Exhibit 10.1
SUBLEASE AGREEMENT
Between
CERTICOM CORP.
as Sublandlord,
and
GUAVA TECHNOLOGIES INC.
as Subtenant
Dated: November 1, 200l
TABLE OF CONTENTS
Page
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ARTICLE 1 - SUBLEASE ........................................................... 1
1.1 Sublease .................................................................. 1
ARTICLE 2 - HEADLEASE .......................................................... 1
2.1 Subleases Subject to Headlease ............................................ 1
2.2 Compliance with Headlease ................................................. 2
2.3 Services .................................................................. 2
2.4 Exercise of Rights and Remedies Under Headlease ........................... 3
2.5 Exclusion from Headlease .................................................. 3
ARTICLE 3 - SUBLEASE TERM ...................................................... 3
3.1 Sublease Term ............................................................. 3
3.2 Common Area ............................................................... 4
3.3 Surrender of Premises ..................................................... 4
3.4 Holding Over .............................................................. 6
3.5 Subtenant's Letter of Credit .............................................. 6
ARTICLE 4 - RENT ............................................................... 7
4.1 Rent ...................................................................... 7
4.2 Basic Rent ................................................................ 7
4.3 Chattels .................................................................. 7
4.4 Additional Rent ........................................................... 8
4.5 Payments Generally ........................................................ 8
4.6 Net Sublease .............................................................. 9
ARTICLE 5 - DELIVERY OF PREMISES; ALTERATIONS .................................. 9
5.1 Delivery of Premises ...................................................... 9
5.2 Condition ................................................................. 10
5.3 Signs ..................................................................... 10
5.4 Access and Inspection ..................................................... 10
ARTICLE 6 - USE, ASSIGNMENT AND SUBLETTING ..................................... 11
6.1 Use ....................................................................... 11
6.2 Legal Requirements ........................................................ 11
6.3 Assignment and Subletting ................................................. 11
6.4 Hazardous Materials ....................................................... 12
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ARTICLE 7 - MAINTENANCE; UTILITIES ............................................. 12
7.1 Maintenance .............................................................. 12
ARTICLE 8 - INSURANCE .......................................................... 12
8.1 Subtenant's Insurance .................................................... 12
8.2 Indemnification of Sublandlord by Subtenant .............................. 13
8.3 Indemnification of Subtenant by Sublandlord .............................. 13
8.4 Legal Fees ............................................................... 14
ARTICLE 9 - TAXES .............................................................. 14
9.1 Taxes .................................................................... 14
ARTICLE 10 - CASUALTY .......................................................... 14
10.1 Casualty ............................................................... 14
ARTICLE 11 - DEFAULT ........................................................... 15
11.1 Subtenant's Default .................................................... 15
11.2 General Provisions Regarding Default ................................... 16
ARTICLE 12 - GENERAL PROVISIONS ................................................ 17
12.1 Mortgage Subordination ................................................. 17
12.2 Estoppel Certificates and Financial Statements ......................... 17
12.3 Representations and Warranties of Subtenant ............................ 17
12.4 Representation and Warranties of Sublandlord ........................... 17
12.5 Notices; Demands and Other Instruments ................................. 18
12.6 Chattels ............................................................... 18
ARTICLE 13 - MISCELLANEOUS ..................................................... 18
13.1 Severability ........................................................... 18
13.2 Binding Effect ......................................................... 18
13.3 Interpretation ......................................................... 19
13.4 Governing Law .......................................................... 19
13.5 Recitals ............................................................... 19
13.6 Headings and Captions .................................................. 19
13.7 Survival or Representations and Warranties ............................. 19
13.8 Entire Agreement ....................................................... 19
13.9 Amendments ............................................................. 19
13.10 Number, Gender ......................................................... 19
13.11 Brokers ................................................................ 20
13.12 Condition Precedent .................................................... 20
13.13 Facsimile Copies ....................................................... 20
SUBLEASE
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THIS SUBLEASE is made as of October ___, 2001 between CERTICOM CORP., a
Delaware Corporation, having an address at 200 Matheson Blvd. W., Mississauga,
Ontario, Canada ("Sublandlord"), and GUAVA TECHNOLOGIES INC., a Delaware
corporation having an address at 863 C Mitten Road, Burlingame, California
("Subtenant").
Recitals:
--------
A. By a lease dated October 20, 1998 (the "Original Lease") between THE
MULTI-EMPLOYER PROPERTY TRUST, A TRUST ORGANIZED UNDER 12 C.F.R. SECTION 9.18
(the "Landlord") and Sublandlord, as amended by an amending agreement dated
November 17, 1998 (the "First Amendment to Lease") and an amending agreement
dated March 15, 1998 (the "Second Amendment to Lease") (the Original Lease,
First Amendment to Lease and Second Amendment to Lease are hereinafter
collectively referred to as the "Headlease"), a redacted copy of which is
attached hereto as Exhibit C, Sublandlord, as tenant, leases all of the Building
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located at 25801 Industrial Blvd. (the "Premises"), Mt. Eden Business Park (the
"Property") Hayward, California, being approximately 42,855 rentable square
feet, the approximate location of which is shown on Exhibit A attached hereto
---------
for a term of 8 years 4 months commencing March 1, 1999 and ending July 31,
2007. The entity from time to time holding the Landlord's interest under the
Headlease is referred to as "Headlandlord".
B. Subtenant desires to sublease from Sublandlord and Sublandlord desires
to sublease to Subtenant the Premises upon the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the Premises, the rents reserved herein
and the mutual benefits to be derived by Sublandlord and Subtenant, the parties
hereby agree as follows:
ARTICLE 1 - SUBLEASE
--------------------
1.1 Sublease.
--------
Sublandlord hereby subleases to Subtenant and Subtenant hereby subleases
from Sublandlord for the term at the rental, and upon all of the conditions set
forth herein, the Premises.
ARTICLE 2 - HEADLEASE
---------------------
2.1 Sublease Subject to Headlease.
-----------------------------
Except as otherwise expressly provided in this Sublease and the Consent to
Sublease Agreement the ("Consent") executed by Landlord, Sublandlord and
Subtenant following the execution of this Sublease, Sublandlord and Subtenant
hereby acknowledge and agree that this Sublease is subject and subordinate to
all terms, conditions and covenants of the Headlease. As between Sublandlord and
Subtenant, however, subject to any modifications contained in the
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Consent, the terms of this Sublease shall govern in the event of any
inconsistency between the Sublease and the Headlease.
2.2 Compliance with Headlease.
-------------------------
(a) For the purposes of this Sublease only, Subtenant covenants and agrees to
assume all of the responsibilities and obligations of Sublandlord as the tenant
under the Headlease with respect to the Premises for the entire Sublease Term
(as hereinafter defined) (other than those provisions specifically excluded or
modified in this Sublease, including, but not limited to, the obligations to pay
rent which payment obligations are governed by this Sublease). Sublandlord and
Subtenant each covenant and agree to deliver promptly to the other copies of any
and all notices or other correspondence received by each from the Headlandlord
which are applicable to the Premises, and each further agrees, notwithstanding
anything contained in Article 12.5 hereof to the contrary, to deliver such
notices in the manner most appropriate to insure that the other will be able to
respond to any of such notices or other correspondence from the Headlandlord
within any time periods set forth in the Headlease.
(b) Subtenant covenants and agrees not to do, permit or allow any act which
would or might violate or constitute a breach of or a default under any of the
terms and conditions of the Headlease, or which would or might render
Sublandlord liable for any damage, claim, charge, penalty or expense thereunder.
(c) Subtenant agrees that Sublandlord shall not be required to perform any of
the covenants, agreements and/or obligations of Headlandlord under the Headlease
and, insofar as any of the covenants, agreements and obligations of Sublandlord
hereunder are required to be performed under the Headlease by the Headlandlord,
Subtenant agrees that Sublandlord shall be entitled to look to Headlandlord for
such performance. Notwithstanding the foregoing, Sublandlord shall promptly take
such action as may reasonably be indicated, under the circumstances, to secure
such performance upon Subtenant's request to Sublandlord to do so and shall
thereafter diligently prosecute such performance on the part of Headlandlord.
2.3 Services.
--------
Except as otherwise provided in the Consent and as otherwise limited
herein, Subtenant hereby acknowledges and agrees that the only services,
amenities and rights to the Premises, and to which Subtenant is entitled under
this Sublease are those to the Premises to which Sublandlord is entitled under
the Headlease, subject to all the provisions, restrictions and conditions set
forth in the Headlease and this Sublease. Sublandlord shall not be liable to
Subtenant for Headlandlord's failure to provide any such services, amenities
and rights, nor shall any such failure be construed as a breach of this Sublease
by Sublandlord or an eviction of Subtenant, unless any such failure is the
result, directly or indirectly, of Sublandlord's act or failure to act in
accordance with the Headlease, during a period when Subtenant is not in default
under this Sublease. Further, Headlandlord's failure to provide any such
services, amenities and rights shall not entitle Subtenant to an abatement of
any of the Basic Rent, Additional Rent (as hereinafter defined) or any other
sums payable under this Sublease, except and only to the extent that (a)
Sublandlord receives an abatement under the Headlease with respect thereto, or
(b) such
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failure to provide services, amenities or rights is due solely to Sublandlord's
uncured default under the Headlease.
2.4 Exercise of Rights and Remedies Under Headlease.
------------------------------------------------
Subtenant shall not have the right to exercise any of Sublandlord's options
or elections permitted or authorized under the Headlease, or to institute any
action or proceeding against Headlandlord for the enforcement of the Headlease.
If Headlandlord shall default in the performance of any of its obligations
under the Headlease, Sublandlord shall, upon the written request of Subtenant
and at Subtenant's sole cost and expense, use its good faith efforts to enforce
the Headlease and obtain Headlandlord's compliance with its obligations
thereunder. Sublandlord shall in no event be liable to Subtenant for any default
by Headlandlord in the performance of its obligations under the Headlease, nor
shall any such default be construed as a breach of this Sublease by Sublandlord
or an eviction of Subtenant, or entitle Subtenant to an abatement of any of
Basic Rent, Additional Rent or any other sums payable under this Sublease,
except and only to the extent that (a) Sublandlord receives an abatement under
the Headlease with respect thereto, or (b) such failure to provide services,
amenities or rights is due to Sublandlord's uncured default under the Headlease
during a period when Subtenant is not in default under this Sublease.
2.5 Exclusion from Headlease
------------------------
Subject to the Consent, the following Articles and Exhibits of the
Headlease are, without limitation, expressly excluded from this Sublease and
shall not apply to the Subtenant except where expressly identified in this
Sublease: Basic Lease Information, Articles 2(a) and 2(b), Article 4, Article 7,
Article 9(a) (with respect to "Alteration Fee" only), Article 9(c) (with respect
to the second sentence only), Article 9(d), Article 12 (first sentence only),
Article 14(a) (clause (i.) of the first subparagraph), Article 14(c), Article
15(a)(v), Article 17, Article 27, Article 36, Article 39(m), Exhibit B, Exhibit
C, First Amendment to Lease and Second Amendment to Lease.
ARTICLE 3 - SUBLEASE TERM
-------------------------
3.1 Sublease Term.
-------------
(a) Sublandlord hereby subleases and demises to Subtenant and Subtenant hereby
subleases and takes from Sublandlord the Premises for a term (the "Sublease
Term") commencing January 1, 2002 (the "Term Commencement Date") and expiring as
providkd in the Headlease on July 30, 2007 (the "Expiration Date"), unless
terminated earlier according to the terms hereof or extended according to the
terms of Article 3.1(b), for the rent herein reserved and upon and subject to
the covenants, agreements, terms, conditions and provisions hereinafter set
forth. Except as otherwise provided in the Consent, if the Headlease is
terminated in accordance with its terms (whether by expiry, termination or
surrender) this Sublease shall be automatically terminated at the same time as
the Headlease is terminated. Subtenant agrees to accept possession of the
Premises on or after November 12, 200l.
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(b) Notwithstanding the foregoing provisions of Article 3.1(a), if the
Sublandlord exercises the option to renew the Headlease as provided in Article
40 of the Headlease, the Sublandlord, at th.e same time as written notice of
such exercise is delivered to the Headlandlord, shall send to Subtenant a copy
of said notice. Subtenant shall then have the option to renew this Sublease for
an additional term equal to the term set forth in Article 40 of the Headlease.
Such renewal option must be exercised, if at all, by written notice given to
Sublandlord not later than three (3) months after receipt of a copy of
Sublandlord's notice to Headlandlord. Notwithstanding the foregoing provisions
of this Article 3.1(b), this renewal option shall be null and void and Subtenant
shall have no right to renew this Sublease if, (i) the Sublandlord fails to
renew the Headlease, or (ii) on the date Subtenant exercises such renewal option
or on the date immediately preceding the commencement of the renewal period
Subtenant is in default of any of its obligations under this Sublease. If
Subtenant exercises such renewal option, then during the renewal period the Base
Rent payable by Subtenant shall be determined as provided in the second
paragraph of Article 40(a) of the Headlease; provided, however, that the term
"fair market rent" as used in said second paragraph of Article 40(a) of the
Headlease shall mean the rental rate for comparable space under a sublease (and
not a primary lease) to new subtenants.
(c) Subtenant shall throughout the Sublease Term lease the chattels listed or
described in Exhibit C attached hereto (collectively, the "Chattels") and shall
use the Chattels in connection with the use of the Premises only; provided,
however, that Subtenant may remove all or any portion of the Chattels from the
Premises and store said Chattels in a commercial facility engaged in the
business of storing similar property of its customers. Such storage of the
Chattels shall be at the sole cost and expense of Subtenant and shall be in
addition to the rent payable by Subtenant for such Chattels pursuant to Article
4.3. In the event that all or any portion of the Chattels are removed from the
Premises for storage, Subtenant shall provide to Sublandlord written notice
specifying the location of Chattels so removed and a complete inventory of the
Chattels removed from the Premises and placed in storage.
3.2 Common Area.
-----------
Except as otherwise provided in the Consent, Subtenant's use of the Common
Area shall be subject to all restrictions, covenants and rules and regulations
of the Headlease, including the CC&R%. Except as otherwise provided in the
Consent, Subtenant covenants not to do or permit to be done any act in or on the
Common Area which would unreasonably interfere with the use or enjoyment of the
Common Area by the other tenants and occupants of other buildings on the
Property.
3.3 Surrender of Premises.
---------------------
(a) On the Expiration Date or upon the earlier termination of the Sublease or
of Subtenant's right to possession of the Premises, Subtenant will at once
surrender and deliver up the Premises, together with all improvements thereon,
to Sublandlord in good condition and repair, reasonable wear and tear excepted;
conditions existing because of Subtenant's failure to perform maintenance,
repairs or replacements as required of Subtenant under this Sublease shall not
be deemed "reasonable wear and tear." Said improvements shall include all
plumbing, lighting, electrical, heating, cooling and ventilating fixtures and
equipment and other articles of personal
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property used in the operation of the Premises (as distinguished from operations
incident to the business of Subtenant). Subtenant shall surrender to Sublandlord
all keys to the Premises and make known to Sublandlord the combination of all
combination locks which Subtenant is permitted to leave on the Premises.
(b) All Initial Alterations (as defined in Article 5.1(a)) and Other Subtenant
Alterations (as defined in Article 5.l(a))in or upon the Premises made by
Subtenant shall become a part of and shall remain upon the Premises upon such
termination without compensation, allowance or credit to Subtenant; provided,
however, that Sublandlord shall have the right to require Subtenant to remove
any Other Subtenant Alterations, or portions thereof unless Consent specifically
states that no such removal required. Said right shall be exercisable by
Sublandlord's giving written notice thereof to Subtenant not less than sixty
(60) days prior to such Expiration Date or more than twenty (20) days after such
termination. In addition to the foregoing, Subtenant shall also remove any Other
Subtenant Alterations made by Subtenant, or portion thereof, which Headlandlord
may require Sublandlord to remove, pursuant to the terms of the Headlease. In
any such event, Subtenant shall restore the Premises to their condition prior to
the making of such Other Subtenant Alterations, repairing any damage occasioned
by such removal or restoration. If Sublandlord or Headlandlord requires removal
of any Other Subtenant Alteration, or a portion thereof, and Subtenant does not
make such removal in accordance with this Article 3.3, Sublandlord may remove
the same (and repair any damage occasioned thereby), and dispose thereof, or at
its election, warehouse the same. Subtenant shall pay the costs of such removal,
repair and warehousing on demand.
(c) As between Sublandlord and Subtenant, Subtenant shall not be required to
remove any Alterations performed by Sublandlord prior to the Term Commencement
Date or to restore the Premises to their condition prior to the making of such
Alterations. If Sublandlord is required under the Headlease to remove any
Alterations performed prior to the Commencement Date, Subtenant shall permit
Sublandlord to enter the Premises for a reasonable period of time prior to the
Expiration Date, subject to such conditions as Subtenant may reasonably impose,
for the purpose of removing Sublandlord's Alterations and restoring the Premises
as required by the Headlease.
(d) On the Expiration Date, or upon the earlier termination of the Sublease or
of Subtenant's right to possession of the Premises, Subtenant shall remove
Subtenant's articles of personal property incident to Subtenant's business
("Trade Fixtures"); provided, however that Subtenant shall repair any injury or
damage to the Premises which may result from such removal, and shall restore the
Premises to the same condition as prior to the installation thereof. If
Subtenant does not remove Subtenant's Trade Fixtures from the Premises on or
before the Expiration Date or the earlier termination of this Sublease,
Sublandlord may, at its option, remove the same (and repair any damage
occasioned thereby and restore the Premises as aforesaid) and dispose thereof or
warehouse the same, and Subtenant shall pay the cost of such removal, repair,
restoration or warehousing to Sublandlord on demand, or Sublandlord may treat
said Trade Fixtures as having been conveyed to Sublandlord with this Sublease
acting as a Bill of Sale therefor, without further payment or credit by
Sublandlord to Subtenant shall indemnify, defend and hold harmless from all
damages, loss, cost and expense (including reasonable attorneys' fees) arising
out of or in
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connection with Subtenant's failure to surrender the Premises in accordance
with this Article 3.3. This Article 3.3 shall survive the termination or
expiration of this Sublease.
3.4 Holding Over.
------------
If Subtenant remains in occupancy of the Premises beyond the Expiration
Date or earlier termination of the Sublease, it shall remain solely as a
subtenant from month-to-month, and all provisions of this Sublease applicable to
the Sublease Term shall remain in full force and effect, except that Basic Rent
shall be 150% of that in effect upon the expiration or termination date. Nothing
in this Article is intended or shall be construed to permit Subtenant to remain
in occupancy of the Premises beyond the expiration or termination of the
Sublease Term or to waive any right or remedy of Sublandlord as a result
thereof. Subtenant shall defend, indemnify and save Sublandlord, its successors
and assigns, harmless from any cost, loss, damage or expense, including, without
limitation, attorneys' fees, incurred by Sublandlord as a result of any claim,
suit, liability or demand arising out of, pertaining to or involving Subtenant's
remaining in occupancy of the Premises beyond the expiration or termination of
the Sublease Term.
3.5 Subtenant's Letter of Credit.
----------------------------
(a) Concurrently with the execution of this Sublease by Subtenant, Subtenant
shall deliver to Headlandlord an unconditional irrevocable letter of credit
("Letter of Credit"), in the form and content required by the Consent, as
consideration for Subtenant's execution of this Sublease and as consideration
for the granting of an attornment clause to Subtenant by Headlandlord, as
provided in the Consent. The Letter of Credit shall be maintained in effect from
the date of this Sublease through thirty (30) days after the expiration or
earlier termination of the Term, provided, however, that if the term of the
Letter of Credit will expire prior to the expiration of such thirty (30) day
period, Subtenant shall deliver to Headlandlord, at least fifteen (15) calendar
days prior to the expiration date of the Letter of Credit, a renewal of the
Letter of Credit or a replacement Letter of Credit which satisfies the
conditions of this Article 3.6 and the Consent. Further, Subtenant shall deliver
to Headlandlord, during said fifteen (15) day period, a confirmation from the
issuer of said extension or replacement Letter of Credit.
(b) The Letter of Credit shall be issued, at Subtenant's sole expense, by a
Chicago office of UBS Paine Webber, another similarly qualified financial
institution or a San Francisco or New York office of a major national bank
reasonably satisfactory to Subtenant and Sublandlord (the "Bank"), name the
Headlandlord as the beneficiary, in the amount of $600,000.00 from and during
the Sublease Term. The Letter of Credit shall be for a one-year term or, at
Subtenant's election, longer, and shall not vary materially in form and content
from Exhibit E. In the event that the Bank shall fail to notify Headlandlord
that the Letter of Credit will be renewed for at least one (1) year beyond the
then applicable expiration date, and Subtenant shall not have delivered to
Headlandlord, at least fifteen (15) days prior to the relevant annual expiration
date, a replacement Letter of Credit in the amount required hereunder and
otherwise meeting the requirements set forth above, then Headlandlord shall be
entitled to draw on the expiring Letter of Credit, up to the full amount
thereof, and shall hold and apply the proceeds of such draw as Letter of Credit
Proceeds pursuant to Article 3.5(a) above.
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ARTICLE 4 - RENT
----------------
4.1 Rent.
----
The Subtenant acknowledges that it has examined a copy of the Headlease
and the covenants and obligations of the Landlord contained therein. The
Subtenant shall honor, perform and observe all of the Sublandlord's covenants,
obligations, and agreements therein respectively reserved and contained with
respect to the Premises, including the payment of all rentals, charges, costs
and other expenses of any kind or nature whatsoever to be paid by the
Sublandlord under the Headlease, as if the same were a part of this Sublease.
4.2 Basic Rent.
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Commencing on January 1, 2002 (the "Rent Commencement Date"), and
continuing throughout the Sublease Term, commencing in each year on the
anniversary date of the Rent Commencement Date, Subtenant shall pay to
Sublandlord or as it may from time to time direct as "Basic Rent", as rent, for
the Premises:
(i) during Year 1 of the Sublease Term $694,251.00;
(ii) during Year 2 of the Sublease Term $715,078.56;
(iii) during Year 3 of the Sublease Term $736,530.84;
(iv) during Year 4 of the Sublease Term $758,626.80;
(v) during Year 5 of the Sublease Term $781,385.52; and
(vi) during Year 6 of the Sublease Term $804,827.16;
payable in each case in equal monthly installments in advance on the Rent
Commencement Date and on the first day of each month thereafter during the
Sublease Term. Basic Rent for any broken month shall be pro-rated.
4.3 Chattels.
--------
Commencing on the Rent Commencement Date and continuing throughout the
Sublease Term, Subtenant shall pay to Sublandlord or as it may from time to time
direct, as rent, for the Chattels:
(i) during Year 1 of the Sublease Term $150,000.00;
(ii) during Year 2 of the Sublease Term $154,500.00;
(iii) during Year 3 of the Sublease Term $159,135.00;
(iv) during Year 4 of the Sublease Term $163,909.05;
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(v) during Year 5 of the Sublease Term $168,826.32 and
(vi) during Year 6 of the Sublease Term $173,891.10;
payable in each case in equal monthly installments in advance on the Rent
Commencement Date and on the first day of each month thereafter during the
Sublease Term. Rent for any broken month shall be pro-rated.
4.4 Additional Rent.
---------------
(a) The Subtenant agrees to pay to the Sublandlord as additional rent in
respect of the Premises, commencing on the Rent Commencement Date, all sums
which the Sublandlord is from time to time required to pay to the Headlandlord
as additional rent under the Headlease, including without limiting the
generality of the foregoing the payments for Real Property Taxes, Tenant's
Percentage Share of Operating Expenses, payments for taxes, rates, duties and
assessments, water, utilities, bulbs, and other amounts due under the Headlease
(collectively, "Additional Rent"). Additional Rent may be collected by the
Sublandlord as rent, with all rights of distress and otherwise as reserved to
the Sublandlord hereunder or at law in respect of rent in arrears.
(b) All payments of Additional Rent required to be paid by the Subtenant to the
Sublandlord hereunder, shall be paid by the Subtenant to the Sublandlord not
later than the times that such are payable by the Sublandlord to the
Headlandlord under the Headlease.
4.5 Payments Generally.
------------------
Payments by the Subtenant to the Sublandlord of whatsoever nature required
or contemplated by this Sublease shall: (i) be made when due hereunder, without
notice or demand therefor and without any abatement, set-off, compensation or
deduction whatsoever at the address of the Sublandlord set forth above or at
such other place as the Sublandlord may designate from time to time to
Subtenant; (ii) be applied towards amounts then outstanding hereunder in such
manner as the Sublandlord determines; and (iii) shall be subject to the late
payment charges set out in Article 3 of the Headlease. In the event of any
non-payment of any amounts required to be paid pursuant to the provisions of
this Sublease, or the Headlease, as the case may be, the Sublandlord, in
addition to any other rights hereunder or at law, shall have the same remedies
and may take the same steps for the recovery of all amounts as the Sublandlord
may have for recovery of rent in arrears under the terms of this Sublease or at
law.
4.6 Net Sublease.
-------------
The Subtenant acknowledges and agrees that it is the intention of the
parties that this Sublease shall be a completely carefree net Sublease for the
Sublandlord, and that the Sublandlord shall not be responsible during the
Sublease Term for any loss, charges, expenses and outlays of any nature or kind
whatsoever arising from or relating to the Premises or the contents thereof and
the Subtenant shall pay all such charges, impositions and expenses of every kind
and nature relating to the Premises, as is required to be paid by the
Sublandlord under the terms and provision of the Headlease save such as to be
perfomed by the Headlandlord under
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the Headlease, and covenants with the Sublandlord accordingly. Any amount and
any obligation relating to the Premises or this Sublease which is not expressly
declared in this Sublease to be the responsibility of the Sublandlord shall be
the responsibility of the Subtenant to be paid or performed by or at the
Subtenant's expense.
ARTICLE 5 - DELIVERY OF PREMISES; ALTERATIONS
---------------------------------------------
5.1 Delivery of Premises.
---------------------
(a) Alterations. Sublandlord has reviewed and approved detailed plans and
specifications for the initial alterations and additions to the Premises and
Common Area listed in Exhibit D (the "Initial Alterations"). Sublandlord hereby
approves and consents to the construction by Subtenant of the Initial
Alterations, provided that the Consent includes the consent of the Landlord to
the construction of the Initial Improvements. Subtenant shall not make any
other alterations in or additions to the Premises ("Other Subtenant
Alterations"), if to do so would constitute a default under the Headlease
(without regard to any requirement of notice or cure period). If Subtenant's
proposed Other Subtenant Alterations would not constitute a default under the
Headlease, Sublandlord's consent thereto shall nonetheless be required, but
Sublandlord's consent to such Other Subtenant Alterations shall not be
unreasonably withheld, and if Sublandlord consents thereto, Sublandlord shall
use reasonable efforts to obtain the consent of the Headlandlord if such
consent is required under the Headlease. If Other Subtenant Alterations are
permitted or consented to, Subtenant shall make all Other Subtenant Alterations
in accordance with all requirements set forth in the Headlease and this
Sublease, and Subtenant shall be responsible to pay, directly to Headlandlord,
all sums required to be paid in connection with the making of Alterations under
the Headlease. Subtenant shall indemnify, defend and hold harmless Sublandlord
against liability, loss, cost, damage, liens and expense imposed on Sublandlord
arising out of the performance of Other Subtenant Alterations by Subtenant.
