Exhibit 10.21
LEASE AGREEMENT
by and between
M-D DOWNTOWN SUNNYVALE, LLC
("LANDLORD")
and
BROADCOM CORPORATION
("TENANT")
DATED AS OF MAY 18, 2000
BASIC LEASE INFORMATION
Lease Date: May 18, 2000
Landlord: MD-Downtown Sunnyvale, LLC,
a Delaware limited liability company
Managing Agent: The Mozart Development Company
Landlord's and Managing Agent's Address:
c/o The Mozart Development Company
1068 East Meadow Circle
Palo Alto, CA 94303
Attn: James Freitas & John Mozart
Tenant: Broadcom Corporation, a California corporation
TENANT'S ADDRESS: FOR NOTICE FOR BILLING
16215 Alton Parkway Same as for Notice
Irvine, CA 92618
Attn: Director of Attn: Accounts payable
Corporate Services
with a copy to:
The Premises
Attn: Group Controller
Land: The real property outlined on Exhibit "A"
attached hereto.
Building: A five-story building at the corner of Washington
and Mathilda Avenues in Sunnyvale, currently in
the planning and design stage, to be constructed
on a portion of the Land in the location and
configuration generally shown on Exhibit "A" in
accordance with this Lease, which shall include a
three to four level underground parking garage
(the "Phase I Garage").
Premises: All space located in the entire Building,
exclusive of (i) approximately 3,000 square feet
of space that will be located on the ground floor
generally in the area outlined on the floor plan
attached hereto as Exhibit "A-1", which shall be
designated more specifically on Landlord's Plans
(the "Excluded Space"), and (ii) the Phase I
Garage.
Phase I: The Land, the Building (including the Premises,
the Excluded Space and the Phase I Garage) and
any other improvements located on or under the
Land.
Project: The Project shall consist of Phase I. The Project
may be expanded to include other land and
improvements and/or reconfigured in accordance
with Paragraph 1.
Rentable Area of the Premises: Approximately 121,000 rentable square feet. The
Premises will be measured for the purposes of
rentable square footage to the exterior surface
of the outside walls or exterior glass lines, not
including exterior planters, with no deductions
for vertical penetrations or architectural
details (such that, among other things, there are
no deductions for indentiations or additions for
ledges or cornices).
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Within thirty (30) days after substantial
completion of the Base Building, Landlord will
provide to Tenant a certification of Landlord's
architect with respect to its calculations of the
actual Rentable Area of the Premises, and the
Rentable Area shown in such certification shall
be conclusive and binding on the parties for
purposes of calculating Monthly Base Rent,
Tenant's Share and the Tenant Allowance hereunder
and not subject to remeasurement; provided,
however, that Tenant shall have a period of
fifteen (15) business days after receipt of such
certification to verify Landlord's architect's
measurements and calculation (without conducting
a physical remeasurement of the Premises) and, if
Tenant discovers an error in Landlord's
architect's determination of Rentable Area in
excess of one percent (1%) of the stated Rentable
Area, Landlord shall cause Landlord's architect
to recalculate and recertify the Rentable Area
and such recalculation shall be conclusive and
binding on the parties. If the Rentable Area of
the Premises has not been vertified prior to the
Commencement Date, Monthly Base Rent, Tenant's
Share and the Tenant Allowance shall be
determined based on Landlord's architect's
initial determination of the Rentable Area, and a
retroactive adjustment (if and as appropriate)
shall be made to Monthly Base Rent, Tenant's
Share and/or the Tenant Allowance at such time as
the Rentable Area is finally verified as provided
in this paragraph.
Parking Spaces: 360 spaces (with the portion of such spaces that
are "compact" spaces not to exceed the percentage
allowed by applicable Laws that affect the
Project; provided, however, that such percentage
of the parking spaces that are "compact" spaces
shall not exceed 10% unless such greater
percentage is required by applicable Laws) will
be provided for Tenant's use in accordance with
Paragraph 33.
Tenant's Use of the Premises: General office, sales, research and development
(excluding uses that involve the use of Hazardous
Substances, as defined in Paragraph 39, beyond
levels typical for office use).
Lease Term: Ten (10) years (the "Initial Term"), with the
right to extend for two (2) additional five (5)
year terms (each an "Extension Term") in
accordance with Paragraph 42. Tenant also shall
have a limited right to holdover for a period of
three months (the "Holdover Term") in accordance
with, and subject to the terms and conditions of,
Paragraph 14(a). The Initial Term, any Extension
Term(s) and/or any Holdover Term shall
collectively be defined as the "Term".
Scheduled Rent Commencement Date: Ninety (90) days after the Delivery Date.
Tenant Allowance: $40 per rentable square foot of the Rentable Area
of the Premises.
Monthly Base Rent: $3.35 per rentable square foot of the Rentable
Area of the Premises.
Monthly Base Rent Adjustment: On each anniversary of the Commencement Date, the
Monthly Base Rent shall increase by four percent
(4%) of the Monthly Base Rent for the immediately
prior year.
Tenant's Share: 97.58%
Security Deposit: None.
Guarantor of Lease: None.
Landlord's Broker: Dennis Chambers and Steve Horton of CPS
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Tenant's Broker: Kim Josephson of Real Estate & Logistics
Technology and Jerry Inguagiato of CB Richard
Ellis
Broker's Fee or Commission, if any, paid by: Landlord, pursuant to separate
agreement
The foregoing Basic Lease Information is hereby incorporated into and made a
part of this Lease. Each reference in this Lease to any of the Basic Lease
Information shall mean the respective information hereinabove set forth and
shall be construed to incorporate all of the terms provided under the particular
paragraph pertaining to such information. In the event of any conflict between
any Basic Lease Information and the Lease, the latter shall control.
LANDLORD:
M-D DOWNTOWN SUNNYVALE, LLC,
a Delaware limited liability company
By: /s/ JOHN MOZART
-------------------------------
Its: President
-------------------------------
TENANT:
BROADCOM CORPORATION,
a California corporation
By: /s/ WILLIAM J. RUEHLE
-------------------------------
Its: Vice-President and CFO
-------------------------------
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LEASE AGREEMENT
THIS LEASE AGREEMENT (the "Lease") is made and entered into as of May 18,
2000, by and between M-D DOWNTOWN SUNNYVALE, LLC, a Delaware limited liability
company (herein called "Landlord"), and BROADCOM CORPORATION, a California
corporation (herein called "Tenant").
1. PREMISES AND PROJECT.
(a) PREMISES. Upon and subject to the terms, covenants and conditions
hereinafter set forth, Landlord hereby leases to Tenant and Tenant hereby
hires from Landlord, the "Premises" (as defined in the Basic Lease
Information).
(b) ACQUISITION OF THE LAND. Landlord currently is negotiating a
Disposition and Development Agreement (as it may be revised prior to
execution, or amended thereafter from time to time, the "DDA") with the
Sunnyvale Redevelopment Agency ("City") that would give Landlord the right
to acquire the Land, plus additional land generally outlined on the
Potential Project Site Plan attached hereto as Exhibit "B" (the "Additional
Land"), and construct the Building and additional buildings and parking
facilities (which may be connected to, and operated and managed
collectively with, the Phase I Garage and/or the City Garage (as defined
below)) thereon. Tenant acknowledges that Landlord has not acquired the
Land nor constructed the Building as of the date of this Lease. Landlord
may elect, in Landlord's sole discretion, (i) to acquire all, a portion of,
or none of the Land and/or the Additional Land, and to acquire the
Additional Land prior to, simultaneously with, or after Landlord acquires
the Land. If Landlord acquires the portion of the Additional Land on which
Building III will be located as shown on Exhibit "B", pursuant to the DDA
Landlord would then be obligated to build an underground public parking
facility (the "City Garage") under certain adjacent land owned by the City,
which underground parking facility would be connected physically to the
Project Garage (as defined below), and in addition would be obligated to
grant the City the right, pursuant to a Declaration of Covenants,
Conditions, and Restrictions and Reciprocal Easement Agreement (Downtown
Sunnyvale Parking Structures, in the form attached to the DDA or such other
form as may be agreed upon between City and Landlord (such document being
defined as the "Parking REA"), to use the Project Garage for parking in up
to 320 parking stalls in evening and weekend hours as specified in the DDA,
and also to use the entire Project Garage for "special events" parking in
evening and weekend hours up to eight times per year as specified by the
City (such rights, and any other similar parking rights granted to the City
pursuant to the DDA, the Parking REA or other approvals in connection with
Landlord's initial development of the Project, the "City Parking Rights").
The Parking REA also shall provide for the allocation of certain shared
costs between the City Garage and the Project Garage and such other matters
and Landlord and City may mutually agree, provided that the costs of
maintenance, repair and operation of the Project Garage will be allocated
between the City Garage and Project Garage in a reasonable manner taking
into account the proportionate use and/or space available to the City and
the Project. All parking rights of Tenant hereunder, and of the other
tenants in the Project, are subject to the City Parking Rights.
(c) PROJECT. The term "Project" shall mean Phase I (as defined in the
Basic Lease Information). In addition, if Landlord (or one or more
affiliates of Landlord) acquires any or all of the Additional Land, at
Landlord's sole election (exercisable by delivering written notice thereof
to Tenant) the term "Project" may be revised to include such Additional
Land and any of the buildings, parking structures and improvements
constructed on the Additional Land that is acquired by Landlord (or one or
more affiliates of Landlord) that Landlord designates as being included in
the Project (such Additional Land and improvements being defined herein as
the "Future Phases"). Landlord may expand the land and improvements that
are included in the "Project" to include (i) all or any portion of the
Future Phases, and/or (ii) any other property acquired by Landlord or its
affiliates (as such term is defined at any given time), regardless of
whether the Future Phases or any such other property is leased to Tenant or
leased to, sold to or occupied by a third party or third parties. Such
expansion may include parking facilities that are physically connected to
the Phase I Garage and, at Landlord's sole election, are jointly operated
with the Phase I Garage (the Phase I Garage, together with all other
parking facilities included in the Project as is exists from time to time
(if any), being defined herein as the "Project Garage"). Landlord shall
deliver written notice to Tenant of Landlord's intent to expand the
Project, identifying the property and improvements which will be added to
the Project and including a new Exhibit "A" reflecting the addition to the
Project. Any such Project Expansion shall be effective on the date
designated by Landlord in its notice to Tenant. The development of
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the Project (including for purposes of this definition both Phase I and the
Future Phases, to the extent Landlord elects to acquire and develop them)
as contemplated or required by the DDA shall be defined in this Lease as
the "Initial Development", and shall include, without limitation, (i) the
acquisition of the Land and any Additional Land, (ii) construction of the
Building, the Project Garage, and all other buildings and improvements
(including any necessary demolition) to be constructed on the Land or
Additional Land, (iii) creation, filing and recordation of the Initial
Parcel Map (as defined below), the Parking REA, the Initial CC&Rs (as
defined below), and any other Encumbrances contemplated by the DDA, and
(iv) any and all other activities, actions, requirements, assessments,
approvals, documents, instruments and similar items that are, in Landlord's
sole discretion, necessary or desirable in connection therewith.
(d) RECONFIGURATION/PARCEL MAP. In connection with the Initial
Development, Landlord intends to file one or more parcel maps that will, at
Landlord's sole election, either (A) cause the airspace to be occupied by
the Building (excluding the Phase I Garage) to consist of one legal parcel,
and the airspace to be occupied by each additional building in the Project
to consist of a separate legal parcel, and the Project Garage and Project
Common Area collectively to consist of a separate legal parcel, or (B)
cause Phase I to consist of one legal parcel and, if Landlord acquires any
of the Additional Land, cause the Additional Land to consist of one or more
separate legal parcels (any such parcel map being defined as the "Initial
Parcel Map"). Any Initial Parcel Map shall be filed in Landlord's sole
discretion. Landlord reserves the right, in connection with the filing of
any Initial Parcel Map, without incurring any liability to Tenant and
without constituting an eviction (constructive or otherwise), and without
entitling Tenant to any abatement of Rent or to terminate this Lease or
otherwise releasing Tenant from any of Tenant's obligations under this
Lease, to reconfigure the parcels in any Initial Parcel Map, or to file a
different parcel map, even if such map would cause a reduction in the size
of the Land, so long as the size of the building envelope in which the
Building is or will be located is not materially affected by such action,
the Project continues to be in compliance with all applicable Laws
(including, without limitation, city parking requirements and other
development approvals and land use regulatory requirements), Tenant's
Permitted Use of the Premises as allowed by this Lease is not materially
impaired thereby, and the Minimum Parking continues to be available to
Tenant as provided in Paragraph 33. Landlord shall use commercially
reasonable best efforts to minimize any additional assessments against the
Project, any increases in Tenant's cost of occupancy and any reductions in
Tenant's rights under this Lease (other than assessments, costs and
limitations on Tenant's rights specifically contemplated by the DDA and/or
this Lease), as a result solely of any conditions of approval associated
with such reconfiguration or different parcel map, so long as in Landlord's
reasonable business judgment, (i) such efforts will not materially and
adversely interfere with Landlord's ability to obtain any necessary
approvals or permits in connection with the development of or construction
on any portion of the Project, or otherwise have a net detrimental impact
on the Project, and (iii) the resulting savings in assessments and costs
will exceed any economic detriment to the Project resulting from such
efforts (such as by the imposition of additional conditions or
requirements); provided, however, that Landlord shall not be liable to
Tenant for failure to so minimize assessments, costs or limitations despite
Landlord's commercially reasonable best efforts. Landlord shall deliver
written notice to Tenant of any Initial Parcel Map and any resulting
alteration of the boundaries of Phase I. Any reconfiguration of the Land
shall be effective on the date any such Initial Parcel Map is filed. On the
effective date of such Initial Parcel Map, the description of the Land and
of Phase I shall automatically be revised (if applicable), and the terms
and conditions of the original Lease shall remain in full force and effect
except that any revised Exhibits A and/or B provided by Landlord to Tenant
with its written notice reflecting the location of the newly configured
Land and/or Phase I shall become part of this Lease. The Base Rent shall
not be revised as a result of any Initial Parcel Map. Tenant shall
cooperate with Landlord in connection with the creation and filing of the
Initial Parcel Map and/or any other subdivision or lot line adjustment
process with respect to the Land or Project generally. In addition to
filing the Initial Parcel Map as provided herein, at any time during the
Term, Landlord may reduce the land and improvements that are included in
the Project, subdivide the Project, or otherwise reconfigure the Project in
any way, so long as in connection with such reconfiguration (other than the
Initial Parcel Map) the size of the building envelope in which the Building
is or will be located is not materially affected by such action, the
Project continues to be in compliance with all applicable Laws (including,
without limitation, city parking requirements and other development
approvals and land use regulatory requirements), Tenant's Permitted Use of
the Premises as allowed by this Lease is not impaired thereby, and the
Minimum Parking continues to be available to Tenant as provided by
Paragraph 33, and Tenant's cost of occupancy of the Premises are not
materially increase and/or Tenant's rights under this Lease are not
materially diminished as a result solely of such reconfiguration (except as
required by applicable governmental authority, quasi-governmental
authority, or Laws), unless Tenant consents to such reconfiguration in
writing in advance, which consent shall not be unreasonably withheld,
conditioned or delayed. Upon Landlord's request,
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Tenant shall execute and deliver any documents or instruments reasonably
required in connection with the Initial Parcel Map and/or any other
subdivision or lot line adjustment process in connection with this
Paragraph 1(d)(i).
(e) CONSTRUCTION OF FUTURE PHASES. Landlord may construct additional
buildings and improvements on the Land or Additional Land in such locations
as Landlord may determine, in its sole discretion. Tenant acknowledges that
during any such construction and development, Landlord, its tenants, and
their respective employees, contractors and agents will require access
across and through the Project Common Area for purposes of construction and
development of additional buildings and improvements in the Project (as it
may exist from time to time) and use of portions of the Project Common Area
for construction staging in connection with such construction and
development, including, without limitation, for the storage of all
necessary materials, tools and equipment. Landlord shall not be liable to
Tenant for any interference with Tenant's use of the Project Common Area
with respect to such construction and development activities or any noise,
vibration, or other disturbance to Tenant's business at the Premises which
may result from such activities, so long as the Building's structural
components and Building Systems are not materially adversely affected by
such activities, the Project continues to be in compliance with all
applicable Laws, Tenant at all times has reasonable access to the Building
and use of the Minimum Parking as provided in Paragraph 33, and Landlord
takes commercially reasonable steps to minimize any material adverse effect
on Tenant's Permitted Use of the Premises arising from such activities.
Landlord shall, at Landlord's expense, repair any damage to the Building's
structural components or Building Systems that results from Landlord's
construction and development activities, provided that Landlord's
obligation to make any such particular repair shall not commence until
Tenant notifies Landlord in writing of any circumstances which Tenant
believes may trigger Landlord's obligations. Tenant shall cooperate with
Landlord in connection with any construction or development activities with
respect to any such construction of buildings or improvements, including,
without limitation, by cooperating in any parking restrictions and
limitations during such activities as more specifically provided in
Paragraph 33.
(f) COMMON AREA. The term "Common Area" or "Project Common Area" shall
mean all areas and facilities within the Project that are not designated by
Landlord, from time to time, for the exclusive use of Tenant or any other
tenant or other occupant of the Project, that are located outside the
building envelopes of the Building and of any other buildings now or
hereafter located in the Project. Project Common Areas shall include,
without limitation, the Project Garage, facilities and equipment servicing
the Project as a whole or the Project Garage, access and perimeter roads
and ramps, pedestrian sidewalks, landscaped areas, plaza areas, trash
enclosures, recreation areas and the like.
(g) CC&RS. The operation of the Project Common Area (including the
Project Garage), and access to, from and between various portions of the
Project Common Area, may, at Landlord's election, be governed by
conditions, covenants and restrictions and/or reciprocal easements and/or
reciprocal licenses (any of the foregoing being defined herein collectively
as "CC&Rs"), as are required by or pursuant to the DDA, in connection with
the Initial Parcel Map, or as Landlord may otherwise determine in its
discretion are necessary or desirable in connection with the Initial
Development (such CC&Rs in connection with the DDA or Initial Development
being defined herein collectively as the "Initial CC&Rs") between the
owners of portions of the Project, including, without limitation, in order
to provide necessary or appropriate access over, across and from the Common
Area (including any ramps between the parking structures, roadways and
drive aisles located thereon) to other portions of the Common Area and/or
to any other property which is included in the Project, and/or that
encumber portions of the Project for the benefit of other portions of the
Project or the adjacent City property (or reciprocally benefit each other),
and/or in order to provide sufficient parking for any portion of the
Project or in connection with the City Parking Rights, and/or that allocate
costs of the operation, maintenance, repair Project and/or Project Common
Area among the owners of portions of the Project in a reasonable and
customary manner. Without limiting the foregoing, if (and from and after
such time as) the Project is expanded to include Future Phases, the Initial
CC&Rs (or subsequent CC&Rs) shall provide for the following: (i) elevator
and stairwell access from the Phase I Garage to the exterior Project Common
Area through a corridor located on the ground floor of the Building (in the
Premises) from the elevator and stairwell to the exterior Project Common
Area in the general location and configuration shown on the attached
Exhibit "A-2" and as more specifically shown on Landlord's Plans (as
defined in the Work Letter) (such access area being defined herein as the
"Dedicated Garage Exit Area"), which access right shall burden the
Dedicated Garage Exit Area of the Premises for the benefit of other
portions of the Project, provided that such corridor shall be physically
partitioned from the remainder of the Premises such that Tenant shall have
the right to
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limit, prevent or lock any direct access to the remainder of the Premises
from such corridor; and (ii) elevator and stairwell access from the portion
of the Project Garage located under each building in the Project to the
exterior Project Common Area through a corridor located on the ground floor
of each such building from the elevator and stairwell to the exterior
Project Common Area in a substantially similar location and configuration
as the Dedicated Garage Exit Area, which access right shall burden the
applicable Future Phase for the benefit of the Premises and other Future
Phases of the Project. The Initial CC&Rs may be recorded against the
Project by Landlord at any time, at Landlord's election, and will at all
times be superior in priority to this Lease, provided that the Initial
CC&Rs do not materially adversely affect Tenant's Permitted Use of the
Premises, Tenant's Minimum Parking as provided in Paragraph 33, or
reasonable access to the Premises, except as contemplated by this Lease or
the DDA. Landlord shall have the right to make reasonable modifications to
the Initial CC&Rs during the Term, or to create additional CC&Rs affecting
all or portions of the Project, provided that such modifications or
additional CC&Rs do not materially adversely affect Tenant's Permitted Use
of the Premises, Minimum Parking as provided in Paragraph 33 or access to
the Premises, and Tenant's cost of occupancy of the Premises are not
materially increased and/or Tenant's rights under this Lease are not
materially diminished as a result solely of such modifications or
additional CC&Rs (except as required by applicable governmental authority,
quasi-governmental authority, or Laws), unless Tenant consents to such
modifications or additional CC&Rs in writing in advance, which consent
shall not be unreasonably withheld, conditioned or delayed.
(h) USE OF THE PREMISES AND COMMON AREA. Tenant may use and occupy the
Premises for the purposes specified in the Basic Lease Information
("Permitted Use"), subject to the terms and conditions of this Lease, and
for no other use or purpose without the prior written consent of Landlord.
Landlord shall have the right to grant or withhold consent to a use other
than the Permitted Use in its sole discretion. Tenant shall be entitled to
the nonexclusive use of the Common Area with Landlord and other occupants
(if any) of the Project in accordance with the limitations and restrictions
in this Lease and the Rules and Regulations established by Landlord from
time to time; provided, however, that if Landlord reconfigures the Project
or sells a portion of the Project (including, without limitation, if the
Project Garage is owned by an entity other than Landlord), Landlord shall
assure to Tenant that Tenant shall continue to have reasonable access to
the Premises and Tenant's Minimum Parking as provided in Paragraph 33
through the Initial CC&Rs or subsequent CC&Rs or other like mechanism.
