Exhibit 10.18
LEASE AGREEMENT
BETWEEN
Sobrato Interests
a California Limited Partnership
and
Broadcom Corporation
a California corporation
November 20, 2000
LEASE BETWEEN
SOBRATO INTERESTS AND BROADCOM CORPORATION
SECTION..........................................................................PAGE #
Parties...............................................................................1
Premises..............................................................................1
Use...................................................................................1
Permitted Uses.....................................................................1
Uses Prohibited....................................................................2
Advertisements and Signs...........................................................2
Covenants, Conditions and Restrictions.............................................2
Parking............................................................................2
Term and Rental.......................................................................2
Base Monthly Rent..................................................................2
Late Charges.......................................................................3
Security Deposit...................................................................4
Construction..........................................................................4
Landlord's Obligations.............................................................4
Tenant Improvement Plans...........................................................5
Tenant Improvement Costs...........................................................5
Construction.......................................................................6
Insurance..........................................................................6
Punch List & Warranty..............................................................6
Other Work by Tenant...............................................................6
Acceptance of Possession and Covenants to Surrender...................................6
Delivery and Acceptance............................................................6
Condition Upon Surrender...........................................................6
Failure to Surrender...............................................................7
Alterations and Additions.............................................................7
Tenant's Alterations...............................................................7
Free From Liens....................................................................8
Compliance With Governmental Regulations...........................................8
Back-Up Generator..................................................................8
Communications and Power Conduits and Equipment....................................9
Maintenance of Premises..............................................................10
Landlord's Obligations............................................................10
Tenant's Obligations..............................................................10
Landlord and Tenant's Obligations Regarding Reimbursable Operating Costs..........11
Reimbursable Operating Costs......................................................11
Tenant's Allocable Share..........................................................12
Page i
Waiver of Liability...............................................................13
Audit Rights......................................................................13
Hazard Insurance.....................................................................13
Tenant's Use......................................................................13
Landlord's Insurance..............................................................14
Tenant's Insurance................................................................14
Waiver............................................................................14
Taxes................................................................................14
Utilities............................................................................15
Toxic Waste and Environmental Damage.................................................15
Tenant's Responsibility...........................................................15
Tenant's Indemnity Regarding Hazardous Materials..................................16
Actual Release by Tenant..........................................................16
Environmental Monitoring..........................................................17
Landlord's Indemnity Regarding Hazardous Materials................................17
Tenant's Default.....................................................................18
Remedies..........................................................................18
Right to Re-enter.................................................................19
Abandonment.......................................................................19
No Termination....................................................................19
Non-Waiver........................................................................19
Performance by Landlord...........................................................20
Habitual Default..................................................................20
Landlord's Liability................................................................20
Limitation on Landlord's Liability................................................20
Limitation on Tenant's Recourse...................................................21
Indemnification of Landlord.......................................................21
Destruction of Premises..............................................................21
Landlord's Obligation to Restore..................................................21
Limitations on Landlord's Restoration Obligation..................................21
Condemnation.........................................................................22
Assignment or Sublease...............................................................22
Consent by Landlord...............................................................22
Assignment or Subletting Consideration............................................23
No Release........................................................................23
Reorganization of Tenant..........................................................24
Permitted Transfers...............................................................24
Effect of Default.................................................................24
Effects of Conveyance.............................................................25
Successors and Assigns............................................................25
Customer Equipment................................................................25
Option to Extend the Lease Term......................................................25
Grant and Exercise of Option......................................................25
Determination of Fair Market Rental...............................................26
Resolution of a Disagreement over the Fair Market Rental..........................26
Personal to Tenant................................................................27
General Provisions...................................................................27
Attorney's Fees...................................................................27
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Authority of Parties..............................................................27
Brokers...........................................................................27
Choice of Law.....................................................................27
Dispute Resolution................................................................27
Entire Agreement..................................................................29
Entry by Landlord.................................................................29
Estoppel Certificates.............................................................29
Exhibits..........................................................................29
Interest..........................................................................29
Modifications Required by Lender..................................................30
No Presumption Against Drafter....................................................30
Notices...........................................................................30
Property Management...............................................................30
Rent..............................................................................30
Representations...................................................................30
Rights and Remedies...............................................................30
Severability......................................................................31
Submission of Lease...............................................................31
Subordination.....................................................................31
Survival of Indemnities...........................................................31
Time..............................................................................31
Transportation Demand Management Programs.........................................31
Waiver of Right to Jury Trial.....................................................32
General Provisions...................................................................32
Grant.............................................................................32
Exclusions........................................................................32
Nortel Sublease...................................................................33
EXHIBIT A - Premises, Building & Project.............................................35
EXHIBIT B - Draft Letter of Credit...................................................36
EXHIBIT C - Therma Mechanical Report.................................................37
EXHIBIT D - Nortel Sublease Space....................................................38
Page iii
1. PARTIES: THIS LEASE, is entered into on this 20th day of November 2000,
("Effective Date") between Sobrato Interests, a California Limited Partnership,
whose address is 10600 North De Anza Boulevard, Suite 200, Cupertino, CA 95014,
and Broadcom Corporation, a California Corporation, whose address is 16215 Alton
Parkway, Irvine, California, 92618, hereinafter called respectively Landlord and
Tenant.
2. PREMISES: Landlord hereby leases to Tenant, and Tenant hires from Landlord
those certain Premises with the appurtenances, situated in the City of Santa
Clara, County of Santa Clara, State of California, commonly known and designated
as 2451-2465 Mission College Boulevard consisting of a three story building of
136,708 rentable square feet ("Building") as outlined in red on Exhibit "A"
attached hereto, and all improvements located therein including but not limited
to parking areas and structures, landscaping, loading docks, sidewalks, service
areas and other facilities. The Building is situated within a project site
shared with three additional buildings owned by Landlord as outlined in green on
Exhibit "A" ("Project"). Tenant shall be entitled to use (on a non-assigned
basis) its Allocable Share (as defined in Lease section 8.E. below) of the
parking stalls within the project, which shall not be less than 460 parking
spaces. Notwithstanding the foregoing, Tenant shall be allowed to designate
approximately 35 parking stalls for Tenant's exclusive use near the lobby of the
Building in the location depicted on Exhibit "A". Tenant acknowledges Landlord's
right to and hereby consents to construction of additional building(s) within
the Project or on adjacent land owned by Landlord. The Building has the address
and contains the square footage specified above; provided, however, that any
statement of square footage set forth in this Lease, or that may have been used
in calculating any of the economic terms hereof is an approximation which
Landlord and Tenant agree is reasonable and no economic terms based thereon
shall be subject to revision whether or not the actual square footage is more or
less.
