EXHIBIT 10.8
LEASE BETWEEN
NORTH SAN JOSE INTERESTS AND NETRO CORPORATION
SECTION PAGE #
- ------- ------
Parties.......................................................................... 1
Premises......................................................................... 1
Definitions................................................................... 1
Description................................................................... 1
Use.............................................................................. 1
Permitted Uses................................................................ 1
Uses Prohibited............................................................... 2
Advertisements and Signs...................................................... 2
Covenants, Conditions and Restrictions........................................ 2
Term and Rental.................................................................. 2
Base Monthly Rent............................................................. 2
Late Charges.................................................................. 3
Security Deposit.............................................................. 3
Conditional Security Deposit Reduction........................................ 4
Construction..................................................................... 4
Acceptance of Possession and Covenants to Surrender.............................. 4
Delivery and Acceptance....................................................... 4
Condition Upon Surrender...................................................... 4
Failure to Surrender.......................................................... 5
Alterations and Additions........................................................ 5
Tenant's Alterations.......................................................... 5
Free From Liens............................................................... 6
Compliance With Governmental Regulations...................................... 6
Maintenance of Premises.......................................................... 6
Landlord's Obligations........................................................ 6
Tenant's Obligations.......................................................... 6
Landlord and Tenant's Obligations Regarding Reimbursable Operating Costs...... 7
Reimbursable Operating Costs.................................................. 7
Tenant's Allocable Share...................................................... 9
Waiver of Liability........................................................... 9
Hazard Insurance................................................................. 9
Tenant's Use.................................................................. 9
Landlord's Insurance.......................................................... 9
Tenant's Insurance............................................................ 10
Waiver........................................................................ 10
Page i
Taxes............................................................................ 10
Utilities........................................................................ 11
Toxic Waste and Environmental Damage............................................. 11
Use of Hazardous Material..................................................... 11
Tenant's Indemnity Regarding Hazardous Material............................... 12
Notice of Release or Violation................................................ 12
Remediation Obligations....................................................... 13
Environmental Monitoring...................................................... 13
Tenant's Default................................................................. 13
Remedies...................................................................... 14
Right to Re-enter............................................................. 14
Abandonment................................................................... 14
No Termination................................................................ 15
Non-Waiver.................................................................... 15
Performance by Landlord....................................................... 15
Landlord's Liability............................................................ 15
Limitation on Landlord's Liability............................................ 15
Limitation on Tenant's Recourse............................................... 16
Indemnification of Landlord................................................... 16
Destruction of Premises.......................................................... 16
Landlord's Obligation to Restore.............................................. 16
Limitations on Landlord's Restoration Obligation.............................. 17
Condemnation..................................................................... 17
Assignment or Sublease........................................................... 17
Consent by Landlord........................................................... 17
Assignment or Subletting Consideration........................................ 18
No Release.................................................................... 18
Reorganization of Tenant...................................................... 19
Permitted Transfers........................................................... 19
Effect of Default............................................................. 19
Effects of Conveyance......................................................... 20
Successors and Assigns........................................................ 20
Option to Extend the Lease Term.................................................. 20
Grant and Exercise of Option.................................................. 20
Determination of Fair Market Rental........................................... 21
Resolution of a Disagreement over the Fair Market Rental...................... 21
Personal to Tenant............................................................ 22
General Provisions............................................................... 22
Attorney's Fees............................................................... 22
Authority of Parties.......................................................... 22
Brokers....................................................................... 22
Choice of Law................................................................. 22
Dispute Resolution............................................................ 22
Entire Agreement.............................................................. 23
Entry by Landlord............................................................. 23
Estoppel Certificates......................................................... 24
Exhibits...................................................................... 24
Interest...................................................................... 24
Page ii
Modifications Required by Lender.............................................. 24
No Presumption Against Drafter................................................ 25
Notices....................................................................... 25
Rent.......................................................................... 25
Representations............................................................... 25
Rights and Remedies........................................................... 25
Severability.................................................................. 25
Submission of Lease........................................................... 25
Subordination................................................................. 25
Survival of Indemnities....................................................... 26
Time.......................................................................... 26
Waiver of Right to Jury Trial................................................. 26
Tenant's Right to Cancel the Lease............................................ 26
EXHIBIT A -- Premises & Building
EXHIBIT B - Draft Letter of Credit
Page iii
1. PARTIES: THIS LEASE, is entered into on this ___ day of April, 2001,
("Effective Date") between North San Jose Interests, a California Limited
Partnership, whose address is 10600 North De Anza Boulevard, Suite 200,
Cupertino, CA 95014 and Netro Corporation, a California Corporation, whose
address is 3860 N. First Street, San Jose, California, 95134 hereinafter called
respectively Landlord and Tenant.
2. PREMISES:
A. DEFINITIONS.
I. BUILDING 3. The term "Building 3" or "Building" shall mean that
single-story building consisting of 101,552 rentable square feet and all
improvements therein, shown as Building 3 on Exhibit "A", commonly known as 3860
North First Street, San Jose, California.
II. BUILDING 1. The term "Building 1" shall mean that two-story
building containing 89,616 rentable square feet and all improvements therein,
shown as Building 1 on Exhibit "A" and commonly known as 3870 North First
Street, San Jose, California.
III. BUILDING 2. The term "Building 2" shall mean that two-story
building containing 89,616 rentable square feet and all improvements therein,
shown as Building 2 on Exhibit "A" and commonly known as 3850 North First
Street, San Jose, California.
V. COMMON AREA. The term "Common Area" shall mean that certain real
property and all improvements thereon surrounding Building 1, Building 2, and
Building 3, including all parking areas and landscaped areas.
VI. PROJECT. The term "Project" shall mean that certain real property
currently consisting of five parcels (APN 097-80-01, 097-80-02, 097-80-03,
097-80-04, and 097-80-06 respectively) totaling approximately 15.8 acres at the
corner of North First Street and Rose Orchard Way in San Jose, California, and
all improvements constructed thereon consisting of Building 1, Building 2,
Building 3, and the Common Area as shown in Exhibit "A". Tenant shall be
responsible to ensure that the total number of vehicles parked in the Project by
employees and invitees of Tenant pursuant to this Lease does not exceed 254.
VII. PREMISES. The term "Premises" shall mean Building 3, also
referred to herein as "Building", and a non-exclusive right to use the Common
Area.
B. GRANT: Landlord hereby leases the Premises to Tenant, and Tenant
hires the Premises from Landlord.
3. USE:
A. PERMITTED USES: Tenant shall use the Premises as permitted under
applicable zoning laws only for the following purposes and shall not change the
use of the Premises without the prior written consent of Landlord: Office,
research and development, marketing, light manufacturing, ancillary storage and
other incidental uses. Tenant shall use only the number of parking spaces
allocated to Tenant under this Lease. All commercial trucks and delivery
vehicles shall (i) be parked at the rear of the Building, (ii) loaded and
unloaded in a manner which does not interfere with the businesses of other
occupants of the Project, and (iii) permitted to remain within the Project only
so long as is reasonably necessary to complete the loading and unloading.
Landlord makes no
Page 1
representation or warranty that any specific use of the Premises desired by
Tenant is permitted pursuant to any Laws.
B. USES PROHIBITED: Tenant shall not commit or suffer to be committed on the
Premises any waste, nuisance, or other act or thing which may disturb the quiet
enjoyment of any other tenant in or around the Premises, nor allow any sale by
auction or any other use of the Premises for an unlawful purpose. Tenant shall
not (i) damage or overload the electrical, mechanical or plumbing systems of the
Premises, (ii) attach, hang or suspend anything from the ceiling, walls or
columns of the building in excess of the load limits for which such ceiling,
walls, or columns are designed; or set any load on the floor in excess of the
load limits for which such floors are designed, or (iii) generate dust, fumes or
waste products which create a fire or health hazard or damage the Premises or
any portion of the Project, including without limitation the soils or ground
water in or around the Project. No materials, supplies, equipment, finished
products or semi-finished products, raw materials or articles of any nature, or
any waste materials, refuse, scrap or debris, shall be stored upon or permitted
to remain on any portion of the Premises outside of the Building without
Landlord's prior approval, which approval may be withheld in its sole
discretion.
C. ADVERTISEMENTS AND SIGNS: Tenant will not place or permit to be placed,
in, upon or about the Premises any signs not approved by the city and other
governing authority having jurisdiction. Tenant will not place or permit to be
placed upon the outside of the Building or Premises any signs, advertisements or
notices without the written consent of Landlord as to type, size, design,
lettering, coloring and location, which consent will not be unreasonably
withheld. Any sign placed on the Premises shall be removed by Tenant, at its
sole cost, prior to the Expiration Date or promptly following the earlier
termination of the Lease, and Tenant shall repair, at its sole cost, any damage
or injury to the Premises caused thereby, and if not so removed, then Landlord
may have same so removed at Tenant's expense.
Subject to compliance with all applicable governmental regulations, Landlord
hereby consents to a monument sign for Tenant immediately in front of the
Building. Further, Landlord agrees that Tenant shall have approximately one
third of the signage area on any sign at the Project listing Project tenants.
D. COVENANTS, CONDITIONS AND RESTRICTIONS: This Lease is subject to the
effect of (i) any covenants, conditions, restrictions, easements, mortgages or
deeds of trust, ground leases, rights of way of record and any other matters or
documents of record (collectively referred to herein as "Restrictions") and
Tenant will conform to and will not violate the terms of any such Restrictions.
4. TERM AND RENTAL:
A. BASE MONTHLY RENT: The term ("Lease Term") shall be for sixty (60)
months, commencing on September 16, 2001 (the "Commencement Date") and ending on
September 15, 2006 ("Expiration Date"). Notwithstanding the Parties agreement
that the Lease Term begins on the Commencement Date, this Lease and all of the
obligations of Landlord and Tenant shall be binding and in full force and effect
from and after the Effective Date. In addition to all other sums payable by
Tenant under this Lease, Tenant shall pay base monthly rent ("Base Monthly
Rent") for the Premises according to the following schedule:
Months 01-12: $340,199.00 per month
Months 13-24: $350,354.00 per month
Months 25-36: $360,510.00 per month
Months 37-48: $370,665.00 per month
Months 49-60: $380,820.00 per month
Base Monthly Rent shall be due in advance on or before the first day of each
calendar month during the Lease Term. All sums payable by Tenant under this
Lease shall be paid to Landlord in lawful money of the United States of America,
without offset or deduction and without prior notice or demand, at the address
specified in Section 1 of this Lease or at such place or places as may be
designated in writing by Landlord during the Lease Term. Base Monthly Rent for
any period less than a
Page 2
calendar month shall be a pro rata portion of the monthly installment. On or
before June 1, 2001, Tenant shall pay to Landlord the sum of Three Hundred Forty
Thousand One Hundred Ninety Nine Dollars ($340,199.00) as prepaid rent for the
first month of the Lease.
B. LATE CHARGES: Tenant hereby acknowledges that late payment by Tenant to
Landlord of Base Monthly Rent and other sums due hereunder will cause Landlord
to incur costs not contemplated by this Lease, the exact amount of which is
extremely difficult to ascertain. Such costs include but are not limited to:
administrative, processing, accounting, and late charges which may be imposed on
Landlord by the terms of any contract, revolving credit, mortgage, or trust deed
covering the Premises. Accordingly, if any installment of Base Monthly Rent or
other sum due from Tenant shall not be received by Landlord or its designee
within five (5) business days after the rent is due, Tenant shall pay to
Landlord a late charge equal to five (5%) percent of such overdue amount, which
late charge shall be due and payable on the same date that the overdue amount
was due. The parties agree that such late charge represents a fair and
reasonable estimate of the costs Landlord will incur by reason of late payment
by Tenant, excluding interest and attorneys fees and costs. If any rent or other
sum due from Tenant remains delinquent for a period in excess of thirty (30)
days then, in addition to such late charge, Tenant shall pay to Landlord
interest on any rent that is not paid when due at the Agreed Interest Rate
specified in Section 19.J following the date such amount became due until paid.
