INDUSTRIAL LEASE
Between
G. F. PROPERTIES, INC., as Landlord,
and
SANDISK CORPORATION, as Tenant
Regarding the Premises Located at
111 JAVA DRIVE
MOFFETT INDUSTRIAL PARK
SUNNYVALE, CALIFORNIA
June 10, 1998
INDUSTRIAL LEASE
Table of Contents
Recitals
SECTION 1. Lease of Premises 1
SECTION 2. Term of Lease 1
SECTION 3. Intentionally Omitted 2
SECTION 4. Possession 2
SECTION 5. Monthly Rent 2
SECTION 6. Use 4
SECTION 7. Utilities 5
SECTION 8. Taxes 5
SECTION 9. Intentionally Omitted 7
SECTION 10. Repairs and Maintenance 7
SECTION 11. Alterations 10
SECTION 12. Entry 12
SECTION 13. Surrender of Premises; Holding Over 12
SECTION 14. Indemnity 13
SECTION 15. Insurance 13
SECTION 16. Trade Fixtures 15
SECTION 17. Communications Cables 16
SECTION 18. Signs 17
SECTION 19. Damage and Destruction 17
SECTION 20. Condemnation 18
SECTION 21. Assignment and Subletting 19
SECTION 22. Default 22
SECTION 23. Remedies 23
SECTION 24. Late Charge 26
SECTION 25. Default Interest 26
SECTION 26. Waiver of Breach 27
SECTION 27. Estoppel Certificates 27
SECTION 28. Attorney Fees 27
SECTION 29. Security Deposit 28
SECTION 30. Authority 28
SECTION 31. Notices 29
SECTION 32. Heirs and Successors 29
SECTION 33. Partial Invalidity 29
SECTION 34. Entire Agreement 30
SECTION 35. Time of Essence 30
SECTION 36. Rent 30
SECTION 37. Amendments 30
SECTION 38. Subordination, Nondisturbance and Attornment 30
SECTION 39. Merger 31
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SECTION 40 Intentionally Omitted 31
SECTION 41 Options To Extend Term 31
SECTION 42. Determination Of Monthly Rent for Second Option Term 32
SECTION 43. Tenant Improvements 33
SECTION 44. Right of First Offer 35
SECTION 45. Hazardous Materials 35
SECTION 46. Existing Rights 39
SECTION 47. Publicity 39
SECTION 48. Easements 39
SECTION 49. Covenants and Conditions 39
SECTION 50. Recording 39
SECTION 51. Transfer by Landlord 39
SECTION 52. Security Measures 39
SECTION 53. Parking 40
SECTION 54. Broker 40
SECTION 55. Offer 40
SECTION 56. Counterparts 40
SECTION 57. Governing Law 40
Exhibit A: Legal Description
Exhibit B: Work Letter
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INDUSTRIAL LEASE
THIS INDUSTRIAL LEASE (this "Lease") is entered into on and as of June
10, 1998 by and between G. F. PROPERTIES, INC., a California corporation
("Landlord") and SANDISK CORPORATION, a Delaware corporation ("Tenant").
Recitals
A. Landlord is the owner of that certain real property located at, 111
Java Drive, Sunnyvale, California, 94089, in the County of Santa Clara (the
"Property") comprising a portion the Moffett Industrial Park. Landlord has
constructed on a portion of the Property that certain building and other
improvements consisting of approximately Fifty Thousand, Three Hundred and
Twenty (50,320) rentable square feet (the "Building") and one fully enclosed
storage area which extends beyond the original footprint of the Building
consisting of approximately Eighteen Hundred (1,800) square feet (the
"Warehouse"). For purposes of this Lease, the term "Premises" shall refer
collectively to the Property, the Building and the Warehouse. The Premises are
more particularly described in Exhibit A attached hereto and incorporated
herein.
B. In accordance with the election of Tenant, pursuant to the terms and
provisions of the First Amendment to Industrial Lease dated April 3, 1997, by
and between Landlord and Tenant with respect to the Premises located at 140
Caspian Court, Sunnyvale, California ("First Amendment"), Landlord has given to
the existing tenant of the Premises at 111 Java Drive the Notice of Termination
of Tenancy on 111 Java Drive provided for in Paragraph 2 of the First Amendment
to Industrial Lease. The Notice of Termination of Tenancy on 111 Java Drive
requires the existing tenant to surrender possession of the Premises effective
July 1, 1998.
C. Having exercised its rights under the First Amendment, Tenant
desires to lease the Premises from Landlord and Landlord desires to lease the
Premises to Tenant on the terms and conditions contained in this Lease.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
SECTION 1. Lease of the Premises.
Landlord leases to Tenant and Tenant leases from Landlord the Premises
on the terms and conditions contained in this Lease.
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SECTION 2. Term of Lease.
The term of this Lease (the "Term") shall commence promptly upon the
surrender of the Property and the Premises by the current tenant of the Premises
(the "Commencement Date"), and shall terminate on July 31, 2001, unless sooner
terminated pursuant to the terms of this Lease (the "Termination Date").
Landlord shall expend its best efforts to cause the current tenant of the
Premises to vacate the Premises upon the expiration or earlier termination of
its current lease, as amended, provided, however that if Landlord shall not
succeed in causing the current tenant of the Premises to vacate the Premises on
or before December 31, 1998, Tenant shall have the right to terminate this Lease
by giving Landlord unequivocal written notice of its election to so terminate
this Lease no sooner than December 31, 1998 and no later than January 8, 1999.
SECTION 3. Intentionally Omitted
SECTION 4. Possession.
Except as otherwise provided in this Lease, Tenant agrees to accept
possession of the Premises on the Commencement Date in its existing "as is"
condition, including but not limited to all patent and latent defects and
subject to all applicable laws, ordinances, and regulations governing and
regulating the use of the Premises, and any recorded covenants, conditions,
restrictions, easements, licenses or right of ways. Prior to the execution of
this Lease, Landlord has provided Tenant with copies of any recorded covenants,
conditions, restrictions, easements, licenses or right of ways. Landlord
represents and warrants that to the best of Landlord's knowledge, without
inquiry or investigation, no ground leases, covenants, conditions, restrictions,
easements, licenses or right of ways burden the Premises except for those
provided to Tenant by Landlord prior to the execution of this Lease.
SECTION 5. Monthly Rent.
(a) Commencing on the Commencement Date, Tenant agrees to pay monthly
rent ("Monthly Rent") as follows:
Months: Monthly Rent: Rent per RSF per month:
Building / Warehouse
7-1-98 to 1-31-99 41,488.20 $.81 / $.405
2-1-99 to 7-31-99 43,537.00 $.85 / $.425
8-1-99 to 7-31-01 46,098.00 $.90 / $.45
(b) The Monthly Rent shall be payable in advance on the first calendar
day of each month at the following address: 999 Baker Way, Suite 200, San Mateo,
California, 94404 or at such other address that Landlord may from time to time
designate by written notice to Tenant. In the event that the Termination Date is
a day other than the last day of
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a calendar month, then the Monthly Rent for the applicable fractional month of
the Term shall be appropriately prorated.
(c) Upon execution of the Lease, Tenant shall pay to Landlord the sum
of One Hundred and Twenty-Four Thousand Four Hundred Sixty Four and 60/100
Dollars
(124,464.60) to be applied toward the first three payments of Monthly Rent.
(d) In the event of a Chronic Delinquency (as hereinafter defined), at
Landlord's option, Landlord shall have the right, in addition to all other
remedies under this Lease and at law, to require that Monthly Rent be paid by
Tenant quarterly, in advance. This provision shall not limit in any way nor be
construed as a waiver of any rights and remedies of Landlord provided herein or
by law in the event of delinquency. "Chronic Delinquency" shall mean failure by
Tenant to pay Monthly Rent, or any other payments required to be paid by Tenant
under this Lease, when due in any of three (3) months (consecutive or
non-consecutive) during any twelve (12) month period.
(e) The Monthly Rent is based upon the mutual assumptions that (i) the
Building (less the subterranean storage area) contains approximately Fifty
Thousand Three Hundred Twenty (50,320) rentable square feet, and (ii) that the
Warehouse contains approximately One Thousand Eight Hundred (1,800) square feet
("Landlord's Measurement"). While the Premises includes both the subterranean
storage space and the partially enclosed storage area which extends beyond the
footprint of the Building, and while no rent shall be charged to or payable by
Tenant for either of such spaces under this Lease, all other terms and
provisions of this Lease shall apply to both of such spaces. Tenant shall have
the right to cause the measurement of the Premises in accordance with Building
Owners and Managers Association standards ANSI Z65.1-1980 (the "BOMA Standards")
and if such measurement results in a determination that the actual rentable
square footage of the Premises varies from Landlord's Measurement by more than
two percent (2%), Tenant may submit to Landlord Tenant's measurements of the
Premises within thirty (30) days after the Commencement Date. If Landlord and
Tenant fail to agree on the rentable square footage of the Premises within ten
(10) business days after delivery of Tenant's measurements of the Premises to
Landlord, Landlord and Tenant shall resolve the dispute by submitting the
dispute to an architect reasonably acceptable to both parties who is . familiar
with the BOMA Standards (the "Architect"). The Architect shall review the
measurements of Tenant and Landlord and if necessary re-measure the Premises and
shall submit its determination of the rentable square footage of the Premises to
Landlord and Tenant within ten (10) business days after the dispute is submitted
to the Architect. In the event that the Architect determines that the rentable
square footage deviates from Landlord's Measurement by more than two percent
(2%), the Monthly Rent schedule contained in Section 5(a) above shall be
modified to reflect the correct rentable square footage of the Premises
multiplied by the rent per square foot shown in the schedule. Such modification
shall be effective as of the Commencement Date and shall be evidenced by an
amendment to this Lease to be executed by the parties.
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(f) Tenant shall be entitled to a rent credit which shall be credited
against the rent due from Tenant to Landlord during the first months of the term
of this Lease. The rent credit shall be calculated by multiplying the number of
full calendar months during which the current tenant of the Premises remains in
possession of the Premises after December 31, 1997, by the sum of $5,283.60,
provided, however, that Tenant shall only be entitled to such rent credit, and
such rent credit shall only be credited by Landlord to Tenant, during any such
holdover period if, when and to the extent that the current tenant of the
Premises pays its rent, including any holdover rent, for the applicable holdover
periods to Landlord. Any such rent credit which is for less than one full month
shall be prorated based on the actual number of days of the month involved.
SECTION 6. Use.
(a) Tenant will occupy and use the Premises for general office, electronics
manufacturing, warehousing, and shipping connected therewith and for any related
lawful use. Tenant agrees not to use the Premises for any immoral or unlawful
purpose. Landlord agrees that, subject to Section 18 and to the prior reasonable
review and approval by Landlord and compliance with all applicable governmental
requirements, including but not limited to the American with Disabilities Act,
and any signing criteria in any covenants, conditions, and restrictions recorded
prior to the date of this Lease, Tenant may erect and maintain on the Premises
and the building and improvements any signs advertising Tenant's business, as
Tenant may desire.
(b) Tenant shall not commit any acts on the Premises, nor use the
Premises in any manner that will cause the cancellation of any fire, liability,
or other insurance policy insuring or hereinafter insuring the Premises or the
improvements on the Premises. Tenant shall, at Tenant's sole cost and expense,
comply with all requirements of Landlord's insurance carriers that are necessary
for the continued maintenance at reasonable rates of fire and liability
insurance policies on the Premises and the improvements on the Premises.
(c) Tenant shall not commit or allow any waste or any public or private
nuisance in, on or under the Premises.
(d) Except as otherwise provided in Sections 10, 19 and 43 hereof,
Tenant shall, at Tenant's sole cost, promptly comply with all laws, statutes,
ordinances, rules, regulations, orders, recorded covenants and restrictions, and
requirements of all municipal, state, and federal authorities now or later in
force, including, but not limited to, all provisions of the Americans with
Disabilities Act (the "ADA"), all seismic retrofitting and other earthquake
protection measures being required by any governmental entity with regard to the
Premises, any requirements of Title 24 of the California Code of Regulations,
the requirements of any board of fire underwriters or other similar body now or
in the future constituted, and the direction or occupancy certificate issued by
public officers (collectively the "Legal Requirements"), insofar as they relate
to the condition, occupancy and use of the Premises, the construction of the
Tenant Improvements (as hereinafter defined) and the construction of any future
Alterations (as hereinafter defined),
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including but not limited to the correction or remediation of a violation
arising out of or in connection with the construction of Tenant Improvements or
other Alterations done by or on behalf of Tenant or which violation arises out
of or results from the actions of Tenant or any of Tenant's contractors,
employees, licensees, invitees or agents. The judgment of any court of competent
jurisdiction or the admission of Tenant in any action or proceeding against
Tenant that Tenant has violated any Legal Requirement in the condition, use, or
occupancy of the Premises, will be conclusive of that fact as between Landlord
and Tenant.
SECTION 7. Utilities.
From and after the Commencement Date, Tenant shall pay, before
delinquency, all charges or assessments for telephone, water, sewer, gas, heat,
electricity, garbage disposal, trash disposal, fire sprinkler and alarm
monitoring and any and all other utilities or maintenance charges and services
of any kind that may be used on or in connection with the Premises. If an
interruption or cessation of utilities results from the gross negligence or
willful misconduct of Landlord, its employees, agents, or contractors and the
Premises are not reasonably usable by Tenant for the conduct of Tenant's
business as a result thereof, Monthly Rent not actually incurred up to that
point by Tenant shall be abated for the period which commences five (5) business
days after the date Tenant gives to Landlord written notice of such interruption
until such utilities are restored. Except the abatement of Monthly Rent,
Landlord shall not be liable to Tenant for any damages occasioned by any
interruption or cessation of utilities, including but not limited to
consequential, speculative or anticipatory damages.
SECTION 8. Taxes.
(a) Within ten (10) business days after receipt of an invoice from
Landlord, Tenant shall, as additional rent, reimburse Landlord for all taxes,
permit, inspection, and license fees, and other public charges of whatever
nature (other than penalties and interest for the late payment of taxes except
to the extent that such penalties and interest arise in connection with a good
faith protest of such taxes by Landlord) that are assessed against the Premises
or arise because of the occupancy, use, or possession of the Premises (including
but not limited to taxes on, or which shall be measured by, any rents or rental
income, taxes on personal property, whether of Landlord or Tenant and taxes or
increases in taxes which result from reassessment of the Premises due to changes
in ownership thereof during the Term or which result from the reassessment of
the Premises due to the improvement thereof) (collectively "Real Estate Taxes"),
subsequent to the Commencement Date, and all installments of assessments that
are due or become due from and after the Commencement Date and on or prior to
the expiration or sooner termination of this Lease. Notwithstanding the
foregoing, "Real Estate Taxes" shall not include and Tenant shall not be
responsible for any taxes in the nature of estate, inheritance, transfer, gift
or franchise taxes of Landlord or the federal or state income taxes imposed on
Landlord's income from all sources or net income taxes imposed on Landlord
unless such
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net income taxes are in substitution or in lieu of real estate taxes or
assessments against the Premises.
