1
EXHIBIT 10.7
STANDARD SUBLEASE
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
1. PARTIES. This Sublease, dated, for reference purposes only, June 16, 1999, is
made by and between Finisar Corporation, a California corporation (herein called
"Sublessor") and Turnstone Systems, Inc., a Delaware corporation (herein called
"Sublessee").
2. PREMISES. Sublessor hereby subleases to Sublessee and Sublessee hereby
subleases from Sublessor for the term, at the rental, and upon all of the
conditions set forth herein, that certain real property situated in the County
of Santa Xxxxx State of California, commonly known as 000 Xxxxxxxx Xxxxx,
Xxxxxxxx View and described as An approximately 20,140 square foot
R&D building, Said real property, including the land and all improvements
thereon, is hereinafter called the "Premises".
3. TERM.
3.1 Term. The term of this Sublease shall be for 34 months commencing on
August 1, 1999 and ending on May 31, 2002 unless sooner terminated pursuant to
any provision hereof.
3.2 Delay in Commencement. Notwithstanding said commencement date, if
for any reason Sublessor cannot deliver possession of the Premises to Sublessee
on said date, Sublessor shall not be subject to any liability therefore, nor
shall such failure affect the validity of this Lease or the obligations of
Sublessee hereunder or extend the term hereof, but in such case Sublessee shall
not be obligated to pay rent until possession of the Premises is tendered to
Sublessee; provided, however, that if Sublessor shall not have delivered
possession of the Premises within sixty (60) days from said commencement date,
Sublessee may, at Sublessee's option, by notice in writing to Sublessor within
ten (10) days thereafter, cancel this Sublease, in which event the parties shall
be discharged from all obligations thereunder. If Sublessee occupies the
Premises prior to said commencement date, such occupancy shall be subject to all
provisions hereof, such occupancy shall not advance the termination date and
Sublessee shall pay rent for such period at the initial monthly rates set forth
below.
4. RENT. Sublessee shall pay to Sublessor as rent for the Premises equal monthly
payments of $35,245.00, in advance, on the first day of each month of the term
hereof. Sublessee shall pay Sublessor upon the execution hereof $35,245.00 as
rent for the first month of the Sublease term. Rent for any period during the
term hereof which is for less than one month shall be a pro rata portion of the
monthly installment. Rent shall be payable in lawful money of the United States
to Sublessor at the address stated herein or to such other persons or at such
other places as Sublessor may designate in writing.
5. SECURITY DEPOSIT. Sublessee shall deposit with Sublessor upon execution
hereof $105,735.00 as security for Sublesee's faithful performance of
Sublessee's obligations hereunder. If Sublessee fails to pay rent
-1-
2
or other charges due hereunder, or otherwise defaults with respect to any
provision of this Sublease, Sublessor may use, apply or retain all or any
portion of said deposit for the payment of any rent or other charge in default
or for the payment of any other sum to which Sublessor may become obligated by
reason of Sublessee's default, or to compensate Sublessor for any loss or damage
which Sublessor may suffer thereby. If Sublessor so uses or applies all or any
portion of said deposit, Sublessee shall within ten (10) days after written
demand therefore deposit cash with Sublessor in an amount sufficient to restore
said deposit to the full amount hereinabove stated and Sublessee's failure to do
so shall be a material breach of this Sublease. Sublessor shall not be required
to keep said deposit separate from its general accounts. If Sublessee performs
all of Sublessee's obligations hereunder, said deposit, or so much thereof as
has not heretofore been applied by Sublessor, shall be returned, without payment
of interest or other increment for its use to Sublessee (or at Sublessor's
option, to the last assignee, if any, of Sublessee's interest hereunder) at the
expiration of the term hereof, and after Sublessee has vacated the Premises. No
trust relationship is created herein between Sublessor and Sublessee with
respect to said Security Deposit. IF SUBLESSEE IS SUCCESSFUL IN RAISING AT LEAST
$18 MILLION AND IS NOT THEN IN DEFAULT OF THIS SUBLEASE, THEN THE SECURITY
DEPOSIT SHALL BE REDUCED TO $35,245.00.
6. USE.
6.1 Use. The Premises shall be used and occupied only for Light
manufacturing, research and development, general office and storage and for no
other purpose.
6.2 Compliance with Law.
(a) Sublessor warrants to Sublessee that the Premises, in its
existing state, but without regard to the use for which Sublessee will use the
Premises, does not violate any applicable building code regulation or ordinance
at the time that this Sublease is executed. In the event it is determined that
this warranty has been violated, then it shall be the obligation of the
Sublessor, after written notice from Sublessee, to promptly, at Sublessor's sole
cost and expense, rectify any such violation. In the event that Sublessee does
not give to Sublessor written notice of the violation of this warranty within
one (1) year from the commencement of the term of this Sublease, it shall be
conclusively deemed that such violation did not exist and the correction of the
same shall be the obligation of the Sublessee.
(b) Except as provided in paragraph 6.2(a), Sublessee shall, at
Sublessee's expense, comply promptly with all applicable statutes: ordinances,
rules, regulations, orders, restrictions of record, and requirements in effect
during the term or any part of the term hereof regulating the use by Sublessee
of the Premises. Sublessee shall not use or permit the use of the Premises in
any manner that will tend to create waste or a nuisance or, if there shall be
more than one tenant of the building containing the Premises, which shall tend
to disturb such other tenants.
6.3 Condition of Premises. Except as provided in paragraph 6.2(a)
Sublessee hereby accepts the Premises in their condition existing as of the date
of the execution hereof, subject to all applicable zoning, municipal, county and
state laws, ordinances and regulations governing and regulating the use of the
Premises, and accepts this Sublease subject thereto and to all matters disclosed
thereby and by any exhibits attached hereto. Sublessee acknowledges that neither
Sublessor nor Sublessor's agents have made any representation or warranty as to
the suitability of the Premises for the conduct of Sublessee's business.
-2-
3
7. MASTER LEASE.
7.1 Sublessor is the lessee of the Premises by virtue of a lease,
hereinafter referred to as the "Master Lease", a copy of which is attached
hereto marked Exhibit 1, dated April 30, 1997, wherein DM Group VIII & DM GROUP
VIII-E is the lessor, hereinafter referred to as the "Master Lessor."
7.2 The Sublease is and shall be at all times subject and subordinate to
the Master Lease.
7.3 The terms, conditions and respective obligations of Sublessor and
Sublessee to each other under this Sublease shall be the terms and conditions of
the Master Lease except for those provisions of the Master Lease which are
directly contradicted by this Sublease in which event the terms of this Sublease
document shall control over the Master Lease. Therefore, for the purposes of
this Sublease, wherever in the Master Lease the word "Lessor" is used it shall
be deemed to mean the Sublessor herein and wherever in the Master Lease the word
"Lessee" is used it shall be deemed to mean the Sublessee herein.
7.4 During the term of this Sublease and for all periods subsequent for
obligations which have arisen prior to the termination of this Sublease,
Sublessee does hereby expressly assume and agree to perform and comply with, for
the benefit of Sublessor and Master Lessor, each and every obligation of
Sublessor under the Master Lease except for the following paragraphs which are
excluded therefrom: paragraphs 4.a, 5.b, 6.a., 24.
7.5 The obligations that Sublessee has assumed under paragraph 7.4
hereof are hereinafter referred to as the "Sublessee's Assumed Obligations." The
obligations that Sublessee has not assumed under paragraph 7.4 hereof are
hereinafter referred to as the "Sublessor's Remaining Obligations."
7.6 Sublessee shall hold Sublessor free and harmless of and from all
liability, judgments, costs, damages, claims or demands, including reasonable
attorneys fees, arising out of Sublessee's failure to comply with or perform
Sublessee's Assumed Obligations.
7.7 Sublessor agrees to maintain the Master Lease during the entire term
of this Sublease, subject, however, to any earlier termination of the Master
Lease without the fault of the Sublessor, and to comply with or perform
Sublessor's Remaining Obligations and to hold Sublessee free and harmless of and
from all liability, judgments, costs, damages, claims or demands arising out of
Sublessor's failure to comply with or perform Sublessor's Remaining Obligations.
7.8 Sublessor represents to Sublessee that the Master Lease is in full
force and effect and that no default exists on the part of any party to the
Master Lease.
8. ASSIGNMENT OF SUBLEASE AND DEFAULT.
8.1 Sublessor hereby assigns and transfers to Master Lessor the
Sublessor's interest in this Sublease and all rentals and income arising
therefrom, subject however to the terms of paragraph 8.2 hereof.
8.2 Master Lessor, by executing this document, agrees that until a
default shall occur in the performance of Sublessor's Obligations under the
Master Lease, that Sublessor may receive, collect and enjoy the rents accruing
under this Sublease. However, if Sublessor shall default in the performance of
its obligations to Master Lessor then Master Lessor may, at its option, receive
and collect, directly from Sublessee, all rent
-3-
4
owing and to be owed under this Sublease. Master Lessor shall not, by reason of
this assignment of the Sublease nor by reason of the collection of the rents
from the Sublessee, be deemed liable to Sublessee for any failure of the
Sublessor to perform and comply with Sublessor's Remaining Obligations.
8.3 Sublessor hereby irrevocably authorizes and directs Sublessee, upon
receipt of any written notice from the Master Lessor stating that a default
exists in the performance of Sublessor's Obligations under the Master Lease, to
pay Master Lessor the rents due and to become due under the Sublease. Sublessor
agrees that Sublessee shall have the right to rely upon any such statement and
request from Master Lessor and that Sublessee shall pay such rents to Master
Lessor without any obligation or right to inquire as to whether such default
exists and notwithstanding any notice from or claim from Sublessor to the
contrary and Sublessor shall have no right or claim against Sublessee for any
such rents so paid by Sublessee.
8.4 No changes or modifications shall be made to this Sublease without
the consent of Master Lessor.
9. CONSENT OF MASTER LESSOR.
9.1 In the event that the Master Lease requires that Sublessor obtain
the consent of Master Lessor to any subletting by Sublessor, then this Sublease
shall not be effective unless, within ten (10) days of the date hereof, Master
Lessor signs this Sublease thereby giving its consent to this Subletting.
9.2 In the event that the obligations of the Sublessor under the Master
Lease have been guaranteed by third parties then neither this Sublease, nor the
Master Lessor's consent, shall be effective unless, within ten (10) days of the
date hereof, said guarantors sign this Sublease thereby giving guarantors
consent to this Sublease and the terms thereof.
9.3 In the event that Master Lessor does give such consent then:
(a) Such consent will not release Sublessor of its obligations or
alter the primary liability of Sublessor to pay the rent and perform and comply
with all of the obligations of Sublessor to be performed under the Master Lease.
(b) The acceptance of rent by Master Lessor from Sublessee or any
one else liable under the Master Lease shall not be deemed a waiver by Master
Lessor of any provisions of the Master Lease.
(c) The consent to this Sublease shall not constitute a consent
to any subsequent subletting or assignment.
(d) In the event of any default of Sublessor under the Master
Lease, Master Lessor may proceed directly against Sublessor, any guarantors or
any one else liable under the Master Lease or this Sublease without first
exhausting Master Lessor's remedies against any other person or entity liable
thereon to Master Lessor.
(e) Master Lessor may consent to subsequent sublettings and
assignments of the Master Lease or this Sublease or any amendments or
modifications thereto without notifying Sublessor nor anyone else liable under
the Master Lease and without obtaining their consent and such action shall not
relieve such persons from liability.
-4-
5
(f) In the event that Sublessor shall default in its obligations
under the Master Lease, then Master Lessor, at its option and without being
obligated to do so, may require Sublessee to attorn to Master Lessor in which
event Master Lessor shall undertake the obligations of Sublessor under this
Sublease from the time of the exercise of said option to termination of this
Sublease but Master Lessor shall not be liable for any prepaid rents nor any
security deposit paid by Sublessee, nor shall Master Lessor be liable for any
other defaults of the Sublessor under the Sublease.
9.4 The signatures of the Master Lessor and any Guarantors of Sublessor
at the end of this document shall constitute their consent to the terms of this
Sublease.
