EXHIBIT 10.3
Lease between
The Sobrato Group and ZiLOG, Inc.
Section...................................................................Page #
Parties........................................................................1
Premises.......................................................................1
Use............................................................................1
Permitted Uses..............................................................1
Uses Prohibited.............................................................1
Advertisements and Signs....................................................1
Covenants, Conditions and Restrictions......................................2
Term and Rental................................................................2
Base Monthly Rent...........................................................2
Late Charges................................................................2
Security Deposit............................................................3
This paragraph intentionally left blank........................................3
Acceptance of Possession and Covenants to Surrender............................3
Delivery and Acceptance.....................................................3
Early Access................................................................4
Condition Upon Surrender....................................................4
Failure to Surrender........................................................5
Alterations and Additions......................................................5
Tenant's Alterations........................................................5
Free From Liens.............................................................6
Compliance With Governmental Regulations....................................6
Maintenance of Premises........................................................6
Landlord's Obligations......................................................6
Tenant's Obligations........................................................6
Landlord and Tenant's Obligations Regarding Reimbursable
Operating Costs.............................................................6
Reimbursable Operating Costs................................................7
Tenant's Allocable Share....................................................9
Waiver of Liability.........................................................9
Waiver of Liability.........................................................9
Hazard Insurance..............................................................10
Tenant's Use...............................................................10
Landlord's Insurance.......................................................10
Tenant's Insurance.........................................................10
Waiver.....................................................................10
Taxes.........................................................................11
Utilities.....................................................................11
Toxic Waste and Environmental Damage..........................................11
Use of Hazardous Material..................................................11
Tenant's Indemnity Regarding Hazardous Material............................12
Notice of Release or Violation.............................................12
Remediation Obligations....................................................13
Environmental Monitoring...................................................13
Tenant's Default..............................................................13
Remedies...................................................................14
Right to Re-enter..........................................................14
Abandonment................................................................14
No Termination.............................................................15
Non-Waiver.................................................................15
Performance by Landlord....................................................15
Landlord's Liability.........................................................15
Limitation on Landlord's Liability.........................................15
Limitation on Tenant's Recourse............................................16
Indemnification of Landlord................................................16
Destruction of Premises.......................................................16
Landlord's Obligation to Restore...........................................16
Limitations on Landlord's Restoration Obligation...........................16
Condemnation..................................................................17
Assignment or Sublease........................................................17
Consent by Landlord........................................................17
Assignment or Subletting Consideration.....................................18
No Release.................................................................19
Reorganization of Tenant...................................................19
Permitted Transfers........................................................20
Effect of Default..........................................................20
Effects of Conveyance......................................................20
Successors and Assigns.....................................................20
Option to Extend the Lease Term...............................................20
Grant and Exercise of Option...............................................20
Determination of Fair Market Rental........................................21
Resolution of a Disagreement over the Fair Market Rental...................21
Personal to Tenant.........................................................21
General Provisions............................................................22
Attorney's Fees............................................................22
Authority of Parties.......................................................22
Brokers....................................................................22
Choice of Law..............................................................22
Dispute Resolution.........................................................22
Entire Agreement...........................................................23
Entry by Landlord..........................................................23
Estoppel Certificates......................................................24
Exhibits...................................................................24
Interest...................................................................24
No Presumption Against Drafter.............................................24
Notices....................................................................24
Property Management........................................................24
Rent.......................................................................25
Representations............................................................25
Rights and Remedies........................................................25
Severability...............................................................25
Submission of Lease........................................................25
Subordination..............................................................25
Survival of Indemnities....................................................26
Time.......................................................................26
Transportation Demand Management Programs..................................26
Waiver of Right to Jury Trial..............................................26
Consents...................................................................26
EXHIBIT A - Premises & Building...............................................28
EXHIBIT B - Tenant's Signage..................................................29
EXHIBIT C - Draft Letter of Credit............................................30
EXHIBIT D - Initial Alterations...............................................31
EXHIBIT E - Hypothecation Form................................................32
1. Parties: THIS LEASE, is entered into on this 21st day of December 2001,
("Effective Date") between The Sobrato Group, a California Limited
Partnership, whose address is ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ("Landlord") and ZiLOG, Inc., a Delaware
Corporation, whose address is ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ("Tenant"). Landlord and Tenant are collectively referred
to in this Lease as the "Parties".
2. Premises: Landlord hereby leases to Tenant, and Tenant hires from
Landlord those certain Premises (the "Premises") consisting of a building
of 40,792 square feet located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ in the city of San Jose,
California ("Building") and depicted on Exhibit "A" attached hereto,
together with all appurtenances located thereon and related thereto
including, without limitation, parking areas and structures, landscaping,
loading docks, sidewalks, service areas and other facilities located
therein and thereon, together with the right to use 140 parking spaces
located adjacent thereto. The parking spaces shall be available for
Tenant's exclusive use but shall not be designated or segregated from the
balance of the parking area. The Building is situated within a project site
shared with five (5) additional buildings owned by Landlord as outlined in
Exhibit "A" attached hereto ("Project").
3. Use:
A. Permitted Uses: Tenant and Tenant's agents, advisors, employees,
partners, shareholders, directors, customers, invitees and independent
contractors (collectively, "Tenant's Agents") shall use the Premises as
permitted under applicable zoning laws only for the following purposes and
shall not change the use of the Premises without the prior written consent
of Landlord: Office, research and development, marketing, light
manufacturing, ancillary storage and other incidental uses, and for any
other uses permitted by law. Tenant and Tenant's Agents shall use only the
number of parking spaces allocated to Tenant under this Lease. Tenant shall
use its best efforts to ensure that all commercial trucks and delivery
vehicles shall be: (i) parked at the rear of the Building, (ii) loaded and
unloaded in a manner which does not interfere with the businesses of other
occupants of the Project, and (iii) permitted to remain within the Project
only so long as is reasonably necessary to complete the loading and
unloading. Landlord makes no representation or warranty that any specific
use of the Premises desired by Tenant is permitted pursuant to any Laws (as
hereinafter defined).
B. Uses Prohibited: Tenant shall not commit or suffer to be committed
on the Premises any waste, nuisance, or other act or thing which may
disturb the quiet enjoyment of any other tenant in or around the Premises
and Project, nor allow any sale by auction or any other use of the Premises
for an unlawful purpose. Tenant shall not (i) damage or overload the
electrical, mechanical or plumbing systems of the Premises, (ii) attach,
hang or suspend anything from the ceiling, walls or columns of the building
that would jeopardize the structural integrity of the Premises, or set any
load on the floor in excess of the load limits for which such floors are
designed, or (iii) generate dust, fumes or waste products which create a
fire or health hazard or damage the Premises or any portion of the Project,
including without limitation the soils or ground water in or around the
Project. No materials, supplies, equipment, finished products or
semi-finished products, raw materials or articles of any nature, or any
waste materials, refuse, scrap or debris, shall be stored upon or permitted
to remain on any portion of the Premises outside of the Building without
Landlord's prior approval, which approval may be withheld in its sole
discretion.
C. Advertisements and Signs: Tenant will not place or permit to be
placed, in, upon or about the exterior of the Building any signs not
approved by the City of San ▇▇▇▇ and any other governing authority having
jurisdiction. Tenant will not place or permit to be placed upon the
exterior of the Building (or visible from the exterior of the Building) any
signs, advertisements or notices without the written consent of Landlord as
to type, size, design, lettering, coloring and location, which consent will
not be unreasonably withheld. Landlord hereby consents to the Building and
monument signage described on Exhibit "B" attached hereto. Any sign placed
on the Premises shall be removed by Tenant, at its sole cost, prior to the
Expiration Date (as hereinafter defined) or promptly following the earlier
termination of the Lease, and Tenant shall repair, at its sole cost, any
damage or injury to the Premises caused thereby, and if not so removed,
then Landlord may have such signage removed at Tenant's expense.
D. Covenants, Conditions and Restrictions: This Lease is subject to
the effect of (i) any covenants, conditions, restrictions, easements,
mortgages or deeds of trust, ground leases, rights of way of record and any
other matters or documents of record as of the Effective Date; and (ii) any
zoning laws of the city, county and state where the Building is situated
(collectively referred to herein as "Restrictions") and Tenant will conform
to and will not violate the terms of any such Restrictions. With respect to
item (i) above, Tenant acknowledges receipt of a title report dated
November 29, 2001 from Alliance Title, together with all underlying
documents referenced therein. To the best of Landlord's knowledge, there
are no other liens or encumbrances affecting the Premises or the Building
except as disclosed in said title report.
4. Term and Rental:
A. Base Monthly Rent: The term ("Lease Term") shall be for sixty (60)
months, commencing on February 1, 2002 ("Commencement Date") and ending
January 31, 2007 ("Expiration Date"). Notwithstanding the foregoing, this
Lease and all of the obligations of Landlord and Tenant hereunder shall be
binding and in full force and effect from and after the Effective Date
through the remainder of the Lease Term. In addition to all other sums
payable by Tenant under this Lease, Tenant shall pay base monthly rent
("Base Monthly Rent") for the Premises commencing on the Commencement Date
in accordance with the following schedule:
Month 01: none
Month 02: $59,088.00
Months 03 -12: $79,544.00 per month
Months 13 -24: $81,992.00 per month
Months 25 -36: $84,439.00 per month
Months 37 -48: $86,887.00 per month
Months 49 -60: $89,334.00 per month
Base Monthly Rent shall be due in advance on or before the first day of
each calendar month during the Lease Term. All sums payable by Tenant under
this Lease shall be paid to Landlord in lawful money of the United States
of America, without offset or deduction and without prior notice or demand,
at the address specified in Section 1 of this Lease or at such place or
places as may be designated in writing by Landlord during the Lease Term.
Base Monthly Rent for any period less than a calendar month shall be a pro
rata portion of the monthly installment.
B. Late Charges: Tenant hereby acknowledges that late payment by
Tenant to Landlord of Base Monthly Rent and other sums due hereunder will
cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which is extremely difficult to ascertain. Such costs include but
are not limited to: administrative, processing, accounting, and late
charges which may be imposed on Landlord by the terms of any contract,
revolving credit agreement, mortgage, or trust deed covering the Premises.
Accordingly, if any installment of Base Monthly Rent or other sum due from
Tenant shall not be received by Landlord or its designee within five (5)
days after receipt of written notice to Tenant from Landlord that such sum
is overdue, then Tenant shall pay to Landlord a late charge equal to five
(5%) percent of such overdue amount, which late charge shall be due and
payable on the same date that the overdue amount was due. The parties agree
that such late charge represents a fair and reasonable estimate of the
costs Landlord will incur by reason of late payment by Tenant, excluding
interest and attorneys fees and costs. If any Base Monthly Rent or other
sum due from Tenant remains delinquent for a period in excess of thirty
(30) days then, in addition to such late charge, Tenant shall pay to
Landlord interest on any rent that is not paid when due at the Agreed
Interest Rate specified in Section 19.J following the date such amount
became due until paid. Acceptance by Landlord of such late charge shall not
constitute a waiver of Tenant's default with respect to such overdue amount
nor prevent Landlord from exercising any of the other rights and remedies
granted hereunder. In the event that a late charge is payable hereunder,
whether or not collected, for four (4) consecutive installments of Base
Monthly Rent, then the Base Monthly Rent shall automatically become due and
payable quarterly in advance, rather than monthly, notwithstanding any
provision of this Lease to the contrary.
C. Security Deposit: Concurrently with Tenant's execution of this
Lease, Tenant has deposited with Landlord the sum of Eighty Four Thousand
Five Hundred and No/100 Dollars ($84,500.00) ("Cash Security "Deposit"). In
addition, on or before January 4, 2002, Tenant shall deposit with Landlord
a letter of credit substantially in the form attached hereto as Exhibit "C"
("Letter of Credit") in an initial amount of Three Hundred Twenty Four
Thousand Dollars ($324,000.00). The Cash Security Deposit and Letter of
Credit are collectively referred to as the Security Deposit. Landlord shall
not be deemed a trustee of the Security Deposit, may use the Cash Security
Deposit in business, and shall not be required to segregate the Cash
Security Deposit from its general accounts. Tenant shall not be entitled to
interest on the Security Deposit. If Tenant defaults with respect to any
provisions of the Lease, including but not limited to the provisions
relating to payment of Base Monthly Rent or other charges, Landlord may, to
the extent reasonably necessary to remedy Tenant's default, use any or all
of the Security Deposit (provided, however, Landlord shall use all of the
Cash Deposit prior to drawing on all or any portion of the Letter of
Credit) towards payment of the following: (i) Base Monthly Rent or other
charges in default; (ii) any other amount which Landlord actually and
reasonably incurs by reason of Tenant's default hereunder including, but
not limited to Tenant's failure to restore or clean the Premises following
vacation thereof in accordance with the terms of this Lease. If any portion
of the Cash Security Deposit is so used or applied, Tenant shall, within
ten (10) days after written demand from Landlord, deposit cash with
Landlord in an amount sufficient to restore the Cash Security Deposit to
its full original amount, and shall pay to Landlord such other sums as may
be due pursuant to subsection (ii) of the immediately preceding sentence.
Tenant may not assign or encumber the Security Deposit without the consent
of Landlord. Any attempt to do so shall be void and shall not be binding on
Landlord. The Security Deposit shall be returned to Tenant within thirty
(30) days after the Expiration Date and surrender of the Premises to
Landlord, less any amount deducted in accordance with this Section,
together with Landlord's written notice itemizing the amounts and purposes
for such deduction.
Landlord shall be entitled to draw against the Letter of Credit at any time
provided only that Landlord certifies to the issuer of the Letter of Credit
that Tenant is in default under the Lease. Landlord shall only draw the
amount necessary to cure the default unless such default is the third
default that has occurred in any consecutive 18-month period during the
Lease Term, in which case Landlord shall be permitted to draw the entire
amount of the Letter of Credit and convert it to cash, subject to the
provisions of this Lease regulating the handling of the Cash Security
Deposit. Tenant shall keep the Letter of Credit in effect during the Lease
Term as required herein. At least thirty (30) days prior to expiration of
the Letter of Credit, the term thereof shall be renewed or extended for a
period of at least one (1) year in the amount required by this Section 4.
Tenant's failure to so renew or extend the Letter of Credit shall be a
material default of this Lease by Tenant. In the event Landlord draws
against the Letter of Credit, Tenant shall replenish the existing Letter of
Credit or cause a new Letter of Credit to be issued such that the aggregate
amount available to Landlord at all times during the Lease Term is the
amount of the Letter of Credit then required.
