LEASE
This Lease is made as of this 8th day of August 1995 (the "Effective
Date"), by and between Alta California Associates, an unincorporated association
("Landlord") and Optivision, Inc., a California corporation ("Tenant") by virtue
of the following facts and circumstances:
RECITALS
A Landlord is the owner of a certain leasehold interest consisting of
land, buildings and improvements located in Palo Alto, Santa Xxxxx County,
California, commonly designated as 3450 and 0000 Xxxxxxxx Xxxxxx (the
"Property"). The Property includes 7.358 acres of land, two buildings - the 3450
Hillview Building (consisting of approximately 43,472 gross rentable square feet
("RSF") and herein referred to as the "Building") and the 3460 Hillview building
(the "3460 Hillview Building") consisting of approximately 35,568 RSF. This
property is more particularly described as:
a portion of the land of The Xxxxxx X. Xxxxxxxx Junior University
located within the boundaries of the County of Santa Clam, California,
being Lot 6 as said lot is shown on the Map of Xxxxx Xx. 0000,
Xxxxxxxx Xxxxxxxxxx Xxxx, filed November 13, 1969, as Document No.
3718383, in Book 261 at Page 40-41, Official Records, Santa Xxxxx
County.
Landlord's leasehold interest was and is derived from that certain ground
lease by and between the Board of Trustees of the Xxxxxx Xxxxxxxx Junior
University, as ground lessor, and Bayhill Associates, a California general
partnership and predecessor-in-interest of Landlord as ground lessee, copy of
which is attached hereto as Exhibit A. A memorandum of the aforesaid original
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lease was dated as of March 15, 1979 and recorded as Documents No. 6327352 in
Book #380 at Page 619, Official Records, Santa Xxxxx County, California. Bayhill
Associates assigned all of its interest in and to the leasehold to Landlord
pursuant to the terms and conditions of a certain Amendment, Assignment,
Assumption and Consent to Assignment of Lease Agreement dated as of November 25,
1981, recorded December 1, 1981, as Document NO. 7224755 at Book G473, Page 708,
Official Records, Santa Xxxxx County, California.
B. Tenant desires to lease from Landlord, and Landlord desires to lease
to Tenant, the entirety of the Building
C. Tenant also desires to obtain and Landlord is willing to grant
Tenant, an option and a right of first offer to lease space in the 3460 Hillview
Building on the terms and conditions stated herein.
1
NOW, THEREFORE, for good and valuable consideration, the parties hereto
agree as follows:
1. LEASE:
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X. Xxxxx: Landlord hereby leases to Tenant, and Tenant hereby
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leases from Landlord, (i) the Building, (ii) the nonexclusive right to use all
other area of the Property outside of the Building and the 3460 Hillview
Building (herein the "Common Area") as depicted on Exhibit B. including without
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limitation all of the parking areas of the Common Area, and (iii) the right to
xxxx all parking spaces located in the parking area adjacent to the entry of the
Building as "visitor". or "[Tenant's name] visitor" or "[Tenant's name]";
together with all easements and rights appurtenant to the foregoing
(collectively the "Premises").
B. Early Entry: Upon waiver of the conditions precedent contained
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in paragraph 23 of this Lease, Landlord shall immediately demolish all of the
interior of the Building (other than the space located on the first floor of the
building and labeled as "Early Entry Space" on attached Exhibit B so that the
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demolition is completed on or before [September 5, 1995], except for minor
demolition work which will not cause traffic, dust, noise, or other disturbance
which will materially interfere with the use of the Early Entry Space by Tenant.
On September 5, 1995 Tenant shall have the right to take early occupancy of the
Early Entry Space on the following terms and conditions:
(i) Rent: The Base Rent the Early Entry Space shall be
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payable on a full-service basis, at the rate of $13,000 per month.
(ii) Commencement Date: Notwithstanding the Tenant's entry
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into the Early Entry Space, the Commencement Date of this Lease shall not occur,
and Tenant shall have no duty to pay Taxes, insurance premiums, nor Landlord's
Maintenance Expenses until, the "Completion" (pursuant to the Improvement
Agreement) of the Initial Improvements for all of that portion of the Premises
other than the Early Space.
(iii) Rent Reduction During Construction: To compensate
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Tenant being deprived of the Early Entry Space after the. Commencement Date
(during construction of the Initial Improvements therein), the Base Monthly Rent
payable under this paragraph 3 shall be reduced in the amount of $13,000, or
$420 per day (i.e., $13,000 / 31). The rent for any partial month between the
Completion of the Initial Improvements to the Premises (other than the Early
Entry Space) and the Completion of Initial Improvements for the Early Entry
Space shall be prorated based on the actual number of days in the partial month.
(iv) Completion of Improvements for the Early Entry Space:
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Within 10 days following the Commencement Date, Tenant shall surrender
possession of the Early Entry Space to Landlord, who shall thereupon promptly
commence and complete the Initial Improvements to be constructed therein
pursuant to the Improvement Agreement so that the same are Completed on or
before the thirty-first (31st) day following surrender of the Early Entry Space
to Landlord. If the Initial Improvements for the Early Entry Space are not
"Completed" by said date in accordance with the Improvement Agreement, then the
Base Monthly Rent payable hereunder for the Premises pursuant to paragraph 3
shall be reduced at the rate of $420 per day for each day of delay in completion
of the Initial Improvements for the Early Entry Space.
2
2. TERM OF LEASE:
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A. Initial Term: The term of this Lease ("Term") shall be for
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seven (7) years, commencing on the later of November 1, 1995 or the "Completion"
of the Landlord's Work (as defined in the Improvement Agreement) in all of the
Premises, other than the Early Entry Space, (the "Commencement Date") and shall
end on the day immediately preceding the seventh annual anniversary of the
Commencement Date, unless the Term is extended in accordance with paragraph 2.B,
below.
B. Options to Renew: Tenant shall have two successive options to
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extend the Lease Term, each for a period of five years. Tenant shall exercise an
option in writing not later than nine months prior to the then existing date for
the expiration of the Lease Term. The Base Monthly Rent for the extension period
shall be determined in accordance with paragraph 3.B; provided, however, that if
the Landlord and Tenant cannot agree upon the Base Monthly Rent for any extended
Term within the time permitted for mutual agreement pursuant to paragraph 33,
then Tenant may elect to either rescind its exercise of the renewal option or
proceed with an appraisal of the "fair market rental value" of the Premises in
accordance with paragraph 3.B.
3. RENT:
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A. Base Rent: "Base Monthly Rent" shall be payable by Tenant to
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Landlord in advance on or about the first day of each month throughout the Lease
Term as follows:
(i) First Lease Year: The Base Monthly Rent for the first
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lease year shall be equal to the following:
First 60 days of Lease Term = $ 22,313.72 per month
Remainder of first lease year = $ 69,120.48 per month
(i.e., until the 1st anniversary of
the Commencement Date)
(ii) Next Six Lease Years: On the first anniversary of the
----------------------
Lease Commencement Date and on each subsequent anniversary of the Lease
Commencement Date, through the sixth anniversary of the Lease Term, the Base
Monthly Rent shall be adjusted to one hundred four percent (104%) of the Base
Monthly Rent in effect immediately prior to the adjustment. (E.g., for the
second lease year - $ 71,885.30 (104% of $69,120.48) and for the third lease
year - $74,760.71 (104% of $ 71,885.30).
(iii) Additional Base Monthly Rent: In addition to the Base
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Monthly Rent, commencing on the sixty-first day following the Lease Commencement
Date and on or about the first day of each succeeding month until the seventh
(7th) anniversary of the Commencement Date, Tenant shall also pay to Landlord as
"Additional Base Rent" the sum of Three Thousand Six Hundred Eight and 18/100
Dollars ($3,608.18) per month. Additional Base Rent shall not be adjusted nor
shall it be payable after the seventh (7th) annual anniversary of the
Commencement Date. Base Monthly Rent and Additional Base Rent are collectively
referred to herein as "Base Rent."
3
B. Base Monthly Rent for Extension Period: If the Lease Term is
---------------------------------------
extended beyond the seventh (7th) anniversary of the Commencement Date, then on
each "Adjustment Date" and for the five lease year periods thereafter, the Base
Monthly Rent payable for the Premises shall be adjusted to an amount equal to
100% of "fair market rental value" of the Premises as of the Adjustment Date in
question. As used in this paragraph "Adjustment Date" shall mean the seventh
(7th) anniversary of the Commencement Date and every fifth subsequent
anniversary date of the Commencement Date (i.e., the 12th, 17th, etc.
anniversary dates of the Commencement Date). "Fair market rental value" shall be
determined as of each such Adjustment Date in accordance with the following
procedure:
(i) "Fair market rental value" shall be based on the fair
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market rental rate of premises in the vicinity of the Premises (including,
without limitation, such periodic rental adjustments in amounts and at intervals
as may be typical for such comparable leases). Such rent (and any appropriate
periodic adjustments thereto) shall be made to reflect, if and as applicable,
the following: (i) the fact that no commission and no tenant improvement
allowance or refurbishing by Landlord will be paid or insured in connection with
the extension, (ii) the fact that capital improvements may have been made at
Landlord's expense, but may not have been fully amortized as a reimbursable
"Landlord Maintenance Expense" and will not, after the recalculation of the Base
Monthly Rent to fair market value rental, continue to be reimbursable by Tenant,
(iii) the fact that the rental rate initially established shall be subject to
any rental rate adjustments in accordance with the foregoing, and (iv) the then
existing condition of the Premises (or, if Tenant has not fulfilled its
maintenance obligations under this Lease, the condition the Premises would be in
had Tenant performed such obligations). "Fair market rental value" shall not
include any rental value for any Alterations (as hereinafter defined) to the
Premises at the expense of the Tenant.
(ii) Tenant's Notice of Rental: Concurrently with its
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exercise of extension option, Tenant shall deliver to Landlord written notice of
Tenant's determination of the current fair market rental value of the Premises,
(including any appropriate periodic rental rate adjustments) for the extended
period ("Tenant's Rent Determination"). If Landlord disagrees with Tenant's Rent
Determination, then Landlord shall notify Tenant on or before the fourteenth
(14th) day following delivery of Tenant's fair market rental value notice of
Landlord's determination of the fair market rental value of the Premises (and
any appropriate periodic rental rate adjustments) for the extended period (the
"Landlord's Rent Determination"). If Landlord does not so notify Tenant, then
Tenant's determination of the current fair market rental value for the Premises
(and any rental rate adjustments for the extended period) shall be determinative
and binding on Landlord and Tenant.