10. BROKER'S FEES.
10.1 Upon execution hereof by all parties, Sublessor shall pay to BT
Commercial a licensed real estate broker (herein called "Broker"), a fee as set
forth in a separate agreement between Sublessor and Broker or, in the event
there is no separate agreement between Sublessor and Broker, the sum of $ N/A
for brokerage services rendered by Broker to Sublessor in this transaction. BT
COMMERCIAL WILL PAY CORNISH & XXXXX COMMERCIAL AN AMOUNT EQUAL TO 3% OF YEAR 1,
PLUS 2.5% OF YEAR 2, PLUS 2.5% OF THE REMAINDER OF THE TERM.
10.2 Sublessor agrees that if Sublessee exercises any option or right of
first refusal granted by Sublessor herein, or any option or right substantially
similar thereto, either to extend the term of this Sublease, to renew this
Sublease, to purchase the Premises, or to lease or purchase adjacent property
which Sublessor may own or in which Sublessor has an interest, or if Broker is
the procuring cause of any lease, sublease, or sale pertaining to the Premises
or any adjacent property which Sublessor may own or in which Sublessor has an
interest, then as to any of said transactions Sublessor shall pay to Broker a
fee, in cash, in accordance with the schedule of Broker in effect at the time of
the execution of this Sublease. Notwithstanding the foregoing, Sublessor's
obligation under this paragraph 10.2 is limited to a transaction in which
Sublessor is acting as a sublessor, lessor or seller.
11. ATTORNEY'S FEES. If any party or the Broker named herein brings an action to
enforce the terms hereof or to declare rights hereunder, the prevailing party in
any such action, on trial and appeal, shall be entitled to his reasonable
attorney's fees to be paid by the losing party as fixed by the Court. The
provision of this paragraph shall inure to the benefit of the Broker named
herein who seeks to enforce a right hereunder.
12. ADDITIONAL PROVISIONS. [If there are no additional provisions draw a line
from this point to the next printed word after the space left here. If there are
additional provisions place the same here.]
12.a RENT INCREASES: AT THE BEGINNING OF THE THIRTEENTH MONTH OF THIS
SUBLEASE THE RENT DESCRIBED IN PARAGRAPH 4 ABOVE SHALL BE INCREASED TO
$36,252.00 AND AT THE BEGINNING OF THE TWENTY-FIFTH MONTH SAID RENT SHALL BE
INCREASED TO $37,259.00.
12.b CONDITION OF PREMISES: SUBLESSOR, AT SUBLESSOR'S COST AND EXPENSE,
WARRANTS THAT ALL ELECTRICAL, HVAC AND PLUMBING SHALL BE IN GOOD WORKING ORDER
UPON SUBLEASE COMMENCEMENT. SUBLESSOR SHALL STEAM CLEAN ALL CARPETED AREAS PRIOR
TO SUBLEASE COMMENCEMENT. SUBLESSEE ASSUMES THE SPACE IN AN OTHERWISE "AS IS"
CONDITION.
-5-
6
IF THIS SUBLEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION TO YOUR
ATTORNEY FOR HIS APPROVAL. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE
REAL ESTATE BROKER OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL
EFFECT, OR TAX CONSEQUENCES OF THIS SUBLEASE OR THE TRANSACTION INVOLVED HEREIN.
Executed at Finisar Corporation, a California corporation
-------------------- -----------------------------------------------
on By /s/ Xxxxx Xxxxx
----------------------------- --------------------------------------------
XXXXX XXXXX, PRESIDENT
address: 000 Xxxxxxxx Xxxxx By /s/ X. X. Xxxxxxx
----------------------- --------------------------------------------
XXXXX XXXXXXX, CFO
Xxxxxxxx Xxxx, XX 00000 "Sublessor"
-----------------------
Executed at Turnstone Systems, Inc., a Delaware corporation
-------------------- -----------------------------------------------
on By /s/ M. D. Xxxxxx
----------------------------- --------------------------------------------
XXXXXX XXXXXX, CFO & VP, BUSINESS
OPERATIONS
address: 000 Xxxxx Xxxxx Xxxxxx By /s/ Xxxxxxx X. Xxxxxxx
----------------------- --------------------------------------------
XXXX XXXXXXX, CEO
Xxxxxxxx Xxxx, XX 00000 "Sublessee"
-----------------------
Executed at DM GROUP VIII, a California Limited partnership
-------------------- -----------------------------------------------
on By /s/ Xxxx X. Xxxxxxxxxxx
----------------------------- --------------------------------------------
XXXX X. XXXXXXXXXXX, AUTHORIZED AGENT
address
------------------------
-------------------------------
DM GROUP VIII-E, a California limited partnership
-------------------------------------------------
By /s/ Xxxx X. Xxxxxxxxxxx
----------------------------------------------
XXXX X. XXXXXXXXXXX, AUTHORIZED AGENT
"Master Lessor"
NOTE: For these forms write or call the American Industrial Real Estate
Association, 000 X. Xxxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxx, XX 00000.
000-000-0000.
-6-
7
EXHIBIT 10.7
TABLE OF CONTENTS
COMMERCIAL LEASE
XXXXXXXX OAKS BUSINESS PARK
FINISAR CORPORATION
AND
DM GROUP VIII & DM GROUP VIII-E
APRIL 30, 1997
PAGE
-----
1. Parties.............................................................................. 1
2. Premises............................................................................. 1
3. Use.................................................................................. 1
4. Term................................................................................. 2
5. Acceptance of Premises and Tenant Improvement Allowance.............................. 2
6. Rent................................................................................. 3
7. Services............................................................................. 7
8. Personal Property Taxes.............................................................. 7
9. Compliance with Laws................................................................. 7
10. Tenant's Repairs and Alterations..................................................... 8
11. Landlord Repairs..................................................................... 11
12. Tenant's Indemnity; Waiver of Subrogation............................................ 11
13. Landlord's Indemnity................................................................. 13
14. Insurance............................................................................ 13
15. Common Areas and Parking............................................................. 15
16. Entry by Landlord.................................................................... 15
17. Assignment and Subletting............................................................ 15
18. Damage by Casualty:.................................................................. 17
19. Eminent Domain and Condemnation...................................................... 19
20. Default by Tenant.................................................................... 21
21. Landlord's Breach; Tenant's Remedies................................................. 23
22. Subordination, Non-disturbance, and Attornment....................................... 23
23. Signs and Advertising................................................................ 23
24. Brokers.............................................................................. 24
25. Notices.............................................................................. 24
26. Estoppel Statement................................................................... 25
27. Attorney's Fees...................................................................... 25
28. Surrender of Premises; Holding Over.................................................. 26
29. No Waste............................................................................. 27
30. No Waiver............................................................................ 27
31. Effect of Landlord's Conveyance...................................................... 27
32. Authority to Execute Lease........................................................... 28
33. Mortgage Protection.................................................................. 28
-i-
8
34. Time of the Essence.................................................................. 28
35. Covenant of Quiet Possession......................................................... 28
36. General Provisions................................................................... 28
Exhibit A - Legal Description of Premises
Exhibit B - Legal Description of Project
Exhibit C - Occupied Area Defined
-ii-
9
COMMERCIAL LEASE
XXXXXXXX OAKS BUSINESS PARK
MOUNTAIN VIEW, CALIFORNIA
1. Parties. THIS LEASE is made and entered into as of the 30th day of April
1997, by and between DM GROUP VIII, a California limited partnership, and DM
Group VIII-E, a California limited partnership (hereinafter collectively called
"Landlord"), and Finisar Corporation, a California corporation, having a mailing
address of 000 Xxxxxxxx Xxxxx, Xxxxxxxx Xxxx, Xxxxxxxxxx 00000 (hereinafter
called "Tenant").
2. Premises. Landlord leases to Tenant and Tenant leases from Landlord
those certain premises consisting of a freestanding, single story research and
development building containing approximately 20,140 square feet of space,
located at 000 Xxxxxxxx Xxxxx, Xxxxxxxx Xxxx, Xxxxxxxxxx (the "Premises"), for
the term, at the rental rate, and upon all of the terms, covenants, and
conditions set forth in this Lease. The Premises are described on Exhibit "A",
which Exhibit is attached hereto and is incorporated herein. The Premises are a
portion of, and are incorporated in, a unified planned development of three (3)
research and development buildings and associates common areas, commonly known
as the Xxxxxxxx Oaks Business Park (the "Project"). The legal description of the
real property comprising the Project is attached hereto as Exhibit "B", which
Exhibit is attached hereto and incorporated herein. In addition to the exclusive
use of the Premises, Tenant shall also have the right to non-exclusive use of
all Common Areas (as that term is hereinafter defined in Paragraph 6(e), below)
in the Project designated by Landlord for use by tenants of the Project, in
accordance with and subject to the provisions of this lease.
This Lease is subject to the following:
(a) All those documents and matters of record, known or recorded as of
the Commencement Date (as defined below), including the effect thereof,
including but not limited to any covenants, conditions, restrictions, easements,
mortgages, deeds of trust, and rights of way;
(b) General and special taxes not delinquent; and
(c) The effect of any zoning and building codes of the City of Mountain
View, County of Santa Xxxxx, or State of California.
3. Use.
(a) Permitted Use. Tenant shall use the Premises for general office,
engineering, research, and production of Tenant's products and equipment, for
the education and training of Tenant's clients and employees, and all other uses
related or incidental thereto.
10
(b) Uses Prohibited. Tenant agrees that no portion of the Premises shall
be used:
(i) in any manner inconsistent with, contrary to, or in
violation of the requirements of any laws, rules, regulations, or ordinances, of
any local, regional, state or federal governmental authority now in force, or
which may hereafter be in force, or which violates the terms or conditions of
any covenants, easements, or restrictions of record binding on the Project or
the Property;
(ii) in any manner which shall present a danger or hazard to the
premises or the Project, or any other tenant or user thereof; or which violate
the requirements of any applicable fire insurance underwriter or rating bureau;
(iii) for any trade, service, activity or purpose which is
excessively obnoxious or offensive, or be a nuisance by reason of unsightliness
or excess emission of odors, dust, fumes, smoke, liquid waste, noise, glare,
vibration, radiation or other similar condition;
(iv) in any manner which will increase the existing rate of any
insurance upon the Premises or the Project, or cause a cancellation of such
insurance, or which will interfere with other tenants at the Project;
(v) for any unlawful purpose.
(c) Floor Loads. Tenant shall not place a load upon the Premises
exceeding the floor load per square foot area which it was designed to carry.
Landlord reserves the right to prescribe the weight and position of all safes,
business machines and mechanical equipment. Such installations shall be placed
and maintained by Tenant, at Tenant's expense, in settings sufficient, in
Landlord's reasonable judgment, to absorb and prevent vibration, noise and
annoyance.
4. Term.
(a) Primary Term. The term of this lease ("the Primary Term") shall
begin on the first day of June, 1997 (the "Commencement Date") and, unless
sooner terminated in accordance with the provisions of this Lease, extend until
the 31st day of May, 2002 (the "Termination Date"). The first full monthly
installment of Base Rent shall be due on the Commencement Date.
5. Acceptance of Premises and Tenant Improvement Allowance.
(a) Premises. Landlord shall deliver the existing improvements to the
Tenant with the current floor plan and finishes.
(b) Landlord's Limited Warranty. Landlord warrants that the HVAC for the
area defined in Exhibit C shall be, as of the Commencement Date, and shall
remain, for a period of sixty (60) days after the Commencement Date (the
"Warranty Period") in a state of good condition, order, and repair. If, during
the Warranty Period, Landlord is notified in writing that any of the equipment
are in a state of disrepair, Landlord, at its sole and exclusive cost and
expense, shall, at its option,
-2-
11
replace, restore, or repair said equipment. The cost of repair, restoration, or
replacement shall be Landlord's sole obligation pursuant to this Warranty, and
Landlord shall under no circumstances be liable, to Tenant or to any third
party, for any other damages including, without limitation, for any incidental
or consequential damages including, without limitation, damages for loss of use
or loss of profits.
