Exhibit 10.16
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STANDARD FORM LEASE
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PARTIES: This Lease, executed in duplicate at Cupertino, California, on December
____, 1996, by and between Berg & Berg Enterprises, Inc., a California
Corporation, and Cisco Systems, 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 and development,
light manufacturing, and warehouse activities, and any other legal activity; and
for no other purpose without obtaining the prior written consent of Lessor.
PREMISES: The real property with appurtenances as shown on Exhibit A (the
"Premises") situated in the City of Santa Clara, County of Santa Clara, State of
California, and more particularly described as follows:
65,780 square feet of building, including all improvements thereto, as
shown on Exhibit A.1 including the right to use all parking available at
the Premises. The address for the Premises is 4750 Patrick Henry Drive,
Santa Clara, California. Lessee's pro-rata share of the building is 100%.
TERM: The term shall be for thirty-six (36) months unless extended pursuant to
Section 35 of this Lease (the "Lease Term"), commencing on the February 1, 1997
(the "Commencement Date") and ending on the date that is thirty-six (36) months
thereafter.
RIGHT TO TERMINATE: If Lessor is unable to deliver possession of the Premises
to Lessee by April 1, 1997, Lessee shall have the right to terminate this Lease
by providing written notice to Lessor no later than April 15, 1997.
RENT: Base rent shall be payable in monthly installments as follows:
Months 1 through 36 $75,647
Base rent as scheduled above shall be payable in advance on or before the first
day of each calendar month during the Lease Term. The term "Rent," as used
herein, shall be deemed to be and to mean the base monthly rent and all other
sums required to be paid by Lessee pursuant to the terms of this Lease. Rent
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. Upon
execution of this Lease, Lessee shall deposit with Lessor the first month's base
rent.
SECURITY DEPOSIT: Lessee shall deposit with Lessor the sum of Seventy-Five
Thousand Six Hundred Forty-Seven Dollars ($75,647) (the "Security Deposit").
The Security Deposit shall be held by Lessor as security for the faithful
performance by Lessee of all of the terms, covenants, and conditions of this
Lease applicable to Lessee. If Lessee commits a default as provided for herein,
including but not limited to a default with respect to the provisions contained
herein relating to the condition of the Premises, Lessor may (but shall not be
required to) use, apply or retain all or any part of the Security Deposit for
the payment of any amount which Lessor may spend by reason of default by Lessee.
If any portion of the Security Deposit is so used or applied, Lessee shall,
within ten days after written demand therefor, deposit cash with Lessor in an
amount sufficient to restore the Security Deposit to its original amount.
Lessee's failure to do so shall be a default by Lessee. Any attempt by Lessee
to transfer or encumber its interest in the Security Deposit shall be null and
void. Upon execution of this Lease, Lessee shall deposit with Lessor the
Security Deposit. Notwithstanding the above, Lessor agrees to waive the
requirement for Lessee to make a security deposit provided Lessee's
shareholder's equity exceeds $50 million. If at any time during this Lease,
Lessee's shareholder's equity is less than $50 million, Lessee shall deposit
with Lessor the Security Deposit referenced above within ten days after the
issuance of Lessee's financial statements indicating the reduction in
shareholder's equity below $50 million. If Lessee fails to make the Security
Deposit as required, Lessee shall be deemed to be in default per Section 14.1
(a) of this Lease.
LATE CHARGES: Lessee hereby acknowledges that a late payment made 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
according to the terms of any mortgage or trust deed covering the Premises.
Accordingly, if any installment of Rent or any other sum due from Lessee is not
received by Lessor or Lessor's designee within ten (10) days after such amount
is 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
payments made by Lessee. Acceptance of such late charges by Lessor shall in no
event constitute a waiver of Lessee's default with respect to such overdue
amount, nor shall it prevent Lessor from exercising any of the other rights and
remedies granted hereunder. No more than once per calendar year, such late
charge shall not be due and payable from Lessee if an installment of Rent or any
other sum due from Lessee is not received by Lessor or Lessor's designee within
said ten (10) day period after such amount is due if Lessee delivers payment of
such overdue amount within five (5) business days after Lessor's delivery of
notice to Lessee that such overdue amount has not been received by Lessor.
QUIET ENJOYMENT: Lessor covenants and agrees with Lessee that upon Lessee paying
Rent and performing its covenants and conditions under this Lease, Lessee shall
and may peaceably and quietly have, hold and enjoy the Premises for the Lease
Term, subject, however, to the rights reserved by Lessor hereunder. Lessor
warrants that it has the full right and authority to execute and perform the
obligations of Lessor under this Lease and to grant the leasehold estate demised
herein.
IT IS FURTHER MUTUALLY AGREED BETWEEN THE PARTIES AS FOLLOWS:
1. POSSESSION: Possession shall be deemed tendered and rent shall commence on
the Commencement Date.
2. LESSEE'S IMPROVEMENTS: Subject to Lessor's obligation set forth in the first
sentence of Section 2.1, Lessor is delivering the Premises to Lessee in an "AS
IS" physical and operating condition. Lessee agrees, at its sole cost and
expense, to improve the entire building to the standard of a typical Cisco
Systems building including carpeting, drop ceiling, VAV HVAC system, and open
office electrical. Lessee shall not be responsible for the cost of restoration
or improvements to the exterior of the building, foundation, exterior walls,
roof membrane, or roof structure unless such costs are a result of Lessee's
application for modifications to the Premises or actual modifications to the
Premises made by Lessee or Lessee's Agents or the acts or omissions of Lessee or
Lessee's Agents. As part of Lessee's initial improvements, Lessee shall be
permitted to reconfigure parking.
2.1 ACCEPTANCE OF PREMISES AND COVENANTS TO SURRENDER: Lessor represents that
the Premises are in good order and repair considering age, and complies with all
requirements for occupancy as of the last remodel by the former Lessee. Lessor
has agreed to this Lease based on a total interior remodel by Lessee. Lessee
agrees on the last day of the Lease Term, or on the sooner termination of this
Lease, to surrender the Premises to Lessor in Good Condition and Repair. Good
Condition and Repair ("Good Condition and Repair") shall not mean original
condition, but shall mean that the Premises are in a commercially acceptable
condition for surrender by a reasonable lessee. 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 and in Good Condition and
Repair. 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.
Lessee, on or before the end of the Lease Term or sooner termination of this
Lease, shall remove all its personal property and trade fixtures from the
Premises, and all such property not so removed shall be deemed to be abandoned
by Lessee. Lessee shall reimburse Lessor for all disposition costs incurred by
Lessor relative to Lessee's abandoned property. If the Premises are not
surrendered at the end of the Lease Term or earlier termination of this Lease,
Lessee shall indemnify Lessor against loss or liability resulting from any delay
caused by Lessee in surrendering the Premises including, without limitation, any
claims made by any succeeding Lessee founded on such delay. Notwithstanding the
foregoing, if (i) Lessee notifies Lessor at
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least six (6) months before the end of the Lease Term, (ii) Lessee provides
Lessor with a date certain that Lessee will be vacating the Premises, and (iii)
the hold over requested is for a period of six (6) months or less, Lessee shall
not be liable for any consequential damages which may result from the holdover
provided the above conditions are met by Lessee, including any claims pursuant
to the foregoing indemnity.
3. USES PROHIBITED: Lessee shall not commit, or suffer to be committed, any
waste upon the 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 subject Premises are located or allow any sale by auction upon the
Premises, or allow the Premises to be used for any improper, immoral, unlawful
or objectionable purpose, or place any loads upon the floor, walls, or ceiling
which may 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.
Lessee shall not store any materials, including, without limitation, waste
materials or refuse, outside the building proper, except in fully screened or
fenced areas designed for such purpose, which have been approved in writing by
Lessor for such use, subject to any required city approvals. No waste materials
or refuse shall be dumped upon or permitted to remain upon any part of the
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
Premises outside of the building structure, unless approved by the local, state
federal or other applicable governing authority. Lessor consents to Lessee's
use of materials which are incidental to the normal, day-to-day operations of
any office user, such as copier fluids, cleaning materials, etc., but this does
not relieve Lessee of any of its obligations not to contaminate the Premises or
related real property or violated any Hazardous Materials Laws.
4. ALTERATIONS AND ADDITIONS: Lessee shall not make, or suffer to be made, any
alteration or addition to said Premises, or any part thereof in excess of
$15,000 after completion of Lessee's initial improvements, without the express,
advance written consent of Lessor; any addition or alteration to said Premises,
except movable furniture and trade fixtures, shall become at once a part of the
realty and belong to Lessor at the end of the Lease Term or earlier termination
of this Lease. Alterations and additions which are not deemed as trade fixtures
shall include HVAC systems, lighting systems, electrical systems, partitioning,
carpeting, or any other installation which has become an integral part of the
Premises. Lessee agrees that it will not proceed to make such alterations or
additions until all required government permits have been obtained and after
having obtained consent from Lessor to do so, until five (5) days from the
receipt of such consent, so that Lessor may post appropriate notices to avoid
any liability to contractors or material suppliers for payment for Lessee's
improvements. Lessee shall at all times permit such notices to be posted and to
remain posted until the completion of work. At the end of the Lease Term or
earlier termination of this Lease, Lessee shall remove and shall be required to
remove its special tenant improvements and all related equipment installed by
Lessee at or during the Lease Term and Lessee shall return the Premises to the
condition that existed before the installation of the special tenant
improvements. Notwithstanding the above, Lessor agrees to allow any reasonable
standard Cisco System building alterations and improvements as provided for in
Section 2 to remain at the end of the Lease Term or earlier termination of this
Lease.
5. MAINTENANCE OF PREMISES: Lessee shall at its sole cost and expense keep and
maintain the interior of the Premises, including, but not limited to, all
lighting systems, temperature control systems, plumbing systems, and all window
washing, exterior and interior, in Good Condition and Repair, including any
required replacements. Lessee shall maintain all wall surfaces and floor
coverings in Good Condition and Repair, free of holes, gouges, or defacements.
Lessee shall keep and maintain in Good Condition and Repair including
replacements, at Lessee's expense, the following:
1. The exterior of the building, any appurtenances and every part thereof,
including but not limited to, glazing, sidewalks, parking areas, electrical
systems, HVAC systems, elevator systems, roof, and painting of exterior
walls.
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2. The HVAC by a service contract with a licensed air conditioning and
heating contractor which contract shall provide for a minimum of bi-monthly
maintenance of all air conditioning and heating equipment at the Premises
including HVAC repairs or replacements which are either excluded from such
service contract or any existing equipment warranties.
3. The landscaping by a landscape contract to water, maintain, trim and
replace, when necessary, any shrubbery and landscaping on the Premises.
4. The roof membrane shall be maintained at the expense of Lessor by a
service contract with a licensed reputable roofing contractor which
contract shall provide for a minimum of semi-annual maintenance, cleaning
storm gutters, drains and removing debris and trimming overhanging trees,
repair of the roof, and application of a finish coat every five years at
the Premises. Notwithstanding the terms above related to the roof,
Lessee's total obligation shall be $7,000 per year to cover any
maintenance, repairs, and roof amortization costs.
5. Extermination services.
6. Fire monitoring services.
Lessee hereby waives any and all rights 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.
Lessor shall be responsible for any structural defects in the Premises including
the roof structure (not membrane), exterior walls and foundation during the
Lease Term.
6. HAZARD INSURANCE: Lessee shall not use, or permit said Premises, or any part
thereof, to be used, for any purpose other than that for which said Premises are
hereby leased; and no use shall be made or permitted to be made of the Premises,
nor acts done, which may 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
a standard form fire and extended form insurance policy. Lessee shall, at its
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 general liability insurance, covering said
building and appurtenances. Lessee agrees to purchase and keep in force fire
and extended coverage insurance covering loss or damage to the Premises in an
amount equal to the full replacement cost of said Premises as determined by
Lessor, with proceeds payable to Lessor. For purposes of this Lease, the full
replacement cost of the building shall not be less than $4,900,000. Lessee
acknowledges that the insurance referenced above does not include coverage for
Lessee's personal property. In the event of a loss per the insurance provisions
of this paragraph, Lessee shall be responsible for all deductibles. Lessee
agrees to pay the full cost of said insurance. Lessee shall provide all of the
policies of insurance required in this Lease provided the policies meet the
minimum standards of Lessor ("Lessor's Insurance Standards") as follows and are
paid in full by Lessee: (a) certificates evidencing the insurance required under
this Lease shall be deposited with Lessor thirty (30) days prior to the
Commencement Date, and upon each renewal of such policies, shall be effective
not less than thirty (30) days prior to the expiration date of the term of such
coverage, (b) shall be in a form reasonably satisfactory to Lessor and shall
provide all of the coverage required in this Lease, (c) shall be carried with
companies with a Best Rating of AVIII minimum, (d) shall specifically provide
that such policies shall not be subject to cancellation, reduction of coverage
or other change except after at least thirty (30) days' prior written notice to
Lessor, (e) shall name Lessor, a lender with a security interest in the Premises
identified to Lessee by Lessor, as additional insureds by endorsement to policy
to the extent of the full replacement cost of the Premises, (f) shall provide
the insurance proceeds are payable to Lessor, and (g) shall provide that Lessee
assumes the responsibilities set forth in Section 19 with regard to maintaining
insurance.
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Lessor and Lessee hereby waive any rights each may have against the other
related to any loss or damage caused to Lessor or 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. Lessee shall provide that the
insurance policies insuring the property or the personal property include a
waiver of any right of subrogation which said insurance company may have against
Lessor or Lessee, as the case may be. Lessee shall maintain in full force and
effect, a policy of rental loss insurance, in an amount equal to the amount of
Rent payable by Lessee commencing on the date of loss during the next ensuing
one (1) year, as reasonably determined by Lessor with proceeds payable to Lessor
("Loss of Rents Insurance"). Lessee shall pay for the full cost of the Loss of
Rents Insurance. The proceeds payable to Lessor from the Loss of Rents
Insurance coverage shall not be less than $1,020,000 per year payable monthly.
7. ABANDONMENT: Lessee shall not vacate or abandon the Premises at any time
during the Lease Term; and if Lessee shall abandon, vacate or 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. Notwithstanding the above, the Premises
shall not be considered vacated or abandoned if Lessee maintains the Premises in
Good Condition and Repair, provides security and is not in default.
8. FREE FROM LIENS: Lessee shall keep the subject Premises and the property in
which the subject Premises are situated, free from any and all liens including
but not limited to liens arising out of any work performed, materials furnished,
or obligations incurred by Lessee. However, the Lessor shall allow Lessee to
contest a lien claim, so long as the claim is discharged prior to any
foreclosure proceeding being initiated against the property and provided Lessee
provides Lessor a bond if the lien exceeds $5,000.
