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EXHIBIT 10.17
SUBLEASE AGREEMENT
This Sublease dated as of August 30, 2000 is made between Nortel Networks NA
Inc., a Delaware corporation ("Sublandlord"), and Netgear, Inc., a Delaware
corporation ("Subtenant").
Background
A. Sublandlord is the tenant under the Lease dated January 3, 1996 as
amended, a copy of which is attached hereto as Exhibit A and hereby made a
part hereof ("Master Lease"), wherein Dell Associates II as predecessor in
interest to Dell Associates II-A, ("Master Landlord"), leased to
Sublandlord the Building located at 4500 Great America Parkway, Santa
Clara, California ("Building") containing approximately Seventy-Five
Thousand Two rentable square feet ("Master Premises").
B. Sublandlord and Subtenant now wish to enter into a sublease of a portion
of the premises covered by the Master Lease, on the terms and conditions
of this Sublease.
NOW, THEREFORE, the parties agrees as follows:
1. PREMISES
Sublandlord hereby subleases to Subtenant on the terms and conditions set
forth in this Sublease a portion of the Master Premises, consisting of
approximately 32,322 rentable square feet on the first floor, as
highlighted, on the floorplan attached hereto as Exhibit B ("Premises").
2. TERM
The term of this Sublease shall commence on September 1, 2000
("Commencement Date") and continue for fifteen months until November 30,
2001, unless terminated prior to such date pursuant to the terms hereof.
3. RENT
Subtenant shall pay to Sublandlord as Base Monthly Rent for the Premises,
without deduction, offset, notice, or demand, 2221 Lakeside Blvd., M.S.
04D/07/B40, Richardson, Texas 75082, or at such other place as Sublandlord
shall designate from time to time by notice to Subtenant, the monthly sums
of $1.90 per rentable square foot or $61,411.80 ("Base Monthly Rent").
This Base Monthly Rent shall be paid each month by Subtenant during the
term and shall be paid in advance on or before the first day of each
calendar month during said period.
4. NET LEASE; OPERATING EXPENSES
In addition to Base Monthly Rent, Subtenant shall pay to Sublandlord
Subtenant's percentage share for all utilities, insurance, taxes, building
operating costs and any other charges, fees, assessments or expenses
payable by Sublandlord pursuant to the Master Lease or in the operation
and maintenance of the Building ("Operating Expenses"). "Subtenant's
percentage share" shall be 43.09% of all such Operating Expenses.
Sublandlord shall pass through to Subtenant 43.09% of all Operating
Expenses charged to Sublandlord as and when billed by Master Landlord or
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incurred by Sublandlord. Subtenant shall pay Subtenant's percentage share
of Operating Charges as estimated from time to time by Sublandlord (subject
to later adjustment) as additional rent. Unless otherwise specified, all
payments of Subtenant's percentage share of Operating Expenses shall be
payable in full on the date that the next installment of Base Monthly Rent
is payable.
5. INSURANCE
Subtenant shall also be obligated to carry any insurance required under the
Master Lease covering the Premises or any tenant or subtenant improvements
therein with any liability insurance naming Sublandlord as an additional
insured. In addition, Subtenant shall carry insurance for the fully
insurable amount covering all of Subtenant's personal property on the
Premises. All insurance obtained by Subtenant shall contain a waiver of
subrogation clause in favor of Sublandlord and Master Landlord.
6. SECURITY DEPOSIT
Subtenant shall pay to Sublandlord a security deposit in the amount of
$86,245.87 (equal to the first month's rent and operating expenses) upon
execution of this Sublease as security for full performance of all
obligations of this Sublease. Subtenant shall be required to leave the
Premises in broom clean condition and in the same condition as of the
commencement of this Sublease, normal wear and tear excepted, or
Sublandlord may appropriate all or part of this deposit to repair any
damage to the Premises. If Subtenant is not in default hereunder,
Sublandlord shall return the deposit, if any remains, to Subtenant within
thirty (30) days after the Sublease terminates. Sublandlord shall not be
required to keep this deposit separate from its general funds, and
Subtenant is not entitled to interest.
7. USE OF PREMISES
The premises shall be used and occupied in accordance with the Master Lease
including, but not limited to Section 6 of the Master Lease.
8. ASSIGNMENT AND SUBLETTING
Subtenant shall not assign this Sublease or further sublet all or any part
of the Premises without the prior written consent of Sublandlord and of
Master Landlord, which the consent of either or both may be withheld for
any reason in their respective discretion.
9. PROVISION OF SERVICES
No services are currently included in Base Monthly Rent or Operating costs
except for any provided by Master Landlord to Sublandlord under the Master
Lease. If Sublandlord furnishes the Premises with any additional services
upon request of Subtenant, Sublandlord shall charge Subtenant a reasonable
charge therefor, and Subtenant shall pay the additional charge upon billing
by Sublandlord.
10. CONDITION OF PREMISES; TRADE FIXTURES
Subtenant accepts the Premises and Workstations (as hereinafter defined) in
their "as is" condition as of the Commencement Date. Subtenant shall have
the right to furnish and install any trade fixtures that are necessary for
the conduct of its
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business; provided, however, that at the termination of this Sublease,
Subtenant shall, if required by Sublandlord, remove such trade fixtures
and restore the Premises at Subtenant's sole cost to the state and
condition in which they existed on the Commencement Date, ordinary wear
and tear excepted. If Subtenant fails to comply with the provisions of
this paragraph, Sublandlord may make such repairs or restoration, and
the reasonable cost thereof shall be additional rent payable by
Subtenant on demand. All trade fixtures shall be and remain the
property of Subtenant (excluding Workstations), provided that any such
trade fixtures remaining on the Premises after the expiration or
termination of the term hereof shall be deemed abandoned by Subtenant
and shall, at Sublandlord's option, become the property of Sublandlord
without payment therefor.
10.A MAINTENANCE OF PREMISES
Subtenant shall be required to maintain the Premises as required by the
Master Lease, including but not limited to maintaining the Premises in
compliance with all applicable laws, codes and regulations at
Subtenant's sole cost and expense.
11. ALTERATIONS AND IMPROVEMENTS
Sublandlord shall have no obligation to make any alterations or
improvements to the Premises for Subtenant's use or occupancy thereof.
Any alterations and additions to the Premises made by Subtenant shall
be at Subtenant's expense and shall be made in accordance with the
Master Lease, and shall be subject to prior written approval of
Sublandlord and Master Landlord. At Sublandlord's option, all
alterations, additions and improvements (except movable trade fixtures)
shall be and remain the property of Sublandlord upon installation and
shall be surrendered to Sublandlord upon the termination of this
Sublease, or shall be removed by Subtenant and the Premises restored to
their condition on the Commencement Date. If Sublandlord requires such
removal and restoration and Subtenant fails to comply, Sublandlord may
do so and the reasonable cost thereof shall be additional rent payable
by Subtenant on demand.
12. SUBORDINATION TO MASTER LEASE
This Sublease shall at all times be subject and subordinate to the
terms and provisions of the Master Lease except as otherwise expressly
set forth herein. Except for paragraphs 1, 2, 3, 4, 5, the first
paragraph of 10A, the first sentence of the second paragraph of 10A,
the second paragraph of 10B, 11, 22, 23, 24, 25, 26, 37, 40, of the
Master Lease and except as otherwise set forth in this Sublease, all of
the terms and conditions contained in the Master Lease are hereby
incorporated herein by this reference as terms and conditions of this
Sublease, with each reference to Lessor and Lessee (or Landlord and
Tenant, as applicable) therein to be deemed to refer to Sublandlord and
Subtenant respectively herein. Sublandlord shall have the right but
shall not be obligated to agree with the Master Landlord to any
amendment to the Master Lease which the Sublandlord in its discretion
deems to be appropriate, without the approval of the Subtenant.
Sublandlord shall give Subtenant written notice of any such amendment,
and such amendment shall be deemed to be binding on Subtenant
hereunder.
Upon the breach of any of the terms, conditions or covenants of the
Master Lease or upon the failure of Subtenant to pay rent or comply
with any of the provisions of this Sublease, Sublandlord may exercise
any and all rights and remedies granted to Master Landlord by the
Master Lease. In the event that Subtenant breaches any of the terms,
conditions or covenants of this Sublease or of the
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Master Lease and fails to remedy such breach within ten (10) days of
written notice, Sublandlord has the right, but not the obligation, to
cure such breach and bill Subtenant for the costs incurred thereby,
which costs Subtenant shall pay to Sublandlord upon demand. Subtenant
shall not commit or suffer any act or omission that will violate any of
the provisions of the Master Lease. If the Master Lease terminates, this
Sublease shall terminate and the parties shall be relieved of any
further liability or obligation under this Sublease; provided, however,
that Subtenant shall pay to Sublandlord all sums due and accrued under
this Sublease as of the termination date.
13. HOLDING OVER
If Subtenant, with Sublandlord's and Master Landlord's written consent,
remains in possession of the Premises or any part thereof after the
expiration or other termination of the term hereof, such occupancy shall
be a tenancy at sufferance at a rental in the amount of one hundred and
seventy-five percent (175%) of the last Base Monthly Rent installment
and Operating Expenses, and upon all the other provisions of this
Sublease pertaining to the obligations of Subtenant. Notwithstanding
anything to the contrary herein, Subtenant shall pay to Sublandlord all
costs incurred by Sublandlord as a result of Subtenant's holding over.
14. ATTORNEYS' FEES
If Sublandlord or Subtenant shall commence an action against the other
arising out of or in connection with this Sublease, the prevailing party
shall be entitled to recover its costs of suit and reasonable attorneys'
fees.
15. NOTICES OR DEMANDS
Except as otherwise provided herein, all notices or demands herein
provided to be given or made, or which may be given or made by either
party to the other, shall be in writing and shall be deemed to have been
duly given and made when deposited in the United States mail, certified
mail, return receipt requested, postage prepaid and addressed as set out
below, or when deposited with a recognized and established overnight
delivery service, return receipt requested, freight prepaid and
addressed as set out below:
To Sublandlord: Nortel Networks Inc.
2221 Lakeside Blvd.
M.S. 04D/07/B40
Richardson, TX 75082
Attn: Real Estate Department
With Copy to: Nortel Networks Inc.
200 Athens Way
Nashville, TN 37228-1803
Attn: Law Department
To Subtenant: Netgear, Inc.
4500 Great America Parkway
Suite 100
Santa Clara, CA 95054
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Notices shall be deemed received and effective upon receipt as evidenced by
the U.S. Postal Service return receipt card or upon delivery by a
nationally recognized overnight courier. The address to which notices or
demands may be given or made by either party may be changed by written
notice given by such party to the other pursuant to this paragraph.
16. DISCLAIMER OF CONSEQUENTIAL DAMAGES
In no event shall Master Landlord or Sublandlord and/or any of its
affiliates, including without limitation any corporations or other entities
controlling, controlled by or under common control with Sublandlord, be
liable for any consequential damages suffered by Subtenant in connection
with any breach of this Sublease or otherwise.
17. MASTER LANDLORD'S CONSENT
This Sublease is expressly conditioned upon the receipt of Master
Landlord's written consent hereto by September 30, 2000.
18. CHOICE OF LAW
This Sublease shall be governed by the laws of the State of California,
except for its conflict of law rules.
19. ENTIRE AGREEMENT
This Sublease, along with any exhibits and attachments hereto and the
Master Lease, constitutes the entire agreement between Sublandlord and
Subtenant relative to the Premises, and this Sublease and the exhibits and
attachments may be altered amended or revoked only by an instrument in
writing signed by both Sublandlord and Subtenant and consented to by Master
Landlord. Sublandlord and Subtenant agree hereby that all prior or
contemporaneous oral agreements between and among themselves and their
agents and representatives relative to the subleasing of the Premises are
merged in or revoked by this Sublease.
20. SUCCESSORS AND ASSIGNS
This Sublease shall inure to the benefit of and be binding upon the
respective heirs, administrators, executors, successors and assigns of the
parties hereto; provided, however, that this provision shall not be
construed to allow an assignment or subletting which is otherwise
specifically prohibited herein.
21. SECTION AND PARAGRAPH HEADINGS
The section and paragraph headings are included only for the convenience of
the parties and are not part of this Sublease and shall not be used to
interpret the meaning of provisions contained herein or the intent of the
parties hereto.