Tenant's leasehold interest in the Premises, which is the entire Building,
includes, without limitation, the utility raceways and risers and the rooftop of
such Building. Notwithstanding the foregoing, Tenant agrees and acknowledges
that Landlord shall have non-exclusive access to and use of any and all
mechanical, electrical, telephone and similar rooms, janitor closets, elevators,
pipe and other vertical shafts and ducts, flues and stairwells of the Building,
to the extent that such access and use is required (A) to comply with Landlord's
obligations under this Lease, (B) to enforce Landlord's rights under this Lease
and (C) to otherwise protect Landlord's interest in the Building. In connection
with any of the foregoing activities of Landlord, Landlord shall use reasonable
efforts while conducting such activities to minimize any interference with
Tenant's use and occupancy of the Premises.
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, incidental warehouse,
ancillary storage, electronics labs, and other incidental
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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
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 (except for decorations and wall hangings typically
found in buildings with similar permitted uses) or set any load on the floor in
excess of the load limits for which such items 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 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, conditioned or
delayed; provided, however, that Tenant shall have the exclusive right to place
signs on the exterior of the Building, and the non-exclusive right to place
signs on monuments of the Project, subject to Landlord's consent as provided
herein. 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.
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; and (ii) any zoning laws of the city, county and state
where the Building is situated (collectively referred to herein as
"Restrictions") and Tenant will conform to and will not violate the terms of any
such Restrictions.
E. PARKING:: No charge or fee (other than rent payable hereunder, and
except as required by law) shall be imposed in exchange for the right of Tenant
and its employees, invitees and contractors to have access to or from, or to
park in, the parking areas of the Project during the Term of this Lease.
4. TERM AND RENTAL:
A. BASE MONTHLY RENT: The term ("Lease Term") shall be for ninety six (96)
months, commencing on March 1, 2001 (the "Commencement Date") and ending on
February 28, 2009, ("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
Page 2
under this Lease, Tenant shall pay base monthly rent ("Base Monthly Rent") for
the Premises according to the following schedule:
Months 01-12: $751,894.00 per month $5.50 psf
Months 13-24: $781,969.76 per month $5.72 psf
Months 25-36: $813,412.60 per month $5.95 psf
Months 37-48: $846,222.52 per month $6.19 psf
Months 49-60: $879,032.44 per month $6.43 psf
Months 61-72: $914,576.52 per month $6.69 psf
Months 73-84: $951,487.68 per month $6.96 psf
Months 85-96: $989,765.92 per month $7.24 psf
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 calendar month shall be a pro rata portion of the monthly
installment. Concurrently with Tenant's execution of this Lease, Tenant shall
pay to Landlord the sum of Seven Hundred Fifty One Thousand Eight Hundred Ninety
Four and No/100 Dollars ($751,894.00) as prepaid rent for the first month of the
Lease.
Notwithstanding the Commencement Date, Tenant shall have the right, but not the
obligation, upon Tenant's receipt of a temporary certificate of occupancy (or
its legal equivalent), to take early occupancy before the Commencement Date, of
all or any portion of the Premises for the Permitted Use and to enable Tenant
and its contractors to install the Initial Improvements described in Section 5
below, equipment, trade fixtures, furnishings and decorations in the Premises
("Early Occupancy"). Such Early Occupancy shall not change the Term Commencement
Date or Term Expiration Date. Tenant's occupancy of the Premises under this
Section 3(b) shall be upon all the terms, covenants and conditions contained in
the Lease, except that Tenant shall only be obligated to pay Base Monthly Rent
and Tenant's Allocable Share of Reimbursable Operating Costs during any Early
Occupancy based on that portion of the Premises that Tenant is actually
occupying for the conduct of Tenant's business.
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 date 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. Notwithstanding the
foregoing, upon the first failure of Tenant to make timely payment in any
calendar year of the Term, Tenant shall not be liable for such late charge if
Tenant pays such overdue amount to Landlord within three (3) business days after
receipt of written notice that such amount was not received when due. 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
Page 3
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: Prior to March 1, 2005, Tenant shall deposit with
Landlord the sum of Seven Hundred Fifty One Thousand Eight Hundred Ninety Four
and No/100 Dollars ($751,894.00) ("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, after the expiration of all applicable notice and cure periods, 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) business 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. In the event of termination of
Landlord's interest in this Lease, Landlord may deliver or credit the Security
Deposit to Landlord's successor in interest in the Premises and thereupon be
relieved of further responsibility with respect to the Security Deposit provided
such successor assumes, in writing, Landlord's obligations with respect to such
Security Deposit.
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 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.
5. CONSTRUCTION:
A. LANDLORD'S OBLIGATIONS: Landlord shall ensure that the existing Building
systems are in good operating condition and repair including the plumbing,
sprinklers, electrical (including panels and outlets), and doors (both shipping
and personnel) With regard to the HVAC systems, Landlord agrees perform the work
specified in the inspection report issued by
Page 4
Therma Mechanical dated July 20, 2000 and attached as Exhibit "C" necessary to
put such systems into good condition and repair.
B. TENANT IMPROVEMENT PLANS: Tenant, at Tenant's sole cost and expense, shall
retain an interior architect ("Architect") to prepare plans and outline
specifications to be attached as Exhibit "C" ("Tenant Improvement Plans and
Specifications") with respect to the construction of initial interior
improvements to the Premises ("Tenant Improvements"). The Tenant Improvement
Plans and Specifications shall be completed for all aspects of the work (either
in one package or in phases as provided below) by June 30, 2001 with all detail
necessary for submittal to the city, within three (3) days thereafter, for
issuance of building permits and for construction, and shall include any
information required by the relevant agencies regarding Tenant's use of
Hazardous Materials if applicable. The Tenant Improvements shall: (i) be
reasonably compatible with (and not damaging to) the structural, mechanical,
electrical, plumbing and other systems of the Building, (ii) not materially
adversely impact (in Landlord's reasonable judgment) the exterior appearance or
operations of the Building, the currently existing interior improvements in the
Building, or the appearance or operations of the public areas of the Building
and (iii) comply with all any law, statute, ordinance, order, rule, regulation
or requirement of any governmental or quasi-governmental authority. All Tenant
Improvements shall be subject to Landlord's reasonable approval, which shall not
be unreasonably withheld or delayed beyond five (5) business days following
receipt of Tenant's Plans and Specifications, provided the above conditions are
met. Landlord's failure to approve, or reasonably disapprove, the Tenant
Improvement Plans and Specifications (or revised Plans and Specifications)
within five (5) business days following Landlord's receipt thereof shall be
deemed Landlord's approval. The Tenant Improvement Plans and Specifications
shall include all detail required by the City of Santa Clara necessary to obtain
a Certificate of Occupancy. Construction of the Tenant Improvements shall be
performed by a general contractor ("General Contractor") selected by Tenant,
subject to Landlord's reasonable approval. Tenant shall not be required to use
union labor as a condition of receiving Landlord's approval hereunder. The
Tenant Improvement Plans and Specifications shall be prepared in sufficient
detail to allow General Contractor to construct the Tenant Improvements. The
Tenant shall contract directly with General Contractor for construction of the
Tenant Improvements and shall cause the General Contractor to construct the
Tenant Improvements in accordance with all Tenant Improvement Plans and
Specifications. Tenant shall have no obligation to remove the Tenant
Improvements at the expiration or earlier termination of the Lease. The Tenant
Improvements (other than Tenant's trade fixtures, equipment and furnishings and
other personal property of Tenant that can be removed without permanent damage
to the Premises) shall not be removed or altered by Tenant without the prior
written consent of Landlord as provided in Section 7. Tenant shall have the
right to depreciate and claim and collect any investment tax credits in the
Tenant Improvements during the Lease Term. Upon expiration of the Lease Term or
any earlier termination of the Lease, the Tenant Improvements (other than
Tenant's trade fixtures, equipment and furnishings and other personal property
of Tenant that can be removed without permanent damage to the Premises) shall
become the property of Landlord and shall remain upon and be surrendered with
the Premises, and title thereto shall automatically vest in Landlord without any
payment therefore.