(b) Removal of Other Subtenant Alterations. If Subtenant performs any Other
Subtenant Alterations, Subtenant shall be obligated to remove such Other
Subtenant Alterations and restore the Premises to the condition existing on the
Term Commencement Date if the Headlease or the Consent requires such removal and
restoration.
(c) No Liens. Subtenant shall not do any act which in any way encumbers the
title of the Headlandlord in and to the Premises, the Building or the Property
(or any part thereof) nor shall the interest or estate of Headlandlord or
Sublandlord be in any way subject to any claim by way of lien or encumbrance,
whether by operation of law or by virtue of any express or implied contract by
Subtenant, or by reason of any other act or omission of Subtenant. Any lien
shall, at Subtenant's expense, be discharged within ten (10) days after Notice
is hereby given that Sublandlord and Headlandlord will not be liable for any
labor, service or material furnished or to be furnished to Subtenant, and that
no mechanics or other liens for such labor, services or materials shall attach
to or affect the interest of Sublandlord or Headlandlord in and to the Premises
or any part thereof. Subtenant shall defend, indemnify and save Sublandlord,
Headlandlord and Headlandlord's mortgagee, if any, and their respective
successors and assigns, harmless from any cost, loss, damage or expense,
including, without limitation, attorneys' fees, incurred as a result of any
claim, suit, liability or demand arising out of, pertaining to or
-10-
involving any mechanics' or other lien or security interest which Subtenant
permits to be filed against the Premises.
5.2 Condition.
---------
(a) The Premises are subleased and assigned to Subtenant and the rights to the
Common Area are granted to Subtenant in their present condition by Sublandlord,
without representation or warranty, express or implied, subject and subordinate
to the Headlease, all easements, restrictions, agreements and recorded matters,
all taxes and Real Property Taxes, not yet due and payable, and all applicable
zoning restrictions, regulations and ordinances and building restrictions and
governmental regulations now or hereafter in effect.
(b) By execution of this Sublease and except as expressly set forth herein,
Subtenant acknowledges and agrees that it has inspected the Premises, the
Building and the Property and shall accept the Premises and the Common Area on
the Term Commencement Date in their then "as is" and "where is" physical and
environmental condition. Subtenant acknowledges and agrees that neither
Sublandlord nor its agents or employees has made any express warranty or
representation regarding the physical or environmental condition of the
Premises, the Common Area, the Building or the Property, the quality of material
or workmanship of the Premises, the Common Area, the Building or the Property,
latent or patent, or the fitness of the Premises, the Common Area, the Building
or the Property for any particular use or purpose and that no such
representation or warranty shall be implied by law, it being agreed that all
such risks are to be borne by Subtenant.
(c) Subtenant acknowledges that Exhibit A is an approximation only of the
---------
buildings and improvements on the Property and that no representation or
warranty, express or implied, is hereby made by Sublandlord, its employees or
agents, regarding the existence, location or size of any buildings or
improvements in the Property. Subtenant acknowledges that, without Subtenant's
consent, the owners, tenants and occupants of the Building or buildings on the
Property may have the right to modify the buildings and improvements or
construct additions or additional buildings or improvements in the Building or
on the Property.
(d) The Sublandlord agrees, at its own expense, to deliver the Premises in a
broom swept condition.
5.3 Signs.
------
Subtenant acknowledges that any signage shall be subject to the terms of
Article 21 of the Headlease, CC&R's, Headlandlord's approval and all Legal
Requirements, and at Subtenant's sole expense.
5.4 Access and Inspection.
----------------------
Upon reasonable prior notice to Subtenant (but nothing in the foregoing
shall limit any right of Headlandlord to enter the Premises under the
Headlease), Sublandlord and Headlandlord, and their respective agents, shall
have access to the Premises at all reasonable times to (i) examine and inspect
and the Premises; (ii) repair the Premises or any part thereof in accordance
-ll-
with the Headlease; (iii) show the Premises to prospective mortgagees and
purchasers; and (iv) during the last one hundred twenty (120) days of the
Sublease Term, to show the Premises to prospective assignees, subtenants.
ARTICLE 6 - USE, ASSIGNMENT AND SUBLETTING
------------------------------------------
6.1 Use.
---
The Subtenant shall use and occupy the Premises from and after the Rent
Commencement Date and shall thereafter conduct its business therein. The
Premises may be used for general office and administrative purposes, including
computer hardware and software development, engineering and laboratory
facilities for development of scientific instrumentation and chemical reagents,
light manufacturing facilities for the assembly of scientific instruments and
production of chemical reagents, the development, light manufacturing and
marketing of medical instruments or similar products and the storage of
materials used in foregoing activities, including, but not limited to, chemicals
which are classified by Article 8 of the Headlease as "Hazardous Materials" (the
"Permitted Use"), and for no other purpose without the prior written consent of
Landlord and Sublandlord; provided that such purpose is not precluded by and is
in accordance with Article 8 (as modified by the Consent) and any other
provisions of the Headlease and all other Legal Requirements applicable to the
Premises and Subtenant's operations therein.
6.2 Legal Requirements.
------------------
Subtenant shall comply with and cause the Premises to comply with: (a) all
Legal Requirements and federal laws, orders and regulations now or hereafter
applicable to the Premises or the occupancy or use thereof or the health and
welfare of Subtenant's employees, invitees, licensees or customers, including,
without limitation, Legal Requirements which require unforeseen or structural
alterations or repairs to the Premises; (b) the Headlease; and (c) all
easements, agreements, restrictions and recorded matters affecting or relating
to the Premises, and all agreements entered into by Subtenant and Sublandlord
with regard to the Premises, including insurance policies. Subtenant covenants
not to do or permit to be done any act in the Premises which would unreasonably
interfere with the use or enjoyment of the Premises, the Building or the other
buildings on the Property by the occupants of the Premises, the Building or any
of the other buildings on the Property.
6.3 Assignment and Subletting.
-------------------------
Subtenant may not assign or transfer this Sublease or sublet all or any
part of the Premises without Sublandlord's prior written consent, and any
assignment or subletting without Sublandlord's consent shall be void and of no
effect. If Subtenant assigns this Sublease or sublets all or any part of the
Premises, Subtenant shall nevertheless remain primarily liable to Sublandlord
for the full payment of Basic Rent, Additional Rent and any other sum due under
this Sublease and the observance and performance of all obligations, covenants
and agreements under this Sublease as payments and obligations of a principal
and not of a guarantor or surety as
-12-
though no assignment or subletting had been made. Each sublease shall expressly
be made subject to the provisions of this Sublease.
6.4 Hazardous Materials.
-------------------
Subject to the Consent, Sublandlord acknowledges and agrees that Subtenant,
in addition to the Hazardous Materials permitted in, on or about the Premises or
Real Property by Article 8 of the Headlease, shall be permitted to store and use
in, on or about the Premises or Real Property, in a normal and customary manner
for Subtenant's permitted uses of the Premises under this Article 6, the
Hazardous Materials listed in Exhibit F attached hereto; provided that the
Handling of such Hazardous Materials shall comply at all times with all Legal
Requirements, including Hazardous Material Laws (as defined in the Headlease).
When applying Article 8(d) of the Headlease as an incorporated provision of this
Sublease, the Subtenant's indemnity of the Headlandlord and the Sublandlord
shall not apply to the extent the Claim arises by reason of Hazardous Materials
conditions existing upon the Premises or the Real Property as of the Term
Commencement Date of this Sublease.
ARTICLE 7 - MAINTENANCE; UTILITIES
----------------------------------
7.1 Maintenance.
-----------
Subtenant covenants and agrees to comply with Article 10 of the Headlease.
During the Sublease Term, Subtenant shall keep fully paid a contract for regular
servicing and maintenance (at least once quarterly) of the heating, ventilating
and air conditioning systems serving the Premises, which contractor shall be
approved by Sublandlord, such approval not to be unreasonably withheld.
Sublandlord shall not be required to maintain, repair or rebuild the Premises.
Subtenant hereby waives the right to perform maintenance or make repairs at the
expense of Sublandlord pursuant to any law at any time in effect.
ARTICLE 8 - INSURANCE
---------------------
8.1 Subtenant's Insurance.
---------------------
(a) Commencing on the Term Commencement Date, Subtenant shall take out and
at all times during the Sublease Term Subtenant shall keep in force such
insurance in respect of the Premises as shall comply with the obligations of the
Sublandlord pursuant to Article 13 of the Headlease, and shall be subject to the
same limitations of liability with respect to damage, loss or injury as are set
out in the Headlease. Each policy shall name as additional insureds the
Headlandlord, Headlandlord's mortgagee, if any, and Sublandlord. In addition,
every policy shall provide that such policy shall not be canceled or materially
amended without at least thirty (30) days prior written notice to the named and
additional insureds and that it shall not be invalidated or the proceeds not
payable by or due to any act or neglect of Subtenant or the additional insureds,
occupancy or use of the Premises for purposes more hazardous than permitted by
such policy, any foreclosure or other proceedings relating to the Premises or
change in title to or ownership of the Premises, or part thereof. Such policies
shall not require Subtenant and the additional insureds to pay any portion of
any loss, damage or claim prior to payment by the insurer. On the
-13-
date that this Sublease is executed by Subtenant and thereafter not less than
thirty (30) days prior to the expiration of such insurance, Subtenant shall
deliver to Sublandlord certificates of such insurance. Subtenant shall not
obtain or carry separate insurance concurrent in form or contributing in the
event of loss with that required by this Sublease.
(b) Sublandlord and Subtenant each hereby waives any and all rights of recovery
against the other or against the directors, officers, shareholders, partners,
employees, agents and representatives of the other, on account of loss or damage
of such waiving party or its property, or the property of others under its
control, to the extent that such loss or damage is insured against under any
property coverage insurance policy which either may have in force at the time of
such loss or damage. Subtenant shall, upon obtaining the policies of property
insurance required under this Sublease, give notice to its insurance carrier(s)
that the foregoing mutual waiver of subrogation is contained in this Sublease.
The waivers set forth herein shall be required to the extent that same are
available from each party's insurer without additional premium, if an extra
charge is incurred to obtain such waiver, it shall be paid by the party in whose
favor the waiver runs within fifteen (15) days after written notice from the
other party.
8.2 Indemnification of Sublandlord by Subtenant.
-------------------------------------------
Subtenant shall indemnify and hold harmless Sublandlord and the
Headlandlord, and each of their agents and employees (collectively the
"Indemnified Parties"), from and against any and all claims, suits, demands,
damages, judgments, costs and expenses arising from Subtenant's use of the
Premises, or from the conduct of Subtenant's business, or from any activity,
work, act or omission of Subtenant and its agents, employees, contractors or
invitees, or permitted or suffered by Subtenant in or about the Premises or
elsewhere unless such claims, suits, demands, damages, judgments, costs and
expenses are caused by or arise from the negligence or wilful conduct of any of
the Indemnified Parties, and shall further indemnify and hold harmless
Sublandlord or the Headlandlord, as the case may be, from and against any and
all claims, suits, demands, damages, judgments, costs and expenses arising from
any breach or default in the performance of any obligation on Subtenant's part
to be performed under the terms of this Sublease, or arising from any negligence
of Subtenant or any of Subtenant's agents, invitees, contractors, or employees,
and from and against all costs, expenses and liabilities (including, without
limitation, reasonable legal fees and disbursements) incurred in the defence of
any such claim or any action or proceeding brought thereon. Subtenant agrees
that should any action or proceeding be brought against Sublandlord or the
Headlandlord by reason of any such claim, upon notice from Sublandlord or the
Headlandlord, unless caused by or arising from the negligence or willful conduct
of any of the Indemnified Parties, as the case may be, Subtenant shall defend
the same at Subtenant's expense by counsel reasonably satisfactory to
Sublandlord or the Headlandlord, as the case may be. The indemnifications set
forth in this paragraph shall survive the expiration or earlier termination of
this Sublease.
8.3 Indemnification of Subtenant by Sublandlord.
-------------------------------------------
Sublandlord shall indemnify and hold harmless Subtenant and each of its
agents and employees (collectively the "Subtenant Indemnified Parties"), from
and against any and all claims, suits, demands, damages, judgments, costs and
expenses arising from the use of the
-14-
Premises by Sublandlord, or from the conduct of Sublandlord's business, or from
any activity, work, act or omission of Sublandlord and its agents, employees,
contractors or invitees, or permitted or suffered by Sublandlord in or about the
Premises or elsewhere unless such claims, suits, demands, damages, judgments,
costs and expenses are caused by or arise from the negligence or wilful conduct
of any of the Subtenant Indemnified Parties, and shall further indemnify and
hold harmless Subtenant from and against any and all claims, suits, demands,
damages, judgments, costs and expenses arising from any breach or default in the
performance of any obligation on Sublandlord's part to be performed under the
terms of this Sublease, or arising from any negligence of Sublandlord or any of
Sublandlord's agents, invitees, contractors, or employees, and from and against
all costs, expenses and liabilities (including, without limitation, reasonable
legal fees and disbursements) incurred in the defence of any such claim or any
action or proceeding brought thereon. Sublandlord agrees that should any action
or proceeding be brought against Subtenant by reason of any such claim, upon
notice from Subtenant, unless caused by or arising from the negligence or
willful conduct of any of the Subtenant Indemnified Parties, as the case may be,
Sublandlord shall defend the same at Sublandlord's expense by counsel reasonably
satisfactory to Subtenant, as the case may be. The indemnifications set forth in
this paragraph shall survive the expiration or earlier termination of this
Sublease.
8.4 Legal Fees.
-----------
In the event a Party to this Sublease, without any fault on its part, is
a party to any litigation commenced by or against the other Party, the other
Party shall pay all costs including, without limitation, reasonable legal fees
incurred by or imposed by or upon the Party in connection with such litigation.
ARTICLE 9 - TAXES
-----------------
9.1 Taxes.
------
The Subtenant shall pay all taxes, Real Property Taxes, rates, duties and
assessments as may be levied, rated, charged or assessed against or in respect
of all improvements, equipment and facilities on or in the Premises and in
respect of any business carried on thereon or therein or in respect of the use
or occupancy thereof by the Subtenant pursuant to the Headlease, including
without limitation all sales, ad Valorem, business transfer, whether imposed on
the Sublandlord, the Headlandlord or the Subtenant.
ARTICLE 10 - CASUALTY
---------------------
10.1 Casualty.
---------
(a) If, during the Sublease Term, the Premises shall be partially or
totally damaged or destroyed by fire or other casualty, Subtenant shall
immediately notify Sublandlord of the existence and extent of such damage.
-15-
(b) If Headlandlord would have the right under Article 11 of the Headlease and
elects to terminate pursuant to the terms of the Headlease, Sublandlord shall
give prompt notice thereof to Subtenant and this Sublease shall terminate as of
the same date as the Headlease terminates.
ARTICLE 11 - DEFAULT
--------------------
11.1 Subtenant's Default.
-------------------
(a) Any one or more of following events shall be considered an "Event of
Default" by Subtenant, as such term is used in this Sublease:
(i) Subtenant shall be adjudged an involuntary bankrupt, or a decree or
order approving, as properly filed, a petition or answer filed
against Subtenant asking reorganization of Subtenant under the
Federal bankruptcy laws as now or hereafter amended, or under the
laws of any state, shall be entered, and any such decree or
judgment or order shall not have been vacated or stayed or set
aside within sixty (60) days from the date of the entry or granting
thereof; or
(ii) Subtenant shall file, or admit the jurisdiction of the court and
the material allegations contained in, any petition in bankruptcy,
or any petition pursuant or purporting to be pursuant to the
Federal Bankruptcy laws now or hereafter amended, or Subtenant
shall institute any proceedings for relief of Subtenant under any
bankruptcy or insolvency laws or any laws relating to the relief of
debtors, readjustment of indebtedness, re-organization,
arrangements, composition or extension; or
(iii) Subtenant shall make any assignment for the benefit of creditors or
shall apply for or consent to the appointment of a receiver for
Subtenant or any of the property of Subtenant; or
(iv) Subtenant shall admit in writing its inability to pay its debts as
they become due; or
(v) The Premises are levied on by any revenue officer or similar
officer; or
(vi) A decree or order appointing a receiver of the property of
Subtenant shall be made and such decree or order shall not have
been vacated, stayed or set aside within thirty (30) days from the
date of entry or granting thereof; or
(vii) Subtenant shall vacate or abandon the Premises during the Sublease
Term or assign this Sublease or further sublet of the Premises
other than in strict accordance with Article 6.3; or
(viii) Subtenant fails to make any payment of rent required to be made by
Subtenant as and when the same is due, notwithstanding the
foregoing, Sublandlord shall give Subtenant notice of non-payment
and three (3) days from receipt of such notice to
-16-
cure such non-payment before assessing late fees and/or interest
provided that in no event shall Subtenant be late in payment of any
rent more than twice during any year of the Sublease Term; or
(ix) Subtenant fails to secure insurance or to provide proper evidence
of insurance as set forth in Article 8 of this Sublease or fails to
keep the Premises, the Building or the Property free of lien claims
as set forth in Article 5 of this Sublease and either such failure
continues for more than seven (7) days after written notice thereof
to Subtenant; or
(x) Subtenant, by its act or omission, causes an event or condition
under the Headlease which either is an Event of Default or default
thereunder; or
(xi) Subtenant fails to fulfill, keep, observe or perform any of the
other covenants and obligations herein contained to be fulfilled,
kept, observed and performed by Subtenant, and such failure
continues for more than five (5) days after notice thereof in
writing to Subtenant, provided, however, that if Subtenant, upon
receipt of said notice, commences action to cure the default within
such five (5) day period and diligently pursues such action to
completion, such event shall not be considered an "Event of
Default". Notwithstanding the foregoing, in the event the default
is not cured within thirty (30) days of receipt of the aforesaid
notice, such default shall be an "Event of Default".
(b) Upon the occurrence of any one or more Events of Defaults, Sublandlord may
exercise any remedy against Subtenant which Headlandlord may exercise for Events
of Default by Sublandlord under the Headlease. Without limiting the generality
of the foregoing, Sublandlord may exercise the damage remedies available under
California Civil Code Sections 1951.2 and 1951.4 or any similar or successor
statute which provides that a lessor may continue a lease in effect and recover
damages as they become due.
11.2 General Provisions Regarding Default.
------------------------------------
No right or remedy under this Sublease or at law or equity shall be
exclusive of any other right or remedy but shall be cumulative. Failure to
insist upon strict performance of any provision of a this Sublease or to
exercise any right or remedy of this Sublease or at law or equity shall not
constitute a waiver of any future performance. Receipt by Sublandlord of any
Basic Rent, Additional Rent or other sum payable under this Sublease with
knowledge of an Event of Default or Subtenant's breach of this Sublease shall
not constitute a waiver of such Event of Default or breach. No waiver by either
party of any provision of this Sublease shall be deemed to have been made unless
made in writing. Each party shall be entitled to injunctive relief in the event
of violation or threatened violation of the other party's material obligations
hereunder beyond applicable cure periods. Subtenant hereby waives and surrenders
for itself and all those claiming under it, including creditors of all kinds,
any right and privilege which it or any of them may have to redeem the Premises
or to have a continuance of this Sublease after expiration or termination of
Subtenant's right of occupancy by order or judgment, any legal process or writ,
or under the terms of this Sublease.
-17-
ARTICLE 12 - GENERAL PROVISIONS
-------------------------------
12.1 Mortgage Subordination.
-----------------------
Upon request by Sublandlord or Headlandlord, Subtenant shall execute
and deliver an agreement subordinating this Sublease and Subtenant's interest in
the Premises to any mortgage upon the Premises, the Building or the Property (or
part thereof) or to any mortgage of Sublandlord's leasehold interest under the
Headlease; provided that the holder of such mortgage shall agree in writing not
to disturb Subtenant's tenancy if there is no Event of Default.
12.2 Estoppel Certificates and Financial Statements.
-----------------------------------------------
Subtenant shall, from time to time, upon ten (10) days prior written
request from Sublandlord, cause to be executed, acknowledged and delivered a
certificate stating that this Sublease is unmodified and in full effect (or, if
there have been modifications, that this Sublease is in full effect as modified
and setting forth such modifications), the amount of Basic Rent, the dates to
which Basic Rent has been paid, and stating that, to the knowledge of Subtenant,
either no default exists under this Sublease or specifying each such default of
which Subtenant has knowledge. Subtenant shall, from time to time, but not more
than once in any calendar year during the Sublease Term, upon ten (10) days
prior written request from the Sublandlord, deliver or cause to be delivered to
Sublandlord or its designee, then current financial statements (including a
statement of cash flows) certified as accurate by a certified public accountant
and prepared in conformance with generally accepted accounting principles for
(i) Subtenant, (ii) any entity which owns a controlling interest in Subtenant,
(iii) any entity the controlling interest of which is owned by Subtenant, and
(iv) any successor entity to Subtenant by merger or operation of law.
12.3 Representations and Warranties of Subtenant.
--------------------------------------------
Subtenant represents and warrants to Sublandlord that: (i) Subtenant
is a corporation, duly organized, validly existing and in good standing under
the laws of California and has the power to own its property and assets and
carry on its business in California (ii) the execution of this Sublease
constitutes the binding obligation of Subtenant and has been authorized by
Subtenant's Board of Directors; and (iii) the Sublease of the Premises will not
conflict with or result in a breach of Subtenant's Articles of Incorporation or
Bylaws or any agreement to which Subtenant is a party or by which it may be
bound, or violate any state or federal governmental law, statute, ordinance or
regulation.
12.4 Representation and Warranties of Sublandlord.
---------------------------------------------
Sublandlord represents and warrants to Subtenant that: (i) the
Headlease is valid and subsisting and to the best of Sublandlord's knowledge,
there are no and have been no defaults thereunder (ii) all payments of rent and
other charges have been paid under the Headlease to the date of this Sublease
and will be paid to the Rent Commencement Date.
-18-
12.5 Notices; Demands and Other Instruments.
---------------------------------------
All notices, demands or other communications given pursuant to this
Sublease shall be in writing and shall be deemed given on the date mailed if
sent by overnight delivery by nationally recognized overnight courier or by
registered or certified mail, return receipt requested, with postage prepaid if:
(a) when mailed to Sublandlord, it is addressed to Sublandlord at its address
set forth above, marked "Attention: Chief Financial Officer", and (b) when
mailed to Subtenant, it is addressed to Subtenant at its address set forth
above. The parties may specify any other address in the United States or Canada
with not less than fifteen (15) days' written notice to the other party.
12.6 Chattels.
---------
The Chattels are made available for Subtenant's use on an "as is" and
"with all faults" basis, and Sublandlord shall have no obligation to alter or
repair the Chattels in anticipation of Subtenant's use. Such right of use shall
end upon the termination of this Sublease. During the Sublease Term, Subtenant
shall (a) insure the Chattels against loss, (b) maintain the Chattels in good
condition and repair, (c) not remove the Chattels from the Premises except with
Sublandlord's consent, and (d) bear all risk of loss to the Chattels.
Notwithstanding the foregoing, Subtenant shall be entitled upon the expiration
of the Sublease Term by affluxion of time but not otherwise and so long as all
rent payable hereunder has been paid to purchase the Chattels from Sublandlord
for $1.00.
ARTICLE 13 - MISCELLANEOUS
--------------------------
13.1 Severability.
-------------
If any provision of this Sublease or its application to any person or
circumstance shall be declared invalid or unenforceable, the remaining
provisions of this Sublease, or the application of such provision to persons or
circumstances other than those to which it is invalid or unenforceable, shall
not be affected thereby and each provision shall be valid and enforceable to the
extent permitted by law.
13.2 Binding Effect.
---------------
Subject to the terms and restrictions of Article 6.3 and this Article
all provisions contained in this Sublease shall be binding upon, inure to the
benefit of, and be enforceable by, the respective heirs, executors,
representatives, successors and assigns of Sublandlord and Subtenant. The
covenants and obligations of Sublandlord under this Sublease shall not be
binding upon the Sublandlord herein named or any subsequent Sublandlord with
respect to any period subsequent to the transfer of all its interests in the
Premises, and, in the event of any such transfer, Subtenant agrees to look
solely to the transferee for the performance of any term, covenant, obligation,
warranty or representation of Sublandlord hereunder, but only with respect to
the period beginning with such transfer and ending with a subsequent transfer of
such interest. If Sublandlord terminates the Headlease and assigns this Sublease
to the Headlandlord, Subtenant hereby agrees to attorn to the Headlandlord as
the "Sublandlord" under this Sublease
-19-
provided that Headlandlord assumes Sublandlord's obligations under this
Sublease. If Sublandlord shall acquire a fee interest in the Building or the
Property, this Sublease shall continue as a direct lease between. Sublandlord,
as landlord, and Subtenant, as tenant.
13.3 Interpretation.
--------------
Where used in this Sublease, any word or term which is specifically
defined in the Headlease shall have the meaning ascribed to it in the Headlease
unless such word or term is otherwise defined in this Sublease. This Sublease is
the product of negotiation and the parties agree that it shall be interpreted in
accordance with its fair and apparent meaning and not for or against either
party.
13.4 Governing Law.
-------------
This Sublease shall be interpreted under and is governed by the laws of
California.
13.5 Recitals.
--------
The recitals to this Sublease are hereby incorporated in this Sublease.
13.6 Headings and Captions.
---------------------
The Article and Subarticle captions are for the convenient reference of
the parties only and are not intended to and shall not be deemed to modify the
interpretation of the Article or subarticle from that which is indicated by the
text of the Article or subarticle alone.
13.7 Survival or Representations and Warranties.
------------------------------------------
All of the representations, warranties and indemnities contained in this
Sublease shall survive indefinitely the expiration or termination of this
Sublease.
13.8 Entire Agreement.
----------------
Sublease contains the entire agreement between the parties with respect to
the Premises and all prior negotiations or agreements, whether oral or written,
are superseded and merged herein.
13.9 Amendments.
----------
This Sublease may not be changed or amended except by a writing duly
authorized and executed by the party against whom enforcement is sought.
13.10 Number, Gender.
--------------
Word importing the singular number only include the plural and vice versa,
words importing the masculine gender shall include the feminine and
neuter gender, and word importing persons shall include firms and corporations,
and vice versa.