9. COMPLIANCE WITH GOVERNMENTAL REGULATIONS: Lessee shall, at its sole cost and
expense, comply with all of the requirements of all local, municipal, state and
federal authorities now in force, or which may hereafter be in force, pertaining
to the Premises, and shall faithfully observe in the use of the Premises all
local and municipal ordinances and state and federal statutes now in force or
which may hereafter be in force. Except as stated above, Lessee shall not be
required to pay for the construction of any single improvement required under
this Section in excess of $25,000, unless such improvement (i) is required to
comply with Lessee's particular use of the Premises, (ii) is required as a
result of Lessee or Lessee's Agents application for modifications to the
Premises or (iii) is required as a result of actual modifications to the
Premises made by Lessee or Lessee's Agents; if such improvement is not required
due to Lessee's particular use of the Premises or is not required as a result of
Lessee or Lessee's Agents application for modifications to the Premises or
actual modifications to the Premises by Lessee or Lessee's Agents and such
improvement cost exceeds $25,000, such improvement cost shall be amortized over
the estimated useful life of the improvement, not to exceed 15 years at Wells
Fargo prime rate plus one percent (1%). Lessee shall pay to Lessor the
amortized costs of such improvement on a monthly basis over the Lease Term.
10. LESSEE'S INSURANCE: Lessee, as a material part of the consideration to be
rendered to Lessor, hereby waives all claims against Lessor and Lessor's Agents
for damages to goods, wares and merchandise, and all other personal property in,
upon or about said Premises, and for injuries to persons in, upon or about said
Premises, from any cause arising at any time, and Lessee will hold Lessor and
Lessor's Agents exempt and harmless from any damage or injury to any person, or
to the goods, wares and merchandise and all other personal property of any
person, arising from the use or occupancy 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 standard policy of commercial
general liability insurance and property damage policy covering the Premises,
including parking areas, insuring the Lessee. A certificate of said policy
naming Lessor as an additional insured shall be delivered to Lessor and will
have a combined single limit for both bodily injury, death and property damage
in an amount not less than two million dollars ($2,000,000.00) and shall self
insure for a minimum of three million dollars ($3,000,000). The limits of said
insurance
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shall not, however, limit the liability of Lessee hereunder. The certificate of
Lessee's insurance shall require the insurer to notify Lessor 30 days in advance
in writing before any cancellation thereof. Lessee shall obtain, at Lessee's
sole cost and expense, a policy of fire and extended coverage insurance
including coverage for direct physical loss special form, and a sprinkler
leakage endorsement insuring the personal property of Lessee. The proceeds from
any personal property damage policy shall be payable to Lessee. Lessee shall,
at its sole cost and expense, comply with all of the insurance requirements of
all local, municipal, state and federal authorities now in force, or which may
hereafter be in force, pertaining to Lessee's use and occupancy of the said
Premises.
10.1 LESSEE'S SELF-INSURANCE: Notwithstanding the insurance provisions of
this Lease to the contrary, Lessee shall have the right to self-insure with
respect to any of the insurance required under this Lease and Lessor agrees
to waive the above liability insurance requirements provided (i) Lessee is a
publicly traded U.S. Corporation whose stock is traded on a nationally
recognized exchange, (ii) Lessee has not assigned this Lease, (iii) Lessee
maintains a minimum net worth of at least one hundred million dollars
($100,000,000) according to its most recent audited financial statements,
(iv) Lessee governs and manages its self-insurance program in a manner
consistent with programs managed by prudent businesses whose stock is
publicly traded on nationally recognized exchanges; and (v) applicable law(s)
do not prohibit or render unenforceable indemnification of Lessor for
Lessor's own negligence. Upon request, Lessee shall supply to Lessor from
time to time with evidence reasonably satisfactory to Lessor of Lessee's net
worth and the satisfaction of the conditions set forth above. If Lessee
elects to self-insure, Lessee shall be responsible for losses or liabilities
which would have been assumed by insurance companies which would have issued
the insurance required by Lessee under this Lease in conformance with
Lessor's Insurance Standards plus any deductibles and Lessee shall accept
Lessor's tender of defense for any claims within the scope of Lessee's
indemnity obligations as if Lessor and Lessor's lender, if any, were named as
additional insureds on any liability policy maintained by Lessee meeting
Lessor's Insurance Standards. Lessee will notify Lessor in advance of any
period for which Lessee intends to self-insure and shall provide Lessor with
satisfactory evidence that it complies with the requirements set forth herein
in order to give Lessor an opportunity to confirm the satisfaction of the
conditions set forth herein. For so long as Lessee self-insures, Lessee, for
applicable periods, shall and does hereby indemnify and hold harmless Lessor,
its partners, agents, employees and representatives for and against all
costs, damages, or expenses (including reasonable attorneys' fees) incurred
or paid by Lessor as a result of any claim customarily covered by a
broad-form policy of commercial general liability insurance and property
damage provided by such policy(ies) meet Lessor's Insurance Standards as
defined in Section 6, including a contractual liability endorsement.
11. ADVERTISEMENTS AND SIGNS: Lessee shall not place or permit to be placed, in,
upon or about the Premises any unusual or extraordinary signs, or any signs not
approved by the city, local, state, federal or other applicable governing
authority. Lessee shall 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 shall not be unreasonably withheld. A sign so placed on the
Premises shall be so placed upon the understanding and agreement that Lessee
will remove same at the end of the Lease Term or earlier termination of this
Lease and repair any damage or injury to the Premises caused thereby, and if not
so removed by Lessee, then Lessor may have the same removed at Lessee's expense.
12. UTILITIES: Lessee shall pay for all water, gas, heat, light, power,
telephone and other utilities supplied to the Premises. Any charges for sewer
usage, PG&E, and telephone service to the Premises or related fees shall be the
obligation of Lessee and paid for by Lessee. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion of all
charges which are jointly metered, the determination to be made by Lessor acting
reasonably and on any equitable basis. Lessee and Lessor agree that Lessor
shall not be liable to Lessee for any disruption in any of the utility services
to the Premises.
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13. ATTORNEY'S FEES: In case suit should be brought for the possession of the
Premises, for the recovery of any sum due hereunder, because of the breach of
any other covenant herein, or to enforce, protect, or establish any term,
conditions, or covenant of this Lease or the right of either party hereunder,
the losing party shall pay to the Prevailing Party 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. The
term "Prevailing Party" shall mean the party that received substantial relief
requested, whether by settlement, dismissal, summary judgment, judgment, or
otherwise.
14.1 DEFAULT: The occurrence of any of the following shall constitute a default
and breach of this Lease by Lessee: a) Any failure by Lessee to pay Rent or to
make any other payment required to be made by Lessee hereunder when due if not
cured within ten (10) days after written notice thereof by Lessor to Lessee; b)
The abandonment or vacation of the Premises by Lessee except as provided in
Section 7; c) A failure by Lessee to observe and perform any other provision of
this Lease to be observed or performed by Lessee, where such failure continues
for thirty days after written notice thereof by Lessor to Lessee; provided,
however, that if the nature of such default is such that the same cannot be
reasonably cured within such thirty (30) day period, Lessee shall not be deemed
to be in default if Lessee shall, within such period, commence such cure and
thereafter diligently prosecute the same to completion; d) 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 adjudged a bankrupt or of a petition for
reorganization or arrangement under any law relating to bankruptcy; e) the
appointment of a trustee or receiver to take possession of substantially all of
Lessee's assets or Lessee's interest in this Lease, or the attachment, execution
or other judicial seizure of substantially all of Lessee's assets located at the
Premises or of Lessee's interest in this Lease.
14.2 SURRENDER OF LEASE: In the event of any such default by Lessee, then in
addition to any other remedies available to Lessor at law or in equity, Lessor
shall have the immediate option to terminate this Lease before the end of the
Lease Term and all rights of Lessee hereunder, by giving written notice of such
intention to terminate. In the event that Lessor terminates this Lease due to a
default of Lessee, then Lessor may recover from Lessee: a) the worth at the time
of award of any unpaid Rent which had been earned at the time of such
termination; plus b) the worth at the time of award of unpaid Rent which would
have been earned after termination until the time of award exceeding the amount
of such rental loss that the Lessee proves could have been reasonably avoided;
plus c) the worth at the time of award of the amount by which the unpaid Rent
for the balance of the Lease Term after the time of award exceeds the amount of
such rental loss that the Lessee proves could have been reasonably avoided; plus
d) any other amount necessary to compensate Lessor for all the detriment
proximately caused by Lessee's failure to perform his obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom; and e) at Lessor's election, such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time by applicable
California law. As used in (a) and (b) above, the "worth at the time of award"
is computed by allowing interest at the rate of Wells Fargo's prime rate plus
two percent (2%) per annum. As used in (c) above, the "worth at the time of
award" is computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%).
14.3 RIGHT OF ENTRY AND REMOVAL: In the event of any such default by Lessee,
Lessor shall also have the right, with or without terminating this Lease, to
re-enter the Premises and remove all persons and property from the Premises;
such property may be removed and stored in a public warehouse or elsewhere at
the cost of and for the account of Lessee.
14.4 ABANDONMENT: In the event of the vacation or abandonment, except as
provided in Section 7, of the Premises by Lessee or in the event that Lessor
shall elect to re-enter as provided in paragraph 14.3 above or shall take
possession of the Premises pursuant to legal proceeding or pursuant to any
notice provided by law, and Lessor does not elect to terminate this Lease as
provided in paragraph 14.2 above, then Lessor may from time to time, without
terminating this Lease, either recover all Rent as it becomes due or relet the
Premises or any part thereof for such term or terms and at such rental rates and
upon such other terms
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and conditions as Lessor, in its sole discretion, may deem advisable with the
right to make alterations and repairs to the Premises. In the event that Lessor
elects to relet the Premises, then Rent received by Lessor from such reletting
shall be applied; first, to the payment of any indebtedness other than Rent due
hereunder from Lessee to Lessor; second, to the payment of any cost of such
reletting; third, to the payment of the cost of any alterations and repairs to
the Premises; fourth, to the payment of Rent due and unpaid hereunder; and the
residue, if any, shall be held by Lessor and applied to the payment of future
Rent as the same may become due and payable hereunder. Should that portion of
such Rent received from such reletting during any month, which is applied by the
payment of Rent hereunder according to the application procedure outlined above,
be less than the Rent payable during that month by Lessee hereunder, then Lessee
shall pay such deficiency to Lessor immediately upon demand therefor by Lessor.
Such deficiency shall be calculated and paid monthly. Lessee shall also pay to
Lessor, as soon as ascertained, any costs and expenses incurred by Lessor in
such reletting or in making such alterations and repairs not covered by the
rentals received from such reletting.
14.5 NO IMPLIED TERMINATION: No re-entry or taking possession of the Premises by
Lessor pursuant to 14.3 or 14.4 of this Article 14 shall be construed as an
election to terminate this Lease unless a written notice of such intention is
given to Lessee or unless the termination thereof is decreed by a 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 any such default.
15. SURRENDER OF LEASE: 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 sub tenancies,
or may, at the option of Lessor, operate as an assignment to him of any or all
such subleases or sub tenancies.
16. TAXES: Lessee shall pay and discharge punctually and when the same shall
become due and payable without penalty, all real estate taxes, personal property
taxes, taxes based on vehicles utilizing parking areas in the Premises, taxes
computed or based on rental income (other than federal, state and municipal net
income taxes), environmental surcharges, privilege taxes, excise taxes, business
and occupation taxes, school fees or surcharges, gross receipts taxes, sales
and/or use taxes, employee taxes, occupational license taxes, water and sewer
taxes, assessments (including, but not limited to, assessments for public
improvements or benefit), assessments for local improvement and maintenance
districts, and all other governmental impositions and charges of every kind and
nature whatsoever, regardless of whether now customary or within the
contemplation of the parties hereto and regardless of whether resulting from
increased rate and/or valuation, or whether extraordinary or ordinary, general
or special, unforeseen or foreseen, or similar or dissimilar to any of the
foregoing (all of the foregoing being hereinafter collectively called "Tax" or
"Taxes") which, at any time during the Lease Term, shall be applicable or
against the Premises, or shall become due and payable and a lien or charge upon
the Premises under or by virtue of any present or future laws, statutes,
ordinances, regulations, or other requirements of any governmental authority
whatsoever. The term "Environmental Surcharge" shall include any and all
expenses, taxes, charges or penalties imposed by the Federal Department of
Energy, Federal Environmental Protection Agency, the Federal Clean Air Act, or
any regulations promulgated thereunder, or any other local, state or federal
governmental agency or entity now or hereafter vested with the power to impose
taxes, assessments or other types of surcharges as a means of controlling or
abating environmental pollution or the use of energy (i) generally imposed on
similar properties in a wide geographic area without regard to whether the
properties subject to the tax are contaminated by Hazardous Materials and which
is part of a comprehensive plan imposed by a governmental unit or (ii) imposed
with respect to the Premises as the result of the presence of Hazardous
Materials for which Lessee is required to indemnify Lessor under Section 33
below or to undertake remediation pursuant to Section 33.5 below. The term
"Tax" shall include, without limitation, all taxes, assessments, levies, fees,
impositions or charges levied, imposed, assessed, measured, or based in any
manner whatsoever (i) in whole or in part on the Rent payable by Lessee under
this Lease, (ii) upon or with respect to the use, possession, occupancy,
leasing, operation or management of the Premises, (iii) upon this transaction or
any document to which Lessee is a
PAGE 8
party creating or transferring an interest or an estate in the Premises, (iv)
upon Lessee's business operations conducted at the Premises, (v) upon, measured
by or reasonably attributable to the cost or value of Lessee's equipment,
furniture, fixtures and other personal property located on the Premises or the
cost or value of any leasehold improvements made in or to the Premises by or for
Lessee, regardless of whether title to such improvements shall be in Lessor or
Lessee, or (vi) in lieu of or equivalent to any Tax set forth in this Section
16. In the event any such Taxes are payable by Lessor and it shall not be
lawful for Lessee to reimburse Lessor for such Taxes, then the Rent payable
thereunder shall be increased to net Lessor the same net rent after imposition
of any such Tax upon Lessor as would have been payable to Lessor prior to the
imposition of any such Tax. It is the intention of the parties that Lessor
shall be free from all such Taxes and all other governmental impositions and
charges of every kind and nature whatsoever. However, nothing contained in this
Section 16 shall require Lessee to pay any Federal or State income, franchise,
estate, inheritance, succession, transfer or excess profits tax imposed upon
Lessor. If any general or special assessment is levied and assessed against the
Premises, Lessor agrees to use its best reasonable efforts to cause the
assessment to become a lien on the Premises securing repayment of a bond sold to
finance the improvements to which the assessment relates which is payable in
installments of principal and interest over the maximum term allowed by law. It
is understood and agreed that Lessee's obligation under this paragraph will be
prorated to reflect the Commencement Date and the end of the Lease Term. It is
further understood that if Taxes cover the Premises and Lessee does not occupy
the entire Premises, the Taxes will be allocated to the portion of the Premises
occupied by Lessee based on a pro-rata square footage or other equitable basis.
Notwithstanding the above, Lessee shall have no obligation for taxes until due
or any personal property taxes attributable to sculptures or other objects of
art installed by Lessor on the Premises or reserves for future taxes.
