Exhibit 10.2
STANDARD INDUSTRIAL LEASE
by and between
MARIN COUNTY EMPLOYEES' RETIREMENT ASSOCIATION
and
INTERNATIONAL MICROCIRCUITS, INC.
TABLE OF CONTENTS
Page
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1. Parties..................................................................................................1
2. Premises and Parking.....................................................................................1
2.1 Premises........................................................................................1
2.2 Vehicle Parking.................................................................................1
2.3 Common Areas - Definitions......................................................................1
3. Term.....................................................................................................2
4. Rent.....................................................................................................3
4.1 Base Rent.......................................................................................3
4.2 Adjustment to Base Rent.........................................................................3
4.3 Operating Expenses..............................................................................3
4.4 Additional Rent.................................................................................6
4.5 Lessee's Share..................................................................................6
5. Security and Letter of Credit............................................................................6
5.1 Security Deposit................................................................................6
5.2 Letter of Credit................................................................................6
6. Use......................................................................................................7
6.1 Use.............................................................................................7
6.2 Compliance with Law.............................................................................7
6.3 Condition of Premises...........................................................................8
7. Maintenance, Repairs and Alterations.....................................................................8
7.1 Lessor's Obligations............................................................................8
7.2 Lessee's Obligations............................................................................8
7.3 Alterations and Additions.......................................................................9
8. Insurance; Indemnity....................................................................................11
8.1 Lessee's Insurance.............................................................................11
8.2 Lessor's Insurance.............................................................................12
8.3 Blanket Policy.................................................................................12
8.4 Insurance Policies.............................................................................12
8.5 Waiver of Subrogation..........................................................................13
8.6 Indemnity......................................................................................13
8.7 Exemption of Lessor from Liability.............................................................14
9. Damage or Destruction...................................................................................14
9.1 Definitions....................................................................................14
9.2 Premises Partial Damage........................................................................14
9.3 Premises Total Destruction.....................................................................15
9.4 Abatement of Rent, Lessee's Remedies...........................................................15
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TABLE OF CONTENTS
(continued)
Page
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9.5 Termination - Advance Payments.................................................................16
9.6 Waiver.........................................................................................16
9.7 Lessee's Property..............................................................................16
9.8 Notice of Damage...............................................................................16
9.9 Replacement Cost...............................................................................16
10. Real Property Taxes.....................................................................................16
10.1 Payment of Taxes...............................................................................16
10.2 Payment of Taxes; Additional Improvements......................................................16
10.3 Definition of "Real Property Taxes."...........................................................16
10.4 Personal Property Taxes........................................................................17
11. Utilities...............................................................................................17
12. Assignment and Subletting...............................................................................17
12.1 Documentation..................................................................................18
12.2 Terms and Conditions...........................................................................18
12.3 Partnership....................................................................................19
12.4 Corporation....................................................................................19
12.5 Lessor's Remedies..............................................................................19
12.6 Permitted Transfers............................................................................19
13. Default; Remedies.......................................................................................20
13.1 Default........................................................................................20
13.2 Remedies.......................................................................................21
13.3 Default by Lessor..............................................................................22
13.4 Late Charges...................................................................................22
13.5 No Relief From Forfeiture After Default........................................................23
14. Condemnation............................................................................................23
15. Broker's Fee............................................................................................23
16. Estoppel Certificate....................................................................................24
17. Lessor's Liability......................................................................................24
18. Severability............................................................................................25
19. Interest on Past-due Obligations........................................................................25
20. Time of Essence.........................................................................................25
21. Incorporation of Prior Agreements; Amendments...........................................................25
22. Notices.................................................................................................25
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TABLE OF CONTENTS
(continued)
Page
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23. Waivers.................................................................................................26
24. Recording...............................................................................................26
25. Holding Over............................................................................................26
26. Cumulative Remedies.....................................................................................26
27. Covenants and Conditions................................................................................26
28. Binding Effect; Choice of Law...........................................................................26
29. Subordination...........................................................................................26
30. Hazardous Materials.....................................................................................27
30.1 Use of Hazardous Materials.....................................................................27
30.2 Lessee's Indemnification.......................................................................27
30.3 Hazardous Materials Documents..................................................................28
30.4 Notices........................................................................................28
30.5 Definition.....................................................................................28
31. Attorneys' Fees.........................................................................................30
32. Lessor's Access.........................................................................................30
33. Signs...................................................................................................30
34. Merger..................................................................................................31
35. Security Measures.......................................................................................31
36. Easements...............................................................................................31
37. Authority...............................................................................................31
38. Offer...................................................................................................31
39. Interpretation..........................................................................................31
40. Attachments.............................................................................................31
41. Possessory Interest.....................................................................................32
42. Counterparts............................................................................................32
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STANDARD INDUSTRIAL LEASE
1. PARTIES. This Lease, dated for reference purposes only, as of
July _, 1998, is made by and between Marin County Employees' Retirement
Association, a political subdivision of the State of California, or its
assignee ("Lessor') and International Microcircuits, Inc., a California
corporation ("Lessee"). This Lease is entered into concurrently with the
Purchase and Sale Agreement by and between Lessee, as seller, and Lessor, as
buyer, dated as of May 7, 1998, as amended by the First Amendment to Purchase
Agreement dated as of July 2, 1998, and the Assignment of Purchase and Sale
Agreement, dated as of July 16, 1998 (collectively, the "Purchase Agreement").
2. PREMISES AND PARKING.
2.1 PREMISES. Lessor hereby leases to Lessee, and
Lessee leases from Lessor, for the term, at the rental, and upon all of the
conditions set forth herein, those certain premises commonly known as 525 Los
Coches Street, Milpitas, California (the "Premises"), including the building
("Building") located on that certain real property (the "Property") as
outlined on Exhibit A attached hereto, including rights to the Common Areas
(as hereinafter specified) but not including the roof or the exterior walls
of the Building. Lessor and Lessee agree that for purposes of this Lease the
interior of the Building contains 38,710 square feet. The Premises do not
include any rights to the airspace above the Premises.
2.2 VEHICLE PARKING. Lessee shall be entitled to the use
of vehicle parking spaces, unreserved and unassigned, on those portions of
the Common Areas designated by Lessor for parking. Said parking spaces shall
be used only for parking by vehicles no larger than full size passenger
automobiles or pick-up trucks, herein called "Permitted Size Vehicles."
Vehicles other than Permitted Size Vehicles are herein referred to as
"Oversized Vehicles."
2.2.1 Lessee shall not permit or allow any vehicles
that belong to or are controlled by Lessee or Lessee's employees, suppliers,
shippers, customers, or invitees to be loaded, unloaded, or parked in areas
other than those designated by Lessor for such activities.
2.2.2 If Lessee permits or allows any of the
prohibited activities described in Section 2.2 of this Lease, then Lessor
shall have the right, following reasonable notice to Lessee, in addition to
such other reasonable rights and remedies that it may have, to remove or tow
away the vehicle involved and charge the cost thereof to Lessee, which costs
shall be immediately payable upon demand by Lessor as additional rent
hereunder.
2.3 COMMON AREAS - DEFINITIONS. The term "Common Areas" is
defined as all areas and facilities outside the Building and within the
exterior boundary line of the Property on which the Building is located that
are provided and designated by the Lessor from time to time for the general
non-exclusive use of Lessor, Lessee and of any other lessees of the Property,
if any, and their respective employees, suppliers, shippers, customers and
invitees, including parking areas, loading and unloading areas, trash areas,
roadways, sidewalks, walkways, parkways, driveways and landscaped areas.
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2.3.1 COMMON AREAS - LESSEE'S RIGHTS. Lessor hereby
grants to Lessee, for the benefit of Lessee and its employees, suppliers,
shippers, customers and invitees, during the term of this 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 reserved by Lessor under the terms hereof or under the terms
of any rules and regulations or restrictions governing the use of the Common
Areas established from time to time by Lessor, subject to the provisions of
Section 2.3.2. Under no circumstances shall the right herein granted to
Lessee to use the Common Areas be deemed to include the right to store any
property, temporarily or permanently, in the Common Areas. Any such storage
shall be permitted only by the prior written consent of Lessor or Lessor's
designated representative, which consent may be revoked at any time. In the
event that any unauthorized storage shaft occur, then Lessor shall have the
right, without notice, in addition to such other rights and remedies that it
may have, to remove the property and charge the reasonable cost thereof to
Lessee, which cost shall be immediately payable upon demand by Lessor.
2.3.2 COMMON AREAS -- RULES AND REGULATIONS. Lessor
or such other person(s) as Lessor may appoint shall have the exclusive
control and management of the Common Areas and shall have the right, from
time to time, to establish, modify, amend and enforce reasonable,
non-discriminatory, rules and regulations with respect thereto. No such rules
and regulations shall materially impair or conflict with the rights of Lessee
under this Lease. Lessee agrees to abide by and conform to all such rules and
regulations upon reasonable written notice of such rules and regulations, and
to cause its employees, suppliers, shippers, customers, and invitees to so
abide and conform.
2.3.3 COMMON AREAS - CHANGES. Provided that none of
the following shall materially impair or conflict with the rights of Lessee
under the Lease, including, but not limited to, Lessee's rights of ingress
and egress, Lessor shall have the right, in Lessor's sole discretion, from
time to time: (a) to make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas,
ingress, egress, direction of traffic, landscaped areas and walkways,
provided such changes do not reduce the number of available parking spaces;
(b) to close temporarily any of the Common Areas for maintenance purposes so
long as reasonable access to the Premises remains available; (c) to designate
other land outside the boundaries of the Premises to be a part of the Common
Areas; (d) to add additional improvements to the Common Areas; (e) to use the
Common Areas while engaged in making additional improvements, repairs or
alterations to the Building, or any portion thereof, (f) to do and perform
such other acts and make such other changes in, to or with respect to the
Common Areas and Premises as Lessor may-deem to be appropriate; and (g) to
remove areas from use as Common Areas.
3. TERM. The term of this Lease shall commence on the Closing
Date (as defined in the Purchase Agreement) of Lessor's acquisition of the
Property pursuant to the terms and conditions of the Purchase Agreement (the
"Commencement Date") and ending at midnight on the date which is eighty-four
(84) months following the Commencement Date (the "Expiration Date"), unless
sooner terminated pursuant to the provisions hereof. The parties agree to
execute a certificate confirming the actual Commencement Date and Expiration
Date once such dates have been determined in connection with the consummation
of the Purchase Agreement.
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4. RENT.
4.1 BASE RENT. Lessee shall pay to Lessor Fifty-Two
Thousand Two Hundred Fifty-Eight and 50/100 Dollars ($52,258.50), as "Base
Rent" for the Premises, each month in advance, without offset or deduction,
notice or demand, commencing and continuing thereafter on the first (1st) day
of each month of the term of this Lease.
Base Rent for any period during the term of this Lease which
is for less than one month shall be a pro rata portion of the Base Rent for
such month. Base Rent shall be payable in lawful money of the United States
to Lessor at the address stated herein or to such other persons or at such
other places as Lessor may designate from time to time to Lessee in writing.
Upon execution of this Lease, Lessee shall deposit into the escrow with North
American Title Insurance Company (the "Escrow") Base Rent for the first month
of the term of this Lease.
4.2 ADJUSTMENT TO BASE RENT. The Base Rent shall be
adjusted on the first anniversary of the Commencement Date and every twelve
(12) months thereafter (the "Rental Adjustment Dates"), to reflect any
increase in the cost of living from the end of the first year of the term of
this Lease or the immediately preceding Rental Adjustment Date for all
subsequent adjustments (the "Base Dates"). The adjustment or adjustments, if
any, shall be calculated upon the basis of the United States Department of
Labor, Bureau of Labor Statistics CONSUMER PRICE INDEX FOR ALL-URBAN
CONSUMERS, for San Francisco/Oakland/San Jose (1982-1984 = 100), hereafter
referred to as the "Index." The applicable Index for each adjustment made
under this Section 4.2 shall be the latest published Index as of the
applicable Base Date and the applicable Rental Adjustment Date. On each
Rental Adjustment Date, the Base Rent then in effect shall be increased by an
amount equal to the Base Rent then in effect multiplied by the percentage
increase in the Index during the twelve (12) month period between the Base
Date immediately preceding such Rental Adjustment Date and such Rental
Adjustment Date. When the adjusted Base Rent is determined upon each Rental
Adjustment Date, Lessor shall give Lessee written notice to that effect
indicating how the new Base Rent figure was computed in accordance with this
Section 4.2. If the Index does not exist on any Rental Adjustment Date in the
same format as referred to in this paragraph, Lessor shall substitute in lieu
thereof an index reasonably comparable to the Index then published by the
Bureau of Labor Statistics, or successor or similar governmental agency, or
if no governmental agency then publishes an index, Lessor shall substitute
therefor any comparable index then published by a reputable private
organization.