Notwithstanding the foregoing, and provided Tenant is not then in default
of the Lease (beyond any applicable notice and cure period) and the Cash
Security Deposit is at its required amount, the amount of the Letter of
Credit shall be reduced annually by $108,000.00, commencing on February 1,
2003, such reduction to continue annually until the Letter of Credit is
entirely eliminated.
5. This paragraph intentionally left blank.:
6. Acceptance of Possession and Covenants to Surrender:
A. Delivery and Acceptance: On the Commencement Date, Landlord shall
deliver the Premises to Tenant in broom clean condition, with all interior
walls cleaned and repaired, any carpets cleaned, all floors cleaned and
waxed, with all existing Building systems and fixtures fully operational,
with all property of the prior tenant removed. Additionally, Landlord shall
perform the following work prior to the Commencement Date (all such work to
be completed to the reasonable satisfaction of Tenant): (i) fix the roof
leak over the computer room and any other roof leaks that currently exist;
(ii) repair the transformer in fire alarm room so as to reduce the noise;
and (iii) replace damaged tiles in the computer room. On the Commencement
Date, Tenant shall accept possession of the Premises and enter into
occupancy of the Premises on the Commencement Date. If for any reason
whatsoever, Landlord cannot deliver possession of the Premises to Tenant on
or before the Commencement Date, Tenant shall not be liable for Basic
Monthly Rent or any other amounts otherwise due hereunder until Landlord
delivers possession of the Premises to Tenant in accordance with the terms
hereof. Tenant acknowledges that it has had an opportunity to conduct, and
has conducted, such inspections of the Premises as it deems necessary to
evaluate its condition. Except for Landlord's obligation to complete the
work and deliver the Premises in accordance with this Section 6, Tenant
agrees to accept possession of the Premises in its then existing condition,
subject to all Restrictions and without representation or warranty by
Landlord except for latent defects and any express representations made by
Landlord hereunder. Within twelve (12) months after the Commencement Date,
Tenant agrees to be utilizing at least fifty percent (50%) of the Building.
Landlord hereby represents and warrants to Tenant that, as of the date of
this Lease, Landlord has terminated the prior lease of any and all tenants
of the Premises. Landlord further represents and warrants that (i) it has
good, valid and marketable fee simple title to the Building and the
Project, and (ii) upon the Effective Date and during the Lease Term, Tenant
shall have quiet enjoyment and peaceful possession of the Premises subject
to rights specifically granted Landlord under this Lease (including
Landlord's right and obligation to perform its obligations described in
this Section 6.A) or remedies specifically available to Landlord under this
Lease for a default by Tenant. In addition to Landlord's work as set forth
under this Section 6.A., Landlord shall pay Sixty Seven Thousand Five
Hundred Dollars ($67,500.00) towards the cost to construct a new restroom
core near the Building lobby (in the same location as when the Building was
initially improved and subject to Landlord's prior approval of the plans as
set forth in Section 7.A. below), such construction to occur as part of
Tenant's Alterations (as hereinafter defined) during the first year of the
Lease Term. Landlord's Initial payment shall be made to Tenant within
fifteen (15) days from completion of the work and payment of the cost by
Tenant.
B. Early Access: Tenant shall be allowed early access and occupancy of
the Premises from the date on which Tenant has deposited its Letter of
Credit pursuant to Section 4.C. above until the Commencement Date ("Early
Occupancy Period"). Tenant shall be subject to all the terms and conditions
of the Lease during the Early Occupancy Period except that no Base Monthly
Rent or other expenses or amounts shall be due or payable (excluding
utility charges incurred by Tenant).
C. Condition Upon Surrender: Tenant further agrees on the Expiration
Date or on the sooner termination of this Lease, to surrender the Premises
to Landlord in good condition and repair (damage by acts of God, fire, and
normal wear and tear excepted. In this regard, "normal wear and tear" shall
be construed to mean wear and tear caused to the Premises by the natural
aging process which occurs in spite of prudent application of commercially
reasonable standards for maintenance, repair replacement, and janitorial
practices, and does not include items of neglected or deferred maintenance.
In any event, Tenant shall cause the following to be done prior to the
Expiration Date or sooner termination of this Lease: (i) all interior walls
shall be patched, cleaned, and otherwise made paint-ready, (ii) all tiled
floors shall be cleaned and waxed, (iii) all carpets shall be cleaned and
shampooed, (iv) all broken, marred, stained or nonconforming acoustical
ceiling tiles shall be replaced, (v) all cabling placed above the ceiling
by Tenant or Tenant's contractors shall be removed, (vi) all windows shall
be washed; (vii) the HVAC system shall be serviced by a reputable and
licensed service firm and left in "good operating condition and repair" as
so certified by such firm, (viii) the plumbing and electrical systems and
lighting shall be placed in good order and repair (including replacement of
any burned out, discolored or broken light bulbs, ballasts, or lenses. On
or before the Expiration Date or sooner termination of this Lease, Tenant
shall remove all its personal property and trade fixtures from the
Premises. All property and fixtures not so removed shall be deemed as
abandoned by Tenant. On or before the Expiration Date or sooner termination
of this Lease, Tenant shall remove any or all Alterations (as hereinafter
defined) and restore the Premises to the condition prior to the Alteration
(including repair of any damage caused by such removal) provided that
Landlord notified Tenant in writing of such removal obligation at the time
Tenant requested Landlord's consent to such Alterations. All Alterations
except those which Landlord (in accordance with the terms hereof)
previously required Tenant to remove shall remain in the Premises as the
property of Landlord. Such repair and restoration shall include causing the
Premises to be brought into compliance with all applicable building codes
and laws in effect at the time of the removal to the extent such compliance
is necessitated by the removal of the Alterations.
D. Failure to Surrender: If the Premises are not surrendered at the
Expiration Date or sooner termination of this Lease in the condition
required by this Section 6, Tenant shall be deemed in a holdover tenancy
pursuant to this Section 6.C and Tenant shall indemnify, defend, and hold
Landlord harmless against loss or liability resulting from delay by Tenant
in so surrendering the Premises including, without limitation, any claims
made by any succeeding tenant founded on such delay and costs incurred by
Landlord in returning the Premises to the required condition, plus interest
at the Agreed Interest Rate. If Tenant remains in possession of the
Premises after the Expiration Date or sooner termination of this Lease
without Landlord's consent, Tenant's continued possession shall be on the
basis of a tenancy at sufferance and Tenant shall pay as rent during the
holdover period an amount equal to one hundred fifty percent (150%) of the
Base Monthly Rent due in the month preceding the termination or Expiration
Date, plus all other amounts payable by Tenant under this Lease. Any
holding over shall otherwise be on the terms and conditions herein
specified, except those provisions relating to the Lease Term and any
options to extend or renew, which provisions shall be of no further force
and effect following the expiration of the applicable exercise period.
Notwithstanding anything to the contrary contained herein, Tenant's
obligation to pay holdover rent, as well as its indemnification obligations
under this Section 6.D. shall expire at such time as Landlord has completed
the work necessary to restore the Premises to the condition required under
Section 6.C. of this Lease and has charged Tenant for such work in
accordance with this Lease. This provision shall survive the termination or
expiration of the Lease.
7. Alterations and Additions:
A. Tenant's Alterations: Tenant shall not make, or suffer to be made,
any alteration or addition to the Premises ("Alterations"), or any part
thereof, without obtaining Landlord's prior written consent and delivering
to Landlord the proposed architectural and structural plans for all such
Alterations at least ten (10) days prior to the start of construction. If
such Alterations affect the structure of the Building, Tenant additionally
agrees to reimburse Landlord its reasonable out-of-pocket costs incurred in
reviewing Tenant's plans. After obtaining Landlord's consent, Tenant shall
not proceed to make such Alterations until Tenant has obtained all required
governmental approvals and permits. Tenant agrees to provide Landlord (i)
written notice of the anticipated and actual start-date of the work, (ii) a
complete set of half-size (15" X 21") vellum as-built drawings, and (iii) a
certificate of occupancy for the work upon completion of the Alterations.
All Alterations shall be constructed in compliance with all applicable
building codes and laws including, without limitation, the Americans with
Disabilities Act of 1990 as amended from time to time. Upon the Expiration
Date, all Alterations, except movable furniture and trade fixtures, shall
become a part of the realty and belong to Landlord but shall nevertheless
be subject to removal by Tenant as provided in Section 6 above. Alterations
which are not deemed as trade fixtures include heating, lighting,
electrical systems, air conditioning, walls, carpeting, or any other
installation which has become an integral part of the Premises. All
Alterations shall be maintained, replaced or repaired by Tenant at its sole
cost and expense. Landlord hereby acknowledges and agrees that during the
Early Occupancy Period, Tenant intends to make the Alterations described on
Exhibit "D" ("Initial Alterations") attached hereto, and Landlord hereby
approves such Alterations in satisfaction of its approval right set forth
in this Section 7.A.
Notwithstanding the foregoing, Tenant shall be entitled, without obtaining
Landlord's consent, to make Alterations which do not affect the structure
of the Buildings and which do not cost more than Fifty Thousand Dollars
($50,000.00) per Alteration ("Permitted Alterations"); provided, however,
that: (i) Tenant shall still be required to comply with all other
provisions of this paragraph; and (ii) Landlord may elect to have Tenant
remove such Permitted Alterations at the expiration or earlier termination
of the Lease, unless Tenant has notified Landlord of such Permitted
Alterations at least ten (10) days prior to commencing construction and
received approval from Landlord that such Permitted Alterations will not be
required to be removed at the expiration of the Lease.
B. Free From Liens: Tenant shall keep the Premises free from all liens
arising out of work performed, materials furnished, or obligations incurred
by Tenant or claimed to have been performed for Tenant. In the event Tenant
fails to discharge (or post a proper bond over) any such lien within ten
(10) days after receiving written notice of the filing, Landlord shall
immediately be entitled to discharge the lien at Tenant's expense and all
resulting costs incurred by Landlord, including reasonable attorney's fees
shall be due from Tenant as additional rent.
C. Compliance With Governmental Regulations: The term Laws or
Governmental Regulations shall include all federal, state, county, city or
governmental agency laws, statutes, ordinances, standards, rules,
requirements, or orders now in force or hereafter enacted, promulgated, or
issued. The term also includes government measures regulating or enforcing
public access, traffic mitigation, occupational, health, or safety
standards for employers, employees, landlords, or tenants. Tenant, at
Tenant's sole expense, shall comply with all Governmental Regulations
pertaining to Tenant's particular use of the Premises and shall make all
repairs, replacements, alterations, or improvements necessary to comply
with all Governmental Regulations pertaining to Tenant's particular use of
the Premises. Landlord shall comply with all Governmental Requirements
pertaining to the Building or the Project or which are applicable to it,
and secure any necessary permits therefore. Landlord shall have sole
responsibility for costs related to required compliance with the Americans
with Disabilities Act ("ADA") unless said compliance was triggered by any
Alterations. Once restrooms have been added pursuant to Section 6.A.
Landlord hereby represents and warrants that to the best of its knowledge,
as of the date hereof, the Building and Premises are in full compliance
with all Laws and Governmental Regulations. The judgment of any court of
competent jurisdiction or the admission of Tenant in any action or
proceeding against Tenant (whether Landlord be a party thereto or not) that
Tenant has violated any such law, regulation or other requirement in its
use of the Premises shall be conclusive of that fact as between Landlord
and Tenant.
8. Maintenance of Premises:
A. Landlord's Obligations: Landlord at its sole cost and expense,
shall maintain in good condition, order, and repair, and replace as and
when necessary, the foundation, exterior load bearing walls and roof
structure of the Building Shell. Landlord shall also, at Tenant's expense
through reimbursement to Landlord as provided in Section 8.C. below,
maintain in good order, condition and repair, and replace when necessary:
(i) all plumbing and sewage facilities outside the Building and/or beneath
the Building slab; (ii) the parking lot and all underground utility
facilities servicing the Premises, (iii) the roof membrane system, and (iv)
all waterscape, landscaping and shrubbery.
B. Tenant's Obligations: Tenant shall clean, maintain, repair and
replace when necessary the Premises and every part thereof through regular
inspections and servicing, including but not limited to: (i) all plumbing
and sewage facilities inside the Building and above the slab, (ii) all
heating ventilating and air conditioning facilities and equipment, (iii)
all fixtures, interior walls floors, carpets and ceilings, (iv) all
windows, door entrances, plate glass and glazing systems including
caulking, and skylights, (v) all electrical facilities and equipment that
serve the Building exclusively, and (vi) all automatic fire extinguisher
equipment. All wall surfaces and floor tile are to be maintained in an as
good a condition as when Tenant took possession free of holes, gouges, or
defacements. With respect to item (ii) above, Tenant shall provide Landlord
a copy of paid invoices detailing work performed if requested by Landlord.
C. Landlord and Tenant's Obligations Regarding Reimbursable Operating
Costs: In addition to the direct payment by Tenant of expenses as provided
in Sections 8.B, 9, 10 and 11 of this Lease, Tenant agrees to reimburse
Landlord for Tenant's Allocable Share (as defined in Section 8.E below) of
Reimbursable Operating Costs (as defined in Section 8.D below) resulting
from Landlord payment of expenses related to the Building or Project which
are not otherwise paid by Tenant directly. Tenant agrees to pay its
Allocable Share of the Reimbursable Operating Costs as additional rental
within twenty (20) days after its receipt of a written statement from
Landlord detailing Tenant's Allocable Share of Reimbursable Operating Costs
(together with invoices and other reasonably satisfactory evidence of all
applicable costs) incurred since Tenant's most recent payment of
Reimbursable Operating Costs, which statement shall be provided no more
frequently than monthly and no less frequently than annually. Tenant or its
CPA (as defined below) shall have the right, at Tenant's sole cost and
expense, upon at least thirty (30) days prior written notice to Landlord,
at any time during regular business hours (but no more than twice a year)
to audit, review and photocopy Landlord's records pertaining to
Reimbursable Operating Costs for the immediately previous calendar year
only. Any Certified Public Accountant ("CPA") engaged by Tenant to inspect
Landlord's records shall be compensated by Tenant and shall be subject to
Landlord's prior written approval. The inspection of Landlord's records
must be completed within five (5) days after such records are made
available to Tenant or its CPA. Tenant agrees to keep, and to cause its CPA
to keep, all information thereby obtained by Tenant or its CPA
confidential, except that Tenant shall be permitted to disclose such
information to the extent reasonably necessary in connection with any
dispute with Landlord regarding Reimbursable Operating Costs.