C. TENANT IMPROVEMENT COSTS: Tenant shall pay all costs associated with the
Tenant Improvements. The cost of Tenant Improvements shall include the following
to the extent actually incurred by Tenant or General Contractor in connection
with the construction of Tenant Improvements: architectural design fees,
construction costs, all permit fees, and construction taxes or other costs
imposed by governmental authorities related to the Tenant Improvements. Landlord
shall not charge
Page 5
Tenant any fee of any kind for its involvement in the construction or design of
the Tenant Improvement, other than the out-of-pocket costs paid to professional
consultants for review of the Tenant Improvement Plans and Specifications, and
any revisions thereto. Tenant shall pay directly to the General Contractor all
amounts due pursuant to the construction of Tenant Improvements.
D. CONSTRUCTION: Tenant shall diligently supervise the construction of
Tenant Improvements until they are substantially complete as hereinafter
defined. The Tenant Improvements shall be deemed substantially complete
("Substantially Complete" or "Substantial Completion") when the Tenant
Improvements have been substantially completed in accordance with the Tenant
Improvement Plans and Specifications, as evidenced by the completion of a final
inspection or the issuance of a certificate of occupancy or its equivalent by
the appropriate governmental authority, and the issuance of a certificate by the
Architect certifying that the Tenant Improvements have been completed in
accordance with the plans. Installation of Tenant's data and phone cabling and
furniture shall not be required in order to deem the Premises Substantially
Complete.
E. INSURANCE: General Contractor shall procure builder's risk insurance for
the full replacement cost of the Tenant Improvements while the Tenant
Improvements are under construction, up until the date that the casualty
insurance policy described in Section 9 is in full force and effect.
F. PUNCH LIST & WARRANTY: After the Tenant Improvements are Substantially
Complete, Tenant shall cause the General Contractor to immediately correct any
construction defects or other "punch list" items which require attention. The
General Contractor shall provide a standard contractor's warranty with respect
to the Tenant Improvements for one (1) year from the Commencement Date. Such
warranty shall exclude routine maintenance, damage caused by Tenant's negligence
or misuse, and acts of God.
G. OTHER WORK BY TENANT: All work not described in the Tenant Improvement
Plans and Specifications, such as furniture, telephone equipment, telephone
wiring and office equipment work, shall be furnished and installed by Tenant at
Tenant' cost. Prior to Substantial Completion, Tenant shall be obligated to
contract with a firm to monitor the fire system.
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.
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 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 repaired, patched, cleaned, 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
Page 6
ceiling tiles shall be replaced except to the extent such staining or
discoloration is attributable to Landlord's failure to maintain the Building to
the extent required by Section 8.A. of this Lease, (v) all cabling placed above
the ceiling by Tenant or Tenant's contractors shall be removed unless such
cabling has been properly suspended in accordance with applicable code and is
not weighing on the ceiling, (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. Tenant shall ascertain from Landlord within
ninety (90) days before the Expiration Date whether Landlord desires to have any
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 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. Any
holding over after the termination or Expiration Date with Landlord's express
written consent, shall be construed as month-to-month tenancy, terminable on
thirty (30) days written notice from either party, and Tenant shall pay as Base
Monthly Rent to Landlord a rate equal to one hundred twenty five percent (125%)
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. 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. 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 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
Page 7
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. Landlord approves Tenant's right to finance and
to secure under the California Uniform Commercial Code, Tenant's trade fixtures,
equipment and other personal property which may be affixed to the Premises, and
Landlord shall reasonably cooperate with the requests of any lessors of, or
lenders holding a security interest in, such trade fixtures and equipment,
provided that such cooperation does not materially affect Landlord's rights
under this Lease. 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 and which do not cost more than Fifty Thousand Dollars ($50,000.00) per
Alteration ("Permitted Alterations"); provided, however, that: (i) Tenant shall
still be required to comply with all other provisions of this paragraph; and
(ii) such Permitted 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 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 shall make all repairs,
replacements, alterations, or improvements to the Premises (other than repairs,
replacements, Alterations or improvements to the structural portions of the
Building and the Common Areas of the Project unless such are required due to
Tenant's specific use, occupancy or Alterations) needed 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.
D. BACK-UP GENERATOR: Tenant shall have the right, subject to Landlord's
prior written
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consent (which consent shall be subject to the terms in this Section 7.C. but
which shall not otherwise be unreasonably withheld, conditioned or delayed) to
install one 300 KW back-up electrical generator, together with reasonably
necessary connections from the location of such generator to the Premises and
related above-ground diesel fuel storage tanks (collectively, "Generator"),
either in the parking lot area of the Common Area or on the roof of the Building
in a location reasonably designated by Landlord and reasonably acceptable to
Tenant. Without otherwise limiting the criteria upon which Landlord may withhold
its consent to any proposed Generator, withholding of consent shall be
presumptively reasonable if Landlord withholds its consent due to concerns
regarding the appearance of the Generator, its impact on structural aspects of
the Building or Common Area improvements, ventilation concerns, or actual or
potential loss of any parking spaces or areas for the Project due to
installation of the Generator, provided that if Tenant agrees to take steps (at
Tenant's expense) to mitigate any such concerns raised by Landlord in a manner
reasonably satisfactory to Landlord, Landlord shall grant its consent to the
Generator subject to such mitigation. All locations or areas on the Building
roof or within the Common Area where the Generator is located shall be provided
by Landlord without additional rent. Tenant shall install the Generator at its
sole expense and with components reasonably acceptable to Landlord, and shall be
responsible for maintenance of the Generator, for compliance with all applicable
Laws with respect to the Generator, and for any damage caused by the
installation of the Generator or related to the Generator. At the end of the
Term, Tenant shall remove the Generator from the Project and restore those
affected areas of the Premises to their condition prior to the installation of
the Generator.
E. COMMUNICATIONS AND POWER CONDUITS AND EQUIPMENT: Notwithstanding the
provisions of Section 7.A above, Tenant shall have the right, at its sole cost
and expense, to trench in any exterior area within the boundaries of the Project
reasonably approved by Landlord (which approval may be denied if such trenching
adversely affects other Tenant's in the Project) for the purposes of "hard
wiring" voice, data and power transmissions to the Building ("Conduit"),
pursuant to reasonable specifications which have been approved in writing by
Landlord and Tenant. At the end of the Term hereof, Tenant shall not be required
to remove any properly installed underground Conduit. Tenant shall also have the
exclusive right, at its sole cost and expense, to construct, maintain, operate
and repair an equipment area outside of the Building, including, without
limitation, the rooftop of the Building, which area shall include, without
limitation, the following equipment and systems: UPS battery systems (the "Power
Systems"), and antennae, satellite dishes and other communications systems and
equipment ("Communications Systems"). All permits, application fees, and all
costs associated with the Power and Communications Systems shall be Tenant's
responsibility. Tenant, at its sole cost and expense, shall have the exclusive
right to install, maintain, and from time to time replace all or a portion of
the Power and Communications Systems on the roof of the Building, provided that
prior to commencing any installation or maintenance, Tenant shall (i) obtain
Landlord's prior approval (which approval shall not be unreasonably withheld,
conditioned or delayed) of the proposed size, weight and location of such Power
and Communications Systems and method for fastening such Power and
Communications Systems to the roof, (ii) such installation and/or replacement
shall comply strictly with all Laws and the conditions of any bond or warranty
maintained by Landlord on the roof, and (iii) obtain, at Tenant's sole cost and
expense, any necessary federal, state, and municipal permits, licenses and
approvals, and deliver copies thereof to Landlord. Landlord may supervise any
roof penetration related to the installation of any Power or Communications
Systems, and Landlord may charge Landlord's reasonable out-of-pocket costs of
any such supervision performed by a third-party consultant to Tenant. Tenant
agrees that all installation, construction and maintenance shall be performed in
a neat,
Page 9
responsible, and workmanlike manner, using generally acceptable construction
standards, consistent with such reasonable requirements as shall be imposed by
Landlord. Tenant shall repair any damage to the Building caused by Tenant's
installation, maintenance, replacement, use or removal of the Power and
Communications Systems. The Power and Communications Systems shall be considered
Tenant's Trade Fixtures (as defined below) and shall remain the property of
Tenant, and Tenant may remove the Power and Communications Systems at its cost
at any time during the Term. Tenant shall remove the Communications Systems at
Tenant's cost and expense upon the expiration or termination of this Lease and
shall restore the Building and Premises to their condition prior to the
installation of the Communications Systems. Landlord makes no warranty or
representation that the Building or any portions thereof are suitable for the
use of the Power or Communications Systems, it being assumed that Tenant has
satisfied itself thereof. Tenant shall protect, defend, indemnify and hold
harmless Landlord and Landlord's Agents from and against claims, damages,
liabilities, costs and expenses of every kind and nature, including attorneys'
fees, incurred by or asserted against Landlord arising out of Tenant's
installation, maintenance, replacement, use or removal of the Power and
Communications Systems.
8. MAINTENANCE OF PREMISES:
A. LANDLORD'S OBLIGATIONS: Landlord at its sole cost and expense, shall
maintain in good condition, order, and repair, and replace as and when
necessary, the foundation, footings, poured concrete floors, exterior walls,
load bearing walls, and roof structure of the Building.
Notwithstanding the foregoing, during the initial Term of this Lease, Landlord
shall be obligated to perform and pay for the work of replacement of the roof
membrane at the end of its useful life (as determined in accordance with
Landlord's reasonable judgement and consistent with prudent standards for
building owners in the San Jose area) at Landlord's sole cost and expense. If
Landlord fails to reasonably act to perform its repair obligations of this
Paragraph 8.A, and such failure materially affects Tenant's ability to use and
occupy the Premises for the purposes permitted herein, Tenant shall have the
right, but not the obligation, to perform such repairs and/or maintenance if
such failure continues for more than ten (10) business days after written notice
from Tenant; provided, however, that if the nature of the repairs and/or
maintenance to be completed by Landlord is such that more than 10 business days
are required to complete such repairs and/or maintenance, Landlord shall have
such additional time as is reasonably necessary to complete such repairs and/or
maintenance and thereafter diligently pursue such repairs and/or maintenance to
completion. In such event, Landlord shall reimburse Tenant for the reasonable
costs incurred by Tenant to complete such repairs and/or maintenance within
thirty (30) days after receipt of Tenant's written demand therefore, together
with copies of the paid invoices evidencing the costs incurred by Tenant. Any
repairs and/or maintenance permitted herein shall be performed in a good and
workmanlike manner by licensed contractors. If Landlord objects to the repairs
and/or maintenance performed or the expenses incurred by Tenant in performing
such work, Landlord shall deliver a written notice of Landlord's objection to
Tenant within thirty (30) days after Landlord's receipt of Tenant's invoice
evidencing the expenses incurred by Tenant. Landlord's notice shall set forth in
reasonable detail Landlord's reasons for its claim that such repairs and/or
maintenance were not required or were not Landlord's obligations in the terms of
this lease and/or the reasons for Landlord's dispute of the expenses incurred by
Tenant in performing such work. If Landlord and Tenant fail to resolve any such
dispute within said thirty (30) day period, after Landlord has notified Tenant
of Landlord's objections, the matter shall be resolved pursuant to Section 19.E.
below.
B. TENANT'S OBLIGATIONS: Except those items for which Landlord is obligated
pursuant to Section 8.A. above, Tenant shall clean,
Page 10
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 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) all
elevator equipment, (ix) the roof membrane system, and (x) 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), (viii) and (ix) 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 in writing by Landlord.
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) business days
of written invoice from Landlord.
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 (excluding any costs
allocable to any other occupant of the Project), 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 without limitation,
common area janitorial services, alarm and security services, exterior window
cleaning, and maintenance of the sidewalks, landscaping, waterscape, roof
membrane of the Building (except as provided in Section 8.A.), parking areas,
driveways, service areas, mechanical rooms, elevators, and the Building
exterior; (iii) insurance premiums and costs, including without limitation, the
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 Taxes 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
Page 11
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 or
related to any capital item, and all rental and other payable due under any
ground or underlying lease, or any lease for any equipment ordinarily considered
to be of a capital nature (except janitorial equipment which is not affixed to
the Building); (viii) any compensation paid to clerks, attendants, or other
persons in commercial concessions operated by Landlord; (ix) advertising and
promotional expenditures; (x) costs of repairs and other work occasioned by
fire, windstorm, or other casualty of an insurable nature and intended to be
covered by insurance required to be carried by Landlord; (xi) 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
negligence or willful misconduct; (xii) costs for sculpture, paintings, or other
objects of art (nor insurance thereon or extraordinary security in connection
therewith); (xiii) wages, salaries, or other compensation paid to any executive
employees above the grade of building manager; (xiv) the cost of correcting any
building code or other violations which were violations prior to the
Commencement Date; (xv) the cost of containing, removing, or otherwise
remediating any contamination of the Project (including the underlying land and
ground water) by any toxic or hazardous materials where such contamination was
not caused by Tenant or its agents, invitees, employees, or suppliers; (xvi)
reserves for any Reimbursable Operating Costs; (xvii) repairs and maintenance to
buildings of the Project in which Tenant is not an occupant, and (xviii) any
property management or similar fee in excess of three percent (3%) of the Base
Monthly Rent.