4.3 OPERATING EXPENSES. Lessee shall pay to Lessor during
the term hereof, in addition to the Base Rent, Lessee's Pro Rata Share (as
defined in Section 4.5 hereof) of Operating Expenses, as hereinafter defined,
during each calendar year of the term of this Lease, in accordance with the
following provisions:
4.3.1 "Operating Expenses" shall include:
(a) All costs and expenses paid or
incurred by Landlord for the ownership, operation, maintenance, repair and
replacement of structural and non-structural portions and components of the
Building and the Common Areas (provided, that if the cost for any replacement
of a portion of the Building or the Common Areas would be capitalized under
generally accepted accounting principles ("GAAP"), such cost shall be
amortized by Lessor at a
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rate of ten percent (10%) per annum over the useful life of such replacement
as reasonably determined by the manufacturer of the replacement or the
contractor installing the replacement, and Lessee shall be required to pay
only such portion of the cost for the replacement which is amortized during
the term of this Lease), including but not limited to: (i) maintaining,
cleaning, repairing and resurfacing the roof (including repair of leaks) and
the exterior surfaces (including painting) of the Building, (ii) maintaining
operating and replacing when necessary HVAC equipment, if Lessor so elects
under Section 7.2.1 below, utility facilities and other building service
equipment, (iii) complying with all Laws (as hereinafter defined), (iv)
operating, maintaining, repairing, cleaning, painting, restripping, paving
resurfacing and landscaping the Common Areas, (v) replacement or installation
of lighting fixtures, direction or other signs and signals, irrigation
systems, trees, shrubs, ground cover and other plant materials and all
landscaping the Common Areas, (vi) management fees paid by Lessor with
respect to the management of the Building, and (vii) any other service
provided by Lessor that is elsewhere in this Lease stated to be an Operating
Expense;
(b) The cost of the premiums for the
insurance policies maintained by Lessor pursuant to Section 8 hereof and all
increases in such premiums during the term of this Lease;
(c) The amount of the Real Property
Taxes to be paid by Lessor pursuant to Section 10.1 hereof;
(d) The cost of providing water, gas,
electricity, sanitary sewer, storm drain, and other utility services to the
Premises which are not paid directly by Lessee; and
(e) Deductibles on the liability and
property (including flood and earthquake) insurance policies to be maintained
by Lessor pursuant to Section 8 hereof.
4.3.2 Notwithstanding anything in Section 4.3.1 to
the contrary, the following shall not constitute Operating Expenses for the
purposes of this Lease:
(a) Legal fees, brokerage commissions,
advertising costs and other related costs and expenses incurred in connection
with the leasing of the Premises or any portion of the Property;
(b) The cost of (i) repair of damage or
destruction to the Premises, and (ii) maintenance of the Premises, to the
extent such cost is covered by any insurance policy carried by Lessor or any
warranty held by Landlord, in connection with the Premises.
(c) Lessor's general overhead expenses
not related to the Premises, including executive salaries of Lessor above the
manager level (this exclusion shall not affect Lessor's right to collect the
management fees as Operating Expenses pursuant to Section 4.3.1(a)(v) hereof;
(d) Payments of principal or interest on
any mortgage or other encumbrance including ground lease payments and points,
and commissions and legal fees associated with financing;
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(e) Depreciation of any portion of the
Premises (except as otherwise expressly set forth herein);
(f) Interest, penalties or other costs
arising out of Lessor's failure to make timely payments of its obligations,
unless Lessee fails to pay any amounts due under this Lease;
(g) Management fees in any year which
are in excess of three percent (3%) of the aggregate rent, operating expenses
and other monetary obligations due under all leases on the Building for such
year;
(h) Costs, fines, or penalties incurred
due solely to violations by Lessor of any governmental rule or authority,
this Lease or any other lease in the Property, or due solely to Lessor's
negligence or willful misconduct;
(i) Costs of services sold to any tenant
(other than Tenant) or other occupant for which Lessor is entitled to be
reimbursed as an additional charge or rental over and above the basic rent
and escalations payable under the lease with that tenant;
(j) Costs incurred due solely to
Lessor's violation of any terms or conditions of this Lease or any other
lease relating to the Building or Property; and
(k) Overhead profit increments paid to
Lessor's subsidiaries or affiliates for management or other services on or to
the building or for supplies or other materials to the extent that the cost
of the services, supplies, or materials exceeds the cost that would have been
paid had the services, supplies, or materials been provided by unaffiliated
parties on a competitive bases.
4.3.3 The inclusion of the improvements, facilities
and services set forth in the definition of Operating Expenses shall not be
deemed to impose an obligation upon Lessor to either have said improvements
or facilities or to provide those services unless the Premises already has
the same or Lessor has agreed elsewhere in this Lease to provide the same.
4.3.4 Operating Expenses shall be payable by Lessee
to Lessor within ten (10) business days after a statement of the actual
annual Operating Expenses incurred by Lessor is delivered to Lessee by
Lessor. Provided, however, at Lessor's option, Lessor may require Lessee to
pay monthly an amount estimated by Lessor from time to time to be one-twelfth
(1/12) of Lessor's estimate of the annual Operating Expenses, and the same
shall be payable during each calendar year of the Lease term on the same day
as the Base Rent is due hereunder. In the event that Lessee is required to
pay Lessor's estimate of Operating Expenses as aforesaid, Lessor shall
deliver to Lessee within one hundred twenty (120) days after the expiration
of each calendar year a statement showing the actual Operating Expenses
incurred during the preceding calendar year and the amount of the estimated
payments made by Lessee. If Lessee's estimated payments under this Section
4.3.3 during said preceding year exceed the actual Operating Expenses as
indicated on said statement, Lessee shall be entitled to credit the amount of
such overpayment against Operating Expenses next falling due until such
amount is fully credited, or if no such payments shall be due by reason of
the expiration of the term of this Lease, the amount of such overpayment
shall be paid to Lessee by Lessor within ninety (90) days
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following the date of expiration of the term of this Lease. If Lessee's
estimated payments under this Section 4.3.3 during said preceding calendar
year were less than the actual Operating Expenses as indicated on said
statement, Lessee shall pay to Lessor the amount of the deficiency within ten
(10) business days after delivery by Lessor to Lessee of said statement.
Within ninety (90) days after receipt of Lessor's statement setting forth
actual Operating Expenses and Real Property Taxes (the "Statement"), Lessee
shall have the right to audit at Lessor's local offices, at Lessee's expense,
Lessor's accounts and records relating to Operating Expenses and Real
Property Taxes. Such audit shall be conducted by a certified public
accountant approved by Lessor, which approval shall not be unreasonably
withheld. If such audit reveals that Lessor has overcharged Lessee, the
amount overcharged shall be paid to Lessee within thirty (30) days after the
audit is concluded.
4.4 ADDITIONAL RENT. All monetary obligations of Lessee to
Lessor under the terms of this Lease, including, but not limited to Operating
Expenses shall be deemed to be rent.
4.5 LESSEE'S SHARE. "Lessee's Share" shall be one hundred
percent (100%) of all Operating Expenses so long as Lessee leases one hundred
percent (100%) of the Premises.
5. SECURITY AND LETTER OF CREDIT.
5.1 SECURITY DEPOSIT. Upon execution of this Lease by
Lessee, Lessee shall deposit in Escrow for immediate release -to Lessor, the
cash sum of Fifty-Two Thousand Two Hundred Fifty-Eight and 50/100 Dollars
($52,258.50), as security for Lessee's faithful performance of Lessee's
obligations hereunder. If Lessee fails to pay rent or other charges due
hereunder, or otherwise defaults with respect to any provision of this Lease,
beyond any applicable notice and cure period, Lessor may use, apply or retain
all or any portion of said deposit for the payment of any rent or other
charge in default or for the payment of any other sum which Lessor may become
obligated by reason of Lessee's default, or to compensate Lessor for any loss
or damage which Lessor may suffer by reason of Lessee's default. If Lessor so
uses or applies all or any portion of said deposit, Lessee shall within ten
(10) days after written demand deposit with Lessor in cash an amount
sufficient to restore said deposit to the full original amount. Lessor shall
not be required to keep said deposit separate from its general accounts or to
pay interest on said deposit. If Lessee performs all of Lessee's obligations
hereunder, said deposit, or so much thereof as has not theretofore been
applied or retained by Lessor pursuant to this Section 5.1, shall be returned
to Lessee (or, at Lessor's option, to the last assignee, if any, of Lessee's
interest under this Lease) at the expiration of the term of this Lease,
promptly after Lessee has vacated the Premises. No trust relationship is
created herein between Lessor and Lessee with respect to said deposit.
5.2 LETTER OF CREDIT. Upon execution of this Lease by
Lessee, Lessee shall post an irrevocable letter of credit (the "Letter of
Credit") in the initial amount of Three Hundred Fifty Thousand Dollars
($350,000). The Letter of Credit shall be issued by a financial institution
reasonably acceptable to Lessor, shall show Lessor as the account party and
shall have a term of not less than six (6) months. The Letter of Credit shall
be in the form of Exhibit "C" attached hereto and shall be delivered to
Lessor upon execution of this Lease by Lessee. Lessee shall be entitled to
have the Letter of Credit returned prior to the expiration date of such
Letter of Credit in the event that no Event of Default has occurred during
Lessee's tenancy and Lessee has
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demonstrated to the satisfaction of Lessor that Lessee has maintained a net
worth of at least Ten Million Dollars ($10,000,000) for a period of six (6)
consecutive months, as evidenced by monthly financial statements including a
balance sheet prepared in accordance with generally acceptable accounting
principles, consistently applied, during such period as the Letter of Credit
is outstanding (with the final financial statement for the sixth month
delivered to Lessor to be an audited statement).
5.2.1 The Letter of Credit shall be renewed from
time to time during the period that the Letter of Credit must be maintained
pursuant to this Section 5.2. Such renewals shall be for a period of not less
than six (6) months. The amount of each renewal Letter of Credit shall be
equal to the amount required pursuant to this Section 5.2. The term "Letter
of Credit" shall, for the purposes of this Lease, include any replacement or
renewal Letter of Credit.
5.2.2 Upon issuance of the Letter of Credit to
Lessor pursuant to this Section 5.2, Lessor may draw against the Letter of
Credit if (a) Lessee is in default of any term, provision, covenant or
condition of this Lease provided that Lessor has given written notice to
Lessee under the terms of this Lease and the applicable period of cure (if
any) under this Lease for such default has expired and the default of Lessee
has not been cured, or (b) Lessee shall fail to deliver or cause to be
delivered to Lessor any renewal or replacement Letter of Credit required
under this Section 5.2 not later than thirty (30) business days prior to the
date of expiration of the Letter of Credit then held by Lessor.
6. USE.
6.1 USE.
6.1.1 Subject to applicable laws and covenants,
conditions and restrictions of record applicable to the Premises, the
Premises shall be used and occupied only for manufacturing, general office,
research and development, warehouse and any other legal use which is
reasonably comparable or related thereto, and for no other purpose, unless
approved in writing by Lessor, which approval shall not be unreasonably
withheld or delayed.
6.1.2 Lessee shall not conduct, nor permit to be
conducted, either voluntarily or involuntarily, any auction, or going out of
business, fire or bankruptcy sale upon the Premises without first having
obtained Lessor's prior written consent.
6.1.3 Lessee, at Lessee's sole cost and expense,
shall obtain and maintain in force during the term of this Lease all permits,
Licenses and approvals required or necessary for the conduct of the
activities of Lessee on the Premises.
6.2 COMPLIANCE WITH LAW. During the term of this Lease,
Lessee shall, at Lessee's expense, promptly comply with all statutes,
ordinances, rules, regulations, orders of governmental authorities, covenants
and restrictions of record, and requirements of any fire insurance
underwriters or rating bureaus, now in effect or which may hereafter come
into effect ("Laws"), whether or not they reflect a change in policy from
that now existing, relating to, imposed by reason of or applicable to the
condition of the Premises or Lessee's use or occupancy of the Premises, or
any alteration, improvement or change made to the Premises by Lessee,
including any alterations that might be required solely to bring the Premises
in compliance with
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the Americans with Disabilities Act ("ADA"). Lessee shall not use, nor permit
its employees, agents, contractors or invitees to use, the Premises in any
manner that will tend to create a waste or a nuisance or shall tend to
disturb the occupants of properties adjoining the Premises. Notwithstanding
the foregoing, Lessee shall have no obligation to make any improvements or
alterations to the Premises in order to comply with Laws unless triggered by
Lessee's particular use, occupancy or alterations to the Premises.
6.3 CONDITION OF PREMISES. Lessee currently occupies the
Premises and therefore accepts the Premises, the Building, and all
improvements thereon, in their "as is" existing condition, subject to all
applicable zoning, municipal, county and state laws, ordinances and
regulations governing and regulating the use of the Premises, and any
covenants or restrictions of record, and accepts this Lease subject to all of
the foregoing and to all matters known or unknown to Lessee as current
occupant of the Premises. Lessee acknowledges that neither Lessor nor
Lessor's agent has made any representation or warranty as to the future
suitability of the Premises for the conduct of the Lessee's business or the
uses proposed by Lessee.