(iii) Dispute Resolution: If Landlord disagrees with
-------------------
Tenant's Rent Determination of the current fair market rental value, then the
parties shall meet and confer for an additional period of fourteen (14) days to
reach agreement. If they are unable to reach agreement within the permitted time
period, then Tenant may elect to rescind its renewal of the Lease by delivery of
a written notice to Landlord within ten (10) days following conclusion of the
14-day negotiation period, in which case the Lease will terminate in accordance
with its terms at the end of the existing Lease Term. If Tenant fails to
exercise the election as herein provided by delivery of written notice in a
timely fashion, then "fair market rental value" (and any appropriate adjustments
thereof) shall be determined by an appraisal conducted by real estate
appraiser(s), all of which shall be licensed real estate brokers in good
standing with at least five (5) years experience appraising comparable space
located in the vicinity of the Premises in accordance with the following
procedures:
4
(a) Tenant may demand an appraisal by giving written
notice to Landlord at anytime after the lapse of the negotiation period, which
demand to be effective must state the name, address, and qualifications of an
appraiser selected by Tenant. Within ten (10) days following the Tenant's
appraisal demand, the Landlord shall either approve the appraiser selected by
the Tenant or select a second properly qualified appraiser by giving written
notice of name, address, and qualification of said appraiser to Tenant. If
Landlord fails to select an appraiser within the ten (10) day period, the
appraiser selected by Tenant shall be deemed selected by both parties and no
other appraiser shall be selected.
(b) If only one appraiser is selected, that appraiser
shall notify the parties in simple letter form of its determination of the
current fair market rental (and any associated adjustments) for the Premises
within fifteen (15) days following selection, which appraisal shall be
conclusively determinative and binding on the parties as the current fair market
rental value for the Premises, unless the appraiser's determination is less than
the Tenant's Rent Determination or greater than the Landlord's Rent
Determination (in which case the average of the Landlord's or Tenant's Rent
Determination, as the case may be, shall be conclusively binding on the
parties).
(c) If each party selects an appraiser, each appraiser,
within ten (10) days after being selected, shall make his determination of the
current fair market rental for the Premises in simple letter form. If the two
(2) appraisers agree on the current fair market rental value (and any associated
adjustments), they shall notify the parties in writing of such fact and the
agreed value shall be determinative and binding upon the parties. If the two (2)
appraisers are unable to agree on the current fair market rental value (or the
adjustments thereto) within twenty (21) days following the appointment of the
second appraiser, then on or before the fifth (5th) day following delivery of a
written notice by either party to the appraisers demanding agreement or
appointment of a third appraiser, the appraisers shall (i) notify the parties in
writing of their best opinion as to the fair market rental value (and any
associated periodic rental adjustments) for Premises during the extension
period, and (ii) the name of a third appraiser. If the two appraisers fail to
select a third qualified appraiser within such five (5) day period, then the
third appraiser shall be appointed by the then presiding judge of Santa Xxxxx
County, upon application of either Landlord or Tenant. Within ten (10) days
following appointment of the third appraiser, the third appraiser shall provide
it opinion of the fair market rental value and any associated periodic
adjustments. The "fair market rental value" of the Premises shall be equal to
the average of the three appraisals; provided, that (i) if the third appraiser's
opinion is more than the higher or less than the lower of the other two
appraisals, then it shall be disregarded in calculating the average, and (ii) if
three appraisals will be considered under the foregoing rule and the highest or
lowest of the three appraisals differs from the middle appraisal by more than
ten percent (10%) of the middle appraisal, then such materially higher or lower
appraisal(s) shall be disregarded in calculating the average.
(d) If only one appraiser is selected, then each party
shall pay one-half of the fees and expenses of that appraiser. If more than one
appraiser is selected, then each party shall bear the fees and expenses of the
appraiser it selects and one-half of the fees and expenses of any third
appraiser.
C. Additional Rent: Commencing on the Commencement Date and
----------------
continuing throughout the Lease Term, Tenant shall pay, as additional rent (the
"Additional Rent"), (i) "Taxes" as required by paragraph 7, (ii) insurance
premiums for Landlord's insurance as required by
5
paragraph 8.B, (iii) "Landlord's Maintenance Expenses" as required by paragraph
12, and (ii) any other charges due Landlord pursuant to this Lease.
D. Payment of Rent: All rent shall be paid in lawful money of the
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United States, to Landlord at its address for notices as set forth below or at
such other place as Landlord may designate from time to time by written notice
to Tenant. In the event the Commencement Date or Lease expiration date falls on
a day other than the first day or the last day of a month, respectively, then
Base Rent for such months shall be prorated based on the actual number of days
of said month in the Lease Term.
E. Late Payment Charge: If any Base Rent is not paid on or before
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the fifth (5th) day after the due date thereof or if any other sum due from
Tenant is not paid within five (5) days after Landlord's written notice to
Tenant that such amount has not been received when due, Tenant shall pay an
additional sum equal to three percent (3%) of the amount overdue as a late
charge and, in addition thereto shall pay to Landlord interest on the overdue
amount from the date the payment was due until paid at the annual percentage
rate of ten percent (10%) (the "Agreed Interest Rate"). The parties agree that
the foregoing sums represent 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 of Tenant's default with respect to
the overdue amount.
4. SECURITY DEPOSIT:
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Tenant shall pay to Landlord the aggregate sum of $145,196.48 in cash upon
execution of this Lease as and for a security deposit to secure Tenant's
performance of all terms and conditions of this Lease. Pending waiver by
Landlord and Tenant of the condition precedent to their performance found in
paragraph 23, below, said sum shall be held by Cornish & Xxxxx Commercial
Brokerage in an interest-bearing trust account established for such specific
purposes. From and after the date on which Landlord and Tenant shall have waived
the condition precedent to their obligations as set forth in paragraph 23,
Landlord shall take and apply one-half of the aforesaid monies in payment of the
first rent due under the terms of this Lease. The balance of the aforesaid
monies shall consist of a security deposit securing performance of Tenant's
obligations under this Lease. The amount held as a deposit shall not be
construed as an advance payment of any rental due and Landlord may commingle the
security deposit with other funds of Landlord. If Tenant fails to perform
Tenant's obligations, Landlord may, but without any obligation to do so, apply
all or any portion of the security deposit toward fulfillment of Tenant's
unperformed obligations. If Landlord does so apply any portion of the security
deposit, Tenant's failure to remit to Landlord a sufficient amount in cash to
restore the security deposit to the original amount within 10 days after receipt
of Landlord's written demand to do so shall constitute a default under this
Lease. Within twenty (20) days following the termination of this Lease, Landlord
shall return the security deposit (or so much as has not been applied to cure
Tenant's default in accordance with this paragraph) to Tenant without payment of
interest until said twentieth (20th) day and with interest on the unpaid amount
thereafter until paid at the Agreed Rate. If Landlord sells or otherwise
transfers Landlord's rights or interests under this Lease, Landlord shall
deliver the security deposit to the transferee, whereupon, Landlord shall be
released from any further liability to Tenant with respect to the security
deposit.
6
5. USE:
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Tenant may use the Premises only for technological research and development
and associated. administrative uses and prototype manufacturing, and for any
other use permitted by the laws, rules, regulations, building codes, statutes,
and orders of any local, state or federal governmental authority having
jurisdiction over the Premises ("Laws") and the Ground Lease.
6. UTILITIES:
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Tenant shall pay before delinquency all charges or assessments for
telephone, water, sewer, gas, heat, electricity, garbage disposal, trash
disposal and all other utilities and services of any kind that may be used on
the Premises throughout the Lease Term.
7. TAXES:
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Subject to the other provisions of this paragraph, commencing on the
Commencement Date, Tenant shall pay one hundred percent (100%) of all ad valorem
real property taxes and assessments ("Taxes") levied against the Building and
Tenant's Pro Rata Share of the Taxes levied against the Common Area. Landlord
and Tenant shall pro rate all Taxes the first and last years of the Lease Term.
The actual amount of Taxes payable by Tenant shall be equitably determined by
Landlord in accordance with a mathematical formula which shall take into account
the proportionate share which the RSF of the Building leased by Tenant bears to
the total amount of RSF within the Building and in the 3460 Hillview Building
upon which, in turn, the Taxes are based. Tenant shall pay 1/12th of its share
of Taxes for each year on a monthly basis (with an appropriate year-end
reconciliation) in accordance with the procedure described in paragraph 12.A,
below. Notwithstanding the foregoing, Tenant's responsibility to reimburse
Landlord for Taxes as hereinabove described shall be limited as follows:
(1) If and to the extent the Tax is increased due solely to the
sale or conveyance by Landlord or any other "change or ownership" of the
Property, or any portion thereof or interest therein (collectively a "Change of
Ownership"), Tenant's obligation to reimburse Landlord for Taxes for the
thirty-six months immediately succeeding the Change of Ownership shall not
exceed (i) the Taxes that would have been payable by Tenant for such period had
the Change of Ownership not occurred, plus (ii) the following:
For the 12-month period immediately succeeding the Change of
Ownership, twenty-five percent (25%) of the Taxes which are payable
only as a consequence of the Change of Ownership Taxes for the first
12 months succeeding the Change of Ownership;
For the 13th through months succeeding the Change of Ownership, fifty
percent (50%) of the Taxes, which are payable for 13th through 24th
months succeeding the Change of Ownership only as a consequence of the
Change of Ownership;
For the 25th through 36th months succeeding the Change of Ownership,
seventy-five percent (75%) of the Taxes, which are payable for the
25th through 36th months succeeding the Ownership only as a
consequence of the Change of Ownership.
7
(2) If any assessment is levied against the Property, Landlord may
elect to either pay the assessment in fall or allow the assessment to go to
bond. If Landlord pays the assessment in full, Tenant shall pay to Landlord each
time payment of Taxes is made, a sum equal to that which would have been payable
(as both principal and interest) had Landlord allowed the assessment to go to
bond.
(3) No Tax reasonably attributable to the 3460 Hillview Building
shall be included in Taxes (unless or until Tenant leases said building).
(4) "Taxes" shall not include any transfer, inheritance, franchise
or net income tax.
(5) In the event that Tenant shall desire in good faith to contest
or otherwise review by appropriate legal or administrative proceeding any Tax,
Tenant may withhold payment of the Tax being contested if nonpayment is
permitted during the pendency of such proceedings without the foreclosure of any
or the imposition of any fine or penalty. At the request of Tenant, Landlord
shall cooperate with Tenant in any contest or other proceedings which Tenant may
desire to bring pursuant to this paragraph. Within ten (10) days after the final
determination of the amount due from Tenant with respect to the Tax contested,
Tenant shall pay the amount so determined to be due, together with all costs,
expenses and interest, whether or not this Lease shall have then expired or
terminated.
Landlord shall be solely responsible for payment of the balance of any Tax
allocable to the Property.
8. INSURANCE:
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A. Liability Insurance: Tenant agrees at all times during the
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Lease Term (including any extension of the Term hereof) to maintain in force and
effect at its sole cost and expense comprehensive public liability insurance,
from a responsible insurance company authorized to do business in California
with a combined single limit of not less than $2,000,000 for injury or death to
any person or damage to property and $3,000,000 excess umbrella coverage for
injury or death or property damage for any claims, demands or causes of action
of any person arising out of accidents occurring on the Premises during the
Lease Term or arising out of Tenant's use of the Premises. Landlord shall be
named as an additional insured on said policy.