Acceptance by Landlord of such late charge shall not constitute a waiver of
Tenant's default with respect to such overdue amount nor prevent Landlord from
exercising any of the other rights and remedies granted hereunder. In the event
that a late charge is payable hereunder, whether or not collected, for three (3)
consecutive installments of Base Monthly Rent, then the Base Monthly Rent shall
automatically become due and payable quarterly in advance, rather than monthly,
notwithstanding any provision of this Lease to the contrary.
C. SECURITY DEPOSIT: On or before June 15, 2001, Tenant shall deposit with
Landlord the sum of Two Million Forty One Thousand Dollars ($2,041,000.00)
("Security "Deposit"). Landlord shall not be deemed a trustee of the Security
Deposit, may use the Security Deposit in business, and shall not be required to
segregate it from its general accounts. Tenant shall not be entitled to interest
on the Security Deposit. If Tenant defaults with respect to any provisions of
the Lease, including but not limited to the provisions relating to payment of
Base Monthly Rent or other charges, Landlord may, to the extent reasonably
necessary to remedy Tenant's default, use any or all of the Security Deposit
towards payment of the following: (i) Base Monthly Rent or other charges in
default; (ii) any other amount which Landlord may spend or become obligated to
spend by reason of Tenant's default including, but not limited to Tenant's
failure to restore or clean the Premises following vacation thereof. If any
portion of the Security Deposit is so used or applied, Tenant shall, within ten
(10) days after written demand from Landlord, deposit cash with Landlord in an
amount sufficient to restore the Security Deposit to its full original amount,
and shall pay to Landlord such other sums as necessary to reimburse Landlord for
any sums paid by Landlord. If Tenant shall default more than three (3) times in
any twelve (12) month period, irrespective of whether or not such default is
cured, then the Security Deposit shall, within ten (10) days after demand by
Landlord, be increased by Tenant to an amount equal to three (3) times the Base
Monthly Rent. Tenant may not assign or encumber the Security Deposit without the
consent of Landlord. Any attempt to do so shall be void and shall not be binding
on Landlord. The Security Deposit shall be returned to Tenant within thirty (30)
days after the Expiration Date and surrender of the Premises to Landlord, less
any amount deducted in accordance with this Section, together with Landlord's
written notice itemizing the amounts and purposes for such deduction.
Landlord agrees that in lieu of a cash Security Deposit, Tenant may deposit a
letter of credit ("Letter of Credit") substantially in the form attached hereto
as Exhibit "B". Landlord shall be entitled to draw against the Letter of Credit
at any time provided only that Landlord certifies
Page 3
to the issuer of the Letter of Credit that Tenant is in default under the Lease.
Tenant shall keep the letter of credit in effect during the entire Lease Term,
as the same may be extended, plus a period of four (4) weeks after expiration of
the Lease Term. At least thirty (30) days prior to expiration of any Letter of
Credit, the term thereof shall be renewed or extended for a period of at least
one (1) year. Tenant's failure to so renew or extend the Letter of Credit shall
be a material default of this Lease by Tenant. In the event Landlord draws
against the Letter of Credit, Tenant shall replenish the existing Letter of
Credit or cause a new Letter of Credit to be issued such that the aggregate
amount of letters of credit available to Landlord at all times during the Lease
Term is the amount of the Security Deposit originally required.
D. CONDITIONAL SECURITY DEPOSIT REDUCTION: Provided Tenant has not been in
monetary default under the Lease during the previous 12 months of the Lease
Term, then at the commencement of the 13th month of the Lease Term and every 12
months thereafter during the initial Lease Term, , Tenant shall be allowed to
reduce the amount of the cash Security Deposit or Letter of Credit by
$408,000.00.
5. CONSTRUCTION: This section has been intentionally omitted as Landlord is
performing no construction work for Tenant pursuant to the terms of this Lease.
6. ACCEPTANCE OF POSSESSION AND COVENANTS TO SURRENDER:
A. DELIVERY AND ACCEPTANCE: On the Commencement Date, Landlord shall deliver
and Tenant shall accept possession of the Premises and enter into occupancy of
the Premises on the Commencement Date. Tenant acknowledges that it has had an
opportunity to conduct, and has conducted, such inspections of the Premises as
it deems necessary to evaluate its condition. Except as otherwise specifically
provided herein, Tenant agrees to accept possession of the Premises in its then
existing condition, subject to all Restrictions and without representation or
warranty by Landlord.
On the Commencement Date, Landlord agrees to deliver the Building to Tenant with
all HVAC, mechanical systems, and the roof in good operating condition and
repair.
B. CONDITION UPON SURRENDER: Tenant further agrees on the Expiration Date or
on the sooner termination of this Lease, to surrender the Premises to Landlord
in good condition and repair, normal wear and tear, casualty, and condemnation
excepted. In this regard, "normal wear and tear" shall be construed to mean wear
and tear caused to the Premises by the natural aging process which occurs in
spite of prudent application of the best commercially reasonable standards for
maintenance, repair replacement, and janitorial practices, and does not include
items of neglected or deferred maintenance. In any event, Tenant shall cause the
following to be done prior to the Expiration Date or sooner termination of this
Lease: (i) all interior walls shall be cleaned, patched, and otherwise made
paint-ready, (ii) all tiled floors shall be cleaned and waxed, (iii) all carpets
shall be cleaned and shampooed, (iv) all broken, marred, stained or
nonconforming acoustical ceiling tiles shall be replaced, (v) all cabling placed
above the ceiling by Tenant or Tenant's contractors shall be removed, (vi) all
windows shall be washed; (vii) the HVAC system shall be serviced by a reputable
and licensed service firm and left in "good operating condition and repair" as
so certified by such firm, (viii) the plumbing and electrical systems and
lighting shall be placed in good order and repair (including replacement of any
burned out, discolored or broken light bulbs, ballasts, or lenses. On or before
the Expiration Date or sooner termination of this Lease, Tenant shall remove all
its personal property and trade fixtures from the Premises. All property and
fixtures not so removed shall be deemed as abandoned by Tenant. Except as
otherwise agreed between the parties, Tenant shall ascertain from Landlord
within ninety (90) days before the Expiration Date whether Landlord desires to
have any Permitted Alterations made by Tenant (as defined in Section 7) removed
and the Premises or any parts thereof restored to a standard open office plan
with materials and finishes consistent with the other open office areas with the
Premises, or to cause Tenant to surrender all Alterations in
Page 4
place to Landlord. If Landlord shall so desire, Tenant shall, at Tenant's sole
cost and expense, remove such Alterations as Landlord requires and shall repair
and restore said Premises or such parts thereof before the Expiration Date. Such
repair and restoration shall include causing the Premises to be brought into
compliance with all applicable building codes and laws in effect at the time of
the removal to the extent such compliance is necessitated by the repair and
restoration work.
C. FAILURE TO SURRENDER: If the Premises are not surrendered at the
Expiration Date or sooner termination of this Lease in the condition required by
this Section 6, Tenant shall be deemed in a holdover tenancy pursuant to this
Section 6.C and Tenant shall indemnify, defend, and hold Landlord harmless
against loss or liability resulting from delay by Tenant in so surrendering the
Premises including, without limitation, any claims made by any succeeding tenant
founded on such delay and costs incurred by Landlord in returning the Premises
to the required condition, plus interest at the Agreed Interest Rate. If Tenant
remains in possession of the Premises after the Expiration Date or sooner
termination of this Lease without Landlord's consent, Tenant's continued
possession shall be on the basis of a tenancy at sufferance and Tenant shall pay
as rent during the holdover period an amount equal to one hundred fifty percent
(150%) of the Base Monthly Rent due in the month preceding the termination or
Expiration Date, plus all other amounts payable by Tenant under this Lease. Any
holding over shall otherwise be on the terms and conditions herein specified,
except those provisions relating to the Lease Term and any options to extend or
renew, which provisions shall be of no further force and effect following the
expiration of the applicable exercise period. This provision shall survive the
termination or expiration of the Lease.
7. ALTERATIONS AND ADDITIONS:
A. TENANT'S ALTERATIONS: Tenant shall not make, or suffer to be made, any
alteration or addition to the Premises ("Alterations"), or any part thereof,
without obtaining Landlord's prior written consent, which shall not be
unreasonably withheld or delayed, and delivering to Landlord the proposed
architectural and structural plans for all such Alterations at least fifteen
(15) days prior to the start of construction. If such Alterations affect the
structure of the Building, Tenant additionally agrees to reimburse Landlord its
reasonable out-of-pocket costs incurred in reviewing Tenant's plans. After
obtaining Landlord's consent, which consent shall state whether or not Landlord
will require Tenant to remove such Alteration at the expiration or earlier
termination of this Lease, Tenant shall not proceed to make such Alterations
until Tenant has obtained all required governmental approvals and permits, and
provides Landlord reasonable security, in form reasonably approved by Landlord,
to protect Landlord against mechanics' lien claims. Tenant agrees to provide
Landlord (i) written notice of the anticipated and actual start-date of the
work, (ii) a complete set of half-size (15" X 21") vellum as-built drawings, and
(iii) a certificate of occupancy for the work upon completion of the
Alterations. All Alterations shall be constructed in compliance with all
applicable building codes and laws including, without limitation, the Americans
with Disabilities Act of 1990 as amended from time to time. Upon the Expiration
Date, all Alterations, except movable furniture and trade fixtures, shall become
a part of the realty and belong to Landlord but shall nevertheless be subject to
removal by Tenant as provided in Section 6 above. Alterations which are not
deemed as trade fixtures include heating, lighting, electrical systems, air
conditioning, walls, carpeting, or any other installation which has become an
integral part of the Premises. All Alterations shall be maintained, replaced or
repaired by Tenant at its sole cost and expense.
Notwithstanding the foregoing, Tenant shall be entitled, without obtaining
Landlord's consent, to make Alterations which do not affect the structure of the
Building or which do not cost more than Fifty Thousand Dollars ($50,000.00) per
Alteration nor an aggregate of One Hundred Thousand Dollars ($100,000.00) in any
twelve (12) month period ("Permitted Alterations"); provided, however, that: (i)
Tenant shall still be required to comply with all other provisions of this
paragraph; and (ii) such Permitted
Page 5
Alterations are subject to removal by Tenant at Landlord's election pursuant to
Section 6.B. above at the expiration or earlier termination of the Lease.
B. FREE FROM LIENS: Tenant shall keep the Premises free from all liens
arising out of work performed, materials furnished, or obligations incurred by
Tenant or claimed to have been performed for Tenant. In the event Tenant fails
to discharge any such lien within ten (10) days after receiving notice of the
filing, Landlord shall immediately be entitled to discharge the lien at Tenant's
expense and all resulting costs incurred by Landlord, including attorney's fees
shall be due from Tenant as additional rent.
C. COMPLIANCE WITH GOVERNMENTAL REGULATIONS: The term Laws or Governmental
Regulations shall include all federal, state, county, city or governmental
agency laws, statutes, ordinances, standards, rules, requirements, or orders now
in force or hereafter enacted, promulgated, or issued. The term also includes
government measures regulating or enforcing public access, traffic mitigation,
occupational, health, or safety standards for employers, employees, landlords,
or tenants. Tenant, at Tenant's sole expense will comply with all such
Governmental Regulations and shall make all repairs, replacements, alterations,
or improvements necessary to comply with all Governmental Regulations. 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 law, regulation or other requirement in
its use of the Premises shall be conclusive of that fact as between Landlord and
Tenant. All costs associated with compliance with this Section 7.C. shall be
borne by Tenant if the requirement for compliance is triggered by: (i) Tenant's
specific use (other than general office or light manufacturing) or change of use
of the Premises; (ii) Tenant's application for any permit or governmental
approval; or (iii) Tenant's construction, installation, or removal of any
Alterations or trade fixtures. If a capital improvement or replacement to the
Premises is required for any other reason, then within ten (10) business days
after Tenant delivers evidence reasonably satisfactory to Landlord
substantiating that the capital improvement or replacement has been performed
and the cost is due, Landlord shall reimburse Tenant for the cost of the
improvement or replacement less that portion of the cost equal to the product of
such total cost multiplied by a fraction, the numerator of which is the number
of years remaining in the Lease Term, the denominator of which is the useful
life (in years) of the capital improvement, as reasonably determined by Landlord
in accordance with generally accepted accounting principles. If the capital
improvement is made during the initial Lease Term, Tenant's share shall
initially be based on the initial Lease Term and if Tenant thereafter exercises
its renewal option, then upon the commencement of the Option term, an adjustment
shall be made so that during the Option Term Tenant shall pay its share
determined by multiplying the cost of the capital improvement by a fraction, the
numerator of which is the sum of the Lease Term remaining at the time the
capital expenditure was made and the Option Term and the denominator of which is
the useful life of the capital improvement.
