EXHIBIT 10.22
LEASE AGREEMENT
1. Parties. This Lease, dated for reference purposes only, June 3, 1996,
is made by and between SOUTH BAY/EDENVALE ASSOCIATES, a California
general partnership, ("Landlord"), and WESTERN DIGITAL CORPORATION, a
Delaware corporation ("Tenant").
2. Premises. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord, upon the terms and conditions hereinafter set forth,
those certain premises (the "Premises") presently known, as of the date
of this Lease, as 5853 Rue Ferrari Drive, situated in the City of San
Jose, County of Santa Clara, State of California, described as follows:
for purposes of this Lease, the rentable square footage area of the
Building shall be deemed to be approximately one hundred twenty-nine
thousand six hundred (129,600) square feet located in that building
commonly known as Building A (the "Building"), as shown cross-hatched
on the site plan (the "Site Plan") attached hereto as Exhibit "A". The
Building is located on a parcel legally described on Exhibit "B"
attached hereto (the "Parcel") containing one other building, known as
and referred to herein as "Building B" and a connecting corridor
between Buildings "A" and "B", known as and referred to herein as
"Building C." The total square footage of Building A and Building B is
approximately two hundred eighty-six three hundred thirty square feet
(286,330) (the "Buildings") as shown on the Site Plan. For purposes of
calculating the Monthly Installment of Rent to be paid by Tenant for
use of the Premises and calculating Tenant's Pro Rata Share (as defined
in Section 7B below) fifty percent (50%) of the rentable square footage
of Building C (which is equal to approximately one thousand three
hundred twenty-five (1,325) square feet) has been added to the
approximate square footage of Building A, resulting in a total rentable
square footage of one hundred thirty thousand nine hundred twenty-five
(130,925) square feet for the Premises. In the event Landlord
subdivides the Parcel in the future into two (2) or more legal parcels,
the term "Parcel" shall thereafter refer to the legal parcel on which
the Premises are located, provided, any such subdivision shall not
impair or reduce Tenant's parking rights under this Lease or access to
the Premises. Landlord shall not be required to make any alterations,
additions or improvements to the Premises except as set forth in this
Lease, and the Premises shall be leased to Tenant in an "as-is"
condition except as specifically provided in this Lease. Tenant shall
construct all improvements to the Premises in accordance with Exhibit
"C".
3. Term. The term of this Lease ("Lease Term") shall be for ten (10)
years, commencing on August 1, 1996 (the "Commencement Date") and
ending on July 31, 2006, unless sooner terminated pursuant to any
provision hereof. If for any reason Landlord has not delivered
possession of the Premises to Tenant on or before June 15, 1996, then
Tenant shall have the option, exercisable by written notice given to
Landlord within ten (10) days thereafter, to terminate this Lease. Upon
exercising such option, all rights and obligations of Landlord and
Tenant under this Lease shall terminate ab initio, and Landlord shall
promptly refund to Tenant all prepaid rent paid by Tenant to Landlord
in connection with this Lease. Notwithstanding any earlier completion
of construction by Tenant, Tenant shall not be obligated to pay the
Monthly Installment of rent, and Common Area Charges until the
Commencement Date.
4. Rent.
A. Time of Payment. Tenant shall pay to Landlord as rent for the
Premises the sum specified in Paragraph 4.B below (the
"Monthly Installment") each month in advance on the first day
of each calendar month, without deduction or offset, prior
notice or demand, commencing on the Commencement Date and
continuing through the term of this Lease,
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together with such additional rents as are payable by Tenant to
Landlord under the terms of this Lease. The Monthly Installment for any
period during the Lease Term which period is less than one (1) full
month shall be a prorata portion of the Monthly Installment based on
the actual number of days in such month.
B. Monthly Installment.
(1) Initial Monthly Installment. The initial Monthly Installment of
rent payable each month during the period from August 1, 1996 through
and including July 31, 1998, shall be the sum of One Hundred Eight
Thousand Thirteen and no/100ths Dollars ($108,013.00) per month.
(2) Rental Adjustments. During the Lease Term, the Monthly Installment
of rent shall be adjusted as follows:
Upon commencement of the twenty-fifty (25th); forty-ninth (49th);
seventy-third (73rd); and ninety-seventh (97th) months of the Lease
Term ("Rental Adjustment Periods"), the Monthly Installment of rent
shall be adjusted by multiplying the Monthly Installment of rent
payable during the period immediately prior to the Rental Adjustment
Period by one hundred eight and sixteen hundredths percent (108.16%),
which results in the following rental schedule:
Months of Lease Term Monthly Installment
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01 - 24 $108,013.00 per month
25 - 48 $116,827.00 per month
49 - 72 $126,360.00 per month
73 - 96 $136,671.00 per month
97 - 120 $147,823.00 per month
C. Late Charge. Tenant acknowledges that late payment by Tenant to
Landlord of rent and other sums due hereunder will cause Landlord to
incur costs not contemplated by this Lease, the exact amount of which
will be extremely difficult to ascertain. Such costs include, but are
not limited to, processing and accounting charges, and late charges
which may be imposed on Landlord by the terms of any mortgage or deed
of trust covering the Premises. Accordingly, if any installment of rent
or any other sum due from Tenant shall not be received by Landlord
within ten (10) days after such amount shall be due, Tenant shall pay
to Landlord, as additional rent, a late charge equal to four percent
(4%) of such overdue amount. The parties hereby agree that such late
charge represents a fair and reasonable estimate of the costs Landlord
will incur by reason of late payment by Tenant. Acceptance of such late
charge by Landlord shall in no event constitute a waiver of Tenant's
default with respect to such overdue amount, nor prevent Landlord from
exercising any of its other rights and remedies granted hereunder.
D. Additional Rent. All taxes, insurance premiums, Common Area Charges,
late charges, costs and expenses which Tenant is required to pay
hereunder, together with all interest and penalties that may accrue
thereon in the event of Tenant's failure to pay such amounts, shall be
deemed to be additional rent ("Additional Rent") and shall be paid in
addition to the Monthly Installment of rent.
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E. Place of Payment. Rent shall be payable in lawful money of the
United States of America to Landlord at 511 Division Street,
Campbell CA, or to such other person(s) or at such other
place(s) as Landlord may designate in writing.
F. Advance Payment. Concurrently with the execution of this
Lease, Tenant shall pay to Landlord the sum of One Hundred
Eight Thousand Thirteen and no/100ths Dollars ($108,013.00) to
be applied to the Monthly Installment of rent first accruing
under this Lease.
5. Security Deposit. [INTENTIONALLY DELETED.]
6. Use of Premises. Tenant shall use the Premises only in conformance with
governmental laws, regulations, rules and ordinances applicable to
Tenant's business operations at and use of the Premises for the purpose
of general office, marketing, sales, warehousing, distribution, light
industrial manufacturing and assembly, research and development of
electronics products, and any other related and legally permitted uses,
and for no other purpose. Tenant shall indemnify, protect, defend, and
hold Landlord harmless against any loss, expense, damage, attorneys'
fees or liability arising solely out of the failure of Tenant to comply
with any applicable law. Tenant shall not commit or suffer to be
committed, any waste upon the Premises, or any nuisance, or other acts
or things which may disturb the quiet enjoyment of any other tenant in
the buildings adjacent to the Premises, or allow any sale by auction
upon the Premises (except at the expiration or earlier termination of
the Lease, Tenant may auction equipment in place from the Premises), or
allow the Premises to be used for any unlawful purpose, or place any
loads upon the floor, walls or ceiling which endanger the structure, or
place any harmful liquids in the drainage system of the Building. No
waste materials or refuse shall be dumped upon or permitted to remain
upon any part of the Premises outside of the Building proper, except in
trash containers placed inside exterior enclosures designated for that
purpose by Landlord. No materials, supplies, equipment, finished
products or semi-finished products, raw materials or articles of any
nature shall be stored upon or permitted to remain on any portion of
the Premises outside of the Building proper, except that Tenant may
store its personal property in the storage areas or in the loading dock
areas (comprising part of the Building A Exclusive Areas described in
Paragraph 11A. below) exclusively reserved for Tenant's use and
identified on the Site Plan attached hereto as Exhibit "A." Such
storage shall be in compliance with all laws, rules, and regulations
applicable thereto. Tenant's use of the Premises shall be subject to
with the terms of Paragraph 39 below.
7. Taxes and Assessments.
A. Tenant's Property. Tenant shall pay before delinquency any and
all taxes and assessments, license fees and public charges
levied, assessed or imposed upon or against Tenant's fixtures,
equipment, furnishings, furniture, appliances and personal
property installed or located on or within the Premises.
Tenant shall cause said fixtures, equipment, furnishings,
furniture, appliances and personal property to be assessed and
billed separately from the real property of Landlord. If any
of Tenant's said personal property shall be assessed with
Landlord's real property, Tenant shall pay Landlord the taxes
attributable to Tenant within thirty (30) days after receipt
of a written statement from Landlord setting forth the taxes
applicable to Tenant's property, together with a copy of
Landlord's tax bill therefor.
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B. Property Taxes. Tenant shall pay, as additional rent, its Pro
Rata Share (as defined below) of all Property Taxes levied or
assessed with respect to the land comprising the Parcel and
with respect to all buildings and improvements located on the
Parcel which become due or accrue during die term of this
Lease. Provided that Landlord bills Tenant at least thirty
(30) days prior to the delinquency date of such Property
Taxes, Tenant shall pay such Property Taxes to Landlord at
least ten (10) days prior to the delinquency date, and if
Tenant fails to do so, Tenant shall reimburse Landlord, on
demand, for all interest, late fees and penalties that the
taxing authority charges Landlord. If Landlord bills Tenant
less than thirty (30) days prior to the delinquency date of
such Property Taxes, Tenant shall pay such Property Taxes to
Landlord within thirty (30) days of the date of delivery of
such bill to Tenant. Landlord's bill to Tenant shall include a
copy of Landlord's tax bill from the taxing authority. In the
event Landlord's mortgagee requires an impound for Property
Taxes, then on the first day of each month during die Lease
Term (commencing not less than thirty (30) days after written
notice to Tenant that such impound account is so required),
Tenant shall pay Landlord one twelfth (1/12) of its annual
share of such Property Taxes. - Tenant's liability hereunder
shall be prorated to reflect the Commencement Date and
termination date of this Lease. If the amount of any such
impound installment payments paid by Tenant exceeds Tenant's
actual share of such Property Taxes after payment to the
applicable taxing authority (exclusive of any interest or
penalties arising from late payment) such excess shall be
refunded to Tenant within thirty (30) days after the payment
is made to the taxing authority.
As used in this Lease, the term "Tenant's Pro Rata Share"
shall mean a fraction, expressed as a percentage, the
numerator of which is the number of square feet of floor space
contained in the Premises, inclusive of fifty percent of the
square footage of Building C (130,925 square feet), and the
denominator of which is the number of square feet of floor
space contained in all of the Buildings (286,330 square feet)
located on the Parcel. As of the Commencement Date, Tenant's
Pro Rata Share is forty-five and seventy-three hundredths
percent (45.73%).
For the purpose of this Lease, "Property Taxes" means and
includes all taxes, assessments (including, but not limited
to, assessments for public improvements or benefits), taxes
based on vehicles, utilizing parking areas, taxes based or
measured by the rent paid, payable or received under this
Lease, taxes based upon, allocable to, or measured by the area
of the Premises or the Buildings or the Parcel; taxes upon or
with respect to the possession, leasing, operation,
management, maintenance, alteration or repair of the Premises
or any portion thereof; gross receipts tax, sales and/or use
tax, water tax, sewer tax, employee tax, occupational license
tax imposed upon Landlord or Tenant with respect to the
Premises, any tax upon this transaction or any document to
which Tenant is a party creating or transferring an interest
or an estate in the Premises, taxes on the value, use, or
occupancy of the Premises, the Buildings and/or the Parcel,
Environmental Surcharges, and all other governmental
impositions and charges of every kind and nature whatsoever,
whether or not customary or within the contemplation of the
parties hereto and regardless of whether the same shall be
extraordinary or ordinary, general or special, unforeseen or
foreseen, or similar or dissimilar to any of the foregoing
which, at any time during the Lease Term, shall be applicable
to the Premises, the Buildings and/or the Parcel or assessed,
levied or imposed upon the Premises, the Buildings and/or the
Parcel, or become due and payable and a lien or charge upon
the Premises, the Buildings and/or the Parcel, or any part
thereof, under or by virtue of any present or future laws,
statutes, ordinances,
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regulations or other requirements of any governmental
authority whatsoever. The term "Environmental Surcharges"
shall mean and include any and all expenses, taxes, charges or
penalties imposed by the Federal Department of Energy, the
Federal Environmental protection Agency, the Federal Clean Air
Act, or any regulations promulgated thereunder or any other
local, state or federal governmental agency or entity now or
hereafter vested with the power to impose taxes, assessments,
or other types of surcharges as a means of controlling or
abating environmental pollution or the use of energy. The term
"Property Taxes" shall not include (a) any federal, state or
local income, franchise, estate, gift or inheritance tax, (b)
any transfer taxes, recording fees, or monument preservation
fees, (c) any license or similar fees imposed to permit the
conduct of Landlord's business, (d) that portion of any tax,
fee or encumbrance that would otherwise come within the
definition of "Property Taxes" but which is assessed or
imposed with respect to the operations, activities of any
tenant or occupant other than Tenant, (e) fuel taxes on
Landlord's vehicles, sales taxes on Landlord's purchases,
withholding taxes for Landlord's employees and Landlord's
business license, (f) any tax imposed on Landlord as a result
of it financing or refinancing the Parcel, or any portion
thereof, or as a result of Landlord's secured lender
foreclosing on the Parcel (except Property Taxes shall include
any increased taxes resulting from a change of ownership
following any foreclosure of the Parcel), or (g) any interest
or penalties imposed as a result of Landlord's failure to
comply with applicable law, including, without limitation,
Landlord's failure to pay its taxes timely, unless such
failure arises from Tenant's acts, negligence, willful
misconduct or breach of this Lease. The term "Environmental
Surcharge" shall not include any expense, tax, penalty or
other charges imposed as a result of (a) any environmental
contamination not caused by Tenant or its Agents, (b) the
operations or activities of any tenant or occupant other than
Tenant, or (c) Landlord's failure to comply with applicable
law, unless such failure arises from Tenant's acts,
negligence, willful misconduct or breach of this Lease.
8. Insurance.
A. Indemnity. Tenant agrees to indemnify, protect and defend
Landlord against and hold Landlord harmless from any and all
claims, causes of action, judgments, obligations or
liabilities, and all reasonable expenses incurred in
investigating or resisting the same (including reasonable
attorneys' fees), on account of, or arising out of, the
operation, maintenance, use or occupancy of the Premises and
all areas appurtenant thereto by Tenant or Tenant's agents,
employees, contractors, guests, invitees or licensees. This
Lease is made on the express understanding that Landlord shall
not be liable for, or suffer loss by reason of, injury to
person or property, from whatever cause (except for negligence
or willful misconduct of Landlord or its Agents), which in any
way may be connected with the operation, use or occupancy of
the Premises by Tenant or Tenant's agents, employees,
contractors, guests, invitees or licensees, specifically
including, without limitation, any liability for injury to the
person or property of Tenant, its agents, officers, employees,
licensees and invitees. The obligations of Tenant under this
Paragraph 8.A shall survive the expiration or earlier
termination of this Lease.