B. Building Casualty Insurance: At all times Landlord shall
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maintain full replacement cost, fire and property damage insurance in extended
coverage, "all risk" form (including coverage for malicious mischief, flood,
inflation, sprinkler leakage and boiler and machinery coverage endorsements (if
applicable), and earthquake coverage), against loss from physical damage to the
Premises, including the Building, the Landlord's Work (but excluding any Initial
Improvements which are Tenant's Property) and the Common Area. The insurance
policy or policies shall name Landlord and Tenant as named insureds and shall
include a lender loss payable endorsement in favor of Landlord's lender,
provided, however, Landlord's lender shall agree that so long as this Lease is
not terminated as a consequence of a casualty, the proceeds of the insurance
shall be used to restore the Building as may be required by paragraph 14, below.
8
Landlord shall also maintain policies of insurance against rental abatement
covering all Base Rent and Additional Rent payable with respect to the Building
in the case of a casualty to be insured against under this paragraph for a
12-month period.
Tenant shall pay its share of the annual premiums for the foregoing
Landlord's insurance on a monthly basis (with an appropriate year-end
reconciliation) in accordance with the procedure described in paragraph 12.A,
below; provided, however that Tenant shall not be required to reimburse Landlord
for any premium for insurance (i) allocable to insurance carried by Landlord
prior to the Commencement Date of this Lease, or (ii) for any earthquake premium
which is not commercially reasonable given the amount of coverage obtained. The
deductible for Landlord's insurance shall be determined by Landlord, shall be
commercially reasonable taking into account both the size of the deductible and
the resulting premium for the policy, and shall be subject to the approval of
the Tenant, which approval shall not be unreasonably withheld.
C. Tenant's Other Insurance: Tenant shall separately insure its
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Alterations and other Tenant's Property located on or in the Building in an
amount equal to at least 90% of the full amount of the replacement cost of the
same, which may from time to time increase as a result of inflation or
otherwise. Tenant shall additionally maintain workers' compensation insurance at
statutory limits.
D. Release and Waiver of Subrogation: Notwithstanding anything to
---------------------------------
the contrary in the Lease, parties hereto release each other, and their
respective employees, agents, contractors, officers, shareholders, directors,
successors, (sub)tenants and assigns (herein collectively "Agents"), from any
liability for injury to any person or damage to property that arises out of or
incident to any peril actually covered by insurance carried by the parties or
out a peril of the type to be covered by the insurance required to be carried by
either the Landlord or the Tenant under the terms of this Lease, whether due to
the negligence of Landlord or Tenant or their respective Agents, or any other
cause. Each party shall cause each insurance policy obtained by it to provide
that the insurer waives all right of recovery by way of subrogation against the
other party and its Agents in connection with any injury or damage covered by
such policy.
9. COMMON AREA:
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Landlord shall repair, maintain and operate the Common Area, provided, that
in exercising any such rights regarding the Common Area, Landlord shall take all
reasonable steps to minimize any disruption to Tenant's business. Tenant's
obligation to reimburse Landlord for the cost incurred by the Landlord to so
repair, maintain and operate the Common Area is set forth in paragraph 12,
below.
10. CONDITION OF PREMISES AT LEASE COMMENCEMENT:
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Tenant shall have the right to conduct a complete inspection of the
Premises until August 31, 1995. Landlord represents to Tenant that the Building
and Property are in good order, repair and condition, comply with the Americans
With Disabilities Act (ADA) and are seismically sound, save and except only the
work to be completed by Landlord prior to the Commencement Date in accordance
with the following:
9
A. HVAC: The existing HVAC system for the Building has been
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inspected and is presently in good operating condition. A correct and complete
copy of the inspection has been delivered to Tenant prior to the execution of
this Lease. Nonetheless, the units themselves are not new and replacement of
the existing HVAC units may be necessary during the Lease Term. If and to the
extent that it is determined by at least two independent licensed HVAC
contractors that one or more HVAC units presently in place require replacement
or will require replacement within six months after the Commencement Date of
this Lease, then Landlord, at its cost and expense, shall promptly replace said
unit(s). Should the replacement be required after the 6th month of the Lease
Term, then throughout the remainder of the then existing Lease Term, commencing
on the first day of the month immediately succeeding the completion of the
replacement, Tenant shall reimburse Landlord for its share of the cost of the
replacement as a "Landlord's Maintenance Expense" in an amount equal to the
monthly amortized amount of the replacement unit, based on its useful life.
Tenant's duty to reimburse Landlord for such amortized cost shall cease on the
earlier of the expiration of the Lease or the date Base Monthly Rent is reset to
the fair market rental value of the Premises. The monthly amortized amount
payable by Tenant shall be pro rated for any partial month, based on the actual
number of days in the month within the Lease Term.
B. Parking Area Resealing and Restripping: As part of Landlord's
---------------------------------------
Work under the Improvement Agreement and at its sole cost and without
reimbursement by Tenant or reduction in the Allowance for Initial Improvements,
Landlord, at Landlord's sole cost and without reimbursement from Tenant, shall
reseal and restripe all of the parking areas in the Common Area. Such work shall
be performed by Landlord prior to the Commencement Date of this Lease.
C. Americans With Disabilities Act: As part of Landlord's Work
----------------------------------
under the Improvement Agreement, at its sole cost and without reimbursement by
Tenant or reduction in the Allowance for Initial Improvements, prior to the
Commencement Date of the Lease, Landlord shall make all improvements to the
Common Area and the exterior of the Building which are required by the Americans
for Disabilities Act (ADA), including without limitation those improvements
described on attached Exhibit C, in accordance with plans approved by Tenant,
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which approval shall not be unreasonably withheld on delayed.
D. Refurbishment: As part of "Landlord's Work" under the
-------------
Improvement Agreement, at its sole cost and without reimbursement by Tenant or
reduction in the Allowance for Initial Improvements, Landlord shall also repair
and replace (to good condition) those items described on attached Exhibit D, in
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accordance with plans approved by Tenant, which approval shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, the parties
agree that the following shall apply to the Construction Cost (as defined in the
Improvement Agreement) which Landlord incurs to replace the bathrooms:
(i) If the Construction Cost for the Initial Improvements to
the entire Premises is less than the Allowance, then the Landlord may apply the
unused portion of the Allowance to the Construction Cost for the bathroom
reconstruction.
(ii) If the unused portion of the Allowance does not repay
all of the Construction Cost incurred by Landlord for the bathroom
reconstruction, then Tenant shall
10
pay the first $13,000 of such Construction Cost and the Landlord shall pay the
remainder, if any.
(iii) If the unused portion of the Allowance plus the
Tenant's contribution pursuant to subpart (ii) above does not repay all of the
Construction Cost incurred by Landlord for the bathroom reconstruction, then on
the Commencement Date of the Lease, Tenant shall advance to Landlord 50% of such
shortfall. The amount so advanced by Tenant shall be reimbursed by Landlord to
Tenant, without interest, in twelve equal monthly installments payable to Tenant
commencing on the first day of the third full month of the Lease Term and
continuing on the first day of the eleven calendar months thereafter. To
facilitate the payments between the parties, the amount of such reimbursement by
Tenant may be offset against the Base Rent payable by Tenant under this Lease.
11. REPAIRS AND MAINTENANCE:
-------------------------
A. By Landlord: Subject to Tenant's reimbursement obligations
------------
under paragraph 12 and Tenant's obligations under paragraph 10, at all times
during the Lease Term, Landlord shall maintain and repair the exterior glass and
walls, the foundation, bearing walls, elevators and elevator shafts, stairs and
stairwells, and the roof of the Building, the plumbing, heating, fire safety,
water, sewer, and electrical systems serving or located within the Building, and
the Common Area (including, without limitation, the landscaping in and around
Building and the-3460 Hillview Building and, the parking areas of the Common
Area) all in a condition and repair consistent with the normal level of
maintenance of the other buildings in the Stanford Industrial Park. The roof
membrane shall at all time be watertight. Landlord shall execute and maintain in
force a service contract with a roof inspection and an authorized HVAC service
company mutually acceptable to Tenant and Landlord. Except as provided in the
last sentence of paragraph 11.B, Landlord shall promptly comply with any present
or future law requiring improvement or repair to the Premises. Tenant shall
provide Landlord with written notice of the need for repairs or maintenance that
is the obligation of Landlord hereunder, within a reasonable time of Tenant
becoming aware of the need for repairs. Except as expressly provided herein to
the contrary, there shall be no abatement of rent, except to the extent Tenant
cannot reasonably use the Premises for its intended purpose, as a result of such
repairs or maintenance or as a result of the Landlord's failure to make such
repairs.
B. By Tenant: Except as otherwise provided in the improvement
----------
Agreement and in paragraphs 10, 11.A, 14, 15, and 18 hereof to the contrary,
Tenant, its sole expense, shall maintain the Building in the condition existing
on the Commencement Date (or on the date the Early Entry Work is Completed in
the case of the Early Entry Space), excepting only ordinary wear and tear, acts
of God, condemnation, and Hazardous Materials not released, disposed of, or
emitted on or about the Premises by Tenant or its Agents. At Tenant's sole cost,
Tenant shall also promptly and properly observe and comply with all Laws
requiring modifications or repairs to the Premises, if such modifications and
repairs are required as a consequence of the specific nature of the use of the
Premises by Tenant and are not generally required for comparable buildings in
the vicinity.
C. Reserve: Landlord shall establish a reserve for the repairs
-------
and replacements (both routine and extraordinary) to the roof membrane of the
Building, the parking areas and paving in the Common Area and for compliance
with any Laws applicable to the Buildings in the amount of Five
11
Hundred dollars ($500) per month. Tenant shall pay said reserve amount to
Landlord, together with the Base Rent or the first day of each calendar month.
12. REIMBURSEMENT OF LANDLORD'S EXPENSES:
--------------------------------------
As additional rent, Tenant shall reimburse Landlord for Tenant's Share of
the costs and expenses reasonably incurred by Landlord after the Commencement
Date to discharge its repair and obligations under this Lease with respect to
the Common Area (see paragraph 9) and with respect to the Building (see
paragraph 11) (collectively referred to herein as "Landlord's Maintenance
Expenses"). Tenant shall pay such share of Landlord's Maintenance Expenses, as
well as, Tenant's share of Taxes and insurance premiums, as follows:
A. As additional rent, Tenant shall pay the estimated amount of
Taxes reimbursable to Landlord pursuant to paragraph 7, the insurance premiums
reimbursable to Landlord pursuant to paragraph 8, and Tenant's Proportionate
Share of Landlord's Maintenance Expenses in monthly installments as estimated by
Landlord. Prior to the Commencement Date and on or before January 31 of each
calendar year Landlord shall deliver to Tenant Landlord's reasonable estimate of
the amount of such reimbursable expenses that it anticipates will be paid or
incurred for each calendar year of the Lease Term, During such calendar year,
Tenant shall pay such estimates in monthly installments concurrently with
payment of the installments of Base Rent. At the end of each calendar year, the
estimated amount shall be reconciled with the actual amount required to be paid
by Tenant. On or before January 31 of each year, Landlord shall provide Tenant
with a statement of the actual amount of such reimbursable expenses for the
preceding calendar year and Tenant's share of such expenses. Within 30 days
following the date such statement is delivered to Tenant, Landlord shall refund
to Tenant all excess payments or Tenant shall pay to Landlord the entire
deficiency.