(c) Landlord shall have no obligation with respect to the construction,
improvement, alteration, or modification of the Premises. Tenant has had the
opportunity to fully inspect the Premises and accepts the condition of the
Premises in an "AS-IS" condition as of the date hereof. Tenant shall be
responsible for performing any and all tenant improvement work at the Premises
at Tenant's expense in accordance with the provisions of Paragraph 10, below.
Neither Landlord nor Landlord's agents have made any representations, warranties
or promises with respect to the physical condition of the Premises, the land
upon which it is erected, or the Premises, or any matter or thing affecting or
related to the Premises, except as is set forth in this Lease.
6. Rent.
Tenant shall pay to Landlord, without offset, deduction (except as
provided herein), notice, or demand, the following items as rent ("Rent") for
the Premises:
(a) Base Rent. Tenant shall pay to Landlord as base rent ("Base Rent")
during the Primary Term hereof the sum of One Million, Seven-Hundred Fifty-Four
Thousand, One Hundred Dollars ($1,754,100) payable as follows:
June 1, 1997 - May 31, 1998 $26,988 per month
June 1, 1998 - May 31, 1999 $28,067 per month
June 1, 1999 - May 31, 2000 $29,190 per month
June 1, 2000 - May 31, 2001 $30,358 per month
June 1, 2001 - May 31, 2002 $31,572 per month
All rental payments shall be payable in advance, on or before the first
day of each and every calendar month during the term hereof, in advance, and the
first rental payment shall be due on the Commencement Date. Rent shall be paid
to Landlord in lawful money of the United States of America at the address set
forth in Paragraph 25, below, for the giving of notices.
(b) Real Estate Taxes. Tenant shall pay to Landlord, as Additional Rent,
the real estate taxes and assessments ("Real Estate Taxes") levied against the
Premises paid by Landlord.
Real Estate Taxes shall include all real property taxes and assessments
levied against the Premises by any governmental or quasi-governmental authority,
including any taxes, assessments, surcharges, or service or other fees of a
nature not presently in effect which shall hereafter be levied on the Project as
a result of the use, ownership or operation of the Project or for any other
reason, whether in lieu of or in addition to any current real estate taxes and
assessments; provided, however, that any taxes which shall be levied on the
rentals of the Building shall be determined as if the
-3-
12
Building were Landlord's only property and provided further, that in no event
shall the term Real Estate Taxes include any federal, state or local income
taxes levied or assessed on landlord, unless such taxes are a specific
substitute for real property taxes; such term shall, however, include gross
taxes on rental and expenses incurred by Landlord for tax consultants and in
contesting the amount or validity of any Real Estate Taxes. Assessments shall
include any and all so-called special assessments, license tax, business license
fee, business license tax, commercial rental tax, levy, charge or tax imposed by
any authority having the direct power to tax, including any city, county, state
or federal government, or any school, agricultural, lighting, water, drainage
other improvement or special district thereof, against the Project, or any part
thereof, or against any legal or equitable interest of Landlord therein. For the
purposes of this Lease, any special assessment shall be deemed payable in such
number of installments as if actually paid.
Landlord shall give Tenant written notice of the amount of Tenant's
liability for payment of taxes and assessments hereunder on or before sixty (60)
days prior to the delinquency date for payment of such taxes and assessments.
Tenant shall pay to Landlord the amount of Tenant's liability hereunder for
taxes and assessments within fifteen (15) days of Tenant's receipt of such
written notice. Landlord shall pay the Real Estate Taxes and assessments levied
against the Premises prior to delinquency and shall, at Tenant's written
request, send Tenant proof that the Real Estate Taxes and assessments have been
paid. Landlord may estimate the annual Real Estate Taxes liability of Tenant and
based on Landlord's written estimate, Tenant shall pay to Landlord in the same
manner as the Common Area Expenses described in Paragraph 6(g). This Real Estate
Tax impound shall be reconciled on an annual basis.
(c) Landlord's Insurance.
Tenant shall pay to Landlord, as Additional Rent, any amounts paid by
Landlord for insurance premiums under paragraph 14(a), below, and Tenant's Pro
Rata Share (as hereinafter defined) of amounts paid by Landlord for insurance
premiums under Paragraph 14(b), below. Tenant shall pay such amounts to Landlord
within fifteen (15) days of Landlord's written request for same, which request
shall set forth the kind and amount of insurance and the premium (or allocated
portion of premium) therefor. Based on Landlord's written estimate of the annual
insurance liability of Tenant, Tenant shall pay to Landlord in the same manner
as the Common Area Expenses described in Paragraph 6(g). This insurance impound
shall be reconciled on an annual basis.
(d) Property Repairs and Reimbursement.
Except for those repairs, restorations, and replacements which are
herein stated to be the sole responsibility of, and to be made at the sole and
exclusive expense of, the Landlord, Tenant shall pay to Landlord, as Additional
Rent, any amounts paid or incurred by Landlord for the repair, maintenance,
restoration, or replacement of any portion of the Premises. Notwithstanding the
foregoing, if the useful life of any such restoration or replacement exceeds the
term of this Lease (inclusive of any options to extend this Lease), such as
repairs to the structural portion of the Premises made by Landlord pursuant to
Paragraph 11(a), below, Tenant shall reimburse Landlord as Additional Rent only
for Tenant's proportionate share of such repairs, restoration or replacement.
-4-
13
As used in this Paragraph, Tenant's proportionate share shall be equal to the
total cost of such repairs, restoration or replacement, multiplied by a
fraction, the numerator of which shall be the number of months remaining in the
term of this Lease (inclusive of any options to extend this Lease) at the time
of such repair, restoration or replacement, and the denominator of which shall
be the useful life of the system repaired, restored or replaced. Tenant shall
pay to Landlord monthly, in advance, as Additional Rent, an amount equal to the
cost of such repairs, restoration or replacement divided by the number of months
then remaining under this Lease (inclusive of any options to extend this Lease).
(e) Common Areas; Common Area Maintenance Expenses.
The term "Common Areas", as used herein, means all areas or facilities
outside the Premises and within the exterior boundaries of the Project that are
provided and designated by Landlord from time to time for general non-exclusive
use and convenience of Tenant and of other tenants of the Project. Common Areas
include, without limitation, parking areas, pedestrian walkways, landscaped
areas, sidewalks, service corridors, trash enclosures, loading areas, and roads.
Tenant shall have a non-exclusive right to use the Common Areas. Landlord shall
maintain reasonable rules and regulations applicable to all tenants concerning
the maintenance, management, use, and operation of the Common Areas.
Tenant shall pay to Landlord, as Additional Rent, Tenant's Pro Rata
Share (as hereinafter defined) of the Common Area Maintenance Expenses. "Common
Area Maintenance Expenses" shall mean all expenses of any kind or nature which
are necessary, ordinary or customarily incurred with respect to the operation,
repair, maintenance, or replacement of the Common Areas of the Project as
determined in accordance with generally accepted accounting principles and shall
include, but not be limited to, all sums expended in connection within the
Common Areas for all general operation, maintenance, replacement, and repairs,
repainting, restriping or resurfacing of parking areas, cleaning, sweeping and
janitorial services; sidewalks, curbs, and signs in the Project, sprinkler
systems, planting and landscaping; lighting and other utilities; directional
signs and other markers and bumpers; maintenance and repair of any lighting
systems, storm drainage systems, and any other utility systems; costs of
improvements made by Landlord to the Common Areas as mandated by any
governmental authority, the cost of any improvements to bring the Common Areas
into compliance with those requirements of ADA which are required by changes in
existing laws or regulations, and amounts paid to a third party, firm, or
corporation (which may be related to landlord) for the management of the
Project. Landlord may cause any or all of said services to be provided by an
independent contractor or contractors.
(f) Tenant's Pro Rata Share. Tenant's Pro Rata Share, for the purposes
of this Lease, shall be a fraction, the numerator of which is the total square
footage of the Premises and the denominator of which is the total square footage
in all of the buildings at the Project and is equal to 24.1%. Tenant
acknowledges that Landlord has not made any representation that the Common Area
Maintenance Expenses, Taxes, or Insurance will equal any specific amount or will
remain constant during the term.
-5-
14
(g) Payment of Common Area Maintenance Expenses. Tenant shall pay to
Landlord, as Additional Rent, Tenant's Pro Rata Share of Common Area Maintenance
Expenses, Real Estate Taxes and Insurance in the following manner:
(i) Beginning with the Commencement Date, but subject to
adjustment as provided herein, Tenant shall pay to Landlord on the first day of
each calendar month of the term of this Lease an amount estimated by Landlord to
be a monthly installment of Tenant's Pro Rata Share of such Common Area
Maintenance Expenses. At any time, Landlord may adjust the estimated monthly
charge, based on Landlord's experience, costs incurred to the date of such
adjustment, and costs that Landlord reasonably anticipates to be incurred in the
future.
(ii) Within one hundred twenty (120) days following the end of
each calendar year, or, at the termination of Lease, within one hundred twenty
(120) days following such termination, Landlord shall furnish Tenant a statement
covering the calendar year just expired (the "Statement"), showing the total of
such charges, the amount of Tenant's Pro Rata Share thereof for such calendar
year, and the payments actually paid by Tenant during such period. If Tenant's
Pro Rata Share of such charges exceeds payments made by Tenant, Tenant shall pay
Landlord the deficiency within thirty (30) days after receipt of such Statement.
If the estimated payments made exceed Tenant's Pro Rata Share thereof, Landlord
shall credit the excess against any amounts then owing or thereafter becoming
due from Tenant to Landlord. In any Lease Year which is not a full calendar
year, a proportionate reduction shall be made in Tenant's Pro Rata Share of
Common Area Maintenance Expenses. Tenant's liability for Common Area Maintenance
Expenses shall survive the expiration or earlier termination of this Lease for a
period of one (1) year.
(iii) Tenant shall have the right, at its own expense and at a
reasonable time (after written notice to Landlord) within thirty (30) days after
receipt of the Statement to audit Landlord's books relevant to the Tenant's Pro
Rata share of Common Area Maintenance Expenses, Real Estate Taxes, and Insurance
due hereunder. In the event Tenant does not audit Landlord's books and deliver
the results thereof to Landlord within said 30-day period, the terms and amounts
set forth in the Statement from Landlord to Tenant shall be deemed conclusive
and final and Tenant shall have no further right to adjustment. In the event
Tenant's examination reveals that an error has been made in Landlord's
determination of Tenant's Pro Rata share of such charges, and Landlord agrees
with such determination, then the amount of such adjustment shall be payable by
Landlord or Tenant, to the other party as the case may be in accordance with
subparagraph (ii) hereof. In the event Tenant's examination reveals an error has
been made in Landlord's determination of Tenant's Pro Rata share, and Landlord
disagrees with the results thereof, Landlord shall have thirty (30) days to
obtain an audit from an accountant of its choice to determine Tenant's Pro Rata
share of such charges. In the event Landlord's accountant and Tenant's
accountant are unable to reconcile their audits, both accountants shall mutually
agree upon a third accountant, whose determination of Tenant's Pro Rata share of
the charges shall be conclusive. (However, regardless of the third accountant's
determination, Tenant's Pro Rata share shall in no event be more than Landlord's
accountant's determination or less than Tenant's accountant's determination). In
the event the amount of error by Landlord is determined by said third accountant
to be five percent (5%) more, the reasonable costs of the third audit made
pursuant to this subparagraph shall be paid by Landlord. In
-6-
15
the event the amount of error by Landlord is determined to be less than five
percent (5%), the reasonable costs of the third audit made pursuant to this
subparagraph shall be paid by Tenant.
(h) Late Charge. Tenant hereby acknowledges that late payment by Tenant
to Landlord of Base Rent, Additional Rent, or other sums due hereunder will
cause Landlord to incur costs which will be difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Landlord by terms of any mortgage or trust
deed encumbering the Project. Accordingly, except as expressly stated
hereinafter, if any installment of Base Rent, Additional Rent, or any other sum
due from Tenant shall not be received by Landlord within five (5) business days
after said amount is due, Tenant shall pay to Landlord on demand a late charge
of five percent (5%) of such overdue amount. All such charges shall be deemed
Additional Rent hereunder.
7. Services.
(a) Services Available at the Premises. The Premises are currently
served by water, sewer, gas, electric, and telephone utilities.