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
Page 12
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 Date and Expiration Date of this Lease and is subject to
recalculation in the event of expansion of the Building or Project. Tenant's
Allocable Share of the Project is 32.6%
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, 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. 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.
G. AUDIT RIGHTS: Tenant shall have the right, at Tenant's sole cost and
expense, provided Tenant utilizes a Certified Public Accountant (the "CPA"),
upon at least thirty (30) days prior notice to Landlord at any time during
regular business hours, and no more frequently than twice per calendar year, to
audit Landlord's records pertaining to Operating Expenses for the immediately
previous calendar year only, which shall be maintained in the State of
California. Any disputes between Landlord and Tenant concerning Landlord's
accounting of Additional Rent shall be resolved using generally accepted
accounting principles ("GAAP"). If it is determined from Tenant's audit of such
operating expenses that Tenant was overcharged by more than three percent (3%),
such overcharge shall entitle Tenant to credit against its next payment of
Reimbursable Operations Costs the amount of the overcharge and the costs
associated with the audit (and, if such credit occurs following the expiration
of the Term, Landlord shall pay the amount of such credit to Tenant within
thirty (30) days after Landlord's receipt of an invoice from Tenant). If the
audit determines that the Tenant was overcharged less than three percent (3%),
such overcharge shall entitle Tenant to credit against its next payment of
Reimbursable Operations Costs the amount of the overcharge and Tenant shall pay
for all costs associated with the audit. If the audit shall determine that
Tenant was undercharged for the Reimbursable Operations Costs, Tenant shall
promptly pay the amount of such undercharge to Landlord and Tenant shall pay for
all costs associated with the audit. Permitted Assignees of Tenant may only
audit periods for which they occupy the Leased Premises and subtenants of Tenant
are not entitled to any audit rights. Tenant agrees to keep all information
thereby obtained by Tenant confidential.
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 any permanent 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
Page 13
article prohibited by the standard form of fire insurance policies, unless such
use is covered by an endorsement to such 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
fire, extended coverage insurance in an amount equal to the replacement cost of
the Building (not including Tenant's Alterations, the Tenant Improvements or
Tenant's Trade Fixtures) as determined by Landlord's 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
with an insurable interest in the Premises designated in writing 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 loss insurance covering a twelve (12) month period.
All insurance procured by Landlord pursuant to this Section shall be at
commercially reasonable rates. Tenant agrees to pay Landlord as additional rent,
on demand, the full cost 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, and Alterations for their full
replacement value (without depreciation) and to obtain worker's compensation and
public liability and property damage 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. Tenant shall name Landlord
and any Landlord's lender designated in writing as an additional insured and
shall deliver certificates of insurance and renewal certificates to Landlord.
All such policies shall provide for thirty (30) days' prior written notice to
Landlord of any cancellation, termination, or reduction in coverage.
D. WAIVER: Landlord and Tenant hereby waive all 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 use their reasonable efforts
to 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, (provided Tenant receives a tax bill at least 30 days prior to
the delinquency date) the following (collectively referred to herein as
"Taxes"): (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
Page 14
the Lease Term (other than a change of ownership within the existing partnership
structure resulting in a reassessment). 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 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, franchise 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 reasonable fees typically charged
by a third party appeal firm for such services. Property Taxes also shall not
include any tax or assessment expense: (i) levied on Landlord's rental income
unless such tax or assessment expense is imposed in lieu of real property taxes;
(ii) in excess of the amount which would be payable if such tax or assessment
expense were paid in installments over the longest possible term; or (iii)
imposed on land and improvements other than the land upon which the Building is
situated. Tenant, at its sole cost, shall have the right, by appropriate
proceeding, to contest or protest any change in Taxes in its own name, and/or
the name of Landlord if Landlord does not elect to contest such change. If a
reduction in Taxes is obtained for any year in which Tenant paid such Taxes,
then Tenant shall receive a credit or a refund of Tenant's over payment along
with Tenant's pro-rata share of interest corresponding to such amount to the
extent received from the taxing authority.
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 unless utility
services to the Premises are interrupted and such interruption is due to the
active negligence or willful misconduct of Landlord, in which case Tenant shall
be entitled to an abatement of rent unless such Utility or Utilities are
restored within three (3) business days thereafter.
12. TOXIC WASTE AND ENVIRONMENTAL DAMAGE:
A. TENANT'S RESPONSIBILITY: Without the prior written consent of Landlord,
Tenant or Tenant's agents, employees, contractors and invitees ("Tenant's
Agents") shall not bring, use, or permit upon the Premises, or generate, create,
release, emit, or dispose (nor permit any of the same) from the Premises any
chemicals, toxic or hazardous gaseous, liquid or solid materials or waste,
including without limitation, material or substance having characteristics of
ignitability, corrosivity, reactivity, or toxicity or substances or materials
which are listed on any of the Environmental Protection Agency's lists of
hazardous wastes or which are identified in Division 22 Title 26 of the
California Code of Regulations as the same may be amended from time to time or
any wastes, materials or substances which are or may become regulated by or
under the authority of any applicable local, state or federal laws, judgments,
ordinances, orders, rules, regulations, codes or other governmental
restrictions, guidelines or requirements. ("Hazardous Materials") except for
those substances customary in typical office uses and the other Permitted Uses
and fuel and other supplies for the operation and maintenance of Tenant's
emergency
Page 15
generator(s), if any, and the Building Systems to be maintained by Tenant, for
which no consent shall be required. In order to obtain consent, Tenant shall
deliver to Landlord its written proposal describing the toxic material to be
brought onto the Premises, measures to be taken for storage and disposal
thereof, safety measures to be employed to prevent pollution of the air, ground,
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
Materials including doing the following: (i) adhere to all reporting and
inspection requirements imposed by Federal, State, County or Municipal laws,
ordinances or regulations and will 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 Materials on the
Premises; (iii) enforce Hazardous Materials handling and disposal practices
consistent with industry standards; (iv) surrender the Premises free from any
Hazardous Materials arising from Tenant's bringing, using, permitting,
generating, creating, releasing, emitting or disposing of Hazardous Materials;
and (v) properly close the facility with regard to Hazardous Materials including
the removal or decontamination of any process piping, mechanical ducting,
storage tanks, containers, or trenches which have come into contact with
Hazardous Materials as a result of Tenant's acts, and only if required, obtain a
closure certificate from the local administering agency prior to the Expiration
Date.
B. TENANT'S INDEMNITY REGARDING HAZARDOUS MATERIALS: Tenant shall, at its
sole cost and expense, comply with all laws pertaining to, and shall with
counsel reasonably acceptable to Landlord, indemnify, defend and hold harmless
Landlord and Landlord's trustees, shareholders, directors, officers, employees,
partners, affiliates, and agents from, any claims, liabilities, costs or
expenses incurred or suffered arising from the bringing, using, permitting,
generating, emitting or disposing of Hazardous Materials by Tenant, Tenant's
Agents or a third party (other than adjoining landowners or occupants of
adjacent properties) through the surface soils of the Premises during the Lease
Term or the violation of any Governmental Regulation or environmental law, by
Tenant or Tenant's Agents. Tenant's indemnification, defense, and hold harmless
obligations include, without limitation, the following to the extent relating to
Tenant's indemnification obligations under the preceding sentence: (i) claims,
liability, 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 common law or under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 as amended
("CERCLA"), the Resource Conservation and Recovery Act of 1980 ("RCRA") or any
other Federal, State, County or Municipal law, ordinance or regulation now or
hereafter in effect; (ii) claims, liabilities, costs or expenses pertaining to
the identification, monitoring, cleanup, containment, or removal of Hazardous
Materials from soils, riverbeds or aquifers including the provision of an
alternative public drinking water source; (iii) all costs of defending such
claims; (iv) losses attributable to diminution in the value of the Premises or
the Building; (v) loss or restriction of use of rentable space in the Building;
(vi) 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. ACTUAL RELEASE BY TENANT: Tenant agrees to notify Landlord of any
lawsuits or orders which relate to the remedying of or
Page 16
actual release of Hazardous Materials on or into the soils or ground water at or
under the Premises of which Tenant is aware or responsible for. Tenant shall
also provide Landlord all notices required by Section 25359.7(b) of the Health
and Safety Code and all other notices required by law to be given to Landlord in
connection with Hazardous Materials. Without limiting the foregoing, Tenant
shall also deliver to Landlord, within twenty (20) days after receipt thereof,
any written notices from any governmental agency alleging a material violation
of, or material failure to comply with, any laws, regulations, ordinances or
orders, the violation of which or failure to comply with poses a foreseeable and
material risk of contamination of the ground water or injury to humans (other
than injury solely to Tenant or Tenant's Agents.
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 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 commercial 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. 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 other sampling or any other testing, digging,
drilling or analysis to determine whether Tenant is complying with the terms of
this Section 12. If Landlord discovers that Tenant is not in compliance with the
terms of this Section 12, any such costs incurred by Landlord, including
attorneys' and consultants' fees, shall be due and payable by Tenant to Landlord
within ten (10) business days following Landlord's written demand therefore.
E. LANDLORD'S INDEMNITY REGARDING HAZARDOUS MATERIALS: Landlord represents
and warrants, to the best of its knowledge, that as of the Commencement Date,
there do not exist any Hazardous Materials in the Building, Premises or the
Project. Landlord shall indemnify and hold Tenant harmless from any claims,
liabilities, costs or expenses incurred or suffered by Tenant related to the
removal, investigation, monitoring or remediation of Hazardous Materials which
are present or which come to be present on the Premises except to the extent the
presence of such Hazardous Materials is caused by Tenant or by
Page 17
Tenant's failure to prevent a third party from dumping Hazardous Materials
through the surface of the Premises. Landlord's indemnification and hold
harmless obligations include, without limitation, (i) claims, liability, 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 common law or under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Resource Conservation and
Recovery Act of 1980 ("RCRA") or any other Federal, State, County or Municipal
law, ordinance or regulation, (ii) claims, liabilities, costs or expenses
pertaining to the identification, monitoring, cleanup, containment, or removal
of Hazardous Materials from soils, riverbeds or aquifers including the provision
of an alternative public drinking water source, and (iii) all costs of defending
such claims. In no event shall Landlord be liable for any consequential damages
suffered or incurred by Tenant as a result of any such contamination.
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, where such failure continues for
three (3) business days beyond written notice from Landlord that such amount was
not received by the due date, (ii) the abandonment or vacation 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 thirty (30) days,
Tenant shall not be in Default if Tenant commences within such thirty (30) day
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
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; or (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.
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 the Premises to the condition required upon surrender of
this Lease 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
Page 18
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 percent (1%).
B. RIGHT TO RE-ENTER: In the event of any such default by Tenant, Landlord
shall have the right, after terminating this Lease, as permitted by law, 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) the
payment of Base Monthly Rent 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 have 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
Page 19
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, Landlord in its
sole discretion may, without 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
reasonable 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) business days of Landlord's written notice for such payment.
G. HABITUAL DEFAULT: The provisions of Section 13 notwithstanding, the
Parties agree that if Tenant shall have defaulted in the performance of any (but
not necessarily the same) monetary term or condition of this Lease for three or
more times during any twelve (12) month period during the Lease Term, then such
conduct shall, at the election of the Landlord, represent a separate event of
default which cannot be cured by Tenant ("Habitual Default"). Tenant
acknowledges that the purpose of this provision is to prevent repetitive
defaults by Tenant, which work a hardship upon Landlord and deprive Landlord of
Tenant's timely performance under this Lease.
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 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
Page 20
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: 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 (except due to the gross negligence or willful
misconduct of Landlord) 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, except
to the extent caused by the willful misconduct or active negligence of Landlord
or from the failure of Tenant to keep the Premises in good condition and repair
as herein provided, except to the extent due to the gross negligence or willful
misconduct of Landlord. Further, in the event Landlord is made party to any
litigation due to the acts or omission of Tenant and 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
except to the extent due to the gross negligence or willful misconduct of
Landlord.
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, 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 and Tenant. 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. With respect
to a destruction which Landlord is obligated to repair or may elect to repair
under the terms of this Section, Tenant waives the provisions of Section 1932,
and Section 1933, Subdivision 4, of the Civil Code of the State of California,
and any other similarly enacted statute, and the provisions of this Section 15
shall govern in the case of such destruction.
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 (unless Tenant, within 45
days after the casualty, agrees in writing to pay all costs associated with
rebuilding), (iii) the damage or destruction is not fully covered by the
insurance maintained by Landlord (unless Tenant, within 45 days after
Page 21
the casualty, agrees in writing to contribute any shortfall), (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 ninety (90) days without payment
of rent. 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 in excess of 25% of the Premises, either Tenant or 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 the operation of Tenant's business as such business was
performed in the Premises prior to the Vesting Date, 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, 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 but not Government Code Section 7262 with
respect to those claims which Tenant may pursue by separate action.
17. ASSIGNMENT OR SUBLEASE:
A. CONSENT BY LANDLORD: Except as specifically provided in 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 consent shall not
be unreasonably withheld, conditioned or delayed. In the event Tenant desires to
assign this Lease or any interest herein or sublet the Premises or any part
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 year,
(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 ten
(10) business 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 Premises provided, however, that Landlord
Page 22
shall not have the right to terminate on any sublease or assignment expiring two
(2) or more years before the Expiration Date; (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 upon conditions set forth
below. If Landlord should fail to notify Tenant in writing of such election
within the 10 business-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. In the
event Landlord elects option (ii) above, Landlord's written consent to the
proposed assignment or sublease shall not be unreasonably withheld, conditioned
or delayed, 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 Tenant or 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; (v) Tenant reimburses Landlord on demand for any
costs that may be incurred by Landlord in connection with said assignment or
sublease, including the reasonable 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, said reasonable
out-of-pocket costs not to exceed $2,500.00 in total; and (vi) Tenant shall not
have advertised or publicized in any way the availability of the Premises
without prior notice to Landlord. 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. Failure by Landlord to either consent to
or disapprove a proposed assignment or sublease within the ten (10) business day
time period specified above shall be deemed to be Landlord's approval thereof,
so long as Tenant's request includes the following statement in capitalized and
boldfaced letters: By failing to respond to this request, you will be deemed to
have approved the lease assignment or sublease described herein.
B. ASSIGNMENT OR SUBLETTING CONSIDERATION: Landlord and Tenant hereby agree
that Landlord shall receive 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
(a) the Base Monthly Rent payable hereunder, (b) reasonable subletting and
assignment costs incurred by Tenant including lease commissions, attorneys fees,
costs of demising or otherwise preparing the sublease space for occupancy, and
(c) the unamortized cost of Tenant Improvements initially installed by Tenant
provided such Tenant Improvements are specifically utilized by the subtenant or
assignee. 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 effective until the assignee or subtenant shall execute, acknowledge, and
deliver to Landlord an agreement, in form and substance reasonably
Page 23
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 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
transferee or buyer 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.
E. PERMITTED TRANSFERS: Notwithstanding anything contained in this Section
17, so long as Tenant otherwise complies with the provisions of this Article,
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.
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 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 if
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
Page 24
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.
I. CUSTOMER EQUIPMENT: Landlord acknowledges that Tenant's business in the
Premises may require the installation of certain communications equipment by
certain licensees and customers of Tenant (collectively, "Customers") in order
for such Customers to interconnect with Tenant's equipment in the Premises or to
permit Tenant to manage or operate such Customers' equipment, and so long as
such Customers are not granted possessory rights to any portion of the Premises
(whether as assignees, sublessees, licensees, or in any other capacity), these
contracts with the Customers shall not require Landlord's consent, and these
Customer contracts do hereby have the Landlord's consent at no consideration to
Landlord for the limited purpose of permitting the services and uses described
above and so long as Tenant causes such Customers to comply, and all such
services and uses are conducted in a manner in compliance with, all of the terms
and conditions of this Lease.
18. OPTION TO EXTEND THE LEASE TERM:
A. GRANT AND EXERCISE OF OPTION: Landlord grants to Tenant, subject to the
terms and conditions set forth in this Section 18.A, two (2) options (the
"Options") to extend the Lease Term for an additional term (the "Option Term").
Each Option 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 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 Base Monthly Rent applicable to the
period immediately prior to the commencement of the Option 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
Page 25
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 being obtained 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%) 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 allowances, (iii) building
improvement costs, and (iv) vacancy costs.
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
Page 26
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 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 Broadcom Corporation (and any surviving corporation,
transferee or buyer pursuant to Section 17.D. above; or any 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 represents it has not utilized or contacted a real
estate broker or finder with respect to this Lease other than Real Estate &
Logistics Technology, Inc. ("Broker") and Tenant agrees to indemnify, defend and
hold Landlord harmless against any claim, cost, liability or cause of action
asserted by any other broker or finder claiming through Tenant. Landlord shall
pay Broker a real estate commission equal to $751,894.00, payable one half upon
Landlord's receipt of the executed Lease and a check from Tenant for prepaid
Base Monthly Rent for the first month of the Lease, and the remaining half upon
the Commencement Date of the Lease.
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
Page 27
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 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
Page 28
ARBITRATION OF DISPUTES" PROVISION TO NEUTRAL ARBITRATION.
LANDLORD: ______ TENANT: _______
F. ENTIRE AGREEMENT: This Lease and the exhibits attached hereto contains
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 at least 24 hours' notice to Tenant (except in
case of emergency when no prior notice shall be required) and subject to
Tenant's reasonable security regulations, Tenant shall permit 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 that Tenant's use of and access to the
Premises are not materially adversely affected; (iv) performing any obligations
of Landlord under this Lease including remediation of Hazardous Materials if
determined to be the responsibility of Landlord, (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 one hundred eighty (180) days 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 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) business 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) business 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 when 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
Page 29
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 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 by a reputable overnight service such as FedEx at the address
for such party specified in Section 1 of this Lease (and when sending to Tenant,
marked Attn: Director of Corporate Services), 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. Any notice received on Saturday,
Sunday or legal holiday shall be deemed received on the next business day.
Copies of all default notices shall be sent concurrently to Brobeck, Phleger &
Harrison LLP, 12390 El Camino Real, San Diego, CA 92130; Attn: W. Scott Biel,
Esq. 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. When a statute requires service of a notice in a particular
manner, service of that notice (or a similar notice required by this Lease)
shall replace and satisfy the statutory service-of-notice procedures, including
those required by Code of Civil Procedure Section 1162 or any similar or
successor statute.
N. PROPERTY MANAGEMENT: Tenant agrees to pay Landlord along with the
expenses to be reimbursed by Tenant a monthly fee for management services
rendered by either Landlord or a third party manager engaged by Landlord (which
may be a party affiliated with Landlord), in the amount of three percent (3%) of
the Base Monthly Rent.
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.
Page 30
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 ten (10) business 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 (provided such form is commercially
reasonable), 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 pay Base Monthly Rent and
additional rent and observes and performs all required provisions of this Lease.
Within thirty (30) 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 use its best efforts to obtain and deliver to Tenant as soon as
reasonably possible following the Effective Date written nondisturbance
agreements ("Nondisturbance Agreements") from all lessors under all ground
leases or underlying leases, from all beneficiaries under all deeds of trust and
all mortgagees under all mortgages affecting the Premises, stating that so long
as no event of default has occurred, this Lease and all of the terms,
provisions, and conditions of this Lease, shall remain in full force and effect,
and neither this Lease, nor Tenant's rights nor Tenant's possession of the
Premises will be disturbed during the Term of this Lease or any extension
thereof.
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. TRANSPORTATION DEMAND MANAGEMENT PROGRAMS: Should a government agency or
municipality require Landlord to institute TDM (Transportation Demand
Management) facilities and/or programs, Tenant agrees that the cost of
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TDM imposed facilities and programs required on the Premises, including but not
limited to employee showers, lockers, cafeteria, or lunchroom facilities, shall
be paid by Tenant. Further, any ongoing costs or expenses associated with a TDM
program which are required for the Premises and not provided by Tenant, such as
an on-site TDM coordinator, shall be provided by Landlord with such costs being
included as additional rent and reimbursed to Landlord by Tenant within thirty
(30) days after demand. If TDM facilities and programs are instituted on a
Project wide basis, Tenant shall pay its proportionate share of such costs in
accordance with Section 8 above.
X. 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.
20. RIGHT OF FIRST OFFER:
A. GRANT: Subject to the existing rights of any third parties and provided
Tenant concurrently exercises it right of first offering as described below on
all three buildings as a group, Landlord hereby grants Tenant a right of first
offering to lease the adjacent buildings at 2421, 2431 and 2441 Mission College
Boulevard ("Expansion Buildings") totaling 282,649 square feet as highlighted in
green on Exhibit "A"; provided that if Landlord intends to offer less than all
of the Expansion Buildings to any third party, Tenant shall have similar rights
with respect to such lesser additional premises to be so offered. Prior to
Landlord offering to lease the Expansion Buildings to a third party (other than
the third parties with existing rights), Landlord shall give Tenant written
notice of such desire and the terms and other information under which Landlord
intends to lease the Expansion Buildings. Provided at the time of exercise, (i)
Tenant is not in default and (ii) Tenant's then current net worth (as evidenced
by its most recent financial statements) is at least equal to its net worth at
the time of execution of this Lease, Tenant shall have the option, which must be
exercised, if at all, by written notice to Landlord within ten (10) days after
Tenant's receipt of Landlord's notice, to lease the Expansion Buildings at the
rent and terms of lease specified in the notice. In the event Tenant timely
exercises such option to lease the Expansion Buildings, Landlord shall lease the
Expansion Buildings to Tenant, and Tenant shall lease the Expansion Buildings
from Landlord in accordance with the rent and terms specified in Landlord's
notice. Landlord and Tenant shall, in good faith, attempt to reach agreement on
the terms of a mutually acceptable lease agreement consistent with the terms set
forth in Landlord's notice and otherwise on the terms of this Lease within
fifteen (15) business days of Landlord's notice. In the event (i) Landlord and
Tenant are unable to reach agreement on a mutually acceptable lease within such
15 business-day period or (ii) Tenant fails to exercise Tenant's option within
said ten (10) day period, Landlord shall have one hundred eighty (180) days
thereafter to lease the Expansion Buildings at no less than ninety percent (90%)
of the rental rate and upon the same or substantially the same other terms of
lease as specified in the notice to Tenant. In the event Landlord fails to lease
the Expansion Buildings within said one hundred eighty (180) day period or in
the event Landlord proposes to lease the Expansion Buildings at less than ninety
percent (90%) of the rental rate or on other material terms which are more
favorable to the prospective tenant than that proposed to Tenant, Landlord shall
be required to resubmit such offer to Tenant in accordance with this Right of
First Offering.
B. EXCLUSIONS: Notwithstanding the foregoing, this Right of First Offering
shall automatically terminate, (i) upon the expiration or sooner termination of
the Lease, or (ii) in the event that Landlord transfers its interest in the
Premises or in the Expansion Buildings.
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21. NORTEL SUBLEASE: Within thirty (30) days of the Effective Date, Tenant
agrees to enter into a mutually agreeable sublease with Nortel Networks for 310
square feet of the Premises as shown on the attached Exhibit "D".
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease on the day and
year first above written.
LANDLORD: Sobrato Interests, TENANT: Broadcom Corporation,
a California Limited Partnership a California Corporation
By: /s/ JOHN M. SOBRATO * By: /s/ WILLIAM J. RUEHLE
---------------------------------- -----------------------------------
Its: General Partner Its: Vice President
--------------------------------- ------------------------------------
* By: /s/ WILLIAM J. RUEHLE
----------------------------------
Its: Chief Financial Officer
-----------------------------------
* NOTE: This lease must be signed by two (2) officers of such corporation: one
being the chairman of the board, the president, or a vice president, and the
other being the secretary, an assistant secretary, the chief financial officer
or an assistant treasurer. If one (1) individual is signing in two (2) of the
foregoing capacities, that individual must sign twice; once as one officer and
again as the other officer and in such event, Tenant must deliver to Landlord a
certified copy of a corporate resolution authorizing the signatory to execute
this Lease.
Page 34
EXHIBIT "A" - PREMISES, BUILDING & PROJECT
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EXHIBIT "B" - DRAFT LETTER OF CREDIT
Page 36
EXHIBIT "C" - THERMA MECHANICAL REPORT
Page 37
EXHIBIT "D" - NORTEL SUBLEASE SPACE
Page 38
SECOND AMENDMENT TO LEASE
This SECOND AMENDMENT TO LEASE ("Second Amendment") is made as of March
30, 2001, by and between Sobrato Interests, a California limited partnership
("Landlord"), and Broadcom Corporation, a California corporation ("Tenant").
RECITALS
WHEREAS, Landlord and Tenant entered into that certain Lease dated
November 20, 2000 ("Lease") relating to certain premises located at 2451-2465
Mission College Boulevard, Santa Clara, California ("Premises"), as more fully
described in the Lease; and
WHEREAS, Landlord and Tenant desire to amend the Lease in accordance with
the terms and provisions hereof.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants set forth below,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. All capitalized terms not specifically defined in this Second Amendment
shall have the meanings set forth in the Lease.
2. The first sentence of Section 4.A of the Lease is hereby deleted and the
following is substituted therefor: "The term ("Lease Term") shall be for
ninety-six (96) months, commencing on July 1, 2001 (the "Commencement Date")
and ending on June 30, 2009 ("Expiration Date")."
3. The schedule of Base Monthly Rent as set forth in Section 4.A of the
Lease is hereby deleted and the following is substituted therefor:
Months 01-12: $768,925 per month $5.62 psf
Months 13-24: $799,000.76 per month $5.84 psf
Months 25-36: $830,443.60 per month $6.07 psf
Months 37-48: $863,253.52 per month $6.31 psf
Months 49-60: $896,063.44 per month $6.55 psf
Months 61-72: $931,607.52 per month $6.81 psf
Months 73-84: $968,518.68 per month $7.08 psf
Months 85-96: $1,006,796.92 per month $7.36 psf
4. The first sentence of Section 4.C of the Lease is hereby deleted and the
following is substituted therefor: "On or prior to May 1, 2001, Tenant
shall deposit with Landlord the sum of Three Million One Hundred Thousand
and No/100 Dollars ($3,100,000.00) ("Security Deposit")."
5. The sixth sentence of Section 4.C of the Lease, which currently reads "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" is hereby deleted.
6. The last full paragraph of Section 4.C of the Lease, regarding Tenant's
right to deposit a Letter of Credit in lieu of a cash Security Deposit, is
hereby deleted in its entirety.
7. Except as amended in this Second Amendment, all of the terms and provisions
of the Lease remain unchanged and in full force and effect.
8. This Second amendment may be executed in any number of counterparts, each
of which shall be deemed an original and all of which taken together shall
constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be executed as of the day and year first above written.
LANDLORD: TENANT:
SOBRATO INTERESTS, BROADCOM CORPORATION,
a California limited partnership a California corporation
By: /s/ JOHN M. SOBRATO By: /s/ WILLIAM J. RUEHLE
---------------------------- ---------------------------
Name: John M. Sobrato Title: Vice President
-------------------------- ------------------------
Title: General Partner By: /s/ WILLIAM J. RUEHLE
------------------------- ---------------------------
Title: Chief Financial Officer
------------------------
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