Notwithstanding the foregoing, Tenant shall not be responsible for the cost of
compliance with Laws and Governmental Regulations related to alterations to the
Premises made by or on behalf of the previous tenant, excluding any alterations
made for Tenant during its sublease occupancy of the Premises.
8. MAINTENANCE OF PREMISES:
A. LANDLORD'S OBLIGATIONS: Landlord, at its sole cost and expense and
without any right of reimbursement from Tenant, shall maintain in good
condition, order, and repair, and replace as and when necessary, the foundation,
exterior load bearing walls and roof structure of the Building.
B. TENANT'S OBLIGATIONS: Tenant shall clean, maintain, repair and replace
when necessary the Premises and every part thereof through regular inspections
and servicing, including but not limited to: (i) all plumbing and sewage
facilities, (ii) all heating ventilating and
Page 6
air conditioning facilities and equipment, (iii) all fixtures, interior walls
floors, carpets and ceilings, (iv) all windows, door entrances, plate glass and
glazing systems including caulking, and skylights, (v) all electrical facilities
and equipment, (vi) all automatic fire extinguisher equipment, (vii) the parking
lot and all underground utility facilities servicing the Premises, (viii) the
roof membrane system, and (ix) all waterscape, landscaping and shrubbery. All
wall surfaces and floor tile are to be maintained in an as good a condition as
when Tenant took possession free of holes, gouges, or defacements. With respect
to items (ii) and (viii) above, Tenant shall provide Landlord a copy of a
service contract between Tenant and a licensed service contractor providing for
periodic maintenance of all such systems or equipment in conformance with the
manufacturer's recommendations. Tenant shall provide Landlord a copy of such
preventive maintenance contracts and paid invoices for the recommended work if
requested by Landlord. If as a part of Tenant's fulfilment of its maintenance
obligations under this Section 8.B. during the last three (3) years of the Lease
Term, a roof replacement to the Premises is paid for by Tenant, Landlord shall
reimburse Tenant for the cost of the replacement less the sum of (i) Fifty
Thousand Dollars ($50,000.00) plus (ii) that portion of the cost over $50,000.00
equal to the product of such cost multiplied by a fraction, the numerator of
which is the number of years remaining in the Lease Term, the denominator of
which is the useful life (in years) of the roof replacement. Further, if as a
part of Tenant's fulfilment of its maintenance obligations under this Section
8.B. an HVAC unit replacement to the Premises is paid for by Tenant, Landlord
shall reimburse Tenant for the cost of the replacement less the sum of (i)
Fifteen Thousand Dollars ($15,000.00) plus (ii) that portion of the cost over
$15,000.00 equal to the product of such cost multiplied by a fraction, the
numerator of which is the number of years remaining in the Lease Term, the
denominator of which is the useful life (in years) of the new HVAC unit. If the
roof replacement or HVAC unit replacement is made during the initial Lease Term,
Tenant's share shall initially be based on the initial Lease Term and if Tenant
thereafter exercises its renewal option, then upon the commencement of the
Option term, an adjustment shall be made so that during the Option Term Tenant
shall reimburse Landlord an amount determined by multiplying the cost of the
replacement by a fraction, the numerator of which is the sum of the Lease Term
remaining at the time the replacement was made and the Option Term and the
denominator of which is the useful life of the new roof or HVAC unit.
C. LANDLORD AND TENANT'S OBLIGATIONS REGARDING REIMBURSABLE OPERATING COSTS:
In addition to the direct payment by Tenant of expenses as provided in Sections
8.B, 9, 10 and 11 of this Lease, Tenant agrees to reimburse Landlord for
Tenant's Allocable Share (as defined in Section 8.E below) of Reimbursable
Operating Costs (as defined in Section 8.D below) resulting from Landlord
payment of expenses related to the Building or Project which are not otherwise
paid by Tenant directly. Tenant agrees to pay its Allocable Share of the
Reimbursable Operating Costs as additional rental within ten (10) days of
written invoice from Landlord. In no event shall Tenant be responsible to pay
any expense associated with Building 1 or Building 2.
D. REIMBURSABLE OPERATING COSTS: For purposes of calculating Tenant's
Allocable Share of Building and Project Costs, the term "Reimbursable Operating
Costs" is defined as all costs and expenses of the nature hereinafter described
which are incurred by Landlord in connection with ownership and operation of the
Building or the Project in which the Premises are located, together with such
additional facilities as may be determined by Landlord to be reasonably
desirable or necessary to the ownership and operation of the Building and/or
Project. All costs and expenses shall be determined in accordance with generally
accepted accounting principles which shall be consistently applied (with
accruals appropriate to Landlord's business), including but not limited to the
following: (i) common area utilities, including water, power, telephone,
heating, lighting, air conditioning, ventilating, and Building utilities to the
extent not separately metered; (ii) common area maintenance and service
agreements for the Building and/or Project and the equipment therein, including
Page 7
without limitation, common area janitorial services, alarm and security
services, exterior window cleaning, and maintenance of the sidewalks,
landscaping, waterscape, roof membrane, parking areas, driveways, service areas,
mechanical rooms, and the building exterior; (iii) insurance premiums and costs,
including without limitation, the reasonable premiums and cost of fire, casualty
and liability coverage and rental abatement and, if elected by Landlord,
earthquake insurance applicable to the Building or Project; (iv) repairs,
replacements and general maintenance (excluding repairs and general maintenance
paid by proceeds of insurance or by Tenant or other third parties, and repairs
or alterations attributable solely to tenants of the Building or Project other
than Tenant); and (v) all real estate taxes and assessment installments or other
impositions or charges which may be levied on the Building or Project, upon the
occupancy of the Building or Project and including any substitute or additional
charges which may be imposed during, or applicable to the Lease Term including
real estate tax increases due to a sale, transfer or other change of ownership
of the Building or Project, as such taxes are levied or appear on the City and
County tax bills and assessment rolls. Landlord shall have no obligation to
provide guard services or other security measures for the benefit of the
Project. Tenant assumes all responsibility for the protection of Tenant and
Tenant's Agents from acts of third parties; provided, however, that nothing
contained herein shall prevent Landlord, at its sole option, from providing
security measures for the Project. This is a "Net" Lease, meaning that Base
Monthly Rent is paid to Landlord absolutely net of all costs and expenses. The
provision for payment of Reimbursable Operating Costs by means of periodic
payment of Tenant's Allocable Share of Building and/or Project Costs is intended
to pass on to Tenant and reimburse Landlord for all costs of operating and
managing the Building and/or Project.
Notwithstanding anything to the contrary contained in this Lease, the following
shall not be included within Reimbursable Operating Costs: (i) leasing
commissions, attorneys' fees, costs, disbursements, and other expenses incurred
in connection with negotiations or disputes with tenants or in connection with
leasing, renovating, or improving space for tenants or other occupants or
prospective tenants or other occupants of the Building or the Project; (ii) the
cost of any service sold to any tenant (including Tenant) or other occupant for
which Landlord is entitled to be reimbursed as an additional charge or rental
over and above the basic rent and escalations payable under the lease with that
tenant; (iii) any depreciation on the Building or the Project; (iv) expenses in
connection with services or other benefits of a type that are not provided to
Tenant but which are provided another tenant or occupant of the Building or
Project; (v) costs incurred due to Landlord's violation of any terms or
conditions of this Lease or any other lease relating to the Building or Project;
(vi) overhead profit increments paid to Landlord's subsidiaries or affiliates
for services on or to the Building or Project or for supplies or other materials
to the extent that the cost of the services, supplies, or materials exceeds the
cost that would have been paid had the services, supplies, or materials been
provided by unaffiliated parties on a competitive basis; (vii) all interest,
loan fees, and other carrying costs related to any mortgage or deed of trust,
and all rental and other payable due under any ground or underlying lease;
(viii) any compensation paid to clerks, attendants, or other persons in
commercial concessions operated by Landlord; (ix) advertising and promotional
expenditures; (x) any costs, fines, or penalties incurred due to violations by
Landlord of any governmental rule or authority, this Lease or any other lease in
the Project, or due to Landlord's active negligence or willful misconduct; (xi)
costs for sculpture, paintings, or other objects of art (nor insurance thereon
or extraordinary security in connection therewith); (xii) wages, salaries, or
other compensation paid to any executive employees above the grade of building
manager; (xiii) the cost of correcting any building code or other violations
which were violations prior to the Commencement Date; (xiv) reserves for any
Reimbursable Operating Costs; (xv) repairs and maintenance to buildings of the
Project in which Tenant is not an occupant, and (xvi) any property management or
similar fee.
Page 8
E. TENANT'S ALLOCABLE SHARE: For purposes of prorating Reimbursable
Operating Costs which Tenant shall pay, Tenant's Allocable Share of Reimbursable
Operating Costs shall be computed by multiplying the Reimbursable Operating
Costs by a fraction, the numerator of which is the rentable square footage of
the Premises and the denominator of which is either the total rentable square
footage of the Building if the service or cost is allocable only to the
Building, or the total square footage of the Project if the service or cost is
allocable to the entire Project. Tenant's obligation to share in Reimbursable
Operating Costs shall be adjusted to reflect the Lease Commencement and
Expiration dates and is subject to recalculation in the event of expansion of
the Building or Project.
Tenant shall have the right to audit Landlord's business records relating to the
calculation of Tenant's Allocable Share subject to the following: (i) the audit
shall be at the sole cost of the Tenant (unless such audit reveals a discrepancy
in favor of Tenant of greater than 5%, in which case Landlord shall pay the
cost); (ii) the audit shall be conducted at Landlord's office or such other
reasonable location as Landlord may designate, during normal business hours;
(iii) the audit shall be conducted after reasonable notice to Landlord; and (iv)
Tenant shall maintain the results of such audit confidential.
F. WAIVER OF LIABILITY: Failure by Landlord to perform any defined services,
or any cessation thereof, when such failure is caused by accident, breakage,
repairs, strikes, lockout or other labor disturbances or labor disputes of any
character or by any other cause, similar or dissimilar, unless due to the active
negligence or willful misconduct of Landlord, shall not render Landlord liable
to Tenant in any respect, including damages to either person or property, nor be
construed as an eviction of Tenant, nor cause an abatement of rent, nor relieve
Tenant from fulfillment of any covenant or agreement hereof. Should any
equipment or machinery utilized in supplying the services listed herein break
down or for any cause cease to function properly, upon receipt of written notice
from Tenant of any deficiency or failure of any services, Landlord shall use
reasonable diligence to repair the same promptly, but Tenant shall have no right
to terminate this Lease and shall have no claim for rebate of rent or damages on
account of any interruptions in service occasioned thereby or resulting
therefrom. If Landlord fails to use reasonable diligence to make repairs for
which it is responsible under this Section 8 and imminent injury to persons or
damage to property may result therefrom, Tenant may make such repairs and
Landlord shall pay the reasonable cost thereof within thirty (30) days after
written demand. Tenant waives the provisions of California Civil Code Sections
1941 and 1942 concerning the Landlord's obligation of tenantability and Tenant's
right to make repairs and deduct the cost of such repairs from the rent.
Landlord shall not be liable for a loss of or injury to person or property,
however occurring, through or in connection with or incidental to furnishing, or
its failure to furnish, any of the foregoing unless due to Landlord's active
negligence or willful misconduct.
9. HAZARD INSURANCE:
A. TENANT'S USE: Tenant shall not use or permit the Premises, or any part
thereof, to be used for any purpose other than that for which the Premises are
hereby leased; and no use of the Premises shall be made or permitted, nor acts
done, which will cause an increase in premiums or a cancellation of any
insurance policy covering the Premises or any part thereof, nor shall Tenant
sell or permit to be sold, kept, or used in or about the Premises, any article
prohibited by the standard form of fire insurance policies. Tenant shall, at its
sole cost, comply with all requirements of any insurance company or organization
necessary for the maintenance of reasonable fire and public liability insurance
covering the Premises and appurtenances.