(b) Service Interruption. Landlord shall not be liable for failure to
provide any required services. Services may be discontinued due to accident,
repairs, strikes, acts of God, or any other event beyond the reasonable control
of Landlord. In such event, Landlord shall not be liable for such failure or
discontinuance, nor shall such failure or discontinuance be construed as a
constructive eviction of Tenant or cause an abatement of Rent.
(c) Payment by Tenant. Tenant shall pay, prior to delinquency and
directly to the applicable supplier, for all services and utilities supplied to
the Premises and separately metered, together with any taxes thereon. If any
services are not separately metered to Tenant, Tenant shall pay Tenant's Pro
Rata Share of all charges jointly metered with other space in the Project.
Tenant shall arrange and pay for its own telephone service, fire monitoring
systems and other services provided directly to premises.
8. Personal Property Taxes.
Tenant shall pay, as Additional Rent, before delinquency, any taxes upon
Tenant's leasehold improvements, equipment, furniture, fixtures, and any other
personal property located in the Premises. In the event any such personal
property shall be assessed and taxed with the real property, Tenant shall pay to
Landlord its share of such taxes within ten (10) days after delivery to Tenant
of a statement in writing setting forth the amount of such taxes applicable to
Tenant's personal property.
9. Compliance with Laws.
Tenant will comply at all times, and be responsible for the compliance
by its employees, assigns, agents, subcontractors and any others acting for it,
with all applicable federal, state and local laws, regulations, permits,
license, certificates and any approvals of any type relative to any and all
-7-
16
of the operations or activities Tenant or others under Tenant's control will
conduct at or upon the Premises.
Tenant shall immediately notify Landlord of any reports made to any
environmental agency arising in connection with the operations to be performed
at the Premises, as well as any complaints, notices, warnings or asserted
violations which relate to the Premises communicated to Tenant, its employees,
assigns, agents, subcontractors, or any others acting for it, by any
governmental agency. Tenant shall promptly supply Landlord with copies of all
such reports, complaints, notices, warnings or asserted violations. Tenant
further warrants and agrees that no substance regarded as hazardous under the
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA),
42 USC Section 9601 et seq., will be stored or treated, nor will any hazardous
substance be released or disposed of, on, under or about the Premises or the
Property, except for such hazardous materials that are used or produced in the
ordinary course of Tenant's business, provided that such hazardous materials
shall be used, stored, handled, and disposed of in strict conformity to the
regulations and requirements governing such activities. At all times during the
Term and upon the earlier of the expiration or termination of the Term, Tenant
agrees to keep and maintain the Premises and the Property free of contamination
from any substances regarded as hazardous under CERCLA.
After prior notice to the Landlord, Tenant shall have the right to
contest by appropriate legal proceedings (in the name of Tenant) at Tenant's
sole cost and expense and with counsel of Tenant's own choosing, the validity of
any law, ordinance, order, rule, regulations, or requirement with which, by the
terms of this Lease, Tenant is obligated to comply. If by the terms of any such
law, ordinance, order, rules, regulation, or requirement, compliance therewith
may be legally held in abeyance without incurring any lien or charge or record
against the Premises, and without subjecting Landlord to any fines, penalties,
or any other liability for failure to comply therewith. Tenant may postpone
compliance until the final determination of any such proceedings, provided that
all proceedings shall be prosecuted with due diligence. If upon final
determination Tenant is required to so comply then Tenant will promptly comply
and pay the cost of such compliance even if such determination is made after the
end of the term of this Lease.
10. Tenant's Repairs and Alterations.
(a) Repairs. Subject to the provisions of Paragraph 5(b) (relating to
Landlord's repairs during Landlord's Warranty Period), Paragraph 6(e) (relating
to compliance with ADA), Paragraph 11 (relating to Landlord's repair
obligations), Paragraph 18 (relating to the partial or total destruction of the
Premises) and Paragraph 19 (relating to the condemnation of all or a portion of
the Premises), Tenant shall, at Tenant's sole cost and expense, keep and
maintain the Premises and every part thereof, as well as all equipment serving
only the Premises, in good order, condition, and repair, (whether or not the
need for any such repairs occurs as a result of Tenant's use, any prior use, the
elements or the age of the Premises), and shall keep and maintain the Premises
in full compliance with all applicable laws, rules, regulations, ordinances, and
directives of all local, regional, state, and federal governmental authorities.
Tenant's repair obligations as set forth herein shall include, without limiting
the generality of the foregoing, all equipment within or serving only the
Premises such as plumbing, heating, air conditioning, and ventilating equipment,
electrical lighting facilities,
-8-
17
fire sprinklers, alarm systems, interior walls, interior ceilings, floors,
windows, doors, plate glass, roof membranes, and skylights. Tenant's obligations
hereunder shall include restorations, replacements, or renewals, if necessary,
in order to keep and maintain the Premises in good order, condition, and state
of repair; provided, however, that Tenant's obligations to repair and to
maintain plumbing, heating, air conditioning, and ventilating equipment,
electrical lighting facilities, roofing membrane, fire sprinklers, and alarm
systems shall extend only to the routine repair and maintenance thereof. In
addition to Tenant's obligation to maintain the Premises, all damage or injury
to any other portion of the Project, including both the Common Area and other
lease spaces, caused by omission, neglect, or improper conduct of Tenant, its
employees, agents, subtenants, assignees or invitees shall be repaired promptly
by Tenant at its sole cost and expense, to the reasonable satisfaction of
Landlord. In connection with Tenant's performance of its obligations under this
Paragraph, Landlord shall make available to Tenant, and, if necessary, shall
assign to Tenant, any warranties held by Landlord on any equipment on the
Premises.
(b) In order to discharge its obligations under Paragraph 10(a), above,
Tenant, at its election, may utilize its own personnel to perform routine
maintenance upon the following equipment and improvements located on the
Premises, if any: (i) heating, air conditioning, and ventilation equipment; (ii)
boiler, fired or unfired pressure vessels; (iii) fire sprinkler and/or standpipe
and hose or other automatic fire extinguishing systems, including fire alarm
and/or smoke detection; and (iv) roof membrane and drain maintenance. Tenant
shall at all times keep and maintain accurate and complete records of Tenant's
maintenance schedules, procedures, and repairs undertaken by Tenant under this
Paragraph, and shall deliver copies of same to Landlord on an annual basis or
upon Landlord's request.
(c) Alterations. Tenant shall pay all costs of construction done by it
or caused to be done by it on the Premises as permitted by this Lease. Tenant
shall not make any alterations, in, on, under, or about the Premises without
Landlord's prior written consent, which consent shall not be unreasonably
withheld or delayed. Any alterations that Tenant shall desire to make shall be
presented to Landlord in written form with proposed detailed plans, not less
than twenty (20) days prior to the date that work on the alterations is to
commence.
All consents given by Landlord shall be conditioned upon all of the
following:
(i) Prior to commencement of any alteration, Tenant, at
Tenant's sole expense, shall obtain all applicable building and other permits
that may from time to time be required by any government authority having
jurisdiction;
(ii) Tenant shall furnish a copy of all such permits, together
with one (1) copy of the plans, specifications, and contract for such
alteration, and the name of Tenant's general contractor, to Landlord at least
twenty (20) days prior to the commencement of work.
(iii) Tenant shall comply with all conditions of such permits in
a prompt and expeditious manner.
-9-
18
(iv) Prior to the commencement of work Tenant shall deliver to
Landlord insurance certificates evidencing that all contractors and
subcontractors performing the alterations or any part thereof each have adequate
worker's compensation, builder's risk, and comprehensive general liability
insurance, the latter with a combined single limit of not less than One Million
Dollars ($1,000,000). Landlord and Landlord's agent shall be named as an
additional insured on all such policies of comprehensive general liability
insurance.
(v) All alterations shall be completed with due diligence in
compliance with the plans and specifications and working drawings. All
alterations shall comply with all applicable laws, rules, regulations,
ordinances, and directives of all local, regional, state, and federal
governmental authorities.
(vi) The alterations shall be performed in a manner that will
not interfere with the quiet enjoyment of the other tenants in the Project.
(vii) Tenant shall notify Landlord of the names and addresses of
the persons supplying labor and materials in connection with the alterations so
that Landlord may give notice that it shall not be subject for any lien for
Tenant's work, in accordance with California's mechanics' lien statutes.
Landlord shall have the right to keep posted on the Premises notice to such
persons in accordance with such statute.
(viii) Within forty-five (45) days after completion of the
alterations, Tenant shall furnish Landlord with the as-built plans and
specifications therefor.
(d) Ownership of Alterations and Improvements. Subject to Landlord's
right to require their removal or to become the owner thereof as hereinafter
provided in this Paragraph 10(d), all alterations and improvements made to the
Premises by Tenant shall be the property of and owned by Tenant, but considered
a part of the Premises. Landlord shall, at the time Tenant requests the right to
make an alteration or improvement, elect in writing to Tenant to be the owner of
all or any specified portion of the Tenant-owned alterations and improvements.
Unless otherwise elected by Landlord as hereinafter set forth, all alterations
and improvements shall, at the expiration or earlier termination of this Lease,
become the property of Landlord and remain upon and be surrendered by Tenant
with the Premises.
(e) Mechanics' Liens. Tenant shall pay or cause to be paid when due all
costs for work done by or on behalf of Tenant or caused to be done by or on
behalf of Tenant on the Premises of a character which will or may result in
liens against Landlord's interest in the Premises or the Project. Tenant will
keep the same free and clear of all mechanics' liens and other liens on account
of work done for or on behalf of Tenant or persons claiming under Tenant. Tenant
hereby agrees to indemnify, defend and save Landlord harmless of and from all
liability, loss, damages, costs or expenses, including attorneys' fees, incurred
in connection with any claims of any nature whatsoever for work performed for,
or materials or supplies furnished to Tenant, including lien claims of laborers,
materialmen or others. Should any such liens be filed or recorded against the
Premises or the Project with respect to work done for or materials supplied to
or on behalf of Tenant or should
-10-
19
any action affecting the title thereto be commenced, Tenant shall cause such
liens to be released of record within twenty (20) days after notice thereof. If
Tenant desires to contest any such claim of line, Tenant shall nonetheless cause
such lien to be released of record by the posting of adequate security with a
court of competent jurisdiction as may be provided by California's mechanics'
lien statutes. If Tenant shall be delinquent in paying any charge for which such
a mechanics' lien or suit to foreclose such a lien has been recorded or filed
and shall not have caused the lien to be released as aforesaid, Landlord may at
its discretion pay such lien or claim and any costs associated therewith, and
the amount so paid, together with interest thereon at the Interest Rate and
reasonable attorneys' fees incurred in connection therewith, shall be
immediately due from Tenant to Landlord as Additional Rent.
11. Landlord Repairs.
(a) Subject to the provisions of Paragraph 18 and 19, below, Landlord
shall repair and maintain the structural portions of the Premises and the Common
Areas in good order, condition and state of repair. As used herein, the term
"Structural portion of the Premises" shall mean only the roof joists (excluding
skylights and roofing membrane), bearing and exterior walls (excluding doors and
windows), foundations, and subflooring. In addition, subject to the provisions
of Paragraph 12, below, Landlord shall repair the Premises when such repairs are
required due to damage caused by (i) the omission, neglect, or improper conduct
of Landlord, its employees, or its agents; or (ii) due to Landlord's failure to
perform its obligations under this Paragraph 11.
(b) In connection with its obligation to repair and maintain the Common
Areas, Landlord shall repair, restripe, and resurface the parking area when
necessary, except that Landlord shall not be obligated to restripe the parking
area more than once each three (3) years, or resurface the parking area more
than once each seven (7) years.
(c) There shall be no abatement of rent and no liability of Landlord to
Tenant or to third parties by reason of any injury to, or interference with,
Tenant's business arising from the making of any repairs, alterations or
improvements required to be made by Landlord under this Paragraph. Landlord's
obligation to make repairs under this Paragraph 11 is a covenant independent of
any other covenant set forth in this Lease.