B. Liability Insurance. Tenant shall, at Tenant's expense, obtain
and keep in force during the term of this Lease a policy of
commercial general liability insurance insuring Landlord and
Tenant against claims and liabilities arising out of the
operation, use, or occupancy of the Premises and all areas
appurtenant thereto, including parking areas. Such insurance
shall be in an amount of not less than Three Million Dollars
($3,000,000.00) for bodily injury
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or death as a result of any one occurrence and Five Hundred
Thousand Dollars ($500,000.00) for damage to property as a
result of any one occurrence. The insurance shall be with
companies rated A X or better by A. M. Best insurance rating.
Tenant shall deliver to Landlord, prior to possession, and at
least thirty (30) days prior to the expiration thereof, a
certificate of insurance evidencing the existence of the
policy required hereunder and such certificate shall certify
that the policy (1) names Landlord as an additional insured,
(2) shall not be canceled or the coverage or amount of
coverage reduced without thirty (30) days prior written notice
to Landlord, (3) insures performance of the indemnity set
forth in Paragraph 8.A above, (4) the coverage is primary and
any coverage by Landlord is in excess thereto and (5) contains
a cross-liability endorsement or its equivalent (i.e. a
separation of insured provision in the basic comprehensive
liability insurance policy). Landlord may maintain a policy or
policies of comprehensive general liability insurance (or
commercial general liability insurance) insuring Landlord (and
such others as are designated by Landlord), against liability
for personal injury, bodily injury, death and damage to
property occurring or resulting from an occurrence in, on or
about the Premises or the Common Area, with such limits of
coverage as Landlord may from time to time determine are
reasonably necessary for its protection. The cost of any such
liability insurance maintained by Landlord shall be a Common
Area Charge and Tenant shall pay, as additional rent, its
share of such cost to Landlord as provided in Paragraph 12
below.
C. Property Insurance. Landlord shall obtain and keep in force
during the term of this Lease a policy or policies of
insurance covering loss or damage to the Premises and the
Buildings, in the amount of the full replacement value
thereof, providing protection against those perils included
within the classification of "all risk" insurance, plus a
policy of rental income insurance in the amount of one hundred
percent (100%) of twelve (12) months rent (including, without
limitation, sums payable as Additional Rent), plus, at
Landlord's option, flood insurance and earthquake insurance,
and any other coverages which may be required from time to
time by Landlord's mortgagee. Landlord shall furnish to
Tenant, within twenty (20) days after written request by
Tenant, a certificate from Landlord's insurance carrier
evidencing that the insurance coverage required to be carried
by Landlord is in effect. Tenant shall have no interest in nor
any right to the proceeds of any insurance procured by
Landlord on the Premises except as specifically provided in
this Lease.
Provided that Landlord bills Tenant at least thirty (30) days
prior to the due date of the premium for such insurance
procured and maintained by Landlord, Tenant shall pay Tenant's
Pro Rata Share of such premium to Landlord at least ten (10)
days prior to the due date, and if Tenant fails to do so,
Tenant shall reimburse Landlord, on demand, for all interest,
late fees and penalties that the insurance carrier charges
Landlord. If Landlord bills Tenant less than thirty (30) days
prior to the due date of such insurance premium, Tenant shall
pay Tenant's Pro Rata Share of such premium to Landlord within
thirty (30) days of the date of delivery of such bill to
Tenant. Landlord's bill to Tenant shall include a copy of the
insurance carrier's invoice to Landlord. In the event
Landlord's mortgagee requires an impound for insurance
premiums, then on the first day of each month during the Lease
Term (commencing not less than thirty (30) days after written
notice to Tenant that such impound account is so required),
Tenant shall pay Landlord one twelfth (1/12) of its annual Pro
Rata Share of such insurance premiums. If the amount of any
such impound installment payments paid by Tenant exceeds
Tenant's actual share of such insurance premiums after payment
to Landlord's insurer (exclusive of any penalties for
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late payment) such excess shall be refunded to Tenant within
thirty (30) days after the payment is made to Landlord's
insurer.
Tenant acknowledges that such insurance procured by Landlord
shall contain a commercially reasonable deductible which
reduces Tenant's cost for such insurance and, in the event of
loss or damage, Tenant shall be required to pay to Landlord
the amount of such deductible (which, exclusive of the
deductible applicable to the earthquake insurance coverage,
shall not exceed Twenty Thousand Dollars ($20,000) without
Tenant's prior written approval). Tenant further acknowledges
that the insurance carried by Landlord does not cover, and
Landlord has no obligation to insure, the improvements
installed by Tenant pursuant to Exhibit "C", or any
alterations, additions or improvements thereto.
D. Tenant's Insurance; Release of Landlord. Tenant acknowledges
that the insurance to be maintained by Landlord on the
Premises pursuant to Subparagraph C above will not insure any
of Tenant's property. Accordingly, Tenant, at Tenant's own
expense, shall maintain in full force and effect on all of its
fixtures, equipment, leasehold improvements and personal
property in the Premises, a policy of "All Risk" coverage
insurance to the extent of at least ninety percent (90%) of
their insurable value. The foregoing notwithstanding, Tenant
may elect to self-insure Tenant's fixtures, equipment and
personal property (but not leasehold improvements). Tenant
hereby releases Landlord, and its partners, officers, agents
employees and servants from any and all claims, demands,
losses, expenses or injuries to the Premises or to the
furnishings, fixtures, equipment, inventory or other personal
property of Tenant in, about, or upon the Premises, which are
caused by perils, events or happenings where the same are
covered by the insurance required by this Lease or which are
the subject of insurance carried by Tenant and in force at the
time of such loss (and then only to the extent of such
insurance proceeds payable thereunder). Tenant shall procure
an appropriate clause in, or an endorsement to, all policies
required by this Lease or any other insurance policy
maintained by Tenant with respect to the Premises or Tenant's
occupancy thereof, pursuant to which the insurance company or
companies waive subrogation or consent to a waiver of a right
of recovery against Landlord.
E. Waiver of Subrogation. Notwithstanding any provision of this
Lease to the contrary, Landlord and Tenant each hereby waive,
for themselves and their respective insurers, any and all
rights of recovery against the other for any loss or damage
occasioned to such waiving party or its property or the
property of others under its control (and whether or not such
loss or damage is due to the neglect or fault of a party) to
the extent such loss or damage is insured, or is required
hereunder to be insured, against under any casualty insurance
policy existing for the benefit of the respective parties at
the time of such loss or damage. Each party shall obtain any
special endorsements, if required by their insurer, to
evidence compliance with the aforementioned waiver.
9. Utilities. Tenant shall pay for all water, gas, light, heat, power,
electricity, telephone, trash pickup, sewer charges and all other services
supplied to or consumed on the Premises and separately metered to or chargeable
exclusively to the Premises, and all taxes and surcharges thereon. In addition,
the cost of any utility services supplied to the Common Area or not separately
metered to the Premises shall be a Common Area Charge and Tenant shall pay its
share of such costs to Landlord as provided in Paragraph 12 below. Landlord
shall promptly install a separate water meter for the Premises, at Landlord's
sole cost and expense. If, after the Commencement Date, water is not separately
metered to the Premises, then Tenant shall pay a reasonable proportion (as
reasonably determined by Landlord) of the jointly metered water
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charges, as a Common Area Charge, until such time as Landlord separately meters
the Premises as provided for hereinabove.
The parties hereto acknowledge that heating, ventilation and air
conditioning (HVAC) serving Building C is provided mostly through the Building
and power and lighting serving Building C is provided through Building A. The
parties hereto intend and agree that Tenant shall pay approximately one-half
(1/2) of the cost of such utilities serving Building C and that the tenant of
Building B (or Landlord if Building B is not leased or such tenant of Building B
is not obligated to pay its share of such utilities) shall pay the remaining
approximately one-half (1/2)of the cost of such utilities. In order to equalize
the sharing of such utilities' cost applicable to Building C, the parties hereto
agree that not later than July 15, 1996, Landlord shall cause, at Landlord's
sole expense, a consultant (selected by Landlord and reasonably approved by
Tenant and the tenant of Building B) to survey the utilities serving Building C
and the costs of providing the same. Based upon such survey, the consultant will
determine the amount that Tenant and the tenant of Building B (or Landlord if
Building B is not leased or such tenant of Building B is not obligated to pay
its share of such utilities) shall be obligated to pay, respectively, in order
that each of them bear during each year of the Lease Term (prorated for any
partial calendar year) approximately fifty percent (50%) of the costs of such
utilities serving Building C. If, based on such survey (or subsequent survey as
described below), it is determined that Tenant is bearing less than fifty
percent (50%) of the cost of such utilities serving Building C, then Tenant
shall pay to the tenant of Building B (or to Landlord, as the case may be), an
amount equal to that which, when added to the portion of the utilities costs
estimated by the consultant to be borne by Tenant during the preceding calendar
year (prorated for any partial year), shall equal fifty percent (50%) of the
costs of the utilities serving Building C. If, based on such survey (or
subsequent survey as described below), it is determined that Tenant is bearing
more than fifty percent (50%) of the cost of such utilities serving Building C,
then the tenant of Building B (or Landlord if Building B is not leased or the
tenant of Building B is not obligated to pay its share of such Building C
utilities) shall pay to Tenant an amount equal to that which, when added to the
portion of the utilities costs estimated by the consultant to be borne during
the preceding calendar year (prorated for any partial year) by the tenant of
Building B or Landlord, as the case may be, shall equal fifty percent (50%) of
the costs of the utilities serving Building C. Payment shall be made within
thirty (30) days after receipt by Tenant (if payment is owed by Tenant) or by
the tenant of Building B or Landlord, as the case may be, of an invoice setting
forth the amount due with respect to the preceding calendar year (or portion
thereof) within the Lease Term. Consistent with the foregoing, the parties
hereto agree that Tenant's obligation to equalize the costs of utilities serving
Building C for calendar year 1996 shall only be applicable to the period of
August 1, 1996 through December 31, 1996. The obligation to equalize the costs
of utilities serving Building C shall survive the expiration or earlier
termination of this Lease but only with respect to utilities consumed in
Building C within the Lease Term. It is contemplated hereunder that Tenant and
the tenant of Building B will be the parties responsible for equalizing the
amount of the utilities costs applicable to Building C and that Landlord shall
not be involved in such equalization process or obligated to pay for any portion
of the utilities serving Building C unless there is no tenant of Building B at
the time such equalization is applicable or the tenant of Building B is not
obligated to bear its fifty percent share of the cost of the Building C
utilities.
At any time during the Lease Term, but in no event more than once in
any calendar year, Tenant, Landlord or the tenant of Building B shall have the
right to retain a consultant selected by it and reasonably approved by the
others to undertake a survey of the utilities serving Building C and the costs
of providing the same. Based upon such completed survey, the sharing of costs of
utilities serving Building C shall be readjusted so that Tenant and the tenant
of Building B (or Landlord if Building B is not leased or the tenant of Building
B is not obligated to pay its share of such Building C utilities) each pay fifty
percent (50%) of the costs of utilities serving Building C.
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Set forth below is an illustrative example of the manner in which the
costs of utilities serving Building C are to be equalized. Suppose that the
initial consultant determines that the costs of HVAC service to Building C
(which is read on the meter in Building B) equals Six Hundred Dollars ($600) per
month and the costs of power and lighting service to Building C (which is read
on the meter in Building A) equals Three Hundred Dollars ($300) per month. Based
on the foregoing, the tenant of Building B is paying Six Hundred Dollars ($600)
of the Nine Hundred Dollars ($900) of Building C utilities costs. Since the
tenant of Building B should only be paving fifty percent (50%) of the total
Building C utilities costs (i.e., $450), the Tenant should reimburse the tenant
of Building B, not later than January 30 of the applicable year, an amount equal
to One Hundred Fifty Dollars ($150) per month (or One Thousand Eight Hundred
Dollars ($1,800) per year (prorated for any partial year)) to equalize the
payment of Building C utilities costs.
Tenant shall store its waste either inside the Premises or in its own
dumpsters located within the now existing outside trash enclosures. Tenant shall
not at any time store, place or maintain any garbage, trash, rubbish, other
refuse or Tenant's personal property in any area of the Common Areas or exterior
of the Premises (except in the outside dumpsters and in any storage areas which
have been designated for Tenant's exclusive use and are identified on Exhibit A
attached hereto). Tenant at its sole expense shall be responsible to maintain
and keep the designated trash enclosures and Common Areas free of garbage,
trash, rubbish and other refuse of Tenant or Tenant's personal property.
10. Repairs and Maintenance.
A. Landlord's Repairs. Subject to provisions of Paragraph 16,
Landlord shall keep and maintain the structural elements of
the Building in good order and repair. Tenant shall not be
required to reimburse Landlord for the cost of maintenance and
repairs of the structural elements of the Building unless such
maintenance or repair is required because of the negligence or
willful misconduct of Tenant or its employees, agents or
invitees. As used herein, the term "structural elements of the
building" shall mean and be limited to the foundation,
footings, floor slab (but not flooring), structural walls, and
roof structure (but not roofing or roof membrane). Landlord
shall have no obligation to make repairs to the structural
elements of the Building under this Subparagraph until a
reasonable time after receipt of written notice from Tenant of
the need for such repairs. However, in the event of
circumstances posing imminent risk of personal injury or
property damage, Tenant, upon notice to Landlord, shall have
the right, but not the obligation, to make such repairs and
Landlord shall reimburse Tenant the reasonable cost thereof
within thirty (30) days after presentation of Tenant's
invoice.
As provided in Paragraph 11, Landlord shall keep and maintain
the driveways, parking areas, walkways, landscaped areas and
the roofing and roof membrane of Building "C" ("Common Area")
in good order and repair. Tenant shall reimburse Landlord, as
additional rent, within thirty (30) days after receipt of
billing, its Pro Rata Share of the cost of such repairs and
maintenance of the Common Areas, which are the obligation of
Landlord hereunder.
B. Tenant's Repairs. Except as expressly provided in Subparagraph
A above and subject to Paragraphs 16 and 17 below, Tenant
shall, at its sole cost, keep and maintain the entire Premises
and every part thereof and the Building A Exclusive Common
Area (defined in
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Paragraph 11.A below) in the same condition as delivered to
Tenant by Landlord, ordinary wear and tear excepted, including
without limitation the exterior walls, roof, roof membrane,
the windows, window frames, plate glass, glazing, skylights,
truck doors, doors and all door hardware, the walls and
partitions, and the electrical, plumbing, lighting, heating,
ventilating and air conditioning systems and equipment. The
term "repair" shall include replacements, restorations and/or
renewals when necessary as well as painting. Tenant's
obligation shall extend to all alterations, additions and
improvements to the Premises and the Building A Exclusive
Common Area, and all fixtures and appurtenances therein and
thereto. Landlord hereby assigns to Tenant all of its rights
and interests under all manufacturer and installation
warranties covering the heating, ventilation and air
conditioning ("HVAC") equipment or other fixtures or personal
property within the Premises and agrees to reasonably
cooperate, at no cost to Landlord, with Tenant in enforcing
such warranties.