D. Reimbursable Operating Costs: For purposes of calculating Tenant's
Allocable Share of Building and Project Costs, the term "Reimbursable
Operating Costs" is defined as all costs and expenses of the nature
hereinafter described which are incurred by Landlord in connection with
ownership and operation of the Building or the Project in which the
Premises are located. All costs and expenses shall be determined in
accordance with generally accepted accounting principles which shall be
consistently applied (with accruals appropriate to Landlord's business),
including but not limited to the following: (i) common area utilities,
including water, power, telephone, heating, lighting, air conditioning,
ventilating, and Building utilities to the extent not separately metered
and paid by Tenant in accordance with Section 11 below; (ii) common area
maintenance and service agreements for the Building and/or Project and the
equipment therein, including without limitation, common area janitorial
services, alarm and security services, exterior window cleaning, and
maintenance of the sidewalks, landscaping, waterscape, roof membrane,
parking areas, driveways, service areas, mechanical rooms, and the building
exterior; (iii) insurance premiums and costs, including without limitation,
the premiums and cost of fire, casualty and liability coverage and rental
abatement and, if elected by Landlord, earthquake insurance applicable to
the Building or Project provided that the cost thereof does not exceed
three cents ($.03) per square foot of the Premises per month (if the
premium due for such insurance exceeds the foregoing amount, Landlord can
elect to continue such insurance and pay the excess portion of the premium
without reimbursement, or may terminate earthquake coverage upon ten (10)
days' prior written notice to Tenant, unless Tenant notifies Landlord in
writing within such ten (10) day period that Tenant will pay Tenant's
Allocable Share of the full cost of the insurance premium due for that
year); (iv) repairs, replacements and general maintenance (excluding
repairs and general maintenance paid by proceeds of insurance or by Tenant
or other third parties, and repairs or alterations attributable solely to
tenants of the Building or Project other than Tenant); and (v) all real
estate taxes and assessment installments or other impositions or charges
which may be levied on the Building or Project (but with regard to the
Project, only to the extent that the Building is part of a larger tax lot
that includes all or a portion of the Project), upon the occupancy of the
Building or Project (but with regard to the Project, only to the extent
that the Building is part of a larger tax lot that includes all or a
portion of the Project) and including any substitute or additional charges
which may be imposed during, or applicable to the Lease Term including such
portion (as described below) of real estate tax increases due to a sale,
transfer or other change of ownership of the Building or Project, as such
taxes are levied or appear on the City and County tax bills and assessment
rolls.
Notwithstanding anything to the contrary contained in this Lease, the
following shall not be included within Reimbursable Operating Costs: (i)
leasing commissions, attorneys' fees, costs, disbursements, and other
expenses incurred in connection with negotiations or disputes with tenants
or in connection with leasing, renovating, or improving space for tenants
or other occupants or prospective tenants or other occupants of the
Building or the Project; (ii) the cost of any service sold to any tenant
(including Tenant) or other occupant for which Landlord is entitled to be
reimbursed as an additional charge or rental over and above the basic rent
and escalations payable under the lease with that tenant; (iii) any
depreciation on the Building or the Project; (iv) expenses in connection
with services or other benefits of a type that are not provided to Tenant
but which are provided another tenant or occupant of the Building or
Project; (v) costs incurred due to Landlord's violation of any terms or
conditions of this Lease or any other lease relating to the Building or
Project; (vi) overhead profit increments paid to Landlord's subsidiaries or
affiliates for services on or to the Building or Project or for supplies or
other materials to the extent that the cost of the services, supplies, or
materials exceeds the cost that would have been paid had the services,
supplies, or materials been provided by unaffiliated parties on a
competitive basis; (vii) all interest, loan fees, and other carrying costs
related to any mortgage or deed of trust or related to any capital item,
and all rental and other payable due under any ground or underlying lease,
or any lease for any equipment ordinarily considered to be of a capital
nature (except janitorial equipment which is not affixed to the Building);
(viii) any compensation paid to clerks, attendants, or other persons in
commercial concessions operated by Landlord; (ix) advertising and
promotional expenditures; (x) costs of repairs and other work occasioned by
fire, windstorm, or other casualty of an insurable nature and intended to
be covered by insurance required to be carried by Landlord; (xi) any costs,
fines, or penalties incurred due to violations by Landlord of any
governmental rule or authority, this Lease or any other lease in the
Project, or due to Landlord's gross negligence or willful misconduct; (xii)
costs for sculpture, paintings, or other objects of art (nor insurance
thereon or extraordinary security in connection therewith); (xiii) wages,
salaries, or other compensation paid to any executive employees above the
grade of building manager; (xiv) the cost of correcting any building code
or other violations which were violations prior to the Commencement Date;
(xv) the cost of containing, removing, or otherwise remediating any
contamination of the Project (including the underlying land and ground
water) by any toxic or hazardous materials where such contamination was not
caused by Tenant or its agents, invitees, employees, or suppliers; (xvi)
reserves for any Reimbursable Operating Costs; (xvii) repairs and
maintenance to buildings of the Project in which Tenant is not an occupant,
(xviii) costs of after-hours heating, ventilation and air conditioning
provided to other tenants of the Project and to the extent Landlord has
billed Tenant therefore, any after-hours heating, ventilation and air
conditioning provided to Tenant; (xix) any property management or similar
fee in excess of 1.5% of the Base Monthly Rent as provided for in Section
19.N below; and (xx) transfer taxes imposed as a result of a sale of the
Premises or the Project.
Landlord shall have no obligation to provide guard services or other
security measures for the benefit of the Project. Tenant assumes all
responsibility for the protection of Tenant and Tenant's Agents from acts
of third parties; provided, however, that nothing contained herein shall
prevent Landlord, at its sole option, from providing security measures for
the Project. This is a "Net" Lease, meaning that Base Monthly Rent is paid
to Landlord absolutely net of all costs and expenses, except as expressly
excluded hereunder. The provision for payment of Reimbursable Operating
Costs by means of periodic payment of Tenant's Allocable Share of Building
and/or Project Costs is intended to pass on to Tenant and reimburse
Landlord for all costs of operating and managing the Building and/or
Project except as specifically excluded in this Lease.
Notwithstanding the foregoing, if property taxes increase during the Lease
Term as a result of a reassessment due to a change of ownership, Tenant's
shall be responsible for payment of the resulting property tax increase as
follows: (i) Tenant shall not be responsible for payment of any increase in
property taxes if the Premises are reassessed due to a change of ownership
during the first year of the Lease Term; and (ii) if the Premises are
reassessed after the first year of the Lease Term, then during the first
twelve months thereafter, Tenant shall be responsible for payment of
Tenant's Allocable Share of thirty three percent (33%) of the tax increase;
during the second twelve months thereafter, Tenant shall be responsible for
payment Tenant's Allocable Share of of sixty seven percent (67%) of the tax
increase, and thereafter Tenant shall be responsible for payment of
Tenant's Allocable Share of the entire tax increase.
E. Tenant's Allocable Share: For purposes of prorating Reimbursable
Operating Costs which Tenant shall pay, Tenant's Allocable Share of
Reimbursable Operating Costs shall be computed by multiplying the
Reimbursable Operating Costs by a fraction, the numerator of which is the
rentable square footage of the Premises and the denominator of which is
either the total rentable square footage of the Building if the service or
cost is allocable only to the Building, or the total square footage of the
Project if the service or cost is allocable to the entire Project. Tenant's
obligation to share in Reimbursable Operating Costs shall be prorated for
any partial months during the Lease Term, and is subject to recalculation
in the event of expansion of the Project. Using the above formula, Tenant's
Allocable Share for the Building is 100% and for the Project is 14.5%.
Landlord hereby represents that the following expenses would have totaled
approximately 19(cent) p.s.f. per month payable by Tenant for calendar year
2001 had Tenant been in occupancy during 2001: (i) property taxes; (ii)
property insurance; (iii) roof maintenance; (iv) scheduled weekly landscape
maintenance, (iv) parking lot sweeping; and (v) Common Area utilities. To
the best of Landlord's knowledge, there are no significant increases
foreseen in the above expenses for calendar year 2002.
F. Waiver of Liability: Failure by Landlord to perform any defined
services, or any cessation thereof, when such failure is caused by
accident, breakage, repairs, strikes, lockout or other labor disturbances
or labor disputes of any character or by any other cause beyond Landlord's
reasonable control and excepting any failure due to Landlord's or
Landlord's agents' gross negligence or willful misconduct, shall not render
Landlord liable to Tenant in any respect, including damages to either
person or property, nor be construed as an eviction of Tenant, nor cause an
abatement of rent, nor relieve Tenant from fulfillment of any covenant or
agreement hereof. Should any equipment or machinery utilized in supplying
the services listed herein break down or for any cause cease to function
properly, upon receipt of written notice from Tenant of any deficiency or
failure of any services, Landlord shall use reasonable diligence to repair
the same promptly, but Tenant shall have no right to terminate this Lease
and shall have no claim for rebate of rent or damages on account of any
interruptions in service occasioned thereby or resulting therefrom. Tenant
waives the provisions of California Civil Code Sections 1941 and 1942
concerning the Landlord's obligation of tenantability and Tenant's right to
make repairs and deduct the cost of such repairs from the rent. Landlord
shall not be liable for a loss of or injury to person or property, however
occurring, through or in connection with or incidental to furnishing, or
its failure to furnish, any of the foregoing excepting any loss or injury
due to Landlord's or Landlord's agents' gross negligence or willful
misconduct.
Notwithstanding any of the foregoing provisions of this Paragraph 8.F. to
the contrary, if solely as a result of Landlord's gross negligence or
willful misconduct, Landlord fails to provide utilities which Landlord is
required to provide to the Premises pursuant to this Lease (an "Abatement
Condition"), which prevents Tenant from occupying all or a material portion
of the Premises (the "Abatement Space"), then, as Tenant's sole and
exclusive remedy for such failure, Base Rent and Tenant's Allocable Share
payable hereunder shall ▇▇▇▇▇ in the proportion that the rentable square
foot area of the Abatement Space actually vacated bears to the rentable
square foot area of the Premises, for a period equal to the lesser of (i)
the period during which Tenant has actually vacated the Abatement Space, or
(ii) the period of time between Tenant's having vacated the Abatement Space
and the date Tenant receives notice from Landlord that the Abatement
Condition has been cured. For purposes of this Paragraph 8.F., vacation of
the Abatement Space shall not require Tenant to remove furniture, fixtures
or equipment. Tenant shall be deemed to have vacated the Abatement Space
if, due to the Abatement Condition, the Abatement Space is not occupiable
by Tenant, and Tenant does not in fact conduct any business in or use the
Abatement Space.
G. Capital Improvements: If as a part of the maintenance of the
Premises, Tenant is liable under Section 8.D for payment of a replacement
to the Premises that would typically be capitalized under normal accounting
procedures, Landlord shall credit Tenant for the cost of the replacement
less that portion of the cost equal to the product of such total cost
multiplied by a fraction, the numerator of which is the number of years
remaining in the Lease Term, the denominator of which is the useful life
(in years) of the replacement, as reasonably determined by Landlord in
accordance with generally accepted accounting principles. If the capital
improvement is made during the initial Lease Term, Tenant's share shall
initially be based on the initial Lease Term and if Tenant thereafter
exercises its renewal option, then upon the commencement of the Option
term, an adjustment shall be made so that during the Option Term Tenant
shall reimburse Landlord an amount determined by multiplying the cost of
the capital improvement by a fraction, the numerator of which is the sum of
the Lease Term remaining at the time the capital expenditure was made and
the Option Term and the denominator of which is the useful life of the
capital improvement.
9. Hazard Insurance:
A. Tenant's Use: Tenant shall not use or permit the Premises, or any
part thereof, to be used for any purpose other than that for which the
Premises are hereby leased; and no use of the Premises shall be made or
permitted, nor acts done, which will cause an increase in premiums or a
cancellation of any insurance policy covering the Premises or any part
thereof, nor shall Tenant sell or permit to be sold, kept, or used in or
about the Premises, any article prohibited by the standard form of fire
insurance policies. Tenant shall, at its sole cost, comply with all
material terms and requirements of any insurance company or organization
necessary for the maintenance of reasonable fire and public liability
insurance covering the Premises and appurtenances.
B. Landlord's Insurance: Landlord agrees to purchase and keep in force
All Risk and fire insurance in an amount equal to the replacement cost of
the Building (not including any Alterations paid for by Tenant) as
determined by Landlord's insurance company's appraisers. At Landlord's
election, such fire and property damage insurance may be endorsed to cover
loss caused by such additional perils against which Landlord may elect to
insure, including earthquake and/or flood (subject to the limits set forth
in Section 8.D above), and shall contain reasonable deductibles.
Additionally Landlord may maintain a policy of (i) commercial general
liability insurance insuring Landlord (and such others designated by
Landlord) against liability for personal injury, bodily injury, death and
damage to property occurring or resulting from an occurrence in, on or
about the Premises or Project in an amount as Landlord determines is
reasonably necessary for its protection, and (ii) rental loss insurance
covering a twelve (12) month period. Tenant agrees to pay Landlord as
additional rent pursuant to Section 8.D, the full cost of said insurance as
evidenced by insurance ▇▇▇▇▇▇▇▇ to Landlord, and in the event of damage to
the Premises covered by said insurance, the amount of any deductible under
such policy. Payment shall be due to Landlord within thirty (30) days after
written invoice to Tenant. It is understood and agreed that Tenant's
obligation under this Section shall be prorated for any partial months
during the Lease Term.
C. Tenant's Insurance: Tenant agrees, at its sole cost, to insure its
personal property and Alterations against damage. Landlord has no
obligation to insure Tenant's personal property and Alterations. Said
insurance shall provide All Risk and fire coverage. The property casualty
insurance provided by Tenant as required by this paragraph shall be carried
in favor of Landlord and Tenant as their respective interests may appear.
Upon request by Landlord, Tenant shall deliver a copy of the policy and
renewal certificate to Landlord. Tenant agrees, at its sole cost, and to
obtain worker's compensation and Commercial General Liability insurance for
occurrences within the Premises with a combined single limit of not less
than Five Million Dollars ($5,000,000.00). Tenant's liability insurance
shall be primary insurance containing a cross-liability endorsement, and
shall provide coverage on an "occurrence" rather than on a "claims made"
basis. All such insurance shall provide for severability of interests;
shall provide that an act or omission of one of the named (additional)
insureds shall not reduce or avoid coverage to the other named (additional
insureds). Tenant shall name Landlord and Landlord's lender as an
additional insured and shall, upon Landlord's written request, deliver a
copy of the policies and renewal certificates to Landlord. All insurance
policies required under this section shall provide for thirty (30) days'
prior written notice to Landlord of any cancellation, termination, or
reduction in coverage.