(b) Tenant shall pay directly to the public authorities charged with
the collection on or before the last day on which payment may be made without
penalty or interest, as additional rent, all taxes, permit, inspection, and
license fees, and other public charges of whatever nature that are assessed
against Tenant's personal property, subsequent to the Commencement Date, and all
installments of assessments that are due or become due from and after the
Commencement Date and on or prior to the expiration or sooner termination of
this Lease.
(c) All Real Estate Taxes levied on the Premises for the tax year in
which the Commencement Date falls shall be appropriately prorated between
Landlord and Tenant, so that Tenant's share will reflect the portion of that tax
year after the Commencement Date. Taxes levied on the Premises for the tax year
in which the Termination Date occurs shall be similarly prorated between
Landlord and Tenant to reflect the period of Tenant's possession of the Premises
during that tax year. Real Estate Taxes reimbursable from Tenant in any year
shall include only installments of taxes and assessments which would have become
due during such year if Landlord had elected to pay such taxes and assessments
in the maximum number of installments thereof.
(d) Notwithstanding anything to the contrary contained in this Section,
Tenant shall have the right to contest or appeal the validity or the legality of
any tax (including penalties and interest), assessment, tax lien, forfeiture, or
other imposition or charge against the Premises or any part of the Premises or
any improvements (each a "Tax" and collectively "Taxes"), so long as Tenant
diligently and in good faith pursues such contest or appeal to fruition;
provided however, that notwithstanding Tenant's desire to contest or appeal the
validity or the legality of any Tax, Landlord shall have the right in its sole
discretion to pay such Tax and Tenant shall, as a condition precedent to its
right to contest or appeal the imposition of any Tax, reimburse Landlord for
such Tax in accordance with Section 8(a). Any proceedings for contesting or
appealing the validity, legality, or amount of any tax, assessment, imposition,
or charge, or to recover any tax, assessment, imposition, or charge paid by
Tenant, may be brought by Tenant in the name of Landlord or in the name of
Tenant, or both, as Tenant deems advisable. Landlord agrees that Landlord will,
upon the reasonable request of Tenant, execute or join in the execution of any
instrument or document necessary in connection with any proceeding. However, if
any proceedings are brought by Tenant, Tenant agrees to indemnify, defend and
hold Landlord harmless for all reasonable loss, cost, or expense that may be
imposed on Landlord in connection with the proceeding. In any event, Tenant
shall notify Landlord in advance of any tax contest proceedings that Tenant
intends to initiate, and shall then inform Landlord of all significant
developments in the proceedings as they may occur. Upon the successful
conclusion of any such contest or appeal, Landlord agrees to, at Landlord's sole
discretion, either (i) pay over to Tenant such amounts as shall be returned to
Landlord in connection with such appeal or contest or (ii) apply such amounts as
shall be returned to
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Landlord in connection with such appeal or contest to amounts then owing from
Tenant to Landlord under this Lease.
(e) If Tenant has not paid any tax, assessment, or public charge
required by this Lease to be paid by Tenant before its delinquency, or if a tax,
assessment, or public charge is contested by Tenant and that tax, assessment, or
public charge has not been paid within thirty (30) days after a final
determination of the validity, legality, or amount of the tax, assessment or
public charge, then Landlord may, but shall not be required to, pay and
discharge the tax, assessment, or public charge. If a tax, assessment, or public
charge, including penalties and interest, are paid by Landlord, the amount of
that payment shall be due and payable to Landlord by Tenant with the next
succeeding rental installment, and shall bear interest at the lesser of ten
percent (10%) per annum or the highest rate allowed by law from the date of the
payment by Landlord until repayment by Tenant.
(f) If any assessments for local improvements become a lien after the
Commencement Date, Tenant shall pay only the installments of the assessments
that become due and payable during the Term. On the request of Tenant, Landlord
agrees to cooperate or join with Tenant in any application that may be necessary
to permit the payment of the assessments in installments.
SECTION 9. Intentionally Omitted
SECTION 10. Repairs and Maintenance.
(a) Except as otherwise provided in Sections 10, 19 and 43 hereof,
Tenant shall, at Tenant's sole expense, keep and maintain the Premises
(including without limitation, interior walls, roof membrane, heating,
ventilation and air conditioning systems, operating systems, sidewalks, parking
lots, interior and exterior glass, fire sprinklers, alarms and landscaping that
are part of or adjoin the Premises) in a clean and good condition and repair,
including without limitation replacements as needed thereof, and to deliver to
Landlord physical possession of the Premises at the termination of this Lease or
any sooner expiration thereof, in good condition and repair, reasonable wear and
tear excepted. All repairs and replacements required of Tenant shall be promptly
made with new materials of like kind and quality. If the work affects the
structural elements of the Premises or if the estimated cost of any item of
repair or replacement is in excess of Five Thousand Dollars ($5,000.00), Tenant
shall first obtain Landlord's written approval of the scope of the work, the
plans for the work, the materials to be used, and the contractor hired to
perform the work. In the event that any singular repair of the roof membrane,
the HVAC system, the parking lot, the fire sprinklers or the building operating
systems of a capital nature costs in excess of Fifty Thousand dollars
($50,000.00) (each a "Singular Capital Expenditure") or in the event that the
aggregate cost of replacing HVAC units installed in the Premises exceeds Fifty
Thousand dollars ($50,000.00) during the Term (each replacement a "HVAC Capital
Expenditure"), Tenant shall have the right to cause Landlord to pay for such
Singular Capital Expenditure or the excess over Fifty Thousand Dollars
($50,000.00) of the HVAC Capital Expenditures ("Excess HVAC Capital
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Expenditure"), provided that Landlord shall amortize the amount paid by Landlord
over the useful life of such Singular Capital Expenditure or such Excess HVAC
Capital Expenditure, as the case may be, and Tenant shall pay as additional rent
to Landlord on or before the first day of the calendar month immediately
following the payment of such Singular Capital Expenditure or such Excess HVAC
Capital Expenditure by Landlord, as the case may be, and on each anniversary
thereof during the Term, an amount equal to the annual amortization of such
Singular Capital Expenditure and/or such Excess HVAC Capital Expenditure, as the
case may be.
(b) Tenant shall maintain continuously throughout the term of the Lease
a service contract for the maintenance of all heating, air conditioning, and
ventilation equipment with a licensed repair and maintenance contractor
reasonably approved by Landlord; the contract should provide for periodic
inspections and servicing of the heating, air conditioning, and ventilation
equipment at least once every ninety (90) days during the term of the Lease (the
"HVAC Contract").
(c) Tenant shall maintain continuously throughout the term of the Lease
a service contract for the monitoring of fire sprinklers and alarms located on
or about the Premises with a licensed service, which contract shall, inter alia,
provide for the periodic testing and if necessary replacement of the fire
sprinklers and alarms located on or about the Premises (the "Life Safety
Contract").
(d) Within ten (10), days of the Commencement date, Tenant shall
provide copies of the HVAC Contract and the Life Safety Contract to Landlord.
(e) If at any time during the Term, including renewals or extensions
thereof, Tenant fails to maintain the Premises, make any repairs or replacements
as required by this Section or maintain service contracts required by this
Section, Landlord shall have the right to, but shall not be required to, enter
the Premises and perform the maintenance or make the repairs or replacements or
enter into appropriate service contracts, as the case may be, all for the
account of Tenant and any sums expended by Landlord in so doing, together with
interest at the lesser of ten percent (10%) per annum or the highest rate
allowed by law, shall be deemed additional rent and shall be immediately due
from Tenant on demand of Landlord.
(f) Tenant waives the provisions of Civil Code ss.ss. 1941 and 1942 and
any other law that would require Landlord to maintain the Premises in a
tenantable condition or would provide Tenant with the right to make repairs and
deduct the cost of those repairs from the rent.
(g) Landlord agrees that after the Substantial Completion of the Tenant
Improvements, it shall, at its sole expense, maintain, repair and comply with
all Legal Requirements regarding the building foundation, the exterior walls and
the roof structure of the Premises, including any latent defects discovered
therein; provided however that Landlord shall not be responsible for any repairs
to or maintenance to the building
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foundation, exterior walls or roof structure caused by or resulting from the
actions of Tenant or any of Tenant's contractors, employees, licensees, invitees
or agents other than ordinary and customary wear and tear. Tenant agrees that it
shall be responsible for and shall promptly repair or replace, as necessary, any
part or portion of the building foundation, the exterior walls and the roof
structure of the Premises; which repair or maintenance arises out of or results
from the actions of Tenant or any of Tenant's contractors, employees, licensees,
invitees or agents. In addition, Landlord agrees that after the Substantial
Completion of the Tenant Improvements, it shall be responsible for and shall
promptly repair or replace, as necessary, any part or portion of the Premises,
which repair or maintenance arises out of or results from the actions of
Landlord or any of Landlord's contractors, employees, licensees, invitees or
agents (other than Tenant).
(h) In the event of an emergency (being defined as an imminent threat
of personal injury to Tenant's employees or material damage to Tenant's
equipment or other property at the Premises), Tenant shall have the right to
make such temporary, emergency repairs to the roof structure, foundation and
exterior walls of the Premises as may be reasonably necessary to prevent such
personal injury or material damage to the equipment or property of Tenant
situated in the Premises, provided Tenant has no reasonable alternative and has
either (i) notified Landlord's representative of such emergency by telephone
(with subsequent written notice as soon as practicable) and Landlord has failed
to initiate emergency repairs within a reasonable period of time under the
circumstances, but in no event longer than forty-eight (48) hours after such
telephonic notification, or (ii) Tenant has attempted in good faith to notify
Landlord's representative of such emergency by telephone (with subsequent
written notice as soon as practicable) and has been unsuccessful in its attempts
to contact such representative for a time period commensurate with the
circumstances, but in no event more than forty-eight (48) hours after attempting
to contact Landlord. Landlord shall reimburse Tenant for the reasonable, out-of
pocket costs actually incurred by Tenant in making such emergency repairs to the
roof structure, foundation or exterior walls, as applicable, within thirty (30)
days after submission by Tenant to Landlord of any invoice therefor, accompanied
by reasonable supporting documentation for the costs so incurred.
(i) Landlord shall keep and maintain the exterior of the Premises and
all grounds and landscaping in good condition, and repair (collectively
"Exterior Maintenance"). Within twenty (20) business days after receipt of an
invoice from Landlord, Tenant shall, as additional rent, reimburse Landlord for
all costs reasonably incurred by Landlord in such Exterior Maintenance. Tenant
shall have the right to cause Landlord to obtain no more than three (3)
competitive bids for the Exterior Maintenance from reputable independent
contractors. In the event that Tenant causes Landlord to obtain such competitive
bids, Tenant's liability shall be limited to the lesser of the median bid or the
actual cost to Landlord of the Exterior Maintenance.
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SECTION 11. Alterations.
(a) Tenant shall not make or allow any alterations, additions, or
improvements to the Premises or any part of the Premises (collectively,
"Alterations"), without Landlord's prior consent, which shall not be
unreasonably withheld. Consent, however, may be conditioned upon the receipt by,
and approval of, Landlord of a set of plans and specifications for the
alterations no later than thirty (30) days prior to the scheduled construction
of the Alterations together with such additional information regarding the
proposed Alterations as Landlord may reasonably request (collectively the
"Alteration Support"). Landlord agrees to approve or disapprove of such proposed
Alterations within ten (10) business days following the receipt the Alteration
Support. The installation of furnishings, fixtures, equipment, interior
partitions, non-load bearing walls or decorative improvements (other than the
recarpeting of the Premises, which shall be deemed an Alteration for which
Landlord's consent must be obtained), none of which shall affect operating
systems or the structure of the Premises, and the repainting of the Premises,
shall not constitute "Alterations." Except as otherwise provided in Section 16
hereof, all Alterations and any furnishings, fixtures, equipment, interior
partitions, non-load bearing walls or decorative improvements remaining on the
Premises after the termination or earlier expiration of this Lease shall
immediately become Landlord's property and, at the termination or earlier
expiration of this Lease, shall remain on the Premises without compensation to
Tenant, unless Landlord elects by notice to Tenant to have. Tenant remove same
and restore the Premises to the condition of as of the date of this Lease in
which event Tenant shall cause such removal and/or restoration to be done at
Tenant's sole cost and expense. Landlord agrees that contemporaneous with its
consent to the making of any Alterations and subject to Tenant's express written
request therefore it shall notify Tenant as to which of the Alterations Landlord
may require to be removed prior to the termination or earlier expiration of this
Lease. If Landlord fails to notify Tenant in writing that it may require the
removal of Alterations as to which Tenant has requested such notification, then
Landlord shall not be permitted to require the removal of such Alterations upon
the expiration or earlier termination of this Lease. In the event that Landlord
requires Tenant to remove any Alterations and any furnishings, fixtures,
equipment, interior partitions, non-load bearing walls or decorative
improvements and Tenant fails to cause such removal and/or restoration on or
prior to the termination or other earlier expiration of this Lease, such failure
shall be deemed a holdover under Section 1 3(b) of this Lease, and in addition
to any other damages owing Landlord under this Section, Tenant shall owe
Holdover Rent (as hereinafter defined) for each month or portion thereof of such
failure. All improvements, additions, alterations, and repairs and the removal
and restoration thereof, if required under this Lease, shall be performed in
accordance with all applicable laws and at Tenant's sole expense. Tenant will
indemnify and defend Landlord for all liens, claims, or damages caused by
remodeling, improvements, additions, alterations, and repairs and the removal
and restoration thereof, if required under this Lease. Landlord agrees, when
requested by Tenant, to execute and deliver any applications, consents, or other
instruments reasonably required to permit Tenant to do this work or to obtain
permits for the work.
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(b) Before any contract or subcontract is let or other agreement
executed for the performance of any service, or the furnishing of any materials,
and before any work of any kind or nature is commenced upon the construction of
Alterations, Tenant will procure and deliver to Landlord a completion bond and a
payment bond, both in form and substance satisfactory to Landlord issued by
reputable surety corporations or bonding corporations qualified to do business
in California, guaranteeing or otherwise assuring Landlord that the construction
of the Alterations will proceed to completion with due diligence, that the
reconstruction, when completed, will be fully paid for, and that the Premises
will remain free of all mechanics', laborers' or materialmen's liens or claimed
liens on account of any services or materials furnished or labor or work
performed in connection with the construction of the Alterations.
(c) At least ten (10) days before any construction commences or
materials are delivered for any alterations that Tenant is making to the
Premises, whether or not Landlord's consent is required, Tenant shall give
written notice to Landlord as to when the construction is to commence or the
materials are to be delivered. Landlord shall then have the right to post and
maintain on the Premises any notices that are required to protect Landlord and
Landlord's interest in the Premises from any liens for work and labor performed
or materials furnished in making the alterations; provided, however, that it
shall be Tenant's duty to keep the Premises free and clear of all liens, claims,
and demands for work performed, materials furnished, or operations conducted on
the Premises by or on behalf of Tenant. In the event that Tenant fails to
provide Landlord with the notice required by this Section 11 (b), Landlord shall
have the right to cause the cessation of such construction and shall have the
further right to file notices of cessation and/or completion, so as to allow the
Premises to be protected from mechanic's liens. Tenant hereby irrevocably
appoints Landlord its attorney-in-fact which appointment is coupled with an
interest to cause such cessation and to file such notices.