22. WARRANTY BY SUBTENANT
Subtenant agrees to comply with and abide by all of the terms and
conditions of this Sublease and the Master Lease (including the terms of
the Master Lease incorporated herein by reference). Where the terms and
conditions of the Master Lease are contradictory to the terms and
conditions of this Sublease, the terms of the Sublease shall apply.
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23. WARRANTY BY SUBLANDLORD
Sublandlord warrants and represents to Subtenant that Sublandlord has no
knowledge of any claim that Sublandlord is in default or breach of any of
the provisions of the Master Lease.
24. PARKING
Subtenant shall have the non-exclusive use of 120 of the parking spaces
which Sublandlord is entitled to use under the Master Lease.
25. SECURITY
Subtenant shall be responsible for all security measures and systems that
it deems appropriate for the Premises. Subtenant acknowledges that
Sublandlord has no responsibility for the security of the Premises, the
costs thereof, or any costs or liability arising from the security of the
Premises.
27. SIGNS
Pursuant to Section 32 of the Master Lease, Subtenant shall be entitled to
one-third of the existing monument signage at the Building and Subtenant
shall also be allowed to place signage on the glass in the lobby on the
first floor, and will have exclusive usage of monument signage outside of
the lobby on the first floor.
28. WORKSTATIONS
Subtenant shall also have the use of 38 pre-wired workstations
("Workstations") during the Term hereof. In consideration for the use of
the Workstations Subtenant shall pay to Sublandlord, without deduction,
offset, notice, or demand, 2221 Lakeside Blvd., M.S. 04D/07/B40,
Richardson, Texas 75082, or at such other place as Sublandlord shall
designate from time to time by notice to Subtenant, $60.00 per
workstation per month or $2,280.00 per month. Subtenant shall be
responsible for the maintenance and repair of the Workstations, and
Sublandlord shall have no responsibilities in regard to the Workstations.
The Workstations shall be surrendered in the same condition as the
Commencement of this Sublease, normal wear and tear and casualty excluded.
IN WITNESS WHEREOF, the parties have caused this Sublease to be signed by
their duly authorized representatives to be effective on the date first set out
above.
Sublandlord: Subtenant:
NORTEL NETWORKS NA INC. NETGEAR, INC.
By: By: /s/ PATRICK LO
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Print Name: Print Name: PATRICK LO
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Print Title: Print Title: PRESIDENT & CEO
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Date: Date: 8/30/2000
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Master Landlord's Consent
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The undersigned Master Landlord under the Master Lease (as defined in the
above Sublease) hereby consents to such Sublease, on the terms and conditions
stated therein.
Master Landlord:
DELL ASSOCIATES II-A
By:
-------------------------------
Print Name:
-----------------------
Print Title:
----------------------
Date:
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EXHIBIT A
Master Lease For 4500 Great America Parkway Between Dell Associates II-A
and Nortel Networks NA Inc.
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LEASE AGREEMENT
1. Parties. This Lease is made by and between DELL ASSOCIATES II, a
California general partnership ("Landlord"), and BAY NETWORKS, INC., a
Delaware corporation ("Tenant").
2. Premises. Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord, upon the terms and conditions hereinafter set forth, those
certain premises (the "Premises") presently known, as of the date of this
Lease, as 4500 Great America Parkway, situated in the City of Santa Clara,
County of Santa Clara, State of California, described as follows: the
Building containing approximately Seventy-Five Thousand, Two (75,002)
rentable square feet (the "Building"), as shown on the site plan (the "Site
Plan") attached hereto as Exhibit "A" and the parcel (the "Parcel") on
which the Building is located. In the event Landlord subdivides the Parcel
in the future into two (2) or more legal parcels, the term "Parcel" shall
thereafter refer to the legal parcel on which the Premises are located.
Landlord shall not be required to make any alterations, additions or
improvements to the premises and the Premises shall be leased to Tenant in
an "as-is" condition.
3. Term. The term of this Lease ("Lease Term") shall be for three (3) years,
commencing on January 1, 1996, (the "Commencement Date") and ending on
December 31, 1998 unless sooner terminated pursuant to any provision
hereof. Notwithstanding said scheduled Commencement Date, if for any
reason Landlord cannot deliver possession of the Premises to Tenant on said
date, Landlord shall not be subject to any liability therefor, nor shall
such failure affect the validity of this Lease or the obligations of Tenant
hereunder, but in such case Tenant shall not be obligated to pay rent until
possession of the Premises is tendered to Tenant and the commencement and
termination dates of this Lease shall be revised to conform to the date of
Landlord's delivery of possession. Landlord shall permit Tenant possession
of the Premises prior to the Commencement Date. Such occupancy shall be
subject to all the provisions of this Lease, including the obligation to
pay utilities, but excluding the Monthly Installment of Rent and Property
Taxes. Notwithstanding the foregoing, if Landlord is unable to deliver the
Premises on or before February 15, 1996, Tenant shall have the option as
its sole remedy, to terminate this Lease with ten (10) days written notice
to Landlord.
4. Rent.
A. Time of Payment. Tenant shall pay to Landlord as rent for the
Premises the sum specified in Paragraph 4.B below (the "Monthly
Installment") each month in advance on the first day of each calendar
month, without deduction or offset, prior notice or demand, commencing
on the Commencement Date and continuing through the term of this
Lease, together with such additional rents as are payable by Tenant to
Landlord under the terms of this Lease. The Monthly Installment for
any period during the Lease Term which period is less than one (1)
full month shall be a prorata portion of the Monthly Installment based
upon a thirty (30) day month.
B. Monthly Installment. The Monthly Installment of rent payable each
month during the Term shall be Sixty-Nine thousand Two and 00/100ths
Dollars ($69,002.00).
C. Late Charge. Tenant acknowledges that late payment by Tenant to
Landlord of rent and other sums due hereunder will cause Landlord to
incur costs not contemplated by this Lease, the exact amount of which
will be extremely difficult to ascertain. Such costs include, but are
not limited to, processing and accounting charges, and late charges
which may be imposed on Landlord by the terms of any mortgage or deed
of trust covering the Premises. Accordingly, if any installment of
rent or any other sum due from Tenant shall not be received by
Landlord within ten (10) days after such amount shall be due, Tenant
shall pay to Landlord, as additional rent, a late charge equal to
three percent (3%) of such overdue amount. The parties hereby agree
that such late charge represents a fair and
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reasonable estimate of the costs Landlord will incur by reason of late
payment by Tenant. Acceptance of such late charge by Landlord shall in
no event constitute a waiver of Tenant's default with respect to such
overdue amount, nor prevent Landlord from exercising any of its other
rights and remedies granted hereunder.
D. Additional Rent. All taxes, insurance premiums, late charges, costs
and expenses which Tenant is required to pay hereunder, together with
all interest and penalties that may accrue thereon in the event of
Tenant's failure to pay such amounts, and all reasonable damages,
costs and attorneys' fees and expenses which Landlord may incur by
reason of any default of Tenant or failure on Tenant's part to comply
with the terms of this Lease, shall be deemed to be additional rent
("Additional Rent") and shall be paid in addition to the Monthly
Installment of rent, and, in the event of nonpayment of the Monthly
Installment of rent.
E. Place of Payment. Rent shall be payable in lawful money of the United
States of America to Landlord at 511 Division Street, Campbell, CA, or
to such other person(s) or at such other place(s) as Landlord may
designate in writing.
F. Advance Payment. Concurrently with the execution of this Lease, Tenant
shall pay to Landlord the sum of Sixty-Nine Thousand, Two and
00/100ths Dollars ($69,002.00) to be applied to the Monthly
Installment of rent first accruing under this Lease.
5. Security Deposit. Tenant shall deposit the sum of Fifty Thousand and
00/100ths Dollars ($50,000.00) (the "Security Deposit") upon execution of
this Lease, to secure the faithful performance by Tenant of each term,
covenant and condition of this Lease. If Tenant shall at any time fail to
make any payment or fail to keep or perform any term, covenant or condition
on its part to be made or performed or kept under this Lease, Landlord may,
but shall not be obligated to and without waiving or releasing Tenant from
any obligation under this Lease, use, apply or retain the whole or any part
of the Security Deposit (A) to the extent of any sum due to Landlord; (B)
to make any required payment on Tenant's behalf; or (C) to compensate
Landlord for any loss, damages, attorneys' fees or expense sustained by
Landlord due to Tenant's default. In such event, Tenant shall, within five
(5) days of written demand by Landlord, remit to Landlord sufficient funds
to restore the Security Deposit to its original sum. Landlord shall not be
required to keep the Security Deposit separate from its general funds.
Should Tenant comply with all the terms, covenants, and conditions of this
Lease and at the end of the term of this Lease leave the Premises in the
condition required by this Lease, then said Security Deposit, plus an
interest amount equal to three percent (3%) per annum compounded monthly,
less any sums owing to Landlord, shall be returned to Tenant within thirty
(30) days after the termination of this Lease and vacancy of the Premises
by Tenant.
6. Use of Premises. Tenant shall use the Premises only in conformance with
applicable governmental laws, regulations, rules and ordinances for the
purpose of general office, research and development, engineering, light
manufacturing and storage of Tenant's products, and for no other purpose.
Tenant shall indemnify, protect, defend, and hold Landlord harmless against
any loss, expense, damage, attorneys' fees or liability arising out of the
failure of Tenant to comply with any applicable law. Tenant shall not
commit or suffer to be committed, any waste upon the Premises, or any
nuisance, or other acts or things which may disturb the quiet enjoyment of
any tenant in the buildings adjacent to the Premises, or allow any sale by
auction upon the Premises, or allow the Premises to be used for any
unlawful purpose, or place any loads upon the floor, walls or ceiling which
endanger the structure, or place any harmful liquids in the drainage system
of the Building. No waste materials or refuse shall be dumped upon or
permitted to remain upon any part of the Premises outside of the Building
proper, except in trash containers placed inside exterior enclosures
designated for that purpose by Landlord. No materials, supplies, equipment,
finished products or semi-finished products, raw materials or articles of
any nature shall be stored upon or
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permitted to remain on any portion of the Premises outside of the Building
proper. Tenant shall strictly comply with the provisions of Paragraph 39
below:
7. Taxes and Assessments.
A. Tenant's Property. Tenant shall pay before delinquency any and all
taxes and assessments, license fees and public charges levied,
assessed or imposed upon or against Tenant's fixtures, equipment,
furnishings, furniture, appliances and personal property installed or
located on or within the Premises. Tenant shall cause said fixtures,
equipment, furnishings, furniture, appliances and personal property to
be assessed and billed separately from the real property of Landlord.
If any of Tenant's said personal property shall be assessed with
Landlord's real property, Tenant shall pay Landlord the taxes
attributable to Tenant within ten (10) days after receipt of a written
statement from Landlord setting forth the taxes applicable to Tenant's
property.
B. Property Taxes. Tenant shall pay, as additional rent, all Property
Taxes levied or assessed with respect to the land comprising the
Parcel and with respect to all buildings and improvements located on
the Parcel which become due or accrue during the term of this Lease.
Tenant shall pay such Property Taxes to Landlord within twenty (20)
days after receipt of billing. Provided that Landlord bills Tenant at
least thirty (30) days prior to the delinquency date of such Property
Taxes. Tenant shall pay such Property Taxes to Landlord at least ten
(10) days prior to the delinquency date, and if Tenant fails to do so,
Tenant shall reimburse Landlord, on demand, for all interest, late
fees and penalties that the taxing authority charges Landlord. In the
event Landlord's mortgagee requires an impound for Property Taxes,
then on the first day of each month during the Lease Term, Tenant
shall pay Landlord one twelfth (1/12) of its annual share of such
Property Taxes. Tenant's liability hereunder shall be prorated to
reflect the Commencement and termination dates of this Lease. Tenant's
share of the Property Taxes shall be determined by Landlord from the
respective valuation assigned in the Assessor's worksheet or such
other information as may be reasonably available. Landlord's
reasonable determination thereof, in good faith, shall be conclusive.