7. MAINTENANCE, REPAIRS AND ALTERATIONS.
7.1 LESSOR'S OBLIGATIONS. Subject to the provisions of
Section 9 (Damage and Destruction) and 14 (Condemnation) and Section 7.2
(Lessee's Obligations), and except to the extent any damage is caused by any
negligent or intentional act or omission of Lessee or Lessee's employees,
customers, or invitees (which is not covered by insurance carried by Lessor),
Lessee shall repair any such damage at Lessee's expense, Lessor shall keep in
good condition and repair the structural portion of the exterior walls (other
than cleaning or painting of the exterior surface of such exterior walls,
which maintenance or painting shall be the responsibility of Lessee),
foundations, the roof of the Building, and the Common Areas. The cost and
expense of any repairs and replacements made by Lessor shall be reimbursed by
Lessee as an Operating Expense. Lessor shall not, however, be obligated to
paint the exterior or interior surface of exterior walls nor shall Lessor be
required to maintain, repair or replace windows, doors or plate glass of the
Premises. Lessor shall have no obligation to make repairs under this Section
7.1 until a reasonable time after receipt of written notice from Lessee of
the need for such repairs. Lessee expressly waives the benefits of any
statute now or hereafter in effect which would otherwise afford Lessee the
right to make repairs at Lessor's expense or to terminate this Lease because
of Lessor's failure to keep the Premises in good order, condition and repair;
provided that if the condition materially interferes with the conduct of
Lessee's business and Lessor has not repaired the condition in a timely
manner, Lessee may exercise its legal rights and seek an appropriate remedy
at law or in equity. Lessor shall not be liable for damages or loss of any
kind or nature by reason of Lessor's failure to furnish any such services,
except where and to the extent such failure is caused by the sole, active
negligence or intentional misconduct of Lessor or the agents, employees,
contractors or invitees of Lessor, or the breach of this Lease by Lessor.
7.2 LESSEE'S OBLIGATIONS.
7.2.1 Subject to the provisions of Section 9
(Damage and Destruction) and 14 (Condemnation) and Section 7.1 (Lessor's
Obligations), Lessee, at Lessee's expense,
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shall keep in good order, condition and repair the Premises and every part
thereof including, without limiting the generality of the foregoing, all
plumbing, heating, ventilating and air conditioning systems serving the
Premises (Lessor shall procure and maintain, at Lessee's expense, a
ventilating and air conditioning system maintenance contract), electrical and
lighting facilities and equipment within or serving the Premises, fixtures,
interior walls and interior and exterior surfaces of exterior walls,
ceilings, roof membrane, windows, doors, plate glass, and skylights located
within the Premises, the parking lots, walkways, driveways, landscaping,
fences, signs, and utility installations of the Premises and all parts
thereof. Lessor reserves the right to maintain the ventilating and air
conditioning system maintenance contract for the heating, ventilating and air
conditioning system serving the Premises and, if Lessor so elects, Lessee
shall reimburse Lessor, upon demand, for the reasonable cost thereof.
7.2.2 If Lessee fails to perform Lessee's
obligations under this Section 7.2 or under any other paragraph of this Lease
where such failure presents, in Lessor's good faith judgment, an emergency or
a default of Lessor's obligations under any loan documents which Lessor is a
party, then Lessor may enter upon the Premises, perform such obligations on
Lessee's behalf and put the Premises in good order, condition and repair, and
the reasonable cost of such performance, together with interest thereon at
the rate set forth in Section 19, shall be due and payable as additional rent
to Lessor upon demand.
7.2.3 On the last day of the term of this Lease, or
on the date of any sooner termination, Lessee shall surrender the Premises to
Lessor in clean condition and in as good condition as when received, clean
and free of debris, except for ordinary wear and tear, casualty damage (as
provided in Section 9), condemnation (as provided in Section 14) and damage
due to the negligence or intentional act or omission of Lessor or Lessor's
employees, agents or contractors. Any damage or deterioration of the Premises
shall not be deemed ordinary wear and tear if the same could have been
prevented by customary and ordinary maintenance practices. On or prior to
termination of the Lease, Lessee shall have the right to remove from the
Premises any specialized tenant improvements installed by and paid for by
Lessee after the Commencement Date, and furniture, furnishings, fixtures,
trade fixtures, laboratory equipment, machinery and other personal property
of Lessee. Prior to expiration of the term of this Lease or the date of any
sooner termination, Lessee shall repair any damage to the Premises occasioned
by the installation or removal of Lessee's trade fixtures (including any
specialized tenant improvements or laboratory fixtures installed by and paid
for by Lessee), furnishings, equipment Alterations (as defined below),
Installations (as defined below) and personal property. Notwithstanding
anything to the contrary otherwise stated in this Lease, Lessee shall leave
any air lines, power panels, electrical distribution systems, lighting
fixtures, space heaters, heating ventilating and air conditioning systems and
equipment, and plumbing system and fixtures located on the Premises which
Lessee is not permitted to remove under the terms of this Lease in good
operating condition and repair. Lessee acknowledges that Lessor has no
obligation to provide safety and security devices, services or programs under
this Lease and Lessee assumes the full risk of all criminal acts or other
losses in, on or about the Premises.
7.3 ALTERATIONS AND ADDITIONS.
7.3.1 Other than as provided in Section 7.3.5,
Lessee shall not, without Lessor's prior written consent, which consent shall
not be unreasonably withheld or delayed,
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make any alterations, improvements, additions (collectively, "Alterations"),
or Installations in, on or about the Premises. Any Alterations or
Installations made by Lessee shall not interfere with the operation of any
mechanical apparatus or electrical or plumbing systems in the Building. As
used in this Section 7.3 the term "Installation" shall mean carpeting, window
coverings, air lines, power panels, electrical distribution systems, lighting
fixtures, space heaters, air conditioning, and plumbing. Lessor may require
Lessee to provide Lessor, at Lessee's sole cost and expense, payment and
performance bonds in an amount equal to one and one-half times the estimated
costs of such Alterations or Installations to insure Lessor against any
liability for mechanic's and materialmen's liens and to insure payment and
performance of the work. Except as expressly permitted in this Section 7.3.1
and in Section 7.3.5, should Lessee make any Alterations or Installations
without the prior approval of Lessor, Lessor may, at any time during the term
of this Lease, require that Lessee remove any or all of the same.
7.3.2 Any Alterations or Installations that Lessee
desires to make in or about the Premises and which requires the consent of
Lessor shall be presented to Lessor in written form for Lessor's approval,
with proposed detailed plans and specifications therefor prepared at Lessee's
sole cost. Lessor shall have fifteen (15) business days after receipt of
Lessee's written request to make an Alteration or Installation in accordance
with the preceding sentence to approve or disapprove such Alterations or
Installations, and unless Lessor objects within such period, Lessor shall be
deemed to have consented. Any consent by Lessor thereto shall be deemed
conditioned upon Lessee's acquisition of all permits required to make such
Alterations or Installations from all appropriate governmental agencies, the
furnishing of copies thereof to Lessor prior to commencement of the work, and
the compliance by Lessee with all conditions of said permits in a prompt and
expeditious manner, all at Lessee's sole cost. Upon completion of any such
Alterations or Installations, Lessee shall, at Lessee's sole cost,
immediately deliver to Lessor "as-built" plans and specifications therefor.
All construction work required or permitted to be done by Lessee shall be
performed by a licensed contractor approved by Lessor, which approval shall
not be unreasonably withheld or delayed, and in a prompt, diligent, and good
and workmanlike manner. All such construction work shall conform in quality
and design with the Premises existing as of the Commencement Date and shall
not diminish the value of the Building or the Premises. All such construction
work shall be performed in compliance with all applicable Governmental
Regulations. Notwithstanding any other provision of this Lease, if any
Alterations or Installations (including any restoration work required in
connection with the removal of Lessee's specialized tenant improvements and
laboratory fixtures and other property at the expiration of the term of this
Lease or if the Lease is terminated at Lessor's sole discretion) require
upgrades to the Premises or the Common Areas, including without limitation
structural upgrades, for earthquakes, sprinklers, ADA requirements, asbestos
removal or any other Governmental Regulations' requirements, Lessee shall be
required to complete such upgrades at Lessee's sole cost as a condition to
installing any such Alterations or Installations.
7.3.3 Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for
Lessee at or for use in the Premises. Lessee shall give Lessor not less than
ten (10) days' written notice prior to the commencement of any work in the
Premises, and Lessor shall have the right to post notices of
non-responsibility in or on the Premises or the Building as provided by law.
If Lessee shall, in good faith, contest the validity of any such lien, claim
or demand and post a bond in the full amount of such lien, claim
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or demand, then Lessee shall, at its sole cost and expense, defend itself and
Lessor against the same and shall pay and satisfy, any judgment that may be
rendered thereon before the enforcement thereof against Lessor or the
Premises. In addition, Lessor may require Lessee to pay Lessor's reasonable
attorneys' fees and costs, upon demand, in participating in such action if
Lessor shall decide it is in Lessor's best interest to do so. All work in the
Premises performed by or at the request of Lessee shall be performed in
compliance with all applicable Laws and covenants, conditions and
restrictions of record against the Premises.
7.3.4 Except as set forth below, all Alterations
and Installations shall be removed from the Premises by Lessee at the
expiration or sooner termination of the term of this Lease at Lessor's sole
discretion, unless Lessor requires that the same remain and be surrendered
with the Premises pursuant to Section 7.3-1. Notwithstanding the provisions
of this Section 7.3.4, Lessee's machinery, trade fixtures, personal property
and equipment, including specialized tenant improvements installed by and
paid for by Lessee and laboratory fixtures, shall remain the property of
Lessee and shall be removed by Lessee subject to the provisions of Section
7.2.3.
7.3.5 Notwithstanding anything to the contrary
contained in this Section 7.3, Lessee shall have the right, without obtaining
the prior written consent of Lessor, to make interior, non-structural
Alterations or Installations in, on, or about the Premises, provided that all
such Alterations or Installations made by Lessee during any calendar year
shall not have a cost in excess of Twenty-Five Thousand Dollars ($25,000) and
do not affect the roof or roof membrane. All such Alterations and
Installations shall be subject to all of the requirements of Section 7.3.3
and Section 7.3.4.
8. INSURANCE; INDEMNITY.
8.1 LESSEE'S INSURANCE.
8.1.1 Lessee shall, at Lessee's expense, obtain and
keep in force during the term of this Lease a policy of comprehensive public
liability and property damage insurance insuring Lessee and Lessor against
any liability arising out of the use, occupancy or maintenance of the
Premises and the Common Areas. Such insurance shall have limits of liability
of not less than Three Million Dollars ($3,000,000.00) per occurrence and
shall name Lessor as an additional insured. The policy shall contain broad
form contractual liability coverage applicable to Lessee's obligations under
the indemnity provision of this Section 8. The limits of said insurance shall
not, however, limit the liability of Lessee under this Lease.
8.1.2 Lessee shall, at Lessee's expense, obtain and
keep in force during the term of this Lease a policy or policies of insurance
covering loss or damage to Lessees' furniture, fixtures, equipment, inventory
and other personal property located in or on the Premises and all Alterations
and Installations in or about the Premises made by Lessee, in an amount not
less than the full replacement value thereof, as the same may exist from time
to time, providing protection against all perils included within the
classification of fire, extended coverage, vandalism, malicious mischief,
flood (in the event the Building is located in a designated flood hazard
area) special extended perils ("all risk," or "special causes of loss as such
terms are used in the insurance industry), earthquake and such other
insurance coverages as
11
Lessor from time to time reasonably deems advisable, and shall name Lessor as
an additional insured.
8.2 LESSOR'S INSURANCE.
8.2.1 Lessor may obtain and keep in force during
the term of this Lease a policy of comprehensive public liability and
property damage insurance, insuring Lessor, but not Lessee, against any
liability arising out of the ownership, use, occupancy or maintenance of the
Premises with limits of liability as determined by Lessor in its sole
discretion. It is specifically acknowledged and agreed that all liability
insurance required to be provided by Lessee is and shall be considered
primary and first to respond, and any liability insurance of Lessor is and
shall be considered secondary to such insurance provided by Lessee. In
addition to the obligations of Section 8.4 hereof, Lessee shall obtain and
provide Lessor with evidence of a primary insurance endorsement indicating
that Lessee has obtained such coverage. It is further agreed that the
insurance maintained by Lessor pursuant to this Section 8.2.1 shall not be
contributory with the insurance maintained by Lessee pursuant to Section
8.1.1.
8.2.2 Lessor shall obtain and keep in force during
the term of this Lease a policy or policies of insurance covering first party
loss or damage to the Building and the other improvements within the
Premises, but not Lessee's personal property, fixtures, equipment,
Installations or Alterations, in an amount not to exceed the full replacement
value thereof, as the same may exist from time to time, providing protection
against all perils included within the classification of fire, extended
coverage, vandalism, malicious mischief, flood (in the event the Building is
located in a designated flood hazard area and flood insurance is required by
a lender having a lien on the Premises) special extended perils ("all risk,"
or "special" causes of loss as such terms are used in the insurance industry)
and such other insurance coverages, including earthquake insurance, as Lessor
from time to time reasonably deems advisable so long as it is available at
commercially reasonable rates. In addition, Lessor may obtain and keep in
force, during the term of this Lease, a policy of rental value insurance
covering one hundred percent (100%) of all Base Rent, additional rent
(including Operating Expenses) and other sums payable by Lessee under this
lease period of one (1) year, with loss payable to Lessor. The amount of the
rental value insurance shall be reviewed annually and adjusted to reflect any
changes in the amount of the Base Rent or the additional rent.
8.3 BLANKET POLICY. Notwithstanding anything to the
contrary contained in this Lease, Lessee's obligation to carry insurance may
be satisfied by coverage under a so-called "blanket policy" or policies of
insurance, provided that Lessor shall be named as an additional insured per
the terms of the Lease, the coverage afforded Lessor shall not be reduced or
diminished from that otherwise required by this Lease, and all requirements
set forth in this Lease are otherwise satisfied by such blanket policy or
policies.