Notwithstanding anything to the contrary in the Basic Lease Information or
in this Lease, Tenant understands and agrees that (a) the Parking REA, the
Initial CC&Rs and such additional CC&Rs as Landlord may elect to record
against the Project as provided in Paragraph 1(g) , and/or (b) a ground
lease, and /or (c) certain other Encumbrances recorded in the official
records of Santa Clara County (collectively, the Parking REA, the Initial
CC&Rs, any additional CC&Rs, any ground lease and any Encumbrances are
sometimes collectively referred to herein as the "Encumbrances") may
encumber the Land and/or Project now or in the future, and that Tenant's
occupancy and use of the Premises and use of the Project Common Area may be
restricted by such Encumbrances. If necessary, Tenant shall execute such
documents as are reasonably necessary to cause this Lease to become
subordinate to any such Encumbrances, provided that Tenant shall have been
provided with a true, correct and complete copy thereof prior to the date
hereof or, with respect to future CC&Rs, ground lease or Encumbrance, prior
to its effective date, and any approval given by Landlord hereunder shall
be limited to the matters covered by such approval with respect to this
Lease only and shall not be interpreted to include any approval or consent
in respect of the CC&R's, ground lease or Encumbrance; provided, however,
that such Encumbrances that are not created and/or recorded in connection
with the Initial Development shall not materially adversely affect Tenant's
Permitted Use of the Premises, Minimum Parking as provided in Paragraph 33
or access to the Premises, and do not materially increase Tenant's cost of
occupancy of the Premises or materially restrict Tenant's rights under this
Lease except as required by applicable governmental authority,
quasi-governmental authority, or Laws, unless Tenant consents to such
Encumbrance in writing in advance, which consent shall not be unreasonably
withheld, conditioned or delayed.
2. TERMS AND POSSESSION.
(a) TERM. The term of this Lease (the "Term") shall commence on the
Commencement Date (as defined below) and, unless sooner terminated pursuant
to the express provisions of this Lease, shall expire on the date that is
one day prior to the tenth anniversary of the Commencement Date (subject to
extension in accordance with Paragraph 42 to the date that is one day prior
to the fifth anniversary of any exercised Extension Term) (such date being
the "Expiration Date"). The "Commencement Date" shall be the earlier to
occur of (i) the Scheduled Rent Commencement Date set forth in the Basic
Lease Information, (ii) the date on which Tenant has
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substantially completed the Tenant Improvements in accordance with the Work
Letter, or (iii) the date upon which Tenant actually commences business in
any portion of the Premises.
(b) DELIVERY DATE. The "Delivery Date" shall be the date on which
Landlord has (i) completed the construction components of the Base Building
required to be completed by Landlord in order for the "Initial Tenant Work
Date" (as defined in the Work Letter) to occur, and (ii) tendered
possession of the Premises to Tenant subject to Landlord's continuing right
to access the Premises and take all steps required to complete the Base
Building. All of the rights and obligations of the parties under this Lease
(other than Tenant's obligation to pay Monthly Base Rent and Additional
Charges for Expenses and Taxes) shall commence on the Delivery Date. Tenant
shall be deemed to occupy the Premises from and after the Delivery Date.
Within five (5) business days after the Delivery Date, the parties shall
execute a letter confirming the Delivery Date and certifying that Tenant
has accepted delivery of the Premises (the "Delivery Date Memorandum").
Either party's failure to request execution of, or to execute, the Delivery
Date Memorandum shall not in any way alter the Delivery Date.
(c) CONSTRUCTION OF IMPROVEMENTS. Completion of the Base Building (as
defined in the Work Letter) by Landlord and the Tenant Improvements by
Tenant shall be governed by the terms and conditions of Work Letter which
is attached hereto as Exhibit "C". Tenant's obligation to construct the
Tenant Improvements pursuant to the Work Letter is independent of, and in
addition to, Tenant's obligation to pay Rent under this Lease. Landlord
represents and warrants to Tenant that to Landlord's best knowledge, upon
substantial completion of the Base Building Improvements, the Land and
Building will not be in violation of any applicable Laws, subject to
completion of the Tenant Improvements to the extent such completion is
required for compliance with any Law ("Landlord's best knowledge" being
defined for such purposes as the current actual knowledge of James Freitas
after reasonably appropriate and diligent inquiry in connection with the
acquisition of the Land and design and construction of the Base Building).
Tenant represents and warrants to Landlord that, to Tenant's best
knowledge, upon substantial completion of the Tenant Improvements, the
Premises will not be in violation of any applicable Laws ("Tenant's best
knowledge" being defined for such purposes as the current actual knowledge
of Tom Porter after reasonably appropriate and diligent inquiry in
connection with the design and construction of the Tenant Improvements).
Except as otherwise expressly set forth herein, Tenant acknowledges that
Landlord has not made any representation or warranty with respect to the
construction of the Base Building or the condition of the Premises or the
Project Common Area, or with respect to the suitability or fitness of any
of the foregoing for the conduct of Tenant's permitted use or for any other
purpose. By occupying the Premises, Tenant shall be deemed to have accepted
the same as suitable for the purpose herein intended, subject to completion
of items on Landlord's architect's punch list with respect to the Base
Building. In connection with the construction of the Base Building,
Landlord shall obtain customary construction warranties for the Building
skin and windows for a period of not less than one year, and for the roof
for a period of not less than ten years. Upon Tenant's request, Landlord
shall use reasonable efforts to enforce such warranties. If Tenant is not
satisfied, in Tenant's reasonable discretion, with Landlord's actions in
enforcing such warranties, Tenant may upon written notice to Landlord take
any actions necessary in Tenant's reasonable judgment to enforce such
warranties directly, and Landlord shall take all commercially reasonable
action to cooperate with Tenant, including assigning to Tenant Landlord's
rights with respect to such warranties.
(d) CERTIFICATE OF OCCUPANCY. After substantial completion of the
Tenant Improvements (as defined in the Work Letter), Tenant shall
immediately apply for, and use best efforts to obtain within fifteen (15)
business days, a certificate of occupancy (or equivalent documentation) for
the Premises. Tenant shall promptly deliver to Landlord copies of the
certificate of occupancy, and all other permits, consents and approvals
from the appropriate governmental agencies which are necessary for
occupancy and operation of the Premises as contemplated by this Lease to
the extent they are requested by Landlord. Tenant shall, no later than
ninety (90) days after the date of issuance by the City of Sunnyvale of a
Certificate of Occupancy or its equivalent concerning the Tenant
Improvements, occupy a portion of the Premises. This Paragraph 2(d) shall
not be construed as an obligation of Tenant to continuously occupy the
Premises.
(e) MILESTONES. The parties have set forth certain events which must
occur prior to or during the acquisition of the Land and construction of
the Base Building (each, a "Milestone"), which must be accomplished by
Landlord on or before certain prescribed dates or Tenant and/or Landlord,
as applicable, shall have
5
the right to terminate this Lease in accordance with this Paragraph 2(e).
The Milestones to which Landlord and Tenant have agreed are as follows:
(i) Landlord shall have acquired title to the Land on or before
October 31, 2000.
(ii) Landlord shall have commenced construction of the Base
Building on or before January 31, 2001.
(iii) The Base Building shall be substantially complete (as
defined in the Work Letter) on or before July 31, 2002.
Landlord shall, in good faith and using commercially reasonable diligent
efforts, attempt to achieve each Milestone, and to achieve the actions
associated with such Milestone, as soon as commercially reasonable. If any
Milestone is not achieved by the applicable date (as such date may be
extended as provided below), Tenant shall have the right to terminate this
Lease by written notice to Landlord at any time within five (5) days after
the applicable date as so extended. If Tenant does not elect to terminate
this Lease within such five (5) day period, Tenant shall again have the
option to terminate this Lease by delivering written notice to Landlord
within five (5) business days after the thirtieth (30th) day following the
applicable date as so extended, and each thirtieth (30th) day thereafter
(each such date, together with the initial applicable date as so extended,
a "Window Date"), if the applicable Milestone has not occurred on or before
any such Window Date. In addition to Tenant's termination rights as
provided in this Paragraph, if the Milestone set forth in clause (i) above
is not accomplished, then Landlord shall have the right to terminate this
Lease by written notice to Tenant within the same five day period after any
Window Date as applicable to Tenant's right to terminate. If Tenant or
Landlord, if applicable, does not deliver written notice of termination to
Landlord within any such five day period after a Window Date, all rights
and obligations of the parties under this Lease shall continue
notwithstanding the delay in achieving such Milestone. Tenant's sole and
exclusive remedy in the event of Landlord's failure to achieve any
Milestone shall be to terminate this Lease as provided in this Paragraph
2(e). If Tenant exercises a termination right pursuant to this Paragraph
and Landlord believes that the applicable Milestone was achieved by the
appropriate Window Date, the parties agree to submit the dispute concerning
Landlord's failure to substantially complete and Tenant's resulting right
to terminate the Lease to binding arbitration pursuant to the provisions of
Paragraph 45. Each Milestone shall be extended as follows: (A) one day for
each day of delay caused by Tenant Delays (as defined in the Work Letter);
(B) one day for each day of delay caused by casualty, natural disaster,
acts of the government, labor strikes, or other causes outside the
reasonable control of Landlord or Tenant, as applicable ("Force Majeure
Events"); and (C) by the amount of time required to complete any
arbitration process resulting from disputes between Landlord and Tenant
under this Lease or the Work Letter plus an additional thirty (30) days.
3. RENT; RENT ADJUSTMENTS; ADDITIONAL CHARGES FOR EXPENSES AND TAXES.
(a) MONTHLY BASE RENT AND ADDITIONAL CHARGES. Tenant's obligation to
pay Monthly Base Rent and Additional Charges for Expenses and Taxes
hereunder shall commence on the Commencement Date. Commencing on the
Commencement Date and throughout the Term of this Lease, Tenant shall the
monthly base rent specified in the Basic Lease Information, as adjusted
pursuant to Paragraph 3(b) (as so adjusted from time to time, "Monthly Base
Rent"), on the first day of each month, in advance, with the first month's
Monthly Base Rent and Additional Charges for Expenses and Taxes (as defined
below) due upon execution of this Lease, in lawful money of the United
States (without any prior demand therefor and without deduction or offset
whatsoever, except as expressly provided in this Lease) to Landlord or its
Managing Agent at the address specified in the Basic Lease Information or
to such other firm or to such other place as Landlord or its Managing Agent
may from time to time designate in writing. In addition, Tenant shall pay
to Landlord all charges and other amounts whatsoever as provided in this
Lease ("Additional Charges") at the place where the Monthly Base Rent is
payable, and Landlord shall have the same remedies for a Default in the
payment of Additional Charges as for a Default in the payment of Monthly
Base Rent. As used herein, the term "Rent" shall include all Monthly Base
Rent and Additional Charges (including, without limitation, Additional
Charges for Real Estate Taxes and Expenses pursuant to Paragraph 3(c)
below, and Additional Charges pursuant to Paragraphs 5(c), 6, 7(e), 8,
10(d) and (f), 20(c) and 23). If the Commencement Date occurs on a day
other than the first day of a calendar month, or the Expiration Date occurs
on
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a day other than the last day of a calendar month, then the Monthly Base
Rent and Additional Charges for such fractional month shall be prorated on
a daily basis.
(b) ANNUAL ADJUSTMENTS IN MONTHLY BASE RENT. The Monthly Base Rent
under Paragraph 3(a) shall be adjusted throughout the Term (including any
Extension Term(s)) as provided in the Basic Lease Information under the
heading "Monthly Base Rent Adjustment".
(c) ADDITIONAL CHARGES FOR EXPENSES AND TAXES.
(i) DEFINITIONS OF ADDITIONAL CHARGES: For purposes of this
Paragraph 3(c), the following terms shall have the meanings
hereinafter set forth:
(A) "TAX YEAR" shall mean each twelve (12) consecutive month
period commencing January 1st of the calendar year during which
the Commencement Date of this Lease occurs, provided that
Landlord, upon notice to Tenant, may change the Tax Year from
time to time to any other twelve (12) consecutive month period
and, in the event of any such change, Tenant's Share of Real
Estate Taxes (as hereinafter defined) shall be equitably adjusted
for the Tax Years involved in any such change.
(B) "TENANT'S SHARE" shall mean the Rentable Area of the
Premises divided by the total rentable area of the Building.
Initially, Tenant's Share is estimated to be the percentage
figure specified in the Basic Lease Information (subject to
change based on measurement of the actual Rentable Area and
rentable area of the Building as provided in the Basic Lease
Information).
(C) "REAL ESTATE TAXES" shall mean (i) to the extent the
Building (or the Building excluding the Phase I Garage) is
assessed separately from any other real property, all taxes,
assessments and charges levied upon or with respect to the
Building, plus the Building Share of all taxes, assessments and
charges levied with respect to the Project Common Area not
included with the Building assessment or any personal property of
Landlord used in the operation thereof, or (ii) to the extent the
Project is assessed as a whole, the Building Share of all taxes,
assessments and charges levied upon or with respect to the
Project or any personal property of Landlord used in the
operation thereof, or Landlord's interest in the Project or such
personal property. Real Estate Taxes shall include, without
limitation, all general real property taxes and general and
special assessments, charges, fees or assessments for transit
and/or parking (including in connection with inclusion of the
Building or Project in a parking or transit district), housing,
police, fire or other governmental services or purported benefits
to the Building or Project (provided, however, that any refunds
of Real Estate Taxes paid by Tenant shall be credited against
Tenant's further obligation to pay Real Estate Taxes during the
Term or refunded to Tenant if received by Landlord within one
year after the Expiration Date), service payments in lieu of
taxes, and any tax, fee or excise on the act of entering into
this Lease, or any other lease of space in the Project, or on the
use or occupancy of the Project or any part thereof, or on the
rent payable under any lease or in connection with the business
of renting space in the Project, that are now or hereafter levied
or assessed against Landlord by the United States of America, the
State of California, or any political subdivision, public
corporation, district or any other political or public entity,
and shall also include any other tax, fee or other excise,
however described, that may be levied or assessed as a substitute
for, or as an addition to, in whole or in part, any other Real
Estate Taxes, whether or not now customary or in the
contemplation of the parties on the date of this Lease. Real
Estate Taxes shall not include franchise, transfer, inheritance
or capital stock taxes or income taxes measured by the net income
of Landlord from all sources unless, due to a change in the
method of taxation, any of such taxes is levied or assessed
against Landlord as a substitute for, in whole or in part, any
other tax that would otherwise constitute a Real Estate Tax.
Additionally, the following shall be excluded from "Real Estate
Taxes": (a) all costs and fees (other than general real property
taxes) payable in connection with Landlord's further development
of the Project, provided that such exclusion shall expressly not
apply to costs and fees payable in connection with
7
or related in any way to the Initial Development, Tenant
Alterations or development requested or consented to by Tenant,
(b) penalties arising from Landlord's failure to timely pay any
tax liability, unless such failure is the result of Tenant's
failure to timely pay its tax obligations hereunder, and (c)
property transfer taxes, stamp or recording taxes attributable to
Landlord's transfer of ownership of the Project or any interest
of Landlord therein. Tenant and Landlord acknowledge that
Proposition 13 was adopted by the voters of the State of
California in the June, 1978 election and that assessments,
taxes, fees, levies and charges may be imposed by governmental
agencies for such purposes as fire protection, street, sidewalk,
road, utility construction and maintenance, refuse removal and
for other governmental services which may formerly have been
provided without charge to property owners or occupants. It is
the intention of the parties that all new and increased
assessments, taxes, fees, levies and charges due to any cause
whatsoever are to be included within the definition of Real
Estate Taxes for purposes of this Lease; provided, however, that
Landlord shall obtain Tenant's prior written consent (which shall
not be unreasonably withheld, delayed or conditioned) for any new
or increased assessment that is not related to the Initial
Development and that is within Landlord's control and not
included within the assessments covered by Proposition 13,
provided further that the foregoing shall not be interpreted to
require Tenant's consent to any sale, refinancing, alteration or
construction by Landlord with respect to the Project (except as
otherwise expressly provided in this Lease) or to exclude any new
or increased assessment covered by Proposition 13 resulting from
any such action from the definition of Real Estate Taxes.
Additionally, Real Estate Taxes shall not include any assessments
or like charges to pay for any remediation of contamination from
any Hazardous Substance (defined in Paragraph 39 hereof) existing
as of the Commencement Date unless introduced in, on, under or
about the Premises by Tenant or Tenant's employees, agents,
contractors or invitees. Real Estate Taxes also shall not include
any taxes attributable to any new construction on the Project
that increases the rentable area of the Project, or any increase
in any Real Estate Taxes directly attributable to such new
buildings or improvements, until such time as such new buildings
or improvements are leased and occupied by tenants paying such
building's share of Real Estate Taxes assessed against the
Project; provided, however, that Real Estate Taxes shall include
the Building Share of any new taxes or increases in Real Estate
Taxes attributable to the Project Garage, the City Garage or
Parking REA, or similar new construction, buildings or
improvements that are used for parking or other Common Area uses
(or the proportionate amount of any such new taxes or increase
attributable to the portion of any new construction, buildings or
improvements used for parking or other Common Area uses). Real
Estate Taxes shall also include reasonable legal fees, costs and
disbursements incurred in connection with proceedings to contest,
determine or reduce Real Estate Taxes; provided that such fees,
costs and disbursements do not exceed the actual savings in Real
Estate Taxes obtained by Tenant over the Term of the Lease. If
any assessments are levied on the Building or Project, Tenant
shall have no obligation to pay more than that amount of annual
installments of principal and interest that would become due
during the Term had Landlord elected to pay the assessment in
installment payments, even if Landlord pays the assessment in
full.
(D) "BUILDING SHARE" shall mean, during any period of time
when the Project consists of more than Phase I, the Rentable Area
in the Building, divided by the total rentable area in the
Project, as determined by Landlord in its reasonable discretion.
(E) "EXPENSES" shall mean the total costs and expenses paid
or incurred by Landlord in connection with the management,
operation, maintenance and repair of the Building and the Project
Common Area, including, without limitation (i) the cost of air
conditioning, electricity, steam, heating, mechanical,
ventilating, elevator systems and all other utilities, to the
extent provided by Landlord, and the cost of supplies and
equipment and maintenance and service contracts in connection
therewith; (ii) the cost of repairs and general maintenance and
cleaning; (iii) the Building Share of the cost of fire, extended
coverage, boiler, sprinkler, public liability, property damage,
rent, earthquake (if Landlord elects to obtain it) and other
insurance for the Project obtained by Landlord, or otherwise
obtained by Landlord in connection with the Project, all
including, without limitation, insurance premiums and any
deductible amounts paid by
8
Landlord, including, without limitation, the insurance required
by Paragraph 10(f); (iv) fees, charges and other costs directly
related to the operation of the Project (as distinct from the
operation of the partnership which owns the Project), including
management fees, consulting fees, legal fees and accounting fees,
fees of all independent contractors engaged by Landlord directly
related to the operation of the Project or reasonably charged by
Landlord if Landlord performs management services in connection
with the Project, (though the management fee shall not exceed the
cap noted in the following paragraph); (v) the cost of any
capital improvements made to the Building, and the Building Share
of the cost of any capital improvements made to the Project
Common Area, after the Commencement Date (a) as a labor saving
device or to effect other economies in the operation or
maintenance of the Building or the Project Common Area (from
which a reasonable person would anticipate that savings would
actually result), (b) to repair or replace capital items which
are no longer capable of providing the services required of them
(other than in connection with a casualty which is addressed by
Paragraph 21), or (c) that are made to the Building or the
Project Common Area after the date of this Lease and are required
under any Laws (as defined in Paragraph 6) (excluding, however,
any capital improvements required by Laws that are Tenant's
responsibility under Paragraph 6, which shall be paid directly by
Tenant pursuant to Paragraph 6), where such capital improvements
were not required under any such Laws to be completed with
respect to the Project prior to the date the Lease was executed;
and the costs of capital improvements incurred by Landlord which
are the responsibility of Tenant pursuant to this Lease shall be
amortized over the useful life of the capital item in question as
determined in accordance with generally accepted accounting
principles ("GAAP"), together with interest on the unamortized
balance at the greater of (x) the rate paid by Landlord on funds
borrowed from an institutional lender for the purpose of
constructing such capital improvements; or (y) 10% per annum;
provided, however, the amount of the cost of capital improvements
which may be included within Expenses pursuant to this clause (v)
shall be the greater of (I) the amount that would be payable
pursuant to the foregoing amortization or (II) $.02 per square
foot of the Rentable Area of the Premises per month (and to the
extent the amount under this clause (II) exceeds the amount that
would be payable under clause (I), such excess shall be credited
against the unamortized balance of the cost of capital
improvements in the inverse order in which they would be payable
by Tenant under clause (i)); and (vi) any other reasonable
expenses of any other kind whatsoever reasonably incurred in
managing, operating, maintaining and repairing the Building,
including, but not limited to, costs incurred or assessed
pursuant to the Parking REA, the Initial CC&Rs, any other CC&Rs,
any ground lease or any Encumbrances, and the Building's Share of
Project Common Expenses; provided, however, that except to the
extent the following are in connection with or related to the
Initial Development, Landlord shall obtain Tenant's prior written
consent before imposing or allowing any additional charges,
assessments, costs or fees to be levied on the Project by any
entity over which Landlord exerts control, directly or
indirectly, and before entering into any agreement making the
Project subject to or a member of an ownership association (other
than pursuant to the Parking REA or the Initial CC&Rs), which
consent shall not be unreasonably withheld, delayed or
conditioned by Tenant. "Project Common Expenses" shall mean any
expenses paid or incurred by Landlord in connection with the
management, operation, maintenance and repair of the Project
Common Area and any other Expenses paid or incurred by Landlord
for the benefit of the Project as a whole, including, but not
limited to, the cost of maintaining any traffic improvements,
surface parking lots and facilities located in the Project Common
Area, landscaping, and any costs allocated to the Project Common
Area (or the Project as a whole) pursuant to the Parking REA. Any
"deductible" amounts relating to capital improvements required to
be paid by Tenant hereunder in connection with any property or
earthquake insurance policy carried by Landlord shall be
amortized over the useful life of the restoration work to which
such deductible amount relates in accordance with GAAP, in the
same manner as other capital improvements that are included in
Expenses as provided above.
