EX-10.15
Lease Agreement wiith Apple Computer, Inc.
LEASE
THIS LEASE, executed in duplicate at Cupertino, California, this 6th day of
January, 1978, by and between JOHN A. SOBRATO and SUSAN R. SOBRATO, as to an
undivided 45% interest, and CARL E. BERG and MARY ANN BERG, as to an undivided
45% interest, and ANN S. RUSSO as to a 10% interest, herein collectively Lessor,
20700 Valley Green Drive, Cupertino, California, and TYMSHARE, INC., a
California corporation, 20705 Valley Green Drive, Cupertino, California, herein
Lessee. For convenience, references herein to Lessor and Lessee shall be without
regard to number or gender.
IN CONSIDERATION of the mutual promises exchanged, it is agreed as follows:
1. Premises Leased: Lessor leases to Lessee and Lessee takes from Lessor, on the
terms and conditions hereinafter set forth, that certain two-story office
building commonly known as 20705 Valley Green Drive, Cupertino, California (the
"existing facility" premises), together with an additional two-story office
building to be constructed at Lessor's expense in accordance with the plans and
specifications approved by Lessee, comprised of an approximate sixty thousand
(60,000) square foot building (the "additional facility" premises) on real
property adjacent to the existing facility premises. The existing facility
premises and additional facility premises are sometimes hereinafter collectively
referred to as the "premises". The real property covered by this lease is
located in the City of Cupertino, County of Santa Clara, State of California and
more particularly described on Exhibit A, attached hereto and incorporated
herein by reference.
2. Term of Lease:
(a) Initial Term: The initial term of the Lease shall be for fifteen (15) years,
commencing January 1, 1978 and ending December 31, 1992, provided, if Lessor
cannot deliver possession of the additional facility on or before July 1, 1978,
Lessee may, at its option terminate this Lease except for delays caused by (i)
war or insurrection; (ii) strike, lockout or other labor dispute; (iii)
unavailability of materials or equipment; (iv) delays caused by acts of God,
local or state governing bodies, or inclement weather beyond the control and
without the negligence of Lessor. In the event Lessee exercises his option to
terminate this Lease, upon such termination, the terms and conditions of
Lessee'. occupancy of the existing facility shall be covered by the Lease dated
October 24, 1974 by and between the parties hereto.
(b) Options to Renew: Lessee shall have the right and option to renew this Lease
for three (3) additional five (5) year terms commencing automatically as of the
expiration date of the initial or any extended term, upon Lessee giving Lessor
written notice of exercise of its option to renew at least 180 days prior to the
expiration of the initial or any extended term. Any extended term shall be upon
all the terms and conditions set forth herein, except that the monthly base
rental for such extended term shall be adjusted in accordance with the
provisions of Sections 3(c) and 3(d) hereof.
3. Rental Consideration.
(a) Monthly Base Rental. The monthly base rental for the initial term of the
Lease shall be the sum of Forty-Five Thousand Three Hundred Seventy-two Dollars
($45,372.00) per month, subject to adjustment at the time of Lessee's possession
of the additional facility, based upon Lessor's actual costs, as the parties
have agreed separately, provided however that there shall be an abatement of
monthly base rental in the stem of Twenty-Two Thousand Eight Hundred Fifty-Five
Dollars ($22,855.00) during the period of time between commencement of the term
of this Lease and the time when Lessee actually takes possession of the
additional facility. Any partial month to be prorated on a basis of the date
Lessee actually takes possession of the additional facility. Each installment of
monthly base rental shall be payable in advance on the first day of each month
during the term of the Lease (subject to the foregoing relating to abatement
prior to completion of the additional facility).
(b) Payment of Taxes: At least ten (10) days prior to delinquency Lessee shall
pay to Lessor, or in the event the premises are separately assessed for tax
purposes, Lessee shall pay to the public officers charged with the collection
thereof, all real and personal property taxes, assessments and charges that are
now or may hereafter be levied, assessed, charged, or imposed upon the premises,
the improvements, or any of them now or hereafter constructed upon the premises,
commencing with taxes and assessments levied and assessed for the tax year
1977-1978, prorated as of the date of possession of the additional facility
premises by Lessee. Lessor will promptly advise Lessee of all notices, levies,
and assessments of taxes and other charges respecting the property. Lessee shall
have the right, at its election, to contest in the name of Lessor, or in its own
name, any tax, levy or assessment which Lessee is required to pay hereunder, in
whole or in part. Lessor shall execute all documents necessary-or appropriate to
effectuate the purposes of this subparagraph and to perfect Lessee's rights of
contest. In the event that taxes are assessed against a parcel or parcels where
the demised premises only form a part of such parcel, Lessee's liability for
such taxes shall be equitably prorated.
(c) Rental Adjustment.
(1) "Adjustment Base" shall be the sum of Forty-Five Thousand Three
Hundred Seventy-two Dollars ($45,372.00), as may be reduced based upon the
Lessor's actual cost savings 1n completing the additional facility.
(2) "Fair rental value" shall mean the going market rental as of the date
of any adjustment of rent or extension of this Lease-, for equivalent
space of similar age and construction by a tenant proposing to execute a
Lease of five (5) years minimum term, and having the financial
qualifications similar to Lessee's. In determining "fair rental value" the
parties shall confer in order to reach agreement and in the event they are
unable to reach agreement, the matter shall be referred to arbitration by
one appraiser, experienced in the evaluation of similar rental properties
in the County of Santa Clara, State of California, whose determination
shall be final for all purposes.
(3) Any adjustment of monthly base rental provided for herein shall be
made in an amount equal to the lesser of: (i) a sum equal to one hundred
percent (1001) of the adjustment base plus 2.5% of such adjustment base
per year or portion thereof during the initial term of the Lease or any
extension, or (ii) a monthly rental equal to the "fair rental value" of
the premises as of the effective date of such adjustment. Any adjustment
in the monthly base rental so determined shall be the monthly base rental
for the succeeding period as provided herein. In the event such
determination is made subsequent to any date provided for herein as the
effective date for such adjustment, the adjusted monthly base rental shall
be retroactive to the date provided for herein. In no event shall the
monthly base rental during any adjusted period be lower than the monthly
base rental during the period immediately preceding such extension.
(d) Adjustment of Base Monthly Rental. The monthly base rental for the premises
shall be adjusted in accordance with Section 3(c) hereof effective June 30,
1985, such adjusted monthly base rental to be in effect for the remaining seven
and one-half (7 1/2) years of the initial term of this Lease. Thereafter, in the
event Lessee exercises any of its options to renew the monthly base rental shall
adjusted in accordance with Section 3(c) hereof as of the commencement date of
any such renewal term.
(e) Taxes: Should the State of California or any political subdivision thereof
(including the County of Santa Clara or City of Cupertino) levy or impose a tax,
assessment, license fee or other charge upon this Lease, the estate created by
this Lease, or upon the Lessor by reason of its ownership of the fee interest in
the property, or upon the rents or other income of the Lessor from the property,
and such tax, assessment, license fee or other charge is assessed, in whole or
in part, in lieu of property taxes and assessments, the parties shall confer
upon an equitable allocation of such tax between Lessor and Lessee, based upon
the extent to which Lessor can reasonably establish that such new tax is a
substitute for real property taxes assessed against the premises for the fiscal
period next preceding enactment of the new tax. In the event the parties cannot
agree upon an equitable allocation of such new tax, the issue shall be submitted
to arbitration in accordance with the then current rules of the American
Arbitration Association. with any amount payable by Lessee and Lessor to be
deemed to be additional rent under the terms of this Lease.
4. Use: The premises may be used by Lessee for any and all lawful purposes, but
initially for the purpose of administrative offices, data processing and
communications operations. Lessee shall abide by all laws, ordinances and
statutes, as they now exist or may hereafter be enacted by legislative bodies
having jurisdiction thereof, relating to its use and occupancy of the premises,
provided that any changes in the laws, ordinances or statutes of any governing
body thee may be hereafter enacted shall not be deemed a breach of any covenant
of this lease by Lessee.
5. Modification to Premises - Waste: Lessee shall not commit or suffer to be
committed any waste upon the premises, or any nuisance. Lessee shall have the
right to construct, alter, modify, or improve any improvements upon the premises
as in its sole discretion it may deem necessary or appropriate for its use and
occupancy of the premises, provided that prior to such construction, alteration
or improvement Lessee shall obtain the written consent of Lessor, which consent
shall not be unreasonably withheld. Any consent by Lessor to construction by
Lessee of alterations or improvements to the premises may be conditioned upon
Lessee's agreement to remove such alterations or improvement at the expiration
of this Lease and restore the premises to their original condition, subject to
reasonable wear and tear based upon the age of the other improvements.
6. Maintenance of Premises: Subject to any construction guarantees or warranties
by Lessor or its subcontractors, Lessee shall at its sole expense, keep and
maintain the premises and appurtenances, including but not limited to sidewalks,
parking areas, electrical and air conditioning systems, roof (provided that
Lessor shall keep and maintain the roof for a period of the first 24 months
after completion of construction, except for damage caused by the negligent acts
of Lessee), and interior of the premises in good and sanitary order, condition
and repair. Further, all water, gas, electricity or other public utility service
used upon or furnished to the premises during the term of the lease or any
extension shall be paid for by Lessee. Lessee shall maintain and replace, when
necessary, any shrubbery, paving, or landscaping, provided by Lessor upon the
leased premises. In the event Lessee's premises are only a portion of the site,
then Lessor shall maintain and replace when necessary any such facilities
located upon the leased premises and the cost of such maintenance, repair and
replacement shall be equitably prorated with the annual cost reimbursable to
Lessor within ten (10) days after Lessor provides evidence of payment of such
expenses. Lessee waives all right to make repairs at the expense of Lessor as
provided in Section 1942 of the Civil Code of the State of California. Lessor
shall, at its sole expense, maintain and repair any defects in the structural
portions of the buildings comprising the leased premises (e.g., concrete walls,
footings, concrete slab, roof structure), except for any damage to the
structural portions caused by the negligent acts of Lessee.
7. Parking Area: Lessee shall have, without additional rental, for the use and
benefit of Lessee, its agents, employees and customers, the exclusive right to
use 100% of the parking area on the premises during the entire term or any
extension of the Lease for parking, ingress, egress of automobiles and other
vehicles. Lessee is to pay any parking use fees, taxes or assessment which might
hereafter be imposed by any Municipal, State of Federal authority.
8. Damage or Destruction of the Premises: If either building in which the
premises are situated shall be substantially damaged or destroyed during the
term hereof 'or any cause, Lessor shall forthwith repair the same, provided such
repairs can be made within one hundred eighty (180) days by working in the usual
and ordinary manner under the laws and regulations of the State, County or
municipal authorities, but such damage or destruction shall in no way annul or
void this Lease, except that Lessee shall be entitled to a proportionate
reduction of rental while such repairs are being made, such proportionate
reduction to be based upon the extent to which the making of such repairs shall
interfere with the business carried on by the Lessee in the premises. If such
repairs cannot be made in said manner in one hundred eighty (180) days, this
Lease may be terminated by either party upon giving notice in writing to the
other party on or before said one hundred eighty (180) days. Said termination
shall be effective thirty (30) days after any party gives such notice. Whether
or not such repairs can be made within one hundred eighty (180) days, Lessee
shall in all events be entitled to an abatement of rental from the time of such
event and during the time such repairs are being made.
9. Condemnation: If the premises or any portion of the structure shall be taken
under any right of eminent domain, or any transfer in lieu thereof, and such
taking renders the leased premises unsuitable in the judgment of Lessee for
Lessee's business operations, Lessee may cancel this lease effective as of the
time of such taking by giving notice to Lessor within thirty (30) days of such
taking. Lessee shall be entitled to reimbursement for the value of any trade
fixtures, equipment and other property installed by it, moving expenses or other
special damages provable in any condemnation action. Lessor shall be entitled to
claim and have paid to it all other compensation awarded for the taking under
the power of eminent domain, except that upon termination of this Lease
agreement under the provisions of this paragraph, Lessee shall be entitled to
have compensation from the condemning authority or from the Lessor, if the
condemning authority shall not make a separate award, on account of the value,
if any, of Lessee's interest or leasehold estate as it exists immediately prior
to such termination. In the event that only a part of the premises shall be so
taken, and the part not so taken shall be sufficient for the operation of
Lessee's business, Lessee at its option may retain the part not so taken, but
the rent shall be proportionately reduced according to the extent to which such
taking shall interfere with or curtail Lessee's business.
10. Quiet Enjoyment: Lessor, for himself, his successors and
assigns, covenants, represents and warrants to Lessee, its
successors and assigns:
(a) Lessor has good and sufficient title to the leased property in fee
simple absolute, free and clear of all liens, encumbrances, covenants,
conditions, restrictions, easements, exceptions or other limitations,
except those covenants, conditions' restrictions, easements or exceptions
now of record and certain Deeds of Trust to secure permanent mortgage
loans from Prudential Insurance Company.
(b) So long as Lessee shall pay its rent and not be in default in the
performance of any of the covenants or conditions to be performed by
Lessee, or any other obligations not expressly set forth herein, which may
affect Lessor's fee title or reversionary interest in the leased premises,
Lessee shall freely and peaceably have, hold and enjoy the sole and
exclusive use and enjoyment of he leased property, or any part thereof.
(c) Lessor will at all times save and hold Lessee free and harmless from
any claim, demand, cause of action or other act relating to the title to
the property, or any part thereof, or which interferes with the quiet,
peaceful and exclusive use and enjoyment of the leased property, or any
part thereof, including but not limited to reasonable costs and attorneys
fees incurred by Lessee in defending any such interference or threatened
interference therewith.
11. Assignment and Subletting: Lessee shall have the full right to assign or
sublet its interest in this Lease, the premises, or any portion thereof,
provided that no such assignment or subletting shall relieve Lessee of its
liabilities for the full performance of this Lease and every provision hereof
required to be performed by Lessee. After the initial term of this Lease and in
the event Lessee desires to assign or sublet its interest in the Lease, or any
portion of the premises, Lessor shall have the right of first refusal to take
such assignment or subletting upon the terms and conditions offered by any
sub-lessee and acceptable to Lessee.
12. Events of Default:
(a) By Lessee: The occurrence of any of the following shall
constitute a material default and breach of this Lease:
(1) Any failure by Lessee to pay the rental when due for a period of ten
(10) days after written notice thereof by Lessor to Lessee;
(2) Any failure by Lessee to make any other payment required to be made by
Lessee hereunder within ten (10) days after written notice from Lessor
specifying in detail the nature and amount of such payment and the
obligation for which is not contested by Lessee;
(3) The failure by Lessee to perform any obligation of Lessee to be
performed by Lessee hereunder for a period of 120 days after written
notice thereof, which notice shall specify with particularity the nature
of Lessee's default; or (4) The making by Lessee of any general assignment
for the benefit of creditors; the filing by or against Lessee of a
petition to have Lessee adjudicated a bankrupt (unless in the case of a
petition filed against Lessee, the same is dismissed within sixty (60)
days); the appointment of a receiver to take possession of all or
substantially all of Lessee's assets located upon the premises where
possession is not restored to Lessee within sixty (60) days.
b) By Lessor: The failure by Lessor to perform any covenant or obligation of
Lessor to be performed hereunder for a period of 120 days after written notice
thereof, which notice shall specify with particularity the nature of Lessor's
default.
13. Lessor's Remedies Upon Default: In the event of any such default by Lessee,
as specified in paragraph 12(a) herein, Lessor shall have the following rights
and remedies:
a) Lessor shall have the immediate option to terminate this Lease and all rights
of Lessee hereunder by giving written notice of such intention to terminate. In
such event, Lessor may recover from Lessee:
(1) The worth at the time of the award of any unpaid rental which had been
earned at the time of such termination; plus
(2) The worth at the time of the award of the amount by which the unpaid
rental would have been earned after termination until the time of the
award exceeds the amount of such rental loss Lessee proves could have been
reasonably avoided; plus
(3) Any other amount necessary to compensate Lessor for all the detriment
proximately caused by Lessee's failure to perform its obligations under
this Lease or which in the ordinary course of things would be likely to
result therefrom. The term "rental" as used herein shall mean the base
rental required to be paid by Lessee pursuant to the terms of this Lease.
As used in subparagraphs (1) and (2) above, the "worth at the time of
award" shall be computed by allowing interest at the rate of seven (7) per
cent per annum.
b) Lessor shall also have the right, with or without termination of this Lease,
to re-enter the premises and remove all persons and property therefrom with such
property to be removed and stored in a public warehouse or elsewhere at the cost
and for the account of Lessee.
c) In the event Lessor elects to re-enter as provided in subparagraph (b)
hereinabove, or shall take possession of the premises pursuant to legal
proceedings or any notice provided by law and Lessor does not elect to terminate
this lease as provided in subparagraph (a) above, then Lessor may from time to
time without terminating this Lease either recover all rental as it becomes due,
or relet the premises or any part thereof for such term or terms and at such
rental or rentals and upon such other terms and conditions as Lessor in its sole
discretion may deem advisable, with the right to make alterations and repairs to
the premises. If Lessor shall elect to so relet, then rentals received by Lessor
from such reletting shall be applied: (1) first to the payment of any cost of
such reletting; (2) to the payment of the costs of any alterations and repairs
occasioned by such reletting upon the premises; (3) to the payment of rentals
due and unpaid hereunder, with residue, if any, to be held by Lessor and applied
in payment of future rent as the same may become due and payable.
d) No re-entry or taking possession of the premises by Lessor pursuant to
subparagraphs (b) or (c) hereof shall be construed as an election to terminate
this lease, unless a written notice of such intention is given to Lessee or
unless a termination thereof be decreed by any court of competent jurisdiction.
Notwithstanding any reletting without termination by Lessor, because of any
default by Lessee, Lessor may at any time after such reletting elect to
terminate this lease for such default.
14. Lessee's Remedies Upon Default: In the event of any default by Lessor
hereunder, Lessee may (a) perform, or cause to be done or performed, any act or
thing to have been performed by Lessor hereunder and Lessor shall repay to
Lessee, upon demand, the entire cost and expense thereof, including any
compensation to agents or servants of Lessee; (b) terminate this Lease and all
rights of Lessor hereunder by giving written notice of such intention to
terminate to Lessor; or (c) with or without terminating this Lease, recover
damages and exercise any other remedies available at law or equity to Lessee.
15. Liens: Each party shall during the entire term of this Lease or any
extension keep the demised premises and the property on which the premises are
situated, free from any and all liens arising out of the work performed,
materials furnished, or obligations incurred by either party in respect to the
premises.
16. Entry by Lessor: Subject to security restrictions imposed by U. S.
Governmental Agencies, Lessee shall permit Lessor and his agents to enter into
and upon said premises at all reasonable times for the purpose of inspecting the
same or for the purpose of maintaining the buildings in which said premises are
situated, or for the purpose of making repairs, alterations or addition. to any
other portion of said buildings, including the erection and maintenance of such
scaffolding, canopies, fences and props as may be required, or for the purpose
of posting non-responsibility notices for alterations, additions, repairs, or
for the purpose of placing upon the property in which the said premises are
located any usual or ordinary 'for sale" signs, without any rebate in rent and
without any liability to Lessee for any loss of occupation or quiet enjoyment of
the premises thereby occasioned; and shall permit Lessor and his agents, at any
time within 180 days prior to the expiration of this lease, to place upon said
premises any usual or ordinary "To Let" or "To Lease" signs and exhibit the
premises to prospective tenants at reasonable hours.
17. Late Charges: In the event Lessee fails Go pay any installment or rent due
hereunder by the fifteenth day of each month when the same is due then there
shall be added to the monthly rental a sum equal to two percent (21) of said
monthly rental, said sum to represent a late charge to be paid to Lessor.
18. Hold Over: Any holding over after the expiration of the initial or any
exceeded term of this Lease, with the consent of Lessor, shall be construed to
be a tenancy from month-to-month at a monthly rental equal to the base monthly
rental as existing during the preceding term of the Lease, and shall otherwise
be on the same terms and conditions as herein specified, so far as applicable.
19. Subordination: Lessee agrees that this lease shall, at the option or any
mortgagee under or beneficiary of any mortgage or deed of trust that may be
placed upon or against said premises, be subordinated to said mortgage or deed
of trust, to any and all advances to be made thereunder, to any interest secured
thereby, and all renewals, replacements and extensions thereof, provided the
mortgage or trust deed shall agree to recognize, if Lessee is not in default,
Lessee's interest hereunder. In the event any mortgagee or trustee shall elect
to have this lease prior to the lien of its mortgage or trust deed, upon such
mortgagee or trustee giving notice in writing to Lessee to that effect, this
lease shall be deemed prior to the lien of such mortgage or trust deed. Lessee
shall execute and deliver whatever instruments may be required for such
purposes, and failing to do so within ten (10) days from demand in writing, does
hereby make, constitute and irrevocably appoint Lessor, or assignee, as its
attorney in fact in its name, place and stead so to do. In the event that this
lease becomes subordinate to any mortgage or deed of trust, Lessee agrees that
in the event of transfer of title to the demised premises by Lessor to a
mortgagee, trustee or beneficiary under any mortgage or deed of trust or to any
purchaser therefrom or successor thereto, this lease, if Lessee is not in
default hereunder, shall not terminate, but Lessee shall attorn to said new
owner regardless of any rule of law to the contrary or absence of privity of
contract. Any subordination agreement shall provide that the Lessee's rights
under this lease shall be honored by the mortgagee, beneficiary, or trustee, as
long as Lessee is not in default, regardless of Lessors default under the
obligation to which the lease is subordinate.
20. Broker: Lessee warrants that Lessee has not had any dealings with any real
estate broker or agent, in connection with negotiating or securing this Lease.
21. Waiver of Subrogation: Lessor and Lessee shall each, upon demand, procure
from and cause each of the insurers under all policies of insurance, now or
hereafter, during the term of this Lease existing, and purchased by either or
both, insuring or covering the premises or any portion thereof, and/or Lessee's
business or operations thereon, a waiver of all rights of subrogation which the
insurer under said policies might otherwise, if at all, have as against the
other party; the foregoing including, the following being by a way of
specification, and not by limitation, all policies of fire, theft and public
liability insurance purchased by either party.
22. Attorneys' Fees: In the event any action is instituted by either party
against the other by reason of the breach or alleged breach of any covenant or
condition in this Lease on the part of the other party, or arising out of this
Lease, the party in whose favor final judgment is entered shall be entitled to
have and recover from the other its actual court costs and reasonable attorneys'
fees to be fixed by the court in such action.
23. Waiver: The waiver by either party of any breach or alleged breach of any
term, condition, covenant or agreement herein contained shall not be deemed to
be waiver of such term, covenant or condition or subsequent breach of the same,
or any other term, covenant or condition herein contained. The subsequent
acceptance of rent hereunder by Lessor shall not be deemed to be a waiver of any
preceding breach or alleged breach by Lessee of any tern, covenant or condition
of this Lease, other than the failure of Lessee to pay a particular rental so
accepted.
24. Signs: Subject to all applicable laws and ordinances, Lessee shall have the
right to erect and maintain a sign or signs, concerning its business on the
exterior wall or right front lawn of the building in which the premises form a
part.
25. Notices: All notices to be given by either party shall be given in writing,
personally or by depositing the same in the United States mail, postage prepaid,
and addressed to the other party at such address as may have been specified by
prior notice to the other. Notice to Lessor may be made to any one of the above
named persons.
26. Successors and Assigns: The covenants and conditions herein contained shall,
subject to the provision hereof as to assignment, apply to and bind the heirs,
successors, and assigns of each party.
27. Insurance:
a) Fire and Extended Coverage: Lessee shall at its sole cost and expense, obtain
and keep in force during the term hereof, fire, extended coverage, malicious
mischief and vandalism insurance on all buildings and improvements that are
constructed upon the premises. The amount of such insurance shall be not less
than one hundred per cent (100%) of the replacement value of such buildings and
improvements. Lessee waives as against Lessor any and all claims and demands for
damages, loss or injury to the buildings and improvements hereafter placed or
built upon the Premises which shall be caused by, or result from fire and other
perils, events or happenings which are the subject of extended coverage
insurance. Lessee further agrees that each such policy of fire and extended
coverage insurance which shall be obtained by Lessee, whether required by the
provisions of this Lease or not, shall be mace expressly subject to the
provisions of this paragraph, and that Lessee's insurers hereunder shall waive
any right of subrogation as against Lessor.
b) Liability Insurance: During the term of this Lease, Lessee shall procure and
maintain in full force and effect, bodily injury liability insurance with limits
of not less than Five Hundred Thousand Dollars ($500,000.00) per person and Five
Hundred Thousand Dollars ($500,000.00) per occurrence insuring against any and
all liability of Lessee with respect to the leased premises or arising out of
the use, occupancy or maintenance thereof. If so requested in writing by Lessor,
property damage liability insurance with a limit of not less than One Hundred
Thousand Dollars ($100,000.00) per action shall be obtained by Lessee. All or
such insurance shall insure the performance by Lessee of its indemnity agreement
as to liability for injury or death of persons and injury or damage to property
as herein set forth. Lessee waives all claims against Lessor for damages to
goods, wares and merchandise in, upon or about the premises and for injuries to
persons in or about the premises from any cause arising at any time, with the
exception of the acts or omissions committed by Lessor, its agents, servants or
representatives.
c) Policy Forms: All of the insurance provided under this paragraph and all
renewals thereof shall be issued by such good, responsible and standard
companies as licensed to do business in the State of California. The policies of
insurance provided for in this paragraph shall be payable to Lessor and Lessee
and to such other firm, firms, person or persons as their interests may appear.
Such insurance shall be carried in the joint names of Lessor and Lessee. All
such policies shall expressly provide that the policy shall not be cancelled
without thirty (30) days prior written notice to Lessor and Lessee. Upon the
issuance thereof, each such policy or duplicate or certificate thereof shall be
delivered to Lessor.
28. Memorandum: Upon the effective date of this lease, the parties hereto shall
record the memorandum of lease in form attached hereto as Exhibit C.
29. Right of First Refusal: Prior to Lessor accepting any offer to purchase the
premises or any part thereof, or prior to Lessor making any offer to sell the
premises or any part thereof, Lessor shall give Lessee written notice of such
offer and shall include in such notice the price and terms or sale and a
statement that Lessor is willing to sell at that price and on those terms or
sale. Lessee shall have the option, which may be exercised by written notice to
Lessor at any time within thirty (30) days from receipt of the Lessor's notice,
to agree to purchase at the price and on the terms of sale specified in the
notice to Lessee; provided, however, that if such terms provide for an exchange
of property as part or all of the price of the premises, Lessee shall purchase
the property to be exchanged upon the terms and at the price specified in the
Notice and thereafter exchange such property in exchange for the demised
premises, on the basis specified in the Notice. If Lessee fails to exercise its
option within the 30-day period, Lessor shall have 180 days thereafter to sell
at the price and upon the terms of sale specified in the notice to Lessee.
30. Option to Purchase: Lessor hereby grants to Lessee an option to purchase the
leased premises, which option is conditioned upon this Lease or any extension
thereof or replacement thereof being in force and effect during the option
period. Such option period shall commence on the first day of the 21st year of
this Lease or any extension thereof and end on the 366th day thereafter. The
price at which the leased premises may be purchased shall be determined by
dividing the annual net rental (being an amount equal to 12 times the monthly
base rental provided for in Section 3(a) hereof, and not including taxes,
repairs, maintenance, and other similar items), as adjusted in accordance with
section 3(d) hereof, for the 21st lease year by .085. For example, if the total
annual net rental for the 21st year of the lease term (as adjusted in accordance
with Section 3(d)) is $540,000, then the option price for the said premises
would be $6,352,941.
The amount of such purchase price, in full in cash or 5% in cash and the balance
in the form of commitments from lending institutions, shall be deposited in
escrow to a title company of Lessee's choice within thirty (30) days after the
exercise or said option and said transaction shall close within ninety (90) days
of the exercise of said option. Lessee agrees that it will assume the balance
due of any permanent loan financing encumbering the leased premises at the time
of closing such transaction, or will (if the same is in accordance with the
terms of said loan) pay any prepayment penalty in connection with the early full
payment thereof. This option shall terminate on any sale by Lessor or its heirs,
successors. or assigns to a bona fide purchaser, provided that any such purchase
shall have been made after Lessor's compliance with all of the provisions of
Paragraph 29 hereof, and Lessee has elected not to exercise its rights to
purchase under the provisions of said Paragraph 29. It is contemplated that in
the event Lessor desires to enter into a three-party exchange agreement, Lessee
will, to the extent that it is not to its detriment, cooperate in any such
three-party exchange, provided however that under no circumstances shall Lessee
be responsible for any expense of any kind or nature in connection with such
three-party exchange.
31. Miscellaneous: Where it is herein provided that the consent of either party
shall be obtained, it is understood and agreed that such consent shall not be
unreasonably withheld. This lease and any exhibits attached hereto constitute
the entire agreement and understanding between the parties, and shall not be
modified, changed or amended in any respect unless in writing signed by both
parties.
Dated and effective as set forth above.
LESSOR
/s/ John A. Sobrato
JOHN A. SOBRATO
/s/ Susan R. Sobrato
SUSAN R. SOBRATO
/s/ Carl E. Berg
CARL E. BERG
/s/ Mary Ann Berg
MARY ANN BERG
/s/ Ann S. Russo
ANN S. RUSSO
LESSEE
TYMSHARE, INC.
A California Corporation
By /s/ Albert A. Eisenstat
And /s/
EXHIBITS
Exhibit A Description of Real Property
Exhibit B Covenants, Conditions, Restrictions, Easements,
Exceptions and Limitations of Record
Exhibit C Memorandum of Lease
EXHIBIT A
[Legal Description]
EXHIBIT B
[Title Report]
EXHIBIT C
Recording Requested By:
Mark A. Bertelsen, Esq.
Wilson, Mosher & Sonsini
When Recorded Return To:
Wilson, Mosher & Sonsini
Two Palo Alto Square, Suite 900
Palo Alto, CA 94304
Attention: Mark A. Bertelsen, Esq.
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE, dated as of the 6th day of January, 1978, is made by
and between JOHN A. SOBRATO and SUSAN R. SOBRATO, CARL E. BERG and MARY ANN
BERG, and ANN S. RUSSO (herein collectively referred to as the "Lessor"), and
TYMSHARE, INC., a California corporation having a place of business at 20705
Valley Green Drive, Cupertino, California 95014 (herein referred to as the
"Lessee").
For and in consideration of the payment of the rental and the performance of the
covenants and undertakings set forth in the Lease, Lessor hereby leases to
Lessee, and Lessee hereby hires from Lessor, on the terms and conditions set
forth in that certain lease entered into by and between the parties hereto and
dated as of even date herewith (herein the "Lease"), which are incorporated
herein by reference with the same force and effect as though fully set forth
herein, the premises located in the City of Cupertino, County of Santa Clara,
State of California, commonly known as 20705 Valley Green Drive, more
particularly described in Schedule A attached hereto and hereby made a part
hereof.
The term of this Lease is for an initial term of 15 years, commencing January 1,
1978, and ending December 31, 1992.
Lessee has the right and option to renew this Lease for three (3) additional
five (5) year terms commencing automatically as of the expiration date of the
initial or any extended term, upon Lessee giving Lessor 180 days prior written
notice of its exercise of such option.
Lessee has the right of first refusal to buy the premises prior to Lessor
accepting any offer to purchase said property or prior to Lessor making any
offer to sell said property, which right must be exercised within thirty (30)
days after receipt of Lessor's notice to Lessee of any such offer to purchase or
intention to sell said property. If Lessee fails to exercise its option within
said 30-day period, Lessor shall have 180 days thereafter to sell at the price
and upon the terms of sale specified in Lessor's notice to Lessee.
Commencing on the first day of the 21st year of this Lease or any extension
thereof and ending on the 366th day thereafter Lessee shall have option to
purchase the premises. This option shall terminate on any sale by Lessor to a
bona fide purchaser, provided that any such purchase shall have been made after
Lessor's compliance with all of the provisions of paragraph 29 of the Lease
"Lessee's right of first refusal" and Lessee has elected not to exercise its
prior right to purchase thereunder.
The purpose of this Memorandum of Lease is to give notice of the existence of
the tenancy, and Lessee's rights of first refusal on sale and option to
purchase, created hereby and by the Lease and of the existence of the Lease,
which together with this Memorandum Of Lease constitute the agreement between
the parties hereto.
IN WITNESS WHEREOF, Lessor and Lessee have respectively executed this Memorandum
of Lease on February ___, 1978, to be effective as of the day and year first
above written.
LESSOR
John A. Sobrato
Susan R. Sobrato
Carl E. Berg
Mary Ann Berg
Ann S. Russo
LESSEE
TYMSHARE, INC.
By _________________
Vice President
TYMSHARE
20705 Valley Green DriveCupertino, California 95014
Telephone: 408/257-6550
January 5, 1978
John A. Sobrato and Susan R. Sobrato
Carl E. Berg and Mary Ann Berg
Ann S. Russo
20700 Valley Green Drive
Cupertino, California 95014
Ladies and Gentlemen:
This letter confirms the Agreement between Tymshare, Inc., a corporation (herein
"Tymshare") and you, relating to the construction by you and lease by Tymshare
of additional facilities for Tymshare corporate headquarters on Valley Green
Drive, Cupertino, California.
1. Execution of New Lease. Attached hereto, marked Exhibit A, and incorporated
herein by reference, is a 'arm of Lease to be executed between Tymshare and you
relating to those facilities presently leased to Tymshare and those additional
facilities to be constructed pursuant to the terms of this letter agreement. The
new Lease (for a period of fifteen (15) years, with three (3) options to renew
for additional terms of fiche (5) years each) shall be executed upon
commencement of construction or the additional facilities, and shall be
effective as of January 1, 1978 or completion of construction, whichever is
sooner; provided, however, that in the event such additional facilities have not
been completed on or before July 1, 1978, at Tymshare's option, the Lease may be
terminated and the terms of Tymshare's occupancy of the presently occupied
premises shall be governed by that certain Lease dated October 24, 1974 by and
between the parties to this letter agreement.
2. Construction of Additional Facilities. Upon the execution of this letter
agreement, you shall, at your own cost and expense, construct or cause to be
constructed in good and workmanlike manner a two-story building of approximately
sixty thousand (60,000) square feet, together with all necessary offsite
improvements including paved parking, sidewalks and landscaping as shown on the
final shell and core plans and specifications dated September 22, 1977, and as
revised October 19, 1977. The final interior plans and specifications shall be
subject to Tymshare's approval, which shall not be unreasonably withheld
provided that such final plans are substantially in accordance with the
preliminary plans. You will construct the improvements detailed on the final
plans and continue the same with diligence to completion, subject to
intervention of causes and contingencies beyond your reasonable control,
including but not limited to accidents, fire, flood, inclement weather,
government actions, strikes or labor disputes, shortages of, delay and delivery
or materials, wars, riots or civil insurrection. Any changes in the plans
subject to commencement of construction shall be approved in writing by
Tymshare. In connection with such construction you agree to assume, pay when due
and indemnify Tymshare against all costs and expenses involved in the
construction of the improvements shown on the plans and specifications,
including the office improvements. After completion and for the period of the
applicable warranty, but in no event less than one year, you shall remedy all
defects due to faulty workmanship or materials, and when necessary, at your
expense enforce any warranty, guaranty or bond covering the building, equipment,
systems, service lines or other equipment, including heating, air conditioning,
ventilating, electrical, mechanical and plumbing fixtures.
3. Cost of Work. As of the commencement of the construction, you nave estimated
your costs (including land costs, costs of all improvements to be constructed at
this time, your profit and overhead) to be the sum of $2,251,764, which when
capitalized at the agreed rate between us results in a base monthly rental for
the additional facilities of Twenty-Two Thousand Eight Hundred Fifty-Five
Dollars ($22,855.00). To the extent that actual costs incurred by you in the
construction of the additional facilities are less than said sum, the monthly
base rental shall be reduced in an amount equal to Ten and 15/100 Dollars
($10.15) per month for each One Thousand Dollars ($1,000.00) or portion thereof
savings effected. In no event, however, shall the monthly base rental be
adjusted upward if such costs exceed your estimated figures.
If the foregoing is in accordance with our understanding, kindly sign in the
place indicated below.
Yours very truly,
TYMSHARE, Inc.
By /s/ Albert A. Eisenstat
Agreed and accepted as the conditions contained herein.
/s/ John A. Sobrato
JOHN A. SOBRATO
/s/ Susan R. Sobrato
SUSAN R. SOBRATO
/s/ Carl E. Berg
CARL E. BERG
/s/ Mary Ann Berg
MARY ANN BERG
/s/ Ann S. Russo
ANN S. RUSSO
TYMSHARE
20705 Valley Green DriveCupertino, California 95014
Telephone: 408/257-6550
February 17, 1978
John A. Sobrato and
Susan R. SobratoCarl E. Berg and
Mary Ann BergAnn S. Russo20700 Valley Green Drive
Cupertino, California 95014
Ladies and Gentlemen:
This letter is intended to confirm the understanding and agreement between
Tymshare, Inc., a California corporation ("Tymshare"), and you relating to the
effect of paragraphs 19, 29 and 30 of that certain Lease dated as of January 6,
1978 between Tymshare and you for the premises (as defined in said Lease)
commonly known and referred to as 20705 Valley Green Drive, Cupertino,
California, upon the foreclosure of a deed of trust upon said property.
Tymshare understands that upon completion of construction of the additional
facility premises (as defined in said Lease) The Prudential Insurance Company of
America will provide you the permanent financing for the premises pursuant to a
loan to be secured by a first deed of trust upon the property comprising the
premises, said deed of trust to be executed by you as trustors in favor of The
Prudential Life Insurance Company of America as beneficiary.
Under paragraph 19 of the Lease, the Lease may be subordinated to any deed of
trust placed upon the premises, at the option of the beneficiary of said deed of
trust, provided that said deed of trust shall recognize Tymshare's interest
under the Lease if Tymshare i. not in default thereunder, and provided that any
such subordination agreement shall provide that Tymshare's rights under the
Lease shall be honored by the beneficiary and trustee of any such deed of trust
as long as Tymshare is not in default of the Lease, regardless of any default by
you under the obligation secured by said deed of trust.
Paragraphs 29 and 30 of the Lease give Tymshare a prior right to purchase and an
option to purchase, respectively, the premises at such times and upon such
conditions as set forth therein.
This is to confirm to you that Tymshare acknowledges and agrees that its rights
under paragraphs 29 and 30 of the Lease do not apply in the event of a
foreclosure of a deed of trust upon the premises (and any foreclosure sale
pursuant thereto), whether by action or under a power of sale in the deed of
trust, by reason of your default in the obligation secured by said deed of
trust. It is understood, however, that so long as Tymshare is not in default of
the Lease, the Lease shall not be terminated nor shall Tymshare's possession be
disturbed by reason of your default under or a foreclosure of any such deed of
trust, and in the event of a sale, either private or public, such sale shall be
subject to Tymshare's right to continue in possession and undisturbed under the
Lease so long as Tymshare is not in default thereunder.
This letter is not intended and shall not be construed to be a modification of
or amendment to the Lease, the terms of which shall continue to remain in full
force and effect, but rather is intended only to clarify the agreement of the
parties in the event of a foreclosure of a deed of trust upon the premises.
Sincerely,
TYMSHARE, INC.
By /s/ Albert A. Eisenstat
Albert A. Eisenstat
Vice President
AMENDMENT
This Amendment shall modify that certain lease dated January 6, 1978 by and
between JOHN A. SOBRATO and SUSAN R. SOBRATO, as to an undivided 45% interest,
and CARL E. BERG and MARY ANN BERG, as to an undivided 45% interest, and ANN S.
RUSSO as to a 10% interest, herein collectively Lessor, and TYMSHARE, INC.,
herein Lessee.
The subject leave is hereby amended in the following particular:
Article 1. Premises Leased:
The premises shall be amended to also include the adjacent one story
building to the west commonly known as 20605 Valley Green Drive,
comprising approximately 21,000 sq. ft.
Article 2. Rental Consideration:
Effective February 10, 1979, (a) Monthly Race Rental: The
monthly base rental shall be increased by the sum of
$7,350.00 per month to reflect the additional premises
described above. (c) Rents Adjustment: The adjustment base
shall be increased by the sum of S7,350.00 to reflect the
additional premises described above.
Expect as herein above expressly provided, said lease dated January 6, 1978
shall remain unchanged.
Consented to by the undersigned on January 30, 1979.
LESSOR
/s/ John A. Sobrato
JOHN A. SOBRATO
/s/ Susan R. Sobrato
SUSAN R. SOBRATO
/s/ Carl E. Berg
CARL E. BERG
/s/ Mary Ann Berg
MARY ANN BERG
/s/ Ann S. Russo
ANN S. RUSSO
LESSEE
TYMSHARE, INC.
By /s/
President
AMENDMENT # 2
This Amendment shall modify that certain lease dated January 6, 1978 by and
between JOHN A. SOBRATO and SUSAN R. SOBRATO, as to an undivided 45% interest,
and CARL E. BERG and MARY ANN BERG, as to an undivided 45% interest, and ANN S.