12. Tenant's Indemnity; Waiver of Subrogation.
(a) The parties intend to assign the risk of loss whether resulting from
negligence of the parties or otherwise, to the party who is obligated hereunder
to cover the risk of such loss with insurance. Thus, the indemnity and waiver of
subrogation provisions of this Lease have as their objective, so long as such
objective is not in violation of public policy, the assignment of risk for a
particular casualty to the party carrying the insurance for such risk, without
respect to the causation thereof.
(b) Neither party shall be liable to the other party for any damage to
the physical property of the other party caused by fire or other perils insured
against by such other party's fire and/or "all-
-11-
20
risk" property insurance carried and maintained pursuant to the terms of this
Lease, only to the extent that such insurance is valid and collectible. Each
party shall cause each fire and/or "all-risk" property insurance policy obtained
by it to provide that the insurer waives all rights of recovery by way of
subrogation against either party in connection with any damage covered by such
policy. If any such insurance policy cannot be obtained with a waiver of
subrogation without payment of an additional premium charge above that charged
by the insurance companies issuing such policies without waiver of subrogation,
the party receiving the benefit shall elect to either forfeit the benefit or
shall pay such additional premium to the insurance carrier requiring such
additional premium.
(c) Tenant, as a material part of the consideration to be rendered to
Landlord, shall indemnify, defend, and save harmless Landlord from and against
any and all liabilities, claims, penalties, forfeitures, and suits, and the
costs and expenses incident thereto, including costs of defense, settlements,
and reasonable attorney's fees, due to injury to any person or property arising
out of or in any way connected with the condition or use of the Premises or
Property, or the improvements or personal property therein or thereon, including
without limitation any liability or injury to the person or property of Tenant,
its agents, officers, employees, guests or invitees. By way of illustration and
not of limitation, Tenant shall indemnify, save harmless, and defend Landlord
from and against any and all liabilities, claims, penalties, forfeitures, and
suits, and the costs and expenses incident thereto, including costs of defense,
settlements, and reasonable attorney's fees, which Landlord may hereafter incur,
become responsible for, or pay out as a result of death or bodily injury to any
person, destruction or damage to any property, contamination of or adverse
effects on the environment, or any violation of governmental laws, regulations,
or orders, caused by 9a) Tenant's failure to comply with any federal, state, or
local law, (b) any negligent or willful act or claim under the Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA) attributable to
Tenant's conduct, or (c) Tenant's breach of any provisions of this Lease. For
purposes of this indemnity, any acts or omission (whether or not they are
negligent, intentional, willful or unlawful) shall be strictly attributable to
Tenant whether performed by it or by employees, agents, assignees,
subcontractors, or others acting for Tenant. Nothing contained herein shall
absolve Landlord from any liability in connection with the willful or gross
negligent acts or omissions of Landlord, its employees, agents, assignees,
subcontractors, or others acting for Landlord. Tenant shall have no obligation
to indemnify Landlord for the willful or gross negligent acts or omissions of
Landlord, its employees, agents, assignees, subcontractors, or others acting for
Landlord. The obligations of Tenant under this subparagraph arising by reason of
any occurrence taking place during the Term of this Lease shall survive the
expiration or earlier termination of this Lease.
(d) Tenant shall assume all normal risk and liability incident to the
use of the Premises upon the signing of this Lease. Tenant, as a material part
of the consideration to be rendered to Landlord, hereby waives all claims
against Landlord for damages to goods, wares, merchandise and loss of business
in, upon or about the Premises and for injury to Tenant, its agents, employees,
invitees or third persons in or about the Premises from any cause arising at any
time, excluding the negligence or willful misconduct of the Landlord.
-12-
21
13. Landlord's Indemnity.
Landlord shall indemnify, defend, and save harmless Tenant from and
against any and all liabilities, claims, penalties, forfeitures, and suits, and
the costs and expenses incident thereto, including costs of defense, arising out
of Landlord's gross negligence or willful misconduct. In addition, Landlord
shall indemnify, protect, and save Tenant harmless from any and all damages,
losses, liabilities, obligations, penalties, claims, litigation, or demands
which may at any time be imposed upon, incurred by, or asserted against Tenant
and which arise out of the failure of the Premises to comply with applicable
environmental laws and regulations as of the date of this Lease.
14. Insurance.
(a) Subject to Paragraph 14(e), at all times during the term of this
Lease and any extensions thereof, Landlord shall obtain and maintain insurance
insuring the Premises and the Property against damage or destruction of the
Premises, the Property, and Project, including without limitation fire,
"all-risk", earthquake, flood, rent loss, boiler and machinery, plate glass
insurance, and change of condition coverage, in an amount not less than the full
replacement value thereof.
(b) Landlord shall obtain and maintain during the term of this Lease a
policy of comprehensive general liability insurance protecting Landlord and
Landlord's agent against claims for bodily injury, personal injury, and property
damage based upon, involving, or arising out of the ownership, use, occupancy,
or maintenance of the Premises, the Property, and the Project. Such insurance
shall have a combined single limit of not less than One Million Dollars
($1,000,000) per occurrence.
(c) Tenant shall procure and maintain at its own cost at all times
during the term of this Lease and any extensions hereof, fire, hazard and
extended coverage insurance on Tenant's property and the contents of the
Premises in an amount not less than full replacement value thereof, worker's
compensation insurance for all of Tenant's employees at the Premises, and
comprehensive general liability insurance, including coverage for bodily injury,
property damage, personal injury (employee and contractual liability exclusions
deleted), products and completed operations, contractual liability, owner's
protective liability, and broad form property damage with a combined single
limit per occurrence of not less than One Million Dollars ($1,000,000).
(d) All insurance policies required to be carried by Tenant hereunder
shall conform to the following requirements:
(i) The insurer in each case shall carry a designation in
"Best's Insurance Reports" acceptable to Landlord in its reasonable discretion;
(ii) The insurer shall be qualified to do business in the State
of California;
(iii) Tenant's policy shall name Landlord and its agents as an
additional insured on its comprehensive general liability policy and, at
Landlord's request, Tenant's property insurance policy shall carry a lender's
loss payee endorsement in favor of Landlord's lender;
-13-
22
(iv) Certificates thereof evidencing the coverages required
herein shall be delivered to Landlord at the commencement of the Term and shall
remain in effect throughout the Term. At least thirty (30) days prior to the
expiration of such policies, a replacement certificate thereof shall be
deposited with Landlord;
(v) These policies shall require that Landlord be notified in
writing by the insurer at least thirty (30) days prior to any cancellation or
expiration of such policy, or any reduction in the amounts of insurance carried;
(vi) Each policy shall be primary, not contributing with, and
not in excess of coverage which Landlord may carry;
(vii) All liability insurance required to be carried by Tenant
hereunder shall carry a standard cross-liability endorsement.
(viii) If Tenant obtains any comprehensive general liability
insurance policy on a claims-made basis, Tenant shall provide continuous
liability coverage for claims arising during the entire term of this Lease,
regardless of when such claims are made, either by obtaining an endorsement
providing for an unlimited extended reporting period in the event such policy is
canceled or not renewed for any reason whatsoever or by obtaining new coverage
with a retroactive date the same as or earlier than the expiration with a
retroactive date the same as or earlier than the expiration date of the canceled
or expired policy.
(e) All insurance policies required to be carried by Landlord hereunder
shall conform to the following requirements:
(i) The insurer in each case shall carry a designation in
"Best's Insurance Reports" acceptable to Tenant in its reasonable discretion;
(ii) The insurer shall be qualified to do business in the State
of California;
(iii) Landlord's policy shall name Tenant as an additional
insured on its comprehensive general liability policy;
(iv) Certificates thereof evidencing the coverages required
herein shall be delivered to Tenant at the commencement of the Term and shall
remain in effect throughout the Term. At least thirty (30) days prior to the
expiration of such policies, a replacement certificate thereof shall be
deposited with Tenant;
(v) These policies shall require that Tenant be notified in
writing by the insurer at least thirty (30) days prior to any cancellation or
expiration of such policy, or any reduction in the amounts of insurance carried;
(vi) Each policy shall be primary, not contributing with, and
not in excess of coverage which Tenant may carry;
-14-
23
(vii) All liability insurance required to be carried by Landlord
hereunder shall carry a standard cross-liability endorsement.
(viii) If Landlord obtains any comprehensive general liability
insurance policy on a claims-made basis, Landlord shall provide continuous
liability coverage for claims arising during the entire term of this Lease,
regardless of when such claims are made, either by obtaining an endorsement
providing for an unlimited extended reporting period in the event such policy is
canceled or not renewed for any reason whatsoever or by obtaining new coverage
with a retroactive date the same as or earlier than the expiration date of the
canceled or expired policy.
15. Common Areas and Parking.
The Common Areas of the Project shall be at all times under Landlord's
exclusive control. Landlord reserves the right to change the entrances, exits,
traffic lanes and the boundaries and locations of parking areas, as long as
Tenant's business is not materially disrupted. Landlord shall keep Common Areas
in clean and orderly condition. All vehicles of Tenant, its agents, employees
and invitees shall be parked only in designated parking areas in the Common
Areas of the Project.
16. Entry by Landlord.
Landlord reserves the right to enter the Premises to inspect the same,
to submit the Premises to prospective purchasers, insurance representatives,
Landlord's agents (and associated parties), or lenders and, within the last nine
(9) months of the Lease Term, to prospective tenants, to post notices of
nonresponsibility, to hereby waive any claim for damages to Tenant's business,
any loss of occupancy or quiet enjoyment of the Premises, and any other loss
occasioned thereby. Landlord shall have the right to use any and all means which
Landlord may deem proper to gain entry to the Premises in the event of an
emergency, without any liability to Tenant. Any entry to the Premises by
Landlord in accordance with the provisions of this Paragraph shall not be
construed to be a forcible or unlawful entry into the Premises, or an eviction
of Tenant from the Premises.
17. Assignment and Subletting.
(a) Tenant (but not Tenant's assignee) may assign or sublet this Lease
with the consent of Landlord, but only if the following terms and conditions are
met and fulfilled:
(i) Tenant shall give Landlord not less than twenty (20) days
prior written notice of Tenant's intention to assign or to sublet this Lease.
Such notice shall set forth: the name of the assignee or sublessee (along with a
description and recent financial statements of assignee or sublessee); the date
that the assignment or sublease is to be effective; and the use to which the
assignee or sublessee intends to put the Premises, and shall contain a copy of
the proposed instrument of assignment or sublease.
(ii) The instrument of assignment or the sublease shall be in
writing.
(iii) Tenant's assignee shall assume the obligations of Tenant
under this Lease.
-15-
24
(iv) The assignment or sublease, and Landlord's acceptance
thereof, shall not relieve Tenant of its primary obligation for the faithful
performance of all of the covenants, terms, and conditions hereof on Tenant's
part to be performed, including the obligation for payment of rent when due
hereunder.
Tenant's right to assignment or to sublease shall apply solely to
Tenant, and Tenant's assignee or sublessee shall have no right to further assign
or to sublet this lease or any portion thereof without Landlord's prior written
consent, which consent Landlord may grant or withhold at its sole and absolute
discretion.
(b) No interest of Tenant in this Lease shall be assignable by operation
of law. Each of the following acts shall be considered an involuntary
assignment:
(i) The corporate dissolution of Tenant;
(ii) If Tenant becomes bankrupt or insolvent, makes an
assignment for the benefit of creditors, or institutes a proceeding under the
Bankruptcy Act in which Tenant is the bankrupt;
(iii) If a writ of attachment or execution is levied on this
Lease;
(iv) If, in any action or proceeding to which Tenant is a
party, a receive is appointed with authority to take possession of the Premises;
or
(v) The foreclosure by any person holding a security interest
in this Lease.
An involuntary assignment shall be voidable and, at Landlord's election, shall
constitute an Event of Default by Tenant, thereupon giving rise to the remedies
contained in this Paragraph.
(c) In the event of any subassignment, sub-sublease, or involuntary
assignment without the prior written consent of Landlord, Landlord may either;
(i) immediately terminate this Lease; or
(ii) on ten (10) days written notice to Tenant, elect to
continue this Lease in full force and effect, and accept performance from such
subtenant, involuntary assignee, or subassignee; in such event, such subtenant,
involuntary assignee, or subassignee shall execute documents setting forth the
provisions of Paragraph 17(b) above; and the subtenant, involuntary assignee, or
subassignee shall have no right to exercise any option in this Lease.