B. In the case of Landlord's Maintenance Expenses, at its election
Landlord may also demand that Tenant pay, as additional rent, Tenant's
Proportionate Share of any actual Landlord's Maintenance Expense not theretofore
billed to Tenant nor included in the estimated amount of Landlord's Maintenance
Expenses for the calendar year in question. Such payments will be made by Tenant
thirty (30) days after receipt by Tenant of a written xxxx therefor from
Landlord, provided, however, that all such xxxxxxxx shall be made not more
frequently than once per month.
As used in this paragraph "Tenant's Share" of Landlord's Maintenance Expenses is
(i) 100% of the Landlord's Maintenance Expenses incurred solely with respect to
the Building, and (ii) 55% of the Landlord's Maintenance Expenses for the Common
Area (unless the RSF of the Building or of the 3460 Hillview Building is
reduced, in which case the Tenant's Proportionate Share of Common Operating
Expenses shall be recalculated to equal the percentage derived by dividing the
RSF of the Building and the RSF of both the Building and the 3460 Hillview
Building).
Notwithstanding anything to the contrary in this Lease, in no event shall
"Landlord's Maintenance Expenses" include, nor shall Tenant have any obligation
to perform or to pay directly, or to reimburse Landlord for, all or any portion
of the following repairs,
12
maintenance, improvements, replacements, claims, losses, fees, charges, costs
and expenses (collectively, "Costs"), nor shall any portion of the Allowance be
used for any of the following Costs:
(1) Certain Maintenance Costs: Costs to repair, replace or
---------------------------
improve the roof covering, the parking areas of the Property, and/or the
Building structure, including the foundation, exterior walls, bearing walls, and
roof structure and, except to the extent expressly made the obligation of Tenant
under the last sentence of paragraph 11.B, Costs incurred to make any repair,
replacement or improvement required to comply with any Law respecting the
condition of the Premises.
(2) Base Building Deficiency: Costs incurred to discharge the
--------------------------
Landlord's obligations to repair and refurbish the Building pursuant to
paragraph 10, to correct any construction defect in the Building or the Common
Area, or to correct any failure of the Building or the Common Area to comply
with applicable Law, land use restrictions or underwriters' requirement as of
Effective Date of this Lease.
(3) Caused by Others: Costs occasioned by the act, omission or
------------------
violation of Law by Landlord, any occupant of the 3460 Hillview Building, or
their respective Agents.
(4) Casualties and Condemnations: Costs occasioned by fire, acts
-----------------------------
of God, or other casualties or by the exercise of the power of eminent domain.
(5) Capital Improvements: Subject to paragraph 10.A, Costs which
---------------------
are properly capitalized under generally accepted accounting principles, except
to the extent that (i) Landlord's Maintenance Expenses otherwise payable by
Tenant under the Lease are reduced and (ii) Tenant's share of such Landlord's
Maintenance Expense is based upon an equitable amortization of the cost of such
item over its useful life. Costs for amortization of a capital improvement
or repair performed prior to the resetting of Monthly Base Rent to "fair market
value" after the Base Monthly Rent is so reset.
(6) Reimbursable Expenses: Costs for which Landlord has a right
----------------------
of reimbursement from others.
(7) Depreciation & Reserves: Depreciation and amortization and,
-------------------------
except to the extent provided in paragraph 11 .C, any reserve for Costs.
(8) Landlord's Financing: Interest, charges and fees incurred on
---------------------
debt to finance the Landlord's Maintenance Expense or Landlord's Work, including
without limitation, payments on obligations secured by mortgages and deeds of
trust and rent and other payments under ground leases.
(9) Hazardous Materials: Except to the extent caused by the
--------------------
release, emission, or disposal of the Hazardous Material in question by Tenant
or its Agents on or about the Premises, Costs to investigate the presence of any
Hazardous Material (defined below), to respond to any claim of Hazardous
Material contamination or damage, to remove any Hazardous Material from the
Property.
(10) Management: Wages, salaries, compensation, and labor burden
----------
for any employee of Landlord or its Agents not stationed on the Property on a
full-time basis or any fee, profit or compensation retained by Landlord or its
Agents for management and
13
administration of the Property in excess of the management fee which would be
charged by a professional management service for operation of comparable
projects in the vicinity; provided however, that the parties agree that Landlord
shall use its best efforts to obtain a reputable management company to manage
the Property at a fee not exceeding 3% of the Base Monthly Rent.
(11) Duplication: Costs for which Tenant reimburses Landlord
-----------
directly or which Tenant pays directly to a third person.
13. ALTERATIONS:
-----------
Tenant shall have the right to make improvements, additions, alterations
and modifications to the Premises ("Alteration") from and after the Commencement
Date of this Lease with the consent of Landlord, which consent shall not be
unreasonably withheld and shall be deemed given if not reasonably withheld by
Landlord in a writing delivered to Tenant within fifteen (15) days after
delivery to Landlord of Tenant's request for Landlord's consent; provided
however, that Tenant shall not be required to obtain Landlord's consent to any
Alteration does not affect structure of the Building and costs Five Thousand
Dollars ($5,000) or less. All Alterations shall be constructed in accordance
with applicable Laws and at Tenant's own expense. Subject to paragraph 8.D,
Tenant will indemnify and defend Landlord from all liens, claims or damages
caused by Tenant's construction of Alterations to the Premises. All Alterations
shall remain the property of Tenant during the Lease Term and may be removed
from the Premises at any time. Landlord shall have no lien or other interest
whatsoever in any such Alteration or on any equipment, trade fixtures or
personal property installed in the Premises by Tenant at its cost (collectively
"Tenant's Property"); and within ten (10) days following receipt of a written
request, Landlord shall execute documents in reasonable form to evidence such
waiver by Landlord of any right, title, fine, or interest in the Tenant's
Property located in the Premises. Tenant shall restore all damage to the
Premises caused by any removal of Tenant's Property. Within ten (10) days
following a request by Tenant, Landlord shall inform Tenant whether it reserves
the right to any Alteration installed by Tenant removed from the Premises by
Tenant upon termination of the Lease.
14. DAMAGE & DESTRUCTION:
----------------------
A. Landlord's Duty to Restore: If the Premises, the Building or
----------------------------
the Common Area is damaged by any peril, Landlord shall restore the same to
substantially the same condition existing immediately prior to such damage,
unless the Lease is terminated by Landlord or Tenant pursuant to this paragraph
14. If the Lease is not terminated, all insurance proceeds available from the
fire and property damage insurance to be carried by Landlord pursuant to
paragraph 8 shall be paid to an independent depository and disbursed as the
restoration work progresses in accordance with the customary procedures for
disbursement of construction loan proceeds. If this Lease is terminated by
Landlord or Tenant pursuant to this paragraph 14, then all insurance proceeds
available from insurance carried by Landlord shall be paid to Landlord.
B. Landlord's Right to Terminate: Landlord shall have the option
------------------------------
to terminate this Lease in the event any of the following occurs, which option
may be exercised only by delivery
14
to Tenant of a written notice of election to terminate within thirty (30) days
after the date of such damage:
(i) The Building is damaged by any peril both (i) not
required to be covered by the type of insurance Landlord is required to carry
pursuant to paragraph 8, and (ii) not actually covered by valid and collectible
insurance carried by Landlord and in force at the time of such damage or
destruction, to such an extent that the estimated cost to restore the Building
exceeds ten percent (10%) of the then actual replacement cost thereof; or
(ii) The Premises are damaged by any peril during the last
twelve (12) months of the Lease Term and the restoration of the Premises cannot
be substantially completed within sixty (60) days after the date of such damage;
provided, however, that Landlord may not terminate this Lease pursuant to this
subparagraph if Tenant, at the time of such damage, exercises any option Tenant
may then have to extend the term of this Lease and Tenant exercises such option
to so further extend the Lease Term within thirty (30) days following the
delivery to Tenant of Landlord's written termination notice.
C. Tenants Right to Abatement and Termination: If all or any portion
--------------------------------------------
of the Premises, the Building, or the Common Area should become unsuitable for
Tenant's intended use (a) as a consequence of fire, casualty, or any other
peril, (b) for a period exceeding seven (7) days in any thirty-day period, as a
consequence of cessation of the availability of utilities, or (c) as a
consequence of the presence of any Hazardous Material not released, emitted or
disposed of on or about the Premises by Tenant or its Agents, then Tenant shall
be entitled to an equitable abatement of all Base Rent and any Additional Rent
payable hereunder to the extent of the interference with Tenant's use of the
Premises occasioned thereby and, if such interference cannot be corrected or the
damage resulting therefrom repaired so that the Premises will be reasonably
suitable for Tenant's intended use within one hundred eight (180) days following
the occurrence of such event, then Tenant also shall be entitled to terminate
this Lease by delivery of written notice of termination to Landlord.
15. CONDEMNATION:
------------
A. Taking of Premises: If all or any part of the Premises or the
-------------------
Common Area is taken by means of (i) any taking by the exercise of the power of
eminent domain, whether by legal proceedings or otherwise, (ii) a voluntary sale
or transfer by Landlord to any condemnor under threat of condemnation or while
legal proceedings for condemnation are pending, or (iii) any taking by inverse
condemnation (a "Condemnation"), and the Premises and the Common Area cannot be
reconstructed within a reasonable period of time and thereby made reasonably
suitable for Tenant's continued occupancy for Tenant's intended use, then Tenant
shall have the option of terminating this Lease. Any such option to terminate by
Tenant must be exercised within a reasonable period of time, and will be
effective as of the date that possession of the Premises is taken by the
condemnor.
B. Restoration Following the Taking: If any part of the Premises
---------------------------------
or the Common Area is taken by Condemnation and this Lease is not terminated,
then Landlord shall make all repairs and alterations that are reasonably
necessary to make that which is not taken a complete architectural unit
reasonably suitable for Tenant's occupancy for Tenant's intended
15
use; provided, that Landlord shall not be required to expend more for such
restoration than the amount of the condemnation award received by Landlord with
respect to the Condemnation.
C. Abatement of Rent: Except in the case of a temporary taking,
if any portion of the Premises is taken by Condemnation and this Lease is not
terminated, then as of the date possession is taken, the Base Rent and
Additional Rent shall be equitably reduced in proportion to the reduction in the
fair market rental value of the Premises as a consequence of the Condemnation.
D. Division of Condemnation Award: Tenant shall be entitled to
---------------------------------
receive a separate award for the Condemnation of Tenant's Property and Tenant's
moving costs, severance damages, and lost goodwill. All other proceeds of the
Condemnation award shall be the sole property of Landlord.