B. LANDLORD'S INSURANCE: Landlord agrees to purchase and keep in force All
Risk and fire insurance in an amount equal to the replacement cost of the
Building (not including any Tenant Improvements or Alterations paid for by
Tenant from sources other than the Work Allowance) as determined by Landlord's
Page 9
insurance company's appraisers. At Landlord's election, such fire and property
damage insurance may be endorsed to cover loss caused by such additional perils
against which Landlord may elect to insure, including earthquake and/or flood,
and shall contain reasonable deductibles. Additionally Landlord may maintain a
policy of (i) commercial general liability insurance insuring Landlord (and such
others 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 or Project in an amount as Landlord determines is
reasonably necessary for its protection, and (ii) rental lost insurance covering
a twelve (12) month period. Tenant agrees to pay Landlord as additional rent, on
demand, the full cost (subject to Tenant's Allocable Share as defined in Section
8.E.) of said insurance as evidenced by insurance billings to Landlord, and in
the event of damage covered by said insurance, the amount of any deductible
under such policy. Payment shall be due to Landlord within ten (10) days after
written invoice to Tenant. It is understood and agreed that Tenant's obligation
under this Section will be prorated to reflect the Lease Commencement and
Expiration Dates.
C. TENANT'S INSURANCE: Tenant agrees, at its sole cost, to insure its
personal property, Tenant Improvements (for which it has paid from sources other
than the Work Allowance), and Alterations against damage for their full
replacement value (without depreciation). Said insurance shall provide All Risk
and fire coverage equal to the replacement cost of said property. The property
casualty insurance provided by Tenant as required by this paragraph shall be
carried in favor of Landlord and Tenant as their respective interests may appear
and shall provide that any loss to Tenant Improvements shall be adjusted with
and be payable to both Landlord and Tenant. Tenant shall deliver a copy of the
policy and renewal certificate to Landlord. Tenant agrees, at its sole cost, and
to obtain worker's compensation and Commercial General Liability insurance for
occurrences within the Premises with a combined single limit of not less than
Five Million Dollars ($5,000,000.00). Tenant's liability insurance shall be
primary insurance containing a cross-liability endorsement, and shall provide
coverage on an "occurrence" rather than on a "claims made" basis. All such
insurance shall provide for severability of interests; shall provide that an act
or omission of one of the named (additional) insureds shall not reduce or avoid
coverage to the other named (additional insureds). Tenant shall name Landlord
and Landlord's lender as an additional insured and shall deliver a copy of the
policies and renewal certificates to Landlord. All insurance policies required
under this section shall provide for thirty (30) days' prior written notice to
Landlord of any cancellation, termination, or reduction in coverage.
Notwithstanding the above, Landlord retains the right to have Tenant provide
other forms of insurance which may be reasonably required to cover future risks.
D. WAIVER: Landlord and Tenant hereby waive all tort, contract or other
rights each may have against the other on account of any loss or damage
sustained by Landlord or Tenant, as the case may be, or to the Premises or its
contents, which may arise from any risk covered by their respective insurance
policies (or which would have been covered had such insurance policies been
maintained in accordance with this Lease) as set forth above. The Parties shall
each obtain from their respective insurance companies a waiver of any right of
subrogation which said insurance company may have against Landlord or Tenant, as
the case may be.
10. TAXES: Tenant shall be liable for and shall pay as additional rental, prior
to delinquency, the following: (i) all taxes and assessments levied against
Tenant's personal property and trade or business fixtures; (ii) all real estate
taxes and assessment installments or other impositions or charges which may be
levied on the Premises or upon the occupancy of the Premises, including any
substitute or additional charges which may be imposed applicable to the Lease
Term; and (iii) real estate tax increases due to an increase in assessed value
resulting from a sale, transfer or other change of ownership of the Premises as
it appears on the City and County tax bills during the Lease Term. All real
estate taxes shall be prorated to reflect the Lease Commencement and Expiration
Dates. If, at any time during the Lease Term a tax, excise on
Page 10
rents, business license tax or any other tax, however described, is levied or
assessed against Landlord as a substitute or addition, in whole or in part, for
taxes assessed or imposed on land or Buildings, Tenant shall pay and discharge
its pro rata share of such tax or excise on rents or other tax before it becomes
delinquent; except that this provision is not intended to cover net income
taxes, inheritance, gift or estate tax imposed upon Landlord. In the event that
a tax is placed, levied, or assessed against Landlord and the taxing authority
takes the position that Tenant cannot pay and discharge its pro rata share of
such tax on behalf of Landlord, then at Landlord's sole election, Landlord may
increase the Base Monthly Rent by the exact amount of such tax and Tenant shall
pay such increase. If by virtue of any application or proceeding brought by
Landlord, there results a reduction in the assessed value of the Premises during
the Lease Term, Tenant agrees to pay Landlord a fee consistent with the fees
charged by a third party appeal firm for such services.
11. UTILITIES: Tenant shall pay directly to the providing utility all water,
gas, electric, telephone, and other utilities supplied to the Premises. Landlord
shall not be liable for loss of or injury to person or property, however
occurring, through or in connection with or incidental to furnishing or the
utility company's failure to furnish utilities to the Premises, and in such
event Tenant shall not be entitled to abatement or reduction of any portion of
Base Monthly Rent or any other amount payable under this Lease.
12. TOXIC WASTE AND ENVIRONMENTAL DAMAGE:
A. USE OF HAZARDOUS MATERIAL: Without the prior written consent of Landlord,
Tenant or Tenant's agents, employees, contractors, subtenants or invitees
("Tenant's Agents") shall not cause or permit any Hazardous Material, as defined
below, to be generated, brought onto, used, stored, created, released or
disposed of in or about the Premises, except that Tenant may use and store small
quantities of common household cleaners and office supplies on the Premises
provided such use and storage is in strict compliance with all Environmental
Laws, as defined below. As used herein, the term "Hazardous Material" shall mean
any substance, material or waste (whether liquid, solid or gaseous), which is a
pollutant or contaminant, or which is hazardous, toxic, ignitable, reactive,
corrosive, dangerous, harmful or injurious, or which presents a risk to public
health or the environment, or which is or may become regulated by or under the
authority of any Environmental Laws, as defined below, including, without
limitation, asbestos or asbestos containing materials, petroleum products,
pesticides, polychlorinated biphenyls, flammable explosives, radioactive
materials and urea formaldehyde. As used herein, the term "Environmental Laws"
shall mean any present or future federal, state or local law, whether common
law, statute, rule, regulation or ordinance, judgment, order, or other
governmental restriction, guideline, listing or requirement, relating to the
environment or any Hazardous Material, including without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
42 U.S.C. Section 9601 et seq., the Resource Conservation and Recovery Act of
1976, 42 U.S.C. Section 6901 et seq., and applicable provisions of the
California Health and Safety Code and the California Water Code, all as
heretofore or hereafter may be amended from time to time. In order to obtain
consent, Tenant shall deliver to Landlord its written proposal describing the
Hazardous Material to be brought onto the Premises, measures to be taken for
storage and disposal thereof, and safety measures to be employed to prevent
pollution or contamination of the air, soil, surface and ground water.
Landlord's approval may be withheld in its reasonable judgment. In the event
Landlord consents to Tenant's use of Hazardous Materials on the Premises or such
consent is not required, Tenant represents and warrants that it shall comply
with all Governmental Regulations applicable to Hazardous Material including
doing the following: (i) adhere to all reporting and inspection requirements
imposed by Federal, State, County or Municipal laws, ordinances or regulations
and provide Landlord a copy of any such reports or agency inspections; (ii)
obtain and provide Landlord copies of all necessary permits required for the use
and handling of Hazardous Material on the
Page 11
Premises; (iii) enforce Hazardous Material handling and disposal practices
consistent with industry standards; (iv) surrender the Premises free from any
Hazardous Materials arising from Tenant's generating, bringing, using, storing,
creating, releasing, or disposing of Hazardous Material; and (v) properly close
the facility with regard to Hazardous Material including the removal or
decontamination of any process piping, mechanical ducting, storage tanks,
containers, or trenches which have come into contact with Hazardous Material and
obtaining a closure certificate from the local administering agency prior to the
Expiration Date.
B. TENANT'S INDEMNITY REGARDING HAZARDOUS MATERIAL: Tenant shall, at its
sole cost and expense and with counsel reasonably acceptable to Landlord,
indemnify, defend and hold harmless Landlord and Landlord's trustees,
shareholders, directors, officers, employees, partners, affiliates, agents,
successors and assigns from, and against any and all claims, liabilities,
obligations, penalties, fines, actions, costs or expenses incurred or suffered
arising from generating, bringing, using, storing, creating, releasing or
disposing of Hazardous Material by Tenant or Tenant's Agents in or about the
Premises, or the violation of any Governmental Regulation or Environmental Laws
by Tenant or Tenant's Agents. This indemnification applies whether or not the
concentrations of any such Hazardous Material exceed applicable maximum
contaminant or action levels or any governmental agency has issued a cleanup
order. Tenant's indemnification, defense, and hold harmless obligations include,
without limitation, the following: (i) claims, liabilities, costs or expenses
resulting from or based upon administrative, judicial (civil or criminal) or
other action, legal or equitable, brought by any private or public person under
present or future laws, including Environmental Laws; (ii) claims, liabilities,
costs or expenses pertaining to the identification, monitoring, cleanup,
containment, or removal of Hazardous Material from soils, riverbeds or aquifers
including the provision of an alternative public drinking water source; (iii)
losses attributable to diminution in the value of the Premises or the Building
(iv) loss or restriction of use of rentable space in the Building; (v) adverse
effect on the marketing of any space in the Building; and (vi) all other
liabilities, obligations, penalties, fines, claims, actions (including remedial
or enforcement actions of any kind and administrative or judicial proceedings,
orders or judgments), damages (including consequential and punitive damages),
and costs (including attorney, consultant, and expert fees and expenses)
resulting from the release or violation. This Section 12.B shall survive the
expiration or termination o this Lease.
C. NOTICE OF RELEASE OR VIOLATION: If, during the Lease Term (including any
extensions), Tenant becomes aware of (i) any actual or threatened release of a
Hazardous Material on, under or about the Premises or (ii) any inquiry,
investigation, proceeding, claim, notice or order by any private or public
person or entity regarding the presence of Hazardous Material on, under or about
the Premises, including alleged violations of Environmental Laws by Tenant or
Tenant's Agents., Tenant shall give Landlord written notice of the release or
investigation within five (5) days after learning of it and shall simultaneously
and thereafter furnish Landlord with copies of any claims, notices of violation,
reports, or other writings received by Tenant concerning the release or
investigation. In the event of an actual release of Hazardous Materials, Tenant
shall also give Landlord immediate verbal notice of such release.
In the event of any release on or into the Premises or into the soil or
ground water under the Premises, the Building or the Project of any Hazardous
Materials used, treated, stored or disposed of by Tenant or Tenant's Agents,
Tenant agrees to comply, at its sole cost, with all laws, regulations,
ordinances and orders of any federal, state or local agency relating to the
monitoring or remediation of such Hazardous Materials. In the event of any such
release of Hazardous Materials Tenant shall immediately give verbal and
follow-up written notice of the release to Landlord, and Tenant agrees to meet
and confer with Landlord and its Lender to attempt to eliminate and mitigate any
financial exposure to such Lender and resultant exposure to Landlord under
California Code of Civil
Page 12
Procedure Section 736(b) as a result of such release, and promptly to take
reasonable monitoring, cleanup and remedial steps given, inter alia, the
historical uses to which the Property has and continues to be used, the risks to
public health posed by the release, the then available technology and the costs
of remediation, cleanup and monitoring, consistent with acceptable customary
practices for the type and severity of such contamination and all applicable
laws. Nothing in the preceding sentence shall eliminate, modify or reduce the
obligation of Tenant under 12.B of this Lease to indemnify, defend and hold
Landlord harmless from any claims liabilities, costs or expenses incurred or
suffered by Landlord. Tenant shall provide Landlord prompt written notice of
Tenant's monitoring, cleanup and remedial steps.