8.4 INSURANCE POLICIES. Insurance required hereunder shall
be in companies holding a rating of at least A, or such other rating as may
be required by any lender having a lien on the Premises, as set forth in the
most current issue of BEST'S INSURANCE REPORTS. Lessee shall not do or permit
to be done anything which shall invalidate or render unenforceable any
portion of the insurance policies carried by Lessee or by Lessor. Lessee
shall deliver to Lessor certificates of insurance or copies of insurance
policies evidencing the existence and amounts of
12
insurance required under this Section 8 not less than seven (7) days prior to
the Commencement Date of this Lease; provided, however, Lessee shall
immediately deliver full copies of insurance policies if Lessor so elects and
upon written request. No such policy shall be cancelable or subject to
reduction of coverage or other modification except after thirty (30) days'
prior written notice to Lessor. Lessee shall, at least thirty (30) days prior
to the expiration of such policies, furnish Lessor with certificates of
insurance, renewals, "binders" or new policies evidencing the insurance to be
maintained by Lessee. If Lessee provides certificates of insurance to
evidence the insurance to be maintained by Lessee pursuant to Section 8.1,
then within fifteen (15) days after Lessor's written request, Lessee shall
deliver to Lessor full copies of the insurance policies. Any failure of
Lessor to demand or obtain any certificate, policy or other matter provided
for in this Lease shall not constitute a waiver of any kind, and shall not
constitute a defense for Lessee under any circumstances.
8.5 WAIVER OF SUBROGATION. Lessee and Lessor each hereby
releases and relieves the other, and waives its right of subrogation against
the other, for loss or damage arising out of or incident to the perils
insured against which perils occur in, on or about the Premises, whether due
to the alleged or actual negligence of Lessor, Lessee or their agents,
employees contractors and/or invitees, to the extent of the insurance
coverage received by the waiving party. Lessee shall give notice to all
insurance carriers that the foregoing mutual waiver of subrogation is
contained in this Lease, and shall obtain from such insurance carriers a
waiver of the rights of subrogation.
8.6 INDEMNITY. Except to the extent caused by the sole,
active negligence or intentional misconduct of Lessor, Lessee shall
indemnify, defend and hold harmless Lessor from and against any and all
claims, liabilities, causes of action, judgments and settlements, including
attorneys' fees and costs, arising from the Premises, or from the conduct of
Lessee's business or from any activity, work or thing done, permitted or
suffered by Lessee in, on or about the Premises, the Common Areas or
elsewhere, and shall further indemnify and hold harmless Lessor from and
against any and all claims, liabilities, causes of action, judgments and
settlements, including attorneys' fees and costs, arising from any breach or
default in the performance of any obligation to be performed by Lessee under
the terms of this Lease, or arising from any act or omission of Lessee, or
any of Lessee's agents, contractors, employees, or invitees. In the event any
action or proceeding of any kind is brought against Lessor in connection with
any of the foregoing matters, Lessee shall defend the same at Lessee's
expense, with counsel reasonably satisfactory to Lessor, and Lessor shall
cooperate with Lessee in such defense; provided, however, that Lessor shall
have the right to defend itself, at Lessee's expense, with counsel of
Lessor's choice and Lessee shall reimburse Lessor for all reasonable fees and
costs of defense upon demand. Lessee, as a material part of the consideration
to Lessor for the execution of this Lease by Lessor, hereby assumes all risk
of damage to property of Lessee or of Lessee's employees, agents, customers
and invitees, or injury to persons, in, upon or about the Premises or the
Common Areas, arising from any cause whatsoever, except such damage or injury
arising from the sole, active negligence or intentional misconduct of Lessor
or breach of this Lease by Lessor which is not otherwise attributable to
Lessee's actions or emissions. Otherwise, Lessee hereby waives all claims and
liabilities whatsoever against Lessor. This indemnity is intended to be as
broad as permitted by law. The parties acknowledge that parol or extrinsic
evidence of the intent of this provision shall not be admissible in a court
of law.
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8.7 EXEMPTION OF LESSOR FROM LIABILITY. Except for the
breach of this Lease by Lessor which is not otherwise attributable to Lessee's
actions or omissions and the sole, active negligence or intentional misconduct
of Lessor, its agents, employees or contractors, Lessee hereby agrees that
Lessor shall not be liable for damage to the goods, wares, merchandise or other
property of Lessee, Lessee's employees, agents, contractors or invitees, or any
other person in or about the Premises, nor shall Lessor be liable for injury to
Lessee or Lessee's employees, agents, contractors or invitees, 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, heating, ventilating or air
conditioning systems or equipment or lighting fixtures, or from any other cause,
whether said damage or injury results from conditions arising upon the Premises,
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 Lessee;
provided, however, in no event shall Lessor be liable to Lessee, or to Lessee's
employees, agents, contractors or invitees, for lost profits or other
consequential or speculative losses or damages claimed or incurred by Lessee or
by Lessee's employees, agents, contractors or invitees, and Lessee waives and
releases all such claims against Lessor for lost profits or other consequential
or speculative losses or damages by Lessee and agrees to indemnify Lessor
pursuant to Section 8.6 against such claims by Lessee's employees, agents,
contractors or invitees.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
9.1.1 "Premises Partial Damage" shall mean the
Premises are damaged or destroyed to the extent that the cost of repair is less
than twenty-five percent (25%) of the then replacement cost of the Premises.
9.1.2 "Premises Total Destruction" shall mean the
Premises are damaged or destroyed to the extent that the cost of repair is
twenty-five percent (25%) or more of the then replacement cost of the Premises.
9.1.3 "Insured Loss" shall mean damage or
destruction which was caused by an event covered by the insurance described in
Section 8.2.2. The fact that an Insured Loss is subject to a deductible amount
shall not make the loss an uninsured loss.
9.1.4 "Replacement Cost" shall mean the amount of
money necessary to be spent in order to repair or rebuild the damaged area to
the condition that existed immediately prior to the damage occurring, excluding
all improvements made by lessees.
9.2 PREMISES PARTIAL DAMAGE.
9.2.1 Insured Loss: If at any time during the term
of this Lease there is damage which is an Insured Loss and which falls into the
classification of Premises Partial Damage, then Lessor shall, at Lessor's
expense, repair such damage to the Premises, but not Lessee's fixtures,
equipment, tenant improvements, alterations, improvements, Alterations or
Installations, as soon as reasonably possible and this Lease shall continue in
full force and effect.
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9.2.2 Uninsured Loss: If at any time during the
term of this Lease there is damage which is not an Insured Loss and which falls
within the classification of Premises Partial Damage, unless caused by the sole,
active negligence or intentional misconduct of Lessee (in which event Lessee
shall make the repairs at Lessee's expense), which damage prevents Lessee from
using the Premises, Lessor may at Lessor's option either (i) repair such damage
as soon as reasonably possible at Lessor's expense, in which event this Lease
shall continue in full force and effect, or (ii) give written notice to Lessee
within sixty (60) days after the date of the occurrence of such damage of
Lessor's intention to cancel and terminate this Lease as of the date of the
occurrence of such damage.
9.3 PREMISES TOTAL DESTRUCTION. If at any time during the
term of this Lease there is damage, whether or not it is an Insured Loss, which
falls into the classifications of Premises Total Destruction, then Lessor may,
at Lessor's option, either (i) repair such damage or destruction to the
Premises, but not Lessee's fixtures, equipment, tenant improvements,
alterations, improvements, Alterations or Installations, as soon as reasonably
possible at Lessor's expense, and this Lease shall continue in full force and
effect, or (ii) give written notice to Lessee within sixty (60) days after the
date of occurrence of such damage of Lessor's intention to cancel and terminate
this Lease, in which case this Lease shall be canceled and terminated as of the
date of the occurrence of such damage. Notwithstanding the foregoing, if at any
time during the term of this Lease there is damage, whether or not it is an
Insured Loss, which falls into the classification of Premises Total Destruction,
then Lessee may, at Lessee's option, either (i) repair such damage or
destruction to the Premises, including Lessee's fixtures, equipment, tenant
improvements, alterations, improvements, Alterations or Installations, as soon
as reasonably possible at Lessee's expense, and this Lease shall continue in
full force and effect, or (ii) give written notice to Lessor within on one
hundred and eighty (180) days after the date of occurrence of such damage of
Lessee's intention to cancel and terminate this Lease, in which case this Lease
shall be canceled and terminated as of the date specified in such notice which
date shall be no less than one hundred and eighty (180) days following the date
of the occurrence of such damage.
9.4 ABATEMENT OF RENT, LESSEE'S REMEDIES. In the event
there is damage to the Premises, the Base Rent and Additional Rent payable
hereunder for the period from the date of such damage and during which such
damage, repair or restoration continues (or through the date of termination,
whichever is applicable) shall be abated in proportion to the degree to which
Lessee's use of the Premises is impaired and, provided that Lessor has obtained
the rental value insurance to be maintained by Lessor pursuant to Section 8.2.2,
such abatement shall be limited to the amount of the proceeds of such rental
value insurance actually received by Lessor. Any dispute between Lessor and
Lessee as to the degree to which Lessee's use of the Premises is impaired which
is not resolved between Lessor and Lessee within fifteen (15) days of the date
Lessee makes a claim for such rental abatement to Lessor shall be jointly
submitted by Lessor and Lessee to JAMS Endispute ("JAMS"), who shall use a
single referee to try such dispute using the then current rules of JAMS. The
cost of such arbitration shall be initially borne equally by Lessor and Lessee,
but upon a ruling by the referee, the party, whose determination of the degree
to which Lessee's use of the Premises is impaired is furthest from that
determination of the referee, shall reimburse the other party for all costs of
the arbitration. Except for abatement of Base Rent and Additional Rent, if any,
Lessee shall have no claim against Lessor for any damage suffered by reason of
any such damage, destruction, repair or restoration.
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9.5 TERMINATION - ADVANCE PAYMENTS. Upon termination of
this Lease pursuant to this Section 9, an equitable adjustment shall be made
concerning advance rent and any advance payments made by Lessee to Lessor.
Lessor shall, in addition, return to Lessee so much of Lessee's security deposit
as has not theretofore been applied by Lessor, within 30 days.
9.6 WAIVER. Lessor and Lessee waive the provisions of
California Civil Code Sections 1932(2) and 1933(4), and any similar or successor
laws or statutes relating to termination of leases in the event of damage or
destruction of the leased property, and agree that the rights and obligations of
the parties in such event shall be solely governed by the terms of this Lease.
9.7 LESSEE'S PROPERTY. Notwithstanding anything in the
Lease to the contrary, Lessor shall have no obligation to rebuild or restore
Lessee's trade fixtures, tenant improvements, specialized tenant improvements or
laboratory fixtures, equipment, merchandise, or any Alterations or Installations
made by Lessee to the Premises.
9.8 NOTICE OF DAMAGE. Lessee shall notify Lessor within
five (5) days after the occurrence thereof of any damage to all or any portion
of the Premises. In no event shall Lessor have any obligation to repair or
restore the Premises pursuant to this Section 9 prior to receipt of notice
hereunder.
9.9 REPLACEMENT COST. The reasonable determination in
good faith by Lessor of the estimated cost of repair of any damage, or of the
replacement cost, shall be conclusive for purposes of this Section 9.
10. REAL PROPERTY TAXES.
10.1 PAYMENT OF TAXES. Lessor shall pay all Real Property
Taxes (as defined in Section 10.3), applicable to the Premises and the Common
Areas, subject to reimbursement by Lessee of such Real Property Taxes in
accordance with the provisions of Section 4.3, except as otherwise provided in
Section 10.2.
10.2 PAYMENT OF TAXES; ADDITIONAL IMPROVEMENTS. Real
Property Taxes shall be an Operating Expense payable pursuant to Section 4.3.
Lessee shall, however, pay to Lessor at the time that Operating Expenses are
payable under Section 4.3.3 the entirety of any increase in Real Property Taxes
assessed by reason of improvements placed upon the Premises by Lessee or at
Lessee's request.