(d) Tenant will not at any time permit any mechanics', laborers', or
materialmen's liens to stand against the Premises for any labor or material
furnished to Tenant or claimed to have been furnished to Tenant or Tenant's
agents, contractors, or subtenants, in connection with work of any character
performed or claimed to have been performed on the Premises by or at the
direction or sufferance of Tenant; provided, however, that Tenant shall have the
right to contest the validity or amount of any lien or claimed lien, upon giving
to Landlord a bond assuring that the lien or claimed lien will be paid when and
to the extent that the lien is finally determined to be valid and owing. On
final determination of the lien or claim of lien, Tenant will immediately pay
any final judgment rendered, with all property costs and charges, and shall have
the lien released or judgment satisfied at Tenant's sole expense. If Tenant
fails to pay the judgment promptly or otherwise fails to prevent any sale,
foreclosure, or forfeiture of the Premises because of a lien, Landlord shall
have the right, upon five (5) days' written notice to Tenant, to pay or prevent
this action, and the amount paid by Landlord shall be immediately due and
payable to Landlord, and shall bear interest at the lesser of ten percent ( 10%)
per annum or the highest rate allowed by law from the date of payment by
Landlord until repayment by Tenant.
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SECTION 12. Entry.
(a) Landlord and its agents may enter the Premises at any reasonable
time upon reasonable notice to Tenant, it being agreed that notice given
twenty-four (24) hours or more in advance shall be deemed to be reasonable
notice, or immediately in the case of an emergency, for the purpose of (i)
inspecting the Premises; (ii) posting notices of non-responsibility; (iii)
supplying any service to be provided by Landlord to Tenant; (iv) showing the
Leased Premises to prospective purchasers, mortgagees, or tenants; (v) making
necessary alterations, additions, or repairs as required by this Lease or to
otherwise perform Landlord's duties under this Lease; (vi) to determine whether
Tenant is complying with the terms of this Lease; (vii) performing Tenant's
obligations when Tenant has failed to do so after written notice from Landlord,
if required by the terms of this Lease; (vii) placing on the Leased Premises
ordinary for lease signs or for sale signs during the last year of the Term;
(viii) to do other lawful acts that may be necessary to protect Landlord's
interest in the Premises under this Lease and (ix) responding to an emergency.
(b) Landlord shall have the right to use any means Landlord deems
necessary and proper to enter the Premises in an emergency. Any entry into the
Premises obtained by Landlord in accordance with this Section shall not be a
forcible or unlawful entry into, or a detainer of, the Premises, or an eviction,
actual or constructive, of Tenant from the Premises, nor shall such entry give
rise to a claim for rent abatement.
SECTION 13. Surrender of Premises: Holding Over.
(a) At the termination of this Lease or any sooner expiration thereof,
Tenant shall promptly surrender and deliver the Premises to Landlord in good and
tenantable condition, casualty, condemnation and reasonable wear and tear
excepted.
(b) At the end of the Term, or any extension, should Tenant hold over
for any reason, it is agreed that in the absence of a written agreement to the
contrary, that tenancy shall be from month-to-month only and not a renewal of
this Lease, nor an extension for any further term. Tenant shall pay Monthly Rent
in an amount (the "Holdover Rent") equal to (i) one hundred and twenty five
percent (125%) of the Monthly Rent payable for the month immediately prior to
the end of the Term or any extension thereof for the first month or any portion
thereof after the end of the Term for which Tenant holds over, and (ii) one
hundred and fifty percent (150%) of the Monthly Rent payable for the month
immediately prior to the end of the Term or any extension thereof for any period
after the first month after the end of the Term for which Tenant holds over, and
the month-to-month tenancy shall be subject to every other term, covenant, and
condition in this Lease that is consistent with and not contrary to a
month-to-month tenancy.
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SECTION 14. Indemnity.
(a) Tenant agrees to indemnify, defend, and hold Landlord, and
Landlord's employees, agents and contractors harmless from all liability,
penalties, losses, damages, costs, expenses, causes of action, claims, or
judgments, including but not limited to attorneys' fees and costs, arising by
reason of any death, bodily injury, personal injury, or property damage
resulting from: (i) any cause occurring in or about or resulting from an
occurrence in or about the Premises during the Term, (ii) act, work or things
done or permitted to be done or otherwise suffered, or any omission to act, in
or about the Premises by Tenant or by any of Tenant's agents, officers,
directors, employees, contractors, licensees or invitees, (iii) the negligence
or willful misconduct of Tenant or Tenant's agents, employees, invitees,
licensees, contractors and subcontractors, or (iii) an Event of Default by
Tenant. The provisions of this Section 14(a) shall survive the expiration or
sooner termination of this Lease.
(b) Except as otherwise provided in this Lease, Landlord shall not be
liable to Tenant, nor shall Tenant be entitled to any abatement of rent for any
damage to Tenant's property or any injury to Tenant or any of Tenant's
employees, agents, or invitees, or loss to Tenant's business arising out of any
cause, including but not limited to (i) the failure, interruption, or
installation of any heating, air conditioning, or ventilation equipment; (ii)
the failure, interruption, or installation of any fire sprinklers or alarms;
(iii) the loss or interruption of any utility service; (iv) the failure to
furnish or delay in fumishing any utilities or services; (v) the limitation,
curtailment, rationing, or restriction on the use of water or electricity, gas
or any other form of utility; (vi) vandalism, malicious mischief, or forcible
entry by unauthorized persons or the criminal act of any person; or (vii)
seepage, flooding, or other penetration of water into any portion of the
Premises.
SECTION 15. Insurance.
(a) Landlord agrees at all times during the Term and during any
extension, to maintain in force, an "all risk" policy of insurance covering the
building and all improvements that may be built or placed on the Premises,
including extended coverage, including fire sprinkler leakage, vandalism and
malicious mischief, in an amount equal to their full insurable value, with a
replacement cost endorsement. Tenant agrees to immediately reimburse Landlord
for the cost of such insurance from time-to-time as and when invoiced by
Landlord. Furthermore, Tenant shall contribute directly or reimburse Landlord as
the case may be for any deductible incurred by Landlord in connection with any
casualty up to but not exceed Fifty Thousand Dollars ($50,000.00). Landlord's
all-risk property insurance shall include a waiver by the insurer of subrogation
and all rights based upon an assignment from its insured against Tenant, its
officers, directors employees, agents, invitees, licensees and contractors in
connection with any loss or damage thereby insured against. Tenant's obligations
under this Section 15(a) shall not extend to any earthquake insurance Landlord
may choose to carry on the Premises.
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(b) Tenant agrees to procure and maintain commercial liability
insurance, including products and completed operations insurance, from a
responsible insurance company authorized to do business in California, with a
combined single limit of not less than One Million Dollars ($1,000,000) for
injury or death to any person or damage to property and Five Million Dollars
($5,000,000) excess umbrella coverage for injury or death or property damage,
for any claims, demands, or causes of action of any person arising out of
accidents occurring on the Premises during the Term or arising out of Tenant's
use of the Premises.
(c) Each policy of insurance obtained by Tenant shall be issued by a
responsible insurance company authorized to do business in California with an
A.M. Best rating of at least A-, and shall be issued in the names of Landlord,
Tenant, Ground Lessor and any beneficiary under any deed of trust covering the
Premises, if required by the deed of trust, as their respective interests may
appear. Tenant shall deliver a certificate for each such insurance policy to
Landlord with all relevant endorsements. Each such policy of insurance shall be
primary and noncontributory with any policies carried by Landlord, to the extent
obtainable, any loss shall be payable notwithstanding any act or negligence of
Landlord that might otherwise result in forfeiture of insurance, shall contain a
cross-liability endorsement; and shall contain a severability clause. Each
insurance policy shall provide that a thirty (30) day notice of cancellation and
of any material modification of coverage shall be given to all named insureds.
The insurance coverage required under this Section may be carried by Tenant
under a blanket policy insuring other locations of Tenant's business, provided
that the Premises covered by this Lease are specifically identified as included
under that policy. Tenant agrees that upon the failure to insure as provided in
this Lease, or to pay the premiums in the insurance, Landlord may contract for
the insurance and pay the premiums, and all sums expended by Landlord for the
insurance shall be considered additional rent under this Lease and shall be
immediately repayable by Tenant. Each policy of insurance obtained by Tenant
shall include a waiver by the insurer of subrogation and all rights based upon
an assignment from its insured against Landlord, its officers, directors
employees, agents, invitees, licensees and contractors in connection with any
loss or damage thereby insured against.
(d) So that the business of Tenant may continue with as little
interruption as possible, Tenant shall, during the Term and any renewals or
extensions, maintain at Tenant's sole cost and expense, insurance for (i)
Tenant's personal property; inventory, alterations, fixtures and equipment
located on the Premises, in an amount not less than one hundred percent (100%)
of their actual replacement value, providing All Risk coverage including fire
sprinkler leakage, vandalism and malicious mischief; and (ii) all plate glass on
the Premises. The proceeds of such insurance, so long as this Lease remains in
effect, shall be used to repair or replace the personal property, inventory,
alterations, fixtures, equipment and plate glass so insured. In addition, Tenant
shall obtain and keep in force, at all times during the Term or any extensions
or renewals thereof, a policy of business interruption insurance coverage,
insuring that one hundred percent (100%) of the Monthly Rent due hereunder will
be paid to Landlord for a period of not less than one (1) year if the Premises
are damaged or destroyed or rendered unfit for occupancy by a risk
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insured against by a policy of All Risk coverage including fire sprinkler
leakage, vandalism and malicious mischief endorsements.
(e) At all times during the Term and any extensions or renewals, Tenant
agrees to keep and maintain, or cause Tenant's agents, contractors, or
subcontractors to keep and maintain, workmen's compensation insurance and other
forms of insurance as may from time to time be required by law or may otherwise
be necessary to protect Landlord and the Premises from claims of any person who
may at any time work on the Premises, whether as a servant, agent, or employee
of Tenant or otherwise. This insurance shall be maintained at the expense of
Tenant or Tenant's agents, contractors, or subcontractors and not at the expense
of Landlord.
(f) Landlord agrees that it will tender and turn over to Tenant or to
Tenant's insurers the defense of any claims, demands, or suits instituted, made,
or brought against Landlord or against Landlord and Tenant jointly, within the
scope of this Section. However, Landlord shall have the right to approve the
selection of legal counsel, to the extent that selection is within Tenant's
control, which approval shall not be unreasonably withheld or delayed. In
addition, Landlord shall retain the right at Landlord's election to have
Landlord's own legal counsel participate as co-counsel, to the extent that
claims are made that may not be covered by Tenant's insurers.
(g) Tenant and Landlord each waive all rights 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
negligence, gross negligence or willful misconduct of either Landlord or Tenant
or any their respective agents, employees, contractors, or invitees. Tenant and
Landlord shall, upon obtaining the required policies of insurance, give notice
to the insurance carriers that this mutual waiver of subrogation is in this
Lease.
(h) Landlord agrees to procure and maintain commercial liability
insurance from a responsible insurance company authorized to do business in
California, with a combined single limit of not less than One Million Dollars ($
1,000,000) for injury or death to any person or damage to property, for any
claims, demands, or causes of action of any person arising out of accidents
occurring on the Premises during the Term.
SECTION 16. Trade Fixtures.
(a) Tenant shall have the right, at any time and from time to time
during the Term and any renewals or extensions, at Tenant's sole cost and
expense, to install and affix on the Premises items for use in Tenant's trade or
business, which Tenant, in Tenant's sole discretion, deems advisable
(collectively "Trade Fixtures"). Trade Fixtures installed in the Premises by
Tenant shall always remain the property of Tenant and may be removed at the
expiration of the Term or any extension, provided that any damage to the
Premises caused by the removal of the Trade Fixtures shall be repaired by
Tenant, and further provided that
15
Landlord shall have the right to keep any Trade Fixtures or to require Tenant to
remove any Trade Fixtures that Tenant might otherwise elect to abandon.
(b) As security for Tenant's performance of obligations under this
Lease, Tenant grants to Landlord a security interest in all Trade Fixtures owned
by Tenant and now or later placed on the Premises by Tenant; provided that (i)
Landlord shall subordinate its lien to the lien of any current or future lender
of Tenant; and (ii) that each such current or future lender of Tenant consents
to Landlord's security interest in the Trade Fixtures. Any right to remove the
Trade Fixtures given Tenant by the provisions of Section 16(a) shall be
exercisable only if, at the time of the removal, an Event of Default has not
occurred and is not continuing on the part of Tenant in its performance of this
Lease. Provided that no Event of Default has occurred and is continuing on the
part of Tenant, Landlord agrees to release its security interest from any Trade
Fixture which Tenant desires to trade in or replace, provided, that this
security interest will then attach to the item that replaced the previous Trade
Fixture. Upon the occurrence of any Event of Default on the part of Tenant under
this Lease, Landlord shall immediately have as to the Trade Fixtures the
remedies provided to a secured party under relevant sections of the California
Uniform Commercial Code. Upon Landlord's request to Tenant and subject to the
forgoing terms and conditions, Tenant agrees to execute and deliver to Landlord
a UCC Financing Statement together with applicable continuations thereof with
regard to Landlord's security interest in the Trade Fixtures.
(c) Any Trade Fixtures that are not removed from the Premises by Tenant
within thirty (30) days after the Termination Date shall be deemed abandoned by
Tenant and shall automatically become the property of Landlord as owner of the
real property to which they are affixed and not due to the lien provided to
Landlord in Section 16(b).
SECTION 17. Communications Cables.
Regardless of any provisions of this Lease to the contrary, Landlord
and Tenant agree as follows:
(a) Cabling and Equipment. Tenant will be responsible, at Tenant's sole
cost, for the installation, maintenance, and repair of all telecommunication
cabling, wiring, and risers running throughout the Premises, together with all
of Tenant's telephones, telecopiers, computers, telephone switching, telephone
panels, and related equipment. Tenant agrees to install, maintain, and repair
the telecommunication cabling, wiring, and risers running throughout the
Premises in a good and proper manner.
(b) Right of Entry. In addition to Landlord's other rights of entry
under this Lease, Landlord may enter the Leased Premises to inspect the
telecommunication cabling, wiring, and risers to assure that the installation,
maintenance, and repair are being performed in a good and proper manner.
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(c) Designated Provider. Tenant agrees to have the installation,
maintenance, and repair of the telecommunication cabling, wiring, and risers
done by an independent contractor approved in writing in advance by Landlord,
provided Landlord shall not unreasonably withhold its approval of such
independent contractor.
(d) Indemnity. Tenant agrees to indemnify, release, defend, and hold
Landlord harmless against any damages, claims, or other liability resulting from
Tenant's installation, repair, or maintenance of the telecommunication cabling,
wiring, and risers, including, but not limited to, the costs of repair.
(e) Release. Tenant releases Landlord from all losses, claims,
injuries, damages, or other liability, including, but not limited to,
consequential damages, whether to persons or property and no matter how caused,
in any way connected with the interruption of telecommunications services due to
the failure of any telecommunications cabling, wiring, or risers. Tenant
expressly waives the right to claim that any interruption constitutes grounds
for a claim of abatement of rent, of constructive eviction, or for termination
of the Lease.