In the absence of an order of any federal, state or local governmental or
quasi-governmental agency relating to the cleanup, remediation or other response
action required by applicable law, any dispute arising between Landlord and
Tenant concerning Tenant's obligation to Landlord under this Section 12.C
concerning the level, method, and manner of cleanup, remediation or response
action required in connection with such a release of Hazardous Materials shall
be resolved by mediation and/or arbitration pursuant to this Lease.
D. REMEDIATION OBLIGATIONS: In the event of any release on, under or about
the Premises of any Hazardous Material generated, brought onto, used, stored,
created or disposed of by Tenant or Tenant's Agents, Tenant shall, at its sole
cost, promptly take all necessary and appropriate actions, in compliance with
applicable Environmental Laws, to remove or remediate such Hazardous Material,
whether or not any governmental agency has issued a cleanup order, so as to
return the Premises to the condition that existed before the introduction of
such Hazardous Material. Tenant shall obtain Landlord's written consent prior to
implementing any proposed removal or remedial action, provided, however, that
Tenant shall be entitled to respond immediately to an emergency without first
obtaining Landlord's written consent. Nothing in the preceding sentence shall in
any way eliminate, modify or reduce the obligation of Tenant under 12.B of this
Lease to indemnify, defend and hold Landlord harmless from any claims,
liabilities, costs or expenses incurred or suffered by Landlord.
E. ENVIRONMENTAL MONITORING: Landlord and its agents shall have the right to
inspect, investigate, sample and monitor the Premises, including any air, soil,
water, ground water, or to conduct any other sampling or testing, digging,
drilling or analysis, to determine whether Tenant is complying with the terms of
this Section 12. Such work shall be at Landlord's expense provided, however,
that if Landlord discovers that Tenant is not in compliance with the terms of
this Section 12, any costs incurred by Landlord in determining Tenant's non-
compliance, including attorneys', consultants' and experts' fees, shall be due
and payable by Tenant to Landlord within five (5) days following Landlord's
written demand therefor.
13. TENANT'S DEFAULT: The occurrence of any of the following shall constitute a
material default and breach of this Lease by Tenant: (i) Tenant's failure to pay
the Base Monthly Rent including additional rent or any other payment due under
this Lease by the date such amount is due, and such failure continues after five
(5) days' written notice from Landlord, (ii) the abandonment (but not the
vacating) of the Premises by Tenant; (iii) Tenant's failure to observe and
perform any other required provision of this Lease, where such failure continues
for thirty (30) days after written notice from Landlord provided, however, that
if the nature of the default is such that it cannot reasonably be cured within
the 30-day period, Tenant shall not be deemed in default if it commences within
such period to cure, and thereafter diligently prosecutes the same to
completion; (iv) Tenant's making of any general assignment for the benefit of
creditors; (v) the filing by or against Tenant of a petition to have Tenant
adjudged a bankrupt or of a petition for reorganization or arrangement under any
law relating to bankruptcy (unless, in the case of a petition filed against
Tenant, the same is
Page 13
dismissed after the filing); (vi) the appointment of a trustee or receiver to
take possession of substantially all of Tenant's assets located at the Premises
or of Tenant's interest in this Lease, where possession is not restored to
Tenant within thirty (30) days; (vii) the attachment, execution or other
judicial seizure of substantially all of Tenant's assets located at the Premises
or of Tenant's interest in this Lease, where such seizure is not discharged
within thirty (30) days; or (viii) the occurrence of any other event described
as a default elsewhere in this Lease or any amendment thereto regardless of
whether such event is defined as a material default and breach of this Lease in
this Paragraph 13.
A. REMEDIES: In the event of any such default by Tenant, then in addition to
other remedies available to Landlord at law or in equity, Landlord shall have
the immediate option to terminate this Lease and all rights of Tenant hereunder
by giving written notice of such intention to terminate. In the event Landlord
elects to so terminate this Lease, Landlord may recover from Tenant all the
following: (i) the worth at time of award of any unpaid rent which had been
earned at the time of such termination; (ii) the worth at 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 for the same
period that Tenant proves could have been reasonably avoided; (iii) the worth at
time of award of the amount by which the unpaid rent for the balance of the
Lease Term after the time of award exceeds the amount of such rental loss that
Tenant proves could be reasonably avoided; (iv) any other amount necessary to
compensate Landlord for all detriment proximately caused by Tenant's failure to
perform its obligations under this Lease, or which in the ordinary course of
things would be likely to result therefrom; including the following: (x)
expenses for repairing, altering or remodeling the Premises for purposes of
reletting, (y) broker's fees, advertising costs or other expenses of reletting
the Premises, and (z) costs of carrying the Premises such as taxes, insurance
premiums, utilities and security precautions; and (v) at Landlord's election,
such other amounts in addition to or in lieu of the foregoing as may be
permitted by applicable California law. The term "rent", as used herein, is
defined as the minimum monthly installments of Base Monthly Rent and all other
sums required to be paid by Tenant pursuant to this Lease, all such other sums
being deemed as additional rent due hereunder. As used in (i) and (ii) above,
"worth at the time of award" shall be computed by allowing interest at a rate
equal to the discount rate of the Federal Reserve Bank of San Francisco plus
five (5%) percent per annum. As used in (iii) above, "worth at the time of
award" shall be computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one (1%)
percent.
B. RIGHT TO RE-ENTER: In the event of any such default by Tenant, Landlord
shall have the right, after terminating this Lease, to re-enter the Premises and
remove all persons and property. Such property may be removed and stored in a
public warehouse or elsewhere at the cost of and for the account of Tenant, and
disposed of by Landlord in any manner permitted by law.
C. ABANDONMENT: If Landlord does not elect to terminate this Lease as
provided in Section 13.A or 13.B above, then the provisions of California Civil
Code Section 1951.4, (Landlord may continue the lease in effect after Tenant's
breach and abandonment and recover rent as it becomes due if Tenant has a right
to sublet and assign, subject only to reasonable limitations) as amended from
time to time, shall apply and Landlord may from time to time, without
terminating this Lease, either recover all rental as it becomes due or relet the
Premises or any part thereof for such term or terms and at such rental or
rentals and upon such other terms and conditions as Landlord in its sole
discretion may deem advisable, with the right to make alterations and repairs to
the Premises. In the event that Landlord elects to so relet, rentals received by
Landlord from such reletting shall be applied in the following order to: (i) the
payment of any indebtedness other than Base Monthly Rent due hereunder from
Tenant to Landlord; (ii) the payment of any cost of such reletting; (iii) the
payment of the cost of any alterations and repairs to the Premises; and (iv)
Page 14
the payment of Base Monthly Rent and other sums due and unpaid hereunder. The
residual rentals, if any, shall be held by Landlord and applied in payment of
future Base Monthly Rent as the same may become due and payable hereunder.
Landlord shall the obligation to market the space but shall have no obligation
to relet the Premises following a default if Landlord has other comparable
available space within the Building or Project. In the event the portion of
rentals received from such reletting which is applied to the payment of rent
hereunder during any month be less than the rent payable during that month by
Tenant hereunder, then Tenant shall pay such deficiency to Landlord immediately
upon demand. Such deficiency shall be calculated and paid monthly. Tenant shall
also pay to Landlord, as soon as ascertained, any costs and expenses incurred by
Landlord in such reletting or in making such alterations and repairs not covered
by the rentals received from such reletting.
D. NO TERMINATION: Landlord's re-entry or taking possession of the Premises
pursuant to 13.B or 13.C shall not be construed as an election to terminate this
Lease unless written notice of such intention is given to Tenant or unless the
termination is decreed by a court of competent jurisdiction. Notwithstanding any
reletting without termination by Landlord because of any default by Tenant,
Landlord may at any time after such reletting elect to terminate this Lease for
any such default.
E. NON-WAIVER: Landlord may accept Tenant's payments without waiving any
rights under this Lease, including rights under a previously served notice of
default. No payment by Tenant or receipt by Landlord of a lesser amount than any
installment of rent due shall be deemed as other than payment on account of the
amount due. If Landlord accepts payments after serving a notice of default,
Landlord may nevertheless commence and pursue an action to enforce rights and
remedies under the previously served notice of default without giving Tenant any
further notice or demand. Furthermore, the Landlord's acceptance of rent from
the Tenant when the Tenant is holding over without express written consent does
not convert Tenant's Tenancy from a tenancy at sufferance to a month to month
tenancy. No waiver of any provision of this Lease shall be implied by any
failure of Landlord to enforce any remedy for the violation of that provision,
even if that violation continues or is repeated. Any waiver by Landlord of any
provision of this Lease must be in writing. Such waiver shall affect only the
provision specified and only for the time and in the manner stated in the
writing. No delay or omission in the exercise of any right or remedy by Landlord
shall impair such right or remedy or be construed as a waiver thereof by
Landlord. No act or conduct of Landlord, including, without limitation, the
acceptance of keys to the Premises, shall constitute acceptance of the surrender
of the Premises by Tenant before the Expiration Date. Only written notice from
Landlord to Tenant of acceptance shall constitute such acceptance of surrender
of the Premises. Landlord's consent to or approval of any act by Tenant which
requires Landlord's consent or approvals shall not be deemed to waive or render
unnecessary Landlord's consent to or approval of any subsequent act by Tenant.
F. PERFORMANCE BY LANDLORD: If Tenant fails to perform any obligation
required under this Lease or by law or governmental regulation and such failure
continues beyond applicable notice and cure periods, Landlord in its sole
discretion may, after three (3) days' notice, without waiving any rights or
remedies and without releasing Tenant from its obligations hereunder, perform
such obligation, in which event Tenant shall pay Landlord as additional rent all
sums paid by Landlord in connection with such substitute performance, including
interest at the Agreed Interest Rate (as defined in Section 19.J) within ten
(10) days of Landlord's written notice for such payment.
14. LANDLORD'S LIABILITY:
A. LIMITATION ON LANDLORD'S LIABILITY: In the event of Landlord's failure to
perform any of its covenants or agreements under this Lease, Tenant shall give
Landlord written notice of such failure and shall give Landlord thirty (30) days
to cure or commence to cure such failure prior to any claim for breach or
resultant damages, provided, however, that if the nature
Page 15
of the default is such that it cannot reasonably be cured within the 30-day
period, Landlord shall not be deemed in default if it commences within such
period to cure, and thereafter diligently prosecutes the same to completion. In
addition, upon any such failure by Landlord, Tenant shall give notice by
registered or certified mail to any person or entity with a security interest in
the Premises ("Mortgagee") that has provided Tenant with notice of its interest
in the Premises, and shall provide Mortgagee a reasonable opportunity to cure
such failure, including such time to obtain possession of the Premises by power
of sale or judicial foreclosure, if such should prove necessary to effectuate a
cure. Tenant agrees that each of the Mortgagees to whom this Lease has been
assigned is an expressed third-party beneficiary hereof. Tenant waives any right
under California Civil Code Section 1950.7 or any other present or future law to
the collection of any payment or deposit from Mortgagee or any purchaser at a
foreclosure sale of Mortgagee's interest unless Mortgagee or such purchaser
shall have actually received and not refunded the applicable payment or deposit.
Tenant Further waives any right to terminate this Lease and to vacate the
Premises on Landlord's default under this Lease. Tenant's sole remedy on
Landlord's default is an action for damages or injunctive or declaratory relief.
B. LIMITATION ON TENANT'S RECOURSE: If Landlord is a corporation, trust,
partnership, joint venture, unincorporated association or other form of business
entity, then (i) the obligations of Landlord shall not constitute personal
obligations of the officers, directors, trustees, partners, joint venturers,
members, owners, stockholders, or other principals or representatives except to
the extent of their interest in the Premises. Tenant shall have recourse only to
the interest of Landlord in the Premises or for the satisfaction of the
obligations of Landlord and shall not have recourse to any other assets of
Landlord for the satisfaction of such obligations.
C. INDEMNIFICATION OF LANDLORD: Except to the extent due to the negligence
or willful misconduct of Landlord, as a material part of the consideration
rendered to Landlord, Tenant hereby waives all claims against Landlord for
damages to goods, wares and merchandise, and all other personal property in,
upon or about said Premises and for injuries to persons in or about said
Premises, from any cause arising at any time to the fullest extent permitted by
law, and Tenant shall indemnify, defend with counsel reasonably acceptable to
Landlord and hold Landlord, and their shareholders, directors, officers,
trustees, employees, partners, affiliates and agents from any claims,
liabilities, costs or expenses incurred or suffered arising from the use of
occupancy of the Premises or any part of the Project by Tenant or Tenant's
Agents, the acts or omissions of Tenant or Tenant's Agents, Tenant's breach of
this Lease, or any damage or injury to person or property from any cause, or
from the failure of Tenant to keep the Premises in good condition and repair as
herein provided,. Further, in the event Landlord is made party to any litigation
due to the acts or omission of Tenant or Tenant's Agents, Tenant will indemnify,
defend (with counsel reasonably acceptable to Landlord) and hold Landlord
harmless from any such claim or liability including Landlord's costs and
expenses and reasonable attorney's fees incurred in defending such claims.
Notwithstanding anything to the contrary in the Lease, (i) Tenant shall neither
release Landlord from, nor indemnify Landlord with respect to the active
negligence or willful misconduct of Landlord, or its agents, employees,
contractors or invitees, and (ii) Landlord shall indemnify and hold harmless
Tenant from all damages, liabilities, judgments, actions, attorneys' fees,
consultants' fees, cost and expenses arising from the active negligence or
willful misconduct of Landlord or its employees, agents, contractors or
invitees.
15. DESTRUCTION OF PREMISES:
A. LANDLORD'S OBLIGATION TO RESTORE: In the event of a destruction of the
Premises during the Lease Term Landlord shall repair the same to a similar
condition to that which existed prior to such destruction. Such destruction
shall not annul or void this Lease; however, Tenant shall be entitled to a
proportionate reduction of Base Monthly Rent while repairs are being made,
Page 16
such proportionate reduction to be based upon the extent to which the repairs
interfere with Tenant's business in the Premises, as reasonably determined by
Landlord. In no event shall Landlord be required to replace or restore
Alterations, Tenant Improvements paid for by Tenant from sources other than the
Work Allowance or Tenant's fixtures or personal property.
B. LIMITATIONS ON LANDLORD'S RESTORATION OBLIGATION: Notwithstanding the
provisions of Section 15.A, Landlord shall have no obligation to repair, or
restore the Premises if any of the following occur: (i) if the repairs cannot be
made in one hundred eighty (180) days from the date of receipt of all
governmental approvals necessary under the laws and regulations of State,
Federal, County or Municipal authorities, as reasonably determined by Landlord,
(ii) if the holder of the first deed of trust or mortgage encumbering the
Building elects not to permit the insurance proceeds payable upon damage or
destruction to be used for such repair or restoration, (iii) the damage or
destruction is not fully covered by the insurance maintained by Landlord
(excluding deductible amounts), (iv) the damage or destruction occurs in the
last eighteen (18) months of the Lease Term unless Tenant has exercised or
promptly exercises an option to extend the Lease Term, (v) Tenant is in default
pursuant to the provisions of Section 13, or (vi) Tenant has vacated the
Premises for more than one hundred twenty (120) days prior to such destruction.
In any such event Landlord may elect either to complete the repair or
restoration, or terminate this Lease by providing Tenant written notice of its
election within sixty (60) days following the damage or destruction. Tenant
shall also have the right to terminate this Lease in the event of either (i) or
(iv) above, by providing Landlord with written notice of its election to do so
within sixty (60) days following the damage or destruction.
16. CONDEMNATION: If any part of the Premises shall be taken for any public or
quasi-public use, under any statute or by right of eminent domain or private
purchase in lieu thereof, and only a part thereof remains which is susceptible
of occupation hereunder, this Lease shall, as to the part so taken, terminate as
of the day before title vests in the condemnor or purchaser ("Vesting Date") and
Base Monthly Rent payable hereunder shall be adjusted so that Tenant is required
to pay for the remainder of the Lease Term only such portion of Base Monthly
Rent as the value of the part remaining after such taking bears to the value of
the entire Premises prior to such taking. Further, in the event of such partial
taking, Landlord shall have the option to terminate this Lease as of the Vesting
Date. If all of the Premises or such part thereof be taken so that there does
not remain a portion susceptible for occupation hereunder, this Lease shall
terminate on the Vesting Date. If part or all of the Premises be taken, all
compensation awarded upon such taking shall go to Landlord, and Tenant shall
have no claim thereto; except Landlord shall cooperate with Tenant, without cost
to Landlord, to recover compensation for damage to or taking of any Alterations,
Tenant Improvements paid for by Tenant from sources other than the Work
Allowance, or for Tenant's moving costs. Tenant hereby waives the provisions of
California Code of Civil Procedures Section 1265.130 and any other similarly
enacted statue, and the provisions of this Section 16 shall govern in the case
of a taking.
Notwithstanding anything to the contrary in this Lease, if there is a taking
under the power of eminent domain (or a transfer in lieu thereof), Tenant shall
have the right to terminate the Lease if there is a taking of more than 33% of
the Building or more than 10% of the parking area. If any part of the Premises
is taken and this Lease is not terminated, then Landlord shall, to the extent
not prohibited by Law, repair any damage occasioned thereby to the remainder
thereof to a condition reasonably suitable for Tenant's continued operations.
17. ASSIGNMENT OR SUBLEASE:
A. CONSENT BY LANDLORD: Except as specifically provided in this Section
17.E, Tenant may not assign, sublet, hypothecate, or allow a third party to use
the Premises without the express written consent of Landlord which shall not be
unreasonably withheld or delayed. In the event Tenant desires to assign this
Lease or any interest herein or sublet the Premises or any part
Page 17
thereof, Tenant shall deliver to Landlord (i) executed counterparts of any
agreement and of all ancillary agreements with the proposed assignee/subtenant,
(ii) current financial statements of the transferee covering the preceding three
years, (iii) the nature of the proposed transferee's business to be carried on
in the Premises, (iv) a statement outlining all consideration to be given on
account of the Transfer, and (v) a current financial statement of Tenant.
Landlord may condition its approval of any Transfer on receipt of a
certification from both Tenant and the proposed transferee of all consideration
to be paid to Tenant in connection with such Transfer. At Landlord's request,
Tenant shall also provide additional information reasonably required by Landlord
to determine whether it will consent to the proposed assignment or sublease.
Landlord shall have a fifteen (15) day period following receipt of all the
foregoing within which to notify Tenant in writing that Landlord elects to: (i)
terminate this Lease in the event the proposed sublease or assignment is for
substantially all of space in the Building and is for the substantially all the
remaining Lease Term; (ii) permit Tenant to assign or sublet such space to the
named assignee/subtenant on the terms and conditions set forth in the notice; or
(iii) refuse consent. If Landlord should fail to notify Tenant in writing of
such election within the 15-day period, Landlord shall be deemed to have elected
option (iii) above. In the event Landlord elects option (i) above, this Lease
shall expire with respect to such part of the Premises on the date upon which
the proposed sublease or transfer was to commence, and from such date forward,
Base Monthly Rent and Tenant's Allocable Share of all other costs and charges
shall be adjusted based upon the proportion that the rentable area of the
Premises remaining bears to the total rentable area of the Building. The
foregoing notwithstanding, in the event Landlord elects option (i) above, Tenant
shall have a three (3) day period in which to rescind the proposed sublease or
assignment. In the event Landlord elects option (ii) above, Landlord's written
consent to the proposed assignment or sublease shall not be unreasonably
withheld, provided and upon the condition that: (i) the proposed assignee or
subtenant is engaged in a business that is limited to the use expressly
permitted under this Lease; (ii) the proposed assignee or subtenant is a company
with sufficient financial worth and management ability to undertake the
financial obligation of this Lease and Landlord has been furnished with
reasonable proof thereof; (iii) the proposed assignment or sublease is in form
reasonably satisfactory to Landlord; (iv) the proposed sublease will not result
in there being greater than three (3) subtenants within the Premises at any time
during the Lease Term; and (v) Tenant reimburses Landlord on demand for any
costs that may be incurred by Landlord in connection with said assignment or
sublease, including the costs of making investigations as to the acceptability
of the proposed assignee or subtenant and legal costs incurred in connection
with the granting of any requested consent. In the event all or any one of the
foregoing conditions are not satisfied, Landlord shall be considered to have
acted reasonably if it withholds its consent. Tenant shall not have advertised
or publicized in any way the availability of the Premises without prior notice
to Landlord.
B. ASSIGNMENT OR SUBLETTING CONSIDERATION: Landlord and Tenant hereby agree
that fifty percent (50%) of any rent or other economic consideration (i)
realized by Tenant under any sublease or assignment, or (ii) realized by any
subtenant under any sub-sublease of the Premises, in excess of the Base Monthly
Rent payable hereunder and reasonable subletting and assignment costs, shall be
paid to Landlord. Tenant's obligation to pay over Landlord's portion of the
consideration constitutes an obligation for additional rent hereunder. The above
provisions relating to Landlord's right to terminate the Lease and relating to
the allocation of excess rent are independently negotiated terms of the Lease
which constitute a material inducement for the Landlord to enter into the Lease,
and are agreed by the Parties to be commercially reasonable. No assignment or
subletting by Tenant shall relieve it of any obligation under this Lease. Any
assignment or subletting which conflicts with the provisions hereof shall be
void.
C. NO RELEASE: Any assignment or sublease shall be made only if and shall
not be
Page 18
effective until the assignee or subtenant shall execute, acknowledge, and
deliver to Landlord an agreement, in form and substance satisfactory to
Landlord, whereby the assignee or subtenant shall assume all the obligations of
this Lease on the part of Tenant to be performed or observed and shall be
subject to all the covenants, agreements, terms, provisions and conditions in
this Lease. Notwithstanding any such sublease or assignment and the acceptance
of rent by Landlord from any subtenant or assignee, Tenant and any guarantor
shall remain fully liable for the payment of Base Monthly Rent and additional
rent due, and to become due hereunder, for the performance of all the covenants,
agreements, terms, provisions and conditions contained in this Lease on the part
of Tenant to be performed and for all acts and omissions of any licensee,
subtenant, assignee or any other person claiming under or through any subtenant
or assignee that shall be in violation of any of the terms and conditions of
this Lease, and any such violation shall be deemed a violation by Tenant. Tenant
shall indemnify, defend and hold Landlord harmless from and against all losses,
liabilities, damages, costs and expenses (including reasonable attorney fees)
resulting from any claims that may be made against Landlord by the proposed
assignee or subtenant or by any real estate brokers or other persons claiming
compensation in connection with the proposed assignment or sublease.
D. REORGANIZATION OF TENANT: The provisions of this Section 17.D shall apply
if Tenant is a corporation and: (i) there is a dissolution, merger,
consolidation, or other reorganization of or affecting Tenant, where Tenant is
not the surviving corporation, or (ii) there is a sale or transfer to one person
or entity (or to any group of related persons or entities) of stock possessing
more than 50% of the total combined voting power of all classes of Tenant's
capital stock issued, outstanding and entitled to vote for the election of
directors, and after such sale or transfer of stock Tenant's stock is no longer
publicly traded. In a transaction under clause (i) the surviving corporation
shall promptly execute and deliver to Landlord an agreement in form reasonably
satisfactory to Landlord under which such surviving corporation assumes the
obligations of Tenant hereunder, and in a transaction under clause (ii) the
acquiring entity shall promptly execute and deliver to Landlord an agreement in
form reasonably satisfactory to Landlord under which such transferee or buyer
assumes the obligations of Tenant under the Lease (unless the acquiring entity
is a subsidiary created for the acquisition in which event the parent of the
acquiring entity shall assume the obligations of Tenant under this Lease).
E. PERMITTED TRANSFERS: Notwithstanding anything contained in this Section
17, so long as Tenant complies with the provisions of this Section 17.E., Tenant
may enter into any of the following transfers (a "Permitted Transfer") without
Landlord's prior consent, and Landlord shall not be entitled to terminate the
Lease or to receive any part of any subrent resulting therefrom that would
otherwise be due pursuant to Sections 17.A and 17.B. Tenant may sublease all or
part of the Premises or assign its interest in this Lease to (i) 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%; (ii) 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
(iii) 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.
The foregoing notwithstanding, Landlord acknowledges that Tenant may change its
current status as a California corporation to a Delaware corporation, and
Landlord hereby consents to and shall not hinder or otherwise interfere with
such change.
F. EFFECT OF DEFAULT: In the event of Tenant's default, Tenant hereby
assigns all rents due from any assignment or subletting to Landlord as security
for performance of its
Page 19
obligations under this Lease, and Landlord may collect such rents as Tenant's
Attorney-in-Fact, except that Tenant may collect such rents unless a default
occurs as described in Section 13 above. A termination of the Lease due to
Tenant's default shall not automatically terminate an assignment or sublease
then in existence; rather at Landlord's election, such assignment or sublease
shall survive the Lease termination, the assignee or subtenant shall attorn to
Landlord, and Landlord shall undertake the obligations of Tenant under the
sublease or assignment; except that Landlord shall not be liable for prepaid
rent, security deposits or other defaults of Tenant to the subtenant or
assignee, or for any acts or omissions of Tenant and Tenant's Agents.
G. CONVEYANCE BY LANDLORD: As used in this Lease, the term "Landlord" is
defined only as the owner for the time being of the Premises, so that in the
event of any sale or other conveyance of the Premises or in the event of a
master lease of the Premises, Landlord shall be entirely freed and relieved of
all its covenants and obligations hereunder, and it shall be deemed and
construed, without further agreement between the Parties and the purchaser at
any such sale or the master tenant of the Premises, that the purchaser or master
tenant of the Premises has assumed and agreed to carry out any and all covenants
and obligations of Landlord hereunder. Such transferor shall transfer and
deliver Tenant's security deposit to the purchaser at any such sale or the
master tenant of the Premises, and thereupon the transferor shall be discharged
from any further liability in reference thereto.
H. SUCCESSORS AND ASSIGNS: Subject to the provisions this Section 17, the
covenants and conditions of this Lease shall apply to and bind the heirs,
successors, executors, administrators and assigns of all Parties hereto; and all
Parties hereto comprising Tenant shall be jointly and severally liable
hereunder.
18. OPTION TO EXTEND THE LEASE TERM:
A. GRANT AND EXERCISE OF OPTION: Provided the tenant in possession of
Building 1 exercises its option to extend its lease term, then Landlord grants
to Tenant, subject to the terms and conditions set forth in this Section 18.A,
an option ("Options") to extend the Lease Term for an additional term (the
"Option Term"), which term shall be for a period of sixty (60) months and shall
be exercised, if at all, by written notice to Landlord no earlier than fifteen
(15) months prior to the date the Lease Term would expire but for such exercise
but no later than nine (9) months prior to the date the Lease Term would expire
but for such exercise, time being of the essence for the giving of such notice.
If Tenant exercises the Option, all of the terms, covenants and conditions of
this Lease shall apply except for the grant of additional Options pursuant to
this Section, provided that Base Monthly Rent for the Premises payable by Tenant
during the Option Term shall be the greater of (i) the average Base Monthly Rent
paid by Tenant during the initial Lease Term, and (ii) ninety five percent (95%)
of the Fair Market Rental as hereinafter defined. Notwithstanding anything
herein to the contrary, if Tenant is in monetary or material non-monetary
default under any of the terms, covenants or conditions of this Lease (beyond
applicable notice and cure periods) either at the time Tenant exercises the
Option or at any time thereafter prior to the commencement date of the Option
Term, then Landlord shall have, in addition to all of Landlord's other rights
and remedies provided in this Lease, the right to terminate the Option upon
notice to Tenant, in which event the Lease Term shall not be extended pursuant
to this Section 18.A. As used herein, the term "Fair Market Rental" is defined
as the rental and all other monetary payments, including any escalations and
adjustments thereto (including without limitation Consumer Price Indexing) that
Landlord could obtain during the Option Term from a third party desiring to
lease the Premises, based upon the current use and other potential uses of the
Premises, as determined by the rents then obtainable for new leases of space
comparable in age and quality to the Premises in the same real estate submarket
as the Building. The appraisers shall be instructed that the foregoing five
percent (5.0%) discount is intended to offset comparable rents that include the
following costs which Landlord will not incur in the event Tenant exercises its
option (i) brokerage commissions, (ii) tenant improvement
Page 20
allowances, (iii) building improvement costs, and (iv) vacancy costs.
The foregoing notwithstanding, in the event the tenant in possession of Building
1 does not exercise its option to extend its Lease Term, then Tenant's Option as
set forth in this Lease section 18.A. shall only be exercisable by Tenant if
Tenant simultaneously commits to lease Building 1 at 95% of the then fair market
rental rate and for a five year term, and otherwise under the same terms and
conditions of this Lease.
B. DETERMINATION OF FAIR MARKET RENTAL: If Tenant exercises the Option,
Landlord shall send Tenant a notice setting forth the Fair Market Rental for the
Option Term within thirty (30) days following the Exercise Date. If Tenant
disputes Landlord's determination of Fair Market Rental for the Option Term,
Tenant shall, within thirty (30) days after the date of Landlord's notice
setting forth Fair Market Rental for the Option Term, send to Landlord a notice
stating that Tenant either elects to terminate its exercise of the Option, in
which event the Option shall lapse and this Lease shall terminate on the
Expiration Date, or that Tenant disagrees with Landlord's determination of Fair
Market Rental for the Option Term and elects to resolve the disagreement as
provided in Section 18.C below. If Tenant does not send Landlord a notice as
provided in the previous sentence, Landlord's determination of Fair Market
Rental shall be the Base Monthly Rent payable by Tenant during the Option Term.
If Tenant elects to resolve the disagreement as provided in Section 18.C and
such procedures are not concluded prior to the commencement date of the Option
Term, Tenant shall pay to Landlord as Base Monthly Rent the Fair Market Rental
as determined by Landlord in the manner provided above. If the Fair Market
Rental as finally determined pursuant to Section 18.C is greater than Landlord's
determination, Tenant shall pay Landlord the difference between the amount paid
by Tenant and the Fair Market Rental as so determined in Section 18.C within
thirty (30) days after such determination. If the Fair Market Rental as finally
determined in Section 18.C is less than Landlord's determination, the difference
between the amount paid by Tenant and the Fair Market Rental as so determined in
Section 18.C shall be credited against the next installments of Base Monthly
Rent due from Tenant to Landlord hereunder.
C. RESOLUTION OF A DISAGREEMENT OVER THE FAIR MARKET RENTAL: Any
disagreement regarding Fair Market Rental shall be resolved as follows:
1. Within thirty (30) days after Tenant's response to Landlord's notice
setting forth the Fair Market Rental, Landlord and Tenant shall meet at a
mutually agreeable time and place, in an attempt to resolve the disagreement.
2. If within the 30-day period referred to above, Landlord and Tenant
cannot reach agreement as to Fair Market Rental, each party shall select one
appraiser to determine Fair Market Rental. Each such appraiser shall arrive at a
determination of Fair Market Rental and submit their conclusions to Landlord and
Tenant within thirty (30) days after the expiration of the 30-day consultation
period described above.
3. If only one appraisal is submitted within the requisite time period,
it shall be deemed as Fair Market Rental. If both appraisals are submitted
within such time period and the two appraisals so submitted differ by less than
ten percent (10%), the average of the two shall be deemed as Fair Market Rental.
If the two appraisals differ by more than 10%, the appraisers shall immediately
select a third appraiser who shall, within thirty (30) days after his selection,
make and submit to Landlord and Tenant a determination of Fair Market Rental.
This third appraisal will then be averaged with the closer of the two previous
appraisals and the result shall be Fair Market Rental.
4. All appraisers specified pursuant to this Section shall be members of
the American Institute of Real Estate Appraisers with not less than ten (10)
years experience appraising office and industrial properties in the Santa Clara
Valley. Each party shall pay the cost of the
Page 21
appraiser selected by such party and one-half of the cost of the third
appraiser.
D. PERSONAL TO TENANT: All Options provided to Tenant in this Lease are
personal and granted to Netro Corporation or a permitted transferee pursuant to
Section 17.E. above and are not exercisable by any third party should Tenant
assign or sublet all or a portion of its rights under this Lease, unless
Landlord consents to permit exercise of any option by any assignee or subtenant,
in Landlord's sole and absolute discretion. In the event Tenant has multiple
options to extend this Lease, a later option to extend the Lease cannot be
exercised unless the prior option has been properly exercised.
19. GENERAL PROVISIONS:
A. ATTORNEY'S FEES: In the event a suit or alternative form of dispute
resolution is brought for the possession of the Premises, for the recovery of
any sum due hereunder, to interpret the Lease, or because of the breach of any
other covenant herein; then the losing party shall pay to the prevailing party
reasonable attorney's fees including the expense of expert witnesses,
depositions and court testimony as part of its costs which shall be deemed to
have accrued on the commencement of such action. The prevailing party shall also
be entitled to recover all costs and expenses including reasonable attorney's
fees incurred in enforcing any judgment or award against the other party. The
foregoing provision relating to post-judgment costs is severable from all other
provisions of this Lease.
B. AUTHORITY OF PARTIES: Tenant represents and warrants that it is duly
formed and in good standing, and is duly authorized to execute and deliver this
Lease on behalf of said corporation, in accordance with a duly adopted
resolution of the Board of Directors of said corporation or in accordance with
the by-laws of said corporation, and that this Lease is binding upon said
corporation in accordance with its terms. At Landlord's request, Tenant shall
provide Landlord with corporate resolutions or other proof in a form acceptable
to Landlord, authorizing the execution of the Lease.
C. BROKERS: Tenant and Landlord each represent to the other that it has not
utilized or contacted a real estate broker or finder with respect to this Lease
other than CRESA Partners, which represents Tenant, and Tenant and Landlord each
agree to indemnify, defend and hold each other harmless against any claim, cost,
liability or cause of action asserted by any other broker or finder claiming
through the indemnifying party.
D. CHOICE OF LAW: This Lease shall be governed by and construed in
accordance with California law. Except as provided in Section 19.E, venue shall
be Santa Clara County.
E. DISPUTE RESOLUTION: Landlord and Tenant and any other party that may
become a party to this Lease or be deemed a party to this Lease including any
subtenants agree that, except for any claim by Landlord for unlawful detainer or
any claim within the jurisdiction of the small claims court (which small claims
court shall be the sole court of competent jurisdiction), any controversy,
dispute, or claim of whatever nature arising out of, in connection with or in
relation to the interpretation, performance or breach of this Lease, including
any claim based on contract, tort, or statute, shall be resolved at the request
of any party to this agreement through a two-step dispute resolution process
administered by J.A.M.S. or another judicial mediation service mutually
acceptable to the parties located in Santa Clara County, California. The dispute
resolution process shall involve first, mediation, followed, if necessary, by
final and binding arbitration administered by and in accordance with the then
existing rules and practices of J.A.M.S. or other judicial mediation service
selected. In the event of any dispute subject to this provision, either party
may initiate a request for mediation and the parties shall use reasonable
efforts to promptly select a J.A.M.S. mediator and commence the mediation. In
the event the parties are not able to agree on a mediator within thirty (30)
days, J. A. M. S. or another judicial mediation service mutually acceptable to
the parties shall appoint a mediator. The mediation shall be confidential and in
accordance with California Evidence Code Section 1119 et. seq. The mediation
shall be held
Page 22
in Santa Clara County, California and in accordance with the existing rules and
practice of J. A. M. S. (or other judicial and mediation service selected). The
parties shall use reasonable efforts to conclude the mediation within sixty (60)
days of the date of either party's request for mediation. The mediation shall be
held prior to any arbitration or court action (other than a claim by Landlord
for unlawful detainer or any claim within the jurisdiction of the small claims
court which are not subject to this mediation/arbitration provision and may be
filed directly with a court of competent jurisdiction). Should the prevailing
party in any dispute subject to this Section 19.E attempt an arbitration or a
court action before attempting to mediate, the prevailing party shall not be
entitled to attorney's fees that might otherwise be available to them in a court
action or arbitration and in addition thereto, the party who is determined by
the arbitrator to have resisted mediation, shall be sanctioned by the arbitrator
or judge.