D. Waiver: Landlord and Tenant hereby waive all tort, contract or
other rights each may have against the other on account of any loss or
damage sustained by Landlord or Tenant, as the case may be, or to the
Premises or its contents, which may arise from any risk covered by their
respective insurance policies (or which would have been covered had such
insurance policies been maintained in accordance with this Lease) as set
forth above. The Parties shall each obtain from their respective insurance
companies a waiver of any right of subrogation which said insurance company
may have against Landlord or Tenant, as the case may be. Nothing in this
Section 9.D shall relieve a party of liability to the other for failure to
carry insurance required by this Lease.
10. Taxes: Tenant shall be liable for and shall pay as additional rental,
prior to delinquency, the following: (i) all taxes and assessments levied
against Tenant's personal property and trade or business fixtures; (ii) all
real estate taxes and assessment installments or other impositions or
charges which may be levied on the Premises or upon the occupancy of the
Premises, including any substitute or additional charges which may be
imposed applicable to the Lease Term; and (iii) real estate tax increases
due to an increase in assessed value resulting from a sale, transfer or
other change of ownership of the Premises as it appears on the City and
County tax bills during the Lease Term (subject to the phased payment of
such increased taxes as set forth in Section 8.D above). All real estate
taxes shall be prorated to reflect the Lease Commencement and Expiration
Dates. In the case of item (i), Tenant shall pay such taxes and assessments
directly; in the case of item (ii), Landlord shall make such payment and
Tenant shall reimburse Landlord as part of its payment of its Allocable
Share of Reimbursable Operating Costs. If, at any time during the Lease
Term a tax, excise on rents, business license tax or any other tax, however
described, is levied or assessed against Landlord as a substitute or
addition, in whole or in part, for taxes assessed or imposed on land or
Buildings, Tenant shall pay and discharge Tenant's Allocable Share of such
tax or excise on rents or other tax before it becomes delinquent; except
that this provision is not intended to cover net income taxes, inheritance,
gift or estate tax imposed upon Landlord. In the event that a tax is
placed, levied, or assessed against Landlord and the taxing authority takes
the position that Tenant cannot pay and discharge its pro rata share of
such tax on behalf of Landlord, then at Landlord's sole election, Landlord
may increase the Base Monthly Rent by the exact amount of such tax and
Tenant shall pay such increase. If by virtue of any application or
proceeding brought by Landlord, there results a reduction in the assessed
value of the Premises during the Lease Term, Tenant agrees to pay Landlord
a fee consistent with the fees charged by a third party appeal firm for
such services. Notwithstanding the foregoing, Tenant shall not be
responsible for any fines or penalties imposed as a result of Landlord's
failure to pay any taxes when due.
11. Utilities: Tenant shall pay directly to the providing utility all
water, gas, electric, telephone, and other utilities supplied to the
Premises. Landlord shall not be liable for loss of or injury to person or
property, however occurring, through or in connection with or incidental to
furnishing or the utility company's failure to furnish utilities to the
Premises, and in such event Tenant shall not be entitled to abatement or
reduction of any portion of Base Monthly Rent or any other amount payable
under this Lease; provided, however, the foregoing shall not limit
Landlord's liability pursuant to applicable law for the gross negligence or
willful misconduct of Landlord, its agents, employees or contractors in
connection with the provision of utility services to the Building.
12. Toxic Waste and Environmental Damage:
A. Use of Hazardous Material: Tenant or Tenant's Tenant's Agents shall
not cause or permit any Hazardous Material, as defined below, to be
generated, brought onto, used, stored, created, released or disposed of in
or about the Premises, except that Tenant and Tenant's Agents may use and
store small quantities of common household cleaners and office supplies on
the Premises provided such use and storage is in strict compliance with all
Environmental Laws, as defined below, and except for Hazardous Materials
present in or about the Premises on the Effective Date. As used herein, the
term "Hazardous Material" shall mean any substance, material or waste
(whether liquid, solid or gaseous), which is a pollutant or contaminant, or
which is hazardous, toxic, ignitable, reactive, corrosive, dangerous,
harmful or injurious, or which presents a risk to public health or the
environment, or which is or may become regulated by or under the authority
of any Environmental Laws, as defined below, including, without limitation,
asbestos or asbestos containing materials, petroleum products, pesticides,
polychlorinated biphenyls, flammable explosives, radioactive materials and
urea formaldehyde. As used herein, the term "Environmental Laws" shall mean
any present or future federal, state or local law, whether common law,
statute, rule, regulation or ordinance, judgment, order, or other
governmental restriction, guideline, listing or requirement, relating to
the environment or any Hazardous Material, including without limitation,
the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, 42 U.S.C. ss.9601 et seq., the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. ss.6901 et seq., and applicable provisions of the
California Health and Safety Code and the California Water Code, all as
heretofore or hereafter may be amended from time to time. Tenant represents
and warrants that it shall comply in every material respect with all
Governmental Regulations applicable to Hazardous Material including doing
the following: (i) adhering to all applicable reporting and inspection
requirements imposed by Federal, State, County or Municipal laws,
ordinances or regulations and provide Landlord a copy of any such reports
or agency inspections; (ii) obtaining and providing Landlord copies of all
necessary permits required for the use and handling of Hazardous Material
on the Premises; (iii) enforcing Hazardous Material handling and disposal
practices consistent with industry standards; (iv) surrendering the
Premises free from any Hazardous Materials arising from Tenant's
generating, bringing, using, storing, creating, releasing, or disposing of
Hazardous Material; and (v) properly closing the facility with regard to
Hazardous Material including the removal or decontamination of any process
piping, mechanical ducting, storage tanks, containers, or trenches which
have come into contact with Hazardous Material and obtaining a closure
certificate from the local administering agency prior to the Expiration
Date.
B. Tenant's Indemnity Regarding Hazardous Material: Tenant shall, at
its sole cost and expense and with counsel reasonably acceptable to
Landlord, indemnify, defend and hold harmless Landlord and Landlord's
trustees, shareholders, directors, officers, employees, partners,
affiliates, agents, successors and assigns from, and against any and all
claims, liabilities, obligations, penalties, fines, actions, costs or
expenses incurred or suffered arising from generating, bringing, using,
storing, creating, releasing or disposing of Hazardous Material by Tenant
or Tenant's Agents in or about the Premises, or the violation of any
Governmental Regulation or Environmental Laws by Tenant or Tenant's Agents.
This indemnification applies whether or not the concentrations of any such
Hazardous Material exceed applicable maximum contaminant or action levels
or any governmental agency has issued a cleanup order. Tenant's
indemnification, defense, and hold harmless obligations include, without
limitation, the following: (i) claims, liabilities, costs or expenses
resulting from or based upon administrative, judicial (civil or criminal)
or other action, legal or equitable, brought by any private or public
person under present or future laws, including Environmental Laws; (ii)
claims, liabilities, costs or expenses pertaining to the identification,
monitoring, cleanup, containment, or removal of Hazardous Material from
soils, riverbeds or aquifers including the provision of an alternative
public drinking water source; (iii) losses attributable to diminution in
the value of the Premises or the Building (iv) loss or restriction of use
of rentable space in the Building; (v) adverse effect on the marketing of
any space in the Building; and (vi) all other liabilities, obligations,
penalties, fines, claims, actions (including remedial or enforcement
actions of any kind and administrative or judicial proceedings, orders or
judgments), damages (including consequential and punitive damages), and
costs (including attorney, consultant, and expert fees and expenses)
resulting from the release or violation. This Section 12.B shall survive
the expiration or termination o this Lease.
C. Notice of Release or Violation: If, during the Lease Term
(including any extensions), Tenant becomes aware of (i) any actual or
threatened release of a Hazardous Material on, under or about the Premises
or (ii) any inquiry, investigation, proceeding, claim, notice or order by
any private or public person or entity regarding the presence of Hazardous
Material on, under or about the Premises, including alleged violations of
Environmental Laws by Tenant or Tenant's Agents., Tenant shall give
Landlord written notice of the release or investigation within five (5)
days after learning of it and shall simultaneously and thereafter furnish
Landlord with copies of any claims, notices of violation, reports, or other
writings received by Tenant concerning the release or investigation. In the
event of an actual release of Hazardous Materials, Tenant shall also give
Landlord prompt verbal notice of such release. In the event that Landlord
first receives any of the information described in the immediately
preceding two (2) sentences, Landlord shall provide equivalent notices to
Tenant as are required of Tenant under this Section 12.C.
In the event of any release on or into the Premises or into the
soil or ground water under the Premises, the Building or the Project of any
Hazardous Materials used, treated, stored or disposed of by Tenant or
Tenant's Agents, Tenant agrees to comply, at its sole cost, with all laws,
regulations, ordinances and orders of any federal, state or local agency
relating to the monitoring or remediation of such Hazardous Materials. In
the event of any such release of Hazardous Materials Tenant shall
immediately give verbal and follow-up written notice of the release to
Landlord, and Tenant agrees to meet and confer with Landlord and its Lender
to attempt to eliminate and mitigate any financial exposure to such Lender
and resultant exposure to Landlord under California Code of Civil Procedure
Section 736(b) as a result of such release, and promptly to take reasonable
monitoring, cleanup and remedial steps given, inter alia, the historical
uses to which the Property has and continues to be used, the risks to
public health posed by the release, the then available technology and the
costs of remediation, cleanup and monitoring, consistent with acceptable
customary practices for the type and severity of such contamination and all
applicable laws. Nothing in the preceding sentence shall eliminate, modify
or reduce the obligation of Tenant under 12.B of this Lease to indemnify,
defend and hold Landlord harmless from any claims liabilities, costs or
expenses incurred or suffered by Landlord. Tenant shall provide Landlord
prompt written notice of Tenant's monitoring, cleanup and remedial steps.
In the absence of an order of any federal, state or local governmental
or quasi-governmental agency relating to the cleanup, remediation or other
response action required by applicable law, any dispute arising between
Landlord and Tenant concerning Tenant's obligation to Landlord under this
Section 12.C concerning the level, method, and manner of cleanup,
remediation or response action required in connection with such a release
of Hazardous Materials shall be resolved by mediation and/or arbitration
pursuant to this Lease.
D. Remediation Obligations: In the event of any release on, under or
about the Premises of any Hazardous Material generated, brought onto, used,
stored, created or disposed of by Tenant or Tenant's Agents, Tenant shall,
at its sole cost, promptly take all necessary and appropriate actions, in
compliance with applicable Environmental Laws, to remove or remediate such
Hazardous Material, whether or not any governmental agency has issued a
cleanup order, so as to return the Premises to the condition that existed
before the introduction of such Hazardous Material. Tenant shall obtain
Landlord's written consent prior to implementing any proposed removal or
remedial action, provided, however, that Tenant shall be entitled to
respond immediately to an emergency without first obtaining Landlord's
written consent. Nothing in the preceding sentence shall in any way
eliminate, modify or reduce the obligation of Tenant under 12.B of this
Lease to indemnify, defend and hold Landlord harmless from any claims,
liabilities, costs or expenses incurred or suffered by Landlord.
E. Environmental Monitoring: Landlord and its agents shall have the
right (subject to Tenant's notice rights under Section 19.G below) to
inspect, investigate, sample and monitor the Premises, including any air,
soil, water, ground water, or to conduct any other sampling or testing,
digging, drilling or analysis, to determine whether Tenant is complying
with the terms of this Section 12. If Landlord discovers that Tenant is not
in compliance with the terms of this Section 12, any costs incurred by
Landlord in determining Tenant's non- compliance, including reasonable
attorneys', consultants' and experts' fees, shall be due and payable by
Tenant to Landlord within five (5) days following Landlord's written demand
therefor.
13. Tenant's Default: The occurrence of any of the following shall
constitute a material default and breach of this Lease by Tenant: (i)
Tenant's failure to pay the Base Monthly Rent including additional rent or
any other payment due under this Lease within five (5) business days after
Tenant's receipt of written notice of the late payment, (ii) the
abandonment of the Premises by Tenant; (iii) Tenant's failure to observe
and perform any other required provision of this Lease, where such failure
continues for thirty (30) days after written notice from Landlord;
provided, however, that if the nature of the default is such that it cannot
reasonably be cured within said 30-day period, Tenant shall not be deemed
to be in default if it commences within such period to cure, and thereafter
diligently prosecutes the same to completion; (iv) Tenant's making of any
general assignment for the benefit of creditors; (v) the filing by or
against Tenant of a petition to have Tenant adjudged a bankrupt or of a
petition for reorganization or arrangement under any law relating to
bankruptcy (unless, in the case of a petition filed against Tenant, the
same is dismissed after the filing); (vi) the appointment of a trustee or
receiver to take possession of substantially all of Tenant's assets located
at the Premises or of Tenant's interest in this Lease, where possession is
not restored to Tenant within thirty (30) days; or (vii) the attachment,
execution or other judicial seizure of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, where such
seizure is not discharged within thirty (30) days.
A. Remedies: In the event of any default by Tenant as defined in this
Section 13, then in addition to other remedies available to Landlord at law
or in equity, Landlord shall have the immediate option to terminate this
Lease and all rights of Tenant hereunder by giving written notice of such
intention to terminate. In the event Landlord elects to so terminate this
Lease, Landlord may recover from Tenant all the following: (i) the worth at
time of award of any unpaid rent which had been earned at the time of such
termination; (ii) the worth at time of award of the amount by which the
unpaid rent which would have been earned after termination until the time
of award exceeds the amount of such rental loss for the same period that
Tenant proves could have been reasonably avoided; (iii) the worth at time
of award of the amount by which the unpaid rent for the balance of the
Lease Term after the time of award exceeds the amount of such rental loss
that Tenant proves could be reasonably avoided; (iv) any other amount
necessary to compensate Landlord for all detriment proximately caused by
Tenant's failure to perform its obligations under this Lease, or which in
the ordinary course of things would be likely to result therefrom;
including the following: (x) reasonable expenses for repairing, altering or
remodeling the Premises for purposes of reletting, (y) reasonable broker's
fees, advertising costs or other expenses of reletting the Premises, and
(z) reasonable costs of carrying the Premises such as taxes, insurance
premiums, utilities and security precautions; and (v) at Landlord's
election, such other amounts in addition to or in lieu of the foregoing as
may be permitted by applicable California law. The term "rent", as used
herein, is defined as the minimum monthly installments of Base Monthly Rent
and all other sums required to be paid by Tenant pursuant to this Lease,
all such other sums being deemed as additional rent due hereunder. As used
in (i) and (ii) above, "worth at the time of award" shall be computed by
allowing interest at a rate equal to the discount rate of the Federal
Reserve Bank of San Francisco plus five (5%) percent per annum. As used in
(iii) above, "worth at the time of award" shall be computed by discounting
such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one (1%) percent.