SECTION 18. Signs.
Tenant shall not maintain nor permit any sign, awning, canopy, marquee,
or other advertising to appear or be affixed on any exterior door, wall, or
window of the Premises, except as permitted by both applicable ordinances and
any conditions, covenants and restrictions covering the Premises, and then at
Tenant's sole cost or expense. Furthermore, Tenant shall not place any
decoration, lettering, or advertising matter on the glass of any exterior window
of the Premises without the prior written approval of Landlord, which approval
shall not be unreasonably withheld. If Tenant maintains any sign, awning,
canopy, marquee, decoration, or advertising matter in accordance with the terms
of this Section, Tenant shall maintain it in good appearance and repair at all
times during this Lease. At the Termination Date, any of the items mentioned in
this Section that are not removed from the Premises by Tenant may, without
damage or liability, be removed and destroyed by Landlord and Tenant shall be
liable to Landlord for the cost of such removal and destruction.
SECTION 19. Damage and Destruction.
If at any time during the Term, the Premises are damaged by a fire or
other casualty, Tenant shall immediately notify Landlord of the occurrence of
such fire or casualty. Landlord shall have thirty (30) days from the receipt of
such notice in the event of a casualty affecting only the Premises and sixty
(60) days from the receipt of such notice in the event of a casualty affecting
the Premises and one or more other buildings, to determine the amount of time it
reasonably estimates will be required to repair or restore the Premises after
obtaining a building permit therefor. If Landlord reasonably estimates that the
time required to repair or restore the Premises exceeds one hundred and fifty
(150) days following the issuance of a building permit therefor, either Landlord
or Tenant
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shall have the right to terminate this Lease upon the notice to other party
given no later than thirty (30) days following the giving of notice by Landlord
to Tenant of Landlord's estimate of the time necessary to repair or restore the
Premises. If neither party elects to terminate this Lease, or if Landlord
estimates that restoration of the Premises shall take one hundred and fifty
(150) days or less to complete, then, subject to receipt of sufficient insurance
proceeds (other than deductibles under such insurance), Landlord shall promptly
restore the Premises, excluding the improvements installed by Tenant, subject to
delays arising from the collection of insurance proceeds or from force majeure
events. Tenant, at Tenant's expense, shall promptly perform, subject to delays
arising from the collection of insurance proceeds or from force majeure events,
all repairs or restoration not required to be done by Landlord and shall
promptly re-enter the Premises and commence doing business in accordance with
this Lease. Notwithstanding the foregoing, either party may terminate this Lease
if the Premises are materially damaged during the last year of the Term and
Landlord reasonably estimates that it will take more than one-hundred and twenty
(120) days to repair such damage; provided however, that Tenant shall have the
right to avoid such termination of this Lease by Landlord by exercising its
option to extend the Term in accordance with Section 41 of this Lease for the
first Option Period, or, if Tenant has previously exercised the option for the
first Option Period, the second Option Period. If Tenant avoids such termination
by exercising its rights, if any, under Section 41 of this Lease, all of the
terms and conditions of this Section 19 relating to any restoration shall be
reinstated and adhered to by the parties hereto. Tenant shall pay to Landlord
with respect to the damage to the Premises the amount of Landlord's deductible
within thirty (30) days after presentment of Landlord's invoice. If the Premises
are damaged to the extent that the Premises are partially unsuitable or
inadequate for the purposes which Tenant was using the Premises prior to the
damage, the Monthly Rent otherwise payable by Tenant shall be reduced effective
as of the date of the damage so that the new Monthly Rent payable shall be an
amount equivalent to the proportion of the Monthly Rent otherwise payable as the
total floor area of the Premises still reasonably suitable for Tenant's use
under this Lease bears to the total floor area of the Premises prior to the
damage; provided that if such partial destruction materially interferes with
Tenant's intended use of the Premises as existing prior to the damage, rent
shall be abated entirely until Tenant is able to re-enter the Premises and use
the Premises for purposes for which Tenant was using the Premises prior to the
damage.
SECTION 20. Condemnation.
(a) If, during the Term or any renewal or extension, the whole of the
Premises shall be taken pursuant to any condemnation proceeding, this Lease
shall terminate as of 12:01 a.m. of the date that actual physical possession of
the Premises is taken, and after that, both Landlord and Tenant shall be
released from all obligations under this Lease.
(b) If, during the Term or any renewal or extension, only a part of the
Premises is taken pursuant to any condemnation proceeding and the remaining
portion is not suitable or adequate for the purposes for which Tenant was using
the Premises prior to the taking, or if the Premises should become unsuitable or
inadequate for those purposes by
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reason of the taking of any other property adjacent to or over the Premises
pursuant to any condemnation proceeding, or if by reason of any law or ordinance
the use of the Premises for the purposes specified in this Lease shall become
unlawful, then and after the taking or after the occurrence of other described
events, Tenant shall have the option to terminate, and the option can be
exercised only after the taking or after the occurrence of other described
events by Tenant giving written notice to Landlord within ten (10) days of such
taking or the occurrence of other described events, and Monthly Rent shall be
paid only to the time when Tenant surrenders possession of the Premises. Without
limiting the generality of the previous provision, it is agreed that in the
event of a partial taking of the Premises pursuant to any condemnation
proceeding, if the number of square feet of floor area in the portion remaining
after the taking is less than eighty percent (80%) of the number of square feet
of floor area at the commencement of the Term, Tenant shall, after the taking,
have the option to terminate this Lease upon giving written notice to Landlord
within ten ( 10) days of such taking or the occurrence of other described
events, and Monthly Rent shall be paid only to the time when Tenant surrenders
possession of the Premises.
(c) If only a part of the Premises is taken pursuant to any
condemnation proceeding under circumstances that Tenant does not have the option
to terminate this Lease as provided in this Section, or having the option to
terminate, Tenant elects not to terminate, then Landlord shall at Landlord's
expense promptly proceed to restore the remainder of the Premises to a self
contained architectural unit, and the Monthly Rent payable shall be reduced
effective the date of the taking to an amount that shall be in the same
proportion to Monthly Rent payable prior to the taking, as the number of square
feet of floor area remaining after the taking bears to the number of square feet
of floor area immediately prior to the taking.
(d) If the whole or any part of the Premises are taken pursuant to any
condemnation proceeding, then Landlord shall be entitled to the entirety of any
condemnation award except that portion allocable to Tenant's unsalvageable Trade
Fixtures and provided that Tenant shall have the right to make a separate claim
against the condemning authority for Tenant's relocation costs and Tenant's
business interruption.
SECTION 21. Assignment and Subletting.
(a) Tenant shall not assign or hypothecate this Lease or any interest
herein (by operation of law or otherwise) or sublet the Premises or any part
thereof, or permit the use of the Premises by any party other than Tenant (each
an "Transfer") without the prior written consent of Landlord which shall not be
unreasonably withheld. If Tenant is a corporation, a partnership or a limited
liability company, the transfer (as a consequence of a single transaction or any
number of separate transactions) of fifty percent (50%) or more of the
beneficial ownership interest of the voting stock of Tenant issued and
outstanding as of the date hereof or partnership interests in Tenant, or
ownership interests in Tenant, as the case may be, other than as a result of the
open trading of Tenant's shares on a public stock exchange which does not
constitute a merger, consolidation or other reorganization,
19
shall constitute a Transfer hereunder for which such consent is required.
Further, Tenant shall not Transfer this Lease to any corporation which controls,
is controlled by or is under common control with Tenant, or to any corporation
resulting from merger or consolidation with Tenant, or to any person or entity
which acquires all the assets as a going concern of the business of Tenant that
is being conducted on the Premises, without the prior written consent of
Landlord which shall not be unreasonably withheld. Any of the foregoing acts
without such consent shall be void, and, at the option of Landlord, shall
terminate this Lease. Notwithstanding anything to the contrary contained in this
Section, provided the use of the Premises does not change, Tenant may Transfer
this Lease without first obtaining Landlord's consent as follows (each a
"Permitted Transfer"): (i) to a corporation, limited liability company or other
entity which results from a merger, consolidation, reorganization or asset sale
with Tenant in which the surviving entity (A) acquires substantially all of the
assets of Tenant as a going concern, (B) assumes, or is deemed by law to be
liable for, all of the liabilities of Tenant and (C) has after such merger,
consolidation, reorganization or asset sale a net worth not less than Tenant's
net worth as of the date of this Lease; and (ii) as a result of a sale, issuance
or transfer of the capital stock of Tenant provided Tenant continues to be a
publicly traded corporation, limited liability company or other entity.
(b) In the event that Tenant should desire to Transfer this Lease or
any portion thereof, Tenant shall first offer the space affected by such
Transfer to Landlord and Landlord shall have the right within thirty (30) days
following such offer to elect to, in Landlord's sole and absolute discretion,
terminate this Lease as to the space affected by the desired Transfer. In the
event that Landlord does not notify Tenant within such thirty-day period of its
election to terminate the Lease as to the space affected by such desired
Transfer, Landlord shall be deemed to have waived its right to so terminate the
Lease as to the space to be affected by the desired Transfer. In the event that
Landlord does not terminate the Lease as to the space affected by Tenant's
desired transfer, and, within one-hundred and twenty (120) days following
Landlord's election not to terminate the Lease as to the space affected by
Tenant's Transfer, Tenant reaches a tentative agreement to Transfer such space
to a third party, Tenant shall provide Landlord with written notice of such
tentative agreement at least ten (10) business days in advance of the effective
date of such proposed Transfer. Such notice shall include (i) the name and legal
composition of the proposed sublessee or assignee, (ii) the nature of business
to be conducted by the proposed sublessee or assignee in the Premises, (iii) the
terms and conditions of the proposed Transfer, (iv) a current financial
statement of the proposed sublessee or assignee, financial statements of
proposed sublessee or assignee covering the preceding three (3) years, if they
exist, and, if available, an audited financial statement of the proposed
sublessee or assignee for a period ending not more than one (1) year prior to
the proposed effective date of the Transfer, all of which are to be prepared in
accordance with generally accepted accounting principles, (v) a statement of all
consideration to be given on account of the Transfer; and (vi) any other
information that Landlord reasonably requests. At any time within ten (10)
business days following receipt of Tenant's notice, Landlord may by written
notice to Tenant elect to (i) unless waived in accordance with this Section
21(b), in Landlord's sole and absolute discretion, terminate this Lease as to
20
the space affected as of the effective date of the proposed Transfer, (ii)
consent to the proposed subletting of the Premises or assignment of this Lease
or (iii) disapprove of the proposed Transfer. If Landlord does not elect to
terminate this Lease, however, Landlord shall not unreasonably withhold its
consent to a proposed Transfer if Tenant is not in default under this Lease at
the time Tenant requests such consent. Without limiting other situations in
which it may be reasonable for Landlord to withhold its consent to any proposed
assignment or sublease, Landlord and Tenant agree that it shall be reasonable
for Landlord to withhold its consent in any one or more of the following
situations: (i) if, in Landlord's reasonable judgment, the net worth and
financial capability of the proposed subtenant or assignee is not sufficient to
support the obligations of such proposed subtenant or assignee; (ii) in
Landlord's reasonable judgment, the business history and reputation in the
community of the proposed subtenant or assignee does not meet the standards
applied by Landlord or (iii) the proposed subtenant or assignee shall be a then
existing or prospective tenant of Landlord; provided that in any event Landlord
shall be entitled to exercise its right of termination in lieu of consenting to
a transfer, as set forth above. In order for any Transfer to be binding on
Landlord, Tenant shall deliver to Landlord, promptly after execution thereof, an
executed copy of such sublease or assignment whereby the sublessee or assignee
shall expressly assume the obligations of Tenant under this Lease.
(c) Landlord and Tenant agree that seventy percent (70%) of any rent or
other consideration received or to be received by or on behalf of or for the
benefit of Tenant as a result of any Transfer, in excess of the aggregate of (i)
the Monthly Rent which Tenant is obligated to pay Landlord under this Lease
(prorated to reflect obligations allocable to that portion of the Premises
subject to such sublease) and (ii) any leasing commissions and reasonable
attorneys' fees actually incurred and paid by Tenant to secure the Transfer,
shall be payable to Landlord as additional rent under this Lease without
affecting or reducing any other obligation of Tenant hereunder. Landlord's share
of such excess rent or other consideration shall be paid by the subtenant or
assignee directly to Landlord at the same time as such rent or other
consideration is payable to Tenant.
(d) Regardless of Landlord's consent, no Transfer shall release Tenant
of Tenant's obligation or alter the primary liability of Tenant to pay the
rental and to perform all other obligations to be performed by Tenant hereunder.
The acceptance of rental by Landlord from any other person shall not be deemed
to be a waiver by landlord of any provision hereof. Consent to one assignment or
subletting shall not be deemed consent to any subsequent or further Transfers.
In the event of default by any assignee or successor of Tenant in the
performance of any of the terms hereof, Landlord may proceed directly against
Tenant without the necessity of exhausting remedies against said assignee or
successor. Landlord may consent to subsequent Transfers of this Lease or
amendments or modifications to this Lease with assignees of Tenant, without
notifying Tenant, or any successor of Tenant, and without obtaining its or their
consent thereto and such action shall not relieve Tenant or any successor of
Tenant of liability under this Lease.
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(e) Tenant shall pay to Landlord, as an additional rent, all reasonable
costs and attorney fees incurred by Landlord in connection with the evaluation,
processing, or documentation of any requested Transfer, whether or not
Landlord's consent is granted. Landlord's reasonable costs shall include the
cost of any review or investigation performed by Landlord or consultant acting
on behalf of Landlord of:
(i) any Hazardous Substances used, stored, released, or disposed of
by the proposed subtenant or assignee, or
(ii) violations of any Environmental Law by the Tenant or the proposed
subtenant or assignee.
(f) Any Transfer approved by Landlord shall not be effective until
Tenant has delivered to Landlord an executed counterpart of the document
evidencing the Transfer is in form and substance reasonably satisfactory to
Landlord.
(g) Any attempted Transfer without Landlord's consent shall constitute
an Event of Default. Landlord's consent to any one Transfer shall not constitute
a waiver of the provision of Section 21 as to any subsequent Transfer or a
consent to any subsequent Transfer.
SECTION 22. Default.