(d) Landlord may accept any rent or performance of Tenant's obligations
from any person other than Tenant. Neither a delay in such approval or
disapproval, nor an acceptance of rent or other performance, shall constitute a
waiver or estoppel of Landlord's right to exercise the remedies herein set
forth.
-16-
25
(e) The Landlord, as consideration in connection with such transfer,
assignment, or subletting, shall be entitled to receive sixty percent (60%) of
all consideration (the excess and/or differential of the rent payable to
Landlord and rent, additional rent, and any other consideration paid by
Sublessee or Assignee to Tenant) payable in connection therewith, including
without limitation, any additional rent or other charges or any lump sum
settlement. In connection with such transfer, Landlord reserves the right to
make modifications to the other provisions of the Lease, including the
cancellation of any options to extend the term of this Lease, as Landlord deems
advisable.
18. Damage by Casualty.
(a) Definitions:
(i) "Partial Damage to the Premises" shall mean damage or
destruction to the Premises, other than alterations and improvements owned by
Tenant, which can be repaired within one hundred twenty (120) days of the date
of the casualty, and the repair cost of which damage or destruction is less than
sixty percent (60%) of the then Replacement Cost of the Premises immediately
prior to such damage or destruction, excluding from such calculation the value
of the land upon which the Premises are situated.
(ii) "Total Destruction of the Premises" shall mean damage or
destruction to the Premises, other than alterations and improvements owned by
Tenant, the repair cost of which damage or destruction is greater than sixty
percent (60%) of the then Replacement Cost of the Premises immediately prior to
such damage or destruction, excluding from such calculation the value of the
land upon which the Premises are situated.
(iii) "Insured Loss" shall mean damage or destruction to the
Premises, other than alterations and improvements owned by Tenant, which was
caused by an event for which either party maintained insurance, and for which
insurance proceeds are available to Landlord and not retained and otherwise
applied by Landlord's Lender.
(iv) "Landlord's Lender" shall mean any lender who holds a
mortgage or deed of trust against the Premises as security for a loan made to
Landlord.
(v) "Replacement Cost" shall mean the cost to repair or to
rebuild the Premises at the time of the occurrence to their condition
immediately prior thereto, including demolition, debris removal, and upgrading
required by the operation of applicable building codes, ordinances, or laws, and
without deduction for depreciation.
(b) Partial Damage. If there is a Partial Damage to the Premises which
is an Insured Loss, then Landlord shall utilize the insurance proceeds therefrom
to rebuild the Premises (other than Tenant's alterations and improvements) as
soon as reasonably possible and this Lease shall continue in full force and
effect; provided, however, that is Landlord's repairs are not completed within
one hundred twenty (120) days from the date of the damage or destruction, which
period shall be extended by the number of days lost in the event of labor
strikes, acts of God, or any other similar
-17-
26
causes beyond the control of Landlord, then Tenant may, by written notice to
Landlord, terminate this Lease.
If there is a Partial Damage to the Premises which is not an Insured
Loss, then Landlord shall either:
(i) rebuild the Premises (other than Tenant's alterations and
improvements) as soon as reasonably possible at Landlord's sole expense (except
if the damage or destruction is caused by the negligence or willful misconduct
of Tenant, in which case, if the loss is not an Insured Loss, Tenant shall pay
to rebuild the Premises in accordance with Paragraph 18(f) below) and this Lease
shall continue in full force and effect; provided, however, that if Landlord's
repairs are not completed within one hundred twenty (120) days from the date of
the damage or destruction, which period shall be extended by the number of days
lost in the event of labor strikes, acts of God, or any other similar causes
beyond the control of Landlord, then Tenant may, by written notice to Landlord,
terminate this Lease; or
(ii) give Tenant written notice not more than thirty (30) days
from the date of the damage or destruction, electing to terminate this Lease not
more than sixty (60) days from the date of such notice.
(c) Total Damage. If there is a Total Destruction of the Premises,
whether or not such Total Destruction is an Insured Loss, then Landlord, by
written notice to Tenant within thirty (30) days of the casualty, may terminate
this Lease, which termination shall be effective not more than sixty (60) days
from the date of such notice.
If this Lease is not terminated, then Landlord shall rebuild the
Premises (other than Tenant's alterations and improvements), using any available
insurance proceeds, as soon as reasonably possible at Landlord's sole expense
(except if the damage or destruction is caused by the negligence or willful
misconduct of Tenant, in which case, if the loss is not an Insured Loss, Tenant
shall pay to rebuild the Premises in accordance with Paragraph 18(f) below) and
this Lease shall continue in full force and effect.
(d) Damage Near End of Term. Notwithstanding the foregoing provisions,
in the event of a Partial Destruction of the Premises or a Total Destruction of
the Premises during the last four (4) months of the term of this Lease, then
either party may elect to terminate this Lease by written notice to the other
party given within seven (7) days of the date of the casualty. If no such
written notice is given, then the foregoing provisions shall apply.
(e) Abatement of Rent. In the event of a Partial Destruction of the
Premises, from the date of the casualty until repairs are effected or this Lease
is terminated pursuant to the terms hereof, Base Rent and Additional Rent shall
be abated in proportion to the degree to which Tenant's use of the Premises is
impaired; but all of the other terms, covenants, and conditions of the Lease
shall remain in full force and effect. In the event of a Total Destruction of
the Premises, from the date of
-18-
27
the casualty until repairs are effected or this Lease is terminated pursuant
to the terms hereof, Base Rent and Additional Rent shall be totally abated.
(f) Damage Due to Tenant's Negligence or Willful Misconduct. If the
damage to or destruction of the Premises is due to Tenant's gross negligence or
willful misconduct, there shall be no abatement of Base Rent or Additional Rent,
and (i) if the loss is an Insured Loss, Tenant shall, upon demand, pay to
Landlord an amount equal to the applicable deductible under Landlord's policy of
insurance; or (ii) if the loss is not an Insured Loss, then Tenant, at its sole
cost and expense, shall promptly repair and rebuild the Premises.
(g) Waive Statutes. Landlord and Tenant agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
with respect to the termination of the Lease and hereby waive the provisions of
any present or future statute to the extent inconsistent herewith.
19. Eminent Domain and Condemnation.
(a) Total or Substantial Condemnation. If at any time during the term of
this Lease the whole of the Premises shall be taken for any public or
quasi-public use, under any statute, or by right of eminent domain, except as
provided in subparagraph (c) hereof, this Lease shall terminate on the date of
such taking and the Base Rent and Additional Rent shall be apportioned as of the
date of the taking. If less than all but more than twenty-five percent (25%) of
the Premises shall be so taken, either party may, by written notice to the other
party within sixty (60) consecutive days after such taking, terminate this
Lease. If either party so exercises its option to terminate, then this Lease and
the term hereof shall end on the date specified in the notice and both Base Rent
and Additional Rent shall be apportioned and paid to the date of such taking.
(b) Partial Condemnation. If less than all of the Premises shall be
taken and unless either party has exercised its option to terminate pursuant to
subparagraph (a) hereof, this lease shall be unaffected, except the Tenant shall
be entitled to a pro rata abatement of Base Rent and Additional Rent in the
proportion that the floor area of the Premises so taken bears to the area of the
Premises demised hereunder immediately prior to such taking.
(c) Temporary Taking. If the use or occupancy of the whole or more than
twenty-five percent (25%) of the Premises is temporarily taken for a public or
quasi-public use for a period less than the balance of the term, the Tenant
shall have the option to terminate this Lease on the date of the taking. If this
lease remains in effect the Tenant shall be entitled to an abatement of Rent and
Additional Rent proportionate to the area of the Premises taken, or, at its
option, receive that portion of the award for such taking which represents
compensation for the value of the Tenant's leasehold estate for the original
term or any exercised extension thereof demised hereunder in which case Tenant
shall continue to pay in full the Rent and Additional Rent when due.
(d) Damages. The Landlord shall be entitled to receive the entire award
or awards in any condemnation proceeding without deduction therefrom for any
estate vested in the Tenant and the
-19-
28
Tenant shall receive no part of such award or awards from the Landlord or in the
proceedings except as otherwise expressly provided in this Paragraph. Subject to
the foregoing, the Tenant hereby assigns to the Landlord any and all of its
right, title, and interest in or to such award or awards or any part thereof.
(e) Tenant's Improvements. In the event of a taking of any of Tenant's
improvements or alterations, the Tenant shall be entitled to receive out of the
award, or, if allowed by law, to appear, claim, prove, and receive in the
condemnation proceedings (i) the unamortized value over the term of this Lease
of the Tenant's improvements and alterations to the Premises, depreciated as
allowed by law or otherwise proven from the date of installation thereof to the
date of the taking, minus the amount of Landlord's allowance, if any, provided
the same shall have been installed by or at the Tenant's expense but regardless
of whether the improvements and alterations might be considered part of the
Premises or real property or shall be or become the property of the Landlord
under the terms of this Lease; (ii) the value of the Tenant's fixtures, minus
the amount of Landlord's allowance, if any; (iii) the cost of moving to new
premises; and (iv) special awards or allowances provided by law to tenants in
the event their premises are taken by eminent domain.
(f) Restoration of Premises. If there is a taking hereunder and this
Lease is continued, the Landlord shall, at its expense, and upon receipt of any
award or awards deemed sufficient by an independent architect selected by
Landlord and approved by Tenant for the purpose, proceed with reasonable
diligence to repair, alter, and restore the Premises as a complete architectural
unit of substantially the same proportionate usefulness, design, and
construction existing immediately prior to the date of taking, except that the
Landlord may elect to reconstruct the interior of the Premises either in
accordance with the original specification or in accordance with single line
control drawings and specifications furnished by Tenant. If Landlord agrees to
so rebuild the Premises in accordance with Tenant's specifications, then no
later than thirty (30) days before commencement of such repair and
reconstruction, the Tenant shall pay to the Landlord a sum equal to the
difference between an independent architect of Landlord's estimate of (i) the
cost to be incurred by the Landlord to complete reconstruction of the Premises
in accordance with Tenant's specifications, and (ii) the cost that the
independent architect estimates would have been incurred had Landlord
reconstructed the Premises in accordance with the original construction drawings
and specifications applicable to the Premises (as such improvements may have
been altered by Landlord during the term prior to the taking) to the extent that
such improvements have been constructed for the Tenant by the Landlord, at the
Landlord's expense, prior to and during the term hereof; provided, however, that
Landlord shall pay the difference between the actual cost incurred by Landlord
to complete reconstruction in accordance with Tenant's specifications and the
sum paid by Tenant pursuant hereto within fifteen (15) days after completion of
such reconstruction and delivery of the Premises to Tenant.
(g) Transfer in Lieu. Taking by condemnation or eminent domain hereunder
shall include the exercise of any similar governmental power and any sale,
transfer, or other disposition of the Premises in lieu of or under threat of
condemnation.
-20-
29
20. Default by Tenant.
(a) Event of Default Defined. The following events (herein referred to
as an "Event of Default") shall constitute a default by Tenant hereunder:
(i) Tenant's failure to pay (without notice) when due the Base
Rent, Additional Rent, or any other sums payable hereunder within five (5)
business days of when it is due; or
(ii) Tenant's neglect or failure to perform or observe any of
the other covenants herein contained on Tenant's part to be performed or
observed and Tenant's failure to remedy the same within thirty (30) days after
Landlord shall have mailed to Tenant written notice specifying such neglect or
failure, or such further period as Tenant may reasonably require so long as
Tenant commences to cure such default within such thirty (30) day cure period
and diligently proceeds to effectuate such cure thereafter; or
(iii) Tenant shall violate the provisions of Paragraph 17 with
respect to involuntary assignment, or Tenant's assignee or sublessee shall
violate the provisions of said Paragraph regarding further assignment or
subletting.