Should Tenant fail to commence making repairs required of
Tenant hereunder forthwith upon thirty (30) days notice from
Landlord or should Tenant fail thereafter to diligently
complete the repairs, Landlord, in addition to all other
remedies available hereunder or by law and without waiving any
alternative remedies, may make the same, and in that event,
Tenant shall reimburse Landlord as additional rent for the
cost of such maintenance or repairs within thirty (30) days of
written demand by Landlord. In the event Tenant is required to
effect repairs or replacements to the Premises which are
capitalized under generally accepted accounting principles,
Tenant shall submit the estimated cost thereof to Landlord for
Landlord's reasonable approval prior to undertaking such
repair or replacement. Following approval by Landlord of the
cost, and completion of the work by Tenant, Landlord shall
reimburse Tenant, within thirty (30) days after receipt of
Tenant's invoice, that portion of the capitalized cost which
is determined by multiplying the capitalized cost by a
fraction, the numerator of which is the estimated useful life
(in months) of such repair or replacement reduced by the then
remaining Term of the Lease, and the denominator of which is
the estimated useful life of such repair or replacement.
Landlord shall have no maintenance or repair obligations
whatsoever with respect to the Premises or the Building A
Exclusive Area except as expressly provided in Paragraphs 10.A
and 11. Tenant hereby expressly waives the provisions of
Subsection 1 of Section 1932 and Sections 1941 and 1942 of the
Civil Code of California and all rights to make repairs at the
expense of Landlord as provided in Section 1942 of said Civil
Code. There shall be no allowance to Tenant for diminution of
rental value, and no liability on the part of Landlord by
reason of inconvenience, annoyance or injury to business
arising from the making of any repairs, alterations,
decorations, additions or improvements in or to any portion of
the Premises, the Building, the Common Area or the Building A
Exclusive Areas (or any of the areas used in connection with
the operation thereof, or in or to any fixtures, appurtenances
or equipment), or by reason of the negligence of Tenant or any
other tenant or occupant of the Parcel. Landlord shall use
reasonable efforts to minimize the disruption to Tenant's
business resulting from such activities by Landlord or its
Agents. In no event shall Landlord be responsible for any
consequential damages arising or alleged to have arisen from
any of the foregoing matters. Tenant hereby agrees that
Landlord shall not be liable for injury to Tenant's business
or any loss of income therefrom or for damage to the goods,
wares, merchandise or other property of Tenant, Tenant's
employees, invitees, customers, or any other person in or
about the Premises, the Building, or the Common Area, nor
shall Landlord be liable for injury to the person of
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Tenant, Tenant's employees, agents or contractors whether such
damage or injury is caused by or results from fire, steam,
electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, sprinklers,
wires, appliances, plumbing, air conditioning or lighting
fixtures, or from any other cause, whether the said damage or
injury results from any other cause, whether the said damage
or injury results from conditions arising upon the Premises or
upon other portions of the Building, or from other sources or
places and regardless of whether the cause of such damage or
injury or the means of repairing the same is inaccessible to
Tenant. Landlord shall not be liable for any damages arising
from any act or neglect of any other tenant, if any, of the
Building or the Parcel. However, the provisions of this
subparagraph 10.B shall not apply in the event of the
negligence or willful misconduct of Landlord or its Agents,
but in no event shall Landlord be liable for consequential
damages, including without limitation, lost profits or loss of
business.
11. Common Area.
A. Definitions. The term "Common Areas" shall mean all areas and
facilities outside the Premises and within the exterior
boundary line of the Parcel (excluding, however, Building B,
those areas designated as Building A Exclusive Areas on
Exhibit "A" attached hereto and made a part hereof, and those
areas designated as Building B Exclusive Areas on Exhibit "A"
attached hereto) that are provided and designated by Landlord
from time to time for the general non-exclusive use of
Landlord, Tenant, and of other tenants and other authorized
users of the Buildings and the respective employees,
suppliers, shippers, customers and invitees of the
aforementioned parties, including, but not limited to parking
areas (excluding those parking spaces comprising part of the
Building A Exclusive Areas or Building B Exclusive Areas),
loading and unloading areas, trash areas, roadways, sidewalk,
walkways, parkways, ramps, driveways, landscaped areas and
decorative walls. Common Areas shall also include all of
Building C. Area 18 designated on the Site Plan attached
hereto as Exhibit "A" shall also comprise part of the Common
Area and shall be for the shared use of Landlord, Tenant and
the tenant of Building B.
The term "Project" shall mean the Premises, the Buildings, the
Parcel, the Common Areas and all improvements now or hereafter
situated therein or thereon.
B. Tenant's Rights. From and after the Commencement Date,
Landlord hereby grants to Tenant, for the benefit of Tenant
and its employees, agents, contractors, suppliers, shippers,
customers and invitees, during the term of the Lease, the
non-exclusive right to use, in common with others entitled to
such use, the Common Areas as they exist from time to time,
subject to any rights, powers, and privileges expressly
reserved by Landlord under the terms hereof. Under no
circumstances shall the right herein granted to use the Common
Areas be deemed to include the right to store any property,
temporarily or permanently, in the Common Areas, excluding
vehicle parking and temporary storage of property incidental
to Tenant's use of loading and unloading areas. In the event
that any unauthorized storage shall occur, the Landlord shall
have the right, with notice (except in the event of an
emergency, in which event notice to Tenant need not be given),
in addition to such other rights and remedies that it may
have, to remove the property and charge the cost to Tenant,
which cost shall be immediately payable upon demand by
Landlord.
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C. Exclusive Area Rights. Tenant shall have the exclusive right
to use the Building A Exclusive Areas (designated as Area 19
on the Site Plan attached hereto as Exhibit "A" attached
hereto) including, without limitation, the loading docks
adjacent to Building A, for the specific purposes or uses
identified on Exhibit "A" attached hereto, provided such
purposes or uses are in compliance with all laws, rules and
regulations applicable thereto. Landlord's approval of
Tenant's use of the Building A Exclusive Areas for the
specific purposes identified on Exhibit "A" attached hereto
shall be conditioned upon Tenant obtaining any and all
permits, licenses or approvals from the applicable
governmental agency or agencies required with respect to such
specific uses. Tenant acknowledges that the ATM machine in
Building C is, and shall continue to be, the personal property
of the tenant of Building B.
Landlord or, if included in the terms of any lease of Building
B, any tenant of Building B, shall have the exclusive right to
use those areas designated on Exhibit "A" as the Building B
Exclusive Areas (i.e. Areas 1-17 as shown on the Site Plan
attached hereto as Exhibit "A"), including, without
limitation, the loading docks adjacent to Building B. Tenant
shall have no right to use all or any portion of the areas
designated as Building B Exclusive Areas (as shown on Exhibit
"A" attached hereto) without the prior written consent of
Landlord or, if applicable the tenant of Building B (which
consent may be given or withheld in the sole and absolute
discretion of Landlord or the tenant of Building B, as the
case may be).
D. Rules and Regulations; Landlord's Rights. Tenant's use of the
Common Area shall be subject to the terms and conditions of
this Lease and such rules and regulations as Landlord may from
time to time prescribe. This right and Tenant's right to use
the Building A Exclusive Areas shall terminate upon the
termination of this Lease. Landlord reserves the right from
time to time to make changes in the shape, size, location,
amount and extent of the Common Area; provided that such
change shall not interfere with Tenant's access to and from
the Premises, reduce the number of parking spaces to which
Tenant is entitled hereunder, or otherwise materially impair
Tenant's rights under this Lease. Landlord further reserves
the right to promulgate such reasonable and uniform rules and
regulations relating to the use of the Common Area, and any
part or parts thereof, as Landlord may deem appropriate for
the best interest of the occupants of the Project. The rules
and regulations shall be binding upon Tenant upon delivery of
a copy of them to Tenant, and Tenant shall abide by them and
cooperate in their observance. Such rules and regulations may
be amended by Landlord from time to time, with or without
advance notice, and all amendments shall be effective upon
delivery of a copy of them to Tenant.
E. Parking. Tenant shall have the non-exclusive use of no more
than four hundred forty-five (445) of the parking spaces in
the Common Area. Tenant shall not at any time park or permit
the parking of Tenant's trucks or other vehicles, or the
trucks or other vehicles of others, adjacent to loading areas
for Building B so as to interfere in any way with the use of
such areas, nor shall Tenant at any time park or permit the
parking of Tenant's vehicles or trucks, or the vehicles or
trucks of Tenant's suppliers or others, in any portion of the
Common Area not designated by Landlord for such use by Tenant.
Tenant shall not abandon any inoperative vehicles or equipment
on any portion of the Common Area. Tenant shall make no
alterations, improvements or additions to the Common Area.
-12-
The number of parking spaces that would otherwise be located
within the Building A Exclusive Areas as shown on Exhibit "A"
attached hereto shall be counted against the total of four
hundred forty-five (445) non-exclusive spaces allocated to
Tenant as provided above, notwithstanding that Tenant may
elect to use a portion of such exclusive areas originally
designated for parking for other purposes as noted on Exhibit
"A". Tenant shall not use more parking spaces than the four
hundred forty-five (445) spaces allocated to Tenant.
F. Maintenance. Landlord shall operate, manage, insure, maintain
and repair the Common Area in good order, condition and
repair. Without limiting the foregoing, Landlord shall keep
and maintain the driveways, parking areas, walkways,
landscaped areas, exterior lighting, irrigation systems,
fences, curbs, gutters, drainage systems, and all other
facilities within the Common Area (including, without
limitation, utility systems located therein), and Building C,
in good order and repair. The cost of such repair,
maintenance, operation, insurance and management shall be a
Common Area Charge and Tenant shall pay to Landlord its Pro
Rata Share of such costs as provided in Paragraph 12 below.
The foregoing notwithstanding, Tenant shall operate, manage,
insure, maintain and repair the Building A Exclusive Areas in
good order, condition and repair.
12. Common Area Charges. Tenant shall pay to Landlord, as additional rent,
within thirty (30) days after presentation of an invoice therefor, but
not more often than once each calendar month, an amount equal to its
Pro Rata Share of the Common Area Charges as defined in Paragraphs 8.C,
9, and 11 of this Lease. Tenant acknowledges and agrees that the Common
Area Charges shall include an additional five percent (5%) of the
actual Common Area Charges (excluding insurance premiums) in order to
compensate Landlord for accounting, management and processing services.
Provided Tenant gives Landlord not less than five (5) days prior
written notice, Tenant shall have the right, not more often than twice
during any calendar year, to inspect and make copies at Tenant's
expense, of Landlord's books, records and invoices evidencing the
Common Area Charges allocated to Tenant hereunder.
Notwithstanding anything to the contrary in the Lease, Common Area
Charges shall not include, and Tenant shall have no liability for, the
expense items listed below:
(a) The costs of original construction, the purchase price or
any depreciation or all or any portion of the Project, and the
cost of correcting any building code violation existing as of
the date of execution of the Lease.
(b) Costs incurred for the repair, maintenance and replacement
of the structural elements of the Project, including, without
limitation, beams, columns, foundations, footings, loan
bearing and exterior walls, structural slabs, and the roof
support system (except where the same are required by law).
(c) Costs incurred for the repair, maintenance or replacement
of the Project or any portion thereof, to the extent: (i) of
the proceeds of insurance which Landlord is required to
maintain under the Lease or actually maintains (whichever is
greater), (ii) of any reimbursement which Landlord receives
therefor under any warranties or from any third party (other
than on account of a tenant's pro rata share of the Common
Area Charges, or (iii) caused by the negligence or willful
misconduct of Landlord or Landlord's Agents.
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(d) Rentals and other payments by Landlord under any ground
lease or other lease underlying this Lease; interest,
principal, points, penalties and fees on any security
instrument encumbering all or any portion of the Project; and
any Property Taxes (provided, however, that Tenant is
obligated to pay Tenant's Pro Rata Share of Property Taxes
pursuant to Paragraph 7).
(e) Expenses and penalties (including, without limitation,
attorneys' fees) incurred due to Landlord's violation of any
lease, deed of trust, mortgage, other security instrument,
ground lease, law (including, without limitation, statutes,
ordinances, rules, regulations, orders, judgments and decrees)
or private restriction, unless such violation was caused by
Tenant's or Tenant's agents', employees' or contractors' acts,
negligence or willful misconduct or breach of this Lease.
(f) Leasing commissions, attorneys' fees, tenant improvement
costs and other costs and expenses incurred in connection with
the leasing, or the improvement for leasing, of any premises.
(g) Advertising, marketing, media and promotional expenditures
regarding the Project or any portion thereof, and costs of
signs in or on the Project identifying the owner, lender or
any contractor.
(h) The rental value of any management office, engineer's
office, mechanical spaces, and Common Areas.
(i) Costs incurred in connection with the presence,
investigation, monitoring, release, removal or remediation of
any Hazardous Materials on, under, in or about the Project
(subject, however, to the requirements of Paragraph 39).
(j) Any cost items that are not subject to apportionment among
all tenants of the Project in proportion to the ratio of the
total floor area of the premises leased by such tenants (with
Landlord being considered the tenant of any unleased premises)
to the total floor area of the Buildings (except as expressly
provided above with respect to utilities provided to Building
C).
(k) Insurance premiums allocable to tenant improvements in
Building B and costs incurred by Landlord, if any, to repair,
maintain, insure, manage and operate the Building B Exclusive
Areas.
Common Area Charges shall also be subject to the following limitations:
(l) Any management fee included in the Common Area Charge
shall exclude: salaries, wages and benefits paid for or
provided to persons not employed full-time in the management
and operation of the Project; costs of automobiles and travel
expenses; professional, civic or recreational memberships;
costs of seminars, conventions, educational programs and the
like; charitable contributions; and any other administrative
cost or expense not directly related to the management and
operation of the Project.
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(m) The rates paid by Landlord under landscape and parking lot
maintenance contracts and other on-going service contracts for
the Project shall not exceed rates customarily charged in
Santa Clara County.
(n) No fee shall be charged for the use of the Project parking
area or any other Common Area facility.
(o) The aggregate sum of all Common Area charges allocated to
tenants of the Project for any year upon which an allocation
is made shall not exceed the aggregate sum of such Common Area
Charges which were actually incurred by Landlord for the year
in question. No cost item shall be included more than once or
allocated under more that one expense category. No cost item
shall be submitted for payment by Tenant before it is incurred
by Landlord.
(p) All expense items which are classified as capital
expenditures, improvements or replacements under generally
accepted accounting principles and which are permitted to be
charged to Tenant hereunder shall be amortized on a monthly
basis over their maximum estimated useful lives at the lesser
of Landlord's cost of funds or the Bank of America prime rate
plus two percent (2%) per annum. Only the monthly amortized
portion of such expense which falls due during the Term shall
be included as a Common Area Charge payable by Tenant
hereunder.