Notwithstanding anything to the contrary herein contained, Expenses
shall not include, and in no event shall Tenant have any obligation to
pay for pursuant to this Paragraph 3 or Paragraph 7(b), (aa) the
acquisition cost of the Land or Additional Land, and the initial
construction cost of any new buildings or improvements on the Project
that increase the rentable area of the Project (or any additional
operating expenses incurred during the course of construction and as a
direct result of such construction) other than
9
costs in connection with construction of the Building or Future Phases
that are otherwise payable by Tenant hereunder; (bb) the cost of
providing tenant improvements to Tenant or any other tenant and costs
of preparing any other premises in the Project for occupancy by any
other tenant, including brokerage commissions, attorneys fees and
other fees incurred in connection with the leasing thereof; (cc) any
rent payable pursuant to a ground lease, and debt service (including,
but without limitation, interest, principal and any impound payments)
required to be made on any mortgage or deed of trust recorded with
respect to all or any portion of the Project other than debt service
and financing charges imposed pursuant to Paragraph 3(c)(1)(E)(v)
above; (dd) the cost of special services, goods or materials provided
to any tenant; (ee) depreciation; (ff) the portion of a management fee
paid to Landlord or affiliate in excess of three percent (3%) of
Monthly Base Rent and Additional Charges for Expenses and Taxes
(excluding the management fee); (gg) costs occasioned by Landlord's
fraud or willful misconduct under applicable laws; (hh) costs for
which Landlord has a right of and has received reimbursement from
others; (ii) costs to correct any construction or design defects in
the original construction of the Base Building; (jj) repairs,
replacement and upgrades to the structural elements of the Base
Building (e.g.. steel frame and slab) and structural components of the
roof (not including the roof membrane above the concrete over metal
deck), other than capital improvements pursuant to Paragraph
3(c)(1)(D)(v) above; (kk) environmental pollution remediation related
costs for which Landlord has indemnified Tenant pursuant to Paragraph
39(c); (ll) advertising or promotional expenditures; (mm) leasing or
sales commissions; (nn) repairs, restoration or other work occasioned
by condemnation, or by fire, wind, the elements or other casualty to
the extent of amounts paid or payable under any insurance policy
maintained by Landlord covering the Project or any portion thereof;
(oo) compensation paid to any employee of Landlord other than
maintenance and property management personnel below the level of
project manager, directly associated with the operation and
maintenance of the Building or Project (it being agreed that the
salaries of such management personnel at or above the level of project
manager are covered by the management fee); (pp) repairs, alterations,
additions, improvements or replacements made to rectify or correct any
condition with respect to the Project that is in violation of
applicable Laws on the date of execution of this Lease by Landlord and
Tenant; (qq) Landlord's general overhead expenses in excess of the
property management fee; (rr) legal fees, accountants' fees and other
expenses incurred in connection with disputes with Tenant (except to
the extent such expenses are Tenant's responsibility pursuant to this
Lease) or associated with the defense of Landlord's title to or
Landlord's interest in the Project or any part thereof; (ss)
charitable or political contributions of Landlord; (tt) interest,
penalties or other costs arising out of Landlord's failure to make
timely payments of its obligations, to the extent not caused by
Tenant's failure to make such payments when due under this Lease; (uu)
costs or fees payable to public authorities in connection with any
future construction and/or improvements to the Project, including fees
for transit, housing, schools, open space, child care, arts programs,
traffic mitigation measures, environmental impact reports, traffic
studies, and transportation system management plans Project (other
than any of the foregoing in connection with the Initial Development,
Alterations to the Project made by or for Tenant, and construction or
improvements required to comply with Laws or this Lease, all of which
are expressly included in Expenses); and (vv) reserves for Expenses or
Real Estate Taxes, except as expressly provided herein. All costs and
expenses shall be determined in accordance with GAAP which shall be
consistently applied (with accruals appropriate to Landlord's
business).
(F) "EXPENSE YEAR" shall mean each twelve (12) consecutive
month period commencing January 1 of the calendar year during
which the Commencement Date of the Lease occurs, provided that
Landlord, upon notice to Tenant, may change the Expense Year from
time to time to any other twelve (12) consecutive month period,
and, in the event of any such change, Tenant's Share of Expenses
shall be equitably adjusted for the Expense Years involved in any
such change.
(ii) PAYMENT OF REAL ESTATE TAXES:
(A) Commencing on the Commencement Date, Tenant shall pay to
Landlord as Additional Charges one-twelfth (1/12th) of Tenant's
Share of Real Estate Taxes for each Tax Year on or before the
first day of each month during such Tax Year, in advance, in an
amount reasonably estimated by Landlord and billed by Landlord to
Tenant, and Landlord shall
10
have the right initially to determine monthly estimates and to
revise such estimates from time to time. With reasonable
promptness after Landlord has received the tax bills for any Tax
Year, Landlord shall furnish Tenant with a statement (herein
called "Landlord's Tax Statement") setting forth the amount of
Real Estate Taxes for such Tax Year and Tenant's Share thereof.
If the actual Tenant's Share of Real Estate Taxes for such Tax
Year exceed the estimated Tenant's Share of Real Estate Taxes
paid by Tenant for such Tax Year, Tenant shall pay to Landlord
the difference between the amount paid by Tenant and the actual
Tenant's Share of Real Estate Taxes within fifteen (15) days
after the receipt of Landlord's Tax Statement, and if the total
amount paid by Tenant for any such Tax Year shall exceed the
actual Tenant's Share of Real Estate Taxes for such Tax Year,
such excess shall be credited against the next installment of
Real Estate Taxes due from Tenant to Landlord hereunder or if the
Term has ended it shall be returned to Tenant within thirty (30)
days. If it has been determined that Tenant has overpaid Real
Estate Taxes during the last year of the Lease Term, then
Landlord shall reimburse Tenant for such overage on or before the
thirtieth (30th) day following the Expiration Date. No delay by
Landlord in providing Landlord's Tax Statement shall be deemed a
default by Landlord or a waiver of Landlord's right to require
payment of the actual or estimated sums of Real Estate Taxes.
Tenant's liability for Real Estate Taxes hereunder shall be
prorated to reflect the Commencement Date and the date of
expiration or termination of this Lease. In the case of any Real
Estate Taxes which may be evidenced by bonds or which may be paid
in annual or other periodic installments, Landlord shall cause
such bonds or assessments to be paid in installments over the
maximum period permitted by law, and Tenant shall be responsible
for paying only the installments which become due and payable
during the Term, or at Landlord's sole option, Landlord may pay
the bond or assessment in full but only charge Tenant for
principal and interest that would have become due during the Term
had Landlord elected to pay the bond or assessment in installment
payments; provided, however, that Landlord shall not initiate or
consent to the imposition of any such bonds or assessments other
than those evidenced by a lien in effect as of the date of
execution of this Lease.
(B) Notwithstanding clause (A) above, but subject to the
last sentence of this clause (B), during any period of time that
Tenant is the sole tenant of the Building, and the Building is
separately assessed, Tenant shall not be required to pay Tenant's
Share of Real Estate Taxes in monthly installments; and in lieu
thereof, Landlord shall furnish Tenant with a statement (herein
called "Landlord's Tax Statement") setting forth the amount of
Real Estate Taxes for each Tax Year with reasonable promptness
after Landlord has received the tax bills for the Building in
such Tax Year. Tenant shall then pay to Landlord actual Real
Estate Taxes in installments, twice each Tax Year, no later than
thirty (30) days prior to the delinquency date of each Real
Estate Tax installment (or such earlier time as may be required
by any Mortgagee). Tenant's right to pay Real Estate Taxes when
due as set forth in this clause (B) shall not apply (i) if any
Mortgagee requires monthly estimated payments (provided that
Landlord shall use commercially reasonable efforts [without
incurring additional cost, paying additional fees or making other
concessions], to attempt to persuade any Mortgagee to not require
impounds), or (ii) at Landlord's election, after any failure by
Tenant to pay any installment of Real Estate Taxes when due
hereunder.
(C) RIGHT TO CONTEST TAXES: Tenant shall have the right, by
appropriate proceedings, to protest or contest any assessment,
reassessment or allocation of Real Estate Taxes payable by Tenant
hereunder, in whole or in part, in accordance with this clause
(iii), and provided that any such proceeding and Tenant's
participation therein does not result in a violation of any
Mortgage. Tenant may act in its own name and/or the name of
Landlord, and Landlord shall, at Tenant's request and expense,
cooperate with Tenant in any way Tenant may reasonably require in
connection with such contest. Tenant may utilize any legal
procedure for payment under protest, if available, provided that,
if required by Landlord's Mortgagee or a prospective purchaser of
the Project, Tenant shall utilize a legal procedure for payment
that is satisfactory to such Mortgagee or prospective purchaser,
as applicable. Tenant shall indemnify, hold harmless and defend
Landlord and the Project from any liens, liabilities or damages
arising out of any contest of Real Estate Taxes by Tenant and
shall pay any Real Estate Taxes ultimately determined to be due,
together with any interest or penalties charged by the taxing
entity. If a reduction in property taxes and/or
11
assessments included in Real Estate Taxes previously paid by
Tenant is obtained for any year of the Term during which Tenant
paid Real Estate Taxes, then Landlord shall provide Tenant with a
credit against Tenant's next due obligations for Real Estate
Taxes or, if none or if Landlord receives a cash payment of any
such amounts and/or interest on any such amounts (as opposed to a
credit against future Real Estate Taxes for such amounts and/or
such interest), refund such amounts and/or interest to Tenant
within thirty (30) days based on such adjustment.
If at least twenty (20) days prior to the last day for filing
application for abatement of Real Estate Taxes for any tax year,
Tenant shall give notice to Landlord that Tenant desires to file
an application or abatement of Real Estate Taxes for said tax
year and, if within ten (10) days after the receipt of said
notice, Landlord shall not give notice to Tenant that it shall
file such application, Tenant shall have the right either in its
own name or in the name of Landlord, but at its own cost and
expense to file such application. If within ten (10) days after
receipt by Landlord of such notice by Tenant, Landlord shall give
Tenant notice that Landlord shall file such application, Landlord
shall file the same prior to the expiration of the time for
filing of the same, at its own cost and expense. In the event,
notwithstanding the foregoing, if any abatement by whomever
prosecuted shall be obtained, the cost and expense of obtaining
the same shall be a first charge upon the said abatement. If
Tenant shall file an application for abatement pursuant to the
provisions of this paragraph, Tenant will prosecute the same to
final determination with due diligence and shall not, without
Landlord's written consent (which consent will not be
unreasonably withheld, conditioned or delayed) settle, compromise
or discontinue the same, except, however, Tenant may discontinue
the prosecution of the same at any time after giving Landlord
notice thereof and an opportunity to take over the prosecution of
the same. If Landlord shall file an application for abatement for
any tax year after having received notice from Tenant that Tenant
desires to file an application for abatement for said tax year,
Landlord shall prosecute the same to final determination with due
diligence and shall not, without Tenant's written consent (which
consent will not be unreasonably withheld, conditioned or
delayed), settle, compromise or discontinue the same, except,
however, Landlord may discontinue the prosecution of the same at
any time after giving Tenant notice thereof and an opportunity to
take over the prosecution of the same. If either party shall
prosecute an application for abatement, the other party will
cooperate and furnish any pertinent information in its files
reasonably required by the prosecuting party.
Neither the filing of an application for abatement of Real Estate
Taxes, nor the prosecution of any other proceedings contesting
the amount or validity of any Real Estate Taxes, shall relieve
Tenant of its obligations to pay Real Estate Taxes as and when
provided herein. All abatements attributable to Real Estate Taxes
previously paid by Tenant shall belong to Tenant less the costs
and expenses reasonably incurred in obtaining such abatement.
(iii) PAYMENT OF EXPENSES: Commencing on the Commencement Date,
Tenant shall pay to Landlord as Additional Charges one-twelfth
(1/12th) of Tenant's Share of the Expenses for each Expense Year on or
before the first day of each month of such Expense Year, in advance,
in an amount reasonably estimated by Landlord and billed by Landlord
to Tenant, and Landlord shall have the right initially to determine
monthly estimates and to revise such estimates from time to time. With
reasonable promptness after the expiration of each Expense Year,
Landlord shall furnish Tenant with a statement (herein called
"Landlord's Expense Statement"), setting forth in reasonable detail
the Expenses for such Expense Year and Tenant's Share thereof. If the
actual Tenant's Share of Expenses for such Expense Year exceed the
estimated Tenant's Share of Expenses paid by Tenant for such Expense
Year, Tenant shall pay to Landlord the difference between the amount
paid by Tenant and the actual Tenant's Share of Expenses within
fifteen (15) days after the receipt of Landlord's Expense Statement,
and if the total amount paid by Tenant for any such Expense Year shall
exceed the actual Tenant's Share of Expenses for such Expense Year,
such excess shall be credited against the next installment of the
estimated Expenses due from Tenant to Landlord hereunder or if the
Term has ended it shall be returned to Tenant within thirty (30) days.
Any utility rebates for the Project which Landlord receives for
payments made by Tenant shall be forwarded to Tenant so long as such
rebate is received within one year following the Expiration Date or
sooner termination of the Lease. If it has been determined that Tenant
has overpaid Expenses during the last year
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of the Lease Term (including rebates of utilities applicable to
Tenant), then Landlord shall reimburse Tenant for such overage on or
before the thirtieth (30th) day following the Expiration Date.
(iv) OTHER: To the extent any item of Real Estate Taxes or
Expenses is payable by Landlord in advance of the period to which it
is applicable (e.g. insurance and tax escrows required by Landlord's
Lender), or to the extent that prepayment is customary for the service
or matter, Landlord may (i) include such items in Landlord's estimate
for periods prior to the date such item is to be paid by Landlord and
(ii) to the extent Landlord has not collected the full amount of such
item prior to the date such item is to be paid by Landlord, Landlord
may include the balance of such full amount in a revised monthly
estimate for Additional Charges. If the Commencement Date or
Expiration Date shall occur on a date other than the first day of a
Tax Year and/or Expense Year, Tenant's Share of Real Estate Taxes and
Expenses, for the Tax Year and/or Expense Year in which the
Commencement Date occurs shall be prorated.
(v) AUDIT: Within ninety (90) days after receipt of any Expense
Statement or Tax Statement from Landlord, Tenant shall have the right
to examine and copy Landlord's books and records relating to such
Expense Statements and Tax Statements, or cause an independent audit
thereof to be conducted by a certified public accountant or Tenant. If
the audit conclusively proves that Tenant has overpaid either Expenses
or Real Estate Taxes, then Landlord shall reimburse Tenant within
thirty (30) days for such overage together with interest on such
overpayment at the Default Rate (as defined in 3(d) below), and if
such overage exceeds four percent (4%) of the actual amount of
Expenses or Real Estate Taxes paid by Landlord for the Tax or Expense
Year covered by such audit, then Landlord shall bear the reasonable
cost of such audit, up to a maximum cost of $5,000. If Tenant fails to
object to any such Expense Statement or Tax Statement or conduct an
independent audit thereof within ninety (90) days after receipt
thereof, such Expense Statement and/or Tax Statement shall be final
and shall not be subject to any audit, challenge or adjustment. All
information obtained through any audit by Tenant and any compromise,
settlement or adjustment reached between Landlord and Tenant relative
to the results of such audit shall be held in strict confidence by the
Tenant.
(d) LATE CHARGES. Tenant recognizes that late payment of any Monthly
Base Rent or Additional Charges will result in administrative expenses to
Landlord, the extent of which additional expense is extremely difficult and
economically impractical to ascertain. Tenant therefore agrees that if
Tenant is in Default in the payment of any Monthly Base Rent or Additional
Charges, the amount of such unpaid Monthly Base Rent or Additional Charges
shall be increased by a late charge to be paid to Landlord by Tenant in an
amount equal to four percent (4%) of the amount of the delinquent Monthly
Base Rent or Additional Charges. In addition, any outstanding Monthly Base
Rent, Additional Charges, late charges and other outstanding Rent amounts
shall accrue interest at an annualized rate of the lesser of (i) the
greater of 10% or The Federal Reserve Discount Rate plus 5% until paid to
Landlord, or (ii) the maximum rate permitted by law ("the Default Rate").
Tenant agrees that such amount is a reasonable estimate of the loss and
expense to be suffered by Landlord as a result of such late payment by
Tenant and may be charged by Landlord to defray such loss and expense. The
provisions of this Paragraph 3(d) in no way relieve Tenant of the
obligation to pay Monthly Base Rent or Additional Charges on or before the
date on which they are due, nor do the terms of this Paragraph 3(d) in any
way affect Landlord's remedies pursuant to Paragraph 19 in the event any
Monthly Base Rent or Additional Charges are unpaid after the date due.
4. RESTRICTIONS ON USE.
(a) Tenant shall not do or permit anything to be done in or about the
Premises which will obstruct or interfere with the rights of other tenants
or occupants of the Building or the Project or injure or annoy them, nor
use or allow the Premises to be used for any unlawful purpose, nor shall
Tenant cause or maintain or permit any nuisance in, on or about the
Premises. Tenant shall not commit or suffer the commission of any waste in,
on or about the Premises.
(b) Tenant shall have the right to use the courtyard areas of the
Project Common Areas for Tenant's social and/or business functions with no
additional rent for such use payable by Tenant, on the terms and conditions
set forth in this Paragraph 4(b). Tenant shall deliver written notice to
Landlord requesting to reserve particular space in the Project Common Areas
for such functions at least five (5) days, and no earlier than thirty (30)
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days, prior to such proposed function. Landlord may grant similar rights to
other tenants and occupants of the Project, and Tenant's rights under this
paragraph shall be subject to the rights of such other tenants and
occupants and any reasonable, non-discriminatory system Landlord
incorporates to address conflicting reservations of the same space by more
than one tenant or occupant of the Project. Tenant's use of the courtyard
areas pursuant to this paragraph shall be on the following terms and
conditions: (i) Tenant may conduct up to twelve (12) such functions within
any calendar year; (ii) such functions shall be limited to a reasonable
number of people consistent with applicable fire, health and safety laws,
and shall comply with any applicable requirements of the DDA, REA, CC&Rs
and/or other Encumbrances; (iii) the insurance, indemnity and nonliability
obligations and provisions contained herein and in the Rules and
Regulations , respectively (including Tenant's obligations to carry liquor
law liability insurance if alcoholic beverages are served or consumed
during such functions), shall apply to and govern any claims, liabilities,
costs or expenses arising from any such function, (iv) no such proposed
functions shall, in Landlord's reasonable determination, unreasonably
disrupt either other tenants of the Project, or the operation or
maintenance of the Common Areas, (v) Tenant shall comply with the
obligations of the Rules and Regulations of Exhibit "D" attached hereto
relating to such use, and (v) Tenant shall pay any and all Landlord's
reasonable costs of preparation for, supervision of and/or clean-up in
connection with, such functions.
5. COMPLIANCE WITH LAWS.
(a) TENANT'S COMPLIANCE OBLIGATIONS. Tenant shall not use the Project
or permit anything to be done in or about the Project which will in any way
conflict with any present and future laws, statutes, ordinances,
resolutions, regulations, proclamations, orders or decrees of any
municipal, county, state or federal government or other governmental or
regulatory authority with jurisdiction over the Project, or any portion
thereof, whether currently in effect or adopted in the future and whether
or not in the contemplation of the parties hereto (collectively, "Laws"),
and Tenant shall promptly, at its sole expense, maintain the Premises, any
Alterations (as defined in Paragraph 7 below) permitted hereunder and
Tenant's use and operations thereon in strict compliance at all times with
all Laws. "Laws" shall include, without limitation, all Laws relating to
health and safety (including, without limitation, the California
Occupational Safety and Health Act of 1973 and the California Safe Drinking
Water and Toxic Enforcement Act of 1986, including posting and delivery of
notices required by such Laws with respect to the Premises), disabled
accessibility (including, without limitation, the Americans with
Disabilities Act, 42 U.S.C. section 12101 et seq.), Hazardous Substances,
and all present and future life safety, fire, sprinkler, seismic retrofit,
transportation demand management plan, building code and municipal code
requirements; provided however, that Tenant's obligation to comply with
Laws relating to Hazardous Substances is subject to the terms and
conditions of Paragraph 39, and Tenant shall not be responsible for
compliance with clean-up provisions of any Laws with respect to Hazardous
Substances except to the extent of any release caused by the Tenant or any
of its servants, employees, contractors, agents, licensees or invitees
(collectively, including Tenant, the "Tenant Parties") or otherwise
included in Tenant's indemnity contained in Paragraph 39. Notwithstanding
the foregoing, Landlord, and not Tenant, shall be responsible for
correcting any condition with respect to the Common Area, or the exterior
or structural portions of the Building (but not with respect to the
interior of the Premises), which is in violation of applicable Laws
(subject to Tenant's obligation to pay such costs to the extent they are
included as Expenses under Paragraph 3(c)(1)(D)), except to the extent such
condition is caused by the negligent or intentional acts or omissions of
the Tenant Parties, or such violation results from Tenant's particular use
of the Premises, or such condition will be altered in connection with the
installation of the Tenant Improvements or any Alterations. Tenant shall be
responsible for compliance of the Tenant Improvements with all Laws.
Notwithstanding the first sentence of this Paragraph 5(a), Tenant shall not
be required to make any structural alterations to the Premises in order to
comply with Laws unless the requirement that such alterations be made is
triggered by any of the following (or, if such requirement results from the
cumulative effect of any of the following when added to other negligent or
intentional acts, omissions, or events, to the extent such alterations are
required by any of the following): (i) the installation, use or operation
of the Tenant Improvements, any Alterations, or any of Tenant's trade
fixtures or personal property; (ii) the negligent or intentional acts or
omissions of any of the Tenant Parties; or (iii) the particular use or
particular occupancy or manner of use or occupancy of the Premises by the
Tenant Parties. Any alterations that are Tenant's responsibility pursuant
to this Paragraph 5 shall be made in accordance with Paragraph 6 below, at
Tenant's sole cost. The parties acknowledge and agree that Tenant's
obligation to comply with all Laws as provided in this paragraph (subject
to the limitations contained herein) is a material part of the
bargained-for consideration under this Lease. Tenant's obligations under
this Paragraph and under Paragraph 7(c) below shall include, without
limitation, the responsibility of Tenant to make substantial or structural
repairs and alterations to the Premises to the extent
14
provided above, regardless of, among other factors, the relationship of the
cost of curative action to the Rent under this Lease, the length of the
then remaining Term hereof, the relative benefit of the repairs to Tenant
or Landlord, the degree to which the curative action may interfere with
Tenant's use or enjoyment of the Premises, and the likelihood that the
parties contemplated the particular Law involved.
