundred Eighty (180) days
after the date of the damage or destruction (in such event, both
Landlord and Tenant shall have the right to terminate this Lease);
(iii) the Premises cannot be safely repaired because of the
presence of hazardous factors, including, but not limited to,
earthquake faults, radiation, chemical waste and other similar dangers
(in such event, both Landlord and Tenant shall have the right to
terminate this Lease); or
(iv) the Premises are destroyed or damaged during the last six
(6) months of the Term (in such event, both Landlord and Tenant shall
have the right to terminate this Lease); provided, however, that if,
at the time of such casualty the period in which Tenant is obligated
to exercise its option to extend the Term pursuant to Paragraph 42 of
this Lease has not expired, Tenant shall have fifteen (15) days after
the date of casualty in which to notify Landlord of its election to
exercise such extension option, and, upon such election, Landlord
shall have no right to terminate the Lease pursuant to this
subparagraph.
If either party elects to terminate this Lease (as provided in
this Paragraph 24), such terminating party shall give the other party such
written notice of its election to terminate within thirty (30) days after
the event which gives rise to said party's right to terminate, and this
Lease shall terminate fifteen (15) days after the date the non-terminating
party receives such notice. If this Lease is terminated, Landlord shall
retain all the insurance proceeds payable from insurance required by
Paragraph 22(b)(vi) and (c). If neither party elects to terminate this
Lease, Landlord shall promptly, following the date of such damage or
destruction, commence the process of obtaining necessary permits and
approvals, and shall commence repair of that portion of the Premises or the
Building which was originally constructed by Landlord, and Tenant shall
rebuild that portion of the Premises that Tenant originally constructed, as
soon as practicable, and thereafter both parties shall each prosecute their
respective repair obligations diligently to completion, in which event this
Lease will continue in full force and effect. All insurance proceeds from
insurance under Paragraph 22, excluding proceeds for trade fixtures,
equipment and Tenant's Personal Property, shall be disbursed and paid to
Landlord. Tenant shall be required to pay to Landlord the amount of any
deductibles payable in connection with any insured casualties, unless the
reciprocal indemnification provisions of Paragraph 22(a) shall apply.
-23-
(c) Limited Obligation to Repair. Landlord's obligation, should it
----------------------------
elect or be obligated to repair or rebuild, shall be limited to the basic
Building and the Tenant Improvements, and Tenant shall, at its expense,
replace or fully repair all Tenant's Personal Property and any Alterations
installed by Tenant existing at the time of such damage or destruction.
Landlord shall make available to Tenant any portion of insurance proceeds
it receives which are allocable to the Alterations constructed by Tenant
pursuant to this Lease provided Tenant is not then in default.
(d) Abatement of Rent. Rent shall be temporarily abated
-----------------
proportionately during any period when, by reason of such damage or
destruction, Landlord and Tenant jointly, reasonably determine that there
is substantial interference with Tenant's use of the Building, having
regard to the extent to which Tenant's use of the Building is impaired.
Such abatement shall commence upon such damage or destruction and end upon
substantial completion by Landlord of the repair or reconstruction which
Landlord is obligated or undertakes to do. Tenant shall not be entitled to
any compensation or damages from Landlord for loss of the use of the
Premises, damage to Tenant's Personal Property or any inconvenience
occasioned by such damage, repair or restoration. Tenant hereby waives the
provisions of Section 1932, Subdivision 2, and Sections 1933, Subdivision
4, of the California Civil Code, and the provisions of any similar law
hereinafter enacted.
(e) Replacement Cost. The determination in good faith by Landlord's
----------------
general contractor of the estimated cost of repair of any damage, of the
replacement cost, or of the time period required for repair shall be
conclusive for purposes of this Paragraph.
25. Condemnation.
------------
(a) Total Taking - Termination. If title to all of the premises or so
--------------------------
much thereof is taken for any public or quasi-public use under any statute
or by right of eminent domain so that reconstruction of the Premises will
not, in Landlord's and Tenant's mutual opinion, result in the Premises
being reasonably suitable for Tenant's continued occupancy for the uses and
purposes contemplated by this Lease, this Lease shall terminate as of the
date possession of the Premises or part thereof be taken.
(b) Partial Taking. If any part of the Premises is taken and the
--------------
remaining part is reasonably suitable for Tenant's continued occupancy for
the purposes and uses permitted by this Lease, this Lease shall, as to the
part so taken, terminate as of the date that possession of such part of the
Premises is taken and the Rent and other sums payable hereunder shall he
reduced in the same proportion that the floor area of the portion of the
Building so taken (less any addition thereto by reason of any
reconstruction) bears to the original floor area of the Building. Landlord
shall, at its own cost and expense, make all necessary repairs or
alterations to the Building so as to make the portion of the Building not
taken a complete architectural unit. Such work shall not, however, exceed
the scope of the work done by Landlord in originally constructing the
Building. Rent and other sums payable hereunder shall be temporarily abated
during such restoration period in proportion to the degree to which
Tenant's use of Premises is impaired.
-24-
(c) No Apportionment of Award. No award for any partial or entire
-------------------------
taking shall be apportioned, it being agreed and understood that Landlord
shall be entitled to the entire award for any partial or entire taking.
Tenant assigns to Landlord its interest in any award which may be made in
such taking or condemnation, together with any and all rights of Tenant
arising in or to the same of any part thereof. Nothing contained herein
shall be deemed to give Landlord any interest in or require Tenant to
assign to Landlord any separate award made to Tenant for the taking of
Tenant's Personal Property, for the interruption of Tenant's business, or
its moving costs, or for the loss of its goodwill, or the costs of any
Alterations or improvements (including the Tenant Improvements) paid for by
Tenant (except with the proceeds of the Allowance [as defined in Exhibit
"B"]).