B. Right to Re-enter: In the event of any such default by Tenant,
Landlord shall have the right, after terminating this Lease, to re-enter
the Premises and remove all persons and property. Such property may be
removed and stored in a public warehouse or elsewhere at the cost of and
for the account of Tenant, and disposed of by Landlord in any manner
permitted by law.
C. Abandonment: If Landlord does not elect to terminate this Lease as
provided in Section 13.A or 13.B above, then the provisions of California
Civil Code Section 1951.4, (Landlord may continue the lease in effect after
Tenant's breach and abandonment and recover rent as it becomes due if
Tenant has a right to sublet and assign, subject only to reasonable
limitations) as amended from time to time, shall apply and Landlord may
from time to time, without terminating this Lease, either recover all
rental as it becomes due or relet the Premises or any part thereof for such
term or terms and at such rental or rentals and upon such other terms and
conditions as Landlord in its sole discretion may deem advisable, with the
right to make alterations and repairs to the Premises. In the event that
Landlord elects to so relet, rentals received by Landlord from such
reletting shall be applied in the following order to: (i) the payment of
any indebtedness other than Base Monthly Rent due hereunder from Tenant to
Landlord; (ii) the payment of any cost of such reletting; (iii) the payment
of the cost of any alterations and repairs to the Premises; and (iv) the
payment of Base Monthly Rent and other sums due and unpaid hereunder. The
residual rentals, if any, shall be held by Landlord and applied in payment
of future Base Monthly Rent as the same may become due and payable
hereunder. Landlord shall the obligation to market the space but shall have
no obligation to relet the Premises following a default if Landlord has
other comparable available space within the Building or Project. In the
event the portion of rentals received from such reletting which is applied
to the payment of rent hereunder during any month be less than the rent
payable during that month by Tenant hereunder, then Tenant shall pay such
deficiency to Landlord immediately upon demand. Such deficiency shall be
calculated and paid monthly. Tenant shall also pay to Landlord, as soon as
ascertained, any costs and expenses incurred by Landlord in such reletting
or in making such alterations and repairs not covered by the rentals
received from such reletting.
D. No Termination: Landlord's re-entry or taking possession of the
Premises pursuant to 13.B or 13.C shall not be construed as an election to
terminate this Lease unless written notice of such intention is given to
Tenant or unless the termination is decreed by a court of competent
jurisdiction. Notwithstanding any reletting without termination by Landlord
because of any default by Tenant, Landlord may at any time after such
reletting elect to terminate this Lease for any such default.
E. Non-Waiver: Landlord may accept Tenant's payments without waiving
any rights under this Lease, including rights under a previously served
notice of default. No payment by Tenant or receipt by Landlord of a lesser
amount than any installment of rent due shall be deemed as other than
payment on account of the amount due. If Landlord accepts payments after
serving a notice of default, Landlord may nevertheless commence and pursue
an action to enforce rights and remedies under the previously served notice
of default without giving Tenant any further notice or demand. Furthermore,
the Landlord's acceptance of rent from the Tenant when the Tenant is
holding over without express written consent does not convert Tenant's
Tenancy from a tenancy at sufferance to a month to month tenancy. No waiver
of any provision of this Lease shall be implied by any failure of Landlord
to enforce any remedy for the violation of that provision, even if that
violation continues or is repeated. Any waiver by Landlord of any provision
of this Lease must be in writing. Such waiver shall affect only the
provision specified and only for the time and in the manner stated in the
writing. No delay or omission in the exercise of any right or remedy by
Landlord shall impair such right or remedy or be construed as a waiver
thereof by Landlord. No act or conduct of Landlord, including, without
limitation, the acceptance of keys to the Premises, shall constitute
acceptance of the surrender of the Premises by Tenant before the Expiration
Date. Only written notice from Landlord to Tenant of acceptance shall
constitute such acceptance of surrender of the Premises. Landlord's consent
to or approval of any act by Tenant which requires Landlord's consent or
approvals shall not be deemed to waive or render unnecessary Landlord's
consent to or approval of any subsequent act by Tenant.
F. Performance by Landlord: If Tenant fails to perform any obligation
required under this Lease or by Law or Governmental Regulation (beyond any
applicable notice and cure period) Landlord in its sole discretion may,
without further notice, without waiving any rights or remedies and without
releasing Tenant from its obligations hereunder, perform such obligation,
in which event Tenant shall pay Landlord as additional rent all sums paid
by Landlord in connection with such substitute performance, including
interest at the Agreed Interest Rate (as defined in Section 19.J) within
ten (10) days of Landlord's written notice for such payment.
14. Landlord's Liability:
A. Limitation on Landlord's Liability: In the event of Landlord's
failure to perform any of its covenants or agreements under this Lease,
Tenant shall give Landlord written notice of such failure and shall give
Landlord thirty (30) days to cure or commence to cure such failure prior to
any claim for breach or resultant damages, provided, however, that if the
nature of the default is such that it cannot reasonably be cured within the
30-day period, Landlord shall not be deemed in default if it commences
within such period to cure, and thereafter diligently prosecutes the same
to completion. In addition, upon any such failure by Landlord, Tenant shall
give notice by registered or certified mail to any person or entity with a
security interest in the Premises ("Mortgagee") that has provided Tenant
with notice of its interest in the Premises (with a copy of such notice
concurrently sent to Landlord), and in the event Landlord does not cure or
commence to cure such failure within the requisite time period set forth
hereinabove, shall provide Mortgagee thirty (30) days to cure or commence
to cure such failure prior to any claim for breach or resultant damages,
provided, however, that if the nature of the default is such that it cannot
reasonably be cured within the 30-day period, Mortgagee shall not be deemed
in default if it commences within such period to cure, and thereafter
diligently prosecutes the same to completion. Tenant agrees that each of
the Mortgagees to whom this Lease has been assigned is an expressed
third-party beneficiary hereof. Tenant waives any right under California
Civil Code Section 1950.7 or any other present or future law to the
collection of any payment or deposit from Mortgagee or any purchaser at a
foreclosure sale of Mortgagee's interest unless Mortgagee or such purchaser
shall have actually received and not refunded the applicable payment or
deposit. Except for Tenant's right to terminate the Lease as specifically
set forth in Section 15.B and 19.T, Tenant further waives any right to
terminate this Lease and to vacate the Premises on Landlord's default under
this Lease. Tenant's sole remedy on Landlord's default is an action for
damages or injunctive or declaratory relief.
B. Limitation on Tenant's Recourse: If Landlord is a corporation,
trust, partnership, joint venture, unincorporated association or other form
of business entity, then (i) the obligations of Landlord shall not
constitute personal obligations of the officers, directors, trustees,
partners, joint venturers, members, owners, stockholders, or other
principals or representatives except to the extent of their interest in the
Project. Tenant shall have recourse only to the interest of Landlord in the
Project or for the satisfaction of the obligations of Landlord and shall
not have recourse to any other assets of Landlord for the satisfaction of
such obligations.
C. Indemnification of Landlord: Except to the extent due to the
negligence or willful misconduct of Landlord, as a material part of the
consideration rendered to Landlord, Tenant hereby waives all claims against
Landlord for damages to goods, wares and merchandise, and all other
personal property in, upon or about said Premises and for injuries to
persons in or about said Premises, from any cause arising at any time to
the fullest extent permitted by law, and Tenant shall indemnify, defend
with counsel reasonably acceptable to Landlord and hold Landlord, and their
shareholders, directors, officers, trustees, employees, partners,
affiliates and agents from any claims, liabilities, costs or expenses
incurred or suffered arising from the use of occupancy of the Premises or
any part of the Project by Tenant or Tenant's Agents, the acts or omissions
of Tenant or Tenant's Agents, Tenant's breach of this Lease, or any damage
or injury to person or property occurring on the Premises from any cause or
any damage or injury to person or property occurring on any other part of
the Project and caused by the acts or omissions of Tenant or Tenant's
Agents, or from the failure of Tenant to keep the Premises in good
condition and repair as herein provided,. Further, in the event Landlord is
made party to any litigation due to the acts or omission of Tenant or
Tenant's Agents, Tenant will indemnify, defend (with counsel reasonably
acceptable to Landlord) and hold Landlord harmless from any such claim or
liability including Landlord's costs and expenses and reasonable attorney's
fees incurred in defending such claims.
15. Destruction of Premises:
A. Landlord's Obligation to Restore: In the event of a destruction of
the Premises during the Lease Term Landlord shall repair the same to a
similar condition to that which existed prior to such destruction. Such
destruction shall not annul or void this Lease; however, Tenant shall be
entitled to a proportionate reduction of Base Monthly Rent while repairs
are being made, such proportionate reduction to be based upon the extent to
which the repairs interfere with Tenant's business in the Premises, as
reasonably determined by Landlord. In no event shall Landlord be required
to replace or restore Alterations, Tenant Improvements paid for by Tenant
from sources other than the Work Allowance or Tenant's fixtures or personal
property.
B. Limitations on Landlord's Restoration Obligation: Notwithstanding
the provisions of Section 15.A, Landlord shall have no obligation to
repair, or restore the Premises if any of the following occur: (i) if the
repairs cannot be made in one hundred eighty (180) days from the date of
receipt (provided that Landlord has diligently pursued the issuance of
same) of all governmental approvals necessary under the laws and
regulations of State, Federal, County or Municipal authorities, as
reasonably determined by Landlord, (ii) if the holder of the first deed of
trust or mortgage encumbering the Building elects not to permit the
insurance proceeds payable upon damage or destruction to be used for such
repair or restoration, (iii) the damage or destruction is not fully covered
by the insurance maintained or required to be maintained by Landlord, (iv)
the damage or destruction occurs in the last twenty four (24) months of the
Lease Term, (v) Tenant is in default pursuant to the provisions of Section
13 hereof (beyond any applicable notice or cure periods), or (vi) Tenant
has vacated the Premises for more than ninety (90) days. In any such event
Landlord may elect either to (i) complete the repair or restoration, or
(ii) terminate this Lease by providing Tenant written notice of its
election within forty five (45) days following the damage or destruction.
If Landlord elects to repair or restore, this Lease shall continue in full
force and effect. Tenant shall also have the right to terminate this Lease
in the event of either (i) or (iv) above, by providing Landlord with
written notice of its election to do so within forty five (45) days
following the damage or destruction. If Tenant elects not to terminate the
Lease and Landlord thereafter fails to diligently pursue to completion the
repairs so that it becomes clearly apparent that Landlord will not complete
the repairs on or before the date that is 180 days from the date of receipt
of all governmental approvals necessary under the laws and regulations of
State, Federal, County or Municipal authorities as set forth above, then
Tenant may terminate this Lease on written notice to Landlord within
fifteen (15) business days of such determination by Tenant; provided,
however, if Tenant elects not to terminate this Lease, Landlord and Tenant
shall reasonably agree on a revised completion schedule, and if Landlord
shall fail to complete the restoration within said revised time period,
Tenant shall again have the termination right described in this sentence.
16. Condemnation: If any part of the Premises shall be taken for any public
or quasi-public use, under any statute or by right of eminent domain or
private purchase in lieu thereof, and only a part thereof remains which is
susceptible of occupation hereunder, this Lease shall, as to the part so
taken, terminate as of the day before title vests in the condemnor or
purchaser ("Vesting Date") and Base Monthly Rent payable hereunder shall be
adjusted so that Tenant is required to pay for the remainder of the Lease
Term only such portion of Base Monthly Rent as the value of the part
remaining after such taking bears to the value of the entire Premises prior
to such taking. Further, in the event of any such partial taking of any
rentable square footage of the Premises that could reasonably be expected
to have a material adverse effect on the intended use of the Premises by
Tenant, either Party shall have the option to terminate this Lease as of
the Vesting Date. If all of the Premises or such part thereof be taken so
that there does not remain a portion susceptible for occupation hereunder,
this Lease shall terminate on the Vesting Date. If part or all of the
Premises be taken, all compensation awarded upon such taking shall go to
Landlord, and Tenant shall have no claim thereto; except Landlord shall
cooperate with Tenant, without cost to Landlord, to recover compensation
for damage to or taking of any Alterations, Tenant Improvements paid for by
Tenant from sources other than the Work Allowance, or for Tenant's moving
costs. Tenant hereby waives the provisions of California Code of Civil
Procedures Section 1265.130 and any other similarly enacted statue, and the
provisions of this Section 16 shall govern in the case of a taking.
17. Assignment or Sublease:
A. Consent by Landlord: Except as specifically provided in Section
17.E, Tenant may not voluntarily, involuntarily or by operation of law,
assign, sell or otherwise transfer all or any part of Tenant's interest in
this Lease or in the Premises, cause or permit any part of the Premises to
be sublet, occupied or used by anyone other than Tenant, or permit any
person to succeed to any interest in this Lease or the Premises (all of the
foregoing being a "Transfer") without the express written consent of
Landlord. In the event Tenant desires to effectuate a Transfer, Tenant
shall deliver to Landlord (1) a copy of the proposed sublease or assignment
agreement and of all ancillary agreements with the proposed transferee, (2)
current financial statements of the transferee covering the preceding three
years, (3) the nature of the proposed transferee's business to be carried
on in the Premises, and (4) a statement outlining all consideration to be
given on account of the Transfer. Landlord may condition its approval of
any Transfer on receipt of a certification from both Tenant and the
proposed transferee of all consideration to be paid to Tenant in connection
with such Transfer. At Landlord's request, Tenant shall also provide
additional information reasonably required by Landlord to determine whether
it will consent to the proposed Transfer. Landlord shall have a ten (10)
business-day period following receipt of all the foregoing within which to
notify Tenant in writing that Landlord elects to: (i) permit Tenant to
Transfer such space to the named transferee on the terms and conditions
stated in the proposed sublease or assignment agreement; or (ii) refuse
consent. If Landlord should fail to notify Tenant in writing of such
election within the 10 business-day period, Tenant shall again notify
Landlord in writing and shall give Landlord an additional five (5) business
days to respond. If Landlord fails to notify Tenant in writing of such
election within this second 5 business-day period, then Landlord shall be
deemed to have elected option (i) above. In the event Landlord does not
elect option (i) above, Landlord's consent to the proposed Transfer shall
not be unreasonably withheld, provided and upon the condition that: (i) the
proposed transferee is engaged in a business that is limited to the use
expressly permitted under this Lease; (ii) the proposed transfer agreement
is in form reasonably satisfactory to Landlord; (iii) the proposed Transfer
will not result in there being greater than three (3) subtenants or other
occupants (not including employees) within the Premises at any time during
the Lease Term; and (iv) Tenant reimburses Landlord promptly after demand
for any reasonable costs that may be incurred by Landlord in connection
with said Transfer, including the costs of making investigations as to the
acceptability of the proposed transferee and legal costs incurred in
connection with the granting or denial of any requested consent. In the
event all or any one of the foregoing conditions are not satisfied (without
limiting other factors that may be considered or conditions that may be
imposed by Landlord in connection with a requested Transfer), Landlord
shall be considered to have acted reasonably if it withholds its consent.