IF A MEDIATION IS CONDUCTED BUT IS UNSUCCESSFUL, IT SHALL BE FOLLOWED BY FINAL
AND BINDING ARBITRATION ADMINISTERED BY AND IN ACCORDANCE WITH THE THEN EXISTING
RULES AND PRACTICES OF J.A.M.S. OR THE OTHER JUDICIAL AND MEDIATION SERVICE
SELECTED, AND JUDGMENT UPON ANY AWARD RENDERED BY THE ARBITRATOR(S) MAY BE
ENTERED BY ANY STATE OR FEDERAL COURT HAVING JURISDICTION THEREOF AS PROVIDED BY
CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1280 ET. SEQ, AS SAID STATUTES THEN
APPEAR, INCLUDING ANY AMENDMENTS TO SAID STATUTES OR SUCCESSORS TO SAID STATUTES
OR AMENDED STATUTES, EXCEPT THAT IN NO EVENT SHALL THE PARTIES BE ENTITLED TO
PROPOUND INTERROGATORIES OR REQUEST FOR ADMISSIONS DURING THE ARBITRATION
PROCESS. THE ARBITRATOR SHALL BE A RETIRED JUDGE OR A LICENSED CALIFORNIA
ATTORNEY. THE VENUE FOR ANY SUCH ARBITRATION OR MEDIATION SHALL BE IN SANTA
CLARA COUNTY, CALIFORNIA.
NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE
ARISING OUT OF THE MATTERS INCLUDED IN THE "MEDIATION AND ARBITRATION OF
DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW
AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED
IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP
YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE
SPECIFICALLY INCLUDED IN THE "MEDIATION AND ARBITRATION OF DISPUTES" PROVISION.
IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY
BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL
PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.
WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING
OUT OF THE MATTERS INCLUDED IN THE "MEDIATION AND ARBITRATION OF DISPUTES"
PROVISION TO NEUTRAL ARBITRATION.
LANDLORD: ______ TENANT: _______
F. ENTIRE AGREEMENT: This Lease and the exhibits attached hereto contain all
of the agreements and conditions made between the Parties hereto and may not be
modified orally or in any other manner other than by written agreement signed by
all parties hereto or their respective successors in interest. This Lease
supersedes and revokes all previous negotiations, letters of intent, lease
proposals, brochures, agreements, representations, promises, warranties, and
understandings, whether oral or in writing, between the parties or their
respective representatives or any other person purporting to represent Landlord
or Tenant.
G. ENTRY BY LANDLORD: Upon prior notice to Tenant and subject to Tenant's
reasonable security regulations, Tenant shall permit
Page 23
Landlord and his agents to enter into and upon the Premises at all reasonable
times, and without any rent abatement or reduction or any liability to Tenant
for any loss of occupation or quiet enjoyment of the Premises thereby
occasioned, for the following purposes: (i) inspecting and maintaining the
Premises; (ii) making repairs, alterations or additions to the Premises; (iii)
erecting additional building(s) and improvements on the land where the Premises
are situated or on adjacent land owned by Landlord provided Landlord does not
unreasonably interfere with Tenant's use of or access to the Premises or
parking; (iv) performing any obligations of Landlord under the Lease including
remediation of Hazardous Materials if determined to be the responsibility of
Landlord provided Landlord does not unreasonably interfere with Tenant's use of
or access to the Premises or parking, (v) posting and keeping posted thereon
notices of non-responsibility for any construction, alteration or repair
thereof, as required or permitted by any law, and (vi) showing the Premises to
Landlord's or the Master Landlord's existing or potential successors, purchaser,
tenants and lenders. Tenant shall permit Landlord and his agents, at any time
within nine (9) months prior to the Expiration Date (or at any time during the
Lease if Tenant is in default hereunder), to place upon the Premises "For Lease"
signs and upon prior notice to Tenant any subject to Tenant's reasonable
security regulations, exhibit the Premises to real estate brokers and
prospective tenants at reasonable hours.
H. ESTOPPEL CERTIFICATES: At any time during the Lease Term, Tenant shall,
within ten (10) days following written notice from Landlord, execute and deliver
to Landlord a written statement certifying, if true, the following: (i) that
this Lease is unmodified and in full force and effect (or, if modified, stating
the nature of such modification); (ii) the date to which rent and other charges
are paid in advance, if any; (iii) acknowledging that there are not, to Tenant's
knowledge, any uncured defaults on Landlord's part hereunder (or specifying such
defaults if they are claimed); and (iv) such other information as Landlord may
reasonably request. Any such statement may be conclusively relied upon by any
prospective purchaser or encumbrancer of Landlord's interest in the Premises.
Tenant's failure to deliver such statement within such time shall be conclusive
upon the Tenant that this Lease is in full force and effect without
modification, except as may be represented by Landlord, and that there are no
uncured defaults in Landlord's performance. Tenant agrees to provide, within
five (5) days of Landlord's request, Tenant's most recent three (3) years of
audited financial statements for Landlord's use in financing or sale of the
Premises or Landlord's interest therein.
I. EXHIBITS: All exhibits referred to are attached to this Lease and
incorporated by reference.
J. INTEREST: All rent due hereunder, if not paid within five (5) business
days that it is due, shall bear interest at the rate of the Reference Rate
published by Bank of America, San Francisco Branch, plus two percent (2%) per
annum from that date until paid in full ("Agreed Interest Rate"). This provision
shall survive the expiration or sooner termination of the Lease. Despite any
other provision of this Lease, the total liability for interest payments shall
not exceed the limits, if any, imposed by the usury laws of the State of
California. Any interest paid in excess of those limits shall be refunded to
Tenant by application of the amount of excess interest paid against any sums
outstanding in any order that Landlord requires. If the amount of excess
interest paid exceeds the sums outstanding, the portion exceeding those sums
shall be refunded in cash to Tenant by Landlord. To ascertain whether any
interest payable exceeds the limits imposed, any non-principal payment
(including late charges) shall be considered to the extent permitted by law to
be an expense or a fee, premium, or penalty rather than interest.
K. MODIFICATIONS REQUIRED BY LENDER: If any lender of Landlord or ground
lessor of the Premises requires a modification of this Lease that will not
increase Tenant's cost or expense or materially or adversely change Tenant's
rights and obligations, this Lease shall be so modified and Tenant shall execute
whatever documents
Page 24
are required and deliver them to Landlord within ten (10) days after the
request.
L. NO PRESUMPTION AGAINST DRAFTER: Landlord and Tenant understand, agree and
acknowledge that this Lease has been freely negotiated by both Parties; and that
in any controversy, dispute, or contest over the meaning, interpretation,
validity, or enforceability of this Lease or any of its terms or conditions,
there shall be no inference, presumption, or conclusion drawn whatsoever against
either party by virtue of that party having drafted this Lease or any portion
thereof.
M. NOTICES: All notices, demands, requests, or consents required to be given
under this Lease shall be sent in writing by U.S. certified mail, return receipt
requested, or by personal delivery addressed to the party to be notified at the
address for such party specified in Section 1 of this Lease, or to such other
place as the party to be notified may from time to time designate by at least
fifteen (15) days prior notice to the notifying party. When this Lease requires
service of a notice, that notice shall replace rather than supplement any
equivalent or similar statutory notice, including any notices required by Code
of Civil Procedure Section 1161 or any similar or successor statute.
N. This paragraph intentionally left blank.
O. RENT: All monetary sums due from Tenant to Landlord under this Lease,
including, without limitation those referred to as "additional rent", shall be
deemed as rent.
P. REPRESENTATIONS: Tenant acknowledges that neither Landlord nor any of its
employees or agents have made any agreements, representations, warranties or
promises with respect to the Premises or with respect to present or future
rents, expenses, operations, tenancies or any other matter. Except as herein
expressly set forth herein, Tenant relied on no statement of Landlord or its
employees or agents for that purpose.
Q. RIGHTS AND REMEDIES: Subject to Section 14 above, All rights and remedies
hereunder are cumulative and not alternative to the extent permitted by law, and
are in addition to all other rights and remedies in law and in equity.
R. SEVERABILITY: If any term or provision of this Lease is held
unenforceable or invalid by a court of competent jurisdiction, the remainder of
the Lease shall not be invalidated thereby but shall be enforceable in
accordance with its terms, omitting the invalid or unenforceable term.
S. SUBMISSION OF LEASE: Submission of this document for examination or
signature by the parties does not constitute an option or offer to lease the
Premises on the terms in this document or a reservation of the Premises in favor
of Tenant. This document is not effective as a lease or otherwise until executed
and delivered by both Landlord and Tenant.
T. SUBORDINATION: This Lease is subject and subordinate to ground and
underlying leases, mortgages and deeds of trust (collectively "Encumbrances")
which may now affect the Premises, to any covenants, conditions or restrictions
of record, and to all renewals, modifications, consolidations, replacements and
extensions thereof; provided, however, if the holder or holders of any such
Encumbrance ("Holder") require that this Lease be prior and superior thereto,
within seven (7) days after written request of Landlord to Tenant, Tenant shall
execute, have acknowledged and deliver all documents or instruments, in the form
presented to Tenant, which Landlord or Holder deems necessary or desirable for
such purposes. Landlord shall have the right to cause this Lease to be and
become and remain subject and subordinate to any and all Encumbrances which are
now or may hereafter be executed covering the Premises or any renewals,
modifications, consolidations, replacements or extensions thereof, for the full
amount of all advances made or to be made thereunder and without regard to the
time or character of such advances, together with interest thereon and subject
to all the terms and provisions thereof; provided only, that in the event of
termination of any such lease or upon the foreclosure of any such mortgage or
deed of trust, Holder agrees to recognize Tenant's rights under this Lease as
long as Tenant is not then in default and continues to
Page 25
pay Base Monthly Rent and additional rent and observes and performs all required
provisions of this Lease. Within ten (10) days after Landlord's written request,
Tenant shall execute any documents required by Landlord or the Holder to make
this Lease subordinate to any lien of the Encumbrance. If Tenant fails to do so,
then in addition to such failure constituting a default by Tenant, it shall be
deemed that this Lease is so subordinated to such Encumbrance. Notwithstanding
anything to the contrary in this Section, Tenant hereby attorns and agrees to
attorn to any entity purchasing or otherwise acquiring the Premises at any sale
or other proceeding or pursuant to the exercise of any other rights, powers or
remedies under such encumbrance.
Landlord shall cause the existing lender to furnish to Tenant, within sixty (60)
days of the date of both parties' execution of this Lease, with a written
agreement providing for (i) recognition by the lender of all of the terms and
conditions of this Lease; and (ii) continuation of this Lease upon foreclosure
of existing lender's security interest in the Premises. In the event that
Landlord is unable to provide such agreement, Tenant's sole remedy shall be
termination of the Lease, which election shall be made within fourteen (14) days
following the expiration of such sixty (60) day period.
U. SURVIVAL OF INDEMNITIES: All indemnification, defense, and hold harmless
obligations of Landlord and Tenant under this Lease shall survive the expiration
or sooner termination of the Lease.
V. TIME: Time is of the essence hereunder.
W. WAIVER OF RIGHT TO JURY TRIAL: Landlord and Tenant waive their respective
rights to trial by jury of any contract or tort claim, counterclaim,
cross-complaint, or cause of action in any action, proceeding, or hearing
brought by either party against the other on any matter arising out of or in any
way connected with this Lease, the relationship of Landlord and Tenant, or
Tenant's use or occupancy of the Premises, including any claim of injury or
damage or the enforcement of any remedy under any current or future law,
statute, regulation, code, or ordinance.
X. TENANT'S RIGHT TO CANCEL THE LEASE: Notwithstanding Tenant's execution of
this Lease, the parties agree that Tenant has the right to terminate this Lease
by delivering written notice to Landlord no later than 5 p.m. on Wednesday,
April 18, 2001. In the event of such termination: (i) this Lease shall be null
and void and the parties shall have no legal obligation or liability with
respect thereto; and (ii) Landlord shall promptly return to Tenant the pre-paid
rent for the first month of the Lease Term.
Page 26