10.3 DEFINITION OF "REAL PROPERTY TAXES." As used herein
the term "Real Property Taxes" shall include any form of tax, levy or
assessment, general, special, ordinary or extraordinary, and any license fee,
commercial rental tax, improvement bond or bonds, levy or tax imposed on the
Premises or any portion thereof by any authority having the direct or indirect
power to tax, including any city, county, state or federal government, or any
school, agricultural, sanitary, fire, street, drainage or other improvement,
benefit or service district, as against any legal or equitable interest of
Lessor in the Premises or the Building or in any portion thereof, as against
Lessor's right to rent or other income therefrom, and as against Lessor's
business of leasing the Premises. The term "Real Property Taxes" shall also
include (a) any tax, fee, levy, assessment or charge (i) in substitution of,
partially or totally, any tax, fee, levy, assessment or
16
charge hereinabove included within the definition of "Real Property Taxes,"
(ii) the nature of which was hereinbefore included within the definition of
"Real Property Taxes," (iii) which is imposed as a result of a transfer,
either partial or total, of Lessor's interest in the Premises or which is
added to a tax or charge hereinbefore included within the definition of "Real
Property Taxes" by reason of such transfer, or (iv) which is imposed by
reason of this transaction, any modifications or changes hereto, or any
transfer hereof, and (b) any possessory interest or other tax, fee, levy,
assessment or charge levied in lieu of any tax, fee, levy, assessment or
charge hereinabove included within the definition of "Real Property Taxes" by
reason of the tax exempt or other status of Lessor. The term "Real Property
Taxes" shall not include any interest or penalties resulting from the failure
of Lessor to pay any tax, levy, or assessment, provided that Lessee has
timely paid Real Property Taxes as provided in this Section 10, or any
inheritance, estate, gift, personal or corporate income (unless in
substitution for any other taxes hereinabove included within the definition
of "Real Property Taxes"), succession or documentary transfer taxes of
Lessor. Any assessments levied against the Premises after the date of this
Lease which can be paid over time shall be treated, for the purposes of
determining Real Property Taxes, as if Lessor elected to pay such assessments
over the longest period allowed by law, and only the amount of such
assessments, together with interest at the rate of permitted by law where
such assessments are paid over time rather than in a single payment, which is
allocable to each calendar year during the term of this Lease shall be
included in term "Real Property Taxes."
10.4 PERSONAL PROPERTY TAXES.
10.4.1 Lessee shall pay prior to delinquency all
taxes assessed against and levied upon trade fixtures, furnishings, equipment,
inventory and all other personal property of Lessee located in, on or about the
Premises or the Building. When possible, Lessee shall cause said trade fixtures,
furnishings, equipment, inventory and all other personal property to be assessed
and billed separately from the Real Property Taxes.
10.4.2 If any of Lessee's said personal property
shall be assessed with Lessor's real property, Lessee shall pay to Lessor the
taxes attributable to Lessee's said personal property within ten (10) days after
receipt of a written statement setting forth the taxes applicable to Lessee's
personal property.
11. UTILITIES. Lessee shall contract and pay for all water, gas,
heat, light, power, telephone, trash removal and disposal and other utilities
and services required by Lessee and supplied to the Premises, together with any
taxes or surcharges thereon. Lessor shall have no liability to Lessee for the
interruption, discontinuance, reduction, or curtailment of any utility or
service provided to the Premises, and any such interruption, discontinuance,
reduction or curtailment shall not be grounds for abatement of rent under this
Lease.
12. ASSIGNMENT AND SUBLETTING. Lessee shall not assign, transfer,
encumber, grant any concession or license or hypothecate the leasehold estate
under this Lease, or any interest therein, and shall not sublet the Premises, or
any part thereof, or any right or privilege appurtenant thereto, or suffer any
other person or entity to occupy or use the Premises, or any portion thereof (a
"Transfer") without, in each case, the prior written consent of Lessor, which
consent will not be unreasonably withheld. Notwithstanding the foregoing to the
contrary, Lessor shall be entitled to terminate this Lease with respect to all
or such portion of the Premises which Lessee
17
proposes to Transfer, except for a permitted Transfer not requiring Lessor's
consent as set forth in Section 12.6 hereof, by written notice given to
Lessee within thirty (30) days following receipt by Lessor of written notice
from Lessee of Lessee's proposal to Transfer; provided, however, that Lessee
shall have the right to withdraw its proposal to Transfer and to nullify
Lessor's election to terminate by written notice given to Lessor within five
(5) days following receipt of Lessor's notice of termination. Any such
termination shall be effective thirty (30) days after Lessor's notice of
termination. Upon such termination, any prior subleases of portions of the
Premises, at the option of the Lessor, shall also concurrently terminate.
Notwithstanding the foregoing, Lessor acknowledges that Lessee sublets a
portion of the Premises to Devcon, which Lessor hereby approves subject to
Lessor's review of documentation pursuant to Section 12.1 and compliance by
Lessee with the terms and conditions of this Section 12.
12.1 DOCUMENTATION. Prior to any Transfer, and subject to
Section 12.6 below, which Lessee desires to make, Lessee shall provide to Lessor
in writing the name and address of the proposed transferee, the balance sheet
and income statement (and statement of change in financial condition) of the
proposed transferee for the prior three (3) years to the extent available, true
and complete copies of all documents relating to Lessee's prospective agreement
to Transfer and shall specify all consideration to be received by Lessee for
such Transfer in the form of lump sum payments, installments of rent, or
otherwise, and such other information as Lessor shall reasonably request in
connection with the proposed Transfer within thirty (30) days following receipt
by Lessor of Lessee's proposal to Transfer. For purpose of this Section 12.1,
the term "consideration" shall include, without limitation, all monies or other
consideration of any kind, including, but not limited to, bonus money, and
payments (in excess of reasonable book value thereof) for Lessee's assets,
fixtures, inventory, accounts, equipment, furniture, general intangibles, and
any capital stock or other equity ownership of Lessee. Within fifteen (15)
business days after the receipt of such documentation and other information,
Lessor shall notify Lessee in writing that Lessor either (a) consents to the
proposed Transfer subject to the terms and conditions hereinafter set forth, or
(b) refuses such consent.
12.2 TERMS AND CONDITIONS. As a condition to Lessor
granting its consent to any Transfer, (a) Lessor may require that Lessor receive
fifty percent (50%) of the amount by which all consideration to be received by
Lessee in connection with said Transfer, less any reasonable broker's
commissions paid by Lessee relating to such Transfer, exceeds the Base Rent
payable by Lessee to Lessor for the period of such Transfer (the "Bonus Rent"),
(b) Lessor may require that the proposed transferee make all rent payments under
the Transfer directly to Lessor, provided Lessor pays to Lessee fifty percent
(50%) of any Bonus Rent, (c) Lessee and the proposed transferee must demonstrate
to Lessor's reasonable satisfaction that the transferee is financially
responsible and capable of performing the obligations imposed under this Lease,
(d) that proposed use of the Premises is permitted under the provisions of this
Lease, and (e) that the proposed Transfer, or the use of the Premises by the
proposed transferee, shall not expose Lessor to any additional liability or risk
of loss. Each Transfer agreement to which Lessor has consented shall be an
instrument in writing in form satisfactory to Lessor, and shall be executed by
both Lessee and the transferee, as the case may be. Each such Transfer agreement
shall recite that it is and shall be subject and subordinate to the provisions
to this Lease, that the transferee accepts such Transfer and agrees to perform
all of the obligations of Lessee hereunder (or in the case of a sublease, to the
extent such obligations related to the portion of the Premises subleased), and
that the termination of this Lease shall, at Lessor's sole election, constitute
a
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termination of every such Transfer. In the event Lessor shall consent to a
Transfer, Lessee shall nonetheless remain primarily liable for all obligations
and liabilities of Lessee under this Lease, including but not limited to the
payment of rent. No Transfer shall relieve any guarantor, if any, of this Lease.
Lessee agrees to reimburse Lessor upon demand for reasonable attorneys' fees and
costs incurred by Lessor in connection with the negotiation, review and
documentation of any such requested Transfer in an amount not to exceed One
Thousand Dollars ($1,000).
12.3 PARTNERSHIP. In the event this Lease is assigned to a
partnership, a transfer or transfers, voluntary or involuntary, which in the
aggregate consists of a majority interest or any general partner interest in the
partnership, or the dissolution of the partnership, shall be deemed a Transfer
requiring Lessor's prior written consent.
12.4 CORPORATION. Subject to Section 12.6, if Lessee is a
corporation, any dissolution, merger, consolidation, or other reorganization of
Lessee, or the transfer, of a controlling percentage of the capital stock of
Lessee, or the sale or series of sales within any twelve month period of all or
substantially all of Lessee's assets located in, on, or about the Premises,
shall be deemed a Transfer. The phrase "controlling percentage" means the
ownership of, and the right to vote, stock possessing twenty-five percent (25%)
or more of the total combined voting power of all classes of Lessee's capital
stock issued, outstanding and entitled to vote for the election directors. The
provisions of this paragraph shall not apply to the transfer of the shares of
Lessee through a national securities exchange (as the term is used in the
Securities Exchange Act of 1934, as amended), provided that such transfer is not
effected for the purpose of obtaining effective control of Lessee or for the
purpose of obtaining a controlling percentage of the shares of Lessee.
12.5 LESSOR'S REMEDIES. Except as provided for in Section
12.4 above, any Transfer without Lessor's prior written consent shall at
Lessor's election be void, and shall constitute a default under this Lease. The
consent by Lessor to any Transfer shall not constitute a waiver of the
provisions of this Section 12, including the requirement of Lessor's prior
written consent, with respect to any subsequent Transfer. If Lessee shall
purport to Transfer, without Lessor's prior written consent or without complying
with the provisions of this Section 12, Lessor may collect rent from the person
or persons then or thereafter occupying the Premises and apply the net amount
collected against the rent reserved in this Lease, but such collection shall not
be deemed a waiver of Lessor's rights and remedies under this Section 12, or the
acceptance of any such purported transferee, or a release of Lessee from the
further performance by Lessee of covenants set forth in this Lease, or a release
of any guarantor, if any, of this Lease.
12.6 PERMITTED TRANSFERS. Notwithstanding anything to the
contrary contained in this Section 12, Lessee may make a sublease of all or any
portion of the Premises, or may make an assignment of this Lease, without
Lessor's consent: (a) to a wholly owned or controlled subsidiary or entity; (b)
to a corporation or any other entity or person(s) which wholly owns or controls
Lessee; (c) to a corporation or any other entity wholly owned or controlled by
or which wholly owns or controls a corporation or other entity or person(s)
described in the preceding clauses (a) and (b); (d) to any corporation or other
entity or person(s) into which Lessee or any corporations, entities or persons
described in the preceding clauses (a), (b) and (c) is merged or consolidated,
or to which all or substantially all of Lessee's assets or stock or the assets
or stock of any of the corporations, entities or person(s) described in such
preceding clauses are sold or
19
transferred; provided that the combined tangible net worth and the net income
(as determined by using the Net Income Formula defined below) of any such
transferee is not less than the tangible net worth and net income (as
determined by using the Net Income Formula) of Lessee at the time of
execution of this Lease or as it exists immediately prior to any such
Transfer, whichever is greater, and such transferee possesses, in Lessor's
reasonable judgment, comparable business experience and creditworthiness.
Lessee shall give Lessor not less than thirty (30) days' prior written notice
of any transaction permitted under this Section 12-6, including the identity
of the parties involved, their relationship, the clause of this Section 12.6
which permits such transaction and such other information as Lessor may
reasonably request with respect to the requirements of this Section 12.6. No
Transfer permitted under this Section 12.6 shall result in the release of
Lessee from liability under this Lease. Any Transfer permitted under this
Section 12.6 without Lessor's written consent shall be subject to all of the
other restrictions contained in this Section 12. For purposes of this Section
12.6, "Net Income Formula" shall mean the same formula for the calculation of
net income required by a company in a Form 10Q filing with the Securities and
Exchange Commission.
13. DEFAULT; REMEDIES.
13.1 DEFAULT. The occurrence of any one or more of the
following events shall constitute a default of this Lease by Lessee (an "Event
of Default"):
13.1.1 The vacation for thirty (30) consecutive
days or abandonment of the Premises by Lessee.
13.1.2 The failure by Lessee to make any payment of
rent or any other payment required to be made by Lessee hereunder, as and when
due, where such failure shall continue for a period of five (5) business days
after written notice thereof from Lessor to Lessee; provided, that, such five
(5) business day cure period shall apply only to the first two (2) failures to
pay rent occurring during any calendar year and thereafter the cure period for
all other failures to pay rent shall be three (3) days. In the event that Lessor
serves Lessee with a notice to pay rent or quit pursuant to applicable unlawful
detainer statutes, such notice to pay rent or quit shall also constitute the
notice required by this paragraph.
13.1.3 Except as otherwise provided in this Lease,
the failure by Lessee to observe or perform any of the covenants, conditions or
provisions of this Lease to be observed or performed by Lessee, other than
described in Sections 13.1.1 and 13.1.2 above, where such failure shall continue
for a period of thirty (30) days after written notice thereof from Lessor to
Lessee; provided, however, that if the nature of Lessee's noncompliance is such
that more than thirty (30) days are reasonably required for its cure, then
Lessee shall not be deemed to be in default if Lessee commenced such cure within
said thirty (30) day period and thereafter diligently prosecutes such cure to
completion. To the extent permitted by law, such thirty (30) day notice shall
constitute the sole and exclusive notice required to be given to Lessee under
applicable unlawful detainer statutes.
13.1.4 (a) The making by Lessee of any general
arrangement or general assignment for the benefit of creditors; (b) Lessee
becomes a "debtor" as defined in 11 U.S.C. Section 101 or any successor statute
thereto (unless, in the case of a petition filed against Lessee, the
20
same is dismissed within sixty (60) days); (c), the appointment of a trustee
or receiver to take possession of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where
possession is not restored to Lessee within thirty (30) days; (d) the
attachment, execution or other judicial seizure of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this
Lease, where such seizure is not discharged within thirty (30) days or the
date of any sooner sale of any of such assets; (e) Lessee shall not pay its
debts as they become due; (f) Lessee shall be insolvent or (g) Lessee shall
become subject to any proceeding in bankruptcy or insolvency.