Tenant shall not hypothecate, mortgage, pledge or otherwise encumber
Tenant's interest in this Lease or the Premises or otherwise use the Lease
as a security device in any manner without the consent of Landlord, (all of
the foregoing being an "Hypothecation") which consent Landlord may withhold
in its sole discretion; provided, however, Landlord hereby acknowledges and
agrees that, so long as Tenant is not in default hereunder, Tenant shall be
permitted, with Landlord's reasonable consent, to pledge its interest in
this Lease in connection with the pledge of all or substantially all of its
assets as part of any master credit facility. In the event Landlord
consents to such a Hypothecation, Landlord's consent shall be evidenced by
a written consent in substantially the form attached as Exhibit "E" hereto.
Tenant shall reimburse Landlord on demand for any reasonable costs that may
be incurred by Landlord in connection with an Hypothecation, including
legal costs incurred in connection with the granting or denial of any
requested consent. Landlord's consent to one or more Transfers or
Hypothecations shall not operate to exhaust Tenant's obligation to obtain
Landlord's consent to other Transfers or Hypothecations nor constitute
consent to an assignment or other Transfer following foreclosure of any
permitted lien, mortgage or other encumbrance. If Tenant is a corporation,
limited liability company, unincorporated association, partnership or other
legal entity, the sale, assignment, transfer or hypothecation of any stock,
membership or other ownership interest in such entity (whether occurring at
one time or over a period of time) in the aggregate of more than fifty
percent (50%) (determined cumulatively) shall be deemed an assignment of
this Lease; in the case of a partnership, any withdrawal or substitution
(whether occurring at one time or over a period of time) of any partners
owning fifty percent (50%) or more (cumulatively) of the partnership, or
the dissolution of the partnership shall be deemed an assignment of this
Lease; provided that, subject to Section 17.D below, the foregoing
provisions of this sentence shall not apply to a transfer of stock in a
corporation whose stock is publicly traded on a public stock exchange, a
transfer of stock or ownership interest resulting from a financing of
Tenant or a private or public offering, and the issuance of warrants or
stock options to purchase Tenant's stock (and the exercise of purchase
rights under any such warrants or stock options). If Tenant is a
corporation whose stock is not publicly traded on a public stock exchange,
any dissolution, merger, consolidation or reorganization of Tenant shall be
deemed a Transfer.
B. Assignment or Subletting Consideration: Landlord and Tenant hereby
agree that fifty percent (50%) of any rent or other economic consideration
(including without limitation, payments for trade fixtures and personal
property in excess of the fair market value thereof, stock, warrants, and
options) in excess of the Base Monthly Rent payable hereunder (after
deducting therefrom Reasonable Transfer Costs (defined below) (i) realized
by Tenant in connection with any Transfer by Tenant, and/or (ii) realized
by Tenant in connection with any sublease, assignment, or other Transfer by
a subtenant or any other person or entity (other than Tenant), shall be
paid by Tenant to Landlord promptly after such amounts are paid to Tenant.
As used in this Section 17.B, "Reasonable Transfer Costs" shall mean the
following costs, to the extent reasonably incurred in connection with the
Transfer in question: (i) advertising costs and brokerage commissions
payable to unaffiliated third parties, and (ii) tenant improvement costs
incurred solely in connection with such Transfer. Tenant's obligation to
pay over Landlord's portion of the consideration constitutes an obligation
for additional rent hereunder. The above provisions relating to the
allocation of excess rent is an independently negotiated term of the Lease
which constitutes a material inducement for the Landlord to enter into the
Lease, and is agreed by the Parties to be commercially reasonable. No
Transfer by Tenant shall relieve it of any obligation under this Lease. Any
Transfer which conflicts with the provisions of this Lease shall be void.
C. No Release: Any Transfer shall be made only if and shall not be
effective until the transferee shall execute, acknowledge, and deliver to
Landlord an agreement, in form and substance reasonably satisfactory to
Landlord, whereby the transferee shall assume all the obligations of this
Lease on the part of Tenant to be performed or observed to the extent of
the interest being transferred and shall be subject to all the covenants,
agreements, terms, provisions and conditions in this Lease to the extent
applicable to the interest being transferred. Notwithstanding any Transfer
and the acceptance of rent or other sums by Landlord from any transferee,
Tenant and any guarantor shall remain fully liable for the payment of Base
Monthly Rent and additional rent due, and to become due hereunder, for the
performance of all the covenants, agreements, terms, provisions and
conditions contained in this Lease on the part of Tenant to be performed
and for all acts and omissions of any transferee or any other person
claiming under or through any transferee that shall be in violation of any
of the terms and conditions of this Lease, and any such violation shall be
deemed a violation by Tenant. Tenant shall indemnify, defend and hold
Landlord harmless from and against all losses, liabilities, damages, costs
and expenses (including reasonable attorney fees) resulting from any claims
that may be made against Landlord by the proposed transferee or by any real
estate brokers or other persons claiming compensation in connection with
the proposed Transfer.
D. Reorganization of Tenant: The provisions of this Section 17.D shall
apply if Tenant is a publicly-held corporation and: (i) there is a
dissolution, merger, consolidation, or other reorganization of or affecting
Tenant, where Tenant is not the surviving corporation, or (ii) there is a
sale or transfer of stock possessing more than 50% of the total combined
voting power of all classes of Tenant's capital stock issued, outstanding
and entitled to vote for the election of directors to one person or entity
(or to any group of related persons or entities) (the "Acquiring Entity"),
and after such sale or transfer of stock Tenant's stock is no longer
publicly traded. In a transaction under clause (i), the surviving
corporation shall promptly execute and deliver to Landlord an agreement in
form reasonably satisfactory to Landlord under which such surviving
corporation assumes the obligations of Tenant hereunder. In a transaction
under clause (ii), the Acquiring Entity shall promptly execute and deliver
to Landlord a guaranty of lease in form reasonably satisfactory to Landlord
under which the Acquiring Entity guarantees the full payment and
performance of the obligations of Tenant under the Lease (`Lease
Guaranty"). The foregoing notwithstanding, in the event the Acquiring
Entity is itself not a publicly-traded corporation, but is instead the
subsidiary of a publicly-traded corporation (or a subsidiary of a
subsidiary of a publicly-traded corporation, or a subsidiary in a chain of
entities in which a parent corporation is publicly traded), then the
publicly-traded parent corporation shall be required to execute and deliver
to Landlord the Lease Guaranty. In addition, in the event that after such
acquisition Tenant no longer prepares audited financial statements, then in
addition to the financial statements required to be delivered by Tenant
hereunder, the entity required to execute the Lease Guaranty shall provide
Landlord its audited financial statements at the times and in the manner
required of Tenant hereunder. It is the intent of the parties that after
such an acquisition of the stock of Tenant, Landlord shall be entitled to
rely on the creditworthiness of a publicly-traded corporation and to
receive audited financial information from a publicly-traded corporation.
E. Permitted Transfers: Notwithstanding anything contained in this
Section 17, so long as Tenant otherwise complies with the provisions of
this Section 17, Tenant may enter into any of the following Transfers (a
"Permitted Transfer") without Landlord's prior consent, and Landlord shall
not be entitled to terminate the Lease or to receive any part of any
subrent or other consideration resulting therefrom that would otherwise be
due pursuant to Sections 17.A and 17.B. Tenant may sublease all or part of
the Premises or assign its interest in this Lease to (i) any corporation
which controls, is controlled by, or is under common control with the
original Tenant to this Lease by means of an ownership interest of more
than 50%; (ii) a corporation which results from a merger, consolidation or
other reorganization in which Tenant is not the surviving corporation, so
long as the surviving corporation has a net worth at the time of such
assignment that is equal to or greater than the net worth of Tenant
immediately prior to such transaction; and (iii) a corporation which
purchases or otherwise acquires all or substantially all of the assets of
Tenant so long as such acquiring corporation has a net worth at the time of
such assignment that is equal to or greater than the net worth of Tenant
immediately prior to such transaction.
F. Effect of Default: In the event of Tenant's default beyond any
applicable notice and cure period), Tenant hereby assigns all amounts due
to Landlord from any Transfer as security for performance of Tenant's
obligations under this Lease, and Landlord may collect such amounts as
Tenant's Attorney-in-Fact, except that Tenant may collect such amounts
unless a default occurs as described in Section 13 above. A termination of
the Lease due to Tenant's default shall not automatically terminate a
Transfer then in existence; rather at Landlord's election, such Transfer
shall survive the Lease termination, the transferee shall attorn to
Landlord, and Landlord shall undertake the obligations of Tenant under the
transfer agreement; except that Landlord shall not be liable for prepaid
rent, security deposits or other defaults of Tenant to the transferee, or
for any acts or omissions of Tenant and Tenant's Agents.
G. Conveyance by Landlord: As used in this Lease, the term "Landlord"
is defined only as the owner for the time being of the Premises, so that in
the event of any sale or other conveyance of the Premises or in the event
of a master lease of the Premises, Landlord shall be entirely freed and
relieved of all its covenants and obligations hereunder from and after the
date of such transfer, and it shall be deemed and construed, without
further agreement between the Parties and the purchaser at any such sale or
the master tenant of the Premises, that the purchaser or master tenant of
the Premises has assumed and agreed to carry out any and all covenants and
obligations of Landlord hereunder from and after the date of such transfer.
Such transferor shall transfer and deliver Tenant's security deposit to the
purchaser at any such sale or the master tenant of the Premises, and
thereupon the transferor shall be discharged from any further liability in
reference thereto.
H. Successors and Assigns: Subject to the provisions of this Section
17, the covenants and conditions of this Lease shall apply to and bind the
heirs, successors, executors, administrators and assigns of all Parties
hereto; and all parties hereto comprising Tenant shall be jointly and
severally liable hereunder.
18. Option to Extend the Lease Term:
▇. ▇▇▇▇▇ and Exercise of Option: Landlord grants to Tenant, subject to
the terms and conditions set forth in this Section 18.A, an option
("Option") to extend the Lease Term for an additional term (the "Option
Term"). The Option Term shall be for a period of three (3) years and shall
be exercised, if at all, by written notice to Landlord no earlier than
eighteen (18) months prior to the date the Lease Term would expire but for
such exercise but no later than twelve (12) months prior to the date the
Lease Term would expire but for such exercise, time being of the essence
for the giving of such notice. If Tenant exercises the Option, all of the
terms, covenants and conditions of this Lease shall apply except for the
grant of additional Options pursuant to this Section, provided that Base
Monthly Rent for the Premises payable by Tenant during the Option Term
shall be at the Fair Market Rental as hereinafter defined. Notwithstanding
anything herein to the contrary, if Tenant is in monetary or material
non-monetary default (beyond applicable notice and cure periods) under any
of the terms, covenants or conditions of this Lease either at the time
Tenant exercises the Option or at any time thereafter prior to the
commencement date of the Option Term, then Landlord shall have, in addition
to all of Landlord's other rights and remedies provided in this Lease, the
right to terminate the Option upon notice to Tenant, in which event the
Lease Term shall not be extended pursuant to this Section 18.A. As used
herein, the term "Fair Market Rental" is defined as the rental and all
other monetary payments, including any escalations and adjustments thereto
(including without limitation Consumer Price Indexing) that Landlord could
obtain during the Option Term from a third party desiring to lease the
Premises, based upon the current use and other potential uses of the
Premises, as determined by the rents then obtainable for new leases of
space comparable in age, size and quality to the Premises in the same real
estate submarket as the Building.
B. Determination of Fair Market Rental: If Tenant exercises the
Option, Landlord shall send Tenant a notice setting forth the Fair Market
Rental for the Option Term within thirty (30) days following the Exercise
Date. If Tenant disputes Landlord's determination of Fair Market Rental for
the Option Term, Tenant shall, within thirty (30) days after the date of
Landlord's notice setting forth Fair Market Rental for the Option Term,
send to Landlord a notice stating that Tenant either elects to terminate
its exercise of the Option, in which event the Option shall lapse and this
Lease shall terminate on the Expiration Date, or that Tenant disagrees with
Landlord's determination of Fair Market Rental for the Option Term and
elects to resolve the disagreement as provided in Section 18.C below. If
Tenant does not send Landlord a notice as provided in the previous
sentence, Landlord's determination of Fair Market Rental shall be the Base
Monthly Rent payable by Tenant during the Option Term. If Tenant elects to
resolve the disagreement as provided in Section 18.C and such procedures
are not concluded prior to the commencement date of the Option Term, Tenant
shall pay to Landlord as Base Monthly Rent the Fair Market Rental as
determined by Landlord in the manner provided above. If the Fair Market
Rental as finally determined pursuant to Section 18.C is greater than
Landlord's determination, Tenant shall pay Landlord the difference between
the amount paid by Tenant and the Fair Market Rental as so determined in
Section 18.C within thirty (30) days after such determination. If the Fair
Market Rental as finally determined in Section 18.C is less than Landlord's
determination, the difference between the amount paid by Tenant and the
Fair Market Rental as so determined in Section 18.C shall be credited
against the next installments of Base Monthly Rent due from Tenant to
Landlord hereunder.
C. Resolution of a Disagreement over the Fair Market Rental: Any
disagreement regarding Fair Market Rental shall be resolved as follows:
1. Within thirty (30) days after Tenant's response to Landlord's
notice setting forth the Fair Market Rental, Landlord and Tenant shall meet
at a mutually agreeable time and place, in an attempt to resolve the
disagreement.
2. If within the 30-day period referred to above, Landlord and
Tenant cannot reach agreement as to Fair Market Rental, each party shall
select one appraiser to determine Fair Market Rental. Each such appraiser
shall arrive at a determination of Fair Market Rental and submit their
conclusions to Landlord and Tenant within thirty (30) days after the
expiration of the 30-day consultation period described above.