16. SIGNAGE:
-------
Tenant shall have the right to install its signage on any monument signs in
the Common Area in the manner and at the location on the sign selected by
Tenant, and to erect all other signs permitted by applicable Laws and the Ground
Lease.
17. ASSIGNMENT AND SUBLETTING:
---------------------------
A. Requirement for Landlord's Consent: Tenant shall not sublease
-----------------------------------
the Premises or any portion thereof without the written consent of Landlord,
which consent shall not be unreasonably withheld or delayed. If Landlord's
consent is not reasonably withheld by delivery of a written notice to Tenant of
Landlord's disapproval and the reasons therefore within ten (10) days following
delivery of a request for consent to Landlord, then Landlord's consent shall be
deemed given. Consent by Landlord to one or more assignments or encumbrances of
this Lease or to one or more sublettings of the Premises be shall not deemed to
be a consent to any subsequent assignment, encumbrance, or subletting.
B. Permitted Transfers: Notwithstanding the foregoing, Tenant may
-------------------
assign this Lease or sublet all or a portion of the Premises without Landlord's
to (i) a subsidiary, affiliate, division or corporation controlling, controlled
by or under common control with Tenant; (ii) a successor corporation related to
Tenant by merger, consolidation, nonbankruptcy reorganization, or government
action provided the net worth of the successor Tenant shall not be less than the
net worth of the Tenant immediately prior to the transaction; or (iii) a
purchaser of substantially all of Tenant's assets located in the Premises,
provided the net worth of the purchasing Tenant shall not be less than the net
worth of the selling Tenant immediately prior to the sale. For the purpose of
this Lease, sale of Tenant's capital stock through any public exchange shall not
be deemed an assignment, subletting, or any other transfer of the Lease or the
Premises.
C. Sharing of Subletting Profit: Fifty percent (50%) of any "net
-----------------------------
subletting proceeds" actually received by Tenant under any sublease or
assignment (other than a sublease or assignment qualifying under subparagraph B,
above) shall be paid by Tenant to Landlord. Tenant's obligation to pay such
consideration shall constitute an obligation for additional rent hereunder. As
used in this subparagraph "net subletting proceeds" means the rental actually
received by Tenant in
16
excess of (a) the rent payable hereunder, plus (b) the unamortized cost of any
Initial Tenant Improvements denominated as "Tenant's Property" pursuant to the
Improvement Agreement, plus (c) the unamortized cost of any Alterations
installed at Tenant's expense, plus (d) subletting and assignment costs incurred
by Tenant in connection with the assignment or sublease (including, without
limitation, attorneys' fees, brokerage commissions, and remodeling costs), plus
(e) any vacancy costs incurred by Tenant; and plus (f) any other costs incurred
by Tenant to perform its obligations under the assignment or sublease.
18. HAZARDOUS SUBSTANCES:
---------------------
A. Definitions: As used in this paragraph the following terms
-----------
shall have the following meanings:
(i) "Hazardous Materials" means all of those materials
identified as such by and under State and Federal statutes, laws, ordinances,
rules, regulations or orders as hazardous, toxic, extremely hazardous, acutely,
hazardous or otherwise harmful to human health or the environment, including,
without limitation petroleum, asbestos, radon, and radioactive materials.
(ii) "Environmental Laws" shall mean all local, state, or
federal laws, statutes, ordinances, rules, regulations, judgments, injunctions,
stipulations, decrees, orders, permits, approvals, treaties, or protocols now or
hereafter enacted, issued or promulgated by any governmental authority which
relate to any Hazardous Material or to the use, handling, transportation,
production, disposal, discharge, release, emission, sale, or storage of, or the
exposure of any person to, a Hazardous Material.
B. Tenant's Hazardous Materials Activities: Tenant shall strictly
---------------------------------------
comply with all Environmental Laws governing Tenant's use, generation, storage,
transfer or disposal of Hazardous Materials on or about the Premises. Within the
time permitted by applicable Environmental Law, Tenant, at its sole cost, shall
perform or cause to be performed, any investigation, remediation, removal
action, and detoxification of the Premises required by Environmental Law as a
consequence of any release of a Hazardous Material by Tenant or its Agents into
the soil, groundwater, surface water or building materials of the Premises in
violation of any Environmental Law ("Tenant's Contamination").
C. Hazardous Material Indemnity by Tenant: Subject to
------------------------------------------
subparagraphs 18.D through F, below, Tenant shall indemnify, defend with counsel
reasonably acceptable to Landlord, protect, and hold harmless Landlord and its
heirs, executors, successors and assigns (collectively the "Landlord
Indemnitees") from and against all claims, actions, suits, proceedings,
judgments, losses, costs, personal injuries, damages, liabilities, deficiencies,
fines, penalties, damages, attorneys' fees, consultants' fees, investigations,
detoxifications, remediations, removals, and expenses of every type and nature
("claims"), to the extent caused by (i) Tenant's Contamination, or (ii) the
violation of any Environmental Law applicable to the storage, use, disposal or
release of a Hazardous Material by Tenant or its Agents.
D. Landlord's Representations: Landlord represents and warrants
---------------------------
that to its knowledge:
(i) No Hazardous Materials have been used, generated, stored,
transferred or disposed of on the Property during its ownership and no previous
owner or
17
occupant has used, generated, stored, transferred or disposed of any Hazardous
Materials on the Property;
(ii) No Hazardous Material is present in the soil,
groundwater, ambient air or building materials of the Premises; and
(iii) Landlord does not have any environmental reports,
investigations and assessment of the Property in its possession or control.
E. Landlord Covenant to Comply with Environmental Laws: Within
------------------------------------------------------
the time permitted by applicable Environmental Law, Landlord, at its sole cost,
shall perform or cause to be performed, any investigation, remediation, removal
action, detoxification of the Premises or Project required by consequence of any
Hazardous Material present at any time on or about the soil, air, groundwater,
surface water or building materials of the Premises or the Property (other than
Tenant's Contamination).
F. Landlord's Indemnity: Landlord shall indemnify, defend with
---------------------
counsel reasonably acceptable to Tenant, protect, and hold harmless Tenant, its
employees, stockholders, officers, directors, successors, subtenants, and
assigns (collectively the "Tenant Indemnitees") from and against all Claims to
the extent arising out of (i) any Hazardous Material present in the soil, air,
groundwater, surface water or building materials of the Property or the Premises
(other than Tenant's Contamination), or (ii) the violation of any Law applicable
to the storage, use, disposal or release of a Hazardous Material by Landlord or
its Agents.
G. Waivers: Notwithstanding anything to the contrary in this
-------
Lease; to the extent arising out of Tenant's Contamination, (i) Landlord shall
have no liability or responsibility in any way for, (ii) Landlord shall not be
required to reimburse Tenant with respect to, and (iii) Tenant (for itself and
its successors and assigns) hereby waives and releases all Claims (including
without limitation, Claims arising under CERCLA, RCRA, the California Hazardous
Material Substance Account Act, and the California Hazardous Waste Control Law)
against Landlord and the other Landlord Indemnitees with respect to, Tenant's
Contamination. Notwithstanding anything to the contrary in this Lease Tenant
shall have no liability or responsibility in any way for, Tenant shall not be
required to reimburse Landlord with respect to, and Landlord (for itself and its
successors and assigns) hereby waives and releases all Claims (including without
limitation, Claims arising under CERCLA, RCRA, the California Hazardous Material
Substance Account Act, and the California Hazardous Waste Control Law) against
Tenant and the other Tenant Indemnitees, to the extent arising out of, the
presence of any Hazardous Material (other than Tenant's Contamination) present
in the soil, groundwater, surface water, air or building materials of the
Project or the Premises. Landlord, for itself and its successors and assigns,
and Tenant, for itself and its successors and assigns, also waive the benefits
of all Laws which provide that a waiver of unknown claims is unenforceable or
which would otherwise limit the obligations, waivers or releases of the Landlord
or Tenant as set forth in this paragraph, including without limitation
California Civil Code Section 1542.
H. Exclusive Paragraph: The parties agree that their entire
--------------------
agreement with respect to their respective rights and remedies each against the
other under this Lease are set forth
18
exclusively in this paragraph and no other provision of this Lease shall apply
to Hazardous Materials, except to the extent that the words "Hazardous
Materials" are expressly used in said paragraph.
19. INDEMNITY:
---------
A. By Tenant: Except to the extent arising out of the negligence
----------
or willful misconduct of Landlord or its Agents, Landlord's breach of its
obligations or representations under this Lease, or a violation by Landlord of
any Law, Tenant shall indemnify, defend, protect and hold harmless Landlord from
all damages, liabilities, claims, judgments, actions, attorneys' fees,
consultants' fees, costs and expenses ("Damages") to the extent arising from (a)
the negligence or willful misconduct of Tenant or its Agents, (b) Tenant's
breach of its obligations or representations under this Lease, or (c) the
violation by Tenant of any Law relating to the Premises or Tenant's use thereof.
B. By Landlord: Except to the extent arising out of the
------------
negligence or willful misconduct of Tenant or its Agents, Tenant's breach of its
obligations or representations under this Lease, or a violation by Tenant of any
Law, Landlord shall indemnify, defend, protect and hold harmless Tenant from all
Damages to the extent arising from (a) the negligence or willful misconduct of
Landlord or its Agents, (b) Landlord's breach of its obligations or
representations under this Lease, or (c) the violation by Landlord of any Law
relating to the Premises or this Lease.
20. DEFAULT AND REMEDIES:
----------------------
A. Events of Tenant's Default: An "Event of Default" by Tenant
-----------------------------
shall occur, if
(i) Tenant fails to pay any Base Rent or Additional Rent when
due and such failure is not cured within ten (10) days after Landlord notifies
Tenant in writing that such payment was not made when due; or
(ii) fails to perform any other term, covenant, or condition
of this Lease and Tenant fails to cure such default within thirty (30) days
after delivery of written notice from Landlord specifying the nature of such
default where such default could reasonably be cured within said thirty (30) day
period, or fails to commence such cure within said thirty (30) day period and
thereafter continuously with due diligence prosecute such cure to completion,
where such default could not reasonably be cured within said thirty (30) day
period; or
(iii) Tenant shall have permitted the sequestration or
attachment of, or execution on, or the appointment of a custodian or receiver
with respect to, all or any substantial part of the property of Tenant or any
property essential to the conduct of Tenant's business, and Tenant shall have
failed to obtain a return or release of such property within sixty (60) days
thereafter or prior to sale pursuant to such sequestration, attachment or levy,
whichever is earlier, or
(iv) A court shall have made or entered any decree or order
with respect to Tenant, or Tenant shall have submitted to or sought a decree or
order (or a petition or pleading shall have been filed in connection therewith)
which: (i) grants or constitutes (or seeks) an order for relief, appointment of
a trustee, or confirmation of a reorganization plan under the bankruptcy laws of
the United States; (ii) approves as properly filed (or seeks such approval of) a
petition seeking liquidation or reorganization under said bankruptcy laws or any
other debtor's
19
relief law or statute of the United States or any state thereof, or (iii)
otherwise directs (or seeks) the winding up or liquidation of Tenant; and such
petition, decree or order shall have continued in effect for a period of sixty
(60) or more days.