13. Alterations. Tenant shall not make, or suffer to be made, any
alterations, improvements or additions in, on, about or to the Premises
or the Building A Exclusive Areas or any part thereof, without the
prior written consent of Landlord, which consent will not be
unreasonably withheld or delayed; and without a valid building permit
issued by the appropriate governmental authority. The foregoing
notwithstanding, Landlord's consent shall not be required for
non-structural alterations, improvements or additions (which do not
adversely affect the basic building systems of Building A or involve
roof or wall penetrations) costing not more that $100,000 annually. The
preceding sentence notwithstanding, whether or not Landlord's consent
is required, Tenant agrees to give Landlord at least five (5) days
prior written notice prior to commencing any work of improvement in, on
or about the Premises (a) for which a building permit is required,
and/or (b) which is to be performed by a third party contractor or
subcontractor and which is estimated to cost or will cost in excess of
$25,000. Within ten (10) days after Tenant's written request, Landlord
shall advise Tenant as to whether Landlord will require any proposed
alterations, improvements or additions to be removed or surrendered at
the expiration (or earlier termination) of the Term. In the absence of
any such request by Tenant, Landlord shall give Tenant written notice,
not less than ninety (90) days prior to the expiration of the Term, of
any alterations, additions or improvements Landlord requires to be
removed. Failure of Landlord to respond timely to Tenant's request or,
otherwise to give timely notice of the alterations, additions or
improvements Landlord requires to be removed at the expiration of the
Term, shall constitute Landlord's consent to the surrender of such
alterations, improvements or additions, excluding any non-structural
alterations, improvements or additions which Tenant elects to remove,
provided that Tenant repairs all damage to the Premises caused by such
removal. Unless Landlord requires that Tenant remove any such
alterations, improvement or addition, any alteration, addition or
improvement to the Premises, except movable furniture and trade
fixtures, shall become the property of Landlord upon termination of the
Lease and shall remain upon and be surrendered with the Premises at the
termination of this Lease. Without limiting the generality of the
foregoing, all heating, lighting, electrical (including all wiring,
conduit, outlets, drops, buss ducts, main and
-15-
subpanels), air conditioning, partitioning [except for modular
demountables, which may be removed], drapery, and carpet installations
made by Tenant regardless of how affixed to the Premises, together with
all other additions, alterations and improvements that have become an
integral part of the Building, shall be and become the property of the
Landlord upon termination of the Lease, and shall not be deemed trade
fixtures, and shall remain upon and be surrendered with the Premises at
the termination of this Lease.
If, during the term hereof, any alteration, addition or change of any
sort to all or any portion of the Premises or the Building A Exclusive
Areas is required by law, regulation, ordinance or order of any public
agency as a result of (i) Tenant's negligence or willful misconduct,
(ii) Tenant's particular use of the Premises (including, without
limitation, any change of use of the Premises by Tenant), (iii) any
alterations, additions or improvements to the Premises by or for
Tenant, or (iv) Tenant's applications for governmental approvals or
permits, rather than due to the use and occupancy of the Premises in
general or for any other reason, Tenant shall promptly make the same at
its sole cost and expense. If during the term hereof, any alteration,
addition, or change to the Premises (except as provided in the previous
sentence) or to the Common Area is required by law, regulation,
ordinance or order of any public agency, Landlord shall make the same
and no portion of the cost of such alteration, addition or change shall
be a Common Area Charge or borne by the Tenant. It is expressly
understood and agreed that Tenant shall not be required to make any
alterations, improvement or addition to the Premises which is required
by any law, regulation, ordinance or order except and only to the
extent that such requirement applies because of the specific activities
conducted by Tenant at the Premises, including without limitation, the
negligence or willful misconduct of Tenant, the particular use or any
change in use of the Premises by Tenant, any alterations, additions or
improvements to the Premises by or for Tenant, or any application by
Tenant for governmental approvals or permits.
14. Acceptance of the Premises. Landlord represents and warrants to Tenant
that (a) Landlord has received no notice from any governmental
authority claiming that the Project (or any portion thereof) fails to
comply with any applicable law, is the subject of any investigation to
determine whether or not the Project (or any portion thereof) is in
compliance with any applicable law, or otherwise requiring any work to
be done on or about the Project; and (b) as of the date of delivery of
possession of the Premises by Landlord to Tenant, to the best of
Landlord's knowledge, the Premises are in good condition and repair,
with all plumbing, electrical, water, sewer, mechanical and HVAC
systems in good working order, except that certain cabling installed in
the Building by the prior tenant remains in the Building, there exists
water leakage at certain joints between the window frame and the
exterior walls of the Building, and there is deferred maintenance with
respect to the roof and HVAC system of the Building. Not later than the
Commencement Date of this Lease, Landlord shall, at no cost to Tenant,
and without interference by Tenant or its agents, employees or
contractors, remove the aforementioned cabling from the Building,
repair the leak(s) around the window(s) referred to in the immediately
preceding sentence, repair the roof so that the same is water tight and
repair the HVAC system in the Building so that it is in good operating
condition and repair. Except for latent defects and violations of
applicable law, and without limiting Landlord's obligations under this
Lease (and subject to Landlord performing its obligations under the
immediately preceding sentence), by entering and taking possession of
the Premises pursuant to this Lease, Tenant accepts the Premises as
being in good and sanitary order, condition and repair and accepts the
Premises in their condition existing as of the date of such entry.
Tenant acknowledges that neither the Landlord nor Landlord's agents has
made any representation or warranty as to the suitability of the
Premises to the conduct of Tenant's business. Any agreements,
warranties or representations not expressly contained herein shall in
no way bind
-16-
either Landlord or Tenant, and Landlord and Tenant expressly waive all
claims for damages by reason of any statement, representation,
warranty, promise or agreement, if any, not contained in this Lease.
This Lease constitutes the entire understanding between the parties
hereto and no addition to, or modification of, any term or provision of
this Lease shall be effective until set forth in a writing signed by
both Landlord and Tenant.
15. Default.
A. Events of Default. A breach of this Lease shall exist if any
of the following events (hereinafter referred to as "Event of
Default") shall occur:
1. Default in the payment when due of any installment of
rent or other payment required to be made by Tenant
hereunder, where such default shall not have been
cured within five (5) days after written notice of
such default is given to Tenant;
2. Tenant's failure to perform any other term, covenant
or condition contained in this Lease where such
failure shall have continued for thirty (30) days
after written notice of such failure is given to
Tenant; provided that if performance reasonably
requires more than thirty (30) days, then Tenant
shall not be in default unless Tenant shall have
failed to commence performance within such thirty
(30) day period and thereafter diligently pursued
such performance to completion.
3. Tenant's general assignment of its assets for the
benefit of its creditors:
4. The sequestration of, attachment of, or execution on,
any substantial part of the property of Tenant or on
any property essential to the conduct of Tenant's
business shall have occurred and Tenant shall have
failed to obtain a return or release of such property
within sixty (60) days thereafter, or prior to sale
pursuant to such sequestration, attachment or levy,
whichever is earlier;
5. Tenant shall commence any case, proceeding or other
action seeking reorganization, arrangement,
adjustment, liquidation, dissolution or composition
of it or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of
debtors, or seek appointment of a receiver, trustee,
custodian, or other similar official for it or for
all or any substantial part of its property; or
6. Any case, proceeding or other action against Tenant
shall be commenced seeking to have an order for
relief entered against it as debtor, or seeking
reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under
any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, or seeking
appointment of a receiver, trustee, custodian or
other similar official for it or for all or any
substantial part of its property, and such case,
proceeding or other action (i) results in the entry
of an order for relief against it which is not fully
stayed within thirty (30) business days after the
entry thereof or (ii) remains undismissed for a
period of sixty (60) days.
B. Remedies. Upon any Event of Default, Landlord shall have the
following remedies, in addition to all other rights and
remedies provided by law, to which Landlord may resort
cumulatively, or in the alternative:
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1. Recovery of Rent. Landlord shall be entitled to keep
this Lease in full force and effect (whether or not
Tenant shall have abandoned the Premises) and to
enforce all of its rights and remedies under this
Lease, including the right to recover rent and other
sums as they become due, plus interest at the
Permitted Rate (as defined in Paragraph 33 below)
from the due date of each installment of rent or
other sum until paid.
2. Termination. Landlord may terminate this Lease by
giving Tenant written notice of termination. On the
giving of the notice all of Tenant's rights in the
Premises and the Building and Parcel shall terminate.
Upon the giving of the notice of termination, Tenant
shall surrender and vacate the Premises in the
condition required by Paragraph 34, and Landlord may
re-enter and take possession of the Premises and all
the remaining improvements or property and eject
Tenant or any of Tenant's subtenants, assignees or
other person or persons claiming any right under or
through Tenant or eject some and not others or eject
none. This Lease may also be terminated by a judgment
specifically providing for termination. Any
termination under this paragraph shall not release
Tenant from the payment of any sum then due Landlord
or from any claim for damages or rent previously
accrued or then accruing against Tenant. In no event
shall any one or more of the following actions by
Landlord constitute a termination of this Lease:
a. maintenance and preservation of the
Premises;
b. efforts to relet the Premises;
c. appointment of a receiver in order to
protect Landlord's interest hereunder;
d. consent to any subletting of the Premises or
assignment of this Lease by Tenant, whether
pursuant to provisions hereof concerning
subletting and assignment or otherwise; or
e. any other action reasonably taken by
Landlord or Landlord's agents intended to
mitigate the adverse effects from any breach
of this Lease by Tenant.
3. Damages. In the event this Lease is terminated
pursuant to Subparagraph 15.B.2 above, or otherwise,
Landlord shall be entitled to damages in the
following sums:
a. the worth at the time of award of the unpaid
rent which has been earned at the time of
termination; plus
b. the worth at the time of award of the amount
by which the unpaid rent which would have
been earned after termination until the time
of award exceeds the amount of such rental
loss that Tenant proves could have been
reasonably avoided; plus
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c. the worth at the time of award of the amount
by which the unpaid rent for the balance of
the term after the time of award exceeds the
amount of such rental loss that Tenant
proves could be reasonably avoided; and
d. any other amount necessary to compensate
Landlord for all detriment proximately
caused by Tenant's failure to perform
Tenant's obligations under this Lease, or
which in the ordinary course of things would
be likely to result therefrom including,
without limitation, the following: (i)
expenses for cleaning, repairing or
restoring the Premises; ii) costs of
carrying the Premises such as taxes and
insurance premiums thereon, utilities and
security precautions; (iii) expenses in
retaking possession of the Premises; (iv)
reasonable attorneys' fees and court costs;
and (v) any unamortized real estate
brokerage commission paid in connection with
this Lease.
e. The "worth at the time of award" of the
amounts referred to in Subparagraphs (a) and
(b) of this Paragraph, is computed by
allowing interest at the Permitted Rate. The
"worth at the time of award" of the amounts
referred to in Subparagraph (c) of this
Paragraph is computed by discounting such
amount at the discount rate of the Federal
Reserve Board of San Francisco at the time
of award plus one percent (1%). The term
"rent" as used in this Paragraph shall
include all sums required to be paid by
Tenant to Landlord pursuant to the terms of
this Lease.
16. Destruction. In the event that any portion of the Premises are
destroyed or damaged by an uninsured peril, Landlord or Tenant may,
upon written notice to the other, given within thirty (30) days after
the occurrence of such damage or destruction, elect to terminate this
Lease; provided, however, that either party may, within thirty (30)
days after receipt of such notice, elect to make any required repairs
and/or restoration at such party's sole cost and expense, in which
event this Lease shall remain in full force and effect, and the party
having made such election to restore or repair shall thereafter
diligently proceed with such repairs and/or restoration.
In the event the Premises are damaged or destroyed from any insured
peril to the extent of fifty percent (50%) or more of the then
replacement cost of the Premises, Landlord may, upon written notice to
Tenant, given within thirty (30) days after the occurrence of such
damage or destruction, elect to terminate this Lease. If Landlord does
not give such notice in writing within such period, Landlord shall be
deemed to have elected to rebuild or restore the Premises, in which
event Landlord shall, at its expense, promptly rebuild or restore the
Premises to their condition prior to the damage or destruction and
Tenant shall pay to Landlord upon commencement of reconstruction the
amount of any deductible from the insurance policy.
In the event the Premises are damaged or destroyed from any insured
peril to the extent of less than fifty percent (50%) of the then
replacement cost of the Premises, Landlord shall, at Landlord's
expense, promptly rebuild or restore the Premises to their condition
prior to the damage or destruction and Tenant shall pay to Landlord
upon commencement of reconstruction the amount of any deductible from
the insurance policy.
In the event that, pursuant to the foregoing provisions, Landlord is to
rebuild or restore the Premises, Landlord shall, within thirty (30)
days after the occurrence of such damage or
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destruction, provide Tenant with written notice of the estimated time
required for such repair or restoration. If such period is longer than
one hundred eighty (180) days from the date of the event causing such
damage or destruction of the Premises, Tenant may, within thirty (30)
days after receipt of Landlord's notice, elect to terminate the Lease
by giving written notice to Landlord of such election, whereupon the
Lease shall immediately terminate. The period of time for Landlord to
complete the repair or restoration shall be extended for delays caused
by the fault or neglect of Tenant or because of acts of God, labor
disputes, strikes, fires, freight embargoes, rainy or stormy weather,
inability to obtain materials, supplies or fuels, acts of contractors
or subcontractors, or delay of contractors or subcontractors due to
such causes, or other contingencies beyond the control of Landlord.
Landlord's obligation to repair or restore the Premises shall not
include restoration of Tenant's trade fixtures, equipment, merchandise,
or any improvements (including the initial improvements installed
pursuant to Exhibit "C"), alterations or additions made by Tenant to
the Premises.
Unless this Lease is terminated pursuant to the foregoing provisions,
this Lease shall remain in full force and effect; provided, however,
that during any period of repairs or restoration, rent and all other
amounts to be paid by Tenant on account of the Premises and this Lease
shall be abated in proportion to the area of the Premises rendered not
reasonably suitable for the conduct of Tenant's business thereon.
Tenant hereby expressly waives the provisions of Section 1932,
Subdivision 2 and Section 1933, Subdivision 4 of the California Civil
Code.
17. Condemnation.
A. Definition of Terms. For the purposes of this Lease, the term
(1) "Taking" means a taking of the Premises or the Common Area
or damage to the Premises or the Common Area related to the
exercise of the power of eminent domain and includes a
voluntary conveyance, in lieu of court proceedings, to any
agency, authority, public utility, person or corporate entity
empowered to condemn property and who has commenced
proceedings to condemn the Premises or the Common Area; (2)
"Total Taking" means the taking of the entire Premises or the
Common Area or so much of the Premises or the Common Area as
to prevent or substantially impair the use thereof by Tenant
for the uses herein specified; provided, however, in no event
shall a Taking of less than ten percent (10%) of the Premises
or twenty-five percent (25%) of the Common Area be deemed a
Total Taking; (3) "Partial Taking" means the taking of only a
portion of the Premises which does not constitute a Total
Taking; (4) "Date of Taking" means the date upon which the
title to the Premises, or a portion thereof, passes to and
vests in the condemnor or the effective date of any order for
possession if issued prior to the date title vests in the
condemnor; and (5) "Award" means the amount of any award made,
consideration paid, or damages ordered as a result of a
Taking.