-20-
13.11 Brokers.
-------
Except for CB Richard Ellis and Charles E. Smith Commercial Realty,
LP, Sublandlord and Subtenant covenant and represent to each other that no
parties are entitled to be paid a fee or commission in connection with the
transaction contemplated by this Sublease. If any other individual or entity
shall assert a claim to a finder's fee or commission as a broker or a finder,
then the party who is alleged to have retained such individual or entity or
whose acts, omissions or representations are alleged to give rise to such claim
shall defend (with counsel reasonably acceptable to the indemnified party),
indemnify and hold harmless the other party from and against any such claim and
all costs, expenses, liabilities and damages incurred in connection with such
claim or any action or proceeding brought thereon. Subtenant agrees and
acknowledges that no broker is entitled to any commissions arising from the
leasing of the Chattels by the Sublandlord to the Subtenant. Subtenant shall
indemnify and hold harmless Sublandlord and its agents and employees, from and
against any and all claims, suits, demands, damages, judgments, costs and
expenses arising with respect to commissions' claimed by any broker pertaining
to the Chattels.
13.12 Condition Precedent.
-------------------
This Sublease is subject to the execution of the Consent by the Landlord
and delivery of the Consent to the Sublandlord and Subtenant on or before the
Term Commencement Date. If the Landlord refuses to consent to this Sublease,
then this Sublease shall simultaneously terminate and neither party shall have
any further rights or obligations under the Sublease and hereby release any
claims against one another, and each party releases the other from any cost,
loss, damage, claim, liability, expense, fee or charge related thereto or
arising therefrom.
13.13 Facsimile Copies.
----------------
The parties hereto (i) have each agreed to permit the use, from time to
time and where appropriate, of telecopied signatures in order to expedite the
transaction contemplated by this Agreement, (ii) each intend to be bound by its
respective telecopied signature, (iii) are each aware that the other will rely
on the telecopied signature, and (iv) each acknowledge such reliance and waive
any defenses to the enforcement of the documents effecting the transaction
contemplated by this Agreement based on a telecopied signature.
13.14 Counterparts.
------------
This agreement may be executed in any number of counterparts, each of
which shall constitute an original hereof and all of which together shall
constitute a single instrument.
-21-
13.15 Memorandum of Sublease.
----------------------
This Sublease shall not be recorded. If a party records this Sublease, it
shall be a default hereunder by such party.
IN WITNESS WHEREOF, the parties hereto have caused this Sublease to be
executed as of the date first above written.
"SUBLANDLORD"
CERTICOM CORP.,
a Delaware Corporation
--------------------------------
By: /s/ Gregory M. Capitolo
------------------------------
Name: Gregory M. Capitolo
------------------------
Its: CFO
------------------------
By: ______________________________
Name: ________________________
Its: ________________________
"SUBTENANT"
GUAVA TECHNOLOGIES INC.,
a ________________________________
By: /s/ [SIGNATURE ILLEGIBLE]
------------------------------
Name: [SIGNATURE ILLEGIBLE]
------------------------
Its: President
------------------------
By: /s/ Jack Giroux
------------------------------
Name: Jack Giroux
------------------------
Its: Executive V.P.
------------------------
EXHIBIT A
---------
The Premises
Exhibit A from Headlease attached
EXHIBIT A
---------
Mt. Eden Business Park
Hayward, CA
[DRAWING OF MOUNT EDEN BUSINESS]
PREMISES: Building A (Entire Building)
EXHIBIT B
---------
Chattels
INVENTORY LIST FOR BUILDING A
Bldg. A Description Qty
Teknion 8'xlO' cubes include - 46
(1) worksurface, (1) two drawer with one file cabinet, (1)
two drawer file, (1) mobile ped, (1) overhead bin, (1) set of
cube access., (1) shelf, (1) corner shelf, (1) chair.
Hard wall office furniture includes - 11
(new side of building)
(1) desk, (1) return, (1) credenza, (1) credenza hutch, (l)
wardrobe, (1) under desk storage, (1) desk chair (2) wood
back chairs.
Concierge office 1
(1) desk, (1) return, (1) credenza (1) hutch for credenza,
(1) 36" round table, (l) ward-robe, (1) desk chair, (3) wood
back chairs.
Executive office includes -
(1) desk, (1) credenza, (1) credenza hutch, (2) wardrobe,
(1) round table,(l) desk chair.
Workrooms includes - (new side) 4
(1) 48 round table, (4) chairs, corner table
Boardroom B includes 1
(1) confer. table, (14) chairs, (1) corner table
Main Boardroom includes - 1
(1) conference table (16"x4"), (14) chairs
(1) wall white board with wood front
(1) retractable ceiling screen
Classroom one includes - 1
(8) tables, (14) chairs
Classroom two includes - 1
(8) tables, (14) chairs
-2-
lateral file cabinets with wood tops
Three drawer lateral 42" wide file 9
Three drawer lateral 36" wide file 2
Upholstery
Brayton sofa (fabric/leather) 1
Brayton sofa * 1
Matching chairs (large) * 2
Brayton chairs(leather) with attached work surface. 3
Dual colored leather chair 2
Other breakout furniture
oval wood/glass coffee table 2
round wood/glass coffee table 1
round wood/glass end table 2
Additional furniture wood furniture
credenza (122"w X 20d X 26h) 1
Breakout kitchen
Refrigerator 1
Microwave 1
Hayworth Workstations (older side)
Hayworth 8 x 10 cubes include - 25
(1) worksurface,(1) two drawer lateral file
(1) overhead bin and a chair
Keyboard trays 11
Hayworth 8 X 8 cubes include - 20
(1) worksurface, (1) 2 drawer lateral file
(1) 2 drawer w/file,
(1) overhead bin and chair
Keyboard trays 5
Hayworth 8 X 7 cubes include - 5
(1) worksurface, (1) 2 drawer narrow file
(1) 2 drawer w/file,(l) overhead bin and a chair
Keyboard trays 2
Hayworth 7 X 10 cubes include - 3
(1) 2 drawer w/file, overhead bin and chair
hard wall offices older side of building
offices have one desk, small credenza
-3-
with hutch top and a chair 6
offices have one desk, small credenza
bookcase and a chair 2
Additional furniture
whiteboards hung in cubes 27
whiteboards in building not hung 5
file cabinets metal (light gray)
30" file cabinets two drawer 6
36" file cabinet two drawer 1
42" file cabinet two drawer 3
Additional file cabinets metal (dark gray)
30" file cabinets three drawer 7
36" file cabinets three drawer 13
42" file cabinets three drawer 2
30" file cabinets two drawer 3
metal file cabinet (16w X 22d X 23h) 2
metal file cabinet (15w X 24d X 28h) 2
It. Yellow metal bookcase(3lw X 13dx 54h) 1
36" round tables 9
Bookcases with 3 shelves (dark gray) 8
bookcases with 4 shelves (dark gray) 5
mail slot cabinets 37"x13"x60" 2
mail slot cabinets 37"x13"X36" 6
mail slot cabinets 37"xl3"x71" 1
5 drawer tilt lid file cab.(36w X 18d X 64h) 3
metal desk with laminate top and side 3
return with 2 attached files and 2 drawers
and a chair
metal desk with laminate top, 2 attached 1
drawer w/file and pencil drawer and a chair
wood two sided white board with 1
storage at the bottom (45w X 16dX 58h)
very large curved whiteboard 1
plastic table (59w X 29d X 28h) 1
plastic table (computer) 1
-4-
It. Gray table (48w X 30d X 28h) 1
folding table (72w X 30d X 29h) 1
freestanding millwork - L shape 1
(7 feet long, 38 inches deep, 34 inches high
Extra desk chairs not in cubes or offices 23
workrooms on older side of building 2
table, (4) chairs, small phone table
Kitchen table and chairs
Tall table 8
Barstools 42
Table 4
Chair 12
Refrigerator 3
Microwave 2
large serving table 1
Dishwasher 2
floor mat 2
Phones and equipment
M2008 phones, one in every office 126
and one in every cube and workroom
paging system 1
alarm system and access control computer 1
EXHIBIT C
---------
Headlease
Attached
NET LEASE
BASIC LEASE INFORMATION
DATE: October 30, l998
LANDLORD: The Multi-Employer Property Trust, a trust organized under 12 C.F.R.
Section 9.18
TENANT: Certicom Corp., a Delaware corporation
PREMISES: All of the Building located at 25801 Industrial Blvd., Hayward,
California
PROPERTY: Mt. Eden Business Park, Hayward, California
USE: General Office and Administrative Purposes, including computer
hardware and software development
TERM: Approximately Seven (7) Years
ESTIMATED COMMENCEMENT DATE: January 15, 1999.
INITIAL BASE RENT: $53,568.75
TENANT'S PERCENTAGE SHARE: 100%
SECURITY DEPOSIT: $75,000 & Letter of Credit described in
Section 17
GUARANTOR: Certicom Corp. an Ontario corporation
BROKERS: CB Commercial Real Estate Group Inc.; Colliers Parish International
Inc; Presco
ADDRESS FOR NOTICES: Landlord: The Multi-Employer Property Trust
c/o Riggs & Company
808 17th Street N.W.
Washington, D.C. 20006
Attn: Patrick O. Mayberry
Tenant: Certicom Corp.
200 Matheson Blvd. W
Mississauga, Ontario
Canada L5R 3L7
After Commencement Date: To Tenant at the Premises
LANDLORD'S CONTRIBUTION
TO TENANT IMPROVEMENTS: $857,100.00
LANDLORD'S INITIALS: TENANT'S INITIALS:
/s/ [SIGNATURE ILLEGIBLE] /s/ [SIGNATURE ILLEGIBLE]
- -------------------------------- ------------------------------------
TABLE OF CONTENTS
Page
----
1. Premises. 1
2. Term. 1
3. Rent. 1
4. Base Rent 2
5. Operating Expenses 2
6. Proration of Rent 4
7. Tenant Improvements 4
8. Use of the Premises 5
9. Alterations 7
1O. Repairs 8
11. Damage or Destruction 8
12. Eminent Domain 9
13. Indemnity and Insurance 10
14. Assignment or Sublet 12
15. Default 15
16. Landlord's Right to Perform Tenant's Covenants 16
17. Security Deposit; Letter of Credit 16
18. Surrender of Premises 18
19. Holding Over 18
20. Access to Premises 19
21. Signs 19
22. Subordination 20
23. Transfer of the Property 20
24. Estoppel Certificates; Financial Statements 21
25. Mortgagee Protection 21
26. Attorneys' Fees 21
27. Brokers 21
28. Parking 22
29. Utilities and Services 22
30. Intentionally Deleted 22
31. Acceptance 22
32. Use of Building Name 22
33. Recording 23
34. Quitclaim 23
35. Notices 23
36. Landlord's Exculpation 23
37. Additional Structures 23
38. Consents and Approvals 24
39. General 24
40. Renewal Option 25
EXHIBIT "A": Premises and Business Park Site Plan
EXHIBIT "B": Tenant Improvements
EXHIBIT "C": Commencement Date Memorandum
EXHIBIT "D": Rules and Regulations
EXHIBIT "E": Form of Tenant Estoppel Certificate
EXHIBIT "F": Appraisal Procedure
NET LEASE
THIS LEASE, which is effective as of the date set forth in the Basic Lease
Information, is entered by Landlord and Tenant, as set forth in the Basic Lease
Information. Terms which are capitalized in this Lease shall have the meanings
set forth in the Basic Lease Information.
1. Premises.
--------
Landlord leases to Tenant, and Tenant leases from Landlord, the Premises
described in the Basic Lease Information (as shown on Exhibit A), together with
---------
the right in common to use the Common Areas. The Common Areas shall mean the
areas and facilities within the land shown on Exhibit A (the "Land") and within
---------
the Building identified in the Basic Lease Information (the "Building") and
within all other buildings and improvements now or hereafter located on the
Land, provided and designated by Landlord for the general use, convenience or
benefit of Tenant and other tenants and occupants of the Property (e.g.,
---
restrooms; janitorial, telephone and electrical closets; sidewalks; driveways,
public lobbies, entrances and stairs; and unreserved parking areas). The Common
Areas shall include the Cultural Center delineated on Exhibit A (the "Cultural
---------
Center"); provided, however, that Landlord may from time to time prescribe rules
and regulations for use of and access to the Cultural Center by Tenant and other
tenants of the Property. Without limitation of the provisions of any such rules
and regulations, Tenant acknowledges that (i) no tenant of the Property
(including Tenant) shall have exclusive rights to use the Cultural Center, (ii)
on up to ten (10) occasions each calendar year some or all of the tenants of the
Property (including Tenant) may be excluded from use of the Cultural Center,
(iii) access to the Cultural Center shall be restricted by means of a locked
gate or other apparatus daily from 6:00 p.m. to 8:00 a.m. Landlord reserves the
right to make changes to the Common Areas. The Building and such other buildings
and improvements now or hereafter located on the Land are collectively referred
to in this Lease as the "Buildings". The Land, the Buildings and the Common
Areas are collectively referred to in this Lease as the "Property" or the "Real
Property".
2. Term.
----
a. Lease Term. The term of this Lease (the "Term") shall commence on the
----------
date the "Commencement Date") which is the later to occur of (x) January
15, 1999, or (y) Substantial Completion of the Tenant Improvements. "Substantial
Completion of the Tenant Improvements" shall be deemed to have occurred when the
Tenant Improvements (as defined in Exhibit B) have been completed in accordance
---------
with Final Plans (as defined in Exhibit B), subject only to the completion or
---------
correction of Punch List Items. "Punch List Items" shall mean incomplete or
defective work or materials in the Tenant Improvements which do not materially
impair Tenant's use of the Premises for the conduct of Tenant's business
therein. The Term shall end on the last day of the calendar month in which the
seventh (7th) annual anniversary of the Commencement Date occurs (the
"Expiration Date"). Notwithstanding the foregoing, if the Commencement Date is
delayed due to Tenant Delay (as defined in Exhibit B), then for purposes of
---------
determining the commencement of Tenant's obligation to pay Base Rent and
Operating Expenses pursuant to Sections 4 and 5 below, the Commencement Date
shall be deemed accelerated by the period of Tenant Delay.
b. Premises Not Delivered. If, for any reason, the Commencement Date does
----------------------
not occur by the Estimated Commencement Date, the failure shall not affect the
validity of this Lease, or the obligations of Tenant under this Lease, and
Landlord shall not be subject to any liability.
c. Commencement Date Memorandum. When the Commencement Date is determined,
----------------------------
the parties shall execute a Commencement Date Memorandum, in the form attached
hereto as Exhibit C, setting forth the Commencement Date and the Expiration
---------
Date.
d. Early Entry. If Tenant is permitted by Landlord to enter the Premises
-----------
prior to the Commencement Date for the purpose of fixturing or any purpose other
than the conduct of Tenant's business, the entry shall
1
be subject to all the terms and provisions of this Lease, except that Tenant's
obligation to pay Base Rent and Operating Expenses shall not commence until the
Commencement Date. Without limitation, in no event will Landlord consent to such
early access if Landlord shall reasonably determine that the same might delay or
interfere with Landlord's construction of the Tenant Improvements, or increase
the cost of the Tenant Improvements.
3. Rent.
----
As used in this Lease, the term "Rent" shall include: (i) the Base Rent; (ii)
Operating Expenses payable by Tenant pursuant to Section 5 below; and (iii) all
other amounts which Tenant is obligated to pay under the terms of this Lease.
All amounts of money payable by Tenant to Landlord shall be paid without prior
notice or demand, deduction or offset. If any installment of Base Rent is not
paid by Tenant by the fifth (5th) day of the month, or if any payment of
Operating Expenses or any other amount payable by Tenant is not paid within five
(5) days of the due date thereof, Tenant shall pay to Landlord a late payment
charge equal to five percent (5%) of the amount of the delinquent amount, in
addition to the amount of Rent then owing, regardless of whether a notice of
default or notice of termination has been given by Landlord. In addition to the
five percent (5%) late charge, any Base Rent, Operating Expenses or other
amounts owing hereunder which are not paid within five (5) days after the date
they are due shall thereafter bear interest at the rate ("Interest Rate") which
is the lesser of eighteen percent (18%) per annum or the maximum rate permitted
by applicable law. Notwithstanding the foregoing, Landlord shall give Tenant
notice of non-payment and three (3) days from receipt of such notice to cure
such non-payment twice in any calendar year before assessing such late fees
and/or interest in such calendar year.
4. Base Rent.
---------
a. Initial Base Rent. Commencing on the Commencement Date, and thereafter on
-----------------
the first day of each calendar month of the Term, Tenant shall pay Base Rent to
Landlord (or other entity designated by Landlord), in advance, at Landlord's
address for notices (as set forth in the Basic Lease Information) or at such
other address as Landlord may designate. The Initial Base Rent shall be the
amount set forth in the Basic Lease Information. Base Rent payable hereunder for
the first full calendar month after Tenant's obligation to pay Base Rent
commences shall be paid upon Tenant's execution of this Lease.
b. Base Rent Adjustment. Commencing on the first day of the 37th full calendar
--------------------
month of the Term, the base Rent shall increase to $56,831.09 per month, and
shall be payable in such amount through the end of the 60th full calendar month
of the Term. Commencing on the first day of the 61st full calendar month of the
Term, the Base Rent shall increase to $60,292.10 per month, and shall be payable
in such amount through the Expiration Date.
5. Operating Expenses.
------------------
a. Operating Expenses. Tenant shall pay Tenant's Percentage Share of Operating
------------------
Expenses incurred by Landlord during each calendar year falling in whole or in
part during the Term.
b. Operating Expenses. The term "Operating Expenses" shall include all
------------------
reasonable expenses and costs of every kind and nature, except as provided in
the next paragraph, which Landlord shall pay or become obligated to pay because
of or in connection with the ownership, management, administration, maintenance,
repair and operation of the Premises, the Buildings, the Common Areas and the
balance of the Property, to the extent allocable to the Building in which the
Premises is located. The allocation of Operating Expenses to the Building shall
be made on the same ratio that the rentable square footage of the Building bears
to the aggregate rentable square footage of all buildings in the Business Park
(assuming for such purpose that all buildings in the Business Park, as shown on
Exhibit A, attached hereto, are fully constructed); except where Landlord shall
- ---------
reasonably determine, for good cause, that the nature of any given
2
Operating Expense requires that it be allocated in another reasonable manner.
Operating Expenses shall include, without limitation, the following: (i) all
impositions relating to the Real Property, including Real Property Taxes (as
defined in Section 5.d.); (ii) premiums for insurance relating to the Real
Property, including as set forth in Sections 13.b., 13.d. and 13.i., and
insurance deductibles paid by Landlord; (iii) wages, salaries, bonuses and
expenses and benefits (including hospitalization, medical, surgical, retirement
plan, pension plan, union dues, life insurance, including group life insurance,
welfare and other fringe benefits, and vacation, holidays and other paid absence
benefits, and costs of uniforms) of all on-site and off-site employees of
Landlord or its agents, at the rank of property manager or below, engaged in
operation, management, administration, maintenance, repair and security of the
Real Property, including, without limitation, administrative, management and
accounting personnel and the individual(s) responsible for management of the
Property, and payroll, social security, workers' compensation, unemployment and
similar taxes with respect to such employees of Landlord or its agents, and the
cost of providing disability or other benefits imposed by law or otherwise, with
respect to such employees; (iv) costs of all supplies, materials and equipment
rentals used in operations; (v) all maintenance, janitorial, security and
service costs; (vi) a management fee not to exceed 4% of all gross revenues from
the Real Property, including revenues attributable to Tenant's and other
tenants' payments of Operating Expenses; (vii) legal and accounting expenses,
including the cost of audits by certified public accountants; (viii) all repair,
painting and maintenance costs relating to the Real Property and its Common
Areas, including sidewalks, landscaping, service areas, mechanical rooms,
parking areas, Building exterior and driveways; (ix) all charges for heat,
water, gas, steam, fuel, electricity and other utilities used or consumed in the
Buildings and Common Areas; (x) costs of repairs, replacements, and general
maintenance to and of the Building Systems and the Base Building Components (as
such terms are defined in Sections 9.a. and 10.a.; respectively, below); (xi)
the costs of capital improvements, capital replacements, capital repairs,
capital equipment, and capital tools and devices installed or paid for by
Landlord and intended to reduce other Operating Expenses or required to comply
with Legal Requirements (as defined in Section 8.c. below) or intended for the
protection of the health and safety of the cccupants of the Property; and (xii)
Landlord's costs of maintaining the Cultural Center, which costs shall be
deemed, for purposes of this Lease, the sum of $60,000.00, as such sum shall be
increased on January 30, 1999 and each January 30th thereafter (each, an
"Adjustment Date"), by the percentage increase in the Index over the one (1)
year period ending on the date on which the Index is published in the month
immediately preceding the Adjustment Date. With respect to any costs included in
Operating Expenses under clause (x) which are capital expenditures, as
determined by Landlord in accordance with generally accepted accounting
principles consistently applied, and with respect to the costs of items included
in Operating Expenses under clause (xi), such costs shall be amortized over a
period determined by Landlord, together with interest on the unamortized balance
at a rate per annum equal to three (3) percentage points over the Treasury Rate
charged at the time such item is constructed or acquired, or at such higher rate
as may have been paid by Landlord on funds borrowed for the purpose of acquiring
or constructing such item, but in either case not more than the maximum rate
permitted by law at the time such item is acquired or constructed. As used
herein, "Treasury Rate" means the six-month United States treaty bill rate in
effect from time to time by the San Francisco Main Office of Bank of America,
NT&SA (or any successor bank thereto), or if there is no such rate, the rate
quoted by such bank in pricing ninety day commercial loans to substantial
commercial borrowers.
The term "Index" as used herein shall mean the Consumer Price Index for All
Urban Consumers (1982-84 = 100) San Francisco-Oakland-San Jose, California, All
Items, published by the Bureau of Labor Statistics of the U.S. Department of
Labor. If the Bureau of Labor Statistics ceases to publish the above Index, or
if the above Index is otherwise renamed, discontinued or superseded, the parties
agree that the Bureau of Labor Statistics or any successor governmental agency
thereto will be the sole judge of the comparability of successive indexes, but
if no succeeding index is published, the calculations under this Lease based on
the Index shall be made using the most closely comparable statistics on the
purchasing power of the consumer dollar as published by a responsible financial
authority and selected by Landlord.
3
Operating Expenses shall not include the following: (i) depreciation
on the Buildings or equipment or systems therein; (ii) debt service; (iii)
rental under any ground or underlying lease; (iv) attorneys' fees and expenses
incurred in connection with lease negotiations or disputes with past, current or
prospective Building tenants; (v) the cost of decorating, improving for tenant
occupancy, painting or redecorating portions of the Buildings to be demised to
tenants; (vi) advertising expenses; (vii) costs reimbursed by insurance
proceeds; or (viii) real estate broker's or other leasing commissions.
The parties agree that statements in this Lease to the effect that
Landlord is to perform certain of its obligations hereunder at its own or sole
cost and/or expense shall not be interpreted as excluding any cost from
Operating Expenses if such cost is an Operating Expense pursuant to the terms of
this Section 5.b.
c. Monthly Increments; Adjustment. Promptly following the commencement of
------------------------------
the Term and prior to the commencement of each subsequent calendar year (or as
soon thereafter as practicable), Landlord shall estimate the Operating Expenses
payable by Tenant for such calendar year pursuant to this Section. Tenant shall
pay to Landlord, on the first day of each month, in advance, one-twelfth (l/12)
of Landlord's estimated amount. If at any time during the course of the year
Landlord determines that the Operating Expenses payable by Tenant will vary from
the then estimated amount, by notice to Tenant Landlord may revise the amount
payable by Tenant during the balance of the calendar year such that the total
estimated additional amount due from Tenant for such calendar year is paid by
Tenant during the balance of the calendar year in equal monthly amounts. Within
ninety (90) days (or as soon thereafter as practicable) after the close of each
calendar year, Landlord shall provide Tenant with a statement to account for any
difference between the actual and the estimated Operating Expenses for the
previous year. Landlord's annual statement shall be final and binding upon
Landlord and Tenant unless, within ninety (90) days after delivery thereof to
Tenant, Landlord shall revise or Tenant shall contest any item therein by
written notice to the other, specifying each item revised or contested and the
reason therefor. Notwithstanding the foregoing, the Real Property Taxes included
in any such annual statement may be modified by any subsequent adjustment or
retroactive application of Real Property Taxes affecting the calculation of
Operating Expenses. If Tenant has overpaid the amount of Operating Expenses
owing pursuant to this Section, Landlord shall credit the overpayment against
Tenant's next payments due under this Section 5. If Tenant has underpaid the
amount of Operating Expenses owing pursuant to this Section, Tenant shall pay
the amount of the underpayment to Landlord within thirty (30) days after
Tenant's receipt of Landlord's statement. If all of the buildings in the
Business Park shown on Exhibit A attached hereto are not fully constructed
---------
during any calendar year, or if the rentable area of all such buildings or of
the Building is not fully occupied during any calendar year, Operating Expenses
for such calendar year shall be adjusted to equal Landlord's reasonable estimate
of the Operating Expenses which would have been incurred during such calendar
year if all buildings in the Business Park were constructed and the total
rentable area of all such buildings and the Building were occupied, and such
adjusted Operating Expenses shall be allocated to the Building as provided in
Section 5.b. above.
d. Definition of Real Property Taxes. The term "Real Property Taxes" shall
---------------------------------
mean any ordinary or extraordinary form of assessment or special assessment,
license fee, rent tax, levy, penalty (if a result of Tenant's delinquency), or
tax (other than net income, estate, succession, inheritance, transfer or
franchise taxes), imposed by any authority having the direct or indirect power
to tax, or by any city, county, state or federal government for any maintenance
or improvement or other district or division thereof. The term shall include all
transit charges, housing fund assessments, real estate taxes and all other taxes
relating to the Premises, Building and/or Property, all other taxes which may be
levied in lieu of real estate taxes, all assessments, assessment bonds, levies,
fees, and other governmental charges (including, but not limited to, charges for
traffic facilities, improvements, child care, water services studies and
improvements, and fire services studies and improvements) for amounts necessary
to be expended because of governmental orders, whether general or special,
ordinary or extraordinary, unforeseen as well as foreseen, of any kind and
nature for public improvement, services, benefits or any other purposes which
are assessed, levied, confirmed, imposed or become a lien upon the Premises,
Building or Property or become payable during the Term.
4
e. Acknowledgment of Parties. It is acknowledged by Landlord and Tenant that
-------------------------
Proposition 13 was adopted by the voters of the State of California in the
June, 1978 election, and that assessments, taxes, fees, levies and charges may
be imposed by governmental agencies for such purposes as fire protection,
street, sidewalk, road, utility construction and maintenance, refuse removal and
for other governmental services which formerly may have been provided without
charge to property owners or occupants. It is the intention of the parties that
all new and increased assessments, taxes, fees, levies and charges due to
Proposition 13 or any other cause are to be included within the definition of
Real Property Taxes for purposes of this Lease.
f. Taxes on Tenant Improvements and Personal Property. Notwithstanding any
--------------------------------------------------
other provision hereof, Tenant shall pay the full amount of any increase in Real
Property Taxes during the Term resulting from any and all Alterations (as
defined in Section 9.a below) of any kind whatsoever placed in, on or about the
Premises for the benefit of, at the request of, or by Tenant. Tenant shall pay,
prior to delinquency, all taxes assessed or levied against Tenant's personal
property, equipment, furniture or fixtures (collectively, "Personal Property")
in, on or about the Premises. When possible, Tenant shall cause its Personal
Property to be assessed and billed separately from the real or personal property
of Landlord. Tenant recognizes that pursuant to Section 107.6 of the California
Revenue and Taxation Code Tenant's possessory interest under this Lease may be
subject to property taxation based on the full cash value, as defined in
Sections 110 and 110.1 of the California Revenue and Taxation Code.
g. Fiscal Year. Landlord shall have the right to account and bill for
-----------
Operating Expenses on the basis of a fiscal year, rather than a calendar year as
set forth above, and to revise such fiscal year from time to time, provided that
Landlord follows generally accepted accounting principles consistently applied
in connection therewith.
h. Net Lease. This shall be a Net Lease and Base Rent shall be paid to
---------
Landlord absolutely net of all costs and expenses except as expressly herein
provided. The provisions for Tenant's payment of Tenant's Percentage Share of
Operating Expenses are intended to pass on to Tenant and reimburse Landlord for
Tenant's Percentage Share of all costs and expenses associated with the Real
Property, except as expressly provided in this Lease.
6. Proration of Rent. If the Commencement Date is not the first day of a
-----------------
calendar month, or if the end of the Term is not the last day of a calendar
month, Base Rent payable by Tenant pursuant to Section 4, and Operating
Expenses payable by Tenant pursuant to Section 5, shall be prorated on a daily
basis (based upon a thirty (30) day month) for such fractional month. The
termination of this Lease shall not affect the obligations of Landlord and
Tenant pursuant to Section 5.c. which are to be performed after the termination.
7. Tenant Improvements. Landlord agrees to construct within the Premises
------------------
certain improvements to the Premises ("Tenant Improvements") pursuant to the
terms of Exhibit B. Subject to completion of the Tenant Improvements (including,
---------
without limitation, the Punch List Items with respect thereto), the Premises
shall be delivered to Tenant in its then "as-is" condition, and Landlord shall
not have any obligation to make or pay for any alterations, additions,
improvements or repairs to prepare the Premises for Tenant's occupancy. The
foregoing shall not relieve Landlord from responsibility for correcting any
latent defects in the construction of the Tenant Improvements, provided that
written notice thereof is given by Tenant to Landlord within one (1) year from
the Commencement Date.
8. Use of the Premises.
-------------------
a. Use. The Premises shall be used solely for the use set forth in the Basic
---
Lease Information and for no other use or purpose. Tenant shall not do or suffer
or permit anything to be done in or about the Premises or the Real Property
which will in any way obstruct or interfere with the rights of other tenants or
occupants of the Building or injure or annoy them, or use or suffer or permit
the Premises to be used for any immoral, unlawful or objectionable purpose, nor
shall Tenant cause, maintain, suffer or petit any nuisance
5
in, on or about the Premises or the Real Property. Without limiting the
foregoing, Tenant shall not permit any odors, smoke, dust, gas, substances,
noise or vibration to emanate from the Premises, and no loudspeakers or
other similar device which can be heard outside the Premises shall, without the
prior written approval of Landlord, be used in or about the Premises. Tenant
shall not commit or suffer to be committed any waste in, to or about the
Premises. Tenant agrees not to employ any person, entity or contractor for any
work in the Premises (including moving Tenant's equipment and furnishings in,
out or around the Premises) whose presence may give rise to a labor or other
disturbance in the Building and, if necessary to prevent such a disturbance in a
particular situation, Landlord may require Tenant to employ union labor for the
work.
b. Rules and Regulations: CC&R's. Tenant shall comply with the Rules and
-----------------------------
Regulations attached hereto as Exhibit D, as the same may be modified from time
---------
to time by Landlord upon prior notice to Tenant (the "Rules"), to the extent
Landlord the Rules are not in conflict with the other provisions of this Lease.
In addition, Tenant shall comply with any covenants, conditions and restrictions
("CC&R's") applicable to the Real Property, and all rules, regulations and
restrictions imposed by any association formed pursuant to the CC&R's, in each
case to the extent Landlord has delivered a copy thereof to Tenant and the same
are not in conflict with the provisions of this Lease.
c. Compliance. Tenant shall not permit the Premises to be used in
----------
violation of or in conflict with, and at its sole cost and expense shall
promptly comply with, all laws, statutes, ordinances and governmental rules,
regulations or requirements now in force or which hereinafter may be in force,
with the requirements of any board of fire underwriters or other similar board
now or hereafter constituted, with any direction or occupancy certificate
issued pursuant to any law by any public officer or officers, as well as the
provisions of all recorded documents affecting the Premises (all of the
foregoing, collectively, "Legal Requirements"), insofar as any thereof relate to
or affect the condition, use or occupancy of the Premises, and Tenant shall
perform all work to the Premises and other portions of the Real Property
required to effect such compliance (or, at Landlord's election, Landlord may
perform such work at Tenant's expense). The judgement of any court of competent
jurisdiction or the admission of Tenant in any actions against Tenant, whether
Landlord be a party thereto or not, that Tenant has so violated any such law,
statute, ordinance, rule, regulation or requirement, shall be conclusive of such
violation as between Landlord or Tenant.
In no event shall the foregoing, or any other provisions of this
Lease, impose any obligation or liability upon Tenant to perform any work or
otherwise remedy any non-compliant condition to the extent that such work or
condition arises by reason of Landlord's failure to construct the Tenant
Improvements and Landlord's Work (as defined in Exhibit B) in compliance with
---------
all Legal Requirements.
d. Hazardous Materials. Tenant shall not cause or permit the storage,
-------------------
use, generation, release, handling or disposal (collectively, "Handling") of any
Hazardous Materials (as defined below), in, on, or about the Premises or the
Real Property by Tenant or any agents, employees, contractors, licensees,
subtenants, customers, guests or invitees of Tenant (collectively with Tenant,
"Tenant Parties"), except that Tenant shall be permitted to use in the Premises
in a normal and customary manner normal quantities of office supplies or
products (such as copier fluids or cleaning supplies) customarily used in the
conduct of general business office activities ("Common Office Chemicals"),
provided that the Handling of such Common Office Chemicals shall comply at all
times with all Legal Requirements, including Hazardous Materials Laws (as
defined below). Upon Landlord's request from time to time, Tenant shall provide
to Landlord a complete written inventory of all Hazardous Materials which Tenant
anticipates using or storing on, or discharging from, the Premises along with
copies of all reports, permits and business plans filed with any federal, state,
local or other governmental agency. Tenant shall update the inventory as
frequently as required to reflect any material changes to the items required to
be disclosed therein. Tenant shall be solely responsible for and shall
indemnify, defend and hold Landlord and all other Indemnitees (as defined in
Section 13.a. below), harmless from and against all Claims (as defined in
Section 13.a. below), arising out of or in connection with, or otherwise
relating to (i) any Handling of Hazardous Materials by any Tenant Party or
Tenant's breach of its obligations hereunder, or (ii) any removal, cleanup, or
restoration work and
6
materials necessary to return the Real Property or any other property of
whatever nature located on the Real Property to their condition existing prior
to the Handling of Hazardous Materials in, on or about the Premises by any
Tenant Party. Tenant shall promptly provide Landlord with copies of all notices
received by it, including, without limitation, any notice of violations, notice
of responsibility or demand for action from any federal, state or local
authority or official in connection with the presence of Hazardous Materials in
or about the Premises or any other portion of the Property. In the event of any
release of Hazardous Materials upon the Premises or any other portion of the
Property, or upon adjacent lands, if caused by Tenant or any other Tenant Party,
Tenant shall promptly remedy the problem in accordance with all applicable Legal
Requirements. For purposes of this Lease, "Hazardous Materials" means any
explosive, radioactive materials, hazardous wastes, or hazardous substances,
including without limitation asbestos containing materials, PCB's, CFC's, or
substances defined as "hazardous substances" in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section
961-9657; the Hazardous Materials Transportation Act of 1975, 49 USC. Section
1801-1812; the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section
6901-6987; or any other Legal Requirement regulating, relating to, or imposing
liability or standards of conduct concerning any such materials or substances
now or at any time hereafter in effect (collectively, "Hazardous Materials
Laws"). Tenant's obligations under this Section 8.d. shall survive the
expiration or other termination of this Lease.
9. Alterations.
-----------
a. Alterations. Tenant shall not make any alteration, addition or
improvement in, to or upon the Premises ("Alteration") without the prior written
consent of Landlord in each instance, which consent shall not be unreasonably
withheld with respect to proposed Alterations which (i) are not structural in
nature, (ii) do not affect the Base Building Components, (iii) are, in
Landlord's opinion, compatible with the Building and the balance of the Real
Property and the Building's mechanical, plumbing, electrical,
heating/ventilation/air conditioning, communication, security and fire and other
life safety systems (collectively, the "Building Systems"), and (iv) in
Landlord's opinion will not interfere with the use and occupancy of any other
portion of the Building or the Real Property by any other tenant or permitted *
occupant thereof. Tenant shall give Landlord not less than ten (10) days' prior
written notice of any Alteration Tenant desires to make. Any Alterations as to
which Landlord shall consent shall be made only by contractors approved in
advance, in writing by Landlord, which approval shall not be unreasonably
withheld; provided, however, that Landlord may, in its sole discretion, specify
the engineers and contractors to perform any work relating to or affecting the
Building Systems or the Base Building Components. Tenant shall comply with all
Legal Requirements applicable to each Alteration and shall deliver to Landlord a
complete set of "as built" plans and specifications for each Alteration. Any
work to the balance of the Building or Real Property related to or affected or
triggered by Tenant's Alterations shall be performed by Tenant at Tenant's
expense (or, at Landlord's election, Landlord may perform such work at Tenant's
expense). Tenant shall be solely responsible for maintenance and repair of all
Alterations made by Tenant. Tenant shall pay Landlord on demand (whether prior
to or during the course of construction) an amount (the "Alteration Fee") equal
to five percent (5%) of the total cost of each Alteration (and for purposes of
calculating the Alteration Fee, such cost shall include architectural and
engineering fees, but shall not include permit fees) as compensation to Landlord
for miscellaneous costs incurred by Landlord in connection with the Alteration.
In addition, Tenant shall reimburse Landlord for all third party fees paid by
Landlord in connection with reviewing the proposed Alterations (whether or not
the proposed Alterations are ultimately approved by Landlord or made by Tenant),
including, without limitation, Landlord's architectural and engineering fees.
All Alterations shall be performed diligently and in a first-class workmanlike
manner and in accordance with plans and specifications approved by Landlord, and
shall comply with Landlord's construction procedures and requirements for the
Building (including Landlord's requirements relating to insurance and contractor
qualifications and scheduling of the work).
b. Liens. If because of any act or omission of Tenant or anyone claiming
-----
by, through, or under Tenant, any mechanic's lien or other lien is filed against
the Premises or any other portion of the Real
7
Property or against other property of Landlord (whether or not the lien is valid
or enforceable), Tenant shall, at its own expense, cause it to be discharged of
record within a reasonable time, not to exceed ten (10) days, after the date of
the filing. In addition, Tenant shall defend and indemnify Landlord and hold it
harmless from any and all Claims resulting from the lien. Without limitation of
Landlord's other remedies, Landlord shall have the rights under Section 16 below
if any such lien is not timely discharged by Tenant.
c. Ownership of Alterations. All Alterations shall immediately become
------------------------
Landlord's property. Except as provided in Section 9.d., Landlord may require
Tenant, at Tenant's sole expense and by the end of the Term, to remove any
Alterations and to restore the Premises to its condition prior to the
Alteration.
d. Request Regarding Removal Obligation. At the time that Tenant requests
------------------------------------
Landlord's consent to any Alteration, Tenant may request that Landlord notify
Tenant if Landlord will require Tenant, at Tenant's sole expense, to remove any
or all of the Alteration by the end of the Term, and to restore the Premises to
its condition prior to the Alteration. Unless Landlord shall have expressly
agreed in writing not to require such removal and restoration, Landlord's
election right under Section 9.c. shall continue through the end of the Term as
to such Alterations.
10. Repairs.
-------
a. Landlord's Repairs. Landlord shall maintain the roof, foundations, floor
------------------
slabs and exterior walls of the Building (collectively, the "Base Building
Components") in good condition and repair, reasonable wear and tear excepted.
The term walls as used herein shall not include windows, glass or plate glass,
doors, special store fronts or office entries. The term roof as used herein
shall not include skylights, smoke hatches or roof vents. Landlord shall also
maintain in good condition and repair, reasonable wear and tear excepted, the
Common Areas, including, but not limited to, the landscaped areas, parking areas
and driveways. Tenant shall reimburse Landlord for Landlord's costs of complying
with its obligations under this Section 10 in accordance with Section 5 above,
provided, however, that any damage caused by or repairs necessitated by any act
of Tenant or any other Tenant Party may be repaired by Landlord at Landlord's
option and at Tenant's expense. Tenant shall give Landlord prompt written notice
of any repairs required of Landlord pursuant to this Section 10, after which
notice Landlord shall have reasonable opportunity to perform the same.
b. Tenant's Repairs. Tenant shall, at Tenant's expense, maintain all parts of
----------------
the Premises in a good, clean and secure condition, promptly making all
necessary repairs and replacements including, but not limited to, all windows,
glass or plate glass, doors and any special store fronts or office entries,
walls and wall finishes, floor covering, Building Systems, truck doors, dock
bumpers, dock plates and levelers, plumbing work and fixtures, downspouts,
skylights, smoke hatches, roof vents and utility equipment, in each case to the
extent the same are located within or exclusively serve the Premises. Tenant
shall, at Tenant's expense, also perform necessary pest extermination and
regular removal of trash and debris. Landlord shall, at Tenant's expense, enter
into a regularly scheduled preventive maintenance/service contract with a
maintenance contractor for servicing all hot water, heating and air
conditioning systems and equipment within or serving the Premises. Tenant shall
not damage any demising wall or disturb the integrity and support provided by
any demising wall and shall, at its sole expense, immediately repair any damage
to any demising wall caused by Tenant or its employees, agents or invitees or
any other Tenant Party. Tenant hereby waives all right to make repairs at the
expense of Landlord or in lieu thereof to vacate the Premises and its other
similar rights as provided in California Civil Code Sections 1932(l), 1941 and
1942 or any other Legal Requirement (whether now or hereafter in effect).
11. Damage or Destruction.
---------------------
a. Landlord's Obligation to Rebuild. If the Premises are damaged or
--------------------------------
destroyed, Landlord shall promptly and diligently repair the Premises unless
Landlord has the option to terminate this Lease as
8
provided herein, and Landlord elects to terminate.
b. Right to Terminate. Landlord shall have the option to terminate this
------------------
Lease if the Premises or the building is destroyed or damaged by fire or other
casualty, regardless of whether the casualty is insured against under this
Lease, if Landlord reasonably estimates that the repair of the Premises or the
Building cannot be completed within one hundred eighty (180) days after the
casualty. Landlord shall also have the right to terminate this Lease if the
repair is not fully covered by insurance maintained (or required to be
maintained) by the Landlord pursuant to this Lease other than by reason of the
deductible amounts under Landlord's insurance policies. Tenant shall have the
option to terminate this Lease if the Premises is damaged or destroyed by fire
or other casualty, and Landlord reasonably estimates that the repair of the
Premises cannot be completed within one (1) year after the casualty. Landlord
shall notify Tenant of Landlord's reasonable repair period estimate within (60)
days after the casualty. If a party desires to exercise the right to terminate
this Lease as a result of a casualty, the party shall exercise the right by
giving the other party written notice of its election to terminate within thirty
(30) days after delivery of Landlord's repair period estimate, in which event
this Lease shall terminate fifteen (15) days after the date of the terminating
party's notice. If neither Landlord nor Tenant exercises the right to terminate
this Lease, this Lease shall continue in full force and effect and Landlord
shall promptly commence the process of obtaining necessary permits and
approvals, and shall commence repair of the Premises or the Building as soon as
practicable and thereafter prosecute the repair diligently to completion.
c. Limited Obligation to Repair. Landlord's obligation, should Landlord
----------------------------
elect or be obligated to repair or rebuild, shall be limited to the Building
shell and any tenant improvements in the Premises which are constructed and paid
for by Landlord pursuant to Exhibit B. Tenant, at its option and expense, shall
---------
replace or fully repair all trade fixtures, equipment, Alterations and other
improvements installed by Tenant and existing at the time of the damage or
destruction.
d. Abatement of Rent. In the event of any damage or destruction to the
-----------------
Premises which does not result in termination of this Lease, the Base Rent shall
be temporarily abated proportionately to the degree the Premises are
untenantable as a result of the damage or destruction, commencing from the date
of the damage or destruction and continuing during the period required by
Landlord to substantially complete its repair and restoration of the Premises;
provided, however, that nothing herein shall preclude Landlord from being
entitled to collect the full amount of any rent loss insurance proceeds. Tenant
shall not be entitled to any compensation or damages from Landlord for loss of
the use of the Premises, damage to Tenant's Personal Property or any
inconvenience occasioned by any damage, repair or restoration. Tenant hereby
waives the provisions of Section 1932, Subdivision 2, and Section 1933,
Subdivision 4, and Sections 1941 and 1942 of the California Civil Code, and the
provisions of any similar Legal Requirement (whether now or hereafter in
effect).
e. Insurance Proceeds. If this Lease is terminated, Landlord may keep all
------------------
the insurance proceeds resulting from the damage payable pursuant to insurance
coverage maintained by Landlord, and Tenant shall have no claims thereto.
12. Eminent Domain. If all or any material part of the Premises or balance
--------------
of the Real Property is taken for public or quasi-public use by a governmental
authority under the power of eminent domain or is conveyed to a governmental
authority in lieu of such taking (a "taking"), Landlord may terminate this Lease
by written notice to Tenant within thirty (30) days after the taking. If all or
any material part of the Premises is taken, and if the taking causes the
remaining part of the Premises to be untenantable and inadequate for use by
Tenant for the purpose for which they were leased, then Tenant, at its option
and by giving notice within fifteen (15) days after the taking, may terminate
this Lease as of the date Tenant is required to surrender possession of the
Premises. If part of the Premises is taken but the remaining part is tenantable
and adequate for Tenant's use, then this Lease shall be terminated as to the
part taken as of the date Tenant is requited to surrender possession, and,
unless Landlord shall have terminated this Lease
9
pursuant to the foregoing provisions, Landlord shall make such repairs,
alterations and improvements as may be necessary to render the part not taken
tenantable, and the Base Rent shall be reduced in proportion to the part of the
Premises taken. All compensation awarded for the taking shall be the property of
Landlord without any deduction therefrom for any estate of Tenant, and Tenant
hereby assigns to Landlord all its right, title and interest in and to the
award. Tenant shall have the right, however, to recover from the governmental
authority, but not from Landlord, such compensation as may be awarded to Tenant
on account of the interruption of Tenant's business, moving and relocation
expenses and removal of Tenant's Personal Property, provided that any such award
to Tenant will not reduce the award which would otherwise be made to Landlord.
13. Indemnity and Insurance.
-----------------------
a. Indemnity. Tenant shall hold Landlord and its constituent shareholders,
---------
partners, members or other owners, and all of their agents, contractors,
servants, officers, directors, employees and licensees (collectively with
Landlord, the "Indemnitees") harmless from and indemnify the Indemnitees against
my and all claims, liabilities, damages, costs and expenses, including
reasonable attorneys' fees and costs incurred in defending against the same
(collectively, "Claims"), to the extent arising from (a) the acts or omissions
of Tenant or any other Tenant Party in, on or about the Real Property, or (b)
any construction or other work undertaken by or on behalf of Tenant in, on or
about the Premises, whether prior to or during the Term, or (c) any accident,
injury or damage, howsoever and by whomsoever caused, to any person or property,
occurring in, on or about the Premises; except to the extent such Claims are
caused by the negligence or willful misconduct of Landlord or its authorized
representatives. In case any action or proceeding be brought against any of the
Indemnitees by reason of any such Claim, Tenant, upon notice from Landlord,
covenants to resist and defend at Tenant's sole expense such action or
proceeding by counsel reasonably satisfactory to Landlord. The provisions of
this Section 13.a. shall survive the expiration or earlier termination of this
Lease with respect to any injury, illness, death or damage occurring prior to
such expiration or termination.
b. Fire and Extended Coverage. Landlord shall procure and maintain in full
--------------------------
force and effect with respect to the Building (including any tenant improvements
in the Premises constructed and paid for by Landlord pursuant to Exhibit B) a
---------
policy or policies of all risk insurance (including sprinkler, vandalism and
malicious mischief coverage, and any other endorsements desired by the Landlord
or required by the holder of any fee or leasehold mortgage on the Real Property,
but excluding, at Landlord's option, the insurance described in Section 13.i.
below) in such amount as Landlord shall determine, but in an amount at least
equal to eighty percent (80%) (or such greater percentage as shall be required
to preclude Landlord from being deemed a coinsurer)) of the full replacement
cost (including debris removal, and demolition, but excluding the land and the
footings, foundations and installations below the basement level) thereof. Such
insurance, and all other insurance maintained by Landlord under this Lease,
shall be for the sole benefit of Landlord, and the proceeds therefrom shall be
under Landlord's sole control.
c. Public Liability. Tenant, at its own cost and expense, shall keep and
----------------
maintain in full force and effect during the Term the following insurance
coverages, written by an insurance company licensed by and admitted to issue
insurance in the State of California, with a general policyholders' rating of
"A" or better and a financial size ranking of "Class X" or higher, in the most
recent edition of Best's Insurance Guide, in the form customary to the locality,
(i) commercial general liability insurance, including contractual liability
coverage, insuring Tenant's activities with respect to the Premises and/or the
Building against loss, damage or liability for personal injury or death of any
person or loss or damage to property occurring in, upon or about the Premises,
with a minimum coverage of One Million Dollars ($1,000,000) per occurrence/Two
Million Dollars ($2,000,000) general aggregate, plus a Five Million Dollar
($5,000,000) per occurrence/general aggregate umbrella, (ii) fire damage legal
liability insurance and personal/advertising injury insurance (which shall not
be subject to the contractual liability exclusion), each in the minimum amount
of One Million Dollars ($1,000,000), (iii) medical payments insurance in the
minimum amount of
10
Five Thousand Dollars ($5,000), (iv) worker's compensation insurance in
statutory amounts, and (v) if Tenant operates owned, leased or non-owned
vehicles on the Property, comprehensive automobile liability insurance with a
minimum coverage of $1,000,000 per occurrence/Two Million Dollars ($2,000,000)
general aggregate; provided, however, that if, at any time during the Term,
Tenant shall have in full force and effect a blanket policy of public liability
insurance with the same coverage for the Premises as described above, as well as
coverage of other premises and properties of Tenant, or in which Tenant has some
interest, the blanket insurance shall satisfy the requirement hereof and be
endorsed to separately apply to the Premises.
d. Rental Abatement Insurance. Landlord may keep and maintain in full force
--------------------------
and effect during the Term rental abatement insurance against abatement or loss
of rents with respect to the Real Property in such amount as determined by
Landlord.
e. Insurance Certificates. Tenant shall furnish to Landlord, on or before
----------------------
the Commencement Date and thereafter within thirty (30) days prior to the
expiration of each policy, an original certificate of insurance issued by the
insurance carrier of each policy of insurance carried by Tenant pursuant to this
Section 13. The certificates shall expressly provide that the policies shall not
be cancelable or subject to reduction of coverage or otherwise be subject to
modification except after thirty (30) days' prior written notice to the parties
named as insureds. Landlord, its successors and assigns, and any nominee of
Landlord holding any interest in the Premises, including, without limitation,
any ground lessor or the holder of any fee or leasehold mortgage, shall be named
as an additional insured under each policy of insurance maintained by Tenant
pursuant to this Lease. The policies and certificates shall further provide that
the coverage shall be primary, and that any coverage carried by Landlord shall
be secondary and noncontributory with respect to Tenant's policy.
f. Tenant's Failure. If Tenant fails to maintain any insurance required by
----------------
this Lease, Tenant shall be liable for any loss or cost resulting from the
failure. This Section shall not be deemed to be a waiver of any of Landlord's
rights and remedies under any other provision of this Lease.
g. Waiver of Subrogation. Any policy or policies of fire, extended coverage
---------------------
or similar casualty insurance which either party obtains in connection with the
Building, the Premises, or Tenant's Personal Property shall include a clause or
endorsement denying the insurer any rights of subrogation against the other
party (and the other parties named as additional insureds pursuant to Section
13.e. above) to the extent rights have been waived by the insured prior to the
occurrence of injury or loss. Landlord and Tenant each waives any rights of
recovery against the other (and the other parties named as additional insureds
pursuant to Section 13.e. above) for injury or loss due to hazards insurable by
policies of fire, extended coverage or similar casualty insurance, regardless of
whether such insurance policies or coverage shall actually have been obtained by
the party granting such waiver, and regardless of the cause of such fire or
casualty, including the negligence of the party benefiting from such waiver.
Because this Section 13.g will preclude the assignment of any claim mentioned in
it by way of subrogation or otherwise to an insurance company or any other
person, each party to this Lease agrees immediately to give to each of its
insurance companies written notice of the terms of the mutual waivers contained
in this Section 13.g and to have the insurance policies properly endorsed, if
necessary, to prevent the invalidation of the insurance coverages by reason of
the mutual waivers contained in this Section 13.g.
h. Tenant's Property and Fixtures. Tenant shall assume the risk of damage
------------------------------
to any of Tenant's furniture, equipment, machinery, goods, supplies or fixtures
or other Personal Property, and to any Alterations which Tenant may make to the
Premises, and shall insure the same throughout the Term, for their full
replacement cost, under insurance policies reasonably satisfactory to Landlord
(certificates of which shall be delivered to Landlord as set forth above in
Section 13.e). Tenant hereby releases Landlord from any obligation to insure the
foregoing items and from any liability for loss of or damage to such items,
regardless of cause.
11
i. Earthquake and Flood Insurance. In addition to any other insurance
------------------------------
policies carried by Landlord in connection with the Building, Landlord may elect
to procure and maintain in full force and effect during the Term with respect to
the Building a policy of earthquake/volcanic action and flood and/or surface
water insurance, including rental value insurance against abatement or loss of
rent in the case of damage or loss covered under the earthquake/volcanic and
flood and/or surface water insurance, in an amount up to one hundred percent
(100%) of the full replacement cost (including debris removal and demolition) of
the Building.
14. Assignment or Sublet.
--------------------
a. Tenant shall not assign this Lease or sublet the Premises or any portion
thereof without the prior written consent of Landlord in each instance, which
consent shall not, subject to Landlord's rights under clause (i) below, be
unreasonably withheld. If Tenant desires to assign this Lease or to sublet the
Premises, or any part thereof, Tenant shall give to Landlord written notice of
its intent at least sixty (60) days in advance of the date on which Tenant
desires to assign or sublet the Premises, which notice shall designate the terms
of the proposed assignment or sublet, the identity of the proposed assignee or
sublessee, and shall be accompanied by financial statements of such proposed
assignee or sublessee and such other information regarding such party and its
business and reputation as shall be required by Landlord to evaluate the
proposed assignment or sublet. Landlord shall have thirty (30) days after
receipt of Tenant's written notice and the above specified information within
which to notify Tenant in writing that Landlord elects to (i) terminate this
Lease, in the case of a proposed assignment, or to terminate this Lease as to
that portion of the Premises to be sublet, in the case of a proposed sublet,
(ii) consent to the proposed assignment or sublet as described in Tenant's
notice, or (iii) reasonably refuse to consent to Tenant's proposed assignment or
sublet, stating the reasons for such refusal. If Landlord fails to notify Tenant
in writing of its election within the thirty (30) day period, Landlord shall be
deemed to have made the election in clause (iii) above. No consent by Landlord
to any assignment or sublet shall be deemed to be a consent to a use not
permitted under this Lease, to any act in violation of this Lease or to any
subsequent assignment or sublet. No assignment or sublet by Tenant shall relieve
Tenant of any liability theretofore or thereafter arising under this Lease. Any
attempted assignment or sublet by Tenant in violation of the terms and covenants
of this Section shall be void.
During the first six (6) months of the Term, the sixty (60) and thirty (30)
day periods in the preceding paragraph shall each be reduced to ten (10) days.
Notwithstanding the provisions of the foregoing paragraph, Landlord shall
not have the termination option described in clause (i) of the preceding
paragraph as to any sublease proposed by Tenant which will terminate three (3)
years or earlier from the Commencement Date, unless the space subject to such
sublease, taken together with all other portions of the Premises subject to any
sublease, would exceed fifty percent (50%) of the total Premises then demised
under this Lease. In addition, Landlord shall not have the termination option
described in clause (i) of the preceding paragraph as to any sublease proposed
by Tenant if, within ten (10) days after Tenant's receipt of notice from
Landlord that Landlord is exercising such termination right, Tenant withdraws
its request for Landlord's consent to such sublease.
If Tenant shall propose to assign this Lease effective as of a date which
is during the first two (2) years of the Term, or if Tenant shall propose to
sublease any portion of the Premises effective as of a date which is during the
first two (2) years of the Term and the term of such sublease is for more than
three (3) years, due to the potential material adverse affect such proposed
transaction would have on Landlord's ability to lease the balance of the Real
Property, Landlord's refusal to consent to any such proposed transaction shall
be deemed reasonable (without limitation of any other reasonable grounds
Landlord may have for refusing to consent to any assignment or subletting).
b. Processing Expenses. Tenant shall pay to Landlord, as Landlord's cost of
-------------------
processing each
12
proposed assignment or subletting (whether or not the same is ultimately
approved by Landlord or consummated by Tenant), an amount equal to the sum of
(i) Landlord's reasonable attorneys' and other professional fees, plus (ii) the
sum of $1000.00 for the cost of Landlord's administrative, accounting and
clerical time (collectively, "Processing Costs"). Notwithstanding anything to
the contrary herein, Landlord shall not be required to process any request for
Landlord's consent to an assignment or subletting until Tenant has paid to
Landlord the amount of Landlord's estimate of the Processing Costs. When the
actual mount of the Processing Costs is determined, it shall be reconciled with
Landlord's estimate, and any payments or refunds required as a result thereof
shall promptly thereafter be made by the parties.
c. Consideration to Landlord. In the event of any assignment or sublease,
-------------------------
whether or not requiring Landlord's consent, Landlord shall be entitled to
receive, as additional rent hereunder, seventy-five percent (75%) of any
consideration (including, without limitation, payment for leasehold improvements
and any "Leasehold Profit" as defined below) paid by the assignee or subtenant
for the assignment or sublease and, in the case of a sublease, the excess of the
amount of rent paid for the sublet space by the subtenant over the amount of
Monthly Base Rent under Section 4 above and Operating Expenses under Section 5
above attributable to the sublet space for the corresponding month; except that
Tenant may recapture, on an amortized basis over the term of the sublease or
assignment, any brokerage commissions paid by Tenant in connection with the
subletting or assignment (not to exceed commissions typically paid in the market
at the time of such subletting or assignment), Tenant's reasonable costs of
advertising the space for sublease or assignment, any improvement allowance paid
by Tenant to the subtenant or assignee, and any improvement costs paid by Tenant
solely to prepare the space for the assignment or sublet.. "Leasehold Profit"
shall be the value allocated to the leasehold between the parties to the
assignment or sublease, but in no event less than the excess of the present
value of the fair market rent of the Premises for the remaining term of this
Lease after such assignment or sublease, over the Base Rent payable hereunder
for such remaining term, as reasonably determined by Landlord. Upon Landlord's
request, Tenant shall direct any subtenant or assignee to pay the directly to
Landlord the amounts due to it pursuant to this Section 14.c. on account of such
sublease or assignment. If there is more than one sublease under this Lease, the
amounts (if any) to be paid by Tenant to Landlord pursuant to this Section 14.c.
shall be separately calculated for each sublease and amounts due Landlord with
regard to any one sublease may not be offset against rental and other
consideration pertaining to or due under any other sublease.
d. Documentation. No permitted assignment or subletting by Tenant shall be
-------------
effective until there has been delivered to Landlord a fully executed
counterpart of the assignment or sublease which expressly provides that (i) in
the case of a sublease, the subtenant may not assign its sublease or further
sublet the sublet space without Landlord's prior written consent, (ii) in the
case of an assignment, the assignee assumes all of Tenant's obligations under
this Lease arising on or after the date of the assignment, and (iii) in the case
of a sublease, the subtenant agrees to be and remain jointly and severally
liable with Tenant to Landlord for the payment of Rent pertaining to the sublet
space in the amount set forth in the sublease, and for the performance of all of
the terms and provisions of this Lease pertaining to the sublet space. In
addition to the foregoing, no assignment or sublease by Tenant shall be
effective until there has been delivered to Landlord a fully executed
counterpart of Landlord's consent to assignment or sublease form, as applicable.
The failure or refusal of a subtenant or assignee to execute any such instrument
shall not release or discharge the subtenant or assignee from its liability as
set forth above. Notwithstanding the foregoing, no subtenant or assignee shall
be permitted to occupy the Premises unless and until such subtenant or assignee
provides Landlord with certificates evidencing that such subtenant or assignee
is carrying all insurance coverage required of it under this Lease.
e. No Merger. Without limiting any of the provisions of this Section 14,
---------
the voluntary or other surrender of this Lease by Tenant, or a mutual
cancellation by Landlord and Tenant, shall not work a merger, and shall, at the
option of Landlord, terminate all or any existing subleases or subtenancies or,
at the option of Landlord, operate as an assignment to Landlord of any or all
such subleases or subtenancies. If Landlord does elect that such surrender or
cancellation operate as an assignment of such subleases or subtenancies,
13
Landlord shall in no way be liable for any previous act or omission by Tenant
under the subleases or for the return of any deposit(s) under the subleases that
have not been actually delivered to Landlord, nor shall Landlord be bound by any
sublease modification(s) executed without Landlord's consent or for any advance
rental payment by the subtenant in excess of one month's rent.
f. Indirect Assignments. For purposes of this Section 14, the following
--------------------
events shall be deemed an assignment or sublease, as appropriate: (i) the
issuance of equity interests (whether stock, partnership interests or otherwise)
in Tenant or any subtenant or assignee, or any entity controlling any of them,
to any person or group of related persons, in a single transaction or a series
of related or unrelated transactions, such that, following such issuance, such
person or group shall have Control (as defined below) of Tenant or any subtenant
or assignee; (ii) a transfer of Control of Tenant or any subtenant or assignee,
or any entity controlling any of them, in a single transaction or a series of
related or unrelated transactions (including, without limitation, by
consolidation, merger, acquisition or reorganization), except that the transfer
of outstanding capital stock or other listed equity interests by persons or
parties other than "insiders" within the meaning of the Securities Exchange Act
of 1934, as amended, through the "over-the-counter" market or any recognized
national or international securities exchange, shall not be included in
determining whether Control has been transferred; (iii) a reduction of Tenant's
assets to the point that this Lease and/or other leases are substantially
Tenant's only asset(s); or (iv) a change or conversion in the form of entity of
Tenant, any subtenant or assignee, or any entity controlling any of them, which
has the effect of limiting the liability of any of the partners, members or
other owners of such entity. "Control" shall mean direct or indirect ownership
of 50% or more of all of the voting stock of a corporation or 50% or more of the
voting legal or equitable interest in any other business entity, or the power to
direct the management and operations of any entity (by equity ownership,
contract or otherwise).
g. Affiliates: Successors. Notwithstanding anything to the contrary in
----------------------
Section 14.a or Section 14.c., but subject to the other provisions of this
Section 14, Tenant may assign this Lease or sublet the Premises or any portion
thereof, without Landlord's consent, to any partnership, corporation or other
entity which controls, is controlled by, or is under common control with Tenant
(control being defined for such purposes as ownership of 50% or more of all of
the voting stock of a corporation or 50% or more of the voting legal or
equitable interest in any other business entity, and the power to direct the
management and operations of, the relevant entity) (an "Affiliate") or to any
partnership, corporation or other entity resulting from a merger or
consolidation with Tenant or which acquires all or substantially all of Tenant's
assets (through a transfer of assets or equity interests in Tenant) as a going
concern and such assets include substantial assets other than this Lease (a
"Successor'), provided that (i) Landlord receives at least ten (10) days' prior
written notice of the assignment or subletting, in which Tenant shall expressly
confirm that Tenant remains primarily liable (together with the assignee in the
event of an assignment) for all of the obligations of the Tenant under this
Lease, (ii) in the case of an assignment to a Successor, the Successor's net
worth is not less than Tenant's net worth immediately prior to such assignment
(or series of transactions of which such assignment is a part), (iii) in the
case of a subletting or assignment to an Affiliate, the Affiliate remains an
Affiliate for the duration of the subletting or the balance of the term in the
event of an assignment, (iv) Landlord receives a fully executed copy of the
assignment or sublease agreement between Tenant and the Affiliate or Successor
at least ten (10) days prior to the effective date of such assignment or
sublease, in which the Affiliate or Successor, as the case may be, assumes (in
the event of an assignment) all of Tenant's obligations under this Lease, and
agrees (in the event of a sublease) that such subtenant will, at Landlord's
election, attorn directly to Landlord in the event that this Lease is terminated
for any reason, and (v) in the case of an assignment, the essential purpose of
such assignment is to transfer an active, ongoing business with substantial
assets in addition to this Lease, and in the case of an assignment or sublease
the transaction is for legitimate business purposes unrelated to this lease and
the transaction is not a subterfuge by Tenant to avoid it obligations under
this Lease or the restrictions on assignment and subletting contained herein.
14
15. Default.
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a. Tenant's Default. A material breach of this Lease by Tenant shall exist
----------------
if any of the following events (severally, "Event of Default"; collectively,
"Events of Default") shall occur: (i) if Tenant shall have failed to pay Base
Rent, Tenant's Percentage Share of increased Operating Expenses, or any other
sum required to be paid hereunder when due, including any interest due under
Section 3; (ii) if Tenant shall have failed to perform any term, covenant or
condition of this Lease except those requiring the payment of money, and Tenant
shall have failed to cure the breach within fifteen (15) days after written
notice from Landlord if the breach could reasonably be cured within the fifteen
(15) day period; provided, however, if the failure could not reasonably be cured
within the fifteen (15) day period, then Tenant shall not be in default unless
it has failed to promptly commence and thereafter continue to make diligent and
reasonable efforts to cure the failure as soon as practicable as reasonably
determined by Landlord; (iii) if Tenant shall have assigned its assets for the
benefit of its creditors; (iv) if the sequestration of, attachment of, or
execution on, any material part of the property of Tenant or on any property
essential to the conduct of Tenant's business shall have occurred, and Tenant
shall have failed to obtain a return or release of the property within thirty
(30) days thereafter, or prior to sale pursuant to any sequestration, attachment
or levy, whichever is earlier; (v) if Tenant shall have failed to continuously
and uninterruptedly conduct its business in the Premises, or shall have
abandoned or vacated the Premises; (vi) if a court shall have made or entered
any decree or order adjudging Tenant to be insolvent, or approving as properly
filed a petition seeking reorganization of Tenant, or directing the winding up
or liquidation of Tenant, and the decree or order shall have continued for a
period of thirty (30) days; (vii) if Tenant shall make or suffer any transfer
which constitutes a fraudulent or otherwise avoidable transfer under any
provision of the federal Bankruptcy Laws or any applicable state law; or (viii)
if Tenant shall have failed to comply with the provisions of Sections 23 or 25
of this Lease within the time periods stated therein. An Event of Default shall
constitute a default under this Lease.
b. Remedies Upon Tenant's Default. Upon an Event of Default, Landlord shall
------------------------------
have the following remedies, in addition to all other rights and remedies
provided by law, equity, statute or otherwise provided in this Lease, to which
Landlord may resort cumulatively or in the alternative:
(i) Landlord has the remedy described in California Civil Code Section
1951.4 (a landlord may continue the lease in effect after the tenant's breach
and abandonment and recover rent as it becomes due, if the tenant has the right
to sublet and assign subject only to reasonable limitations), and may continue
this Lease in full force and effect, and this Lease shall continue in full force
and effect as long as Landlord does not terminate Tenant's right to possession,
and Landlord shall have the right to collect Rent when due. During the period
Tenant is in default, Landlord may enter the Premises and relet it, or any part
of it, to third parties for Tenant's account, provided that any Rent in excess
of the Rent due hereunder shall be payable to Landlord. Tenant shall be liable
immediately to Landlord for all costs Landlord incurs in reletting the Premises,
including, without limitation, brokers' commissions, expenses of cleaning and
redecorating the Premises required by the reletting and like costs. Reletting
may be for a period shorter or longer than the remaining Term of this Lease.
Tenant shall pay to Landlord the Rent and other sums due under this Lease on the
dates the Rent is due, less the Rent and other sums Landlord receives from any
reletting. No act by Landlord allowed by this Subsection (i) shall terminate
this Lease unless Landlord notifies Tenant in writing that Landlord elects to
terminate this Lease.
(ii) Landlord may terminate Tenant's right to possession of the Premises
at any time by giving written notice to that effect. No act by Landlord other
than giving written notice to Tenant of such termination shall terminate this
Lease. Acts of maintenance, efforts to relet the Premises or the appointment of
a receiver on Landlord's initiative to protect Landlord's interest under this
Lease shall not constitute a termination of Tenant's right to possession. On
termination, Landlord shall have the right to remove all personal property of
Tenant and store it at Tenant's cost and to recover from Tenant as damages: (a)
the worth at the time of award of unpaid Rent and other sums due and payable
which had been earned at the
15
time of termination; plus (b) the worth at the time of award of the amount by
which the unpaid Rent and other sums due and payable which would have been
payable after termination until the time of award exceeds the amount of the Rent
loss that Tenant proves could have been reasonably avoided; plus (c) the worth
at the time of award of the amount by which the unpaid Rent and other sums due
and payable for the balance of the Term after the time of award exceeds the
amount of the Rent loss that Tenant proves could be reasonably avoided; plus (d)
any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform Tenant's obligations under
this Lease, or which, in the ordinary course of things, would be likely to
result therefrom, including, without limitation, any costs or expenses incurred
by Landlord: (1) in retaking possession of the Premises, including reasonable
attorneys' fees and costs therefor; (2) maintaining or preserving the Premises
for reletting to a new tenant, including repairs or alterations to the Premises
for the reletting; (3) leasing commissions; (4) any other costs necessary or
appropriate to relet the Premises; and (5) at Landlord's election, such other
amounts in addition to or in lieu of the foregoing as may be permitted from time
to time by California Civil Code Section 1951.2 or any other laws of the State
of California.
The "worth at the time of award" of the amounts referred to in Subsections
(ii)(a) and (ii)(b) is computed by allowing interest at the lesser of eighteen
percent (18%) per annum or the maximum rate permitted by law, on the unpaid
Rent and other sums due and payable from the date due through the date of award.
The "worth at the time of award" of the amount referred to in Subsection (ii)(c)
is computed by discounting the amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award, plus one percent (1%).
Tenant waives redemption or relief from forfeiture under California Code of
Civil Procdure Sections 1174 and 1179, or under any other present or future law,
if Tenant is evicted or Landlord takes possession of the Premises by reason
of any default of Tenant hereunder.
c. Landlord's Default. Landlord shall not be deemed to be in default in the
------------------
performance of any obligation required to be performed by Landlord hereunder
unless and until Landlord has failed to perform the obligation within thirty
(30) days after receipt of written notice by Tenant to Landlord specifying the
obligation Landlord has failed to perform; provided, however, that if the nature
of Landlord's obligation is such that more than thirty (30) days are required
for its performance, then Landlord shall not be deemed to be in default if
Landlord shall commence the performance of such obligation within the thirty
(30) day period and thereafter shall diligently prosecute the same to
completion.
16. Landlord's Right to Perform Tenant's Covenants.
----------------------------------------------
If Tenant shall at any time fail to make any payment or perform any other
act on its part to be made or performed under this Lease, Landlord may, but
shall not be obligated to, make the payment or perform any other act to the
extent Landlord may deem desirable and, in connection therewith, pay expenses
and employ counsel. Any payment or performance by Landlord shall not waive or
release Tenant from any obligations of Tenant under this Lease. All sums so paid
by Landlord, and all penalties, interest and costs in connection therewith,
shall be due and payable by Tenant on the next day after any payment by
Landlord, together with interest thereon at the Interest Rate, from that date to
the date of payment thereof by Tenant to Landlord, plus collection costs and
attorneys' fees. Landlord shall have the same rights and remedies for the
nonpayment thereof as in the case of default in the payment of Base Rent.
17. Security Deposit: Letter of Credit.
----------------------------------
a. Security Deposit. Tenant has deposited with Landlord the Security
----------------
Deposit, in the amount specified in the Basic Lease Information, as security for
the full and faithful performance of every provision of this Lease to be
performed by Tenant. If Tenant defaults with respect to any proviSion of this
Lease, Landlord may use, apply or retain all or any part of the Security Deposit
for the payment of any Rent or other sum in default, for the payment of any
amount which Landlord may expend or become obligated to expend by reason of
Tenant's default, or for any loss or damage which Landlord may suffer by reason
of
Tenant's default; provided, however, that the Security Deposit shall not be
deemed an advance rent deposit or an advance payment of any kind, or a measure
or limitation of Landlord's damages or constitute a bar or defense to any of the
Landlord's other remedies under this Lease or at law upon Tenant's default. If
any portion of the Security Deposit is used or applied, Tenant shall deposit
with Landlord, within ten (10) days after written demand therefor, cash in an
amount sufficient to restore the Security Deposit to its original amount.
Landlord shall not be required to keep the Security Deposit separate from its
general funds, and Tenant shall not be entitled to interest on the Security
Deposit. Upon the expiration or earlier termination of this Lease, and Tenant's
fulfillment of all of its obligations hereunder (including any obligations which
survive such expiration or earlier termination), Landlord shall return the
Security Deposit (or the balance thereof after application as aforesaid) to
Tenant.
b. Letter of Credit. In addition to the Security Deposit made by Tenant
----------------
pursuant to Section 17.a., concurrently with Tenant's execution and delivery of
this Lease to Landlord, Tenant has delivered to Landlord the Letter of Credit
described below as security for Tenant's performance of all of Tenant's
covenants and obligations under this Lease; provided, however, that neither the
Letter of Credit nor any proceeds therefrom (the "Letter of Credit Proceeds")
shall be deemed an advance rent deposit or an advance payment of any other kind,
or a measure or limitation of Landlord's damages or constitute a bar or defense
to any of the Landlord's other remedies under this Lease or at law upon
Tenant's default. The Letter of Credit shall be maintained in effect from the
date of this Lease through ninety (90) days after the expiration or earlier
termination of the Term, and on or prior to the expiration of such ninety (90)
day period, Landlord shall return to Tenant the Letter of Credit (unless
presented for payment as provided herein) and any Letter of Credit Proceeds then
held by Landlord (other than those held for application by Landlord as provided
below, including application to cure any failure by Tenant to restore the
Premises as required by this Lease upon the surrender thereof); provided,
however, that in no event shall any such return be construed as an admission by
Landlord that Tenant has performed all of its obligations hereunder. Landlord
shall not be required to segregate the Letter of Credit Proceeds from its other
funds and no interest shall accrue or be payable to Tenant with respect thereto.
Landlord may (but shall not be required to) draw upon the Letter of Credit and
use the Letter of Credit Proceeds or any portion thereof to cure any Event of
Default by Tenant under this Lease or to compensate Landlord for any damage
Landlord incurs as a result of Tenant's failure to perform any of its
obligations hereunder, it being understood that any use of the Letter of Credit
Proceeds shall not constitute a bar or defense to any of Landlord's other
remedies under this Lease. In such event and upon written notice from Landlord
to Tenant specifying the amount of the Letter of Credit Proceeds so utilized by
Landlord and the particular purpose for which such amount was applied, Tenant
shall immediately deliver to Landlord an amendment to the Letter of Credit or a
replacement thereof in an amount equal to one hundred percent (100%) of the
amount specified below for the applicable period. Tenant's failure to deliver
such amendment or replacement to Landlord within five (5) days of Landlord's
notice shall constitute an Event of Default hereunder. No lessor under any
ground or underlying lease or holder of or beneficiary under a mortgage or deed
of trust, nor any purchaser at any judicial or private foreclosure sale of the
Property or any portion thereof, shall be responsible to Tenant for such Letter
of Credit or any Letter of Credit Proceeds unless such lessor, holder or
purchaser shall have actually received the same.
C. As used herein, Letter of Credit shall mean an unconditional,
irrevocable letter of credit (hereinafter referred to as the "Letter of Credit")
issued at Tenant's sole expense by the San Francisco or New York office of a
major national bank satisfactory to Landlord (the "Bank"), naming Landlord as
beneficiary, and in form and substance satisfactory to Landlord, in the amount
of One Million Dollars ($1,000,000.00) (subject to increase by the amount of the
Improvement Advance as described below) for the during the period from the date
of this Lease through the first annual anniversary of the Commencement Date, and
reducing in amount on the first annual anniversary of the Commencement Date and
on each subsequent annual anniversary of the Commencement Date by twenty percent
(20%) of the original amount of the Letter of Credit; provided, however, that if
on the date the Letter of Credit amount would otherwise reduce, an Event of
Default, or default that with notice or the passage of time or both could mature
into an Event of Default, shall have occurred and be continuing, the Letter of
Credit amount shall not reduce on such date and shall not thereafter
17
reduce until the later of the next scheduled reduction date or the date such
Event of Default or default shall have been cured. The Letter of Credit shall be
for a one-year or, at Tenant's election, longer, term and shall provide: (i)
that Landlord may make partial and multiple draws thereunder, up to the face
amount thereof, (ii) that Landlord may draw upon the Letter of Credit up to the
full amount thereof, as determined by Landlord, and the Bank will pay to
Landlord the amount of such draw upon receipt by the Bank of a sight draft
signed by Landlord and accompanied by a written certification from Landlord to
the Bank stating either: (a) that an Event of Default has occurred and is
continuing under this Lease, or (b) that Landlord has not received notice from
the Bank that the Letter of Credit will be renewed by the Bank for at least one
(1) year beyond the then relevant expiration date and Tenant has not furnished
Landlord with a replacement Letter of Credit as hereinafter provided, or (c)
that Bank no longer meets the requirements set forth above and Tenant has not
furnished Landlord with a replacement Letter of Credit as required hereunder
from a Bank meeting such requirements; and (iii) that, in the event of
Landlord's assignment or other transfer of its interest in this Lease, the
Letter of Credit shall be freely transferable by Landlord, without charge and
without recourse, to the assignee or transferee of such interest and the Bank
shall confirm the same to Landlord and such assignee or transferee. The Letter
of Credit shall further provide that a draw thereon pursuant to clause (ii)(b)
above may only be made during the thirty (30) day period preceding the then
applicable expiration date of the Letter of Credit. In the event that the Bank
shall fail to notify Landlord that the Letter of Credit will be renewed for at
least one (1) year beyond the then applicable expiration date, and Tenant shall
not have delivered to Landlord, at least thirty (30) days prior to the relevant
annual expiration date, a replacement Letter of Credit in the amount required
hereunder and otherwise meeting the requirements set forth above, then Landlord
shall be entitled to draw on the Letter of Credit as provided above, and shall
hold and apply the proceeds of such draw as Letter of Credit Proceeds pursuant
to Paragraph 17.b above.
Notwithstanding the foregoing, in the event that Landlord shall make an
Improvement Advance as described in Exhibit B attached hereto, within thirty
---------
(30) days of the determination of the total amount of the Improvement Advance
Tenant shall increase the initial amount of the Letter of Credit by the amount
of the Improvement Advance.
18. Surrender of Premises.
---------------------
By taking possession of the Premises, Tenant shall be deemed to have accepted
the Premises and the Property in good, clean and completed condition and repair,
subject to all applicable laws, codes and ordinances. On the Expiration Date or
earlier termination of this Lease, Tenant shall surrender the Premises to
Landlord in its condition as of the Commencement Date, normal wear and tear
excepted. Tenant shall remove from the Premises all of Tenant's Personal
Property and any Alterations required to be removed pursuant to Section 9 of
this Lease. Tenant shall repair any damage or perform any restoration work
required by the removal. If Tenant fails to timely remove any Personal Property
or Alterations as aforesaid, Landlord may remove the property and store and/or
dispose of the same at Tenant's expense, including interest at the Interest
Rate. If the Premises are not so surrendered at the termination of this Lease,
Tenant shall indemnify Landlord against all Claims resulting from delay by
Tenant in so surrendering the Premises, including, without limitation, any
claims made by any succeeding tenant, losses to Landlord due to lost
opportunities to lease to succeeding tenants, and attorneys' fees and costs.
Tenant shall give written notice to Landlord at least thirty (30) days prior to
vacating the Premises and shall meet with Landlord for a joint inspection of the
Premises at the time of vacating. In the event of Tenant's failure to give such
notice or participate in such joint inspection, Landlord's inspection at or
after Tenant's vacating the Premises shall conclusively be deemed correct for
purposes of determining Tenant's responsibility for removal of Alterations and
repairs and restoration of the Premises.
19. Holding Over.
------------
If Tenant remains in possession of all or any part of the Premises after the
expiration of the Term or the
18
earlier termination of this Lease without Landlord's prior written consent, the
tenancy shall be a tenancy at sufferance only and shall not constitute a renewal
or extension for any further term, regardless of whether Landlord shall accept
Rent for any such period. In such event, Base Rent shall be increased in an
amount equal to two hundred percent (200%) of the Base Rent during the last
month of the Tern (including any extensions), and any other sums due under this
Lease shall be payable in the amount, and at the times, specified in this Lease.
The tenancy shall be subject to every other term, condition, covenant and
agreement contained in this Lease, except that any renewal or extension option
in favor of Tenant shall not be applicable. No such increase shall impair
Landlord's other rights and remedies against Tenant by reason of such holding
over by Tenant, and Tenant shall vacate the Premises immediately upon Landlord's
request.
20. Access to Premises.
------------------
Tenant shall permit Landlord and its agents to enter the Premises at all
reasonable times upon reasonable notice, except in the case of an emergency (in
which event entry may be made when necessary and without notice), to inspect the
Premises, to post Notices of Nonresponsibility and similar notices, to show the
Premises to interested parties such as prospective mortgagees, purchasers and
tenants to provide any services required of Landlord hereunder, to make
necessary alterations, additions, improvements or repairs either to the
Premises, the Building, or other premises within the Building, and to discharge
Tenant's obligations hereunder when Tenant has failed to do so within a
reasonable time after written notice from Landlord. No such entry shall
constitute a constructive eviction or give rise to an abatement of Rent
hereunder, constitute a constructive eviction, or otherwise diminish Tenant's
obligations under this Lease. In exercising its rights under this Section 20,
Landlord shall at all times endeavor to minimize interference with Tenant's
operations, to the extent practicable. During the last year of the Term,
Landlord shall have the right to erect on the exterior of the Premises and/or on
the exterior or in the Common Areas of the Building and the Property suitable
signs indicating that the Premises are available for lease.
21. Signs.
-----
a. The size, design, color, location and other physical aspects of any sign in
or on the Premises shall be subject to the CC&R's, Rules, Landlord's approval
prior to installation, and to all Legal Requirements. The costs of any permitted
sign, and the costs of its installation, maintenance and removal, shall be at
Tenant's sole expense and shall be paid within ten (10) days of Tenant's receipt
of a bill from Landlord for the costs. In no event shall Tenant be permitted to
place any sign, logo or other identification on the exterior of the Building, in
the Building's Common Areas (other than on a Building directory maintained to
identify the Building's tenants), or upon the Property, or which is inside the
Premises but visible from outside of the Premises (other than upon the door(s)
to the Premises).
b. Exterior Building Signage. Notwithstanding Section 21.a., so long as
-------------------------
the Tenant under this Lease (i) is the Tenant originally named under this Lease
in the Basic Lease Information, or any Affiliate or Successor of such original
Tenant, (ii) is in occupancy pursuant to this Lease of at least seventy-five
percent (75%) of the entire Premises originally demised under this Lease, and
(iii) is not in default of any of its obligations hereunder beyond the
expiration of any applicable grace or cure period, Tenant shall be permitted to
maintain identification signage at the top of one exterior side of the Building
in a location reasonably approved by Landlord. The installation, maintenance and
removal of Tenant's signage pursuant to this Section 21.b. shall be performed by
Tenant at Tenant's expense, but in coordination with Landlord and its reasonable
installation procedures and requirements, or at Landlord's option, by Landlord
at Tenant's expense. Such signage of Tenant shall be subject to Landlord's prior
approval and all Legal Requirements, and shall be limited to Tenant's name
and/or logo. If Tenant shall fail to meet the signage conditions specified
herein, Landlord may immediately remove Tenant's signage at Tenant's expense,
and Tenant's signage rights pursuant to this Section 21.b. shall thereafter
forever cease and terminate; provided, however, that if applicable Legal
-----------------
Requirements do not require removal of such signage prior to the expiration of
the thirty (30) day period hereinafter provided, Landlord shall not remove such
signage unless it shall have
19
given Tenant thirty (30) days' prior notice of the signage conditions Tenant has
failed to meet, and such failure continues after the expiration of such thirty
(30) day period. Upon the expiration or earlier termination of this Lease,
Tenant shall, at Tenant's expense, or at Landlord's option Landlord shall, at
Tenant's expense, remove Tenant's signage and repair any damage to the Building
caused by such removal.
22. Subordination.
-------------
a. Subordinate Nature. Except as provided in Subsections b. and c., this
------------------
Lease is subject and subordinate to all ground and underlying leases, mortgages
and deeds of trust which now or may hereafter affect the Real Property or any
portion thereof, to the CC&R's, and to all renewals, modifications,
consolidations, replacements and extensions of the foregoing, without the
necessity of any further documentation evidencing such subordination.
Notwithstanding such self-operative subordination, within ten (10) days after
Landlord's written request therefor, Tenant shall execute any and all documents
required by Landlord, the lessor under any ground or underlying lease ("Ground
Lessor"), or the holder or holders of any mortgage or deed of trust ("Holder"),
evidencing this Lease to be subordinate to the lien of any such lease, mortgage
or deed of trust, as the case may be. Tenant hereby irrevocably appoints
Landlord as Tenant's attorney-in-fact to execute and deliver any such instrument
in the name of Tenant if Tenant fails to do so within such time. If the interest
of Landlord in the Real Property or the Building is transferred to any Ground
Lessor or Holder pursuant to or in lieu of proceedings for enforcement of any
such lease, mortgage, or deed of trust, Tenant shall immediately and
automatically attorn to the Ground Lessor or Holder, and this Lease shall
continue in full force and effect as a direct lease between the Ground Lessor or
Holder and Tenant on the terms and conditions set forth herein.
b. Possible Priority of Lease. If a Ground Lessor or a Holder advises
--------------------------
Landlord that it desires or requires this Lease to be prior and superior to a
lease, mortgage or deed of trust, Landlord may notify Tenant. Within seven (7)
days of Landlord's notice, Tenant shall execute, have acknowledged and deliver
to Landlord any and all documents or instruments, in the reasonable form
presented to Tenant, which Landlord, Ground Lessor or Holder deems necessary or
desirable to make this Lease prior and superior to the lease, mortgage or deed
of trust.
c. Lease Modification. If, in connection with obtaining financing for the
------------------
Real Property or any portion thereof, any Holder or Ground Lessor shall request
reasonable modification to this Lease as a condition to such ground lease or
financing, Tenant shall execute and deliver to Landlord, within ten (10) days of
Landlord's request, any such modification agreement so requested, provided such
modifications do not adversely affect Tenant's rights or increase Tenant's
obligations hereunder (other than additional obligations requiring Tenant to
send such Holder or Ground Lessor copies of notices given to Landlord).
d. Nondisturbance Agreement. It shall be a condition to the subordination
------------------------
of this Lease to any Superior Interest created after the date of this Lease (as
distinguished from any Superior Interest in effect as of the date of this Lease,
or any amendment or modification thereto), that Tenant shall receive from the
Ground Lessor or Holder, as applicable, of such Superior Interest a so-called
non-disturbance agreement in the form reasonably required by such Ground Lessor
or Holder.
23. Transfer of the Property.
------------------------
Upon transfer of the Real Property and assignment of this Lease, Landlord shall
be entirely freed and relieved of all liability under any and all of its
covenants and obligations contained in or derived from this Lease occurring
after the consummation of the transfer and assignment, and if Landlord shall
transfer the Security Deposit to the transferee of Landlord's interest in the
Real Property, Landlord shall be released from all liability for the Security
Deposit. Tenant shall attorn to any entity purchasing or otherwise acquiring the
Premises at any sale or other proceeding.
20
24. Estoppel Certificates: Financial Statements.
-------------------------------------------
Within ten (10) days following written request by Landlord from time to time
throughout the Term, Tenant shall execute and deliver to Landlord an estoppel
certificate in the form attached hereto as Exhibit E, duly completed by Tenant.
---------
At the request of Landlord from time to time during the Term, Tenant shall
provide to Landlord its current financial statements or other information
setting forth Tenant's financial condition and net worth. Landlord shall use
such documentation solely for purposes of this Lease and in connection with the
ownership, financing, management and disposition of the Real Property.
25. Mortgagee Protection.
--------------------
In the event of any default on the part of Landlord, Tenant will give notice by
registered or certified mail to each Ground Lessor and Holder whose identity has
been disclosed to Tenant, and shall offer the Ground Lessor or Holder a
reasonable opportunity after such notice (but in no event less than thirty (30)
days) to cure the default, including time to obtain possession of the Property
or the Premises by lease termination, power of sale or a judicial foreclosure
(as applicable), if such should prove necessary to effect a cure. In no event
shall any Ground Lessor or Holder in any way or to any extent be: (a) liable for
any act or omission of any prior Landlord in contravention of any provision of
this Lease; or (b) subject to any offsets, claims or defenses which Tenant might
have against any prior Landlord; or (c) bound by any Rent which Tenant might
have paid for more than thirty (30) days in advance to any prior Landlord; or
(d) bound by any agreement or modification of this Lease made without such
Ground Lessor's or Holder's written consent. Tenant agrees that if any Ground
Lessor or Holder acquires possession of the Premises or title to the Real
Property as a result of termination of its ground lease or foreclosure of such
Holder's deed of trust or other security instrument, as applicable, the
acceptance of a lease surrender or deed in lieu of such foreclosure, or
otherwise, the provisions of Section 36 below shall be applicable to liability
of such Ground Lessor or Holder as successor Landlord under this Lease.
26. Attorneys' Fees.
---------------
If either party shall bring any action or legal proceeding for damages for an
alleged breach of any provision of this Lease, to recover rent or other sums
due, to terminate the tenancy of the Premises or to enforce, protect or
establish any term, condition or covenant of this Lease or right of either
party, the prevailing party shall be entitled to recover, as a part of the
action or proceedings, or in a separate action brought for that purpose,
reasonable attorneys' fees and court costs as may be fixed by the court or jury.
The prevailing party shall be the party which secures a final judgment in its
favor, provided that if the party bringing any action shall dismiss the same
without the consent of the other party, the other party shall be deemed the
prevailing party.
27. Brokers.
-------
Tenant warrants and represents that it has had no dealings with any real estate
broker or agent in connection with the negotiation of this Lease, except for the
brokers(s) specified in the Basic Lease Information (the "Brokers"), and that it
knows of no other real estate broker or agent who is or might be entitled to a
fee, commission or other compensation in connection with this Lease. Tenant
shall indemnify and hold harmless Landlord from and against any and all
liabilities or expenses (including reasonable attorneys' fees and costs) arising
out of claims made by any broker or individual (other than the Brokers) for a
fee, commission or other compensation resulting from this Lease. Pursuant to the
terms of separate agreement(s) between Landlord and the Brokers, Landlord shall
pay the Brokers any fee, commission or other compensation to which they are
entitled from Landlord by reason of this Lease. Tenant shall have no liability
to the Brokers for any fee, commission or other compensation.
21
28. Parking.
-------
Tenant shall have the right to park in the Building's parking facilities, in
common with other tenants of the Building, upon such terms and conditions as may
from time to time be established by Landlord. There shall be no charge for any
portion of the parking facilities which is not reserved. Tenant agrees not to
use in excess of its proportionate share (i.e. the rentable square footage of
the Premises in proportion to the rentable square footage of the Building or
Buildings served by such parking facilities) of parking facilities and agrees to
cooperate with Landlord and other tenants in the use of the parking facilities.
Landlord reserves the right, in its absolute discretion, to determine whether
the parking facilities are becoming crowded and to allocate and assign parking
spaces among Tenant and the other tenants. Landlord shall not be liable to
Tenant, nor shall this Lease be affected, if any parking is impaired by
moratorium, initiative, referendum, law, ordinance, regulation or order passed,
issued or made by any governmental or quasi-governmental body or by fire or
other casualty.
29. Utilities and Services.
----------------------
Tenant shall arrange for all telephone, water, gas, electricity and other
power and utilities which it shall require in connection with its use or
occupancy of the Premises and shall pay for the same, together with any taxes,
penalties, surcharges or the like pertaining thereto. Landlord shall have no
obligation to furnish any utilities or services to the Premises or any equipment
providing for the same. Without limitation, Tenant shall be solely responsible
for providing such heating, ventilation and air conditioning ("HVAC") to the
Premises as Tenant shall require for the comfortable occupancy thereof. Any
equipment or systems which Tenant shall require in order to supply HVAC shall be
subject to the provisions of Section 9 above. Tenant shall obtain, at its
expense all electric light bulbs, ballasts and tubes as it shall require for the
Premises. If any of the foregoing utilities or services are not separately
metered to Tenant, Tenant shall pay a reasonable proportion, as determined by
Landlord, of all charges jointly serving the Premises and other premises.
Landlord shall not be liable for any damages directly or indirectly resulting
from nor shall the Base Rent, Operating Expenses or any other monies owed by
Tenant to Landlord under this Lease be abated or reduced by reason of (a) the
installation, use or interruption of use of any equipment used in connection
with the furnishing of any of the foregoing utilities and services, (b) failure
to furnish or delay in furnishing any such utilities or services for any reason
whatsoever, or (c) the limitation, curtailment, rationing or restriction on use
of water, electricity, gas or any other form of energy or any other service or
utility whatsoever serving the Premises or the Real Property. Landlord shall be
entitled to cooperate voluntarily and in a reasonable manner with the efforts of
national, state or local government agencies or utility suppliers in reducing
energy or other resource consumption. The obligation to make services available
hereunder shall be subject to the limitations of any such voluntary, reasonable
program.
30. Intentionally Deleted.
----------------------
31. Acceptance.
----------
Delivery of this Lease, duly executed by Tenant, constitutes Tenant's offer
to lease the Premises as set forth herein, and under no circumstances shall such
delivery be deemed to create an option or reservation to lease the Premises for
the benefit of Tenant. This Lease shall become effective and binding only upon
execution hereof by Landlord and delivery of a signed copy to Tenant. If
Landlord does not accept the Tenant's offer, any sums delivered by Tenant with
its offer shall be returned to Tenant.
32. Use of Building Name.
--------------------
Tenant shall not employ the name of the Building in the name or title of its
business or occupation, or for my other purpose, except to identify the address
of the Building, without Landlord's prior written consent, which consent
Landlord may withhold in its sole discretion. Landlord reserves the right to
change the name
22
of the Building without Tenant's consent and without any liability to Tenant.
33. Recording.
---------
Neither Landlord nor Tenant shall record this Lease, nor a short form
memorandum of this Lease, without the prior written consent of the other.
34. Quitclaim.
---------
Upon any termination or expiration of this Lease pursuant to its terms,
Tenant, at Landlord's request, shall execute, have acknowledged and deliver to
Landlord a quitclaim deed of all Tenant's interest in the Premises, Building and
Property created by this Lease.
35. Notices.
-------
Any notice, demand or request required or desired to be given under this
Lease shall be in writing sent to the address of the party specified in this
Lease, and shall be given by hand delivery, electronic mail (e.g., telecopy),
---
overnight courier service (e.g. Federal Express), or the United States mail,
registered or certified, the postage prepaid. All notices shall be deemed to
have been given when received at the address of the party to which it has been
sent (or when such receipt is refused). As of the date of execution of this
Lease, the addresses of Landlord and Tenant are as specified in the Basic Lease
Information. Either party may change its address by giving notice of the change
in accordance this Section.
36. Landlord's Exculpation.
----------------------
The term "Landlord," as used in this Lease, shall mean only the owner or
owners of the Real Property at the time in question. Notwithstanding any other
provision of this Lease, the liability of Landlord for its obligations under
this Lease is limited solely to Landlord's interest in the Real Property as the
same may from time to time be encumbered, and no personal liability shall at any
time be asserted or enforceable against any other assets of Landlord or against
the constituent shareholders, partners or other owners of Landlord, or the
directors, officers, employees and agents of Landlord or such constituent
shareholder, partner or other owner, on account of any of Landlord's
obligations or actions under this Lease. Notwithstanding any other provision of
this Lease, Landlord shall not be liable for any consequential damages or
interruption or loss of business, income or profits, nor shall Landlord be
liable for loss of or damage to artwork, currency, jewelry, bullion, unique or
valuable documents, securities or other valuables, or for other property not
in the nature of ordinary fixtures, furnishings and equipment. Wherever in this
Lease Tenant (a) releases Landlord from any claim or liability, (b) waives or
limits any right of Tenant to assert any claim against Landlord or to seek
recourse against any property of Landlord or (c) agrees to indemnify Landlord
against any matters, the relevant release, waiver, limitation or indemnity shall
run in favor of and apply to Landlord, the constituent shareholders, partners or
other owners of Landlord, and the directors, officers, employees and agents of
Landlord and each such constituent shareholder, partner or other owner. In no
event shall any shareholder, partner, member, officer, director or other
constituent of Landlord or its direct or indirect constituents ever be
personally liable for Landlord's obligations or liability under this Lease.
37. Additional Structures.
---------------------
Any diminution or interference with light, air or view by any structure
which may be erected on land adjacent to the Building shall in no way alter this
Lease or impose any liability on Landlord.
23
38. Consents and Approvals.
----------------------
Wherever the consent, approval, judgment or determination of Landlord is
required or permitted under this Lease, except as expressly provided herein
Landlord may exercise its sole discretion in granting or withholding such
consent or approval or in making such judgment or determination. Whenever Tenant
requests Landlord to take any action or give any consent or approval, Tenant
shall reimburse Landlord for all of Landlord's costs incurred in reviewing the
proposed action or consent (whether or not Landlord consents to any such
proposed action), including, without limitation, reasonable attorneys' or
consultants' fees and expenses, within ten (10) days after Landlord's delivery
to Tenant of a statement of such costs. If it is determined that Landlord failed
to give its consent or approval where it was required to do so under this Lease,
Tenant's sole remedy will be an order of specific performance or mandatory
injunction of the Landlord's agreement to give its consent or approval. The
review and/or approval by Landlord of any item shall not impose upon Landlord
any liability for accuracy or sufficiency of any such item or the quality or
suitability of such item for its intended use. Any such review or approval is
for the sole purpose of protecting Landlord's interest in the Real Property,
and neither Tenant nor any Tenant Party nor any person or entity claiming by,
through or under Tenant, nor any other third party shall have any rights
hereunder by virtue of such review and/or approval by Landlord.
39. General.
-------
a. Captions. The captions and headings used in this Lease are for the
--------
purpose of convenience only and shall not be construed to limit or extend the
meaning of any part of this Lease.
b. Time. Time is of the essence for the performance of each term, condition
----
and covenant of this Lease.
c. Severability. If any provision of this Lease is held to be invalid;
------------
illegal or inenforceable, the invalidity, illegality, or unenforceability shall
not affect any other provision of this Lease, but this Lease shall be construed
as if the invalid, illegal or unenforceable provision had not been contained
herein.
d. Choice of Law: Construction. This Lease shall be construed and enforced
---------------------------
in accordance with the laws of the State of California. The language in all
parts of this Lease shall in all cases be construed as a whole according to its
fair meaning and not strictly for or against either Landlord or Tenant.
e. Gender: Singular. Plural. When the context of this Lease requires, the
------------------------
neuter gender includes the masculine, the feminine, a partnership or corporation
or joint venture, and the singular includes the plural.
f. Binding Effect. The covenants and agreements contained in this Lease
--------------
shall be binding on the parties hereto and, subject to Section 14 above, on
their respective successors and assigns.
g. Waiver. The waiver of Landlord of any breach of any term, condition or
------
covenant of this Lease shall not be deemed to be a waiver of the provision or
any subsequent breach of the same or any other term, condition or covenant of
this Lease. The subsequent acceptance of Rent hereunder by Landlord shall not be
deemed to be a waiver of any preceding breach at the time of acceptance of the
payment. No covenant, term or condition of this Lease shall be deemed to have
been waived by Landlord unless the waiver is in writing signed by Landlord.
h. Entire Agreement. This Lease is the entire agreement between the
----------------
parties, and supersedes all prior agreements, including letters of intent,
between them, and there are no agreements or representations between the parties
except as expressly set forth herein. Except as otherwise provided herein, no
subsequent change or addition to this Lease shall be binding unless in writing
and signed by the parties hereto.
24
i. Waiver of Jury. Tenant hereby waives any right it may have to a jury trial
--------------
in the event of litigation between Tenant and Landlord pertaining to this Lease.
Landlord and Tenant agree that this paragraph constitutes a written consent to
waiver of trial by jury within the meaning of California Code of Civil Procedure
Section 631(a)(2), and Tenant does hereby authorize and empower Landlord to
file this paragraph and or this Lease, as required, with the clerk or judge of
any court of competent jurisdiction as a written consent to waiver of jury
trial.
j. Counterparts. This Lease may be executed in counterparts, each of which
------------
shall be an original, and all of which together shall constitute but one
instrument.
k. Exhibits. The Basic Lease Information and all exhibits attached
--------
hereto are hereby incorporated herein and made an integral part hereof.
l. Addendum. The Addendum, if any, attached hereto is hereby incorporated
--------
herein and made an integral part hereof.
m. Other Leases. Tenant represents and warrants to Landlord that, with the
------------
exception of this Lease, neither Tenant nor any affiliate of Tenant is a tenant
under a lease or any other tenancy agreement (1) with (a) Riggs & Company; a
division of Riggs Bank NA., as trustee of the Multi-Employer Property Trust, (b)
Riggs Bank N.A., as trustee of the Multi-Employer Property Trust, (c) the
Multi-Employer Property Trust, (d) the National Bank of Washington
Multi-Employer Property Trust, the previous name of the Multi-Employer Property
Trust, (e) The Riggs National Bank of Washington, DC., as trustee of the Multi-
Employer Property Trust, (f) Northridge Business Center LLC, (g) the Corporate
Drive Corporation, as trustee of the Corporate Drive Nominee Realty Trust, (h)
Arboretum Lakes-I, L,L.C., a Delaware limited liability company, (i) Village
Green at Seven Bridges, L.L.C., (j) Pine Street Development, L.L.C., (k) MEPT
Realty LLC, a New York limited liability company, (1) MEPT, L.L.C., a Delaware
1imited liability company, (m) Cabrillo Properties LLC, (n) Valencia LLC, (o)
Mission Trails LLC, or (p) Centrepointe Distribution Center LLC, or (2)
involving any property in which any one or more of the entities named in clauses
(l)(a) through (e) are known by Tenant to have an ownership interest.
40. Renewal Option.
--------------
a. Tenant shall have the option to renew this Lease for one (1) additional
term of five (5) years, commencing upon expiration of the initial Term. Such
renewal option must be exercised, if at all, by written notice given by Tenant
to Landlord not later than nine (9) months prior to expiration of the initial
Term. Notwithstanding the foregoing, this renewal option shall be null and void
and Tenant shall have no right to renew this Lease if (i) as of the date
immediately preceding the commencement of the renewal period the original Tenant
named under this Lease in the Basic Lease Information is not in occupancy of the
entire Premises then demised hereunder or such Tenant does not intend to
continue to occupy the entire Premises then demised hereunder (but intends to
assign this Lease or sublet the Premises in whole or in part), or (ii) on the
date Tenant exercises such renewal option or on the date immediately preceding
the commencement date of the renewal period Tenant is in default of any of its
obligations under this Lease.
If Tenant exercises such renewal option, then during the renewal period the
Base Rent payable by Tenant shall be the then fair market rent for the Premises
based upon the terms of this Lease, as renewed. For purposes of this Section 40,
the term "fair market rent" shall mean the rental rate for comparable space
under primary lease (and not sublease) to new tenants, taking into consideration
such amenities as existing improvements, view, floor on which the Premises are
situated and the like, situated in comparable first-class office buildings in
comparable business parks in a fifteen (15) mile radius of the Property, taking
into consideration the then-prevailing ordinary rental market practices with
respect to tenant concessions (if any) (e.g. not offering extraordinary rental,
promotional deals and other concessions to tenants which deviate from what is
the then-prevailing ordinary practice in an effort to alleviate cash flow
problems, difficulties
25
in meeting loan obligations or other financial distress, or in response to a
greater than average vacancy rate). Fair market rent shall include the periodic
rental increases, if any, that would be included for space leased for the
renewal period. The fair market rent shall be mutually agreed upon by Landlord
and Tenant in writing within the thirty (30) calendar day period commencing
three (3) months prior to commencement of the renewal period. If Landlord and
Tenant do not agree upon the fair market rent within said thirty (30) day
period, then the fair market rent shall be established by appraisal in
accordance with the procedures set forth in Exhibit F attached hereto.
---------
b. Notwithstanding anything in the foregoing or in Exhibit F to the contrary,
---------
in no event shall the Base Rent during the renewal period be less than the Base
Rent payable by Tenant for the month immediately preceding the commencement of
the renewal period (without regard to any temporary abatement of rental then in
effect pursuant to the provisions of this Lease).
IN WITNESS WHEREOF, the parties have executed this Lease on the dates
set forth below, effective as of the date first above written.
Landlord: Tenant:
THE MULTI-EMPLOYER CERTICOM CORP.,
PROPERTY TRUST, A TRUST a Delaware corporation
ORGANIZED UNDER 12 C.F.R
SECTION 9.18, by its trustee
Riggs & Company, a division of BY: /s/ [ILLEGIBLE]
----------------------------
Riggs Bank N.A.
Its: CHAIRMAN & CEO
---------------------------
By: /s/ Maryanne Martins By: /s/ [ILLEGIBLE]
---------------------------------- ----------------------------
MARY ANNE MARTINS
Its: Managing Director Its: VICE PRESIDENT & CEO
--------------------------------- ---------------------------
26
EXHIBIT A
Mt. Eden Business Park
Hayward, CA
[DRAWING OF MT. EDEN BUSINESS PARK]
PREMISES: Building A (Entire Building)
EXHIBIT B
TENANT IMPROVEMENTS
-------------------
1. Tenant Improvements.
-------------------
a. Plans. Improvements shall be constructed in the Premises in
-----
accordance with this Paragraph 1. On or before October 27, 1998, Tenant shall
furnish to Landlord for Landlord's review and approval (which approval shall not
be unreasonably withheld) detailed layout plans and finish specifications (the
"Space Plans") prepared by an architect approved by Landlord. The Space Plans
shall show all of the improvements which Tenant desires to be constructed in the
Premises, and all such improvements shall comply with all applicable building
codes and other Legal Requirements. The Space Plans shall separately note any
proposed structural work or extraordinary or supplemental electrical, plumbing
or HVAC requirements, and shall contain such detail and specifications as would
permit a general contractor to obtain preliminary estimates of the cost of
performing all work shown thereon. Tenant shall respond promptly to any
reasonable objections of Landlord to the Space Plans and shall resubmit
appropriately revised Space Plans prepared by Tenant's architect within three
(3) Business Days of Tenant's receipt of Landlord's objections. The Space Plans,
as finally approved in writing by Landlord, shall be referred to herein as the
"Final Space Plans." Landlord shall furnish to Tenant for Tenant's written
approval (which shall not be unreasonably withheld) working plans and
specifications (the "Working Drawings") prepared by Landlord's architect for the
improvements which Tenant desires to be constructed in the Premises. The
Working Drawings shall show improvements that conform to the Final Space Plans
(except to the extent specifically noted therein or in accompanying
specifications). Tenant shall respond to the Working Drawings within three (3)
Business Days of its receipt thereof. Landlord shall respond promptly to any
reasonable objections of Tenant to the Working Drawings and shall resubmit to
Tenant for Tenant's approval (which shall not be unreasonably withheld)
appropriately revised Working Drawings prepared by Landlord's architect. Tenant
shall respond to the revised Working Drawings within three (3) Business Days of
its receipt thereof. If Tenant fails to respond to the Working Drawings or the
revised Working Drawings within the periods described above, Tenant shall be
deemed to have approved the Working Drawings or revised Working Drawings, as
applicable. The Working Drawings, as approved in writing by Landlord and Tenant,
as revised in accordance with the following provisions of this Paragraph 1, are
hereinafter called the "Final Plans", and the improvements to be performed in
accordance with the Final Plans are hereinafter called the "Tenant
Improvements". Any delay in Substantial Completion of the Tenant Improvements or
increased cost of the Tenant Improvements caused directly or indirectly by any
revision to the Space Plans or the Working Drawings requested by Tenant shall
constitute a Tenant Delay under Paragraph 1.e. below.
b. Construction. Upon approval of the Final Plans, Landlord shall
-----------
submit the same for pricing to a contractor selected by Landlord ("Landlord's
Contractor"), and thereafter provide Tenant with an estimated budget for the
Tenant Improvements, including Landlord's Construction Operations Fee (as
defined in Paragraph 1.f.iii.B. below). Tenant shall have five (5) Business Days
after the receipt of Landlord's estimated budget to approve or reasonably
disapprove of the same. If Tenant disapproves of the budget within such five (5)
Business Day period, Tenant shall so notify Landlord and the Final Plans shall
promptly be modified by Landlord's architect in order to satisfactorily reduce
the amount of the estimated budget, as requested by Tenant. Any and all
revisions to the Final Plans shall be subject to Landlord's and Tenant's
reasonable approval. Upon Landlord's revision of the Final Plans, Landlord shall
cause Landlord's Contractor to promptly issue new pricing and upon receipt of
such pricing Landlord shall prepare and submit to Tenant a revised estimated
budget. Tenant shall respond to the revised estimated budget in the manner
described above. Any delay in Substantial Completion of the Tenant Improvements
or increased cost of the
1
Tenant Improvements caused directly or indirectly by any revision to the Final
Plans or the estimated budget to address Tenant's disapproval of the estimated
budget shall constitute a Tenant Delay under Paragraph 1.e. below. If Tenant
fails to raise any objections to the budget within the five (5) Business Day
period(s) described above, Tenant shall be deemed to have approved Landlord's
proposed budget. Landlord shall commence construction of the Tenant Improvements
promptly after approval of the Final Plans, and thereafter diligently pursue
such construction to completion (but in no event shall Landlord be required to
pursue a construction schedule which would cause Substantial Completion to occur
prior to January 15, 1999). Landlord shall use reasonable care in preparing the
budget, but it shall be good faith estimate only and will not limit Tenant's
obligation to pay for its share of the costs of the Tenant Improvements as set
forth below in this Paragraph 1.
c. Changes. In the event that Tenant shall request any change in or
-------
to the Final Plans (a "Change"), Landlord's architect shall prepare for
Landlord's and Tenant's review and written approval a change order with respect
to such Change (the "Change Order"), together with, if appropriate, revised
Working Drawings incorporating the requested Change and clearly identifying
the same as such on the revised Working Drawings. Landlord shall not
unreasonably withhold or delay its approval of the Change Order or revised
Working Drawings, provided, however, that Landlord shall have at least three (3)
Business Days after receipt thereof to review any proposed Change. In the event
that Landlord shall approve any proposed Change, together with such approval,
if practicable, and if not practicable as soon thereafter as is practicable,
Landlord shall give Tenant Landlord's estimated increase or decrease in the
cost of the Tenant Improvements which would result from incorporating such
Change and Landlord's estimate of the delay, if any, in the commencement or
completion of the Tenant Improvements which would result from incorporating such
Change. Landlord will use reasonable care in preparing the estimates, but they
shall be good faith estimates only and will not limit Tenant's obligation to pay
for the actual increase in the cost of the Tenant Improvements or Tenant's
responsibility for the actual construction delay resulting from the Change.
Within two (2) Business Days after receipt of such cost and delay estimates,
Tenant shall notify Landlord in writing whether Tenant approves the Change. If
Tenant fails to approve the change within such two (2) Business Day period,
construction of the Tenant Improvements shall proceed as provided in accordance
with the Final Plans as they existed prior to the requested Change. If,
following Tenant's review of the estimated costs and delays, Tenant desires
Landlord to incorporate the Change into the Tenant Improvements, then Tenant and
Landlord shall execute a change order for such Change on Landlord's standard
form therefor, and the term "Final Plans" shall thereafter be deemed to refer to
the Working Drawings as so revised and approved.
d. Landlord's Work. In addition to construction of the Tenant
---------------
Improvements, Landlord shall construct the Building as a watertight shell, with
all utilities brought to the Building, in accordance with plans prepared by
Landlord's architect and previously delivered to Tenant (collectively,
"Landlord's Work"). Landlord's Work shall be performed at Landlord's sole cost
and expense (except for any costs resulting from Tenant Delays, including any
Changes) by such general contractor as Landlord shall determine.
e. Tenant Delays. Tenant shall be responsible for, and shall pay to
-------------
Landlord, any and all costs and expenses (including lost rent) incurred by
Landlord in connection with the following, or by reason of any delay in the
commencement or completion of Landlord's Work or the Tenant Improvements or in
Landlord's timely delivery of the Premises caused by the following: (i) the
failure of Tenant to submit the Space Plans or Final Space Plans to Landlord by
the dates or within the time periods set forth in Paragraph 1.a. above, or the
failure of the Space Plans or Final Space Plans to meet the applicable
requirements of Paragraph 1.a. above, (ii) Tenant's failure to respond to the
Working Drawings within the time period(s) set forth in Paragraph 1.a above,
(iii) any changes in the Space Plans requested by Tenant, or any changes in the
Working Drawings requested by Tenant (including any costs or delays resulting
from proposed changes that are not ultimately
2
made), (iv) any failure by Tenant to promptly respond to inquiries regarding the
construction of the Tenant Improvements or Landlord's Work or to promptly grant
Tenant's approval of materials or finishes for the Tenant Improvements or
Landlord's Work, (v) any failure by Tenant to timely pay any amounts due from
Tenant hereunder (it being acknowledged that if Tenant fails to make or
otherwise delays making such payments, Landlord may stop Landlord's Work rather
than incur costs which Tenant is obligated to fund but has not yet done so and
any delay from such a work stoppage will be a Tenant Delay), (vi) any
interference by Tenant with the construction of the Tenant Improvements or
Landlord's Work, or (vii) any other delay requested or caused by Tenant,
including, without limitation, any delay caused by Tenant's early entry into any
portion of the Premises pursuant to Section 2.d. of the Lease. Each of the
foregoing is referred to herein and in the Lease as a "Tenant Delay".
Landlord shall notify Tenant in writing of any Tenant Delay
(identifying the nature of the Tenant Delay) as soon as reasonably practicable
after Landlord becomes actually aware of such Tenant Delay, together with
Landlord's then good faith estimate of the probable duration of such Tenant
Delay. Without limitation, Landlord will use its good faith efforts to notify
Tenant of "long lead item" as soon as reasonably practicable after actually
being advised of the delay by the suppliers involved, or otherwise actually
becoming aware of the delay. Landlord will suggest alternative products to
alleviate the delay, if possible, and may substitute reasonably equivalent
products as deemed reasonably necessary by Landlord.
f. Cost of Improvements. The cost of the construction and
--------------------
installation of the Tenant Improvements shall be borne as follows:
i. Landlord shall pay the entire cost of Landlord's Work
(as described in Paragraph 1.d. above), including costs of
obtaining permits for the same.
ii. Landlord's architectural, engineering and other
consultant fees in connection with the design and construction of
the Tenant Improvements, including the costs of producing the
Working Drawings and Final Plans, shall be paid by Tenant upon
Landlord's demand, subject to Tenant's right to use a portion of
Landlord's Contribution towards the amount of such costs as
provided below.
iii. Landlord shall contribute toward the cost of the
construction and installation of the Tenant Improvements an
amount not to exceed $857,100.00 (which is the product of $20.00
times the stipulated number of rentable square feet of the
Premises as set forth in the Basic Lease Information)
("Landlord's Contribution"). The following provisions shall
govern the payment of Landlord's Contribution:
A. Excess Cost: Shares of Costs. If the total cost of
----------------------------
construction of the Tenant Improvements (including the
Construction Operations Fee described below and the City of
Hayward Interim Supplemental Building Construction and
Improvement Tax) exceeds the funds available therefor from
Landlord's Contribution, then tenant shall pay all such excess
(the "Excess Cost"). Based on the estimated cost (the "Estimated
Costs") of the construction of the Tenant Improvements, the
prorata share of the Estimated Costs payable by Landlord and
Tenant shall be determined and an appropriate percentage share
established for each (a "Share of Costs"). Tenant and Landlord
shall fund the cost of such work as the same is performed, in
accordance with their respective Share of Costs for such work. At
such time as Landlord's Contribution has been entirely disbursed,
Tenant shall pay the remaining Excess Cost, if any, which
payments shall be made in installments as
3
construction progresses in the same manner as Tenant's payments of Tenant's
Share of Costs were paid.
B. Construction Operations Fee. Landlord shall retain from the amount
---------------------------
of Landlord's Contribution, in the manner described below, an aggregate sum
equal to four percent (4%) of the total cost of the construction and
installation of the Tenant Improvements (which cost of the construction and
installation shall include architectural and engineering fees but shall not
include permit fees) (the "Construction Operations Fee") as compensation to
Landlord for review of plans, specifications and budgets, coordinating the
schedule for construction of the Tenant Improvements, and for other
miscellaneous costs incurred by Landlord as a result of the construction work.
At the time Landlord makes any disbursement of Landlord's Contribution, Landlord
shall retain from Landlord's Contribution, as a partial payment of the
Construction Operations Fee, a proportionate amount of the Construction
Operations Fee based upon Landlord's reasonable estimate of the amount required
to be withheld from such disbursement in order to ensure that the entire
Construction Operations Fee is retained over the course of construction on a
prorata basis. At such time as Landlord's Contribution has been entirely
disbursed, if the entire Construction Operations Fee has not yet been paid to
Landlord, Tenant shall pay to Landlord a prorata portion of each payment made by
Tenant on account of the Tenant Improvements in order to ensure that the balance
of the Construction Operations Fee is paid to Landlord over the course of
construction on a prorata basis.
C. Certain Costs. Portions of Landlord's Contribution may, at
-------------
Tenant's election, be applied toward Tenant's architectural fees in connection
with the production of the Space Plans and Final Space Plans, and Landlord's
architectural, engineering and other consultant fees in connection with the
design and construction of the Tenant Improvements, including the costs of
producing the Working Drawings and Final Plans; provided, however, that the
portion of Landlord's Contribution applied to such fees may not exceed One
Dollar ($1.00) per rentable square foot of the Premises and any excess shall be
paid directly by Tenant to Landlord from Tenant's own funds. In no event may any
portions of Landlord's Contribution be applied towards the costs of Tenant's
engineering fees (if any), trade fixtures, personal property, equipment or
furniture, or towards rent due under this Lease.
D. Entire Premises to be Improved. Tenant acknowledges that
------------------------------
Landlord's Contribution is to be applied to the Tenant Improvements (and the
costs permitted under Paragraph l.f.iii.C. above) covering the entire Premises.
If Tenant does not improve the entire Premises, then, without limitation of any
other rights or remedies of Landlord hereunder, Landlord's Contribution shall be
adjusted on a prorata per rentable square foot basis to reflect the number of
rentable square feet actually being improved.
E. Provisions Applicable to Phases. Landlord and Tenant acknowledge
-------------------------------
that the Premises may be improved by Tenant in two phases based on Tenant's
anticipated occupancy schedule for the Premises. Accordingly, the foregoing
provisions shall apply separately as to each phase of the Premises, and where
the foregoing provisions refer to the "Premises", such reference shall be deemed
a reference to the applicable phase of the Premises.
iv. Improvement Advance. Notwithstanding the foregoing provisions, if the
-------------------
cost of the Tenant Improvements shall exceed Landlord's Contribution, upon
Tenant's request Landlord shall advance to Tenant the Excess Cost, up to a total
4
advance of $299,985.00 (which is $7.00 per rentable square foot of the
Premises). The amount of the total Excess Cost advanced by Landlord
(the "Improvement Advance") shall be repaid by Tenant, together with
interest on amounts thereof from time to time unpaid at the rate of
eleven percent (11%) per annum, in equal monthly installments of
principal and interest, as additional rent hereunder, payable with the
monthly Basic Rent. Such installments shall be in such amount as will
fully amortize the amount of the Improvement Advance, together with
such interest, over the initial Term. Upon the determination of the
amount of the Improvement Advance, Landlord and Tenant shall promptly
execute a written memorandum of the amount of such installments.
Notwithstanding anything in the foregoing to the contrary, in the
event this Lease is terminated prior to the originally scheduled
Expiration Date, for any reason whatsoever, the then-outstanding
balance of Improvement Advance, together with accrued and unpaid
interest thereon, but without any prepayment penalty, shall become
immediately due and payable in full by Tenant.
5
EXHIBIT C
---------
COMMENCEMENT DATE MEMORANDUM
----------------------------
LANDLORD: ________________________________
________________________________
TENANT: ________________________________
________________________________
LEASE DATE: ________________________________
PREMISES: ________________________________
________________________________
________________________________
Pursuant to Section 2.d. of the above-referenced Lease, the Commencement Date
hereby is established as ___________________, and the Expiration Date hereby is
established as _______________.
LANDLORD:
______________________________
a_____________________________
By____________________________
Its_________________________
TENANT:
______________________________
a_____________________________
BY____________________________
Its_________________________
EXHIBIT D
---------
RULES AND REGULATIONS
---------------------
1. No sign, placard, picture, advertisement, name or notice shall be installed
or displayed on any part of the outside or inside of the Building without the
prior written consent of Landlord. Landlord shall have the right to remove, at
Tenant's expense and without notice, any sign installed or displayed in
violation of this rule. All approved signs or lettering on doors, windows and
walls shall be printed, painted, affixed or inscribed at the expense of Tenant
by a person chosen by Landlord, using materials of Landlord's choice and in a
style and format approved by Landlord.
2. The directory of the Building will be provided exclusively for the display
of the name and location of tenants, and Landlord reserves the right to exclude
any other names therefrom. Tenant shall pay Landlord's standard charge for
Tenant's listing thereon and for any changes by Tenant.
3. Except as consented to in writing by Landlord or in accordance with Building
standard improvements, no draperies, curtains, blinds, shades, screens or other
devices shall be hung at or used in connection with any window or exterior door
or doors of the Premises. No awning shall be permitted on any part of the
Premises. Tenant shall not place anything against or near glass partitions or
doors or windows which may appear unsightly from outside the Premises.
4. Tenant shall not obstruct any sidewalks, halls, lobbies, passages, exits,
entrances, elevators or stairways of the Building. No tenant and no employee or
invitee of any tenant shall go upon the roof of the Building or make any roof or
terrace penetrations. Tenant shall not allow anything to be placed on the
outside terraces or balconies without the prior written consent of Landlord.
5. No Tenant shall invite to the Premises, or permit the visit of, persons in
such numbers or under such conditions as to interfere with the use and enjoyment
of the Common Areas of the Building by other tenants.
6. Intentionally Deleted.
7. Landlord will furnish Tenant, free of charge, two (2) keys to Tenant's suite
entrance. Landlord may make a reasonable charge for any additional keys and for
having any locks changed. Tenant shall not make or have made additional keys
without Landlord's prior written consent, and Tenant shall not alter any lock or
install a new additional lock or bolt on any door of its Premises without
Landlord's prior written consent. Tenant shall deliver to Landlord, upon the
termination of its tenancy, the keys to all locks for doors on the Premises. If
Tenant loses any keys furnished by Landlord, Tenant shall pay Landlord the cost
of rekeying the Premises.
Landlord will furnish Tenant, free of charge, two (2) building access cards. A
reasonable charge will be assessed for any additional cards and lost or stolen
cards. Tenant shall deliver to Landlord, upon the termination of its tenancy,
all access cards.
8. If Tenant requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain, and comply with, Landlord's instructions for
their installation.
9. Intentionally Deleted.
10. Tenant shall not place a load upon any floor of the Premises which exceeds
the maximum load per square foot which the floor was designed to carry and
which is allowed by law. Tenant's business machines and mechanical equipment
which cause noise or vibration which may be transmitted to the structure of the
Building or to any space therein, and which is objectionable to Landlord or to
any tenants in the Building, shall be placed and maintained by Tenant, at
Tenant's expense, on vibration eliminators or other devices sufficient to
eliminate noise or vibration.
11. Tenant shall not use or keep in the Premises any toxic or hazardous
materials or any kerosene gasoline or inflammable or combustible fluid or
material other than those limited quantities necessary for the operation or
maintenance of office equipment. Tenant shall not use or permit to be used in
the Premises any foul or noxious gas or substance, or permit or allow the
Premises to be occupied or used in a manner offensive or objectionable to
Landlord or other occupants of the Building by reason of noise, odors or
vibrations. No animal, except seeing eye dogs when in the company of their
masters, may be brought into or kept in the Building.
12. Tenant shall not use any method of heating or air-conditioning other than
that supplied by Landlord, unless Tenant receives the prior written consent of
Landlord.
13. Tenant shall cooperate fully with Landlord to assure the most effective
operation of the Building's heating and air-conditioning and to comply with any
governmental energy-saving rules, laws or regulations of which Tenant has actual
notice. Tenant shall refrain from attempting to adjust controls other than room
thermostats installed for Tenant's use.
14. All entrance doors to the Premises shall be left locked when the Premises
are not in use, and all doors opening to public corridors shall be kept closed
except for normal ingress and egress to and from the Premises.
15. Landlord reserves the right, exercisable without notice and without
liability to Tenant, to change the name and street address of the Building.
16. Landlord reserves the right to prevent access to the Building by closing the
doors or by other appropriate action in case of invasion, mob, riot, public
excitement or other commotion.
17. Tenant shall close and lock the doors of its Premises, shut off all water
faucets or other water apparatus and turn off all lights and other equipment
which is not required to be continuously run. Tenant shall be responsible for
any damage or injuries sustained by other tenants or occupants of the Building
or Landlord for noncompliance with this Rule.
18. The toilet rooms, toilets, urinals wash bowls and other apparatus shall not
be used for any purpose other than that for which they were constructed, and no
foreign substance of any kind whatsoever shall be placed therein. The expense of
any breakage, stoppage or damage resulting from any violation of this rule shall
be borne, by the tenant who, or whose employees or invitees; shall have caused
it.
19. Tenant shall not install any radio or television antenna, loudspeaker or
other device on the roof or exterior walls of the Building, except as part of
Alterations approved by Landlord pursuant to Section 9 of the Lease. Tenant
shall not interfere with radio or television broadcasting or reception from or
in the Building or elsewhere.
20. Intentionally Deleted.
21. Tenant shall not install, maintain or operate upon the Premises any vending
machine (other than vending machines for use by Tenant's employees) without the
prior written consent of Landlord.
22. Canvassing, soliciting and distributing handbills or any other written
material and peddling in the Building are prohibited, and each tenant shall
cooperate to prevent these activities.
23. Landlord reserves the right to exclude or expel from the Building any person
who, in Landlord's
judgment, is intoxicated or under the influence of liquor or drugs, or who is in
violation of any of the Rules and Regulations of the Building.
24. Tenant shall store all its trash and garbage within its Premises. Tenant
shall not place in any trash box or receptacle any material which cannot be
disposed of in the ordinary and customary manner of trash and garbage disposal
within the Building. All garbage and refuse disposal shall be made in accordance
with directions issued from time to time by Landlord.
25. Use by Tenant of Underwriters' Laboratory approved equipment for brewing
coffee, tea, hot chocolate and similar beverages and microwaving food shall be
permitted, provided that the equipment and use is in accordance with all
applicable federal, state, county and city laws, codes, ordinances, rules and
regulations.
26. Tenant shall not use the name of the Building in connection with or in
promoting or advertising the business of Tenant, except as Tenant's address,
without the written consent of Landlord.
27. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.
Tenant shall be responsible for any increased insurance premiums attributable to
Tenant's use of the Premises, Building or Property.
28. Tenant assumes any and all responsibility for protecting its Premises from
theft and robbery, which responsibility includes keeping doors locked and other
means of entry to the Premises closed.
29. Tenant shall not use the Premises, or suffer or permit anything to be done
on, in or about the Premises, which may result in an increase to Landlord in the
cost of insurance maintained by Landlord on the Building and Common Areas.
30. Tenant's requests for assistance will be attended to only upon appropriate
application to the office of the Building by an authorized individual.
Employees of Landlord shall not perform any work or do anything outside of their
regular duties unless under special instructions from Landlord, and no
employee of Landlord will admit any person (Tenant or otherwise) to any office
without specific instructions from Landlord.
31. Tenant shall not park its vehicles in any parking areas designated by
Landlord as areas for parking by visitors to the Building or other reserved
parking spaces. Tenant shall not leave vehicles in the Building parking areas
overnight, nor park any vehicles in the Building parking areas other than
automobiles, motorcycles, motor driven or non-motor driven bicycles or
four-wheeled trucks. Tenant, its agents, employees and invitees shall not park
any one (1) vehicle in more than one (1) parking space.
32. The scheduling and manner of all Tenant move-ins and move-outs shall be
subject to the discretion and approval of Landlord, and move-ins and move-outs
shall take place only after 6:00 p.m. on weekdays, on weekends, or at other
times as Landlord may designate. Landlord shall have the right to approve or
disapprove the movers or moving company employed by Tenant, and Tenant shall
cause the movers to use only the entry doors and elevators designated by
Landlord. If Tenant's movers damage the elevator or any other part of the
Property, Tenant shall pay to Landlord the amount required to repair the damage.
33. No cooking shall be permitted on the Premises, except with a microwave oven
or using facilities constructed as Alterations approved by Landlord pursuant to
Section 9 of the Lease, nor shall the Premises be used for washing clothes, for
lodging or for any improper, objectionable or immoral purpose.
34. Tenant shall not use in any space or in the public halls of the Building,
any hand trucks except those equipped with rubber tires and side guards or such
other material-handling equipment as Landlord may approve. Tenant shall not
bring any bicycles or other vehicles of any kind into the building.
35. Landlord shall have the right to control and operate the public portions of
the Building and the public facilities, heating and air conditioning, as well as
facilities furnished for the common use of the tenants, in such manner as it
deems best for the benefit of the tenants generally.
36. Landlord may waive any one or more of these Rules and Regulations for the
benefit of Tenant or any other tenant, but no waiver by Landlord shall be
construed as a waiver of the Rules and Regulations in favor of Tenant or any
other tenant, nor prevent Landlord from thereafter enforcing the Rules and
Regulations against any or all of the tenants of the Building.
37. These Rules and Regulations are in addition to, and shall not be construed
to in any way modify or amend, in whole or in part, the terms, covenants,
agreements and conditions of any lease of premises in the Building.
38. Landlord reserves the right to make other reasonable Rules and Regulations
as, in its judgment, may from time to time be needed for safety and security,
for care and cleanliness of the Building and for the preservation of good order
therein. Tenant agrees to abide by all Rules and Regulations hereinabove stated
and any additional rules and regulations which are adopted.
39. Tenant shall be responsible for the observance of all of the foregoing rules
by Tenant's employees, agents, clients, customers, invitees and guests.
EXHIBIT E
TO DEVELOPMENT SERVICES AGREEMENT
Tenant Estoppel Certificate
---------------------------
TO: The Multi-Employer Property Trust, a trust organized under 12 C.F.R.
Section 9.18 ("Landlord")
c/o Kennedy Associates Real Estate Counsel, Inc.
2400 Financial Center Building
1215 Fourth Avenue
Seattle, Washington 98161
THIS IS TO CERTIFY:
1. That the undersigned is the Tenant under that certain Lease dated
___________, and, if applicable, amended on ______________, by and between The
Multi-Employer Property Trust by its trustee Riggs & Company, a division of
Riggs Bank N.A. ("Landlord"), and the undersigned ("Tenant") covering those
certain premises located as shown on the drawing made part of the Lease (the
"Premises").
2. That said Lease is in full force and effect and, except as noted in
paragraph 1 above, has not been modified, changed, altered or amended in any
respect, and is the only lease or agreement between the Tenant and the Landlord
affecting the Premises.
3. To the best of Tenant's knowledge, the information set forth below is
true and correct:
3.1 Square footage of the Premises:_________________________________
3.2 Annual rent as of the commencement of Lease:$___________________
3.3 Current annual rent (if different than at commencement):$_______
3.4 Commencement date of Lease:_____________________________________
3.5 Lease termination date:_________________________________________
3.6 Rent paid to and including:_____________________________________
3.7 Security deposit:_______________________________________________
3.8 Prepaid rent for and in amount of:$_____________________________
3.9 Free Rent Period:______________________ to _____________________
3.10 Amount of current monthly escrow payment obligations with
respect to taxes, insurance, and Common Area Maintenance charges
under the Lease:
Taxes: $__________________
Insurance: $__________________
Common Area Maintenance Charges: $__________________
3.11 Dates through which Tenant has paid monthly escrow payments and
Common Area Maintenance charges:
Escrow Payment for Taxes: ________________
Escrow Payment for Insurance: ________________
Common Area Maintenance charge: ________________
3.12 Base Amounts (stops) established in leases for monthly escrow
payments:
Base Amount Taxes: $_______________
Base Amount Insurance: $_______________
Base Amount Maintenance Charge: $_______________
4. Tenant now occupies the Premises, accepts the Premises in their
current condition subject only to those punch list items listed in Exhibit A, if
---------
any, and is not aware of any defect in the Premises except as described in
Exhibit A, if any.
- ---------
5. No rent has been paid in the current month other than as disclosed in
paragraph 3. No free rent or other concessions, benefits, or inducements other
than as specified in the Lease have been granted to Tenant or undertaken by the
Landlord.
6. Tenant has not been granted any renewal, expansion or purchase options
and has not been granted any rights of first refusal except as disclosed in
writing in the Lease.
7. Neither Tenant nor to the best of Tenant's knowledge, Landlord is in
breach of the Lease and there has not occurred any event, act, omission or
condition which by notice or lapse of time or both or otherwise, will result in
any breach by Tenant or to the best of Tenant's knowledge, by Landlord. As of
the date hereof, and except as set forth in the Lease, the undersigned is
entitled to no credit, offset or deduction in rent. Tenant knows of no
liabilities or obligations of Landlord which have accrued but are unsatisfied
under the Lease as of the date of this Certificate.
8. To the best of Tenant's knowledge, there are no actions, whether
voluntary or otherwise, pending against the undersigned under the bankruptcy
laws or other laws for the relief of debtors of the United States or any state
thereof.