3. If only one appraisal is submitted within the requisite time
period, it shall be deemed as Fair Market Rental. If both appraisals are
submitted within such time period and the two appraisals so submitted
differ by less than ten percent (10%), the average of the two shall be
deemed as Fair Market Rental. If the two appraisals differ by more than
10%, the appraisers shall immediately select a third appraiser who shall,
within thirty (30) days after his selection, make and submit to Landlord
and Tenant a determination of Fair Market Rental. This third appraisal will
then be averaged with the closer of the two previous appraisals and the
result shall be Fair Market Rental.
4. All appraisers specified pursuant to this Section shall be
members of the American Institute of Real Estate Appraisers with not less
than ten (10) years experience appraising office and industrial properties
in the Santa ▇▇▇▇▇ Valley. Each party shall pay the cost of the appraiser
selected by such party and one-half of the cost of the third appraiser.
D. Personal to Tenant: All Options provided to Tenant in this Lease
are personal and granted to ZiLOG, Inc. or a permitted transferee pursuant
to Section 17.E above, and are not exercisable by any third party should
Tenant assign or sublet all or a portion of its rights under this Lease,
unless Landlord consents to permit exercise of any option by any assignee
or subtenant, in Landlord's sole and absolute discretion. In the event
Tenant has multiple options to extend this Lease, a later option to extend
the Lease cannot be exercised unless the prior option has been properly
exercised.
19. General Provisions:
A. Attorney's Fees: In the event a suit or alternative form of dispute
resolution is brought for the possession of the Premises, for the recovery
of any sum due hereunder, to interpret the Lease, or because of the breach
of any other covenant herein; then the losing party shall pay to the
prevailing party reasonable attorney's fees including the expense of expert
witnesses, depositions and court testimony as part of its costs which shall
be deemed to have accrued on the commencement of such action. The
prevailing party shall also be entitled to recover all costs and expenses
including reasonable attorney's fees incurred in enforcing any judgment or
award against the other party. The foregoing provision relating to
post-judgment costs is severable from all other provisions of this Lease.
B. Authority of Parties: Each party represents and warrants that it is
duly formed and in good standing, and is duly authorized to execute and
deliver this Lease on behalf of said partnership or corporation and that
this Lease is legally valid and binding upon said corporation or
partnership in accordance with its terms. At the request of either party,
the other party shall provide the requesting party with corporate or
partnership resolutions or other proof in a form acceptable to the
requesting party, authorizing the execution of the Lease.
C. Brokers: Tenant represents it has not utilized or contacted a real
estate broker or finder with respect to this Lease other than ▇▇▇▇▇ & ▇▇▇▇▇
Company ("Broker"). Landlord and Tenant each represent and warrant to the
other that neither it nor its officers or agents nor anyone acting on its
behalf has dealt with any real estate representative other than Broker in
the negotiating or making of this Lease, and each Party agrees to indemnify
and hold harmless the other from any claim or claims, and costs and
expenses, including attorneys' fees, incurred by the indemnified Party in
conjunction with any such claim or claims of any other broker or brokers to
a commission in connection with this Lease as a result of the actions of
the indemnifying party(s). Landlord agrees to pay the commissions owing to
the Broker pursuant to separate written agreement.
D. Choice of Law: This Lease shall be governed by and construed in
accordance with California law. Except as provided in Section 19.E, venue
shall be Santa ▇▇▇▇▇ County.
E. Dispute Resolution: Landlord and Tenant and any other party that
may become a party to this Lease or be deemed a party to this Lease
including any subtenants agree that, except for any claim by Landlord for
unlawful detainer or any claim within the jurisdiction of the small claims
court (which small claims court shall be the sole court of competent
jurisdiction), any controversy, dispute, or claim of whatever nature
arising out of, in connection with or in relation to the interpretation,
performance or breach of this Lease, including any claim based on contract,
tort, or statute, shall be resolved at the request of any party to this
agreement through a two-step dispute resolution process administered by
J.A.M.S. or another judicial mediation service mutually acceptable to the
parties located in Santa ▇▇▇▇▇ County, California. The dispute resolution
process shall involve first, mediation, followed, if necessary, by final
and binding arbitration administered by and in accordance with the then
existing rules and practices of J.A.M.S. or other judicial mediation
service selected. In the event of any dispute subject to this provision,
either party may initiate a request for mediation and the parties shall use
reasonable efforts to promptly select a J.A.M.S. mediator and commence the
mediation. In the event the parties are not able to agree on a mediator
within thirty (30) days, J. A. M. S. or another judicial mediation service
mutually acceptable to the parties shall appoint a mediator. The mediation
shall be confidential and in accordance with California Evidence Code ss.
1119 et. seq. The mediation shall be held in Santa ▇▇▇▇▇ County, California
and in accordance with the existing rules and practice of J. A. M. S. (or
other judicial and mediation service selected). The parties shall use
reasonable efforts to conclude the mediation within sixty (60) days of the
date of either party's request for mediation. The mediation shall be held
prior to any arbitration or court action (other than a claim by Landlord
for unlawful detainer or any claim within the jurisdiction of the small
claims court which are not subject to this mediation/arbitration provision
and may be filed directly with a court of competent jurisdiction). Should
the prevailing party in any dispute subject to this Section 19.E attempt an
arbitration or a court action before attempting to mediate, the prevailing
party shall not be entitled to attorney's fees that might otherwise be
available to them in a court action or arbitration and in addition thereto,
the party who is determined by the arbitrator to have resisted mediation,
shall be sanctioned by the arbitrator or judge.
If a mediation is conducted but is unsuccessful, it shall be followed by
final and binding arbitration administered by and in accordance with the
then existing rules and practices of J.A.M.S. or the other judicial and
mediation service selected, and judgment upon any award rendered by the
arbitrator(s) may be entered by any state or federal court having
jurisdiction thereof AS PROVIDED BY CALIFORNIA CODE OF CIVIL PROCEDURE
SECTION 1280 ET. SEQ, AS SAID STATUTES THEN APPEAR, INCLUDING ANY
AMENDMENTS TO SAID STATUTES OR SUCCESSORS TO SAID STATUTES OR AMENDED
STATUTES, EXCEPT THAT in no event shall the parties be entitled to propound
interrogatories or request for admissions during the arbitration process.
The arbitrator shall be a retired judge or a licensed California attorney.
The venue for any such arbitration or mediation shall be in Santa ▇▇▇▇▇
County, California.
NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY
DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "MEDIATION AND
ARBITRATION OF DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AS
PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT
POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY
INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO
DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE
"MEDIATION AND ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT
TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO
ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE.
YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.
WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES
ARISING OUT OF THE MATTERS INCLUDED IN THE "MEDIATION AND ARBITRATION OF
DISPUTES" PROVISION TO NEUTRAL ARBITRATION.
LANDLORD: ______ TENANT: _______
F. Entire Agreement: This Lease and the exhibits attached hereto
contain all of the agreements and conditions made between the Parties
hereto and may not be modified orally or in any other manner other than by
written agreement signed by all parties hereto or their respective
successors in interest. This Lease supersedes and revokes all previous
negotiations, letters of intent, lease proposals, brochures, agreements,
representations, promises, warranties, and understandings, whether oral or
in writing, between the parties or their respective representatives or any
other person purporting to represent Landlord or Tenant.
G. Entry by Landlord: Upon not less than twenty-four (24 hours prior
notice to Tenant (except in the case of an emergency) and subject to
Tenant's reasonable security regulations, Tenant shall permit Landlord and
his agents to enter into and upon the Premises at all reasonable times, and
without any rent abatement or reduction or any liability to Tenant for any
loss of occupation or quiet enjoyment of the Premises thereby occasioned
(except for actual damages resulting from the gross negligence or willful
misconduct of Landlord or its agents), for the following purposes only: (i)
inspecting and maintaining the Premises; (ii) making repairs, alterations
or additions to the Premises; (iii) performing any obligations of Landlord
under the Lease including remediation of Hazardous Materials if determined
to be the responsibility of Landlord, (iv) posting and keeping posted
thereon notices of non-responsibility for any construction, alteration or
repair thereof, as required or permitted by any law, and (v) showing the
Premises to Landlord's existing or potential successors, purchaser, and
lenders (and their brokers). Provided that Tenant has not then exercised
its Option, Tenant shall permit Landlord and his agents, at any time within
twelve (12) months prior to the Expiration Date (or at any time during the
Lease if Tenant is in default hereunder), to place upon the Premises "For
Lease" signs and exhibit the Premises to real estate brokers and
prospective tenants at reasonable hours, subject to the notification
obligation of Landlord set forth above.
H. Estoppel Certificates: At any time during the Lease Term, each
party (the "Responding Party") shall, within twenty (20) days following
written notice from the other party (the "Requesting Party"), execute and
deliver to the Requesting Party a written statement certifying, if true,
the following: (i) that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification); (ii) the
date to which rent and other charges are paid in advance, if any; (iii)
acknowledging that there are not, to Responding Party's knowledge, any
uncured defaults on Requesting Party's part hereunder (or specifying such
defaults if they are claimed); and (iv) such other information as
Requesting Party may reasonably request. Any such statement may be
conclusively relied upon by any prospective purchaser or encumbrancer of
Requesting Party's interest in the Premises. The Responding Party's failure
to deliver such statement within such time shall be conclusive upon the
Responding Party that this Lease is in full force and effect without
modification, except as may be represented by the Requesting Party, and
that there are no uncured defaults in Requesting Party's performance.
Tenant agrees to provide, within ten (10) days of Landlord's request,
Tenant's most recent three (3) years of audited financial statements for
Landlord's use in financing or sale of the Premises or Landlord's interest
therein. Landlord agrees to keep such financial statements confidential.
I. Exhibits: All exhibits referred to are attached to this Lease and
incorporated by reference.
J. Interest: All rent due hereunder, if not paid when due (beyond any
applicable grace period), shall bear interest at the rate of the Reference
Rate published by Bank of America, San ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, plus two percent
(2%) per annum from that date until paid in full ("Agreed Interest Rate").
This provision shall survive the expiration or sooner termination of the
Lease. Despite any other provision of this Lease, the total liability for
interest payments shall not exceed the limits, if any, imposed by the usury
laws of the State of California. Any interest paid in excess of those
limits shall be refunded to Tenant by application of the amount of excess
interest paid against any sums outstanding in any order that Landlord
requires. If the amount of excess interest paid exceeds the sums
outstanding, the portion exceeding those sums shall be refunded in cash to
Tenant by Landlord. To ascertain whether any interest payable exceeds the
limits imposed, any non-principal payment (including late charges) shall be
considered to the extent permitted by law to be an expense or a fee,
premium, or penalty rather than interest.
K. This section intentionally left blank.
L. No Presumption Against Drafter: Landlord and Tenant understand,
agree and acknowledge that this Lease has been freely negotiated by both
Parties; and that in any controversy, dispute, or contest over the meaning,
interpretation, validity, or enforceability of this Lease or any of its
terms or conditions, there shall be no inference, presumption, or
conclusion drawn whatsoever against either party by virtue of that party
having drafted this Lease or any portion thereof.
M. Notices: All notices, demands, requests, or consents required to be
given under this Lease shall be sent in writing by U.S. certified mail,
return receipt requested, or by personal delivery addressed to the party to
be notified at the address specified in Section 1 of this Lease (with
respect to Landlord), at the Premises (with respect to Tenant) or to such
other place as the party to be notified may from time to time designate by
at least fifteen (15) days prior notice to the notifying party. When this
Lease requires service of a notice, that notice shall replace rather than
supplement any equivalent or similar statutory notice, including any
notices required by Code of Civil Procedure Section 1161 or any similar or
successor statute.
N. Property Management: In addition, Tenant agrees to pay Landlord
along with the expenses to be reimbursed by Tenant a monthly fee for
management services rendered by either Landlord or a third party manager
engaged by Landlord (which may be a party affiliated with Landlord), in the
amount of one and a half percent (1.5 %) of the Base Monthly Rent.
O. Rent: All monetary sums due from Tenant to Landlord under this
Lease, including, without limitation those referred to as "additional
rent", shall be deemed as rent.
P. Representations: Tenant acknowledges that neither Landlord nor any
of its employees or agents have made any agreements, representations,
warranties or promises with respect to the Premises or with respect to
present or future rents, expenses, operations, tenancies or any other
matter except as expressly set forth herein. Except as herein expressly set
forth herein, Tenant relied on no statement of Landlord or its employees or
agents for that purpose.
Q. Rights and Remedies: Subject to Section 14 above, All rights and
remedies hereunder are cumulative and not alternative to the extent
permitted by law, and are in addition to all other rights and remedies in
law and in equity.
R. Severability: If any term or provision of this Lease is held
unenforceable or invalid by a court of competent jurisdiction, the
remainder of the Lease shall not be invalidated thereby but shall be
enforceable in accordance with its terms, omitting the invalid or
unenforceable term.
S. Submission of Lease: Submission of this document for examination or
signature by the parties does not constitute an option or offer to lease
the Premises on the terms in this document or a reservation of the Premises
in favor of Tenant. This document is not effective as a lease or otherwise
until executed and delivered by both Landlord and Tenant.
T. Subordination: This Lease is subject and subordinate to ground and
underlying leases, mortgages and deeds of trust (collectively
"Encumbrances") which may now affect the Premises, to any covenants,
conditions or restrictions of record as of the Effective Date, and to all
renewals, modifications, consolidations, replacements and extensions
thereof (that do not have a material adverse effect upon Tenant); provided,
however, if the holder or holders of any such Encumbrance ("Holder")
require that this Lease be prior and superior thereto, within seven (7)
days after written request of Landlord to Tenant, Tenant shall execute,
have acknowledged and deliver all documents or instruments, in the form
presented to Tenant, which Landlord or Holder deems necessary or desirable
for such purposes. Landlord shall have the right to cause this Lease to be
and become and remain subject and subordinate to any and all Encumbrances
which are now or may hereafter be executed covering the Premises or any
renewals, modifications, consolidations, replacements or extensions
thereof, for the full amount of all advances made or to be made thereunder
and without regard to the time or character of such advances, together with
interest thereon and subject to all the terms and provisions thereof;
provided only, that in the event of termination of any such lease or upon
the foreclosure of any such mortgage or deed of trust, Holder agrees to
recognize Tenant's rights under this Lease as long as Tenant is not then in
default and continues to pay Base Monthly Rent and additional rent and
observes and performs all required provisions of this Lease. Within ten
(10) days after Landlord's written request, Tenant shall execute any
documents reasonably required by Landlord or the Holder to make this Lease
subordinate to any lien of the Encumbrance. If Tenant fails to do so, then
it shall be deemed that this Lease is so subordinated to such Encumbrance.