B. Rights. The parties agree that in the event of a Taking all
rights between them or in and to an Award shall be as set
forth herein and Tenant shall have no right to any Award
except as set forth herein.
C. Total Taking. In the event of a Total Taking during the term
hereof (1) the rights of Tenant under the Lease and the
leasehold estate of Tenant in and to the Premises shall cease
and terminate as of the Date of Taking; (2) Landlord shall
refund to Tenant any prepaid rent; (3) Tenant shall pay
Landlord any rent or charges due Landlord under the Lease,
each prorated as of the Date of Taking; (4) Tenant shall
receive from Landlord
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those portions of the Award attributable to (a) the
unamortized Excess TI Costs (defined in Exhibit "C"),
amortized on a straight-line basis over a ten-year period, (b)
movable personal property or trade fixtures of Tenant, and (c)
moving expenses of Tenant; and (5) the remainder of the Award
shall be paid to and be the property of Landlord.
D. Partial Taking. In the event of a Partial Taking during the
term hereof (1) the rights of Tenant under the Lease and
leasehold estate of Tenant in and to the portion of the
Premises taken shall cease and terminate as of the Date of
Taking; (2) from and after the Date of Taking the Monthly
Installment of rent shall be an amount equal to the product
obtained by multiplying the Monthly Installment of rent
immediately prior to the Taking by a fraction, the numerator
of which is the number of square feet contained in the
Premises after the Taking and the denominator of which is the
number of square feet contained in the Premises prior to the
Taking; (3) Tenant shall receive from the Award the portions
of the Award attributable to (a) the unamortized Excess TI
Costs allocable on a per-square-foot basis to the portion of
the Premises taken, amortized on a straight-line basis over a
ten-year period, (b) movable personal property or trade
fixtures of Tenant, and (c) removal costs; and (4) the
remainder of the Award shall be paid to and be the property of
Landlord.
18. Mechanics' Lien. Tenant shall (A) pay for all labor and services
performed for, materials used by or furnished to, Tenant or any
contractor employed by Tenant with respect to the Premises; (B)
indemnify, defend, protect and hold Landlord and the Premises harmless
and free from any liens, claims, liabilities, demands, encumbrances, or
judgments created or suffered by reason of any labor or services
performed for, materials used by or furnished to, Tenant or any
contractor employed by Tenant with respect to the Premises; and (C)
permit Landlord to post a notice of nonresponsibility in accordance
with the statutory requirements of California Civil Code Section 3094
or any amendment thereof. In the event Tenant is required to post an
improvement bond with a public agency in connection with the above,
Tenant agrees to include Landlord as an additional obligee.
19. Inspection of the Premises. Tenant shall permit Landlord and its agents
to enter the Premises at any reasonable time for the purpose of
inspecting the same, performing Landlord's maintenance and repair
responsibilities, posting a notice of non-responsibility for
alterations, additions or repairs and at any time within ninety (90)
days prior to expiration of this Lease, to place upon the Premises,
ordinary "For Lease" or "For Sale" signs. Except in the event of an
emergency, Landlord shall give Tenant at least 48 hours prior notice
and enter only during Tenant's normal business hours. Entry shall be
subject to Tenant's reasonable security requirements. Landlord shall
exercise good faith efforts to perform its activities on the Premises
in a manner so as to minimize any disruption, disturbance or
interference with the conduct of Tenant's business to the extent
practicable under the circumstances.
20. Compliance with Laws. Tenant shall, at its own cost, comply with all of
the requirements of all municipal, county, state and federal
authorities now in force, or which may hereafter be in force,
pertaining to the use and occupancy of the Premises by Tenant, and
shall faithfully observe all municipal, county, state and federal law,
statutes or ordinances now in force or which may hereafter be in force
applicable to Tenant's use or occupancy of the Premises. The judgment
of any court of competent jurisdiction or the admission of Tenant in
any action or proceeding against Tenant, whether Landlord be a party
thereto or not, that Tenant has violated any such ordinance or statute
in the use and occupancy of the Premises shall be conclusive of the
fact that such violation by Tenant has occurred.
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21. Subordination. The following provisions shall govern the relationship
of this Lease to any underlying lease, mortgage or deed of trust which
now or hereafter affects the Premises, the Building and/or the Parcel,
or Landlord's interest or estate therein (the "Project") and any
renewal, modification, consolidation, replacement, or extension thereof
(a "Security Instrument").
A. Priority. This Lease is subject and subordinate to Security
Instruments existing as of the Commencement Date. However, if
any Lender so requires, this Lease shall become prior and
superior to any such Security Instrument. Landlord shall use
its reasonable efforts to obtain a non-disturbance agreement
from the existing Lender for the benefit of Tenant; provided
that the obtaining of such agreement shall not be a condition
to the effectiveness of the Lease.
B. Subsequent Security Instruments. At Landlord's election, this
Lease shall become subject and subordinate to any Security
Instrument created after the Commencement Date.
Notwithstanding such subordination, Tenant's rights under this
Lease, including without limitation, its right to quiet
possession of the Premises shall not be disturbed so long as
Tenant is not in default and performs all of its obligations
under this Lease, unless this Lease is otherwise terminated
pursuant to its terms.
C. Documents. Tenant shall execute any document or instrument
required by Landlord or any Lender to make this Lease either
prior or subordinate to a Security Instrument, which may
include such other matters as the Lender customarily requires
in connection with such agreements, including provisions that
the Lender not be liable for (1) the return of the Security
Deposit unless the Lender receives it from Landlord, and (2)
any defaults on the part of Landlord occurring prior to the
time that the Lender takes possession of the Project in
connection with the enforcement of its Security Instrument.
Tenant's failure to execute any such document or instrument
within fifteen (15) days after written demand therefor shall
constitute a default by Tenant.
D. Tenant's Attornment. Tenant shall attorn (1) to any purchaser
of the Premises at any foreclosure sale or private sale
conducted pursuant to any Security Instrument encumbering the
Project; (2) to grantee or transferee designated in any deed
given in lieu of foreclosure; or (3) to the lessor under any
underlying ground lease should such ground lease be
terminated, provided such party, in writing, assumes and
agrees to observe and perform the obligations of Landlord
under this Lease accruing after the date of the applicable
transfer.
E. Lender. The term "Lender" shall mean (1) any beneficiary,
mortgagee, secured party, or other holder of any deed of
trust, mortgage, or other written security device or agreement
affecting the Project; and (2) any lessor under any underlying
lease under which Landlord holds its interest in the Project.
22. Holding Over. This Lease shall terminate without further notice at the
expiration of the Lease Term. Any holding over by Tenant after
expiration shall not constitute a renewal or extension or give Tenant
any rights in or to the Premises except as expressly provided in this
Lease. Any holding over after the expiration without the consent of
Landlord shall be construed to be a tenancy from month to month, at one
hundred twenty-five percent (125%) of the monthly rent for the last
month of the Lease Term, and shall otherwise be on the terms and
conditions herein specified insofar as applicable.
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23. Notices. Any notice required or desired to be given under this Lease
shall be in writing with copies directed as indicated below and shall
be personally served or given by mail. Any notice given by mail shall
be deemed to have been given on the third (3rd) day following the date
on which such notice was deposited in the United States mails,
certified and postage prepaid, addressed to the party to be served with
a copy as indicated herein at the last address given by that party to
the other party under the provisions of this Paragraph. At this date of
execution of this Lease, the address of Landlord is:
511 Division Street
Campbell CA 95008
and the address of Tenant is:
8105 Irvine Center Drive
Irvine, CA 92718
Attention: Manager, Corporate Real Estate
24. Attorneys' Fees. In the event either party shall bring any action or
legal proceeding for damages for any alleged breach of any provision of
this Lease, to recover rent or possession of the Premises, to terminate
this Lease, or to enforce, protect or establish any term or covenant of
this Lease or right or remedy of either party, the prevailing party
shall be entitled to recover as a part of such action or proceeding,
reasonable attorneys' fees and court costs, including attorneys' fees
and costs for appeal, as may be fixed by the court or jury. The term
"prevailing party" shall mean the party who received substantially the
relief requested, whether by settlement, dismissal, summary judgment,
judgment, or otherwise.
25. Nonassignment.
A. Landlord's Consent Required. Except as expressly provided in
this Paragraph 25, Tenant's interest in this Lease is not
assignable, by operation of law or otherwise, nor shall Tenant
have the right to sublet the Premises, transfer any interest
of Tenant therein or permit any use of the Premises by another
party, without the prior written consent of Landlord to such
assignment, subletting, transfer or use, which consent
Landlord agrees not to withhold or delay unreasonably subject
to the provisions of Subparagraph B below. A consent to one
assignment, subletting, occupancy or use by another party
shall not be deemed to be a consent to any subsequent
assignment, subletting, occupancy or use by another party. Any
assignment or subletting without such consent shall be void
and shall, at the option of Landlord, terminate this Lease.
Landlord's waiver or consent to any assignment or subletting
hereunder shall not relieve Tenant from any obligation under
this Lease unless the consent shall so provide.
B. Transferee Information Required. If Tenant desires to assign
its interest in this Lease or sublet the Premises, or transfer
any interest of Tenant therein, or permit the use of the
Premises by another party (hereinafter collectively referred
to as a "Transfer"), Tenant shall give Landlord at least ten
(10) days prior written notice of the proposed Transfer and of
the terms of such proposed Transfer, including, but not
limited to, the name and legal composition of the proposed
transferee, a financial statement of the proposed transferee,
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the nature of the proposed transferee's business to be carried
on in the Premises, the payment to be made or other
consideration to be given to Tenant on account of the
Transfer, and such other pertinent information as may be
requested by Landlord, all in sufficient detail to enable
Landlord to evaluate the proposed Transfer and the prospective
transferee. Landlord shall keep and maintain such information
in strict confidence and shall not disclose the same to any
person or entity (other than to Landlord's lender, general
partners, attorneys and employees who have a need to know such
information and who agree in writing to comply with this
confidentiality obligation) without Tenant's express written
consent. In the event Tenant seeks to Transfer its interest in
this Lease or the Premises, Landlord shall have the following
options, which may be exercised at its sole choice without
limiting Landlord in the exercise of any other right or remedy
which Landlord may have by reason of such proposed Transfer:
(1) If Tenant proposes to assign this Lease or sublet
more than seventy-five percent (75%) of the total
rentable square footage of the Premises for a term
exceeding two years (or, if less, for the balance of
the Term), then Landlord may elect to terminate this
Lease effective as of the proposed effective date of
the proposed Transfer and release Tenant from any
further liability hereunder accruing after such
termination date by giving Tenant written notice of
such termination within ten (10) days after receipt
by Landlord of Tenant's notice of intent to transfer
as provided above. If Landlord makes such election to
terminate this Lease, Tenant shall surrender the
Premises, in accordance with Paragraph 34, on or
before the effective termination date, however, this
Lease shall not terminate if, within five (5) days
after receiving Landlord's notice electing to
terminate this Lease, Tenant notifies Landlord in
writing that Tenant has withdrawn its assignment or
sublet proposal; or
(2) Landlord may consent to the proposed Transfer on the
condition that Tenant agrees to pay to Landlord, as
additional rent, fifty percent (50%) of all rents or
other consideration (including key money) received by
Tenant from the transferee by reason of such Transfer
in excess of the rent payable by Tenant to Landlord
under this Lease (prorated in the event of a
subletting of less than the entire Premises) (less
any brokerage commissions, advertising expenses, or
tenant improvement costs or other concessions paid or
incurred by Tenant in connection with the Transfer).
Tenant expressly agrees that the foregoing is a
reasonable condition for obtaining Landlord's consent
to any Transfer; or
(3) Landlord may reasonably withhold its consent to the
proposed Transfer.
Notwithstanding anything to the contrary contained herein, the
provisions of this Paragraph 25 shall not apply to any
transfer (a) to any affiliate of Tenant, (b) any entity who
acquires all or substantially all of the assets of Tenant, by
merger or otherwise, or (c) to independent contractors under
contract to provide services to or for the benefit if Tenant,
including, without limitation, vending machine companies, food
service providers, and consultants.
26. Successors. The covenants and agreements contained in this Lease shall
be binding on the parties hereto and on their respective heirs,
successors and assigns (to the extent the Lease is assignable).
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27. Mortgagee Protection. In the event of any default on the part of
Landlord, Tenant will give notice by registered or certified mail to
any beneficiary of a deed of trust or mortgagee of a mortgage
encumbering the Premises, whose address shall have been furnished to
Tenant, and shall offer such beneficiary or mortgagee a reasonable
opportunity to cure the default, including reasonable time to obtain
possession of the Premises by power of sale or judicial foreclosure, if
such should prove necessary to effect a cure.
28. Landlord Loan or Sale. Tenant agrees promptly following request by
Landlord to (A) execute and deliver to Landlord estoppel certificates
presented to Tenant by Landlord, (i) certifying that this Lease is
unmodified and in full force and effect or specifying any modifications
and the date to which the rent and other charges are paid in advance,
if any, and (ii) acknowledging that there are not, to Tenant's
knowledge, any uncured defaults on the part of Landlord hereunder or
specifying the nature of any such defaults, and (iii) evidencing the
status of the Lease as may be required either by a lender making a loan
to Landlord to be secured by a deed of trust or mortgage covering the
Premises or a purchaser of the Premises from Landlord and (B) to
deliver to Landlord the publicly available (as to the original Tenant
hereunder) financial statement of Tenant with an opinion of a certified
public accountant, if available, including a balance sheet and profit
and loss statement, for the last completed fiscal year all prepared in
accordance with generally accepted accounting principles consistently
applied. Tenant's failure to deliver an estoppel certificate promptly
following such request shall be an Event of Default under this Lease.
29. Surrender of Lease Not Merger. The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation thereof, shall not work a
merger and shall, at the option of Landlord, terminate all or any
existing subleases or subtenants, or operate as an assignment to
Landlord of any or all such subleases or subtenants.
30. Waiver. The waiver by Landlord or Tenant of any breach of any term,
covenant or condition herein contained shall not be deemed to be a
waiver of any preceding or succeeding breach of the same or any other
covenant or condition herein contained.
31. General.
A. Captions. The captions and paragraph headings used in this
Lease are for the purposes of convenience only. They shall not
be construed to limit or extend the meaning of any part of
this Lease, or be used to interpret specific sections. The
word (s) enclosed in quotation marks shall be construed as
defined terms for purposes of this Lease. As used in this
Lease, the masculine, feminine and neuter and the singular or
plural number shall each be deemed to include the other
whenever the context so requires.