(b) COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT. Landlord and
Tenant hereby agree and acknowledge that the Premises, the Building and/or
the Project may be subject to, among other Laws, the requirements of the
Americans with Disabilities Act, a federal law codified at 42 U.S.C. 12101
et seq., including, but not limited to Title III thereof, and all
regulations and guidelines related thereto, together with any and all laws,
rules, regulations, ordinances, codes and statutes now or hereafter enacted
by local or state agencies having jurisdiction thereof, as the same may be
in effect on the date of this Lease and may be hereafter modified, amended
or supplemented, including, without limitation, all requirements of Title
24 of the State of California Code (collectively, the "ADA"). Any Tenant
Improvements to be constructed hereunder shall be in compliance with the
requirements of the ADA, and all costs incurred for purposes of compliance
of such Tenant Improvements therewith shall be a part of and included in
the costs of the Tenant Improvements. Tenant shall be solely responsible
for conducting its own independent investigation of this matter and for
ensuring that the design of all Tenant Improvements strictly complies with
all requirements of the ADA. If any barrier removal work or other work is
required to the Base Building or the Common Area under the ADA, then such
work shall be the responsibility of Landlord at Landlord's sole cost and
expense (subject to Tenant's obligation to pay such costs to the extent
they relate to future violations and are included in Expenses under
Paragraph 3(c)(1)(D)); provided, if such work is required under the ADA as
a result of Tenant's particular use of the Premises or the design or
installation of any Tenant Improvements or Alterations (as hereinafter
defined) made to the Premises by or on behalf of Tenant, then such work
shall be performed by Tenant at the sole cost and expense of Tenant. Within
ten (10) days after receipt, Tenant shall advise Landlord in writing, and
provide Landlord with copies of (as applicable), any notices alleging
violation of the ADA relating to any portion of the Premises, the Building
or the Project; any claims made or threatened orally or in writing
regarding noncompliance with the ADA and relating to any portion of the
Premises, the Building, or the Project; or any governmental or regulatory
actions or investigations instituted or threatened regarding noncompliance
with the ADA and relating to any portion of the Premises, the Building or
the Project.
(c) TRAFFIC MITIGATION. The parties anticipate that, in connection
with and/or as a condition to approval of the Initial Development, the City
and/or other governmental agencies or quasi-governmental agencies will
require the implementation of a transportation demand management plan
and/or one or more similar programs to reduce the traffic generated by the
Project and to facilitate the use of public transportation (any such
program, a "TDM"). A TDM may apply to (and measure required alternative
transportation use) based on the Project as a whole, or based on each
building included in the Project, or based on the Premises occupied by each
or certain tenant(s) in the Project. Tenant hereby agrees to designate one
of its employees to act as a liaison with Landlord or with the City or
other entity enforcing the TDM, as appropriate, to facilitate and
coordinate any TDM. Tenant shall comply with the requirements of any TDM
that applies in whole or in part to the Premises, at Tenant's cost with
respect to both compliance costs and any penalties resulting from Tenant's
failure to comply with program requirements. If any TDM applies to the
Project as a whole, or to a portion of the Project that includes more than
the Premises, (i) Tenant shall pay as Expenses the Tenant's Share of the
Building Share of any compliance costs with respect to such TDM, and (ii)
Tenant shall pay Landlord on demand, as an Additional Charge, any penalties
that are imposed under any such TDM to the extent such penalties result
from Tenant's failure to comply with the requirements of such TDM,
including, without limitation, by failure to timely comply with any
reporting requirements or by failure of Tenant to meet any thresholds or
other standards imposed by such TDM with respect to traffic, public
transportation or other similar matters included in such TDM. If any TDM is
imposed that applies only to Tenant or only to the Premises, Tenant shall
be solely responsible for compliance with such TDM, including, without
limitation, by satisfying any survey or reporting requirements thereunder
directly to the entity enforcing such TDM, and by paying any penalties or
costs imposed thereunder directly to the entity enforcing such TDM, and
Tenant shall indemnify, defend and hold harmless Landlord against any
claims, suits, costs (including reasonable attorneys' fees), damage,
liability, and losses, whether foreseeable or unforeseeable, by reason of
Tenant's failure to comply with, or violation of, any such TDM that applies
solely to Tenant or the Premises.
(d) INSURANCE REQUIREMENTS. Tenant shall not do or permit anything to
be done in or about the Premises or bring or keep anything therein which
will in any way increase the rate of any insurance upon the
15
Project or any of its contents (unless Tenant agrees to pay for such
increase) or cause a cancellation of any insurance on the Project or
otherwise violate any requirements, guidelines, conditions, rules or orders
with respect to such insurance. Tenant shall at its sole cost and expense
promptly comply with the requirements of the Insurance Services Office
(ISO), board of fire underwriters, or other similar body now or hereafter
constituted relating to or affecting Tenant's use or occupancy of the
Project (other than in situations where compliance involves repair,
maintenance or replacement of items that Landlord is expressly required to
repair, maintain or replace under this Lease).
(e) NO LIMITATION ON OBLIGATIONS. The provisions of this Paragraph 5
shall in no way limit Tenant's maintenance, repair and replacement
obligations under Paragraph 7 or Tenant's obligation to pay Expenses under
Paragraph 3(c). The judgment of any court of competent jurisdiction or the
admission of Tenant in an action against Tenant, whether Landlord is a
party thereto or not, that Tenant has so violated any such Law shall be
conclusive of such violation as between Landlord and Tenant.
6. ALTERATIONS.
(a) After completion of the Tenant Improvements (which shall be
governed by the Work Letter), Tenant shall not make or suffer to be made
any additional alterations, additions or improvements (herein referred to
individually as an "Alteration", and collectively as the "Alterations") in,
on or to the Premises or any part thereof without the prior written consent
of Landlord. Failure of Landlord to give its approval within fifteen (15)
calendar days after receipt of Tenant's written request for approval shall
constitute disapproval by Landlord. Any Alterations in, on or to the
Premises, except for Tenant's trade fixtures and movable furniture and
equipment, shall be the property of Tenant during the Term and shall become
Landlord's property at the end of the Term without compensation to Tenant.
Landlord shall not unreasonably withhold or delay its consent to
Alterations that (i) do not materially affect the structure of the Building
or its electrical, plumbing, HVAC, security or other systems, (ii) are not
visible from the exterior of the Premises and do not otherwise affect the
exterior appearance of the Building, (iii) are consistent with Tenant's
Permitted Use hereunder; (iv) do not require any application to a political
jurisdiction for rezoning, general plan amendment, variance, conditional
use permit or architectural review approval, (v) will not interfere with
the use and occupancy of any other portion of the Project by Landlord or by
any other tenants or occupants or their invitees, or by any other party
with the right to use any portion of the Project, (vi) comply with any
ground lease, the Parking REA, the Initial CC&Rs, any other CC&Rs, any
other Encumbrances, and any Mortgages, and (vii) do not adversely affect
the value or marketability of Landlord's reversionary interest upon
termination or expiration of this Lease.
(b) Notwithstanding Paragraph 6(a), Tenant may make Alterations to the
Premises without Landlord's prior consent so long as (x) such Alterations
comply with items (i) through (vii) in Paragraph 6(a), and (y) the cost of
each such Alteration (or group of Alterations, if occurring substantially
at the same time and as part of a single project) does not exceed Two
Hundred Thousand Dollars ($200,000) (any such Alterations being defined
herein as "Permitted Alterations"). Tenant shall be required to notify
Landlord in writing before making any Permitted Alterations and within
thirty (30) days after completion of such Permitted Alterations, and at
Landlord's request shall provide Landlord with accurate as-built drawings
of any Permitted Alterations.
(c) Any Alterations consented to by Landlord pursuant to Paragraph
6(a), and any Permitted Alterations, shall be made by Tenant, at Tenant's
sole cost and expense, in accordance with plans and specifications
reasonably approved by Landlord, and any contractor or person selected by
Tenant to make the same must first be reasonably approved in writing by
Landlord. With respect to any Alterations that affect the structure of the
Building, the Building Systems, or any portion of the Project outside the
Premises, at Landlord's option the Alterations shall be made by Landlord,
or by a contractor specified by Landlord, for Tenant's account and Tenant
shall reimburse Landlord for the actual third-party costs incurred by
Landlord in connection therewith as an Additional Charge, within twenty
(20) days after receipt of a statement from Landlord therefor.
(d) Tenant shall reimburse Landlord upon demand for any reasonable
out-of-pocket expenses incurred by Landlord in the review of any
Alterations made by Tenant, including fees charged by Landlord's
contractors or consultants to review plans and specifications, and such
obligation shall be an Additional Charge. Landlord's consent to any
Alterations shall not obligate Landlord to repair, maintain, insure or
otherwise assume
16
any responsibility or liability with respect to any such Alteration. In
addition, notwithstanding Landlord's review, Tenant and not Landlord shall
be responsible for compliance of the Alterations, and plans and
specifications therefor, with all applicable Laws, and Landlord shall not
be responsible for any omissions or errors therein.
(e) Upon the expiration or sooner termination of the Term, Tenant
shall upon demand by Landlord, at Landlord's election either (i) at
Tenant's sole cost and expense, forthwith and with all due diligence remove
any Alterations made by or for the account of Tenant, designated by
Landlord to be removed (provided, however, that upon the written request of
Tenant prior to installation of such Alterations, Landlord shall advise
Tenant at that time whether or not such Alterations must be removed upon
the expiration or sooner termination of this Lease), and restore the
Premises to substantially its original condition as of the Commencement
Date, subject to normal wear and tear and the rights and obligations of
Tenant concerning casualty damage pursuant to Paragraph 20 or (ii) pay
Landlord the reasonable estimated cost thereof.
(f) All wiring, circuit breakers, transformers, cabling, plumbing,
heating and sprinkling systems, fixtures and outlets, vaults, paneling,
molding, shelving, radiator enclosures, flooring, HVAC equipment and HVAC
ducts shall be deemed to be real estate fixtures and at all times after
installation be and remain Landlord's property, whether or not attached to
or built into the Premises; provided, however, that any HVAC equipment
installed by Tenant to handle loads in excess of the HVAC capacity required
to operate the Building as a first-class office building and electrical
systems for backup emergency power may be removed by Tenant at any time
prior to the expiration of the Term as long as Tenant repairs any damage to
the Building and Common Area which may result from such removal. Any trade
fixtures, furniture and trade equipment installed by the Tenant which may
be removed from the Premises without injury thereto (including, without
limitation, demountable partitions, refrigerators and other kitchen
appliances, computer racking and similar demountable fixtures)
(collectively, "Trade Fixtures") shall remain the property of the Tenant
and shall be removed by the Tenant, at the Tenant's sole cost and expense,
from the Premises upon the expiration or earlier termination of this Lease.
Landlord acknowledges Tenant's right to finance and to secure under the
Uniform Commercial Code, Tenant's inventory, furnishings, furniture,
equipment, machinery, leasehold improvements and other personal property
located at the Property, other than the fixtures, equipment and other
improvements required to be titled in the name of Landlord, and Landlord
agrees, at Tenant's cost and expenses, to execute Landlord's lien waiver
forms with respect to such financed personal property and other similar
documentation (in form and substance reasonably satisfactory to Landlord;
provided that such waivers shall not increase Landlord's obligations or
limit Landlord's rights and remedies under this Lease) in favor of any
purchase money seller, Landlord or lender who has financed or may finance
in the future such items, which documentation will provide such purchase
money seller, Landlord or lender a reasonable period of time to remove such
financed personal property (but in no event to exceed the time of Tenant's
right to possession of the Premises).
7. REPAIR AND MAINTENANCE.
(a) LANDLORD'S OBLIGATIONS.
(i) Landlord shall maintain, repair and replace, at its sole cost
and expense, except as provided in Paragraph 7(c), the exterior
(excluding windows and window frames), roof structure (but not the
roof membrane) and structural portions of the Building (including load
bearing walls and foundations).
(ii) Landlord shall maintain, repair and replace the parking
areas, courtyards, sidewalks, entryways, lawns, fountains, landscaping
and other similar facilities located in the Common Area.
All costs incurred by Landlord in connection with the foregoing obligations
shall be payable by Tenant as Additional Charges in accordance with
Paragraph 3(c) to the extent they are properly included in Expenses
thereunder. Landlord's obligations under this Paragraph 7(a) with respect
to any particular repair, replacement or maintenance requirement, shall not
commence until Tenant notifies Landlord in writing of any circumstances
which Tenant believes may trigger Landlord's obligations. If Landlord fails
after thirty (30) days' written notice by Tenant (or such lesser period as
may be reasonable if such failure materially interferes with Tenant's use
or occupancy of the Premises or threatens material damage to Tenant's
property or material harm to Tenant's employees, even if
17
such shorter period of time is less than the cure period provided in
Paragraph 19(b) before such failure would be a "default" by Landlord under
this Lease) to proceed with due diligence to make repairs required to be
made by Landlord under this Paragraph 7(a), the same may be made by Tenant
at the expense of Landlord, so long as Tenant first provides Landlord with
an additional notice and an additional five (5) business days (or, in the
event of an emergency that threatens material damage to Tenant's property
or material harm to Tenant's employees, one (1) business day) to either (i)
dispute Landlord's obligation and submit such dispute to arbitration
pursuant to Paragraph 45, (ii) commence cure, or (iii) by written notice to
Tenant within such five business day period after receipt of such notice,
designate the contractor Tenant shall use in connection with any such
repair by Tenant in which event Tenant shall only make such repairs using
such designated contractor. If Landlord fails to dispute such obligation,
commence cure or to so designate a contractor, Tenant may proceed with an
experienced, duly licensed and adequately insured contractor selected by
Tenant. Any expenses incurred by Tenant in connection with the preceding
sentence shall be reimbursed (with interest at the rate of 8.5% from the
date on which Tenant incurs such costs) within thirty (30) days after
submission of a bill or statement therefor to Landlord. Tenant shall have
no right to offset any such amounts against Rent hereunder. If Landlord
disputes Tenant's right to cure Landlord's default or the reasonableness of
the costs incurred by Tenant, Landlord shall submit such dispute to binding
arbitration pursuant to Paragraph 45 below within thirty (30) business days
after Tenant's demand. If Landlord fails to either reimburse Tenant or
dispute Tenant's demand pursuant to the previous sentence within thirty
(30) business days after Tenant's demand, Tenant may submit such dispute to
binding arbitration pursuant to Paragraph 45.
(b) TENANT'S OBLIGATIONS. Tenant shall maintain, repair and replace,
to the extent necessary to maintain the Building in good operating order
and first-class condition, at its sole cost and expense, all portions of
the Premises which are not Landlord's obligations under Paragraph 7(a),
including, without limitation, (i) the roof membrane, windows, and window
frames; (ii) the building systems serving the Premises for electrical,
mechanical, HVAC and plumbing and all controls appurtenant thereto, and any
elevators in the Building (collectively, including elevators, "Building
Systems"); and (iii) the interior portion of the Building, the Tenant
Improvements, the Alterations, and any additional tenant improvements,
alterations or additions installed by or on behalf of Tenant within the
Premises. Tenant shall be responsible for the expense of installation,
operation, and maintenance of its telephone and other communications
cabling from the point of entry into the Building to the Premises and
throughout the Premises; though Landlord shall have the right to perform
such work on behalf of Tenant in Common Areas, provided Landlord performs
such work in coordination with Tenant and its contractors in such a manner
as will accommodate Tenant's reasonable objectives with respect thereto.
The Premises shall at all times be maintained by Tenant in the condition of
a first-class office building. Tenant's obligations under this Paragraph 7
include, without limitation, the replacement, at Tenant's sole cost and
expense, of any portions of the Premises or Building Systems which are not
Landlord's express responsibility under Paragraph 7(a), if it would be
commercially prudent to replace, rather than repair, such portions of the
Premises, regardless of whether such replacement would be considered a
capital expenditure. Tenant hereby waives and releases its right to make
repairs at Landlord's expense under Sections 1941 and 1942 of the
California Civil Code or under any similar law, statute or ordinance now or
hereafter in effect. In addition, Tenant hereby waives and releases its
right to terminate this Lease under Section 1932(1) of the California Civil
Code or under any similar law, statute or ordinance now or hereafter in
effect.
(c) ADDITIONAL OBLIGATIONS OF TENANT. The purpose of Paragraph 7(a)
and 7(b) is to define the obligations of Landlord and Tenant to perform
various repair and maintenance functions; the allocation of the costs
therefor are covered under this Paragraph 7(c) and Paragraph 3. Tenant
shall bear the full cost of repairs or maintenance interior or exterior,
structural or otherwise, to preserve the Premises and the Building in good
working order and first-class condition, arising out of (i) the existence,
installation, use or operation of any Tenant Improvements, Alterations, or
any of Tenant's trade fixtures or personal property; (ii) the moving of
Tenant's property or fixtures in or out of the Building or Project or in
and about the Premises; (iii) the particular use or particular occupancy or
manner of use or occupancy of the Premises by any Tenant Party; or (iv)
except to the extent any claims arising from any of the foregoing are
reimbursed by insurance carried by Landlord, are covered by the waiver of
subrogation in Paragraph 11 or are otherwise provided for in Paragraph 20,
the acts, omissions or negligence of any Tenant Parties.
(d) MAINTENANCE SERVICE CONTRACTS. In connection with Tenant's
maintenance and repair obligations contained in this Paragraph 7, Tenant
shall, at its own cost and expense, enter into regularly scheduled
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preventive maintenance service contracts with maintenance contractors
approved by Landlord, in its reasonable discretion, for servicing all
Building Systems, elevators and equipment within the Premises, and shall
provide copies of such contracts and periodic maintenance reports to
Landlord. At Landlord's option at any time in which Tenant is in Default
hereunder, maintenance service contracts shall be prepaid on an annual
basis. Each maintenance service contract shall specifically name Landlord
as a third party beneficiary, with the right to receive copies of all
notices delivered under such contract and the ability to exercise Tenant's
rights thereunder, at Landlord's election, in connection with any cure of
Tenant's default by Landlord, or any assumption by Landlord of Tenant's
maintenance obligations with respect to Building Systems, pursuant to
Paragraph 7(e) below.
(e) CURE RIGHTS. Tenant shall have a period of thirty (30) days from
the date of written notice from Landlord within which to cure any failure
to fulfill any of its obligations under this Paragraph 7; provided,
however, that if such failure is curable but cannot be cured within such
thirty (30) day period, Tenant shall have such additional time as may be
reasonably required to cure (not to exceed sixty (60) additional days) so
long as Tenant commences such cure within such (30) day period and
diligently prosecutes such cure to completion. Landlord shall have the
rights set forth in Paragraph 23 with respect to any failure of Tenant to
perform its obligations under this Paragraph 7. In addition, Landlord may
elect, by delivery of written notice to Tenant, to assume Tenant's
maintenance obligations with respect to the Building Systems under
Paragraph 7(b)(ii) if Tenant does not cure any breach of such obligations,
or if Tenant has failed to perform such obligations more than once in any
twelve month period (without benefit of cure periods) upon the second such
failure. If Landlord assumes such obligations, all costs incurred by
Landlord in connection therewith shall be included in Expenses payable by
Tenant as Additional Charges in accordance with Paragraph 4(c). The
remedies described in this paragraph are cumulative and in addition to any
other remedies Landlord may have at law or under this Lease.
(f) NO ABATEMENT. Except to the extent any claims arising from any of
the foregoing are reimbursed by rental abatement insurance proceeds
actually received by Landlord, are covered by the waiver of subrogation in
Paragraph 11 or are otherwise provided for in Paragraph 20, there shall be
no abatement of Rent with respect to, and except for Landlord's gross
negligence or willful misconduct, Landlord shall not be liable for any
injury to or interference with Tenant's business arising from, any repairs,
maintenance, alteration or improvement in or to any portion of the Project,
including the Premises, or in or to the fixtures, appurtenances and
equipment therein.
8. LIENS. Tenant shall keep the Premises free from any liens arising out of
any work performed, material furnished or obligations incurred by Tenant. In the
event that Tenant shall not, within ten (10) days following the imposition of
any such lien, cause the same to be released of record by payment or posting of
a proper bond, Landlord shall have, in addition to all other remedies provided
herein and by law, the right, but not the obligation, to cause the same to be
released by such means as it shall deem proper, including without limitation by
the payment of the claim giving rise to such lien or by the posting of a bond.
All such sums paid by Landlord and all expenses incurred by Landlord in
connection therewith shall be considered Additional Charges and shall be payable
to Landlord by Tenant on demand with interest from the date incurred by Landlord
at the Default Rate. Landlord shall have the right at all times to post and keep
posted on the Premises any notices permitted or required by law, or which
Landlord shall deem proper, for the protection of Landlord, the Premises, the
Project and any other party having an interest therein, from mechanics' and
materialmen's liens, and Tenant shall give written notice to Landlord at least
fifteen (15) business days' prior to commencement of any construction on the
Premises.
9. ASSIGNMENT AND SUBLETTING.
(a) Except as otherwise provided in this Section 9, Tenant shall not
directly or indirectly, voluntarily or by operation of law, sell, assign,
encumber, pledge or otherwise transfer or hypothecate all or any part of
the Premises or Tenant's leasehold estate hereunder (collectively,
"Assignment"), or permit the Premises to be occupied by anyone other than
Tenant or sublet the Premises or any portion thereof (collectively,
"Sublease"), without Landlord's prior written consent in each instance,
which consent shall not be unreasonably withheld. Without otherwise
limiting the criteria upon which Landlord may withhold its consent to any
proposed Sublease or Assignment, if Landlord withholds its consent where
either (i) the creditworthiness of the proposed Sublessee or Assignee is
not reasonably acceptable to Landlord, or (ii) the proposed Sublessee's or
Assignee's use of the Premises is not in compliance with the Permitted Use
as described in the Basic Lease Information, such withholding
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of consent shall be presumptively reasonable. If Landlord consents to the
Sublease or Assignment, Tenant may thereafter enter into a valid Sublease
or Assignment upon the terms and conditions set forth in this Paragraph 9.
(b) If Tenant desires at any time to enter into an Assignment of this
Lease or a Sublease of the Premises or any portion thereof for which
Landlord's consent is required, it shall first give written notice to
Landlord of its desire to do so, which notice shall contain (i) the name of
the proposed assignee, subtenant or occupant; (ii) the name of the proposed
assignee's, subtenant, or occupant's business to be carried on in the
Premises; (iii) the terms and provisions of the proposed Assignment or
Sublease; and (iv) such financial information as Landlord may reasonably
request concerning the proposed assignee, subtenant or occupant.