13.1.5 The failure of Lessee to renew the Letter of
Credit within thirty (30) days prior to its expiration date; the failure of the
financial institution which has issued the Letter of Credit to honor the Letter
of Credit; or the issuance of any notice by the financial institution which as
issued the Letter of Credit declaring that the Letter of Credit has been or will
be withdrawn or terminated.
13.1.6 The discovery by Lessor that any financial
statement given to Lessor by Lessee, any assignee of Lessee, any subtenant of
Lessee, or any successor in interest of Lessee, was materially false or
misleading.
13.1.7 The failure of Lessee to apply a portion of
the sale proceeds from the sale of the Property pursuant to the Purchase
Agreement, in the minimum amount of approximately One Million Dollars
($1,000,000) to pay Seller's 1998 tax obligations arising from the sale of the
Property. Lessee shall deliver evidence of such payment to Lessor within ten
(10) days following payment.
13.2 REMEDIES. Upon an Event of Default, Lessor may at any
time thereafter, with or without notice or demand and without limiting Lessor in
the exercise of any right or remedy which Lessor may have by reason of such
default;
13.2.1 Terminate Lessee's right to possession of
the Premises by any lawful means, in which case this Lease and the term hereof
shall terminate and Lessee shall immediately surrender possession of the
Premises to Lessor. In such event Lessor shall be entitled to recover from
Lessee:
(a) the worth at the time of award of
the unpaid rent which had been earned at the time of termination of this Lease;
(b) the worth at the time of award of
the amount by which the unpaid rent which would have been earned after
termination of the Lease until the time of award exceeds the amount of rental
loss that Lessee proves could have been reasonably avoided;
(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 rental loss that Lessee proves could be
reasonably avoided; and
(d) any other amount necessary to
compensate Lessor for all detriment proximately caused by Lessee's default
including but not limited to, the cost of recovering possession of the Premises,
reasonable expenses of reletting, including renovation
21
and alteration of the Premises, reasonable attorneys' fees, that portion of
the leasing commission paid by Lessor pursuant to Section 15 applicable to
the unexpired term of this Lease, and any real estate commission incurred in
reletting the Premises.
As used in Sections 13.2.1(a) and 13.2.1(b), the phrase "worth at the time of
award" shall include interest at the rate of ten percent (10%) per annum. As
used in Section 13.2.1(c), the phrase "worth at the time of award" shall be
computed by discounting such amount by the discount rate of the Federal Reserve
Bank of San Francisco at the time of the award plus one percent (1%).
13.2.2 Maintain Lessee's right to possession in
which case this Lease shall continue in effect whether or not Lessee shall have
vacated or abandoned the Premises. In such event, Lessor shall be entitled to
enforce all of Lessor's rights and remedies under this Lease, including the
right to recover the rent as it becomes due hereunder. No action by Lessor shall
be deemed a termination of this Lease except written notice by Lessor delivered
to Lessee expressly declaring a termination of this Lease. If Lessor maintains
Lessee's right to possession, Lessor may thereafter elect to terminate this
Lease.
13.2.3 Terminate this Lease and, in addition to any
recoveries Lessor may seek under Section 13.2.1, bring an action to reenter and
regain possession of the Premises in the manner provided by the laws of unlawful
detainer of the State of California then in effect.
13.2.4 Pursue any other remedy now or hereafter
available to Lessor under the laws or judicial decisions of the State of
California. Unpaid installments of rent and other unpaid monetary obligations of
Lessee under the terms of this Lease shall bear interest from the date due at
the maximum rate then allowable by law.
13.3 DEFAULT BY LESSOR. Lessor shall not be in default
unless Lessor fails to perform obligations required of Lessor within a
reasonable time, but in no event earlier than thirty (30) days after written
notice by Lessee to Lessor and to the holder of any first mortgage or deed of
trust encumbering the Premises whose name and address shall have theretofore
been furnished to Lessee in writing, specifying wherein Lessor has failed to
perform such obligation; provided, however, that if the nature of Lessor's
obligation is such that more than thirty (30) days are required for performance
then Lessor shall not be in default if Lessor commences performance within such
thirty (30) day period and thereafter diligently prosecutes the same to
completion.
13.4 LATE CHARGES. Lessee hereby acknowledges that late
payment by Lessee to Lessor of Base Rent, Operating Expenses or other sums due
hereunder will cause Lessor 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 Lessor by the terms of any mortgage or trust
deed covering the Premises. Accordingly, if any installment of Base Rent,
Operating Expenses or any other sum due from Lessee shall not be received by
Lessor or Lessor's designee within five (5) days after such amount shall be due,
then, without any requirement for notice to Lessee, Lessee shall pay to Lessor a
late charge equal to ten percent (10%) of such overdue amount. The parties
hereby agree that such charge by Lessor shall in no event constitute a waiver of
Lessee's default with respect to such overdue amount, nor prevent Lessor from
exercising any of the other
22
rights and remedies granted hereunder. In the event that a late charge is
payable hereunder, whether or not collected, for three (3) installments of
any of the aforesaid monetary obligations of Lessee, then Base Rent shall
automatically become due and payable quarterly in advance, rather than
monthly, notwithstanding Section 4.1 or any other provision of this Lease to
the contrary.
13.5 NO RELIEF FROM FORFEITURE AFTER DEFAULT. Lessee
waives all rights of redemption or relief from forfeiture under California Code
of Civil Procedure Sections 1174 and 1179, and under any other present or future
laws or statutes, in the event Lessee is evicted or Lessor otherwise lawfully
takes possession of the Premises by reason of any default by Lessee under this
Lease.
14. CONDEMNATION. If the Premises or any portion thereof or the
Premises are taken under the power of eminent domain, or sold under the threat
of the exercise of said power (collectively, "condemnation"), this Lease shall
terminate as to the part so taken as of the date the condemning authority takes
title or possession, whichever first occurs. If more than thirty-three and
one-third percent (33-1/3%) of the floor area of the Building, or more than
thirty-three and one-third percent (33-1/3%) of that portion of the Premises
designated as parking for the Building, is taken by condemnation, then either
Lessor or Lessee, within ten (10) days after the condemning authority shall have
taken possession, may elect to terminate this Lease as of the date the
condemning authority takes such possession by written notice given to the other
party. If neither Lessor and Lessee so elects to terminate this Lease, this
Lease shall remain in full force and effect as to the portion of the Premises
remaining, except that the Base Rent shall be reduced in the proportion that the
floor area of the Premises taken bears to the total floor area of the Premises.
No reduction of rent shall occur if the only area taken is that which does not
have the Premises located thereon. Any award for the taking of all or any part
of the Premises under the power of eminent domain or any payment made under
threat of the exercise of such power shall be the sole property of Lessor,
whether such award shall be made as compensation for diminution in value of the
leasehold or for the taking of the fee, or as severance damages; provided,
however, that Lessee shall be entitled to any separate award for loss of or
damage to Lessee's trade fixtures and any property which Lessee is entitled to
remove at the expiration of the term under the terms of this Lease, loss of good
will, the unamortized book value or cost (whichever is less) of the improvements
made to the Premises by Lessee at Lessee's sole cost and expense and relocation
costs. In the event that this Lease is not terminated by reason of such
condemnation and as permitted by applicable law, Lessor shall to the extent of
severance damages received by Lessor in connection with such condemnation,
repair any damage to the Premises caused by such condemnation, except to the
extent that Lessee has been reimbursed therefor by the condemning authority.
Lessee shall pay any amount in excess of such severance damage required to
complete such repair, only with respect to the replacement of its property.
Lessor and Lessee waive the provisions of California Code of Civil
Procedure Sections 1265.110, 1265.120 and 1265.130, and any similar or successor
statutes relating to termination of leases in the event of condemnation, and
agree that the rights and obligations of the parties in such event shall be
governed by the terms of this Lease.
15. BROKER'S FEE. Lessor and Lessee acknowledge that Grubb & Ellis
shall be entitled to a broker's commission pursuant to Section 14 of the
Purchase Agreement with respect
23
to the purchase and sale transaction. Except for the foregoing, Lessor and
Lessee each warrant and represent to the other that no broker or finder has
been engaged or used by Lessor or Lessee in connection with this Lease or the
Premises. The warranties and representations contained in this Section 15
shall survive the termination of this Lease.
16. ESTOPPEL CERTIFICATE.
16.1 Each party (as "responding party") shall at any time
upon not less than ten (10) business days prior written notice from the other
party ("requesting party") execute, acknowledge and deliver to the requesting
party a statement in writing (i) certifying that this Lease is unmodified and in
full force and effect (or, if modified, stating the nature of such modification
and certifying that this Lease, as so modified, is in full force and effect) and
the date to which the rent and other charges are paid in advance, if any, and
(ii) acknowledging that there are not, to the responding party's knowledge, any
uncured defaults on the part of the requesting party, or specifying such
defaults if any are claimed. Any such statement may be conclusively relied upon
by the requesting party and any prospective purchaser or encumbrancer of the
Premises or of the business of the requesting party to the extent of the
representations contained in such statement.
16.2 At the requesting party's option, the failure to
deliver such statement within such time shall be a default of this Lease by the
party who is to respond, without any further notice to such party, or it shall
be conclusive upon such party that (i) this Lease is in full force and effect,
without modification except as may be represented by the requesting party, (ii)
there are no uncured defaults in the requesting party's performance, and (iii)
if Lessor is the requesting party, not more than one month's rent has been paid
in advance.
16.3 If Lessor desires to finance, refinance, or sell the
Premises, or any part thereof, Lessee hereby agrees to deliver to any lender or
purchaser designated by Lessor such financial statements of Lessee as may be
reasonably required by such lender or purchaser with reasonably satisfactory
arrangements to maintain confidentiality. Notwithstanding the foregoing to the
contrary, if Lessee is a public company having shares that trade on a national
securities exchange, Lessee shall only be required to deliver such financial
statements that are otherwise available to the public. Such statements shall
include the past three (3) years' financial statements of Lessee. All such
financial statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
17. LESSOR'S LIABILITY. The term "Lessor" as used herein shall
mean only the owner or owners, at the time in question, of the fee title or a
lessee's interest in a ground lease of the Premises, and in the event of any
transfer of such title or interest, the Lessor herein named (and in case of any
subsequent transfers, then the grantor) shall be relieved from and after the
date of such transfer of all liability as respects Lessor's obligations
thereafter to be performed by Lessor under this Lease, provided that any funds
held by Lessor or the then transferor at the time of such transfer under the
provisions of this Lease shall be delivered to the transferee and that such
transferee assumes in full the obligations of the "Lessor" under this Lease
which are to be performed from and after the effective date of the transfer. The
obligations contained in this Lease to be performed by Lessor shall, subject as
aforesaid, be binding on Lessor's successors and assigns, only during their
respective periods of ownership.
24
Notwithstanding any provision of this Lease to the contrary, Lessee
agrees that it shall look solely to the estate and property of the Lessor in the
Premises (including, but not limited to, any proceeds derived from the sale of
the Premises or any portion of the Premises), subject to the prior rights of any
mortgagee or holder of a deed of trust encumbering the Premises or any portion
thereof and subject to the Lessor's rights under a leasehold interest in the
Premises or any part thereof, if any, for the collection of any judgment (or
other judicial process) requiring the payment of money by Lessor in the event of
any default by Lessor with respect to any of the terms, covenants and conditions
of this Lease to be observed or performed by Lessor, and no other asset of
Lessor shall be subject to any levy, execution or other process for the
satisfaction of Lessee's remedies under this Lease. No officer, director,
administrator, employee, agent, or attorney of Lessor shall be personally liable
for any default of Lessor under this Lease.
18. SEVERABILITY. The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction shall in no way affect the
validity of any other provision hereof.
19. INTEREST ON PAST-DUE OBLIGATIONS. Any amount due to Lessor not
paid when due shall bear interest at the lesser of a floating rate equal to the
"prime" or "reference" rate of Bank of America, N.T. & S.A., in effect from time
to time plus two percent (2%), or the maximum rate than allowable by law, from
the date such amount is due until such amount is received by Lessor. Payment of
such interest shall not excuse or cure any default by Lessee under this Lease;
provided, however, that interest shall not be payable on late charges incurred
by Lessee.
20. TIME OF ESSENCE. Time is of the essence with respect to the
obligations to be performed under this Lease.
21. INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS. This Lease
contains all agreements of the parties with respect to any matter mentioned
herein. No prior or contemporaneous agreement or understanding pertaining to any
such matter shall be effective. This Lease may be modified in writing only,
signed by the parties in interest at the time of the modification. Except as
otherwise stated in this Lease, Lessee hereby acknowledges that neither the real
estate broker listed in Section 15 hereof nor any cooperating broker on this
transaction nor the Lessor or any employee or agents of any of said persons has
made any oral or written warranties or representations to Lessee relative to the
terms of this Lease or the condition or use by Lessee of the Premises and Lessee
acknowledges that Lessee assumes all responsibilities regarding the Occupational
Safety Health Act, the Americans With Disabilities Act, the legal use and
adaptability of the Premises and the compliance thereof with all applicable laws
and regulations in effect during the term of this Lease, except as otherwise
expressly stated in this Lease.