Any of the following events or occurrences shall constitute a material
breach of this Lease by Tenant and, after the expiration of any applicable grace
period, shall constitute an event of default (each an "Event of Default"):
(a) The failure by Tenant to pay any amount in full when it is due
under the Lease, provided however that once every 12 months during the Term,
Tenant's failure to pay any amount when it is due under the Lease shall not be
an Event of Default if Tenant makes such payment within three (3) business days
following written notice from Landlord of such failure;
(b) The failure by Tenant to perform any obligation under this Lease,
which by its nature Tenant has no capacity to cure;
(c) The failure by Tenant to perform any other obligation under this
Lease, if the failure has continued for a period of ten (10) days after Landlord
demands in writing that Tenant cure the failure. If, however, by its nature the
failure cannot be cured within ten (10) days, Tenant may have a longer period as
is necessary to cure the failure, but this is conditioned upon Tenant's promptly
commencing to cure within the ten (10) day period and thereafter diligently
pursuing such cure to completion within one-hundred and twenty (120) days after
Landlord demands in writing that Tenant cure the failure. Tenant shall indemnify
and defend Landlord against any liability, claim, damage, loss, or penalty that
22
may be threatened or may in fact arise from that failure during the period the
failure is incurred;
(d) Any of the following: a general assignment by Tenant for the
benefit of Tenant's creditors; any voluntary filing, petition, or application by
Tenant under any law relating to insolvency or bankruptcy, whether for a
declaration of bankruptcy, a reorganization, an arrangement, or otherwise; or
the dispossession of Tenant from the Premises (other than by Landlord) by
process of law or otherwise; or
(e) The appointment of a trustee or receiver to take possession of all
or substantially all of Tenant's assets; or the attachment, execution or other
judicial seizure of all or substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this Lease, unless the appointment or
attachment, execution, or seizure is discharged within sixty (60) days; or the
involuntary filing against Tenant, or any general partner of Tenant if Tenant is
a partnership, of
(i) a petition to have Tenant, or any partner of Tenant if Tenant is a
partnership, declared bankrupt, or
(ii) a petition for reorganization or arrangement of Tenant under any
law relating to insolvency or bankruptcy, unless, in the case of any
involuntary filing, it is dismissed within sixty (60) days;
SECTION 23. Remedies.
Upon the occurrence of an Event of Default, Landlord, in addition to
any other rights or remedies available to Landlord at law or in equity, shall
have the right to
(a) terminate this Lease and all rights of Tenant under this Lease by
giving Tenant written notice that this Lease is terminated, in which case
Landlord may recover from Tenant the aggregate sum of
(i) the worth at the time of award of any unpaid rent that had been
earned at the time of termination;
(ii) the worth at the time of award of the amount by which (A) the
unpaid rent that would have been earned after termination until the
time of award exceeds (B) the amount of the rental loss, if any, as
Tenant affirmatively proves could have been reasonably avoided;
(iii) the worth at the time of award of the amount by which (A) the
unpaid rent for the balance of the term after the time of award exceeds
(B) the amount of rental loss, if any, as Tenant affirmatively proves
could be reasonably avoided;
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(iv) any other amount necessary to compensate Landlord for all the
detriment caused by Tenant's failure to perform Tenant's obligations or
that, in the ordinary course of things, would be likely to result from
Tenant's failure, including without limitation the costs and expenses
incurred by Landlord for:
(A) retaking possession of the Premises;
(B) cleaning and making repairs and alterations (including the
cost of leasehold improvements installed in connection with
the releasing of the Premises, whether or not the same shall
be funded by a reduction of rent, direct payment or otherwise,
as amortized over the life of such improvements to the extent
such amortization occurs during what would have been the
remaining portion of the scheduled Term of this Lease)
necessary to return the Premises to good condition and
preparing the Premises for reletting;
(C) removing, transporting, and storing any of Tenant's
property left at the Premises (although Landlord shall have no
obligation to remove, transport, or store any of the said
property);
(D) reletting the Premises, including without limitation,
brokerage commissions, advertising costs, and attorneys' fees;
(E) expert witness fees, court costs and reasonable attorney's
fees;
(F) any unamortized real estate brokerage commissions paid in
connection with this Lease; and
(G) costs of carrying the Premises, such as repairs,
maintenance, taxes and insurance premiums, utilities and
security precautions, if any; and (v) all other amounts in
addition to or in lieu of those previously set out as may be
permitted from time to time by applicable California law.
As used in clauses (i) and (ii) of Section 23(a), the "worth at the
time of award" shall be computed by allowing interest at the rate of ten percent
(10%) per annum. As used in clause (iii) of Section 23(a), the "worth at the
time of award" shall be computed by discounting that amount at the discount rate
of the Federal Reserve Bank of San Francisco at the time of award plus one
percent (1%). As used in this Section, the term "rent" shall include Monthly
Rent as well as any other payments required by Tenant under this Lease.
(b) continue this Lease, and from time to time, without terminating
this Lease, either:
(i) recover all rent and other amounts payable as they become due in
accordance with California Civil Code ss.1951.4; or
24
(ii) relet the Premises or any part on behalf of Tenant on terms and at
the rent that Landlord, in Landlord's sole discretion, may deem
advisable, all with the right to make alterations and repairs to the
Premises, at Tenant's cost, and apply the proceeds of reletting to the
rent and other amounts payable by Tenant. To the extent that the rent
and other amounts payable by Tenant under this Lease exceed the amount
of the proceeds from reletting, the Landlord may recover the excess
from Tenant as and when due.
(c) Upon the occurrence of an Event of Default, Landlord shall also
have the right, with or without terminating this Lease, to re-enter the Premises
and remove all persons and property from the Premises. Landlord may store the
property removed from the Premises in a public warehouse or elsewhere at the
expense and for the account of Tenant.
(d) None of the following remedial actions, alone or in combination,
shall be construed as an election by Landlord to terminate this Lease unless
Landlord has in fact given Tenant written notice that this Lease is terminated
or unless a court of competent jurisdiction decrees termination of this Lease:
any act by Landlord to maintain or preserve the Premises; any efforts by
Landlord to relet the Premises; any re-entry, repossession, or reletting of the
Premises; or any re-entry, repossession, or reletting of the Premises by
Landlord pursuant to this Section. If Landlord takes any of the previous
remedial actions without terminating this Lease, Landlord may nevertheless at
any later time terminate this Lease by written notice to Tenant.
(e) If Landlord relets the Premises, Landlord shall apply the revenue
from the reletting as follows: first, to the payment of any indebtedness other
than rent due from Tenant to Landlord; second, to the payment of any cost of
reletting, including without limitation finder's fees and leasing commissions;
third, to the payment of the cost of any maintenance and repairs to the
Premises; and fourth, to the payment of rent and other amounts due and unpaid
under this Lease. Landlord shall hold and apply the residue, if any, to payment
of future amounts payable under this Lease as the same may become due, and shall
be entitled to retain the eventual balance with no liability to Tenant. If the
revenue from reletting during any month, after application pursuant to the
previous provisions, is less than the sum of (i) Landlord's expenditures for the
Premises during that month and (ii) the amounts due from Tenant during that
month, Tenant shall pay the deficiency to Landlord immediately upon demand.
(f) After the occurrence of an Event of Default, Landlord, in addition
to or in lieu of exercising other remedies, may, but without any obligation to
do so, cure the breach underlying the Event of Default for the account and at
the expense of Tenant. However Landlord shall by prior notice first allow Tenant
a reasonable opportunity to cure, except in cases of emergency, where Landlord
may proceed without prior notice to Tenant. Tenant shall, upon demand,
immediately reimburse Landlord for all costs,
25
including costs of settlements, defense, court costs, and attorney fees, that
Landlord may incur in the course of any cure.
(g) No security or guaranty for the performance of Tenant's obligations
that Landlord may now or later hold shall in any way constitute a bar or defense
to any action initiated by Landlord for unlawful detainer or for the recovery of
the Premises, for enforcement of any obligation of Tenant, or for the recovery
of damages caused by a breach of this Lease by Tenant or by an Event of Default.
(h) Except where this is inconsistent with or contrary to any
provisions of this Lease, no right or remedy conferred upon or reserved to
either party is intended to be exclusive of any other right or remedy, or any
right or remedy given or now or later existing at law or in equity or by
statute. Except to the extent that either party may have otherwise agreed in
writing, no waiver by a party of any violation or nonperformance by the other
party of any obligations, agreements, or covenants under this Lease shall be
deemed to be a waiver of any subsequent violation or nonperformance of the same
or any other covenant, agreement, or obligation, nor shall any forbearance by
either party to exercise a remedy for any violation or nonperformance by the
other party be deemed a waiver by that party of the rights or remedies with
respect to that violation or nonperformance, except that acceptance by Landlord
of any amount due or owing under the Lease shall be a waiver of any failure of
Tenant to pay such amount.
SECTION 24. Late Charge.
Tenant acknowledges that Tenant's failure to pay any installment of the
Monthly Rent, or any other amounts due under this Lease as and when due may
cause Landlord to incur costs not contemplated by Landlord when entering into
this Lease, the exact nature and amount of which would be extremely difficult
and impracticable to ascertain. Accordingly, (i) if any installment of the
Monthly Rent is not received by Landlord as and when due or (ii) if any other
amount due under the Lease is not received by Landlord within three (3) business
days after notice to Tenant that such amount is past due, then, without notice
to Tenant, Tenant shall pay to Landlord an amount equal to four percent (4%) of
the past due amount, which the parties agree represents a fair and reasonable
estimate of the costs incurred by Landlord as a result of the late payment by
Tenant.
SECTION 25. Default Interest.
If Tenant fails to pay any amount due under this Lease as and when due,
that amount shall bear interest at the lesser of ten percent (10%) per annum or
the maximum rate then allowable by law from the due date until paid.
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SECTION 26. Waiver of Breach.
Any express or implied waiver of a breach of any term of this Lease
shall not constitute a waiver of any further breach of the same or other term of
this Lease; and the acceptance of rent shall not constitute a waiver of any
breach of any term of this Lease, except as to the payment of rent accepted.
SECTION 27. Estoppel Certificates.
At any time, with at least fifteen (15) days' prior notice by Landlord,
Tenant shall execute, acknowledge, and deliver to Landlord a certificate
certifying:
(a) the Commencement Date, the occupancy date and the Term,
(b) the amount of the Monthly Rent,
(c) the dates to which rent and other charges have been paid,
(d) that this Lease is unmodified and in full force or, if there have
been modifications, that this Lease is in full force, as modified, and stating
the date and nature of each modification,
(e) that no notice has been received by Tenant of any default by Tenant
that has not been cured, except, if any exist, those defaults shall be specified
in the certificate, and Tenant shall certify that no event has occurred that,
but for the expiration of the applicable time period or the giving of notice or
both, would constitute an Event of Default under this Lease,
(f) that no default of Landlord is claimed by Tenant, except, if any,
those defaults shall be specified in the certificate, and
(g) other matters as may be reasonably requested by Landlord or
Landlord's lenders.
Any such certificate may be relied on by prospective purchasers, mortgagees, or
beneficiaries under any deed of trust on the Premises or any part of it.
SECTION 28. Attorney Fees.
If any action at law or in equity or any other proceeding is brought to
recover any rent or other sums under this Lease, or for or on account of any
breach or alleged breach of or to enforce or interpret any of the covenants,
terms, or conditions of this Lease, or for the recovery of the possession of the
Premises, the "prevailing party" shall be entitled to recover from the other
party as part of prevailing party's costs reasonable attorney fees and other
costs incurred in that action or proceeding, including, but not limited to,
expert's
27
expenses, in addition to any other relief to which they may be entitled. The
"prevailing party" shall include without limitation (a) a party who dismisses an
action in exchange for sums allegedly due; (b) the party who receives
performance from the other party of an alleged breach of covenant or a desired
remedy where that is substantially equal to the relief sought in an action; or
(c) the party determined to be the prevailing party by a court of law.
SECTION 29. Security Deposit.
Tenant has deposited with Landlord on or before the execution of this
Lease the sum of Eight Two Thousand Nine Hundred and Seventy Six and 40/100
Dollars ($82,976.40) which shall be held by Landlord as security for the
performance of Tenant's covenants and obligations under this Lease (the
"Security Deposit"), it being expressly understood and agreed that the Security
Deposit is not an advance rental deposit or a measure of the Landlord's damages
in case of Tenant's default. Landlord agrees to pay to Tenant interest of three
percent (3%) per annum, compounded annually, on the Security Deposit, such
interest to be held with and increase the Security Deposit on an annual basis.
Upon the occurrence of any Event of Default by Tenant, Landlord may, from time
to time and without prejudice to any other remedy provided by this Lease or by
law, use the Security Deposit to the extent necessary to make good any arrears
of rent or other payments or liability caused by the Event of Default. Tenant
shall pay to Landlord on demand the amount that was applied in order to restore
the Security Deposit to the amount held by Landlord prior to the application.
Although the Security Deposit together with any interest accruing thereon shall
be deemed the property of Landlord, any remaining balance of the Security
Deposit shall promptly be returned by Landlord to Tenant at the time after
termination of this Lease that all of Tenant's obligations under this Lease have
been fulfilled to Landlord's reasonable satisfaction. Landlord shall not be
required to keep the Security Deposit separate from the general accounts of
Landlord. Tenant shall concurrent with the execution of this Lease provide
Landlord with its federal employer identification number to allow Landlord to
report on an annual basis the amount of interest paid on the Security Deposit.
SECTION 30. Authority.
(a) All individuals executing this Lease on behalf of Tenant represent
that they are authorized to execute and deliver this Lease on behalf of Tenant.
Tenant shall, prior to the execution of this Lease, deliver to Landlord evidence
of that authority and evidence of due formation, all reasonably satisfactory to
Landlord. Tenant agrees that it shall in a timely manner obtain all corporate
and other approvals necessary to allow it to execute this Lease and carry out
Tenant's obligations hereunder.
(b) All individuals executing this Lease on behalf of Landlord
represent that they are authorized to execute and deliver this Lease on behalf
of Landlord. Landlord shall, prior to the execution of this Lease, deliver to
Tenant evidence of that authority, all reasonably satisfactory to Tenant.
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SECTION 31. Notices.
Except as otherwise expressly provided by law, all notices or other
communications required or permitted by this Lease or by law to be served on or
given to either party to this Lease by the other party shall be in writing and
shall be deemed served when personally delivered to the party to whom they are
directed, or in lieu of the personal service, three days following deposit in
the United States Mail, certified or registered mail, return receipt requested,
postage prepaid, addressed as follows:
If to Tenant: SanDisk Corporation
140 Caspian Court
Sunnyvale, CA 94089
Attn.: Chief Financial Officer
With a copy to: Scott Biel, Esq.
Brobeck, Phleger & Harrison LLP
550 West C Street, Suite 1300
San Diego, CA 92101
If to Landlord: G.F. Properties, Inc.
999 Baker Way, Suite 200
San Mateo, California, 94404
Attn.: Mr. Jack Pryde
With a copy to: Stephen R. Barbieri
Law Offices of Stephen R. Barbieri
214 Grant Ave., Suite 400
San Francisco, CA 94108
Either party, Tenant or Landlord, may change the address for the
purpose of this Section by giving written notice of the change to the other
party in the manner provided in this Section.
SECTION 32. Heirs and Successors.
This Lease shall be binding on and shall inure to the benefit of the
heirs, executors, administrators, successors, and assigns of Landlord and
Tenant.
SECTION 33. Partial Invalidity.
Should any provision of this Lease be held by a court of competent
jurisdiction to be either invalid or unenforceable, the remaining provisions of
this Lease shall remain in effect, unimpaired by the holding.
29
SECTION 34. Entire Agreement.
This instrument constitutes the sole agreement between Landlord and
Tenant respecting the Premises, the leasing of the Premises to Tenant, and the
specified lease term, and correctly sets forth the obligations of Landlord and
Tenant. Any agreement or representations respecting the Premises or their
leasing by Landlord to Tenant not expressly set forth in this instrument are
void.