(d) Temporary Taking. No temporary taking of the Premises shall
----------------
terminate this Lease or give Tenant any right to any abatement of Rent. Any
award made to Tenant by reason of such temporary taking shall belong
entirely to Tenant and Landlord shall not be entitled to share therein.
Each party agrees to execute and deliver to the other all instruments that
may be required to effectuate the provisions of this subparagraph.
(e) Sale Under Threat of Condemnation. A sale by Landlord to any
---------------------------------
authority having the power of eminent domain, either under threat of
condemnation or while condemnation proceedings are pending, shall be deemed
a taking under the power of eminent domain for all purposes of this
Paragraph.
26. Sublease.
--------
(a) Landlord's Consent. Tenant shall not enter into any Sublease
------------------
without Landlord's prior written consent, which consent shall not be
unreasonably withheld; it being understood that Landlord's consent (or the
withholding of same) shall be communicated to Tenant by written notice
within ten (10) calendar days following Landlord's receipt of the
information described in Paragraph 26(d), below; and it being further
understood that any notice indicating the withholding of Landlord's consent
shall set forth a reasonably particularized statement as to the basis of
such withholding. Any attempted or purported Sublease of the Premises or
any portion thereof without Landlord's prior written consent shall be void
and confer no rights upon any third person and, at Landlord's election,
shall terminate this Lease.
(b) Sublease Form. Each Sublease to which Landlord has consented shall
-------------
be in a form reasonably satisfactory to Landlord, and shall be executed by
Tenant and Subtenant. Each Subtenant shall agree in writing, for the
benefit of Landlord, to assume, to be bound by, and to perform the terms,
conditions and covenants of this Lease to be performed by Tenant. In no
event shall Tenant be released from personal liability for the performance
of each term, condition and covenant of this Lease by reason of Landlord's
consent to a Sublease unless Landlord specifically grants such release in
writing.
(c) No Waiver. Consent by Landlord to any particular Sublease shall
---------
not be deemed to be a consent to any subsequent Sublease.
-25-
(d) Information to be Furnished. If Tenant desires at any time to
---------------------------
enter into a Sublease, it shall first notify Landlord of its desire to do
so and shall submit in writing to Landlord: (i) the name of the proposed
Subtenant; (ii) the nature of the proposed Subtenant's business to be
carried on in the Premises; (iii) the terms and provisions of the proposed
Sublease and a copy of the proposed Sublease agreement containing a
description of the premises proposed to be sublet; and (iv) such financial
information, including financial statements, as Landlord may reasonably
request concerning the proposed Subtenant.
(e) Sublease During Initial Term. During the initial Term of the
----------------------------
Lease, Landlord shall have no right to any Subrent in excess of Monthly
Rent or any right of recapture in the event of a proposed Sublease by
Tenant.
(f) Landlord's Alternatives During Option Terms. In the event Tenant
-------------------------------------------
enters into a Sublease during one of the Option Terms (as defined in
Paragraph 42, below), Landlord shall have the right at any time during the
Option Terms, within ten (10) business days after Landlord's receipt of the
information specified in Paragraph 26(d), by written notice to Tenant, to
elect: (i) consent to the Sublease by Tenant; or (if) refuse its consent to
the Sublease which shall not be unreasonably withheld.
If Landlord proceeds with subparagraph 26(f)(i) above, Tenant may
thereafter enter into a valid Sublease of the Premises or portion thereof,
upon the terms and conditions and with the proposed Subtenant set forth in
the information furnished by Tenant to Landlord pursuant to Subparagraph
26(d), subject, however, to the condition (applicable during the Option
Terms, only) that twenty-five percent (25%) of any excess of the Subrent
over the Rent required to be paid by Tenant hereunder shall be paid to
Landlord; provided, however, that Tenant shall be entitled first to recover
its reasonable subleasing costs, including brokerage commissions,
subleasing concessions, and the reasonable cost of any tenant improvements
constructed for such Subtenant (but only to the extent incremental rental
value is shown to be attributable to said tenant improvements). Any such
Subrent to be paid to Landlord pursuant hereto shall be payable to Landlord
within five (5) business days after each payment of Subrent is received by
Tenant throughout the term of the Sublease. It shall be understood that
during the Option Terms (as hereinafter defined), the provisions of the
last paragraph of Paragraph 42(b) (relative to adjustments to Monthly Rent)
shall apply in the event of a Sublease.
(g) Proration. If a portion of the Premises is subleased, the pro rata
---------
share of the Rent attributable to such partial area of the Premises shall
be determined by Landlord by dividing the Rent payable by Tenant hereunder
by the total leasable square footage of the Premises and multiplying the
resulting quotient (the per square foot rent) by the number of square feet
of the Premises which are subleased.
(h) Executed Original. No Sublease shall be valid nor shall any
-----------------
Subtenant take possession of the Premises until a fully executed original
of the Sublease agreement has been delivered to Landlord.
-26-
(i) Transfer to Purchaser. In the event Tenant elects to assign this
---------------------
Lease, or sublease all or a portion of the Premises to an Affiliate or to
an entity with which Tenant merges or consolidates, or to a purchaser of
all or substantially all of the assets and/or stock of Tenant (as a going
concern), where such sublease or assignment would result in a tenant (with
different management personnel than that of Tenant) to occupy all or any
portion of the Premises, Landlord shall be given prior written notice of
such election, and an opportunity to review the financial condition of such
entity or purchaser following said assignment or subletting, and the
results of such review shall be communicated to Tenant as soon as
reasonably possible following completion thereof, but in no event later
than fifteen (15) business days after receipt of such financial
information. In addition, Landlord shall have the right to require, if
commercially reasonable under the circumstances, that said entity or
purchaser deliver to Landlord a security deposit within thirty (30) days of
written demand therefor. It shall be understood that if Tenant assigns or
sublets all or a portion of the Premises to an Affiliate, the original
Tenant named herein shall remain primarily liable under this Lease.
27. Default.
-------
(a) Tenant's Default. At the option of Landlord, a default under this
----------------
Lease by Tenant shall exist if any of the following events shall occur:
(i) If Tenant shall have failed to pay Rent or any other sum
required to be paid hereunder after five (5) days' written notice that
such sum is due; or
(ii) If Tenant shall have failed to perform any term, covenant or
condition of this Lease, except those requiring the payment of money,
and Tenant shall have failed to cure such breach within thirty (30)
days after written notice from Landlord where such breach could
reasonably be cured within such thirty (30) day period; provided,
however, that where such failure could not reasonably be cured within
the thirty (30) day period, that Tenant shall not be in default if it
has commenced such cure within the thirty (30) day period and
diligently thereafter prosecutes the same to completion; or
(iii) If Tenant shall have assigned its assets for the benefit
of its creditors; or
(iv) If the sequestration or attachment of or execution on any
material part of Tenant's Personal Property essential to the conduct
of Tenant's business shall have occurred, and Tenant shall have failed
to obtain a return or release of such Personal Property within thirty
(30) days thereafter, or prior to sale pursuant to such sequestration,
attachment or levy, whichever is earlier; or
(v) If Tenant shall have abandoned or vacated the Premises; or
(vi) If a court shall have made or entered any decree or order
other than under the bankruptcy laws of the United States adjudging
Tenant to be insolvent; or approving as properly filed a petition
seeking
-27-
reorganization of Tenant; or directing the winding up or liquidation
of Tenant and such decree or order shall have continued for a period
of sixty (60) days; or
(vii) If Tenant shall have failed to comply with the provisions
of Paragraphs 28 or 31 of this Lease.
(b) Remedies. Upon a default, Landlord shall have the following
--------
remedies, in addition to all other rights and remedies provided by law or
otherwise provided in this Lease, to which Landlord may resort cumulatively
or in the alternative:
(i) Landlord may continue this Lease in full force and effect,
and this Lease shall continue in full force and effect as long as
Landlord does not terminate this Lease, and Landlord shall have the
right to collect Rent when due;
(ii) Landlord may terminate Tenant's right to possession of the
Premises at any time by giving written notice to that effect, and
relet the Premises or any part thereof. Tenant shall be liable
immediately to Landlord for all costs Landlord incurs in reletting the
Premises or any part thereof, including, without limitation, broker's
commissions, expenses of cleaning, redecorating, and further improving
the Premises and like costs. Reletting may be for a period shorter or
longer than the remaining Term of this Lease. No act by Landlord other
than giving written notice to Tenant shall terminate this Lease. Acts
of maintenance, efforts to relet the Premises or the appointment of a
receiver on Landlord's initiative to protect Landlord's interest under
this Lease shall not constitute a termination of Tenant's right to
possession. Upon termination, Landlord shall have the right to remove
all of Tenant's Personal Property and store same at Tenant's cost and
to recover from Tenant as damages:
(A) The worth at the time of award of any unpaid Rent and
other sums due and payable which had been earned at the time of
termination; plus
(B) The worth at the time of award of the amount by which
the unpaid Rent and other sums which would have been payable
after termination until the time of award exceeds the amount of
such Rent loss that Tenant proves could have been reasonably
avoided; plus
(C) The worth at the time of award of the amount by which
the unpaid Rent and other sums due for the balance of the Term
after the time of award exceeds the amount of such Rent loss that
Tenant proves could be reasonably avoided; plus
(D) Any other amounts to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform
Tenant's obligations under this Lease, or which, in the ordinary
course of things, would be likely to result therefrom, including,
without limitation, any reasonable costs or expenses incurred by
Landlord: (i) in retaking possession of the Premises; (ii) in
maintaining, repairing, preserving, restoring, replacing,
-28-
cleaning, altering or rehabilitating the Premises or any portion
thereof, including such acts for reletting to a new tenant or
tenants; (iii) for leasing commissions; or (iv) for any other
costs necessary or appropriate to relet the Premises; plus
(E) At Landlord's election, such other amounts and remedies
in addition to or in lieu of the foregoing as may be permitted
from time to time by the laws of the State of California
including, without limitation, the remedies provided by
California Civil Code Section 1951.4, as amended from time to
time.
The "worth at the time of award" of the amounts referred to in
Paragraphs 27(b)(ii)(A) and 27(b)(ii)(A) is computed by allowing
interest at the Interest Rate on the unpaid rent and other sums due
and payable from the termination date through the date of award. The
"worth at the time of award" of the amount referred to in Paragraph
27(h)(ii)(C) 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%); or
(iii) Landlord may, with or without terminating this Lease, re-
enter the Premises and remove all persons and property from the
Premises; such property may be removed and stored in a public
warehouse or elsewhere at the cost of and for the account of Tenant.
No re-entry or taking possession of the Premises by Landlord pursuant
to this subparagraph shall be construed as an election to terminate
this Lease unless a written notice of such intention is given to
Tenant.
(c) Landlord's Default. Landlord shall not be deemed to be in default
------------------
in the performance of any obligation required to be performed by it
hereunder unless and until it has failed to perform such obligation within
thirty (30) days (or, if an emergency condition exists, within a
commercially reasonable period of time) after receipt of written notice by
Tenant to Landlord specifying the nature of such default; provided,
however, that, with respect to non-emergencies only, if the nature of
Landlord's obligation is such that more than thirty (30) days are required
for its performance, then Landlord shall not be deemed to be in default if
it shall commence such performance within such thirty (30) day period and
thereafter diligently prosecute the same to completion.
28. Subordination. Without the necessity of any additional document being
-------------
executed by Tenant for the purpose of effecting a subordination, and at the
election of Landlord or any bona fide mortgagee or deed of trust beneficiary
with a lien on all or portion of the Premises or any ground lessor with respect
to the Project and/or Building, this Lease shall be subject and subordinate at
all times to:
(a) all ground leases or underlying leases which may now exist or
hereafter be executed affecting the Building or the land upon which the
Building is situated, or both, and
(b) the lien of any mortgage or deed of trust which may now exist or
hereafter be executed in any amount for which the Building, land, ground
leases or underlying leases, or Landlord's interest or estate in any of
said items is specified as security.
-29-
Notwithstanding the foregoing, Landlord shall have the right to subordinate
or cause to be subordinated any such ground leases or underlying leases or
any such liens to this Lease. In the event that any ground lease or
underlying lease terminates for any reason or any mortgage or deed of trust
is foreclosed or a conveyance in lieu of foreclosure is made for any
reason, Tenant shall, notwithstanding any subordination, attorn to and
become the Tenant of the successor in interest to Landlord. Tenant
covenants and agrees to execute and deliver, within fifteen (15) days after
written demand by Landlord and in the form reasonably requested by
Landlord, any additional documents evidencing the priority or subordination
of this Lease with respect to any such ground leases or underlying leases
or the lien of any such mortgage or deed of trust. Tenant's failure to
timely execute and deliver such additional documents shall constitute an
additional default hereunder.
Notwithstanding the provisions of this Paragraph 28, Tenant shall not
be required to subordinate its interest under this Lease, and no
subordination shall be effective pursuant hereto, unless (a) such
subordination does not materially increase Tenant's obligations, or
materially decrease its rights under this Lease, and (b) Landlord first
obtains from the holder of the mortgage, deed of trust, or other instrument
of security to which this Lease is to become subordinated a written
agreement that provides substantially the following:
"As long as Tenant performs its obligations under this Lease, no
foreclosure of, deed given in lieu of foreclosure of, or sale under
the encumbrance, and no steps or procedures taken under the
encumbrance, shall materially affect Tenant's rights hereunder."
29. Notices. Any notice or demand required or desired to be given under
-------
this Lease shall be in writing and shall be personally served or in lieu of
personal service may be given by mail. If given by mail, such notice shall be
deemed to have been given when seventy-two (72) hours have elapsed from the time
when such notice was deposited in the United States mail, registered or
certified, and postage prepaid, return receipt requested, addressed to the party
to be served. At the date of execution of this Lease, the addresses of Landlord
and Tenant are as set forth in Paragraph 1; provided, however, with the
exception of notices indicating Landlord's default (which shall be sent to all
parties specified to receive notices to Landlord as set forth in Paragraph 1),
Tenant shall be deemed to have satisfied the requirements of this Paragraph if
it sends all notices to The Xxxxx & Xxxxxxx Company, X.X. Xxx 0000, Xxx Xxxxx,
Xxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxx, Xx. After the Commencement Date,
the address of Tenant shall be the address of the Premises. Either party may
change its address by giving notice of same in accordance with this paragraph.
30. Attorneys' Fees. If either party brings any action or legal proceeding
---------------
for damages for an alleged breach of any provision of this Lease, to recover
rent or other sums due, to terminate this Lease or to enforce, protect or
establish any term, condition or covenant of this Lease or the right of either
party hereunder or at law, the prevailing party shall be entitled to recover as
a part of such action or proceedings, or in a separate action brought for that
purpose, reasonable attorneys' fees and costs.
Notwithstanding the foregoing, and in addition thereto, either party
shall be entitled to the immediate receipt from the
-30-
breaching party in connection with any breach of this Lease such reasonable
attorneys' fees, (which in no event shall be less than Fifty Dollars ($50.00)),
as may be incurred by the non-breaching party or its agents in connection with
each notice or demand delivered to the breaching party pursuant to Paragraph 29.
Landlord and Tenant agree that such sums constitute reimbursement only of the
reasonable costs of the preparation and delivery of each notice caused by any
breach hereunder.
31. Estoppel Certificate.
--------------------
(i) Either party shall within ten (10) business days following
written request by the other party execute and deliver to the
requesting party any documents, including estoppel certificates, in a
form prepared by the requesting party (a) certifying that this Lease
is unmodified and in full force and effect or, if modified, stating
the nature of such modification and certifying that this Lease, as so
modified, is in full force and effect and the date to which the Rent
and other charges are paid in advance, if any, and (b) acknowledging
that there are not, to the complying party's knowledge, any uncured
defaults on the part of the requesting party or stating the nature of
any uncured defaults; (c) evidencing the status of the Lease as may be
required either by a lender making a loan to the requesting party to
be secured by deed of trust or mortgage covering the Premises or the
leasehold, or a purchaser of the Premises from Landlord; (d)
certifying the current monthly rent amount; and (e) certifying to such
other information as either party, its agents, mortgagees, prospective
mortgagees and buyers may reasonably request.
Either party's failure to deliver an estoppel certificate within
ten (10) business days after delivery of the requesting party's
written request therefor shall be conclusive upon the complying party
(a) that this Lease is in full force and effect, without modification
except as may be represented by the requesting party; (b) that there
are now no uncured defaults in the requesting party's performance; (c)
that no Rent has been paid in advance; and (d) that the other
information requested by the requesting party is correct as stated in
the form presented by the requesting party.
(ii) Tenant shall within fifteen (15) days following written
request by Landlord, deliver to Landlord the current financial
statements of Tenant, and financial statements of the two (2) years
prior to the current financial statements year, with an opinion of a
certified public accountant, including a balance sheet and profit and
loss statement for the most recent prior year, all prepared in
accordance with generally accepted accounting principles consistently
applied; it being understood by the parties that all such statements,
information, and materials shall be kept confidential by Landlord.
32. Transfer of the Premises by Landlord. In the event of any conveyance
------------------------------------
of the Premises and assignment by Landlord of this Lease, Landlord shall be and
is hereby entirely released from all liability under any and all of its
covenants and obligations contained in or derived from this Lease occurring
after the date of such conveyance and assignment, and Tenant agrees to attorn to
any entity purchasing or otherwise acquiring the Premises effective upon the
assumption by said entity of all rights and obligations of Landlord (including
those that are then-current and/or prospective).
-31-
33. Right to Perform Other Party's Covenants. If either party ("Defaulting
----------------------------------------
Party") shall at any time fail to make any payment or perform any other act on
its part to be made or performed under this Lease, the other party ("non-
Defaulting Party") may, but shall not be obligated to and without waiving or
releasing the Defaulting Party from any obligation of the Defaulting Party under
this Lease, make such payment or perform such other act to the extent the non-
Defaulting Party may deem desirable, and in connection therewith, pay expenses
and employ counsel. All sums so paid by such non-Defaulting Party and all
penalties, interest and costs in connection therewith shall be due and payable
by the Defaulting Party on the next day after such payment by the non-Defaulting
Party, together with interest thereon at the Interest Rate from such date to the
date of payment thereof by the Defaulting Party to the non-Defaulting Party,
plus collection costs and attorneys' fees. If Tenant is the Defaulting Party,
and such default relates to the payment of any sum due under this Lease,
Landlord shall have the same rights and remedies for the nonpayment thereof as
in the case of default in the payment of Rent.
34. Tenant's Remedy. With the exception of actions arising from (i)
---------------
Landlord's fraud, bad faith or willful misconduct during the Term, or (ii) the
indemnities set forth in Paragraph 11(c) above, any liability of Landlord under
this Lease shall be limited to Landlord's interest in the Building and the
parcel of real property on which the Building is located, and any appurtenant
rights thereto; provided, however, in order to ensure that Landlord maintains a
commercially reasonable equity position in the Building, the above limitation on
Landlord's liability shall not be applicable to the extent that Landlord's
Equity (as defined hereinbelow) is less than the greater of (a) twenty percent
(20%) of the then fair market value of the Building, including the parcel
of real property on which the Building is located or (b) $1,000,000. For
purposes hereof, "Landlord's Equity" shall mean the amount by which the then
fair market value of the Building (including the parcel of real property on
which the Building is located) exceeds the debt secured by deeds of trust or
mortgages encumbering the Building (including the parcel of real property on
which the Building is located). The parties hereby acknowledge and agree that
the fair market value of the Building (including the parcel of real property on
which the Building is located) shall be determined in the manner set forth
hereinbelow:
(i) Within fifteen (15) days following the reasonable
determination by either the Landlord or Tenant that such an
independent determination of Fair Market Value is necessary, as
evidenced by notice thereof sent to either the Landlord or the Tenant,
as the case may be, Landlord and Tenant shall each appoint an
individual who shall by profession be a real estate appraiser who
shall have been active over the five (5) year period ending on the
date of such appointment in the appraisal of commercial properties
located in the City.
(ii) The two appraisers so appointed shall, within fifteen (15)
days of the date of the appointment of the last appointed appraiser,
agree upon and appoint a third appraiser who shall be qualified under
the same criteria set forth hereinabove for qualification of the
initial two appraisers.
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(iii) The three appraisers shall within thirty (30) days of the
appointment of the third appraiser reach a decision as to the Fair
Market Value of the property at issue.
(iv) The decision of the majority of the three appraisers shall
be binding upon Landlord and Tenant. In the event a majority cannot
agree, then the average value of the two (2) closest values determined
by said three (3) appraisers shall be binding upon the Landlord and
the Tenant.
(v) If either Landlord or Tenant fails to appoint an appraiser
within the time period specified hereinabove, the appraiser appointed
by one of them shall reach a decision, notify Landlord and Tenant
thereof, and such appraiser's decision shall be binding upon Landlord
and Tenant.
(vi) If the two appraisers fail to agree upon and appoint a
third appraiser, both appraisers shall be dismissed and the matter to
be decided shall be forthwith submitted to arbitration under the
provisions of the American Arbitration Association.
(vii) The cost of appraisal and, if necessary, arbitration, shall
be paid by Landlord and Tenant equally.
35. Mortgage Protection. In the event of any default on the part of
-------------------
Landlord, Tenant will give notice by registered or certified mail to any
beneficiary of a deed of trust or mortgagee of a mortgage covering the Premises
who has provided Tenant with notice of their interest together with an address
for receiving notice, and shall offer such beneficiary or mortgagee a reasonable
opportunity to cure the default, including time to obtain possession of the
Premises by power of sale or a judicial foreclosure, if such should prove
necessary to effect a cure (it being understood that Tenant shall give such
beneficiary or mortgagee at least thirty (30) days [after written notice to such
beneficiary or mortgagee] to cure any such default by Landlord, which thirty
(30) day period shall run concurrently with Landlord's cure period); provided,
however, that if the nature of Landlord's obligation is such that more than
thirty (30) days are required for its performance, and such beneficiary or
mortgagee has commenced cure within said thirty day period, then Tenant shall
grant said beneficiary or mortgagee as much time as is reasonably required to
complete said cure, and Landlord, Landlord's beneficiary or mortgagee, as the
case may be, shall not then be in default under the terms of this Lease.
36. Brokers. Landlord and Tenant each warrant and represent to the other
-------
party that it has had no dealings with any real estate broker, agent or finder
in connection with the negotiation of this Lease or the introduction of the
parties to this transaction, except for Xxxxxx Xxxxxxx of The Xxxxx & Xxxxxxx
Company, and that it knows of no other real estate broker, agent or finder who
is or might be entitled to a commission or fee in connection with this Lease. It
is understood by the parties that Landlord shall, at its sole expense, pay any
brokerage commission or fee to the above named brokers that shall become payable
as a result of Tenant's execution of this Lease. Tenant agrees to indemnify and
hold harmless Landlord and its agents from and against any and all liabilities
and expenses, including attorneys' fees and costs, arising out of or in
connection with claims made by any other
-33-
broker or individual for commissions or fees based upon Tenant's relationship
and dealings with such other broker or individual with respect to Tenant's
execution of this Lease.
37. Acceptance. Delivery of this Lease, duly executed by Tenant,
----------
constitutes an offer to lease the Premises, and under no circumstances shall
such delivery be deemed to create an option or reservation to lease the Premises
for the benefit of Tenant. This Lease shall only become effective and binding
upon full execution hereof by Landlord and delivery of a signed copy to Tenant.
Upon acceptance of Tenant's offer to lease under the terms hereof and receipt by
Landlord of the Security Deposit in connection with Tenant's submission of said
offer, Landlord shall be entitled to retain such deposit and apply same to
damages, costs and expenses incurred by Landlord if Tenant fails to occupy the
Premises. If Landlord declines said offer, any such deposit shall be returned to
Tenant.
38. Recording. Landlord and Tenant shall have the right to record a short
---------
form memorandum of this Lease specifying the fact that Tenant has an option to
purchase the Building.
39. Quitclaim. Upon any termination of this Lease, Tenant shall, at
---------
Landlord's request, execute, have acknowledged and deliver to Landlord a
quitclaim deed of the Premises.
40. Modifications for Lender. If, in connection with obtaining financing
------------------------
for the Premises or any portion thereof, Landlord's lender shall request
reasonable modification to this Lease as a condition to such financing, Tenant
shall not unreasonably withhold, delay or defer its consent thereto, provided
such modifications do not materially adversely affect Tenant's rights, or
materially increases its obligations hereunder.
41. Sewer Fees. Tenant acknowledges that Menlo Business Park Joint Venture
----------
has pre-paid the connection fees for a certain amount of sewerage capacity for
the Project. Tenant shall have the option to benefit from such pre-paid sewerage
capacity; provided that Tenant shall reimburse Landlord, as Additional Rent, for
such pre-payments at the rate of Two and 50/100 Dollars ($2.50) per gallon per
day.
42. Options to Extend.
------------------
(a) Grant of Option. Landlord hereby grants to Tenant two (2) options
---------------
to extend the Term of this Lease (individually, "Option to Extend" and
collectively, "Options to Extend") for additional periods of five (5) years
each (individually, "Option Term" and collectively, "Option Terms"). The
Options to Extend must be exercised, if at all, by written notice ("Option
Notice") received by Landlord no later than one hundred eighty (180) days
prior to the expiration of the then-current Term. Further, the Options to
Extend shall not be deemed to be properly exercised if, as of the date of
the applicable Option Notice, or at the end of the then-current Term,
Tenant is in default as to any of the terms, covenants or conditions of
this Lease or any other lease between Landlord and Tenant. Provided that
Tenant shall properly exercise the applicable Option to Extend, the Term of
the Lease shall be extended by the applicable Option Term, and all terms,
covenants and conditions of the Lease shall remain unmodified and in full
force and effect; except that Monthly Rent payable during each Option Term
shall be determined pursuant to Subparagraph 42(b) below.
-34-
(b) Option Rent.
-----------
(i) The Monthly Rent for the first two (2) years of the first Option
Term, if any, shall be increased by multiplying the Monthly Rent payable
pursuant to Paragraph 5(a) by a fraction, the numerator of which is the
Index published for the third calendar month prior to the commencement date
of the first Option Term and the denominator of which shall be the Index
published for the third calendar month prior to the Commencement Date;
provided that in no event shall the Monthly Rent payable for the first two
(2) years of the first Option Term exceed the Monthly Rent payable pursuant
to Paragraph 5(a) by more than twelve and one-half percent (12 1/2%).
Thereafter, the Monthly Rent payable during the first Option Term shall be
further increased effective on the first day of both the twenty-fifth
(25th) and forty-ninth (49th) calendar months of the first Option Term
(individually, a "First Option Term Adjustment Date") in accordance with
the percentage further increase, if any, demonstrated by the Index for the
period between the commencement date of the first Option Term and the
applicable First Option Term Adjustment Date. The Monthly Rent payable on
each First Option Term Adjustment Date shall be increased by multiplying
the Monthly Rent payable upon the commencement date of the first Option
Term by a fraction, the numerator of which is the Index published for the
third calendar month prior to the applicable First Option Term Adjustment
Date and the denominator of which shall be the Index published for the
third calendar month prior to the commencement date of the first Option
Term, and the Monthly Rent payable until the immediately succeeding First
Option Term Adjustment Date, if any, (as increased in accordance herewith)
shall be paid thereafter in accordance with the terms of Paragraph 5(a),
above.
(ii) The Monthly Rent for the first two (2) years of the second Option
Term, if any, shall be increased by multiplying the Monthly Rent payable
upon the commencement date of the first Option Term by a fraction, the
numerator of which is the Index published for the third calendar month
prior to the commencement date of the second Option Term and the
denominator of which is the Index published for the third calendar month
prior to the commencement date of the first option Term. Thereafter the
Monthly Rent payable during the second Option Term shall be further
increased effective on the first day of both the twenty-fifth (25th) and
forty-ninth (49th) calendar months of the second Option Term (individually,
a "Second Option Adjustment Date") in the same manner as Monthly Rent is
increased during the first Option Term.
(iii) For purposes of determining all Monthly Rent increases
pursuant to this Paragraph 42(b), except for the determination of Monthly
Rent for the first two (2) years of the first Option Term, in no event
shall the Monthly Rent increase at a rate which is leas than three percent
(3%) per annum (non-compounded) or more than six percent (6%) per annum
(non-compounded). Notwithstanding the preceding sentence, if Tenant enters
into a Sublease, then with respect to any First Option Term Adjustment Date
and Second Option Term Adjustment Date occurring after the effective date
of such Sublease, in no event shall the Monthly Rent increase subsequent to
the Affective date of said Sublease at a rate which is (1) less than four
percent (4%) per annum (non-compounded), or (2) greater than eight percent
(8%) per annum (non-compounded).
-35-
(iv) Should be Bureau discontinue the publication of the above
Index, or publish the same less frequently, or vary the method of
calculation of same, or alter the same in some other manner, then Landlord
shall adopt, at its sole discretion, a substitute procedure which
reasonably reflects and monitors consumer prices.
43. Right of First Offer.
--------------------
(a) Provided that Tenant is not in default under the terms of this
Lease on the date of its exercise of the First Right (as defined
hereinbelow), and subject to any and all rights of other tenants of
the Project as of the date of this Lease, which rights are listed in
Exhibit "E" to this Lease, Landlord grants to Tenant the right ("First
-----------
Right") to lease additional space in buildings 5, 6, 7, 11, 13, 14 and 18
of the Project ("First Right Space") to the extent such space is or becomes
available for lease during the Term, as extended pursuant to Paragraph 42
above.
(b) As soon as reasonably possible following the date any First
Right Space becomes available, Landlord shall give Tenant written notice of
the basic economic terms (including the applicable Monthly Rent) ("Economic
Terms") upon which Landlord is willing to lease such First Right Space to
Tenant or to a third party. Within five (5) business days thereafter,
Tenant must give Landlord notice pursuant to which Tenant shall elect to:
(i) lease such First Right Space upon such Economic Terms, subject to
customary negotiations with respect to non-Economic Terms (which shall be
substantially in the form of this Lease); (ii) refuse to lease such First
Right Space, specifying that such refusal is not based upon said Economic
Terms, but upon Tenant's need for such First Right Space, in which event
Landlord may market such First Right Space to third parties upon any terms
it deems appropriate; or (iii) refuse to lease the First Right Space
specifying that such refusal is based upon the Economic Terms, in which
Tenant shall also specify revised Economic Terms upon which Tenant shall be
willing to lease the First Right Space. In the event Landlord and Tenant
fail to reach agreement with respect to the lease of any First Right Space
following good faith negotiations, Landlord shall have the right to enter
into negotiations with any third party with respect to such space on any
terms which are no less favorable to such third party than the Economic
Terms. It shall be understood, however, that if Landlord enters into a
letter of intent or lease negotiations with a third party involving a
rental rate which is effectively lower than the Economic Terms, Landlord
may not proceed with said letter of intent or lease negotiation, unless
Landlord presents such rental-rate offer to Tenant and Tenant thereafter
fails to accept such offer within five (5) days of receipt of said rental-
rate offer.
44. Option to Purchase.
-------------------
(a) Landlord hereby grants to Tenant the option to purchase the
Building (including the real property on which the Building is situated,
said Building and said real property being hereafter referred to
collectively as the "Property") ("Option to Purchase") in the manner set
forth hereinbelow. In order to exercise the Option to Purchase, Tenant must
give Landlord written notice of its election between the beginning of the
forty-ninth (49th) month and the end of the fifty-fourth (54th) month of
the initial Term, or if applicable, between the beginning of the forty-
ninth (49th) month and the end of the Fifty-fourth (54th) month of
-36-
the first Option Term. In the event Tenant properly exercises said Option
to Purchase, the parties shall enter into an agreement of purchase and sale
which shall provide for: (i) an escrow which shall close within one hundred
twenty days (120) of the date of Tenant's exercise of the Option to
Purchase; (ii) a cash purchase price which shall be ninety-seven and one-
half percent (97.5%) of the Fair Market Value of the Property; (iii)
conveyance by Landlord to Tenant of fee simple title of the Property, at
closing, subject only to (A) those matters which were excluded from
coverage by the terms of that certain policy of title insurance, issued to
Landlord by First American Title Insurance Company under policy no. 300189,
------
dated 7/24/84, (B) then-current and non-delinquent taxes and assessments,
-------
(C) those exceptions to title numbered 2, 3, 4, and 5 (first-appearing) of
the preliminary Title Report, issued by First American Title Insurance
Company under its Order No. 355654, and dated 2/14/90, (D) those exceptions
-------
to title created, caused or permitted by Tenant or approved by Tenant, and
(E) such other exceptions to title which, as of the date hereof, are not
known to Landlord and which have not been created, caused or permitted by
Landlord; and (iv) such other reasonable terms as may be agreed upon by the
parties; it being understood that Landlord shall not create any further
exceptions to title affecting the Property which shall not be removed of
title by Landlord, at closing, unless said exceptions to title are
governmentally mandated. The Fair Market Value of the Property shall be
mutually determined by the parties. If Landlord and Tenant are unable to
agree upon the Fair Market Value, each party shall select a MAI appraiser,
each of whom shall conduct an independent appraisal of the Property, and if
such appraisals demonstrate a variance of less than five percent (5%), the
Fair Market Value shall be deemed to be the average between said two
appraisals. If, however, the variance between said two appraisals show a
variance which is greater than five percent (5%), a third appraiser shall
be selected by the two initial appraisers and the third appraiser shall
determine the Fair Market Value, based upon the valuations made by the
initial two appraisers. It shall be understood that the decision of the
third appraiser shall be final and binding between the parties.
(b) In addition to the Option to Purchase described in Paragraph
44(a), above, if, at any time during the initial Term or any Option Term of
this Lease, Landlord elects to sell the Property to an unrelated third
party, Landlord shall give Tenant written notice of the basic economic
terms ("Economic Terms") upon which Landlord is willing to sell the
Property to said third party. Within five (5) business days thereafter,
Tenant shall have the right, by written notice to Landlord ("Purchase
Notice") to: (i) purchase the Property upon such Economic Terms, subject to
customary negotiations with respect to non-Economic Terms; (ii) refuse to
purchase said Property, specifying that such refusal is not based upon said
Economic Terms, in which event Landlord may market and sell the Property to
third parties upon any terms it deems appropriate; or (iii) refuse to
purchase the Property, specifying that such refusal is based upon the
Economic Terms, in which event Tenant shall also specify revised Economic
Terms upon which Tenant shall be willing to purchase the Property. In the
event Tenant gives Landlord notice pursuant to Subparagraph 44(b)(iii)
above, or if Tenant fails to respond within such five (5) business day
period, Landlord shall have the option either to (A) sell the (TO COME) or
(B) sell the Property to any third party it so desires upon terms which are
not less favorable to Landlord as such revised Economic Terms.
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(c) The parties hereby agree and acknowledge that Tenant's rights
under this Paragraph 44 shall be conditioned upon Tenant not being in
default (at the time of exercise of such rights) under any of the terms and
obligations under this Lease.
45. General
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(a) Captions. The captions and headings used in this Lease are for the
--------
purpose of convenience only and shall not be construed to limit or extend
the meaning of any part of this Lease.
(b) Executed Copy. Any fully executed copy of this Lease shall be
-------------
deemed an original for all purposes.
(c) Time. Time is of the essence for the performance of each term,
----
condition and covenant of this Lease.
(d) Separability. If any one or more of the provisions contained
------------
herein shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect any other provision of this Lease, but this Lease shall be construed
as if such invalid, illegal or unenforceable provision had not been
contained herein.
(e) Choice of Law. This Lease shall be construed and enforced in
-------------
accordance with the laws of the State of California. The language in all
parts of this Lease shall in all cases be construed as a whole according to
its fair meaning and not strictly for or against either Landlord or Tenant.
(f) Gender; Singular, Plural. When the context of this Lease requires,
------------------------
the neuter gender includes the masculine, the feminine, a partnership or
corporation or joint venture, and the singular includes the plural.
(g) Binding Effect. The covenants and agreement contained in this
--------------
Lease shall be binding on the parties hereto and on their respective
successors and assigns to the extent this Lease is assignable.
(h) Waiver. The waiver by either party of any breach of any term,
------
condition or covenant, of this Lease shall not be deemed to be a waiver of
such provision or any subsequent breach of the same or any other term,
condition or covenant of this Lease. The subsequent acceptance or payment
of Rent hereunder by a party shall not be deemed to be a waiver of any
preceding breach at the time of such acceptance or payment. No covenant,
term or condition of this Lease shall be deemed to have been waived by a
party unless such waiver is in writing signed by such party.
(i) Entire Agreement. This Lease is the entire agreement between the
----------------
parties, and there are no agreements or representations between the parties
except as expressed herein. Except as otherwise provided herein, no
subsequent change or addition to this Lease shall be binding unless in
writing and signed by the parties hereto.
(j) Authority. If Tenant is a corporation or a partnership, each
---------
individual executing this Lease on behalf of said corporation or
partnership, as the case may be, represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of said entity in
accordance with its corporate bylaws, statement of partnership or
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certificate of limited partnership, as the case may be, and that this Lease
is binding upon said entity in accordance with its terms. Landlord, at its
option, may require a copy of such written authorization to enter into this
Lease.
(k) Exhibits. All exhibits, amendments riders and addendums attached
--------
hereto are hereby incorporated herein and made a part hereof.
(l) Lease Summary. The Lease Summary attached to this Lease is
-------------
intended to provide general information only. In the event of any
inconsistency between the Lease Summary and the specific provisions of this
Lease, the specific provisions of this Lease shall prevail.
THIS LEASE is effective as of the date the last signatory necessary to
execute the Lease shall have executed this Lease.
TENANT:
Dated: March 1, 1990 RAYCHEM CORPORATION,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------
Its: Senior Vice President
---------------------------
By:
----------------------------
Its:
---------------------------
LANDLORD:
Dated: Xxxxx 0, 0000 XXXXX BUSINESS PARK, a California
general partnership
By: /s/ Xxxx X. Xxxxx
----------------------------
XXXX X. XXXXX
Its General Partner
By: XXXXXXX INVESTMENT COMPANY,
a California Limited
Partnership Its General
Partner
By: /s/ X.X. Xxxxxxx, XX
-----------------------
X. X. XXXXXXX, XX
General Partner
By: /s/ Xxxxx X. Xxxxxxx
-----------------------
Xxxxx X. Xxxxxxx
General Partner
PATRICIAN ASSOCIATES, INC., a
California corporation
By: /s/ R.E. Xxxxx
----------------------------
R.E. Xxxxx
Its: Vice President
By: /s/ X.X. Xxxxx
----------------------------
X.X. Xxxxx
Its: Vice President
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