Subject to any limitations or restrictions imposed by any deeds of trust or
mortgages now or hereafter covering or affecting the Premises, Lessee shall have
the right to contest or review the amount or validity of any Tax by appropriate
legal proceedings but which is not to be deemed or construed in any way as
relieving, modifying or extending Lessee's covenant to pay such Tax at the time
and in the manner as provided in this Section 16. However, as a condition of
Lessee's right to contest, if such contested Tax is not paid before such contest
and if the legal proceedings shall not operate to prevent or stay the collection
of the Tax so contested, Lessee shall, before instituting any such proceeding,
protect the Premises and the interest of Lessor and of the beneficiary of a deed
of trust or the mortgagee of a mortgage affecting the Premises against any lien
upon the Premises by a surety bond, issued by an insurance company acceptable to
Lessor and in an amount equal to one and one-half (1 1/2) times the amount
contested or, at Lessor's option, the amount of the contested Tax and the
interest and penalties in connection therewith. Any contest as to the validity
or amount of any Tax, whether before or after payment, shall be made by Lessee
in Lessee's own name, or if required by law, in the name of Lessor or both
Lessor and Lessee. Lessee shall defend, indemnify and hold harmless Lessor
from and against any and all costs or expenses, including attorneys' fees, in
connection with any such proceedings brought by Lessee, whether in its own name
or not. Lessee shall be entitled to retain any refund of any such contested Tax
and penalties or interest thereon which have been paid by Lessee. Nothing
contained herein shall be construed as affecting or limiting Lessor's right to
contest any Tax at Lessor's expense. In the event Lessor receives the refund of
any such contested Taxes, Lessor shall refund such amount to Lessee within
thirty (30) days after such refund in received by Lessor during the Lease Term.
17. NOTICES: Unless otherwise provided for in this Lease, any and all written
notices or other communication (the "Communication") to be given in connection
with this Lease shall be given in writing and shall be given by certified mail,
"return receipt requested" , fully prepaid, in a sealed envelope addressed to
the intended recipient as follows:
(a) to the Lessor at: 10050 Bandley Drive
Cupertino, California 95014
Attention: Carl E. Berg
Fax No: (408) 725-1626
PAGE 9
(b) to the Lessee at: Cisco Systems, Inc.
170 West Tasman Drive
San Jose, California 95134
Attention: Vice President, Worldwide Real Estate and
Workplace Resources
and for billings and notices of nonpayment to:
U.S. Bills/Rents
P.O. Box 641570
MS Lease
San Jose, California 95164
or such other addresses or individual as may be designated by a Communication
given by a party to the other parties as aforesaid. Any Communication given by
certified mail shall be conclusively deemed to have been made on the day on
which delivery is made or refused.
18. ENTRY BY LESSOR: Lessee shall permit Lessor and its agents to enter into and
upon said Premises at all reasonable times subject to 24 hours advance written
notice to Lessee, except in emergency situations in which case no notice
required, using the minimum amount of interference and inconvenience to Lessee
and Lessee's business, 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; and shall permit
Lessor and his agents, at any time within ninety (90) days prior to the end of
the Lease Term, to place upon said Premises any usual or ordinary "For Sale" or
"For Lease" signs and exhibit the Premises to prospective tenants at reasonable
hours. Notice for entry under this Section 18 can be made telephonically to
Lessee's designated representative at the Premises.
19. DESTRUCTION OF PREMISES: In the event of a partial or complete destruction
of the Premises during the Lease Term from any cause except earthquakes, Lessee
shall forthwith repair the same under the laws and regulations of State,
Federal, County, or Municipal authorities, except that Lessee shall be entitled
to a proportionate reduction of Rent while such repairs are being made to the
extent of payments received by Lessor under the Loss of Rents Insurance
coverage.
20. ASSIGNMENT AND SUBLETTING: 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 cause any other person or
entity (a bona fide subsidiary or affiliate of Lessee excepted) to occupy or
use the Premises, or any portion thereof, without the advance written consent
of Lessor. Whether or not Lessor's consent to a sublease or assignment is
required, in the event of any sublease or assignment, Lessee shall be and
shall remain primarily liable for the performance of all conditions,
covenants, and obligations of Lessee hereunder and, in the event of a default
by an assignee or sublessee, Lessor may proceed directly against the original
Lessee hereunder and/or any other predecessor of such assignee or sublessee
without the necessity of exhausting remedies against said assignee or
sublessee.
21. 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, 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 vests in the condemnor or purchaser, and the Rent payable
hereunder shall be adjusted so that the Lessee shall be required to pay for the
remainder of the Lease Term only that portion of
PAGE 10
Rent as the value of the part remaining, subject to Lessee's and Lessor's mutual
agreement that as a result of such taking, the remainder of the Premises is
reasonably suitable for Lessee's continued occupancy and use of the Premises.
The rental adjustment resulting will be computed at the same Rental rate for the
remaining part not taken; however, Lessor 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 a 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 be payable to the Lessor. Lessee
may file a separate claim and be entitled to any award granted to Lessee.
22. EFFECTS OF CONVEYANCE: The term "Lessor" as used in this Lease, means only
the owner for the time being of the land and building constituting the Premises,
so that, in the event of any sale of said land or building, or in the event of a
Lease of said building, Lessor shall be and hereby is entirely freed and
relieved of all covenants and obligations of Lessor hereunder, and it shall be
deemed and construed, without further agreement between the parties and the
purchaser of any such sale, or the Lessor of the building, that the purchaser or
lessor of the building has assumed and agreed to carry out any and all covenants
and obligations of the Lessor hereunder. If any security is given by Lessee to
secure the faithful performance of all or any of the covenants of this Lease on
the part of Lessee, Lessor may transfer and deliver the security, as such, to
the purchaser at any such sale of the building, and thereupon the Lessor shall
be discharged from any further liability.
23. SUBORDINATION: This Lease, in the event Lessor 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 at which the
Premises are a part and to any and all advances made on the security thereof and
to renewals, modifications, replacements and extensions thereof. Lessee agrees
to promptly execute any documents which may be required to effectuate such
subordination provided as long as Lessee is not in default according to the
terms and conditions of this Lease, such party requesting subordination
recognizes Lessee's rights under this Lease and Lessee's right to possession of
the Premises pursuant to the terms of this Lease, and such subordination
document does not materially restrict or limit Lessee's rights or materially
increase Lessee's obligations under this Lease. Notwithstanding such
subordination, if Lessee is not in default and so long as Lessee shall pay the
Rent and observe and perform all of the provisions and covenants required under
this Lease, Lessee's right to quiet possession of the Premises shall not be
disturbed or effected by any subordination.
24. WAIVER: The waiver by Lessor of any breach of any term, covenant or
condition, herein contained shall not be construed to be a 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 Lessee's breach of any
term, covenant, or condition of the Lease.
25. HOLDING OVER: Any holding over after the end of the Lease Term requires
Lessor's written approval prior to the end of the Lease Term, which,
notwithstanding any other provisions of this Lease, Lessor may withhold and
shall be construed to be a tenancy at sufferance from month to month. Lessee
shall pay to Lessor monthly base rent equal to one and one-half (1.5) times the
monthly base rent installment due in the last month of the Lease Term and all
other additional rent and all other terms and conditions of the Lease shall
apply, so far as applicable. Holding over by Lessee without written approval of
Lessor shall subject Lessee to the liabilities and obligations provided for in
this Lease and by law, including, but not limited to those in Section 2.1 of
this Lease. Lessee shall indemnify and hold Lessor harmless against any loss or
liability resulting from any delay caused by Lessee in surrendering the
Premises, including without limitation, any claims made or penalties incurred by
any succeeding lessee or by Lessor. No holding over shall be deemed or
construed to exercise any option to extend or renew this Lease in lieu of full
and timely exercise of any such option as required hereunder.
PAGE 11
26. SUCCESSORS AND ASSIGNS: 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.
27. ESTOPPEL CERTIFICATES: Lessee shall at any time during the Lease Term, upon
not less than ten (10) 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 dates to which the Rent and other charges have been
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 encumbrancer of the Premises.
Lessee's failure to deliver such a 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.
28. TIME: Time is of the essence of the Lease.
29. CAPTIONS: The headings on 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.
30. PARTY NAMES: Landlord and Tenant may be used in various places in this Lease
as a substitute for Lessor and Lessee respectively.
31. EARTHQUAKE INSURANCE: As a condition of Lessor agreeing to waive the
requirement for earthquake insurance, Lessee agrees that it will pay, as
additional Rent, an amount not to exceed Twenty-Six Thousand Three Hundred
Dollars ($26,300) per year for earthquake insurance if Lessor desires to obtain
some form of earthquake insurance in the future, if and when available, on terms
acceptable to Lessor.
32. HABITUAL DEFAULT: Notwithstanding anything to the contrary contained in
Section 14 herein, Lessor and Lessee agree that if Lessee shall have
defaulted in the payment of Rent for three or more times during any twelve
month period during the Lease Term, then such conduct shall, at the option of
the Lessor, represent a separate event of default which cannot be cured by
Lessee. Lessee acknowledges that the purpose of this provision is to prevent
repetitive defaults by the Lessee under the Lease, which constitute a
hardship to the Lessor and deprive the Lessor of the timely performance by
the Lessee hereunder.
33. HAZARDOUS MATERIALS
33.1 DEFINITIONS: As used in this Lease, the following terms shall have the
following meaning:
a. 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
substance" "hazardous water", "hazardous material", "extremely hazardous
waste", "restricted hazardous waste" under Section 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 "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 25181 of the California Health and Safety Code,
PAGE 12
Division 20l, 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) defined
as "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
1004 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 "hazardous substance" pursuant to Section 101 of the Comprehensive
Environmental Responsibility Compensations, and Liability Act, 42 U.S.C.
9601 et seq., or (xi) regulated under the Toxic Substances Control Act, 156
U.S.C. 2601 et seq.
b. The term "Hazardous Materials Laws" shall mean any local, state and
federal laws, rules, regulations, or ordinances relating to the use,
generation, transportation, analysis, manufacture, installation, release,
discharge, storage or disposal of Hazardous Material.
c. The term "Lessor's Agents" as used herein shall mean Lessor's agents,
representatives, employees, contractors, subcontractors, directors,
officers and partners.
d. The term "Lessee's Agents" as used herein shall mean Lessee's agents,
representatives, employees, contractors, subcontractors, directors,
officers, partners, invitees or any other person in or about the Premises.
33.2 LESSEE'S RIGHT TO INVESTIGATE: Lessee shall be entitled to cause such
inspection, soils and ground water tests, and other evaluations to be made of
the Premises as Lessee deems necessary regarding (i) the presence and use of
Hazardous Materials in or about the Premises, and (ii) the potential for
exposure to Lessee's employees and other persons to any Hazardous Materials used
and stored by previous occupants in or about the Premises. Lessee shall provide
Lessor with copies of all inspections, tests and evaluations. Lessee shall
indemnify, defend, and hold Lessor harmless from any cost, claim or expense
arising from such entry by Lessee or from the performance of any such
investigation by such Lessee. Within thirty (30) days of the Commencement Date,
Lessee shall provide Lessor with the results of its Hazardous Materials
investigations which shall be used to establish a base line level for Hazardous
Materials at the Premises.
33.3 LESSOR'S REPRESENTATIONS: Lessor hereby represents and warrants to the best
of Lessor's knowledge that the Premises are, as of the date of this Lease, in
compliance with all Hazardous Material Laws.
33.4 LESSEE'S OBLIGATION TO INDEMNIFY: Lessee, at its sole cost and expense,
shall indemnify, defend, protect and hold Lessor and Lessor's Agents harmless
from and against any and all cost or expenses, including those described under
subparagraphs i, ii and iii herein below set forth, arising from or caused in
whole or in part, directly or indirectly by:
a. Lessee's or Lessee's Agents' use, analysis, storage, transportation,
disposal, release, threatened release, discharge or generation of Hazardous
Material to, in, on, under, about or from the Premises; or
b. Lessee's or Lessee's Agents failure to comply with Hazardous Material
laws; or
c. Any release of Hazardous Material to, in, on, under, about, from or onto
the Premises caused by Lessee or Lessee's Agents or occurring during the
Lease Term, except ground water contamination from other parcels where the
source is from off the Premises not arising from or caused by Lessee or
Lessee's Agents.
The cost and expenses indemnified against include, but are not limited to the
following:
i. Any and all claims, actions, suits, proceedings, losses, damages,
liabilities, deficiencies, forfeitures, penalties, fines, punitive damages,
cost or expenses;
ii. 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, release or other adverse effects
on the environment;
PAGE 13
iii. The cost of any repair, clean-up, treatment or detoxification of the
Premises necessary to bring the Premises into compliance with all Hazardous
Material 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 attorney's fees and
consultants fees, investigation and laboratory fees, court cost and
litigation expenses).
33.5 LESSEE'S OBLIGATION TO REMEDIATE CONTAMINATION: Lessee shall, at its sole
cost and expense, promptly take any and all action necessary to remediate
contamination of the Premises by Hazardous Materials during the Lease Term
occurring as a result of acts or omissions of Lessee or Lessee's Agents, but
Lessee shall only be obligated to remediate to levels required now or in the
future by any governmental agency having jurisdiction over such contamination.
33.6 OBLIGATION TO NOTIFY: Lessor and Lessee shall each give written notice to
the other as soon as reasonably practical of (i) any communication received from
any governmental authority concerning Hazardous Material which related to the
Premises and (ii) any contamination of the Premises by Hazardous Materials which
constitutes a violation of any Hazardous Material Laws.
33.7 SURVIVAL: The obligations of Lessee under this Section 33 shall survive the
Lease Term or earlier termination of this Lease.
33.8 CERTIFICATION AND CLOSURE: On or before the end of the Lease Term or
earlier termination of this Lease, Lessee shall deliver to Lessor a
certification executed by Lessee stating that, to the best of Lessee's
knowledge, there exists no violation of Hazardous Material Laws resulting from
Lessee's obligation in Paragraph 33. If pursuant to local ordinance, state or
federal law, Lessee 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 Lessee
shall furnish to Lessor a copy of such plan.
33.9 PRIOR HAZARDOUS MATERIALS: Lessee shall have no obligation to clean up or
to hold Lessor harmless with respect to, any Hazardous Material or wastes
discovered on the Premises which were not introduced into, in, on, about, from
or under the Premises during the Lease Term or ground water contamination from
other parcels where the source is from off the Premises not arising from or
caused by Lessee or Lessee's Agents.
34. BROKERS: Lessor and Lessee represent that they have not utilized or
contacted a real estate broker or finder with respect to this Lease other than
CPS ("CPS") and Lessee agrees to indemnify and hold Lessor harmless against any
claim, cost, liability or cause of action asserted by any broker or finder
claiming through Lessee other than CPS. Lessor shall at its sole cost and
expense pay the brokerage commission per Lessor's standard commission schedule
to CPS in connection with this transaction. Lessor represents and warrants that
it has not utilized or contacted a real estate broker or finder with respect to
this Lease other than CPS and Lessor agrees to indemnify and hold Lessee
harmless against any claim, cost, liability or cause of action asserted by any
broker or finder claiming through Lessor.
35. OPTION TO EXTEND: Lessor hereby grants to Lessee one (1) option to extend
the Lease Term, with the extended term to be for a period of one (1) year, on
the following terms and conditions:
(i) Lessee shall give Lessor written notice of its exercise of its option
to extend no earlier than twenty-four (24) calendar months, nor later than
six (6) calendar months before the Lease Term would end but for said
exercise. Time is of the essence.
(ii) Lessee may not extend the Lease Term pursuant to any option granted by
this section 35 if Lessee is in default as of the date of the exercise of
its option. If Lessee has committed a default by Lessee as defined in
Section 14 or 32 that has not been cured or waived by Lessor in writing by
the date that any extended term is to commence, then Lessor may
PAGE 14
elect not to allow the Lease Term to be extended, notwithstanding any
notice given by Lessee of an exercise of this option to extend.
(iii) All terms and conditions of this Lease shall apply during the
extended term, except that the base rent shall be $82,225.
(iv) Once Lessee delivers a notice of exercise of its options to extend the
Lease Term, Lessee may not withdraw such exercise and subject to the
provisions of this Section 35, such notice shall operate to extend the
Lease Term. Upon any extension of the Lease Term pursuant to this Section
35, the term "Lease Term" as used in this Lease shall thereafter include
the then extended term.
(v) The option rights of Cisco Systems, Inc. granted under this Section 35
are granted for Cisco Systems, Inc.'s personal benefit and may not be
assigned or transferred by Cisco Systems, Inc. or exercised if Cisco
Systems, Inc. is not occupying the Premises at the time of exercise.
Notwithstanding the above, Lessor waives the above due to the limit of one
year on the option herein.
36. APPROVALS: Whenever in this Lease the Lessor's or Lessee's consent is
required, such consent shall not be unreasonably or arbitrarily withheld or
delayed. In the event that the Lessor or Lessee does not respond to a request
for any consents which may be required of it in this Lease within ten business
days of the request of such consent in writing by the Lessee or Lessor, such
consent shall be deemed to have been given by the Lessor or Lessee.
37. AUTHORITY: Each party executing this Lease represents and warrants that
he or she is duly authorized to execute and deliver the Lease. If executed
on behalf of a corporation, that the Lease is executed in accordance with the
by-laws of said corporation (or a partnership that the Lease is executed in
accordance with the partnership agreement of such partnership), that no other
party's approval or consent to such execution and delivery is required, and
that the Lease is binding upon said individual, corporation (or partnership)
as the case may be in accordance with its terms.
38. INDEMNIFICATION OF LESSOR: Except to the extent caused by the sole
negligence or willful misconduct of Lessor or Lessor's Agents, Lessee shall
defend, indemnify and hold Lessor harmless from and against any and all
obligations, losses, costs, expenses, claims, demands, attorney's fees,
investigation costs or liabilities on account of, or arising out of the use,
condition or occupancy of the Premises or any act or omission to act of Lessee
or Lessee's Agents or any occurrence in, upon, about or at the Premises,
including, without limitation, any of the foregoing provisions arising out of
the use, generation, manufacture, installation, release, discharge, storage, or
disposal of Hazardous Materials by Lessee or Lessee's Agents. It is understood
that Lessee is and shall be in control and possession of the Premises and that
Lessor shall in no event be responsible or liable for any injury or damage or
injury to any person whatsoever, happening on, in, about, or in connection with
the Premises, or for any injury or damage to the Premises or any part thereof.
This Lease is entered into on the express condition that Lessor shall not be
liable for, or suffer loss by reason of injury to person or property, from
whatever cause, which in any way may be connected with the use, condition or
occupancy of the Premises or personal property located herein. The provisions of
this Lease permitting Lessor to enter and inspect the Premises are for the
purpose of enabling Lessor to become informed as to whether Lessee is complying
with the terms of this Lease and Lessor shall be under no duty to enter, inspect
or to perform any of Lessee's covenants set forth in this Lease. Lessee shall
further indemnify, defend and hold harmless Lessor from and against any and all
claims arising from any breach or default in the performance of any obligation
to Lessee's part to be performed under the terms of this Lease. The provisions
of Section 38 shall survive the Lease Term or earlier termination of this Lease
with respect to any damage, injury or death occurring during the Lease Term.
PAGE 15
39. LESSOR'S LIABILITY: If Lessee should recover a money judgment against Lessor
arising in connection with this Lease, the judgment shall be satisfied only out
of the Lessor's interest in the Premises and any proceeds from the sale or
refinance of the Premises and neither Lessor or any of its partners shall be
liable personally for any deficiency.
40. MISCELLANEOUS PROVISIONS: All rights and remedies hereunder are cumulative
and not alternative to the extent permitted by law and are in addition to all
other rights or remedies in law and in equity.
41. CHOICE OF LAW: This lease shall be construed and enforced in accordance
with the substantive laws of the State of California. The language of all parts
of this lease shall in all cases be construed as a whole according to its fair
meaning and not strictly for or against either Lessor or Lessee.
42. ENTIRE AGREEMENT: This Lease is the entire agreement between the parties,
and there are no agreements or representations between the parties except as
expressed herein. Except as otherwise provided for herein, no subsequent change
or addition to this Lease shall be binding unless in writing and signed by the
parties hereto.
IN WITNESS WHEREOF, Lessor and Lessee have executed these presents, the day and
year first above written.
LESSOR LESSEE
BERG & BERG ENTERPRISES, INC. CISCO SYSTEMS, INC.
By: By:
---------------------------------- ----------------------------------
signature of authorized representative signature of authorized representative
- - -------------------------------------- --------------------------------------
printed name printed name
- - -------------------------------------- --------------------------------------
title title
- - -------------------------------------- --------------------------------------
date date
PAGE 16
Exhibit A
Site Plan to be attached.
PAGE 17
Exhibit A.1
Floor Plan to be attached.
PAGE 18
PARTIES: This Lease, executed in duplicate at Cupertino, California, on May __,
1995, by and between Berg & Berg Enterprises, Inc., a California corporation,
and StrataCom, Inc., a Delaware Corporation, hereinafter called respectively
Lessor and Lessee, without regard to number or gender.
USE AND PREMISES: WITNESSETH: That Lessor hereby Leases to Lessee, and Lessee
hires from Lessor, for the purpose of conducting therein office, research and
development, light manufacturing, and warehouse activities, and any other legal
activity; and for no other purpose without obtaining the prior written consent
of Lessor, those certain Premises with the appurtenances (the "Premises"),
situated in the City of San Jose, County of Santa Clara, State of California,
and more particularly described as follows:
200,000 square feet of space (the "Building"), including all improvements
thereto of the Premises, including the right to use up to 700 unreserved
parking spaces, as shown on Exhibit A. The address for the Premises is
_________Hellyer Avenue, San Jose, California 95138.
TERM: The term shall be for eighty-four (84) months, commencing on the
Commencement Date as defined in Paragraph 1 and ending eighty-four months
thereafter.
RENT: Base rent shall be payable in monthly installments as follows:
Months 1 to 24 $159,056
Months 25 to 48 $169,056
Months 49 to 60 $173,056
Months 61 to 84 $183,056
Base rent as scheduled above shall be payable in advance on or before the first
day of each calendar month during the term hereof. The term "Rent," as used
herein, shall be deemed to be and to mean the base monthly rent and all other
sums required to be paid by Lessee pursuant to the terms of this Lease. Rent
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. Lessee
shall deposit with Lessor the first month's rent on or before November 1, 1995.
SECURITY DEPOSIT: Lessee shall deposit with Lessor the sum of One Hundred
Fifty-Nine Thousand and Fifty-Six Dollars ($159,056) (the "Security
Deposit"). The Security Deposit shall be held by Lessor as security for the
faithful performance by Lessee of all of the terms, covenants, and conditions
of this Lease applicable to Lessee. If Lessee commits a Default as provided
for herein, including but not limited to a Default with respect to the
provisions contained herein relating to the condition of the Premises upon
the Lease Expiration or Termination, Lessor may (but shall not be required
to) use, apply or retain all or any part of the Security Deposit for the
payment of any amount which Lessor may spend by reason of Default by Lessee.
If any portion of the Security Deposit is so used or applied, Lessee shall,
within ten days after written demand therefor, deposit cash with Lessor in an
amount sufficient to restore the Security Deposit to its original amount.
Lessee's failure to do so shall be a Default by Lessee. Any attempt by
Lessee to transfer or encumber its interest in the Security Deposit shall be
null and void. Upon execution of this Lease, Lessee shall deposit with
Lessor the Security Deposit. In lieu of a cash security deposit, Lessee may
provide Lessor with an irrevocable, unconditional standard form letter of
credit. Notwithstanding the above, Lessor agrees to waive the requirement
for Lessee to make a security deposit provided Lessee's net worth exceeds $75
million. If at any time during this Lease, Lessee's net worth is less than
$75 million, Lessee shall deposit with Lessor the Security Deposit referenced
above within ten days after the issuance of Lessee's financial statements
indicating the reduction in net worth below $75 million. If Lessee fails to
make the Security Deposit as required and such failure is not cured within
ten (10) days after Lessee's receipt of written notice from Lessor, Lessee
shall be deemed to be in Default per Section 14.1 (a) of this Lease.
LATE CHARGES: Lessee hereby acknowledges that a late payment made 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
according to the terms of any mortgage or trust deed covering the Premises.
Accordingly, if any installment of Rent or any other sum due from Lessee is not
received by Lessor or Lessor's designee within ten (10) days after such amount
is due,
PAGE 19
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
payments made by Lessee. Acceptance of such late charges by Lessor shall in
no event constitute a waiver of Lessee's Default with respect to such overdue
amount, nor shall it prevent Lessor from exercising any of the other rights
and remedies granted hereunder. Notwithstanding the above, Lessor agrees to
waive one late charge per any twelve month period during the lease term. In
addition, Lessee shall not be required to pay a late charge if it is the
result of a non-recurring unusual event such as an accounting error.
QUIET ENJOYMENT: Lessor covenants and agrees with Lessee that upon Lessee paying
Rent and performing its covenants and conditions under this Lease, Lessee shall
and may peaceably and quietly have, hold and enjoy the Premises for the Lease
Term, subject, however, to the rights reserved by Lessor hereunder. Subject to
the above, Lessor shall obtain a non-disturbance agreement from existing or
future lenders for benefit of Lessee.
IT IS FURTHER MUTUALLY AGREED BETWEEN THE PARTIES AS FOLLOWS:
1. POSSESSION: Possession shall be deemed tendered and the term shall commence
upon the first to occur of the following (the "Commencement Date"): (i) the
Premises are Substantially Complete or (ii) Lessee occupies the Premises and
commences to conduct business operations or (iii) if Lessor is prevented from or
delayed in completing its work under Section 2 of this Lease due to the acts or
omissions of Lessee, such work will be deemed Substantially Complete as of the
date on which it would have been Substantially Complete had it not been for such
Lessee-caused delay. It is the intention of Lessee and Lessor that January 1,
1996 shall be the Commencement Date.
When the actual Commencement Date is determined, the parties shall execute a
Commencement Date Memorandum setting forth the Commencement Date, the actual
gross exterior square footage of the Building and the Base rent amount based on
the actual gross exterior square footage and the TI Allowance based on the
actual gross exterior square footage of the Building, but failure to do so shall
not affect the continuing validity and enforceability of this Lease, which shall
remain in full force and effect.
"Substantially Complete" shall mean that: (i) Lessor has tendered possession of
Premises to Lessee, (ii) Lessor has met all legal requirements for occupancy,
(iii) The Building Shell and Lessee Improvements are materially complete per the
approved plans, exclusive of telephone or other communication systems, punchlist
items and there remains no incomplete or defective items of work which would
materially adversely affect Lessee's intended use of the Premises and (iv) said
interior of the building is in a "broom clean" condition.
2. BUILDING SHELL AND LESSEE'S IMPROVEMENTS: The "Building Shell", as defined in
the attached Exhibit B shall be constructed at Lessor's sole cost and expense by
independent contractors to be employed by and under the supervision of Lessor in
accordance with the StrataCom, Inc. Performance Specification Division 1-8,
attached hereto as Exhibit C, site plan, elevations, plans, specifications, and
working drawings to be prepared by Lessor, approved by Lessee, and thereafter
attached hereto as Exhibit D (collectively the "Shell Plans").
The "Lessee Interior Improvements" shall be defined as all items not part of the
Building Shell and shall conform to the StrataCom, Inc. Performance
Specification, Division 9-16, attached hereto as Exhibit C and shall be
constructed by independent contractors to be employed by and under the
supervision of Lessor, in accordance with complete plans and specifications
prepared by Lessor for submission to the City of San Jose ("Lessee Improvement
Plans"), complete with all mechanical and electrical design, approved by Lessee,
and then to be attached hereto as Exhibit E. Lessee and its designated
representatives, shall at all times during the construction of the Building
Shell and the Lessee Interior Improvements have access to the Premises to
monitor the progress of construction and Lessor's compliance with its obligation
hereunder; provided however, that such access shall not unreasonably interfere
with the activities of Lessor or its contractors. If Lessor notifies Lessee
that any fittings, finishes or other materials included in the specifications
for the Lessee Interior Improvements cannot be obtained within sixty (60) days
after placing an order therefor, Lessee shall be responsible for selecting
alternative fittings, finishes or other materials which can be obtained within
said sixty (60) day period, or, if Lessee does not specify any alternative,
Lessee shall be responsible for any delay beyond said sixty (60) day period.
Lessor shall be responsible for ensuring that the Building Shell and Lessee
Interior Improvements conform to all applied statutes, rules, regulations,
ordinances, and San Jose Building Department interpretations. Lessor shall
construct the Building Shell and
PAGE 20
Lessee Interior Improvements in accordance with the Lessee approved plans and
all existing applicable municipal, local, state and federal laws, statutes,
rules, regulations and ordinances.
For any contract to be entered into between Lessor and any contractor furnishing
labor or materials in connection with the construction of the Lessee Interior
Improvements where the payment due under such contract is estimated by Lessor or
Lessee to be in excess of $50,000, Lessor shall request bids from at least three
(3) qualified contractors selected by Lessor for bidding. Lessor will accept
the lowest bid. Lessee shall have the opportunity to review the qualified
bidders list and may select a bidder of their choice for any bid provided the
bidder meets Lessor's reasonable requirements.
Lessor shall be responsible for and shall pay the cost of the Lessee Interior
Improvements up to the amount of Five Million Dollars ($5,000,000) (the "TI
Allowance"), being $25.00 per square foot times 200,000 square feet. In the
event the cost of the Lessee Interior Improvements is less than the TI
Allowance, the monthly rent under the Lease shall be reduced by a factor of $.01
per month for each dollar of the TI Allowance not expended. Costs in excess of
the TI Allowance, if any, will not be incurred without advance approval of
Lessee. Any approved cost over the TI Allowance shall be paid for by Lessee in
cash within fifteen (15) days after Lessor has provided Lessee with evidence
that the work approved is complete. Lessor shall be entitled to a construction
management fee covering its overhead and profit on the TI Allowance not to
exceed eight percent (8%). All costs for Lessee Interior Improvements shall be
documented and subject to verification by Lessee. Minimum Lessee Interior
Improvements shall be $4,000,000.
Lessor shall use its best efforts to cause the Commencement Date of the initial
term to occur not later than January 1, 1996. If the Commencement Date of the
initial term has not occurred on or before January 15, 1996, Lessee shall be
entitled to a credit against the monthly payments of Base rent due after the
commencement of the term in an amount equal to $500,000 and if the Commencement
Date has not occurred by January 31, 1996, Lessee shall be entitled to an
additional credit of $500,000 against monthly payments of Base rent. If the
Commencement Date has not occurred by April 15, 1996, Lessee may at its sole
option by written notice to Lessor have the right to terminate this Lease at any
time thereafter until the term, in fact, commences. If Lessee should terminate
this Lease as provided above, Lessor shall within 5 days pay Lessee in cash the
$1,000,000 as liquidated damages. Lessor hereby acknowledges that having a
Commencement Date after January 1, 1996 will cause Lessee to incur costs not
contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Accordingly, the parties hereby agree that the above
referenced credits represent a fair and reasonable estimate of the costs Lessee
will incur by reason of a Commencement Date later than January 1, 1996.
Notwithstanding anything to the contrary herein, all dates stated herein shall
be extended one day for each day Lessor is unable to Substantially Complete the
Premises due to acts of God, one day for each day Lessor is unable to
Substantially Complete the Premises due to Lessee delays, one day for each day
Lessor is unable to Substantially Complete the Premises due to governmental
actions (other than governmental action of refusing to approve work which fails
to comply with the law or the building permit) which occurs after receipt of
normal building permits, and one day each for each day Lessee fails to meet
Lessee deadlines for approvals as shown on attached Exhibit F. Lessee shall
have a minimum of 3 business days to approve or disapprove any preliminary plans
and a minimum of 10 business days to approve or disapprove any final plans. If
plans are disapproved, Lessee shall state the reason for disapproval and Lessor
and Lessee shall act in good faith to resolve any issues.
2.1 ACCEPTANCE OF PREMISES AND COVENANTS TO SURRENDER: Lessor represents that
the Premises will be in good order and repair, and will comply with all legal
requirements for occupancy as of the Commencement Date. Lessee agrees on the
last day of the term hereof, or on the sooner Termination of this Lease, to
surrender the Premises to Lessor in good condition and repair. Good condition
and repair shall not mean original condition, but shall mean the Premises are in
a commercially acceptable condition suitable for continuing occupancy by a
reasonable lessee, Hazardous Materials not caused by Lessee or Lessee's Agents,
casualty damage and condemnation excepted. The interior walls of all office and
warehouse areas, the floors of all office and warehouse areas, all suspended
ceilings and any carpeting shall be cleaned and in good condition and repair,
free of holes, gouges and defacements, Hazardous Materials not caused by Lessee
or Lessee's Agents, casualty damage and condemnation excepted. 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 (Lessee's
Alterations), except with respect to Lessee's Alterations which Lessor notified
Lessee that Lessor would require to be removed at the time Lessor consented to
the making of such Lessee's Alterations. Lessee will remove all such Lessee's
Alterations at Lessee's sole cost and expense and Lessee will repair any and all
material damage to the Premises caused by such removal. Lessee, on or before
the end of the term or sooner Termination of this
PAGE 21
Lease, shall remove all its personal property and trade fixtures from the
Premises, and all such property not so removed shall be deemed to be abandoned
by Lessee. Lessee shall reimburse Lessor for all disposition costs incurred by
Lessor relative to Lessee's abandoned property. If the Premises are not
surrendered at the end of the term, Lessee shall indemnify Lessor against loss
or liability resulting from any delay caused by Lessee in surrendering the
Premises including, without limitation, any claims made by any succeeding lessee
founded on such delay. Notwithstanding the above, Lessee's liability pursuant
to the indemnification provision in this Section 2.1 shall not exceed one
million dollars ($1,000,000). Lessor waives any and all claims against and
releases Lessee from liability for loss or liability of Lessor in excess of
$1,000,000 which may be caused by or arise in connection with any delay caused
by Lessee in surrendering the Premises as provided in this Section 2.1, except
that Lessee must, in addition to the above, comply with all other terms of the
Lease, including the payment of Rent until Lessee surrenders the Premises to
Lessor.
3. USES PROHIBITED: 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 subject Premises may be located or allow any sale by
auction upon the Premises, or allow the Premises to be used for any improper,
immoral, unlawful or objectionable purpose, or place any loads upon the
floor, walls, or ceiling which may 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 building structure, unless approved by the local,
state federal or other applicable governing authority. Lessor consents to
Lessee's use of materials which are incidental to the normal, day-to-day
operations of Lessee, such as copier fluids, cleaning materials, etc., but
this does not relieve Lessee of any of its obligations not to contaminate the
Premises or related real property or violated any hazardous materials laws.
4. ALTERATIONS AND ADDITIONS: Lessee shall not make, or suffer to be made,
any alteration or addition to said Premises, or any part thereof, without the
express, advance written consent of Lessor; any addition or alteration to
said Premises, except movable furniture and trade fixtures, shall become at
once a part of the realty and belong to Lessor as of termination of the
Lease. Alterations and additions which are not deemed as trade fixtures shall
include HVAC systems, lighting systems, electrical systems, partitioning,
carpeting, or any other installation which has become an integral part of the
Leased Premises. Lessee agrees that it will not proceed to make such
alterations or additions until all required government permits have been
obtained and after having obtained consent from Lessor to do so, until five
(5) days from the receipt of such consent, so 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. Lessee may remove and will be required to remove its special tenant
improvements and all related equipment installed by Lessee at or prior to
Lease Expiration or Termination. Notwithstanding the above, Lessor agrees to
allow any reasonable alterations and improvements and will notify Lessee in
accordance with Section 2.1 at the time of approval if such improvements or
alterations are to be removed on Expiration or Termination. Notwithstanding
the above, Lessee shall have the right, during the term of this Lease, to
make improvements to the Premises at their sole cost and expense of $25,000
with no approval from Lessor, provided they are not structural and subject to
the requirement to remove the subject improvements at Lease Expiration or
Termination.
5. MAINTENANCE OF PREMISES: Lessee shall at its sole cost and expense keep
and maintain the interior of the Premises, including, but not limited to, all
lighting systems, temperature control systems and plumbing systems, in good
and sanitary order, condition and repair, including any required
replacements. Lessee shall maintain all wall surfaces and floor coverings in
good condition.
Lessee shall keep and maintain in good condition and repair including required
replacements, at Lessee's sole cost and expense the following:
1. The exterior of the building, any appurtenances and every part thereof,
including but not limited to, glazing, sidewalks, parking areas, electrical
systems, HVAC systems, elevator systems, roof, and painting of exterior
walls.
2. The HVAC by a service contract with a licensed air conditioning and
heating contractor which contract shall provide for a minimum of bi-monthly
maintenance of all air conditioning and heating equipment at the
PAGE 22
Leased Premises including HVAC repairs or replacements which are either
excluded from such service contract or any existing equipment warranties.
3. The landscaping by a landscape contract to water, maintain, trim and
replace, when necessary, any shrubbery and landscaping on the Leased
Premises.
4. The roof membrane by a service contract with a licensed reputable
roofing contractor which contract shall provide for a minimum of
semi-annual maintenance and repair of the roof at the Leased Premises,
including cleaning storm gutters and drains and removing debris and
trimming overhanging trees.
5. The elevator by a service contract with a licensed elevator service
company which contract will provide for a minimum of quarterly maintenance
of the elevator and related equipment at the Leased Premises, including
repair and replacements of parts and equipment.
Notwithstanding the maintenance obligations imposed on Lessee by this Section 5,
if any single repair or replacement for which Lessee would otherwise be
responsible under this Section 5 would cost more than $25,000, provided Lessee
gives Lessor 5 business days advance written notice of its intent to make such
repair (except in the case of an emergency), then Lessor shall reimburse Lessee
for the cost of such repair or replacement and the total cost shall be amortized
(calculated in terms of months) over the estimated useful life of the repair or
replacement item, not to exceed 12 years, at Wells Fargo prime rate plus one
percent (1%) and Lessee shall pay to Lessor the monthly amount so derived during
each month occurring in the remaining Lease term and any extension thereof.
Lessee hereby waives any and all rights 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.
Lessor shall be responsible for any maintaining and repairing (including,
without limitation, the correction of any defect) in the structural components
of the Premises, including without limitation, the roof structure (not
membrane), exterior walls and foundation during the Lease term subject to
Section 19.
6. HAZARD INSURANCE: Lessee shall not use, or permit said Premises, or any
part thereof, to be used, for any purpose other than that for which said
Premises are hereby Leased; and no use shall be made or permitted to be made
of the said Premises, nor acts done, which may 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 a standard form fire insurance policy.
Lessee shall, at its 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 general
liability insurance, covering said building and appurtenances. The Lessor
agrees to purchase and keep in force fire and extended coverage insurance
covering loss or damage to the Premises in an amount equal to the full
replacement cost of said Premises as determined by Lessor, with proceeds
payable to Lessor. The Lessee acknowledges that the insurance referenced
above does not include coverage for Lessee's personal property. In the event
of a loss per the insurance provisions of this paragraph, Lessee shall be
responsible for deductibles up to a maximum of $5,000 per occurrence. The
Lessee agrees to pay to the Lessor as additional Rent, on demand, the full
cost of said insurance as evidenced by insurance billings to the Lessor. It
is understood and agreed that Lessee's obligation under this paragraph will
be prorated to reflect the Commencement Date and Termination Date of this
Lease.
Notwithstanding any provisions to the contrary in the Lease, Lessor and Lessee
hereby waive any rights each may have against the other related to any loss or
damage caused 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 provide that their respective
insurance policies insuring the property or the personal property include a
waiver of any right of subrogation which said insurance company may have against
the Lessor or the Lessee, as the case may be. Lessor shall maintain in full
force and effect, a policy of rental loss insurance, in an amount equal to the
amount of Rent payable by Lessee commencing on the date of loss during the next
ensuing one (1) year, as reasonably determined by Lessor with proceeds payable
to Lessor unless Lessee notifies Lessor in writing that Lessee will provide the
loss of rents coverage required herein. Lessee shall reimburse Lessor for the
full cost of said rental loss insurance coverage.
Lessee may provide all of the policies of insurance required in Section 6
provided the policies meet the standards of Lessor below and are paid in full by
Lessee:
PAGE 23
a. certificates evidencing the insurance required hereunder shall be
deposited with Lessor thirty (30) days prior to the Commencement Date, and
upon each renewal of such policies, shall be effective not less than thirty
(30) days prior to the expiration date of the term of such coverage,
b. shall be in a form reasonably satisfactory to Lessor and shall provide
all of the coverage required in Section 6,
c. shall be carried with companies with a Best Rating of A+ minimum,
d. shall specifically provide that such policies shall not be subject to
cancellation, reduction of coverage or other change except after at least
thirty (30) days' prior written notice to Lessor,
e. shall name Lessor, a lender with a security interest in the Premises
identified to Lessee by Lessor, as additional insureds by endorsement to
policy to the extent of the full replacement cost of the Premises,
f. shall provide the insurance proceeds are payable to Lessor,
g. shall provide that Lessee assumes responsibilities of Lessor in Section
19 with regard to maintaining insurance.
7. ABANDONMENT: Lessee shall not vacate or abandon the Premises at any time
during the term; and if Lessee shall abandon, vacate or 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. Notwithstanding the above, the Premises shall not be
considered vacated or abandoned if Lessee maintains the Premises in good
condition, provides security and is not in Default.
8. FREE FROM LIENS: Lessee shall keep the subject Premises and the property in
which the subject Premises are situated, free from any and all liens including
but not limited to liens arising out of any work performed, materials furnished,
or obligations incurred by Lessee. However, the Lessor shall allow Lessee to
contest a lien claim, so long as the claim is discharged prior to any
foreclosure proceeding being initiated against the property and provided Lessee
provides Lessor a bond if the lien exceeds $5,000.
9. COMPLIANCE WITH GOVERNMENTAL REGULATIONS: Lessee shall, at its sole cost and
expense, comply with all of the requirements of all Local, Municipal, State and
Federal authorities now in force, or which may hereafter be in force, pertaining
to Lessee's use and occupancy of the said Premises, and shall faithfully observe
in the use of the Premises all Local and Municipal ordinances and State and
Federal statutes now in force or which may hereafter be in force.
Notwithstanding the obligations to comply with governmental regulations imposed
on Lessee by this Section 9, if any single addition, repair or replacement for
which Lessee would otherwise be responsible under this Section 9 would cost more
than $15,000 and such addition, repair or replacement is not required as a
result of Lessee's particular use of the Premises, then Lessor shall make and
pay for such addition, repair or replacement and the total cost shall be
amortized (calculated in terms of months) over the estimated useful life of the
repair or replacement item, not to exceed 12 years, at Wells Fargo prime rate
plus one percent (1%), and Lessee shall pay to Lessor the amount so derived
during each month occurring in the remaining Lease term and any extension
thereof.
10. LESSEE'S INSURANCE: Lessee, as a material part of the consideration to be
rendered to Lessor, hereby waives all claims against Lessor and Lessor's
Agents for damages to goods, wares and merchandise, and all other personal
property in, upon or about said Premises, including loss of use, and for
injuries to persons in, upon or about said Premises, from any cause arising
at any time, and Lessee will hold Lessor and Lessor's Agents exempt and
harmless from any damage or injury to any person, or to the goods, wares and
merchandise and all other personal property of any person, arising from the
use or occupancy 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 standard policy of general liability
insurance and property damage policy covering the Leased Premises, including
parking areas, insuring the Lessee. A certificate of said policy naming
Lessor as an additional insured shall be delivered to Lessor and will have a
combined single limit for both bodily injury, death and property damage in an
amount not less than five million dollars ($5,000,000.00). Lessee shall
obtain a written obligation on the part of the insurer to notify Lessor
PAGE 24
30 days in advance in writing before any cancellation thereof. Lessee shall
obtain, at Lessee's sole cost and expense, a policy of fire and extended
coverage insurance including coverage for direct physical loss special form,
and a sprinkler leakage endorsement insuring the personal property of the
Lessee. The proceeds from any property damage policy shall be payable to
Lessee. Lessee shall, at its sole cost and expense, comply with all of the
insurance requirements of all Local, Municipal, State and Federal authorities
now in force, or which may hereafter be in force, pertaining to Lessee's use
and occupancy of the said Premises. The provisions of this Section 10, shall
not apply to any injury caused by the sole negligence or willful misconduct
of Lessor or Lessor's Agents.
11. ADVERTISEMENTS AND SIGNS: Lessee will not place or permit to be placed,
in, upon or about the Premises any unusual or extraordinary signs, or any
signs not approved by the city, local, state, federal or other applicable
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 shall not be unreasonably withheld.
A sign so placed on the Premises shall be so placed upon the understanding
and agreement that Lessee will remove same at the Termination of this Lease
and repair any damage or injury to the Premises caused thereby, and if not so
removed by Lessee, then Lessor may have the same removed at Lessee's expense.
Subject to the provisions above, Lessor hereby consents to the placement of
signage on the building as well as a monument sign at the entrance.
12. UTILITIES: Lessee shall pay for all water, gas, heat, light, power,
telephone and other utilities supplied to the Premises. Any charges for
sewer usage or related fees shall be the obligation of Lessee and paid for by
Lessee.
13. ATTORNEY'S FEES: 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
reasonable attorney's fees 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. In addition to the above, if any party hereto
secures a judgment in any legal action or proceeding brought to enforce or
interpret any provision of this Lease, or to protect or establish any right or
remedy hereunder, then any costs and expenses, including attorneys' fees and
costs, incurred by such party in enforcing such judgment shall be recoverable
separately from and in addition to any other amount included in such judgment.
This Section 13 is intended to be severable from the other provisions of this
Lease, and shall survive and not be merged into any such judgment.
14.1 DEFAULT: The occurrence of any of the following shall constitute a
"Default" and breach of this Lease by Lessee: a) Any failure by Lessee to pay
Rent or to make any other payment required to be made by Lessee hereunder when
due if not cured within ten (10) days after written notice thereof by Lessor to
Lessee; b) The abandonment or vacation of the Premises by Lessee except as
provided in Section 7; c) A failure by Lessee to observe and perform any other
provision of this Lease to be observed or performed by Lessee, where such
failure continues for thirty (30) days after written notice thereof by Lessor to
Lessee; provided, however, that if the nature of such Default is such that the
same cannot be reasonably cured within such thirty (30) day period, Lessee shall
not be deemed to be in Default if Lessee shall, within such period, commence
such cure and thereafter diligently prosecute the same to completion; d) 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 adjudged a bankrupt or
of a petition for reorganization or arrangement under any law relating to
bankruptcy which petition is not discharged within 60 days; e) the appointment
of a trustee or receiver to take possession of substantially all of Lessee's
assets or Lessee's interest in this Lease, or the attachment, execution or other
judicial seizure of substantially all of Lessee's assets located at the Premises
or of Lessee's interest in this Lease unless such appointment or attachment be
dissolved within 60 days.
14.2 SURRENDER OF LEASE: In the event of any such Default by Lessee, then in
addition to any other remedies available to Lessor at law or in equity, 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 the
event that Lessor terminates this Lease due to a Default of Lessee, then Lessor
may recover from Lessee: a) the worth at the time of award of any unpaid Rent
which had been earned at the time of such termination; plus b) the worth at the
time of award of unpaid Rent which would have been earned after termination
until the time of award exceeding the amount of such rental loss; plus c) the
worth at the time of award of the amount by which the unpaid Rent for the
balance of the term after the time of award exceeds the amount of such rental
loss; plus d) any other amount necessary to compensate Lessor for all the
detriment proximately caused by Lessee's failure to perform his obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom; and e) at Lessor's election, such other
PAGE 25
amounts in addition to or in lieu of the foregoing as may be permitted from time
to time by applicable California law. As used in (a), (b) and (c) above, the
"worth at the time of award" is computed by allowing interest at the rate of
Wells Fargo's prime rate plus two (2%) percent per annum.
14.3 RIGHT OF ENTRY AND REMOVAL: In the event of any such Default by Lessee,
Lessor shall also have the right, with or without terminating this Lease, to
re-enter the Premises and remove all persons and property from the Premises;
such property may be removed and stored in a public warehouse or elsewhere at
the cost of and for the account of Lessee.
14.4 ABANDONMENT: In the event of the vacation or abandonment, except as
provided in Section 7, of the Premises by Lessee or in the event that Lessor
shall elect to re-enter as provided in paragraph 14.3 above or shall take
possession of the Premises pursuant to legal proceeding or pursuant to any
notice provided by law, then if Lessor does not elect to terminate this Lease
as provided in paragraph 14.2 above, this Lease shall continue in effect for so
long as Lessor does not terminate Lessee's right to possession, and Lessor may
enforce all its rights and remedies under this Lease, including without
limitation the right to recover all rent as it becomes due. Acts of
maintenance, or preservation, efforts to relet the Leased Premises, or the
appointment of a receiver upon initiative of the Lessor to protect Lessor's
interest in the Lease shall not constitute a termination of Lessee's right to
possession.
14.5 NO IMPLIED TERMINATION: No re-entry or taking possession of the Premises by
Lessor pursuant to 14.3 or 14.4 of this Article 14 shall be construed as an
election to terminate this Lease unless (i) a written notice of such intention
is given to Lessee, (ii) Lessee's right to possession of the Premises is
terminated, or (iii) the termination thereof is decreed by a court of competent
jurisdiction.
15. SURRENDER OF LEASE: 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 sub tenancies,
or may, at the option of Lessor, operate as an assignment to him of any or all
such subleases or sub tenancies.
16. TAXES: Lessee shall pay and discharge punctually and when the same shall
become due and payable without penalty, all real estate taxes, personal property
taxes, taxes based on vehicles utilizing parking areas in the Premises, taxes
computed or based on rental income (other than federal, state and municipal net
income taxes), Environmental Surcharges, privilege taxes, excise taxes, business
and occupation taxes, school fees or surcharges, gross receipts taxes, sales
and/or use taxes, employee taxes, occupational license taxes, water and sewer
taxes, assessments (including, but not limited to, assessments for public
improvements or benefit), and all other governmental impositions and charges of
every kind and nature whatsoever, regardless of whether now customary or within
the contemplation of the parties hereto and regardless of whether resulting from
increased rate and/or valuation, or whether extraordinary or ordinary, general
or special, unforeseen or foreseen, or similar or dissimilar to any of the
foregoing (all of the foregoing being hereinafter collectively called "Tax" or
"Taxes") which, at any time during the Lease term, shall be applicable or
against the Premises, or shall become due and payable and a lien or charge upon
the Premises under or by virtue of any present or future laws, statutes,
ordinances, regulations, or other requirements of any governmental authority
whatsoever. The term "Environmental Surcharge" shall include any and all
expenses, taxes, charges or penalties imposed by the Federal Department of
Energy, Federal Environmental Protection Agency, the Federal Clean Air Act, or
any regulations promulgated thereunder, or any other local, state or federal
governmental agency or entity now or hereafter vested with the power to impose
taxes, assessments or other types of surcharges as a means of controlling or
abating environmental pollution or the use of energy (i) generally imposed on
similar properties in a wide geographic area without regard to whether the
properties subject to the tax are contaminated by Hazardous Materials and which
is part of a comprehensive plan imposed by a governmental unit or (ii) imposed
with respect to the Premises as the result of the presence of Hazardous
Materials for which Lessee is required to indemnify Lessor under Section 33.4
below or to undertake remediation pursuant to Section 33.5 below. . The term
"Tax" shall include, without limitation, all taxes, assessments, levies, fees,
impositions or charges levied, imposed, assessed, measured, or based in any
manner whatsoever (i) in whole or in part on the Rent payable by Lessee under
this Lease, (ii) upon or with respect to the use, possession, occupancy,
leasing, operation or management of the Premises, (iii) upon this transaction or
any document to which Lessee is a party creating or transferring an interest or
an estate in the Premises, (iv) upon Lessee's business operations conducted at
the Premises, (v) upon, measured by or reasonably attributable to the cost or
value of Lessee's equipment, furniture, fixtures and other personal property
located on the Premises or the cost or value of any leasehold improvements made
in or to the Premises by or for Lessee, regardless of whether title to such
improvements shall be in Lessor or
PAGE 26
Lessee, or (vi) in lieu of or equivalent to any Tax set forth in this Section
16. In the event any such Taxes are payable by Lessor and it shall not be
lawful for Lessee to reimburse Lessor for such Taxes, then the Rent payable
thereunder shall be increased to net Lessor the same net rent after imposition
of any such Tax upon Lessor as would have been payable to Lessor prior to the
imposition of any such Tax. It is the intention of the parties that Lessor
shall be free from all such Taxes and all other governmental impositions and
charges of every kind and nature whatsoever. However, nothing contained in this
Section 16 shall require Lessee to pay any Federal or State income, franchise,
estate, inheritance, succession, transfer or excess profits tax imposed upon
Lessor. If any general or special assessment is levied and assessed against the
Premises, Lessor agrees to use its best reasonable efforts to cause the
assessment to become a lien on the Premises securing repayment of a bond sold to
finance the improvements to which the assessment relates which is payable in
installments of principal and interest over the maximum term allowed by law. It
is understood and agreed that Lessee's obligation under this paragraph will be
prorated to reflect the Commencement Date and Termination Date of this Lease.
Notwithstanding the above, Lessee shall not be responsible for increases in real
property taxes during the initial term of the Lease if such increase is the sole
result of a change in ownership of the Premises by Lessor to other than Lessee
(Transfers to corporations, partnerships, trusts or other entities controlled by
the Berg family exempted).
Subject to any limitations or restrictions imposed by any deeds of trust or
mortgages now or hereafter covering or affecting the Premises, Lessee shall have
the right to contest or review the amount or validity of any Tax by appropriate
legal proceedings but which is not to be deemed or construed in any way as
relieving, modifying or extending Lessee's covenant to pay such Tax at the time
and in the manner as provided in this Section 16. However, as a condition of
Lessee's right to contest, if such contested Tax is not paid before such contest
and if the legal proceedings shall not operate to prevent or stay the collection
of the Tax so contested, Lessee shall, before instituting any such proceeding,
protect the Premises and the interest of Lessor and of the beneficiary of a deed
of trust or the mortgagee of a mortgage affecting the Premises against any lien
upon the Premises by a surety bond, issued by an insurance company acceptable to
Lessor and in an amount equal to one and one-half (1 1/2) times the amount
contested or, at Lessor's option, the amount of the contested Tax and the
interest and penalties in connection therewith. Any contest as to the validity
or amount of any Tax, whether before or after payment, shall be made by Lessee
in Lessee's own name, or if required by law, in the name of Lessor or both
Lessor and Lessee. Lessee shall defend, indemnify and hold harmless Lessor
from and against any and all costs or expenses, including attorneys' fees, in
connection with any such proceedings brought by Lessee, whether in its own name
or not. Lessee shall be entitled to retain any refund of any such contested Tax
and penalties or interest thereon which have been paid by Lessee. Nothing
contained herein shall be construed as affecting or limiting Lessor's right to
contest any Tax at Lessor's expense.
17. NOTICES: Unless otherwise provided for in this Lease, any and all written
notices or other communication (the "Communication") to be given in connection
with this Lease shall be given in writing and shall be given by personal
delivery, facsimile transmission or by mailing by registered or certified mail
with postage thereon or recognized overnight courier, fully prepaid, in a sealed
envelope addressed to the intended recipient as follows:
(a) to the Lessor at: 10050 Bandley Drive
Cupertino, California 95014
Attention: Carl E. Berg
Fax No: (408) 725-1626
(b) to the Lessee at: 1400 Parkmoor Avenue
San Jose, California 95126
Attention: Vice President of Finance
Fax No: (408) 999-0836
or such other addresses, facsimile number or individual as may be designated by
a Communication given by a party to the other parties as aforesaid. Any
Communication given by personal delivery shall be conclusively deemed to have
been given and received on a date it is so delivered at such address provided
that such date is a business day, otherwise on the first business day following
its receipt, and if given by registered or certified mail, on the day on which
delivery is made or refused or if given by recognized overnight courier, on the
first business day following deposit with such overnight courier and if given by
facsimile
PAGE 27
transmission, on the day on which it was transmitted provided such day is a
business day, failing which, on the next business day thereafter.
18. ENTRY BY LESSOR: Lessee shall permit Lessor and its agents to enter into and
upon said Premises at all reasonable times using the minimum amount of
interference and inconvenience to Lessee and Lessee's business, 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; 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 "For Lease" signs and exhibit the Premises to
prospective tenants at reasonable hours.
19. DESTRUCTION OF PREMISES: In the event of a partial destruction of the said
Premises during the said term of this Lease from any cause which is covered by
Section 6's property insurance, Lessor shall forthwith repair the same, provided
such repairs can be made within ninety (90) 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 to the extent of payments received by Lessor under its Loss of Rents
Insurance coverage. With 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 subject Premises may be situated is
destroyed to an extent greater than thirty-three and one-third (33 1/3%) of the
replacement cost thereof, Lessor may within ten (10) days of such occurrence, at
its sole option, elect to terminate this Lease, whether the subject Premises are
injured or not. A total destruction of the building in which the subject
Premises are situated shall terminate this Lease. Notwithstanding the above,
Lessor is only obligated to repair or rebuild to the extent of the total of
available insurance proceeds ("Available Insurance Proceeds") including (i) any
"deductible" amount and (ii) any insurance proceeds which would ordinarily have
been available had Lessor fulfilled its obligation to carry the hazard insurance
specified in Section 6 unless Lessor had previously notified Lessee in writing
that such required hazard insurance was not commercially available, in which
case insurance proceeds which would have been available if Lessor had carrier
such commercially unavailable insurance shall not be included as Available
Insurance Proceeds hereunder. If the deductible exceeds $5,000, Lessee's
deductible obligation, but is less than $100,000, then Lessor shall fund the
amount in excess of $5,000. The deductible amount funded by Lessor, if any,
shall be amortized over 20 years at Wells Fargo prime rate plus one percent
(1%), and Lessee shall pay to Lessor the amortized cost on a monthly basis over
the remaining Lease term and any extensions thereof. Should Lessor reasonably
determine that insufficient or no Available Insurance Proceeds are available for
repair or reconstruction of Premises, Lessor, at its sole option, may terminate
the Lease provided that Lessee shall have the option of continuing this Lease
by agreeing to pay all repair costs to the subject Premises in excess of the
Available Insurance Proceeds. If Lessor reasonably determines that such repairs
will require more than 180 days to complete, Lessor shall so notify Lessee
within 10 days following the occurrence of such damage or destruction, and
either Lessor or Lessee may terminate this Lease by giving written notice to the
other party within ten (10) days after Lessee's receipt of such notice.
20. ASSIGNMENT AND SUBLETTING: 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 cause any other person or entity
(a bona fide subsidiary or affiliate of Lessee excepted) to occupy or use the
said Premises, or any portion thereof, without the advance written consent of
Lessor which shall not be unreasonably withheld or delayed. Any such assignment
or subletting without such consent shall be void, and shall, at the option of
the Lessor, terminate this Lease. This Lease shall not, or 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 subject 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. Notwithstanding any provision to the contrary in this Lease, Lessee
may, without Lessor's prior written consent, and without participation by Lessor
in assignment and subletting proceeds, sublet or assign the Lease to (i) a
subsidiary, affiliate, division or corporation controlled or under common
control with Lessee, (ii) a successor corporation related to Lessee by merger,
consolidation, non bankruptcy reorganization or government action, (iii) a
purchaser of substantially all of Lessee's assets located at the Premises
(collectively, "Permitted Transfers"; individually "Permitted Transfer").
Notwithstanding any provision to the contrary in this Lease, the sale or
transfer of Lessee's capital stock, including, without limitation, a transfer in
connection
PAGE 28
with the merger, consolidation or nonbankruptcy reorganization of Lessee and any
sale through any public exchange, shall not be deemed an assignment, subletting
or any other transfer of the Lease or the Premises. Whether or not Lessor's
consent to a sublease or assignment is required, in the event of any sublease or
assignment, Lessee shall be and remain primarily liable for the performance of
all conditions, covenants, and obligations of Lessee hereunder and, in the event
of a Default by an assignee or sublessee, Lessor may proceed directly against
the original Lessee hereunder and/or any other predecessor of such assignee or
sublessee without the necessity of exhausting remedies against said assignee or
sublessee.
21. 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, 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 vests in the condemnor or purchaser, and the Rent payable
hereunder shall be adjusted so that the Lessee shall be required to pay for the
remainder of the term only that portion of Rent as the value of the part
remaining. The rental adjustment resulting will be computed at the same Rental
rate for the remaining part not taken; however, Lessor 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 a portion susceptible for occupation hereunder or
if such a part thereof is taken that Lessee's contemplated use of the Premises
is materially and adversely affected, this Lease shall thereupon terminate. If
a part or all of the Premises be taken, all compensation awarded upon such
taking shall be payable to the Lessor. Lessee shall be entitled to file its own
claim based on tenant improvements Lessee is entitled to remove at termination
of the Lease, the unamortized value of such improvements installed at Lessee's
expense which are not removable and Lessee's moving costs.
22. EFFECTS OF CONVEYANCE: The term "Lessor" as used in this Lease, means only
the owner for the time being of the land and building constituting the Premises,
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 of any such sale, or the Lessor of the building, that the purchaser or
lessee of the building has assumed and agreed to carry out any and all covenants
and obligations of the Lessor hereunder provided that such purchaser or lessee
has assumed Lessor's obligations in a writing reasonably acceptable to Lessee.
If any security is given by the Lessee to secure the faithful performance of all
or any of 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
sale of the Lessee of the building, and thereupon the Lessor shall be discharged
from any further liability.
23. SUBORDINATION: In the event Lessor notifies Lessee in writing, the Lease
shall be subordinate to any ground Lease, deed of trust, or other hypothecation
for security now or hereafter placed upon the real property at which the
Premises are a part and to any and all advances made on the security thereof and
to renewals, modifications, replacements and extensions thereof. Lessee agrees
to promptly execute any documents which may be required to effectuate such
subordination. Notwithstanding the above, Lessor shall obtain from the holder
of any encumbrance against all or any part of the Premises a nondisturbance
agreement for the benefit of Lessee in form reasonably acceptable to Lessee.
Lessee shall not be required to subordinate its leasehold interest to any deed
of trust placed on the Premises in the future unless the holder of any such deed
of trust executes a subordination, nondisturbance, recognition and attornment
agreement in form reasonably acceptable to Lessee, which does not materially
adversely affect Lessee's rights under the Lease or increase Lessee's
obligations under the Lease.
24. WAIVER: The waiver by either party of any breach of any term, covenant or
condition, herein contained shall not be construed to be a 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 Lessee's breach of any
term, covenant, or condition of the Lease.
25. HOLDING OVER: Any holding over after the Termination or Expiration of the
said term shall be construed to be a hold over tenancy from month to month. In
addition to the liabilities and obligations provided for herein, including but
not limited to in Section 2.1, Lessee shall pay to Lessor Rent equal to one and
one-fourth (1.25) times the monthly base rent installment due in the month
preceding the Termination or Expiration of the Lease and all other additional
rent and all other terms and conditions of the Lease shall apply, so far as
applicable. No holding over shall be deemed or construed to exercise any option
to extend or renew this Lease in lieu of full and timely exercise of any such
option as required hereunder.
PAGE 29
26. SUCCESSORS AND ASSIGNS: 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.
27. ESTOPPEL CERTIFICATES: Each party shall at any time during the term of this
Lease, upon not less than ten (10) days prior written notice from the other,
execute and deliver to the other 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 dates to which the Rent and other charges
have been paid in advance, if any, and acknowledging that there are not, to such
party's knowledge, any uncured Defaults on the part of the other party hereunder
or specifying such Defaults if they are claimed. Any such statement may be
conclusively relied upon by any prospective purchaser or encumbrancer of the
Premises. A party's failure to deliver such a statement within such time shall
be conclusive upon the other that (a) this Lease is in full force and effect,
without modification except as may be represented by the other party and (b)
there are no uncured Defaults in performance.
28. TIME: Time is of the essence of the Lease.
29. CAPTIONS: The headings on 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.
30. PARTY NAMES: Landlord and Tenant may be used in various places in this Lease
as a substitute for Lessor and Lessee respectively.
31. EARTHQUAKE INSURANCE: As a condition of Lessor agreeing to waive the
requirement for earthquake insurance, Lessee agrees that it will pay, as
additional Rent, an amount not to exceed sixty thousand dollars ($60,000) per
year for earthquake insurance if Lessor desires to obtain some form of
earthquake insurance in the future, if and when available, on terms acceptable
to Lessor.
32. HABITUAL DEFAULT: Notwithstanding anything to the contrary contained in
Section 14 herein, Lessor and Lessee agree that if the Lessee shall have
committed a Default in the payment of Rent for three or more times during any
twelve month period during the term hereof, then such conduct shall, at the
option of the Lessor, represent a separate event of Default which cannot be
cured by Lessee. Lessee acknowledges that the purpose of this provision is to
prevent repetitive Defaults by the Lessee under the Lease, which constitute a
hardship to the Lessor and deprive the Lessor of the timely performance by the
Lessee hereunder.
33. HAZARDOUS MATERIALS
33.1 DEFINITIONS: As used herein, the following terms shall have the following
meaning:
a. 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
substance" "hazardous water", "hazardous material", "extremely hazardous
waste", "restricted hazardous waste" under Section 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 "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 25181 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) designed
as "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
1004 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 "hazardous substance" pursuant to Section 101 of the Comprehensive
Environmental Responsibility Compensation, and Liability Act, 42 U.S.C.
9601 et seq., or (xi) regulated under the Toxic Substances Control Act, 156
U.S.C. 2601 et seq.
PAGE 30
b. The term "Hazardous Materials Laws" shall mean any local, state and
federal laws, rules, regulations, or ordinances relating to the use,
generation, transportation, analysis, manufacture, installation, release,
discharge, storage or disposal of Hazardous Materials.
c. The term "Lessor's Agents" as used herein shall mean Lessor's agents,
representatives, employees, contractors, subcontractors, directors,
officers and partners.
d. The term "Lessee's Agents" as used herein shall mean Lessee's agents,
representatives, employees, contractors, subcontractors, directors,
officers, partners, invitees or any other person in or about the Premises.
33.2 LESSEE'S RIGHT TO INVESTIGATE: Lessee shall be entitled to cause such
inspection, soils and groundwater tests, and other evaluations to be made of the
Premises as Lessee deems necessary regarding (i) the presence and use of
Hazardous Materials in or about the Premises, and (ii) the potential for
exposure to Lessee's employees and other persons to any Hazardous Materials used
and stored by previous occupants in or about the Premises. Lessee shall provide
Lessor with copies of all inspections, tests and evaluations. Lessee shall
indemnify, defend and hold Lessor harmless from any cost, claim or expense
arising from such entry by Lessee or from the performance of any such
investigation by such Lessee, provided that Lessee shall have no liability
caused by or arising from the presence of Hazardous Materials revealed by
Lessee's investigations, tests and the like.
33.3 LESSOR'S REPRESENTATIONS: Lessor hereby represents and warrants to the best
of Lessor's knowledge that the Premises are as of the date of the Lease and
shall be as of the Commencement Date, in compliance with all Hazardous Material
Laws.
33.4 LESSEE'S OBLIGATION TO INDEMNIFY: Lessee, at its sole cost and expense,
shall indemnify, defend, protect and hold Lessor and Lessor's Agents harmless
from and against any and all cost or expenses, including those described under
subparagraphs (i), (ii) and (iii) hereinbelow set forth, arising from or caused
directly or indirectly by:
a. Lessee's or Lessee'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
b. Lessee's or Lessee's Agents' failure to comply with Hazardous Material
Laws; or
c. Any release of Hazardous Materials to, in, on, under, about, from or
onto the Premises caused by Lessee or Lessee's Agents or occurring during
the Lease Term, except if such release is from migration from a source off
the Premises not arising from or caused by Lessee or Lessee's Agents..
The cost and expenses indemnified against include, but are not limited to the
following:
i. Any and all claims, actions, suits, proceedings, losses, damages,
liabilities, deficiencies, forfeitures, penalties, fines, punitive damages,
cost or expenses;
ii. 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, release or other adverse effects
on the environment;
iii. The cost of any repair, clean-up, treatment or detoxification of the
Premises necessary to bring the Premises into compliance with all Hazardous
Material 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).
33.5 LESSEE'S OBLIGATION TO REMEDIATE CONTAMINATION: Lessee shall, at its sole
cost and expense, promptly take any and all action necessary to remediate
contamination of the Premises by Hazardous Materials as herein defined, to the
extent Lessee is liable for the presence of such Hazardous Materials pursuant to
other provisions of this Article 33.
33.6 OBLIGATION TO NOTIFY: Lessor and Lessee shall each give written notice to
the other as soon as reasonably practical of (i) any communication received from
any governmental authority concerning Hazardous Materials which relates to the
Premises and (ii) any contamination of the Premises by Hazardous Materials which
constitutes a violation of any Hazardous Materials Laws.
33.7 SURVIVAL: The obligations of Lessee under this Section 33 shall survive the
Expiration or earlier Termination of the Lease.
PAGE 31
33.8 CERTIFICATION AND CLOSURE: On or before the Expiration or earlier
Termination of this Lease, Lessee shall deliver to Lessor a certification
executed by Lessee stating that, to the best of Lessee's knowledge, there exists
no violation of Hazardous Material Laws resulting from Lessee's obligation in
Paragraph 33. If pursuant to local ordinance, state or federal law, Lessee 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 Lessee shall furnish to
Lessor a copy of such plan.
33.9 PRIOR HAZARDOUS MATERIALS: Notwithstanding any provision to the contrary in
this Lease, Lessee shall have no obligation to clean up, or to comply with any
law regarding, or to reimburse, indemnify, defend, release or hold Lessor
harmless with respect to, and Lessor releases Lessee from and waives all claims
against Lessee for, any and all liability for any Hazardous Materials or wastes
discovered in, on, under, or about the Premises which (i) were not introduced
into, in, on, about, from or under the Premises during the Lessee's Lease term
and/or (ii) are present in, on, under, or about the Premises as the result of
migration from a source off the Premises not arising from or caused by Lessee or
Lessee's Agents.
34. BROKERS: Lessor and Lessee represent that they have not utilized or
contacted a real estate broker or finder with respect to this Lease other than
CPS ("CPS") and Lessee agrees to indemnify and hold Lessor harmless against any
claim, cost, liability or cause of action asserted by any broker or finder
claiming through Lessee other than CPS. Lessor shall at its sole cost and
expense pay the brokerage commission agreed to with CPS in connection with this
transaction. Lessor represents and warrants that it has not utilized or
contacted a real estate broker or finder with respect to this Lease other than
CPS and Lessor agrees to indemnify and hold Lessee harmless against any claim,
cost, liability or cause of action asserted by any broker or finder claiming
through Lessor.
35. OPTION TO EXTEND
A. OPTION: Lessor hereby grants to Lessee two (2) options to extend the Lease
Term, with each extended term to be for a period of five (5) years, on the
following terms and conditions, which shall apply separately to each option to
extend:
(a) Lessee shall give Lessor written notice of its exercise of one of its
options to extend no earlier than twenty-four (24) calendar months, nor later
than six (6) calendar months before the Lease Term would end but for said
exercise. Time is of the essence.
(b) Lessee may not extend the Lease Term pursuant to any option granted by this
section 35 if Lessee is in Default as defined in Section 14 or Section 32 of the
Lease as of the date of the exercise of one of its options. If Lessee is in
Default as defined in Section 14 or 32 on the date that any extended term is to
commence, then Lessor may elect not to allow the Lease Term to be extended,
notwithstanding any notice given by Lessee of an exercise of this option to
extend.
(c) Lessee must exercise each option consecutively, and if it fails to exercise
any one option, it waives the right to exercise the subsequent option and the
Lease Term shall not be extended further.
(d) All terms and conditions of this Lease shall apply during each extended
term, except that the Base Rent and rental increases for each extended term
shall be determined as provided in Section 35 (B) below
(e) Once Lessee delivers a notice of exercise of one of its options to extend
the Lease Term, Lessee may not withdraw such exercise and subject to the
provisions of this Section 35, such notice shall operate to extend the Lease
Term. Upon any extension of the Lease Term pursuant to this Section 35, the
term "Lease Term" as used in this Lease shall thereafter include the then
extended term and the Lease Termination date shall be the expiration date of the
then extended term.
(f) The option rights of StrataCom, Inc. granted under this Section 35 are
granted for StrataCom, Inc.'s personal benefit and may not be assigned or
transferred by StrataCom, Inc. except in connection with a Permitted Transfer or
exercised if StrataCom, Inc. or a successor to StrataCom, Inc. as a result of a
Permitted Transfer is not occupying the Premises at the time of exercise.
B. EXTENDED TERM RENT - OPTION PERIODS: The monthly Rent for the Premises during
the Extended Terms shall equal the monthly Rent during the last month of the
immediately preceding lease term plus 3% for the first year of the Extended
Terms and 3% per year increases annually thereafter. In other words, annual
Base rent increases during the Extended Terms shall be 3% per year.
PAGE 32
36. APPROVALS: Whenever in this Lease the Lessor's or Lessee's consent is
required, such consent shall not be unreasonably or arbitrarily withheld or
delayed. In the event that the Lessor or Lessee does not respond to a request
for any consents which may be required of it in this Lease within ten business
days of the request of such consent in writing by the Lessee or Lessor, such
consent shall be deemed to have been given by the Lessor or Lessee.
37. AUTHORITY: Each party executing this Lease represents and warrants that
he or she is duly authorized to execute and deliver the Lease. If executed
on behalf of a corporation, that the Lease is executed in accordance with the
by-laws of said corporation (or a partnership that the Lease is executed in
accordance with the partnership agreement of such partnership), that no other
party's approval or consent to such execution and delivery is required, and
that the Lease is binding upon said individual, corporation (or partnership)
as the case may be in accordance with its terms.
38. INDEMNIFICATION OF LESSOR: Lessee shall defend, indemnify and hold Lessor
harmless from and against any and all obligations, losses, costs, expenses,
claims, demands, attorneys' fees, investigation costs or liabilities on account
of, or arising out of the use, condition or occupancy of the Premises or any
act or omission to act of Lessee or Lessee's Agents or any occurrence in, upon,
about or at the Premises. It is understood that Lessee is and shall be in
control and possession of the Premises and that Lessor shall in no event be
responsible or liable for any injury or damage or injury to any person
whatsoever, happening on, in, about, or in connection with the Premises, or for
any injury or damage to the Premises or any part thereof except to the extent
caused by Lessor's sole negligence or willful misconduct. This Lease is entered
into on the express condition that Lessor shall not be liable for, or suffer
loss by reason of injury to person or property, from whatever cause, which in
any way may be connected with the use, condition or occupancy of the Premises or
personal property located herein. The provisions of this Lease permitting Lessor
to enter and inspect the Premises are for the purpose of enabling Lessor to
become informed as the whether Lessee is complying with the terms of this Lease
and Lessor shall be under no duty to enter, inspect or to perform any of
Lessee's covenants set forth in this Lease. Lessee shall further indemnify,
defend and hold harmless Lessor from and against any and all claims arising from
any breach or Default in the performance of any obligation to Lessee's part to
be performed under the terms of this Lease. The provisions of Section 38 shall
survive Lease Expiration or Termination with respect to any damage, injury or
death occurring during the Lease term.
The indemnifications of each party are subject to (i) the indemnifying party
being given prompt notice of the suit or claim and (ii) the indemnifying party
having the exclusive right to defend or settle a claim and the reasonable
cooperation of the indemnified party.
Notwithstanding the above, Lessor shall indemnify and hold harmless Lessee from
all damages, liabilities, claims, judgments, actions, attorneys' fees,
consultants' fees, cost and expenses arising from the sole negligence or willful
misconduct of Lessor or its employees, agents, contractors or invitees, or the
material breach of Lessor's obligations or representations under this Lease.
39. LESSOR'S LIABILITY: If Lessee should recover a money judgment against Lessor
arising in connection with this Lease, the judgment shall be satisfied only out
of the Lessor's interest in the Premises and any applicable insurance coverage
and neither Lessor or any of its partners shall be liable personally for any
deficiency.
40. FAIR MARKET VALUE: For purposes of this Lease the term "Fair Market Value"
shall mean the going market rental customary in the market as of the date of the
Expansion Exercise Date for new construction in the South San Jose area, for
improvements of a similar quality and construction for a lessee proposing to
sign a seven (7) year lease and having financial qualifications similar to
Lessee, it being understood that in determining Fair Market Value the parties
shall negotiate in good faith in order to reach an agreement; and in the event
that the parties are unable to reach agreement, the matter shall be determined
by appraisal by three (3) M.A.I. appraisers, experienced in the evaluation of
rent for new construction in the County of Santa Clara, State of California.
Lessor and Lessee shall each appoint one such appraiser within thirty (30) days
of a written request for appraisal from the other, and the two appraisers so
selected shall select a third appraiser within fifteen (15) days after the
selection of the second appraiser. The determination of the three appraisers
shall be made by the vote of two (2) or more of the three arbitrators within
thirty (30) days from the date of the appointment of the third appraiser and
shall be final for all purposes. The cost of such appraisal shall be shared
equally.
PAGE 33
41. RIGHT OF FIRST OFFER TO PURCHASE: Prior to Lessor accepting any offer to
purchase the Premises or any individual Expansion Property or the Expansion Land
or any part thereof, or prior to Lessor making any offer to sell the Premises or
any individual Expansion Property or the Expansion Land or any part thereof,
Lessor shall give Lessee written notice of such offer and shall include in such
notice the price and terms of sale and a statement that Lessor is willing to
sell at that price and on those terms of sale. Lessee shall have the option,
which may be exercised by written notice to Lessor at any time within thirty
(30) days from the 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 provided for an exchange of property as part of the
purchase 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 Premises or any individual Expansion Property
or the Expansion Land on the basis specified in the notice. If Lessee fails to
exercise its option within the 30-day period, Lessor shall have 270 days
thereafter to sell at the price and on the terms of sale specified in the notice
to Lessee.
If Lessor elects, within 270 days of Lessor's notice, to sell the Premises or
any individual Expansion Property or the Expansion Land to a third party on
terms more favorable to the third party buyer than the terms set forth in
Lessor's notice, then Lessor must re-offer the Premises or any individual
Expansion Property or the Expansion Land to Lessee on the same terms and
conditions offered to the third party buyer ("Lessor's Second Notice"). Lessee
shall have five (5) business days from Lessee's receipt of Lessor's Second
Notice to elect to buy the Premises or any individual Expansion Property or the
Expansion Land. If Lessee does not respond in writing accepting all terms and
conditions, Lessor shall thereafter be entitled to sell the Premises or any
individual Expansion Property or the Expansion Land to the third party on the
terms and conditions set forth in Lessor's Second Notice or on other terms and
conditions at least as favorable to Lessor as said terms and conditions in
Lessor's Second Notice for a period of 270 days after which Lessee's Right of
First Offer to Purchase shall again be in effect for the Premises or individual
Expansion Property or the Expansion Land .
42. RIGHT OF FIRST OFFER TO LEASE: After October 31 1996, prior to Lessor
accepting any offer to lease future buildings and improvements on the
Expansion Land, or prior to Lessor making any offer to lease future building
and improvements on the Expansion Land, Lessor shall give Lessee written
notice of such offer and Lessee shall have the opportunity to lease the
Expansion Land or the part thereof offered for lease on the terms and
conditions set forth in Section 44. Lessee shall have the option, which may
be exercised by written notice to Lessor at any time within thirty (30) days
from the receipt of the Lessor's notice to agree to lease the portion of the
Expansion Land specified in the notice to Lessee. If Lessee fails to
exercise its option within the 30-day period, Lessor shall have 270 days
thereafter to lease the Expansion Land specified in the notice, but in no
case on terms more favorable than those offered to Lessee in Section 44.
If Lessor elects, within 270 days of Lessor's notice, to lease the Expansion
Land to a third party on terms more favorable to the third party lessee than
the terms set forth in Section 44, then Lessor must re-offer the Expansion
Land to Lessee on the same terms and conditions offered to the third party
buyer ("Lessor's Second Notice"). Lessee shall have five (5) business days
from Lessee's receipt of Lessor's Second Notice to elect to lease the
Expansion Land. If Lessee does not respond in writing accepting all terms and
conditions, Lessor shall thereafter be entitled to lease the Expansion Land
to the third party on the terms and conditions set forth in Lessor's Second
Notice or on other terms and conditions at least as favorable to Lessor as
said terms and conditions in Lessor's Second Notice for a period of 270 days
after which Lessee's Right of First Offer to Lease shall again be in effect
for the Premises or individual Expansion Land.
43. OPTION TO PURCHASE: Lessor grants to Lessee an option to purchase the
Premises or any individual Expansion Property in accordance with the
following terms and conditions:
(a) Lessor's obligation to sell the Premises or any individual Expansion
Property to Lessee and Lessee's obligation to buy the Premises or any
individual Expansion Property from Lessor shall be conditioned upon Lessor's
obtaining all building permits, approvals, subdivision maps and any other
approvals, instruments or documents necessary for the Premises to be legally
subdivided from the property of which it is a part and sold as a separate
legal parcel. Lessor shall not be obligated for any costs resulting from City
imposed subdivision conditions in excess of $50,000 for the entire legal
parcel of which the Premises or Expansion Property are a part.
PAGE 34
(b) In order to exercise this option to purchase, Lessee must notify Lessor in
writing of such exercise between the third and fourth months or the 36th through
the 47th month on the initial Lease term of any property. This option shall be
null and void if not exercised as stated herein before the expiration of the
48th month of the initial Lease term of any property.
(c) The purchase price shall be payable in cash or other immediately available
funds, at close of escrow, which shall occur on a date chosen by Lessee but in
any event (i) no earlier than thirty (30) days after Lessee has exercised its
option to purchase and (ii) not later than the sixth month after Lessee has
exercised its option to purchase. Upon payment of said purchase price. Lessor
shall deliver fee simple absolute title to Lessee by grant deed, free and clear
of all claims, liens, restrictions and encumbrances, other than current taxes,
assessments, easements (all as of the date of Lessee's exercise of its option)
and anything of record or not of record resulting from the acts or omissions of
Lessee, and such other matters as Lessor and Lessee may mutually agree upon.
The purchase price shall be based on the actual monthly rent in effect at the
time of the exercise of the purchase option and shall be determined by
capitalization of annual rent as follows:
Option exercised in 3rd or 4th month 8.75%
Option exercised in 36th to 48th month 9.00%
(Example: Monthly Rent x 12 divided by capitalization rate = purchase price).
(d) The provisions of this Section 43 (d) also apply in Section 41. Both Lessor
and Lessee agree to cooperate with each other in effectuating a tax-deferred
exchange of the Property pursuant to Section 1031 of the Internal Revenue Code
of 1986, as amended. Each party agrees to fully cooperate with any such
exchange, provided that each party's obligation to the other shall be limited to
its purchase or sale of the Property, as the case may be, in accordance with
this paragraph 43 and the purchase and sale agreement to be executed by the
parties as herein provided; neither party shall have any greater or different
obligations and no lesser or different rights from those set forth in this
paragraph and such purchase and sale agreement; neither party shall be put to
any additional cost or expense on account of any such exchange undertaken by the
other party; and neither party shall have any responsibility whatsoever for the
tax or nontax consequences of an exchange undertaken by the other party, or any
liability arising out of holding title to facilitate such exchange (for which
the exchanging party shall indemnify the cooperating party), including without
limitation whether the tax effects of any such exchange contemplated by such
party and/or any third party to the exchange are in fact successfully realized.
No such exchange shall delay or excuse any of the time periods specified in this
paragraph or in the purchase and sale agreement to be executed by the parties as
herein provided. Accordingly, if an exchange is contemplated but is not, for
whatever reason, completed on the closing date agreed upon by the parties for
the consummation of the sale of the Premises or any individual Expansion
Property, the party which has undertaken such exchange (or both parties, if both
parties have undertaken exchanges) nevertheless shall be obligated to close on
the purchase and sale of the Premises or any individual Expansion Property at
the time and in the manner such close would have occurred had such party (or
both parties, if both parties have undertaken an exchange) not undertaken an
exchange.
(e) Prorations shall be calculated as of the close of escrow, Lessee to assume
assessments and closing costs shall be paid by Lessee.
(f) Lessee shall purchase the Premises or any individual Expansion Property in
an "as is" condition without warranty or representation from Lessor.
44. EXPANSION AGREEMENTS: Lessor and Lessee agree to the following related to
future facilities expansion:
(a) Lessor shall hold that portion of the Assessor Parcel #678-16-006 as shown
on the attached Exhibit G that is not a part of the Premises ("Expansion Land")
without carry cost to Lessee until October 31, 1996. After October 31, 1996,
Lessor will grant Lessee a Right of First Offer to Lease as provided in Section
42 to lease future buildings and improvements from Lessor on the Expansion Land
throughout Lessee's occupancy of the Premises or any portion of the Expansion
Land.
(b) If Lessee elects to expand into additional buildings on the Expansion Land
(the "Expansion Property"), the Building Shell shall be similar in quality to
the Premises and the Lessee Interior Improvements shall include a $25.00
allowance subject to the adjustment below. Required terms for any individual
Expansion Property shall be a seven year lease with a minimum of 80,000 square
feet, parking for 3.5 cars per 1,000 square feet and the lease shall conform to
the Lease on the Premises. Lessee's existing Lease(s) to be extended to new
additional building's termination date at Lessee's sole option at time of
commitment to expansion. Upon written request from Lessee, Lessor shall
construct future building(s) in general conformance to the terms of Section 2
PAGE 35
herein, except that Lessor shall not be obligated to a performance penalty
unless agreed at time of expansion by Lessee and Lessor. Lessor shall use its
best efforts to complete any construction within 12 months of Lessee's request
for future buildings. The initial Base rent for any individual Expansion
Property shall be on the terms stated below based on the date of the request for
the future expansion provided such request is for improvements to be completed
within 12 months from the date of the request:
May 1, 1995 - April 30, 1996 $.84 NNN/PSF
May 1, 1996 - April 30, 1997 $.86 NNN/PSF
May 1, 1997 - April 30, 1998 $.88 NNN/PSF
May 1, 1998 - April 30, 1999 $.906 NNN/PSF
May 1, 1999 - April 30, 2000 $.933 NNN/PSF
Subject to the following adjustments:
Every 1/4% change in the Prime interest rate (as published in the Wall Street
Journal, base to be 9%) shall adjust initial rent (increase or decrease) by
$.0125 per square foot per month. Additionally every 1% change (over a 3%
annual base) in the Consumer Price Index, All Urban Consumers for San
Francisco/Oakland/San Jose, as published by the U.S. Department of Labor (the
"CPI"), from April, 1995 shall adjust initial rent (increase or decrease) by
$.00758 per square foot per month and the $25.00 TI Allowance shall be adjusted
by an amount equal to the change in the CPI over the base 3% annually.
Additionally the Base rent shall increase every twenty-four (24) months by 6%
during original lease term and per the terms of Section 35 (B) during all option
terms.
The Base rent on the Expansion Property requested after April 30, 2000 shall be
95% of Fair Market Value for new construction at the date of request for
expansion ("Expansion Exercise Date").
45. MISCELLANEOUS PROVISIONS: All rights and remedies hereunder are cumulative
and not alternative to the extent permitted by law and are in addition to all
other rights or remedies in law and in equity.
46. CHOICE OF LAW: This lease shall be construed and enforced in accordance
with the substantive laws of the State of California. The language of all parts
of this lease shall in all cases be construed as a whole according to its fair
meaning and not strictly for or against either Lessor or Lessee.
47. ENTIRE AGREEMENT: This Lease is the entire agreement between the parties,
and there are no agreements or representations between the parties except as
expressed herein. Except as otherwise provided for herein, no subsequent change
or addition to this Lease shall be binding unless in writing and signed by the
parties hereto.
IN WITNESS WHEREOF, Lessor and Lessee have executed these presents, the day and
year first above written.
LESSOR LESSEE
BERG & BERG ENTERPRISES, INC. STRATACOM, INC.
By: By:
---------------------------------- ----------------------------------
signature of authorized representative signature of authorized representative
- - -------------------------------------- --------------------------------------
printed name printed name
- - -------------------------------------- --------------------------------------
title title
- - -------------------------------------- --------------------------------------
date date
PAGE 36
Exhibit B
Lessor and Lessee hereby agree as follows with regard to Lessee Improvements:
1. LESSEE IMPROVEMENTS. Reference herein to "Lessee Improvements" shall include
all work to be done in the Premises pursuant to the Preliminary Elevations, Site
Plan and single line floor plan. Lessor shall construct the Lessee
Improvements in a good and workmanlike manner using materials of a customary
quality and in compliance with all government regulations. Lessor and Lessee
shall have initialed the Preliminary Elevations, Site Plan and single line
floor plan indicating their approval of same.
Lessee Improvements shall include the following:
- - - Construction of a 2 story building shell consisting of approximately
200,000 square feet per building elevations and rendering shown on the
attached Exhibit A and including the items shown on attached Exhibit C
- - - $5,000,000 tenant improvement allowance for non-specialized improvements as
requested and approved by Lessee..
2. FINAL PLANS. Upon completion of the Final Construction Plans, Lessor and
Lessee shall approve and initial the Final Plans No further changes
shall be made to the Final Plans without the consent of both Lessor
and Lessee, and then only after Lessee has agreed to pay for any
excess costs, including design and engineering fees, resulting from
such changes. Lessor, with Lessee's cooperation agrees to make all
changes: (i) required by any public agency to conform with
governmental regulations, or (ii) requested in writing by Lessee
subject to Lessor's reasonable approval. Any costs resulting from
Lessee's changes to the Final Plans and any additional costs
associated with the public agency approvals shall be considered costs
of Lessee's Improvements. Any costs incurred for the Additional
Improvements in excess of such maximum shall be paid by Lessee to
Lessor within ten (10) days of billing therefore. Costs related to
changes shall include, without limitation, any architectural, design,
government fees and construction management costs.
PAGE 37
COMMENCEMENT DATE MEMORANDUM
Lessor: Berg & Berg Enterprises, Inc.
Lessee: StrataCom, Inc.
Lease Date: May 5, 1995
Pursuant to Paragraph 1 of the Lease, the following are hereby determined and
agreed between Lessor and Lessee:
- - - The Commencement Date is January 1, 1996
- - - The actual gross square footage of the Building is 200,484 square feet
- - - The base rent is: Months 1 to 24 $159,441
Months 25 to 48 $169,465
Months 49 to 60 $173,475
Months 61 to 84 $183,499
Lessee: Lessor:
StrataCom, Inc., Berg & Berg Enterprises, Inc.,
a Delaware corporation a California corporation
By: By:
---------------------- ----------------------
Its: V.P. FINANCE AND CFO Its: President
---------------------------- --------------------------
Dated: Dated:
---------------------- -------------------
PAGE 38