For the purpose of this Lease, "Property Taxes" means and includes all
taxes, assessments (including, but not limited to, assessments for
public improvements or benefits), taxes based on vehicles, utilizing
parking areas, taxes based or measured by the rent paid, payable or
received under this Lease, taxes on the value, use, or occupancy of
the Premises, the Buildings and/or the Parcel, and all other
governmental impositions and charges of every kind and nature
whatsoever, whether or not customary or within the contemplation of
the parties hereto and regardless of whether the same shall be
extraordinary or ordinary, general or special, unforeseen or foreseen,
or similar or dissimilar to any of the foregoing which, at any time
during the Lease Term, shall be applicable to the Premises, the
Building and/or the Parcel or assessed, levied or imposed upon the
Premises, the Building and/or the Parcel, or become due and payable
and a lien or charge upon the Premises, the Building and/or Parcel, or
any part thereof, under or by virtue of any present or future laws,
statutes, ordinances, regulations or other requirements of any
governmental authority whatsoever. The term "Property Taxes" shall not
include any federal, state or local net income, estate, or inheritance
tax imposed on Landlord.
8. Insurance.
A.1. Indemnity. Tenant agrees to indemnify, protect and defend Landlord
against and hold Landlord harmless from any and all claims, causes of
action, judgments, obligations or liabilities, and all reasonable
expenses incurred in investigating or resisting the same (including
reasonable attorneys' fees), on account of, or arising out of, the
operation, maintenance, use or occupancy of the Premises and all areas
appurtenant thereto. This
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Lease is made on the express understanding that Landlord shall not be
liable for, or suffer loss by reason of, injury to person or property,
from whatever cause (except for negligence or willful misconduct of
Landlord), which in any way may be connected with the operation, use or
occupancy of the Premises specifically including, without limitation,
any liability for injury to the person or property of Tenant, its
agents, officers, employees, licensees and invitees.
A.2. Landlord agrees to indemnify, protect and defend Tenant against and
hold Tenant harmless from any and all claims, causes of action,
judgments, obligations or liabilities, and all reasonable expenses
incurred in investigating or resisting the same (including reasonable
attorneys' fees), on account of, or arising out of, Landlord's
negligence or Landlord's failure to perform its obligations under this
Lease.
B. Liability Insurance. Tenant shall, at Tenant's expense, obtain and keep
in force during the term of this Lease a policy of comprehensive public
liability insurance insuring Landlord and Tenant against claims and
liabilities arising out of the operation, use, or occupancy of the
Premises and all areas appurtenant thereto, including parking areas.
Such insurance shall be in an amount of not less than Three Million
Dollars ($3,000,000.00) for bodily injury or death as a result of any
one occurrence and Five Hundred Thousand Dollars ($500,000.00) for
damage to property, as a result of any one occurrence. The insurance
shall be with companies approved by Landlord, which approval Landlord
agrees not to withhold unreasonably. Tenant shall deliver to Landlord,
prior to possession, and at least thirty (30) days prior to the
expiration thereof, a certificate of insurance evidencing the existence
of the policy required hereunder and such certificate shall certify
that the policy (1) names Landlord as an additional insured, (2) shall
not be canceled or altered without thirty (30) days prior written
notice to Landlord, (3) insures performance of the indemnity set forth
in Paragraph 8.A above, and (4) the coverage is primary and any
coverage by Landlord is in excess thereto. Landlord may maintain a
policy or policies of comprehensive general liability insurance
insuring Landlord (and such others as are designated by Landlord),
against liability for personal injury, bodily injury, death and damage
to property occurring or resulting from an occurrence in, on or about
the Premises, with such limits of coverage as Landlord may from time to
time determine are reasonably necessary for its protection. The cost of
any such liability insurance maintained by Landlord shall be paid for
by Tenant as Additional Rent. Landlord shall name Tenant as additional
insured under Landlord's liability insurance.
C. Property Insurance. Landlord shall obtain and keep in force during the
term of this Lease a policy or policies of insurance covering loss or
damage to the Premises and the Buildings, in the amount of the full
replacement value thereof, including all alterations or improvements
constructed by Tenant pursuant to Paragraph 13, below, providing
protection against those perils included within the classification of
"all risk" insurance, plus a policy of rental income insurance in the
amount of one hundred percent (100%) of twelve (12) months rent
(including, without limitation, sums payable as Additional Rent),
plus, at Landlord's option, flood insurance and earthquake insurance
(provided that earthquake insurance is available at commercially
reasonable rates) and any other coverages which may be required from
time to time by Landlord's mortgagee. Tenant shall have no interest in
nor any right to the proceeds of any insurance procured by Landlord on
the Premises. Tenant shall, within twenty (20) days after receipt of
billing, pay to Landlord as additional rent, the full cost of such
insurance procured and maintained by Landlord. Tenant acknowledges that
such insurance procured by Landlord shall contain a deductible which
reduces Tenant's cost for such insurance and, in the event of loss or
damage, Tenant shall be required to pay to Landlord the amount of such
deductible, not to exceed Five Thousand and 00/100ths Dollars
($5,000.00). In the case of any insured loss or damage caused by
earthquake, Tenant shall be required to pay Landlord one half of the
amount of such deductible.
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D. Tenant's Insurance. Release of Landlord. Tenant acknowledges that the
insurance to be maintained by Landlord on the Premises pursuant to
Subparagraph C above will not insure any of Tenant's property.
Accordingly, Tenant, at Tenant's own expense, shall maintain in full
force and effect on all of its fixtures, equipment, leasehold
improvements and personal property in the Premises, a policy of "All
Risk" coverage insurance to the extent of at least ninety percent
(90%) of their insurable value. Tenant hereby releases Landlord, and
its partners, officers, agents, employees and servants from any and
all claims, demands, losses, expenses or injuries to the Premises or
to the furnishings, fixtures, equipment, inventory or other personal
property of Tenant in, about, or upon the Premises, which are caused
by perils, events or happenings where the same are covered by the
insurance required by this Lease or which are the subject of insurance
carried by Tenant and in force at the time of such loss.
9. Utilities. Tenant shall pay for all water, gas, light, heat, power,
electricity, telephone, trash pick-up, sewer charges, elevator or fountain
related services, and all other services supplied to or consumed on the
Premises and all taxes and surcharges thereon. Tenant shall provide
Landlord with copies of all service contracts.
10. Repairs and Maintenance.
A. Landlord's Repairs. Subject to provisions of Paragraph 16, Landlord
shall keep and maintain the exterior roof, structural elements and
exterior walls of the Building in good order and repair. Landlord
shall not, however, be required to maintain, repair or replace the
interior surface of exterior walls, nor shall Landlord be required to
maintain, repair or replace windows, doors, skylights or plate glass.
Landlord shall have no obligation to make repairs under this
Subparagraph until a reasonable time after receipt of written notice
from Tenant of the need for such repairs. Tenant shall reimburse
Landlord, as additional rent, within fifteen (15) days after receipt
of billing, for the cost of such repairs and maintenance which are
the obligation of Landlord hereunder, provided however, that Tenant
shall not be required to reimburse Landlord for the cost of
maintenance and repairs of the structural elements of the Building
unless such maintenance or repair is required because of the
negligence or willful misconduct of Tenant or its employees, agents
or invitees. As used herein, the term "structural elements of the
building" shall mean and be limited to the foundation, footings,
floor slab (but not flooring), structural walls, and roof structure
(but not roofing or roof membrane).
Landlord shall deliver the Premises to Tenant with the roof and all
electrical, mechanical and plumbing systems in good working condition.
Where the repair or replacement cost of any of the items mentioned in
the previous sentence or the parking lot or driveway, exceeds
$1,500.00 per occurrence, during the first year of the Term. Landlord
shall be responsible for such repair or replacement and paying any
such amount over said $1,500.00. After the first year of the Lease
Term, if a repair or replacement to the roof, parking lot, driveway,
electrical system, mechanical system or plumbing system is required
and if such repair or replacement is of such a nature that it would be
required to be capitalized under generally accepted accounting
principals (GAAP), then Tenant shall pay to Landlord, as Additional
Rent, a fraction of the cost of such repair or replacement, which
fraction shall have as its numerator the number of months then
remaining in the Lease Term at the time of such repair or replacement
and shall have as its denominator the number of months in the useful
life of such repair or replacement (determined in accordance with
GAAP); and if Tenant exercises the option to extend pursuant to
Paragraph 40, Tenant shall pay to Landlord, upon commencement of the
Option Term, as Additional Rent, an additional fraction of the
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cost of such repair or replacement which fraction shall have as its
numerator 36 months and shall have as its denominator the number of
months in the useful life of the repair or replacement; provided,
however, in no event shall Tenant be required to pay more than one
hundred percent (100%) of the cost of such repair or replacement.
B. Tenant's Repairs/Maintenance. Subject to Landlord's obligation to
Paragraph 10.A. Tenant shall, during the Lease Term, at Tenant's sole
cost and expense, keep and maintain in good order, condition and
repair the entire Premises and every part thereof, including, without
limitation, windows, window frames, plate glass, glazing, skylights,
doors and all door hardware, elevator, fountain, partitions and all
plumbing, electrical, lighting, heating, air conditioning and
ventilation facilities, equipment and systems within the Premises. The
term "repair" shall include replacements, restorations and/or renewals
when necessary, as well as painting. Tenant's obligation shall extend
to all alterations, additions and improvements to the Premises, and
all fixtures and appurtenances therein and thereto. Tenant shall, at
all times during the Lease Term, have an effect a service contract for
the maintenance of the HVAC equipment with a licensed HVAC repair and
maintenance contractor approved by Landlord which provides for
periodic inspection and servicing at least once every ninety (90) days
during the Lease Term and shall provide Landlord with a copy of such
contract. No less frequently than every one hundred eighty (180) days,
Tenant shall cause to be made an inspection of the HVAC system by a
licensed HVAC repair and maintenance contractor or mechanical engineer
approved by Landlord. Tenant shall deliver to Landlord a written
report prepared by the party making such inspections promptly after
the conclusion of each such inspection. Except as otherwise provided
herein, Tenant shall perform such maintenance and repair work as is
recommended by such inspectors to the extent such work is reasonably
necessary to keep such HVAC equipment in good order, condition and
repair.
Tenant shall also have in effect a service contract for the
maintenance of the fountain and for the elevator, and provide Landlord
with copies of such service contracts and all inspection, or service
reports.
Should Tenant fail to make repairs required of Tenant hereunder
forthwith upon five (5) days notice from Landlord or should Tenant
fail thereafter to diligently complete the repairs, Landlord, in
addition to all other remedies available hereunder or by law and
without waiving any alternative remedies, may make the same, and in
that event, Tenant shall reimburse Landlord as additional rent for the
cost of such maintenance or repairs within five (5) days of written
demand by Landlord.
Landlord shall have no maintenance or repair obligations whatsoever
with respect to the Premises except as expressly provided in
Paragraphs 10.A. Tenant hereby expressly waives the provisions of
Subsection 1 of Section 1932 and Sections 1941 and 1942 of the Civil
Code of California and all rights to make repairs at the expense of
Landlord as provided in Section 1942 of said Civil Code.
Tenant shall operate, manage, insure, maintain and keep the Parcel in
good order, condition and repair. The manner in which the Parcel shall
be maintained shall be at the reasonable discretion of Landlord. The
cost of such repair, maintenance, operation, insurance and management,
including without limitation, maintenance and repair of landscaping,
irrigation systems, paving, driveways, parking areas, fountain,
sidewalks, fences, and lighting, shall be paid by Tenant, except as
otherwise provided in Paragraph 10.A. above.
11. Parking. Tenant shall have the non-exclusive use of all the parking spaces
on the Parcel, which number approximately Two Hundred Eighty (280).
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12. Additional Rent. Tenant shall pay to Landlord, as Additional Rent, upon
demand but not more often than once each calendar month, an amount equal to
One Hundred percent (100%) of the charges set forth in Paragraph 8.C. of
this Lease. Tenant acknowledges and agrees that these charges shall include
an additional five percent (5%) of the actual expenditures in order to
compensate Landlord for accounting, management and processing services.
13. Alterations. Tenant shall not make, or suffer to be made, any alterations,
improvements or additions in, on, about or to the Premises or any part
thereof, without the prior written consent of Landlord and without a valid
building permit issued by the appropriate governmental authority. As a
condition to giving such consent. Landlord may require that Tenant agree to
remove any such alterations, improvements or additions at the termination
of this Lease, and to restore the Premises to their prior condition.