SECTION 35. Time of the Essence.
Time is of the essence in this Lease.
SECTION 36. Rent.
All monetary obligations of Tenant to Landlord under the Lease,
including but not limited to the Monthly Rent shall be deemed rent.
SECTION 37. Amendments.
This Lease may be modified only in writing and only if signed by the
parties at the time of the modification.
SECTION 38. Subordination. Nondisturbance and Attornment.
(a) This Lease and the rights of Tenant hereunder are subject and
subordinate to any lien of the holder of or beneficiary under a mortgage or deed
of trust which now or in the future encumbers the Premises and to any and all
advances made thereunder, and interest thereon, and all modifications, renewals,
supplements, consolidations and replacements thereof.
(b) Tenant agrees that any lender may at its option, unilaterally
elect to subordinate in whole or in part, such lien of such mortgage or deed or
trust to this Lease, provided that such subordination shall be conditioned upon
lender agreeing to enter into a nondisturbance and attornment agreement with
Tenant which shall provide that (i) so long as Tenant is not in default in the
payment of rent or in the performance of any of the terms, covenants and
conditions of this Lease, the beneficiary under a mortgage or deed of trust
which now encumbers the Premises and any purchaser at a trustee's sale or
foreclosure sale shall not interfere with Tenant's possession of the Premises
during the term of this Lease, and (ii) if Landlord's interest in the Premises
is transferred to the beneficiary under a mortgage or deed of trust which now
encumbers the Premises or any other purchaser at a trustee's sale or foreclosure
sale of the Premises, Tenant shall agree to be bound to such transferee under
all of the terms, covenants and conditions of the Lease for the balance of the
term hereof (including any extensions or renewals). Except for such
nondisturbance agreement, such subordination or priority of this Lease, as the
case may be, shall be effective without the necessity of executing any further
instrument or
30
agreement to effect such subordination or priority; provided, however, that
Tenant agrees to execute, acknowledge and deliver to Landlord upon demand any
and all instruments required by Landlord, lessor or lender evidencing the
subordination or priority of this Lease, as the case may be. Tenant hereby
irrevocably appoints Landlord as its agent and attorney-in-fact (which
appointment is coupled with an interest) to execute, acknowledge and deliver any
such instruments in the name of and on behalf of Tenant if Tenant fails to so
execute, acknowledge and deliver such instruments within 10 days after written
request therefor. Landlord agrees to use commercially reasonable efforts to
cause any lender or other party to a nondisturbance agreement to agree that upon
taking possession of the Premises it will be bound by the ongoing obligations of
Landlord under this Lease, other than such past obligations with regard to which
Landlord may be then in default.
(c) Within thirty (30) days of the execution by both parties of this
Lease, Landlord shall cause the holder of or beneficiary under a mortgage or
deed of trust which now encumbers the Premises to enter into a nondisturbance
and attornment agreement with Tenant which shall provide that (i) so long as
Tenant is not in default in the payment of rent or in the performance of any of
the terms, covenants and conditions of this Lease, the beneficiary under a
mortgage or deed of trust which now encumbers the Premises and any purchaser at
a trustee's sale or foreclosure sale shall not interfere with Tenant's
possession of the Premises during the term of this Lease, and; (ii) If
Landlord's interest in the Premises is transferred to the beneficiary under a
mortgage or deed of trust which now encumbers the Premises or any other
purchaser at a trustee's sale or foreclosure sale of the Premises, Tenant shall
agree to be bound to such transferee under all of the terms, covenants and
conditions of the Lease for the balance of the term hereof (including any
extensions or renewals).
SECTION 39. Merger.
The voluntary or other surrender of this Lease by Tenant, or a mutual
cancellation of the Lease, or a termination by Landlord, shall not work a
merger, and shall, at the option of Landlord, terminate all or any existing
subtenancies or may, at the option of Landlord, operate as an assignment to a
Landlord of any of the subtenancies.
SECTION 40. Intentionally Omitted.
SECTION 41. Options To Extend Term.
(a) Tenant shall have the option (collectively the "Extension Options")
to extend the Term, for two (2) additional periods (each an "Option Term") by
giving Landlord prior written notice of Tenant's election to exercise each
Extension Option not more than nine (9) months before the then scheduled
expiration of the Term and not less than six (6) months before the then
scheduled expiration of the Term; provided that if there exists an uncured Event
of Default on Tenant's part either at the time of the exercise of such Extension
Option or at the time that the Option Period would commence, Landlord may cancel
Tenant's exercise of such Extension Options in which case such Extension Option
31
and any other Extension Options granted by this Lease shall terminate and be of
no further force or effect.
(b) The first Option Period will extend the Term for a period
commencing the day following the expiration of the original Term of this Lease
(the "First Option Commencement Date") and ending on June 30, 2006 (the "First
Option Term"). The Monthly Rent for the First Option Term shall be as follows:
Period: Monthly Rent per RSF:
- ------- ---------------------
Building / Warehouse
First Option Commencement Date-December 31, 2002 $.95 / $.475
January 1, 2003-June 30,2004 $1.00 / $.50
July l, 2004-December 31, 2005 $1.05 / $.525
January 1, 2006-June 30, 2006 $l.l0 / $.55
Except for the Monthly Rent, the lease of the Premises for the First
Option Term shall be on the same terms and conditions as are contained in this
Lease.
(c) The Second Option Term will extend the First Option Term for a
period commencing the day following the expiration of the First Option Term and
ending on June 30, 2011 (the "Second Option Term"). The Monthly Rent for the
Second Option Term shall be determined in accordance with Section 42 hereof.
(d) Each of the Extension Options are personal to the named tenant
herein and any Transfer of such tenant's interest in the Lease (other than a
Permitted Transfer), whether or not consented to by Landlord, shall cause such
Extension Option and any subsequent Extension Option to terminate and be of no
further force or effect.
SECTION 42. Determination Of Monthly Rent for Second Option Term.
For purposes of Section 41(c), Monthly Rent for the Second Option Term
shall be determined as follows:
(a) Parties shall have thirty (30) days from the receipt by Landlord of
Tenant's notice electing to exercise the second Extension Option, to agree on
the Monthly Rent for the Second Option Term. If the parties agree on the Monthly
Rent for the Second Option Term, by such date, they shall immediately execute an
amendment to this Lease stating the Monthly Rent for the Second Option Term.
(b) If the parties are unable to agree upon the Monthly Rent for the
Second Option Term in accordance with Section 42(a), then within fourteen (14)
days after the parties fail to agree on the Monthly Rent for the Second Option
Term, each party at its cost and by giving notice to the other party, shall
appoint a real estate appraiser with at least five (5) years full time MAI
appraisal experience in Santa Clara County, to determine
32
the Monthly Rent for the Second Option Term, and shall deliver to said
appraiser as well as the other party, such party's proposal for the Monthly Rent
for the Second Option Term. If a party does not appoint an appraiser within said
fourteen (14) day period and the other party has given notice of the name of its
appraiser, the single appraiser appointed shall be the sole appraiser and shall
determine the Monthly Rent for the Second Option Term. If an appraiser is
appointed by each of the parties as provided in this section, they shall meet
promptly and attempt to set the Monthly Rent for the Second Option Term, by
agreeing on which party's proposal most closely reflects the Fair Market Rental
Value for the Second Option Term. If they are unable to agree within thirty (30)
days after the second appraiser has been appointed, the appraisers can if they
so agree cause to be appointed a third appraiser who meets the qualifications
stated in this Section or if they cannot so agree either of the parties to this
Lease, by giving ten (10) days notice to the other party, can apply to the then
Presiding Judge of the Santa Clara County Superior Court for the appointment of
a third appraiser who meets the qualifications stated in this Section. Each of
the parties shall bear one-half of the cost of appointing the third appraiser
together with one-half of such appraiser's fee. The third appraiser, however,
shall be a person who has not previously acted in any capacity for either party
during the prior three (3) years. Within thirty (30) days after the selection of
the third appraiser, a majority of the appraisers shall determine which party's
proposal more closely reflects the Fair Market Rental Value for the Second
Option Term. As used herein, "Fair Market Rental Value" shall mean the then
prevailing annual rental rate per square foot of rentable area for mixed used
industrial space in comparable buildings in Santa Clara County which has been
built out for occupancy, comparable in area and location to the space for which
such rental rate is being determined (to the extent that quoted rental rates
vary with regard to location), being leased for a duration comparable to the
term for which such space is being leased and taking into consideration rental
concessions and abatements, tenant improvement allowances, if any, being offered
by Landlord, the "as is" condition of the space, operating expenses and taxes,
other adjustments to basic rent and other comparable factors.
(c) After the appraisers determine which party's proposal more closely
reflects the Fair Market Rental Value for the Second Option Term, the appraisers
shall immediately notify the parties and the parties of their findings and the
parties shall immediately execute an amendment to this Lease stating the Monthly
Rent for the Second Option Term based upon the party's proposal which most
closely reflects the Fair Market Rental Value for the Second Option Term,
provided however that in no event shall the Monthly Rent for the Second Option
Term be less than the Monthly Rent immediately preceding the commencement of the
Second Option Term.
SECTION 43. Tenant Improvements.
Landlord agrees to effect a program of Alterations for the renovation
of the Premises as soon after the Commencement Date as the mutual best efforts
of Landlord and Tenant shall allow. All such Alterations effected as part of the
renovation program being hereinafter referred to as the "Tenant Improvements."
The renovation program shall be accomplished in accordance with the provisions
of Section 11 of this Lease and
33
the provisions of a work letter agreement to be agreed upon by Landlord and
Tenant no later than June 1, 1998, to be marked Exhibit C (Work Letter), and to
be attached hereto and incorporated herein, in form and substance similar to
Exhibit B (Work Letter) which is attached hereto and incorporated herein,
subject to the following provisions:
(a) Tenant shall bear the cost of the Tenant Improvements and the cost
of architectural and engineering consultants in connection therewith, provided
however that Landlord shall contribute an amount not to exceed Five Dollars
($5.00) per square foot of Building (specifically not including Warehouse) space
(the "Unrestricted Tenant Improvement Allowance") to be applied to the
construction of new tenant improvements together with the cost of architectural
and engineering consultants in connection therewith.
(b) In addition to the Unrestricted Tenant Improvement Allowance,
Landlord agrees to contribute an amount not to exceed Two Dollars ($2.00) per
square foot of Building (specifically not including Warehouse) space (the
"Restricted Tenant Improvement Allowance") for the removal and demolition of
existing tenant improvements located in the Premises on the Commencement Date
and the upgrading of the Premises to comply with Legal Requirements (as defined
in Section 6 hereof) in effect as of the date of this Lease, including but not
limited to compliance with the ADA, Title 24 of the California Code of
Regulations, and the Uniform Building Code (collectively the "Upgrading
Requirements"). By way of example and not by way of limitation, the Restricted
Tenant Improvement Allowance would be available to pay for the installation of
smoke detectors, door handles, door locks, signage, handicapped accessibility,
lighting and lighting controls if and to the extent such items are required by
Legal Requirements in place as of the date of this Lease. Notwithstanding the
foregoing, the Restricted Tenant Improvement Allowance shall not be used for
compliance with Legal Requirements in the construction of new tenant
improvements but only in causing the compliance with Legal Requirements of the
existing improvements, it being the intention of the parties hereto that the
cost of compliance with Legal Requirements in the construction of new tenant
improvements be paid out of the Unrestricted Tenant Improvement Allowance.
(c) If and to the extent that either (i) the cost of the new tenant
improvements to be constructed in the Premises (inclusive of the cost of
architectural and engineering consultants in connection therewith) exceeds the
Unrestricted Tenant Improvement Allowance or (ii) the cost of improvements to be
constructed in the Premises pursuant to the provisions of Section 43(b) exceed
the aggregate of the Restricted Tenant Improvement Allowance, Tenant shall
reimburse Landlord for such excess within fifteen (15) days following receipt by
Tenant of invoices for such excess.
(d) Landlord represents and warrants that as of the date of completion
of the Tenant Improvements (i) the Premises and the Tenant Improvements shall be
in full compliance with all applicable Legal Requirements and shall be built in
a good and workmanlike manner with good materials in accordance with the plans
therefore, (ii) the equipment and the building systems serving the Premises are
in good working order, and
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(iii) to the best of Landlord's knowledge, no Hazardous Substances exist in
measurable quantities in or about the Premises. Landlord agrees to use its
commercially reasonable efforts to cause any contractor responsible for a latent
defect to cure such latent defect. Landlord hereby agrees to indemnify Tenant
against any inaccuracy in the representations contained in this Section 43(d).
SECTION 44. Right of First Offer.
At any time during the Term, Tenant shall have the right of first offer
to acquire the Premises on the terms and conditions set forth in this Section
(the "Right of First Offer"). If at any time during the Term or any extension or
renewal thereof, Landlord elects to sell its interest in the Premises, Landlord
shall notify Tenant in writing by certified mail, return receipt requested, of
its intent to sell its interest in the Premises (the "Sale Notice"). The Sale
Notice shall contain the price and terms on which Landlord intends to offer its
interest in the Premises on the open market. Tenant shall have fifteen (15)
business days from said notification to notify Landlord in writing of Tenant's
intent to negotiate a purchase of the Premises (the "Exercise Notice"). Tenant
and Landlord shall then have thirty (30) days from Landlord's receipt of the
Exercise Notice to agree on the terms and conditions of a purchase and sale
agreement covering the Premises (the "Purchase Agreement"). If Tenant fails to
give the Exercise Notice, it will be deemed that Tenant has waived its Right of
First Offer. If Landlord and Tenant do not enter into the Purchase Agreement
covering the Premises within such thirty (30) day period, Tenant's Right of
First Offer to purchase the Premises shall terminate and Landlord shall have the
right to sell the Premises to a third party on any terms and conditions it deems
acceptable in its sole discretion. The Right of First Offer shall not apply to a
transfer to a party related to Landlord.. The Right of First Offer is personal
to the named tenant herein and any Transfer of such tenant's interest in the
Lease (other than a Permitted Transfer), whether or not consented to by
Landlord, shall cause the Right of First Offer to terminate and be of no further
effect.
SECTION 45. Hazardous Materials.
(a) Tenant agrees that any and all handling, transportation, storage,
treatment, disposal, or use of Hazardous Substances by Tenant in or about the
Premises shall strictly comply with all applicable Environmental Laws.
(b) Tenant agrees to indemnify, defend and hold Landlord harmless from
any liabilities, losses, claims, damages, penalties, fines, attorney fees,
expert fees, court costs, remediation costs, investigation costs, or other
expenses resulting from or arising out of the use, storage, treatment,
transportation, release, or disposal of Hazardous Substances on or about the
Premises by Tenant.
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(c) If the presence of Hazardous Substances on the Project caused or
permitted by Tenant results in the contamination or deterioration of the Project
or any water or soil beneath the Project, Tenant shall promptly take all action
necessary to investigate and remediate that contamination.
(d) Landlord and Tenant each agree to promptly notify the other of any
communication received from any governmental entity concerning the contamination
of the Property or the Premises by Hazardous Substances or the violation of
Environmental Laws that relate to the Premises.