B. Landlord's Remedies: In the event of any default by Tenant,
-------------------
Landlord shall have the following remedies, in addition to all other rights and
remedies provided by any Law or otherwise provided in this Lease, to which
Landlord may resort cumulatively or in the alternative:
(i) Maintenance of Lease: Landlord may, at Landlord's
--------------------
election, keep this Lease in effect and enforce by an action at law or in equity
all of its rights and remedies under this Lease, including (i) the right to
recover the rent and other sums as they become due by appropriate legal action,
(i) the right to make payments required of Tenant or perform Tenant's
obligations and be reimbursed by Tenant for the cost thereof with interest at
the Agreed Interest Rate from the date the sum is paid by Landlord until
Landlord is reimbursed by Tenant, (iii) the remedies of injunctive relief and
specific performance to compel Tenant to perform its obligations under this
Lease, and (iv) the right to recover the rent as it becomes due under the Lease
as provided in California Civil Code Section 1951.4 as in effect on the
Effective Date of this Lease.
(ii) Termination: Landlord may, at Landlord's election,
terminate this Lease by giving Tenant written notice of termination, in which
event this Lease shall terminate on the date set forth for termination in such
notice. Any termination under this subparagraph shall not relieve Tenant from
its obligation to pay sums then due Landlord or from any claim against Tenant
for damages or rent previously accrued or then accruing. In no event shall any
one or more of the following actions by Landlord, in the absence of a written
election by Landlord to terminate this Lease, constitute a termination of this
Lease: (a) appointment of a receiver in order to protect Landlord's interest
hereunder; (b) consent to any subletting of the Premises or assignment of this
Lease by Tenant, whether pursuant to the provisions hereof or otherwise; or (c)
any other action by Landlord or Landlord's Agents intended to mitigate the
adverse effects of any breach of this Lease by Tenant, including without
limitation any action taken to maintain and preserve the Premises or any action
taken to relet the Premises or any portions thereof. In the event Landlord
terminates this Lease, Landlord shall be entitled, at Landlord's election, to
damages in an amount as set forth in California Civil Code Section 1951.2 as in
effect on Effective bate of this Lease. For purposes of computing damages
pursuant to Section 1951.2, an interest rate equal to the Agreed Interest Rate
shall be used where permitted. Such damages shall include without limitation:
(1) The worth at the time of award of the amount by which the
unpaid rent for the balance of the term after the time of award exceeds the
amount of such rental loss that Tenant proves could be reasonably avoided,
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%); and
(2) Any other amount necessary to compensate Landlord for all
detriment proximately caused by Tenant's failure to perform Tenant's obligations
under this Lease, in the ordinary course of things would be likely to result
therefrom.
20
C Landlord's Default and Tenant's Remedies: In the event Landlord
-----------------------------------------
fails to perform any of its obligations under this Lease and fails to cure such
default within thirty (30) days after written notice from Tenant specifying the
nature of such default where such default could reasonably be cured within said
thirty (30) day period, or fails to commence such cure within said thirty (30)
day period and thereafter continuously with due diligence prosecute such cure to
completion where such default could not reasonably be cured within said thirty
(30) day period, Tenant shall have the following remedies:
(i) Tenant may proceed in equity or at law to compel Landlord
to perform its obligations and/or to recover damages proximately caused by such
failure to perform except to the extent provided to the contrary in paragraph
8.D.
(ii) Tenant may cure any default of Landlord at Landlord's
cost. If Tenant at any time by reason of Landlord's default reasonably pays any
sum or does any act that requires the payment of any sum, the sum paid by Tenant
shall be immediately due from Landlord to Tenant at the time the sum is paid,
and shall bear interest at the Agreed Interest Rate from the date the sum is
paid by Tenant until Tenant is reimbursed by Landlord. Any such amount shall be
payable by Landlord to Tenant within ten (10) days following Tenant's written
demand for payment and, if not so paid, may be offset against the next
installments of Base Monthly Rent and Additional Rent payable by Tenant to
Landlord under the Lease.
D. No Waiver: One party's consent to or approval of any act by
----------
the other party requiring the first party's consent or approval shall not be
deemed to waive or render unnecessary the first party's consent to or approval
of any subsequent similar act by the other party. The receipt by Landlord of any
rent or payment with or without knowledge of the breach of any other provision
hereof shall not be deemed a waiver of any such breach unless such waiver is in
writing and signed by Landlord. No delay or omission in the exercise of any
right or remedy accruing to either party upon any breach by the other party
under this Lease shall impair such right or remedy or be construed as a waiver
of any such breach theretofore or thereafter occurring. The waiver by either
party of any breach of any provision of this Lease shall not be deemed to be a
waiver of any subsequent breach of the same or any other provisions herein
contained.
21. OPTION TO LEASE AND RIGHT OF FIRST OFFER TO LEASE THE 3460 HILLVIEW
-------------------------------------------------------------------
BUILDING:
--------
A. Existing Lease: The 3460 Hillview Building is currently leased
--------------
to Xxxxxx-Xxxxxx Information Services (formerly Dialog Information Services)
pursuant to that certain lease, dated March 5, 1979 (the "Existing 3460 Hillview
Building Lease"), [a complete and accurate copy of has been delivered to
Tenant]. Landlord shall notify Tenant in writing of any termination of the
Existing Building 3460 Lease prior to its stated expiration date of October 14,
1999 or of receipt of any notice from the tenant thereunder exercising the right
of termination described therein within fifteen (15) days following the date
Landlord is made aware of the termination or the circumstances giving rise to
such early termination.
21
B. Option to Lease:
-----------------
(i) Grant of Option: Tenant shall have the option to lease
-----------------
all of the 3460 Hillview Building or, at Tenant's election the approximately
25,948 square foot portion of the 3460 Hillview Building consisting of the
entire second floor and that portion of the first floor consisting of the area
which includes the loading dock, elevator and extends to the existing entry to
building (the "Option Space"). If Tenant leases less than the entire 3460
Hillview Building, then the existing entry lobby shall be common area. The 3460
Hillview Building premises shall be measured in a manner which is consistent
with the measurement methodology employed to measure the Building as a 43,472
square foot facility.
(ii) Terms of Lease for Option Space: The terms and
------------------------------------
conditions of the lease for the Option space shall be identical to the terms and
conditions of this Lease (including the Improvement Agreement hereto), except
that:
(a) Terns of Lease: The length of the initial term of
----------------
the lease for the Option Space shall be seven (7) years commencing upon the
"Completion" of the Initial Improvements for the Option Space (as defined in a
manner consistent with the improvement Agreement), and Tenant will have two
options to extend the term of the lease for the Option Space, each for a period
of five (5) years. Notwithstanding the foregoing, the parties agree that if the
scheduled date for expiration of the initial term of the lease for the Option
Space and the then scheduled expiration date of this Lease (ignoring for this
purpose any unexpired options to extend the term of this Lease) at the time the
lease for the Option Space is signed will occur within twelve months of each
other, then, in such event, Tenant shall elect to lengthen either the then
existing term of this Lease or the term of the Option Space so that said dates
do not occur within a twelve month period.
(b) Base Monthly Rent: No "Additional Base Rent" shall
------------------
be payable for the Option Space and the Base Monthly Rent for the Option Space
shall be equal to the "fair market rental value" of the Option Space determined
in the manner described in subparagraph 3.B above, except that:
(1) Commissions, if any, payable with respect to
Tenant's exercise of the option and the size of the "Allowance" for the
remodeling and refurbishment of the Option Space shall be taken into account in
determining "fair market rental value"; and
(2) Tenant shall deliver to Landlord written notice
of Tenant's Rent Determination for the Option Space concurrently with delivery
to Landlord of Tenant's notice exercising the expansion right herein granted.
(c) Construction of Initial Improvements to the Option
----------------------------------------------------
Space and the Amount of the Allowance: Landlord shall construct "Initial
------------------------------------------
Improvements" in the Option Space in accordance with the terms of the
Improvement Agreement and shall provide an "Allowance" for the "Construction
Cost" of such improvements (as said terms are defined in the Improvement
Agreement) in the amount designated by Tenant in its exercise notice, which
amount shall not exceed (x) Twenty Five Dollars ($25:00) per RSF of the Option
Space, if the Option Space has not been completely remodeled (in a manner
22
substantially consistent with the remodeling of the Premises subject to this
Lease in accordance with the Improvement Agreement) between the Effective Dates
and the date of the Tenant's exercise, or (y) Eight Dollars ($8.00) per RSF of
the Option Space, if the Option been so remodeled (in a manner substantially
consistent with the remodeling of the Premises subject to this Lease in
accordance with the Improvement Agreement). The total amount of the Allowance
designated by Tenant shall be factored into the determination of the "fair
market rental value" (and thereby the "Base Monthly Rent") for the Option Space.
(d) Tenant's Duty to Contribute to Allowance: If Tenant
----------------------------------------
designates an amount in excess of Eight Dollars ($8.00) per RSF of the Option
Space as an Allowance, then at the election of Landlord, Landlord may require
Tenant to fund up to one-half (1/2) of the Allowance designated by Tenant, in
return for a credit to Tenant against the Base Monthly Rent that would otherwise
be payable for the Option Space. Such rental credit shall be equal to the amount
derived by multiplying $0.0166 per month by each $1.00 of the Allowance funded
by the Tenant. Because of the aforesaid rent credit, Landlord's election to
require Tenant to fund a portion of the Allowance shall not reduce the "fair
market rental value" of the Option Space upon which the Base Monthly Rent will
be based.
(e) Condition of Option Space: At its sole cost and
----------------------------
without reduction in the Allowance, Landlord shall deliver the Option Space to
Tenant in compliance with all Laws (including without limitation the ADA)
applicable to the Option Space on the date Tenant exercises its option to lease
(and without regard to new legal requirements that become applicable to Space
merely because of the construction of Initial Improvements therein), with a
water-tight roof, and with all building operating systems in good operating
condition. To the extent the same or similar work to that described on Exhibit D
is required with respect to the Option Space, at its sole expense Landlord shall
also complete all such work prior to delivery of possession of the Premises to
Tenant. If and to the extent that Landlord is required to and does make repairs
and/or performs work in, on and about the 3460 Hillview Building at its sole
cost pursuant to this subparagraph, then the resulting improved condition of the
Option Space shall be taken into consideration in the determination of fair
market value rental for the Option Space.