B. Definition of Landlord. The term "Landlord" as used in this
Lease, so far as the covenants or obligations on the part of
Landlord are concerned, shall be limited to mean and include
only the owner at the time in question of the fee title of the
Premises, and in the event of any transfer or transfers of the
title of such fee, the Landlord herein named (and in case of
any subsequent transfers or conveyances, the then grantor)
shall after the date of such transfer or conveyance be
automatically freed and relieved of all liability with respect
to performance of any covenants or obligations on the part of
Landlord contained in this Lease, thereafter to be performed;
provided that any funds in the hands of Landlord or the then
grantor at the time of such transfer, in which Tenant has an
interest, shall be turned over to the grantee. It is intended
that the covenants and obligations contained in this
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Lease on the part of Landlord shall, subject as aforesaid, be
binding upon each Landlord, its heirs, personal
representatives, successors and assigns only during its
respective period of ownership.
C. Time of Essence. Time is of the essence for the performance of
each term, covenant and condition of this Lease in which the
time for performance is specified.
D. Severability. In case any one or more of the provisions
contained herein, except for the payment of rent, shall for
any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Lease, but this
Lease shall be construed as if such invalid, illegal or
unenforceable provision had not been contained herein. This
Lease shall be construed and enforced in accordance with the
laws of the State of California.
E. Joint and Several Liability. If Tenant is more than one person
or entity, each such person or entity shall be jointly and
severally liable for the obligations of Tenant hereunder.
F. Law. The term "law" shall mean any judicial decision, statute,
constitution, ordinance, resolution, regulation, rule,
administrative order, or other published and available
requirement of any government agency or authority having
jurisdiction over the parties to this Lease or the Premises or
both, in effect at the Commencement Date of this Lease or any
time during the Lease Term, including, without limitation, any
regulation, order, or policy of any quasi-official entity or
body (e.g., board of fire examiners, public utility or special
district).
G. Agent. As used herein the term "Agent" shall mean, with
respect to either Landlord or Tenant, its respective agents,
employees, contractors (and their subcontractors), and
invitees (and in the case of Tenant, its subtenants).
H. WAIVER OF JURY TRIAL. LANDLORD AND TENANT HEREBY WAIVE THEIR
RESPECTIVE RIGHT TO TRIAL BY JURY OF ANY CAUSE OF ACTION,
CLAIM COUNTERCLAIM OR CROSS-COMPLAINT IN ANY ACTION,
PROCEEDING, AND/OR HEARING BROUGHT BY EITHER LANDLORD AGAINST
TENANT OR TENANT AGAINST LANDLORD ON ANY MATTER WHATSOEVER
ARISING OUT OF, OR AN ANY WAY CONNECTED WITH, THIS LEASE, THE
RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY
OF THE PREMISES OR ANY CLAIM OF INJURY OR DAMAGE, OR THE
ENFORCEMENT OF ANY REMEDY UNDER ANY LAW, STATUTE, OR
REGULATION, EMERGENCY OR OTHERWISE, NOW OR HEREAFTER IN
EFFECT.
INITIALS: LANDLORD [ILLEGIBLE]
--------------
TENANT [ILLEGIBLE]
----------------
32. Sign. Subject to all necessary governmental approvals, Tenant shall
have the right to place identifying signs on the exterior of the
Building and on a sign monument at the entrance to the Project. The
location and size of such sign shall be subject to Landlord's approval,
which shall not be unreasonably withheld or delayed. Tenant may place
additional signs or decorations on the
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exterior of the Building or on the Parcel with the prior written
consent of Landlord, which consent will not be unreasonably withheld or
delayed.
33. Interest on Past Due Obligations. Any Monthly Installment of rent or
any other sum due from Tenant under this Lease which is received by
Landlord after the date the same is due shall bear interest from said
due date until paid, at an annual rate equal to the lesser of (the
"Permitted Rate"): (1) twelve percent (12%); or (2) five percent (5%)
plus the rate established by the Federal Reserve Bank of San Francisco,
as of the twenty-fifth (25th) day of the month immediately preceding
the due date, on advances to member banks under Section 13 and 13 (a)
of the Federal Reserve Act, as now in effect or hereafter from time to
time amended. Payment of such interest shall not excuse or cure any
default by Tenant. In addition, Tenant shall pay all reasonable costs
and attorneys' fees incurred by Landlord in collection of such amounts.
34. Surrender of the Premises. On the last day of the term hereof, or on
the sooner termination of this Lease, Tenant shall surrender the
Premises and the Building A Exclusive Areas to Landlord in their
condition existing as of the Commencement Date of this Lease, ordinary
wear and tear and damage from casualty or condemnation excepted (unless
caused by the negligence or willful misconduct of Tenant or Tenant's
agents, employees or contractors), with all interior walls cleaned, and
repaired or replaced, all carpets shampooed and cleaned, the air
conditioning and heating equipment serviced and repaired by a reputable
and licensed service firm, all floors cleaned and waxed, all to the
reasonable satisfaction of Landlord. Tenant shall remove all of
Tenant's personal property and trade fixtures from the Premises, and
all property not so removed shall be deemed abandoned by Tenant.
Tenant, at its sole cost, shall repair any damage to the Premises and
the Building A Exclusive Areas caused by the removal of Tenant's
personal property, machinery and equipment, which repair shall include,
without limitation, the patching and filling of holes and repair of
structural damage. If the Premises and the Building A Exclusive Areas
are not so surrendered at the termination of this Lease, Tenant shall
indemnify, defend, protect and hold Landlord harmless from and against
loss or liability resulting from delay by Tenant in so surrendering the
Premises and the Building A Exclusive Areas including without
limitation, any claims made by any succeeding tenant or losses to
Landlord due to lost opportunities to lease to succeeding tenants.
35. Authority. The undersigned parties hereby warrant that they have proper
authority and are empowered to execute this Lease on behalf of Landlord
and Tenant, respectively.
36. Public Record. This Lease is made subject to all matters of public
record affecting title to the property of which the Premises are a
part. Tenant shall abide by and comply with all matters of public
record now or hereafter affecting the Premises and any amendment
thereof. The preceding notwithstanding, Tenant shall not be responsible
for correcting any violations existing as of the date possession of the
Premises is delivered to Tenant of the provisions of any document which
is of public record and affecting the Premises or the Parcel.
37. Brokers. Tenant represents and warrants to Landlord that it has dealt
solely with CB Commercial with respect to this transaction and hereby
agrees to indemnify and hold Landlord harmless from and against any
brokerage commission or fee, obligation, claim or damage (including
attorneys' fees) paid or incurred respecting any other broker claiming
through Tenant or with which/whom Tenant has dealt. It is acknowledged
that one or more of Landlord's partners may be real estate brokers.
Landlord shall pay and be solely responsible for all commissions due CB
Commercial pursuant to a separate written agreement between Landlord
and CB Commercial and any other persons or entities representing or
claiming under or through Landlord in connection with this
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transaction. Landlord hereby indemnifies and agrees to defend and hold
harmless Tenant from and against all claims, demands, liabilities,
damages and expenses (including, without limitation, attorneys' fees
and costs) from all such persons or entities.
38. Limitation on Landlord's Liability. Tenant, for itself and its
successors and assigns (to the extent this Lease is assignable), hereby
agrees that in the event of any actual, or alleged, breach or default
by Landlord under this Lease that:
(A) Tenant's sole and exclusive remedy against Landlord shall be
as against the assets owned by Landlord (including, without
limitation, Landlord's interest in the Building and Parcel,
and any insurance proceeds available to Landlord), but not
against the individual assets of Landlord's partners;
B) No partner or officer of any partner of Landlord shall be sued
or named as a party in a suit or action (except as may be
necessary to secure jurisdiction of the partnership);
C) No service of process shall be made against any partner of
Landlord (except as may be necessary to secure jurisdiction of
the partnership);
D) No partner of Landlord shall be required to answer or
otherwise plead to any service of process;
E) No judgment will be taken against any partner of Landlord;
F) Any judgment taken against any partner of Landlord maybe
vacated and set aside at any time nunc pro tunc;
G) No writ of execution will ever be levied against the assets of
any partner of Landlord;
H) The covenants and agreements of Tenant set forth in this
Section 38 shall be enforceable by Landlord and any partner of
Landlord.
39. Hazardous Material.
A. Definitions. As used herein, the term "Hazardous Material"
shall mean any substance: (i) the presence of which requires
investigation or remediation under any federal, state or local
statutes, regulation, ordinance, order, action, policy or
common law; (ii) which is or becomes defined "hazardous
waste," "hazardous substance," pollutant or contaminant under
any federal, state or local statute, regulation, rule or
ordinance or amendments thereto including, without limitation,
the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601 et seq.) and/or the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901
et seq.); (iii) which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic,
or otherwise hazardous and is or becomes regulated by any
governmental authority, agency, department, commission, board,
agency, or instrumentality of the United States, the State of
California or any political subdivision thereof; (iv) the
presence of which on the Premises poses or threatens to pose a
hazard to the health or safety of persons on or about the
Premises; (v) without limitation which contains gasoline,
diesel fuel, or other petroleum
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hydrocarbons; (vi) without limitation which contains
polychlorinated biphenyls (PCBs), asbestos or urea
formaldehyde foam insulation; or (vii) without limitation
radon gas.
B. Landlord's Indemnity. Landlord shall indemnify, defend,
protect and hold Tenant harmless from and against all
liabilities, claims, penalties, fines, response costs and
other expenses (including, but limited to, reasonable
attorneys' fees and consultants' fees and costs) arising out
of, resulting from, or caused by any Hazardous Material used,
generated, discharged, transported to or from, stored or
disposed of by Landlord or its Agents in, on, under, over,
through or about the Premises and/or the surrounding real
property. Landlord further agrees not to hold Tenant
responsible for the cleanup or remediation of any Hazardous
Materials that exist, if any, in, on or under the Parcel or
the Premises as of the date possession of the Premises is
delivered to Tenant (unless the same was generated or caused
to be present by Tenant or its agents, employees or
contractors). Nothing stated herein (including, without
limitation, the terms of the immediately preceding sentence)
shall be interpreted or construed as creating an obligation on
Landlord to indemnify or defend Tenant against liabilities,
claims, penalties, fines, response costs and other expenses
(including, without limitation, attorneys' fees and
consultants' fees and costs) arising out of, resulting from,
or caused by any Hazardous Materials used, generated,
discharged, transported to or from, stored or disposed of by a
person or entity other than Landlord or its Agents.
C. Permitted Use. Subject to the compliance by Tenant with the
provisions of Subparagraphs D, E, F, G, I, J and K below,
Tenant shall be permitted to use and store on the Premises
those Hazardous Materials listed in Exhibit "D" attached
hereto in the quantities attached set forth in Exhibit "D" and
such additional Hazardous Materials as are reasonably required
or necessary in connection with Tenant's business. Unless such
new Hazardous Materials are described in a HMMP (as described
below) furnished to Landlord, promptly following Tenant's use
of any Hazardous Materials that are not described on Exhibit
"D" attached hereto, Tenant shall notify Landlord in writing
of the name of the new Hazardous Materials being used by
Tenant and the estimated quantities of such Hazardous
Materials being used.
D. Hazardous Materials Management Plan. Prior to Tenant using,
handling, transporting or storing any Hazardous Material at or
about the Premises (including, without limitation, those
listed in Exhibit "D"). Tenant shall submit to Landlord a
Hazardous Materials Management Plan ("HMMP") for Landlord's
review and approval, which approval shall not be unreasonably
withheld. The HMMP shall describe: (i) the approximate
quantities of each material to be used, (ii) the purpose for
which each material is to be used (subject to Tenant's
requirements for maintaining the confidentiality of its trade
secrets), (iii) the method of storage of each material, (iv)
the method of transporting each material to and from the
Premises and within the Premises, (v) the methods Tenant will
employ to monitor the use of the material and to detect any
leaks or potential hazards, and (vi) any other information any
department of any governmental entity (city, state or federal)
requires prior to the issuance of any required permit for the
Premises or during Tenant's occupancy of the Premises.
Landlord may, but shall have no obligation to review and
approve the foregoing information and HMMP, and such review
and approval or failure to review and approve shall not act as
an estoppel or otherwise waive Landlord's rights under this
Lease or relieve Tenant of its obligations under this lease.
If Landlord determines in good faith by inspection of the
Premises or review of the HMMP that the methods in use or
described
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by Tenant are not adequate in Landlord's good faith judgment
to prevent or eliminate the existence of environmental
hazards, then Tenant shall not use, handle, transport, or
store such Hazardous Materials at or about the Premises unless
and until such methods are approved by an environmental
consultant reasonably approved by Landlord and Tenant and
added to an approved HMMP. Tenant shall strictly comply with
the HMMP and shall not change its use, operations or
procedures with respect to Hazardous Materials without
submitting an amended HMMP for Landlord's review and approval
as provided above.
E. Use Restriction. Except as specifically allowed in
Subparagraph C above, Tenant shall not cause or permit any
Hazardous Material to be used, stored, generated, discharged,
transported to or from, or disposed of in or about the
Premises, or any other land or improvements in the vicinity of
the Premises. Without limiting the generality of the
foregoing, Tenant, at its sole cost, shall comply with all
Laws relating to the storage, use, generation, transport,
discharge and disposal by Tenant or its Agents of any
Hazardous Material. If the presence of any Hazardous Material
on the Premises caused or permitted by Tenant or its Agents
results in contamination of the Premises or any soil, air,
ground or surface waters under, through, over, on, in or about
the Premises, Tenant, at its expense, shall promptly take all
actions necessary to return the Premises and/or the
surrounding real property to the condition required by
applicable governmental authorities or agencies. The
obligation of Tenant to return the Premises and/or surrounding
property to the condition required by applicable governmental
authorities or agencies shall not limit, reduce or alter in
any manner Tenant's indemnity obligation under Subparagraph F
below; it being understood and agreed by Tenant that, although
hypothetically the applicable governmental agencies may allow
Tenant to keep on the Premises, or encapsulate thereunder,
certain traces of a Hazardous Material(s) and not remove all
of it from the Premises, if Tenant suffers any damages,
liabilities or losses as a result of such Hazardous Materials
remaining on the Premises or the Parcel or migrating onto
another property (including, without limitation, diminution in
the fair market value of the Premises or Parcel, diminution in
the fair rental value of the Premises or Parcel, inability to
finance or refinance the Premises or Parcel or inability to
lease or sell the Premises or Parcel), Tenant shall be liable
for such damages, liabilities or losses under the terms of
Subparagraph F below.
F. Tenant Indemnity. Tenant shall defend, protect, hold harmless
and indemnify Landlord and its Agents and Lenders with respect
to all actions, claims, losses (including, diminution in value
of the Premises), fines, penalties, fees, (including, but not
limited to, reasonable attorneys' and consultants' fees and
costs) costs, damages, liabilities, remediation costs,
investigation costs, response costs and other expenses arising
out of, resulting from, or caused by any Hazardous Material
used, generated discharged, transported to or from, stored, or
disposed of by Tenant or its Agents in, on, under, over,
through or about the Premises and/or the surrounding real
property. Tenant shall not suffer any lien to be recorded
against the Premises as a consequence for the disposal of any
Hazardous Material on the Premises by Tenant or its Agents,
including any so called state, federal or local "super fund"
lien related to the "clean up" of any Hazardous Material in,
over, on, under through, or about the Premises.