(e) Tenant shall not use, handle, store, transport, generate, release,
or dispose of any Hazardous Substances on, under, or about the Premises, except
that Tenant may use (i) small quantities of common chemicals such as adhesives,
lubricants, and cleaning fluids in order to conduct business at the Premises and
(ii) other Hazardous Substances that are necessary for the operation of Tenant's
business all of which shall be used in accordance with all Environmental Laws
(as hereinafter defined). At any time during the term of this Lease, Tenant
shall, within ten (10) days after written request from Landlord, disclose in
writing all Hazardous Substances that are being used by Tenant on the Premises,
the nature of the use, and the manner of storage and disposal.
(f) At any time and upon prior written notice to Tenant, Landlord may
require testing wells to be drilled on the Premises and may require the ground
water to be tested to detect the presence of Hazardous Substances by the use of
any tests that are then customarily used for those purposes. Landlord shall
supply Tenant with copies of the test results. The cost of these tests and of
the installation, maintenance, repair, and replacement of the wells shall be
paid by Tenant if the tests disclose the existence of facts that give rise to
liability of Tenant pursuant to this Section 45.
(g) Landlord has provided to Tenant and Tenant has approved that
certain Phase I Environmental Assessment Moffett Industrial Park 140 Caspian
Court, 169 Java Drive, 111 Java Drive Sunnyvale, California ENV01540, prepared
for Wells Fargo Bank, N.A. by All Environmental, Inc., dated November 8, 1994,
covering, inter alia, the Premises (the "Phase I ESA"). Landlord shall perform a
Phase I Environmental Site Assessment ("Entrance Assessment"), consisting of an
update of the Phase I ESA, which Entrance Assessment shall be addressed to and
may be relied upon by both Landlord and Tenant. Landlord shall provide a copy of
the report of the Entrance Assessment to Tenant. The cost of the Entrance
Assessment shall be paid by Landlord. Provided that the Entrance Assessment
shows no material adverse changes in the condition of the Property or the
Premises from the Phase I ESA, Tenant shall be deemed to have approved the
Entrance Assessment upon receipt of the Entrance Assessment. In the event that
the Entrance Assessment shows a material adverse change in the condition of the
Property or the Premises from the Phase I ESA, Landlord shall immediately
remediate such condition or in the event Landlord refuses or fails to so
remediate such condition or fails to complete such remediation within sixty (60)
days following the commencement of such remediation, Tenant shall have the right
to terminate this Lease upon written notice to Landlord.
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(h) Landlord agrees to indemnify, defend and hold Tenant harmless from
any liabilities, losses, claims, damages, penalties, fines, attorney fees,
expert fees, court costs, remediation costs, investigation costs, or other
expenses resulting from or arising out of (i) the use, storage, treatment,
transportation, release, or disposal of Hazardous Substances on or about the
Premises prior to Tenant's occupancy of the Premises and (ii) the off site
migration of Hazardous Substances onto or under the Premises, whether such
migration occurs prior to, during or after Tenant's occupancy of the Premises.
(i) Within fifteen (15) days after vacating the Premises, Tenant shall
perform, at Tenant's sole cost and expense, a Phase I Environmental Site
Assessment covering the Premises and the Property as necessary to bring current
the Entrance Assessment prepared by a reputable environmental consulting firm
acceptable to Landlord in Landlord's sole discretion (the "Exit Assessment"),
provided, however, that the firm which issues the Entrance Assessment shall be
acceptable to Landlord for purposes of issuing the Exit Assessment, so long as
such firm remains licensed and in good standing within its industry. In the
event that the Exit Assessment discloses contamination of the Property or the
Premises resulting from or arising out causes other than (i) the use, storage,
treatment, transportation, release, or disposal of Hazardous Substances on or
about the Premises prior to Tenant's occupancy of the Premises or (ii) the off
site migration of Hazardous Substances onto or under the Premises, occurs prior
to, during or after Tenant's occupancy of the Premises, Tenant shall, at
Tenant's sole cost and expense, immediately commence and diligently pursue to
completion the remediation of such contamination as well as such other actions
as may be recommended by the Exit Assessment (collectively "Remediation
Actions"). Tenant acknowledges and agrees that Remediation Actions that extend
beyond the termination or sooner expiration of this Lease may cause Landlord to
sustain lost rental income. Accordingly, if Remediation Actions extend beyond
the termination or sooner expiration of this Lease, then Tenant shall pay to
Landlord an amount equal to the Holdover Rent for the period during which such
Remediation Actions extend beyond the termination or sooner expiration of this
Lease. Nothing contained herein shall limit or restrict any liability of Tenant
for the completion of the Remediation Actions in accordance with applicable law
and the recommendations of the Exit Assessment, nor shall anything herein serve
to limit or restrict Tenant's liability under this Section 45.
(j) As used herein the following terms have the following meanings:
"Environmental Laws" means all federal, state, local, or municipal laws, rules,
orders, regulations, statutes, ordinances, codes, decrees, or requirements of
any government authority regulating, relating to, or imposing liability or
standards of conduct concerning any Hazardous Substance (as later defined), or
pertaining to occupational health or industrial hygiene (and only to the extent
that the occupational health or industrial hygiene laws, ordinances, or
regulations relate to Hazardous Substances on, under, or about the Premises),
occupational or environmental conditions on, under, or about the Premises, as
now or may at any later time be in effect. including without limitation, the
Comprehensive
37
Environmental Response, Compensation and Liability Act of 1980 (CERCLA) [42 USCS
ss.ss. 9601 et seq.]; the Resource Conservation and Recovery Act of 1976 (RCRA)
[42 USCS ss.ss. 6901 et seq.]; the Clean Water Act, also known as the Federal
Water Pollution Control Act (FWPCA) [33 USCS ss.ss. 1251 et seq.]; the Toxic
Substances Control Act (TSCA) [15 USCS ss.ss. 2601 et seq.]; the Hazardous
Materials Transportation Act (HMTA) [49 USCS ss.ss. 1801 et seq.]; the
Insecticide, Fungicide, Rodenticide Act [7 USCS ss.ss. 136 et seq.]; the
Superfund Amendments and Reauthorization Act [42 USCS ss.ss. 6901 et seq.]; the
Clean Air Act [42 USCS ss.ss. 7401 et seq.]; the Safe Drinking Water Act [42
USCS ss.ss. 300f et seq.]; the Solid Waste Disposal Act [42 USCS ss.ss. 6901 et
seq.]; the Surface Mining Control and Reclamation Act [30 USCS ss.ss. 1201 et
seq.]; the Emergency Planning and Community Right to Know Act [42 USCS ss.ss.
11001 et seq.]; the Occupational Safety and Health Act [29 USCS ss.ss. 655 and
657]; the California Underground Storage of Hazardous Substances Act [H & S C
ss.ss. 25280 et seq.]; the California Hazardous Substances Account Act [H & S C
ss.ss. 25300 et seq.]; the California Hazardous Waste Control Act [H & S C
ss.ss. 25100 et seq.]; the California Safe Drinking Water and Toxic Enforcement
Act [H & S C ss.ss. 24249.5 et seq.]; the Porter-Cologne Water Quality Act
[Water Code ss.ss. 13000 et seq.] together with any amendments of or regulations
promulgated under the statutes cited above and any other federal, state, or
local law, statute, ordinance, or regulation now in effect or later enacted that
pertains to occupational health or industrial hygiene, and only to the extent
that the occupational health or industrial hygiene laws, ordinances, or
regulations relate to Hazardous Substances on, under, or about the Premises, or
the regulation or protection of the environment, including ambient air, soil,
soil vapor, groundwater, surface water, or land use.
(ii) "Hazardous Substances" includes without limitation:
(A) Those substances included within the definitions of hazardous
substance, hazardous waste, hazardous material, toxic substance, solid waste, or
pollutant or contaminant in CERCLA, RCRA, TSCA, HMTA, or under any other
Environmental Law;
(B) Those substances listed in the United States Department of
Transportation (DOT) Table [49 CFR 172. 101], or by the Environmental Protection
Agency (EPA), or any successor agency, as hazardous substances [40 CFR Part
302];
(C) Other substances, materials, and wastes that are or become
regulated or classified as hazardous or toxic under federal, state, or local
laws or regulations; and
(D) Any material, waste, or substance that is (1) a petroleum or
refined petroleum product, (2) asbestos, (3) polychlorinated biphenyl, (iv)
designated as a hazardous substance pursuant to 33 USCS ss. 1321 or listed
pursuant to 33 USCS ss. 1317, (5) a flammable explosive, or (6) a radioactive
material.
38
SECTION 46. Existing Rights.
Landlord represents and warrants to Tenant that as of the date of this
Lease the Premises are not subject to any options, rights of first refusal or
other similar rights which could affect Tenant's right to occupy the Premises.
SECTION 47. Publicity.
Landlord on behalf of itself and its agents and representatives
expressly agrees that it is not authorized to announce this Lease or the terms
and conditions contained therein to any third party without the prior written
consent of Tenant. SECTION 48. Easements.
Landlord reserves the right to grant easements, rights, and dedications
that Landlord deems necessary or desirable, and to record parcel maps and
restrictions, so long as these easements, rights, dedications, maps, and
restrictions do not unreasonably interfere with Tenant's use of the Premises.
Tenant agrees to sign any of these documents within ten (10) days after written
request of Landlord.
SECTION 49. Covenants and Conditions.
Each term of this Lease performable by Tenant shall be deemed both a
covenant and a condition.
SECTION 50. Recording.
Tenant shall have the right to record a memorandum of this Lease,
subject to Landlord's prior written approval of the form and substance of such
memorandum, which approval shall not be unreasonably withheld.
SECTION 51. Transfer by Landlord.
If Landlord transfers the Premises, Landlord shall be relieved of all
liability for the performance of Landlord's obligations after the date of the
transfer. However, any prepaid rent or security deposit held by Landlord at the
time of the transfer shall be delivered to the transferee.
SECTION 52. Security Measures.
Tenant acknowledges that Landlord shall have no obligation to provide
any guard service or other security measures to the Premises, and Tenant assumes
all responsibility for the protection of Tenant, Tenant's agents, invitees, and
customers, and the property of Tenant and of Tenant's agents, invitees, and
customers from acts of third parties.
39
SECTION 53. Parking
Tenant shall be entitled to all parking spaces on the Premises.
SECTION 54. Broker.
(a) Tenant represents and warrants to Landlord that no real estate
broker, agent or finder negotiated or was instrumental in negotiating or
representing Tenant in the negotiation of this Lease or the consummation hereof
except for CPS, The Commercial Property Services Company ("Broker"). Landlord
shall be responsible for the payment of the commission or fee, if any, owed to
Broker pursuant to a separate fee agreement between Broker and Landlord. Tenant
shall pay the commission or fee of any other broker, agent or finder acting for
Tenant or claiming any commissions or fees on the basis of contacts or dealings
with Tenant and not disclosed herein by Tenant and Tenant shall indemnify and
hold Landlord harmless from and against any claims made by any such broker,
agent or finder of Tenant and any and all costs and damages suffered by Landlord
as a consequence thereof, including without limitation attorneys' fees.
(b) Landlord represents and warrants to Tenant that no real estate
broker, agent or finder negotiated or was instrumental in negotiating or
representing Landlord in the negotiation of this Lease or the consummation
hereof except for CPS, The Commercial Property Services Company ("Broker").
Landlord shall be responsible for the payment of the commission or fee. If any,
owed to Broker pursuant to a separate fee agreement between Broker and Landlord.
Landlord shall pay the commission or fee of any other broker, agent or finder
acting for Landlord or claiming any commissions or fees on the basis of contacts
or dealings with Landlord and not disclosed herein by Landlord and Landlord
shall indemnify and hold Tenant harmless from and against any claims made by any
such broker, agent or finder of Landlord and any and all costs and damages
suffered by Tenant as a consequence thereof, including without limitation
attorneys' fees.
SECTION 55. Offer.
Preparation of this Lease by Landlord or Landlord's agent and
submission to Tenant shall not be deemed an offer to lease. This Lease shall
become binding on Landlord and Tenant only when fully executed by Landlord and
Tenant.
SECTION 56. Counterparts.
This Lease may be executed in one or more identical counterparts, each
of which shall be deemed an original and all, taken together, shall constitute
one and the same instrument.
SECTION 57. Governing Law.
This Lease shall be governed by and construed in accordance with
California law.
40
IN WITNESS WHEREOF, the parties have executed this Lease as of the date
first above written.
LANDLORD: TENANT:
G. F. PROPERTIES, INC., SANDISK CORPORATION,
a California corporation, a Delaware corporation,
By: /s/ Stephen R. Barbieri By:/s/ Cindy Burgdorf
-------------------------- ------------------------
Stephen R. Barbieri, Secretary Cindy Burgdorf, CFO
EXHIBIT "A" - Page 1 of 1
THE LAND REFERRED TO IS SITUATED IN THE CITY OF SUNNYVALE, COUNTY OF SANTA
CLARA, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:
PARCEL ONE:
All of parcel 3 as shown upon that certain map entitled "Parcel Map lying within
the City of Sunnyvale, being a resubdivision of parcel 6 as shown on that
certain Parcel Map filed in Book 397 of Maps at page 12, Records of Santa Clara
County", which Map was filed for record in the County of Santa Clara, State of
California on December 18, 1986 in book 568 of Maps, pages 42 and 43.
Excepting therefrom from Parcel 3 therein, that certain portion described and
conveyed to the Santa Clara County Transit District in Grant Deed recorded June
2, 1997 under Series No. 13723854, Official Records, being more particularly
described as follows:
All of that certain property situated in the City of Sunnyvale, County of Santa
Clara, State of California, and being a portion of Parcel 3, as said Parcel 3 is
shown on that certain Parcel Map filed in Book 568 of Maps, page 43, Records of
Santa Clara county. California and more particularly described as follows:
Beginning at the Southwest corner of Parcel 3, said corner on the Northerly line
of Java Drive (50.00 foot half street) as said Parcel and Drive are shown on
said Parcel Map, thence Northerly along said Westerly line of said Parcel 3.
North 15 degrees 45' 10" East 6.67 feet, thence South 74 degrees 14' 33" East
164.44 feet to a curve; thence Easterly along said curve concave Northerly with
a radius of 198.00 feet, through a central angle of 4 degrees 34' 26" and an arc
length of 15.8I feet; thence South 78 degrees 48' 59" East 88.34 feet to a
curve: thence Easterly along said curve concave Southerly with a radius of
102.00 feet through a central angle of 1 degree 46' 04" and an arc length of
3.15 feet-. thence North 15 degrees 45' 27" East 6.12 feet; thence South 74
degrees 14' 33" East 23.59 feet; thence north 15 degrees 45' 27" East 6.00 feet;
thence South 74 degrees 14' 33" East 20.00 feet; thence South 15 degrees 45' 27"
West 6.00; thence South 74 degrees 14' 33" East 10.00 feet; thence South 15
degrees 45' 27" West 6.00 feet; thence South 74 degrees 14' 33" East 10.25 feet
to a curve, thence Easterly along said curve concave Northerly with a radius of
47.00 feet Through a central angle of 59 degrees 58' 21" and an arc length of
49.20 feet; thence South 42 degrees 59' 45" East 3.20 feet to a curve on the
Westerly line of Borregas Avenue (33-00 foot half street) as said Avenue is
shown on said Parcel Map; thence along said Westerly line of Borregas Avenue
from a tangent bearing of South 24 degrees 27' 24" West alone said curve concave
Northwesterly with a radius of 50.00 feet, through a central angle of 81 degrees
17' 29" and an arc length of 70.94 feet to said Northerly line of Java Drive;
thence Westerly along said Northerly line North 74 degrees 15' 07" West 319.28
feet to the point of beginning.