22. NOTICES. Any notice required or permitted to be given
hereunder shall be in writing and may be given by personal delivery, overnight
courier, facsimile followed by overnight delivery or certified mail and if given
personally or by mail, shall be deemed sufficiently given if addressed to Lessee
or to Lessor at the address noted below the signature of the respective parties,
as the case may be. Either party may by notice to the other specify a different
address for notice purposes, except that upon Lessee's taking possession of the
Premises, the Premises shall constitute Lessee's address for notice purposes. A
copy of all notices required or permitted to be given to Lessor hereunder shall
be concurrently transmitted to
25
such party or parties at all such addresses as Lessor may from time to time
hereafter designate by notice to Lessee. Notice shall be deemed effective
upon receipt or refusal of receipt as shown on the return receipt or bill of
lading.
23. WAIVERS. No waiver by Lessor or any provision hereof shall be
deemed a waiver of any other provision hereof or of any subsequent breach by
Lessee of the same or any other provision. Lessor's consent to, or approval of,
any act shall not be deemed to render unnecessary the obtaining of Lessor's
consent to or approval of any subsequent act by Lessee. The acceptance of rent
hereunder by Lessor shall not be a waiver of any preceding breach of Lessee of
any provision hereof, other than the failure of Lessee to pay the particular
rent so accepted, regardless of Lessor's knowledge or such preceding breach at
the time of acceptance of such rent.
24. RECORDING. The parties agree to execute a memorandum of lease
to be recorded in the county records.
25. HOLDING OVER. If Lessee, with Lessor's consent remains in
possession of the Premises or any part thereof after the expiration of the term
hereof, such occupancy shall be a tenancy from month-to-month upon all the
provisions of this Lease pertaining to the obligations of Lessee, except that
Base Rent shall be increased to an amount equal to one hundred fifty percent
(150%) of the Base Rent paid during the last month of the term, and any other
sums due hereunder shall be due and payable in the amount and at the time
specified in this Lease.
If Lessee holds over in the Premises after the expiration or sooner
termination of the term of this Lease without the prior written consent of
Lessor, Lessee shall be a trespasser, and Lessee shall indemnify, defend,
protect and hold harmless Lessor from and against any and all claims for damages
by any succeeding tenant as the result of the failure of Lessee to surrender the
Premises in the condition required by this Lease upon the expiration or sooner
termination of the term of this Lease.
26. CUMULATIVE REMEDIES. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
27. COVENANTS AND CONDITIONS. Each provision of this Lease
performable by Lessee shall be deemed both a covenant and a condition.
28. BINDING EFFECT; CHOICE OF LAW. Subject to any provision hereof
restricting assignment or subletting by Lessee and subject to the provisions of
Section 17, this Lease shall bind the parties, their personal representatives,
successors and assigns. This Lease shall be governed by the laws of the State of
California and any litigation concerning this Lease between the parties hereto
shall be initiated in the County of Santa Clara, California.
29. SUBORDINATION.
29.1 This Lease and the rights of Lessee hereunder, shall
be subordinate to any ground lease, mortgage, deed of trust, or any other
hypothecation or security now or hereafter placed upon the Premises or any
portion thereof and to any and all advances made on the security thereof and to
all renewals, modifications, consolidations, replacements and extensions
26
thereof, provided that Lessee shall have received a reasonably satisfactory
nondisturbance agreement from the holder of such senior interest.
Notwithstanding such subordination, Lessee's right to quiet possession of the
Premises shall not be disturbed if Lessee is not in default beyond any
applicable notice and cure period and so long as Lessee shall pay the rent and
observe and perform all of the terms and provisions of this Lease, unless this
Lease is otherwise terminated pursuant to its terms. If any mortgagee, trustee
or ground lessor shall elect to have this Lease prior or superior to the lien of
its mortgage, deed of trust or ground lease, and shall give written notice
thereof to Lessee, this Lease shall be deemed prior to such mortgage, deed of
trust or ground lease, whether this Lease is dated prior to or subsequent to the
date of said mortgage, deed of trust or ground lease or the date of recording
thereof.
29.2 Lessee agrees to execute any documents required to
effectuate an attornment, a Subordination or to make this Lease prior to the
lien of any mortgage, deed of trust or ground lease, as the case may be;
provided that any holder of any mortgage, deed of trust or similar security
instrument or any ground lessor shall agree in writing that in the event any
mortgage, deed of trust or security instrument is foreclosed or a conveyance in
lieu of foreclosure is made, or any ground lease or underlying lease terminates,
Lessee's quiet enjoyment and possession of the Premises and other rights under
this Lease shall not be disturbed so long as Lessee is not in default under the
terms and provisions of this Lease beyond any applicable notice and cure period
and subject to any standard exclusions to Lessee's rights under the Lease which
any holder or any ground lessor may require in such writing provided that such
standard exclusions do not expand Lessee's obligations or materially decrease
Lessee's rights hereunder. Lessee's failure to execute such documents within ten
(10) business days after written demand shall constitute a default by Lessee
hereunder without further notice to Lessee.
30. HAZARDOUS MATERIALS.
30.1 USE OF HAZARDOUS MATERIALS. During the term of this
Lease, Lessee shall not generate, handle, place, store, or use, or permit
(either knowingly or as the result of the negligence of Lessee) the generation,
handling, storage, disposal or use of, Hazardous Materials in, on, about, or
under the Premises, including without limitation the soils and groundwater
thereunder, without Lessor's written consent. Lessee shall not dispose of,
discharge or release any Hazardous Materials in, on or about the Premises or any
adjoining property, or into the air above, or the ground or groundwater below,
the Premises or any adjoining property. Notwithstanding any provision of this
Section 30 to the contrary, Lessee shall have the right to store and use
reasonable quantities of normal office and cleaning supplies on the Premises.
All such office and cleaning supplies shall be stored, used and disposed of in
compliance with all laws.
30.2 LESSEE'S INDEMNIFICATION. Lessee hereby indemnifies,
and agrees to protect, defend and hold Lessor harmless from and against all
liability, costs, claims, judgments, losses, demands, causes of action,
proceedings or hearings, including Lessor's reasonable attorneys' fees and court
costs, relating to Lessee or its agents, employees, contractors or invitees'
generation, handling, placement, discharge, release, storage, disposal, or use
of Hazardous Materials on or about the Premises by Lessee or its agents,
employees, contractors or invitees during the term of this Lease. Lessee shall
reimburse Lessor upon demand for (a) all losses in or reductions to rental
income or value of the Premises resulting from the generation,
27
handling, placement, discharge, release, storage, disposal, or use of
Hazardous Materials on or about the Premises during the term of this Lease;
(b) all costs of cleanup or other alterations to the Premises necessitated by
the generation, handling, placement, discharge, release, storage, disposal,
or use of Hazardous Materials by Lessee or its agents, employees, contractors
or invitees on or about the Premises during the term of this Lease, including
but not limited to, all civil and criminal fines, penalties and sanctions,
and (c) all , reasonable attorneys fees and court costs incurred by Lessor in
connection with the generation, handling, placement, discharge, release,
storage, disposal, or use of Hazardous Materials by Lessee or its agents,
employees, contractors or invitees on or about the Premises during the term
of this Lease.
30.3 HAZARDOUS MATERIALS DOCUMENTS. Prior to the
Commencement Date, Lessee shall deliver to Lessor in writing (a) a list of all
Hazardous Materials which Lessee proposes to generate, handle, store, dispose
of, or otherwise use in, on or about the Premises, including the proposed
quantities of each Hazardous Material, the proposed location for the storage of
each Hazardous Material and the proposed method for storage and security of each
Hazardous Material, (b) copies of all governmental permits, authorizations,
approvals and consents required with respect to the proposed generation,
handling, storage, or use of Hazardous Materials by Lessee in, on or about the
Premises, or the disposal of Hazardous Materials by Lessee, (c) any Hazardous
Materials management plan required to be prepared by Lessee with respect to
Lessee's generation, handling, storage, or use of Hazardous Materials in, on or
about the Premises, or the disposal of Hazardous Materials by Lessee, and (d)
the methods proposed by Lessee for the transportation and disposal of Hazardous
Materials generated, handled, stored, or used (or the wastes or by-products of
Lessee's operations) in, on or about the Premises, including the names,
addresses and telephone numbers of all licensed transportation and disposal
contractors to be used by Lessee and copies of the contracts between Lessee and
such licensed transportation and disposal contractors. Lessee shall give Lessor
written notice prior to bringing onto the Premises any Hazardous Materials which
are not listed on the list of Hazardous Materials previously provided to and
approved in writing by Lessor or prior to increasing the quantity of any
Hazardous Materials generated, handled, stored or used in, on or about the
Premises. Lessee's shall provide to Lessor updated information regarding
Lessee's generation, handling, storage, disposal, and use of Hazardous Materials
upon the written request of Lessor, but in all events not less frequently than
semi-annually.
30.4 NOTICES. Either party shall promptly after receipt
thereof deliver to the other party a copy of any notice received by such party
from any governmental agency or entity proposing or threatening remedial action
or alleging a violation of any law, rule or regulation relating to the physical
or environmental condition of the Premises including, but not limited to, any
alleged generation, handling, placement, discharge, release, storage, disposal,
or use of Hazardous Materials in, on or about the Premises or any adjoining
property. Lessee shall, with the concurrence and reasonable approval of Lessor,
perform any and all clean-up, remediation, or other action required by an
governmental agency or entity required in connection with the generation,
handling, placement, discharge, release, storage, disposal or use of Hazardous
Materials by Lessee or its agents, employees, contractors or invitees in, on or
about the Premises or any adjoining property.
30.5 DEFINITION. As used herein, the term "Hazardous
Materials" means material, waste, chemical, compound, substance, mixture, or
byproduct that is identified,
28
defined, designated, listed, restricted or otherwise regulated under
Environmental Laws (defined below) as a "hazardous constituent," "hazardous
substance," "hazardous material," "extremely hazardous material," "hazardous
waste," "acutely hazardous waste," "hazardous waste constituent," "infectious
waste," "medical waste," `biohazardous waste," "extremely hazardous waste,"
"pollutant," "toxic pollutant," or "contaminant," or any other formulation
intended to classify substances by reason of properties that are deleterious
to the environment, natural resources or public health or safety including
without limitation, ignitability, corrosiveness, reactivity, carcinogenicity,
toxicity, and reproductive toxicity. The term "Hazardous Material" shall
include, without limitation the following:
(i) A "Hazardous Substance", "Hazardous
Material", "Hazardous Waste", or "Toxic Substance" under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
Section 9601, et seq., the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq. or the Solid Waste Disposal Act, 42 U.S.C. Section 6901,
et seq., including any regulations promulgated thereunder, as any of the
foregoing may be amended;
(ii) An "Acutely Hazardous Waste", "Extremely
Hazardous Waste", "Hazardous Waste", or "Restricted Hazardous Waste", under
Section 25110.02, 25115, 25117 or 25122.7 of the California Health and Safety
Code, or is listed pursuant to Section 25140 of the California Health and Safety
Code, as any of the foregoing may be amended;
(iii) A "Hazardous Material", "Hazardous
Substance" or "Hazardous Waste" under Sections 25260, 25281, 25316, 25501, or
25501.1 of the California Health and Safety Code, as any of the foregoing may be
amended;
(iv) "Oil" or a "Hazardous Substance" under
Section 311 of the Federal Water Pollution Control Act, 33 U.S.C. Section 1321,
as may be amended, as well as any other hydrocarbonic substance, fraction,
distillate or by-product;
(v) Any substance or material defined,
identified or listed as an "Acutely Hazardous Waste," "Extremely Hazardous
Material", "Extremely Hazardous Waste", "Hazardous Constituent", "Hazardous
Material", "Hazardous Waste", "Hazardous Waste Constituent", or "Toxic Waste"
pursuant to Division 4.5, Chapters 10 or 11 of Title 22 of the California Code
of Regulations, as any of the foregoing may be amended;
(vi) Any substance or material listed by the
State of California as a chemical known by the State to cause cancer or
reproductive toxicity pursuant to Section 25249.8 of the California Health and
Safety Code, as may be amended;
(vii) A "Biohazardous Waste" or "Medical Waste"
under Section 117635 or 117690 of the California Health and Safety Code, as may
be amended;
(viii) Polychlorinated biphenyls, asbestos, and any
asbestos containing material; and/or
(ix) A substance that, due to its characteristics
or interaction with one or more other materials, wastes, chemicals, compounds,
substances, mixtures, or byproducts,
29
damages or threatens to damage the environment, natural resources or public
health or safety, or is required by any law or public entity to be
remediated, including remediation which such law or public entity requires in
order for the property to be put to any lawful purpose.
As used herein, the term "Environmental Laws" means any applicable
foreign, federal, state, or local law, statute, regulation, rule, ordinance,
permit, prohibition, restriction, license, order, requirement, agreement,
consent, or approval, or any decision, opinion, determination, judgment,
directive, decree or order of any executive, administrative or judicial
authority at any applicable foreign, federal, state or local level (whether now
existing or subsequently adopted or promulgated) relating to pollution or the
protection of the environment, ecology, natural resources or public health and
safety.