G. Compliance. Tenant shall immediately notify Landlord of any
governmentally required test, investigation, or enforcement
proceeding against Tenant or the Premises concerning any
Hazardous Material in, on, under or about the Premises or
allegedly used in, on, under
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or about the Premises. Any remediation plan prepared by or on
behalf of Tenant must be submitted to Landlord prior to
conducting any work pursuant to such plan and prior to
submittal to any applicable government authority and shall be
subject to Landlord's consent. Tenant acknowledges that
Landlord, as the owner of the Parcel and Buildings located
thereon, at its election, shall have the sole right to
negotiate, defend, approve and appeal any action taken or
order issued with regard to any Hazardous Material by any
applicable governmental authority. The preceding sentence
notwithstanding, Landlord agrees that if governmental
enforcement action is taken against Landlord with respect to
any Hazardous Materials discharged or released or caused to be
present on, in or under the Parcel or Building B, then
Landlord shall promptly notify Tenant of such enforcement
action and Tenant shall be entitled to participate in any
negotiations with the applicable governmental agency
concerning the clean up, remediation or monitoring of such
Hazardous Materials. Nothing stated herein shall preclude
Landlord from settling or compromising any claims or actions
initiated against it or from entering into any monitoring or
remediation plan for which Tenant has an obligation of
indemnity hereunder.
H. Assignment and Subletting. It shall not be unreasonable for
Landlord to withhold its consent to any proposed assignment or
subletting if the proposed assignee or subtenant has been
required by any prior landlord, lender, or governmental
authority to "clean up" or remediate any Hazardous Material
and has failed to promptly do so; provided that the foregoing
will not apply in the case of a Fortune 1,000 Company.
Landlord shall not unreasonably withhold its consent to any
proposed assignment or subletting if (i) the proposed
assignee's or subtenant's anticipated use of the Premises
involves the storage, generation, discharge, transport, use or
disposal of any Hazardous Material not permitted under
Subparagraph C above; or (ii) if the proposed assignee or
subtenant is subject to investigation or enforcement order or
proceeding by any governmental authority in connection with
the use, generation, discharge, transport, disposal or storage
of any material amount of Hazardous Material.
I. Surrender. Upon the expiration or earlier termination of the
Lease, Tenant, at its sole cost, shall remove all Hazardous
Materials from the Premises that Tenant or its Agents
introduced to the Premises. If Tenant fails to so surrender
the Premises, Tenant shall indemnify, protect, defend and hold
Landlord harmless from and against all damages resulting from
Tenant's failure to surrender the Premises as required by this
Paragraph, including, without limitation, any actions, claims,
losses, liabilities, fees (including, but not limited to,
reasonable attorneys' fees and consultants' fees and costs),
fines, costs, penalties, or damages in connection with the
presence of such Hazardous Materials at the Premises
including, without limitation, damages occasioned by the
inability to relet the Premises or a reduction in the fair
market and/or rental value of the Premises by reason of the
existence of any Hazardous Materials in, on, over, under,
through or around the Premises introduced by Tenant.
J. Right to Appoint Consultant. Landlord shall have the right to
appoint a consultant, reasonably acceptable to Tenant, to
conduct an investigation to determine whether any Hazardous
Material is being used, generated, discharged, transported to
or from, stored or disposed of in, on, over, through, or about
the Premises, in an appropriate and lawful manner. If Tenant
has violated any Law or covenant in this Lease regarding the
use, storage or disposal of Hazardous Materials on or about
the Premises, Tenant shall reimburse Landlord for the
reasonable cost of such investigations applicable to the
-31-
discovery of Tenant's violation and future investigations of
the environmental condition of the Parcel reasonably
undertaken by or on behalf of Landlord to confirm the
violation has been cured. Tenant, at its expense, shall comply
with all reasonable recommendations of the consultant required
to conform Tenant's use, storage or disposal of Hazardous
Materials to the requirements of applicable Law or to fulfill
the obligations of Tenant hereunder.
K. Holding Over. If any action of any kind is required to be
taken by any governmental authority to clean-up, remove,
remediate or monitor Hazardous Material (the presence of which
is the result of the acts or omissions of Tenant or its
Agents) and such action is not completed prior to the
expiration or earlier termination of the Lease, Tenant shall
be deemed to have impermissibly held over until such time as
such required action is completed, and Landlord shall be
entitled, subject to Landlord's obligation to attempt to
reasonably mitigate its damages, to all damages directly or
indirectly incurred in connection with such holding over,
including without limitation, damages occasioned by the
inability to re-let the Premises or a reduction of the fair
market and/or rental value of the Premises.
L. Existing Environmental Reports. Tenant hereby acknowledges
that it has received, read and reviewed the reports and test
results described in Exhibit "E" attached hereto and made a
part hereof (the "Existing Environmental Reports").
M. Provisions Survive Termination. The provisions of this
Paragraph 39 shall survive the expiration or termination of
this Lease.
N. Controlling Provisions. The provisions of this Paragraph 39
are intended to govern the rights and liabilities of the
Landlord and Tenant hereunder respecting Hazardous Materials
to the exclusion of any other provisions in this Lease that
might otherwise be deemed applicable. The provisions of this
Paragraph 39 shall be controlling with respect to any
provisions in this Lease that are inconsistent with this
Paragraph 39.
40. First Opportunity to Lease.
A. Definitions. As used in this Paragraph 40, the following terms
shall have the following meanings:
(1) "First Opportunity Space" shall mean that certain
154,080 space commonly known as "Building B" and the Building
B Exclusive Areas.
(2) "Xerox Lease" shall mean the existing lease, as the
same has been amended, between Landlord and Xerox Corporation,
a New York corporation ("Xerox") covering the First
Opportunity Space.
B. First Opportunity to Lease. Provided that (i) Tenant is not in
default under this Lease; (ii) this Lease is in full force and
effect; and, iii) Tenant has not assigned this Lease and is in
physical occupancy of at least fifty percent (50%) of the area
of the Premises (excluding transfers not requiring Landlord's
consent hereunder); then, and only then, Tenant shall have the
right to lease the First Opportunity Space, as the First
Opportunity Space becomes available upon the
-32-
expiration or sooner termination of the Xerox Lease subject,
however, to the following terms and conditions.
C. Landlord's Notice. If Landlord proposes to lease the First
Opportunity Space to a prospective tenant after the expiration
or sooner termination of Xerox Lease and all conditions set
forth in Subparagraph B above are satisfied, then Landlord
shall notify Tenant in writing ("Landlord's Notice") of the
following basic business terms upon which Landlord is willing
to lease such space (collectively referred to herein as the
"Basic Business Terms"): (i) the description of the particular
First Opportunity Space then available (the "Proposed Space");
(ii) the term of the lease; (iii) the tenant improvements
Landlord is willing to construct or that it will require to be
constructed and the contribution Landlord is willing to make
to pay for such tenant improvements, if any; (iv) the rent for
the initial term or the formula to be used to determine such
rent (including, if applicable the rental commencement date,
Tenant's share of taxes, assessments, operating expenses,
insurance costs and the like); (v) any option or options to
extend (including the rent to be charged or the formula for
such charges during the extension periods); and (vi) any other
material business term Landlord elects to specify.
D. Second Lease. If, within five (5) business days after receipt
of Landlord's Notice, Tenant delivers to Landlord in writing
Tenant's agreement to lease the Proposed Space on the Basic
Business Terms stated in Landlord's Notice, and within five
(5) business days after Tenant's receipt of a written lease in
substantially the same form as this Lease with the Basic
Business Terms incorporated therein (the "Second Lease"),
Tenant executes and returns to Landlord the Second Lease,
Landlord shall lease to Tenant and Tenant shall lease from
Landlord the Proposed Space on the terms and conditions
contained in the Second Lease, provided, however, that this
Lease shall be modified to include, and the Second Lease shall
include, a cross-default provision providing that Tenant will
be in default under both the Second Lease and this Lease, if
Tenant is in default under either Lease.
E. Failure to Exercise. If Tenant does not indicate in writing
its agreement to lease the Proposed Space on the terms
contained in Landlord's Notice within the five (5) business
day time period, or if Tenant does not execute and return to
Landlord the Second Lease within five (5) business days after
Tenant's receipt thereof, then Landlord shall thereafter have
the unfettered right to lease the Proposed Space to any third
party on terms and conditions not substantially more favorable
to the tenant than those set forth in the Basic Business
Terms. For purposes of this subparagraph E., the term
"substantially more favorable" shall mean a rental rate of
less than ninety-five percent (95%) of the rental rate offered
to Tenant in the Basic Business Terms and/or a deviation of
more than five percent (5%) in the overall economics of the
offer described in the Basic Business Terms. If Landlord
proposes to lease the Proposed Space on substantially more
favorable terms that those submitted to Tenant, then Landlord
must resubmit the modified terms to Tenant, and Tenant shall
have the right to accept or reject such modified terms, in
accordance with subparagraphs C. and D. above.
F. Termination. The provisions of this Paragraph shall terminate
upon (i) the expiration of earlier termination of this Lease;
or (ii) any assignment by Tenant of its interest in this Lease
or the subletting by Tenant of substantially all of the
Premises for substantially all of the remainder of the Lease
Term (except for any Transfer not requiring Landlord's consent
under this Lease). Tenant's failure to exercise its right to
lease granted herein as to any particular Proposed Space shall
not terminate Tenant's right to lease any subsequently
available Proposed Space.
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41. Effectiveness of Lease. The effectiveness of this Lease is expressly
conditioned upon (i) the execution by Landlord and Xerox of an
amendment to the Xerox Lease, which amendment shall be in form and
substance acceptable to Landlord in Landlord's sole discretion and
will, among other things, reduce the size of the premises leased by
Xerox under the Xerox Lease by terminating the Xerox Lease with respect
to the Premises leased to Tenant herein, and (ii) the granting of
written consent by The Sumitomo Bank Limited ("Sumitomo") to the
above-described amendment of the Xerox Lease and to this Lease. If
either of the aforementioned conditions are not satisfied on or before
June 15, 1996, this Lease shall automatically terminate and shall be of
no further force or effect. Upon satisfaction of both of the
aforementioned conditions by June 15 1996, this Lease shall not
terminate pursuant to this Paragraph 42, and shall be binding on and
enforceable against Landlord and Tenant. Landlord shall notify Tenant
in writing promptly upon satisfaction of both conditions.
IN WITNESS WHEREOF, the parties have executed this Agreement on the dates set
forth below.
LANDLORD: TENANT:
SOUTH BAY/EDENVALE ASSOCIATES, WESTERN DIGITAL CORPORATION,
a California general partnership a Delaware corporation
By: M & ASSOCIATES, a California By: /s/ Richard M. Salvi
general partnership ----------------------------
By: /s/ James D. Mair Printed: Richard M. Salvi
-----------------------------
Title: Vice President
Printed: James D. Mair
Dated: 6/4/96
Title: General Partner
Dated: 6/11/96
-34-
EXHIBIT "A"
BUILDING SITE PLAN
[To Be Attached]
-1-
EXHIBIT A
All that certain real property situate in the City of San Jose, County of Santa
Clara, State of California, described as follows:
Parcels 2 and 3, as shown on the Parcel Map filed for record in the Office of
the Recorder of the County of Santa Clara, State of California on September 26,
1991 in Book 630 of Maps, Pages 39 and 40.
EXHIBIT "B"
All that certain real property situated in the City of San Jose, County of Santa
Clara, State of California, described as follows:
Parcel 1, as shown on the Parcel Map filed for record in the Office of the
Recorder of the County of Santa Clara, State of California on September 26, 1991
in Book 630 of Maps, Pages 39 and 40.
-1-
EXHIBIT "C"
IMPROVEMENT AGREEMENT
This Improvement Agreement is made part of that Lease dated June 3,
1996 (the "Lease") by and between SOUTH BAY/EDENVALE ASSOCIATES, a California
general partnership ("Landlord") and WESTERN DIGITAL CORPORATION, a Delaware
corporation ("Tenant"). Landlord and Tenant agree that the following terms are
part of the Lease:
1. Purpose of Improvement Agreement. The purpose of the
Improvement Agreement is to set forth the rights and obligations of Landlord and
Tenant with respect to the construction of the Tenant Improvements in the
Premises.
2. Definitions. As used in this Improvement Agreement, the
following terms shall have the following meanings, and initially capitalized
terms which are not defined below, but which are defined in the Lease and which
are used in this Improvement Agreement, shall have the meanings ascribed to them
in the Lease:
(a) Final Tenant Improvement Plans. The term "Final
Tenant Improvement Plans" shall mean those plans and specifications for the
Tenant Improvements to be constructed by Tenant which are to be prepared by
Tenant and approved by Landlord pursuant to Paragraph 3 below.
(b) Tenant Improvements. The term "Tenant Improvements"
shall mean the tenant improvements to be constructed by Tenant in accordance
with the Final Tenant Improvement Plans.
(c) TI Costs. The terms "TI Costs" shall mean and include
all costs and expenses incurred by Tenant for any or all of the following:
architectural and engineering fees and costs, all building permits fees and
taxes and other governmental fees and taxes required for the construction and
occupancy of the Tenant Improvements. all of Tenant's contractors' and
subcontractors' prices and fees for constructing the Tenant Improvements,
including the cost of all partitions, utility systems, fire sprinkler systems,
heating, ventilating and air conditioning systems and equipment, roof screens,
electrical distribution facilities, wiring, lighting, ceilings, installations of
fixtures and equipment, restrooms, carpeting, and all other improvements and
alterations required to prepare the Building for occupancy by Tenant in
accordance with the Final Tenant Improvement Plans. However, "TI Costs" shall
not include any costs and expenses incurred (a) to remove any cabling left in
the Premises by the prior tenant of the Building, (b) to repair any water leaks
at the joints between the window frame and the exterior walls of the Building,
(c) to repair the roof of the Building so that it is water tight, or (d) to
repair the HVAC system in the Premises so that it is in good condition and
repair; it being understood and agreed that Landlord shall perform such work, at
no cost to Tenant, as provided in Paragraph 14 of the Lease.
(d) Maximum TI Allowance. The term "Maximum TI Allowance"
shall mean a sum equal to Six Hundred Sixty-five Thousand Five Hundred Fifty
Dollars ($665,550).
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(e) Excess TI Costs. The term "Excess TI Costs" shall
mean all TI Costs in excess of the Maximum TI Allowance.
3. Design of Tenant Improvements.
(a) Preliminary Tenant Improvement Plans. Tenant shall,
on or before 6/15/96, prepare and deliver to Landlord for its review and
approval preliminary plans for the Tenant Improvements, which preliminary plans
shall show Tenant's desired floor plan, layout, electrical requirements, HVAC
requirements and general requirements ins sufficient detail in order to permit
Tenant's architect to prepare working drawings for the Tenant Improvements (the
"Preliminary Tenant Improvement Plans"). Within five (5) business days after
receipt of the Preliminary Tenant Improvement Plans, Landlord shall either
approve such plans or notify Tenant in writing of any request for changes to the
Preliminary Tenant Improvement Plans. If Landlord submits any request for
changes, the parties shall meet and confer to develop Preliminary Tenant
Improvement Plans that are acceptable to both Landlord and Tenant within five
(5) business days after Landlord has notified Tenant of its request for changes.