(b) Remedies. Upon an Event of Default by Tenant, Landlord may at any
time thereafter, in its sole discretion, without limiting Landlord in the
exercise of a right or remedy which Landlord may have by reason of such default
or breach, elect to pursue one or more of the following remedies, which are
cumulative and in addition to any remedies now or later allowed by law:
(i) Landlord may continue this Lease in full force and effect,
and the Lease will continue in effect as long as Landlord does not terminate
Tenant's right to possession, and Landlord shall have the right to collect rent
when due. During the period Tenant is in default, Landlord can enter the
Premises and relet them, or any part of them, to third parties for Tenant's
account. Tenant shall be liable immediately to Landlord for all reasonable costs
and expenses incurred by Landlord in mitigation of damages as required by law.
Reletting can be for a period shorter or longer than the remaining term of this
Lease. Tenant shall pay to Landlord the rent due under this Lease on the dates
the rent is due, less the rent Landlord receives from reletting. No act by
Landlord allowed by this Paragraph shall terminate this Lease unless Landlord
notifies Tenant that Landlord elects to terminate this Lease. After Tenant's
default and for as long as Landlord does not terminate Tenant's right to
possession of the Premises, Tenant shall have the right to assign or, with
Landlord's consent, sublet the Premises, but Tenant shall not be released from
liability therefrom. Landlord's consent to a subletting shall not be
unreasonably withheld.
If Landlord elects to relet the Premises as provided in this Paragraph,
rent that Landlord receives from reletting shall be applied to the Payment of:
(A) First, any indebtedness from Tenant to Landlord other
than rent due from Tenant;
-21-
30
(B) Second, all reasonable costs, including any costs and
expenses incurred in preparing the Premises for reletting, incurred by Landlord
in mitigation of damages as required by law;
(C) Third, rent due and unpaid under this Lease.
After deducting the payments referred to in this Paragraph, any sums remaining
from the rent that Landlord receives from reletting shall be held by Landlord
and applied in payment of future rent as rent becomes due under this Lease. In
no event shall Landlord be entitled to any excess rent received by Landlord. If,
on the date rent is due under this Lease, the rent received from the reletting
is less than the rent due on that date, Tenant shall pay to Landlord, in
addition to the remaining rent due, all costs, including for maintenance,
Landlord incurred in reletting that remain after applying the rent received from
the reletting as provided in this Paragraph.
(ii) Landlord can terminate Tenant's right to possession of the
Premises at any time. No act by Landlord other than giving notice to Tenant
shall terminate this Lease. Acts of maintenance or efforts to relet the Premises
shall not constitute a termination of Tenant's right to possession. On
termination, Landlord shall have the right to recover from Tenant:
(A) The worth, at the time of the award, of the unpaid
rent that had been earned at the time of the termination of the Lease;
(B) The worth, at the time of the award, of the amount by
which the unpaid rent that would have been earned after the date of termination
of this Lease until the time of award exceeds the amount of the loss of rent
that Tenant proves could have been reasonably avoided;
(C) The worth, at the time of the award, of the amount by
which the unpaid rent for the balance of the term after the time of award
exceeds the amount of the loss of rent that Tenant proves could have been
reasonably avoided; and
(D) Any other amount, and court costs, necessary to
compensate Landlord for all detriment proximately caused by Tenant's default.
As used in subparagraphs (A) and (B) above, the "worth at the time of
the award" is to be computed by allowing interest at the maximum rate an
individual can charge. As used in subparagraph (C) above, the "worth at the time
of the award" is to be computed by discounting the amount at the discount rate
of the Federal Reserve Bank of San Francisco at the time of the award, plus one
percent (1%).
(iii) Landlord, at any time after an Event of Default, can cure
the default at Tenant's cost. If Landlord at any time, by reason of a breach of
this Lease by Tenant, pays any sum or does any act that requires the payment of
any sum, the sum paid by Landlord shall be due immediately from Tenant to
Landlord, together with interest thereon at the maximum rate an
-22-
31
individual can charge from the date the sum is paid by Landlord until reimbursed
by Tenant. The sum, together with interest thereon, shall be Additional Rent.
(iv) Pursue any other remedy now or hereafter available to
Landlord under the laws or judicial decisions of the State of California.
21. Landlord's Breach; Tenant's Remedies.
Landlord shall be in default of this Lease if Landlord fails or refuses
to perform any provision of this Lease that it is obligated to perform if the
failure to perform is not cured within thirty (30) days after notice of the
default has been given by Tenant to Landlord. If the default cannot reasonably
be cured within thirty (30) days, Landlord shall not be in default of this Lease
if Landlord commences to cure the default within the thirty (30) day period and
diligently and in good faith continues to cure the default.
Tenant, at any time after the Landlord commits a default, and as its
sole remedy therefor, can cure the default at Landlord's cost. If Tenant at any
time, by reason of Landlord's default, pays any sum or does any act that
requires the payment of any sum, the sum paid by Tenant shall be due immediately
from Landlord to Tenant, together with interest thereon at the maximum rate an
individual can charge from the date the sum is paid by Tenant until reimbursed
by Landlord. If Landlord fails to reimburse Tenant as required by this
Paragraph, Tenant shall have the right to withhold from future rent due the sum
Tenant has paid until Tenant is reimbursed in full for the sum and interest on
it.
22. Subordination, Non-disturbance, and Attornment.
This Lease is subordinate to any mortgage or deed of trust now placed on
the Project and to any renewal, modification, consolidation, replacement or
extension of such mortgage or deed of trust. This clause shall be
self-operative, and no further instrument of subordination shall be required.
Within five (5) days after written request by Landlord, Tenant shall execute any
documents which may be desirable to confirm the subordination of this Lease.
Landlord is hereby irrevocably appointed agent and attorney-in-fact of Tenant to
execute all such subordination instruments in the event Tenant fails to execute
said instruments within fifteen (15) days after notice from Landlord demanding
the execution thereof. At the request of Tenant, Landlord shall request a
subordination, attornment, and non-disturbance agreement from the lender,
although Landlord makes no representation that such subordination, attornment,
and non-disturbance agreement can be obtained.
23. Signs and Advertising.
Tenant shall have the right, at its sole cost and expense, to place a
sign on the Project monument/directional signage, as designated by Landlord.
Tenant shall place no signs on the roof of the Premises. Tenant shall place no
sign on the exterior of the Premises without Landlord's prior written consent,
which consent shall not be unreasonably withheld or delayed.
-23-
32
24. Brokers.
Landlord and Tenant represents that they have dealt only with Pacific
Equity Partners, LLC ("Broker") in the negotiation of this Lease. Tenant and
Landlord acknowledge and agree that the Broker acted as a Transaction Broker,
defined as a broker assisting the Landlord or Tenant and/or both throughout this
real estate transaction with communication, advice, negotiation, contracting and
closing without being an agent or advocate for any of the parties. The parties
to a transaction are not legally responsible for the actions of a Transaction
Broker and a Transaction Broker does not owe those parties the duties of an
agent. However, a Transaction Broker does owe the parties a number of statutory
obligations and responsibilities, including using reasonable skill and care in
the performance of any oral or written agreement. A Transaction Broker must also
make the same disclosures as agents about adverse material facts concerning a
property or a buyer's financial ability to perform the terms of a transaction
and whether the buyer intends to occupy the property. No written agreement is
required.
25. Notices.
All notices required or permitted by this Lease shall be in writing and
may be delivered in person (by hand or by messenger or by overnight courier
service), or may be sent by regular, certified, or registered mail or by United
State Postal Service Express Mail, with postage prepaid, or by facsimile
transmission, and shall be deemed sufficiently given if served or delivered in a
manner specified in this Paragraph 25. The addresses for delivery of notice
herein shall be:
To Landlord at: Drever Partners, Inc.
Xxxx Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx
With Copies to: XxXxxxxx Properties
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attn: Xxxx XxXxxxxx
With Copies to: Pacific Equity Partners, LLC
Xxx Xxxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000-0000
Attn: Xxxx X. Xxxxxxxxxxx
-24-
33
To Tenant: Finisar Corporation
000 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000
Attn: Xxxxx Xxxxx
Either party may by written notice to the other specify a different address for
notice purposes. Hand-delivered notices shall be deemed given when actually
received by Landlord or Tenant. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, and if no delivery date is shown, the postmark thereon. If
sent by regular mail the notice shall be deemed given forty-eight (48) hours
after the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that
guarantees next day delivery shall be deemed given twenty-four (24) hours after
delivery of the same to the United States Postage Service or representative of
the overnight courier. If any notice is transmitted by facsimile transmission or
similar means, the same shall be deemed served or delivered on telephone
confirmation of receipt of the transmission thereof. If notice is received on a
Sunday or legal holiday, it shall be deemed received on the next business day.
26. Estoppel Statement.
Tenant shall within five (5) days of Landlord's written request therefor
execute, acknowledge and deliver to Landlord or Landlord's designee a statement
in writing including the following information (but not limited to) (a)
certifying that this Lease constitutes the entire agreement between Landlord and
Tenant and is unmodified and in full force and effect (or if there have been
modifications, that the same is in full force and effect as modified and stating
the modification(s); (b) the dates to which the rent and other charges hereunder
have been paid, and the amount of any security deposited with Landlord; (c) that
the Premises have been completed on or before the date of such letter and that
all conditions precedent to this lease taking effect have been carried out (or
specifying in what way they have not); (d) that Tenant has accepted possession,
that the term has commenced, that the Tenant is occupying the Premises, and that
Tenant knows of no default under this Lease by Landlord and that to the best of
Tenant's knowledge there are no defaults or offsets which Tenant has against
enforcement of this Lease by Landlord; (e) the actual Commencement Date and
expiration date of the term of this Lease; and (f) that the Premises are open
for business. Any such Estoppel Certificate may be conclusively relied upon by
Landlord and any prospective purchaser or encumbrance of the Premises or
Project. In the event that such Estoppel Certificate is not so delivered by
Tenant as required herein within ten (10) days of Landlord's request therefor,
Tenant will be conclusively deemed for all purposes to have signed and to be
bound by such Estoppel Certificate in a form which, inter alia, (i) states that
the Lease has not been modified; (ii) states that all conditions precedent to
the Lease taking effect have been carried out; and (iii) states that Tenant
knows of no default under the Lease.
27. Attorney's Fees.
(a) If either party becomes a party to any litigation concerning this
Lease, the Premises, or the Project, by reason of any act or omission of the
other party or its authorized representatives,
-25-
34
the party that causes the other party to become involved in the litigation shall
be liable to that party for reasonable attorney's fees, court costs,
investigation expenses, discovery costs and costs of appeal incurred by it in
the litigation.
(b) If either party commences an action against the other party arising
out of or in connection with this Lease, the prevailing party shall be entitled
to have and recover from the losing party, reasonable attorney's fees, costs of
suit, investigation costs and discovery costs, including costs of appeal.
(c) Should it be necessary for either party to employ legal counsel to
enforce any of the provisions herein contained, the non-prevailing party shall
pay all attorney's fees and court costs reasonably incurred thereby.
(d) Each party's obligations under this Paragraph shall survive the
expiration of the term or any earlier termination of this Lease. This Paragraph
is intended to supplement (and not to limit) other provisions of this Lease
pertaining to indemnities and/or attorney's fees.
28. Surrender of Premises; Holding Over.
(a) Upon expiration or earlier termination of this Lease, Tenant shall
surrender to Landlord the Premises and all of Tenant's improvements and
alterations thereon in good operating order, condition, and state of repair,
clean and free of debris (except for ordinary wear and tear occurring after
Tenant's last necessary maintenance, and subject to the provisions of Paragraph
18, relating to the destruction or partial destruction of the Premises), except
for alterations and improvements that Tenant is required to remove by written
election of the Landlord pursuant to Paragraph 10(e), above. Tenant shall remove
all of its personal property and trade fixtures from the Premises prior to the
expiration or earlier termination of this Lease. Tenant shall perform at its
sole cost and expense all restoration made necessary by its removal of
alterations and improvements, personal property, and trade fixtures.