(c) At any time within fifteen (15) days after Landlord's receipt of
the notice specified in Paragraph 9(b), Landlord may by written notice to
Tenant elect to (i) consent to the Sublease or Assignment; or (ii)
disapprove the Sublease or Assignment. In addition, unless Tenant has
previously delivered an Availability Notice to Landlord with respect to the
portion of the Premises covered by such proposed Sublease or Assignment
within the previous 120 days as provided in Paragraph 9(d), Landlord may
elect to terminate this Lease as to the portion of the Premises that is
specified in such notice, with a proportionate abatement in Monthly Base
Rent and Additional Charges for Expenses and Taxes, if such notice is with
respect to (x) any proposed Assignment, or (y) any proposed Sublease and
either (I) such Sublease has a term (including any renewal or extension
options) that either is coterminous with the Term or expires within the
last twelve (12) months of the Term, or (II) after giving effect to such
Sublease, the original Tenant will occupy less than fifty percent (50%) of
the Rentable Area of the Premises for a period in excess of twenty-four
(24) consecutive months. If Landlord elects to terminate the Lease as to a
portion of the Premises pursuant to the immediately preceding sentence,
Tenant shall at all times provide reasonable and appropriate access to such
portion of the Premises and use of any common facilities within the
Building (including, at Landlord's election and as reasonable under the
circumstances, by the designation of "building common areas" as appropriate
for the use of and access to the recaptured space, including provision of
any utilities and services for such recaptured space), Tenant's Share shall
be modified (based on the remaining Rentable Area of the Premises divided
by the total rentable area in the Building, as determined by Landlord in
its reasonable discretion), Tenant's Minimum Parking shall be reduced by
multiplying the number of parking spaces included in Tenant's Minimum
Parking by a fraction, the numerator of which shall be the remaining
Rentable Area of the Premises and the denominator of which shall be the
Rentable Area of the entire Premises as of the Delivery Date (determined as
provided in the Basic Lease Information) and Tenant's rights with respect
to any monument or other Project signage and the roof space (for Satellite
Antennae) shall be reduced in the same proportion as the Minimum Parking,
except that so long as Tenant is the largest occupant in the Building
Tenant shall continue to have the use of any available Building top signage
(subject to the requirements of Paragraph 38). Promptly after request from
Landlord, Tenant shall enter into any amendment to this Lease or other
documentation reasonably requested by Landlord in connection with any such
termination of this Lease as to a portion of the Premises (which shall
include provisions creating building common area and regarding the other
modifications to the extent set forth in the preceding sentence). Failure
by Landlord to either consent to or disapprove a proposed Assignment or
Sublease within the fifteen (15) 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.
(d) At Tenant's option, Tenant may notify Landlord in writing if
Tenant wishes to Assign or Sublease any portion of the Premises, prior to
commencing negotiations for an Assignment or Sublease with another party
and without the required information set forth in Paragraph 9(b), if such
Assignment or Sublease would be subject to Landlord's termination right
provided above (such notice being the "Availability Notice"), and Landlord
shall have the option, by written notice to Tenant within fifteen (15) days
after receiving any Availability Notice, to terminate this Lease with
respect to the portion of the Premises as provided above. If Landlord
declines or fails timely to elect to terminate this Lease with respect to
such portion of the Premises, Tenant shall have the right, within one
hundred twenty (120) days after the expiration of such fifteen (15) day
period, to enter into an Assignment or Sublease with respect to the portion
of the Premises designated in the Availability Notice, subject to
Landlord's consent and the other provisions of this Paragraph 9, except
that Landlord shall not have the further right to terminate with respect to
such Assignment or Sublease. If Tenant fails to enter into an Assignment or
Sublease within such one hundred twenty (120) day period, or upon
expiration of any Sublease entered into within such one
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hundred twenty (120) day period, Landlord's rights under this Paragraph 9
to terminate the Lease with respect to the portion of the Premises upon any
future proposed Sublease or Assignment shall revive. If Landlord consents
to the Sublease or Assignment within fifteen (15) days after receipt of
Tenant's notice as provided above, Tenant may thereafter within one hundred
twenty (120) days after Landlord's consent, but not later than the
expiration of said one hundred twenty (120) days, enter into such
Assignment or Sublease of the Premises or portion thereof upon the terms
and conditions set forth in the notice furnished by Tenant to Landlord
pursuant to Paragraph 9(b). However, Tenant shall pay to Landlord fifty
percent (50%) of any rent or other consideration realized by Tenant under
any and all Subleases in excess of the Monthly Base Rent and Additional
Charges payable hereunder (or the amount thereof proportionate to the
portion of the Premises subject to such Sublease(s)), including, without
limitation, any sums paid for the sale or rental of the Tenant
Improvements, after first deducting from such excess costs reasonably
incurred for tenant improvements installed by Tenant (commensurate with a
standard office build-out) to obtain the Sublease or Assignment in
question, each of which are installed in that portion of the Premises which
is the subject of the Sublease or Assignment and which unamortized costs
shall be amortized on a straight line basis (without interest) over the
term of the Sublease or Assignment in equal installments, and after
deducting therefrom any customary brokers' commissions that Tenant has
incurred in connection with such Sublease.
(e) No consent by Landlord to any Assignment or Sublease by Tenant
shall relieve Tenant of any obligation to be performed by Tenant under this
Lease, whether arising before or after the Assignment or Sublease. The
consent by Landlord to any Assignment or Sublease shall not relieve Tenant
from the obligation to obtain Landlord's express written consent to any
other Assignment or Sublease. Any Assignment or Sublease that is not in
compliance with this Paragraph 9 shall be void and, at the option of
Landlord, shall constitute a material Default by Tenant under this Lease.
The acceptance of Monthly Base Rent or Additional Charges by Landlord from
a proposed assignee or sublessee shall not constitute the consent to such
Assignment or Sublease by Landlord.
(f) The following shall be deemed a voluntary assignment of Tenant's
interest in this Lease: (i) any dissolution, merger, consolidation, or
other reorganization of Tenant; and (ii) if the capital stock of Tenant is
not publicly traded, the sale or transfer to one person or entity stock
possessing more than fifty percent (50%) of the total combined voting power
of all classes of Tenant's stock issued, outstanding and entitled to vote
for the election of directors. Notwithstanding anything to the contrary
contained in this Paragraph 9, Tenant may enter into any of the following
transfers (a "Permitted Transfer") without Landlord's prior written
consent: (1) Tenant may assign its interest in the Lease to a corporation,
partnership, professional corporation, limited liability company, or
limited liability partnership ("Transfer Entity") which results from a
merger, consolidation or other reorganization, so long as immediately
following such transaction the surviving Transfer Entity satisfies each of
the Transfer Standards (as defined below) or the obligations of such
Transfer Entity are guaranteed (by documentation that is in form and
substance satisfactory to Landlord in its reasonable discretion) by Tenant
or an Affiliate (as defined below) satisfying each of the Transfer
Standards; and (2) Tenant may assign this Lease to a Transfer Entity which
purchases or otherwise acquires all or substantially all of the assets of
Tenant, so long as immediately following such transaction such acquiring
corporation satisfies each of the Transfer Standards. For purposes of this
Paragraph 9(f), the Transfer Standards shall mean each of the following, as
reflected in audited financial statements (which include an unqualified
certification by a licensed certified pubic accountant reasonably
acceptable to Landlord) provided to Landlord: (a) if Tenant leases space in
only one Building as of the effective date of the transfer: (i) a net worth
of at least Five Hundred Million Dollars ($500,000,000); (iii) unencumbered
and unrestricted cash, cash equivalents and third party marketable
securities with liquidity of 90 to 360 days (collectively, "Liquid Assets")
of One Hundred Million Dollars ($100,000,000); and (iii) an operating
profit of not less than Fifty Million Dollars ($50,000,000) for the prior
twelve (12) months (combined operations of pre-existing entities); or (b)
if Tenant leases space in more than one building in the Project as of the
effective date of the transfer: (i) a net worth of at least Five Hundred
Million Dollars ($500,000,000); (ii) Liquid Assets of the One Hundred Fifty
Million Dollars ($150,000,000); and (iii) an operating profit of not less
than Eighty Million Dollars ($80,000,000) for the prior twelve (12) months
(combined operations of pre-existing entities);.
(g) Each assignee pursuant to an Assignment as provided in this
Paragraph 9 shall assume all obligations of Tenant under this Lease, and
shall be and remain liable jointly and severally with Tenant for the
payment of Monthly Base Rent and Additional Charges, and for the
performance of all the terms, covenants, conditions and agreements herein
contained on Tenant's part to be performed for the Term. No Assignment
shall be binding on Landlord unless the assignee or Tenant shall deliver to
Landlord a counterpart of the Assignment and an
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instrument in recordable form that contains a covenant of assumption by the
assignee satisfactory in substance and form to Landlord, consistent with
the requirements of this Paragraph 9(g), but the failure or refusal of the
assignee to execute such instrument of assumption shall not release or
discharge the assignee from its liability as set forth above.
Notwithstanding anything to the contrary in this Lease, no Sublease shall
be binding on Landlord unless and until Landlord shall agree in writing
following termination of this Lease to recognize such sublessee and such
sublessee agrees in writing to attorn to Landlord on the terms and
conditions of the sublease (including the obligations under this Lease to
the extent that they relate to the portion of the Premises subleased), and
any Sublease entered into by Tenant hereunder shall include an obligation
by the sublessee to so attorn to Landlord if Landlord, in Landlord's sole
discretion, elects to recognize such Sublease upon any termination of this
Lease.
(h) Tenant shall have the right, without Landlord's consent and
without triggering Landlord's rights under Paragraph 10(c), but with
written notice to Landlord at least ten (10) days prior thereto, to enter
into an Assignment of Tenant's interest in the Lease or a Sublease of all
or any portion of the Premises to an Affiliate (as defined below) of
Tenant, provided that (i) in connection with an Assignment that is not a
Sublease, the Affiliate delivers to Landlord concurrent with such
Assignment a written notice of the Assignment and an assumption agreement
whereby the Affiliate assumes and agrees to perform, observe and abide by
the terms, conditions, obligations, and provisions of this Lease arising
from and after the effective date of the assignment; and (ii) the assignee
or sublessee remains an Affiliate throughout the term of this Lease (and,
in connection with an Assignment that is not a Sublease, the assumption
agreement shall contain provisions consistent with the provisions of this
subparagraph allowing Landlord to terminate this Lease at such time as the
entity is no longer an Affiliate of the original Tenant). If this Lease is
assigned or sublet to an Affiliate and thereafter any circumstance occurs
which causes such assignee or sublessee to no longer be an Affiliate of the
assigning or subleasing Tenant, Tenant shall give written notice thereof to
Landlord, which notice, to become effective, shall refer to Landlord's
right to terminate this Lease pursuant to this subparagraph, in the event
of an Assignment, or to cause Tenant to terminate the Sublease, in the
event of a Sublease ("Affiliation Termination Notice"). Following
occurrence of the circumstance giving rise to the discontinuation of such
assignee or sublessee being an Affiliate ("Affiliate Termination") of the
assigning or subleasing Tenant, Landlord shall be entitled to terminate
this Lease in the event of an Assignment, or to cause Tenant to terminate
the Sublease in the event of a Sublease, unless Landlord has given its
prior written consent to such circumstance, which consent shall not be
unreasonably withheld by Landlord so long as, in the event of an
Assignment, such assignee (after giving effect to such circumstance) has
financial strength (as demonstrated by audited financial statements) equal
to or greater than the assigning or subleasing Tenant (including its net
worth) as of the date of execution of this Lease, or the assigning or
subleasing Tenant executes a guaranty in usual form reasonably acceptable
to Landlord (however, this does not imply that Tenant would be released
without such guaranty). No Sublease or Assignment by Tenant made pursuant
to this Paragraph shall relieve Tenant of Tenant's obligations under this
Lease. As used in this paragraph, the term "Affiliate" shall mean and
collectively refer to a corporation or other entity which controls, is
controlled by or is under common control with Tenant, by means of an
ownership of either (aa) more than fifty percent (50%) of the outstanding
voting shares of stock or partnership or other ownership interests, or (bb)
stock, or partnership or other ownership interests, which provide the right
to control the operations, transactions and activities of the applicable
entity.
(i) 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.
10. INSURANCE AND INDEMNIFICATION.
(a) Except to the extent caused by the negligence or willful
misconduct of Tenant Parties or Tenant's breach of this Lease, Landlord
shall indemnify and hold Tenant harmless from and defend Tenant against any
and all claims or liability for any injury or damage to any person or
property including any reasonable attorney's
22
fees (but excluding any consequential damages or loss of business)
occurring in, on, or about the Project to the extent such injury or damage
is caused by the gross negligence or willful misconduct of Landlord, its
agents, servants, contractors, employees (collectively, including Landlord,
"Landlord Parties").
(b) Landlord shall not be liable to Tenant, and Tenant hereby waives
all claims against Landlord Parties for any injury or damage to any person
or property in or about the Premises by or from any cause whatsoever (other
than the gross negligence or willful misconduct of Landlord Parties), and
without limiting the generality of the foregoing, whether caused by water
leakage of any character from the roof, walls, basement, or other portion
of the Premises or the Building, or caused by gas, fire, oil, electricity,
or any cause whatsoever, in, on, or about the Premises, the Project or any
part thereof (other than that caused by the gross negligence or willful
misconduct of Landlord Parties). Tenant acknowledges that any casualty
insurance carried by Landlord will not cover loss of income to Tenant or
damage to the Alterations in the Premises installed by Tenant or Tenant's
personal property located within the Premises (except as provided in
Paragraph 10(f) below). Tenant shall be required to maintain the insurance
described in Paragraph 10(d) below during the Term.
(c) Except to the extent caused by the gross negligence or willful
misconduct of Landlord Parties, Tenant shall indemnify and hold Landlord
harmless from and defend Landlord against any and all claims or liability
for any injury or damage to any person or property whatsoever: (i)
occurring in or on the Premises; or (ii) occurring in, on, or about any
other portion of the Project to the extent such injury or damage shall be
caused by the negligence or willful misconduct by the Tenant Parties.
Tenant further agrees to indemnify and hold Landlord harmless from, and
defend Landlord against, any and all claims, losses, or liabilities
(including damage to Landlord's property) arising from (x) any breach of
this Lease by Tenant, (y) any matter referred to in Paragraph 10(g), and/or
(z) the conduct of any work or business of Tenant Parties in or about the
Project, including, but not limited to any release, discharge, storage or
use of any Hazardous Substance. In the event of a discrepancy between the
terms of this paragraph and the terms of Paragraph 39 of the Lease
concerning Hazardous Substance liability, the latter shall control.
(d) Tenant shall procure at its cost and expense and keep in effect
during the Term (and during the construction period for the Tenant
Improvements) the following insurance:
(i) Commercial general liability insurance on an occurrence form,
including contractual liability, with a minimum combined single limit
of liability of Three Million Dollars ($3,000,000). Such insurance
shall name Landlord, any Mortgagee, any ground lessor, and such other
parties as Landlord may request as additional insureds, shall
specifically include the liability assumed hereunder by Tenant, and
shall provide that it is primary insurance, and not excess over or
contributory with any other valid, existing and applicable insurance
in force for or on behalf of Landlord, and shall provide that Landlord
shall receive thirty (30) days' written notice from the insurer prior
to any cancellation or change of coverage. The limits of such
insurance shall not limit the liability of Tenant hereunder, and
Tenant is responsible for ensuring that the amount of liability
insurance carried by Tenant is sufficient for Tenant's purposes.
(ii) Business interruption insurance, insuring Tenant for a
period of twelve (12) months against losses arising from the
interruption of Tenant's business, and for lost profits, and charges
and expenses which continue but would have been earned if the business
had gone on without interruption, insuring against such perils, in
such form and with such deductible amount as are commercially
reasonable;
(iii) "Special" (also known as "all risk") property insurance
(including, without limitation, boiler and machinery (if applicable);
sprinkler damage, vandalism and malicious mischief) on all of Tenant's
personal property. Such insurance shall be in an amount equal to full
replacement cost of the aggregate of the foregoing and shall provide
coverage comparable to the coverage in the standard ISO All Risk form,
when such form is supplemented with the coverages required above.
During the Term of this Lease, the proceeds from any such policy or
policies of insurance shall be used for the repair or replacement of
the fixtures and equipment so insured. Landlord shall have no interest
in the insurance upon Tenant's Trade Fixtures or personal property
(other than as necessary to enforce Tenant's obligations with respect
to such insurance under this Lease) and will sign all documents
reasonably necessary in
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connection with the settlement of any claim or loss by Tenant in
connection with such insurance. Landlord will not carry insurance on
Tenant's Trade Fixtures or personal property possessions.
(iv) Worker's compensation insurance with limits as may be
required by law.
(v) Such other insurance as may be required by Laws, or by
Landlord to the extent it is commercially reasonable for tenants to be
required to carry such other insurance under similar leases with
respect to similar property in similar locations.
Insurance required under this Paragraph 10(d) shall be in companies rated
"A-" VIII or better in "Best's Insurance Guide." Tenant shall deliver
copies of policies of such insurance and certificates naming the additional
insureds thereof to Landlord on or before the date Tenant commences work on
the Tenant Improvements, and thereafter at least thirty (30) days before
the expiration dates of expiring policies; and, in the event Tenant shall
fail to procure such insurance, or to deliver such policies or
certificates, Landlord may, at its option, procure same for the account of
Tenant, and the cost thereof shall be paid to Landlord as Additional
Charges within five (5) days after delivery to Tenant of bills therefor.
(e) The provisions of this paragraph 10 shall survive the expiration
or termination of this Lease with respect to any claims or liability
occurring prior to such expiration or termination.
(f) Landlord shall maintain insurance on the Project, including the
Building, the Tenant Improvements and any Alterations installed in the
Premises by Tenant at its expense to the extent Tenant provides Landlord
with all information reasonably required by Landlord or its insurer in
connection therewith (with the entire cost of any such insurance on Tenant
Improvements and Alterations to be payable directly by Tenant to Landlord
as an Additional Charge, including the incremental cost to add such
insurance to Landlord's policies and any deductibles payable with respect
to such Tenant Improvements and Alterations), against fire and risks
covered by "special" coverage (also known as "all risk") (excluding
earthquake and flood, though Landlord, at its sole option, may include this
coverage) on a 100% of "replacement cost" basis (though reasonable
deductibles may be included under such coverage). Landlord's insurance
shall also cover the improvements installed by Landlord prior to the
commencement of the Term, and the Tenant Improvements installed by Tenant
pursuant to the Work Letter, shall have a building ordinance provision, and
shall provide for rental interruption insurance covering a period of twelve
(12) full months. In no event shall Landlord be deemed a co-insurer under
such policy. Landlord shall also maintain commercial general liability
insurance on an occurrence basis in amounts not less than Three Million
Dollars ($3,000,000) per occurrence with respect to bodily injury or death
and property damage in the Project. Notwithstanding the foregoing
obligations of Landlord to carry insurance, Landlord may modify the
foregoing coverages if and to the extent it is commercially reasonable to
do so. Landlord agrees to provide Tenant, upon written request, with
certificates of insurance evidencing the foregoing coverages. Tenant
acknowledges that, notwithstanding any provision of this Paragraph 10(f) or
this Lease, Landlord currently intends to carry earthquake insurance on the
Project during the Term of this Lease.
(g) Tenant acknowledges that even if Landlord installs and operates
security cameras or other security equipment and/or provides any other
services that could be construed as being intended to enhance security,
Landlord shall have no obligation to Tenant or to any of Tenant's Parties
for any damage, claim, loss or liability related to any claim that Landlord
had a duty to provide security or that the equipment or services provided
by Landlord were inadequate, inoperative or otherwise failed to provide
adequate security. Any such claim made against Landlord by any employee,
customer or invitee of Tenant shall be included within Tenant's obligation
of indemnity and defense set forth in subparagraph (c) above.
11. WAIVER OF SUBROGATION. Notwithstanding anything to the contrary in this
Lease, the parties hereto release each other (including Landlord Parties and
Tenant Parties) and their respective agents, employees, successors, assignees
and subtenants from all liability for injury to any person or damage to any
property that is caused by or results from a risk (i) which is actually insured
against, to the extent of receipt of payment under such policy (unless the
failure to receive payment under any such policy results from a failure of the
insured party to comply with or observe the terms and conditions of the
insurance policy covering such liability, in which event, such release shall not
be so limited), (ii) which is required to be insured against under this Lease,
without regard to
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the negligence or willful misconduct of the entity so released, or (iii) which
would normally be covered by the standard form of "special" or "all risk"
coverage property insurance. Landlord and Tenant shall each obtain from their
respective insurers under all policies of fire, theft, and other property
insurance maintained by either of them at any time during the Term insuring or
covering the Building, the Premises, or the Project or any portion thereof of
its contents therein, a waiver of all rights of subrogation which the insurer of
one party might otherwise, if at all, have against the other party and Landlord
and Tenant shall each indemnify the other against any loss or expense, including
reasonable attorneys' fees, resulting from the failure to obtain such waiver.
12. SERVICES AND UTILITIES.
(a) Landlord shall provide the maintenance and repairs described in
Paragraph 7(a), except for damage occasioned by the act or omission of
Tenant or for which Tenant is responsible pursuant to Paragraph 7(c), which
damage shall be repaired by Landlord at Tenant's expense. Landlord shall
cause the Excluded Space to be provided with necessary utilities and
services independently of the Premises and the Building Systems servicing
the Premises.
(b) Subject to the provisions elsewhere herein contained and to the
Rules and Regulations, Tenant shall be responsible for arranging for, and
direct payment of any and all cost of, garbage pickup, recycling,
janitorial, security, transportation management and mitigation programs,
water, electricity, gas, telephone, cable and digital services, and Tenant
shall provide the maintenance, repair and replacement of Building Systems
in connection with such utilities and services, and Tenant shall provide
the maintenance, repair and services as described in Section 7(b). Landlord
shall cooperate with Tenant's efforts to arrange all such services. If
Landlord assumes Tenant's maintenance obligations with respect to the
Building Systems pursuant to Paragraph 7(e), Tenant shall cooperate fully
with Landlord and abide by all the reasonable regulations and requirements
that Landlord may prescribe for the proper functioning and protection of
the Building Systems.
(c) Unless such apparatus or device in included in Tenant's space
plans approved by Landlord, Tenant will not without the written consent of
Landlord, which consent shall not be unreasonably withheld or delayed, use
any apparatus or device in the Premises which, when used, puts an excessive
load on the Building or its structure or systems, including, without
limitation, electronic data processing machines, punch card machines and
machines using excess lighting or voltage in excess of the amount for which
the Building is designed without providing the necessary (in Landlord's
reasonable discretion) alteration necessary for the safe and adequate
operation of said apparatus or device.
(d) Landlord shall not be in default hereunder, nor be deemed to have
evicted Tenant, nor be liable for any damages directly or indirectly
resulting from, nor shall the rental herein reserved be abated, except as
expressly provided for in the last sentence of this paragraph, by reason of
(i) the installation, use or interruption of use of any equipment in
connection with the foregoing utilities and services; (ii) failure to
furnish or delay in furnishing any services to be provided by Landlord when
such failure or delay is caused by Acts of God or the elements, labor
disturbances of any character, any other accidents or other conditions
beyond the reasonable control of Landlord (any of the foregoing, "Force
Majeure"), or by the making of repairs or improvements to the Premises or
to the Building (except in the case of Landlord's gross negligence or
willful misconduct); or (iii) the limitation, curtailment, rationing or
restriction on use of water or electricity, gas or any other form of energy
or any other service or utility whatsoever serving the Premises or the
Project. Furthermore, Landlord shall be entitled to cooperate with the
mandatory requirements of national, state or local governmental agencies or
utilities suppliers in connection with reducing energy or other resources
consumption. If the Premises become unsuitable for Tenant's use as a
consequence of cessation of gas and electric utilities or other services
provided to the Premises resulting from a casualty covered by Landlord's
insurance, then Tenant's Monthly Base Rent and Additional Charges shall
abate during the period of time in which Tenant cannot occupy the Premises
for the Permitted Uses, but only to the extent of rental abatement
insurance proceeds received by Landlord.
13. TENANT'S CERTIFICATES. Tenant, at any time and from time to time,
within ten (10) days from receipt of written notice from Landlord, will execute,
acknowledge and deliver to Landlord and, at Landlord's request, to any
prospective purchaser, ground or underlying lessor or mortgagee of any part of
the Project any other party acquiring an interest in Landlord, a certificate of
Tenant substantially in the form attached as EXHIBIT E and
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also containing any other information that may reasonably be required by any of
such persons. It is intended that any such certificate of Tenant delivered
pursuant to this Paragraph 13 may be relied upon by Landlord and any prospective
purchaser, ground or underlying lessor or mortgagee of any part of the Project,
or such other party.
14. HOLDING OVER.
(a) Provided no Default is then continuing under this Lease, Tenant
shall have the right to extend the Term for a period of three months (the
"Holdover Term") after either (i) the expiration of the Initial Term if
Tenant has not exercised its option for the first Extension Term, or (ii)
the expiration of the first Extension Term, if any, if Tenant has not
exercised the second Extension Term, or (iii) the expiration of the second
Extension Term, if any, by giving written notice to Landlord at least six
(6) months prior to expiration of the then-applicable Term (the "Holdover
Notice"). Any such Holdover Term shall be on all of the terms and
conditions of this Lease, except that the Monthly Base Rent payable shall
be one hundred four percent (104%) of the Monthly Base Rent payable in the
last full month prior to the Holdover Term. Notwithstanding anything to the
contrary in this Paragraph 14(a), if, prior to receipt of the Holdover
Notice Landlord enters into a lease for all or any portion of the Premises
with another tenant that provides for delivery to (including delivery in
order for such tenant to perform tenant improvement or cabling or trade
fixture installation work), or occupancy by, such other tenant of any
portion of the Premises prior to the expiration of the prospective Holdover
Term, all of Tenant's rights under this Paragraph 14(a) shall immediately
and automatically terminate and be of no further force or effect. If Tenant
remains in possession of all or any portion of the Premises after
expiration of the Holdover Term (if any), or if Tenant fails to exercise
its right to the Holdover Term in accordance with this Paragraph 14(a) or
Tenant's right to the Holdover Term terminates as provided in this
Paragraph 14(a) and Tenant nevertheless remains in possession of all or any
portion of the Premises after expiration of the Term, then such holdover
shall be governed by Paragraph 14(b).
(b) If Tenant (directly or through any successor-in-interest of
Tenant) remains in possession of all or any portion of the Premises after
the expiration or termination of this Lease with the written consent of
Landlord, such continued possession shall be construed to be a tenancy from
month to month at one hundred twenty-five percent (125%) of the Monthly
Base Rent payable in the last full month prior to such termination or
expiration (and shall be increased in accordance with Paragraph 3(b),
together with an amount estimated by Landlord for the monthly Additional
Charges for Expenses and Taxes payable under this Lease, and shall
otherwise be on the terms and conditions herein specified so far as
applicable. If Tenant (directly or through any successor-in-interest of
Tenant) remains in possession of all or any portion of the Premises after
the expiration or termination of this Lease without the written consent of
Landlord, Tenant's continued possession shall be on the basis of a tenancy
at the sufferance of Landlord. In such event, Tenant shall continue to
comply with or perform all the terms and obligations of Tenant under this
Lease, except that the Monthly Base Rent during Tenant's holding over shall
be the greater of the then-fair market rent for the Premises (as reasonably
determined by Landlord) or one hundred fifty percent (150%) of the Monthly
Base Rent and Additional Charges for Expenses and Taxes payable in the last
full month prior to the termination or expiration of this Lease (and shall
be increased in accordance with Paragraph 3(b). In addition to Rent, Tenant
shall pay Landlord for all damages proximately caused by reason of the
Tenant's retention of possession. Landlord's acceptance of Rent after the
termination of this Lease shall not constitute a renewal of this Lease, and
nothing contained in this provision shall be deemed to waive Landlord's
right of re-entry or any other right hereunder or at law. Tenant
acknowledges that, in Landlord's marketing and re-leasing efforts for the
Premises, Landlord is relying on Tenant's vacation of the Premises on the
Expiration Date. Accordingly, Tenant shall indemnify, defend and hold
Landlord harmless from and against all claims, liabilities, losses, costs,
expenses and damages arising or resulting directly or indirectly from
Tenant's failure to timely surrender the Premises, including (i) any loss,
cost or damages suffered by any prospective tenant of all or any part of
the Premises, and (ii) Landlord's damages as a result of such prospective
tenant rescinding or refusing to enter into the prospective lease of all or
any portion of the Premises by reason of such failure of Tenant to timely
surrender the Premises.
15. SUBORDINATION. Without the necessity of any additional document being
executed by Tenant for the purpose of effecting a subordination, this Lease
shall be subject and subordinate at all times to: (i) all ground leases or
underlying leases which may now exist or hereafter be executed affecting all or
any portion of the Project, (ii) the Parking REA, the Initial CC&Rs, any other
CC&Rs or other Encumbrances currently in effect or that Landlord may enter into
in the future, and (iii) the lien of any mortgage or deed of trust which may now
exist or hereafter be executed in any amount for which all or any portion of the
Project, ground leases or underlying leases,
26
or Landlord's interest or estate in any of said items, is specified as security
(any of the foregoing, a "Mortgage", and the beneficiary or mortgagee under any
of the foregoing, a "Mortgagee") provided that this Lease shall not be subject
or subordinate to any ground or underlying lease or to any Mortgage, unless the
ground lessor or Mortgagee executes a reasonable recognition and non-disturbance
agreement which provides that neither this Lease, nor Tenant's rights nor
Tenant's possession of the Premises on the terms and conditions of this Lease
will be disturbed during the Term (including any Extension Term) so long as
Tenant is not in Default under any of the terms, covenants, conditions or
agreements of this Lease. Notwithstanding the foregoing, Landlord shall have the
right to subordinate or cause to be subordinated any such ground leases or
underlying leases or any such Mortgages to this Lease. In the event that any
ground lease or underlying lease terminates for any reason or any Mortgage is
foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant
shall, notwithstanding any subordination, attorn to and become the Tenant of the
successor in interest to Landlord at the option of such successor in interest.
Tenant covenants and agrees to execute and deliver upon demand by Landlord and
in the form requested by Landlord and reasonably acceptable to Tenant, any
customary additional documents evidencing the priority or subordination of this
Lease with respect to any such ground leases or underlying leases or the lien of
any such Mortgage, which documents may, at any ground lessor's or Mortgagee's
request, provide, without limitation, that the ground lessor, Mortgagee and/or
any person acquiring title by reason of a foreclosure sale or an exercise of a
power of sale or by deed expressly in lieu of foreclosure shall not: (i) have
any liability for any act, omission, default or breach by Landlord under this
Lease occurring prior to the time of such acquisition by such Mortgagee or
person; (ii) be subject to any claim or offset which Tenant may have had against
Landlord which arose prior to such foreclosure, trustee sale or deed-in-lieu,
except for the obligation to fund any portion of the Tenant Allowance, which
shall be the continuing obligation of any subsequent landlord under this Lease;
(iii) be bound by any payment of Rent or any part thereof more than one month in
advance; (iv) be bound by any amendment or modification to this Lease made after
Tenant enters into any such subordination and non-disturbance agreement with
such Mortgagee and without the written consent of such Mortgagee; (v) be
obligated for the return of any security deposit or other thing of value now or
hereafter given to Landlord to secure the performance by Tenant of its
obligations under this Lease or any one or more of such obligations, except to
the extent such security deposit or thing of value has been received by such
Mortgagee or person; (vi) be required to perform, or liable for the failure to
perform, the obligations of Landlord with respect to the construction of the
Base Building (provided that Tenant shall have the rights under Section 2(e));
and (vii) be obligated to perform any repair or restoration of the Project
required as a result of any damage, destruction or condemnation, except to the
extent that such Mortgagee or other person owns the portion of the Project
damaged or condemned and insurance proceeds or condemnation awards received by
such Mortgagee or person are sufficient to fully pay the cost of such repair or
restoration.. Tenant shall execute, deliver and record any such documents within
ten (10) days after Landlord's written request.
16. RULES AND REGULATIONS. Tenant shall faithfully observe and comply with
the rules and regulations attached to this Lease as EXHIBIT D and all reasonable
modifications thereof and additions thereto from time to time put into effect by
Landlord. Landlord shall not be responsible for the nonperformance by any other
Tenant or occupant of the Building or the Project of any said rules and
regulations. In the event of an express and direct conflict between the terms,
covenants, agreements and conditions of this Lease and those set forth in the
rules and regulations, as modified and amended from time to time by Landlord,
this Lease shall control.
17. RE-ENTRY BY LANDLORD. Landlord reserves and shall at all reasonable
times, upon reasonable prior notice (except in the case of an emergency), and
subject to Tenant's reasonable security precautions and the right of Tenant to
accompany Landlord at all times, have the right to re-enter the Premises to
supply any service to be provided by Landlord to Tenant hereunder (unless Tenant
is supplying such service), to post notices of nonresponsibility or as otherwise
required or allowed by this Lease or by law, and to alter, improve or repair the
Premises and any portion of the Building (and may for that purpose erect, use,
and maintain scaffolding, pipes, conduits, and other necessary structures in and
through the Premises where reasonably required by the character of the work to
be performed), and, during normal business hours only, to inspect the Premises
and to show the Premises to prospective purchasers, Mortgagees or tenants (as to
prospective tenants, only during the last eighteen (18) months of the Term),.
Landlord shall not be liable in any manner for any inconvenience, disturbance,
loss of business, nuisance or other damage arising from Landlord's entry and
acts pursuant to this Paragraph and Tenant shall not be entitled to an abatement
or reduction of Monthly Base Rent or Additional Charges if Landlord exercises
any rights reserved in this paragraph. Tenant hereby waives any claim for
damages for any injury or inconvenience to or interference with Tenant's
business, any loss of occupancy or quiet enjoyment of the Premises, and any
other
27
loss occasioned thereby, except for Landlord's gross negligence or willful
misconduct. For each of the aforesaid purposes, Landlord shall at all times have
and retain a key with which to unlock all of the doors in, upon and about the
Premises, excluding Tenant's vaults and safes, or special security areas
(designated in advance), and Landlord shall have the right to use any and all
means which Landlord may deem necessary or proper to open said doors in an
emergency, in order to obtain entry to any portion of the Premises, and any
entry to the Premises, or portion thereof obtained by Landlord by any of said
means, or otherwise, shall not under any emergency circumstances be construed or
deemed to be a forcible or unlawful entry into, or a detainer of, the Premises,
or an eviction, actual or constructive, of Tenant from the Premises or any
portions thereof. Landlord shall use commercially reasonable efforts during
re-entry to not unreasonably materially and adversely affect Tenant's use of the
Premises or its business conducted therein.
18. INSOLVENCY OR BANKRUPTCY. The appointment of a receiver to take
possession of all or substantially all of the assets of Tenant, or an assignment
of Tenant for the benefit of creditors, or any action taken or suffered by
Tenant under any insolvency, bankruptcy, reorganization or other debtor relief
proceedings, whether now existing or hereafter amended or enacted, shall at
Landlord's option constitute a breach of this Lease by Tenant (provided that,
with respect to a petition in bankruptcy, or receiver attachment, or other
remedy pursued by a third party, such event shall not constitute a breach of
this Lease so long as it is discharged within sixty (60) days). Upon the
happening of any such event or at any time thereafter, this Lease shall
terminate five (5) days after written notice of termination from Landlord to
Tenant. In no event shall this Lease be assigned or assignable by operation of
law or by voluntary or involuntary bankruptcy proceedings or otherwise and in no
event shall this Lease or any rights or privileges hereunder be an asset of
Tenant under any bankruptcy, insolvency, reorganization or other debtor relief
proceedings.
19. DEFAULT.
(a) The failure to perform or honor any covenant, condition or
representation made under this Lease shall constitute a "Default" hereunder
by Tenant upon expiration of the appropriate grace period hereinafter
provided. Tenant shall have a period of three (3) business days from the
date of written notice from Landlord (which notice shall be in lieu of and
not in addition to the notice required by Section 1161 of the California
Code of Civil Procedure) within which to cure any failure to pay Monthly
Base Rent or Additional Charges; provided, however, that Landlord shall not
be required to provide such notice more than two (2) times during any two
(2) year period during the Term with respect to non-payment of Monthly Base
Rent or Additional Charges, the third such non-payment constituting Default
without requirement of notice. Tenant shall have a period of thirty (30)
days from the date of receipt of written notice from Landlord within which
to cure any other Default under this Lease; provided, however, that with
respect to any curable Default other than the payment of Monthly Base Rent
or Additional Charges that cannot reasonably be cured within thirty (30)
days, the cure period shall be extended for an additional period of time
reasonably required to cause such cure if Tenant commences to cure within
thirty (30) days from Landlord's notice and continues to prosecute
diligently the curing thereof, provided that such cure period shall in no
event extend beyond ninety (90) days after Landlord's notice (subject to
delays by Force Majeure). Notwithstanding the foregoing, (i) if a different
cure period is specified elsewhere in this Lease with respect to any
specific obligation of Tenant, such specific cure period shall apply with
respect to a failure of such obligation in lieu of, and not in addition to,
the cure period provided in this Paragraph 19(a); and (ii) the cure periods
specified in Paragraphs 7(e) and 23 shall apply with respect to Landlord's
rights to cure Tenant's failure to perform pursuant to Paragraphs 7(e) and
23, respectively. Upon a Default of this Lease by Tenant, Landlord shall
have the following rights and remedies in addition to any other rights or
remedies available to Landlord at law or in equity:
(i) The rights and remedies provided by California Civil Code,
Section 1951.2, including but not limited to, recovery of the worth at
the time of award of the amount by which the unpaid Monthly Base Rent
and Additional Charges for the balance of the Term after the time of
award exceeds the amount of rental loss for the same period that the
Tenant proves could be reasonably avoided, as computed pursuant to
subsection (b) of said Section 1951.2;
(ii) The rights and remedies provided by California Civil Code,
Section 1951.4, that allows Landlord to continue this Lease in effect
and to enforce all of its rights and remedies under this Lease,
including the right to recover Monthly Base Rent and Additional
Charges as they become due, for so
28
long as Landlord does not terminate Tenant's right to possession;
provided, however, if Landlord elects to exercise its remedies
described in this Paragraph 19(a)(ii) and Landlord does not terminate
this Lease, and if Tenant requests Landlord's consent to an assignment
of this Lease or a sublease of the Premises at such time as Tenant is
in Default, Landlord shall not unreasonably withhold its consent to
such assignment or sublease. Acts of maintenance or preservation,
efforts to relet the Premises or the appointment of a receiver upon
Landlord's initiative to protect its interest under this Lease shall
not constitute a termination of Tenant's rights to possession;
(iii) The right to terminate this Lease by giving notice to
Tenant in accordance with applicable law;
(iv) If Landlord elects to terminate this Lease, the right and
power to enter the Premises and remove therefrom all persons and
property and, to store such property in a public warehouse or
elsewhere at the cost of and for the account of Tenant, and to sell
such property and apply such proceeds therefrom pursuant to applicable
California law.
(b) Landlord shall have a period of thirty (30) days from the date of
written notice from Tenant within which to cure any default of Landlord
under this Lease; provided, however, that with respect to any default that
cannot reasonably be cured within thirty (30) days, the default shall not
be deemed to be uncured if Landlord commences to cure within thirty (30)
days from Tenant's notice and continues to prosecute diligently the curing
thereof. Tenant agrees to deliver to any Mortgagee a copy of any Notice of
Default served upon the Landlord in the manner prescribed by Paragraph 26
hereof, provided that prior to such notice Tenant has been notified in
writing (by way of Notice of Assignment of Rents and Leases, or otherwise)
of the address of such Mortgagee. Tenant further agrees that if Landlord
shall have failed to cure such default within the time provided for in this
Lease, then the Mortgagee shall have an additional thirty (30) days
(provided that Tenant notifies Mortgagee concurrently with Tenant's notice
to Landlord at the beginning of Landlord's thirty (30) day period;
otherwise Mortgagee shall have sixty (60) days from the date on which it is
noticed) within which to cure such default or if such default cannot be
cured within that time, then such additional time as may be reasonably
necessary to cure such default shall be granted if within such applicable
period Mortgagee has commenced and is diligently pursuing the remedies
necessary to cure such default (including, but not limited to, commencement
of foreclosure proceedings, if necessary to effect such cure), in which
event the Lease shall not be terminated while such remedies are being so
diligently pursued.
20. DAMAGE BY FIRE, ETC.
(a) RESTORATION OR TERMINATION. If the Premises or the Building
(including the Tenant Improvements) are damaged by fire or other casualty,
Landlord shall forthwith repair the same, provided that such repairs can be
made within two hundred seventy (270) days after the date of such damage
under the laws and regulations of the federal, state and local governmental
authorities having jurisdiction thereof. In such event, this Lease shall
remain in full force and effect except that Tenant shall be entitled to a
proportionate reduction of Monthly Base Rent and Additional Charges while
such repairs to be made hereunder by Landlord are being made. Such
reduction of Monthly Base Rent and Additional Charges, if any, shall be
based upon the greater of (i) the proportion that the area of the Premises
rendered untenantable by such damage bears to the total area of the
Premises; or (ii) the extent to which such damage and the making of such
repairs by Landlord shall interfere with the business carried on by Tenant
in the Premises, and shall be limited to the extent of rental abatement
insurance proceeds actually received by Landlord under Landlord's casualty
insurance policy. Landlord shall, by written notice to Tenant within thirty
(30) days after the date of such damage, notify Tenant whether or not in
Landlord's reasonable opinion, based on a good faith estimate from a
third-party general contractor, such repairs can be made within two hundred
and seventy (270) days after the date of such damage and Landlord's
reasonable estimate of the time needed for such repairs, also based on a
good faith estimate from a third-party general contractor. If such repairs
cannot be made within two hundred and seventy (270) days from the date of
such damage, Landlord shall within thirty (30) days after the date of such
damage elect either to: (i) notify Tenant of Landlord's intention to repair
such damage and diligently prosecute such repairs, in which event this
Lease shall continue in full force and effect and the Monthly Base Rent and
Additional Charges shall be reduced as provided herein; or (ii) notify
Tenant of Landlord's election to terminate this Lease as of a date
specified in such notice, which date shall not be less than
29
thirty (30) days nor more than sixty (60) days after such notice is given
and this Lease shall terminate on the date specified in such notice. If
Landlord notifies Tenant that restoration or repair of the Premises will
take more than two hundred and seventy (270) days, Tenant shall have a
right to terminate the Lease within fifteen (15) days following receipt of
Landlord's notice, by providing Landlord with written notice of its
election to do so. In such event (and also in the event Landlord terminates
the Lease pursuant to the immediately preceding sentence), Tenant shall
have no liability for payment of the deductible under Landlord's insurance
relating to such damage. In case of termination by either event, the
Monthly Base Rent and Additional Charges shall be reduced by a
proportionate amount based upon the extent to which such damage interfered
with the business carried on by Tenant in the Premises, and Tenant shall
pay such reduced Monthly Base Rent and Additional Charges up to the date of
termination. Landlord agrees to refund to Tenant any Monthly Base Rent and
Additional Charges previously paid for any period of time subsequent to
such date of termination. The repairs to be made hereunder by Landlord
shall not include, and Landlord shall not be required to repair, any damage
by fire or other cause to the property of Tenant or any repairs or
replacements of any paneling, decorations, railings, floor coverings or any
alterations, additions, fixtures or improvements installed on the Premises
by or at the expense of Tenant other than Tenant Improvements to the extent
they are covered by Landlord's insurance policies; provided, however, that
to the extent Landlord's insurance policies cover any Alterations pursuant
to Paragraph 10(f), Landlord shall make available to Tenant any available
insurance proceeds with respect to any damage or destruction that affects
such Alterations, after deducting therefrom the cost, if any, to Landlord
for the recovery of such proceeds and/or of any repair to the Building or
Premises or Project for which Landlord is responsible hereunder, in order
for Tenant to repair and restore such Alterations, pursuant to disbursement
procedures established by Landlord and/or any Mortgagee. Tenant hereby
waives the provisions of Section 1932.2, and Section 1933.4, of the Civil
Code of California. Notwithstanding anything contained herein to the
contrary, if a Major Casualty (as defined below) occurs with respect to any
portion of the Building, and the net insurance proceeds obtained as a
result of such casualty are ninety percent (90%) or a lesser percentage of
the cost of restoration, rebuilding or replacement, then Landlord shall not
be obligated to undertake such restoration, rebuilding or replacement
unless Landlord elects to do so in writing, provided that Landlord's
election not to restore shall be deemed Landlord's election to terminate.
For the purpose of this Lease, a "Major Casualty" shall mean a casualty
that renders unusable twenty percent (20%) or more of the Net Rentable Area
of the Building or which materially adversely affects the use of such
Building.
(b) CASUALTY AT END OF TERM. Notwithstanding anything to the contrary
contained in this Lease, if during the twelve (12) months prior to the
expiration of the Term, either of the Building or a substantial portion
thereof are damaged or destroyed by fire or other casualty, either Tenant
or Landlord shall have the option to terminate this Lease as of the date of
such damage or destruction by written notice to the other party given
within thirty (30) days after such damage or destruction, in which event
Landlord shall make a proportionate refund to Tenant of such Rent as may
have been paid in advance. For purposes of this paragraph, a "substantial
portion" shall mean fifty percent (50%) of the Building.