(iii) Exercise of Option: Tenant may exercise is option to
--------------------
lease the Option Space by delivering a written exercise notice to Landlord at
any time prior to January 1, 1999, unless the Existing 3460 Hillview Building
Lease terminates prior to said date, in which case, Tenant shall have until the
thirtieth (30th) day following delivery to Tenant of Landlord's notice of the
earlier expiration of the Existing 3460 Hillview Building Lease in which to
exercise the option to lease herein granted. If Tenant indicates in writing its
election to its option to lease the Option Space, then Landlord shall lease to
Tenant and Tenant shall lease from Landlord, the Option Space on the foregoing
terms and the other terms of this Lease not inconsistent therewith; and within
ten (10) days after such exercise by Tenant, Landlord and Tenant will execute a
lease agreement for the Option Space memorializing said lease; provided however
that the Landlord's failure or refusal to execute the lease agreement shall not
in any manner adversely affect the validity of the Tenant's lease of the Option
Space.
(iv) Tenant's Failure to Exercise Option: If Tenant does not
-----------------------------------
exercise its option to lease the Option Space within the allowed time period
then this Option shall terminate. Landlord shall thereafter have the right to
lease the Option Space to a third party on such terms as the
23
Landlord shall find acceptable at anytime within the one-year period following
expiration of the option period, free of any rights by Tenant, under either this
subparagraph 21.B or subparagraph 21.C, below. However, if Landlord proposes to
lease the Option Space other than within said one-year period, then subparagraph
21.C shall be applicable in accordance with its terms.
C. Tenant's Right of First Offer to Lease:
--------------------------------------------
(i) Grant of First Right to Lease: Landlord hereby grants to
-----------------------------
Tenant a right of first offer to Lease the 3460 Hillview Building, or such
portion(s) thereof as Landlord shall desire to lease or to grant any other
occupancy right in a third party. If Landlord determines on any occasion to
lease or grant any occupancy right in the 3460 Hillview Building, or any portion
thereof (the "Offered Space"), then Landlord shall first deliver Tenant a
written notice ("Landlord's Notice") of such intent and specifying: (a) the RSF
of the Offered Space and the (b) the initial "Base Monthly Rent" for the Offered
Space and any adjustment to the Base Monthly Rent during the lease term. The
other terms and conditions of this lease shall be the terms and conditions of a
lease for the Offered Space, except that:
(a) Term of Lease: The length of the initial term of
---------------
the lease for the Space shall be seven (7) years commencing upon the
"Completion" of the Initial Improvements for the Offered Space (as defined in a
manner consistent with the Improvement Agreement), and Tenant will have two
options to extend the term of the lease for the Space, each for a period of five
(5) years. Notwithstanding the foregoing, the parties agree that if the
scheduled date for expiration of the initial term of the lease for the Offered
Space and the then scheduled expiration date of this Lease (ignoring for this
purpose only any unexpired options to extend the term of this Lease) at the time
the lease for the Offered Space is signed will occur within twelve months of
each other, then, in such event, Tenant shall elect to lengthen either the then
existing term of this Lease or the term of the lease for the Offered Space so
that said dates do not occur within a twelve month period.
(b) Base Rent: No "Additional Base Rent" shall be
----------
payable for the Offered Space.
(c) Construction of Initial Improvements to the Offered
----------------------------------------------------
Space and the Amount of the Allowance: Landlord shall construct "Initial
-------------------------------------------
Improvements" in the Offered Space in accordance with the terms of the
Improvement Agreement and shall provide an "Allowance" for the "Construction
Cost" of such improvements (as said terms are defined in the Improvement
Agreement) in the amount designated by Tenant in its exercise notice, which
amount shall not exceed (x) Twenty Five Dollars ($25.00) per RSF of the Offered
Space, if the Offered Space has not been completely remodeled (in a manner
substantially consistent with the remodeling of the Premises subject to this
Lease in accordance with the Improvement Agreement) between the Effective Date
and the date of Tenant's exercise, or (y) Eight Dollars ($8.00) per RSF of the
Offered Space, if the Offered Space has been so remodeled (in a manner
substantially consistent with the remodeling, of the Premises subject to this
Lease in accordance with the Improvement Agreement). The total amount of the
Allowance designated by Tenant shall be factored into the determination of the
"fair market rental value" (and thereby the "Base Monthly Rent") for the Offered
Space.
(d) Tenant's Duty to Contribute to Allowance: If Tenant
----------------------------------------
designates an amount in excess of Eight Dollars ($8.00) per RSF of the Offered
Space as an
24
Allowance, then at the election of Landlord, Landlord may require Tenant to fund
up to one-half (1/2) of the Allowance so designated by Tenant, in return for a
credit against the Base Monthly Rent that would otherwise be payable for the
Offered Space. Such rental credit shall be equal to the amount derived by
multiplying $0.0166 per month by each $1.00 of the Allowance funded by the
Tenant. Because of the aforesaid rent credit, Landlord's election to require
Tenant to fund a portion of the Allowance shall not reduce the "fair market
rental value" of the Offered Space upon which the Base Monthly Rent may be
based.
(e) Condition of Offered Space: At its sole cost and
-----------------------------
without reduction in the Allowance, Landlord shall deliver the Offered Space to
Tenant in compliance with all Laws (including without limitation the ADA)
applicable to the Space on the date Tenant exercises its option of lease (and
without regard to new legal requirements that become applicable to the Offered
Space merely because of the construction of Initial Improvements therein), with
a water-tight roof, and with all operating systems in good operating condition.
To the extent the same or similar work to that described on Exhibit D is
required with respect to the Offered Space, at its sole expense Landlord shall
also complete all such work prior to delivery of possession of the Premises to
Tenant. If and to the extent that Landlord is required to and does make repairs
and/or performs work in, on and about the Offered Space, at its sole cost
pursuant to this subparagraph, then the resulting condition of the Offered Space
shall be taken into consideration in any determination of fair market value
rental for the Offered Space.
(ii) Tenant's Exercise of Right & Determination Of Initial
--------------------------------------------------------
Base Monthly Rent: Within twenty (20) days following delivery of the Landlord's
-----------------
Notice to Tenant, Tenant shall notify the Landlord that it will (a) lease the
Offered Space at the Base Monthly Rent specified in the Landlord's Notice, (b)
lease the Offered Space at a Base Monthly Rent which differs from the amount
specified in the Landlord's Notice by providing to Landlord written notice of
Tenant's Rent Determination (as defined in paragraph 3), or (c) not lease the
Offered Space.
If Tenant indicates its agreement to lease the Offered Space on the terms
stated in Landlord's notice, then Landlord shall lease to Tenant and Tenant
shall lease from Landlord the Offered Space at the Base Monthly Rent (and with
any adjustments thereto) stated in Landlord's Notice and on the other terms and
conditions specified in this paragraph.
If Tenant indicates its agreement to lease the Offered Space at a different
Base Monthly Rent, then the parties shall exclusively negotiate for a period of
fourteen (14) days following delivery of Tenant's exercise notice to Landlord to
reach agreement on said Base Monthly Rent and all adjustments thereto. If the
parties cannot agree upon the initial Base Monthly Rent during such period, then
Tenant's shall be deemed to have waived its right of first offer under this
subparagraph 21.C unless it notifies Landlord in writing that it accepts the
Base Monthly Rent and the adjustments thereto specified in the Landlord's Notice
within two (2) business days following the expiration of said 14-day negotiation
period.
Notwithstanding anything to the contrary above, if the Landlord's Notice is
delivered to Tenant prior to January 1, 1999, then, in addition to the rights of
Tenant to accept the Base Monthly Rent specified in the Landlord's Notice (if
the parties are not able to agree between themselves as to the initial Base
Monthly Rent for the Offered Space within the negotiation
25
period), the Tenant shall have the right to require that the Base Monthly Rent
for the Offered Space be equal to the "fair market rental value" for the Offered
Space as determined by an appraisal conducted in accordance with the procedures
outlined in subparagraph 3.B above. In this regard:
(a) Tenant shall notify Landlord of its election to
require any appraisal within two (2) business days following expiration of the
14-day negotiation period. If Tenant fails to so notify Landlord of its election
within the permitted time period, then Tenant's right to require an appraisal
shall be deemed waived.
(b) The appraiser(s) shall be instructed to take into
account any commission payable with respect to the lease of the Offered Space to
Tenant, the other terms of the lease of the Offered Space to Tenant, and in this
subparagraph 21.C, in determining fair market rental value of the Offered Space.
On or before the tenth (10th) day following the determination of the "Base
Monthly Rent" in accordance with the foregoing, the parties shall prepare and
execute a Lease for the Offered Space providing for the Base Monthly Rent (and
any adjustments thereto) determined in accordance with this paragraph, the other
matters described above, and all of the other terms and conditions of this Lease
not inconsistent therewith
(iii) Tenant's Failure to Exercise Right to Lease: If Tenant
-------------------------------------------
does not indicate in writing its election to lease the Offered Space within the
allowed time period, or if having notified the Landlord that it elects to lease
the Offered Space at a rental which differs from the rate specified in
Landlord's Notice, Tenant (a) fails to reach agreement with Landlord upon the
Base Monthly Rent (and any associated rental adjustments) for the Offered space
and (b) does not either accept the Base Monthly Rent (and adjustments) specified
in Landlord's Notice or properly demand an appraisal of such amounts within the
time permitted above, then Landlord shall thereafter have the right to lease the
Offered Space to a third party on such terms as the Landlord shall find
acceptable at anytime within a one-year period following delivery of Landlord's
original notice to the Tenant. If Landlord does not enter into a lease of the
Offered Space with a third party within said one year period, then this
provision shall again become operative and Landlord shall have the obligation to
provide Tenant with another opportunity to lease the Offered Space in accordance
with the terms of this Section 21.C, before leasing the space to others. In
addition, this right of first offer shall become operative each time that a
lease of the 3460 Hillview Building terminates. Tenant's failure to exercise its
right of first to lease Offered Space on any particular occasion shall not be
deemed a waiver of this right of first refusal on other occasion or with respect
to any other portion of the 3460 Hillview Building.
D. Tenant's Right to Adjust the Term of This Lease: At Tenant's
-------------------------------------------------
election, upon exercise of its option to lease Option Space pursuant to
subparagraph 21.B or its right of first offer to lease any Offered Space
pursuant to subparagraph 21.C, Tenant may also elect to lengthen the then
existing Term of this Lease to a date which is one year longer shorter than the
initial term of the lease for the Option or Offered Space; provided, however
that in no event may the Tenant shorten the then existing Term of this Lease.
Tenant's exercise of such right shall be delivered to Landlord before the date
the Tenant executes a lease agreement for the Offered or the Option Space, as
the case may be. In no event shall Tenant's extension of the Term of this Lease
affect any unexercised options
26
to extend this Lease Term or the "Adjustment Dates" described in paragraph 2
above; rather, all unexercised options to extend this Lease shall become
operative at the end of the Term of this Lease as extended pursuant to this
subparagraph and the Base Monthly Rent far this Lease shall be determined in the
manner described in Paragraph 2 throughout the Term of this Lease and any
extensions thereof, without regard to the expiration date of the Lease Term or
the commencement date of any extension period.
22. [Intentionally deleted.]