At the time Tenant submits its Preliminary Tenant Improvement Plans to
Landlord, Tenant shall inquire of Landlord in writing whether Landlord will
require any of the proposed Tenant Improvements to be removed or surrendered at
the expiration (or earlier termination) of the Lease Term. Landlord shall have
ten (10) days following receipt of Tenant's written inquiry to respond to the
same. In the absence of any such written inquiry by Tenant, Landlord shall give
Tenant written notice, not less than ninety (90) days prior to the expiration of
the Lease Term, of any of the Tenant Improvements Landlord requires to be
removed. Failure of Landlord to respond timely to Tenant's inquiry or to
otherwise give timely notice of the Tenant Improvements, if any, Landlord
requires to be removed at the expiration (or earlier termination) of the Lease
Term, shall constitute Landlord's consent to the surrender of such Tenant
Improvements with the Premises. Unless Landlord requires that Tenant remove any
such Tenant Improvements, the same shall, once constructed or installed in the
Premises by or for Tenant, become the property of Landlord upon termination of
the Lease and shall remain upon and be surrendered with the Premises at the
termination of the Lease. The preceding sentence to the contrary
notwithstanding, so long as no Event of Default by Tenant exists under the Lease
as of the date(s) Tenant desires to remove any Tenant Improvements from the
Premises and provided, further, that Tenant notifies Landlord in writing not
later than 180 days prior to the expiration of the Lease Term of the Tenant
Improvements that Tenant desires to remove from the Premises prior to the
expiration of the Lease Term, Tenant shall have the right to remove any such
Tenant Improvements from the Premises prior to the expiration of the Lease Term,
except that Tenant shall then restore the portion of the Premises from which
such Tenant Improvements are removed to the condition existing immediately prior
to the installation or construction of such Tenant Improvements so removed and
Tenant shall repair all damage, if any, to the Premises caused by such removal.
Any Tenant Improvements that Landlord timely requests be removed from the
Premises at the expiration (or earlier termination of the Lease Term), shall be
so removed by Tenant at its sole cost, and Tenant shall repair all damage, if
any, to the Premises caused by such removal.
(b) Development and Approval of Tenant Improvement Plans.
Once the Preliminary Tenant Improvement Plans have been approved by Landlord and
Tenant, Tenant shall cause Tenant's architect to complete and submit to Landlord
for its approval final working drawings for
-2-
the Tenant Improvements that are consistent with and are logical evolutions of
the Preliminary Tenant Improvement Plans approved by the parties. Landlord shall
approve the final working drawings for the Tenant Improvements or notify Tenant
in writing of its specific request for changes within five (5) business days
after receipt of the working drawings from Tenant. If Landlord submits any
request for changes, the parties shall confer and reach agreement upon the final
working drawings for the Tenant Improvements within five (5) business days after
Landlord has notified Tenant of its request for changes. When Landlord and
Tenant agree upon the final working drawings for the Tenant Improvements, a
representative of each shall sign the same. The final working drawings so
approved by Landlord and Tenant are referred to herein as the "Final Improvement
Plans".
4. Construction of Tenant Improvements. Prior to the commencement
of the construction of the Tenant Improvements, Tenant shall submit to Landlord
for its approval Tenant's general contractor for the Tenant Improvements.
Landlord shall have the right but not the obligation nor the duty, to disapprove
any such contractor who, in Landlord's good faith determination, is financially
or otherwise unqualified. The failure of Landlord to disapprove a contractor
shall not constitute a warranty that any contractor not so disapproved is in
fact qualified. Following Landlord's approval of the Final Tenant Improvement
Plans and Tenant's contractor, Tenant shall promptly commence construction and
installation of the Tenant Improvements and shall thereafter pursue the same
diligently to completion. Any damage to the Building caused by Tenant or its
contractors or subcontractors in connection with the construction of the Tenant
Improvements shall be repaired at Tenant's expense. Tenant shall be responsible
for obtaining all necessary permits and approvals required for the construction
and installation of the Tenant Improvements and Landlord agrees to reasonably
cooperate at no cost to it with Tenant in obtaining the same. All work done in
connection with the Tenant Improvements shall be performed in compliance with
all applicable laws, ordinances, rules, orders and regulations of all federal,
state, county and municipal governments or agencies now in force or that may be
enacted hereafter and with all directives rules and regulations of the fire
marshal, health officer, building inspector or other proper officers of any
governmental agency now having or hereafter acquiring jurisdiction.
5. Changes to Approved Plans. There shall be no changes to the
approved Final Tenant Improvement Plans without the prior written consent of
Landlord except that Landlord's consent shall not be required for non-material
deviations rendered necessary or appropriate by on-site conditions or required
by building inspectors or similar government agencies. All change orders
requested by Tenant shall be made in writing. Any change not approved or
disapproved by Landlord within five (5) business days of Landlord's receipt of
detailed plans and specifications therefor shall be deemed disapproved. Landlord
shall not withhold or delay its consent unreasonably.
6. Purpose of Maximum TI Allowance. The Maximum TI Allowance
shall be used by Tenant to design and construct the Tenant Improvements in the
Building.
7. Payment of TI Costs. The TI Costs for the Tenant Improvements
shall be paid by Landlord and Tenant as follows:
(a) Maximum TI Allowance. Landlord shall contribute the
Maximum TI Allowance toward the TI Costs, in the manner set forth below, but
subject to the satisfaction of the conditions set forth in Paragraphs 8 and 9
below. In no event shall Landlord be required to contribute
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more than the Maximum TI Allowance toward the costs of designing and
constructing the Tenant Improvements.
(b) Excess TI Costs. Tenant shall pay the full amount of
all Excess TI Costs, in the manner set forth below.
(c) Progress Payments During Construction. During the
course of construction of the Tenant Improvements, each progress payment due to
Tenant's contractor or to any subcontractor or material supplier shall be paid
by Landlord and Tenant as follows: (i) Landlord shall pay a fraction of each
progress or other payment, which fraction shall have as its numerator the
Maximum TI Allowance and shall have as its denominator Tenant's estimate of the
total TI Costs to complete construction of the Tenant Improvements (it being
understood and agreed, however, that in no event shall Landlord be required to
contribute more than the Maximum TI Allowance toward the costs of designing and
constructing the Tenant Improvements); and (ii) Tenant shall pay the balance of
each progress or other payment. If Tenant's construction contract does not
otherwise provide for a retention of at least ten percent (10%) then Landlord's
portion of each progress payment shall be reduced by ten percent (10%) and such
ten percent (10%) retention shall be paid by Landlord to Tenant thirty-five (35)
days after the timely filing of a Notice of Completion or, if no Notice of
Completion is filed, then ninety-five (95) days after substantial completion of
the Tenant Improvements, in each case assuming such period shall expire without
the filing of any lien claims. If lien claims are filed, such retention shall be
paid within ten (10) days after presentation to Landlord of appropriate recorded
lien releases, surety bonds or other evidence satisfactory to Landlord that such
lien has been removed or released from record title.
8. Conditions Precedent. Landlord shall not be obligated to make
any disbursements of the Maximum TI Allowance to or for the benefit of Tenant
unless at the time of each request for disbursement, all of the following
conditions are satisfied:
(a) Such request shall be made (except with respect to
disputed claims made within ninety (90) days after completion) prior to the date
which is one (1) year following the Commencement Date;
(b) There shall exist no Event of Default hereunder or
under the Lease;
(c) The Lease shall be in full force and effect;
(d) Tenant shall have furnished to Landlord bills and
statutory releases of lien rights covering work done and/or materials furnished
in connection with the construction of the Tenant Improvements.
9. Disbursement Procedures. Tenant may request disbursements from
the Maximum TI Allowance not more frequently than once each month. No
disbursements shall be made until Landlord has approved the Final Tenant
Improvement Plans. Each request for disbursement shall be accompanied by (i) an
itemized statement, in form and content reasonably acceptable to Landlord; (ii)
statutory lien releases from all persons and entities providing work or
materials covered by such statement; and (iii) invoices, vouchers, statements,
affidavits and/or other documents in a form
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reasonably acceptable to Landlord which substantiate and justify the
disbursement requested. Landlord shall make disbursements of the Maximum TI
Allowance within thirty (30) days after Landlord's receipt of each fully
completed disbursement request directly to Tenant or, at Landlord's option upon
notice to Tenant, directly to contractors, contractors, laborers or suppliers
entitled thereto. Prior to or at the time of each disbursement hereunder for
construction costs, Tenant shall deliver to Landlord statutory lien waivers from
Tenant's prime contractor to whom funds were disbursed under the previous
disbursement.
10. Inspections. In addition to Landlord's right under the Lease
to enter the Premises for the purpose of posting notices of nonresponsibility,
Landlord, its officers, agents or employees, shall have the right at all
reasonable times to enter upon the Premises and inspect the Tenant Improvements
to determine that the same are in conformity with the Final Tenant Improvement
Plans and all requirements hereof. Landlord, however, is under no obligation to
supervise, inspect or inform Tenant of the progress of construction and Tenant
shall not rely upon Landlord therefor. While on the Premises, Landlord shall not
unreasonably interfere with the progress of construction.
11. Protection Against Lien Claims. In addition to the Lease,
Tenant agrees to fully pay and discharge all claims for labor done and materials
and services furnished in connection with the construction of the Tenant
Improvements, to diligently file or procure the filing of a valid Notice of
Completion upon completion of construction or within ten (10) days thereafter,
to diligently file or procure the filing of a Notice of Cessation upon a
cessation of labor on the Tenant Improvements for a continuous period of thirty
(30) days or more, and to take all other reasonable steps to forestall the
assertion of claims of lien against the Premises, the Parcel, or any part
thereof or right or interest appurtenant thereto.
12. Default. Each of the following events shall constitute an
Event of Default hereunder:
(a) Substantial deviations in construction work from the
Final Tenant Improvement Plans, without the prior approval of Landlord (not to
be withheld or delayed unreasonably) or the appearance of defective workmanship
or materials when said deviations or defects are not corrected within thirty
(30) days after written notice thereof;
(b) Cessation of construction work prior to the
completion of the Tenant Improvements for a continuous period of thirty (30)
days or more for causes other than causes beyond the reasonable control of
Tenant;
(c) The filing of any claim of lien against the Premises,
the Parcel, or any part thereof, in connection with the Tenant Improvements, and
the continued maintenance of said claim of lien for a period of forty-five (45)
days after notice to Tenant thereof without discharge or satisfaction thereof or
provision therefor satisfactory to Landlord (at Landlord's sole discretion),
provided that recording of a surety bond pursuant to the terms of Civil Code
Section 3143 in the amount of one and one-half (1 1/2) of the amount of such
lien claim shall constitute satisfactory provision; or
(d) The occurrence of a Event of Default by Tenant under
the Lease.
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13. Remedies. In the event of a default by Tenant hereunder,
Landlord shall thereafter have no further obligation to disburse any portion of
the Maximum TI Allowance, unless and until such default is cured. In addition,
Landlord shall have the right (but not the obligation) to enter upon the
Premises and take over and complete the construction of the Tenant Improvements,
to make disbursements from the Maximum TI Allowance, and to discharge or replace
the contractors or subcontractors performing such work. In no event shall
Landlord be required to expend its own funds to complete the Tenant Improvements
if the Maximum TI Allowance is insufficient. Where substantial deviations from
the Final Tenant Improvement Plans have occurred which have not been approved in
accordance with Paragraph 5 above, or defective or unworkmanlike labor or
materials are being used in construction of the Tenant Improvements, Landlord
shall have the right to immediately order stoppage of all construction and
demand that such condition be corrected. After issuance of such an order in
writing, no further work shall be done on the Tenant Improvements without the
prior written consent of Landlord unless and until said condition has been
corrected to Landlord's reasonable satisfaction, and upon correction, Landlord
shall promptly consent to the continuation of construction.
14. Evidence of Compliance with Government Regulations. Upon
completion of the Tenant Improvements, Tenant shall furnish to Landlord copies
of such permits of occupancy as may be required by any public authority having
jurisdiction.
15. Indemnification. Tenant shall, at Tenant's expense, defend,
indemnify, save and hold Landlord harmless from any and all claims, demands,
losses, expenses, damages (general, punitive or otherwise but excluding lost
profits) causes of action (whether legal or equitable in nature) asserted by any
person, firm, corporation, governmental body or agency, or entity arising out of
the construction of the Tenant Improvements or caused by the use of the Maximum
TI Allowance. Tenant shall pay to Landlord upon demand all claims, judgments,
damages, losses or expenses (including attorneys' fees) incurred by Landlord as
a result of any legal action arising out of the construction of the Tenant
Improvements. The provisions of this paragraph shall not apply to claims,
demands, losses, expenses, damages, judgments and causes of action arising from
or related to any act, neglect or misconduct of
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Landlord or its Agents. The obligations of Tenant under this Paragraph 15 shall
survive the expiration or earlier termination of the Lease.
IN WITNESS WHEREOF, the parties have executed this Agreement on the dates set
forth below.
LANDLORD: TENANT:
SOUTH BAY/EDENVALE ASSOCIATES, WESTERN DIGITAL CORPORATION,
a California general partnership a Delaware corporation
By: M & ASSOCIATES, a California By: /s/ Richard M. Salvi
general partnership ----------------------------
By /s/ James D. Mair Printed: Richard M. Salvi
----------------------
Title: Vice President
Printed: James D. Mair
Dated: 6/4/96
Title: General Partner
Dated: 6/11/96
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EXHIBIT "D"
LIST OF HAZARDOUS MATERIALS PERMITTED TO BE USED BY TENANT
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FIRST AMENDMENT
This First Amendment to Lease ("First Amendment") is made by and between WESTERN
DIGITAL CORPORATION, A DELAWARE CORPORATION, ("Tenant") and SOUTH BAY/EDENVALE
ASSOCIATES, a California general partnership ("Landlord"), as of the date set
forth below with reference to the following facts:
A. By Lease Agreement dated June 14, 1996 (the "Lease"), Landlord
has leased to Tenant certain property commonly known as 5863 Rue Ferrari Drive,
San Jose, California.
B. Landlord and Tenant desire to amend the Lease to acknowledge
their mutual understanding to extend the term of the Lease as provided below.
NOW THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, Landlord and Tenant hereby agree as follows:
1. Landlord and Tenant mutually agree that the address of Tenant,
as defined in the second paragraph of the Lease, shall be changed from 5853 Rue
Ferrari Drive, San Jose, California to 5863 RUE FERRARI DRIVE, SAN JOSE,
CALIFORNIA.
All other terms and conditions of the Lease shall remain the same and in full
force and effect.
As entered into this ____ day of _________, 1996.
LANDLORD: TENANT:
SOUTH BAY/EDENVALE ASSOCIATES, WESTERN DIGITAL CORPORATION,
a California general partnership a Delaware corporation
By: [SIGNED] By: /s/ Richard M. Salvi
----------------------------- ------------------------------
James D. Mair Richard M. Salvi
Title: General Partner Title: Vice President
Dated: __________________________ Dated: 8/7/96