(c) UNINSURED CASUALTY. Notwithstanding Paragraph 20(a), and subject
to the termination right in Paragraph 20(b), in the event of a total or
partial destruction of the Premises (i) by a casualty of a type not
required to be insured against by Landlord under the terms of this Lease,
or (ii) under circumstances where Landlord has been required by any
Mortgagee to utilize substantially all of the insurance proceeds to pay
down the Mortgage (substantially all, for such purpose, being defined as
ninety percent (90%) or more of the cost of restoration), which destruction
exceeds five percent (5%) of the replacement cost of the Building, this
Lease shall automatically terminate, unless (x) Landlord elects to
reconstruct the Building (not including the Tenant Improvements), and (y)
the damage can be reconstructed within two hundred seventy (270) days after
the date of such damage. However, notwithstanding the foregoing, if
Landlord elects not to reconstruct, Tenant may by written notice to
Landlord within ten (10) days after Landlord notifies Tenant of Landlord's
election, request that Landlord undertake such reconstruction on the
condition that the cost incurred by Landlord for such reconstruction (less
any insurance proceeds actually received by Landlord and available to
Landlord for application to such reconstruction) shall be amortized over
the useful life of the Building (except that the cost for reconstruction of
any Tenant Improvements shall be paid by Tenant in its entirety within
thirty (30) days after receipt
30
of an invoice therefor), and shall be reimbursed by Tenant to Landlord as
an Additional Charge together with interest at the Default Rate; provided,
however, that Tenant shall not be obligated to pay for any portion of the
useful life of the Base Building Improvements which extends beyond the
Expiration Date (as it may be extended by the Extension Term(s)). Landlord
shall respond to Tenant's request, in Landlord's sole discretion, within
thirty (30) days after receipt thereof. If Landlord reconstructs the
Building pursuant to this Paragraph 20(c), Tenant shall be obligated to
reconstruct the Tenant Improvements, at Tenant's cost.
21. EMINENT DOMAIN. If any part over fifteen percent (15%) of the Premises
shall be taken or appropriated under the power of eminent domain or conveyed in
lieu thereof, Tenant shall have the right to terminate this Lease at its option.
In such event, Landlord shall receive (and Tenant shall assign to Landlord upon
demand from Landlord) any income, rent, award or any interest therein which may
be paid in connection with the exercise of such power of eminent domain, and
Tenant shall have no claim against Landlord for any part of sum paid by virtue
of such proceedings, whether or not attributable to the value of the unexpired
term of this Lease except that Tenant shall be entitled to petition the
condemning authority for the following: (i) the then unamortized cost of any
Alterations or Tenant Improvements paid for by Tenant from its own funds (as
opposed to any allowance, including the Tenant Allowance, provided by Landlord);
(ii) the value of Tenant's trade fixtures; (iii) Tenant's relocation costs; and
(iv) Tenant's goodwill, loss of business and business interruption. If a part of
the Premises shall be so taken or appropriated or conveyed and neither party
hereto shall elect to terminate this Lease and the Premises have been damaged as
a consequence of such partial taking or appropriation or conveyance, Landlord
shall restore the Premises continuing under this Lease at Landlord's cost and
expense; provided, however, that Landlord shall not be required to repair or
restore any injury or damage to the property of Tenant or to make any repairs or
restoration of any Alterations or any Tenant Improvements installed on the
Premises by or at the expense of Tenant. Thereafter, the Monthly Base Rent and
Additional Charges to be paid under this Lease for the remainder of the Term
shall be proportionately reduced, such that thereafter the amounts to be paid by
Tenant shall be in the ratio that they are of the portion of the Premises not so
taken bears to the total area of the Premises prior to such taking.
Notwithstanding anything to the contrary contained in this Paragraph 21, if the
temporary use or occupancy of any part of the Premises shall be taken or
appropriated under power of eminent domain during the Term, this Lease shall be
and remain unaffected by such taking or appropriation and Tenant shall continue
to pay in full all Monthly Base Rent and Additional Charges payable hereunder by
Tenant during the Term. In the event of any such temporary appropriation or
taking, Tenant shall be entitled to receive that portion of any award which
represents compensation for the use of or occupancy of the Premises during the
Term, and Landlord shall be entitled to receive that portion of any award which
represents the cost of restoration of the Premises and the use and occupancy of
the Premises after the end of the Term. If such temporary taking is for a period
longer than two hundred and seventy (270) days and unreasonably interferes with
Tenant's use of the Premises or the Common Area, then Tenant shall have the
right to terminate the Lease. Landlord and Tenant understand and agree that the
provisions of this Paragraph 21 are intended to govern fully the rights and
obligations of the parties in the event of a Taking of all or any portion of the
Premises. Accordingly, the parties each hereby waives any right to terminate
this Lease in whole or in part under Sections 1265.120 and 1265.130 of the
California Code of Civil Procedure or under any similar Law now or hereafter in
effect.
22. SALE BY LANDLORD. If Landlord sells or otherwise conveys its interest
in the Premises, Landlord shall be relieved of its obligations under the Lease
from and after the date of sale or conveyance (including the obligations of
Landlord under Paragraph 39), only when the successor assumes in writing the
obligations to be performed by Landlord on and after the effective date of the
transfer, whereupon Tenant shall attorn to such successor.
23. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements to be
performed by Tenant under any of the terms of this Lease shall be performed by
Tenant at Tenant's sole cost and expense and without any abatement of Monthly
Base Rent or Additional Charges. If Tenant shall default in the payment of any
sum of money, other than Monthly Base Rent or Additional Charges, required to be
paid by it hereunder or shall fail to perform any other act on its part to be
performed hereunder (including, without limitation, Tenant's obligation to
maintain and repair the Premises and Building Systems pursuant to Paragraph
7(b)), and either (i) such failure continues, and Tenant does not commence cure
of such failure, for ten (10) days after notice thereof by Landlord as provided
in Paragraph 19(a) (except in the event of emergency, when no cure period shall
be required but Landlord shall make reasonable good faith efforts to notify
Tenant prior to commencing such emergency cure), or (ii) having commenced such
cure Tenant does not diligently prosecute the curing thereof, or (iii) if
Landlord is, in Landlord's reasonable business judgment, in a better position to
accomplish such cure or can accomplish such cure in a more efficient or
cost-effective manner than Tenant, or (iv) if a default under any CCRs, other
Encumbrance or Mortgage is, in Landlord's reasonable judgment, likely to occur
due to Tenant's failure to cure such failure in a timely
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manner, then in any such situation Landlord may, but shall not be obligated so
to do, and without waiving or releasing Tenant from any obligations of Tenant,
make any such payment or perform any such act on Tenant's part to be made or
performed as provided in this Lease. All sums so paid and costs so incurred by
Landlord, together with interest thereon at the Default Rate from the date
Landlord makes such payment or incurs such cost, shall be payable as Additional
Charges to Landlord within thirty (30) days after receipt by Tenant of a bill or
statement therefor.
24. SURRENDER OF PREMISES.
(a) At the end of the Term or any renewal thereof or other sooner
termination of this Lease, Tenant will peaceably deliver to Landlord
possession of the Premises, together with all improvements or additions
upon or belonging to Landlord , by whomsoever made, in substantially the
same condition as received, or first installed, subject to the terms of
Paragraphs 6, 21 and 39, subject to normal wear and tear and the rights and
obligations of Tenant concerning casualty damage pursuant to Paragraph 20.
Tenant may, upon the termination of this Lease, remove all movable
furniture and equipment belonging to Tenant, at Tenant's sole cost,
provided that Tenant repairs any damage caused by such removal. Property
not so removed by the Expiration Date (or in the event of an earlier
termination, within five (5) days of such earlier termination date) shall
be deemed abandoned by Tenant, and title to the same shall thereupon pass
to Landlord. Upon such expiration or sooner termination of the Term, Tenant
shall upon demand by Landlord, at Landlord's election either (i) at
Tenant's sole cost and expense, forthwith and with all due diligence remove
any Tenant Modifications, Tenant Improvements or Alterations made by or for
the account of Tenant, designated by Landlord to be removed (provided,
however, that upon the written request of Tenant prior to installation of
such Tenant Modifications, Tenant Improvements or Alterations, Landlord
shall advise Tenant at that time whether or not such Tenant Modifications,
Tenant Improvements or Alterations must be removed upon the expiration or
sooner termination of this Lease), and restore the Premises to its original
condition as of the Delivery Date (or with respect to Tenant Modifications,
restore the Base Building to its condition prior to such Tenant
Modifications being made), subject to the foregoing; or (ii) pay Landlord
the reasonable estimated cost thereof.
(b) The voluntary or other surrender of this Lease by Tenant, or a
mutual cancellation thereof, shall not work a merger, and shall, at the
option of Landlord, terminate all or any existing subleases or
subtenancies, or may, at the option of Landlord, operate as an assignment
to it of any or all such subleases or subtenancies.
25. WAIVER. If either Landlord or Tenant waives the performance of any
term, covenant or condition contained in this Lease, such waiver shall not be
deemed to be a waiver of any subsequent breach of the same or any other term,
covenant or condition contained herein. Furthermore, the acceptance of Rent or
Additional Charges by Landlord shall not constitute a waiver of any preceding
breach by Tenant of any term, covenant or condition of this Lease, regardless of
Landlord's knowledge of such preceding breach at the time Landlord accepted such
Monthly Base Rent or Additional Charges. Failure by Landlord to enforce any of
the terms, covenants or conditions of this Lease for any length of time shall
not be deemed to waive or to decrease the right of Landlord to insist thereafter
upon strict performance by Tenant. Waiver by Landlord of any term, covenant or
condition contained in this Lease may only be made by a written document signed
by Landlord.
26. NOTICES. Except as otherwise expressly provided in this Lease, any
bills, statements, notices, demands, requests or other communications given or
required to be given under this Lease shall be effective only if rendered or
given in writing, sent by certified mail, return receipt requested, reputable
overnight carrier, or delivered personally, (i) to Tenant, at Tenant's address
set forth in the Basic Lease Information, if sent prior to Tenant's taking
possession of the Premises, or at any place where Tenant may be found if sent
subsequent to Tenant's vacating, deserting, abandoning or surrendering the
Premises; or (ii) to Landlord at Landlord's address set forth in the Basic Lease
Information; or (iii) to such other address as either Landlord or Tenant may
designate as its new address for such purpose by notice given to the other in
accordance with the provisions of this Paragraph 26. Any such bill, statement,
notice, demand, request or other communication shall be deemed to have been
rendered or given on the date the return receipt indicates delivery of or
refusal of delivery if sent by certified mail, the day upon which recipient
accepts and signs for delivery from a reputable overnight carrier, or on the
date a reputable overnight carrier indicates refusal of delivery, or upon the
date personal delivery is made. If Tenant is notified in writing of
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the identity and address of any Mortgagee or ground or underlying lessor, Tenant
shall give to such Mortgagee or ground or underlying lessor notice of any
Default by Landlord under the terms of this Lease in writing sent by registered
or certified mail, and such Mortgagee or ground or underlying lessor shall be
given the opportunity to cure such Default (as defined in Paragraph 19 (b))
prior to Tenant exercising any remedy available to it.
27. TAXES PAYABLE BY TENANT. Prior to delinquency Tenant shall pay all
taxes levied or assessed upon Tenant's equipment, furniture, fixtures and other
personal property located in or about the Premises. If the assessed value of
Landlord's property is increased by the inclusion therein of a value placed upon
Tenant's equipment, furniture, fixtures or other personal property, Tenant shall
pay to Landlord, upon written demand, the taxes so levied against Landlord, or
the proportion thereof resulting from said increase in assessment.
28. ABANDONMENT. Tenant shall not abandon the Premises and cease performing
its financial and maintenance obligations under this Lease at any time during
the Term, and if Tenant shall abandon and cease performing its financial and
maintenance obligations under this Lease, or surrender the Premises or be
dispossessed by process of law, or otherwise, any personal property belonging to
Tenant and left on the Premises shall, at the option of Landlord, be deemed to
be abandoned and title thereto shall thereupon pass to Landlord. Notwithstanding
anything to the contrary contained herein, Tenant shall not be allowed to vacate
the Premises for any period of time unless either (a) such vacation would not
result in a termination of, limitation on, or other adverse effect on,
Landlord's insurance policies, or (b) Tenant pays the incremental premium costs,
and assumes responsibility for any increased deductible amounts, to the extent
required to cause Landlord's insurance policies to not be terminated, limited or
adversely affected as a result of such vacation. For purposes of this Paragraph
28, the Tenant shall not be deemed to have abandoned the Premises solely because
the Tenant is not occupying the Premises.
29. SUCCESSORS AND ASSIGNS. Subject to the provisions of Paragraph 9, the
terms, covenants and conditions contained herein shall be binding upon and inure
to the benefit of the parties hereto and their respective legal and personal
representatives, successors and assigns.
30. ATTORNEY'S FEES. If Tenant or Landlord brings any action for any relief
against the other, declaratory or otherwise, arising out of this Lease,
including any suit by Landlord for the recovery of Rent or possession of the
Premises, the losing party shall pay to the prevailing party a reasonable sum
for attorney's fees and costs, which shall be deemed to have accrued on the
commencement of such action and shall be paid whether or not the action is
prosecuted to judgment. "Prevailing party" shall mean the party who receives
substantially the relief requested, whether by settlement, dismissal, summary
judgment or judgment.
31. LIGHT AND AIR. Tenant covenants and agrees that no diminution of light,
air or view by any structure which may hereafter be lawfully erected (whether or
not by Landlord) shall entitle Tenant to any reduction of rent under this Lease,
result in any liability of Landlord to Tenant, or in any other way affect this
Lease or Tenant's obligations hereunder. Landlord has informed Tenant that it
has no intention of constructing additional facilities at the Project except
those facilities needed to service the Project.
32. CORPORATE AUTHORITY; FINANCIAL INFORMATION. If Tenant signs as a
corporation each of the persons executing this Lease on behalf of Tenant does
hereby covenant and warrant that Tenant is a duly authorized and existing
corporation, that Tenant has and is qualified to do business in California, that
the corporation has full right and authority to enter into this Lease, and that
each and both of the persons signing on behalf of the corporation were
authorized to do so . If Tenant signs as a partnership or limited liability
company, each of the persons executing this Lease on behalf of Tenant does
hereby covenant and warrant that Tenant is a duly authorized and existing
partnership or limited liability company, as applicable, that Tenant has and is
qualified to do business in California, that Tenant has full right and authority
to enter into this Lease, and that each and both of the persons signing on
behalf of the Tenant were authorized to do so and by their signatures bind the
Tenant. Upon Landlord's request, Tenant shall provide Landlord with evidence
reasonably satisfactory to Landlord confirming the foregoing covenants and
warranties. Upon Landlord's request, Tenant shall provide Landlord with evidence
reasonably satisfactory to Landlord confirming the foregoing covenants and
warranties. Tenant hereby further covenants and warrants to Landlord that all
financial information and other descriptive information regarding Tenant's
business, which has been or shall be furnished to Landlord, is and shall be
accurate and complete at the time of delivery to Landlord. If Landlord signs as
a corporation each of the persons executing this Lease on behalf
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of Landlord does hereby covenant and warrant that Landlord is a duly authorized
and existing corporation, that Landlord has and is qualified to do business in
California, that the corporation has full right and authority to enter into this
Lease, and that each and both of the persons signing on behalf of the
corporation were authorized to do so. Upon Tenant's request, Landlord shall
provide Tenant with evidence reasonably satisfactory to Tenant confirming the
foregoing covenants and warranties.
33. PARKING.
(a) Tenant shall have the right to use the number of parking spaces
located in the Project Garage as specified in the Basic Lease Information
(which number of required parking spaces [subject to all limitations,
restrictions and requirements set forth in this Paragraph 33] shall be
defined as the "Minimum Parking") in common with other tenants or occupants
of the Project, if any, subject to (i) the City Parking Rights, (ii) the
Parking REA, (iii) the Initial CC&Rs, and (iv) any other CC&Rs, other
Encumbrances and rules and regulations of Landlord for the Project Garage
which may be established or altered by Landlord at any time or from time to
time during the Term. Landlord represents and warrants to Tenant that the
number of parking spaces constructed by Landlord in connection with the
Initial Development of the Project shall be equal to or greater than the
minimum number required by the City of Sunnyvale for the Project, and that
Landlord will not thereafter voluntarily reduce the number of parking
spaces available to the Project below such minimum number except as may be
required by Law, development or land use requirements of the City, or in
connection with condemnation. A portion of Tenant's Minimum Parking shall
consist of fifty reserved parking spaces located in the Phase I Garage,
provided that other than marking and striping the appropriate number of
parking spaces as designated for Tenant's use, Landlord shall not be
obligated to enforce Tenant's exclusive right to the Minimum Parking
provided in this Paragraph 33. Landlord shall not provide any other tenant
in the Project with a greater proportionate number of reserved parking
spaces (taking into account the rentable area of such tenant's, and the
Tenant's, leased premises). Landlord may, at its option, install a security
gate and/or other access devices for the Project Garage (although Landlord
shall not be obligated to do so and may discontinue it at any time during
the Term), and Landlord shall provide parking passes and/or access keys or
cards for the number of parking spaces included in Tenant's Minimum
Parking; provided that such items are provided to Tenant solely for use by
Tenant, and may not be transferred, assigned (except in connection with an
assignment of this Lease), or subleased (except in connection with a
sublease of this Lease and then in proportion to the space sublet) without
Landlord's prior written approval. No charge or fee (other than the Rent
payable hereunder) shall be imposed in exchange for the right of Tenant and
its agents, employees, contractors and invitees to have access to or from,
or to park in, the Minimum Parking (except for Tenant's liability for
Expenses, as set forth in Subparagraph 3(c)) for the Term; provided that
Landlord, at its sole election, may charge for the use of parking spaces in
the Project Garage in excess of the Minimum Parking. Tenant shall comply,
and shall use best efforts to cause Tenant's employees, visitors and
invitees to comply, with all rules and regulations prescribed by Landlord
from time to time for the Project Garage and any other parking, including
any rules, regulations, restrictions, limitations and/or requirements in
connection with the City Parking Rights.
(b) Notwithstanding anything to the contrary in Subparagraph 33(a),
during any period of construction of the Project (including any
construction on a Future Phase), (i) as a condition to approvals and
permits in connection with such construction the City may require that a
portion of the Phase I Garage (which Landlord anticipates will not exceed
twenty-five percent (25%) of the total parking spaces in the Phase I
Garage) be made available to the public for evening and weekend parking in
order to mitigate reduction or elimination of parking in connection with
such construction, and/or (ii) either as a condition to approvals and
permits in connection with such construction, or at Landlord's election, as
all or a portion of Tenant's Minimum Parking Landlord may provide parking
to Tenant on land that is adjacent to the Project, or may provide valet
parking for Tenant's use, at Landlord's sole election, rather than parking
in the Project Garage. To the extent Landlord elects to provide valet
parking, Landlord will operate or provide a valet parking service from 8:00
a.m. to 6:00 p.m. Monday through Friday, excluding holidays. Tenant shall
cooperate with Landlord in connection with any limitations or restrictions
on parking, establishment of designated or restricted parking areas,
required valet parking, or any other requirements during any period of
construction of any portion of the Project.
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34. MISCELLANEOUS.
(a) The term "Premises" wherever it appears herein includes and shall
be deemed or taken to include (except where such meaning would be clearly
repugnant to the context) the office space demised and improvements now or
at any time hereafter comprising or built in the space hereby demised. The
paragraph headings herein are for convenience of reference and shall in no
way define, increase, limit or describe the scope or intent of any
provision of this Lease. The term "Landlord" shall include Landlord and its
successors and assigns. In any case where this Lease is signed by more than
one person, the obligations hereunder shall be joint and several. The term
"Tenant" or any pronoun used in place thereof shall indicate and include
the masculine or feminine, the singular or plural number, individuals,
firms or corporations, and their and each of their respective successors,
executors, administrators, and permitted assigns, according to the context
hereof.
(b) Time is of the essence of this Lease and all of its provisions.
This Lease shall in all respects be governed by the laws of the State of
California. This Lease, together with its exhibits, contains all the
agreements of the parties hereto and supersedes any previous negotiations.
There have been no representations made by the Landlord or Tenant or
understandings made between the parties other than those set forth in this
Lease and its exhibits. This Lease may not be modified except by a written
instrument by the parties hereto.
(c) If for any reason whatsoever any of the provisions hereof shall be
unenforceable or ineffective, all of the other provisions shall be and
remain in full force and effect.
(d) Upon Tenant paying the Monthly Base Rent and Additional Charges
and performing all of Tenant's obligations under this Lease, Tenant shall
have quiet and peaceful enjoyment of the Premises during the Term as
against all persons or entities lawfully claiming by, through or under
Landlord; subject, however, to the provisions of this Lease.
35. TENANT'S REMEDIES. In addition to Tenant's rights under Paragraph 7(a),
if any default hereunder by Landlord is not cured within the applicable cure
period provided in Paragraph 19(b) (including any Mortgagee's additional cure
period), Tenant's exclusive remedies shall be (i) an action for specific
performance, or (ii) an action for actual damages. Tenant shall look solely to
Landlord's interest in the Project (including, but not limited to, net proceeds
obtained by Landlord from any sale of any portion of the Project, net insurance
proceeds and condemnation awards) for the recovery of any judgment from
Landlord. Landlord, or if Landlord is a partnership its partners whether general
or limited, or if Landlord is a corporation its directors, officers or
shareholders, or if Landlord is a limited liability company its members or
managers, shall never be personally liable for any such judgment. Any lien
obtained to enforce such judgment and any levy of execution thereon shall be
subject and subordinate to any Mortgage (excluding any Mortgage which was
created as part of an effort to defraud creditors, i.e., a fraudulent
conveyance); provided, however that any such judgement and any such levy of
execution thereon shall not be subject or subordinated to any Mortgage that is
created or recorded in the official records of the county in which the Project
is located after the date of the judgement giving rise to such lien. Landlord's
interest in the Project shall include any insurance proceeds received by
Landlord which are not controlled by any Mortgagee or other lender. Tenant
hereby waives the benefit of any Laws granting it (A) the right to perform
Landlord's obligations, or (B) the right to terminate this Lease or withhold
Rent on account of any Landlord default, including, without limitation, Sections
1932(1), 1941 and 1942 of the California Civil Code.
36. REAL ESTATE BROKERS. Each party represents that it has not had dealings
with any real estate broker, finder or other person with respect to this Lease
in any manner, except for any broker named in the Basic Lease Information, whose
fees or commission, if earned, shall be paid as provided in the Basic Lease
Information. Each party shall hold harmless the other party from all damages
resulting from any claims that may be asserted against the other party by any
other broker, finder or other person with whom the other party has or
purportedly has dealt.
37. LEASE EFFECTIVE DATE. Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or option for lease,
and it is not effective as a lease or otherwise until execution and delivery by
both Landlord and Tenant.