RUSSO as to a 10% interest, herein collectively Lessor, and TYMSHARE, INC.,
herein Lessee.
The subject lease is hereby amended in the following particular:
3.a) The monthly base rental for the initial term of the lease is adjusted
to a figure of $50,977.00 ($43,627.00 + $7,350.00) based upon Lessor's
actual costs and the inclusion of space referred to in Lease Amendment 11.
Except as herein above expressly provided, said lease dated January 6, 1978
shall remain unchanged.
Consented to by the undersigned on 3/17/79.
LESSOR
/s/ John A. Sobrato
JOHN A. SOBRATO
/s/ Susan R. Sobrato
SUSAN R. SOBRATO
/s/ Carl E. Berg
CARL E. BERG
/s/ Mary Ann Berg
MARY ANN BERG
/s/ Ann S. Russo
ANN S. RUSSO
LESSEE
TYMSHARE, INC.
A California Corporation
By /s/
AMENDMENT #3
This Amendment #3 ("Amendment #3") shall modify that certain Lease Agreement
("Lease") dated January 6, 1978, executed by and between JOHN A. SOBRATO and
SUSAN R. SOBRATO, as to an undivided forty-five percent (45%) interest, and to
CARL E. BERG and MARY ANN BERG, as to an undivided forty-five percent (45%)
interest, and to ANN S. RUSSO as to a ten percent (10%) interest, all of whom
are predecessors to Carl E. Berg and Mary Ann Berg, Trustees of the Berg Living
Trust UTA dated May 1, 1981, as to an undivided 81.01% interest, CLYDE BERG and
NANCY BERG, Trustees of the Clyde Berg Living Trust, UTA dated December 17,
1981, as to an undivided 11.83% interest, and CLYDE BERG, Trustee of Carl Berg
Child's Trust UTA dated June 2, 1978, as to an undivided 7.16% interest
("Lessor"); and TYMSHARE, INC., predecessor to McDonnell Douglas Corporation, a
Maryland corporation ("Lessee"), as amended by that certain Amendment to Lease
executed January 30, 1979, and that certain Amendment #2 to Lease executed March
17, 1979. For purposes hereof, the Lease, as amended by the Amendment and the
Amendment #2 thereto, is referred to herein as the "Amended Lease."
RECITALS
A. Pursuant to the terms of the Amended Lease, Lessor leases to Lessee, and
Lessee leases from Lessor the real property, together with all buildings and
appurtenances thereto commonly known as 20605, 20665 and 20705 Valley Green
Drive, Cupertino, California
(the "Premises").
B. Pursuant to the terms of Paragraphs 3(c)(3) of the Amended Lease, the
adjustment of monthly base rental is to be an amount equal to the lesser of (i)
one hundred percent (100%) of the monthly base rental plus two and one-half
percent (2.5%) of such monthly base rental per year or a portion thereof during
the initial term of the Amended Lease or any extension, or (ii) a monthly rental
equal to the "fair rental value" of the Premises as of the effective date of
such adjustment. Pursuant to Paragraph 3(d) of the Amended Lease, the monthly
base rental for the Premises has been adjusted in accordance with Paragraph
3(c)(3)(i) thereof effective June 30, 1985, for the remaining seven and one-half
(7-1/2) years of the initial term of the Amended Lease. Paragraph 3(d) further
provides that the monthly base rental is to be readjusted pursuant to Paragraph
3(c)(3) as of the commencement date of any extended term, if exercised.
D. Some controversy has arisen between Lessor and Lessee as to whether the
calculation of the monthly base rental adjustment pursuant to Paragraph
3(c)(3)(i) of the Amended Lease should be made using a compounded adjustment
rate or a simple adjustment rate.
E. Lessor has requested, and Lessee has agreed, that in light of such
Controversy, the monthly base rental for the last seven and one-half (7-1/2)
years of the initial term of the Amended Lease, and for each exercised extended
term thereafter, shall be equal to the respective amounts set forth in Paragraph
1 of this Amendment #3.
F. Accordingly, Lessor agrees to reimburse Lessee for the monthly base rental
paid by Lessee in excess of the monthly base rental which should have been paid
by Lessee as set forth in this Amendment #3 for the period commencing from July
1, 1985, and ending June 30. 1997.
NOW, THEREFORE, in consideration of the mutual covenants and conditions stated
herein, Lessor and Lessee hereby agree as follows:
1. Rental Adjustment. Paragraph 3(c)(3)(i) of the Amended Lease shall be amended
by deleting the entirety thereof and substituting therefor the following
amounts:
DURING THE PERIOD MONTHLY BASE RENTAL
Initial Lease Term: July 1, 1985 - December 31, 1992 $60,944.00
First Extended Term: January 1, 1993 - December 31, 1997 $72,862.00
Second Extended Term: January 1, 1998 - December 31, 2002 $82,206.00
Third Extended Term: January 1, 2003 - December 31, 2007 $92,750.00
2. Rental Reimbursement. Pursuant to the terms of Paragraph 1 above, Lessor
shall reimburse to Lessee no later than five (5) days following the execution of
this Amendment #3 the sum of Nine Thousand Eight Hundred Sixteen Dollars
($9,816) constituting the difference between the monthly base rental paid by
Lessee and the monthly base rental which should have been paid by Lessee
pursuant to Paragraph 1 above for the period commencing July 1, 1985, and ending
June 30, 1987.
3. Affirmation of Amended Lease. Except as provided herein, the terms and
conditions of the Amended Lease (and exhibits thereto) shall remain unmodified
and in full force and effect. In the event of any conflict between the terms of
the Amended Lease (and the exhibits attached thereto) and this Amendment #3,
with regard to Paragraph 3(c)(3)(i), this Amendment #3 shall control. 4. Entire
Agreement. This Amendment #3 is the entire agreement between the parties with
regard to Paragraph 3(c)(3)(i). This Amendment #3 supersedes and cancels any and
all previous negotiations, arrangements, agreements and understandings, whether
written or oral, between Lessor and its agents and Lessee and its agents with
respect Paragraph 3(c)(3)(i) only. No addition to, or modification of, any term
or provision of this Amendment #3 shall be effective until and unless set forth
in a written instrument signed by both Lessor and Lessee.
5. Attorneys' Fees. If any action or proceeding is commenced to enforce the
provisions of this Amendment #3, the prevailing party in such action shall have
the right to recover from the other party its reasonable attorneys' fees, in
addition to costs and expenses of litigation.
6. Counterparts. This Amendment #3 may be executed in counterparts, each of
which shall be deemed an original, all of which together shall constitute one
agreement.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Amendment #3 on this
1st day of July, 1987.
LESSOR:
CARL E. BERG and MARY ANN BERG, Trustees for Berg Living Trust UTA dated May 1,
1981, as to an undivided 81.01% interest, CLYDE BERG and NANCY BERG, Trustees of
the Clyde Berg Living Trust, UTA dated December 17, 1981, as to an undivided
11.83% interest, and CLYDE BERG, Trustee of Carl Berg Child's Trust UTA dated
June 2, 1978, as to an undivided 7.16% interest
/s/ Carl E. Berg
CARL E. BERG
/s/ Mary Ann Berg by Carl E. Berg her Attorney in Fact
MARY ANN BERG
/s/ Clyde Berg
CLYDE BERG
/s/ Nancy Berg by Clyde Berg her attorney in Fact
NANCY BERG
LESSEE:
MCDONNELL DOUGLAS CORPORATION,
A Maryland corporation
By /s/
Its
BERG & BERG PROPERTIES
10050 Bandley Drive
Cupertino, California 95014
"Developers of business parks
and Industrial complexes in Palo Alto,
Mountain View, Sunnyvale,
Cupertino & Santa Clara."
This LEASE, executed in duplicate at Cupertino, California, this 6th day of
October, l987, by and between Carl E, Berg & Mary Ann Berg trustees of the Berg
Living Trust, UTA dated May 1, 1981, as to an undivided 81.01% interest, Clyde
Berg & Nancy Berg, Trustees of the Clyde Berg Living Trust UTA dated Dec. 17,
1981, as to an undivided 11.83%, and Clyde Berg, Trustee of Carl Berg Child's
Trust UTA dated June 2, 1978, as to an undivided 7.16% interest and APPLE
COMPUTER, INC., a California Corporation hereinafter called respectively Lessor
and Lessee. without regard to number or gender.
USE
WITNESSETH: That Lessor hereby leases to Lessee, and Lessee hires from Lessor,
for the purpose of conducting therein office, research, light manufacturing and
warehouse and for no other purpose without obtaining, the prior written consent
of Lessor, those certain premises with the appurtenances, situated in the City
of Cupertino , County of Santa Clara, State of California, and more Particularly
described as follows. to-wit:
PREMISES
A one story building ("the premises") of approximately 23,400 square feet and
appurtent improvements, including parking areas, situated at 10300 Bubb Road.
TERM
The term shall be for FORTY EIGHT (48) months, commencing on the 1st day of
December, l987, and ending on the 30th day of November, l991, at the total rent
or sum of EIGHT HUNDRED, FORTY TWO THOUSAND, FOUR HUNDRED DOLLARS & 00/100
($842,400.00) Dollars, payable in monthly installments of SEVENTEEN THOUSAND,
FIVE HUNDRED & FIFTY DOLLARS ($17,550.00 ) Dollars on or before the first day of
each calendar month during the term hereof. Said rental shall be paid in lawful
money of the United States of America, without offset or deduction, and shall be
paid to Lessor at such place or places as may be designated from time to time by
Lessor. Rent for any period less than a calendar month shall be a pro rata
portion of the monthly installment.
LATE CHARGES
Lessee hereby acknowledges that late payment by Lessee to Lessor of rent and
other sums due hereunder will cause Lessor to incur costs not contemplated by
this Lease, the exact amount of which will be extremely difficult to ascertain.
Such costs include, but are not limited to, processing and accounting charges,
and late charges, which may be imposed on Lessor by the terms of any mortgage or
trust deed covering the Premises. Accordingly, if any installment of rent or any
other sum due from Lessee shall not be received by Lessor or Lessor's designee
within ten (10) days after such amount shall be due, Lessee shall pay to Lessor
a late charge equal to five (5%) percent of such overdue amount. The parties
hereby agree that such late charge represents a fair and reasonable estimate of
the costs Lessor will incur by reason of late payment by Lessee Acceptance of
such late charge by Lessor shall in no event constitute a waiver of Lessor's
default with respect to such overdue amount. nor prevent Lessor from exercising
any of the other rights and remedies granted hereunder.
IT IS FURTHER MUTUALLY AGREED BETWEEN THE PARTIES AS FOLLOWS:
POSSESSION
1. If Lessor, for any reason whatsoever, cannot deliver possession of the said
premises to Lessee at the commencement of the said term, as hereinbefore
specified, this lease shall not be void or voidable, nor shall Lessor be liable
to Lessee for an, loss or damage resulting therefrom; but in that event the
commencement and termination dates of the lease and all other dates affected
thereby shall be revised to conform to the date of Lessor's delivery of
possession. The above is however, subject to the provision that the period of
delay of delivery of the premises shall not exceed Thirty (30) days from the
commencement date herein. If the period of delay of delivery exceeds the
foregoing, Lessee, at his or its option, may cancel this Lease and declare it
null and void. Provided further, that if under this Lease, Lessor is required to
do any construction or remodeling work, then the date on which the Lessee has
the right to cancel shall be extended to a later date by a number of working
days equal to the number of working days during which work necessary to prepare
the premises for occupancy is delayed by changes requested by Lessee, strikes,
boycott, shortage of materials, governmental regulations affecting construction,
acts of God, inclement weather preventing construction, or other events of like
nature beyond the control and without the negligence of Lessor. If under this
Lease Lessor is required to do any construction or remodeling work, then
possession shall not be deemed tendered and the term shall not start, nor shall
any rentals commence under this Lease, until the earlier of the following shall
have occurred: (a) A Certificate of Occupancy is granted by the proper
governmental agency or, if no Certificate of Occupancy be issued by any local
agency, then upon certification by Lessor's architect or contractor that the
Lessor's construction work has been completed; or (b) upon the Lessee's opening
for business.
ACCEPTANCE OF PREMISES AND COVENANTS TO SURRENDER
2. By entry hereunder, Lessee accepts the premises as being in good and sanitary
order, condition and repair and accepts the building and the other improvements
in their present condition. Any exceptions to the foregoing must be by written
agreement executed by Lessor and Lessee. The Lessee agrees on the last day of
the term hereof, or on the sooner termination of this lease, to surrender the
premises unto Lessor in good condition and repair. The interior walls of all
office and warehouse areas, the floors of all office and warehouse areas, all
suspended ceilings and any carpeting are to be cleaned. Lessee also agrees to
surrender unto Lessor all alterations, additions, and improvements which may
have been made in, to, or on the premises by Lessee, except that Lessee shall
ascertain from Lessor within thirty (30) days before the end of the term of this
lease whether Lessor desires to have the premises or any part or parts thereof
restored to their condition as of the commencement of this Lease; if Lessor
shall so desire, then Lessee shall restore said premises or such part or parts
thereof before the termination of this Lease at Lessee's sole cost and expense.
Lessee may request that the alterations to be installed by Lessee remain in
premises at Lease termination. If Lessor agrees to allow said alterations to
remain, Lessee is not required to remove same at Lease termination and they are
considered property of Lessor. Lessee on or before the end of the term or sooner
termination of this Lease, shall remove all his or its personal property and
trade fixtures from the premises, and all property not so removed shall be
deemed to be abandoned by Lessee. If the premises be not surrendered at the end
of the term or sooner termination of this Lease, Lessee shall indemnify Lessor
against loss or liability resulting from delay by Lessee in so surrendering the
premises including without limitation, any claims made by any succeeding tenant
founded on such delay.
USES PROHIBITED
3. Lessee shall not commit, or suffer to be committed, any waste upon the said
premises, or any nuisance, or other act or thing which may disturb the quiet
enjoyment of any other tenant in or around the buildings in which the demised
premises may be located or allow any sale by auction upon the premises, or allow
the premises to be used for any unlawful purpose, or place any loads upon the
floor, walls, or ceiling which endanger the structure, or use any machinery or
apparatus which will in any manner vibrate or shake the premises or the building
of which it is a part, or place any harmful liquids in the drainage system of
the building. No waste materials or refuse shall be dumped upon or permitted to
remain upon any part of the leased premises outside of the building proper. No
materials, supplies, equipment, finished products or semi-finished products, raw
materials or articles of any nature shall be stored upon or permitted to remain
on any portion of the leased premises outside of the buildings proper, for more
than 15 days. See Addendum, Page 1 for continuance of this Paragraph #3.
ALTERATIONS AND ADDITIONS
4. Lessee shall not make, or suffer to be made, any alteration or addition to
the said premises, or any part thereof, without the written consent of Lessor
first had and obtained by Lessee, which shall not be unreasonably withheld, any
addition or alteration to the said premises, except movable furniture and trade
fixtures, shall become at once a part of the realty and belong to Lessor.
Alterations and additions which are not to be deemed as trade fixtures shall
include heating, lighting, electrical systems, air conditioning, partitioning,
carpeting, or any other installation which has become an integral part of the
leased premises. Lessee agrees that he or it will not proceed to make such
alterations or additions, after having obtained consent from Lessor to do so,
which shall not be unreasonably withheld, until three (3) days from the receipt
of such consent, in order that Lessor may post appropriate notices to avoid any
liability to contractors or material suppliers for payment for Lessee's
improvements. Lessee will at all times permit such notices to be posted and to
remain posted until the completion of work. See Page 1 of the Addendum for
continuance of this Paragraph #4.
MAINTENANCE OF PREMISES
5. Lessee shall, at his sole cost, keep and maintain said premises and
appurtenances; and every part hereof, including but not limited to, glazing,
sidewalks, parking areas, plumbing, electrical systems, roof, exterior walls,
and the interior of the premises in good and sanitary order, condition, and
repair. Lessee is to provide Lessor with a copy of a service contract between
Lessee and a licensed air-conditioning and heating contractor which contract
shall provide for bimonthly maintenance of all air conditioning and heating
equipment at the leased premises. Lessee to provide Lessor with a copy of a
service contract, between Lessee and a licensed roof contractor to perform
regular maintenance to make repairs of the roof. Lessee is to further pay the
cost of all air-conditioning and heating equipment repairs or replacements which
are either excluded from such service contract or any existing equipment
warranties. All vinyl wall surfaces are to be maintained in an as good a
condition as when Lessee took possession free of holes, gouges, or defacements.
Lessee to limit attachments to vinyl wall surfaces exclusively to V-joints with
no larger than #6 screws. The Lessee agrees to water maintain and replace, when
necessary, any shrubbery and landscaping provided by Lessor on the leased
premises. In the event Lessee's premises are only a portion of a building, then
Lessor shall pay the cost of any maintenance and such cost allocated to the
leased premises shall be prorated on a square footage or other equitable basis
and reimbursed to Lessor by Lessee within ten (10) days after Lessor provides
evidence of payment. The Lessee hereby waives al' right to make repairs at the
expense of Lessor as provided in *Section 1942 of the Civil Code of the State of
California, and all rights provided for by Section 1941 of said Civil Code.
HAZARD INSURANCE
6. Lessee shall not use, or permit said premises, or any part thereof, to be
used, for any purpose other than that for which the said premises are hereby
leased; and no use shall be made or permitted to be made of the said premises,
nor acts done, which will cause a cancellation of any insurance policy covering
said building, or any part thereof, nor shall Lessee sell or permit to be kept,
used or sold, in or about said premises, any article which may be prohibited by
the standard form of fire insurance policies. Lessee shall, at his sole cost and
expense, comply with any and all requirements, pertaining to said premises, of
any insurance organization or company, necessary for the maintenance of
reasonable fire and public liability insurance, covering said building and
appurtenances. The Lessee agrees to purchase and keep in force fire, and
extended coverage insurance covering the leased premises in amounts not to
exceed the actual insurable value of said premises as determined by Lessee's
insurance company's appraisers, quotable basis, as calculated by Lessor. It is
understood and agreed that Lessee's obligation under this paragraph will be
prorated to reflect the commencement and termination dates of this Lease. Lessor
and Lessee hereby waive any rights each may have against the other on account of
any loss or damage occasioned to the Lessor or the Lessee as the case may be, or
to the Premises or its contents, and which may arise from any risk generally
covered by fire and extended coverage insurance. The parties shall obtain from
their respective insurance companies insuring the property a waiver of any right
of subrogation which said insurance company may have against the Lessor or the
Lessee, as the case may be. See Page 1 for continuance of this Paragraph #6.
ABANDONMENT
7. Lessee shall not vacate or abandon the premises at any time during the term;
and if Lessee shall abandon, vacate of surrender said premises, or be
dispossessed by process of law, or otherwise, any personal property belonging to
Lessee and left on the premises shall be deemed to be abandoned, at the option
of Lessor, except such property as may be mortgaged to Lessor.
FREE FROM LIENS
8. Lessee shall keep the demised premises and the property in which the demised
premises are situated, free from any liens arising out of any work performed,
materials furnished, or obligations incurred by Lessee.
COMPLIANCE
9. Lessee shall, at his sole cost and expense, comply with all of the
requirements of all Municipal, State and Federal authorities now in force, or
which may hereafter be in force, pertaining to the said premises, and shall
faithfully observe in the use of the premises all Municipal ordinances and State
and Federal statutes now in force or which may hereafter be it force. The
judgement of any court of competent jurisdiction, or the admission of Lessee in
any action or proceeding against Lessee, whether Lessor be a party thereto or
not, that Lessee has violated any such ordinance or statute in the use of the
premises, shall be conclusive of that fact as between Lessor and Lessee.
LIABILITY INSURANCE
10. Lessee, as a material part of the consideration to be rendered to Lessor,
hereby waives all claims against Lessor to damages to goods, wares and
merchandise, and all other personal property in, upon or about said premises and
for injuries to persons in or about said premises, except when caused by
Lessor's gross negligence, and Lessee will hold Lessor exempt and harmless from
any damage or Injury to any person, or o the goods, wares and merchandise and
all other personal property of any person arising from the use of the premises
by Lessee, or from the failure of Lessee to keep the premises in good condition
and repair, as herein provided. Lessee shall secure and keep in force a public
liability insurance and property damage policy covering the leased premises.
including parking areas. insuring the Lessee and naming Lessor as an additional
insured. A copy of said policy shall be delivered to Lessor and minimum limits
of coverage thereof shall be $5,000,000.00 combined coverage for multiple
injuries, and $1,000 000 00 property damage. and Lessee shall obtain a written
obligation on the part of the insurer to notify Lessor in writing before any
cancellation thereof.
ADVERTISEMENTS AND SIGNS
11. Lessee will not place or permit to be placed, in, upon or about the said
premises any unusual or extraordinary signs, or any signs not approved by the
city or other governing authority. The Lessee will not place, or permit to be
placed, upon the premises, any signs, advertisements or notices without the
written consent of the Lessor, and such consent will not be unreasonably
withheld. Any sign so placed on the premises shall be so placed upon the
understanding and agreement that Lessee will remove same at the termination of
the tenancy herein created and repair any damage or injury to the premise;
caused thereby. and if not so removed by Lessee then Lessor may have same so
removed at Lessee's expense.
UTILITIES
12. Lessee shall pay for all water, gas, heat, light, power, telephone and other
utilities supplied to the premises. Any changes for sewer usage or related fees
shall be the obligation of Lessee and paid for by Lessee.
ATTORNEY'S FEES
13. In case suit should be brought for the possession of the premises, for the
recovery of any sum due hereunder, or because of the breach of any other
covenant herein, the losing party shall pay to the prevailing party a reasonable
attorney's fee which shall be deemed to have accrued on the commencement of such
action and shall be enforceable whether or not such action is prosecuted to
judgment.
DEFAULT
14.1 See Addendum, Page 2 and 3
SURRENDER OF LEASE
14.2 See Addendum, Page 3
14.3 See Addendum, Page 3
14.4 See Addendum, Page 3 and 4
14.5 See Addendum, Page 4
14.6 See Addendum, Page 4 and 5
SURRENDER OF LEASE
15. The voluntary or other surrender of this Lease by Lessee, or a mutual
cancellation thereof, shall not work a merger, and shall, at the option of
Lessor, terminate all or any existing subleases or subtenancies, or may, at the
option of Lessor, operate as an assignment to him of any or all such subleases
or subtenancies.
TAXES
16. Lessee shall be liable for all taxes levied against personal property and
trade or business fixtures, and agrees to pay, as additional rental, all real
estate taxes and special assessment installments as they appear on the City and
County tax bills during the Lease term, and as they become due. If said taxes
and assessments are assessed against the entire building and building site, and
this lease does not cover entire building or building site, the taxes and
assessment installments allocated to the leased premises shall be pro-rated on a
square footage or other equitable basis, as calculated by Lessor. It is
understood and agreed that Lessee's obligation under this paragraph will be
pro-rated to reflect the commencement and termination dates of this Lease. See
Paragraph #33 for Tax Clause.
NOTICES
17. All notices given to Lessee must be given in writing by depositing the same
in the United States certified or registered mail, postage prepaid, and
addressed to Lessee at the said premises, whether or not Lessee has departed
from abandoned or vacated the premises. See Addendum, Page 5 for continuance of
this paragraph #17.
ENTRY BY LESSOR
18. Lessee shall permit Lessor and his agents to enter into and upon said
premises upon 24 hours notice subject to any security regulations of Lessee for
the purpose of inspecting the same or for the purpose of maintaining the
building in which said premises are situated, or for the purpose of making
repairs, alterations or additions to any other portion of said building,
including the erection and maintenance of such scaffolding, canopies, fences and
props as may be required without any rebate of rent and without any liability to
Lessee for any loss of occupation or quiet enjoyment of the premises thereby
occasioned; and shall permit Lessor and his agents, at any time within ninety
(90) days prior to the expiration of this Lease, to place upon said premises any
usual or ordinary "For Sale" or "to lease" signs and exhibit the premises to
prospective tenants at reasonable hours.
DESTRUCTION OF PREMISES
19. In the event of a partial destruction of the said premises during the said
term from any cause, Lessor shall forthwith repair the same, provided such
repairs can be made within One Hundred Eighty (180) days under the laws and
regulations of State, Federal, County or Municipal authorities, but such partial
destruction shall in no way annul or void this lease, except that Lessee shall
be entitled to a proportionate reduction of rent while such repairs are being
made, such proportionate reduction to be based upon the extent to which the
making of such repairs shall interfere with the business carried on by Lessee in
the said premises. If such repairs cannot be made in One Hundred Eighty (180)
days, Lessor may, at his option, make same within a reasonable time, this Lease
continuing in full force and effect and the rent to be proportionately reduced
as aforesaid in this paragraph provided. In the event that Lessor does not so
elect to make such repairs which cannot be made in One Hundred Eighty (180)
days, or such repairs cannot be made under such laws and regulations, this Lease
may be terminated at the option of either party. In respect to any partial
destruction which Lessor is obligated to repair or may elect to repair under the
terms of this paragraph, the provision of Section 1932, Subdivision 2, and of
Section 1933, Subdivision 4, of the Civil Code of the State of California are
waived by Lessee. In the event that the building in which the demised premises
may be situated be destroyed to the extent of not less than 33-1/3% of the
replacement cost thereof. Lessor may elect to terminate this Lease, whether the
demised premises be injured or not. A total destruction of the building in which
the said premises may be situated shall terminate this Lease. In the event of
any dispute between Lessor and Lessee relative to the provisions of this
paragraph, they shall each select an arbitrator, the two arbitrators so selected
shall select a third arbitrator and the three arbitrators so selected shall hear
and determine the controversy and their decision thereon shall be final and
binding upon both Lessor and Lessee, who shall bear the cost of such arbitration
equally between them.
ASSIGNMENT AND SUBLETTING
20. Lessee shall not assign this Lease, or any interest therein, and shall not
sublet the said premises or any part thereof, or any right or privilege
appurtenant thereto, or suffer any other person (a bona fide subsidiary or
affiliate of Lessee excepted) to occupy or use the said premises, or any portion
thereof, without the written consent of Lessor first had and obtained, and a
consent to one assignment, subletting, occupation or use by any other person,
shall not be deemed to be a consent to any subsequent assignment, subletting,
occupation or use by another person. Any such assignment or subletting without
such consent shall be void, and shall, at the option of the Lessor, terminate
this Lease, providing Lessor has not unreasonably withheld such consent. This
Lease shall not, nor shall any interest therein, be assignable, as to the
interest of Lessee, by operation of law, without the written consent of Lessor.
If Lessee desires to assign its rights under this Lease or to sublet all or a
portion of the demised premises to a party other than a bona fide subsidiary or
affiliate of Lessee, Lessee shall first notify Lessor of the proposed terms and
conditions of such assignment or subletting. Lessor shall have the right of
first refusal to enter into a direct Lessor-Lessee relationship with such party
under such proposed terms and conditions. in which event Lessee shall be
relieved of its obligations hereunder to the extent of the Lessor-Lessee
relationship entered into between Lessor and such third party. Lessee does not
need Lessor's approval if Lessee is subletting less than 50% (fifty percent) of
the premises.
CONDEMNATION
21. If any part of the premises shall be taken for any public or quasi-public
use, under any statute or by right of eminent domain or private purchase in lieu
thereof, and a part thereof remains which is susceptible of occupation
hereunder, this Lease shall as to the part so taken, terminate as of the date
title shall vest in the condemnor or purchaser, and the rent pay able hereunder
shall be adjusted so that the Lessee shall be required to pay for the remainder
of the term only such portion of such rent as the value of the part remaining
after such taking bears to the value of the entire premises prior to such
taking; but in such event Lessor or Lessee shall have the option to terminate
this Lease as of the date when title to the part so taken vests in the condemnor
or purchaser. If all of the premises, or such part thereof be taken so that
there does not remain, portion susceptible for occupation hereunder, this Lease
shall thereupon terminate. If a part or all of the premises be taken all
compensation awarded upon such taking shall go to the Lessor and the Lessee
shall have no claim thereto.
EFFECTS OF CONVEYANCE
22. The term "Lessor" as used in this Lease. means only the owner for the time
being of the land and building, containing the promises, so that, in the event
of any sale of said land or building, or in the event of a Lease of said
building, the Lessor shall be and hereby is entirely freed and relieved of all
covenants and obligations of the Lessor hereunder, and it shall be deemed and
construed, without further agreement between the parties and the purchaser at
any such sale, or the Lessee o! the building, that the purchaser or Lessee of
the building has assumed and agreed to carry out any and all covenants ant
obligations of the Lessor hereunder. It any security be given by the Lessee to
secure the faithful performance of all or any o the covenants of this Lease on
the part of Lessee, the Lessor may transfer and deliver the security, as such,
to the purchaser at any such sale or the Lessee of the building, and thereupon
the Lessor shall be discharged from any further liability in reference thereto.
SUBORDINATION
23. This Lease, in the event Lessor so notifies Lessee in writing, shall be
subordinate to any ground Lease, deed of trust or other hypothecation for
security now or hereafter placed upon the real property of which the Premises
are a part and to any and all advances made on the security thereof and too
renewals, modifications, replacements and extensions thereof. Lessee agrees to
promptly execute any reasonable documents which may be required to effectuate
such subordination. Notwithstanding such subordination, Lessee's right to quiet
possession of the Premises shall not be disturbed if Lessee is not in default
and so long as Lessee shall pay the rent and observe and perform all of the
provisions of this Lease.
WAIVER
24. The waiver by Lessor of any breach of any term, covenant or condition,
herein contained shall not be deemed to be waiver of such term, covenant or
condition or any subsequent breach of the same or any other term, covenant or
condition therein contained. The subsequent acceptance of rent hereunder by
Lessor shall not be deemed to be a waiver of any preceding breach by Lessee of
any term, covenant or condition of this Lease, other than the failure of Lessee
to pay the particular rental so accepted, regardless of Lessor's knowledge of
such preceding breach at the time of acceptance of such rent.
HOLDING OVER
25. Any holding over after the expiration of the said term, with the consent of
Lessor, shall be construed to be a tenancy from month to month, at a rental to
be negotiated by Lessor and Lessee prior to the expiration of said term, and
shall otherwise be on the terms and conditions herein specified, so far as
applicable, not to exceed 125% of rent.
SUCCESSORS AND ASSIGNS
26. The covenants and conditions herein contained shall, subject to the
provisions as to assignment, apply to and bind the heirs, successors, executors,
administrators and assigns of all of the parties hereto; and all of the parties
hereto shall be jointly and severally liable hereunder.
ESTOPPEL CERTIFICATES
27. Lessee shall at any time during the term of this Lease, upon not less than
twenty (20) days prior written notice from Lessor, execute and deliver to Lessor
a statement in writing certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification) and
the date to which the rent and other charges are paid in advance, if any, and
acknowledging that there are not, to Lessee's knowledge, any uncured defaults on
the part of Lessor hereunder or specifying such defaults if they are claimed.
Any such statement may be conclusively relied upon by any prospective purchaser
or encumbrances of the Premises. Lessee's failure to deliver such statement
within such time shall be conclusive upon the Lessee that (a) this Lease is in
full force and effect, without modification except as may be represented by
Lessor; (b) there are no uncured defaults in Lessor's performance.
TIME
28. Time is of the essence of this Lease.
MARGINAL CAPTIONS
29. The marginal headings or titles to the paragraphs of this Lease are not a
part of this Lease and shall have no effect upon the construction or
interpretation of any part thereof. This instrument contains all of the
agreements and conditions made between the parties hereto and may not be
modified orally or in any other manner than by an agreement in writing signed by
all of the parties hereto or their respective successors in interest. Articles
30 through 34 are included herein by this reference.
IN WITNESS WHEREOF, Lessor and Lessee have executed these presents, the day and
year first above written.
LESSOR
/s/ Carl E. Berg, Trustee
/s/ Mary Ann Berg, Trustee, by Carl E. Berg her Attorney in Fact
/s/ Clyde Berg, Trustee, by Carl E. Berg his Attorney in Fact
/s/ Nancy Berg, Trustee, by Carl E. Berg her Attorney in Fact
/s/ Carl Berg Child Trust by Clyde Berg, Trustee, by Carl E. Berg
his Attorney in Fact
LESSEE
APPLE COMPUTER, INC. a California Corp.
By: /s/
Its: Vice President
ADDENDUM TO LEASE
Dated October 6th, 1987
By and Between
and APPLE COMPUTER SYSTEMS, INC. Paragraph #3 of Lease agreement, page 2
continued: Lessee agrees that it shall not store or use any hazardous waste, as
that term is defined in this Lease, in its use of the premises without first
obtaining the prior written consent of the Lessor, which consent shall not be
unreasonably withheld, provided adequate assurances against loss because of such
activities is provided to Lessor, including but not limited to any appropriate
modification of Paragraph #34 set forth in the Addendum to this Lease.
Paragraph #4 of Lease agreement, page 2 continued:
Notwithstanding the foregoing, Lessee accepts the premises "as is" subject to
electrical mechanical, plumbing, etc. systems plus roof being in good operable
condition. Lessee intends to remove most or all of the existing interior
partitions and carpet; re-carpet and paint; plus general construction upgrading
of the space at Lessee's sole expense. Lessee shall provide Lessor with a plan
of the new interior improvements, which will be approved by Lessor, such
approval shall not be unreasonably withheld. Lessee will complete, as proposed,
improvements in a timely manner. Said improvements will become property of
Lessor at Lease termination. Lessee to provide Lessor with complete copy of "as
built" plans. Lessee may make alterations of no more than $10,000.00 without the
consent of the Lessor.
Paragraph #6 of Lease agreement, Page 3 continued:
Lessee shall maintain at its sole cost, in full force and effect rental
abatement insurance against abatement or- loss of hen t in case of fir-e or
other- casualty, in an amount at least equal to the amount of the Rent payable
by Lessee during the next ensuing one (1) year, as reasonably determined by
Lessor. Lessee to reimburse Lessor for full cost of said rental abatement
insurance. Where Lessee is responsible for purchasing and keeping in force
insurance in this paragraph, Lessee's insurance cover-age shall name Lessor as
an additional insured and provide Lessor with an endorsed copy of said
insurance.
14.1 EVENTS OF DEFAULT
If Lessee fails to make any payment of any sum due under this Lease for (10) ten
days after receipt by Lessee of written notice from lessor, or if Lessee
breaches any other term of this Lease and fails to cure such breach within (30)
thirsty days after receipt of written notice from Lessor' or, if such bract
cannot be cured within such (act) thirty day period, and if Lesser fails to
commence such cure within (go) thirty day period, and thereinafter diligently
proceeds to clime it, or if Lessee's interest herein, or, any part thereof, is
assigned or, transferred, either voluntarily or by operation of law (except as
expressly permitted by other provisions of this Lease), including, without
limitation, the filing of a petition by or against Lessee or any member of
Lessee if Lessee is a partnership or joint venture, under any insolvency or
bankruptcy laws, or if Lessee makes a general assignment for the benefit of its
creditors, then ant such events shall constitute a breach of this Lease by
Lessee and Lessor may, at its option, elect the remedies specified in either
subparagraph (a) or (b) below.
(a) Lessor may repossess the Premises and remove all per-sons and property
therefrom. If Lessor repossesses the Premises because of a breach of this Lease,
this Lease shall terminate and Lessor may recover from Lessee:
(1) the worth at the time of award of the unpaid rent which has been
earned at the time of termination including interest thereon at the rate
equal to five percent (5%) above the discount rate charged to members
banks by the Federal Reserve Bank of San Francisco until paid:
(2) the worth at the time of award of the amount by which the unpaid rent
which would have been earned after termination until the time of award
exceeds the amount of such rental loss that Lessee proves could have been
reasonably avoided including interest thereon at the rate equal to five
percent (5%) above the discount rate charged to member banks by the
Federal Reserve Bank of San Francisco until paid;
(3) the worth at the time of award of the amount by which the unpaid rent
for the balance of the term after the time of award exceeds the amount of
such rental loss for the same period that Lessee proves could be
reasonably avoided; and
(4) any other account necessary to compensate Lessor for all the detriment
approximately caused by Lessee's failure to perform its obligations under
this Lease or which in the ordinary course of things would be likely to
result therefrom.
(b) If Lessor does not repossess the Premises, then this Lease shall continue in
effect for so long as Lessor does not terminate Lessee's right to possession and
Lessor may enforce all of its rights and remedies under this Lease, including
the right to recover the rent and other sums due from Lessee hereunder. For the
purposes of this Article 14 the following do not constitute repossession of the
Premises by Lessor or a termination of the lease by Lessor:
(1) Acts of maintenance or preservation by Lessor or efforts
by Lessor to relet the Premises; or
(2) The appointment of a receiver by Lessor to protect Lessor's interests
under this Lease.
14.2 TIME OF AWARD
As used herein, the term "time of award" shall mean either the date upon which
Lessee pays to Lessor the amount recoverable by Lessors as hereinabove set forth
or the date of entry of any determination, order or judgment of any court or
other legally constituted body determining the amount recoverable, whichever
first occurs.
14.3 LEASE REMAINS IN EFFECT
Should Lessor, following any breach or default of this Lease by Lessee elect to
continue this Lease in full force and effect, with Lessee retaining the right to
possession of the Premises (notwithstanding the fact that Lessee may have
abandoned the Premises) then, besides all other rights and remedies Lessor may
have at law or equity, Lesson shall have the right to enforce all of the
Lessor's rights and remedies under this Lease, including but not limited to,
Lessor's right to recover the Fixed Rental and other sums payable by Lessee
hereunder as they become due under this Lease. Notwithstanding any such election
to have this Lease remain in full force and effect, Lessor may at any time
thereafter elect, by written notice to Lessee, to terminate this Lease and
Lessee's right to possession of the Premises for any previous breach or default
which remains uncured, or for any subsequent breach or default.
14.4 LESSOR'S ADDITIONAL RIGHTS
In addition to any specific rights given to Lessor under this Lease to cure
Lessee's breaches, if Lessee fails to perform any of its obligations under this
Lease and such failure continues after notice thereof is given in accordance
with Section 14.1 (ii) and (iii), then in addition to all other rights and
remedies of Lessor under this Lease and at law or equity, Lessor may (but shall
not be obligated to) cure such breach or behalf Lessee and upon demand by
Lessor, Lessee shall promptly pay to Lessor the costs and expenses of such cure,
including but not limited to, reasonable attorneys' fees incurred by Lessor in
curing such breach on behalf of Lessee. When Lessor makes demand for payment,
Lessor shall furnish Lessee an itemized statement of the costs and expenses
incurred for cure. All costs and expenses incurred or advanced by Lessor under
any provision of this Lease to cure any non-monetary default by Lessee of its
obligations under this Lease shall bear interest from the date Lessor demands
payment thereof by written notice to Lessee until payment in full by Lessee at
the rate of five percent (5%) above the discount rate charged to member banks by
the Federal Reserve Bank of San Francisco, or the maximum rate allowed by law,
whichever is lower.
14.5 LESSOR'S LIABILITY
Lessee shall have recourse to all appropriate legal and equitable remedies in
the event of a breach of this Lease by Lessor, provided however, that Lessee
shall first provide to Lessor at least thirty (30) days prior written notice,
specifying with particularity the breach claimed it Lessee and allowing Lessor
the right to cure such breach during the thirty (30) day period or such longer
period as may be reasonably required to cure such breach, provided that Lessor
commences such cure during said period of thirty (30) days and diligently
prosecutes such cure to completion, Lessor shall have no liability for any
consequential damage.
14.6 LESSEE'S ADDITIONAL RIGHTS
If Lessor fails to perform any of its obligations under Paragraph 19
(Destruction) of this Lease, and such failure continues after notice thereof is
given in accordance with Sector 14.1, then in addition to all other rights and
remedies of Lessee under this Lease and at law or equity Lessee may (but shall
not be obligated to) cure finch breach on behalf of Lessor and upon demand by
Lessee, Lessor shall promptly pay to Lessee the costs and expenses of such cure.
Should Lessor fail promptly to pay such costs and expense, Lessee may recover
said amounts by appropriate local proceedings. When Lessee makes demand for
payment, Lessee shall furnish Lessor an itemized statement of the costs and
expense, incurred for cure. All costs and expenses incurred or advanced by
Lessee under any provision of this Lease to cure any defaults by Lessor of its
obligations under this Lease to cure any defaults by Lessor of its obligations
under this Lease shall bear interest from the date Lessee demands payment
thereof by written notice to Lessor until Payment in full by Lessor at the rate
of five percent (5%) above the discount rate charged to member banks by the
Federal Reserve Bank of San Francisco. or the maximum rate allowed by law,
whichever is lower.
Paragraph # 17 of Lease agreement, Page 4 continued.
Notices: All notices shall be given to Lessor and Lessee at the address listed
below:
Lessor:
Berg & Berg Developers
10050 Bandley Drive
Cupertino, CA 95014
Lessee:
Apple Computer, Inc.
20525 Mariani Avenue
Cupertino, CA 95014
Attn: Real Estate Dept.
30. Early Entry.
Thirty (30) days prior to the commencement date of the Lease Term. Lessee may,
at Lessee's sole risk, enter the Premises and install interior improvements as
defined in Paragraph # 4 herein, trade fixtures, and equipment in the Premises;
provided, however, that (a) Lessee shall execute an indemnity agreement in favor
of Lessor in form and substance reasonably satisfactory to Lessor; (b) Lessee
shall pay for and provide evidence of insurance satisfactory to Lessor; and
Lessee shall pay utility charges reasonably allocated by Lessor to Lessee.
31. Damage or Destruction.
If, during the term, the premises for the building and other improvements in
which the premises are located are totally or partially destroyer from any
cause, rendering the premises totally or partially inaccessible or unusable
Lessee shall restore the premises or the building and other improvements in
which the premises are in immediately before destruction.
2. Option to Extend
a. Option. At the expiration of the original term hereof, Lessee may extend the
term of this Lease for an additional period of twenty-four (24) months
commencing immediately following the Expiration Date (the "Extended Term").
Lessee shall exercise this option, if at all, by giving Lessor notice of
Lessee's intention to do so at least one hundred twenty (120) days prior to the
Expiration Date. In no event shall any purported exercise of such option by
Lessee be effective if an Event of Default (as defined in Paragraph 14) exists
at the time of such exercise or at the time the Extended Term would otherwise
have commenced. Such Extended Term shall be upon all of the terms and conditions
hereof, except that the monthly rental and method of rental adjustment for the
Extended Term shall be determined as set forth below. The option rights of
Lessee under this paragraph are granted for Lessee's personal benefit and may
not be assigned or transferred by Lessee.
b. Extended Term Rent. As of the commencement of the Extended Term, the monthly
rent for the Extended Term shall be subject to negotiation between Lessor and
Lessee, with an effort to determine a fair market rental for the Premises, as
improved. In the event the parties fail to agree upon the amount of the monthly
rent for the Extended Term prior to commencement thereof, the monthly Rent for
the Extended Term shall be determined by appraisal in the manner hereafter set
forth; provided, however, that in no event shall the monthly rent for the
Extended Term be less than the monthly Rent payable hereunder for the last full
month of the Lease term immediately preceding commencement of the Extended Term.
In the event it becomes necessary under this paragraph to determine the fair
market monthly rent and the method of rental adjustment of the Premises by
appraisal, Lessor and Lessee each shall appoint a real estate appraiser who
shall be a member of the American Institute of Real Estate Appraisers ("AIREA")
and such appraisers shall each determine the fair market monthly rent for the
Premises, and the method of rental adjustment taking into account the value of
the Premises and the amenities provided by the Outside Areas, the Common Areas
and the Building and prevailing comparable rentals and rental adjustment
practices in the area. Such appraisers shall, within twenty (20) business days
after their appointment, complete their appraisals and submit their appraisal
reports to Lessor and Lessee. If the fair market monthly rent of the Premises
established in the two (2) appraisals varies by five percent (5%) or less of the
higher rental, the average of the two shell be controlling. If said fair market
monthly rent varies by more than five percent (5%) of the higher rental, said
appraisers, within ten (10) days after submission of the last appraisal, shall
appoint a third appraiser who shall be a member of the AIREA and who shall also
be experienced in the appraisal of rental value and adjustment practices for
commercial properties in the vicinity of the Premises. Such third appraiser
shell within twenty (20) business days after his appointment, determine by
appraisal the fair market monthly rent of the Premises sating into account the
same factors referred to above, and submit his appraisal report to Lessor and
Lessee. The fair market monthly rent determined by the third appraiser for the
Premises shall be controlling, unless it is less than that set forth in the
lower appraisal previously obtained, in which case the value set forth in said
lower appraisal shall be controlling, or unless it is greater than that set
forts in the higher appraisal previously obtained in which case the rental set
forth in said higher appraisal shall be controlling. The method of adjusting
rental periodically, including the manner and timing of such adjustments, shall
be as determined by the initial two appraisers, if they agree on a single
method; otherwise, it shall be as determined by the third appraiser. If either
Lessor or Lessee fails to appoint an appraiser, or if an appraiser appointed by
either of them fails, after his appointment to submit his appraisal within the
requited period in accordance with the foregoing, the appraisal submitted by the
appraiser properly appointed and timely submitting his appraisal shall be
controlling. If the two appraisers appointed by Lessor and Lessee are unable to
agree upon a third appraiser within the required period in accordance with the
foregoing, application shall be made within twenty (20) days thereafter by
either Lessor or Lessee to AIREA, which shall appoint a member of said institute
willing to serve as appraiser. The cost of all appraisals under this
subparagraph shall be borne equally by Lessor and Lessee. The rent for the
Extended Term will be equal to 92.5% the above fait market monthly rent.
c. Second Option to Extend. Provided Lessee has timely exercised the option to
extend provided in subparagraph a above, Lessee may extend the term of this
Lease for one additional period of twenty-four (24) months commencing
immediately following the last day of the first Extended Term (the "Second
Extended Term"). Lessee shall exercise this option, if at all, by giving Lessor
notice of Lessee's intention to do so at least one hundred twenty (120) darts
prior to the date of expiration of the Extended Term. In no event shall any
purported exercise of such option by Lessee be effective if an Event of Default
(as definer in paragraph 14.1 exists at the time of such exercise or at the time
the Second Extended Term would have otherwise commenced. The Second Extended
Term shall be upon all of the terms and conditions hereof except that the
monthly rent and method of rental adjustment for the Second Extended Term shall
be determined in accordance smith the provisions of paragraph b, assuming that
"Extended Term" as used in said subparagraph means the "Second Extended Term."
Unless expressly mentioned and approved in the written consent of Lessor
referred to in Paragraph 20 of this Lease, the option rights of Lessee under
this paragraph are granted for Lessee's personal benefit and may not be assigned
or transferred by Lessee.
33. Taxes Lessee, at its cost, shall have the right, at ant time, to seek a
reduction in the assessed valuation of the premises or to contest any real
property taxes that are to be paid by Lessee. If Lessee seeks a reduction or
contests the real property taxes, the failure on Lessee's part to pay the real
property taxes shall not constitute a default as long as Lessee complies with
the provisions of this paragraph and posts a bone or Letter of Credit payable to
Lessor for all delinquent taxes and proposed penalties. Lessor shall not be
required to join in any proceeding or contest brought by Lessee unless the
provisions of any law requires that the proceeding or contest be brought by or
in the name of Lessor or any owner of the premises. In that case, Lessor shall
join in the proceeding or contest or permit it to be brought in Lessor's name as
long as Lessor is not required to bear any cost. Lessee, on final determination
of the proceeding or contest, shall immediately pay or discharge any decision or
judgment rendered, together with all costs, changes, interest and penalties
incidental to the decision or judgment. Outing the initial four year term of
this lease, but not during any option extensions, Apple shall. not be obligated
to pay for any property tax increases that incur as the direct result of a
transfer or the property from one entity controlled by Berg to another entity
controlled by Berg. This clause is null and void if Lessor should sell property
to an independent third party. Tax bills will be sent to the address in the
Notice section, Article #17.
If at any time during the term of this lease a tax or excise on rents or other
tax, however described, is levied or assessed against Lessor, as a substitute in
whole or in part for real property taxes assessed or imposed on the premises
Lessee shall pay before delinquency such tax or excise on rents or such other
tax to the extent that such tax or excise on rents or such other tax is
substitute in whole or in part for real property taxes on the premises. In the
event that a tax:, or excise on rents is levied or assessed against Lessor, as a
substitute in whole or in part for taxes assessed or imposed on the premises,
and the taxing authority takes the position that Lessee cannot pay and discharge
such tax on behalf or Lessor, then at the election of Lessor, Lessor may
increase the rent charged hereunder by the exact portion of such tax which is a
substitute in whole or in part for real property taxes on the premises, and
Lessee agrees to pay said portion in additional rent. Lessor agrees that the
additional rents if any, collected per this paragraph 33 shall not be subject to
the incremental rental increases as provided in Paragraph 32. Lessee further
agrees to pay any sewer or water usage fees or taxes that may be assessed
against the property as a result of Lessee's usage of Premises.
34. Hazardous Materials
34.l DEFINITION
The term "Hazardous Materials" shall mean any substance, material, or waste
which is or becomes regulated by any local governmental authority, the State of
California, or the United States Government , including, but not limited to, any
material or substance which is (i) defined as a "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous waste," or "restricted
hazardous waste" under any provision of California. law, and (ii) petroleum,
(iii) asbestos, (iv) polychlorinated biphenyls, (v) radioactive materials, (vi)
designated as a "hazardous substance" pursuant to Section 311 of the Clean Water
Act, 33 U.S.C. #1251 et seq. (33 U.S.C. #1321) or listed pursuant to Section 307
of the Clean Water Act (33 U.S.C. #1317), (vii) defined as "hazardous waste"
pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42
U.S.C. #6901 et seq. (42 U.S.C. #6903), or (viii) defined as a "hazardous
substance" pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. #9601 et seq. (42 U.S.C. #9601) or
which is otherwise prohibited by law.
34.2 LESSEE'S COVENANT REGARDING HAZARDOUS MATERIALS.
Lessee at its sole cost shall comply with all laws relating to the storage, use
and disposal of Hazardous Materials. Lessee shall be solely responsible for and
shall defend, indemnify and hold Lessor and its agents harmless from, and
against all claims costs and liabilities, including attorneys' fees and costs
arising out of or in connection with Lessee's storage, use and/or disposal of
Hazardous Material. This indemnity shall include, without limitation:
(a) any damage, liability, fine, penalty, punitive damages cost or expense
advising from or out of any claim, action, suit or proceeding for personal
injury (including sickness, disease or death), tangible or intangible
property damage, compensation for lost wages, business income, profits or
other economic loss, damage to the natural resources or the environment,
nuisance, pollution, contamination, leaks, spills, release or other
adverse effect on the environment, and
(b) the cost of any reclaimed or necessary repair, clean-up, treatment or
detoxification of the Premises, and the preparation and implementation of
any closure, disposal, remedial or other required actions with the
Premises.
If the presence of Hazardous Materials on the Premises caused or permitted by
Lessee results in a level of contamination greater than the levels established
by any governmental agency having jurisdiction over such contamination, then
Lessee shall promptly take any and all actions necessary to clean up such
contamination if required by law or as a condition to the issuance of or
continuing effectiveness of any governmental approval which relates to the use
of the Premises. At the expiration of the term, Lessee shall have the right to
conduct appropriate tests of water and soil to demonstrate that no contamination
in excess of permitted levels has occurred as a result of Lessee's use of the
Premises. Lessee shall promptly deliver to the Lessor the results of such tests.
Lessee's obligations hereunder shall survive the termination of the Lease.
AMENDMENT #1
This amendment shall modify that certain lease dated October 6, 1987 by and
between Carl E. Berg and Mary Ann Berg, Trustees of the Berg Living Trust, UTA
dated May 1, 1981, as to an undivided 81.01% interest, Clyde Berg & Nancy Berg,
Trustees of the Clyde Berg Living Trust UTA dated Dec. 17, 1981 as to an
undivided 11.83% and Clyde Berg, Trustee of Carl Berg Child's Trust UTA dated
June 2, 1978, as to an undivided 7.16% interest herein collectively Lessor and
APPLE COMPUTER, INC., herein Lessee.
The subject lease is hereby amended in the following particular:
ARTICLE #31 is amended and replaced as follows:
Damage or Destruction. If during the term of this lease the building or tenant
improvements constructed on the leased premises are totally or partially
destroyed from any cause, insured or uninsured, there shall be no abatement rent
whatsoever, to the extent that from the rental abatement insurance described in
Article 6 are available and the Lessee shall be responsible at its sole cost and
expense to repair and restore such total or partial damage or destruction and
restore the building and tenant improvements to the condition existing
immediately before the damage and destruction as soon as it is reasonably
possible to do so.
Except as herein above expressly provided, said Lease dated October 6, 1987
shall remain unchanged. Consented to by the undersigned on
LESSOR
/s/ Carl E. Berg
CARL E. BERG
/s/ Mary Ann Berg by Carl E. Berg her Attorney in Fact
MARY ANN BERG
/s/ Clyde Berg
CLYDE BERG
/s/ Nancy Berg by Clyde Berg her attorney in Fact
NANCY BERG
/s/ Clyde Berg
CLYDE BERG, TRUSTEE
LESSEE
APPLE COMPUTER, INC.
By: /s/ Robert Hecex
Title: Manager Real Estate
SUMMARY OF SUBLEASE PROVISIONS
Sublessor: McDonnell Douglas Corporation
Sublessee: Apple Computer, Inc.
Address of Premises: 20605, 20665 and 20705 Valley Green Drive
Cupertino, CA
Square Footage of the Premises: approximately 142,000 square feet
Term: One hundred twenty-two (122) months,
subject to extension as provided in
Paragraph 4.2 (Paragraph 4).
Commencement Date: November 1, 1987.
Rent:
Rent Commencement Date: November 1, 1987.
Payment to: Regional Manager, Management Services
Southern Pacific Industrial Development
Company
File #31461
P.O. Box 6000
San Francisco, CA 94160 (Paragraph 5).
Notices:
To Sublessor: Southern Pacific Industrial
Development Company
201 Mission St., Ste. 250
San Francisco, CA 94105
Attn: Regional Manager,
Property Management Services
To Sublessee: Apple Computer, Inc.
20525 Mariani Avenue
Cupertino, CA 95014
Attn: R.E. Department, MS 16-0
Copy to: Apple Computer, Inc.
10201 DeAnza Blvd.
Cupertino, CA 95014
Attn: General Counsel
(Paragraph 9).
Exhibits: Exhibit A - Master Lease.
Exhibit B - Memorandum of Lease
Summary:
The foregoing Summary of Sublease Terms is incorporated in and made a part of
the Sublease to which such Summary of Sublease Terms is attached. If there is
any conflict between such Summary of Sublease Terms and such Sublease, the
latter shall control.
TABLE OF CONTENTS
Page
1. Parties.....................................................1
2. Subordination; Defaults; Provisions Constituting Sublease...1
2.1 Subordination; Default under Master Lease..............1
2.2 Provisions Constituting Sublease.......................2
3. Premises....................................................3
3.1 Subleased Premises.....................................3
3.2 As Is..................................................3
3.3 Sublessor's Warranty...................................4
3.4 Alterations by Sublessee...............................4
4. Term .......................................................5
4.1 Sublease Term..........................................5
4.2 Option to Extend Sublease Term.........................6
4.3 Holding Over...........................................7
5. Rent .......................................................7
5.1 Rent...................................................7
5.2 Rent During Extended Term..............................7
(a) Mutual Agreement...................................8
(b) Appraisal..........................................8
5.3 Late Charge............................................9
5.4 Charges................................................9
6. Taxes.......................................................9
6.1 Payment of Taxes.......................................9
6.2 Substitute Taxes......................................10
7. Maintenance of Premises....................................11
8. Use ......................................................11
9. Notices......................................................
11
9.1 General...............................................11
11
9.2 Notices from Lessor...................................12
10. Interest.....................................................
12
11. Damage and Destruction.....................................12
12. Condemnation...............................................13
13. Insurance..................................................13
14. Lessor's and Sublessor's Consent...........................14
15. Assignment and Subletting..................................14
15.1 Prohibitions in General...............................14
(a) Transfer..........................................14
(b) Hypothecation.....................................15
15.2 Transfer Agreement....................................15
15.3 Request for Transfer..................................16
15.4 Excess Rents .........................................16
15.5 Sublessor's Rights....................................17
15.6 Corporations and Partnerships..............................17
15.7 Reasonable Provisions......................................18
15.8 Subject to Master Lease...............................18
15.9 Miscellaneous.........................................18
16. Default and Remedies.......................................18
16.1 Events of Default.....................................18
16.2 Remedies..............................................20
16.2.1 Termination....................................20
16.2.2 Continuance of Sublease........................21
16.2.3 Reletting Premises.............................21
16.3 Attorneys' Fees.......................................22
16.4 Sublessor's Default...................................22
16.4.1 Default........................................22
16.4.2 Sublessee's Right to Perform Sublessor's
Obligations Under the Master Lease....................22
17. Quiet Enjoyment............................................23
18. Right of Entry.............................................23
19. Sublessor's Right to Perform Sublessee's Covenants.........23
20. Surrender of Premises......................................24
21. Option to Purchase.........................................24
(a) Notice................................................24
(b) Automatic Termination.................................24
(c) Sublessor to Exercise Option to Purchase..............24
(d) Terms of Sale.........................................25
(i) Purchase Price....................................25
(ii) Payment of Purchase Price........................25
(iii) Close of Escrow.................................25
(iv) Closing Costs....................................26
(v) Condition of Title................................26
(e) No Warranties.........................................26
(f) Time..................................................26
(g) Right to Exchange.....................................26
(h) Notice Binding........................................26
(i) Limitation of Obligations of Sublessor;
Indemnification.......................................27
22. Right of First Refusal.....................................27
22.1 Sublessee's Right to Exercise Right of First Refusal..27
22.2 Attorney-in-Fact......................................28
22.3 Terms of Sale.........................................28
(a) Purchase Price....................................29
(b) Payment of Purchase Price.........................29
(c) Close of Escrow...................................30
(d) Closing Costs.....................................30
22.4 Limitations on Sublessor's Obligations;
Indemnification.......................................30
23. Property Loss; Damage......................................30
23.1 Waiver of Claims......................................30
23.2 Waiver of Subrogation.................................31
23.3 Indemnification.......................................31
24. General......................................................
31 24.1 Captions and Headings.................................31
24.2 Surrender of Sublease Not Merger...........................32
24.3 Interpretation of Terms....................................32
24.4 Counterparts...............................................32
24.5 Time of Essence............................................32
24.6 Severability...............................................32
24.7 Governing Law..............................................32
24.8 Joint and Several Liability...........................32
24.9 Construction of Sublease Provisions...................32
24.10 Sublessor or Sublessee as Party Defendant............33
24.11 Sublessor Not a Trustee..............................33
24.12 No Partnership or Joint Venture......................33
24.13 Exhibits.............................................33
24.14 Attorneys' Fees......................................33
24.15 Indemnities to Survive Sublease......................33
24.16 Attorney-in-Fact.....................................33
25. Entire Agreement...........................................33
26. Real Estate Brokers........................................34
27. Subordination..............................................34
28. Hazardous Materials........................................34
28.1 Definitions...........................................34
28.2 Use of Premises and Compliance with Laws..............35
28.3 Notice................................................35
28.4 Indemnification.......................................36
28.5 Charges...............................................36
28.6 Liens.................................................36
28.7 Sublessor's Right of Access...........................36
28.8 Assignment and Subletting.............................37
29. Memorandum of Sublease.....................................37
30. Sublessor's Undertaking with Respect to Master Lease.......37
31 Covenant of Good Faith and Fair Dealing....................37
32. Sublessor's Agent..........................................37
SUBLEASE
1. Parties. This Sublease ("Sublease") is entered into by and between McDONNELL
DOUGLAS CORPORATION, a Maryland corporation ("Sublessor"), and APPLE COMPUTER,
INC., a California corporation ("Sublessee"), as a sublease under that certain
Lease ("Lease") dated January 6, 1978, as amended by that certain letter of
clarification, dated February 17, 1978; Amendment ("Amendment"), dated January
30, 1979; Amendment #2 ("Amendment #2"), dated March 17, 1979; and Amendment #3
("Amendment #3"), dated July 1, 1987 (collectively the "Master Lease") by and
between JOHN A. SOBRATO and SUSAN R. SOBRATO, as to an undivided forty-five
percent (45%) interest, and CARL E. BERG and MARY ANN BERG, as to an undivided
forty-five percent (45%) interest, and ANN RUSSO as to a ten percent (10%)
interest, predecessor in interest of the current lessor thereunder, Carl E. Berg
and Mary Ann Berg, as trustees on behalf of the Berg Living Trust UTA, dated May
1, 1981, as to an undivided 81.01% interest, Clyde Berg and Nancy Berg, Trustees
of the Clyde Berg Living Trust, UTA, dated December 17, 1981, as to an undivided
11.83% interest, and Clyde Berg, Trustee of Carl Berg Child's Trust UTA, dated
June 2, 1978, as to an undivided 7.16% interest ("Lessor"), and TYMSHARE, INC.,
predecessor in interest of Sublessor, as lessee. A copy of the Master Lease is
attached hereto as Exhibit "A" and made a part hereof, subject to the terms and
conditions of this Sublease.
2. Subordination; Defaults: Provisions Constituting Sublease.
2.1 Subordination; Default under Master Lease. As between the parties to this
Sublease, this Sublease is subject and subordinate in all respects to the Master
Lease, and to the matters to which the Master Lease is subject and subordinate
in accordance with its terms, and to those amendments to the Master Lease or
supplemental agreements thereunder made between Sublessor and Lessor which do
not adversely affect or diminish Sublessee's rights, or materially enlarge or
alter Sublessee's obligations or duties under this Sublease. Sublessee covenants
and agrees to refrain from doing or causing to be done, or permitting any party
under its control to act in a manner, (i) which would constitute a default under
the Master Lease or cause the Master Lease or the rights of Sublessor as lessee
under the Master Lease to be cancelled, terminated, forfeited or surrendered, or
(ii) which would make Sublessor liable for any damages, claims or penalty under
the Master Lease. Sublessor shall use reasonable efforts to cause Lessor to
perform its obligations under the Master Lease; provided, however, that
Sublessor shall have no liability of any nature whatsoever to Sublessee and
Sublessee shall have no liability of any nature whatsoever to Sublessor as a
consequence of Lessor's failure or delay in performing its obligations under the
Master Lease, including without limitation, Lessor Is breach of the covenant of
quiet enjoyment set forth in Paragraph 10 of the Master Lease or the
non-disturbance provisions of Paragraph 19 of the Master Lease. If Lessor shall
be in default under the Master Lease in any of its obligations to Sublessor or
in any of its obligations to Sublessee, if any, Sublessee shall, by written
notice to Sublessor, specify any such default by Lessor, and Sublessor shall,
after receiving such notice, either (i) take
- 1 -
action for the enforcement of Sublessor's rights against Lessor with respect to
such default as described in this Paragraph 2.1 above, or (ii) cure any such
default to the extent permitted pursuant to the provisions of the Master Lease.
Sublessee shall be entitled to participate with Sublessor in the enforcement of
Sublessor's rights against Lessor (and in any recovery or relief obtained to the
extent the parties' respective rights or interests are affected or costs are
incurred). One-half (1/2) of all expenses incurred by Sublessor in connection
with its efforts to cause Lessor to perform said obligations shall be paid to
Sublessor by Sublessee upon demand, as Charges (defined in Paragraph 5.4 below).
If Sublessee wishes to pursue Lessor's failure to perform its obligations under
the Master Lease in addition to Sublessor's reasonable pursuit of the same,
then, provided such action would not constitute a default under the Master
Lease, Sublessee shall have the right to take enforcement or self-help action
against Lessor in its own name or in the name of Sublessor and at its sole cost
and expense and, for that purpose and only to such extent, all of the rights of
Sublessor to enforce or perform the obligations of Lessor under the Master Lease
are hereby conferred upon and for this purpose assigned to Sublessee and
Sublessee hereby is subrogated to such rights (including the benefit of any
recovery or relief). Sublessee shall indemnify and hold Sublessor harmless from
and against all loss, cost, liability, claims, damages and expenses (including
without limitation reasonable attorneys' fees), penalties and fines incurred in
connection with or arising from the taking of any such action by Sublessee.
Sublessee's obligations hereunder (including without limitation the obligation
of Sublessee to pay all Rent (defined in Paragraph 5.1 below) and Charges) shall
not be impaired nor shall the performance thereof be excused because of any
failure or delay on Lessor's part in performing its obligations under the Master
Lease unless (i) such failure or delay results from Sublessor's being in default
under the Master Lease and Sublessor's default thereunder is not due to a
default of Sublessee hereunder, or (ii) such failure or delay results from
Sublessor's willful misconduct. Under no circumstances shall Sublessee have the
right to require performance by Sublessor of Lessor's obligations. Sublessor
shall have no right to terminate the Master Lease, unless an Event of Default
(defined in Paragraph 16.1 below) occurs hereunder or except as otherwise
provided in this Sublease. In the event of such a permitted termination of the
Master Lease, this Sublease shall terminate concurrently therewith, without any
liability of Sublessor to Sublessee. 2.2 Provisions Constituting Sublease. All
of the terms and conditions contained in the Master Lease are incorporated
herein, except for Paragraphs 1, 2, 3(a), 3(c), 3(d), 3(e), 8, 9, 10, 11, 12,
13, 14, 17, 18, 19, 20, 25, 28, 29, 30, and 31 of the Lease, Article 2 of the
Amendment and all of the provisions of Amendment #2 and Amendment #3, as terms
and conditions of this Sublease (with (i) each reference therein to lessor and
lessee to be deemed to refer to Sublessor and Sublessee, except that all
references to 'Lessor" in Paragraph 5 of the Master Lease shall mean both Lessor
and Sublessor and those obligations of Lessor set forth in Paragraph 6 of the
Master Lease shall remain the obligations of Lessor, and (ii) each reference to
"Lease" to be deemed to refer to
- 2 -
Sublease) and along with all of the paragraphs set out in this Sublease, shall
be the complete terms and conditions of this Sublease. The parties acknowledge
that to the extent the provisions contained in Paragraphs 10, 14, 19 and 31 of
the Master Lease are covenants running with the land, such covenants shall inure
to the benefit of, and Sublessee shall derive the benefit from such provisions,
notwithstanding that such provisions are not incorporated into this Sublease.
The enforcement provisions of Paragraph 2.1 above shall apply if Lessor breaches
any of the covenants in Paragraphs 10, 14, 19 and 31 of the Master Lease.
3. Premises.
3.1 Subleased Premises. Sublessor leases to Sublessee and Sublessee leases from
Sublessor the premises described in Paragraph 1 of the Master Lease, as amended
by Article 1 of the Amendment ("Premises").
3.2 As Is. The parties acknowledge that Sublessee intends to remove the existing
interior improvements from the Premises and to install new interior improvements
in accordance with conceptual plans and explanatory detail to be developed by
Sublessee ("Tenant Improvements"). Sublessee shall use good faith, reasonable
efforts to submit said conceptual plans and explanatory detail to Sublessor no
later than November 15, 1987 for Sublessor's and Lessor's approval in accordance
with Paragraph 5 of the Master Lease. This Sublease is conditioned upon the
written consent or approval of Sublessor and Lessor having been obtained on or
before December 15, 1987 to the conceptual plans and explanatory detail for
Tenant Improvements, in addition to Lessor's and Sublessor's concurrent consent
to allowing substantially all of the Tenant Improvements to remain in the
Premises upon surrender of the Premises by Sublessee and by Sublessor. If, for
any reason, Lessor's consent to the conceptual plans and explanatory detail is
not obtained on or before December 15, 1987, either party may terminate this
Sublease; provided, however, that Sublessee shall nevertheless be obligated to
pay Rent and Charges through the later to occur of (i) December 31, 1987 or (ii)
the date the Premises are surrendered to Sublessor.
Sublessee agrees to accept the Premises and appurtenances thereto in their
existing "As Is" condition as of the Effective Date (defined immediately above
the signatures of the parties), subject to the limitations set forth in
Paragraph 3.3 below. Sublessor acknowledges that Sublessee has no interest in
subleasing the Premises if Sublessee is unable to remodel the Premises to
accommodate Sublessee's intended use. Accordingly, Sublessee shall have the
right to terminate this Sublease by delivery of written notice to Sublessor (i)
on or before November 20, 1987 if Sublessee determines that Hazardous Materials
(defined in Paragraph 28.1 below) are discovered in the Premises or (ii) on or
before December 1, 1987 if Sublessee reasonably believes that notwithstanding
good faith efforts it will be unable to obtain a building permit for the
remodeling of the Premises b; February 15, 1988. Subject to the foregoing
conditions, by taking possession of the Premises on the Commencement Date
(defined in Paragraph 4.1 below), Sublessee shall be deemed to have accepted the
Premises as being in good and sanitary order, condition and repair and to have
accepted the Premises in
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their condition existing as of the date Sublessee takes possession of the
Premises, subject to all applicable laws, covenants, conditions, restrictions,
easements and other matters of public record. Sublessee acknowledges that (i) it
has conducted all investigations, tests and studies concerning the Premises that
Sublessee deems appropriate and material to its decision to sublease the
Premises, including tests and investigations concerning the existence of
Hazardous Materials in and about the Premises; and (ii) that it has no knowledge
of the presence of any Hazardous Materials on the Premises, except as otherwise
disclosed by Sublessee to Sublessor in writing. Sublessee acknowledges that
except as provided in Paragraph 3.3, neither Sublessor nor Sublessor's agents
have made any representation or warranty as to the suitability of the Premises
for the conduct of Sublessee's business, the condition of the Premises, or the
use or occupancy which may be made and Sublessee has independently investigated
and is satisfied that the Premises are suitable for Sublessee's intended use and
that the Premises meet all governmental requirements for such intended use.
On the Commencement Date, Sublessor shall deliver exclusive occupancy of the
Premises to Sublessee free of all personal property and trade fixtures belonging
to Sublessor.
3.3 Sublessor's Warranty. Sublessor represents, warrants and covenants that the
Premises and everything contained therein for which Sublessor is responsible
pursuant to the terms and conditions of the Master Lease, including but not
limited to all equipment, systems and other component parts thereof, were in
good and clean condition and repair, reasonable wear and tear excepted, on
September 24, 1987. Sublessor further represents and warrants that to
Sublessor's knowledge the portion of the Premises for which the Lessor is
responsible pursuant to the terms and conditions of the Master Lease are in good
and clean condition and repair, reasonable wear and tear excepted on the
Effective Date. To Sublessor's knowledge, Sublessor has provided to Sublessee
all information, data, documents, plans, specifications and other materials
within the possession, or under the control of, Sublessor regarding (i) the
existence of Hazardous Materials, if any, on the Premises, and (ii) to the
extent that Sublessee has requested such information in writing, the Premises,
its design and physical condition, its compliance with applicable laws,
ordinances, rules and regulations, and other material matters, and all of the
material provided to Sublessor in accordance with the foregoing has been
complete, true and correct originals, or copies thereof. As to the future
condition of the Premises, Sublessor shall assign to Sublessee any warranties
Sublessor holds with respect to the Premises, including, without limitation,
warranties for any equipment, systems and other component parts thereof.
3.4 Alterations by Sublessee. Pursuant to Paragraph 5 of the Master Lease, as
incorporated into this Sublease, Lessor and Sublessor may condition their
consent to the making of any alterations, improvements or modifications to the
Premises upon Sublessee's agreement to remove the same upon its surrender of the
Premises. Following Sublessor s receipt of Sublessee's plans and specifications
for the making of any alterations, improvements or modifications to the
Premises, Sublessor shall submit the same to Lessor for its consent and use
reasonable efforts to obtain Lessor's consent
- 4 -
and concurrently obtain Lessor's decision as to whether the alteration,
improvement or modification must be removed upon termination of the Master
Lease. If Sublessor consents to any alteration, improvement or modification,
Sublessor shall advise Sublessee as to whether Sublessor may require the
alteration, improvement or modification to be removed from the Premises upon
termination of the Sublease Term. If Sublessor advises Sublessee that any
alteration, improvement or modification may remain in the Premises upon
termination of the Sublease Term, Sublessor shall be bound by such decision and
may not thereafter revoke or change such decision. All alterations, improvements
or modifications made to the Premises by Sublessee, including without limitation
the Tenant Improvements, shall remain the property of Sublessee during the
Sublease Term, but those improvements which are to remain at surrender shall not
be altered or removed from the Premises prior to the end of the Sublease Term
(except on compliance with the provisions of this Sublease), and at the end of
the Sublease Term, shall become Sublessor's property without compensation to
Sublessee by Sublessor or be removed by Sublessee in accordance with the terms
of Paragraph 20 below.
4. Term.
4.1 Sublease Term. The term of this Sublease ("Sublease Term") shall be for a
period of one hundred twenty-two (122) months, subject to extension pursuant to
the terms of Paragraph 4.2 below, commencing on November 1, 1987 ("Commencement
Date") and ending on December 31, 1997.
With respect to the initial Sublease Term, Sublessee acknowledges that pursuant
to Paragraph 2 of the Master Lease, the initial term of the Master Lease
terminates on December 31, 1992. Thereafter, Sublessor has the right and option
under said Paragraph 2 to renew the Master Lease for three (3) additional five
(5) year terms commencing automatically as of the expiration of the initial or
any extended term, upon giving Lessor written notice of exercise of Sublessor's
option to renew at least one hundred eighty (180) days prior to the expiration
of the initial or any extended term. Subject to all other provisions of the
Master Lease which may cause the early termination of the Master Lease (other
than as a result of Sublessor's default thereunder or a surrender thereof by
Sublessor), Sublessor shall, no later than May 1, 1992, exercise its first
option to extend the Master Lease term to December 31, 1997. Sublessor appoints
Sublessee as its special attorney-in-fact solely for the purpose of exercising
Sublessor's first option to extend the Master Lease term to December 31, 1997,
and Sublessee shall have the nonexclusive right to exercise such option in
Sublessor's name, if and only if Sublessor has not provided Sublessee with
written evidence of its exercise of said first option by May 1, 1992.
Accordingly, Sublessor shall not be liable to Sublessee for Sublessor's failure
to exercise said option. Each party shall deliver to the other a copy of its
exercise notice concurrently with its delivery of the same to Lessor. The
foregoing notwithstanding, if an Event of Default exists at any time either
party desires or is required ;c exercise the first option to extend the Master
Lease 'term to December 31, 1997, then at sum time Sublessor shall not obligated
to exercise its first option to extend the Master Lease term for Sublessee's
benefit nor shall Sublessee have any right to exercise said option in
Sublessor's name as
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special attorney-in-fact for Sublessor. If, for any reason, the Master Lease
term is not extended (other than due to the refusal of Lessor to honor or accept
the exercise of the option to extend the Master Lease, except where due to an
Event of Default), then this Sublease shall terminate on December 31, 1992.
4.2 Option to Extend Sublease Term. Sublessor hereby grants to Sublessee the
option to extend the Sublease Term for two (2) consecutive five (5) year terms
(the "First Extended Term" and the "Second Extended Term," respectively, or each
an "Extended Term"), on the following terms and conditions;
(a) Sublessee shall give Sublessor's Agent (defined in Paragraph 5.1 below)
written notice of its exercise of the option to extend the Sublease Term no
earlier than twelve (12) months nor later than nine (9) months before the date
the initial Sublease Term ends (i.e., April 1, 1997), or the First Extended Term
ends (i.e., April 1, 2002), as the case may be. Time is of the essence. Subject
to all of the provisions of the Master Lease which may cause the early
termination of the Master Lease (other than as a result of Sublessor's default
thereunder or surrender thereof by Sublessor), Sublessor shall, no later than
May 1, 1997, or no later than May 1, 2002, as the case may be, exercise its
option to extend the Master Lease term to December 31, 2002, or to December 31,
2007, as the case may be. Sublessor appoints Sublessee as its special
attorney-in-fact solely for the purpose of exercising the corresponding options
to extend the Master Lease term and Sublessee shall have the nonexclusive right
to exercise such options in Sublessor's name, if and only if Sublessor has not
provided Sublessee with written evidence of its exercise of said options under
the Master Lease by May 1, 1997 or May 1, 2002, as the case may be. Accordingly,
Sublessor shall not be liable to Sublessee for Sublessor's failure to exercise
said options. Each party shall deliver to the other a copy of its exercise
notice concurrently with its delivery of the same to Lessor.
(b) The foregoing notwithstanding, if an Event of Default exists (i) at any time
Sublessee exercises its option to extend the Sublease Term for either Extended
Term, or (ii) at any time either party desires or is required to exercise the
option to extend the Master Lease Term to December 31, 2002 or December 31,
2007, as the case may be, then Sublessee may not at such time extend the
Sublease Term pursuant to this Paragraph 4.2, nor shall, Sublessee have any
right, at such time, to exercise said corresponding options under the Master
Lease in Sublessor's name, as Sublessor's special attorney-in-fact.
(c) All terms and conditions of this Sublease shall apply during each Extended
Term, except that the Rent for the Extended Term shall be determined in
accordance with Paragraph 5.2.
(d) Once Sublessee delivers notice of its exercise of the option to extend the
Sublease Term, Sublessee may not withdraw such exercise and, subject to the
provisions of this Paragraph 4.2, such notice shall operate to extend the
Sublease Term. Upon the extension of the Sublease Term pursuant to this
Paragraph 4.2, the term "Sublease Term" as used
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in this Sublease shall thereafter include the Extended Term and the Sublease
termination date shall be the expiration date of the Extended Term. 4.3 Holding
Over. If Sublessee remains in possession of the Premises after the expiration of
the Sublease Term, such tenancy shall be from month-to-month only and shall not
be a renewal or an extension for any further term. In the event of such tenancy,
the monthly Rent due hereunder shall be one hundred twenty-five percent (125%)
of the Rent for the month preceding the Sublease termination and shall be
payable at the times specified in Paragraph 5 below. Such month-to-month tenancy
shall otherwise be subject to every applicable term, covenant and agreement
contained herein. Either party may terminate such tenancy upon thirty (30) day's
written notice of termination to the other.
5. Rent.
5.1 Rent. Sublessee shall pay to Sublessor as monthly rent ("Rent") for the
Premises the following amounts:
Monthly Rent
During the Period Installment
November 1, 1987 - December 31, 1987 $116,932
January 1, 1988 - May 31, 1988 -0-
June 1, 1988 - October 31, 1992 $116,932
November 1, 1992 - December 31, 1997 $135,470
Rent shall be payable in advance on the Effective Date and on the first day of
each calendar month thereafter and continuing throughout the Sublease Term. Rent
shall be prorated, based on the number of days in the particular month, for any
partial month during the Sublease Term. Rent shall be payable without deduction,
offset, prior notice or demand in lawful money of the United States to
Sublessor's agent, Southern Pacific Industrial Development Company ("Sublessor's
Agent"), to the attention of Regional Manager, Property Management Services,
File #31461, at Post Office Box 6000, San Francisco, CA 94160, or at such other
place or places as Sublessor or Sublessor's Agent may from time to time direct.
5.2 Rent During Extended Term. If Sublessee elects to extend the Sublease Term
pursuant to Paragraph 4.2, the annual Rent for each Extended Term shall be an
amount equal to ninety percent (90%) of the fair market rental value of the
Premises in relation to market conditions at the time of the extension for the
uses of the Premises permitted under Paragraph 4 of the Master Lease (including,
but not limited to the following market conditions: rental rates for comparable
space with comparable tenant improvements; any adjustments to rent based upon
direct costs (operating expenses) and taxes or rental adjustments; the size of
the space; lease assumptions or contributions; the condition of the Premises
vis-a-vis comparable space; leasing commissions paid or payable; methods of
determining escalations; concessions, if any, granted to tenants (such as free
rent, moving allowances, etc.); improvement allowances or contributions;
building standard improvements; and any other relevant terms, conditions or
factors which affect market rental values at the time of extension); provided,
that the Rent for each Extended Term shall in
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no event be lower than the then existing Rent. The Rent for each Extended Term
shall be determined as follows: (a) Mutual Agreement. After timely receipt by
Sublessor of Sublessee's notice of exercise of the option to extend the Sublease
Term, Sublessor and Sublessee shall have a period of thirty (30) days in which
to agree on the Rent for the First Extended Term or the Second Extended Term, as
the case may be. If Sublessor and Sublessee agree on said Rent during that
period, they shall immediately execute an amendment to this Sublease stating the
Rent for the applicable Extended Term. If Sublessor and Sublessee are unable to
agree on the Rent for the applicable Extended Term as aforesaid, the Provisions
of Paragraph 5.2(b) below shall apply.
(b) Appraisal. Within five (5) days after the expiration of the thirty (30) day
period described in Paragraph 5.2(a) above, each party, at its cost and by
giving notice to the other party, shall appoint an M.A.I. real estate appraiser,
with at least ten (10) years full-time commercial appraisal experience and five
(5) years full-time commercial appraisal experience in the area in which the
Premises are located, to appraise and set the fair market rental value of the
Premises. If a party does not appoint an appraiser within five (5) days after
the other party has given notice of the name of its appraiser, the single
appraiser appointed shall be the sole appraiser and shall set the fair market
rental value. The cost of such sole appraiser shall be borne equally by the
parties. If two appraisers are appointed by the parties as provided in this
Paragraph 5.2(b), the two appraisers shall meet promptly and attempt to set the
fair market rental value. If they are unable to agree within twenty (20) days
after the last appraiser has been appointed, then the two appraisers shall
select a third appraiser meeting the qualifications stated in this Paragraph
5.2(b) within thirty (30) days after appointment of the second appraiser. If
they are unable to agree on the third appraiser within the time period allowed,
either of the parties to this Sublease, by giving ten (10) days notice to the
other party, may apply to the presiding judge of the Superior Court of Santa
Clara County for the selection of a third appraiser who meets the qualifications
stated above. Each of the parties shall bear one-half (1/2) of the cost of
appointing the third appraiser and of paying the third appraiser's fee. The
third appraiser, however selected, shall be a person who has not previously
acted in any capacity for either party. Within twenty (20) days after the
selection of the third appraiser, the majority of the appraisers shall set the
fair market rental value. If the majority of the appraisers are unable to set
the fair market rental value within said twenty (20) day period, the three
appraisals shall be added together and the total divided by three; the resulting
quotient shall be the fair market rental value and shall be deemed incorporated
herein. Provided, however, that if any appraisal differs from the median
appraisal by an amount equal to more than ten percent (logo) of such median
appraisal, that appraisal shall be disregarded, and the average of the remaining
appraisals (or the remaining appraisal) shall be the fair market rental value.
The terms of this Paragraph 5.2 shall control the definition and determination
of "fair market rental value" and the procedure used to make such determination
and the jurisdiction of the appraisers is so limited. Any determination
hereunder
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shall be binding on the parties absent fraud or gross error and may be entered
as a judgment in court. The appraisers shall have no right to alter, vary or
amend the provisions of this Paragraph 5.2 in making their determination
hereunder. Either party may submit evidence to the appraisers as to the fair
market rental value of the Premises so long as each party provides the other
party with a copy of the same to allow rebuttal evidence. Evidentiary hearings
shall not be held for purposes of determining fair market rental value. The
determination of the appraisers, or each appraiser, if applicable, shall be set
forth in detail, in writing, including the information and data forming the
basis of the determination.
5.3 Late Charge. Sublessee hereby acknowledges that late payment by Sublessee to
Sublessor of Rent will cause Sublessor to incur costs not contemplated by this
Sublease, the exact amount of which will be extremely difficult to ascertain.
Such costs include, but are not limited to, processing and accounting charges,
and late charges which may be imposed upon Sublessor by the terms of the Master
Lease. Accordingly, Sublessee shall pay to Sublessor's Agent, as Charges,
without the necessity of prior notice or demand, a late charge equal to two
percent (2%) of any installment of Rent which is not received by Sublessor's
Agent within fifteen (15) days after the due date for such installment. The
parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Sublessor will incur by reason of late payment by
Sublessee. In no event shall this provision for a late charge be deemed to grant
to Sublessee a grace period or extension of time within which to pay any
installment of Rent or prevent Sublessor from exercising any right or remedy
available to Sublessor upon Sublessee's failure to pay such installment of Rent
when due, including without limitation the right to terminate the Sublease. In
the event any installment of Rent is not received by Sublessor's Agent by the
thirtieth (30th) day after the due date for such installment, such installment
shall bear interest at an annual rate set forth in Paragraph 10 below,
commencing on the thirty-first (31st) day after the due date for such
installment and continuing until such installment is paid in full. In addition,
Sublessee shall pay all reasonable costs and attorneys' fees incurred by
Sublessor in the collection of such amounts.
5.4 Charges. Sublessee shall timely pay all taxes, charges, costs and expenses
and other sums which Sublessee is required to pay hereunder (together with all
interest and charges that may accrue thereon in the event of Sublessee's failure
to pay the same), and all damages, costs and expenses which Sublessor may incur
by reason of any default by Sublessee (collectively, "Charges"). The obligation
to pay Rent and Charges shall commence on the Commencement Date. In the event of
nonpayment by Sublessee of any Charges, Sublessor shall have all of the same
rights and remedies with respect thereto as Sublessor has for the nonpayment of
Rent, including, without limitation, the rights and remedies available pursuant
to California Civil Code Sections 1941.2 and 1941.4, or any successor or
replacement statute.
6. Taxes.
6.1 Payment of Taxes. At least twenty (20) days prior to delinquency, Sublessee
shall pay any and all taxes,
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assessments or other charges (other than those charges assessed by reason of
Sublessor's default under the Master Lease to the extent not caused by an Event
of Default) (i) payable by Sublessor pursuant to the Master Lease, or (ii)
payable by Sublessor as owner of the Premises if and when Sublessor acquires fee
title to the same. Sublessor will advise Sublessee and provide Sublessee with
copies of all notices, levies and assessments of taxes and other charges
respecting the Premises after receiving notification from Lessor of the same.
Sublessor shall use reasonable efforts to arrange for any and all notices,
levies and assessments of taxes and other charges to be sent directly to
Sublessee. If any notices, levies and/or assessments of taxes and other charges
are delivered directly to Sublessee or the Premises by any tax authority,
Sublessee shall notify Sublessor of the same and shall pay such taxes,
assessments or charges directly to the taxing authority twenty (20) days prior
to delinquency and provide Sublessor with written evidence of such payment at
least twenty (20) days prior to delinquency. If any notices, levies and/or
assessments of taxes and other charges are delivered to Sublessee by either
Lessor or Sublessor, Sublessee shall pay such taxes, assessments or charges to
Lessor or Sublessor, as the case may be, at least twenty (20) days prior to
delinquency. To the extent permitted by the Master Lease or if Lessor otherwise
consents thereto, Sublessee's payment of taxes and assessments may, at
Sublessee's election, be paid in installments as may be permitted by law or the
taxing authority.
Pursuant to Paragraph 3(b) of the Master Lease, Sublessor has the right to
contest in the name of Lessor, or in its own name, any tax, levy or assessment
which Sublessor is required to pay thereunder, in whole or in part. If Sublessee
wishes to contest the payment of any tax, levy or assessment, then Sublessee
shall have the right to contest the same in the name of Lessor (to the extent
permitted by the Master Lease), in the name of Sublessor, or in its own name.
Sublessor shall execute all documents necessary or appropriate to effectuate the
contest and will use reasonable efforts to cause Lessor to do the same. Any
steps, actions or proceedings instituted by Sublessee shall be at the expense of
Sublessee. Sublessee shall indemnify and hold Sublessor harmless from and
against all loss, cost, liability, claims, damages and expenses (including
without limitation reasonable attorneys' fees), penalties and fines incurred in
connection with or arising from the taking of any such action by Sublessee.
6.2 Substitute Taxes. Should the State of California or any political
subdivision thereof (including the County of Santa Clara or City of Cupertino)
levy or impose a tax, assessment, license fee or other charge upon the Master
Lease, this Sublease, the estate created by the Master Lease or this Sublease,
or upon Lessor (or Sublessor) by reason of its ownership of the fee interest in
the Premises, or upon the rents or other income of the Lessor or Sublessor from
the Premises. and such tax, assessment, license fee or other charge is assessed,
in whole or in part, in lieu of property taxes anchor assessments pursuant to
Paragraph 3(e) of the Master Lease, there shall be an equitable allocation of
such tax between Lessor and Sublessor, based upon the extent to which Lessor can
reasonably establish that such new tax is a substitute for real property taxes
assessed against the Premises for the fiscal period next preceding enactment of
the
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new tax. Sublessor and Sublessee shall meet and confer in order to determine
what the parties believe to be an equitable allocation of such tax as between
Lessor and Sublessor. Sublessor shall present such determination to Lessor as an
appropriate equitable allocation. The portion so allocated to Sublessor by
Lessor shall be passed on to Sublessee accordingly.
7. Maintenance of Premises. Sublessor shall not be responsible to Sublessee for
furnishing any service, maintenance or repairs to the Premises, including
without limitation all structural and nonstructural portions of the roof, it
being understood that such obligations, if any, are either those of Lessor
pursuant to the Master Lease or those of Sublessee, pursuant to this Sublease.
The foregoing notwithstanding, if any dispute arises between Lessor and
Sublessor regarding the obligation to maintain and repair the structural
portions of the Premises "including without limitation concrete walls, footings,
concrete slab or roof structure), or Lessor fails to maintain or repair the same
after the enforcement provisions of Paragraph 2.1 above have been effectuated,
Sublessor shall perform the required maintenance or repair (except with respect
to the roof, which maintenance and repair obligations Sublessee shall perform at
its sole cost and expense), at its sole cost and expense. The foregoing
notwithstanding, Sublessee shall maintain and repair all structural portions of
the Premises which have been constructed, altered, modified or improved by
Sublessee if, and to the extent, any such construction, alteration, modification
or improvement would give rise to a defense by Lessor to its repair and
maintenance obligations under the Master Lease.
8. Use. Sublessee shall be entitled to use the Premises for any uses permitted
under Paragraph 4 of the Master Lease (but not for underground storage
facilities and only for aboveground storage facilities reasonably necessary for
Sublessee's use of the Premises) and for no other purpose without the prior
written consent of Sublessor. Sublessee shall not do or suffer anything to be
done upon the Premises which will cause structural injury to the Premises. If
any act on the part of Sublessee or use of the Premises by Sublessee shall
cause, directly or indirectly, any increase of Sublessor's insurance expense
under the Master Lease, if any, said additional expense shall be paid by
Sublessee to Sublessor upon demand.
9. Notices.
9.1 General. Any notice required or desired to be given under this Sublease
shall be in writing and all notices shall be given by personal delivery or by a
commercial courier service which guarantees overnight delivery. The parties
hereto intend that the notice requirements contained in this Sublease shall
supersede those contained in the California Code of Civil Procedure Section 1161
and any successor or replaces, statute, and that any notice served in accordance
with the requirements hereof shall be sufficient for the purposes of such
statutory requirements. All notices delivered by courier shall be paid for by
the sender and addressed to the addresses set forth in the Summary of Sublease
Provisions. Either party may change its address for purposes of notice by giving
notice Of such change of address to the other
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party in accordance with the provisions of this paragraph at least ten (10) days
before the effective date of the change. Any notice given pursuant to this
Paragraph 9.1 shall be deemed served when delivered by personal service, with
delivery evidenced by a signed receipt, or the day of delivery by the commercial
courier service, as evidenced by its signed receipt.
9.2 Notices from Lessor. Sublessee shall send to Sublessor's Agent a copy of all
notices and other communications it shall receive from Lessor (including,
without limitation, any notices of default) which pertain to the Premises, the
Master Lease or this Sublease within forty-eight (48) hours of receiving a
notice or other communication. Sublessor's Agent (or Sublessor, if Sublessor
receives the notice) shall send to Sublessee a copy of all notices and other
communications it shall receive from Lessor (including, without limitation, any
notices of default) which pertain to the Premises, the Master Lease or this
Sublease within forty-eight (48) hours of receiving a notice or other
communication.
10. Interest. Any payment due from one party to the other (except for Rent which
is addressed below) shall bear interest from the date due until paid, at the
rate of ten percent (10%) per annum. Rent not received by Sublessor within
thirty (30) days after the same is due shall bear interest from the thirty-first
(31st) day after the due date until paid, at the rate of ten percent (10%) per
annum. Notwithstanding the foregoing, any nonrecurring payment due from one
party to the other, including, without limitation, payments due under Paragraphs
16.4.2 and 19 below, shall not bear interest until ten (10) days following
delivery of written notice from one party to the other that said payment is due.
In addition, Sublessee shall pay all reasonable costs and attorneys' fees
incurred by Sublessor in the collection of such amounts.
11. Damage and Destruction. Neither Sublessor nor Sublessee shall have any
obligation to rebuild, restore or repair all or a portion of the Premises in the
event of any damage or destruction thereto, but Sublessor shall use reasonable
efforts to cause Lessor to perform its obligation to do so pursuant to Paragraph
2.1 above. If Lessor elects to terminate the Master Lease pursuant to the terms
and conditions of Paragraph 8 of the Master Lease, this Sublease shall terminate
concurrently therewith without any liability of Sublessor to Sublessee. If
Sublessor is entitled to terminate the Master Lease pursuant to Paragraph 8
thereof, then Sublessee may elect to terminate this Sublease by written notice
delivered to Sublessor within one hundred fifty (150) days from the destructive
event.
If Sublessor is entitled to terminate the Master Lease pursuant to Paragraph 8
thereof and Sublessor desires to so terminate the Master Lease, Sublessor shall
provide Sublessee written notice of Sublessor's intention to terminate the
Master Lease within one hundred twenty (120) days of the destructive event.
Sublessee shall approve or disapprove Sublessor's intention by written notice
delivered to Sublessor within one hundred fifty (150) days of the destructive
event. If Sublessee approves Sublessor s intention to terminate the Master
Lease, then Sublessor may notify Lessor of Sublessor's election to terminate the
Master Lease pursuant to
- 12 -
Paragraph 8 thereof and this Sublease shall terminate concurrently with the
termination of the Master Lease. If Sublessee desires to continue the Sublease
and disapproves Sublessor's intention to terminate the Master Lease, then
Sublessor shall not terminate the Master Lease and the Sublease shall continue.
Except as expressly provided herein, Sublessee waives any other rights to
terminate this Sublease, including without limitation any rights pursuant to the
provisions of Subdivision 2 of Section 1932 and Subdivision 4 of Section 1933 of
the California Civil Code, as amended from time to time, and the provisions of
any similar law hereinafter enacted, which provisions relate to the termination
of the hiring of a thing upon its substantial damage and destruction. In the
event of any damage or destruction to the Premises, the then-current Rent shall
be proportionately reduced in the same proportion and for the same period that
the rent paid by Sublessor to Lessor for the Premises is reduced pursuant to
Paragraph 8 of the Master Lease. All other amounts due pursuant to this Sublease
shall continue unaffected or shall be abated in the same proportion and for the
same period that such amounts are abated to Sublessor pursuant to Paragraph 8 of
the Master Lease.
12. Condemnation. If any part of the Premises shall be taken for any public or
quasi-public use, under any statute or by right of eminent domain or private
purchase in lieu thereof, this Sublease shall, as to the part so taken,
terminate as of the date title shall vest in or possession is taken by the
condemnor or purchaser, and the Rent payable hereunder for the portion of the
Premises remaining shall be proportionately reduced according to the extent to
which such taking shall interfere with or curtail Sublessee's business on the
Premises. Provided Sublessor has the right to terminate the Master Lease under
the conditions described in Paragraph 9 thereof, Sublessee shall have the right
to terminate this Sublease by delivering to Sublessor written notice of its
intention to terminate the Sublease within ten (10) days following the date of
said taking. For purposes of the foregoing, Sublessee's then business operations
in the Premises shall be deemed Sublessor's and Sublessee's judgments regarding
the suitability of the Premises for its business operations shall be binding on
Sublessor. In such event, this Sublease shall terminate, effective as of the
date of such taking, pursuant to Paragraph 9 of the Master Lease. Any award
received by Sublessor or Sublessee as a result of the taking of all or a portion
of the Premises under any right of eminent domain, or any transfer in lieu
thereof, shall belong to Sublessor, however, Sublessee shall receive from
Sublessor's award or portion of the award (i) the value of Sublessee's trade
fixtures, equipment and other property installed by it, moving expenses, (ii)
seventy-five percent (75%) of the value, if any, of Sublessee's interest or
subleasehold estate, if any, and (iii) other special damages provable in the
condemnation action.
13. Insurance. All insurance policies required to be carried by Sublessee
pursuant o Paragraph 27 of the Master Lease shall name Lessor, Sublessor and
Sublessor's Agent (with respect to the insurance required to be carried by
Sublessee pursuant to Paragraph 27(b) of the Master Lease) as additional
insureds and shall provide that such policy or policies shall not be subject to
cancellation or change except after at least
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thirty (30) days prior written notice to Lessor, Sublessor and Sublessor's
Agent. 14. Lessor's and Sublessor's Consent. If Sublessor approves any matter
requiring Sublessor's consent herein and such matter further requires Lessor's
approval under the Master Lease, or if only Lessor's consent is required under
the Master Lease, Sublessor shall promptly submit the same to Lessor and shall
use Sublessor's reasonable efforts (with Sublessor and Sublessee each bearing
one-half (1/2) of the costs and expenses associated therewith in the manner set
forth in Paragraph 2.1 above) to obtain Lessor's approval of such matter. If
Sublessor does not consent to any matter as to which its consent is required
hereunder, Sublessor shall advise Sublessee, in writing, in reasonable detail,
of the basis for its decision. Sublessor shall use reasonable efforts to obtain
similar information from Lessor, where Lessor does not consent to any matter as
to which its consent is required pursuant to the Master Lease. Any approvals
required to be given by Sublessor to Sublessee hereunder (including approvals
under Paragraph 15 below) shall not be unreasonably withheld or delayed, and, if
such approval or disapproval is not given within thirty (30) days (or such
longer or shorter time period as may otherwise be permitted by this Sublease or
the Master Lease) following Sublessee's written request for the same, the matter
shall be deemed approved by Sublessor unless such approval would cause a default
under the Master Lease. In no event, however, shall Sublessor's disapproval be
deemed unreasonable if (but only for so long as) Lessor has disapproved of such
matter (but Lessor's disapproval shall not be considered either evidence or an
admission of the reasonableness thereof) nor shall Sublessor have any liability
to Sublessee by reason thereof, other than by reason of a breach by Sublessor of
its obligations under this Sublease.
15. Assignment and Subletting.
15.1 Prohibitions in General.
(a) Transfer. Sublessee shall not (whether voluntarily, involuntarily, or by
operation of law) (i) assign this Sublease or allow all or any part of the
Premises to be sublet, occupied, or used by any person or entity other than
Sublessee, (ii) transfer any right appurtenant to this Sublease or the Premises,
or (iii) permit any person to assume or succeed to any interest whatsoever in
this Sublease (collectively, "Transfer"), without Sublessor's prior written
consent in each instance, which consent shall not be unreasonably withheld,
subject, nevertheless, to the restrictions, limitations and conditions set forth
in this Paragraph 15. The foregoing notwithstanding, Sublessee may sublease up
to an aggregate of thirty thousand (30,000) square feet of the Premises without
Sublessor's prior written consent, but subject to all other restrictions,
limitations and conditions, applicable to a Transfer, contained in this
Paragraph 15. With respect to (A) subleases for less than thirty thousand
(30,000) square feet of the Premises, and (B) Affiliate Transfers (defined in
Paragraph 15.6 below), Sublessee may nevertheless request Sublessor's consent
thereto for purposes of Paragraph 24.2(i), which consent shall not be
unreasonably withheld. Any Transfer contrary to the provisions of this
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Paragraph 15 shall constitute an Event of Default and shall be voidable by
Sublessor, except where such Transfer is rescinded within thirty (30) days of
Sublessor's written notice to Sublessee of Sublessor's disapproval of or
withholding of consent to such Transfer. Sublessor's consent to any one Transfer
shall not constitute a waiver of the provisions of this Paragraph 15 as to any
subsequent Transfer nor a consent to any subsequent Transfer. Sublessor's
consent to any one Transfer shall not release Sublessee from Sublessee's
obligations under this Sublease. Except as otherwise provided in this Paragraph
15, the effectiveness of a proposed Transfer is conditioned upon Sublessor's
written consent to the same. The Transfer shall be valid and the Transferee
(defined in Paragraph 15.3) shall have the right to take possession of the
Premises only if an executed counterpart of the assignment, sublease or other
document evidencing the Transfer is delivered to Sublessor and such transfer
document is consistent with the information set forth in Sublessee's notice
given to Sublessor pursuant to Paragraph 15.3, or any modifications thereto to
which Sublessor has a right to consent and has consented to in writing.
(b) Hypothecation. Notwithstanding any other provision of this Sublease,
Sublessee shall not (whether voluntarily, involuntarily, or by operation of law)
hypothecate, mortgage or encumber as security Sublessee's interest in this
Sublease or in the Premises (or otherwise use the Sublease as a security
device), without Sublessor's prior written consent in each instance, which
consent may be withheld in Sublessor's sole and absolute discretion. Any
hypothecation, mortgage or encumbrance (collectively "Hypothecation") without
Sublessor's consent shall constitute a default by Sublessee and shall be void.
Sublessor's consent to any one Hypothecation shall not constitute a waiver of
the provisions of this Paragraph 15 as to any subsequent Hypothecation nor a
consent to any subsequent Hypothecation. All Hypothecations are subject to
Paragraphs 15.7 through 15.9 below.
15.2 Transfer Agreement. As a condition to the effectiveness of any Transfer,
the document evidencing the Transfer between Sublessee and Sublessee's assignee,
subsublessee, or transferee (collectively, "Transferee") shall include a
provision that Sublessee's Transferee expressly assumes those obligations of
Sublessee under this Sublease so delineated in the document evidencing the
Transfer, and shall be and remain jointly and severally liable with Sublessee
for the performance of those obligations under this Sublease from the effective
date of the Transfer. Sublessee shall remain liable for the performance of all
conditions, covenants, and obligations under this Sublease, whether or not such
conditions, covenants, and obligations have been expressly assumed by the
Transferee. As a condition to any Hypothecation (and without limiting
Sublessor's right to withhold consent to any Hypothecation in Sublessor's sole
discretion) of Sublessee's interest in this Sublease or the Premises, the
document evidencing the Hypothecation between Sublessee and Sublessee's
encumbrances, hypothecatee or mortgagee (collectively "mortgagee") shall
include- a provision that when Sublessee's Mortgagee succeeds to Sublessee's
interest through foreclosure or otherwise, Sublessee's Mortgagee shall expressly
assume all obligations of Sublessee under this Sublease, other than uncurable
Events of Default, shall be bound by all Provisions of this Sublease and shall
be and
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remain jointly and severally liable with Sublessee for the performance of all
conditions, covenants and obligations under this Sublease from the date that
such Mortgagee succeeds to Sublessee's interest in this Sublease or the
Premises.
15.3 Request for Transfer. Sublessee shall give Sublessor twenty (20) days prior
written notice of any desired Transfer, which notice shall include the following
information: (i) the term or duration of such Transfer; (ii) the nature of the
Transfer; (iii) the name and legal composition of the proposed Transferee; (iv)
the allocation of responsibilities and obligations between Sublessee and the
proposed Transferee; (v) an audited financial statement prepared in accordance
with generally accepted accounting principles (or a statement providing
equivalent information and evidencing the truth and completeness of the
information contained therein) of the proposed Transferee dated as of a date,
and for the period ending on such date, which is within fifteen (15) months
prior to the proposed effective date of the Transfer; (vi) the nature of the
proposed Transferee's business to be carried on in the Premises (including,
without limitation, any proposed use of Hazardous Materials); and (vii) the
payment to be made or other consideration to be given on account of the
Transfer; all in reasonably sufficient detail to enable Sublessor to evaluate
the proposed Transfer and the prospective Transferee. Sublessee's notice shall
not be deemed to have been served or given until such time as Sublessee has
provided Sublessor with all information specified above, but Sublessor shall
promptly notify Sublessee of any missing or incomplete information. Sublessee
shall immediately notify Sublessor of any modification to the foregoing items.
Sublessor's consent to any Transfer for which consent is required or requested
hereunder shall be based on the financial ability of the Transferee to perform
its obligations under the proposed Transfer (including, but not limited to, the
obligations set forth in Paragraph 28 of this Sublease) and whether the
Transferee's proposed use is permitted by the Master Lease and this Sublease.
15.4 Excess Rents. Sublessor shall be entitled to one-fourth (1/4) of any Excess
Rents (defined below) payable by any Transferee and Sublessee shall pay such
amount to Sublessor as and when the same is received by Sublessee following
recovery of the Costs (defined below) incurred by Sublessee in connection with
said Transfer. "Excess Rents" shall mean any and all rents, payments, charges or
other consideration received by Sublessee from a Transferee in excess of the
Rent and Charges payable by Sublessee to Sublessor (calculated on a "per square
foot" basis if less than the entire Premises is the subject of the Transfer)
after recovery by Sublessee of the following ("Costs"): (a) all costs incurred
in connection with the Transfer, including attorneys' fees, brokers'
commissions, allowances, concessions, the cost of constructing improvements and
the cost of Sublessee's performance under any sub-sublease (if other than a net
lease), and (b) the unamortized cost of any improvements to or personal property
(to the extent included for purposes of calculating "rent" under this Paragraph
15) the Premises constructed O. paid for by Sublessee (Sublessee hereby
acknowledging that the Tenant Improvements will be fully amortized during the
initial Sublease Term) in the portion of the Premises that is the subject of the
Transfer, in each case, so long as the term of the Transfer is for the full
Sublease Term (including any
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option to extend the Sublease Term which must be exercised by Sublessee pursuant
to Sublessee's agreement with the Transferee). Otherwise, Sublessee shall only
be entitled to recovery of a pro rata portion of the unamortized cost of its
improvements amortized over the term of the Transfer. For the purposes of this
Paragraph 15, the term "rent" shall include any consideration of any kind
received, or to be received, by Sublessee (or from any subtenant of Sublessee)
from the Transferee, if such sums are related to Sublessee's interest in this
Sublease or in the Premises, including, but not limited to, key money and
payments for Sublessee's personal property in excess of the unamortized cost or
book value thereof. The term "personal property" as used in this subsection
shall refer to fixtures, inventory, good will, equipment and furniture.
15.5 Sublessor's Rights. If Sublessee seeks to make any Transfer of its interest
in this Sublease or the Premises, Sublessor shall have the right to condition
its consent to such Transfer on the requirement that either Sublessee or the
proposed Transferee cure, on or before the proposed effective date of such
Transfer, any and all uncured Events of Default; provided, however, in no event
shall Sublessor's failure to condition its consent upon such cure be deemed to
be a waiver of any such Event of Default or Sublessor's rights and remedies
under this Sublease or law in regard thereto. If the cure period for any Event
of Default has not expired by the date upon which Sublessor must respond to a
request for consent to a Transfer in accordance with this Paragraph 15, then the
period within which Sublessor must respond shall be extended, at Sublessor's
option, to the date following the day on which the cure period for such existing
Event of Default expires. If Sublessor elects to impose such cure as a condition
to its consent and such condition is not satisfied by the effective date of the
Transfer, the Transfer shall be voidable at Sublessor's option.
15.6 Corporations and Partnerships. If Sublessee is a partnership, a withdrawal
or substitution (whether voluntary, involuntary or by operation of law and
whether occurring at one time or over a period of time) of any general
partner(s) owning more than fifty percent (50%) of any interest in the capital
or profits of the partnership, or the dissolution of the partnership shall be
deemed a Transfer of this Sublease. If Sublessee is a corporation, the capital
stock of which is not publicly traded, any dissolution, merger, consolidation or
other reorganization of Sublessee, any sale or transfer (or cumulative sales or
transfers) of the capital stock of Sublessee in excess of fifty percent (50%),
or any sale (or cumulative sales) of fifty-one percent (51%) of the value of the
assets of Sublessee shall be deemed a Transfer of this Sublease. Notwithstanding
the foregoing, Sublessee may, without Sublessor's prior written consent. enter
into any Transfer with: (i) a subsidiary, affiliate, division or corporation
controlled by or under common control with Sublessee; or (ii) a successor
corporation related to Sublessee by merger, consolidation, non-bankruptcy
reorganization, or government action ("Affiliate Transfers"). Upon request from
Sublessee, Sublessor shall execute an acknowledgement, in form reasonably
satisfactory to Sublessor, evidencing that Sublessor's consent is not required
for a Transfer meeting the criteria herein set forth.
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15.7 Reasonable Provisions. Sublessee expressly agrees that the provisions of
this Paragraph 15 are not unreasonable standards or conditions for purposes of
Section 1951.4(b)(2) of the California Civil Code, as amended from time to time.
15.8 Subject to Master Lease. Sublessee acknowledges that any Transfer or
Hypothecation hereunder is subject to the terms and conditions of the Master
Lease.
15.9 Miscellaneous. Regardless of Sublessor's consent, no Transfer or
Hypothecation shall release Sublessee of Sublessee's obligations hereunder or
alter the primary liability of Sublessee to pay the Rent and Charges and to
perform all other obligations to be performed by Sublessee hereunder. The
acceptance of Rent or Charges by Sublessor from any other person shall not be
deemed to be a waiver by Sublessor of any provision hereof. In the event of
default by any Transferee, Mortgagee or any successor of Sublessee in the
performance of any of the terms hereof, Sublessor may proceed directly against
Sublessee without the necessity of exhausting remedies against said Transferee,
Mortgagee or successor. Sublessor may consent to subsequent Transfers or
Hypothecations of this Sublease or amendments or modifications to this Sublease
with any Transferee, Mortgagee or successor of Sublessee, without notifying
Sublessee, or any successor of Sublessee, and without obtaining its or their
consent thereto and such action shall not relieve Sublessee of liability under
this Sublease, except that Sublessee shall not be bound by any amendment or
modification to which Sublessee has not consented.
Sublessee acknowledges that Sublessor's right, in its reasonable discretion, to
withhold consent to a proposed Transfer described in Paragraph 15.1(a)(ii) or
15.1(a)(iii) and all other provisions of this Paragraph 15 are commercially
reasonable, agreed-upon and bargained-for rights of Sublessor and that the Rent
and Charges set forth in the Sublease have taken into consideration Sublessor's
rights under this Paragraph 15.
16. Default and Remedies.
16.1 Events of Default. The term "Event of Default" as used in this Sublease
shall mean the occurrence of any of the following events:
(a) Sublessee's failure to pay when due any Rent or Charges, where such failure
shall continue for a period of ten (10) days after written notice thereof from
Sublessor to Sublessee;
(b) Unless actively and diligently contested. by Sublessee, commencement and
continuation for at least sixty (60) days of any case, action or proceeding by,
against or concerning Sublessee under any federal or state bankruptcy,
insolvency or other debtor's relief law, including without limitation, (i) a
case under Title 11 of the United States Code concerning Sublessee, whether
under Chapter 7, 11, or 13 of such Title or under any other Chapter, or (ii) a
case, action or proceeding seeking Sublessee's financial reorganization or an
arrangement with any of Sublessee's creditors;
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(c) Voluntary appointment of a receiver, trustee, keeper or other person who
takes possession for more than sixty (60) days of substantially all of
Sublessee's assets used in Sublessee's business on the Premises, regardless of
whether such appointment is as a result of insolvency or any other cause;
(d) Unless actively and diligently contested by Sublessee, involuntary
appointment of a receiver, trustee, keeper or other person who takes possession
for more than sixty (60) days of substantially all of Sublessee's assets used in
Sublessee's business on the Premises, regardless of whether such appointment is
as a result of insolvency or any other cause;
(e) Execution of an assignment for the benefit of creditors of substantially all
assets of Sublessee available by law for the satisfaction of judgment creditors;
(f) Commencement of proceedings for winding up or dissolving (whether voluntary
or involuntary) the entity of Sublessee if Sublessee is a corporation or a
partnership, which proceedings are not dismissed within sixty (60) days;
(g) Levy of a writ of attachment or execution on Sublessee's interest under this
Sublease, if such writ is not being contested and continues for a period of
sixty (60) days;
(h) Transfer or Hypothecation or attempted Transfer or Hypothecation of this
Sublease or the Premises by Sublessee contrary to the provisions of Paragraph 15
above, except where such Transfer or Hypothecation is rescinded within thirty
(30) days of Sublessor's written notice to Sublessee of Sublessor's disapproval
of or withholding of consent to such Transfer or Hypothecation;
(i) The failure of Sublessee promptly to observe or perform any of the terms,
covenants, conditions, warranties or other provisions contained in Paragraph 28
below, where Sublessee fails to commence to cure within seven (7) days after
written notice thereof from Sublessor and to complete the cure within a period
of thirty (30) days after said written notice from Sublessor; provided, however,
that if the nature of Sublessee's default is such that more than thirty (30)
days are reasonably required for its cure, then no Event of Default shall exist
if Sublessee commences to cure within said seven (7) day period and thereafter
diligently prosecutes such cure to completion; or
(j) Breach by Sublessee of any other term, covenant, condition, warranty or
other provision contained in this Sublease (which shall incorporate all exhibits
attached hereto), where such breach shall continue for a period of ninety (90)
days after written notice therefrom from Sublessor to Sublessee of the nature of
such default.
Any notice given by Sublessor to Sublessee pursuant to (a), (h), (i) or (j)
above shall be delivered to both addresses of Sublessee set forth on the Summary
of Sublease Provisions (including the copy address) and if so delivered shall be
sufficient notice for the purpose of California Code of Civil Procedure Section
1161, or any successor or
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replacement statute, if served in accordance with the requirements of Paragraph
9.1 above and no additional notice shall be required in order for Sublessor to
commence an unlawful detainer proceeding. Sublessor shall take such steps as are
reasonably necessary to mitigate any damages resulting from a default by
Sublessee.
16.2 Remedies. Upon any default by Sublessee, Sublessor shall have the following
remedies, in addition to all other rights and remedies provided by law, to which
Sublessor may resort cumulatively, or in the alternative:
16.2.1 Termination. Upon any default by Sublessee, Sublessor shall have the
right (but not the obligation) to terminate this Sublease and Sublessee's right
to possession of the Premises. If Sublessor has given Sublessee written notice
pursuant to Paragraph 16.1(a) or (i) above, then Sublessor shall not be required
to give Sublessee any additional notice terminating this Sublease. Upon
termination of this Sublease, Sublessor shall have the right to recover from
Sublessee:
(a) The worth at the time of award of the unpaid Rent and Charges which had been
earned at the time of termination:
(b) The worth at the time of award of the amount by which the Rent and Charges
which would have been earned after termination until the time of award exceeds
the amount of such rental loss that Sublessee proves could have been reasonably
avoided;
(c) The worth at the time of award (computed by discounting at the discount rate
of the Federal Reserve Bank of San Francisco at the time of award plus one
percent) of the amount by which the Rent and Charges for the balance of the
Sublease Term after the time of award exceed the amount of such rental loss that
Sublessee proves could be reasonably avoided;
(d) Any other amounts necessary to compensate Sublessor for all detriment
proximately caused by the default by Sublessee or which in the ordinary course
of events would likely result, including without limitation any of the following
as may be permitted by law:
(i) Expenses in retaking possession of the Premises:
(ii) Expenses for cleaning, repairing or restoring the
Premises;
(iii) Any unamortized real estate brokerage commission paid in connection
with this Sublease;
(iv) Expenses for removing, transporting, and storing any of Sublessee's
property left at the Premises (although Sublessor shall have no obligation
to remove, transport, or store any such property);
(v) Expenses of reletting the Premises, including without limitation,
brokerage commissions and attorneys' fees;
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(vi) Attorneys' fees and court costs; and (vii) Costs of carrying the
Premises such as repairs, maintenance, taxes and insurance premiums,
utilities and security precautions (if any) to the extent such costs are
not included in the calculation of the award described in subparagraphs
(a), (b) and (c) above.
Sublessor acknowledges that the itemization of costs and expenses in
Subparagraphs (i) through (vii) above does not constitute an admission by
Sublessee that Sublessor is permitted by law to recover such costs and expenses
or shift the burden of proof of showing entitlement thereto in any action
brought on account of an Event of Default, nor does Sublessee waive its right to
challenge the ability of Sublessor to recover any of the costs and expenses so
itemized.
(e) The "worth at the time of award" Of the amounts referred to in subparagraphs
(a) and (b) of this Paragraph 16.2.1 is computed by allowing interest at an
annual rate equal to the greater of: 10% or 5% plus the rate established by the
Federal Reserve Bank of San Francisco, as of the 25th day of the month
immediately preceding the default by Sublessee, on advances to member banks
under Sections 13 and 13(a) of the Federal Reserve Act, as now in effect or
hereafter from time to time amended, not to exceed the maximum rate allowable by
law.
16.2.2 Continuance of Sublease. Upon a default by Sublessee and unless and until
Sublessor elects to terminate this Sublease pursuant to Paragraph 16.2.1 above,
this Sublease shall continue in effect after the default by Sublessee and
Sublessor may enforce all rights and remedies under this Sublease, including
without limitation, the right to recover payment of Rent and Charges as they
become due and the right to request the appointment of a receiver to collect all
rents not otherwise payable to Sublessor by reason of any Transfer of all or any
part of the Premises or this Sublease. Neither efforts by Sublessor to mitigate
damages caused by a default by Sublessee nor the acceptance of any Rent and
Charges shall constitute a waiver by Sublessor of any of Sublessor's rights or
remedies, including the rights and remedies specified in this Paragraph 16.2.
16.2.3 Reletting Premises. Upon a default by Sublessee, Sublessor may, at
Sublessor's election, re-enter the Premises, and without terminating this
Sublease, and at any time and from time to time, relet the Premises or any part
or parts thereof for the account and in the name of Sublessee or otherwise.
Sublessor may, at Sublessor's election, eject Sublessee or any of Sublessee's
subtenants, assignees or other person claiming any right in or through this
Sublease by appropriate judicial proceeding. Sublessee shall nevertheless pay to
Sublessor on the due dates specified in this Sublease all sums required to be
paid by Sublessee under this Sublease, plus Sublessor's reasonable expenses
incurred in connection with such reletting, less the proceeds of any sublease Or
reletting. The expenses allowed Sublessor shall be expenses reasonably incurred
in the ordinary course of reletting the Premises. which reasonable expenses may
include without limitation costs paid to retake possession of the Premises
(including reasonable attorneys' fees), costs to place the
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Premises in its original condition, ordinary wear and tear excepted, costs to
secure new tenants (including brokers' commissions and reasonable attorneys'
fees) and costs to fulfill all of' Sublessee's covenants and conditions
hereunder to the end of the Sublease Term. No act by or on behalf of Sublessor
under this Paragraph 16.2.3 shall constitute a lease termination unless
Sublessor gives Sublessee written notice of termination as provided in Paragraph
16.2.1. Notwithstanding any prior reletting without termination, Sublessor may
later elect to terminate this Sublease because of any Event of Default.
16.3 Attorneys' Fees. The defaulting party shall pay reasonable fees and costs
of attorneys engaged by the non-defaulting party in collection of any amounts
owing or to enforce any of the non-defaulting party's rights and remedies under
this Paragraph 16 and applicable law.
16.4 Sublessor's Default.
16.4.1 Default. Sublessor shall not be in default under this Sublease unless
Sublessee shall have given Sublessor written notice of the breach and, within
thirty (30) days after notice, Sublessor has not cured the breach or, if the
breach is such that it cannot reasonably be cured under the circumstances within
thirty days, Sublessor has not commenced diligently to prosecute the cure to
completion; provided, however, Sublessor shall have ten (10) days after notice
from Sublessee to cure any breach involving a monetary obligation of Sublessor.
This Paragraph 16.4.1 is subject to any other provision of this Sublease wherein
Sublessee is granted the right to remedy any default by Sublessor.
16.4.2 Sublessee's Right to Perform Sublessor's Obligations Under the Master
Lease. If Sublessor shall at any time fail to make any payment of rent when due
pursuant to the terms of Paragraph 3 of the Master Lease or perform any act
required to be performed by Sublessor when required under the Master Lease and
notice of such failure to perform is given by Lessor, Sublessee may make such
payment on three (3) days' written notice to Sublessor, or perform such act on
Sublessor's behalf upon ten (10) days' written notice to Sublessor, but shall
not be obligated to do so and may do so without waiving or releasing Sublessor
from any obligation under this Sublease. All sums so paid by Sublessee and all
penalties, interest (pursuant to Paragraph 10 above), and costs incurred in
connection with such performance of any obligation of Sublessor shall be due and
payable by Sublessor upon demand by Sublessee, unless Sublessor performs such
obligation within the notice period hereunder and provides Sublessee with
written evidence that it has performed the same, in which event Sublessor shall
have no liability to Sublessee for the foregoing.
The foregoing notwithstanding, if any dispute arises between Sublessor and
Lessor over the payment of rent under the Master Lease and Sublessor has
contested and is actively pursuing a resolution of said dispute, Sublessee shall
not be entitled to pay any rent to Lessor which Lessor claims due under the
Master Lease in excess of the rent due pursuant to the terms of Paragraph 3 of
the Master Lease. In such event, Sublessor shall protect Sublessee's rights
pursuant to this Sublease and prevent its termination, but without waiver of
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any rights Sublessor may have, including the right to withhold payment or to
make payment under protest of all or a portion of the rent in excess of that
Sublessor believes is due to Lessor under the Master Lease.
17. Quiet Enjoyment. Sublessor covenants and agrees with Sublessee that:
(a) Upon Sublessee paying Rent and Charges and performing its covenants and
conditions under this Sublease, Sublessee shall and may peaceably and quietly
have, hold and enjoy the Premises for the Sublease Term, subject, however, to
the terms of this Sublease, the rights reserved by Sublessor hereunder and all
matters to which this Sublease is subject and subordinate; and
(b) Sublessor has good and sufficient title to the leasehold interest in the
Premises, free and clear of all liens, encumbrances, covenants, conditions,
restrictions, easements, exceptions or other limitations, except those
covenants, conditions, restrictions, easements, encumbrances or exceptions now
of record or hereafter placed of record to which this Sublease is subordinated
as required pursuant to the Master Lease.
(c) Sublessor will at all times save and hold Sublessee free and harmless from
any claim, demand, cause of action or other act relating to Sublessor's title to
the leasehold estate in the Premises (other than as expressly provided herein)
which interferes with the quiet, peaceful and exclusive use and enjoyment of the
Premises, or any part thereof, including but not limited to reasonable costs and
attorneys' fees incurred by Sublessee in defending any interference or
threatened inference therewith.
18. Right of Entry. All references to "Lessor" in Paragraph 16 of the Master
Lease shall mean both Lessor and Sublessor. Notwithstanding the foregoing,
Sublessee shall have the right from time to time or at any time in connection
with the exercise by Sublessor of its access rights hereunder to designate
portions of the Premises as to which access shall be controlled and regulated by
Sublessee (such as areas of the Premises which are subject to regulation on
account of Sublessee's confidentiality requirements). Sublessor shall abide by
the controls and regulations imposed by Sublessee with respect to such portions
of the Premises and shall also use reasonable efforts to impose the same
requirements on Lessor with respect to its rights of access to the Premises
under the Master Lease.
19. Sublessor's Right to Perform Sublessee's Covenants. Except as otherwise
provided herein, if Sublessee commits an Event of Default, Sublessor may,
without further notice to Sublessee, but shall not be obligated to and without
waiving or releasing Sublessee from any obligation under this Sublease, make
such payment or perform such other act to the extent that Sublessor is required
pursuant to the Master Lease or to protect the Premises, and in connection
therewith, pay expenses and employ counsel. All sums so paid by Sublessor and
ail penalties, interest (pursuant to Paragraph 10 above) and costs incurred in
connection therewith shall be due and payable by Sublessee upon demand by
Sublessor.
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20. Surrender of Premises. On the last day of the Sublease Term or upon sooner
termination of this Sublease, Sublessee shall surrender the Premises to
Sublessor in good, broom clean condition (reasonable wear and tear, acts of God,
condemnation and casualties excepted), subject to the requirements of the Master
Lease. The foregoing notwithstanding, with respect to casualties covered by the
insurance required to be carried by Sublessee pursuant to Paragraph 27 of the
Master Lease, Sublessee shall assign all insurance proceeds received by
Sublessee and payable to Lessor under the Master Lease to Sublessor. Sublessee
shall remove from the Premises all of Sublessee's personal property, trade
fixtures and those alterations, improvements and modifications required by
Sublessor to be removed under Paragraph 5 of the Master Lease as incorporated
under Paragraph 3.4 above, or required by Lessor to be removed pursuant to
Paragraph 5 of the Master Lease. All personal property and trade fixtures not so
removed shall be deemed abandoned by Sublessee. Furthermore, Sublessee shall
immediately repair all damage to the Premises caused by any such removal. If the
Premises are not so surrendered at termination of this Sublease, Sublessee shall
indemnify Sublessor against any loss or liability resulting from delay by
Sublessee in so surrendering the Premises, including, without limitation, any
claims made by any succeeding sublessee or tenant or losses to Sublessor due to
lost opportunities to lease to succeeding tenants.
21. Option to Purchase. Subject to the provisions of Paragraphs 29 and 30 of the
Master Lease and Paragraph 22 of this Sublease, Sublessor grants to Sublessee
the option to purchase the Premises during the Sublease Term ("Option to
Purchase"), provided Sublessee first exercises its option to extend the Sublease
Term for the First Extended Term pursuant to Paragraph 4.2 above, on the
following terms and conditions:
(a) Notice. Sublessee shall give Sublessor's Agent written notice of its
exercise of the Option to Purchase no earlier than January 1, l998 nor later
than June 30, 1998.
(b) Automatic Termination. If Sublessee (i) fails to exercise this Option to
Purchase strictly in accordance with the terms of this paragraph or (ii) assigns
this Option to Purchase, other than as part of a valid Transfer of at least
seventy-five percent (75%) of the Premises under Paragraph 15 above, then this
Option to Purchase and all rights of Sublessee hereunder shall automatically and
immediately terminate without notice, and each party shall be discharged of its
obligations hereunder. In addition, upon termination of Sublessor's option to
purchase the Premises in accordance with the terms of Paragraph 29 of the Master
Lease, Sublessee's Option to Purchase under this Paragraph 21 shall terminate
(except as provided in Paragraph 22.1(c) below) and each party shall be
discharged of its obligations pursuant to this Paragraph 21.
(c) Sublessor to Exercise Option to Purchase. If Sublessee elects to exercise
this Option to Purchase, then subject to Paragraphs ,9n and 30 of the Master
Lease and Paragraph 22 of this Sublease, Sublessor shall exercise its option to
purchase the Premises from Lessor pursuant to Paragraph 30 of the Master Lease
on behalf of Sublessee within thirty (30) days from the date Sublessee exercises
this Option to Purchase. Sublessor appoints Sublessee as its special
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attorney-in-fact solely for the purpose of exercising Sublessor's option to
purchase the Premises from Lessor pursuant to Paragraph 10 of the Master Lease
and Sublessee shall have the nonexclusive right to exercise said option in
Sublessor's name, if and only if Sublessor has not provided Sublessee with the
written evidence of its exercise of said option to purchase under the Master
Lease within thirty-five (35) days from the date Sublessee validly exercises
this Option to Purchase. Accordingly, Sublessor shall not be liable to Sublessee
for Sublessor's failure to exercise said Option to Purchase. Each party shall
deliver to the other a copy of its exercise notice concurrently with its
delivery of the same to Lessor. The foregoing notwithstanding, if an Event of
Default exists at the time Sublessee exercises its Option to Purchase or at any
time either party desires or is required to exercise the option to purchase
pursuant to Paragraph 30 of the Master Lease, then at such time Sublessor shall
not be obligated to exercise its option to purchase pursuant to Paragraph 30 of
the Master Lease for Sublessee's benefit nor shall Sublessee have any right to
exercise said option to purchase in Sublessor's name as special attorney-in-fact
for Sublessor.
(d) Terms of Sale. Exercising this Option to Purchase as provided herein shall
constitute an agreement by Sublessor to sell and by Sublessee to purchase the
Premises on the following terms and conditions:
(i) Purchase Price. The purchase price for the Premises to be paid by
Sublessee to Sublessor shall be equal to the quotient obtained by dividing
the annual Rent for the First Extended Term (determined pursuant to the
terms of Paragraph 5.2 above) by .085.
(ii) Payment of Purchase Price. Subject to Paragraph 30 of the Master
Lease, the purchase price shall be paid by Sublessee to Sublessor, in cash
at the close of escrow as set forth herein. Sublessee shall deposit in
escrow, within thirty (30) days following Sublessor's exercise of its
option to purchase the Premises pursuant to Paragraph 30 of the Master
Lease, either the full purchase price or five percent (5%) of the purchase
price and the balance in the form of lending commitments from lending
institutions. To the extent permitted by the Master Lease, Sublessor shall
allow Sublessee to make the election provided to Sublessor in Paragraph 30
of the Master Lease to either assume the remaining balance of any
permanent loan financing encumbering the Premises at the time of closing
the transaction contemplated herein, or pay any prepayment penalty in
connection with the early full payment thereof. If Lessor does not allow
Sublessee itself to make such election, Sublessee may require Sublessor to
make such election on Sublessee's behalf.
(iii) Close of Escrow. An escrow shall be opened at a title company of
Sublessor's choice (subject to Sublessee's reasonable approval) within
thirty (30) days of Sublessor's exercise of its option to purchase
pursuant to Paragraph 30 of the Lease. Thc close of escrow shall occur not
later than ninety (90) days thereafter and shall occur concurrently with
close of escrow pursuant to Paragraph 30 under the Master Lease. The
Master Lease and this Sublease shall terminate concurrently with said
close of escrow.
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(iv) Closing Costs. If Lessor transfers ownership of the Premises directly
to Sublessee, all escrow costs and charges shall be allocated between
Lessor and Sublessee as provided in Paragraph 30 or the Master Lease. If
Sublessor must first purchase the Premises from Lessor on behalf of
Sublessee, all escrow costs and charges (including, without limitation any
prepayment penalties charged to Sublessor pursuant to said Paragraph 30 or
payable by Sublessee pursuant to Paragraph 21(d)(ii) above) for the
transfer of the Premises from Lessor to Sublessor, and payable by
Sublessor under Paragraph 30 of the Master Lease shall be reimbursed to
Sublessor by Sublessee at the close of escrow of the transfer of the
Premises from Sublessor to Sublessee. All escrow costs and charges
incurred in the transfer of the Premises from Sublessor to Sublessee shall
be paid by Sublessee.
(v) Condition of Title. Sublessee shall take title to the Premises in the
same condition Lessor is required to convey title to the Premises to
Sublessor pursuant to Paragraph 30 of the Master Lease.
(e) No Warranties. Subject to the repair and maintenance obligations of Lessor
and Sublessor and solely in Sublessee's capacity as purchaser under this Option
to Purchase, Sublessee hereby: (i) acknowledges that it has inspected the
Premises and observed its physical characteristics and conditions; (ii) waives
any and all objections to said physical characteristics and conditions of the
Premises which would be disclosed by such inspection; (iii) acknowledges and
agrees that the Premises is accepted by Sublessee in its present condition, "as
is," and that no patent or latent physical condition of the Premises whether or
not known or discovered, shall affect the rights of either party hereto; (iv)
has investigated and has knowledge of operative or proposed governmental laws
and regulations including, but not limited to, zoning, environmental and land
use laws and regulations to which the Premises may be subject; and (v) has
neither received nor relied upon any representations concerning such laws and
regulations made by Sublessor or any other person acting on or in behalf of
Sublessor.
(f) Time. Time is of the essence of this Option to Purchase. If the Option to
Purchase is not exercised in the manner provided herein, then the Option to
Purchase shall terminate and may not be revived by any subsequent payment or
further action by Sublessee.
(g) Right to Exchange. Sublessee acknowledges Lessor's right to exchange the
Premises, pursuant to Internal Revenue Code Section 1031, for one or more other
properties of like kind, and agrees to cooperate in and facilitate such an
exchange and to accept conveyance of and acquire the Premises from a third party
should Lessor elect to enter into such an exchange prior to the date set for
close of escrow under the Option to Purchase, so long as Sublessee shall incur
no additional costs, fees, expenses, obligations or liabilities thereby.
(h) Notice Binding Subject to the provisions Of this Paragraph 21, once
Sublessee delivers notice of its exercise of the Option to Purchase, Sublessee
may not withdraw such exercise.
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(i) Limitation of Obligations of Sublessor; Indemnification. Except as provided
in this Paragraph 21 and unless required to do so to exercise the option to
purchase pursuant to Paragraph 30 of the Master Lease (in which event Sublessor
shall be reimbursed by Sublessee upon the close of escrow for the conveyance of
the Premises from Sublessor to Sublessee), Sublessor shall not be required to
incur any costs or assume any evidence of indebtedness in connection with its
exercise of the option to purchase pursuant to Paragraph 30 of the Master Lease
on behalf of Sublessee. Sublessee shall indemnify, defend, protect and hold
Sublessor harmless from and against any and all losses, costs, claims or
liability arising in connection with the acquisition and conveyance by Sublessor
of the Premises and any required assumption of indebtedness, other than as may
arise due to neglect, an act, or a default hereunder by Sublessor. The indemnity
and hold harmless obligation shall exist whether or not escrow between Sublessor
and Sublessee closes, and shall survive the close of escrow with respect to
Sublessor and Lessor, the close of escrow between Sublessor and Sublessee, and
shall not merge with any deed or conveyance executed by Sublessee.
22. Right of First Refusal.
22.1 Sublessee's Right to Exercise Right of First Refusal. If Sublessor receives
notice from Lessor pursuant to Paragraph 29 of the Master Lease during the
Sublease Term on or before June 30, 1998, then Sublessor grants to Sublessee the
right to require Sublessor to exercise Sublessor's right of first refusal as
provided in Paragraph 29 of the Master Lease and thereafter convey the Premises
to Sublessee on the following terms and conditions:
(a) Within three (3) days of receiving Lessor's notice of any offer to purchase
all or a portion of the Premises or Lessor's offer to sell all or a portion of
the Premises pursuant to Paragraph 29 of the Master Lease ("Lessor's Notice"),
Sublessor shall provide Sublessee with a copy of Lessor's Notice.
(b) Sublessee shall have eight (8) days from receipt of Lessor's Notice to
notify Sublessor's Agent in writing of Sublessee's election to exercise the
right of first refusal offered in Lessor's Notice. If Sublessee elects to
exercise the right of first refusal offered in Lessor's Notice, then Sublessor
will exercise its right of first refusal pursuant to Paragraph 29 of the Master
Lease on behalf of Sublessee (subject to the terms of Paragraph 22.3 below)
within five (5) days from receipt of Sublessee's Notice of its elect ion to
exercise.
(c) If Sublessee elects not to exercise Its first right to the right of first
refusal offered in Lessor's Notice or fails to notify Sublessor's Agent within
said eight (8) day period, then Sublessor's Agent shall have eight (8) days from
receipt of Sublessee's notice of non-election (or from the expiration of said
eight (8) Way period, whichever occurs earlier) to notify Sublessee of
Sublessor's election to exercise said right of first refusal on its own behalf
or not to exercise said right of first refusal. If Sublessor elects to exercise
said right of first refusal on its own behalf, then Sublessee's Option to
Purchase pursuant to Paragraph 21
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above shall remain in full force and effect in accordance with the terms
thereof. (d) If Sublessor elects not to exercise the right of first refusal
offered in Lessor's Notice pursuant to subparagraph (c) above, or fails to
notify Sublessee within said additional eight (8) day period, then Sublessee
shall have five (5) days from receipt of Sublessor's Agent's notice of
non-election (or from the expiration of said eight (8) day period, whichever
occurs earlier) to notify Sublessor's Agent of Sublessee's election to exercise
said right of first refusal. If Sublessee so elects to exercise the right of
first refusal offered in Lessor's Notice, then Sublessor will exercise its right
of first refusal pursuant to Paragraph 29 of the Master Lease on behalf of
Sublessee (subject to the terms of Paragraph 22.3 below) within five (5) days
from receipt of Sublessee's Notice of its election to exercise. If Sublessee
does not elect to exercise the right of first refusal offered in Lessor's
Notice, then the Option to Purchase shall terminate, and Sublessee shall have no
further right to acquire the Premises.
(e) If Sublessee elects not to exercise the right of first refusal offered in
Lessor's Notice pursuant to subparagraph (d) above, or fails to notify
Sublessor's Agent within said five (5) day period, then Sublessor may exercise
its right of first refusal on its own behalf pursuant to Paragraph 29 of the
Master Lease, free and clear of any right of Sublessee to the Option to
Purchase.
22.2 Attorney-in-Fact. If Sublessee elects to exercise the right of first
refusal, Sublessor shall exercise its right of first refusal under Paragraph 29
of the Master Lease within the time periods set forth in Paragraph 22.1 above.
Sublessor appoints Sublessee as its special attorney-in-fact solely for the
purpose of exercising Sublessor's right of first refusal pursuant to Paragraph
29 of the Master Lease, and Sublessee shall have the nonexclusive right to
exercise such right of first refusal in Sublessor's name, if and only if
Sublessor has not provided Sublessee with written evidence of its exercise of
said right of first refusal within the time periods set forth in Paragraph 22.1
above. Accordingly, Sublessor shall not be liable to Sublessee for Sublessor's
failure to exercise said right of first refusal. Each party shall deliver to the
other a copy of its exercise notice concurrently with its delivery of the same
to Lessor. The foregoing notwithstanding, if an Event of Default exists at the
time Sublessee exercises the right of first refusal pursuant to this Paragraph
22 or at any time either party desires or is required to exercise the right of
first refusal under Paragraph 29 of the Master Lease, then at such time
Sublessor shall not be obligated to exercise the right of first refusal pursuant
to Paragraph 29 of the Master Lease for Sublessee's benefit nor shall Sublessee
have any right to exercise said right of first refusal in Sublessor's name as
special attorney-in-fact for Sublessor.
22.3 Terms of Sale. If Sublessee timely and validly exercises said right of
first refusal as provided above, then the Master Lease and Sublease shall
terminate upon acquisition by Sublessee of fee title to the Premises. Such
exercise by Sublessee shall constitute an agreement by Sub-
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lessor to sell and by Sublessee to purchase the Premises on the
terms and conditions of Lessor's Notice, except as set forth
below:
(a) Purchase Price. The purchase price to be paid for the
Premises by Sublessee to Sublessor shall be equal to the sum of:
(i) The amount to be paid by Sublessor for the Premises pursuant to the
right of first refusal under Paragraph 29 of the Master Lease; plus
(ii) The present value at the time of payment, if applicable, determined
by applying a discount rate of nine percent (9%) per annum of the excess,
if any, of the purchase price under the Option to Purchase, calculated
pursuant to Paragraph 21(d)(i) above, over the purchase price under the
right of first refusal; plus
(iii) The present value at the time of payment (determined by applying a
discount rate of nine percent (9%) per annum) of the excess of the Rent
that would be payable by Sublessee hereunder over the rent that would be
payable by Sublessor to Lessor pursuant to the Master Lease (assuming rent
is calculated as provided in Amendment #3) for the remaining months
(prorated based on the number of days in the particular month, for any
partial month) in the initial Sublease Term beginning with the date escrow
closes on Sublessee's purchase of the Premises under the right of first
refusal and ending with the last month of the tenth (10th) calendar year
of the Sublease Term (December 31, 1997); plus
(iv) The present value at the time of payment, if applicable, determined
by applying a discount rate of nine percent (9%) per annum of the excess
of the Rent that would be payable by Sublessee hereunder (determined in
accordance with 2203(b)(iii) below), over the rent that would be payable
by Sublessor to Lessor pursuant to the Master Lease (assuming rent is
calculated as provided in Amendment #3) for the eleventh (11th) calendar
year of this Sublease (January 1, 1998 through December 31, 1998).
(b) Payment of Purchase Price. The purchase price shall be paid by Sublessee to
Sublessor as follows:
(i) The amount set forth in Paragraph 22.3(a)(i) above shall be paid in
the manner set forth in Lessor's Notice;
(ii) The amount set forth in Paragraph 22.3(a)(iii) shall be paid
to Sublessor's Agent in rash at close of escrow: and
(iii) The parties hereto recognize that the amounts set forth in
Paragraphs 22.3(a)(ii) and 22.3(a)(iv) above cannot be determined until
the tenth (10th) year of the Sublease Term, as provided in Paragraph 5.2
above, at which time this Sublease and the Master Lease shall have
terminated pursuant to the provisions of this Paragraph 22. Nevertheless,
in order to determine the amounts set forth in Paragraphs 22.3(a)(ii) and
22.3(a)(iv) above, the parties shall first attempt to agree on the Rent
which would have been payable hereunder during the First Extended Term at
the time
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of exercise by Sublessee of said right of first refusal. If, at such time,
the parties agree oaths Rent which would have been payable hereunder
during the First Extended Term, then Sublessee shall pay to Sublessor at
close of escrow, the amounts set forth in Paragraphs 22.3(a)(ii) and
22.3(a)(iv) based on such agreed-to rent, discounted to present value as
of the date of payment at the rate of nine percent (9%) per annum. If the
parties cannot reach agreement on such Rent for the First Extended Term at
the time the right of first refusal is exercised by Sublessee, then the
parties shall utilize the procedures set forth in Paragraph 5.2 of this
Sublease beginning on May 1, 1997, which is the last date Sublessee may
exercise its option to extend the Sublease Term for the First Extended
Term. If the procedures set forth in Paragraph 5.2 above must be utilized
at a future date, the amounts set forth in Paragraphs 22.3(a)(ii) and
22.3(a)(iv) shall be determined no later than December 31, 1997 and shall
be payable in full to Sublessor by Sublessee on or before January 1, 1998.
(c) Close of Escrow. Close of escrow between Sublessor and Sublessee shall occur
concurrently with close of escrow between Lessor and Sublessor, which shall
occur pursuant to the terms of Lessor's notice.
(d) Closing Costs. All escrow costs and other charges for which Sublessor is
responsible in connection with the transfer of the Premises from Lessor to
Sublessor shall be paid by Sublessee. All escrow costs and charges incurred in
the transfer of the Premises from Sublessor to Sublessee shall be paid by
Sublessee.
22.4 Limitations on Sublessor's Obligations; Indemnification. Sublessor shall
not be required to incur any costs, assume any secured loan or execute any
promissory note or other evidence of indebtedness in connection with its
exercise of said right of first refusal on behalf of Sublessee (unless required
to do so to exercise the right of first refusal pursuant to Paragraph 29 of the
Master Lease, in which event Sublessor shall be reimbursed by Sublessee upon
close of escrow for the conveyance of the Premises from Sublessor to Sublessee).
Sublessee shall indemnify, defend, protect, and hold Sublessor harmless from and
against any and all losses, costs, claims or liability arising in connection
with the acquisition and conveyance by Sublessor of the Premises and any
required assumption of indebtedness, other than as may arise due to neglect, an
act, or a default hereunder by Sublessor. The indemnity and hold harmless
obligation shall exist whether or not escrow between Sublessor and Sublessee
closes, and shall survive the close of escrow with respect to Sublessor and
Lessor, the close of escrow between Sublessor and Sublessee, and shall not merge
with any deed or conveyance executed by Sublessee.
23. Property Loss; Damage.
23.1 Waiver of Claims. The terms of Paragraph 27(b) of the Master Lease
notwithstanding, and except to the extent caused by the active negligence,
omission to act after written notice from Sublessee of the need to act, or
willful misconduct of Sublessor or its agents or employees, or by the breach by
Sublessor of any obligation under this Sublease or the Master Lease, neither
Sublessor nor its agents or employees shall be liable for any damage to property
of
- 30 -
Sublessee, nor for loss of or damage to any property of Sublessee by theft or
otherwise, nor for any injury or damage to persons or property resulting from
any cause of whatsoever nature.
23.2 Waiver of Subrogation. Sublessor hereby releases Sublessee, and Sublessee
hereby releases Sublessor, and their respective officers, agents, employees and
servants, from any and all claims or demands of damages, loss, expense or injury
to the Premises, or the improvements, alterations, furnishings, fixtures,
equipment, inventory or other property of either Sublessor or Sublessee in,
about or upon the Premises, which is caused by or results from perils, events or
happenings which are the subject of insurance carried by the respective parties
pursuant to this Sublease or otherwise carried by the respective parties
covering the Premises and in force at the time of any such loss, whether due to
the negligence, of the other party or its agents and regardless of cause or
origin; provided, however that such waiver shall be effective only to the extent
permitted by the insurance covering such loss and to the extent such insurance
is not prejudiced thereby.
23.3 Indemnification. Sublessee shall indemnify, hold harmless, and defend
Sublessor (except with respect to Sublessor's active negligence, omission to act
after notice of the need to act, or willful misconduct) against all claims,
losses or liabilities for injury or death to any person or for damage to or loss
of use of any property arising out of any occurrence in, on or about the
Premises caused or contributed to by Sublessee or Sublessee's agents, or arising
out of any occurrence in, upon or at the Premises or on account of the use,
condition, occupational safety or occupancy of the Premises. Sublessor shall
indemnify, hold harmless, and defend Sublessee (except with respect to
Sublessee's active negligence, omission to act after notice of the need to act,
or willful misconduct) against all claims, losses or liabilities for injury or
death to any person or for damage to or loss of use of any property arising out
of any occurrence in, on or about the Premises caused or contributed to by
Sublessor or Sublessor's agents, or arising out of any occurrence in, upon or at
the Premises on the account of the use, condition, occupational safety or
occupancy of the Premises. The preceding indemnifications shall include and
apply to attorneys' fees, investigation costs, and other costs actually incurred
by Sublessor or Sublessee, as the case may be. Each party shall indemnify,
defend and hold harmless the other party from and against any and all claims,
losses, liabilities or damages arising from any breach or default in the
performance of any obligation to be performed under the terms of this Sublease.
The provisions of this Paragraph 23.3 shall survive termination of the Sublease
with respect to any damage, injury, death. breach or default occurring prior to
such termination.
24. General.
24.1 Captions and Headings. The captions and paragraph headings used in this
Sublease are for convenience of reference only. They shall not be construed to
limit or extend the meaning of any part of this Sublease, and shall not be
deemed relevant in resolving any question of interpretation or construction of
any paragraph of this Sublease.
- 31 -
24.2 Surrender of Sublease Not Merger. Subject to the provisions hereof, the
voluntary or other surrender of this Sublease by Sublessee, or a mutual
cancellation thereof, shall not work a merger and shall, at the option of
Sublessor, terminate all or any existing sub-subleases, or may, at the option of
Sublessor, operate as an assignment to Sublessor of any or all such
sub-subleases. The foregoing notwithstanding and subject to the Master Lease, if
(i) Sublessor's consent to the Transfer was requested and given at the time of
the Transfer; (ii) a sub-sublessee of the entire Premises or a portion thereof
is paying rent which is equal to or greater than the Rent (or allocable portion
calculated on a "per square foot" basis if the Transfer affects less than the
entire Premises) paid by Sublessee hereunder during the entire term of the
sub-sublease; (iii) the portion of the Premises not subject to such
sub-sublease(s) is, in Sublessor's reasonable judgment, leaseable, independent
of the portion of the Premises subject to such sub-sublease(s); (iv) such
subsublessee is creditworthy, in Sublessor's reasonable judgment, and (v) such
sub-sublessee is not in default under the terms of its sub-sublease, then
Sublessor shall permit such sub-sublease to remain in full force and effect.
24.3 Interpretation of Terms. The words "Sublessor" and "Sublessee" as used
herein shall include the plural as well as the singular. Words in the neuter
gender include the masculine and feminine and words in the masculine or feminine
gender include the neuter.
24.4 Counterparts. This Sublease may be executed in counterparts, each of which
shall be deemed an original for all purposes and together shall constitute one
instrument.
24.5 Time of Essence. Time is of the essence as to each and every provision in
this Sublease requiring performance within a specified time.
24.6 Severability. In case any one or more of the provisions contained herein
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Sublease, but this Sublease shall be construed as if
such invalid, illegal or unenforceable provision had not been contained herein.
However, if Sublessee's obligation to pay Rent is determined to be invalid or
unenforceable, this Sublease at the option of Sublessor shall terminate.
24.7 Governing Law. This Sublease shall be construed and enforced in accordance
with the laws of the State of California.
24.8 Joint and Several Liability. If Sublessee is more than one person, each
such person or entity shall be jointly and severally liable for the obligations
of Sublessee hereunder.
24.9 Construction of Sublease Provisions. This Sublease shall not be construed
either for or against Sublessee or Sublessor, but shall be construed in
accordance with the general tenor of the language to reach a fair and equitable
result.
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24.10 Sublessor or Sublessee as Party Defendant. If, by reason of any act or
omission by either party or either party's agents, the other party is made a
party defendant in any action, proceeding or suit concerning this Sublease, or
the Premises, the party responsible for said act or omission shall indemnify the
other party against all liability incurred (or threatened against) the other
party as a party defendant, including all damages, costs and attorneys' fees.
24.11 Sublessor Not a Trustee. Sublessor shall not be deemed to be a trustee of
any funds paid to Sublessor by Sublessee (or held by Sublessor for Sublessee)
pursuant to this Sublease. Sublessor shall not be required to keep any such
funds separate from Sublessor's general funds. Any funds held by Sublessor
pursuant to this Sublease shall not bear interest.
24.12 No Partnership or Joint Venture. Nothing in this Sublease shall be
construed as creating a partnership or joint venture between Sublessor,
Sublessee, or any other party, or cause either party to be responsible for the
debts or obligations of the other party or any other party.
24.13 Exhibits. All exhibits attached to this Sublease shall be deemed to be
incorporated herein by the individual reference to each such exhibit, and all
such exhibits shall be deemed a part of this Sublease as though set forth in
full in the body of the Sublease.
24.14 Attorneys' Fees. The provisions of Paragraph 22 of the Master Lease, as
incorporated herein, shall also apply to any action or proceeding by, against or
concerning either party under any federal or state bankruptcy, insolvency or
other debtor's relief law.
24.15 Indemnities to Survive Sublease. The indemnities of the parties set forth
in this Sublease shall survive the expiration or earlier termination of this
Sublease.
24.16 Attorney-in-Fact. Provided the Sublease is then in full force and effect
and no Event of Default then exists, Sublessee's appointment as special
attorney-in-fact for the purposes described in this Sublease is irrevocable,
coupled with an interest and shall survive the transfer of Sublessor's interest
in the Premises or the insolvency, dissolution, or bankruptcy of Sublessor.
25. Entire Agreement. This Sublease, together with al' exhibits attached hereto,
are the entire agreement between the parties, and there are no binding
agreements or representations between the parties except as expressed herein.
Any agreements, warranties or representations not expressly contained herein
shall in no way bind either Sublessor or Sublessee, and Sublessor and Sublessee
expressly waive all claims for damages by reason of any statement,
representation, warranty, promise or agreement, if any, not contained in this
Sublease. This Sublease supersedes and cancels any and all previous
negotiations, arrangements, brochures, agreements and understandings, whether
written or oral, between Sublessor and its agents and Sublessee and its agents
with respect to the Premises and appurtenances thereto. This Sublease
constitutes the entire agreement between the parties hereto and no
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addition to, or modification of, any term or provision of this Sublease shall be
effective until and unless set forth in a written instrument signed by both
Sublessor and Sublessee. 26. Real Estate Brokers. Sublessor warrants and
represents to Sublessee that it has dealt with Cooper/Brady Commercial
Industrial Real Estate ("Cooper/Brady") and Sublessor and Sublessee each warrant
and represent to the other that neither has authorized or employed, or acted by
implication to authorize or to employ, any other real estate broker or salesman
or other person to act for Sublessor or Sublessee, respectively in connection
with this Sublease. Each party shall indemnify and defend the other against and
hold the other harmless from all claims, demands, liabilities, damages, losses,
costs and expenses, including, without limitation, reasonable attorneys' fees,
arising from any claim for any compensation, commission or finder's fee by any
real estate broker or salesman or other person actually or allegedly
representing or acting on behalf of the indemnifying party other than
Cooper/Brady.
Sublessee represents and warrants that no agreement, oral or written, exists
between Sublessee and Cooper/Brady for the payment by Sublessee of any
commission or other compensation in connection with this Sublease or any
transaction contemplated hereunder. Sublessor shall indemnify, defend and hold
Sublessee harmless from all claims, demands, liabilities, damages, losses, costs
and expenses, including without limitation reasonable attorneys' fees, arising
from any claim by Cooper/Brady for commissions owing.
27. Subordination. Except to the extent otherwise required by the Master Lease,
nothing in this Sublease shall subordinate Sublessee's leasehold interest in the
Premises to any deed of trust, mortgage, or instrument of security affecting
Sublessor's leasehold interest, and Sublessee's attornment to any party is
conditioned upon (i) recognition and continuation of this Sublease following any
foreclosure of a deed of trust, mortgage or security interest; and (ii) the
performance by the holder of the interest to which this Sublease is subordinated
of all obligations to be performed by the Sublessor under this Sublease on and
after the date of the holder's succession to an interest in the Premises.
28. Hazardous Materials.
28.1 Definitions. As used in this Sublease, the term "Hazardous Material" shall
mean any substance, material or waste which has been determined or is hereafter
determined by any state, federal or local governmental authority to be capable
of posing a risk of injury or adverse effect (temporary or otherwise) to health,
safety, property, and/or environment, and, as a result, the use or presence of
which is now or hereafter regulated by such government entity, or which must,
under applicable federal. state or local laws, rules or regulations or court
decrees be removed or otherwise remediated by the owner of the land or other
responsible parties if a release thereof occurs, including, but not limited to,
all of those materials, substances or wastes designated as hazardous or toxic by
the Environmental Protection Agency, the California Water Quality Control Board,
the U.S. Department of Labor, the California Department of Industrial Relations,
the U.S. Department of Transportation,
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the California Department of Food & Agriculture, the U. S. Department of Health,
Education and Welfare, the California Department of Health Services or any other
local, state or federal governmental agency or authority actually regulating or
now or hereafter authorized to regulate hazardous or toxic materials and
substances in the environment. Without limiting the generality of the foregoing,
the term "Hazardous Material" shall include all of those materials and
substances (i) defined as "toxic materials" in Sections 66680 through 66685 of
Title 22 of the California Administrative Code, Division 4, Chapter 30, as the
same may be amended from time to time, or (ii) any other hazardous or toxic
substance, material or waste which is or becomes regulated by any local
governmental authority, any agency of the State of California or any agency of
the United States Government, as the above may be amended from time to time.
Sublessee has provided Sublessor with a list of all Hazardous Materials which
Sublessee plans to use or anticipates it will use on the Premises and Sublessee
shall notify Sublessor from time to time during the Sublease Term if Sublessee
plans to use any additional Hazardous Materials on the Premises not contained on
the list ("Permitted Hazardous Materials").
28.2 Use of Premises and Compliance With Laws. Neither Sublessee nor Sublessee's
employees, agents, contractors, assignees, sub-sublessees or invitees shall
permit the introduction, placement, use, storage or disposition of any Permitted
Hazardous Materials in or about the Premises unless such Permitted Hazardous
Materials are contained, stored, used and disposed in a safe manner and strictly
in accordance with all federal, state and local laws and government rules,
regulations and guidelines and, all necessary permits and licenses from any and
all regulatory agencies having jurisdiction have been obtained. Sublessee shall
clean, decontaminate or otherwise correct the effects of any such introduction,
placement, use, storage or disposition of Hazardous Materials in or about the
Premises during the Sublease Term by Sublessee, Sublessee's employees, agents,
contractors, assignees, sub-sublessees, invitees or any other third party on the
Premises, in the manner and in accordance with the requirements set forth above.
Sublessee shall indemnify, defend, protect and hold Sublessor harmless from and
against all costs incurred by Sublessor resulting from a breach of this
Paragraph 28.2.
28.3 Notice. Sublessee shall immediately notify Sublessor of any breach of the
requirements set forth in Paragraph 28.2 above. In addition, Sublessee shall
immediately notify Sublessor of any inquiry, test, investigation or enforcement
proceeding by or against Sublessee, or the Premises involving a Hazardous
Material. The results of any inquiry, test, or investigation conducted by
Sublessee or Sublessee's employees, agents or contractors to determine the
presence of Hazardous Materials in and about the Premises shall be provided to
Sublessor promptly upon receipt of such results by Sublessee or Sublessee's
employees, agents or contractors, but Sublessee and Sublessor shall otherwise
use reasonable good faith efforts to keep such information confidential, except
to the extent that disclosure of such information is required by law. If an
Event of Default exists with respect to this Paragraph 28, Sublessor shall have
the right, at Sublessee's cost and expense, to negotiate, defend, approve and
appeal any action taken or order issued by an applicable
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governmental authority concerning such Hazardous Material. If such an Event of
Default does not exist, Sublessor may nevertheless, but at Sublessor's cost and
without unreasonably interfering with Sublessee's actions, participate in
Sublessee's negotiations, defense, approval or appeal of any action taken or
order issued.
28.4 Indemnification. Sublessee shall indemnify, hold harmless, and defend
Sublessor against all costs (including without limitation the cost of any
studies or investigations to determine the nature, extent and/or proper
remediation of any Hazardous Material), claims, losses or liabilities for injury
or death to any person, or for damage to or loss of use of any property or the
environment, arising out of or in connection with the introduction, placement,
use, storage or disposition of any Hazardous Material in or about the Premises
by Sublessee, or Sublessee's employees, agents, contractors, assignees,
sub-sublessees or invitees or any other third party on the Premises during the
Sublease Term and the removal or clean-up of such Hazardous Materials, including
the payment of any fines and penalties levied in connection with such actions,
or discharging any lien on the Premises securing the foregoing cost of
correction.
28.5 Charges. All costs payable by Sublessee under this Paragraph 28 during the
Sublease Term shall be paid by Sublessee to Sublessor upon demand, as Charges.
28.6 Liens. Sublessee shall not cause or suffer any lien to be recorded against
the Premises as a consequence of, or in any way related to, the introduction,
placement, use, storage or disposition of Hazardous Material in or about the
Premises by Sublessee or Sublessee's employees, agents, contractors, assignees,
sub-sublessees or invitees or any other third party on the Premises during the
Sublease Term and the removal or clean-up of such Hazardous Materials, including
any so-called state, federal or local "super fund" lien relating thereto. To the
extent permitted by the Master Lease, Sublessee shall have the right to contest
the payment of any lien described herein in the name of Lessor (to the extent
permitted by the Master Lease), in the name of Sublessor, or in its own name.
Sublessor shall execute all documents necessary or appropriate to effectuate the
contest and will use reasonable efforts to cause Lessor to do the same. Any
steps, actions or proceedings instituted by Sublessee shall be at the expense of
Sublessee. Sublessee shall indemnify and hold Sublessor harmless from and
against all loss, costs, liability, claims, damages, and expenses (including
without limitation, reasonable attorneys' fees), penalties, and fines incurred
in connection with or arising from such contest by Sublessee.
28. Sublessor's Right of Access. Subject to Paragraph 18 above, Sublessor shall
have the right to enter upon the Premises if Sublessor has reasonable grounds
for doing so and with reasonable prior written notice (except in the event of an
emergency, in which case no notice shall be required) for the purpose of
performing tests to determine the existence and extent of Hazardous Materials in
or about the Premises. In performing such tests, Sublessor shall use reasonable
efforts to cause the least interference with Sublessee's business operations and
shall, upon completion of the tests, restore the Premises to the condition
existing prior to per-
- 36 -
forming such tests. Sublessor shall indemnify and hold Sublessee and its agents
harmless from any loss, claim, liability or expense, including reasonable
attorneys' fees, arising out of, or in connection with such entry on the
Premises or the performance of such tests or work.
28.8 Assignment and Subletting. Notwithstanding anything contained in Paragraph
15 above to the contrary, it shall be presumptively reasonable for Sublessor to
withhold its consent to any proposed assignment or subletting, if (i) the
proposed assignee's or sub-sublessee's anticipated use of the Premises or any
portion thereof involves the introduction, placement, use, storage or
disposition of any Hazardous Materials considered ultra-hazardous by law, or
(ii) if the proposed assignee or sub-sublessee (A) has been required by any
prior owner, sublessor, lender or governmental authority to clean up and remove
any Hazardous Material, or (B) is subject or has been subject in the past to
investigation or enforcement orders or proceedings by any governmental agency or
authority in connection with the introduction, placement, use, storage,
disposition or clean-up of Hazardous Material, to an extent that the existence
of the facts described in either subparagraph (A) or (B) indicates, in
Sublessor's reasonable judgment, a pattern of conduct or behavior of the misuse
of Hazardous Materials.
29. Memorandum of Sublease. In connection with the execution of this Sublease,
Sublessor and Sublessee shall execute in recordable form, a "Memorandum of
Sublease, Option to Purchase and Right of First Refusal" referencing this
Sublease document and setting forth the true and legal description and
assessor's parcel number of the Premises, in the form attached hereto as Exhibit
"B" for recordation in the Official Records of Santa Clara County, California.
30. Sublessor's Undertaking With Respect to Master Lease. Sublessor hereby
represents and warrants to Sublessee that the copy of the Master Lease attached
hereto as Exhibit "A" is a true and complete copy of the Master Lease, and that
to Sublessor's knowledge the Master Lease is in full force and effect, and that
there is no default on the part of any party thereto nor any facts which with
notice, the passage of time, or both, would constitute a default by any party
under the Master Lease. Sublessor shall perform those obligations of the
"Lessee" under the Master Lease which are not the obligations of Sublessee to
perform pursuant to the terms of this Sublease, unless Sublessor's performance
is excused hereunder by reason of the existence of an Event of Default.
31. Covenant of Good Faith and Fair Dealing. Subject to the provisions of
Paragraph 16 above, no party shall do anything which shall have the effect of
harming or injuring the right of the other party to receive the benefits of this
Sublease; each party shall refrain from doing anything which would render its
performance under this Sublease impossible; and each party shall do everything
which this Sublease contemplates that such party shall do in order to accomplish
the objectives and purposes of this Sublease.
32. Sublessor's Agent. Sublessor warrants that Sublessor's Agent is the agent of
Sublessor and, as to those matters with respect to which it is expressly
provided under this Sublease that Sublessor's Agent may act on behalf of
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Sublessor, for purposes of this Sublease, has the authority to so act on behalf
of Sublessor, upon which acts Sublessee may rely. IN WITNESS WHEREOF, the
parties have executed this Sublease effective as of the last date set forth
below ("Effective Date").
SUBLESSOR:
McDONNELL DOUGLAS CORPORATION, a Maryland corporation
By /s/ John Elbert
Its Vice Present Controller,
Network Systems Company, a division of Information Systems Group,
a division of McDonnell Douglas Corporation
Dated: 11/11/87
SUBLESSEE:
APPLE COMPUTER, INC., a California corporation
By /s/ Albert A. Eisenstat
ALBERT A. EISENSTAT,
Senior Vice President
Dated: 11/13/87
By
Secretary
EXHIBIT B
RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO:
Berliner, Cohen & Biagini
99 Almaden Blvd., Suite 400
San Jose, CA 95113
Attn: Peggy L. Springgay, Esq.
MEMORANDUM OF SUBLEASE, OPTION TO PURCHASE AND RIGHT OF FIRST REFUSAL
This Memorandum Of Sublease, Option to Purchase and Right of First Refusal
("Memorandum") is entered into by and between McDONNELL DOUGLAS CORPORATION, a
Maryland corporation ("Sublessor"), and APPLE COMPUTER, INC., a California
corporation ("Sublessee"), with respect to a Sublease under that certain Lease
("Master Lease") dated January 6, 1978, as amended by that certain letter of
clarification, dated February 17, 1978; Amendment, dated January 30, 1979;
Amendment #2, dated March 17, 1979; and Amendment #3, dated July 1, 1987
(collectively the "Master Lease") by and between JOHN A. SOBRATO and SUSAN R.
SOBRATO, as to an undivided forty-five percent (45%) interest, CARL E. BERG and
MARY ANN BERG, as to an undivided forty-five percent (45%) interest, and ANN
RUSSO as to a ten percent (10%) interest, predecessor in interest of the current
lessor thereunder, Carl E. Berg and Mary Ann Berg, as trustees on behalf of the
Berg Living Trust UTA, dated May 1, 1981, as to an undivided 81.01% interest,
Clyde Berg and Nancy Berg, trustees of the Clyde Berg Living Trust UTA, dated
December 17, 1981, as to an undivided 11.83% interest, and Clyde Berg, trustee
of Carl Berg Child's Trust UTA, dated June 2, 1978, as to an undivided 7.16%
interest ("Lessor"), and TYMSHARE, INC., predecessor in interest of Sublessor.
as lessee.
WHEREAS, Sublessor and Sublessee have entered into that certain Sublease dated ,
1987 (the "Sublease"), for the premises commonly known as 20605, 20665 and 20705
Valley Green Drive, Cupertino, California, more particularly described in
Exhibit "A" attached hereto and incorporated herein ("Premises").
NOW, THEREFORE, Sublessor and Sublessee hereby state the following for recording
in the public records of Santa Clara County, California:
1. Sublessor hereby subleases to Sublessee and Sublessee hereby subleases from
Sublessor the Premises for an initial term of One-Hundred Twenty-two Months (122
months), commencing on November 1, 1987 ("Commencement Date"` and ending on
December 31, 1997.
2. Subject to the terms and conditions of Paragraph 4.2 of the Sublease,
Sublessee shall have the option to extend the term of the Sublease for two (2)
successive five (5) year terms.
3. Subject to the terms of the Master Lease and Paragraph 22 of the Sublease,
Sublessee shall have the right of first refusal to purchase the Premises, if
Sublessor receives notice from Lessor of Sublessor's right to exercise the right
of first refusal under the Master Lease on or before June 30. 1998. 4. Subject
to the terms of the Master Lease (including, without limitation, Paragraph 29)
which terms may cause the early termination of the option to purchase granted to
Sublessor under the Master Lease and Paragraph 21 of the Sublease, Sublessee
shall have the option to purchase the Premises, which option to purchase may be
exercised by Sublessee no earlier than January 1, 1998 nor later than June 30.
1998.
5. This Memorandum shall incorporate herein all of the terms and provisions of
the Sublease as though fully set forth herein.
6. This Memorandum is solely for recording purposes and shall not be construed
to alter, modify or supplement the Sublease, and has been recorded to give
notice of the existence of the Sublease, and the Sublessee's right of first
refusal and option to purchase the Premises. If there is any inconsistency
between this Memorandum and the Sublease, the Sublease shall prevail.
IN WITNESS WHEREOF, this Memorandum is executed on this __ day of _________,
1987.
SUBLESSOR:
McDONNELL DOUGLAS CORPORATION, a Maryland corporation
By
Its Vice Present Controller,
Network Systems Company, a division of Information Systems Group,
a division of McDonnell Douglas Corporation
Dated:
SUBLESSEE:
APPLE COMPUTER, INC., a California corporation
By
ALBERT A. EISENSTAT,
Senior Vice President
By
Secretary
LEASE
BY AND BETWEEN
DE ANZA BOULEVARD INVESTMENTS,
a limited partnership, and others, as Landlord
and
APPLE COMPUTER, INC.,
a California corporation,
as Tenant
TABLE OF CONTENTS
Page
1. PREMISES...................................................1
1.1 Description............................................1
1.2 Work of Improvement....................................1
2. TERM.......................................................1
1
2.1 Term...................................................1
2.2 Options to Extend Lease Term...........................1
3. RENT.......................................................2
3.1 Base Monthly Rent......................................2
3.2 Rental Adjustment......................................2
3.3 Late Charge............................................2
4. TAXATION...................................................2
4.1 Real Property Taxes....................................2
4.2 Personal Property Taxes................................3
4.3 Assessments............................................3
4.4 Right to Contest.......................................3
5. USE........................................................3
5.1 Use....................................................3
5.2 Uses Prohibited........................................3
6. UTILITIES AND WASTE DISPOSAL...............................4
6.1 Utilities..............................................4
6.2 Waste Disposal.........................................4
6.3 Interference with Use of the Premises..................4
7. MAINTENANCE, REPAIRS, AND ALTERATIONS......................4
7.1 Landlord's Obligations.................................4
7.2 Tenant's Obligations...................................4
7.3 Leasehold Improvements.................................6
8. ENTRY BY LANDLORD..........................................7
9. LIENS......................................................7
10. INDEMNITY..................................................8
11. INSURANCE..................................................8
11.1 Liability Insurance...................................8
11.2 Property Insurance....................................9
11.3 Waiver of Subrogation.................................9
12. DAMAGE OR DESTRUCTION......................................9
13. CONDEMNATION..............................................12
13.1 Definition of Terms..................................12
13.2 Rights...............................................12
13.3 Total Taking.........................................12
13.4 Partial Taking.......................................12
14. ASSIGNMENT AND SUBLETTING.................................12
15. SUBORDINATION.............................................14
15.1 Subordination........................................14
15.2 Subordination Agreements.............................15
15.3 Quiet Enjoyment......................................15
15.4 Attornment...........................................15
16. DEFAULT; REMEDIES.........................................15
16.1 Default..............................................15
16.2 Remedies.............................................16
16.3 Default by Landlord..................................16
16.4 Tenant's Remedies....................................16
17. BROKERAGE COMMISSIONS.....................................17
18. HAZARDOUS MATERIALS.......................................17
19. MISCELLANEOUS.............................................19
19.1 Estoppel Certificate.................................19
19.2 Transfer of Landlord's Interest......................19
19.3 Captions; Attachments; Defined Terms.................19
19.4 Entire Agreement.....................................19
19.5 Severability.........................................20
19.6 Costs of Suit........................................20
19.7 Time; Joint and Several Liability....................20
19.8 Binding Effect; Choice of Law........................20
19.9 Waiver...............................................21
19.10 Surrender of Premises...............................21
19.11 Holding Over........................................21
19.12 Reasonable Consent..................................21
19.13 Recording...........................................21
19.14 Notices.............................................21
19.15 Authority...........................................21
19.16 Appointment of Landlord's Agent.....................22
19.17 Condition to Effectiveness of Lease.................22
LEASE AGREEMENT
This Lease is dated March 24, 1989 for reference purposes only and is made by
and between DE ANZA BOULEVARD INVESTMENTS, A LIMITED PARTNERSHIP and BERG & BERG
DEVELOPERS, A CALIFORNIA PARTNERSHIP (hereinafter "Landlord") and APPLE
COMPUTER, INC., a California corporation (hereinafter "Tenant"). For and in
consideration of the rental and of the covenants and agreements hereinafter set
forth to be kept and performed by Tenant, Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord the premises hereinafter described for the
term, at the rental and subject to and upon all of the terms, covenants and
agreements hereinafter set forth.
1. PREMISES.
1.1 Description. Landlord hereby leases to Tenant and Tenant hereby rents from
Landlord those certain premises (the "Premises") located in the City of
Cupertino, County of Santa Clara, described and consisting of the following:
A. That certain land and building sometimes referred to as "De Anza 3",
commonly known as 10500 North De Anza Boulevard, and more particularly
described on the attached Exhibit "A", which building contains a total of
211,000 square feet of floor space (the "Building"); and
B. The existing interior improvements and additional improvements that may
be constructed in the Building by Tenant.
1.2 Work of Improvement. Landlord shall deliver the Premises to Tenant in their
existing condition. Landlord shall not be required to remodel or otherwise
construct any improvements or make any alterations to the Premises. Any
alterations, additions or improvements to the Premises required or desired by
Tenant shall be constructed by Tenant at its sole cost and expense, subject to
the provisions of Section 7.3A.
2. TERM.
2.1 Term. The term of this Lease (the "Lease Term") shall commence on April 1,
1989 (the "Commencement Date"). The term of this Lease shall end eight (8) years
and two (2) months following the Commencement Date (i.e., on May 31, 1997),
unless sooner terminated pursuant to the provisions of this Lease, or extended
pursuant to the provisions of Section 2.2.
2.2 Options to Extend Lease Term. Landlord hereby grants to Tenant two (2)
separate options to extend the Lease Term for five (5) years for each such
option on the following terms and conditions:
A. Tenant must give Landlord notice in writing of its exercise of the
option in question no later than one hundred eighty (180) days before the
day the Lease Term would end but for said exercise.
B. Tenant may not extend the Lease Term pursuant to any option granted by
this paragraph if Tenant is in material default as of the date of exercise
of the option in question, as such defaults are defined in Section 16.
C. All terms and conditions of this Lease shall apply during each option period,
except that: (i) the Base Monthly Rent for the first option period shall be
Three Hundred Sixty-One Thousand Five Hundred Seventy Dollars ($361,570) per
month, and (ii) the Base Monthly Rent for the second option period shall be Four
Hundred Thirty-Three Thousand Eight Hundred Eighty-Four Dollars ($433,884) per
month.
3. RENT.
3.1 Base Monthly Rent. Beginning on the Commencement Date and continuing until
May 31, 1989, Tenant shall pay to Landlord as Base Monthly Rent for the Premises
the sum of Two Hundred Ninety-Five Thousand Four Hundred Thirty-Four Dollars
($295,434) per month. Beginning on June 1, 1989, and continuing through the
remainder of the Lease Term, Tenant shall pay to Landlord
- 1 -
as Base Monthly Rent for the Premises, the sum of Two Hundred Ninety-Nine
Thousand Six Hundred Twenty Dollars ($299,620) per month, subject, however, to
adjustment as provided in Section 3.2 and, if one or both of the options to
extend are exercised,
Section 2.2C.
Base Monthly Rent shall be paid in advance on the first day of each calendar
month of the term of the Lease, without deduction, offset, prior notice or
demand, in lawful money of the United States. If the Commencement Date is not
the first day of a month, or if the Lease termination date is not the last day
of a month, a prorated Base Monthly Rent shall be paid at the then current rate
for the fractional month during which the Lease commences and/or terminates.
3.2 Rental Adjustment. The Base Monthly Rent shall be increased during the
initial Lease Term as follows:
A. On the first day of the thirty-third (33rd) full calendar month of the
Lease Term, the Base Monthly Rent shall be increased to Three Hundred
Twelve Thousand Two Hundred Eighty Dollars ($312,280) per month.
B. On the first day of the sixty-third (63rd) full calendar month of the
Lease Term, the Base Monthly Rent shall be increased to Three Hundred
Twenty-Two Thousand Eight Hundred Thirty Dollars ($322,830) per month.
3.3 Late Charge. Tenant acknowledges that late payment by Tenant to Landlord of
the Base Monthly Rent and other sums due hereunder may cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges and late charges which may be imposed on
Landlord by the terms of any mortgage or deed of trust covering the Premises.
Accordingly, in the event Tenant fails to pay any installment of Base Monthly
Rent and/or other sums due hereunder within ten (10) days after said rent or
other sum is due, Tenant shall pay to Landlord a late charge equal to two
percent (2%) of such overdue amount. The parties agree that such late charge
represents a fair and reasonable estimate of the cost Landlord will incur by
reason of late payment by Tenant.
4. TAXATION.
4.1 Real Property Taxes. Tenant shall pay prior to delinquency all real property
taxes which, during the term of this Lease, are levied, assessed or imposed upon
or against the Premises. In the event any such real property taxes cover any
period of time prior to commencement or after the expiration of the term of this
Lease, Tenant's obligation to pay such taxes shall be equitably prorated to
cover only the period of time within the fiscal tax year during which the Lease
is in effect.
As used in this Lease, the term "real property tax" shall include any form of
assessment, levy, penalty or tax (other than inheritance, estate, net income or
franchise taxes) imposed by any authority having the power to tax, including,
without limitation, any tax:
A. Upon, allocable to, or measured by the Premises or the
rental payable hereunder; or
B. Upon or with respect to the possession, leasing,
operation, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises or any portion
thereof; or
C. Upon or measured by the value of Tenant's personal
property, equipment or fixtures located in the Premises; or
D. Upon this transaction or any document to which Tenant is a party
creating or transferring an interest or an estate in the Premises.
E. Tenant acknowledges that it is responsible for any increase in taxes
due to a transfer of Landlord's interest in the Premises.
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4.2 Personal Property Taxes. Tenant shall pay prior to delinquency all taxes
assessed against and levied upon trade fixtures, furnishings, equipment and all
other personal property of Tenant located in the Premises.
4.3 Assessments. If any assessments are levied against the Premises after the
date hereof and Landlord has the option to either pay the assessment in full or
allow the assessment to go to bond and to pay it in installments, Landlord shall
cause the assessment to go to bond and be paid in installments of principal and
interest. Tenant shall pay as its share of each such installment which becomes
due during the Lease Term, an amount based upon the ratio of the square footage
of the Premises to the square footage of the property covered by such
assessment, or such other equitable basis as agreed to by Landlord and Tenant,
provided if the taxing authority requires a lump sum payment of such bonded
assessment during the Lease Term, Tenant shall pay such payment when due.
4.4 Right to Contest. If Landlord receives any notice of assessment or
reassessment in excess of five percent (5%) more than the assessment for the
prior period, or notice of any imposition of new real property taxes, Landlord
shall provide Tenant with a copy of such notice within fifteen (15) days after
Landlord's receipt thereof. In the event Tenant desires in good faith to contest
or otherwise review by appropriate legal or administrative proceedings the
imposition of any such real property tax, Tenant shall, at least ten (10) days
prior to the delinquency of such real property tax, give Landlord written notice
of its intention to do so. Tenant may withhold payment of the real property tax
being contested if (i) non-payment is permitted during the pendency of such
proceedings without the foreclosure of any tax lien or the imposition of any
fine or penalty, and (ii) if required by any beneficiary of a deed of trust of
Landlord's interest in the Premises, or purchaser of Landlord's interest, Tenant
shall furnish Landlord with a bond sufficient to protect Landlord's Interest in
the Premises. Any such contest shall be conducted without delay and solely at
Tenant's expense. Tenant shall protect and indemnify Landlord against any and
all expenses or damages resulting from such contest of other proceeding. At the
request of Tenant, Landlord shall join in any contest or other proceedings which
Tenant may desire to bring pursuant to this Section. Tenant shall pay all of
Landlord's expenses arising out of such joinder. Within ten (10) days after the
final determination of the amount due from Tenant with respect to the real
property tax contested, Tenant shall pay the amount so determined to be due,
together with all costs, expenses and interest, whether or not this Lease shall
have then expired or terminated.
5. USE.
5.1 Use. The Premises shall be used and occupied by Tenant for only the
following purposes and for no other purpose whatsoever without obtaining the
prior written consent of Landlord: office, light warehouse, distribution,
engineering, research and development, product testing, incidental training and
any other legal uses for Tenant's business as the same may exist from time to
time. This Lease shall be subject to all applicable zoning ordinances and to any
municipal, county and state laws and regulations governing and regulating the
use of the Premises.
5.2 Uses Prohibited.
A. Tenant shall not do or permit anything to be done in or about the
Premises which will increase the existing rate of insurance upon the
Premises (unless Tenant shall pay any increased premium as a result of such
use or acts) or cause the cancellation of any insurance policy covering the
Premises, nor shall Tenant sell or permit to be kept, used or sold in or
upon the Premises, any articles which may be prohibited by a standard form
policy of fire insurance.
B. Tenant shall not allow the Premises to be used for any unlawful purpose
nor shall Tenant cause, maintain or permit any nuisance in or upon the
Premises. Tenant shall not commit or suffer to be committed any waste in or
upon the Premises and Tenant shall keep the Premises in a clean condition.
C. Tenant shall not use the Premises, or permit anything to
be in or about the Premises which will violate any Laws now
in force or which may
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hereafter be enacted or promulgated. Subject to the provisions of Section
7.3, Tenant shall at its sole cost and expense promptly comply with all
Laws now in force or which may hereafter be in force relating to or
affecting the condition, use or occupancy of the Premises. The judgment of
any court of competent jurisdiction or the admission of Tenant in any
action against Tenant, whether Landlord is a party thereto or not, that
Tenant has violated any Laws shall be conclusive of that fact as between
Landlord and Tenant. Tenant shall have the right at its expense to contest
the application to it or the Premises of any Laws and to defer compliance
during the pendency of such contest so long as Landlord is not subjected
to any civil or criminal liability by reason of Tenant's noncompliance.
6. UTILITIES AND WASTE DISPOSAL.
6.1 Utilities. Commencing on the Commencement Date, Tenant shall pay prior to
delinquency, for all water, gas, heat, light, power, telephone, sewage, air
conditioning and ventilating, scavenger, Janitorial, and all other materials and
utilities supplied to the Premises and all taxes and surcharges thereon.
6.2 Waste Disposal. Tenant shall store its waste either inside the Premises or
in its own dumpsters located outside the Premises.
6.3 Interference with Use of the Premises. In the event of a material
interference with Tenant's use of the leased Premises as a consequence of the
cessation of utility service caused by the gross negligence or willful
misconduct of Landlord or its agents, contractors, employees or invitees, Tenant
shall be entitled to an abatement of Base Monthly Rent to the extent of the
interference with Tenant's use of the leased Premises, if such cessation of
utility service and consequent material interference persists for a continuous
period of two (2) business days or more. Any abatement of Base Monthly Rent
shall commence with the first business day after the beginning of the cessation
of utility service and shall continue until that date on which the utility
service is restored.
7. MAINTENANCE. REPAIRS. AND ALTERATIONS.
7.1 Landlord's Obligations. Subject to the provisions of Section 12 and except
for damage caused by the negligence, omission, or intentional act of Tenant and
Tenant's agents, employees or invitees, which damage is not covered by the type
of insurance to be maintained pursuant to Section 11.2 hereof, Landlord, at
Landlord's expense, shall keep in good order, condition and repair the
foundation, building structure, and load-bearing walls of the Premises. Landlord
shall have no obligation to make repairs under this Section 7.1 until a
reasonable time after receipt of written notice of the need for such repairs.
If, within thirty (30) days after notice from Tenant, Landlord fails to commence
making repairs which are the obligation of Landlord under this Section 7.1 and
diligently prosecute such work to completion, Tenant shall have the right to
make such repairs and charge Landlord for the reasonable cost thereof. In such
event, Landlord shall reimburse Tenant for the cost of such repairs within
thirty (30) days after demand from Tenant with interest at ten percent (10%) per
annum from the date of such work.
7.2 Tenant's Obligations.
A. Subject to the provisions of Sections 12 and 7.1, Tenant, at Tenant's
expense, shall maintain in good order, condition and repair the Premises and
every part thereof, including but not limited to floors, ceilings, windows,
doors, skylights, roofing, interior walls, the plumbing, heating, air
conditioning and ventilating equipment, electrical and lighting facilities and
equipment to the Premises including exterior lighting, parking lot, and
landscaping. Said maintenance shall include, without limitation, periodic
service to the HVAC equipment and elevators by qualified personnel. If items
Tenant is required to maintain cease to reasonably function, Tenant shall
replace such worn out items.
B. All glass, both interior and exterior, is at the sole risk of Tenant; and any
broken glass shall promptly be replaced by Tenant at Tenant's expense with glass
of the same kind, size and quality according to the current local code.
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C. Upon the expiration or earlier termination of this Lease, Tenant shall
surrender the Premises in the same condition as received, broom clean, ordinary
wear and tear alone excepted. Tenant, at its sole cost and expense, agrees to
repair any damage to the Premises caused by or in connection with the removal of
any articles of personal property, business or trade fixtures, machinery,
equipment or furniture. The obligations of Landlord and Tenant concerning the
following subjects are governed exclusively by the indicated Sections, and the
parties do not intend the immediately preceding two sentences to modify the
obligations of the parties with respect to these subjects: (i) Tenant's
obligation to remove leasehold improvements, which is governed by Section 7.3A;
(ii) the repair and restoration of the Premises following damage caused by any
peril, which is governed by Section 12; (iii) repair of the Premises following a
condemnation, which is governed by Section 13; and (iv) the obligations of the
party with respect to the investigation and remediation of contamination by
Hazardous Materials, which is governed by Section 18.
D. In the event Tenant fails to perform Tenant's obligations under this Section
7, Landlord shall give Tenant written notice to do such acts as are reasonably
required to maintain the Premises. If, within thirty (30) days after notice from
Landlord, Tenant fails to commence the work and diligently prosecute it to
completion, then Landlord shall have the right (but not the obligation) to do
such acts and expend such funds at the expense of Tenant as are reasonably
required to perform such work. Any amount so expended by Landlord shall be paid
by Tenant within thirty (30) days after demand with interest at ten percent
(10%) per annum form the date of such work.
E. Tenant shall have the benefit of all warranties available to Landlord which
would reduce the cost of performing the obligations of Tenant pursuant to
Section 7.2, and Landlord shall cooperate with Tenant in enforcing these
warranties. Tenant shall not be responsible for the cost of maintenance or
repair to the Premises or any portion thereof to the extent such maintenance or
repair is necessary as a result of the gross negligent act or willful misconduct
of Landlord or its agents, employees, contractors or invitees.
F. If Tenant becomes obligated pursuant to Section 7.2 (A) to perform during the
last three (3) years of the initial Lease Term (or during the last three (3)
years of any option period) any item of repair or replacement to any part of the
Premises and the cost of repair or replacement of that item is more than One
Hundred Thousand Dollars ($100,000), then the cost of such item of repair or
replacement shall be shared as follows:
(i) Tenant shall pay the first One Hundred Thousand Dollars ($100,000) of
the cost of such item of repair or replacement, and Landlord shall pay the
balance of such cost ("Landlord's Contribution").
(ii) Landlord's Contribution shall be amortized over a period equal to the
lesser of fifteen (15) years or the functional life of the repair or
replacement in question, with interest on the unamortized balance at the
then prevailing market rate Landlord would pay if it borrowed funds to
permanently finance the cost of such item of repair or replacement from an
institutional lender following completion. Landlord shall notify Tenant of
its determination of the appropriate amortization schedule based upon the
foregoing, and the monthly amortization payment that must be paid to
amortize Landlord's Contribution, and shall provide Tenant with the
information upon which such determination is made. Such determination
shall be subject to the approval of Tenant. Tenant shall pay in addition
to the Base Monthly Rent an amount equal to such monthly amortization
payment for each month after such item of repair or replacement is
completed during the remainder of the initial term of this Lease and any
extension of the Lease Term resulting from the exercise of any option to
extend pursuant to Section 2.2.
G. Immediately prior to Lease termination Tenant shall either: (i) furnish to
Landlord certifications from licensed reputable contractors that the elevators,
HVAC systems and roof of the Premises are in good working condition; or (ii)
shall place the elevators, HVAC systems and roof in such good condition.
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7.3 Leasehold Improvements.
A. Tenant shall not construct any leasehold improvements or otherwise alter the
leased Premises without Landlord's prior written approval of the plans and
specifications therefor, which approval shall not be unreasonably withheld or
delayed; provided, however, that Tenant shall have the right to make interior
alterations to the Premises which do not materially affect the structural
elements of the Premises and do not exceed Twenty-Five Thousand Dollars
($25,000) in cost, without obtaining Landlord's prior written approval. All such
leasehold improvements shall be installed by Tenant at Tenant's expense by a
licensed contractor in compliance with the approved plans and specifications
therefor and in strict accordance with all Laws. All such construction shall be
done in a good and workmanlike manner using new materials of good quality.
Tenant shall not commence construction of any leasehold improvements until (i)
all required governmental approvals and permits shall have been obtained; and
(ii) Tenant shall have given Landlord at least five (5) days prior written
notice of its intention to commence such construction. All leasehold
improvements constructed by Tenant shall remain the property of Tenant during
the Lease Term and Tenant shall have the right to depreciate the same and claim
and collect investment tax credits and all other tax savings with respect
thereto. Tenant shall have the right to remove any leasehold improvements
installed by Tenant so long as (i) it repairs all damage caused by the removal
thereof and returns the Premises to the condition existing prior to the
installation; and (ii) such improvements are not integrated into building
systems such as HVAC or electrical systems. Landlord may require Tenant to
remove at the expiration of the Lease Term leasehold improvements previously
designated by Landlord and restore the Premises to the extent necessary to
return the Premises to a condition that has substantially the same value as
existed on the Commencement Date, ordinary wear and tear excepted, if (a) such
improvements were approved in writing by Landlord; (b) at the time such approval
was given by Landlord, Landlord informed Tenant in writing that Landlord would
require that such leasehold improvements be removed at the termination of the
Lease Term; and (c) such improvements are of limited special purpose use and are
not commonly installed in buildings of the size, quality and type, and in the
location of the Premises. Subject to the provisions of phrases (a) and (b) of
the preceding sentence, Landlord may require Tenant to remove standard office
improvements at the expiration of the Lease Term if more than twenty-five
percent (25%) of the gross square footage of the Premises is used for private
offices, but in no event shall Tenant be obligated to remove more office
improvements than are required to reduce the space within the Premises used for
private offices to twenty-five percent (25%) of the gross square footage of the
Premises.
Within ten (10) business days after demand therefor from Tenant, Landlord shall
execute and deliver a lien waiver or other document in form customarily required
by any supplier, lessor or lender in connection with the installation in the
Premises of Tenant's personal property, equipment or trade fixtures, pursuant to
which Landlord shall waive any right it may have or acquire with respect to such
property. Such waiver may require Landlord to grant to the party requiring
Tenant to obtain such waiver, a license to enter the Premises in order to
assemble, inventory or remove the property covered by the lien waiver, provided
Tenant is not in default and provided that the entry and removal takes place
during the Lease Term and such third party shall repair in a first class manner
any and all damage caused by removal of specific property.
B. Alterations Required by Law. Tenant shall, at its sole cost, make any
alteration, addition or change of any sort, whether structural or otherwise, to
the Premises that is required by Laws because of (i) Tenant's specific use or
change of use of the Premises, or (2) Tenant's construction or installation of
any leasehold improvements or trade fixtures.
C. Right to Contest. In the event Tenant is required by any Laws and pursuant to
Section 7.3(B) to make any capital improvement to the Premises, Tenant shall
have the right to contest or otherwise review by appropriate legal or
administrative proceedings the application of such Laws. If Tenant desires to so
contest or cause the review of such Laws, Tenant shall give Landlord written
notice of its intention to do so and may conduct such contest or other review so
long as it pays all costs, and compliance therewith may be held
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in abeyance pending completion of such proceedings. If required by any
beneficiary of a deed of trust of Landlord's interest in the Premises or
purchaser of Landlord's interest, Tenant shall obtain and furnish Landlord with
an appropriate bond or other security reasonably sufficient to protect Landlord
from Tenant's failure to comply with such Laws during the pendency of such
proceedings. Tenant shall protect and indemnify Landlord against any and all
expenses or damages resulting from such contest or other proceeding.
D. Other Required Capital Improvements. If any capital improvement (including
structural modifications to the foundation, load bearing walls, and building
structure) is required to be made to the Premises in order to comply with any
Laws and if Tenant is not obligated to make such capital improvement pursuant to
Section 7.3(B), then the following shall apply:
(i) Landlord shall construct such capital improvement at its sole cost and
expense in accordance with the applicable Laws.
(ii) All reasonable costs paid by Landlord to construct such required
capital improvement (including financing costs) shall be amortized over
the functional life of such improvement or fifteen (15) years, whichever
is less, with interest on the unamortized balance at the then prevailing
market rate Landlord would pay if it borrowed funds to permanently finance
such improvement from an institutional lender following completion.
Landlord shall notify Tenant of its determination of the appropriate
amortization schedule based upon the foregoing and the monthly
amortization payment that must be made to amortize such costs, and shall
provide Tenant with the information upon which such determination is made.
Such determination shall be subject to the approval of Tenant. In addition
to the Base Monthly Rent, Tenant shall pay an amount equal to such monthly
amortization payment for each month after such capital improvement is
completed during the remainder of the initial term of this Lease and any
extension of the Lease Term resulting from the exercise of any option to
extend pursuant to Section 2.2.
8. ENTRY BY LANDLORD. Landlord and Landlord's agents shall have the right at
reasonable times and upon reasonable written notice to Tenant, of not less then
twenty-four (24) hours, except in an emergency, and subject to Tenant's security
requirements, to enter the Premises to inspect the same or to maintain and
repair, make alterations or additions to the Premises or any portion thereof, to
the extent permitted or required by this Lease, or to show the Premises to
prospective purchasers and lenders or, during the last six (6) months of the
Lease Term, to prospective tenants. Any entry by Landlord or its agents shall be
done in a manner to minimize interference with Tenant's use of the Premises.
9. LIENS. Tenant shall keep the Premises free from any liens arising out of work
performed, materials furnished or obligations incurred by Tenant and shall
indemnify, hold harmless and defend Landlord from any liens and encumbrances
arising out of any work performed or materials furnished by or at the direction
of Tenant. Tenant shall have the right to contest the correctness or the
validity of any such lien if it provides assurances reasonably satisfactory to
Landlord that Landlord will suffer no financial detriment as the result of such
contest; provided, however, that Tenant shall cause such lien to be released in
the event it is necessary for Landlord to cause such lien to be released in
connection with any sale or financing of the Premises that is to occur during
the pendency of such contest. Landlord shall have the right at all times to post
and keep posted on the Premises any notices permitted or required by law, or
which Landlord shall deem proper, for the protection of Landlord and the
Premises, and any other party having an interest therein, from mechanics' and
material persons' liens and Tenant shall give to Landlord at least five (5) days
prior written notice of the expected date of commencement of any work relating
to alterations or additions to the Premises.
10. INDEMNITY. Tenant shall indemnify and hold Landlord harmless from and
against any and all claims of liability for any injury or damage to any person
or property arising from Tenant's use of the Premises, or from the conduct of
Tenant's business, or from any activity, work or thing done, permitted or
suffered by Tenant in or upon the Premises. Tenant shall further indemnify and
hold Landlord harmless from and against any and all claims arising from any
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breach or default in the performance of any obligation on Tenant's part to be
performed under this Lease by Tenant or Tenant's agents, contractors, invitees,
or employees, including Tenant's failure to carry the insurance required by this
Lease, and from and against all costs, attorneys' fees, expenses and liabilities
incurred in the defense of any such claim, or any action or proceeding brought
thereon. In the event any action or proceeding is brought against Landlord by
reason of such claim, Tenant upon notice from Landlord shall defend the same at
Tenant's expense with an attorney reasonably acceptable to Landlord.
Notwithstanding anything to the contrary in this Lease, Tenant shall neither
release Landlord from, nor indemnify Landlord with respect to: (i) the gross
negligence or willful misconduct of Landlord, or its agents, employees,
contractors or invitees; or (ii) a material breach of Landlord's obligations or
representations under this Lease. Landlord shall indemnify and hold harmless
Tenant from all damages, liabilities, judgments, actions, attorneys' fees,
consultants' fees, costs and expenses arising from the gross negligence or
willful misconduct of Landlord or its employees, agents, contractors, or
invitees, or the material breach of Landlord's obligations or representations
under this Lease.
Nothing in this Section 10 is intended to modify the provisions of Section 11.3,
and in the event this Section 10 is determined to be inconsistent with the
provisions of Section 11.3, the provisions of Section 11.3 shall prevail.
11. INSURANCE.
11.1 Liability Insurance. Tenant shall, at its own expense, maintain in full
force and effect during the Lease Term a policy or policies of comprehensive
general liability insurance, including property damage carried with a company or
companies reasonably satisfactory to Landlord, which will insure Tenant and
Landlord against liability for personal injury, bodily injury, death, and damage
to property occurring in or about, or resulting from any occurrence in or about,
the Premises with combined single limit coverage of not less than Five Million
Dollars ($5,000,000). Such comprehensive general liability insurance shall be
extended to include "blanket contractual liability" endorsement insuring
Tenant's performance of Tenant's obligation to indemnify Landlord contained in
Section 10 and all of the other broadened liability features normally contained
in an extended liability endorsement. The limits of such insurance shall not
limit the liability of Tenant. Tenant shall deliver to Landlord certificates of
insurance, endorsements stating Tenant's insurance is primary, evidencing the
existence and amounts of such insurance and naming Landlord as an additional
insured. In the event Tenant fails to procure and maintain such insurance,
Landlord may (but shall not be required to) procure the same at Tenant's expense
after thirty (30) days prior written notice. No such policy shall be cancelable
or subject to reduction of coverage or other modification except after thirty
(30) days prior written notice to Landlord by the insurer. All such policies
shall be written as primary policies, not contributing with and not in excess of
coverage which Landlord may carry. Tenant shall, prior to the expiration of such
policies, furnish Landlord with renewals or binders. Tenant shall have the right
to provide such insurance coverage pursuant to blanket policies obtained by
Tenant provided such blanket policies expressly afford coverage to the Premises
and to Landlord as required by this Lease. Landlord shall maintain, at its sole
cost and expense, a policy or policies of comprehensive general liability
insurance insuring Landlord (and such others as are designated by Landlord)
against liability for personal injury, bodily injury, death, and damage to
property occurring or resulting from an occurrence in, on or about the Premises,
with combined single limit coverage of not less than Five Million Dollars
($5,000,000), or such greater coverage as Landlord may from time to time
determine is reasonably necessary for its protection.
11.2 Property Insurance. Tenant shall, at Tenant's expense, procure and maintain
at all times during the term of this Lease a policy or policies of insurance
covering loss or damage to the Premises in the amount of the full replacement
value thereof and loss of rental income (for a maximum of twelve (12) months)
thereof, providing protection against all perils included within the
classification of fire, extended coverage, vandalism, malicious mischief,
sprinkler leakage and special extended peril (all-risk). Tenant shall not be
- 8 -
obligated to carry earthquake insurance unless it becomes Tenant's practice to
maintain such insurance for a majority of all multi-story buildings leased or
owned by Tenant in the Bay Area and containing 80,000 square feet or more.
Tenant shall deliver to Landlord certificates of insurance, endorsements stating
Tenant's insurance is primary, evidencing the existence and amounts of such
insurance and naming Landlord as an additional insured. In the event Tenant
fails to procure and maintain such insurance, Landlord may (but shall not be
required to) procure the same at Tenant's expense after thirty (30) days prior
written notice. No such policy shall be cancelable or subject to reduction of
coverage or other modification except after thirty (30) days prior written
notice to Landlord by the insurer. All such policies shall be written as primary
policies, not contributing with and not in excess of coverage which Landlord may
carry. Tenant shall, prior to the expiration of such policies, furnish Landlord
with renewals or binders. Tenant shall have the right to provide such insurance
coverage pursuant to blanket policies obtained by Tenant provided such blanket
policies expressly afford coverage to the Premises and to Landlord as required
by this Lease.
11.3 Waiver of Subrogation. Landlord and Tenant each hereby waive any and all
rights of recovery against the other, and against the officers, partners,
employees, agents and representatives of the other, on account of loss or damage
to such waiving party's property or the property of others under its control to
the extent that such injury, loss or damage is insured against under any
insurance policy in force at the time of such loss or damage. Landlord and
Tenant agree to notify the insurance carrier or carriers under any such policy
that the foregoing mutual waiver of subrogation is contained in this Lease.
Landlord and Tenant will each cause its respective insurers to issue a waiver of
subrogation rights endorsement to each policy of insurance in question, and
Landlord and Tenant shall each provide the other with evidence that such waiver
has been obtained within a reasonable period of time.
12. DAMAGE OR DESTRUCTION.
A. If the Premises are damaged by any peril, then Landlord shall restore the
damage, except if this Lease is terminated pursuant to Section 12B, Section 12C,
or Section 12G hereof. All proceeds of the insurance carried pursuant to Section
11.2 shall be paid to Landlord. The proceeds shall be used for the restoration
of the damage, if the Lease is not terminated. Notwithstanding the foregoing, in
the event Landlord is not the original Landlord named herein or a partnership in
which one of the general partners is Carl E. Berg or a partnership of which Carl
E. Berg is the general partner, and the Premises are to be restored, then the
insurance proceeds shall be deposited with any institutional lender holding a
mortgage or deed of trust against the Premises or if none, then such other
institutional lender as agreed to by Landlord and Tenant, for disbursement of
such funds for the purpose of restoration. As used herein, an "institutional
lender" shall mean a bank, savings and loan association, or insurance company.
Upon receipt (or deposit) of such insurance proceeds, if applicable, and the
issuance of all necessary governmental approvals, Landlord shall commence and
diligently prosecute to completion the restoration of the Premises to
substantially the same condition existing immediately prior to such damage,
using the insurance proceeds. Landlord shall be responsible for paying any
"deductible" amount that is excluded from earthquake insurance coverage, up to
Four Hundred Eighty Thousand Dollars ($480,000); provided, however, that any
such earthquake "deductible" paid by Landlord shall be amortized over a period
equal to the remainder of the initial Lease Term and all remaining extension
periods pursuant to Section 2.2 (whether or not exercised) with interest on the
unamortized balance at the then prevailing market rate Landlord would pay for
borrowed funds to permanently finance such restoration from an institutional
lender, and Tenant shall pay as additional monthly rent such amortization during
the remainder of the initial term of this Lease and any extension of the Lease
Term resulting from the exercise of any option to extend pursuant to Section
2.2. If Tenant becomes obligated to pay such amortization and does not exercise
all of its options to extend the Lease Term pursuant to Section 2.2, then upon
the expiration of the Lease Term, Tenant shall pay a lump sum payment to
Landlord equal to the unamortized principal balance of the amount that is being
so amortized. Tenant shall be responsible for paying any "deductible" amount
that is excluded from any other type of insurance coverage.
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B. In the event the Premises are damaged by any peril, whether or not covered by
the insurance carried pursuant to Section 11.2, during the last year of the
Lease Term (as it may be extended) to such an extent that the estimated cost to
restore exceeds Five Hundred Thousand Dollars ($500,000), then Landlord shall
have the option to terminate this Lease by delivery to Tenant of a written
notice of election to terminate within thirty (30) days after the date the
damage occurs. Notwithstanding the foregoing, Landlord may not so terminate this
Lease pursuant to this Section 12B if (i) Tenant, at the time of such damage,
has an unexercised option to further extend the Lease Term and Tenant exercises
such option to so further extend the Lease Term within fifteen (15) days
following Landlord's exercise of its option to terminate and (ii) Tenant agrees
in writing as provided in Section 12G that in the event Landlord does not for
any reason receive sufficient funds from insurance proceeds or Tenant to restore
the Premises that the amount of such insufficiency shall be amortized and Tenant
shall pay as additional rent such amortization in the manner provided in Section
12G.
C. If the Premises are damaged by any peril and Landlord does not elect to
terminate this Lease or is not entitled to terminate this Lease pursuant to this
Section 12, then as soon as reasonably practicable, Landlord shall furnish
Tenant with the written opinion of Landlord's architect or construction
consultant as to when the restoration work required of Landlord may be completed
and the estimated cost of such restoration work. Tenant shall have the following
options to terminate this Lease, which may be exercised only by delivery to
Landlord of a written notice of election to terminate within fifteen (15) days
after Tenant receives from Landlord the estimate of the time needed to complete
such restoration:
(i) Tenant may terminate this Lease if the Premises are damaged by a peril
(whether or not covered by the insurance required to be carried pursuant
to Section 11.2) during the last year of the Lease Term and such damage
cannot be substantially restored within ninety (90) days following the
date of such damage.
(ii) Tenant may terminate this Lease in the event the Premises are damaged
by any peril (whether or not covered by the insurance required to be
carried pursuant to Section 11.2) and the restoration cannot be completed
by Landlord within one hundred eighty (180) days after the date of such
damage.
D. If this Lease is terminated by the proper exercise of an option to terminate
granted to Landlord or Tenant by this Lease, then (i) this Lease shall terminate
fifteen (15) days after the date the option to terminate is properly exercised,
(ii) the Base Monthly Rent and all other charges due hereunder shall be prorated
as of the date of termination, (iii) Landlord shall be entitled to all proceeds
payable under any insurance including loss of rental income, and (iv) neither
Landlord nor Tenant shall have any further rights or obligations under this
Lease except for those that have accrued prior to the date of termination,
subject to the survival of the indemnities contained in Section 10 and Section
18.
E. Landlord's obligation (should it elect or be obligated to repair or rebuild)
shall be limited to the following: (i) the structural parts of the Building;
(ii) all building service equipment and utility systems; and (iii) all interior
walls, light fixtures, floor and wall coverings, and other interior improvements
(excluding Tenant's trade fixtures, business equipment and other personal
property) to substantially the same extent of the level and quality of interior
improvement as existed as of the Commencement Date but in the configuration of
such interior improvements as existed on the date of such damage. If Tenant has
installed leasehold improvements which increase the level and quality of
interior improvement to the Premises over and above that which existed as of the
Commencement Date, Tenant shall be responsible for the restoration of such
higher level of interior improvement. Notwithstanding the foregoing: (i) if
Tenant has during the Lease Term installed permanent partitions resulting in a
higher percentage of the floor area of the Premises being devoted to offices and
conference rooms than existed as of the Commencement Date, Tenant shall only be
obligated to restore the Premises so that it has substantially the same
percentage of floor area devoted to offices and conference rooms as existed as
of the Commencement Date; and (ii) if the level of finishes
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existing prior to the damage was of a substantially higher level of quality than
are customarily installed in comparable space in Cupertino, Tenant shall only be
obligated to restore the Premises to that level of finish as is customary for
comparable space in Cupertino, but in no event to a quality of finish that is
lower than existed as of the Commencement Date. Tenant shall pay for and
complete the replacement or repair of its trade fixtures, business equipment and
personal property to the extent necessary for the continued operation of
Tenant's business in the Premises. Subject to the provisions of Section 12A, all
insurance shall be made available to Landlord to permit it to discharge its
obligations under this Lease regarding restoration; provided, however, that in
the event of restoration only Tenant shall receive proceeds payable under the
insurance carried pursuant to Section 11.2 that are fairly allocable to the
leasehold improvements installed at the expense of Tenant, to the extent any
proceeds remain after deducting that portion attributable to the improvements
Landlord is obligated to repair or rebuild in accordance with the foregoing
(including any improvements Tenant made which are integrated into building
systems such as HVAC or electrical).
F. In the event of any damage to the Premises which does not result in a
termination of this Lease, the Base Monthly Rent and other sums payable
hereunder shall be temporarily abated proportionately with the degree to which
Tenant's use of the Premises is impaired by such damage (based upon the ratio of
Building area rendered unusable to the total Building area), commencing from the
date of such damage or destruction and continuing during the period required by
Landlord to complete its restoration of the Premises. However, such abatement
shall occur only to the extent of the proceeds of rental abatement insurance
actually recovered by Landlord.
G. In the event the Premises are damaged by a peril and Landlord does not for
any reason receive sufficient funds from insurance proceeds or Tenant to restore
the Premises as required by this Section 12, then Landlord may terminate this
Lease; provided, however, that if insurance proceeds are insufficient to restore
the Premises because of a "deductible" amount that is excluded from insurance
coverage and such "deductible" amount is less than Four Hundred Eighty Thousand
Dollars ($480,000), this Section 12G shall not apply but instead the provisions
of Section 12A shall apply. Notwithstanding the foregoing, Landlord may not so
terminate this Lease pursuant to this Section 12G, and shall restore the
Premises, if Tenant, within fifteen (15) days after Landlord exercises such
option to terminate, agrees in writing as follows: (i) the amount by which the
funds received by Landlord (including insurance proceeds and any "deductible"
paid in cash by Tenant) are insufficient to pay the restoration costs shall be
amortized over the remainder of the initial Lease Term and all remaining
extension periods pursuant to Section 2.2 (whether or not exercised) with
interest on the unamortized balance at the then prevailing market rate Landlord
would pay for borrowed funds to permanently finance such restoration from an
institutional lender following completion; (ii) Tenant shall pay as additional
rent such monthly amortization for the remainder of the Lease Term (as it may be
extended); and (iii) if the Lease Term expires or otherwise terminates before
the end of the period over which such costs were amortized, upon such expiration
or termination Tenant shall pay a lump sum payment equal to the unamortized
principal balance of such amortized costs.
H. Any amortization required to be paid by Tenant pursuant to this Section 12
shall be paid by Tenant as additional rent in addition to the Base Monthly Rent.
13. CONDEMNATION.
13.1 Definition of Terms. For the purposes of this Lease, the term (i) "Taking"
means a taking of the Premises or damage to the Premises related to the exercise
of the power of eminent domain and includes a voluntary conveyance, in lieu of
court proceedings, to any agency, authority, public utility, person or corporate
entity empowered to condemn property; (ii) "Total Taking" means the taking of
the entire Premises or so much of the Premises as to prevent or substantially
impair the use thereof by Tenant for the uses herein specified; (iii) "Partial
Taking" means the taking of only a portion of the Premises which does not
constitute a Total Taking; (iv) "Date of Taking" means the date upon which the
title to the Premises, or a portion thereof, passes to and vests in the
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condemnor or the effective date of any order for possession if issued prior to
the date title vests in the condemnor; and (v) "Award" means the amount of any
award made, consideration paid, or damages ordered as a result of a Taking.
13.2 Rights. The parties agree that in the event of a Taking all rights between
them or in and to an Award shall be as set forth herein and Tenant shall have no
right to any Award except as set forth herein.
13.3 Total Taking. In the event of a Total Taking during the term hereof (i) the
rights of Tenant under the Lease and the leasehold estate of Tenant in and to
the Premises shall cease and be terminated as of the Date of Taking; (ii)
Landlord shall refund to Tenant any prepaid rent; (iii) Tenant shall pay to
Landlord any rent or charges due Landlord under the Lease, each prorated as of
the Date of Taking; (iv) Tenant shall receive from the Award those specific
portions of the Award attributable to trade fixtures and moving expenses of
Tenant and to the leasehold improvements which Tenant would be entitled to
remove from the Premises; and (v) the remainder of the Award shall be paid to
and be the property of Landlord.
13.4 Partial Taking. In the event of a Partial Taking during the term hereof (i)
the rights of Tenant under the Lease and the leasehold estate of Tenant in and
to the portion of the Premises taken shall cease and terminate as of the Date of
Taking; (ii) from and after the Date of Taking the Base Monthly Rent shall be an
amount equal to the product obtained by multiplying the Base Monthly Rent
immediately prior to the Taking by the quotient obtained by dividing the number
of square feet contained in the Premises after the Taking by the number of
square feet contained in the Premises prior to the Taking; (iii) Tenant shall
receive from the Award the specific portions of the Award attributable to trade
fixtures of Tenant; and (iv) the remainder of the Award shall be paid to and be
the property of Landlord.
14. ASSIGNMENT AND SUBLETTING.
The following provisions shall apply to any assignment, subletting or other
transfer by Tenant or any subtenant or assignee or other successor in interest
of the original Tenant (collectively referred to in this section as "Tenant"):
A. Tenant shall not do any of the following (collectively referred to herein as
a "Transfer"), whether voluntarily, involuntarily or by operation of Laws,
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld or delayed: (i) sublet all or any part of the Premises or
allow it to be sublet, occupied or used by any person or entity other than
Tenant; (ii) assign its interest in this Lease; (iii) transfer any right
appurtenant to this Lease or the Premises; (iv) mortgage or encumber the Lease
(or otherwise use the Lease as a security device) in any manner; or (v)
terminate or materially amend or modify an assignment, sublease or other
transfer that has been previously approved by Landlord. Any Transfer so approved
by Landlord shall not be effective until Tenant has delivered to Landlord an
executed counterpart of the document evidencing the Transfer which (i) is in
form reasonably approved by Landlord, (ii) contains the same terms and
conditions as stated in Tenant's notice given to Landlord pursuant to Section
14B below, and (iii) contains the agreement of the proposed transferee to assume
all obligations of Tenant related to the Transfer arising after the effective
date of such Transfer and to remain jointly and severally liable therefor with
Tenant. If Landlord fails to respond in writing to Tenant's request for
Landlord's consent to a Transfer within fifteen (15) days of receipt of such
request, Landlord will be deemed to have consented to such Transfer. Any
attempted Transfer without Landlord's consent shall constitute a default by
Tenant and shall be voidable at Landlord's option. Landlord's consent to any one
Transfer shall not constitute a waiver of the provisions of this Section 14 as
to any subsequent Transfer nor a consent to any subsequent Transfer. No
Transfer, even with the consent of Landlord, shall relieve Tenant of its
personal and primary obligation to pay the rent and to perform all of the other
obligations to be performed by Tenant hereunder. The acceptance of rent by
Landlord from any person shall not be deemed to be a waiver by Landlord of any
provision of this Lease nor to be a consent to any Transfer.
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B. Tenant shall give Landlord at least thirty (30) days prior written notice of
any desired Transfer and of the proposed terms of such Transfer including but
not limited to (i) the name and legal composition of the proposed transferee;
(ii) a current financial statement of the transferee, financial statements of
the transferee covering the preceding three years, and (if readily available) an
audited financial statement of the transferee for a period ending not more than
one year prior to the proposed effective date of the Transfer, all of which
statements are prepared in accordance with generally accepted accounting
principles; (iii) the nature of the proposed transferee's business to be carried
on in the Premises; (iv) all consideration to be given on account of the
Transfer; (v) a current financial statement of Tenant; and (vi) such other
information as may be reasonably requested by Landlord. Tenant's notice shall
not be deemed to have been served or given until such time as Tenant has
provided Landlord with all information reasonably requested by Landlord pursuant
to this Section 14B. Tenant shall immediately notify Landlord of any
modification to the proposed terms of such Transfer.
C. If Landlord consents to a Transfer proposed by Tenant, Tenant may enter into
such Transfer, and if Tenant does so, the following shall apply:
(i) Tenant shall not be released of its liability for the performance of
all of its obligations under the Lease.
(ii) If Tenant assigns its interest in this Lease, then Tenant shall pay
to Landlord fifty percent (50%) of all consideration received by Tenant
over and above (i) the assignee's agreement to assume the obligations of
Tenant under this Lease, and (ii) all Permitted Transfer Costs related to
such assignment. In the case of assignment, the amount of consideration
owed to Landlord shall be paid to Landlord on the same basis, whether
periodic or in lump sum, that such consideration is paid to Tenant by the
assignee.
(iii) If Tenant sublets any part of the Premises, then with respect to the
space so subleased, Tenant shall pay to Landlord fifty percent (50%) of
the positive difference, if any, between (i) all rent and other
consideration paid by the subtenant to Tenant, less (ii) all Permitted
Transfer Costs related to such sublease and all Base Monthly Rent and
additional rent fairly allocable to that part of the Premises affected by
such sublease. Such amount shall be paid to Landlord on the same basis,
whether periodic or in lump sum, that such rent and other consideration is
paid to Tenant by its Subtenant. In calculating Landlord's share of any
periodic payments, all such costs permitted to be deducted from the gross
consideration received by Tenant shall be first recovered by Tenant.
(iv) Tenant's obligations under this Section 14C shall survive any
assignment or sublease, and Tenant's failure to perform its obligations
hereunder shall be an event of default by Tenant. At the time Tenant makes
any payment to Landlord required by this Section 14C, Tenant shall deliver
an itemized statement of the method by which the amount to which Landlord
is entitled was calculated, certified by Tenant as true and correct.
Landlord shall have the right at reasonable intervals to inspect Tenant's
books and records relating to the payments due hereunder. Upon request
therefor, Tenant shall deliver to Landlord copies of all bills, invoices
or other documents upon which its calculations are based. Landlord may
condition its approval of any Transfer upon obtaining a certification from
both Tenant and the proposed transferee of all amounts that are to be paid
to Tenant in connection with such Transfer.
(v) As used in this Section 14C, the term "consideration" shall mean any
consideration of any kind received, or to be received, by Tenant as a
result of the Transfer, if such sums are related to Tenant's interest in
this Lease or in the Premises, including payments from or on behalf of the
transferee (in excess of the fair market value thereof) for Tenant's
assets, fixtures, leasehold improvements, inventory, accounts, goodwill,
equipment, furniture, and general intangibles.
(vi) As used in this Section 14C, the term "Permitted Transfer Costs"
shall mean: (i) all reasonable leasing commissions paid to third parties
not affiliated with Tenant in order to obtain the Transfer in question;
(ii) all reasonable attorneys' fees incurred by Tenant with respect to the
Transfer in
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question; and (iii) the cost of all improvements installed by Tenant for
such assignee or subtenant pursuant to such assignment or sublease.
D. Notwithstanding anything contained in this Section 14, so long as Tenant
otherwise complies with the provisions of this section, Tenant may enter into
any of the following transfers (a "Permitted Transfer") without Landlord's prior
written consent, and if Tenant does so, it shall have no obligation to make any
payments of consideration resulting from such Transfer to Landlord pursuant to
subparagraph 14C:
(i) Tenant may sublease all or part of the Premises or assign its interest
in this Lease to any Tenant Affiliate (as defined in subparagraph 14E).
(ii) Tenant may assign its interest in the Lease to a corporation which
results from a merger, consolidation or other reorganization in which
Tenant is not the surviving corporation.
(iii) Tenant may assign this Lease to a corporation which purchases or
otherwise acquires all or substantially all of the assets of Tenant.
E. The term "Tenant Affiliate" shall mean any of the following: (i) any
corporation which owns more than fifty percent (50%) of the capital stock of
Apple Computer, Inc. which is issued, outstanding and entitled to vote for the
election of directors (an "Apple Parent"); (ii) any corporation in which Apple
Computer, Inc. owns more than fifty percent (50%) of the capital stock that is
issued, outstanding and entitled to vote for the election of directors (an
"Apple Sub"); and (iii) any corporation or other entity in which either Apple
Computer, Inc., an Apple Parent, or an Apple Sub owns more than fifty percent
(50%) of the beneficial interest (or, in the case of a corporation, the capital
stock issued. outstanding, and entitled to vote for the election of directors).
F. Tenant shall reimburse Landlord for all reasonable attorney's fees and
processing costs incurred by Landlord in connection with any proposed Transfer
submitted to Landlord for its approval.
15. SUBORDINATION.
15.1 Subordination. This Lease at Landlord's option shall be subject and
subordinate to all ground or underlying leases which now exist affecting the
Premises and to the lien of any mortgages or deeds of trust in any amount or
amounts whatsoever which now exist against the Premises, or on or against
Landlord's interest or estate therein or on or against any ground or underlying
lease, without the necessity of the execution and delivery of any further
instruments on the part of Tenant to confirm such subordination; provided,
however, that Landlord shall use all reasonable efforts to obtain within sixty
(60) days from the date hereof a recognition and non-disturbance agreement
whereby the lessor under any such ground or underlying lease and holder of any
mortgage or deed of trust shall agree that, so long as Tenant is not in default
hereunder, this Lease shall remain in full force and effect notwithstanding the
termination of any such lease or foreclosure of such mortgage or deed of trust.
If any mortgagee, trustee or ground lessor shall elect to have this Lease prior
to the lien of its mortgage, deed of trust or ground lease, and shall give
written notice thereof to Tenant, this Lease shall be deemed prior to such
mortgage, deed of trust or ground lease, whether this Lease is dated prior or
subsequent to the date of said mortgage, deed of trust or ground lease or the
date of the recording thereof.
15.2 Subordination Agreements. Tenant covenants and agrees to promptly execute
and deliver upon demand without charge therefor, any instrument or instruments
of subordination necessary to subordinate this Lease to any future ground or
underlying leases and/or to the lien of any future mortgage or deed of trust in
any amount or amounts whatsoever which may hereafter be placed by Landlord on or
against the Premises, or on or against Landlord's interest or estate therein or
on or against any ground or underlying lease; provided, however, Tenant shall
not be required to execute and deliver any such subordination agreement unless
the lender/lessor consents in writing to the Lease and agrees in writing that in
the event of termination of the lease, foreclosure of the mortgage, or in the
event the lender comes into possession or acquires
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title to the Premises as a result of the foreclosure of its mortgage or the
notes secured thereby, or as a result of any other means, the lender/lessor
agrees that the Lease shall not be terminated and that lender/lessor shall
recognize Tenant and further agrees that Tenant shall not be disturbed in its
possession of the Premises for any reason other than one which would entitle the
Landlord to terminate the Lease under its terms or that would cause, without any
further action by Landlord, the termination of the Lease or would entitle
Landlord to dispossess the Tenant from the Premises.
15.3 Quiet Enjoyment. Landlord covenants and agrees with Tenant that upon Tenant
paying rent and other monetary sums due under the Lease and performing its
covenants and conditions, Tenant shall and may peaceably and quietly have, hold
and enjoy the Premises for the Term, subject however to the terms of the Lease
and of any of the ground leases, mortgages or deeds of trust described above.
15.4 Attornment. In the event any proceedings are brought for default under any
ground or underlying lease or in the event of foreclosure or the exercise of the
power of sale under any mortgage or deed of trust made by Landlord covering the
Premises, Tenant shall attorn to the purchaser upon any such foreclosure or sale
and recognize such purchaser as the Landlord under this Lease; provided said
purchaser expressly agrees in writing to be bound by the terms of the Lease.
15.5 Modifications to Lease Required by Lender: In the event an institutional
lender reasonably requires that modifications be made to this Lease in order to
protect its security interest in the Lease and as a condition to making a loan
to Landlord secured by the Premises, Tenant agrees to execute and deliver any
reasonable modifications of this Lease so required by such lender (i) which do
not materially and adversely affect Tenant's rights or materially increase or
expand Tenant's obligations under this Lease, and (ii) which do not in any way
change the Lease Term, the options to extend the Lease Term, the Base Monthly
Rent, Tenant's right to assign and sublease the Premises, or Section 18
regarding Hazardous Materials.
16. DEFAULT: REMEDIES.
16.1 Default. The occurrence of any of the following shall constitute a material
default and breach of this Lease by Tenant:
A. Any failure by Tenant to pay the rent or any other monetary sums required to
be paid hereunder, where such failure continues for seven (7) days after written
notice thereof by Landlord to Tenant;
B. The abandonment of the Premises by Tenant;
C. A failure by Tenant to observe and perform any other provisions of this Lease
to be observed or performed by Tenant, where such failure continues for twenty
(20) days after written notice thereof by Landlord to Tenant; provided, however,
that if the nature of such default is such that the same cannot reasonably be
cured within such twenty (20) day period, Tenant shall not be deemed to be in
default if Tenant shall within such period commence such cure and thereafter
diligently prosecute the same to completion;
D. The making by Tenant of any general assignment for the benefit
of creditors;
E. A court makes or enters any decree or order with respect to Tenant or Tenant
submits to or seeks a decree or order (or petition or pleading is filed in
connection therewith) which (i) grants or constitutes (or seeks) an order for
relief, appointment of a trustee or confirmation of a reorganization plan under
the Bankruptcy Laws of the United States; (ii) approves as properly filed (or
seeks such approval of) a petition seeking liquidation or reorganization under
said Bankruptcy Laws or any other debtor's relief law or statute of the United
States or any state thereof; (iii) otherwise directs (or seeks) the winding up
or liquidation of Tenant; provided, however, that if any such petition, decree
or order is not voluntarily filed or made by Tenant, that
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Tenant shall not be in default until such petition, decree or order remains
undischarged for a period of sixty (60) days. 16.2 Remedies. In the event of any
such material default or breach by Tenant, Landlord may at any time thereafter,
with or without notice and demand and without limiting Landlord in the exercise
of any right or remedy at law or in equity which Landlord may have by reason of
such default or breach:
A. Maintain this Lease in full force and effect and recover the rent and other
monetary charges as they become due, without terminating Tenant's right to
possession, irrespective of whether Tenant shall have abandoned the Premises. In
the event Landlord elects to not terminate the Lease, Landlord shall have the
right to attempt to re-let the Premises at such rent and upon such conditions
and for such a term, and to do all acts necessary to maintain or preserve the
Premises as Landlord deems reasonable and necessary without being deemed to have
elected to terminate the Lease including removal of all persons and property
from the Premises; such property may be removed and restored in a public
warehouse or elsewhere at the cost of and for the account of Tenant. In the
event any such re-letting occurs, this Lease shall terminate automatically upon
the new Tenant taking possession of the Premises, and Landlord shall be entitled
to recover damages for Tenant's breach pursuant to Section 16.2B.
B. Terminate Tenant's right to possession by any lawful means, in which case
this Lease shall terminate and Tenant shall immediately surrender possession of
the Premises to Landlord. In the event the Lease is so terminated because of
Tenant's default, Landlord shall be entitled to recover from Tenant all damages
incurred by Landlord by reason of Tenant's default including without limitation
thereto, the following: (i) the worth at the time of award of any unpaid rent
which had been earned at the time of such termination; plus (ii) the worth at
the time of award of the amount by which the unpaid rent which would have been
earned after termination until the time of award, exceeds the amount of such
rental loss that Tenant proves could have been reasonably avoided; plus (iii)
the worth at the time of award of the amount by which the unpaid rent for the
balance of the term after the time of award exceeds the amount of such rental
loss that Tenant proves could be reasonably avoided; plus (iv) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant's failure to perform its obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom; plus (v) 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 applicable state law. As used
in clauses (i) and (ii) above, the "worth at the time of award" is computed by
allowing interest at the rate of ten percent (10%) per annum from the date of
default. As used in clause (iii), the "worth at time of award" is computed by
discounting such amount at the discount rate of the U.S. Federal Reserve Bank at
the time of award plus one percent (1%). The term "rent", as used in this
Section 16, shall be deemed to be and to mean the rent to be paid pursuant to
Section 3 and all other monetary sums required to be paid by Tenant pursuant to
the terms of this Lease.
16.3 Default by Landlord. Landlord shall not be in default unless Landlord fails
to perform obligations required of Landlord within a reasonable time, but in no
event later than thirty (30) days after written notice by Tenant to Landlord and
to the holder of any first mortgage or deed of trust covering the Premises whose
name and address shall have theretofore been furnished to Tenant in writing,
specifying wherein Landlord has failed to perform such obligation; provided
however, that if the nature of Landlord's obligation is such that more than
thirty (30) days are required for performance, then Landlord shall not be in
default if Landlord commences performance within such thirty-day period and
thereafter diligently prosecutes the same to completion.
16.4 Tenant's Remedies. In addition to all other rights and remedies of Tenant
under the terms of this Lease or applicable Laws and subject to the provisions
of Section 16.3, Tenant shall have the right to cure any default of Landlord
under the Lease, and to demand reimbursement from Landlord of the cost of such
cure, with interest thereon at the rate of ten percent (10%) per annum, from the
date of the expenditure until repaid.
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17. BROKERAGE COMMISSIONS. Landlord and Tenant represent that they have not had
any dealings with any real estate brokers or salesmen or incurred any
obligations for the payment of real estate brokerage commissions or finder's
fees which would be earned or due and payable by reason of the execution of this
Tenant.
18. HAZARDOUS MATERIALS. Landlord and Tenant agree as follows
with respect to the existence or use of "Hazardous Material" (as
defined below) on the Premises:
A. As used herein, the following terms shall have the following meaning:
(1) The term "Hazardous Materials" shall mean (i) polychlorinated
biphenyls; (ii) radioactive materials; and (iii) any chemical, material or
substance now or hereafter defined as or included in the definitions of
"hazardous substances", "hazardous waste", "hazardous material",
"extremely hazardous waste", "restricted hazardous waste" or "toxic
substances" or words of similar import under any applicable laws
including, without limitation, any material or substance which is (i)
defined as a "hazardous waste", "extremely hazardous waste", or
"restricted hazardous waste" under Sections 25115, 25117 or 15122.7, or
listed pursuant to Section 25140 of the California Health and Safety Code?
Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as
"hazardous substance" under Section 25316 of the California Health and
Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous
Substances Account Act), (iii) defined as a "hazardous material",
"hazardous substance", or "hazardous waste" under Section 25501 of the
California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous
Materials Release, Response, Plans and Inventory), (iv) defined as a
"hazardous substance" under Section 25281 of the California Health and
Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous
Substances), (v) petroleum, (vi) asbestos, (vii) listed under Article 9 or
defined as "hazardous" or "extremely hazardous pursuant to Article II of
Title 22 of the California Administrative Code, Division 4, Chapter 20,
(viii) designated as a "hazardous substance" pursuant to Section 311 of
the Federal Water Pollution Control Act, 33 U.S.C. 1251 et seq. or listed
pursuant to Section 307 of the Federal Water Pollution Control Act (33
U.S.C. 1317), (ix) defined as a "hazardous waste" pursuant to Section 1004
of the Federal Resource Conservation and Recovery Act, 42 U.S.C. 6901 et
seq., (x) defined as a "hazardous substance" pursuant to Section 101 of
the Comprehensive Environmental Response, Compensations, and Liability
Act, 42 U.S.C. 9601 et seq., or (xi) regulated under the Toxic Substances
Control Act, 15 U.S.C. 2601 et seq.
(2) The term "Hazardous Materials Laws" shall mean any local, state and
federal laws, rules, regulations, or ordinances relating to the use,
generation, manufacture, installation, release, discharge, storage or
disposal of hazardous materials.
(3) The term "Landlord's Agents" as used in this Section 18 shall mean
Landlord's agents, representatives, employees, contractors,
subcontractors, directors, officers, partners and invitees.
(4) The term "Tenant's Agents" as used in this Section 18 shall mean
Tenant's agents, representatives, employees, contractors, subcontractors,
directors, officers, partners and invitees.
B. Tenant's Right to Investigate: Tenant shall be entitled to cause such
inspections, soils and groundwater tests, and other evaluations to be made of
the Premises as Tenant deems necessary regarding (i) the presence and use of
Hazardous Materials in or about the Premises, and (ii) the potential for
exposure of Tenant's employees and other persons to any Hazardous Materials used
and stored by previous occupants in or about the Premises. To facilitate
assigning responsibility for the presence of any Hazardous Materials on the
Premises, Tenant shall use its best efforts to take all samples of soil and
groundwater necessary in the course of its inspection and evaluation before the
Commencement Date, and shall thereafter cause the evaluation of such samples to
be conducted as promptly as reasonably possible. Tenant shall provide Landlord
with copies of all inspections, tests and evaluations. Tenant shall indemnify,
defend and hold
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Landlord harmless from any cost, claim or expense arising from such entry by
Tenant or from the performance of any such investigation by such Tenant. C.
Landlord's Representations: Landlord hereby represents and warrants to the best
of Landlord's knowledge that the Premises are, as of the date of this Lease, in
compliance with all Hazardous Materials Laws. Notwithstanding the foregoing,
Landlord makes no representation or warranty concerning the compliance with
Hazardous Materials Laws of Apple Computer, Inc., Four Phase Systems, Inc.,
Motorola Computer Systems, Inc., or Motorola Cupertino Operations, Inc. during
the period each such entity was in possession of the Premises. Nothing contained
in this Section 18 is intended to modify any obligation Apple Computer, Inc.,
Four Phase Systems, Inc., Motorola Computer Systems, Inc., or Motorola Cupertino
Operations, Inc. may have with respect to Hazardous Materials under either the
lease dated March 27, 1980 or that sublease of the Premises, entitled
"Commercial Office Sublease", dated May 1984, executed by Four-Phase Systems,
Inc., a Delaware corporation as sublessor and Apple Computer, Inc. as sublessee.
D. Tenant's Obligation to Indemnify: Tenant, at its sole cost and expense, shall
indemnify, defend, protect and hold Landlord and Landlord's Agents from and
against any and all costs or expenses, including those described under
subparagraphs (a), (b) and (c) herein below set forth, arising from or caused in
whole or in part, directly or indirectly, by:
(1) Tenant's or Tenant's Agents' use, analysis, storage, transportation,
disposal, release, threatened release, discharge or generation of
Hazardous Materials to, in, on, under, about or from the Premises; or
(2) Tenant's or Tenant's Agents' failure to comply with Hazardous
Materials Laws; or
(3) Any release of Hazardous Materials on or onto the Premises caused by
any party other than Landlord or Landlord's Agents occurring during the
Lease Term but specifically excluding (i) below-surface migration of
Hazardous Material in the groundwater underlying the Premises from sources
outside the Premises, and (ii) contamination by Hazardous Materials that
were present on or under the Premises prior to the time that Tenant first
entered into possession of the Premises.
The cost and expenses indemnified against include the following:
(a) Any and all claims, actions, suits, proceedings, losses, damages,
liabilities, deficiencies, forfeitures, penalties, fines, punitive damages,
costs or expenses;
(b) Any claim, action, suit or proceeding for personal injury (including
sickness, disease, or death), tangible or intangible property damage,
compensation for lost wages, business income, profits or other economic loss,
damage to the natural resources of the environment, nuisance, pollution,
contamination, leaks, spills, releases or other adverse effects on the
environment;
(c) The cost of any repair, clean-up, treatment, or detoxification of the
Premises necessary to bring the Premises into compliance with all Hazardous
Materials Laws, including the preparation and implementation of any closure,
disposal, remedial action, or other actions with regard to the Premises, and
expenses (including, without limitation, reasonable attorneys' fees and
consultants' fees, investigation and laboratory fees, court costs and litigation
expenses).
E. Tenant's Obligation to Remediate Contamination: Tenant shall, at its sole
cost and expense, promptly take any and all action necessary to remediate
contamination of the Premises by Hazardous Materials to the extent required by
any Hazardous Materials Law or any governmental agency if such contamination
results from or is caused by any of the actions, causes, or events described in
Section 18D(1), (2), or (3).
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F. Obligation to Notify: Landlord and Tenant shall each give written notice to
the other as soon as reasonably practicable of (i) any communication received
from any governmental authority concerning Hazardous Material which relates to
the Premises and (ii) any contamination of the Premises by Hazardous Materials
which constitutes a violation of any Hazardous Material Law.
G. Survival: The obligations of Landlord and Tenant under this
Section 18 shall survive the expiration or earlier termination of
this Lease.
H. Interpretation: The rights and obligations of Landlord and Tenant with
respect to issues relating to Hazardous Materials are exclusively established by
this Section 18; provided, however, that nothing in this Section 18H is intended
to limit Landlord's remedies in the event of a default under this Section 18.
Any default under this Section 18 shall constitute a default under the Lease
(subject to any requirements for notice and an opportunity to cure as set forth
in Section 16.1). In the event of any inconsistency between any other part of
this Lease and this Section 18, the terms of this Section 18 shall control.
I. Certification and Closure: On or before the expiration or earlier termination
of the term of the Lease, Tenant shall deliver to Landlord a certification
executed by Tenant stating that, to the best of Tenant's knowledge, there exists
no violation of Hazardous Materials Laws resulting from the use, storage,
release or disposal of Hazardous Materials on or about the Premises by Tenant,
its agents, employees, invitees or contractors. If pursuant to local ordinance,
state or federal law, Tenant is required, at the expiration of the Lease Term,
to submit a closure plan for the Premises to a local, state or federal agency,
then Tenant shall furnish to Landlord a copy of such plan.
19. MISCELLANEOUS.
19.1 Estoppel Certificate.
A. Tenant shall at any time upon not less than fifteen (15) business days' prior
written notice from Landlord execute, acknowledge and deliver to Landlord a
statement in writing (i) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect) and the
date to which the rent and other charges are paid in advance, if any, (ii)
acknowledging that there are not, to Tenant's knowledge, any uncured defaults on
the part of Landlord hereunder, or specifying such defaults if any are claimed,
and (iii) certifying, to the best of Tenant's knowledge, such other information
and facts concerning this Lease as may be reasonably requested by a lender
making a loan to Landlord to be secured by a deed of trust or mortgage covering
the Premises or a purchaser of the Premises from Landlord. Any such statement
may be conclusively relied upon by any prospective purchaser or encumbrances of
the Premises.
B. Tenant's failure to deliver such statement within such time shall be
conclusive upon Tenant (i) that this Lease is in full force and effect without
modification except as may be represented by Landlord, (ii) that there are no
uncured defaults in Landlord's performance, and (iii) that not more than one
month's rent has been paid in advance.
19.2 Transfer of Landlord's Interest. In the event of a sale or conveyance by
Landlord of Landlord's interest in the Premises other than a transfer for
security purposes only, Landlord shall be relieved from and after the date
specified in such notice of transfer of all obligations and liabilities accruing
thereafter on the part of the Landlord, provided that any funds in the hands of
Landlord at the time of transfer in which Tenant has an interest, shall be
delivered to the successor of Landlord. This Lease shall not be affected by any
such sale and Tenant agrees to attorn to the purchaser or assignee provided all
of Landlord's obligations hereunder accruing after the date of transfer are
assumed in writing by the transferee.
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19.3 Captions; Attachments: Defined Terms.
A. The captions of the paragraphs of this Lease are for
convenience only and shall not be deemed to be relevant in
resolving any question of interpretation or construction of any
section of this Lease.
B. Exhibits attached here to, and addenda and schedules initialed by the
parties, are deemed by attachment to constitute part of this Lease and are
incorporated herein.
C. The words "Landlord" and "Tenant" as used herein shall include the plural as
well as the singular. Words used in neuter gender include the masculine and
feminine and words in the masculine and feminine gender include the neuter If
there be more than one Landlord or Tenant, the obligations hereunder imposed
upon Landlord or Tenant shall be joint and several. If the Tenants are husband
and wife, the obligations shall extend individually to their sole and separate
property as well as to their community property.
19.4 Entire Agreement. This instrument along with any exhibits and attachments
hereto constitutes the entire agreement between Landlord and Tenant relative to
the Premises and this Agreement and the exhibits and attachments may be altered,
amended or revoked only by an instrument in writing signed by both Landlord and
Tenant. Landlord and Tenant agree hereby that all prior or contemporaneous oral
agreements between and among themselves and their agents or representatives
relative to the leasing of the Premises are merged in or revoked by this
Agreement.
19.5 Severability. If any term or provision of this Lease shall, to any extent,
be determined by a court of competent jurisdiction to be invalid or
unenforceable, the remainder of this Lease shall not be affected thereby, and
each term and provision of the Lease shall be valid and enforceable to the
fullest extent permitted by law.
19.6 Costs of Suit.
A. If Tenant or Landlord shall bring any action for any relief against the
other, declaratory or otherwise, arising out of this Lease, including any suit
by Landlord for the recovery of rent or possession of the Premises, the losing
party shall pay the successful party a reasonable sum for attorneys' fees which
shall be deemed to have accrued on the commencement of such action and shall be
paid whether or not such action is prosecuted to judgment.
B. In the event Landlord is made a party to any litigation arising from the use
of the Premises by Tenant, its agents, employees, contractors or invitees or
arising from any breach or default on the part of Tenant in the performance of
any covenant or agreement on the part of Tenant to be performed under this
Lease, Tenant covenants to save and hold Landlord harmless from any judgment in
such litigation rendered against Landlord or the Premises or any part thereof,
and all costs and expenses incurred by Landlord in connection with such
litigation, including reasonable attorneys' fees paid by Landlord to its
attorneys; provided, however, that such hold harmless agreement by Tenant shall
not apply to the following: (i) liability incurred by Landlord resulting from
its gross negligence or willful misconduct; (ii) any litigation, judgment, claim
or liability related to Hazardous Materials, it being the agreement of the
parties that the subject of Hazardous Materials is governed exclusively by the
provisions of Section 18 of this Lease.
19.7 Time: Joint and Several Liability. Time is of the essence of this Lease and
each and every provision hereof. All the terms, covenants and conditions
contained in this Lease to be performed by either party shall consist of more
than one person or organization, shall be deemed to be joint and several, and
all rights and remedies of the parties shall be cumulative and non-exclusive of
any other remedy at law or in equity.
19.8 Binding Effect: Choice of Law. Subject to any provision
hereof restricting assignment or subletting by Tenant and subject
to Section 19.2, all of the provisions hereof shall bind and
inure to the benefit of the parties
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hereto and their respective heirs, legal representatives, successors and
assigns. This Lease shall be governed by the laws of the State of California.
19.9 Waiver. No covenant, term or condition or the breach thereof, shall be
deemed waived, except by written consent of the party against whom the waiver is
claimed, and any waiver or the breach of any covenant, term or condition shall
not be deemed to be a waiver of any preceding or succeeding breach of the same
or any other covenant, term or condition.
19.10 Surrender of Premises. The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof shall not work a merger, and shall, at
the option of the Landlord, terminate all or any existing subleases or
subtenancies, or may, at the option of Landlord operate as an assignment to it
or any or all such subleases or subtenancies.
19.11 Holding Over. This Lease shall terminate without further notice at the
expiration of the Lease Term. Any holding over by Tenant after expiration shall
not constitute a renewal or extension or give Tenant any rights in or to the
Premises except as expressly provided in this Lease; provided, however, that in
the event Tenant notifies Landlord in writing at least ninety (90) days before
the expiration of the Lease Term Tenant shall be entitled to a one-time thirty
(30) day extension of the expiration of the Lease Term. Any holding over after
the expiration with the consent of Landlord shall be construed to be a tenancy
from month to month, at one hundred twenty-five percent (125%) of the monthly
rent for the last month of the Lease Term, and shall otherwise be on the terms
and conditions herein specified insofar as applicable.
19.12 Reasonable Consent. Except as limited elsewhere in this Lease, wherever in
this Lease Landlord or Tenant is required to give consent or approval to any
action on the part of the other, such consent or approval shall not be
unreasonably withheld or delayed.
19.13 Recording. Either party shall, upon request of the other, execute,
acknowledge and deliver to the other a "short form" memorandum of this Lease for
recording purposes. Thereafter, either party may record such memorandum in the
Official Records of Santa Clara County, California.
19.14 Notices. All notices or demands of any kind required or desired to be
given by Landlord or Tenant hereunder shall be in writing and shall be given
only by registered, certified, or "Express" mail, or by Federal Express or other
similar courier service, return receipt requested, postage prepaid, to the
recipient at its addresses as follows, which shall be deemed given or served
when actually received:
Landlord: c/o Berg & Berg Developers
10050 Bandley Drive
Cupertino, CA 95014
Tenant: Apple Computer, Inc.
10500 North De Anza Boulevard
Cupertino, CA 95014
With copies to: Apple Computer, Inc.
20525 Mariani Avenue
Cupertino, CA 95014
Attn: Real Estate Department
Apple Computer, Inc.
20525 Mariani Avenue
Cupertino, CA 95014
Attn: General Counsel
Either party may change its address for notice by giving written notice to the
other party in accordance with the provisions of this paragraph.
19.15 Authority. Landlord and Tenant hereby represent and warrant to the other
party that each individual executing this Lease on behalf of the warranting
party is duly authorized to execute and deliver this Lease on behalf
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of the warranting party and that this Lease is binding upon said party in
accordance with its terms.
19.16 Appointment of Landlord's Agent. The Landlord originally named herein
hereby appoints Berg & Berg Developers, a California partnership, as Landlord's
attorney-in-fact for the purpose of, and with full power to, on behalf of
Landlord, grant any consents or approvals contemplated by this Lease or request
by Tenant and enter into any modification or amendment of this Lease, and any
act by such agent on behalf of Landlord shall be binding upon Landlord so long
as such act is in writing executed by such agent. The authority so granted by
Landlord may be revoked by Landlord by an instrument in writing, which
revocation shall only be effective from and after the date a copy of such
written revocation is delivered to Tenant.
19.17 Condition to Effectiveness of Lease. The effectiveness of this Lease is
conditioned upon the termination of the following leases effective as of April
1, 1989: (i) that lease for the Premises dated March 27, 1980 by and between De
Anza Boulevard Investments, a limited partnership, as lessor, and Four-Phase
Systems, a Delaware corporation, as lessee; and (ii) that sublease by and
between Four-Phase Systems, Inc., as sublessor, and Apple Computer, Inc., as
sublessee. In the event such leases are not so terminated effective as of April
1, 1989, then this Lease shall terminate and be of no further force or effect.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease the date and
year first above written.
TENANT:
APPLE COMPUTER, INC.,
a California corporation
By: /s/ Albert A. Eisenstat
Albert A. Eisenstat
Senior Vice President
Dated: 3/30/89
LANDLORD:
DE ANZA BOULEVARD INVESTMENTS,
a limited partnership
By: /s/ Carl E. Berg
Carl E. Berg, Trustee of the Carl E. Berg Revocable Trust
BERG & BERG DEVELOPERS,
a California partnership
By: /s/ Carl E. Berg
Carl E. Berg, General Partner
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EXHIBIT A
[CLTA Preliminary Title Report]
EXTENSION OF LEASE
This Extension of Lease is made on April , 1991, between Carl E. Berg & Mary Ann
Berg Trustees of the Berg Living Trust, UTA dated May 1, 1981, as to an
undivided 81.01% interest, Clyde Berg & Nancy Berg, Trustees of the Clyde Berg
Living Trust UTA dated December 17, 1981, as to an undivided 11.83% and Clyde
berg, Trustee of Carl Berg Child's Trust UTA dated June 2, 1978, as to an
undivided 7.16% interest, ("Lessor"), whose address is 10050 Bandley Drive,
Cupertino, California 95014, and Apple Computer, Inc., ("Lessee"), whose address
is 20525 Mariani, Cupertino, California 95014, Attn: Real Estate Department, who
agree as follows:
1. Recitals This Extension of Lease is made with reference to the following
facts and objectives:
a) The Premises are commonly known as 10300 Bubb Road Cupertino.
b) The parties desire to extend the term of the Lease for an additional
period of two (2) years and to amend the Lease.
2. Extension of Term. The term of Lease is extended for an Additional period of
two (2) years from and after November 30, 1991 through and including November
30, 1993. (referenced as paragraph 32a and 32b)
3. Minimum Monthly Rent. Commencing December 1, 1991, the monthly rent for the
extended term shall be increased $21,762.00 per month, payable pursuant to the
Lease. The monthly rent will increase on December 1, 1992 to $22,230.00
4. Effectiveness of Lease. Except as set forth in this Extension and Amendment
of Lease, all the provisions of the Lease shall remain unchanged and in full
force and effect.
Lessor:
Carl E. Berg & Mary Ann Berg Trustees of the Berg Living Trust, UTA dated May 1,
1981, as to an undivided 81.01% interest, Clyde Berg & Nancy Berg, Trustees of
the Clyde Berg Living Trust UTA dated Dec. 17, 1981, as to an undivided 11.83%,
and Clyde Berg, Trustee of Carl Berg Child's Trust UTA dated June 2, 1989, as to
an undivided 7.16% interest
By: /s/ Carl E. Berg
Its: G. P.
Date: 5/15/91
Lessee:
Apple Computer, Inc.
By: /s/ Joseph A Graziano
Joseph A Graziano
Its: Executive Vice President & Chief Financial Officer
Date: May, 30 1491
April 17, 1992
Via Federal Express
NOTICE OF EXERCISE OF OPTION TO EXTEND TERM OF LEASE
Carl E. Berg and Mary Ann Berg
Clyde Berg and Nancy Berg
10050 Bandley Drive
Cupertino, California 95014
Re: Lease for the Premises commonly known as 20605, 20665, and
20705 Valley Green Drive, Cupertino, California
Ladies and Gentlemen:
McDonnell Douglas Corporation, a Maryland corporation, as successor to Tymshare,
Inc. and as the current lessee under that certain Lease dated January 6, 1978
executed by and between John A. Sobrato and Susan R. Sobrato as to an undivided
45% interest, and Carl E. Berg and Mary Ann Berg as to an undivided 45% interest
and Ann S. Russo as to a 10% interest (collectively "Lessor") and Tymshare, Inc.
a California corporation ("Lessee"), as amended, for the property described in
the Lease, as amended, commonly known as 20605, 20665 and 20705 Valley Green
Drive, Cupertino, California, hereby gives notice pursuant to Paragraph 2(b) of
the Lease that it exercises its option to extend the term of the Lease for one
additional five (5) year term commencing automatically as of the expiration date
of the initial lease term. Pursuant to this notice of exercise of option, the
extended term of the Lease will expire on December 31, 1997.
MCDONNELL DOUGLAS CORPORATION, a Maryland Corporation
/s/ Gerald J. Olsen.
By: Gerald J. Olsen
Director of Corporate Properties/Facilities
cc:
(via Federal Express) (via Federal Express)
Apple Computer, Inc. Apple Computer Inc.
10201 DeAnza Boulevard 20525 Mariani Avenue
Cupertino, CA 95014 . Cupertino, CA 95014
Attn: General Counsel Attn: R.E. Department, MS 16-0
LEASE EXTENSION #2
This Extension of Lease is made on December , 1992, between Berg Family
Partnership, a California General Partnership, ("Lessor"), whose address is
10050 Bandley Drive, Cupertino, California 95014, and Apple Computer, Inc.,
("Lessee"), whose address is 20525 Mariani, Cupertino, California 95014, Attn:
Real Estate Department, who agree as follows:
1. Recitals This Extension of Lease is made with reference to the following
facts and objectives:
a) The Premises are commonly known as 10300 Bubb Road, Cupertino.
b) The Parties desire to extend the term of the Lease for an additional
period of three (3) years and to amend the Lease.
2. Extension of Term The term of Lease is extended for an additional period of
three (3) years from and after November 30, 1993 through and including November
30, 1996.
3. Minimum Monthly Rent Commencing December 1, 1993, the monthly rent for the
extended term shall be increased to $23,400 per month, payable pursuant to the
provision of the Lease.
4. Lessor agrees to replace existing package HVAC units with 2-27 ton VAV
systems and to put roof in top condition. Lessee shall have no obligation for
any roof repair unless caused by their penetration of roof. If Lessee penetrates
the roof, Lessee agrees to use Dale's Waterproofing for repairs in order not to
void Lessor's roof warranty.
5. Effectiveness of Lease Except as set forth in this Extension and Amendment of
Lease, all the provisions of the Lease shall remain unchanged and in full force
and effect.
Lessor:
Berg Family Partnership
By: /s/ Carl E. Berg
Its: G. P.
Date: 12/21/92
Lessee:
Apple Computer, Inc.
By: Glenn N. Barber
Glenn N. BarberIts: Vice President, Real Estate, Construction and
Facilities
Date: 1/14/93
By: /s/ Joseph A. Graziano
Joseph A. Graziano
Its: Executive Vice President and Chief Financial Officer
Date: 1/14//93
RECORDING REQUESTED BY:
Richard T. Tarrant, Esq.
BARTKO, TARRANT & MILLER
900 Front Street, Suite 300
San Francisco, CA 94111
WHEN RECORDED, RETURN TO:
Richard T. Tarrant, Esq.
BARTKO, TARRANT & MILLER
900 Front Street, Suite 300
San Francisco, CA 94111
MEMORANDUM OF ASSIGNMENT OF LEASE AND SUBLEASE
This Memorandum of Assignment of Lease and Sublease (hereinafter "Memorandum")
is entered into by and between MCDONNELL DOUGLAS CORPORATION, a Maryland
corporation (hereinafter "Assignor"), and BERG & BERG ENTERPRISES, INC., a
California corporation (hereinafter "Assignee"), with respect to the assignment
and transfer by Assignor to Assignee of all its right, title and interest, as
lessee, in that certain lease, dated January 6, 1978, as amended by that certain
letter of clarification, dated February 17, 1978; Amendment dated January 30,
1979; Amendment #2, dated March 17,1979; and Amendment #3, dated July 1, 1987
(hereinafter the "Lease"), by and between JOHN A. SOBRATO and SUSAN R. SOBRATO,
as to an undivided forty-five percent (45%) interest, and CARL E. BERG and MARY
ANN BERG, as to an undivided forty-five percent (45%) interest, and ANN RUSSO,
as to a ten percent (10%) interest, predecessor in interest to CARL E. BERG and
MARY ANN BERG, Trustees of the Berg Living Trust UTA dated May 1, 1981; CLYDE
BERG and NANCY BERG, Trustees of the Clyde Berg Living Trust UTA dated December
17, 1981; CLYDE BERG, Trustee of the Carl Berg Child's Trust UTA dated, June 2,
1978 (hereinafter "Landlord"), as lessor thereunder, and TYMSHARE, INC.,
predecessor in interest of Assignor, as lessee thereunder; and all its right,
title and interest, as sublessor, in that certain sublease, dated November 13,
1987 (hereinafter the "Sublease"), by and between Assignor and Apple computer,
Inc., a California corporation, as sublessee (hereinafter "Sublessee"). The
subject of both the Lease and Sublease is that certain real property located in
the City of Cupertino ,County of Santa Clara, State of California, and commonly
known as 20605, 20665, and 20705 Valley Green Drive, as more particularly
described in Exhibit "A" attached hereto and incorporated herein. (hereinafter
the "Premises").
WHEREAS, Assignor and Assignee have entered into an Assignment of Lease and
Sublease, with an effective date of June 1, 1993 (the "Assignment") with regard
to the assignment and the transfer of Assignor's right, title and interest in
the Preemies both as Lessee and Sublessor to Assignee;
NOW, THEREFORE, Assignor and Assignee hereby state following for recording in
the public records of the County of Santa Clara, State of California:
1. Assignor hereby assigns and transfers to Assignee all its right, title and
interest, as both lessee and sublessor, in the Premises (hereinafter the
"Assignment"), including but not limited to all rights of first refusal, options
to renew the, Lease and option to purchase.
2. All parties to the Assignment agree that the Assignment shall not effect a
merger of the Lease and Sublease.
3. This Memorandum shall incorporate herein all the terms and provisions of the
Assignment of Lease and Sublease, as though fully set forth herein.
4. This Memorandum is made solely for recording purposes and shall not be
construed to alter, modify or supplement the Assignment of Lease and Sublease.
This Memorandum has been recorded only for the purpose of giving notice of the
existence of the Assignment of Lease and Sublease. If there is any inconsistency
between this Memorandum and the Assignment of Lease and Sublease, then the
Assignment of Lease and Sublease shall prevail.
IN WITNESS WHEREOF, this Memorandum is executed this 13th day of July, 1993.
ASSIGNOR:
MCDONNELL DOUGLAS CORPORATION a Maryland corporation,
By /s/ Gerald J. Olsen
Gerald J. Olsen
Its Director of Facilities
ASSIGNEE:
BERG & BERG ENTERPRISES, INC.
a California corporation
By /s/ Carl E. Berg..
CARL E. BERG, its President
Witnessed by /s/ Cheryl A. Chavez
FIRST AMENDMENT TO SUBLEASE
This First Amendment to Sublease (the "Amendment") is dated and effective as of
May 25, 1995 and is made by and between Berg & Berg Enterprises, Inc. ("Berg"),
a California corporation, and Apple Computer, Inc. ("Apple"), a California
corporation, with reference to the following:
Recitals
A. Pursuant to that certain sublease dated November 13, 1987 (the 'Sublease"),
McDonnell Douglas Corporation ("MDC"), as sublessor, leased to Apple, as
sublessee, that certain property consisting of two buildings and related parking
areas located at and commonly known as 20605 Valley Green Drive (the "Valley
Green 5 Building"), and 20665 and 20705 Valley Green Drive (the "Valley Green 6
Building"), Cupertino (collectively, the "Premises").
B. The Sublease was made under that certain lease affecting the Premises dated
January 6, 1978, by and between John A. Sobrato and Carl E. Berg, and members of
their respective families (collectively, "Sobrato/Berg"), as landlord, and
Tymshare, Inc. a California corporation ("Tymshare"), as tenant. Said lease was
amended and/or supplemented by the following instruments: (i) letter dated
February 17, 1978, (ii) Amendment dated January 30, 1979, (iii) Amendment #2
dated March 17, 1979, and (iv) Amendment #3 dated July 1, 1987. The original
lease and all of said amendments or supplements are referred to herein
collectively as the "Master Lease".
C. Prior to the date of this Amendment, Mary A. Berg and Carl E. Berg, Trustees,
Clyde Berg and Nancy Berg, Trustees, and Clyde Berg, Trustee (collectively, the
"Berg Family Partnership") succeeded to the interest of Sobrato/ Berg, as
landlord under the Master Lease.
D. Prior to the date of this Amendment, McDonnell Douglas Corporation, a
Maryland corporation ("MDC"), succeeded to the interest of Tymshare, as tenant,
under the Master Lease, and entered into the Sublease with Apple.
E. By Assignment of Lease and Sublease dated July 13, 1993, MDC assigned all its
right and interest as tenant under the Master Lease and as sublessor under the
Sublease to Berg. The Sublease continued in full force and effect, as between
Berg, as sublessor, and Apple, as sublessee.
F. Berg and Apple now wish to extend the term of the Sublease, and to modify and
amend certain provisions of the Sublease, all as more particularly as set forth
herein:
NOW, THEREFORE, THE PARTIES HERETO MUTUALLY AGREE AS FOLLOWS:
1. EXERCISE OF OPTION FOR EXTENSION OF SUBLEASE TERM.
1.1 The Sublease currently provides that the term thereof shall expire (unless
renewed or extended) on December 31,1997.
1.2 Pursuant to paragraph 4.2 ("Option to Extend Sublease Term") of the
Sublease, Apple has been granted two (2) consecutive five (5) year options to
extend the term of the Sublease with respect to the entire Premises.
1.3 By executing this Amendment, Apple hereby notifies Berg of Apple's exercise
of the first five (5) year renewal option (the "First Option") for the Valley
Green 6 Building. Berg and Apple expressly acknowledge and agree that,
notwithstanding the provisions of paragraph 4.2 of the Sublease, Apple shall
have the right to exercise the First Option with respect to the Valley Green 6
Building only, pursuant to this Amendment. Berg and Apple further expressly
acknowledge and agree that this notice shall be sufficient to exercise said
First Option with respect to the Valley Green 6 Building, notwithstanding any
requirement in the Sublease that such notice be given within a certain time
period, and Berg hereby accepts such exercise.
1.4 Pursuant to Apple's exercise of the First Option, as described above, the
termination date of the Sublease, with respect to the Valley Green 6 Building,
is hereby extended to and including 12:00 o'clock midnight on December 31, 2002.
1.5 Berg hereby agrees that Apple shall have the right to exercise the First
Option with respect to the Valley Green 5 Building at any time to and including
12:00 o'clock midnight on June 30, 1997. Apple shall exercise the First Option,
if at all, with respect to the Valley Green 5 Building by giving Berg written
notice of such exercise, in the manner provided by the Sublease or as otherwise
mutually agreed by Berg and Apple. If Apple so exercises the First Option with
respect to the Valley Green 5 Building, then the parties shall execute an
amendment to the Sublease reflecting such exercise, which amendment shall
reflect the inclusion of the Valley Green 5 Building in the Premises for the
First Extended Term (as defined in the Sublease), at a base monthly rental rate
of One Dollar and Ten Cents ($1.10) per rentable square foot of the Valley Green
5 Building
1.6 Berg represents, warrants and covenants to Apple as follows:
(a) In consideration of Apple's exercise of the First Option, as set forth
above, Berg shall exercise its option to extend the term of the Master Lease,
all as more particularly set forth in subparagraph 4.2(a) of the Sublease.
(b) Berg shall not cause, and shall use its best efforts to ensure that the Berg
Family Partnership, as landlord under the Master Lease, does not cause, any
Event of Default (as that term is defined in the Master Lease) to occur under
the Master Lease.
1.7 Notwithstanding the provisions of subsection 1.5, above, Apple shall have
all of its rights as set forth in paragraph 4.2 of the Sublease with respect to
any exercise of any options Berg may have, as tenant under the Master Lease, to
extend the term of the Master Lease.
2. FAILURE OF APPLE TO EXERCISE FIRST OPTION FOR VALLEY GREEN 5 BUILDING.
If Apple does not exercise the First Option with respect to the Valley Green 5
Building, as provided in paragraph 1.5, above, then the following provisions of
this Section 2 shall be applicable and effective.
2.1 Reduction of Premises.
(a) If Apple does not exercise the First Option with respect to the Valley Green
5 Building, as provided in paragraph 1.5, above, then the Valley Green 5
Building shall be deleted from the Sublease, and no longer considered part of
the Premises, effective as of 12:00 o'clock midnight on December 31, 1997 (the
"Premises Reduction Date"). From and after said Premises Reduction Date, the
term "Premises" shall only refer to the Valley Green 6 Building, containing
approximately 121,574 square feet of rentable space.
(b) Effective as of the Premises Reduction Date, the square footage of the
Premises, as described on the Summary of Sublease Provisions, shall be amended
from approximately 142,000 square feet to approximately 121,574 square feet.
(c) Apple shall be responsible for any termination obligations described in
paragraph 20 of the Sublease ("Surrender of Premises") for the Valley green 5
Building, as required by the Sublease.
2.2. Revised Percentage.
(a) For purposes of complying with the provisions of paragraph 6.1 of the
Sublease, Apple and Berg acknowledge and agree that Apple's applicable
percentage of any and all taxes, assessments and other charges payable by Apple
thereunder shall, as of the Premises Reduction Date, shall be amended from One
Hundred Percent (100%) to Eighty Five and Sixty-Two One Hundredths percent
(85.62%).
(b) In addition, Paragraph 7 of the Master Lease ("Parking Area) shall be
modified, as of the Premises Reduction Date, by reducing Apple's exclusive right
to use One Hundred Percent (100%) of the parking area to Eighty Five and Sixty
Two One Hundredths Percent (85.62%) of the total parking area. Said reduced
parking area shall be those parking spaces for the Valley Green 6 Building.
2.3 Insurance.
For purposes of complying with the provisions of paragraph 13 of the Sublease
("Insurance"), Apple and Berg acknowledge and agree that effective as of the
Premises Reduction Date Apple shall only be required to provide insurance for
the Premises, as reduced pursuant to this Amendment to wit: the Valley Green 6
Building.
3. BASE RENT DURING OPTION TERM.
3.1 Notwithstanding any term or provision of the Sublease to the contrary,
including without limitation the terms and conditions of paragraph 5.2 of the
Sublease, Berg expressly agrees that, unless and until Apple exercises the First
Option with respect to the Valley Green 5 Building, as provided in paragraph
1.5, above, Apple shall pay, as Base Monthly Rent for the Premises under the
Sublease for the First Extended Term (as that term is defined in the Sublease),
the amount of One Hundred Thirty-Three Thousand Seven Hundred Thirty-One Dollars
and Forty Cents ($133,731.40) per month.
3.2 If and only if Apple exercises the First Option with respect to the Valley
Green 5 Building, Apple shall pay, as Base Monthly Rent for the Premises under
the Sublease for the First Extended Term, the amount of One Hundred Fifty-Six
Thousand Two Hundred Dollars ($156,200.00) per month.
4. REPLACEMENT OF HVAC EQUIPMENT.
4.1 Berg and Apple agree that the existing roof-top heating and ventilating
units (the "VAV HVAC" units) on the Valley Green 6 Building need to be replaced.
4.2 It is hereby agreed that Berg shall provide Apple with an equipment
improvement fund, in an amount not to exceed Seven Hundred Fifty Thousand
Dollars ($750,000) (hereinafter referred to as the "Fund Amount"), which amount
shall be used to reimburse Apple for costs incurred in connection with the work
of installing four (4) new VAV HVAC units (hereinafter referred to as "Work").
(See Specification Book and Drawings consisting of 14 pages (0.00, M0.1-M0.2,
M1.1-M1.2, M1.4-M1.6, M6.1, M9.1, E1.1-1.2 and S1.1-S1.2) dated May 24, 1995 and
prepared by ENCO Energy Conservation Company, attached hereto as Exhibit "A" and
incorporated herein by this reference.)
4.3 The scope of the Work shall include: (i) structural and engineering design,
(ii) purchasing mechanical equipment consisting of four (4) VAV HVAC units (75
tons each for a total of 300 tons) (collectively, the "Equipment"), (iii)
structural roof work, (iv) labor and installation of the Equipment, and (v)
modifications to the existing duct work.
4.4 Apple shall hire all contractors for the prosecution of the Work, and shall
manage the Work. Apple shall pay for all Work, subject to Berg's obligation to
reimburse Apple for such costs, as set forth in Section 5 of this Amendment,
below. Upon completion of the Work, Apple shall submit to Berg proof that Apple
has paid for the Work (including true and correct copies of all paid invoices
for the Work), and Berg shall promptly reimburse Apple for the amount of all
such invoices, in an amount not exceeding the Fund Amount.
4.5 Both parties agree that portions of the Work have already commenced and the
estimated completion date is September 15,1995.
5. REPAYMENT.
5.1 Apple and Berg agree that Berg, as landlord, shall be entitled to recapture,
and shall recapture, a portion of the cost of the Work through periodic payments
from Apple to Berg, as set forth in this Section 5.
5.2 The total cost of the Work will be amortized over a ten (10) year period
(which is the deemed useful life of the improvements which constitute the Work),
with an annual interest rate of ten percent (10%).
5.3 Commencing on a date to be determined as set forth in Paragraph 5.5, below,
Apple will, during the remaining term of the Sublease (including any further or
additional option, extension or renewal periods), make monthly payments to Berg
in accordance with the attached amortization schedule, which schedule is based
on the Fund Amount. Based on the Fund Amount and the attached amortization
schedule, the additional monthly rent required to be paid by Apple to Berg is
Nine Thousand Nine Hundred Twelve Dollars ($9,912.00), hereinafter referred to
as the "Repayment Amount". This Repayment Amount will be included with the
monthly base rent otherwise due and payable under the Sublease.
5.4 If the actual total cost of the Work is less than the Fund Amount, then the
schedule will be modified to equal the amount of the actual cost of the Work. It
is mutually agreed by both parties that the methodology used in calculating any
revised monthly payments which may be due if the cost of the Work is less than
the Fund Amount will be the same as the attached amortization schedule. In such
event, Berg shall provide a revised amortization schedule based on the actual
cost of the Work and it shall specify the revised monthly payment to be paid by
Apple.
5.5 The start date for commencement of the amortization of the Work shall be the
first day of the month following reimbursement by Berg to Apple, as provided in
Paragraph 5.4, above. Apple and Berg shall mutually agree upon the amortization
commencement date. 5.6 If the Sublease (as it may be renewed or extended, in
Apple's discretion and pursuant to the terms of the Sublease) expires prior to
the expiration of the ten year amortization period, then Apple's obligation to
pay the monthly Repayment Amount shall cease as of the expiration date, and
Apple shall thereafter have no further liability to Berg for payment of any
portion of the amortized amount.
6. EFFECT OF AMENDMENT: RATIFICATION OF SUBLEASE.
Except as modified by this Amendment, the Sublease is hereby ratified, approved
and confirmed upon all of the original terms and conditions.
IN WITNESS WHEREOF, the parties have executed this Amendment on the dates set
forth below, to be effective as set forth above.
BERG & BERG ENTERPRISES, a California corporation
By: /s/ Carl E. Berg
Printed Name: Carl E. Berg
Title: Pres.
Date: 8/2/95
APPLE COMPUTER, INC., a California corporation
By: /s/ Joseph A. Graziano
Printed Name: Joseph A. Graziano
Title: Executive Vice President and Chief Financial Officer
Date: 7/31/95
CONSENT OF MASTER LESSOR
The undersigned, as landlord under the Master Lease, hereby consent to the
foregoing First Amendment to Sublease, on the terms and conditions set forth
therein.
CARL E. BERG and MARY ANN BERG, Trustees for Berg Living Trust
UTA dated
May 1, 1981, as to an undivided 81% interest
/s/ Carl E. Berg
CARL E. BERG
/s/ Mary Ann Berg by Carl E. Berg, her Attorney in Fact
MARY ANN BERG
CLYDE BERG and NANCY BERG, Trustees of the Clyde Berg Living Trust UTA dated
December 17, 1981, as to an undivided 11.83% interest
/s/ Clyde Berg by Carl E. Berg, his Attorney in Fact
CLYDE BERG
/s/ Nancy by Carl E. Berg, her Attorney in Fact
NANCY BERG
CLYDE BERG, Trustee of Carl Berg Child's Trust UTA dated June 1, 1978, as to an
undivided 7.16% interest
/s/ Clyde Berg
CLYDE BERG
Interest Vision
Sample Amortization Schedule - Apple
Loan or Annuity Variables:
Start Date: Jun 1, 1995 End Date: Jun 1, 2005
Start Payment: Jun 1, 1995 No. of Payments: 120
Start Interest: Jun 1, 1995 Interest Rate: 10.000%
Payment Freq.: Monthly Initial Principal: $750000.00
Compound Freq.: Monthly Payment Amount: $9912.33
Days in Mo./Yr.: Actual No. Balloon: $0.00
Payment Mode: In Arrears Amortization Method: Simple Int.
Payment Interest Interest
No. Date Amount Amount Rate/Yr. Principal Balance
Jun 1, 1995 0.00 0.00 0.000 0.00 750000.00
1 Jul 1, 1995 9912.33 6164.38 10.000 3747.94 746252.06
2 Aug 1, 1995 9912.33 6338.03 10.000 3574.30 742677.76
3 Sep 1, 1995 9912.33 6307.67 10.000 3604.65 739073.10
4 Oct 1, 1995 9912.33 6074.57 10.000 3837.76 735235.35
5 Nov 1, 1995 9912.33 6244.46 10.000 3667.86 731567.48
6 Dec 1, 1995 9912.33 6012.88 10.000 3899.45 27668.04
SUBTOTAL: 59473.97 37142.01 22331.96
7 Jan 1, 1996 9912.33 6163.31 10.000 3749.02 723919.02
8 Feb 1, 1996 9912.33 6131.55 10.000 3780.77 720138.25
9 Mar 1, 1996 9912.33 5706.01 10.000 4206.32 715931.93
10 Apr 1, 1996 9912.33 6063.90 10.000 3848.42 712083.51
11 May 1, 1996 9912.33 5836.75 10.000 4075.58 708007.03
12 Jun 1, 1996 9912.33 5996.79 10.000 3915.54 704092.39
13 Jul 1, 1996 9912.33 5771.25 10.000 4141.08 699951.31
14 Aug 1, 1996 9912.33 5928.55 10.000 3983.78 695967.53
15 Sep 1, 1996 9912.33 5894.81 10.000 4017.52 691950.01
16 Oct 1, 1996 9912.33 5671.72 10.000 4240.61 687709.40
17 Nov 1, 1996 9912.33 5824.86 10.000 4087.47 683621.93
18 Dec 1, 1996 9912.33 5603.46 10.000 4308.87 679313.06
SUBTOTAL: 116947.94 70592.97 48354.98
19 Jan 1, 1997 9912.33 5769.51 10.000 4142.82 675170.24
20 Feb 1, 1997 9912.33 5734.32 10.000 4178.01 670992.24
21 Mar 1, 1997 9912.33 5147.34 10.000 4764.99 666227.25
22 Apr 1, 1997 9912.33 5658.37 10.000 4253.96 661973.29
23 May 1, 1997 9912.33 5440.88 10.000 4471.45 657501.83
24 Jun 1, 1997 9912.33 5584.26 10.000 4328.07 653173.77
25 Jul 1, 1997 9912.33 5368.55 10.000 4543.78 648629.99
26 Aug 1, 1997 9912.33 5508.91 10.000 4403.42 644226.57
27 Sep 1, 1997 9912.33 5471.51 10.000 4140.82 639785.76
28 Oct 1, 1997 9912.33 5258.51 10.000 4653.82 635131.94
29 Nov 1, 1997 9912.33 5394.27 10.000 4518.06 630613.89
30 Dec 1, 1997 9912.33 5183.13 10.000 4729.20 625884.69
SUBTOTAL: 118947.94 5519.56 53428.38
31 Jan 1, 1998 9912.33 5315.73 10.000 4596.60 621288.09
32 Feb 1, 1998 9912.33 5276.69 10.000 4635.64 616652.45
33 Mar 1, 1998 9912.33 4730.48 10.000 5181.84 611470.61
34 Apr 1, 1998 9912.33 5193.31 10.000 4719.02 606751.59
35 May 1, 1998 9912.33 4987.00 10.000 4925.33 601826.27
36 Jun 1, 1998 9912.33 5111.40 10.000 4800.93 597025.34
37 Jul 1, 1998 9912.33 4907.06 10.000 5005.27 592020.07
38 Aug 1, 1998 9912.33 5028.12 10.000 4884.21 587135.85
39 Sep 1, 1998 9912.33 4986.63 10.000 4925.70 582210.16
40 Oct 1, 1998 9912.33 4785.29 10.000 5127.04 577083.12
41 Nov 1, 1998 9912.33 4901.25 10.000 5011.07 572072.04
42 Dec 1, 1998 9912.33 4701.96 10.000 5210.37 566861.68
SUBTOTAL: 118947.94 9924.93 59023.01
43 Jan 1, 1999 9912.33 4814.44 10.000 5097.89 561763.79
44 Feb 1, 1999 9912.33 4771.14 10.000 5141.18 556622.61
45 Mar 1, 1999 9912.33 4269.98 10.000 5642.35 550980.26
46 Apr 1, 1999 9912.33 4679.56 10.000 5232.77 545747.49
47 May 1, 1999 9912.33 4485.60 10.000 5426.73 540320.76
48 Jun 1, 1999 9912.33 4589.03 10.000 5323.30 534997.45
49 Jul 1, 1999 9912.33 4397.24 10.000 5515.09 529482.37
50 Aug 1, 1999 9912.33 4496.97 10.000 5415.35 524067.01
51 Sep 1, 1999 9912.33 4450.98 10.000 5461.35 518605.66
52 Oct 1, 1999 9912.33 4262.51 10.000 5649.82 512955.85
53 Nov 1, 1999 9912.33 4356.61 10.000 5555.72 507400.13
54 Dec 1, 1999 9912.33 4170.41 10.000 5741.92 501658.21
SUBTOTAL: 118947.94 53744.48 65203.41
55 Jan 1, 2000 9912.33 4249.02 10.000 5663.31 495994.90
56 Feb 1, 2000 9912.33 4201.05 10.000 5711.28 490283.62
57 Mar 1, 2000 9912.33 3884.76 10.000 6027.57 484256.05
58 Apr 1, 2000 9912.33 4101.62 10.000 5810.71 478445.35
59 May 1, 2000 9912.33 3921.68 10.000 5990.65 472454.70
60 Jun 1, 2000 9912.33 4001.67 10.000 5910.66 466544.04
61 Jul 1, 2000 9912.33 3824.13 10.000 6088.20 460455.84
62 Aug 1, 2000 9912.33 3900.04 10.000 6012.29 454443.55
63 Sep 1, 2000 9912.33 3849.11 10.000 6063.22 448380.33
64 Oct 1, 2000 9912.33 3675.25 10.000 6237.08 442143.25
65 Nov 1, 2000 9912.33 3744.93 10.000 6167.40 435975.86
66 Dec 1, 2000 9912.33 3573.57 10.000 6338.76 429637.10
SUBTOTAL: 118947.94 46926.83 72021.11
67 Jan 1, 2001 9912.33 3648.97 10.000 6263.36 423373.74
68 Feb 1, 2001 9912.33 3595.78 10.000 6316.55 417057.19
69 Mar 1, 2001 9912.33 3199.34 10.000 6712.99 410344.21
70 Apr 1, 2001 9912.33 3485.12 10.000 6427.21 403916.99
71 May 1, 200, 9912.33 3319.87 10.000 6592.46 397324.53
72 Jun 1, 2001 9912.33 3374.54 10.000 6537.79 390786.74
73 Jul 1, 2001 9912.33 3211.95 10.000 6700.38 384086.36
74 Aug 1, 2001 9912.33 3262.10 10.000 6650.23 377436.13
75 Sep 1, 2001 9912.33 3205.62 10.000 6706.71 370729.42
76 Oct 1, 2001 9912.33 3047.09 10.000 6865.24 363864.19
77 Nov 1, 2001 9912.33 3090.35 10.000 6821.98 357042.21
78 Dec 1, 2001 9912.33 2934.59 10.000 6977.73 350064.48
SUBTOTAL: 118947.94 39375.32 79572.62
79 Jan 1, 2002 9912.33 2973.15 10.000 6939.18 343125.30
80 Feb 1, 2002 9912.33 2914.21 10.000 6998.11 336127.18
81 Mar 1, 2002 9912.33 2578.51 10.000 7333.82 328793.37
82 Apr 1, 2002 9912.33 2792.49 10.000 7119.84 321673.53
83 May 1, 2002 9912.33 2643.89 10.000 7268.44 314405.09
84 Jun 1, 2002 9912.33 2670.29 10.000 7242.04 307163.05
85 Jul 1, 2002 9912.33 2524.63 10.000 7387.70 299775.35
86 Aug 1, 2002 9912.33 2546.04 10.000 7366.29 292409.06
87 Sep 1, 2002 9912.33 2483.47 10.000 7428.85 284980.21
88 Oct 1, 2002 9912.33 2342.30 10.000 7570.03 277410.18
89 Nov 1, 2002 9912.33 2356.09 10.000 7556.24 269853.94
90 Dec 1, 2002 9912.33 2217.98 10.000 7694.35 262159.59
SUBTOTAL: 118947.94 31043.06 87904.89
91 Jan 1, 2003 9912.33 2226.56 10.000 7685.77 254473.82
92 Feb 1, 2003 9912.33 2161.28 10.000 7751.04 246722.78
93 Mar 1, 2003 9912.33 1892.67 10.000 8019.66 238703.12
94 Apr 1, 2003 9912.33 2027.34 10.000 7884.99 230818.13
95 May 1, 2003 9912.33 1897.14 10.000 8015.19 222802.94
96 Jun 1, 2003 9912.33 1892.30 10.000 8020.03 214782.91
97 Jul 1, 2003 9912.33 1765.34 10.000 8146.99 206635.92
98 Aug 1, 2003 9912.33 1754.99 10.000 8157.34 198478.58
99 Sep 1, 2003 9912.33 1685.71 10.000 8226.62 190251.96
100 Oct 1, 2003 9912.33 1563.71 10.000 8348.61 181903.35
101 Nov 1, 2003 9912.33 1544.93 10.000 8367.40 173535.95
102 Dec 1, 2003 9912.33 1426.32 10.000 8486.01 165049.94
SUBTOTAL: 116947.94 21838.30 97109.65
103 Jan 1, 2004 9912.33 1397.96 10.000 8514.36 156535.58
104 Feb 1, 2004 9912.33 1325.85 10.000 8586.48 147949.10
105 Mar 1, 2004 9912.33 1172.27 10.000 8740.05 139209.04
106 Apr 1, 2004 9912.33 1179.09 10.000 8733.24 130475.81
107 May 1, 2004 9912.33 1069.47 10.000 8842.85 121632.95
108 Jun 1, 2004 9912.33 1030.22 10.000 8882.10 112750.85
109 Jul 1, 2004 9912.33 924.19 10.000 8988.14 103762.71
110 Aug I, 2004 9912.33 878.86 10.000 9033.46 94729.25
111 Sep 1, 2004 9912.33 802.35 10.000 9109.98 85619.27
112 Oct 1, 2004 9912.33 701.80 10.000 9210.53 76408.74
113 Nov 1, 2004 9912.33 647.18 10.000 9265.15 67143.59
114 Dec 1, 2004 9912.33 550.36 10.000 9361.97 57781.62
SUBTOTAL: 118947.94 11679.61 107268.33
115 Jan 1, 2005 9912.33 490.75 10.000 9421.58 48360.03
116 Feb 1, 2005 9912.33 410.73 10.000 9501.60 38858.44
117 Mar 1, 2005 9912.33 298.09 10.000 9614.24 29244.20
118 Apr 1, 2005 9912.33 248.38 10.000 9663.96 19580.25
119 May 1, 2005 9912.33 160.93 10.000 9751.39 9828.85
120 Jun 1, 2005 9912.33 83.48 10.000 9828.85 0.00
SUBTOTAL: 59473.97 1692.36 57781.62
GRAND TOTAL: 1189479.42 439479.42 750000.00
THIRD AMENDMENT TO LEASE
This Third Amendment to Lease ("Amendment"), is made and entered into this 15th
day of May, 1996 by and between Berg Family Partnership ("Berg" or "Lessor") and
Apple Computer, Inc. ("Apple" or "Lessee'), a California corporation.
RECITALS
A. Apple currently leases from Berg approximately 23,400 square feet of space
located at 10300 Bubb Road, Cupertino, California (the "Premises') pursuant to
that certain lease dated October 6, 1987, that certain lease amendment dated
January 11, 1988, that certain lease amendment dated May 31, 1991, and that
certain lease amendment dated December, 1992 (collectively referred to herein as
the "Lease).
B. The term of the Lease expires on November 30, 1996.
C. Apple has elected and Berg has agreed to extend the Lease pursuant to
Paragraph 2 of that certain lease amendment dated December, 1992 subject to the
terms and conditions set forth herein:
NOW, THEREFORE, the parties hereto agree to amend the Lease as follows:
1. TERM: The term of the Lease is hereby extended for two (2)
years until November 30, 1998.
2. BASIC RENT: The basic monthly rent shall be adjusted to and payable as
follows:
December 1, 1996 through November 30, 1997 $29,250
December 1, 1997 through November 30, 1998 $29,952
3. OPTION TO EXTEND: Berg hereby grants Apple one (1) option (the "Option') to
extend the term of the Lease for a period of two (2) years (the "Option Term')
on the following terms and conditions:
(i) Lessee shall give Lessor written notice of its exercise of its Option
no later than June 1, 1998.
(ii) Lessee may not exercise the Option if Lessee is in default according
to the terms and conditions of the Lease.
(iii) All term and conditions of the Lease and this Amendment shall apply
during the Option Term.
(iv) Rent for the Premises during the Option Term shall be payable in
advance on the first day of each calendar month at 95% of fair market
value, but not more than $1.32 per square foot per month during the first
year of the Option Term and $1.35 per square foot per month during the
second year of the Option Term.
4. RATIFICATION OF LEASE: Except as modified herein, the Lease is hereby
ratified, approved and confirmed upon all the terms, covenants, and conditions.
BERG FAMILY PARTNERSHIP
a California general partnership
By: /s/ Carl E. Berg
Carl E. Berg
Title: General Partner
Date: 6/5/96
APPLE COMPUTER, INC.
a California Corporation
/s/ George Scalise
George Scalise
Title: Executive Vice President, Chief Administrative Officer
Date: 6/14/96
October 21, 1996
Mr. Carl E. Berg
De Alma Boulevard Investment and Berg & Berg Developers
10050 Bandley Drive
Cupertino, CA 95014
Re: Lease dated March 24, 1989 between De Anza Boulevard Investment, a Limited
Partnership and Berg & Berg Developers a California Partnership ("Landlord") and
Apple Computer, Inc., a California corporation ("Tenant") for the Premises
located at 10500 North De Anza Boulevard, Cupertino, CA 95014
Dear Carl:
Pursuant to Paragraph 2.2 of the above referenced Lease ("Options to Extend
Lease Term"), Tenant hereby exercises its first (1st) option to extend the term
of the lease for an additional five (5) year term commencing June 1, 1997 and
ending May 31, 2002. As stipulated in subparagraph 2.2 C of the Lease, the base
monthly for this first option will be Three Hundred Sixty One Thousand Five
Hundred Seventy Dollars ($361,570) per month. All other terms and conditions of
the Lease shall remain the same.
Please sign both copies of this letter acknowledging receipt of this notice and
return one signed counterpart to Apple, to the attention of Robert A. Hecox,
Vice President, RAM Estate. Construction & Facilities at the address below, Mail
Stop 76-AOK.
Very truly yours, Acknowledged and Agreed:
APPLE COMPUTER, INC.,
a California corporation
/s/ G. F. Amelio
Dr. Gilbert F. Amelia
Chief Operating Officer
Date: 11-14-96
Acknowledged and Agreed:
De Anza Boulevard Investment,
a Limited Partnership
/s/ Carl E. Berg
Carl E. Berg, Trustee of the Carl E. Berg Revocable Trust
Date: 11/20/96
Berg & Berg Developers,
a California Partnership
/s/ Carl E. Berg
Carl E. Berg, General Partner
Date: 11/20/96
June 18, 1997
Berg & Berg Enterprises, Inc.
10050 Bandley Drive
Cupertino, California 95014
Attention: Mr. Carl E. Berg
RE: SUBLEASE DATED NOVEMBER 13, 1987 BETWEEN BERG & BERG ENTERPRISES, INC., A
CALIFORNIA CORPORATION, AS SUCCESSOR TO McDONNELL DOUGLAS CORPORATION ("BERG"),
ON THE ONE HAND, AND APPLE COMPUTER, INC. ("APPLE"), ON THE OTHER HAND, FOR THE
PREMISES LOCATED AT 20605 VALLEY GREEN DRIVE (VALLEY GREEN 5) AND 20665 AND
20705 VALLEY (GREEN DRIVE ("VALLEY GREEN 6"), CUPERTINO, CALIFORNIA 95014
Ladies and Gentlemen:
Pursuant to Paragraph 1.5 ("Exercise of Option for Extension of Sublease Term")
of the First Amendment to the Sublease, dated May 25, 1995, Apple hereby
exercises its first option to extend the term of the Sublease with respect to
the Valley Green 5 Premises, for an additional five (5) year term commencing
January 1, 1998 and ending December 31, 2002.
Pursuant to said Paragraph 1.5, the base monthly rent for this first option will
be One Dollar and Ten Cents ($1.103 per rentable square foot for the Valley
Green 5 premises, which the parties agree is a Twenty Thousand Four Hundred
Twenty-Six (20,426) square foot building, for a total of Twenty-Two Thousand
Four Hundred Sixty-Eight Dollars and Sixty Cents ($22,468.60) per month. All
other terms and conditions of the Sublease shall remain the same.
Please sign both copies of this letter acknowledging receipt and approval this
notice of exercise, and return one signed counterpart to Apple, to the attention
of Robert A. Hecox, Vice President, Real Estate, Construction & Facilities at
the address below, Mail Stop 76-AOK.
Very truly yours,
APPLE COMPUTER, INC., a California corporation, as Subtenant
/s/ Fred D. Anderson
Fred D. Anderson
Executive Vice President and Chief Financial Officer
Date: 6/20/97
Acknowledged and Agreed:
BERG & BERG ENTERPRISES, INC., a California corporation, as
Sublessor
/s/ Carl E. Berg
Carl E. Berg
President
Date: 6/24/97
Acknowledged and Agreed:
Berg Family Partnership, as Master Lessor
By: Carl E. Berg and Mary Ann Berg, Trustee for Berg Living
Trust, UTA dated May 1,1981, as to an undivided 81.01% interest
/s/ Carl E. Berg
CARL E. BERG
/s/ Mary Ann Berg
MARY ANN BERG
By: Clyde Berg and Nancy Berg, Trustees of the Clyde Berg Living
Trust UTA dated December 17,1981, as to an undivided 11.83%
interest
/s/ Clyde Berg
CLYDE BERG
/s/ Nancy Berg
NANCY BERG
By: Clyde Berg, Trustee of Carl Berg Child's Trust UTA dated June
1, 1978, as to an undivided 7.16% interest
/s/ Clyde Berg
CLYDE BERG