Reserving therefrom a non-exclusive easement for the purpose of ingress and
egress and access over so much thereof as lies within the bounds of that certain
"26" common ingress / egress and access easement" as shown upon that certain Map
entitled, "Parcel Map" which Map was filed for record in the office of the
Recorder of the County Of Santa Clara, State of California on December 18, 1986
in Book 568 of Maps, pages 42 and 43.
Said easements are reserved as appurtenant and for the benefit of Parcel 1, 2
and 3 of the map bereinabove referred to.
PARCEL TWO:
A non-exclusive easement for the purpose of ingress and egress and access over
Parcels I and 2 as lies within the bounds of that certain "26" common
ingress/egress and access easement", as shown upon that certain map entitled
"Parcel Map" which map was filed for record in the Office of the recorder or
county of Santa Clara, State of California on December 18. 1986, in Book 568 of
Maps, pages 42 and 43.
EXHIBIT B
WORK LETTER
THIS WORK LETTER ("Work Letter") constitutes an integral part of the
Industrial Lease ("Lease") dated as of June 10, 1998 by and between G.F.
PROPERTIES, INC., a California corporation ("Landlord") and SANDISK Corporation,
a Delaware corporation ("Tenant"). The terms of this Work Letter are
incorporated in the Lease for all purposes.
SECTION 1. Defined Terms
As used in this Work Letter, the following capitalized terms shall have
the following meanings:
"Approved Final Working Plans": the final working plans and the final
cost estimate which are approved by Landlord and Tenant as part of Item #11 on
the Pre-Construction Schedule.
"Building Cost": Hard Building Costs plus Soft Building Costs.
"General Contractor": L and S Hallmark Construction, Inc., whose profit
and overhead shall not exceed 7.5% of the total cost of the Improvements, it
being understood that the cost of the General Contractor's on-site
superintendent shall not be included within its profit and overhead.
"Hard Building Costs": All charges by the General Contractor for labor
and materials supplied for construction of the Improvements.
"Improvements": The Tenant Improvements to be constructed in the
Premises, as more particularly shown on the Approved Final Working Plans.
"Landlord's Representative": Jack E. Pryde
"Landlord Delays": Delays caused by Landlord's work in the Premises
which may be required to bring the Premises into compliance with Legal
Requirements or to repair or restore the existing structure and mechanical,
electrical and plumbing systems to the condition required by the Lease for
Tenant's occupancy of the premises.
"Pre-Construction Schedule" Correspondence dated May 21, 1998 from Ned
Cain of L & S Hallmark Construction, Inc. to Jack Pryde of G. F. Properties,
Inc. referencing "San Disk Pre-Construction Schedule", together with one-page
spreadsheet entitled "SANDISK BUILDING 2 PRECONSTRUCTION SCHEDULE L&S HALLMARK
CONSTRUCTION, INC., one complete copy of which marked "Exhibit A", attached
hereto, and incorporated by this reference.
1
"Premises": That certain 50,320 rentable square feet building located
at 111 Java Drive, Sunnyvale, California.
"Punch List Work": Minor details of construction or decoration or
mechanical adjustments, which do not materially and adversely affect the
intended use of the Premises by Tenant.
"Ready for Occupancy": When Landlord's architect has furnished Landlord
with a certificate that (i) the work to be done by Landlord has been
substantially completed in accordance with the Final Working Plans (except for
Punch List work), (ii) that Tenant may legally occupy the Premises, and (iii)
that no mechanics' liens exist as to the Improvements.
"Soft Building Costs": All architectural and engineering charges,
governmental permit fees, utility hook up fees, contractors' insurance and other
miscellaneous soft costs.
"Tenant Delay": Any of the following:
(a) any delay resulting from Tenant's failure to submit information in
conformance with the Pre-Construction Schedule;
(b) any delay resulting from Tenant's failure to approve any matters
requiring approval in a timely manner;
(c) any delay resulting from Change Orders, including any delay
resulting from the need to revise any drawings as a result of any Change
Order(s); or
(d) any delay of any other kind or nature in the completion of the
Improvements caused by Tenant (or Tenant's agents or employees) including,
without limitation, any delay occasioned by (i) Tenant's occupancy of the
Premises, or (ii) any course of maintenance, repair or construction conducted by
or on behalf of Tenant to the Premises.
"Tenant's Representative": Cindy Burgdorf
"Unavoidable Delays": Delays due to acts of God, acts of public
agencies, labor disputes, strikes, fires, freight embargoes, rainy and stormy
weather, inability to obtain supplies, materials, fuels, or permits, delays of
contractors or subcontractors, or other causes or contingencies beyond the
reasonable control of Landlord or Tenant.
Capitalized terms not otherwise defined in this Work Letter will have
the meaning assigned to them in the Lease.
2
SECTION 2. Representatives.
Tenant has designated the Tenant's Representative as the sole
representative with respect to the matters set forth in this Work Letter with
full authority and responsibility to act on behalf of the Tenant as required in
this Work Letter. Landlord has designated the Landlord's Representative as the
sole representative with respect to the matters set forth in this Work Letter
with full authority and responsibility to act on behalf of Landlord as required
in this Work Letter. Either party may change the representative under this Work
Letter at any time by giving five (5) days' written notice to the other party.
SECTION 3. Procedure and Costs.
Landlord and Tenant will comply with the procedure outlined in this
Section in preparing, delivering, approving, and seeking and obtaining
regulatory approval of all matters relating to the Improvements to be
constructed by Landlord.
(a) Working Drawings and Cost Estimates. Landlord and Tenant hereby
agree to expend their individual best efforts to accomplish each of the
activities referenced in the Pre-Construction Schedule on or before the dates
assigned to each such activity. The number of days which any listed activity is
delayed beyond the date assigned for completion of any such activity shall be
allocated as Landlord Delay(s), Tenant Delay(s), or Unavoidable Delay(s), as the
case may be, in the manner outlined in this Agreement. If the date on which the
Premises is Ready for Occupancy occurs on or before April 1, 1999, no further
action shall be taken with regard to delays and no delay penalties shall be due
or payable. If the date on which the Premises is Ready for Occupancy occurs
after April 1, 1999, Tenant shall pay to Landlord the sum of $2,500 for each day
of Tenant Delay between April 1, 1999 and the date on which the Premises is
deemed Ready for Occupancy under this Agreement, it being understood and agreed
that Tenant shall be entitled to a credit against any delay penalties which may
become payable by Tenant to Landlord in the sum of $2,500 for each day of
Landlord Delay. Neither party shall be penalized for Unavoidable Delays.
(i) For purposes of this subsection (a), the following
numbered line items on the Pre-Construction Schedule shall be the sole
responsibility of Tenant: 1 and 3.
(ii) For purposes of this subsection (a), the following
numbered line items on the Pre-Construction Schedule shall be the
responsibility of both Landlord and Tenant: 2, 6, 9, and 11.
(iii) For purposes of this subsection (a), both Landlord and
Tenant shall share responsibility for providing full, complete and
prompt response and assistance to the General Contractor with regard to
the following numbered line items on the Pre-Construction Schedule: 4,
5, 7, 8, 10, 12, 13, 14, and 15.
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(b) General Contractor. Landlord shall execute a construction contract
with General Contractor relating to construction of the Improvements (the
"Construction Contract") in accordance with the Approved Final Working Plans,
promptly following approval by Landlord and Tenant. Landlord shall cause any and
all assignable warranties under the Construction Contract and any subcontracts
entered into in connection therewith to be assigned to Tenant upon the
completion of the Improvements.
(c) Construction of Improvements. Landlord shall expend its best
efforts to cause the General Contractor to construct and complete the
Improvements substantially in accordance with the Approved Final Working Plans
in good and workmanlike manner subject only to Tenant Delays, Landlord Delays
and Unavoidable Delays .
(d) Changes. If at any time Tenant desires any changes, alterations, or
additions to any of the Approved Final Working Plans, Tenant must submit a
detailed written request to Landlord (a "Change Order"). If construction of the
portion of the Improvements Tenant seeks to change has not commenced and if the
requested changes are reasonable and practical, Landlord will seek to comply
with the Change Order. Under no circumstance will Landlord be required to
undertake any change, alteration, or addition to any of the Approved Final
Working Plans prior to the execution of a Change Order by Tenant's
Representative. If any additional plans, drawings of specifications, or
modifications of those items are required as a result of a Change Order, they
will be prepared and approved in the manner set forth in Section 3(a). Delays
caused by Change Orders shall be Tenant Delays.
(e) Tenant Delays. In the event of any Tenant Delay, Landlord shall
expend its reasonable efforts to cause notice of such Tenant Delay(s) to be sent
to Tenant as soon as reasonably practicable after Landlord becomes aware of any
such Tenant Delay(s), provided, however, that Landlord's failure to give notice
of any such Tenant Delay shall have no impact on the designation of any such
delays as Tenant Delay(s).
SECTION 4. Payment.
All amounts payable by Tenant to Landlord pursuant to the provisions of
Paragraph 43 of the Lease shall be due and payable by Tenant within fifteen (15)
calendar days after the rendering to Tenant of a bill by Landlord, which bills
shall not be rendered any more frequently than once per calendar month. Tenant's
failure to pay within the fifteen (15) day time period will constitute a
monetary default under the Lease, and all amounts will then bear interest from
the date on which the bills were submitted to Tenant until paid in full, at the
lesser of ten percent (10%) per annum or the highest rate allowed by law.
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SECTION 5. Ready for Occupancy.
Landlord will cause the General Contractor and the Architect to deliver
to Tenant a written notice of substantial completion certifying that the
Improvements have been completed in conformance with the provisions of the
Construction Contract, the Approved Final Working Plans, and any Change Orders
("Substantial Completion"). Upon receipt by Tenant of such notice of Substantial
Completion, the Improvements will be deemed delivered to Tenant for all purposes
of the Lease and Landlord's obligations under the provisions of Paragraphs 43(a)
and 43(b) of the Lease shall be deemed to be fully discharged. Within five (5)
days after receipt of the notice of Substantial Completion, Tenant shall conduct
a walk-through inspection of the Premises with Landlord to inspect the
Improvements and the Premises, and Tenant's representative, within thirty (30)
days following such inspection shall develop and provide Landlord with a written
list of Punch List Work. Landlord will diligently cause the General Contractor
to complete the Punch List Work within a reasonable time thereafter. In the
event of any dispute as to substantial completion of work performed or required
to be performed by Landlord, the certificate of Landlord's architect will be
conclusive. Substantial completion will have occurred notwithstanding Tenant's
submission of a list of Punch List Work to Landlord.
SECTION 6. No Agency.
Nothing contained in this Letter will make or constitute Tenant as the
agent of Landlord.
SECTION 7. Notices.
Except as otherwise expressly provided by law, all notices or other
communications required or permitted by this Work Letter or by law to be served
on or given to either party to this Work Letter by the other party shall be in
writing and shall be deemed served when personally delivered to the party to
whom they are directed, when sent via facsimile with verbal confirmation of
receipt or after three days following deposit in the United States Mail,
certified or registered mail, return receipt requested, postage prepaid,
addressed as follows:
If to Tenant: SanDisk Corporation
140 Caspian Court
Sunnyvale, CA 94089
Attn.: Cindy Burgdorf
With a copy to: W. Scott Biel, Esq.
Brobeck Phleger & Harrison LLP
550 West C Street, Suite
1300 San Diego, CA 92101
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If to Landlord: G.F. Properties, Inc.
999 Baker Way, Suite 200
San Mateo, California, 94404
Attn.: Mr. Jack E. Pryde
With a copy to: Stephen R. Barbieri
Law Offices of Stephen R. Barbieri
214 Grant Ave., Suite 400
San Francisco, CA 94108
Either party, Tenant or Landlord, may change the address for the
purpose of this Section by giving written notice of the change to the other
party in the manner provided in this Section.
SECTION 8. Disputes.
(a) Dispute Resolution. If any dispute arises in connection with this
Work Letter, such dispute shall be resolved in accordance with this Section 8.
Such dispute shall be determined by a panel consisting of Landlord's
Representative, Tenant's Representative (or another party designated by Tenant)
and Landlord's architect (the "Construction Panel").
(b) Notice. All disputes to be determined in accordance with this
Section 8 shall be raised by notice to the other party, which notice shall state
with particularity the nature of the dispute and the demand for relief, making
specific reference by section number and title to the provision of this Work
Letter alleged to give rise to the dispute, such notice shall also refer to this
Section 8.
(c) Procedures. All proceedings contemplated by this Section 8 shall
take place at the locations for all job-site meetings, unless the Construction
Panel mutually agrees to another location.
(d) Interpretation and Resolution. In determining any dispute, the
Construction Panel shall apply the pertinent provisions of this Work Letter (and
the Lease, if applicable) without departure therefrom in any respect. The
Construction Panel shall not have the power to add to, modify or change any of
the provisions of this Work Letter to the extent necessary in applying the same
to the matters to be determined by the Construction Panel. As part of resolving
a dispute, the Construction Panel shall determine the days of delay in
completing Improvements which directly result from the dispute being considered
by the Construction Panel, if any. The days of delay shall be designated as
either Tenant Delays, Landlord Delays or Unavoidable Delays or any combination
of these three delays, as determined by the Construction Panel.
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(e) Continued Performance. During any proceedings pursuant to this
Section, Landlord and Tenant shall, to the extent possible, continue to perform
and discharge all of their respective obligations under this Work Letter and the
Lease.
(f) Binding Resolution. The Construction Panel shall meet within two
(2) business days after notice of the dispute and shall thereafter resolve the
issue in dispute within two (2) business days unless it is mutually agreed among
the Construction Panel members that additional time is necessary to resolve the
dispute, but in no event shall such additional time exceed five (5) days.
Landlord and Tenant agree that time and strict punctual performance are of the
essence with respect to each provision of this Work Letter and that any and all
decisions of the Construction Panel as to the matter in dispute shall be binding
upon both Landlord and Tenant.
SECTION 9. Miscellaneous.
Except as otherwise specified, all references in this Work Letter to a
number of days shall be references to calendar days. All references in Exhibit A
to this Work Letter to a number of days shall be references to business days.
IN WITNESS WHEREOF, the parties have executed this Work Letter as of
the date first above written.
LANDLORD: TENANT:
G. F. PROPERTIES, INC., SANDISK CORPORATION,
a California corporation, a Delaware corporation,
By: By:
--------------------------- ------------------------
Stephen R. Barbieri, Secretary Cindy Burgdorf, Chief
Financial Officer
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