31. ATTORNEYS' FEES. In the event of any dispute between the
parties arising under this Lease, or the breach of any covenant or condition
under this Lease, then the prevailing party shall be entitled to have and
recover from the party not so prevailing, the prevailing party's reasonable
costs and reasonable attorneys' fees incurred in any dispute, collection or
attempted collection, negotiation relative to the obligations contained herein,
or action or proceeding brought to enforce this Lease, whether such costs and
fees are incurred in taking any action under this Lease or in any judicial
proceeding (including appellate proceeding) "Prevailing party" for the purposes
of this Section 31 shall include, without limitation, the party who receives
from the other party the sums allegedly due, performance of the covenants
allegedly breached, consideration substantially equal to that which was
demanded, or substantially the relief or consideration sought, whether or not
any judicial proceeding is commenced or prosecuted to final judgment, or a party
who dismisses a judicial action in return for substantially the performance or
relief sought or in the payment of the sums allegedly due.
32. LESSOR'S ACCESS. Upon not less, than twenty-four (24) hours'
prior notice to Lessee, except in the event of an emergency in which event no
notice shall be required, Lessor and Lessor's agents shall have the right to
enter the Premises at all reasonable times for the purpose of inspecting the
same, showing the same to prospective purchasers, lenders, or lessees, and
making such alterations, repairs, movements or additions to the Premises of
which they are part as Lessor may deem reasonably necessary or desirable. Lessor
may during the last nine (9) months of the term of this Lease, or during any
period that Lessee is in default under this Lease after the giving of any
required notice and the lapse of any period of cure provided for in Section 13.1
of this Lease, place on or about the Premises any ordinary "For Sale" or "For
Lease" signs. All reasonable activities of Lessor pursuant to this paragraph
shall be without abatement of rent, nor shall Lessor have any liability to
Lessee for the same. In the event of an emergency, Lessor and Lessor's agents
shall have the right to enter upon the Premises by any means including, but not
limited to, forcible entry. In exercising such right of entry, Lessor shall use
reasonable efforts to minimize any interference with the business operations of
Lessee on the Premises occasioned by any such entry.
33. SIGNS. Lessee, at its sole cost and expense, shall have the
exclusive right to place a sign on the Premises and on the monument sign with
Lessor's prior written consent as to content, size and form, which consent shall
not be unreasonably withheld or delayed. Under no circumstances shall Lessee
place a sign on any roof of the Building. All of Lessee's signs shall comply
with the requirements of the covenants, conditions and restrictions of record
and the
30
requirements of the City of Sunnyvale, California. All sign(s) shall be
removed by Lessee and the Premises restored, at the sole cost and expense of
Lessee, upon the expiration or sooner termination of the term of this Lease.
34. MERGER. The voluntary or other surrender of this Lease by
Lessee or a mutual cancellation thereof, or a termination by Lessor, shall not
work a merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to Lessor
of any or all of such subtenancies.
35. SECURITY MEASURES. Lessee hereby acknowledges that Lessor
shall have no obligation whatsoever to provide guard service or other security
measures for the benefit of the Premises. Lessee assumes all responsibility for
the protection of Lessee, its employees, agents, and invitees and the property
of Lessee and of Lessee's employees, agents and invitees from acts of third
parties. Nothing herein contained shall prevent Lessor, at Lessor's sole option,
from providing security protection for the Premises or any part thereof, in
which event the cost thereof shall be included within the definition of
Operating Expenses, as set forth in Section 4.3.1.
36. EASEMENTS. Lessor reserves to itself the right, from time to
time, to grant such easements, rights and dedications that Lessor deems
necessary or desirable, and to cause the recordation of parcel maps and
restrictions, so long as such easements, rights, dedications, maps and
restrictions do not materially interfere with the use or access to of the
Premises by Lessee, for a period of more than thirty (30) consecutive days, as
permitted under this Lease. Lessee shall sign any of the aforementioned
documents upon request of Lessor and failure to do so shall constitute a
material default of this Lease by Lessee without the need for further notice to
Lessee.
37. AUTHORITY. If either party is a corporation, trust, or general
or limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on behalf of said entity. If either Lessor or Lessee is a
corporation, trust or partnership, it shall, concurrently with the execution of
this Lease, deliver to the other party hereto satisfactory evidence of such
authority.
38. OFFER. Preparation of this Lease by Lessor or Lessor's agent
and submission of same to Lessee shall not be deemed an offer to lease. This
Lease shall become binding upon Lessor and Lessee only when fully executed and
delivered by Lessor and Lessee.
39. INTERPRETATION. This Lease has been reviewed by both parties
and their respective legal counsel and this Lease shall be construed as a whole
according to its fair meaning, and not strictly for or against either Lessor or
Lessee.
40. ATTACHMENTS. Attached to this Lease and made a part hereof is
"Exhibit A - The Premises" and "Exhibit C - Letter of Credit."
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED
AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS
LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND
EFFECTUATE
31
THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.
THIS LEASE HAS BEEN PREPARED FOR SUBMISSION TO YOUR ATTORNEY FOR APPROVAL. NO
REPRESENTATION OR RECOMMENDATION IS MADE BY LESSOR OR ITS AGENTS OR EMPLOYEES OR
BY THE REAL ESTATE BROKER(S) AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION RELATING THERETO; THE PARTIES
SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN LEGAL COUNSEL AS TO THE LEGAL AND
TAX CONSEQUENCES OF THIS LEASE.
41. POSSESSORY INTEREST. The parties to this Lease recognize that
certain rights to property may create a "possessory interest", as those words
are used in California Revenue and Taxation Code. For all purposes of compliance
by Lessor with Section 107.6 of the California Revenue and Taxation Code, this
recital shall be deemed full compliance by Lessor. All questions of initial
determination of possessory interest and valuation of such interest, if any,
shall be the responsibility of the County Assessor and the contracting parties
hereto. A taxable possessory interest may be created by this Lease, and if
created, the party in whom such an interest is vested will be subject to the
payment of property taxes levied on such an interest.
42. COUNTERPARTS. This Lease may be executed in counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute a single agreement.
32
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease to be
executed by their duly authorized representatives as of the day and year first
above written.
"LESSOR"
MARIN COUNTY EMPLOYEES' RETIREMENT ASSOCIATION,
a political subdivision of the State of California
By: /s/ Norman Klein
----------------------------------------
Its: Retirement Administrator
---------------------------------------
LESSOR'S ADDRESS FOR NOTICES AND RENT:
- -------------------------------------
3501 Civic Center Drive, Room 212
San Rafael CA 94903-4189
Attention: Norman Klein
Telephone (415) 499-6147
Facsimile (415) 499-3612
with a copy to:
Woodmont Realty Advisors, Inc.
1050 Ralston Avenue
Belmont, CA 94002
Attention: Robert Rouse
Telephone (650) 592-3960
Facsimile (650) 591-4577
and
Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301
Attention: Patrick J. McGaraghan, Esq.
[SIGNATURES CONTINUED ON NEXT PAGE]
33
"LESSEE":
International Microcircuits, Inc.
a California corporation
By: /s/ I. Retragler
-------------------------------
LESSEE'S ADDRESS FOR NOTICES:
- ----------------------------
The Premises
with a copy to:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
Attention: Anna B. Pope, Esq.
Telephone (650) 843-5000
Facsimile (650) 857-0663
and
Fleet National Bank
One Federal Street
Mail Stop: MA OF D07A
Boston, MA 02110
Attention: Matthew M. Glauninger
Telephone (617) 346-0029
Facsimile (617) 346-0151
and
Hinckley, Allen & Snyder
28 State Street
Boston, MA 02109-1775
Attention: Christopher Nelson, Esq.
Telephone (617) 345-9000
Facsimile (617) 345-9020
34
EXHIBIT "A"
The land referred to herein is situated in the State of California, County of
SANTA CLARA, City of MILPITAS, described as follows:
PARCEL ONE:
PARCEL A, AS SHOWN ON THAT PARCEL MAP FILED FOR RECORD IN THE OFFICE OF THE
RECORDER OF THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, ON JANUARY 26, 1988,
IN BOOK 582 OF MAPS, PAGE(S) 28 AND 29.
EXCEPTING THEREFROM ALL MINERALS, OIL, GAS AND OTHER HYDROCARBON SUBSTANCES
BELOW A DEPTH OF 500 FEET OF SAID REAL PROPERTY, WITHOUT THE RIGHT OF SURFACE
ENTRY AS RESERVED IN THE GRANT DEED FROM SACRAMENTO NORTHERN RAILWAY, A
CALIFORNIA CORPORATION, TO A. C. FORTNEY DEVELOPMENT, INC., A CALIFORNIA
CORPORATION, RECORDED AUGUST 31,1979 IN BOOK E 762, PAGE 129 OF OFFICIAL
RECORDS.
PARCEL TWO:
AN EASEMENT FOR INGRESS AND EGRESS FOR THE BENEFIT OF SAID PARCEL A, OVER
PARCELS 1 AND 2, AS SHOWN ON THE PARCEL MAP FILED FOR RECORD FEBRUARY 2, 1982 IN
BOOK 495 OF MAPS, PAGE 49 AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
ALL THAT PORTION OF SAID PARCELS 1 AND 2 LYING WITHIN A STRIP OF LAND, 12.50
FEET IN WIDTH, MEASURED AT RIGHT ANGLES, LYING NORTHERLY OF AND CONTIGUOUS TO
THE FOLLOWING DESCRIBED LINE:
BEGINNING AT A POINT ON THE GENERAL NORTHERLY BOUNDARY LINE OF SAID PARCEL 3
DISTANT THEREON N. 74 DEG. 30' 00" E., 24.18 FEET FROM THE GENERAL NORTHWESTERLY
CORNER OF SAID PARCEL; THENCE, ALONG SAID LINE N. 74 DEG. 30' 00" E. 472.32
FEET, TO THE TERMINUS OF SAID STRIP OF LAND,
THE EASTERLY AND WESTERLY TERMINI OF SAID STRIP OF LAND ARE WITHIN LINES BEARING
S. 15 DEG. 02' 00" E. AND S. 8 DEG. 59' 35" W. RESPECTIVELY.
PARCEL THREE:
AN EASEMENT FOR INGRESS AND EGRESS APPURTENANT TO AND FOR THE BENEFIT OF PARCEL
A, AS SHOWN ON THE MAP FILED FOR RECORD JANUARY 26, 1988, IN BOOK 582 OF MAPS,
PAGE(S) 28 AND 29, OVER THE WESTERLY 15 FEET OF PARCEL B, AS SHOWN ON SAID MAP
AND AS DESIGNATED COMMON EASEMENT FOR INGRESS AND EGRESS OF SAID MAP.
ASSESSOR'S PARCEL NO. 086-28-052
35
EXHIBIT B
Letter of Credit
NAME AND ADDRESS OF FINANCIAL INSTITUTION
- -----------------------------------------
IRREVOCABLE CREDIT NO. ______________________
DATE OF ISSUE __________________, 19__
APPLICANT:
- ---------
International Microcircuits, Inc.
- ------------------------------------
- ------------------------------------
BENEFICIARY:
- -----------
Marin County Employees' Retirement Association
3501 Civic Center Drive, Room 212
San Rafael, CA 94903-4189
AMOUNT OF CREDIT:
- ----------------
THREE HUNDRED FIFTY THOUSAND UNITED STATES DOLLARS (US $350,000)
- ----------------------------------------------------------------
EXPIRATION DATE:
- ---------------
_______________________, 19__
(not less than six (6) months from the Date of Issuance)
Gentlemen:
We hereby authorize you to draw upon Fleet National Bank for the
account of International Microcircuits, Inc. ("IMI") in the amount as certified
below, up to the aggregate amount of US $350,000 (Three Hundred Fifty Thousand
United States Dollars) available by your draft at sight to be accompanied by the
following document:
A written statement certified under penalty of perjury as true by an
officer of Marin County Employees' Retirement Association stating that:
(1) Lessee (as defined in the Lease) is in default in payment of
Base Rent under that certain Standard Industrial Lease by and between IMI and
Marin County Employees' Retirement
36
Association dated as of ___________________, 1998 (the "Lease"), that the
applicable period for cure (if any) of such default has expired and that the
default of Lessee has not been cured, OR
(2) Lessee is in default of any term, provision, covenant or
condition of the Lease, that the applicable period for cure (if any) of such
default has expired, that the default of Lessee has not been cured, OR
(3) IMI has failed to renew or replace this Letter of Credit as
required under the provisions of the Lease not less than thirty (30) business
days prior to the date of expiration of this Letter of Credit.
AND further stating the amount to cure and/or compensate Marin County Employees'
Retirement Association for any default of Lessee under the Lease as of the date
of the certification. IMI's failure to renew or replace the Letter of Credit
pursuant to Paragraph 3 above shall result in the entire amount of the Letter of
Credit being paid to Marin County Employees' Retirement Association, as an
additional security deposit under the Lease.
Partial drawings are permitted.
Drafts under this credit must be marked "Drawn under Fleet National
Bank Credit No. _______________ dated ____________________ (Date of Letter of
Credit) and presented to its office at ______________________________________
(Address of Financial Institution) not later than ____________________, 19__
(Expiration Date of Letter of Credit).
This Letter of Credit must accompany any draft and documents presented
to us for payment.
Unless otherwise expressly stated, this credit is subject to the
"Uniform Custom and Practice For Documentary Credits (1983 Revision),
International Chamber of Commerce.
We hereby undertake that drafts drawn in compliance with the terms of
this Credit will be duly honored by us.
(Name of Financial Institution
---------------------------------------
Authorized Officer
---------------------------------------
Authorized Officer
37