Unless, as a condition of Landlord's consent, Landlord requires that Tenant
remove any such alterations, improvement or addition, any alteration,
addition or improvement to the Premises, except movable furniture and trade
fixtures not affixed to the Premises, shall become the property of Landlord
upon termination of the Lease and shall remain upon and be surrendered with
the Premises at the termination of this Lease. Without limiting the
generality of the foregoing, all heating, lighting, electrical (including
all wiring, conduit, outlets, drops, buss ducts, main and subpanels), air
conditioning, partitioning, drapery, and carpet installations made by
Tenant regardless of how affixed to the Premises, together with all other
additions, alterations and improvements that have become an integral part
of the Building, shall be and become the property of the Landlord upon
termination of the Lease, and shall not be deemed trade fixtures, and shall
remain upon and be surrendered with the Premises at the termination of this
Lease.
If, during the term hereof, any alteration, addition or change of any sort
to all or any portion of the Premises is required by law, regulation,
ordinance or order of any public agency, Tenant shall promptly make the
same at its sole cost and expense. If during the term hereof, any
alteration, addition, or change to the Parcel is required by law,
regulation, ordinance or order of any public agency, Tenant shall make the
same and the cost of such alteration, addition or change shall be paid by
Tenant.
14. Acceptance of the Premises. By entry and taking possession of the Premises
pursuant to this Lease. Tenant accepts the Premises as being in good and
sanitary order, condition and repair latent defects excepted, provided
Tenant gives Landlord written notice of any such latent defects within the
first ninety (90) days of the Lease Term, and accepts the Premises in their
condition existing as of the date of such entry, and Tenant further accepts
the tenant improvements to be constructed by Landlord, if any, as being
completed in accordance with the plans and specifications for such
improvements, except for punch list items. Tenant acknowledges that neither
the Landlord nor Landlord's agents has made any representation or warranty
as to the suitability of the Premises to the conduct of Tenant's business.
Any agreements, warranties or representations not expressly contained
herein shall in no way bind either Landlord or Tenant, and Landlord and
Tenant expressly waive all claims for damages by reason of any statement,
representation, warranty, promise or agreement, if any, not contained in
this Lease. This Lease constitutes the entire understanding between the
parties hereto and no addition to, or modification of, any term or
provision of this Lease shall be effective until set forth in a writing
signed by both Landlord and Tenant.
15. Default.
A. Events of Default. A breach of this Lease shall exist if any of the
following events (hereinafter referred to as "Event of Default") shall
occur:
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1. Default in the payment when due of any installment of rent or other
payment required to be made by Tenant hereunder, where such default
shall not have been cured within three (3) days after written notice
of such default is given to Tenant;
2. Tenant's failure to perform any other term, covenant or condition
contained in this Lease where such failure shall have continued for
twenty (20) days after written notice of such failure is given to
Tenant, unless prior to such date Tenant has commenced and is
diligently pursuing a cure to completion.
3. Tenant's vacating or abandonment of the Premises;
4. Tenant's assignment of its assets for the benefit of its creditors;
5. The sequestration of, attachment of, or execution on, any substantial
part of the property of Tenant or on any property essential to the
conduct of Tenant's business shall have occurred and Tenant shall have
failed to obtain a return or release of such property within sixty
(60) days thereafter, or prior to sale pursuant to such sequestration,
attachment or levy, whichever is earlier;
6. Tenant shall seek appointment of a receiver, trustee, custodian, or
other similar official for it or for all or any substantial part of
its property;
7. Any case, proceeding or other action against Tenant shall commence
seeking appointment of a receiver, trustee, custodian or other similar
official for it or for all or any substantial part of its property,
and such case, proceeding or other action (i) results in the entry of
an order for relief against it which is not fully stayed within seven
(7) business days after the entry thereof or (ii) remains undismissed
for a period of forty-five (45) days.
B. Remedies. Upon any Event of Default, Landlord shall have the following
remedies, in addition to all other rights and remedies provided by law, to
which Landlord may resort cumulatively, or in the alternative;
1. Recovery of Rent. Landlord shall be entitled to keep this Lease in
full force and effect (whether or not Tenant shall have abandoned the
Premises) and to enforce all of its rights and remedies under this
Lease, including the right to recover rent and other sums as they
become due, plus interest at the Permitted Rate (as defined in
Paragraph 33 below) from the due date of each installment of rent or
other sum until paid.
2. Termination. Landlord may terminate this Lease by giving Tenant
written notice of termination. On the giving of the notice all of
Tenant's rights in the Premises and the Building and Parcel shall
terminate. Upon the giving of the notice of termination, Tenant shall
surrender and vacate the Premises in the condition required by
Paragraph 34, and Landlord may re-enter and take possession of the
Premises and all the remaining improvements or property and eject
Tenant or any of Tenant's subtenants, assignees or other person or
persons claiming any right under or through Tenant or eject some and
not others or eject none. This Lease may also be terminated by a
judgment specifically providing for termination. Any termination under
this paragraph shall not release Tenant from the payment of any sum
then due Landlord or from any claim for damages or rent previously
accrued or then accruing against Tenant. In no event shall any one or
more of the following actions by Landlord constitute a termination of
this Lease;
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a. maintenance and preservation of the Premises;
b. efforts to relet the Premises;
c. appointment of a receiver in order to protect Landlord's
interest hereunder;
d. consent to any subletting of the Premises or assignment of
this Lease by Tenant, whether pursuant to provisions hereof
concerning subletting and assignment or otherwise; or
e. any other action by Landlord or Landlord's agents intended
to mitigate the adverse effects from any breach of this
Lease by Tenant.
3. Damages. In the event this Lease is terminated pursuant to
Subparagraph 15.B.2 above, or otherwise, Landlord shall be
entitled to damages in the following sums:
a. the worth at the time of award of the unpaid rent which has
been earned at the time of termination; plus
b. the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination
until the time of award exceeds the amount of such rental
loss that Tenant proves could have been reasonably avoided;
plus
c. the worth at the time of award of the amount by which the
unpaid rent 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; and
d. any other amount necessary to compensate Landlord for all
detriment proximately caused by Tenant's failure to perform
Tenant's obligations under this Lease, or which in the
ordinary course of things would be likely to result
therefrom.
e. The "worth at the time of award" of the amounts referred to
in Subparagraphs (a) and (b) of this Paragraph, is computed
by allowing interest at the Permitted Rate. The "worth at
the time of award" of the amounts referred to in
Subparagraph (c) of this Paragraph is computed by
discounting such amount at the discount rate of the Federal
Reserve Board of San Francisco at the time of award plus one
percent (1%). The term "rent" as used in this Paragraph
shall include all sums required to be paid by Tenant to
Landlord pursuant to the terms of this Lease.
16. Destruction. In the event that any portion of the Premises are destroyed or
damaged by an uninsured peril, Landlord or Tenant may, upon written notice
to the other, given within thirty (30) days after the occurrence of such
damage or destruction, elect to terminate this Lease; provided, however,
that either party may, within thirty (30) days after receipt of such
notice, elect to make any required repairs and/or restoration at such
party's sole cost and expense, in which event this Lease shall remain in
full force and effect, and the party having made such election to restore
or repair shall thereafter diligently proceed with such repairs and/or
restoration.
In the event the Premises are damaged or destroyed from any insured peril
to the extent of fifty percent (50%) or more of the then replacement cost
of the Premises, Landlord may, upon written notice to Tenant, given within
thirty (30) days after the occurrence of such damage or destruction, elect
to terminate this Lease. If Landlord does not give such notice in writing
within such period,
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Landlord shall be deemed to have elected to rebuild or restore the Premises, in
which event Landlord shall, at its expense, promptly rebuild or restore the
Premises to their condition prior to the damage or destruction and Tenant shall
pay to Landlord upon commencement of reconstruction the amount of any
deductible from the insurance policy, subject to limitations set forth in
Paragraph 8.C.
In the event the Premises are damaged or destroyed from any insured peril to
the extent of less than fifty percent (50%) of the then replacement cost of the
Premises, Landlord shall, at Landlord's expense, promptly rebuild or restore
the Premises to their condition prior to the damage or destruction and Tenant
shall pay to Landlord upon commencement of reconstruction the amount of any
deductible from the insurance policy, subject to limitations set forth in
Paragraph 8.C.
In the event that, pursuant to the foregoing provisions, Landlord is to rebuild
or restore the Premises, Landlord shall, within thirty (30) days after the
occurrence of such damage or destruction, provide Tenant with written notice of
the time required for such repair or restoration. If such period is longer than
one hundred eighty (180) days from the issuance of a building permit, Tenant
may, within thirty (30) days after receipt of Landlord's notice, elect to
terminate the Lease by giving written notice to Landlord of such election,
whereupon the Lease shall immediately terminate. The period of time for
Landlord to complete the repair or restoration shall be extended for delays
caused by the fault or neglect of Tenant or because of acts of God, acts of
publication, labor disputes, strikes, fires, freight embargoes, rainy or stormy
weather, inability to obtain materials, supplies or fuels, acts of contractors
or subcontractors, or delay of contractors or subcontractors due to such
causes, or other contingencies beyond the control of Landlord. Landlord's
obligation to repair or restore the Premises shall not include restoration of
Tenant's trade fixtures, equipment, merchandise, but shall include restoration
of any improvements, alterations or additions made by Tenant to the Premises,
pursuant to Paragraph 13.
Unless this Lease is terminated pursuant to the foregoing provisions, this
Lease shall remain in full force and effect; provided, however, that during any
period of repairs or restoration, rent and all other amounts to be paid by
Tenant on account of the Premises and this Lease shall be abated in proportion
to the area of the Premises rendered not reasonably suitable for the conduct of
Tenant's business thereon. Tenant hereby expressly waives the provisions of
Section 1932, Subdivision 2 and Section 1933, Subdivision 4 of the California
Civil Code.
If this Lease terminates pursuant to the provisions of this Paragraph 16, Tenant
shall be entitled to receive that portion of the insurance proceeds attributable
to the unamortized value of the improvements, alterations and additions to the
Premises made and paid for by Tenant pursuant to Paragraph 13, which
alterations, additions and improvements shall be amortized on a straight line
basis over the initial Lease Term.
17. Condemnation.
A. Definition of Terms. For the purposes of this Lease, the term (1) "Taking"
means a taking of the Premises or damage to the Premises related to the
exercise of the power of eminent domain and includes a voluntary
conveyance, in lieu of court proceedings, to any agency, authority, public
utility, person or corporate entity empowered to condemn property; (2)
"Total Taking" means the taking of the entire Premises or so much of the
Premises as to prevent or substantially impair the use thereof by Tenant
for the uses herein specified; provided, however, in no event shall a
Taking of less than ten percent (10%) of the Premises be deemed a Total
Taking; (3) "Partial Taking" means the taking of only a portion of the
Premises which does not constitute a Total Taking; (4) "Date of Taking"
means the date upon which the title to the Premises, or a portion thereof,
passes to and
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vests in the condemnor or the effective date of any order for
possession if issued prior to the date title vests in the condemnor;
and (5) "Award" means the amount of any award made, consideration
paid, or damages ordered as a result of a Taking.
B. Rights. The parties agree that in the event of a Taking all rights
between them or in and to an Award shall be as set forth herein and
Tenant shall have no right to any Award except as set forth herein.
C. Total Taking. In the event of a Total Taking during the term hereof
(1) the rights of Tenant under the Lease and the leasehold estate of
Tenant in and to the Premises shall cease and terminate as of the Date
of Taking; (2) Landlord shall refund to Tenant any prepaid rent; (3)
Tenant shall pay Landlord any rent or charges due Landlord under the
Lease, each prorated as of the Date of Taking; (4) Tenant shall
receive from Landlord those portions of the Award attributable to
trade fixtures of Tenant and for moving expenses of Tenant; and (5)
the remainder of the Award shall be paid to and be the property of
Landlord.
D. Partial Taking. In the event of a Partial Taking during the term
hereof (1) the rights of Tenant under the Lease and leasehold estate
of Tenant in and to the portion of the Premises taken shall cease and
terminate as of the Date of Taking; (2) from and after the Date of
Taking the Monthly Installment of rent shall be an amount equal to the
product obtained by multiplying the Monthly Installment of rent
immediately prior to the Taking by a fraction, the numerator of which
is the number of square feet contained in the Premises after the
Taking and the denominator of which is the number of square feet
contained in the Premises prior to the Taking; (3) Tenant shall
receive from the Award the portions of the Award attributable to trade
fixtures of Tenant; and (4) the remainder of the Award shall be paid
to and be the property of Landlord.
E. Tenant's Award. Notwithstanding anything to the contrary herein,
Tenant shall be entitled to receive any condemnation award that is
made directly to Tenant, provided that such award does not reduce the
amount of the award that would be otherwise payable to Landlord, for
the following: (i) for the taking of personal property or Trade
Fixtures belonging to Tenant; (ii) for the interruption of Tenant's
business or its moving costs; (iii) for the unamortized value of
tenant improvements and/or alterations or modifications installed at
Tenant's sole cost, amortized over the initial lease term; (iv) for
the loss of Tenant's goodwill; or (v) for any temporary taking where
this lease is not terminated as a result of such taking.
18. Mechanics' Lien. Tenant shall (A) pay for all labor and services performed
for, materials used by or furnished to, Tenant or any contractor employed
by Tenant with respect to the Premises; (B) indemnify, defend, protect and
hold Landlord and the Premises harmless and free from any liens, claims,
liabilities, demands, encumbrances, or judgments created or suffered by
reason of any labor or services performed for, materials used by or
furnished to, Tenant or any contractor employed by Tenant with respect to
the Premises; (C) give notice to Landlord in writing five (5) days prior to
employing any laborer or contractor to perform services related to, or
receiving materials for use upon the Premises; and (D) permit Landlord to
post a notice of nonresponsibility in accordance with the statutory
requirements of California Civil Code Section 3094 or any amendment
thereof. In the event Tenant is required to post an improvement bond with a
public agency in connection with the above, Tenant agrees to include
Landlord as an additional obligee.
19. Inspection of the Premises. Tenant shall permit Landlord and its agents to
enter the Premises at any reasonable time with prior notice during normal
business hours excepting emergency situations, for the purpose of
inspecting the same, performing Landlord's maintenance and repair
responsibilities, posting a notice of non-responsibility for alterations,
additions or repairs and at
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any time within one hundred eighty (180) days prior to expiration of this
Lease, to place upon the Premises, ordinary "For Lease" or "For Sale"
signs which may include a rider stating why the building is coming
available, as it relates to Tenant, and to show the Premises to
prospective tenants or buyers.
20. Compliance with Laws. Tenant shall, at its own cost, comply with all of
the requirements of all municipal, county, state and federal authorities
now in force, or which may hereafter be in force, pertaining to the use
and occupancy of the Premises, and shall faithfully observe all
municipal, county, state and federal law, statutes or ordinances now in
force or which may hereafter be in force. The judgment of any court of
competent jurisdiction or the admission of Tenant in any action or
proceeding against Tenant, whether Landlord be a party thereto or not,
that Tenant has violated any such ordinance or statute in the use and
occupancy of the Premises shall be conclusive of the fact that such
violation by Tenant has occurred.
21. Subordination. The following provisions shall govern the relationship of
this Lease to any underlying lease, mortgage or deed of trust which now or
hereafter affects the Premises, the Building and/or the Parcel, or
Landlord's interest or estate therein (the "Project") and any renewal,
modification, consolidation, replacement, or extension thereof (a
"Security Instrument").
A. Priority. This Lease is subject and subordinate to Security
Instruments existing as of the Commencement Date. However, if any
Lender so requires, this Lease shall become prior and superior to
any such Security Instrument.
B. Subsequent Security Instruments. At Landlord's election, this Lease
shall become subject and subordinate to any Security Instrument
created after the Commencement Date. Notwithstanding such
subordination, Tenant's right to quiet possession of the Premises
shall not be disturbed so long as Tenant is not in default and
performs all of its obligations under this Lease, unless this Lease
is otherwise terminated pursuant to its terms.
C. Documents. Tenant shall execute any document or instrument required
by Landlord or any Lender to make this Lease either prior or
subordinate to a Security Instrument, which may include such other
matters as the Lender customarily requires in connection with such
agreements, including provisions that the Lender not be liable for
(1) the return of the Security Deposit unless the Lender receives
it from Landlord, and (2) any defaults on the part of Landlord
occurring prior to the time that the Lender takes possession of the
Project in connection with the enforcement of its Security
Instrument. Tenant's failure to execute any such document or
instrument within ten (10) days after written demand therefor shall
constitute a default by Tenant or, at Landlord's option. Landlord
may execute such documents on behalf of Tenant as Tenant's
attorney-in-fact. Tenant does hereby make, constitute and
irrevocably appoint Landlord as Tenant's attorney-in-fact to
execute such documents in accordance with this Paragraph.
D. Tenant's Attornment. Tenant shall attorn (1) to any purchaser of
the Premises at any foreclosure sale or private sale conducted
pursuant to any Security Instrument encumbering the Project; (2) to
grantee or transferee designated in any deed given in lieu of
foreclosure; or (3) to the lessor under any underlying ground lease
should such ground lease be terminated.
E. Lender. The term "Lender" shall mean (1) any beneficiary, mortgage,
secured party, or other holder of any deed of trust, mortgage, or
other written security device or agreement affecting the Project;
and (2) any lessor under any underlying lease under which Landlord
holds its interest in the Project.
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F. Condition. This Lease and the obligations of Landlord and Tenant
hereunder are expressly conditioned upon Tenant, Landlord and
Landlord's existing Lender executing, on or before December 31, 1995
a Subordination, Non-Disturbance and Attornment Agreement in form and
substance satisfactory to Landlord, Tenant and Landlord's existing
Lender.
22. Holding Over. This Lease shall terminate without further notice at the
expiration of the Lease Term. Any holding over by Tenant after expiration
shall not constitute a renewal or extension or give Tenant any rights in
or to the Premises except as expressly provided in this Lease. Any holding
over after the expiration with the consent of Landlord shall be construed
to be a tenancy from month to month, at one hundred fifty percent (150%)
of the monthly rent for the last month of the Lease Term, and shall
otherwise be on the terms and conditions herein specified insofar as
applicable.
23. Notices. Any notice required or desired to be given under this Lease shall
be in writing with copies directed as indicated below and shall be
personally served or given by mail. Any notice given by mail shall be
deemed to have been given when forty-eight (48) hours have elapsed from
the time such notice was deposited in the United States mails, certified
and postage prepaid, addressed to the party to be served with a copy as
indicated herein at the last address given by that party to the other
party under the provisions of this Paragraph. At this date of execution of
this Lease, the address of Landlord is:
511 Division Street
Campbell, CA 95008
Attn: James D. Mair
and the address of Tenant is:
4401 Great America Parkway
Santa Clara, CA 95052-8185
Attn: Legal Department
with copy to:
8 Federal Street
Billerica, MA 01821
Attn: Real Estate Department
24. Attorneys' Fees. In the event either party shall bring any action or legal
proceeding for damages for any alleged breach of any provision of this
Lease, to recover rent or possession of the Premises, to terminate this
Lease, or to enforce, protect or establish any term or covenant of this
Lease or right or remedy of either party, the prevailing party shall be
entitled to recover as a part of such action or proceeding, reasonable
attorneys' fees and court costs, including attorneys' fees and costs for
appeal, as may be fixed by the court or jury. The term "prevailing party"
shall mean the party who received substantially the relief requested,
whether by settlement, dismissal, summary judgment, judgment, or otherwise.
25. Nonassignment.
A. Landlord's Consent Required. Tenant's interest in this Lease is not
assignable, by operation of law or otherwise, nor shall Tenant have
the right to sublet the Premises, transfer any interest of Tenant
therein or permit any use of the Premises by another party, without
the prior written consent of Landlord to such assignment, subletting,
transfer or use, which consent Landlord agrees not to withhold
unreasonably subject to the provisions of Subparagraph B below. A
consent to one assignment, subletting, occupancy or use by another
party shall not be deemed to be a consent to any subsequent
assignment,
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subletting, occupancy or use by another party. Any assignment or subletting
without such consent shall be void and shall, at the option of Landlord,
terminate this Lease.
It shall not be unreasonable for Landlord to withhold its consent to any
proposed assignment or subletting if (1) the proposed assignee's or
subtenant's anticipated use of the Premises involves the storage,
generation, discharge, transport, use or disposal of any Hazardous
Material; (2) if the proposed assignee or subtenant has been required by
any prior landlord, lender or governmental authority to "clean up" or
remediate any Hazardous Material; (3) if the proposed assignee or subtenant
is subject to investigation or enforcement order or proceeding by any
governmental authority in connection with the use, generation, discharge,
transport, disposal or storage of any Hazardous Material.
Landlord's waiver or consent to any assignment or subletting hereunder
shall not relieve Tenant from any obligation under this Lease unless the
consent shall so provide.
B. Transferee Information Required. If Tenant desires to assign its interest
in this Lease or sublet the Premises, or transfer any interest of
Tenant therein, or permit the use of the Premises by another party
(hereinafter collectively referred to as a "Transfer"), Tenant shall
give Landlord at least thirty (30) days prior written notice of the
proposed Transfer and of the terms of such proposed Transfer,
including, but not limited to, the name and legal composition of the
proposed transferee, a financial statement of the proposed transferee,
the nature of the proposed transferee's business to be carried on in
the Premises, the payment to be made or other consideration to be
given to Tenant on account of the Transfer, and such other pertinent
information as may be requested by Landlord, all in sufficient detail
to enable Landlord to evaluate the proposed Transfer and the
prospective transferee. It is the intent of the parties hereto that
this Lease shall confer upon Tenant only the right to use and occupy
the Premises, and to exercise such other rights as are conferred upon
Tenant by this Lease. The parties agree that this Lease is not
intended to have a bonus value nor to serve as a vehicle whereby
Tenant may profit by a future Transfer of this Lease or the right to
use or occupy the Premises as a result of any favorable terms
contained herein, or future changes in the market for leased space. It
is the intent of the parties that any such bonus value that may attach
to this Lease shall be and remain the exclusive property of Landlord.
Accordingly, in the event Tenant seeks to Transfer its interest in
this Lease or the Premises, Landlord shall have the following options,
which may be exercised at its sole choice without limiting Landlord in
the exercise of any other right or remedy which Landlord may have by
reason of such proposed Transfer:
(1) Landlord may consent to the proposed Transfer on the condition that
Tenant agrees to pay to Landlord, as additional rent, any and all
rents or other consideration (including key money) received by Tenant
from the transferee by reason of such Transfer in excess of the rent
payable by Tenant to Landlord under this Lease (less any brokerage
commissions or tenant improvement costs incurred by Tenant in
connection with the Transfer). Tenant expressly agrees that the
foregoing is a reasonable condition for obtaining Landlord's consent
to any Transfer; or
(2) Landlord may grant or withhold its consent to the proposed Transfer
Pursuant to subparagraph A, above.
C. Landlord's Consent not Required. Notwithstanding anything to the contrary,
so long as Tenant otherwise complies with the provisions of this paragraph,
Tenant may enter into any of the following transfers (a "Permitted
Transfer") without the Landlord's prior
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written consent and Landlord shall not be entitled to receive any
part of any Subrent resulting therefrom that would otherwise be due
Landlord:
(1) Tenant may sublease all or part of the Premises or assign its
interest in this Lease to any corporation which controls, is
controlled by, or is under common control with the original
Tenant to this Lease by means of an ownership interest of more
than 50%.
(2) Tenant may assign its interest in the Lease to a corporation
which results from a merger, consolidation or other
reorganization in which Tenant is not the surviving
corporation, so long as the surviving corporation has a net
worth at the time of such assignment that is equal to or greater
than the net worth of Tenant immediately prior to such
transaction; and
(3) Tenant may assign this Lease to a corporation which purchases or
otherwise acquires all or substantially all of the assets of
Tenant, so long as such acquiring corporation has a net worth at
the time of such assignment that is equal to or greater than
the net worth of Tenant immediately prior to such transaction.
26. Successors. The covenants and agreements contained in this Lease shall be
binding on the parties hereto and on their respective heirs, successors
and assigns (to the extent the Lease is assignable).
27. Mortgagee Protection. In the event of any default on the part of Landlord,
Tenant will give notice by registered or certified mail to any beneficiary
of a deed of trust or mortgagee of a mortgage encumbering the Premises,
whose address shall have been furnished to Tenant, and shall offer such
beneficiary or mortgagee a reasonable opportunity to cure the default.
28. Landlord Loan or Sale. Tenant agrees promptly following request by
Landlord to (A) execute and deliver to Landlord any documents, including
estoppel certificates presented to Tenant by Landlord, (i) certifying that
this Lease is unmodified and in full force and effect and the date to
which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to Tenant's knowledge, any uncured
defaults on the part of Landlord hereunder, unless any such defaults
exists, in which case Tenant shall specify such defaults and (iii)
evidencing the status of the Lease as may be required either by a lender
making a loan to Landlord to be secured by a deed of trust or mortgage
covering the Premises or a purchaser of the Premises from Landlord and
(B) to deliver to Landlord a copy of Tenant's 10K. Tenant's failure to
deliver an estoppel certificate promptly following such request shall be
an Event of Default under this Lease.
29. Surrender of Lease Not Merger. The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation thereof, shall not work a merger
and shall, at the option of Landlord, terminate all or any existing
subleases or subtenants, or operate as an assignment to Landlord of any or
all such subleases or subtenants.
30. Waiver. The waiver by Landlord or Tenant of any breach of any term,
covenant or condition herein contained shall not be deemed to be a waiver
of any preceding or succeeding breach of the same or any other covenant or
condition herein contained.
31. General.
A. Captions. The captions and paragraph headings used in this Lease are
for the purposes of convenience only. They shall not be construed to
limit or extend the meaning of any part
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of this Lease, or be used to interpret specific sections. The word(s)
enclosed in quotation marks shall be construed as defined terms for
purposes of this Lease. As used in this Lease, the masculine, feminine
and neuter and the singular or plural number shall each be deemed to
include the other whenever the context so requires.
B. Definition of Landlord. The term "Landlord" as used in this Lease, so
far as the covenants or obligations on the part of Landlord are
concerned, shall be limited to mean and include only the owner at the
time in question of the fee title of the Premises, and in the event
of any transfer or transfers of the title of such fee, the Landlord
herein named (and in case of any subsequent transfers or conveyances,
the then grantor) shall after the date of such transfer or conveyance
be automatically freed and relieved of all liability with respect to
performance of any covenants or obligations on the part of Landlord
contained in this Lease, thereafter to be performed; provided that
any funds in the hands of Landlord or the then grantor at the time of
such transfer, in which Tenant has an interest, shall be turned over
to the grantee. It is intended that the covenants and obligations
contained in this Lease on the part of Landlord shall, subject as
aforesaid, be binding upon each Landlord, its heirs, personal
representatives, successors and assigns only during its respective
period of ownership.
C. Time of Essence. Time is of the essence for the performance of each
term, covenant and condition of this Lease.
D. Severability. In case any one or more of the provisions contained
herein, except for the payment of rent, shall for any reason be held
to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other
provision of this Lease, but this Lease shall be construed as if such
invalid, illegal or unenforceable provision had not been contained
herein. This Lease shall be construed and enforced in accordance with
the laws of the State of California.
E. Joint and Several Liability. If Tenant is more than one person or
entity, each such person or entity shall be jointly and severally
liable for the obligations of Tenant hereunder.
F. Law. The term "law" shall mean any judicial decision, statute,
constitution, ordinance, resolution, regulation, rule, administrative
order, or other requirement of any government agency or authority
having jurisdiction over the parties to this Lease or the Premises or
both, in effect at the Commencement Date of this Lease or any time
during the Lease Term, including, without limitation, any regulation,
order, or policy of any quasi-official entity or body (e.g., board of
fire examiners, public utility or special district).
32. Sign. Tenant shall not place or permit to be placed any sign or decoration
on the land or the exterior of the Building without the prior written
consent of Landlord. Tenant, upon written notice by Landlord, shall
immediately remove any sign or decoration that Tenant has placed or
permitted to be placed on the land or the exterior of the Building without
the prior written consent of Landlord, and if Tenant fails to so remove
such sign or decoration within five (5) days after Landlord's written
notice, Landlord may enter upon the Premises and remove said sign or
decoration and Tenant agrees to pay Landlord, as additional rent upon
demand, the cost of such removal. At the termination of this Lease, Tenant
shall remove any sign which it has placed on the Parcel or Building and
shall repair any damage caused by the installation or removal of such sign.
33. Interest on Past Due Obligations. Any Monthly Installment of rent or any
other sum due from Tenant under this Lease which is received by Landlord
after the date the same is due shall bear interest from said due date
until paid, at an annual rate equal to the lesser of (the "Permitted
Rate"): (1) twelve percent (12%); or (2) five percent (5%) plus the rate
established by the Federal Reserve Bank of San Francisco, as of the
twenty-fifth (25th) day of the month immediately preceding the due date,
on advances to member banks under Section 13 and 13(a) of the Federal
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Reserve Act, as now in effect or hereafter from time to time amended.
Payment of such interest shall not excuse or cure any default by Tenant. In
addition, Tenant shall pay all costs and attorneys' fees incurred by
Landlord in collection of such amounts.
34. Surrender of the Premises. On the last day of the term hereof, or on the
sooner termination of this Lease, Tenant shall surrender the Premises to
Landlord in their condition existing as of the Commencement Date of this
Lease, ordinary wear and tear excepted, with all interior walls cleaned,
and repaired or replaced, all carpets and floors cleaned, the air
conditioning and heating equipment serviced and repaired by a reputable and
licensed service firm, all to the reasonable satisfaction of Landlord.
Tenant shall remove all of Tenant's personal property and trade fixtures
from the Premises, and all property not so removed shall be deemed
abandoned by Tenant. Tenant, at its sole cost, shall repair any damage to
the Premises caused by the removal of Tenant's personal property, machinery
and equipment, which repair shall include, without limitation, the patching
and filling of holes and repair of structural damage.
35. Authority. The undersigned parties hereby warrant that they have proper
authority and are empowered to execute this Lease on behalf of Landlord and
Tenant, respectively.
36. Public Record. This Lease is made subject to all matters of public record
affecting title to the property of which the Premises are a part.
37. Brokers. Tenant represents and warrants to Landlord that it has not dealt
with any broker respecting this transaction, except Cooper/Brady and agrees
to pay Cooper/Brady a commission as agreed to between Landlord and
Cooper/Brady, and hereby agrees to indemnify and hold Landlord harmless
from and against any brokerage commission or fee, obligation, claim or
damage (including attorneys' fees) paid or incurred respecting any other
broker claiming through Tenant or with which/whom Tenant has dealt.
38. Limitation on Landlord's Liability. Tenant, for itself and its successors
and assigns (to the extent this Lease is assignable), hereby agrees that in
the event of any actual, or alleged, breach or default by Landlord under
this Lease that:
(A) Tenant's sole and exclusive remedy against Landlord shall be as
against Landlord's interest in the Premises plus the recovery of a sum
not to exceed Five Hundred Thousand and 00/100ths Dollars
($500,000.00);
B) No partner or officer of any partner of Landlord shall be sued or
named as a party in a suit or action (except as may be necessary to
secure jurisdiction of the partnership);
C) No service of process shall be made against any partner of Landlord
(except as may be necessary to secure jurisdiction of the
partnership);
D) No partner of Landlord shall be required to answer or otherwise plead
to any service of process;
E) No judgment will be taken against any partner of Landlord;
F) Any judgment taken against any partner of Landlord may be vacated and
set aside at any time nunc pro tunc;
G) No writ of execution will ever be levied against the assets of any
partner of Landlord;
H) The covenants and agreements of Tenant set forth in this Section 38
shall be enforceable by Landlord and any partner of Landlord
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39. Hazardous Material. To the best of Landlord's knowledge, there are no
Hazardous Materials in the Building or underlying land. The only
information Landlord has respecting the existence or absence of Hazardous
Materials was delivered to Tenant on November 2, 1995 via a Level 1 Site
Assessment dated October 10, 1990.
A. Definitions. As used herein, the term "Hazardous Material" shall mean
any substance or material which has been determined by any state,
federal or local governmental authority to be capable of posing a
risk of injury to health, safety or property including all of those
materials and substances designated as hazardous or toxic by the
Environmental Protection Agency, the California Water Quality Control
Board, the Department of Labor, the California Department of
Industrial Relations, the Department of Transportation, the
Department of Agriculture, the Consumer Product Safety Commission,
the Department of Health and Human Services, the Food and Drug Agency
or any other governmental agency now or hereafter authorized to
regulate materials and substances in the environment. Without
limiting the generality of the foregoing, the term "Hazardous
Material" shall include all of those materials and substances
defined as "Toxic Materials" in Sections 66680 through 66685 of Title
22 of the California Code of Regulations, Division 4, Chapter 30, as
the same shall be amended from time to time.
B. Use Restriction. Subject to the terms and conditions set forth
herein, Landlord acknowledges that so long as Tenant is under this
Lease, Tenant shall be permitted to use and store in the Premises
those materials described in Paragraph G below, in the quantities set
forth in said Paragraph. Except as specifically allowed in this
Lease, Tenant shall not cause or permit any Hazardous Material to be
used, stored, generated, discharged, transported to or from, or
disposed of in or about the Premises, or any other land or
improvements in the vicinity of the Premises. The appearance of any
Hazardous Material that is not permitted by this Lease in or about
the Premises shall be deemed an Event of Default under Paragraph 16
above. Without limiting the generality of the foregoing, Tenant, at
its sole cost, shall comply with all laws relating to the storage,
use, generation, transport, discharge and disposal of Hazardous
Materials. If the presence of Hazardous Materials on the premises
caused or permitted by Tenant results in contamination of the
Premises or any soil, air, ground or surface waters under, through,
over, on, in or about the Premises, Tenant, at its expense shall
promptly take all actions necessary to return the Premises and/or the
surrounding real and personal property to the condition existing
prior to the appearance of such Hazardous Material.
Tenant shall defend, protect, hold harmless and indemnify Landlord
and its agents and employees with respect to all actions, claims,
losses, fines, penalties, fees, costs, damages and liabilities
(including but not limited to attorneys' and consultants' fees)
arising out of or in connection with any Hazardous Material used,
generated, discharged, transported to or from, stored, or disposed of
in, on, under, through or about the Premises and/or the surrounding
real and personal property. This Paragraph shall not apply to any
contamination of the Premises existing prior to Tenant's possession
of the Premises.
Tenant shall not suffer any lien to be recorded against the Premises
as a consequence of a Hazardous Material, including any so called
state, federal or local "super fund" lien related to the "clean up"
of a Hazardous Material in, over, on, under, through, or about the
Premises.
Landlord shall defend, protect, hold harmless and indemnify Tenant
and its agents and employees with respect to all actions, claims,
losses, fines, penalties, fees, costs, damages and liabilities
(including but not limited to attorneys' fees and consultants fees)
arising out of or in connection with any Hazardous Material that was
present in, on, or under the Premises as of the date Tenant takes
possession of the Premises.
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C. Compliance. Tenant shall immediately notify Landlord of any inquiry,
test, investigation, enforcement proceeding by or against Tenant or the
Premises concerning a Hazardous Material. Tenant acknowledges that
Landlord, as the owner of the Property, at its election, shall have the
sole right, (after consultation with Tenant), at Tenant's expense, to
negotiate, defend, approve and appeal any action taken or order issued
with regard to any Hazardous Material(s) by any applicable governmental
authority. Landlord shall have the right to appoint a consultant, at
Tenant's expense, to conduct an investigation to determine whether
Hazardous Materials are being used, generated, discharged, transported to
or from, stored or disposed of in, on, over, through, or about the
Premises, in an appropriate and lawful manner. Tenant, at its expense,
shall comply with all recommendations of the consultant.
D. Surrender. Upon the expiration or earlier termination of the Lease,
Tenant, at its sole cost, shall remove all Hazardous Materials from the
Premises and the surrounding real and personal property, the existence of
which is caused by Tenant, its officers, employees, vendors or invitees,
or which has been placed upon the surface of the Premises during the Lease
Term or any Holdover period thereafter by anyone other than Landlord and
shall provide a certificate to Landlord from a registered soils engineer
certifying that there is no contamination of soil or ground or surface
waters in, under, on, through, over or about the Premises and that there
is no other contamination of Hazardous Materials in the Premises. If
Tenant fails to so surrender the Premises, Tenant shall indemnify,
protect, defend and hold Landlord harmless from and against all damages
resulting from Tenant's failure to surrender the Premises as required by
this Paragraph, including, without limitation, any actions, claims,
losses, liabilities, fees (including but not limited to attorneys' and
consultants' fees), fines, costs, penalties, or damages in connection with
the condition of the Premises including, without limitation, damages
occasioned by the inability to relet the Premises or a reduction in the
fair market and/or rental value of the Premises by reason of the existence
of any Hazardous Materials in, on, over, under, through or around the
Premises.
E. Holding Over. If any action of any kind is required to be taken by any
governmental authority to clean-up, remove, remediate or monitor Hazardous
Materials from the Premises and such action is not completed prior to the
expiration or earlier termination of the Lease, Tenant shall be deemed to
have impermissibly held over until such time as such required action is
completed, and Landlord shall be entitled to all damages directly or
indirectly incurred in connection with such holding over, including
without limitation, damages occasioned by the inability to relet the
Premises or a reduction of the fair market and/or rental value of the
Premises. The rent during such holdover period shall be based on the
Monthly Installment of Rent payable during the last month of the Lease
Term or Fair Market Rental, whichever is higher.
F. Materials. Write "none", if inapplicable and initial here: NONE, or list
below. ----
Materials: Quantity:
-------------- -------------
-------------- -------------
-------------- -------------
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G. Provisions Survive Termination. The provisions of this Paragraph 39
shall survive the expiration or termination of this Lease.
H. The provisions of this Paragraph 39 are intended to govern the rights
and liabilities of the Landlord and Tenant hereunder respecting
Hazardous Materials to the exclusion of any other provisions in this
Lease that might otherwise be deemed applicable. The provisions of
this Paragraph 39 shall be controlling with respect to any provisions
in this Lease that are inconsistent with this Paragraph 39.
40. Option to Extend: Tenant is hereby granted one (1) option to extend the
term of this Lease for one, three (3) year period (the
"Option Term"), such extension to be on the same terms
and conditions as the initial term except for the
Monthly Installment of Rent, which shall be determined
as provided below. It shall be a condition of Tenant's
right to exercise the option to renew herein that
Tenant is in compliance with all the terms and
conditions of this Lease both at the time of Tenant's
exercise of this option and at the time the renewal
term is scheduled to commence; and this condition may
be waived by Landlord at its sole discretion and may
not be used by Tenant as a means to negate the
effectiveness of Tenant's exercise of this option. If
Tenant elects to exercise the option, Tenant shall
exercise said option only by written notice, delivered
to Landlord at least one hundred eighty (180) days
prior to the expiration of the Term of this Lease.
There shall be no further options to extend the term of
this Lease at the end of the Option Term.
The Monthly Installment of rent payable during the
Option Term shall be 95% of the Fair Market Rental for
the Premises as of the first day of the Option Term,
but not less than the amount in place at the end of the
initial Term.
Promptly following the exercise of the Option, the
parties shall meet and endeavor to agree upon the Fair
Market Rental for the Premises. The Premises shall be
compared only to buildings in the Santa Clara area of a
similar quality and size. If, within thirty (30) days
after the exercise of the Option, the parties cannot
agree upon the Fair Market Rental for the Premises as
of the first day of the Option Term, the parties shall
submit the matter to binding appraisal in accordance
with the following procedures:
Within sixty (60) days after exercise of the Option,
the parties shall either (a) jointly appoint an
appraiser for this purpose or (b) failing this joint
action, separately designate a disinterested appraiser.
No person shall be appointed or designated an appraiser
unless they have at least five (5) years experience in
appraising major commercial properties in Santa Clara
County and is a member of a recognized society of real
estate appraisers. If, within thirty (30) days after
their appointment, the two appraisers reach agreement
of the Fair Market Rental for the Premises as of the
first day of the Option Term in question, that value
shall be binding and conclusive upon the parties. If
the two appraisers thus appointed cannot reach
agreement on the question presented within thirty (30)
days after their appointment then the appraisers thus
appointed shall appoint a third disinterested appraiser
having like qualifications. If within thirty (30) days
after the appointment of the third appraiser, a
majority of the appraisers agree on the Fair Market
Rental of the Premises as of the first
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day of Option Term, that value shall be binding
and conclusive upon the parties. If within thirty
(30) days after the appointment of the third
appraiser, a majority of the appraisers cannot
reach agreement on the question presented, then
the three appraisers shall each submit their
independent appraisal to the parties, and the
appraisal farthest from the median of the three
appraisals shall be disregarded and the mean
average shall be deemed to be the Fair Market
Rental for the Premises as of the first day of the
Option Term and shall be binding and conclusive
upon the parties. Each party shall pay the fees
and expenses of the appraiser appointed by it and
shall share equally the fees and expense of the
third appraiser. If the two appraisers appointed
by the parties cannot agree on the appointment of
the third appraiser, they or either of them shall
give notice of such failure to agree to the
parties and if the parties fails to agree upon the
selection of such third appraiser within ten (10)
days after the appraisers appointed by the parties
give such notice, then either of the parties, upon
notice to the other party, may request such
appointment by the American Arbitration
Association, or on its failure, refusal or
inability to act, may apply such appointment to
the presiding judge of the Superior Court of the
Country of Santa Clara County, State of
California.
IN WITNESS WHEREOF, the parties have executed this Agreement on the dates set
forth below:
LANDLORD: DELL ASSOCIATES II, TENANT: BAY NETWORKS, INC., A
A CALIFORNIA GENERAL PARTNERSHIP DELAWARE CORPORATION
By: /s/ JAMES D. MAIR by: /s/ WILLIAM J. RUEHLE
--------------------------- -----------------------------
James D. Mair
Print: William J. Ruehle
Title: General Partner -------------------------
By: /s/ W. LESLIE PALIO Title: EVP & CFO
--------------------------- -------------------------
W. Leslie Palio
By:
Title: General Partner ----------------------------
By: /s/ WILLIAM F. JURY Print:
--------------------------- --------------------------
William F. Jury
Title:
Title: General Partner ---------------------------
Dated: 1-3-96 Dated:
------------------------ ---------------------------
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4500 GREAT AMERICA FIRST FLOOR PLAN [DIAGRAM]
PARKWAY
SECOND FLOOR PLAN [DIAGRAM]
SITE PLAN
[DIAGRAM] THIRD FLOOR PLAN [DIAGRAM]
EXHIBIT "A"
31
Loan No. 5428-0050-0
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT
THIS AGREEMENT, made this 28th day of December, 1995, by and between BAY
NETWORKS, INC., a Delaware corporation (hereinafter called "Tenant") and
PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY, A Tennesse corporation
(hereinafter called "Provident").
WHEREAS, by Lease dated December 20, 1995, (hereinafter called the
"Lease"), DELL ASSOCIATES, II, a California general partnership (hereinafter
called "Landlord"), has leased to Tenant and Tenant has rented from Landlord
all that real property and premises located at 4500 Great America Parkway in
the City of Santa Clara, County of Santa Clara, and State of California, more
particularly described in the Lease (hereinafter called the "Premises"); and
WHEREAS, Provident is the holder of a Deed of Trust and Assignment of
Rents, as amended (hereinafter called the "Mortgage"), which constitutes or
will constitute a lien against the Premises; and
WHEREAS, Tenant desires that Provident recognize Tenant's rights under the
Lease in the event that Provident succeeds to the interests of Landlord under
the Lease, and Tenant is willing to agree to attorn to Provident in such event
and to subordinate Tenant's leasehold interest to Provident's Mortgage interest
if Provident will recognize Tenant's right of possession under the Lease;
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00), cash in hand paid, receipt whereof is hereby acknowledged, and for
and in consideration of their respective covenants herein made, the parties
agree as follows:
1. The Lease and all rights of Tenant thereunder are and shall at all
times continue to be subject and subordinate in all respects to the terms and
provisions of the Mortgage and to all renewals, modifications, replacements or
extensions thereof and to any subsequent mortgages with which the Mortgage may
be spread and consolidated, and said Lease is subject to the terms and
conditions stated herein.
2. That, provided Tenant complies with this Agreement and is not in
default under the terms of the Lease in the payment of rent or additional rent
or the performance of any of the terms, conditions, covenants, clauses or
agreements on its part to be performed under the Lease, as of the date
Mortgagee files a lis pendens in, or otherwise commences a foreclosure action,
or at any time thereafter, no default under the Mortgage, as modified,
extended, increased, spread or consolidated, and no proceeding to foreclose the
same will disturb Tenant's possession under said
32
foreclose the same will disturb Tenant's possession under said Lease and the
Lease will not be affected or cut off thereby, (except to the extent that
Tenant's right to receive or set off any monies or obligations owed or to be
performed by Mortgagee's predecessors in title shall not be enforceable
thereafter against Mortgagee or any subsequent owner) and notwithstanding any
such foreclosure or other acquisition of the demised Premises by Mortgagee, the
Lease will be recognized as a lease from Mortgagee or any other party acquiring
the Premises upon such foreclosure or other acquisition, except that Mortgagee,
or any subsequent owner, shall not (a) be liable for any previous act or
omission of landlord under the Lease, (b) be subject to any offset which shall
theretofore have accrued to Tenant against landlord, (c) have any obligation
with respect to any security deposited under the Lease unless such security has
been physically delivered to Mortgagee, or (d) be bound by any previous
modification of the Lease subsequent to the execution of this Agreement, or by
any previous prepayment of fixed rent for a period greater than one (1) month,
unless such modification or prepayment shall have been expressly approved in
writing by Mortgagee.
3. Any provision of this Agreement and/or the Lease to the contrary
notwithstanding, Mortgagee shall have no obligation, or incur any liability,
with respect to the erection and completion of the building in which the
Premises are located or for completion of the Premises or any improvements for
Tenant's use and occupancy. Tenant certifies that the term of the Lease has
commenced and the Lease is presently in full force and effect and unmodified;
that Tenant has accepted possession of the Premises and the Premises are
completed to the satisfaction of Tenant; that no rent under the Lease has been
paid more than one (1) month in advance of its due date; that Tenant as of this
date, has no charge, lien or claim of offset under the Lease, or otherwise,
against the rents or other charges due or to become due thereunder.
4. That, if Mortgagee elects to accept from the then Mortgagor a deed in
lieu of foreclosure, Tenant's right to receive or set off any monies or
obligations owned or to be performed by the Landlord (or any successor
landlord) shall not be enforceable thereafter against Mortgagee or any
subsequent owner.
5. That Tenant will upon request by Mortgagee, or any subsequent owner,
execute a written agreement whereunder Tenant does attorn to Mortgagee or any
such subsequent owner and affirm Tenant's obligations under the Lease and agree
to pay all rentals and charges then due or to become due as they become due to
Mortgagee or such subsequent owner.
6. Tenant from and after the date hereof shall send a copy of any notice
or statement under the Lease to Mortgagee at the same time such notice or
statement is sent to the Landlord under the Lease.
2
33
7. Tenant hereby agrees that from and after the date hereof in the event
of any act or omission by Landlord (or any successor Landlord) under the Lease
(other than any such act or omission which is not capable of being remedied by
Landlord under the Lease within a reasonable period) which would give Tenant the
right, either immediately or after notice and/or the lapse of time, to terminate
the Lease, or to claim a partial or total eviction, Tenant will not exercise any
such right (i) until it has given written notice of such act or omission to
Mortgagee by delivering such notice of such act or omission, by registered mail,
return receipt requested, addressed to Mortgagee, at Mortgagee's address as
given herein (Attention: Vice President, Mortgage Loans), or at the last address
of Mortgagee, furnished to Tenant in writing and (ii) until a reasonable period
of remedying such act or omission shall have elapsed following such giving of
notice and following the time when Mortgagee shall have become entitled under
the Mortgage to remedy the same; provided, Mortgagee, at its option shall,
following the giving of such notice, have elected to commence and continue to
remedy such act or omission or to cause the same to be remedied.
8. Tenant will neither offer nor make prepayment of rent (for a period
in excess of one (1) month, nor further change the terms, covenants, conditions
and agreements of the Lease in any manner without the express consent in
writing of Mortgagee.
9. Nothing contained in this Agreement shall in any way impair or affect
the lien created by the Mortgage, except as specifically set forth herein.
10. No modification, amendment, waiver or release of any provision of
this Agreement or of any right, obligation, claim or cause of action arising
hereunder shall be valid, or binding for any purpose whatsoever unless in
writing and duly executed by the party against whom the same is sought to be
asserted.
11. This Agreement shall inure to the benefit of the parties hereto,
their successors and assigns; provided, however, that in the event of the
assignment or transfer of the interest of Mortgagee, all obligations and
liabilities of Mortgagee under this Agreement shall terminate, and thereupon
all such obligations and liabilities shall be the responsibility of the party
to whom Mortgagee's interest is assigned or transferred; and provided further
that the interest of Tenant under this Agreement may not be assigned or
transferred.
12. Tenant agrees that this Agreement satisfies any condition or
requirement in the Lease relating to the granting of a non-disturbance
agreement.
13. Tenant acknowledges that it has notice that the Lease and the rent
and all other sums due thereunder have been assigned to Mortgagee as part of
the security for the note secured by the
3
34
Mortgage. In the event that Mortgagee notifies Tenant of a default under the
Mortgage and demands that Tenant pays its rent and all other sums due under the
Lease to Mortgagee, Tenant agrees that it will honor such demand and pay its
rent and all other sums due under the Lease directly to Mortgagee.
14. Mortgagee shall have no responsibility to provide any additional space
for which Tenant has any option or right under the Lease unless Mortgagee at its
option elects to provide the same and Tenant hereby releases Mortgagee from any
obligation to provide the same, if any, and agrees that it shall have no right
to cancel the Lease or any claim against Mortgagee as a result of the failure to
provide any option space.
15. Tenant covenants and acknowledges that it has no right or option of
any nature whatsoever, whether pursuant to the Lease or otherwise, to purchase
the Premises or the real property of which the Premises are a part, or any
portion thereof or any interest therein and to the extent that Tenant has had,
or hereafter acquires any such right or option, the same is hereby acknowledged
to be subject to and subordinate to the Mortgage and is hereby waived and
released as against Mortgagee.
16. Mortgagee shall have no obligation, nor incur any liability, with
respect to any warranties of any nature whatsoever, whether pursuant to the
Lease or otherwise, including, without limitation, any warranties respecting
use, compliance with zoning, Landlord's title, Landlord's authority,
habitability, and/or fitness for purpose or possession.
17. Anything herein or in the Lease to the contrary notwithstanding, in
the event that Mortgagee shall acquire title to the Premises or the real
property of which the Premises are a part, Mortgagee shall have no obligation,
nor incur any liability, beyond Mortgagee's then interest, if any, in the
Premises and Tenant shall look exclusively to such interest of Mortgagee, if
any, in the Premises for the payment and discharge of any obligations imposed
upon Mortgagee hereunder or under the Lease, and Mortgagee is hereby released or
relieved of any other obligations hereunder and under the Lease. Tenant agrees
that with respect to any money judgment which may be obtained or secured by
Tenant against Mortgagee, Tenant shall look solely to the estate or interest
owned by Mortgagee in the Premises or the real property of which the Premises
are a part, or any portion thereof, or interest therein and Tenant will not
collect or attempt to collect any such judgment out of any other assets of
Mortgagee.
18. Notwithstanding anything else contained in the Mortgage to the
contrary if (i) the Premises are wholly or partially destroyed by fire or other
casualty (collectively, a "Loss"), (ii) the Loss is insured and the insurance
proceeds payable thereon are sufficient in amount to restore the Premises to the
reasonable satisfaction of both Mortgagee and Tenant whose approval shall not
4
35
be unreasonably withheld, and (iii) Tenant provides satisfactory undertakings
acceptable to Mortgagee, whose approval shall not be unreasonably withheld,
with respect to the continuation of the Lease following a date agreed upon by
both Tenant and Mortgagee for completion of the restoration of the Premises,
unless Mortgagee and Tenant otherwise agree, Mortgagee agrees to make the
insurance proceeds payable in connection with said Loss available to the
Landlord to the full extent necessary for the restoration of the Premises
subject to the disbursement conditions and controls set forth in Section A.1 of
the Mortgage or as may otherwise be reasonably established by Mortgagor
pursuant thereto.
19. Notwithstanding anything else in the Mortgage to the contrary, if (i)
a Loss (as hereinabove defined) occurs, and (ii) Mortgagee is not required to
or does not otherwise elect to apply all or any of the insurance proceeds
received by Mortgagee in respect of the repair of any such Loss, then, in that
event, Mortgagee and Tenant agree to share such insurance proceeds (or any
excess amount thereof not expended for the restoration of the Premises), pro
rata, based, in the case of the Mortgagee, on the percentage which the then
outstanding principal and interest due and owing to Mortgagee on the Note
secured by the Mortgage (the "Loan Balance") represents out of the aggregate
total of the Loan Balance and Tenant's Amortized Improvements Balance (as
hereinafter defined); and in the case of the Tenant, based on the percentage
which the Tenant's Amortized Improvements Balance represents out of the
aggregate total of the Loan Balance and Tenant's Amortized Improvement Balance,
provided, however, that in no event shall the Tenant be entitled to receive
more than the amount of Tenant's Amortized Improvement Balance on the date of
loss.
20. Tenant anticipates making various leasehold improvements to the
Premises at a cost not to exceed $1,000,000.00 in accordance with the plans and
specifications and construction budget to be hereafter submitted to and
approved by Mortgagee (the "Tenant Improvements") whose approval shall not be
unreasonably withheld. Tenant will not make any material changes in the plans
and specifications for the Tenant Improvements without Mortgagee's written
consent following Mortgagee's approval thereof, and will document to the
reasonable satisfaction of Mortgagee the amounts expended by Tenant as and for
the completion of such Tenant Improvements not less than once each quarter
until the Tenant Improvements are completed. The aggregate cost of such Tenant
Improvements, which shall not exceed $1,000,000.00 without the Mortgagee's
written approval, shall, upon completion, be amortized monthly on a straight
line basis over the balance of the initial three (3) year term of the Lease,
the unamortized portion of which shall, as of any date on which determined,
represent the Tenant's Amortized Improvements Balance.
21. Notwithstanding anything else contained in this Agreement to the
contrary, in the event that the Landlord defaults in the performance of its
obligations under the Lease and the Tenant
5
36
advances the funds necessary to cure any such default, Tenant shall be entitled
to deduct such advances from any rents thereafter becoming due and payable
under the Lease; provided, however, (i) Tenant furnishes all information and
documentation Mortgagee may reasonably require as to the expenses so incurred
and the repairs undertaken, and (ii) Tenant agrees to waive the Landlord's
default and pay any Additional Rent required under Section 10A of the Lease.
22. This Agreement may be executed by the parties hereto in one or
more separate counterparts each of which, when taken with all such other
counterparts, shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have respectively signed and sealed
this Agreement as of the day and year first above written.
WITNESS: MORTGAGEE:
PROVIDENT LIFE AND ACCIDENT
INSURANCE COMPANY
/s/ [Signature Illegible] By: /s/ RICHARD E. CORN
- --------------------------- -------------------------------------
Name: Richard E. Corn
Title: Vice President
TENANT:
ATTEST/WITNESS: BAY NETWORKS, INC.
- --------------------------- By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
DELL ASSOCIATES II, a California general partnership, as Landlord under the
Lease and as the Mortgagor under the Mortgage agrees for itself and its
successors and assigns, that (i) the within Agreement does not (a) constitute a
waiver by Mortgagee of any of its rights under the Mortgage and/or (b) in any
way release the Mortgagor from its obligation to comply with the terms,
provisions, conditions, covenants, agreements and clauses of the Mortgage, (ii)
the provisions of the Mortgage remain in full force and effect and must be
complied with by the Mortgagor, and (iii) in the event of a default under the
Mortgage, Tenant may pay all rent and all other sums due under the Lease to
Mortgagee as provided in the within Agreement.
6
37
advances the funds necessary to cure any such default, Tenant shall be entitled
to deduct such advances from any rents thereafter becoming due and payable
under the Lease; provided, however, (i) Tenant furnishes all information and
documentation Mortgagee may reasonably require as to the expenses so incurred
and the repairs undertaken, and (ii) Tenant agrees to waive the Landlord's
default and pay any Additional Rent required under Section 10A of the Lease.
22. This Agreement may be executed by the parties hereto in one or more
separate counterparts each of which, when taken with all such other
counterparts, shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have respectively signed and sealed
this Agreement as of the day and year first above written.
MORTGAGEE:
ATTEST: PROVIDENT LIFE AND ACCIDENT
INSURANCE COMPANY
By:
- -------------------------- ------------------------------
Name:
-----------------------
Title:
----------------------
TENANT:
ATTEST/WITNESS: BAY NETWORKS, INC.
By: /s/ WILLIAM J. RUEHLE
- -------------------------- ------------------------------
Name: William J. Ruehle
-----------------------
Title: EVP & CFO
----------------------
DELL ASSOCIATES II, a California general partnership, as Landlord under the
Lease and as the Mortgagor under the Mortgage agrees for itself and its
successors and assigns, that (i) the within Agreement does not (a) constitute a
waiver by Mortgagee of any of its rights under the Mortgage and/or (b) in any
way release the Mortgagor from its obligation to comply with the terms,
provisions, conditions, covenants, agreements and clauses of the Mortgage,
(ii) the provisions of the Mortgage remain in full force and effect and must be
complied with by the Mortgagor, and (iii) in the event of a default under the
Mortgage, Tenant may pay all rent and all other sums due under the Lease to
Mortgagee as provided in the within Agreement.
6
38
MORTGAGOR/LANDLORD:
ATTEST/WITNESS: Dell Associates II, a California
General Partnership
By: /s/ JAMES D. MAIR
- -------------------------- ------------------------------
Name: James D. Mair
-----------------------
Title: General Partner
----------------------
7
39
STATE OF TENNESSEE )
) SS:
COUNTY OF HAMILTON )
BE IT REMEMBERED, that on this 28th day of December, 1995, before me,
the subscriber, a notary public of the State of Tennessee personally appeared
Richard E. Corn, Vice President of Provident Life and Accident Insurance
Company, the Mortgagee under the within instrument who, I am satisfied, is the
person who has signed the within instrument; and I having first made known to
him the contents thereof, he thereupon acknowledged that he signed, sealed with
the corporate seal and delivered the said instrument as such officer aforesaid;
that the within instrument is the voluntary act and deed of said corporation,
made by virtue of authority from its Board of Directors.
/s/ W. W. [SIGNATURE ILLEGIBLE]
[SEAL] ---------------------------------------
Notary Public
My Commission Expires: January 12, 1997
STATE OF CALIFORNIA )
) SS:
COUNTY OF )
BE IT REMEMBERED, that on this ____ day of December, 1995, before me,
the subscriber, a notary public of the State of California personally appeared
_______________________________ of Bay Networks, Inc., the Tenant under the
within instrument who, I am satisfied, is the person who has signed the within
instrument; and I having first made known to him the contents thereof, he
thereupon acknowledged that he signed, sealed with the corporate seal and
delivered the said instrument as such officer aforesaid; that the within
instrument is the voluntary act and deed of said corporation, made by virtue
of authority from its Board of Directors.
[SEAL] ---------------------------------------
Notary Public
My Commission Expires:
----------------
8
40
STATE OF TENNESSEE )
) SS:
COUNTY OF HAMILTON )
BE IT REMEMBERED, that on this ____ day of December, 1995, before me,
the subscriber, a notary public of the State of Tennessee personally appeared
Richard E. Corn, Vice President of Provident Life and Accident Insurance
Company, the Mortgagee under the within instrument who, I am satisfied, is the
person who has signed the within instrument; and I having first made known to
him the contents thereof, he thereupon acknowledged that he signed, sealed with
the corporate seal and delivered the said instrument as such officer aforesaid;
that the within instrument is the voluntary act and deed of said corporation,
made by virtue of authority from its Board of Directors.
[SEAL] ---------------------------------------
Notary Public
My Commission Expires:
----------------
STATE OF CALIFORNIA )
) SS:
COUNTY OF )
BE IT REMEMBERED, that on this 28th day of December, 1995, before me,
the subscriber, a notary public of the State of California personally appeared
William J. Ruehle of Bay Networks, Inc., the Tenant under the within instrument
who, I am satisfied, is the person who has signed the within instrument; and I
having first made known to him the contents thereof, he thereupon acknowledged
that he signed, sealed with the corporate seal and delivered the said instrument
as such officer aforesaid; that the within instrument is the voluntary act and
deed of said corporation, made by virtue of authority from its Board of
Directors.
/s/ DANIEL J. GALLAGHER
[SEAL] ---------------------------------------
Notary Public
My Commission Expires: 2/6/98
41
State of California
County of Santa Clara
On JANUARY 2, 1996, before me, Melanie Gow, the undersigned Notary Public,
personally appeared JAMES D. MAIR personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person(s) whose names is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies) and that by
his/her/their signature(s) on the instrument the person(s), or entity upon
behalf of which the person(s) acted, executed the instrument.
Witness my hand and official seal
Signature /s/ MELANIE GOW
----------------------- (SEAL)
Print Name Melanie Gow
----------------------
Commission Expires 5/25/98