9. With the exception of this Lease, neither the Tenant nor any affiliate
of the Tenant is a tenant under a lease or any other tenancy arrangement (1)
with (a) Riggs & Company, a division of Riggs Bank N.A., as trustee of the
Multi-Employer Property Trust; (b) Riggs Bank N.A., as trustee of the
Multi-Employer Property Trust, (c) the Multi-Employer Property Trust; (d) the
National Bank of Washington Multi-Employer Property Trust, the previous name of
the Multi-Employer Property Trust; (e) The Riggs National Bank of Washington,
D.C., as trustee of the Multi-Employer Property Trust; (f) the Corporate Drive
Corporation as trustee of the Corporate Drive Nominee Realty Trust; (g)
-2-
Arboretum Lakes-l, L.L.C., a Delaware limited liability company; (h) Village
Green at Seven Bridges, L.L.C.; (i) Pine Street Development, L.L.C.; (j) MEPT
Realty LLC; (k) MEPT, L.L.C.; (l) Cabrillo Properties LLC; (m) Valencia LLC; (n)
Centrepointe Distribution Center LLC; (o) Mission Trails LLC; or (p) Northridge
Business Center LLC; or (2) involving any property in which any one or more of
the entities named in clauses (i) (a) through (e) are known by the Tenant to
have an ownership interest. [This paragraph will be updated from time to time.]
DATED this ___ day of _____, 19__.
TENANT:
------
______________________________________
a ____________________________________
By: __________________________________
Name: ________________________
Its: _________________________
-3-
EXHIBIT A to Tenant Estoppel Certificate
List of Defects
---------------
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE (this "Amendment"), is made as
of the 17th day of November, 1998, by and between THE MULTI-EMPLOYER PROPERTY
TRUST, A TRUST ORGANIZED UNDER 12 C.F.R. SECTION 9.18 ("Landlord"), and
CERTICOM CORP., a Delaware corporation ("Tenant").
WHEREAS, Landlord and Tenant entered into that certain lease
dated October 30, 1998 (the "Lease"), with respect to certain premises (the
"Premises") located at 25801 Industrial Blvd. in the Mt. Eden Business Park in
Hayward, California;
WHEREAS, the lease incorrectly sets forth the agreement of
Landlord and Tenant regarding Base Rent adjustments, and the parties desire to
amend the Lease to correct such error. Unless otherwise defined herein,
capitalized terms are used herein as defined in the Lease.
NOW, THEREFORE, the parties hereto do hereby agree as
follows:
1. Base Rent Adjustment. Section 4.b. of the Lease is hereby
--------------------
amended to read in its entirety as follows:
"b. Base Rent Adjustment. Commencing on the first day of the 37th full calendar
--------------------
month of the Term, the Base Rent shall increase to $58,536.00 per month, and
shall be payable in such amount through the end of the 72nd full calendar month
of the Term. Commencing on the first day of the 73rd full calendar month of the
Term, the Base Rent shall increase to $63,964.00 per month, and shall be payable
in such amount through the Expiration Date."
2. Ratification. Except as amended hereby, the Lease remains
------------
unmodified and in full force and effect.
3. Entire Understanding. This Amendment represents the entire
--------------------
understanding between of the parties concerning the subject matter hereof, and
there are no understandings or agreements between them relating to the Lease or
the leased premises not set forth in writing and signed by the parties hereto.
No party hereto has relied upon any representation, warranty or understanding
not set forth herein, either oral or written, as an inducement to enter into
this Amendment.
4. Counterparts. This Amendment may be executed in any number
------------
of counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
1
IN WITNESS WHEREOF, the parties have executed this Amendment as of
the date first above written.
Landlord: Tenant:
THE MULTI-EMPLOYER CERTICOM CORP.,
PROPERTY TRUST, A TRUST a Delaware corporation
ORGANIZED UNDER 12 C.F.R.
SECTION 9.18, by its trustee
Riggs & Company, a division of By: /s/ [ILLEGIBLE]
Riggs Bank N.A. ----------------------------
Its: CHAIRMAN & CEO
---------------------------
By: /s/ [ILLEGIBLE] By: /s/ BRUCE MACINNIS
------------------------------- ----------------------------
Its: Managing Director Its: VP FINANCE & CEO
------------------------------ ---------------------------
The undersigned, as Guarantor of the Lease pursuant to that certain
Continuing Guaranty of Lease dated as of October 30, 1998 (the "Guaranty"),
hereby consents to the foregoing Amendment and agrees that the Guaranty shall
remain in full force and effect arid shall apply to the foregoing Amendment and
to the Lease as amended thereby.
Guarantor
CERTICOM CORP., an Ontario corporation,
By: /s/ BRUCE MACINNIS
-------------------------------
Name: BRUCE MACINNIS
-----------------------
Title: VP FINANCE & CEO
----------------------
2
SECOND AMENDMENT TO LEASE
THIS SECOND AMENDMENT TO LEASE (this "Amendment") is made as
of the 15 day of March, 2000, by and between THE MULTI-EMPLOYER PROPERTY TRUST,
A TRUST ORGANIZED UNDER 12 C.F.R. SECTION 9.18 ("Landlord"), and CERTICOM CORP.,
a Delaware corporation ("Tenant").
WHEREAS, Landlord and Tenant entered into that certain lease
dated October 30,1998, as amended by First Amendment to Lease dated as of
November 17,1998 (as so amended, the "Lease"), with respect to certain premises
(the "Original Premises") located at 25801 Industrial Blvd. in the Mt. Eden
Business Park in Hayward, California (the "Business Park");
WHEREAS, the parties desire to amend the Lease to add
additional space in the Business Park to the premises demised thereunder and to
make certain changes to the Lease in connection therewith. Unless otherwise
defined herein, capitalized terms are used herein as defined in the Lease.
NOW, THEREFORE, the parties hereto do hereby agree as
follows:
1. Additional Premises.
-------------------
a. Effective as of April 1, 2000 (the "Additional Premises
Commencement Date"), the Additional Premises shall be added to the premises
demised to Tenant under the Lease. The term of the Lease, as applicable to the
Additional Premises, shall expire on the date (the "Additional Premises
Expiration Date") that is seven (7) years from the Additional Premises Rent
Commencement Date (as defined in Paragraph 3 below). The "Additional Premises'
shall mean that portion of the building known as 25821 Industrial Boulevard,
located in the Business Park, as shown on Exhibit A attached hereto. The
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parties hereby stipulate that for all purposes of this Amendment and the Lease,
the Additional Premises consist of 68,182 rentable square feet. From and after
the Additional Premises Commencement Date, the term "Premises" used in the Lease
shall be deemed to refer to the Original Premises and the Additional Premises,
and all of the terms, covenants and conditions of the Lease applicable to the
Original Premises shall be applicable to the Additional Premises, except as
hereinafter set forth or to the extent in conflict with the provisions of this
Amendment.
b. The Additional Premises shall be delivered to Tenant in
their then "as-is" condition, and Landlord shall not have any obligation to
make or, except as provided in Paragraph 2 below, pay for any alterations,
additions or improvements to prepare the Additional Premises for Tenant's
occupancy.
c. If, for any reason, Landlord cannot deliver possession of
the Additional Premises to Tenant on the Additional Premises Commencement
Date, (i) Tenant's obligations hereunder with respect to the Additional
Premises shall not commence, and the Additional Premises Commencement Date
shall not be deemed to have occurred, until possession of the Additional
Premises is delivered to Tenant, (ii) the failure shall not affect the
validity of this Amendment or the Lease, or, except as provided in clause (i),
the obligations of Tenant
1
hereunder or under the Lease, (ii) such failure shall not serve to extend the
Additional Premises Expiration Date, and (iii) Landlord shall not be subject to
any liability.
2. Tenant Improvements. Any alterations, additions or improvements which
-------------------
Tenant desires to make to the Additional Premises to prepare the same for
Tenant's initial occupancy (the "Tenant Improvements") shall be performed in
accordance with, and be subject to all provisions of, Section 9 of the Lease.
Landlord shall contribute toward the cost of the construction of the Tenant
Improvements an amount not to exceed $681,820.00 (which is the product of
$10.00 times the stipulated number of rentable square feet of the Additional
Premises)("Landlord's Contribution"). The following provisions shall govern the
payment of Landlord's Contribution:
A. Excess Cost: Share of Costs. If the total cost of construction of the
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Tenant Improvements (including the Alteration Fee described in Section 9 of the
Lease and the City of Hayward Interim Supplemental Building Construction and
Improvement Tax) exceeds the funds available therefor from Landlord's
Contribution, then Tenant shall pay all such excess (the "Excess Cost"). Based
on the estimated cost (the "Estimated Costs") of the construction of the Tenant
Improvements, the prorata share of the Estimated Costs payable by Landlord and
Tenant shall be determined and an appropriate percentage share established for
each (a "Share of Costs"). Tenant and Landlord shall fund the cost
of such work as the same is performed, in accordance with their respective Share
of Costs for such work. At such time as Landlord's Contribution has been
entirely disbursed, Tenant shall pay the remaining Excess Cost, if any, which
payments shall be made in installments as construction progresses in the same
manner as Tenant's payments of Tenant's Share of Costs were paid. At the time
Landlord makes any disbursement of Landlord's Contribution, Landlord shall
retain from Landlord's Contribution, as a partial payment of the Alteration Fee,
a proportionate amount of the Alteration Fee based upon Landlord's reasonable
estimate of the amount required to be withheld from such disbursement in order
to ensure that the entire Alteration Fee is retained over the course of
construction on a prorata basis. At such time as Landlord's Contribution has
been entirely disbursed, if the entire Alteration Fee has not yet been paid to
Landlord, Tenant shall pay to Landlord a prorata portion of each payment made by
Tenant on account of the Tenant Improvements in order to ensure that the balance
of the Alteration Fee is paid to Landlord over the course of construction on a
prorata basis. Notwithstanding anything to the contrary in this Paragraph 2,
Landlord's Contribution shall be available for disbursement pursuant to the
terms hereof only during the calendar year 2000. Accordingly, if any portion
of Landlord's Contribution is not utilized prior to December 31, 2000, such
unused potion shall be forfeited by Tenant.
B. Certain Costs. Portions of Landlord's Contribution may, at
-------------
Tenant's election, be applied toward Tenant's architectural fees in connection
with the design and construction of the Tenant Improvements; provided, however,
that the portion of Landlord's Contribution applied to such fees may not exceed
One Dollar ($1.00) per rentable square foot of the Additional Premises and any
excess shall be paid directly by Tenant to Landlord from Tenant's own funds. In
no event may any portions of Landlord's Contribution be applied towards the
costs of Tenant's engineering fees (if any), trade fixtures, personal property,
equipment or furniture, or towards rent due under this Lease.
C. Entire Additional Premises to be Improved. Tenant acknowledges that
-----------------------------------------
Landlord's Contribution is to be applied to the Tenant Improvements (and the
costs permitted under Paragraph 2.B. above) covering the entire Additional
Premises. If Tenant does not
2
improve the entire Additional Premises, then, without limitation of any other
rights or remedies of Landlord hereunder, Landlord's Contribution shall be
adjusted on a prorata per rentable square foot basis to reflect the number of
rentable square feet actually being improved.
3. Base Rent. Commencing as of the date (the "Additional
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Premises Rent Commencement Date") that is the earlier of (i) one-hundred twenty
(120) days after the Additional Premises Commencement Date, or (ii) Tenant's
occupancy of the Additional Premises or any portion thereof for the conduct of
business, and thereafter on the first day of each calendar month of the Term,
Tenant shall pay to Landlord (or other entity designated by Landlord) Base Rent
for the Additional Premises, in advance, at Landlord's address for notices (as
set forth in the Basic Lease Information in the Lease) or at such other address
as Landlord may designate. The initial Base Rent for the Additional Premises
shall be Sixty-One Thousand Three Hundred Sixty-Four Dollars ($61,364.00).
Effective as of each annual anniversary of the Additional Premises Rent
Commencement Date, the Base Rent payable by Tenant for the Additional Premises
shall increase to one-hundred three percent (103%) of the Base Rent then in
effect for the Additional Premises. From and after the Additional Premises Rent
Commencement Date, the term "Base Rent" as used in the Lease shall mean the
Base Rent payable for the Original Premises and the Base Rent payable for the
Additional Premises, collectively. The Base Rent for the Additional Premises
shall be payable by Tenant in addition to the Base Rent payable by Tenant for
the Original Premises, as set for the in the Lease.
4 Operating Expenses. Commencing as of the Additional Premises
------------------
Rent Commencement Date, and continuing thereafter during the balance of the
Term, the provisions of Section 5 of the Lease shall be applicable to the
Additional Premises. As so applied to the Additional Premises, the term
"Tenant's Percentage Share" shall mean seventy-five percent (75%), and the term
"Building" shall mean the building in which the Additional Premises are located
The Operating Expenses for the Additional Premises shall be payable by Tenant
in addition to the Operating Expenses payable by Tenant for the Original
Premises, as set forth in the Lease.
5. Security Deposit:Letter of Credit.
---------------------------------
a. Concurrently with Tenant's execution and delivery of this
Amendment to Landlord, Tenant shall increase the Security Deposit delivered to
Landlord pursuant to Section 17 of the Lease to the amount of One Hundred Fifty
Thousand Dollars ($150,000.00), and the term "Security Deposit", as used in the
Lease, shall thereafter refer to the Security Deposit in such amount.
b. In addition to the increase in the Security Deposit required
pursuant to Paragraph 5.a. above, and in addition to the Letter of Credit
previously delivered by Tenant pursuant to the Lease (the "Original Letter of
Credit"), on or prior to the Additional Premises Commencement Date, Tenant
shall deliver an additional Letter of Credit to Landlord as further security for
Tenant's performance of all of Tenant's covenants and obligations under the
Lease. Such additional Letter of Credit (the "Additional Letter of Credit"),
and any proceeds therefrom, shall be subject to all of the terms, covenants and
conditions applicable to the Original Letter of Credit, as set forth in Section
17 of the Lease, except that the Additional Letter of Credit shall be in the
original amount of One Million Two Hundred Thousand Dollars ($1,200,000.00)
during the period from the Additional Premises Commencement Date through the
third annual anniversary of the Additional Premises Rent Commencement Date,
and reducing in amount on
3
the third annual anniversary of the Additional Premises Rent Commencement Date
and on each subsequent annual anniversary of the Additional Premises Rent
Commencement Date by twenty percent (20%) of the original amount of the
Additional Letter of Credit; provided, however, that if on the date the
Additional Letter of Credit amount would otherwise reduce, an Event of Default,
or default that with notice or the passage of time or both could mature into an
Event of Default, shall have occurred and be continuing, the Additional Letter
of Credit amount shall not reduce on such date and shall not thereafter reduce
until the later of the next scheduled reduction date or the date such Event of
Default or default shall have been cured. Where reference is made in Section 17
of the Lease to the Term of the Lease (for purposes of determining the period
during which the Original Letter of Credit or the Additional Letter of Credit,
as applicable, must be maintained in effect), as respects the Original Letter of
Credit such reference shall mean the Term of the Lease as respects the Original
Premises, and as respects the Additional Letter of Credit such reference shall
mean the Term of the Lease as respects the Additional Premises.
6. Lease Term. Effective as of the Additional Premises
----------
Commencement Date, the expiration date of the term of the Lease, as applicable
to the Original Premises, shall be deemed extended from February 28, 2006 (which
the parties acknowledge to be the current expiration date of the term of the
Lease as respects the Original Premises) to the Additional Premises Expiration
Date. All of the terms, covenants and conditions of the Lease shall apply
during such extension period (the "Extension Period"), except the Base Rent
payable by Tenant for the Original Premises shall be the "fair market rent" for
the Original Premises for the Extension Period. "Fair market rent" shall have
the meaning given in Section 40 of the Lease, with all references to the
"renewal period" being deemed references to the "Extension Period". The "rent
floor" specified in Section 40.b. of the Lease shall be fully applicable as
respects the Extension Period.
7. Renewal Option. Pursuant to Section 40 of the Lease, as of
--------------
the date of this Amendment Tenant has the option to renew the Lease for one (1)
additional term of five (5) years. In the event that Tenant validly exercises
its option to renew the Lease for such additional five (5) year term, the
parties hereby agree that such exercise shall apply to the entire premises then
demised hereunder (i.e. both the Original Premises and the Additional Premises),
and such option may not be exercised as to less than all of the premises then
demised hereunder. The "rent floor" specified in Section 40.b. of the Lease
shall be determined, for purposes of such renewal, by reference to the average
Base Rent, per rentable square foot, payable by Tenant for all of the premises
then demised hereunder.
8. Building Definition. The definition of the "Building"
-------------------
contained in the Lease is hereby modified to mean, collectively, the buildings
in which the Original Premises and the Additional Premises are located, unless
the context expressly requires otherwise. As used in Section 11 and Section 12
of the Lease, the term "Building" means only the building in which the Original
Premises or Additional Premises are located which has been damaged or destroyed
or the subject of the taking by eminent domain (or conveyance in lieu thereof),
as applicable, and notwithstanding anything to the contrary contained in Section
11 or Section 12 of the Lease, where Landlord or Tenant is granted in any such
Section a right or option to terminate this Lease by reason of damage or
destruction to, or a taking by eminent domain (or conveyance in lieu thereof),
of the Premises or the Building, such right or option shall only permit
termination of the Lease as to the space demised thereunder in the building
which has been damaged or destroyed or subject to the taking by eminent domain
(or conveyance in lieu thereof).
4
9. Ratification. Except as amended hereby, the Lease remains
------------
unmodified and in full force and effect.
10. Brokers. Each party hereto represents and warrants to
-------
the other party hereto that it has dealt with no broker or finder who can
properly claim a commission, fee or other compensation by reason of this
Amendment or Tenant's lease of the Additional Premises, except that Landlord
acknowledges that it has dealt with Colliers Parish International, Inc.
("Landlord's Broker") in connection with this Amendment. Each party hereto shall
indemnify, protect and hold harmless the other party hereto from and against any
and all loss, cost, damage, liability and expense (including attorneys' fees and
costs) arising out of my breach or alleged breach of its foregoing
representation and warranty. In addition, Landlord shall pay any commission due
to Landlord's Broker by reason of this Amendment pursuant to the terms of a
separate agreement.
11. Entire Understanding. This Amendment represents the
--------------------
entire understanding between of the parties concerning the subject matter
hereof, and there are no understandings or agreements between them relating to
the Lease or the leased premises not set forth in writing and signed by the
parties hereto. No party hereto has relied upon any representation, warranty or
understanding not set forth herein, either oral or written, as an inducement to
enter into this Amendment.
12. Counterparts. This Amendment may be executed in any
------------
number of counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment
as of the date first above written.
Landlord: Tenant:
THE MULTI-EMPLOYER CERTICOM CORP.,
PROPERTY TRUST, A TRUST a Delaware corporation
ORGANIZED UNDER 12 C.F.R.
SECTION 9.18, by its trustee
Riggs & Company, a division of By: /s/ Richard P. Dalmazzi
Riggs Bank N.A. ----------------------------
Richard P. Dalmazzi
President and CEO
By: /s/ [ILLEGIBLE] By: /s/ Richard D. Brounstein
------------------------------ -----------------------------
Richard D. Brounstein
Its: Managing Director Chief Financial Officer
------------------------------
The undersigned, as Guarantor of the Lease pursuant to that certain
Continuing Guaranty of Lease dated as of October 30, 1998 (the "Guaranty"),
hereby consents to the foregoing Amendment and agrees that the Guaranty shall
remain in full force and effect and shall apply to the foregoing Amendment and
to the Lease as amended thereby. The undersigned represents and warrants to
Landlord that it is the successor entity to the entity which originally executed
the Guaranty and the confirmation of the Guaranty contained at the end of the
First Amendment to the Lease.
Guarantor:
CERTICOM CORP., A Yukon corporation
By: /s/ Richard P. Dalmazzi
---------------------------------
Richard P. Dalmazzi
President and CEO
By: /s/ Richard D. Brounstein
---------------------------------
Richard D. Brounstein
Chief Financial Officer
6
EXHIBIT A
---------
Floor Plan - Building D
- -----------------------
MT EDEN
LOGO
[DRAWING OF FLOOR PLAN OF MT EDEN]
EXHIBIT D
---------
Initial Alterations
Plans and specifications dated 9/28/01, prepared by Weske + Associates, pages
PP-1 and PP-2 and the demolition plans dated 9/20/01 prepared by Weske +
Associates, page PP-1 only.
EXHIBIT E
---------
Letter of Credit
Attached
[LETTERHEAD OF PAINEWEBBER]
Beneficiary: Irrevocable Standby
Riggs & Company, a division of Riggs Letter of Credit No. RA09Al
Bank N.A., as trustee of the Issuance Date: November 4, 2001
Multi-Employer Property Trust Expiration Date: November 5, 2002
Attention Patrick O. Maybery
808 17th Street, NW, 7th Floor Applicant: Guava Technologies Inc.
Washington, DC 20006
Ladies and Gentlemen:
We hereby establish our Irrevocable Standby Letter of Credit in your favor
for the account of Guava Technologies Inc. for a maximum amount of US$600,000.00
(six hundred thousand and 00/100 USD) available for payment at sight by your
draft(s) drawn on us when accompanied by the following document:
Beneficiary's dated statement purportedly signed by one of its officers
reading: "This draw in the amount of ______________ USD ($__________) [not to
exceed $600,000.00] under UBS PaineWebber Inc. Irrevocable Standby Letter of
Credit No. RA09A1 represents funds due and owing to us as a result of Guava
Technologies Inc. default beyond applicable notice and cure periods under one or
more of the terms of that certain Sublease dated as of November 1, 2001 by and
between Certicom as landlord with Beneficiary as master landlord, and Guava
Technologies Inc. as subtenant" or under the Consent dated as of November __,
2001 by and among Certicom, Guava Technologies, Inc. and Beneficiary.
It is a condition of this Irrevocable Standby Letter of Credit that it will
be considered automatically renewed without amendment for a one year period upon
the expiration date set forth above and upon each anniversary of such date,
unless at least 60 (sixty) days prior to such expiration date or applicable
anniversary thereof, we notify you in writing by certified mail, return receipt
requested, that we elect not to so renew this Irrevocable Standby Letter of
Credit.
This Letter of Credit cannot be modified or revoked without Beneficiary's
written consent. Multiple and partial draws are allowed under this Letter of
Credit.
This Letter of Credit is transferable in its entirety and not in part. We
shall not recognize any transfer of this Letter of Credit until an executed
transfer form satisfactory to us is filed with us. The form required is attached
as Exhibit A. Our transfer fee of $75.00 is for the account of Guava
Technologies Inc. It shall not be a condition of transfer that such fee
accompanies the transfer request. Payment of the transfer fee is not required
prior to our completing the transfer.
Continued on Page Two
ORIGINAL
[lETTERHEAD OF UBS PAINEWEBBER]
Page Two
L/C No.RA09A1
Drafts and Documents must be presented for payment at our office located at
1200 Harbor Blvd., 4th Floor, Weehawken, NJ 07086 to the attention of the Letter
of Credit Dept. on or before expiration date described herein.
The date of presentment of any draw shall be the date a copy of the sight
draft and draw statement are faxed from Beneficiary to UBS PaineWebber Inc. at
201-352-7622, followed by originals sent by overnight courier to the address
stated below.
This credit is subject to the Uniform Customs and Practice for Documentary
Credits (1993 revision) International Chamber of Commerce Publication No. 500,
and to the extent not inconsistent therewith, the law of the State of
California, including Article 5 of the California Uniform Commercial Code.
We hereby engage with you to honor drafts and documents drawn under and in
compliance with the terms of this credit.
All communications to us with respect to this L/C must be addressed to our
office located at 1200 Harbor Blvd., 4th Floor, Weehawken, NJ 07086 to the
attention of the Letter of Credit Dept.
Very Truly Yours,
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
Authorized Signature Authorized Signature
ORIGINAL
EXHIBIT A
[LETTERHEAD OF UBS PAINEWEBBER]
THIS FORM TO BE USED WHERE A LETTER OF CREDIT IS TRANSFERRED IN ITS ENTIRETY
Date: ___________________
Re: Letter of Credit Number: ____________________ issued by UBS PaineWebber Inc.
Gentlemen:
For value received, the undersigned beneficiary hereby irrevocable transfers to:
________________________________________________________________________________
(Name of Transferee)
________________________________________________________________________________
(Address)
all rights of the undersigned beneficiary to draw under the above Letter of
Credit in its entirety.
By this transfer, all rights of the undersigned beneficiary in such Letter of
Credit are transferred to the transferee and the transferee shall have the sole
rights as beneficiary thereof, including sole rights relating to any amendments
whether increases or extensions or other amendments and whether now existing or
hereafter made.
All amendments are to be advised direct to the transferee without necessity of
any consent of or notice to the undersigned beneficiary.
The original advice of such Letter of Credit is returned herewith together with
any and all amendments, and we ask you to endorse the transfer on the reverse
of the original advice, and forward it to the transferee with your customary
notice of transfer.
Yours very truly,
SIGNATURE GUARANTEED
_______________________________ _______________________________
Name of Bank Name of Beneficiary
_______________________________ _______________________________
Authorized Signature Authorized Signature
EXHIBIT F
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Permitted Hazardous Substances
To: City of Hayward, Planning Department - Submission pending
Re: Guava Technology Control Zone Total by UBC ranking 3-D, 3-E
Industrial Road, Hayward, CA
Control zone I Proposed Chemical List
Date: 8/23/01
Chemical List by UBC ranking 3-D, 3-E
No category total exceeds the amount permitted (exempt quantities) per control
zone. Units are shown in gallons (gal), pounds(lb) or cubic feet (cu ft)
Category Storage Use-closed Use-open Total
Combustible Liquid 0 0 0
Combustible Fiber 0 0 0
Cryogenic Flammable or oxidizing 0 0 0
Explosives 0 0 0
Flammable Solid 0 0 0
Flammable Gas 0 0 0
Flammable Liquid Combination 233.0gal 6gal 1.0gal 240gal
I-A 26gal lgal .5gal 27.5gal
I-B 140 3 .5gal 143.5gal
I-C 67 1 .5gal 68.5
Organic Peroxide-unclassified, detonable 0 0 0 -
Organic Peroxide I-V 0 0 0
Oxidizer 4-1 1 .25 .25
Oxidizer- gas 0 0 0
Pyrophoric 0 0 0
Unstable 4-1 0 0 0
Water Reactive 3-l 0 0 0
Carcinogen .125lb 0 .125lb .1l lb
corrosives 20lb 3.25lb .0125lb 23.375lb
5gal .25gal .25gal 7.5 gal
Highly toxics 0 .0 .0125lb .0125lb
Irritants 1lb .0125lb .0125lb 1.025lb
-2-
Category Storage Use-closed Use-open Total
Radioactives 0 0 0
Sensitizers 0 0 0
Other Health Hazards *are listed in carcinogens irritants, and toxics lists
Toxics .25lb 0 .25 .25lb
15. gal 3 1.0 gal
Non Flammable Gas 13900cu ft
Non regulated materials - media, buffers