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38. SIGNAGE. To the extent approved by the City of Sunnyvale and other
applicable governmental authorities, Tenant shall be allowed to use a
proportionate share (based on Tenant's Share) of the Building's share of any
Project monument signage, and to install exterior signage and signage in the
lobby of the Building, subject to this Paragraph 38. Tenant shall be responsible
for the costs related to such signage. All such signage shall be in conformity
with standards provided by Landlord. Such signage shall be subject to further
approval from Landlord of the exact number, size, location and materials
therefor (which consent shall not be unreasonably withheld, delayed or
conditioned), approval from the City of Sunnyvale (which shall be Tenant's
responsibility to obtain, at Tenant's cost) and compliance with applicable
governmental restrictions, including but not limited to, ordinances of the
applicable city (at Tenant's cost).
39. HAZARDOUS SUBSTANCE LIABILITY. Tenant has received from Landlord a copy
of the Phase I and Screening Level Phase II Environmental Assessment of the
Undeveloped Lot located at the Corner of Caribbean Drive and Geneva Drive,
Sunnyvale, California, dated February 18, 1999, prepared by McLaren /Hart Inc.
(the "Environmental Report").
(a) DEFINITION OF HAZARDOUS SUBSTANCES. For the purpose of this Lease,
"Hazardous Substances" shall be defined, collectively, as oil, flammable
explosives, asbestos, radioactive materials, hazardous wastes, toxic or
contaminated substances or similar materials, including, without
limitation, any substances which are "hazardous substances," "hazardous
wastes," "hazardous materials" or "toxic substances" under applicable
environmental laws, ordinance or regulation.
(b) TENANT INDEMNITY. Tenant releases Landlord from any liability for,
waives all claims against Landlord and shall indemnify, defend and hold
harmless Landlord, its employees, partners, agents, subsidiaries and
affiliate organizations against any and all claims, suits, loss, costs
(including costs of investigation, clean up, monitoring, restoration and
reasonably attorney fees), damage or liability, whether foreseeable or
unforeseeable, by reason of property damage (including diminution in the
value of the property of Landlord), personal injury or death directly
arising from or related to Hazardous Substances released, manufactured,
discharged, disposed, used or stored on, in, or under the Project or
Premises during the Term by any Tenant Parties. The provisions of this
Tenant Indemnity regarding Hazardous Substances shall survive the
termination of the Lease.
(c) LANDLORD INDEMNITY. Landlord releases Tenant from any liability
for, waives all claims against Tenant and shall indemnify, defend and hold
harmless Tenant, its officers, employees, and agents to the extent of
Landlord's interest in the Project, against any and all actions by any
governmental agency for clean up of Hazardous Substances on or under the
Project, including costs of legal proceedings, investigation, clean up,
monitoring, and restoration, including reasonable attorney fees, if, and to
the extent, arising from the presence of Hazardous Substances on, in or
under the Project or Premises, except to the extent caused by the release,
disposal, use or storage of Hazardous Substances in, on or about the
Premises by any Tenant Parties. The provisions of this Landlord Indemnity
regarding Hazardous Substances shall survive the termination of the Lease.
Tenant has informed Landlord, that except for very immaterial amounts of toxic
materials incidental to its office use (e.g.. copier toner), Tenant will not use
any Hazardous Substances in material amounts within the Building and shall
comply with any applicable laws to the extent that it does.
40. SATELLITE ANTENNAE. During the Term of this Lease, Tenant shall have
the right, subject to relevant regulatory approvals, availability of space
within the roofscreen (provided that Tenant's share of the space available
within the roofscreen and allocated by Landlord for installation of Antennas
shall be in the same proportion to other tenants within the Building as the
Rentable Area bears to the total rentable area in the Building) and Landlord's
consent (with Landlord's consent not to be unreasonably withheld, conditioned or
delayed), to install satellite antennae and similar telecommunications systems
and equipment ("Antennae") on the roof of the Building in a location
satisfactory to both Landlord and Tenant. Without otherwise limiting the
criteria upon which Landlord may withhold its consent to any proposed Antennae,
if Landlord withholds its consent due to concerns regarding the appearance of
the Antennae or the impact on structural aspects of the Building, such
withholding of consent shall be presumptively reasonable unless, in the case of
appearance concerns, Tenant screens such Antennae in a manner acceptable to
Landlord in its reasonable discretion. Tenant shall not be charged additional
rent for roof space. Prior to submitting any plans to the City of Sunnyvale or
proceeding with any installation of the Antennae, Tenant shall
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submit to Landlord elevations and specifications for the Antennae. Tenant shall
install the Antennae at its sole expense and shall be responsible for any damage
caused by the installation of the Antennae or related to the Antennae. At the
end of the Term, Tenant shall remove the Antennae from their locations and
repair any damage caused by such removal.
41. BACK-UP GENERATOR. Tenant shall have the right, subject to Landlord's
prior written consent (with Landlord's consent not to be unreasonably withheld,
conditioned or delayed), to install a 250 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 repair any damage caused by such removal.
42. OPTION TO RENEW. Upon condition that (i) no Default is continuing under
this Lease at the time of exercise or at the commencement of the option term,
and (ii) Tenant continues to physically occupy the entire Premises, then Tenant
shall have the right to extend the Term for two (2) periods of five (5) years
each (each, an "Extension Term") following the initial Expiration Date or the
Expiration Date as extended by the first Extension Term, as applicable, by
giving written notice ("Exercise Notice") to Landlord at least eighteen (18)
months prior to the Expiration of the immediately preceding Term.
43. RENT DURING EXTENSION TERM. The initial Monthly Base Rent (subject to
Paragraph 3(b)) during each five (5) year Extension Term shall be the greater of
the Base Rent paid during the last month of the immediately preceding Term or
the Fair Market Rental Value for the Premises as of the commencement of the
option term, as determined below:
(a) Within thirty (30) days after receipt of Tenant's Exercise Notice,
Landlord shall notify Tenant of Landlord's estimate of the Fair Market
Rental Value for the Premises, as determined below, for determining Monthly
Base Rent during the ensuing Extension Term; provided, however, if Tenant's
Exercise Notice is given more than eighteen (18) months before the
Expiration Date, Landlord's estimate of Fair Market Rental Value may, but
need not be given more than eighteen (18) months before the Expiration
Date. Within fifteen (15) days after receipt of such notice from Landlord,
Tenant shall notify Landlord in writing that it (i) agrees with such rental
rate or (ii) disagrees with such rental rate. No response shall constitute
agreement. In the event that Tenant disagrees with Landlord's estimate of
Fair Market Rental Value for the Premises, then the parties shall meet and
endeavor to agree within fifteen (15) days after Landlord receives Tenant's
notice described in the immediately preceding sentence. If the parties
cannot agree upon the Fair Market Rental Value within said fifteen (15) day
period, then the parties shall submit the matter to binding appraisal in
accordance with the following procedure except that in any event neither
party shall be obligated to start such procedure sooner than eighteen (18)
months before the expiration of the Lease Term. Within fifteen (15) days of
the conclusion of the period during which the two parties fail to agree
(but not sooner than eighteen (18) months before the expiration of the
Lease Term), the parties shall either (i) jointly appoint an appraiser for
this purpose or (ii) failing this joint action, each separately designate a
disinterested appraiser. No person shall be appointed or designated an
appraiser unless such person has at least five (5) years experience in
appraising major commercial property in Santa Clara County and is a member
of a recognized society of real estate appraisers. If within thirty (30)
days after the appointment, the two appraisers reach agreement on the Fair
Market Rental Value for the Premises, that value shall be binding and
conclusive upon the parties. If the two appraisers thus appointed cannot
reach agreement on the Fair Market Rental Value for the
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Premises within thirty (30) days after their appointment, then the
appraisers thus appointed shall appoint a third disinterested appraiser
having like qualifications within five (5) days. If within thirty (30) days
after the appointment of the third appraiser a majority of the appraisers
agree on the Fair Market Rental Value of the Premises, that value shall be
binding and conclusive upon the parties. If within thirty (30) days after
the appointment of the third appraiser a majority of the appraisers cannot
reach agreement on the Fair Market Rental Value for the Premises, then the
three appraisers shall each simultaneously submit their independent
appraisal to the parties, the appraisal farthest from the median of the
three appraisals shall be disregarded, and the mean average of the
remaining two appraisals shall be deemed to be the Fair Market Rental Value
for the Premises and shall be binding and conclusive upon the parties. Each
party shall pay the fees and expenses of the appraiser appointed by it and
shall share equally the fees and expenses of the third appraiser. If the
two appraisers appointed by the parties cannot agree on the appointment of
the third appraiser, they or either of them shall give notice of such
failure to agree to the parties and if the parties fail to agree upon the
selection of such third appraiser within ten (10) days after the appraisers
appointed by the parties give such notice, then either of the parties, upon
notice to the other party, may request such appointment by the American
Arbitration Association or, on it failure, refusal or inability to act, may
apply for such appointment to the presiding judge of the Superior Court of
Santa Clara County, California.
(b) Wherever used throughout this Paragraph (Rent during Extension
Term) the term "Fair Market Rental Value" shall mean the fair market rental
value of the Premises, using as a guide the rate of monthly base rent which
would be charged during the Extension Term in the Mid-Peninsula area for
comparable high image, Class A office space in comparable condition, of
comparable quality, as of the time that the Extension Term commences, with
appropriate adjustments regarding taxes, insurance and operating expenses
as necessary to insure comparability to this Lease, as the case may be, and
also taking into consideration amount and type of parking, location, the
existence and condition of any leasehold improvements (regardless of who
paid for them and with the assumption, for purposes of determining the Fair
Market Rental Value, that they are fully usable by Tenant), proposed term
of lease, amount of space leased, extent of service provided or to be
provided, any allowances and other concessions being granted to tenants of
similar net worth and other financial condition as Tenant leasing
comparable space at the time of the Exercise Notice (but also taking into
account any credit enhancement provided by tenants in determining
equivalency of another tenant's financial condition), and any other
relevant terms or conditions (including consideration of whether or not the
monthly base rent is fixed).
(c) In the event of a failure, refusal or inability of any appraiser
to act, his successor shall be appointed by the party who originally
appointed him, but in the case of the third appraiser, his successor shall
be appointed in the same manner as provided for appointment of the third
appraiser.
(d) The appraisers shall render their appraisals in writing with
counterpart copies to Landlord and Tenant. The appraisers shall have no
power to modify the provisions of this Lease.
(e) To the extent that a binding appraisal has not been completed
prior to the expiration of any preceding period for which Monthly Base Rent
has been determined, Tenant shall pay Monthly Base Rent at the rate
estimated by Landlord, with an adjustment to be made once Fair Market
Rental Value is ultimately determined by binding appraisal. In no event
shall any such adjustment result in a decrease of the Monthly Base Rent for
the Premises below the amount payable by Tenant as of the period
immediately preceding the ensuing Extension Term.
(f) From and after the commencement of the Extension Term, all of the
other terms, covenants and conditions of the Lease shall also apply;
provided, however, that during the second Extension Term Tenant shall have
no further rights to extend the Term.
44. RIGHT OF FIRST OFFER.
(a) OFFER NOTICE. If Landlord at its sole election acquires the
portion of the Additional Land on which Landlord proposed to build an
approximately 130,000 square foot building as generally shown on Exhibit
"B" as "Building II", and if Landlord at its sole election proceeds to
build Building Two, prior to such time as Landlord has entered into initial
leases of the entire rentable area of Building Two (the "Lease-up Period"),
for so long as Tenant is not in Default hereunder and provided that Tenant
then satisfies the Transfer Standards (applicable
38
to leasing space in only one building), Tenant shall have the rights
described in this Paragraph 44 ("Right of First Offer") to lease additional
space in Building II (the "First Right Space"). During the Lease-up Period,
Landlord shall be free to negotiate and enter into letters of intent or
leases with other parties for all or any portion of the First Right Space,
provided that Landlord shall provide Tenant with a written "Offer Notice"
if Landlord, in good faith, believes that a letter of intent that it
receives from, or submits to, another party is likely to result in a letter
of intent acceptable to Landlord. The Offer Notice will indicate the
Monthly Base Rent Landlord is prepared to accept for the First Right Space
and, if such Offer Notice is for the lease of less than the entire First
Right Space, the Offer Notice will indicate which portion of the First
Right Space the Offer Notice covers. Tenant shall have five (5) business
days (ending at 5:00 p.m. on such fifth business day) after receipt of the
Offer Notice ("Offer Notice Deadline") to deliver to Landlord the Tenant's
written unconditional election to lease the space described in the Offer
Notice for the Monthly Base Rent specified in the Offer Notice and
otherwise on the terms and conditions set forth in this Paragraph 44
("Tenant's Election Notice"). If Tenant does not deliver to Landlord its
Tenant Election Notice within such five (5) business day period, Landlord
shall be entitled to enter into a lease with the party with whom Landlord
is negotiating or, within one hundred twenty (120) days following the Offer
Notice Deadline, with any other tenant for the space described in the Offer
Notice, provided that any such lease shall be at a Monthly Base Rent that
is not more favorable to the Tenant than that specified in the Offer Notice
(and for purposes of such comparison, if any material differences in the
Tenant Allowance or Landlord's Work exist between such lease and this
Lease, the Monthly Base Rent will be appropriately adjusted by amortizing
the material differences over the term of the lease using a discount rate
of ten percent).
(b) TERMS OF LEASE OF FIRST RIGHT SPACE.
(i) The Monthly Base Rent for the First Right Space leased by
Tenant pursuant to this Paragraph 44 shall be based on the Rentable
Area of such space as determined by measurement of Landlord's
architect, which such architect shall certify in writing to Landlord
and Tenant. The Rentable Area for the First Right Space shall by
computed in a manner consistent with the computations for the
Building. The initial Monthly Base Rent for the First Right Space
shall be the Monthly Base Rent specified in the Offer Notice, and
shall be subject to the annual adjustment pursuant to Paragraph 3(b)
of this Lease.
(ii) If Tenant elects to lease all or part of the First Right
Space pursuant to this Paragraph 44, Tenant's obligations for payment
of Rent shall commence for the First Right Space (the "First Right
Space Rent Commencement Date") on the earlier to occur of (i) ninety
(90) days after the Initial Tenant Work Date with respect to the First
Right Space (as such term is defined in the Work Letter), (ii) the
date on which Tenant has substantially completed any tenant
improvements to the First Right Space in accordance with the Work
Letter, or (iii) the date upon which Tenant actually commences
business in any portion of the Premises, subject to Tenant Delay (as
defined in the Work Letter).
(iii) If Tenant leases any First Right Space pursuant to this
Paragraph 44, in addition to the terms set forth in clauses (i) and
(ii) above, this Lease shall automatically be modified to provide as
follows:
(A) Both the Premises and the First Right Space shall be
part of the "Premises" under the Lease, such that the term
"Premises" as used in the Lease shall refer collectively to both
the Premises and the First Right Space;
(B) In addition to Tenant's Share of Taxes and Expenses
attributable to the initial Building, Tenant shall pay "Tenant
Share" of Taxes and Expenses attributable to Building Two
(calculated in the same manner as for the initial Building),
including without limitation Project Common Expenses allocated to
Building Two;
(C) Tenant's lease of the First Right Space shall be on the
same terms and conditions as in effect for the Premises from time
to time, except as expressly provided in this Paragraph 44;
39
(D) The Expiration Date of the Initial Term for entire
Premises (including the initial Premises and the First Right
Space) shall be determined as follows: (I) if the First Right
Space leased by Tenant is less than fifty percent (50%) of the
entire Rentable Area in Building Two, the Expiration Date shall
the Expiration Date determined as provided in this Lease with
respect to the initial Premises; and (II) if the First Right
Space leased by Tenant is fifty percent (50%) or more of the
entire Rentable Area in Building Two, the Expiration Date shall
be the date which is ten (10) years following the First Right
Space Rent Commencement Date. The initial Term shall expire on
such revised Expiration Date;
(E) Tenant's rights to extend this Lease pursuant to
Paragraph 42 shall apply to both the initial Premises and the
First Right Space, such that Tenant may only exercise its right
to either Extension Term with respect to the entire Premises,
rather than only the initial Premises or the First Right Space;
(F) Landlord shall provide the same Base Building as
provided for the Building, and the Tenant Improvements for the
First Right Space shall be completed by Tenant on the same terms
and conditions as set forth in the Work Letter, and Landlord will
provide a Tenant Allowance in the amount per rentable square foot
of the First Right Space as provided in the Basic Lease
Information;
(G) All references to percentage of destruction or taking in
Paragraphs 20 and 21 shall be deemed to mean each of the Building
and Second Building separately, and Landlord's and Tenant's
respective rights and obligations under such Paragraphs
(including, without limitation, any rights to terminate this
Lease) shall apply separately to the Building and to Building
Two, such that destruction or taking of the Building in a manner
as to provide Tenant the right (expressly provided in this Lease)
to terminate the Lease shall give Tenant the right to terminate
this Lease only with respect to the Building, and destruction or
taking of Building Two in a manner as to allow Tenant the right
to terminate (expressly provided in this Lease) to terminate the
Lease shall give Ten ant the right to terminate this Lease only
with respect to Building Two;
(H) The only Milestone (as set forth in Paragraph 2(e)) with
respect to the First Right Space shall be failure to
substantially complete the Base Building for Building Two, and
the date for satisfaction of such Milestone (subject to extension
as provided in Paragraph 2(e)) shall be a date specified by
Landlord in its Offer Notice, which date shall be not later than
January 31, 2004 (or, if no date is specified in the Offer
Notice, shall be January 31, 2004). Tenant's right to terminate
during a Window for failure of such Milestone shall apply to the
First Right Space only. Accordingly, if Landlord fails to achieve
the Milestone of substantial completion of the First Right Space
(subject to extension as provided in Paragraph 2(e)) Tenant shall
have the right to terminate the Lease only with respect to the
First Right Space, on the terms and conditions of Paragraph 2(e),
but such right shall not affect the Lease with respect to the
initial Premises. If Tenant exercises its right to terminate with
respect to the First Right Space, from and after the effective
date of such termination all of the terms and provisions of this
Paragraph 44 shall terminate and Tenant shall have no further
rights with respect to the First Right Space.
(iv) The parties shall execute a written confirmation of the
addition of the First Right Space and the foregoing terms and
conditions within thirty (30) days after either party's request,
provided that failure to execute such confirmation shall not affect
the automatic modification of the Lease as provided in this Paragraph
44.
(c) NO BROKERS. Neither party has had any contact or dealings
regarding the Second Building through any licensed real estate broker or
other person who may claim a right to a commission or finder's fee as a
procuring cause of any lease that might be entered into with respect to the
First Right Space as contemplated by this Paragraph 44 or otherwise, except
for the broker named in the Basic Lease Information, whose fees or
40
commission, if earned, shall be paid by Landlord in accordance with a
separate agreement with Landlord. If any other broker or finder makes a
claim for a commission or finder's fee based upon any such contact,
dealings, or communications, the party through whom the broker or finder
makes his claim shall be responsible for such commission or fee, and all
costs and expenses (including reasonable attorneys' fees) incurred by the
other party in defending against such claim.
(d) SEPARATE LEASES. Landlord may elect, by delivery of written notice
to Tenant after receipt of Tenant's Election Notice, to lease the First
Right Space to Tenant pursuant to a separate Lease, on all of the terms and
conditions, and in the form, of this Lease, but as modified consistent with
this Paragraph 44. Tenant shall execute and deliver any documents deemed
necessary or desirable by Landlord in connection with such election.
(e) EXPIRATION. Tenant's rights under this Paragraph 44 shall expire
on the first to occur of (i) expiration of the Lease-up Period, or (ii) a
foreclosure or conveyance in lieu of foreclosure on any portion of the
Project by a Mortgagee.
(f) ESTOPPEL. Landlord may require that Tenant confirm by estoppel
certificate or like document that Tenant's rights under this Paragraph 44
have terminated or expired or do not apply to a specific transaction that
Landlord is considering or specify the reasons why Tenant believes that
Tenant's rights hereunder apply to said transaction.
45. ARBITRATION. ANY CONTROVERSY OR CLAIM ARISING OUT OF THE MATTERS
EXPRESSLY MADE SUBJECT TO ARBITRATION PURSUANT TO THIS LEASE OR THE WORK LETTER
SHALL BE SETTLED BY ARBITRATION CONDUCTED IN SAN MATEO OR SANTA CLARA COUNTY,
CALIFORNIA, IN ACCORDANCE WITH THE COMMERCIAL RULES OF THE AMERICAN ARBITRATION
ASSOCIATION, AND JUDGMENT ON THE AWARD RENDERED BY THE ARBITRATOR(S) MAY BE
ENTERED IN ANY COURT HAVING JURISDICTION. THE PREVAILING PARTY IN SUCH
ARBITRATION SHALL BE ENTITLED TO ATTORNEYS' FEES AND COSTS. "PREVAILING PARTY"
SHALL MEAN THAT PARTY WHO RECEIVES SUBSTANTIALLY THE RELIEF REQUESTED, WHETHER
BY SETTLEMENT OR JUDGMENT.
NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE
ARISING OUT OF MATTERS EXPRESSLY MADE SUBJECT TO ARBITRATION PURSUANT TO THIS
LEASE OR THE WORK LETTER 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 "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.
41
WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING
OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION TO
NEUTRAL ARBITRATION.
Consent to neutral arbitration by: /s/ JM Landlord /s/ WJR Tenant
------------------- -------------------
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
date first above written.
LANDLORD:
M-D DOWNTOWN SUNNYVALE, LLC,
a Delaware limited liability company
By: /s/ JOHN MOZART
-------------------------------
Its: President
-------------------------------
TENANT:
BROADCOM CORPORATION,
a California corporation
By: /s/ WILLIAM J. RUEHLE
-------------------------------
Its: Vice-President and CFO
-------------------------------
42
LEASE AGREEMENT
by and between
M-D DOWNTOWN SUNNYVALE, LLC
and
BROADCOM CORPORATION
DATED AS OF MAY 18, 2000
EXHIBITS
Exhibit "A" Phase I/Initial Project Site Plan
Exhibit "A-1" Excluded Space
Exhibit "A-2" Dedicated Garage Exit
Exhibit "B" Potential Project Site Plan (Phase I and Future Phases)
Exhibit "C" Work Letter
Exhibit "C-1" List of Base Building Architectural Drawings
Exhibit "D" Rules and Regulations
Exhibit "E" Form of Tenant Estoppel Certificate
Broadcom Corporation agrees to furnish supplementally a copy of any of the
foregoing exhibits to the SEC upon request.