23. CONDITIONS PRECEDENT TO THIS LEASE:
--------------------------------------
A. To Landlord's Obligations: Landlord intends to present this
---------------------------
signed, executed Lease and Tenant's financial statements to its lenders to
verify the availability of sufficient financing to generate the Allowance set
forth in the Improvement Agreement. Consequently, a condition precedent to
Landlord's performance of this Lease shall be Landlord's satisfaction that
sufficient financing will be available at market rates to finance said
Allowance. If Landlord does not affirmatively waive this condition precedent to
this Lease in a writing delivered to Tenant on or before August 31, 1995, then
this Lease shall be deemed terminated and the deposits made by Tenant pursuant
to paragraph 4 shall be returned to Tenant upon demand. In such event, Landlord
shall execute any documents reasonably requested by Tenant to ensure return of
said deposits. Notwithstanding this condition to Landlord's performance,
Landlord shall use all reasonable efforts to obtain such financing and shall (i)
commence and complete on or before September 5, 1995 demolition of the interior
of the Building other than the "Early Entry Space"; (ii) proceed with the
planning and permitting tasks for Landlord's Work outlined in the Improvement
Agreement, and (iii) be solely responsible for, and indemnify and hold harmless
Tenant with respect to, all costs and expenses of space planning and preparation
working drawing, as well as, demolition and/or construction during said
contingency period. In the event Landlord waives the subject condition
precedent, then the costs and expenses so incurred by Landlord which would
otherwise be included within the definition of "Construction Costs" pursuant to
the Improvement Agreement shall become "Construction Costs" thereunder.
Notwithstanding the foregoing, the parties acknowledge that the Landlord shall
have no obligation to commence the demolition of the Premises until the Tenant
has waived its right to withhold approval of the Final Plans, Cost Estimate and
Scheduled Completion Date in its sole discretion. In this regard, the parties
also acknowledge that Tenant shall be permitted to waive its right to act in its
sole discretion without waiving its right to withhold its approval of the Final
Plans, the Cost Estimate and the Scheduled Completion Date in its reasonable
discretion.
B. To Tenant's Obligations: Tenant desires to inspect the
-------------------------
existing condition of the Premises and to estimate the cost that must be
incurred to make the Premises acceptable to Tenant in its sole discretion and
Tenant is unwilling to lease the Premises unless it obtains a recognition
agreement from Landlord's lender. Consequently, conditions precedent to Tenant's
performance of this Lease shall be: (i) Tenant's satisfaction in its sole
discretion that the Premises can be rehabilitated to a condition acceptable to
Tenant in its sole discretion for a cost not exceeding the Allowance, (ii)
Tenant's determination in its reasonable judgment, based on the advice of HVAC
and roof contractors that the remaining useful life of the roof and the
components of the HVAC system is at least five (5) years after the Commencement
Date, and (iii) a determination by Tenant in its reasonable discretion that it
has or will receive within a reasonable time recognition and non-disturbance
agreement from the Landlord's permanent and construction lenders, both in a form
reasonably acceptable to the
27
Tenant. If Tenant does not affirmatively waive the condition precedent described
in items (i) and (ii) of the preceding sentence in a writing delivered to
Landlord on or before August 31, 1995, or if Tenant does not affirmatively waive
the condition precedent described in item (iii) of the preceding sentence in a
writing delivered to Landlord on or before the tenth (10th) day following the
waiver of the Landlord's financing condition, then this Lease shall be deemed
terminated and the deposits made by Tenant pursuant to paragraph 4 shall be
returned to Tenant upon demand. In such event, Landlord shall "execute any
documents reasonably requested by Tenant to ensure return of said deposits.
Notwithstanding this condition to Tenant's performance, Tenant shall proceed
with the planning tasks in the Improvement Agreement. In the event that Tenant
waives the subject conditions precedent, then the costs and expenses so incurred
by Tenant, which would otherwise be included within the definition of
"Construction Costs" pursuant to the Improvement Agreement, shall become
"Construction Costs" thereunder.
24. MISCELLANEOUS PROVISIONS:
-------------------------
A. Surrender of the Premises: Prior to the expiration date of the
-------------------------
Lease Term (or within sixty (60) days following any earlier termination of the
Lease Term), Tenant shall remove all of the Tenant's Property (other than
Alterations which Tenants elects to surrender and Landlord has agreed may remain
in the Premises), repair all damage caused by the removal of such property, and
vacate and surrender the Premises to Landlord in the condition received on the
Commencement Date, reasonable wear and tear, condemnations, perils, Alterations
which Landlord has agreed in writing may remain in the Premises, and Hazardous
Materials not placed on or about the Premises by Tenant or its Agents excepted.
B. Holding Over: Subject to paragraph 24.A, Tenant may hold over
-------------
after the expiration of the Lease Term only with the written consent of
Landlord. Any such holding over shall be construed to be a tenancy from month to
month on the same terms and conditions herein specified insofar as applicable.
C. Landlord's Right to Enter: Landlord or its Agents may enter
----------------------------
the Premises at any reasonable time for the purpose of (i) inspecting the same,
(ii) posting notices of nonresponsibility, (iii) supplying any service to be
provided by Landlord to Tenant, (iv) performing Landlord's- obligation or
performing Tenant's obligations when Tenant has failed to do so within thirty
(30) days after written notice from Landlord, and/or (vi) in case of an
emergency. However, Landlord may not so enter the Premises until it has first
given Tenant at least twenty-four (24) hours' prior written notice of its
intention to do so (except in case of an emergency) and unless Landlord complies
with all of Tenant's security regulations. If Tenant so elects, Landlord shall
be accompanied by a representative Tenant during any such entry. Landlord shall
not have the right to open or inspect confidential files or safes, and Landlord
shall not disclose to others any confidential information regarding Tenant's
business learned by Landlord during any such entry into the Premises.
D. Estoppel Certificates: Each party agrees, following any
----------------------
request by the other; to promptly execute and deliver an estoppel certificate
upon which the requesting party and any others it designates may rely (i)
certifying that this Lease is unmodified and in full force and effect, or, if
modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in full force and effect, (ii) stating the date to
which the rent and other charges are paid in advance, if any, (iii)
acknowledging that there are not, to the certifying party's knowledge, any
uncured defaults on the part
28
of the other party hereunder, or if there are stating their nature, and (iv)
certifying such other information about the Lease as may be reasonably required
by the requesting party.
E. Reimbursable Expenditures: Any expenditure by a party
--------------------------
permitted or required under this Lease, for which such party is entitled to
demand and does demand reimbursement from the other party, shall be limited to
the actual cost to the demanding party of the goods and/or services giving rise
to such expenditure, which cost shall not exceed the fair market value of such
goods and/or services; shall be reasonably incurred; and shall be substantiated
by documentary evidence available for inspection and review by the other party
or its representative during normal business hours.
F. Notices: Any notice required or desired to be given regarding
-------
this Lease shall be in writing and may be personally served, or in lieu of
personal service may be given by overnight mail. If given by overnight mail,
such notice shall be deemed to have been given (i) on the business day after
mailing if such notice was deposited in the United States mail, certified and
postage prepaid, addressed to the party to be served at its address set forth
below its signature, and (ii) in all other cases when actually received. Either
party may change its address by giving fifteen (15) days prior written notice of
its new address in accordance with this paragraph.
G. Authority: Each individual executing this Lease on behalf of
---------
an entity represents and warrants that he or she is duly authorized to execute
and deliver this Lease on behalf of said entity and that this Lease is binding
upon said entity in accordance with its terms without the necessity of any
signature which is not set forth below.
H. Brokerage Commissions: Each party warrants to the other that
----------------------
it has not had any dealings with any real estate brokers or salesmen or incurred
any obligations for the payment of real estate brokerage commissions or finders'
fees would be earned or due and payable by reason of the execution of this
Lease, other than Cornish & Xxxxx Commercial. Landlord shall pay any commission
owing to Cornish & Xxxxx Commercial pursuant to separate agreement between
Landlord and said broker.
I. Memorandum of Lease: In connection with the execution of this
--------------------
Lease, Landlord and Tenant shall execute in recordable form, a "Memorandum of
Lease" referencing the Lease and setting forth the true and legal description
and assessor's parcel number of the Property and the 3460 Hillview Building in a
form reasonably acceptable to Tenant in the Official Records of Santa Xxxxx
County, California. The Memorandum of Lease shall recite that the Lease contains
an option and a right of first offer to expand into the 3460 Hillview Building.
Upon request, Tenant shall deliver to Landlord's legal counsel in trust, a quit
claim deed to be recorded by such counsel only upon the termination of this
Lease.
J. Successors and Assigns: This Lease shall, subject to the
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provisions regarding assignment, apply to and bind the respective heirs,
successors, executors, administrators and assigns of Landlord and Tenant.
Landlord shall not become or be deemed a partner or a joint venturer of Tenant
by reason of this Lease.
K Consents: Whenever one party's consent or approval is required
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to be given as a condition to the other party's right to take any action
pursuant to this Lease and no standard for the
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giving or withholding of such consent is specified in this Lease, then such
consent or approval shall not be unreasonably withheld or delayed.
L. Interpretation: The Lease and the documents referred to herein
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constitute the entire agreement between the parties, and there are no binding
agreements or representations between the parties except as expressed herein. No
subsequent change or addition to this Lease shall be binding unless in writing
and signed by the parties hereto. Should any provision of this Lease prove to be
invalid or illegal, such invalidity or illegality shall in no way affect, impair
or invalidate any other provision hereof, and such remaining provisions shall
remain in full force and effect. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor. Any executed copy of this Lease shall be deemed an original for all
purposes. 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. The captions used in this Lease are for
convenience only and shall not be considered in the construction or
interpretation of any provision hereof. When the context of this Lease requires,
the neuter gender includes the masculine, the feminine, a partnership or
corporation or joint venture, and the singular includes the plural. The terms
"shall," "will," and "agree" are mandatory. The term "may" is permissive. When a
party is required to do something by this Lease, it shall do so at its sole cost
and expense without right of reimbursement from the other party unless specific
provision is made therefor.
M. Attorneys' Fees: In the event of any legal action for or on
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account of any breach of or to enforce or interpret any of the covenants, terms
or conditions of this Lease, the prevailing party shall be entitled to recover
from the other party as part of prevailing party's costs, reasonable attorney's
fees, the amount of which shall be fixed by the Court and shall be made a part
of any judgment rendered.
IN WITNESS WHEREOF, the parties have executed this Lease as of the date
herein first above set forth.
ALTA CALIFORNIA ASSOCIATES, an unincorporated association
By: Xxxxx X. Xxxxxxxx
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By: Xxxxxx X. Xxxxxxxx
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General Partner of the Trescony Family Limited Partnership
Address For Notice: ALTA CALIFORNIA ASSOCIATES
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000 Xxxx Xxxxxx. Xxxxx X, Xxxxxxx, Xxxxxxxxxx 00000-0000
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OPTIVISION, INC., a California corporation
By: Xxxxx X. Xxxxx
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Address For Notice:
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