Landlord may elect to retain or to dispose of in any manner any
alterations or improvements that Tenant is required to remove pursuant to
Paragraph 10(e) above, or Tenant's trade fixtures or personal property that
Tenant does not remove from the Premises on expiration or earlier termination of
this Lease by giving at least ten (10) days written notice to Tenant. Title to
any such alterations, improvements, trade fixtures, or personal property that
Landlord elects to retain or to dispose of on expiration of the aforesaid ten
(10) day period shall vest in Landlord. Tenant waives all claims against
Landlord and Landlord's agents for any damage to Tenant resulting from
Landlord's retention or disposition of any such alterations, improvements, trade
fixtures, and/or personal property, and Tenant shall be liable to Landlord for
Landlord's costs and expenses for storing, removing, and disposing of same, and
for the cost of restoring the Premises thereafter to the condition required by
subparagraph (a), above.
(b) Tenant has no right to retain possession of the Premises or any part
thereof beyond the expiration or earlier termination of this Lease. If Tenant,
with Landlord's written consent,
-26-
35
remains in possession of the Premises after the expiration or earlier
termination of this Lease, such consensual possession shall be deemed to be a
month-to-month tenancy terminable on thirty (30) days written notice given at
any time by either party. During such month-to-month tenancy, all of the terms
and conditions of this Lease shall remain in full force and effect, except (i)
the Base Rent during the holdover period shall be one hundred fifty percent
(150%) of the Base Rent in force during the month immediately preceding the
expiration or earlier termination of the Lease, and (ii) any option or options
set forth in the Lease to extend the term thereof shall not be exercisable
during any such holdover period, but shall lapse upon the expiration date or
date of the earlier termination of the Lease.
29. No Waste.
Tenant shall commit no waste upon the Premises or the Project.
30. No Waiver.
The waiver by Landlord of any breach of any Lease provision shall not be
deemed to be a permanent waiver of such Lease provision or a waiver of any
subsequent breach of the same or any other term, covenant or condition therein
contained. The subsequent acceptance of rent hereunder by Landlord shall not be
deemed to be a waiver of any preceding breach by Tenant of any provision of this
Lease, other than the failure of Tenant to pay the particular rent so accepted,
regardless of Landlord's knowledge of such preceding breach at the time of
acceptance of such rent. The consent or approval by either party to or of any
act by the other party of a nature requiring consent or approval shall not be
deemed to waive or render unnecessary consent to approval of any subsequent
similar act.
31. Effect of Landlord's Conveyance.
If, during the Term of this Lease, Landlord shall assign or sell, in
whole or in part, its interest in the Project of which the Premises forms a
part, or the Premises, all of which is hereby permitted and which Landlord shall
be allowed to advertise for at any time, then from and after the effective date
of the sale or conveyance, Landlord shall be released and discharged from any
and all obligations and responsibilities under this Lease or arising out of any
act, occurrence or omission relating to the Project or Premises which occurs
after the consummation of such sale, exchange, or assignment, except those
already accrued; provided, however, that if the purchaser or assignee expressly
assumes in writing all of Landlord's liabilities under this Lease, whensoever
accrued, then Landlord shall be released and discharged from any and all
obligations and responsibilities under this Lease, whensoever accrued. If any
security be given by Tenant to secure the faithful transfer and/or deliver the
security, as such, to the purchaser or assignee and thereupon Landlord shall be
discharged from any further liability in reference thereto. Landlord shall give
immediate notice of such sale and/or assignment of Lease to Tenant upon its
occurrence.
-27-
36
32. Authority to Execute Lease.
Tenant is a duly formed corporation in the state of California, and each
individual executing this Lease on behalf of Tenant represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of Tenant in
accordance with a duly adopted Corporate Resolution of Tenant, in accordance
with the bylaws of the Tenant, and certifying that Tenant is duly organized
under the laws of its State of formation, and that this Lease is binding upon
the Tenant in accordance with its terms. Tenant shall furnish with the executed
lease a copy of the Corporate Resolution.
33. Mortgage Protection.
Tenant shall give Landlord's lender, by registered mail, a copy of any
notice of default service upon Landlord, provided that prior to such notice
Tenant has been notified, in writing (by way of notice of assignment of rents
and leases, or otherwise), of the identity and address of Landlord's Lender.
34. Time of the Essence.
Time is of the essence of this Lease with respect to each and every
Paragraph thereof.
35. Covenant of Quiet Possession.
Upon Tenant paying the rent reserved hereunder and observing and
performing all of the covenants, conditions and provisions on Tenant's part to
be observed and performed hereunder, Tenant shall have quiet possession of the
Premises for the entire term hereof, subject to all the provisions of this
Lease.
36. General Provisions.
(a) The captions in the margins and the headings of the several
Paragraphs of this Lease are for convenience only and are not a part of this
Lease and do not in any way limit or amplify the terms and provisions of this
Lease.
(b) Whenever the singular number is used in this Lease and when required
by the context, the same shall include the plural, the plural shall include the
singular, and the masculine gender shall include the feminine and neuter
genders, and the word "person" shall include corporation, limited liability
company, partnership, firm or association. References in this Lease to terms
such as "herein", "hereof", and "hereunder" shall be construed to reference any
applicable provisions contained within the entire Lease.
(c) This Lease contains all of the agreements of the parties hereto with
respect to any matter covered or mentioned in this Lease, and no prior to
contemporaneous agreements or understandings, whether written or oral,
pertaining to any such matters shall be effective for any purpose. No provisions
of this Lease may be amended or added to except by an agreement in writing
signed by the parties hereto or their permitted successors in interest.
-28-
37
(d) Except as otherwise expressly stated, each payment required to be
made by Tenant shall be in addition to and not in substitution for other
payments to be made by Tenant.
(e) The invalidity of any provision of this Lease, as determined by a
court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.
(f) The preparation and submission of a draft of this Lease by either
party to the other shall not constitute an offer nor shall either party be bound
to any terms of this Lease or the entirety of the Lease itself until both
parties have fully executed a final document and an original signature document
has been received by both parties. Until such time as described in the previous
sentence, either party is free to terminate negotiations with no obligations to
the other. This Lease may be fully executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(g) Under the terms of this Lease, numerous charges are and may be due
from Tenant to Landlord including, without limitation, Common Area Costs, Real
Estate Taxes, insurance reimbursement and other items of a similar nature
including advances made by Landlord in respect of Tenant's default at Landlord's
option. If, at any time during the Term, there is a bona fide dispute between
the parties as to the amount due for any of such charges claimed by Landlord to
be due, the undisputed amount demanded by Landlord shall be paid by Tenant until
the resolution of the dispute between the parties by litigation, agreement or
otherwise.
(h) It is understood and agreed that the remedies herein given to either
party shall be cumulative, and the exercise of any one remedy by either party
shall not be to the exclusion of any right to exercise any other remedy.
(i) This Lease shall be construed and enforced in accordance with the
laws of the State of California. Venue and jurisdiction shall be proper in State
Court in Santa Xxxxx County, and/or in Federal Court in the Northern District of
California.
(j) Neither this Lease nor any memorandum or recitation of its terms
shall be recorded without the prior written consent of Landlord.
(k) Nothing contained herein shall be deemed or construed by anyone as
creating the relationship of principal and agent, partnership, or joint venture
between the parties hereto.
(l) Subject to the limitations of Paragraph 17, above, the covenants,
agreements and obligations herein contained shall extend to, bind and inure to
the benefit not only of the parties hereto but their respective personal
representatives, heirs, successors and assigns.
(m) Whenever a period of time is herein provided for either party to do
or perform any act or thing, that party shall not be liable or responsible for
any delays, and applicable periods for performance shall be extended
accordingly, due to strikes, lockouts, riots, acts of God, shortages of labor or
materials, restrictions, laws or regulations, or any other cause or causes,
whether similar or dissimilar to those enumerated, beyond its reasonable
control. The provisions of this Subparagraph
-29-
38
shall not operate to excuse Tenant from prompt payment of Base Rent, Additional
Rent or other monetary payments required by the terms of this Lease.
(n) Landlord shall have the right to grant any easements on, over, under
and above the Premises for such purposes as Landlord determines, provided that
such easements will not materially interfere with Tenant's then-current or
projected use of the Premises.
(o) No provision of this Lease shall be construed against or interpreted
to the disadvantage of any party by any court or other governmental or judicial
authority by reason of such party having or being deemed to have drafted,
devised or imposed such provision.
(p) Unless specifically set forth therein to the contrary, when
reference is made to "Landlord's consent" or "Landlord's prior written consent,"
said consent shall be granted or denied in Landlord's sole discretion.
(q) At any time during this Lease, Landlord may require financial
statements of Tenant (and any sub-tenant and/or assignee) for a designated
period of time. Tenant shall furnish Landlord the requested information within
fifteen (15) days of request.
-30-
39
IN WITNESS WHEREOF, the parties have executed this Lease, to be
effective as of the 30th day of May, 1997.
LANDLORD: DM GROUP VIII, a California
limited partnership, by
/s/ Xxxxxxx Xxxxx Xxxxxx
-------------------------------------
Xxxxxxx Xxxxx Drever
General Partner
/s/ Xxxxxx X. XxXxxxxx
-------------------------------------
Xxxxxx X. XxXxxxxx
General Partner
Drever, XxXxxxxx & Company, Inc., a
California corporation,
general partner, by
/s/ Xxxxxxx Xxxxx Drever
-------------------------------------
Xxxxxxx Xxxxx Xxxxxx
President
DM GROUP VIII-E, a California
limited partner, by
/s/ Xxxxxxx Xxxxx Xxxxxx
-------------------------------------
Xxxxxxx Xxxxx Drever
General Partner
/s/ Xxxxxx X. XxXxxxxx, III
-------------------------------------
Xxxxxx X. XxXxxxxx, III
General Partner
Drever, XxXxxxxx & Company, Inc., a
California corporation,
general partner, by
/s/ Xxxxxxx Xxxxx Drever
-------------------------------------
Xxxxxxx Xxxxx Xxxxxx
President
-31-
40
TENANT: FINISAR CORPORATION, a
California corporation, by
/s/ Xxxxx Xxxxx
--------------------------------------
Its:President
----------------------------------
--------------------------------------
Its:
----------------------------------
-32-
41
EXHIBIT "A"
LEGAL DESCRIPTION OF PREMISES
All of that certain real property situate in the City of Mountain View,
County of Santa Xxxxx, State of California, described as follows:
Xxxx 00 as shown and defined on the Condominium Plan for Xxx 0, Xxxxx
Xx. 0000, attached to and made a part of as Exhibit "A" on "The Combined
Condominium Declaration and Covenants, Conditions, and Restrictions" recorded
August 19, 1982, in Book G972, Page 697, Official Records of Santa Xxxxx County,
and being contained within Xxx 0 xx Xxxxx 0000, filed for record on June 25,
1981, in Book 486 of Maps, Pages 42 and 43, Official Records of Santa Xxxxx
County.
42
EXHIBIT "B"
LEGAL DESCRIPTION OF PROJECT
All of that certain real property situate in the City of Mountain View,
County of Santa Xxxxx, State of California, described as follows:
Parcel One
Units 18A and 18B as shown and defined on the Condominium Plan for Xxx
0, Xxxxx Xx. 0000, attached to and made a part of as Exhibit "A" on "The
Combined Condominium Declaration and Covenants, Conditions, and Restrictions"
recorded August 19, 1982, in Book G972, Page 697, Official Records of Santa
Xxxxx County, and being contained within Xxx 0 xx Xxxxx 0000, filed for record
on June 25, 1981, in Book 486 of Maps, Pages 42 and 43, Official Records of
Santa Xxxxx County.
Parcel Two
Units 1 through 17 and 18A and 18B, and all of the Common Area and
restricted Common Area as shown and defined on the Condominium Plan for Xxx 0,
Xxxxx Xx. 0000, attached to and made a part of as exhibit "A" on "The Combined
Condominium Declaration and Covenants, Conditions, and Restrictions" recorded
August 19, 1982, in Book G972, Page 697, Official Records of Santa Xxxxx county,
and being contained within lot 1 of tract 7110, filed for record on June 25,
1981, in Book 486 of Maps, Pages 42 and 43, Official Records of Santa Xxxxx
County.
43
EXHIBIT C
[Floor Plan Graphic]