Notwithstanding anything to the contrary in this Section, Tenant hereby
attorns and agrees to attorn to any entity purchasing or otherwise
acquiring the Premises at any sale or other proceeding or pursuant to the
exercise of any other rights, powers or remedies under such encumbrance.
Landlord shall cause the existing lender for the Building to furnish to
Tenant, within thirty (30) days of the date of both parties' execution of
this Lease, with a written agreement, in form and substance reasonably
acceptable to Tenant, providing for (i) recognition by the lender of all of
the terms and conditions of this Lease; and (ii) continuation of this Lease
upon foreclosure of existing lender's security interest in the Premises. In
the event that Landlord is unable to provide such agreement, Tenant's sole
remedy shall be termination of the Lease, which election shall be made
within thirty (30) days following the expiration of such 30-day period.
U. Survival of Indemnities: All indemnification, defense, and hold
harmless obligations of Landlord and Tenant under this Lease shall survive
the expiration or sooner termination of the Lease.
V. Time: Time is of the essence hereunder.
W. Transportation Demand Management Programs: Should a government
agency or municipality require Landlord to institute TDM (Transportation
Demand Management) facilities and/or programs, Tenant agrees that the cost
of TDM imposed facilities and programs required on the Premises, including
but not limited to employee showers, lockers, cafeteria, or lunchroom
facilities, shall be paid by Tenant. Further, any ongoing costs or expenses
associated with a TDM program which are required for the Premises and not
provided by Tenant, such as an on-site TDM coordinator, shall be provided
by Landlord with such costs being included as additional rent and
reimbursed to Landlord by Tenant within thirty (30) days after demand. If
TDM facilities and programs are instituted on a Project wide basis, Tenant
shall pay its proportionate share of such costs in accordance with Section
8 above.
X. Waiver of Right to Jury Trial: Landlord and Tenant waive their
respective rights to trial by jury of any contract or tort claim,
counterclaim, cross-complaint, or cause of action in any action,
proceeding, or hearing brought by either party against the other on any
matter arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, or Tenant's use or occupancy of the
Premises, including any claim of injury or damage or the enforcement of any
remedy under any current or future law, statute, regulation, code, or
ordinance.
Y. Consents: Except as expressly stated to the contrary in this Lease,
wherever in this Lease the consent of either Party is required, such
consent shall not be unreasonably withheld, conditioned or delayed.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease on the day
and year first above written.
Landlord: The Sobrato Group, Tenant: ZiLOG, Inc.,
a California Limited Partnership a Delaware Corporation
By: _____________________________ By: ______________________________
Its: _____________________________ Its: ______________________________
Exhibit "A" - Premises & Building
[Photograph]
EXHIBIT "B" - Tenant's Signage
[Photograph]
EXHIBIT "C" - Draft Letter of Credit
IRREVOCABLE STANDBY LETTER OF CREDIT NO.SVB98IS1049
DATE:
BENEFICIARY: SOBRATO -
SOBRATO INVESTMENTS
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
APPLICANT:
AMOUNT:
EXPIRY DATE:
LOCATION: AT OUR COUNTER IN SANTA ▇▇▇▇▇
DEAR SIR/MAM:
WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO.SVB98IS1049 IN
YOUR FAVOR. AVAILABLE FOR PAYMENT BY SILICON VALLEY BANK, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ATTN:INT'L DEPT. OF BENEFICIARY'S DRAFT AT SIGHT DRAWN
ON US, AND ACCOMPANIED BY THE FOLLOWING DOCUMENTS:
1. THE ORIGINAL OF THIS LETTER OF CREDIT AND AMENDMENT IF ANY.
2. A SIGNED AND DATED CERTIFICATION FROM THE BENEFICIARY STATING THE
FOLLOWING:
"AN EVENT OF DEFAULT (AS DEFINED IN THE LEASE DATED JULY 24, 1998)
HAS OCCURRED BY KANISA, INC. AS TENANT UNDER THAT CERTAIN LEASE
AGREEMENT BETWEEN TENANT, AND SOBRATO - SOBRATO INVESTMENTS, AS
LANDLORD".
SPECIAL CONDITION:
IT IS A CONDITION OF THIS LETTER OF CREDIT THAT IT WILL BE DEEMED
AUTOMATICALLY RENEWED WITHOUT AN AMENDMENT FOR A PERIOD OF ONE YEAR FROM THE
PRESENT OR EACH FUTURE EXPIRATION DATE UNLESS AT LEAST THIRTY (30) DAYS PRIOR
TO SUCH EXPIRY DATE WE NOTIFY YOU IN WRITING SENT BY OVERNIGHT MAIL THAT WE
ELECT NOT TO RENEW THIS LETTER OF CREDIT FOR SUCH ADDITIONAL PERIOD.
IRREVOCABLE STANDBY LETTER OP CREDIT NO. SVB98IS1049
DATED AUGUST 18, 1998
ALL DOCUMENTS INCLUDING DRAFT{S) MUST INDICATE THE NUMBER AND DATE OF THIS
CREDIT.
EACH DRAFT PRESENTED HEREUNDER MUST BE ACCOMPANIED BY THIS ORIGINAL LETTER OF
CREDIT FOR OUR ENDORSEMENT THEREON OF THE AMOUNT OF SUCH DRAFT(S).
DOCUMENTS MUST BE SENT TO US VIA OVERNIGHT COURIER (I.E. FEDERAL EXPRESS, UPS,
DHL OR ANY OTHER EXPRESS COURIER) AT OUR ADDRESS: SILICON VALLEY BANK, ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ATTN: INTERNATIONAL DIVISION.
WE HEREBY ENGAGE WITH DRAWERS AND /OR BONAFIDE HOLDERS THAT DRAFT(S) DRAWN
UNDER AND NEGOTIATED IN CONFORMANCE WITH THE TERMS AND CONDITIONS OF THE
SUBJECT CREDIT WILL BE DULY HONORED ON PRESENTATION.
THIS CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY
CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION 500.
______________________
AUTHORIZED SIGNATURE
EXHIBIT "D" - Initial Alterations
December 21, 2001
The following represents the scope of work required by ZiLOG going into the
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ property. Each item number refers to a location on the
attached map. ZiLOG's understanding is that Sobrato has agreed to cover items
3, 16, 17, and 18 at their expense and using their own work crew. Sobrato has
also agreed to provide an allowance of $67,500 toward item number four.
1. Create a demo room off the main lobby by removing a wall between two
existing offices, removing and scaling off the two existing doors adjacent to
the general office area, A new door will be installed adjacent to the main
lobby. A glass wall will be designed in the demo area to have visual access
into the lobby. Fire rating issues need to be addressed by either providing a
deluge sprinkler system on each side of the glass or by extending the wail
adjacent to the general office up to the roof deck. ZiLOG has not yet decided
whether or not to pursue this item.
2. Remove two walls in three offices at Northwest corner of building to and
install one wall resulting in two offices. Remove one door and relocate two
doors and glass sidelights. Replace carpeting.
3. Repair two existing noisy transformers in the electrical/alarm room.
4. Design and construct two new restrooms with two toilets and two sinks per
restroom in order to meet code capacity for the building.
5. Add projection screen into Town Hall (former tenant's NOC Room). Remove the
first three rows of computer consoles. Perform carpet patching or replace
carpel if required.
6. Install chain link fencing directly on lop of the 6" raised floor in the
computer lab area.
7. Utilize the existing depressed truck door for exterior storage. No
modifications required.
8. install compressor and vacuum equipment in either the dock area enclosure
or on top of room - location to be determined.
9. Add a wall to create two separate storage rooms located behind the existing
dock area.
10. Remove existing wall between two offices to create one large executive
office. Remove one door and relocate the other door. Carpet patching or
replacement as needed.
11. Remove existing wall between two offices to create one large conference
room. Remove one door and relocate the other door. Carpet patching or
replacement as needed.
12. Remove wall between two offices to make one large conference room. Remove
one door and replace carpeting. Install projection screen.
13. Add larger projection screen in board room. Possibly add additional track
lighting. Close off existing wall niche.
15. Install smoking canopy in patio area outside of cafeteria.
16. Replace damaged tiles in computer lab area.
17. Ensure that all HVAC, electrical, interior and exterior lighting, plumbing
and fire suppression/pre-action equipment are in good operating order,
including lobby cam lighting.
18. Repair leaks in roof.
EXHIBIT "E" - Hypothecation Form
LANDLORD'S CONSENT TO MORTGAGE
To: [tenant name and address]
____________________________________
________, CA 9____
Attention: _________________
Re: Lease by and between ________________, a California ___________________,
and _____________________________, a ____________________, dated
________ __, ____, for the Premises located at _________________,
________, California (the "Lease")
Landlord's Consent to Leasehold Mortgage ("Landlord's Consent")
Ladies and Gentlemen:
________________, a California ___________________ ("Landlord"),
is in receipt of the request by _____________________________, a
____________________ ("Tenant"), for Landlord's consent to the creation of
a leasehold mortgage ("Mortgage") in favor of ___________________, a
_____________________ ("Mortgagee"), on Tenant's interest under the
above-referenced Lease.
Landlord hereby consents to the granting by Tenant of a Mortgage
on Tenant's interest in the Lease and the leasehold estate created by the
Lease to Mortgagee.
This Landlord's Consent is not, and should not be deemed or
construed as, a consent to any other or further mortgaging, assignment or
subletting. This Landlord's Consent shall not, and shall not be deemed or
construed to, modify, waive, or alter any of the terms, provisions,
covenants, or conditions of the Lease, waive any breach thereof or any of
the rights of Landlord thereunder, or enlarge or increase Landlord's
obligations under the Lease.
In granting this Landlord's Consent, Landlord does not consent to
or approve any term, provision, covenant or condition contained in the
Mortgage and Landlord shall not be bound thereby.
[signature block for landlord]
Letter re: Additional Lease Security During Bankruptcy
Friday, December 21, 2001
ZiLOG, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen,
Reference is made to that certain Lease, dated on even date herewith (the
"Lease"), by and between The Sobrato Group, a California limited partnership
("Landlord"), and ZiLOG Inc., a Delaware corporation ("Tenant"). All
capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to them in the Lease.
The purpose of this letter agreement ("Letter Agreement"), is to reflect an
agreement between Landlord and Tenant with respect to Tenant's deposit of an
additional letter of credit to secure its obligations under the Lease, as well
as to provide for the ultimate extinguishment of said letter of credit.
In consideration of the mutual covenants contained in this Letter Agreement
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. On or before January 4, 2002, Tenant shall deposit with Landlord a letter
of credit substantially in the form attached to the Lease as Exhibit "C" in
the amount of $376, 000.000 (the "Additional Letter of Credit"). The purpose
of the Additional Letter of Credit is to provide Landlord additional Lease
security related to a Chapter 11 bankruptcy filing (the "Bankruptcy) which
Tenant intends to file on or about the Lease Commencement Date as part of a
recapitalization plan.
2. Tenant shall keep the Additional Letter of Credit in effect during the
Lease Term so long as required herein. At least thirty (30) days prior to the
expiration of the Additional Letter of Credit, the term thereof shall be
renewed or extended for a period of at least one (1) year in the amount
required by this Letter Agreement. Tenant's failure to so renew or extend the
Additional Letter of Credit shall entitle Landlord to immediately convert the
Additional Letter of Credit to cash.
3. If the Lease is rejected in Bankruptcy, then in addition to all of
Landlord's other rights under the Lease, Landlord shall be entitled to
immediately cash and retain all of the Additional Letter of Credit as damages.
Landlord shall be entitled to immediately draw against the Additional Letter
of Credit by certifying to the issuer of the Additional Letter of Credit that
either: (i) Tenant has failed to renew or extend the Additional Letter of
Credit within the requisite time period; or (ii) the Lease has been rejected
in Bankruptcy.
4. Notwithstanding the provisions of Section 13 of the Lease setting forth
default scenarios. Landlord shall not be permitted to cash the Letter of
Credit or the Additional Letter of Credit for a default due to Tenant's
Bankruptcy filing provided Tenant does not default in any monetary or other
material aspect of the Lease during such Bankruptcy. In no way does the
foregoing prevent Landlord from drawing against the Letter of Credit if such
is necessary under the Lease to cure a monetary or other material default.
5. Upon the entry of an order (the "Order") by the Bankruptcy Court in which
Tenant's case is pending (i) authorizing Tenant, under Bankruptcy Code ss. 365,
to assume the Lease, or (ii) confirming, under Bankruptcy Code ss. 1129, a
reorganization plan under which ZiLOG will assume the Lease, the Additional
Letter of Credit shall terminate and be of no further force and effect, which
termination shall be duly acknowledged and evidenced by the bank issuing the
Additional Letter of Credit upon said bank's receipt of a copy of the Order,
which copy may be delivered by either Landlord or Tenant.
6. This Letter Agreement, together with the Lease, contains all of the
agreements and conditions made between the parties hereto and may not be
modified orally or in any other manner other than by written agreement signed
by all parties hereto or their respective successors in interest. The Letter
Agreement and the Lease supersede and revoke all previous negotiations,
letters of intent, lease proposals, brochures, agreements, representations,
promises, warranties, and understandings, whether oral or in writing, between
the parties or their respective representatives or any other person purporting
to represent Landlord or Tenant.
7. In the event of any inconsistency between this Letter Agreement and the
Lease, the terms of this Letter Agreement shall control. This Letter Agreement
may be executed in as many counterparts as may be deemed necessary and
convenient, and by the different parties hereto on separate counterparts, each
of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute one and the same instrument
Upon mutual execution of this Letter Agreement, it shall constitute a binding
agreement between Landlord and Tenant. This Letter Agreement shall be governed
by and construed in accordance with California law, with venue in Santa ▇▇▇▇▇
County.
Sincerely,
THE SOBRATO GROUP,
a California limited partnership
By:
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: General Partner
ACCEPTED AND AGREED TO
AS OF THE DATE FIRST WRITTEN ABOVE:
ZILOG, Inc.,
a Delaware corporation
By:
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
ACKNOWLEDGMENT
Received this day, December 21, 2001: signed original of the Lease between The
Sobrato Group and ZiLOG, Inc. for the property at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, signed copy
of a letter entitled Additional Lease Security During Bankruptcy, and ZiLOG
Check #353241, dated December 20, 2001, in the amount of $84,500.00.
Name:
Date:
