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STANDARD FORM LEASE
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PARTIES: This Lease, executed in duplicate at Cupertino, California, on July 25,
1998, by and between Mission West Properties, L.P., a Delaware Limited
Partnership, and Microsoft Corporation, a Washington Corporation, hereinafter
called respectively Lessor and Lessee, without regard to number or gender.
USE:
That Lessor hereby leases to Lessee, and Lessee leases from Lessor, for the
purpose of conducting therein office, research and development, light
manufacturing, and warehouse activities, and any other legal activity; and for
no other purpose without obtaining the prior written consent of Lessor, the
Premises described below.
PREMISES:
The subject premises are located on certain real property consisting of
approximately 32 acres as shown on Exhibit A.1 situated in the City of Mountain
View, County of Santa Xxxxx, State of California ("Property"). Such Property as
improved with five buildings, parking lots with parking for 1,748 cars,
landscaped areas, common areas, and other related improvements, shall be
collectively referred to herein as the "Premises." The five buildings comprising
a portion of the Premises will consist of approximately 515,700 square feet of
space, defined by the City of Mt. View as the maximum allowable development on
the subject real property and are commonly referred to as buildings 1,2, 3, 4,
and 5 (such five buildings shall be defined as the "Buildings"), as shown on
Exhibit A.2. The address for the Premises will be between 1065 and 0000
X'Xxxxxxx, Xxxxxxxx Xxxx, Xxxxxxxxxx. Lessee's pro-rata share of the Premises is
100%.
The actual rentable square feet of the Premises shall be verified by Lessor and
Lessee and shall consist of all space on each floor plane of each Building
measured from the vertical plane of the outside edge of all xxxxx. This means
that the floor area of each floor that is used for elevator shafts, stairwells,
fire corridors, columns, ducts, and the like shall be included in the rentable
square feet of the Premises. Subject to Section 2, Lessee agrees to deliver
Buildings that total at least 515,700 square feet, as measured by Lessor. Lessee
shall pay rent based upon 515,700 square feet, even in the event Lessor's
measurement method results in more square feet than the City of Mt. View's
measurement method.
TERM:
The term for buildings numbered 2, 3, 4, and 5 shall be for eighty-four (84)
months and sixteen (16) days unless extended pursuant to Section 34 of this
Lease (the "Lease Term"), commencing on the 15th day of March, 1999 and ending
on the 31st day of March, 2006 as adjusted per Section 1.1 below. The term for
building number 1 shall be for eighty-two (82) months and sixteen (16) days
unless extended pursuant to Section 34 of this Lease (the "Lease Term"),
commencing on the 15th day of May, 1999 and ending on the 31st day of March,
2006 as adjusted per Section 1 below.
RENT:
Subject to the determination of the final square footage of building number 1,
base rent shall be payable in monthly installments as follows:
Base Estimated
Rent CAC* Total
---------- ----------- ----------
March 15, 1999 to March 31, 1999 $ 672,495 $ 78,526 $ 751,021
April 1, 1999 to April 30, 1999 $1,226,315 $143,195 $1,369,510
May 1, 1999 to May 14, 1999 $ 553,820 $ 64,669 $ 618,489
May 15, 1999 to May 31, 1999 $ 834,270 $ 96,321 $ 930,591
June 1, 1999 to March 31, 2000 $1,521,315 $175,645 $1,696,960
Monthly base rent shall increase by 4% on April 1st of each year, commencing on
April 1, 2000, during the Lease Term over the prior year's base rent.
* CAC CHARGES TO BE ADJUSTED PER COMMON AREA CHARGES SECTION BELOW.
Base rent and CAC as scheduled above shall be payable in advance on or before
the first day of each calendar month during the Lease Term. The term "Rent," as
used herein, shall be deemed to be and to mean the base monthly rent and all
other sums required to be paid by Lessee pursuant to the terms of this Lease.
Rent shall be paid in lawful money of the United States of America, without
offset or deduction, except as provided in Sections 19 and 21, and shall be paid
to Lessor at such place or places as may be designated from time to time by
Lessor. Rent for any period less than a calendar month shall be a pro rata
portion of the monthly installment. Upon execution of this Lease, Lessee shall
deposit with Lessor the first month's rent.
SECURITY DEPOSIT:
Lessee shall deposit with Lessor the sum of One Million Dollars ($1,000,000)
(the "Security Deposit"). The Security Deposit shall be held by Lessor as
security for the faithful performance by Lessee of all of the terms, covenants,
and conditions of this Lease applicable to Lessee. If Lessee commits a default
as provided for herein, including but not limited to a default with respect to
the provisions contained herein relating to the condition of the Premises,
Lessor may (but shall not be required to) use, apply or retain all or any part
of the Security Deposit for the payment of any amount which Lessor may spend by
reason of default by Lessee. If any portion of the Security Deposit is so used
or applied, Lessee shall, within ten days after written demand therefor, deposit
cash with Lessor in an amount sufficient to restore the Security Deposit to its
original amount. Lessee's failure to do so shall be a default by Lessee. Any
attempt by Lessee to transfer or encumber its interest in the Security Deposit
shall be null and void. Upon execution of this Lease, Lessee shall deposit with
Lessor the Security Deposit. Notwithstanding the above, Lessor agrees to waive
the requirement for Lessee to make a Security Deposit provided Lessee's
shareholder's equity exceeds $100 million. If at any time during this Lease,
Lessee's shareholder's equity is less than $100 million, Lessee shall deposit
with Lessor the Security Deposit referenced above within ten days after receipt
of written demand by Lessor based on the issuance of Lessee's annual financial
statements indicating the reduction in shareholder's equity below $100 million.
If Lessee fails to make the Security Deposit as required, Lessee shall be deemed
to be in default per Section 14.1 (a) of this Lease.
COMMON AREA CHARGES:
Lessee shall pay to Lessor, as additional Rent, an amount equal to Lessee's
pro-rata share of the total common area charges of the Premises ("CAC"). Lessee
shall pay to Lessor as Rent, on or before the first day of each calendar month
during the Lease Term, subject to adjustment and reconciliation as provided
hereinbelow, the sum of One Hundred Seventy-Five Thousand Six Hundred Forty-Five
Dollars ($175,645), said sum representing Lessee's estimated monthly payment of
Lessee's pro rata share of CAC. It is understood and agreed that Lessee's
obligation under this paragraph shall be prorated to reflect the Commencement
Date and the end of the Lease Term. Lessee's estimated monthly payment of CAC
payable by Lessee during the calendar year in which the Lease commences is set
forth above. At or prior to the commencement of each succeeding calendar year
term (or as soon as practical thereafter), Lessor shall provide Lessee with
Lessee's estimated monthly payment for CAC which Lessee shall pay to Lessor as
Rent. Within 120 days of the end of the calendar year and the end of the Lease
Term, Lessor shall provide Lessee a statement of actual CAC incurred including
capital reserves for the preceding year or other applicable period in the case
of a termination year. If such statement shows that Lessee has paid less than
its pro rata share of actual CAC, then Lessee shall on demand pay to Lessor the
amount of such deficiency. If such statement shows that Lessee has paid more
than its pro rata share of CAC, then Lessor shall, at its option, promptly
refund such excess to Lessee or credit the amount thereof to the Rent next
becoming due from Lessee. Lessor reserves the right to revise any estimate of
CAC if the actual or projected CAC show an increase or decrease in excess of 10%
from an earlier estimate for the same period. In such event, Lessor shall
provide a revised estimate to Lessee, together with an explanation of the
reasons therefor, and Lessee shall revise its monthly payments accordingly.
Lessor's and Lessee's obligation with respect to adjustments at the end of the
Lease Term or earlier expiration of this Lease shall survive the Lease Term or
earlier expiration. All capital repair and improvement costs incurred by Lessor
shall be funded first from applicable capital reserves, if any, that are derived
from CAC payments made by Lessee to Lessor or other tenants of the Property. To
the extent such reserves are insufficient and the cost is not addressed by
Section 9, then such cost initially shall be paid by Lessor and then amortized
over the estimated useful life of the work, not to exceed 15 years, at Xxxxx
Fargo prime rate plus one percent (1%). Lessee's pro-rata share of the amortized
costs of such improvement shall be added to CAC on a monthly basis over the
Lease Term.
As used in this Lease, CAC shall include but is not limited to: (i) items as
specified in Sections 5(b) and 16; (ii) all costs and expenses including but not
limited to supplies, materials, equipment and tools used or required in
connection with the operation and maintenance of the Premises; (iii) licenses,
permits and inspection fees; (iv) all other costs incurred by Lessor in
maintaining and operating the Premises; (v) all reasonable reserves for capital
replacements and government regulations imposed on the Premises not related to
Lessee's use and occupancy of the Premises; and (vi) a professional management
fee equal to one percent (1%) of the annual base rent, as compensation for
Lessor's accounting, management and processing services. Notwithstanding the
foregoing, the following specific items (and only such specific items) shall be
excluded from CAC:
(1) leasing commissions, fees and costs, advertising and promotional
expenses and other costs incurred in procuring tenants, or in the
negotiations, disputes or claims of other tenants or third parties
except as otherwise stated in this Lease;
(2) tenant improvement work for any tenant, including Lessee;
(3) rental on ground leases or other underlying leases;
(4) wages, bonuses, and fringe benefits and other compensation of
employees above the grade of Building Manager;
(5) costs of any items to the extent which Lessor actually is reimbursed
by insurance;
(6) increased insurance or real estate taxes assessed specifically to any
tenant of the Buildings (other than Lessee) to the extent which
Lessor is entitled to reimbursement by any other tenant;
(7) charges for electricity, water, or other utilities and applicable
taxes (not applicable to Lessee) to the extent which Lessor is
entitled to reimbursement by any other tenant;
(8) cost of any HVAC, janitorial or other services provided to tenants
(other than Lessee) on an extra cost basis after regular business
hours to the extent Lessor is entitled to reimbursement by such other
tenant;
(9) cost of installing, operating and maintaining any specialty service,
such as an observatory, broadcasting facilities, child or daycare,
luncheon club or athletic or recreation club unless required by any
governmental authority;
(10) cost of any work or services performed for any facility other than
the Premises, unless required by any governmental authority;
(11) any cost representing an amount paid to a person, firm, corporation
or other entity related to Lessor that is not commercially
reasonable;
(12) any cost of painting or decorating any interior parts of the
Buildings other than common areas or areas within the Premises;
(13) costs of relamping all light fixtures in non-public areas of the
buildings (other than the Premises) including, without limitation,
labor and materials for light tubes, bulbs, starters, ballasts and
their equivalents;
(14) any cost associated with operating an on or off-site management
office for the Premises(it is understood by Lessee and Lessor that
the 1% management fee paid by Lessee to Lessor covers the cost of
such offices);
(15) Lessor's general overhead not directly attributable to operation and
management of the Premises(e.g., the activities of Lessor's officers
and executives or professional development expenditures) (it is
understood by Lessee and Lessor that the 1% management fee paid by
Lessee to Lessor covers such cost);
(16) costs of any mitigation or impact fees or subsidies (however
characterized), imposed or incurred in connection with the initial
construction of the Buildings;
(17) cost of the initial stock of tools and equipment for operation,
repair and maintenance of the Premises;
(18) late fees or charges incurred by Lessor due to late payment of
expenses;
(19) cost of acquiring sculptures, paintings and other art objects;
provided that the maintenance, repair, and replacement of such items
shall be a CAC expense;
(20) charitable or political contributions;
(21) Lessor shall not recover any item of cost more than once.
Lessor shall at all times use its reasonable efforts to operate the Premises in
a commercially reasonable manner at costs not disproportionately higher than
those experienced by other comparable buildings in the Mountain View/Palo Alto,
California area. It is expressly understood by Lessee and Lessor that this Lease
is intended to be triple net and that the above-listed exceptions to CAC shall
in no manner alter, modify, or diminish the responsibility of Lessee to pay all
sums due pursuant to this Lease.
Lessee shall have the right to review the basis and computation analysis used to
derive the CAC applicable to this Lease annually. Lessee or its audit
representatives shall have the right to inspect and audit Lessor's books and
records with respect to this Lease once each lease year to verify actual CAC.
The Lessor's books and records shall be kept in accordance with generally
accepted accounting principles. If Lessee's audit of the CAC reveals an
overcharge of more than five percent (5%), Lessor promptly shall reimburse
Lessee for the actual out-of-pocket cost of the audit. Any overcharge or
underpayment of CAC shall be due from one party to the other within thirty (30)
days after the amount of the overcharge or underpayment has been fixed. The
foregoing rights also shall apply with respect to verification of any amounts
charged by Lessor to Lessee for utility costs. It is expressly agreed by Lessee
and Lessor that the 1% management fee to be paid by Lessee to Lessor is a "fixed
fee" and that Lessee shall have no right to audit or contest such fee.
LATE CHARGES:
Lessee hereby acknowledges that a late payment made by Lessee to Lessor of Rent
and other sums due hereunder will cause Lessor to incur costs not contemplated
by this Lease, the exact amount of which will be extremely difficult to
ascertain. Such costs include, but are not limited to, processing and accounting
charges, and late charges, which may be imposed on Lessor according to the terms
of any mortgage or trust deed covering the Premises. Accordingly, if any
installment of Rent or any other sum due from Lessee is not received by Lessor
or Lessor's designee within ten (10) days after such amount is due, Lessee shall
pay to Lessor a late charge equal to five (5%) percent of such overdue amount.
The parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Lessor will incur by reason of late payments made by
Lessee. Acceptance of such late charges by Lessor shall in no event constitute a
waiver of Lessee's default with respect to such overdue amount, nor shall it
prevent Lessor from exercising any of the other rights and remedies granted
hereunder. Notwithstanding the above, Lessor agrees to waive one late charge per
any twenty-four month period if it is the result of a non-recurring unusual
event such as an accounting error.
QUIET ENJOYMENT:
Lessor covenants and agrees with Lessee that upon Lessee paying Rent and
performing its covenants and conditions under this Lease, Lessee shall and may
peaceably and quietly have, hold and enjoy the Premises for the Lease Term,
subject, however, to the rights reserved by Lessor hereunder. Lessor shall
provide Lessee with Non-Disturbance Agreements from any existing and future
lienholders of Lessor in a commercially reasonable form. Lessee shall have
access twenty four (24) hours per day and seven (7) days per week to Premises
and parking facilities.
IT IS FURTHER MUTUALLY AGREED BETWEEN THE PARTIES AS FOLLOWS:
1. POSSESSION:
Once this Lease is signed by both Lessee and Lessor, Lessee shall have the right
to come onto the Premises and commence the development of the Premises and the
construction of the Buildings. All of the terms and conditions of this Lease
shall become effective once this Lease is signed by both Lessee and Lessor,
except that Lessee's obligation to pay base rent and CAC shall not start until
the Commencement Dates. Lessee, by signing this Lease, is accepting the Premises
in an "as is" condition, subject to Lessor's on-going remediation of Hazardous
Materials as described in Section 32.3, and agrees to meet all City of Mountain
View conditions and requirements applicable to the construction and occupancy of
the Lessee Improvements, including, but not limited to the Findings Report and
Zoning Permit dated April 3, 1998, and is agreeing to be responsible for all
governmental permits and fees, design, engineering, testing, inspection,
construction, and completion of all Lessee Improvements (as defined in Section
2)., except for the Off-Site Work as specifically listed in Exhibit A.3 and any
pre-existing Hazardous Materials as described in Section 2.5 n.
1.1 COMMENCEMENT DATES:
The initial term of this Lease for Buildings 2, 3, 4, and 5 shall commence on
March 15, 1999, and the initial term of this Lease for Building 1 shall commence
on May 15, 1999, subject to any Uncontrollable Delays as defined in Section
2.5(a) (the "Commencement Date"). The Commencement Date shall be delayed one day
for each day of an Uncontrollable Delay.
2. DEVELOPMENT OF THE PREMISES:
2.1 LESSEE IMPROVEMENTS:
Lessee shall have the sole responsibility for constructing the Building Shells
and the Lessee Interior Improvements (as those terms are defined in this Section
2) and shall pay all costs related thereto, less the Lessor Allowance (as
defined below). The Building Shells and the Lessee Interior Improvements shall
be collectively defined as the "Lessee Improvements."
2.2 BUILDING SHELLS:
"Building Shells" shall be defined as all work shown on Exhibit B, including all
of the on-site improvements for the five buildings to be built on the Premises.
2.3 LESSEE INTERIOR IMPROVEMENTS:
The "Lessee Interior Improvements" shall be defined as all items required for
occupancy that are not part of the Building Shell or the Off-Site Work
2.4 OFF-SITE WORK:
"Off-Site Work" shall be defined as only the work specifically shown on Exhibit
A.3 attached hereto. The Off-Site Work shall be the responsibility of and shall
be completed at the sole cost of Lessor.
2.5 LESSEE IMPROVEMENT REQUIREMENTS:
Lessee represents that the Lessee Improvements will be in good order and repair,
and comply with applicable law and all requirements for occupancy as of the date
Lessee takes occupancy and opens for business. Lessee and Lessor agree to the
following with respect to the Lessee Improvements:
a. Subject to Section 2.5(n) below, Lessee shall be responsible at its sole
cost and expense for all work necessary to complete the Lessee
Improvements, including but not limited to governmental and city fees,
permits and approvals, engineering, design, construction, testing, and
inspections. Lessor shall have no responsibility or liability for: (i) the
Lessee Improvements except for payment of the Lessor Allowance as specified
below, (ii) any delay of the Commencement Date or the date Lessee can take
occupancy and open for business regardless of the reason, including without
limitation delays caused by the City of Mountain View, delays in the design
of the Lessee Improvements, construction delays, work stoppages and
strikes, or delays caused by the shortage of materials, except
Uncontrollable Delays (defined below) (iii) Lessee's obligation to commence
paying Rent on the Commencement Date, subject to Uncontrollable Delays,
(iv) claims asserted by Lessee or Lessee's Agents based on the construction
of the Lessee Improvements, and (v) any claims, responsibility, or
liability Lessor may assume by signing for building permits for the Lessee
Improvements. "Uncontrollable Delay(s)" shall mean any delay caused by
events described in Section 2.5 (n).
b. The Building Shells shall be constructed at Lessee's sole cost by an
independent contractor to be employed by and under the supervision of
Lessee. The Building Shells shall be constructed in accordance with the
site plan, civil engineering drawings, utility plans, landscape plans,
elevations, plans and specifications, and working drawings for the five
buildings and the on-site work (the "Shell Plans"). The Shell Plans are to
be prepared at Lessee's sole cost and approved by Lessor, which approval
shall not be unreasonably withheld, conditioned or delayed, and thereafter
attached hereto as Exhibit X. Xxxxxx shall review and approve all of
Lessee's plans and specifications for the Lessee Interior Improvements to
be made to the Premises after completion of all working drawing (the
"Lessee Interior Plans") and thereafter shall be attached hereto as Exhibit
D. In connection with Lessor's approval, Lessor shall designate any special
tenant improvements that Lessor may require be removed upon expiration or
earlier termination of this Lease. All plans shall be reviewed and approved
or disapproved by Lessor within 5 business days of delivery to Lessor.
c. Lessee shall be responsible for ensuring the Lessee Improvements conform
to the approved plans and all applicable statutes, rules, regulations,
ordinances, and the City of Mountain View Building Department
interpretations necessary for occupancy.
d. The Lessee Improvements shall be completed in a good and workmanlike
manner, in compliance with all government codes, laws, requirements and
regulations, and with all necessary permits.
x. Xxxxxx and its designated representatives, shall at all times during the
construction of the Lessee Improvements have access to the Premises to
monitor the progress of construction, but Lessor shall have no obligation
to verify Lessee's work or compliance with Lessee's obligations herein;
provided however, that such access shall not unreasonably interfere with
the activities of Lessee or its contractors.
f. All of Lessor's reimbursements to Lessee for Lessee Improvements shall
be paid by Lessor within ten (10) days after receipt of the following from
Lessee and subject to the limitations set forth in Section 2.5 (h) below:
(a) Lessee providing Lessor with evidence of the costs paid by Lessee for
the Lessee Improvements, (b) Lessee providing Lessor with copies of
conditional lien releases for sums paid or final and unconditional lien
releases upon completion, as applicable, from all suppliers,
subcontractors, and the general contractor applicable to the Lessee
Improvements, and (c) Lessee, on completion, providing Lessor with a copy
of all approved final inspections and evidence of unconditional occupancy
approval from the City of Mountain View applicable to the Lessee
Improvements at the Premises. Lessee may elect to be reimbursed as work
progresses, or choose to postpone reimbursement until occupancy and receive
said reimbursements plus 0.583% per month simple interest (7% per annum)
calculated from the point the progress payment could have been requested
and ending upon the Commencement Date.
x. Xxxxxx shall reimburse Lessee for the cost of the Lessee Improvements to
be constructed by Lessee in an amount not to exceed the sum of (i) Twenty
Five Dollars ($25.00) per square foot for the Lessee Interior Improvements,
plus (ii) Thirty Six Dollars ($36.00) per square foot for the Building
Shells, plus an additional Six Dollars ($6.00) per square foot for the
Building Shell of Building Number 1 (collectively, the "Lessor Allowance").
For purposes of these calculations, the maximum square footage of the
Premises shall not exceed 515,700 square feet. In the event the cost of the
Lessee Improvements is more than the Lessor Allowance for whatever reason
other than as described in Section 2.5(n), such costs for the Lessee
Improvements shall be paid in cash by Lessee. Lessee shall, at its sole
cost and expense, pay any and all costs necessary to complete the Lessee
Improvements per the approved plans and specifications less the Lessor
Allowance.
h. Lessee acknowledges that Lessor shall cause a notice of
non-responsibility to be posted at the Premises and Lessor shall cause a
notice of non-responsibility to be recorded in the Santa Xxxxx County
public records related to Lessee's Improvements.
i. Once the plans and specifications are approved by Lessor, Lessee and
Lessee's Agents shall not materially change or modify the Lessee
Improvements without signed engineering and architectural drawings and
specific written approval of Lessor which shall not be unreasonably
withheld, conditioned or delayed. Any requests for modifications shall be
reviewed and approved or disapproved by Lessor within five (5) business
days of delivery to Lessor.
j. The Lessee Improvements shall at a minimum consist of the following:
The Building Shells shall at a minimum include the following:
1. Five separate buildings with a total rentable square footage of
not less than 515,700 square feet.
2. No building shall be larger than 125,000 square feet or smaller
than 60,000 square feet.
3. Clearance for ten feet high ceilings on the first and second
floor of each building.
4. A design that will allow for three tenant entrances and three
lobbies per building.
5. Buildings shall be no less than one hundred and twenty feet wide.
6. No material loss of the lineal footage of glass within the office
areas as designed by Xxxxx and Associates and approved by the
City of Mountain View.
7. At least 1 loading area per building, to include raised dock area
and loading space for 2 trucks.
8. Steel second decks and roof systems equal or better than Conglass
ND-24A.
9. At least 1,748 full-size parking spaces.
10. An allocation of parking that is generally proportional and
relates equally to each of the buildings.
11. Access to parking and loading at each building shall be
convenient.
12. All docks and loading areas shall be designed to minimize the
visual and functional impact to the project.
13. Comparable landscaping to that approved by the City.
The Lessee Interior Improvements shall at a minimum per building,
include the following:
1. HVAC system with VAV units that services 95% of the building.
2. Minimum electric requirements of 3,000 amps, 480 volt, 3-phase
service with open office distribution.
3. Open office lighting and drop ceiling in 95% of the building.
4. Ceramic tile in restrooms and carpet flooring in approximately
90% of the building.
k. Lessee and its general contractor shall provide Lessor with evidence of
general liability insurance in the amount of not less than Five Million
Dollars ($5,000,000) naming Lessor as an additional insured by endorsement
prior to Lessee starting any work at the Premises and prior to taking
possession of the Premises.
l. Lessee shall, within 60 (sixty) days after final inspection of the
Building Shells and the other Lessee Improvements, respectively, provide
Lessor with one complete set of all "as-built" drawings from the architect,
civil engineer, plumber, mechanical and electrical contractors as blue line
drawings and one set of "as-built" Auto-Cad diskettes from each trade, if
available.
m. In addition to Lessee's indemnity obligations set forth in Section 37 of
the Lease, Lessee shall defend, indemnify and hold Lessor harmless from and
against any and all obligations, losses, costs, expenses, claims, demands,
reasonable attorneys' fees, investigation costs or liabilities to the
extent arising out of Lessee or Lessee's Agent's design, contracting,
construction, and completion of the Lessee Improvements at the Premises and
any act or omission to act of Lessee or Lessee's Agents with respect to the
design, contracting, construction, and completion of the Lessee
Improvements at the Premises. It is understood that Lessee is and shall be
in control and possession of the Premises effective on the date this Lease
is signed by Lessee and Lessor and that Lessor shall in no event be
responsible or liable for any injury or damage or injury to any person
whatsoever, happening on, in, about, or in connection with the Premises, or
for any injury or damage to the Premises or any part thereof except as
caused by the sole negligence or willful misconduct by Lessor or Lessor's
Agents. The provisions of this Lease permitting Lessor to enter and inspect
the Premises are for the purpose of enabling Lessor to become informed as
to whether Lessee is complying with the terms of this Lease and Lessor
shall be under no duty to enter, inspect or to perform any of Lessee's
covenants set forth in this Lease.
n. If during the course of completing the Building Shells, Hazardous
Materials, or Archeological Artifacts as defined in the City of Mt. View
Findings Report/Zoning Permit condition #19, are found on the Premises in
quantities that require special handling or removal, then Lessee shall
immediately notify Lessor of the same. Lessor shall thereafter have
complete control of and shall conduct all communications with governmental
agencies, provided that if Lessee is named as a potentially responsible
party for any clean-up, remediation or other related liability then Lessee
shall have the right to appear in and participate in any proceedings with
respect thereto. Except for Hazardous Materials that are the responsibility
of Lessee pursuant to Section 32.4, Lessor shall promptly upon receiving
such notice take all required actions including notifying responsible
governmental agencies and performing any removal or treatment of the
Hazardous Materials or Archaeological Artifacts, if required by the
responsible governmental agencies. Lessee shall continue all work on the
Lessee Improvements that are not impacted directly by the Hazardous
Materials or Archaeological Artifacts and generally use its best efforts to
prevent any delays in the completion of the Lessee Improvements.
Additionally, Lessor agrees to complete all Off-Site Work, as defined in
Exhibit A.3, necessary for Lessee to obtain occupancy approvals from the
City of Mt. View. If, however, the removal or treatment of the Hazardous
Materials or Archaeological Artifacts by Lessor causes a delay in Lessee's
completion of the Lessee's Improvements so that the same shall not be
completed on or prior to the Commencement Date, or Lessee is unable to
obtain occupancy approvals from the City of Mt. View solely because
Lessor's Off-Site Work is incomplete, then the rent shall be abated with
respect to that specific portion of the Premises that is affected by one
day for each such day of delay. In such event, Lessee and Lessor shall
within three (3) business days of the determination of a delay due to
Hazardous Materials or Archaeological Artifacts meet and determine the area
affected and the amount of rent abatement per day of delay, if any, that
shall be given to Lessee. If Lessee and Lessor cannot agree within ten (10)
days of first meeting on the amount of rent abatement, both parties agree
to submit the matter to binding arbitration within twenty (20) days of
first meeting. Such arbitration shall be conducted by JAMS with a retired
judge and shall take place either in San Xxxx or San Francisco, California.
The arbitration shall be "baseball" arbitration with the arbitrator
instructed to either select the amount set forth by Lessee or the amount
set forth by Lessor, but without any authority to average or otherwise
compromise the parties' claims.
2.6 ACCEPTANCE OF PREMISES AND COVENANTS TO SURRENDER:
Lessee represents that the Lessee Improvements will be in good order and repair,
and comply with applicable law and all requirements for occupancy as of the date
Lessee takes occupancy of the Premises and opens for business. Lessee agrees on
the last day of the Lease Term, or on the sooner termination of this Lease, to
surrender the Premises to Lessor in Good Condition and Repair. Good Condition
and Repair ("Good Condition and Repair") shall not mean original condition, but
shall mean that the Premises are in a commercially acceptable condition suitable
for occupancy by a reasonable lessee. All of the following are to be in Good
Condition and Repair; (i) the interior walls and floors of all office and other
interior areas, (ii) any carpeting is to be cleaned, (iii) all glazing, windows,
doors, and closures, plate glass, and (iv) all electrical systems including
light fixtures and ballasts, plumbing and HVAC including temperature control
systems. Lessor, during the first twelve years of the Lease Term, at its sole
discretion may, by written request, require Lessee to remove and restore all or
any part of the private offices at the Premises in excess of 100 private offices
per building to standard open office space. If Lessor shall so request, then
Lessee shall restore said Premises or such part or parts thereof before the end
of the Lease Term or earlier termination of this Lease at Lessee's sole cost and
expense. Lessor's right to require such restoration or restoration of special
tenant improvements pursuant to Section 4 and any request for such restoration
shall expire and become null and void upon Lessee's written notice exercising
its right to extend this Lease for a second extended term pursuant to Section
34. Lessee, on or before the end of the Lease Term or sooner termination of this
Lease, shall remove all its personal property and trade fixtures from the
Premises, and all such property not so removed shall be deemed to be abandoned
by Lessee. Lessee shall reimburse Lessor for all disposition costs incurred by
Lessor relative to Lessee's abandoned property. If the Premises are not
surrendered at the end of the Lease Term or earlier termination of this Lease,
Lessee shall indemnify Lessor against loss or liability resulting from any delay
caused by Lessee in surrendering the Premises including, without limitation, any
claims made by any succeeding Lessee founded on such delay. Lessee, on or before
the end of the Lease Term or sooner termination of this Lease, shall execute,
acknowledge and deliver to Lessor a quitclaim deed terminating any rights Lessee
has in the Property as a result of any recorded Memorandum of Lease or
otherwise. In the event Lessee does not exercise its option to extend the Lease
as to all five (5) buildings or if Lessee and Lessor agree to amend the
provisions of this Lease relating to options to extend, or rights of first
refusal to lease or buy any portions of the Property, then the parties shall
concurrently amend any Memorandum of Lease to reflect the same.
3. USES PROHIBITED:
Lessee shall not commit, or suffer to be committed, any waste upon the Premises,
or any nuisance, or other act or thing which may disturb the quiet enjoyment of
any other tenant in or around the buildings in which the subject Premises are
located or allow any sale by auction upon the Premises, or allow the Premises to
be used for any improper, immoral, unlawful or objectionable purpose, or place
any loads upon the floor, walls, or ceiling which may endanger the structure, or
use any machinery or apparatus which will in any manner vibrate or shake the
Premises, or place any harmful liquids in the drainage system of the Premises.
No waste materials or refuse shall be dumped upon or permitted to remain upon
any part of the Premises. No materials, supplies, equipment, finished products
or semi-finished products, raw materials or articles of any nature shall be
stored upon or permitted to remain on any portion of the Premises outside of the
building structures, unless approved by the local, state federal or other
applicable governing authority if and as required by applicable law. Lessor
consents to Lessee's use of materials which are incidental to the normal,
day-to-day operations of any office user, such as copier fluids, cleaning
materials, etc., but this does not relieve Lessee of any of its obligations not
to contaminate the Premises or to violate any Hazardous Materials Laws.
4. ALTERATIONS AND ADDITIONS:
Lessee shall not make, or suffer to be made, any alteration or addition to said
Premises, or any part thereof, without the express, advance written consent of
Lessor, which consent shall not be unreasonably withheld or delayed subject to
the following terms. Any addition or alteration to said Premises, except movable
furniture and trade fixtures, shall become at once a part of the realty and
belong to Lessor at the end of the Lease Term or earlier termination of this
Lease. Alterations and additions which are not deemed to be trade fixtures shall
include HVAC systems, lighting systems, electrical systems, partitioning,
carpeting, or any other installation which has become an integral part of the
Premises. Lessee agrees that it will not proceed to make such alterations or
additions until all required government permits have been obtained and after
having obtained consent from Lessor to do so, until five (5) days from the
receipt of such consent, so that Lessor may post appropriate notices to avoid
any liability to contractors or material suppliers for payment for Lessee's
improvements. Lessee shall at all times permit such notices to be posted and to
remain posted until the completion of work. At the end of the Lease Term or
earlier termination of this Lease, Lessee shall remove and shall be required to
remove its special tenant improvements and all related equipment installed by
Lessee after completion of the initial construction and fit-out of the Buildings
during the Lease Term and Lessee shall return the Premises to the condition that
existed before the installation of the special tenant improvements, except as
provided in Section 2.6. Lessor agrees to allow any reasonable alterations and
improvements and will use its best efforts to notify Lessee at the time of
approval if such improvements or alterations are to be removed at the end of the
Lease Term or earlier termination of this Lease. Notwithstanding the above,
Lessee may make non-structural alterations of less than $50,000 per instance
without the approval of Lessor, but Lessor may require removal as stated herein.
Lessee must obtain advance approval from Lessor to remove any alteration or
improvements from the Premises that are not deemed trade fixtures or furniture.
Lessee shall be entitled to install, at its own cost, satellite and/or microwave
dishes and antenna for reception and transmission of electromagnetic signals on
the Buildings, subject to Lessor's approval of the location and method of
installation, which shall not be unreasonably withheld or delayed and subject to
obtaining the necessary permits and approvals from governmental agencies. Such
items shall be removed by Lessee and the Premises restored by Lessee at its sole
cost in accordance with Sections 2.6 and 4 of this Lease. No additional rent
shall be due from Lessee for use of roof space.
5. MAINTENANCE OF PREMISES:
a. EXCEPT AS PROVIDED IN SECTION 5.B. BELOW, Lessee shall at its sole cost and
expense keep and maintain each and every portion of the Premises, including, but
not limited to: (i) all lighting systems, temperature control systems, plumbing
and electrical systems, fixtures, interior walls, ceilings, windows, doors,
plate glass, skylights and all window washing, exterior and interior, in Good
Condition and Repair, including any required replacements, (ii) all wall
surfaces and floor coverings in Good Condition and Repair, free of holes,
gouges, or defacements, (iii) the HVAC by a service contract with a licensed air
conditioning and heating contractor which contract shall provide for reasonable
and customary maintenance of all air conditioning and heating equipment at the
Premises including HVAC repairs or replacements which are either excluded from
such service contract or any existing equipment warranties, and (iv) the roof
structure, and foundation. Lessee agrees, at its sole cost, to promptly repair
or replace any defective item required to be maintained by Lessee pursuant to
this Section.
x. Xxxxxx shall, at Lessee's expense, keep, repair, and maintain in Good
Condition and Repair including replacements (based on a pro-rata share of (i)
costs based on square footage or (ii) costs directly related to Lessee's use of
the Premises ) the following, which shall be included in the monthly CAC:
1. The exterior of each of the buildings, any appurtenances and every part
thereof, including but not limited to, sidewalks, parking areas, roof, and
painting of exterior walls. The parking lot to receive a finish coat every
five to seven years exterior walls to be painted as required, but no more
than once every five (5) years.
2. The landscaping under landscape contract which provides for the
watering, maintaining, trimming and replacing, when necessary, of any part
of the sprinkler system, shrubbery and landscaping on the Premises.
3. The roof membrane by a service contract with a licensed reputable
roofing contractor which contract shall provide for a minimum of
semi-annual maintenance, cleaning storm gutters, drains and removing
debris and trimming overhanging trees, repair of the roof, and application
of a finish coat every five years at each of the Buildings, if appropriate
for the particular roof system installed.
4. The elevators by a service contract with a licensed elevator service
company, which contract will provide for a minimum of quarterly
maintenance of the elevator and related equipment at each of the
Buildings, including repair and replacements of parts and equipment.
5. The fire alarm system and related monitoring of the Buildings.
Lessee shall have reasonable approval rights on all maintenance contracts
provided for herein.
Immediately prior to the end of the Lease Term, Lessee shall provide Lessor with
a Termite Report indicating that the Premises occupied by Lessee is free of any
active termite infestation and any related damages, if any, have been repaired
by Lessee at Lessee's sole cost and expense.
Lessee hereby waives any and all rights to make repairs at the expense of Lessor
as provided in Section 1942 of the Civil Code of the State of California, and
all rights provided for by Section 1941 of said Civil Code.
6. INSURANCE:
A. HAZARD INSURANCE: Lessee shall not use, or permit said Premises or any
part thereof, to be used, for any purpose other than that for which the
Premises are hereby leased; and no use shall be made or permitted to be
made of the Premises, nor acts done, which may cause a cancellation of any
insurance policy covering said building, or any part thereof, nor shall
Lessee sell or permit to be kept, used or sold, in or about said Premises,
any article which may be prohibited by an all risk insurance policy. Lessee
shall, at its sole cost and expense, comply with any and all requirements,
pertaining to said Premises, of any insurance organization or company,
necessary for the maintenance of reasonable all risk insurance, including
earthquake and flood (subject to availability), covering said Buildings and
appurtenances. Lessee agrees to purchase and keep in force all risk
insurance, including earthquake and flood, covering loss or damage to the
Premises in an amount equal to the full replacement cost of the Premises,
with all claims to be adjusted with Lessee and all proceeds payable to an
insurance trustee acceptable to both parties for disbursement to Lessee for
costs incurred in repairing and reconstructing the Premises, which
disbursements shall be made according to draw procedures comparable to
those described in Section 2.5.f.. Lessee's obligation to maintain such
earthquake insurance shall be capped so that Lessee will not be required to
pay an annual premium for such earthquake insurance in excess of Two
Hundred Fifty Thousand Dollars ($250,000), which cap amount shall escalate
at four percent (4%) on April 1st of each year commencing on April 1, 2000,
during the Lease Term over the prior year's cap amount. At the written
request of Lessee, Lessor shall obtain such all risk insurance, in which
event the premiums for such all risk insurance shall be included in the
monthly CAC. Lessee acknowledges that the insurance referenced above does
not include coverage for Lessee's personal property. In the event of a loss
per the insurance provision of this paragraph, Lessee shall be responsible
for all deductibles.
B. LOSS OF RENTS INSURANCE: Lessee shall maintain in full force and effect
at Lessee's sole cost, a policy of all-risk rental loss insurance
(including earthquake and flood, (subject to availability), in an amount
equal to the amount of Rent payable by Lessee commencing on the date of
loss for the next ensuing one (1) year, as reasonably determined by Lessor
with proceeds payable to Lessor ("Loss of Rents Insurance"). It is agreed
that as of the Commencement Date the amount of Rent payable under the Loss
of Rents Insurance coverage shall be a minimum of Twenty Million Dollars
($20,000,000).
C. LIABILITY AND PROPERTY DAMAGE INSURANCE: Lessee, as a material part of
the consideration to be rendered to Lessor, hereby waives all claims
against Lessor and Lessor's Agents for damages to goods, wares and
merchandise, and all other personal property in, upon, or about the
Premises, and for injuries to persons in, upon, or about the Premises,from
any cause arising at any time, except the sole negligence or willful
misconduct by Lessor or Lessor's Agents. Lessee will hold Lessor and
Lessor's Agents exempt and harmless from any damage or injury to any
person, or to the goods, wares, and merchandise and all other personal
property of any person, arising from the use or occupancy of the Premises
by Lessee,except as caused by the sole negligence or willful misconduct of
Lessor or Lessor's Agents, or from the failure of Lessee to keep the
Premises in Good Condition and Repair, as herein provided. Lessee shall,at
Lessees sole cost secure and keep in force a standard policy of commercial
general liability insurance and property damage policy covering the
Premises and all related areas insuring the Lessee having a combined single
limit for both bodily injury, death and property damage in an amount not
less than Ten Million Dollars ($10,000,000.00) with an endorsement for
aggregate limits of insurance per location in such amount. The policy shall
contain broad form contractual liability coverage applicable to Lessee's
obligations under the indemnity provision contained in Sections 32.4 and 37
of this Lease. The limits of said insurance shall not, however, limit the
liability of Lessee hereunder. Lessee shall, at its sole cost and expense,
comply with all of the insurance requirements of all local, municipal,
state and federal authorities now in force, or which may hereafter be in
force, pertaining to Lessee's use and occupancy of the said Premises.
D. PERSONAL PROPERTY INSURANCE: Lessee shall obtain, at Lessee's sole cost
and expense, a policy of fire and extended coverage insurance including
coverage for direct physical loss special form, and a sprinkler leakage
endorsement insuring the personal property of Lessee. The proceeds from any
personal property damage policy shall be payable to Lessee.
All insurance policies required above shall: (i) provide for a certificate of
insurance evidencing the insurance required herein, being deposited with Lessor
ten (10) days prior to the Commencement Date, and upon each renewal, such
certificates shall be provided thirty (30) days prior to the expiration date of
such coverage, (ii) be in a form reasonably satisfactory to Lessor and shall
provide the coverage required by Lessee in this Lease, (iii) be with Lessee's
liability insurer so long as Lessee is Microsoft Corporation; otherwise such
insurance shall be carried with companies with a Best Rating of A+ minimum, (iv)
specifically provide that such policies shall not be subject to cancellation,
reduction of coverage, or other change except after 30 days prior written notice
to Lessor, (v) with respect to the insurance required by 6a., 6b. and 6.c, name
Lessor, Lessor's lender, and any other party with an insurable interest in the
Premises that is identified by Lessor in writing to Lessee as additional
insureds by endorsement to policy to the extent of Lessee's obligations under
this Lease, and (vi) contain a severability of interests provision, a provision
that the insurance provided to Lessor as additional insured shall be primary to
and not contributory with insurance maintained by Lessor, and a provision that
an act or omission of one of the insureds or additional insureds that would void
or otherwise reduce coverage shall not reduce or void the coverage as to the
other named and additional insureds. At Lessee's option, Lessee may undertake to
maintain commercially reasonable deductibles under the property insurance policy
and may elect to self-insure some or all of the property located at the Premises
provided all obligations required under Section 6 are met and Lessee's liability
on self insurance does not exceed the greater of fifty million dollars
($50,000,000) or 1/10 of Lessee's net equity.
Lessor shall purchase and keep in force during the term of this Lease a
Commercial General Liability Policy with limits of not less than Ten Million and
00/100 Dollars ($10,000,000.00) each occurrence covering bodily injury to
persons, including death, and damage to property. The premiums of such insurance
shall be included in CAC. Such insurance shall be with responsible insurers with
a financial rating comparable to or better than that of Lessee's liability
insurer, and shall provide coverage for Lessor's premises and operations,
independent contractors, and contractual liability assumed in this Lease. Lessor
shall cause its Commercial General Liability insurer to name Lessee as an
additional insured under such insurance by endorsement to policy to the extent
of Lessor's insurable contractual liability assumed in this Lease. The insurance
policy shall contain a severability of interests provision, a provision that the
insurance provided to Lessee as additional insured shall be primary to and not
contributory with insurance maintained by Lessee, and a provision that an act or
omission of one of the insureds or additional insureds that would void or
otherwise reduce coverage shall not reduce or void the coverage as to the other
named and additional insureds. A certificate of insurance evidencing that the
foregoing insurance is in effect shall be delivered to Lessee prior to Lessee's
occupancy of the Premises, and shall be kept current throughout the Lease Term.
Such certificate shall reflect the status of Lessee as additional insured, and
shall provide for fifteen (15) days advance notice to Lessee in the event of
cancellation.
The parties shall provide that their respective insurance policies insuring the
Premises or the personal property include a waiver of any right of subrogation
which said insurance company may have against Lessor or Lessee, as the case may
be. Lessor and Lessee release and relieve the other and waive their entire right
of recovery for loss or damage to property located within or constituting a part
or all of the Buildings or the Property to the extent that the loss or damage is
covered by (i) the injured party's property insurance, or (ii) the property
insurance the injured party is required to carry under this Lease, whichever is
greater.
7. ABANDONMENT:
Lessee shall not abandon the Premises for more than thirty (30) days at any time
during the Lease Term; and if Lessee shall abandon, or surrender said Premises,
or be dispossessed by process of law, or otherwise, any personal property
belonging to Lessee and left on the Premises shall be deemed to be abandoned, at
the option of Lessor. Notwithstanding the above, the Premises shall not be
considered abandoned if Lessee maintains the Premises in Good Condition and
Repair, provides security and is not in default.
8. FREE FROM LIENS:
Lessee shall keep the subject Premises free from any and all liens including but
not limited to liens arising out of any work performed, materials furnished, or
obligations incurred by Lessee. However, the Lessor shall allow Lessee to
contest a lien claim, so long as the claim is discharged prior to any
foreclosure proceeding being initiated against the property and provided Lessee
provides Lessor a bond if the lien exceeds Twenty Five Thousand Dollars
($25,000).
9. COMPLIANCE WITH GOVERNMENTAL REGULATIONS:
Lessee shall, at its sole cost and expense, comply with all of the requirements
of all local, municipal, state and federal authorities now in force, or which
may hereafter be in force, pertaining to the Premises, and shall faithfully
observe in the use of the Premises all local and municipal ordinances and state
and federal statutes now in force or which may hereafter be in force.
Notwithstanding the above, Lessee shall not be required to make a cash payment
for the construction of any single improvement required under this Section in
excess of Fifty Thousand Dollars ($50,000) per Building, unless such improvement
(i) is required to comply with Lessee's particular use of the Premises, (ii) is
required as a result of Lessee or Lessee's Agents application for modifications
to the Premises or (iii) is required as a result of actual modifications to the
Premises made by Lessee or Lessee's Agents. All improvement costs incurred by
Lessor exceeding Fifty Thousand Dollars ($50,000), and not occurring as a result
of (i), (ii), and (iii) shall be initially paid by Lessor and then amortized
over the estimated useful life of the improvement, not to exceed 15 years at
Xxxxx Fargo prime rate plus one percent (1%). Lessee's pro-rata share of the
amortized costs of such improvement shall be added to CAC on a monthly basis
over the Lease Term.
10. INTENTIONALLY OMITTED:
11. ADVERTISEMENTS AND SIGNS:
Lessee shall have the exclusive right, provided Lessee is leasing four (4) or
more entire buildings on the Premises, to erect monument signage, eyebrow
signage and top of building(s) signage on the Premises subject only to
municipality review and approval, as may be required by law. Notwithstanding the
above, any future tenant shall have the right to share signage at the corner of
Macon and L'Avenida and at Macon entries. Any sign so placed on the Premises
shall be so placed upon the understanding and agreement that Lessee will remove
same at the end of the Lease Term or earlier termination of this Lease and
repair any damage or injury to the Premises caused thereby, and if not so
removed by Lessee, then Lessor may have the same removed at Lessee's expense. If
Lessee is leasing less than four (4) buildings, then so long as Lessee is
leasing at least one (1) building Lessee shall have the right to maintain the
signage that it had previously installed on the leased building(s) during the
Lease Term; provided that such right shall not be exclusive and other tenants
shall be entitled to install their signage alongside Lessee's on a pro rata
space basis of all street or project monument signs.
12. UTILITIES:
Lessee shall pay for all water, gas, heat, light, power, telephone and other
utilities supplied to the Premises. Any charges for sewer usage, PG&E, and
telephone site service or related fees shall be the obligation of Lessee and
paid for by Lessee. If any such services are not separately metered to Lessee,
Lessee shall pay a reasonable proportion of all charges which are jointly
metered, the determination to be made by Lessor acting reasonably and on any
equitable basis. Lessee and Lessor agree that Lessor shall not be liable to
Lessee for any disruption in any of the utility services to the Premises.
13. ATTORNEYS' FEES:
In case suit should be brought for the possession of the Premises, for the
recovery of any sum due hereunder, because of the breach of any other covenant
herein, or to enforce, protect, or establish any term, conditions, or covenant
of this Lease or the right of either party hereunder, the losing party shall pay
to the Prevailing Party reasonable attorneys' fees which shall be deemed to have
accrued on the commencement of such action and shall be enforceable whether or
not such action is prosecuted to judgment. The term "Prevailing Party" shall
mean the party that received substantial relief requested, whether by
settlement, dismissal, summary judgment, judgment, or otherwise.
14. LESSEE DEFAULT:
14.1 DEFAULT:
The occurrence of any of the following shall constitute a default and breach of
this Lease by Lessee: a) any failure by Lessee to pay Rent or to make any other
payment required to be made by Lessee hereunder when due if not cured within ten
(10) days after written notice thereof from Lessor to Lessee; b) the abandonment
or vacation of the Premises by Lessee except as provided in Section 7; c) a
failure by Lessee to observe and perform any other provision of this Lease to be
observed or performed by Lessee, where such failure continues for thirty (30)
days after written notice thereof from Lessor to Lessee; provided, however, that
if the nature of such default is such that the same cannot be reasonably cured
within such thirty (30) day period, Lessee shall not be deemed to be in default
if Lessee shall, within such period, commence such cure and thereafter
diligently prosecute the same to completion; d) the making by Lessee of any
general assignment for the benefit of creditors; the filing by or against Lessee
of a petition to have Lessee adjudged a bankrupt or of a petition for
reorganization or arrangement under any law relating to bankruptcy; and e) the
appointment of a trustee or receiver to take possession of substantially all of
Lessee's assets or Lessee's interest in this Lease, or the attachment, execution
or other judicial seizure of substantially all of Lessee's assets located at the
Premises or of Lessee's interest in this Lease.
14.2 SURRENDER OF LEASE:
In the event of any such default by Lessee, then in addition to any other
remedies available to Lessor at law or in equity, Lessor shall have the
immediate option to terminate this Lease before the end of the Lease Term and
all rights of Lessee hereunder, by giving written notice of such intention to
terminate. In the event that Lessor terminates this Lease due to a default of
Lessee, then Lessor may recover from Lessee: a) the worth at the time of award
of any unpaid Rent which had been earned at the time of such termination; plus
b) the worth at the time of award of unpaid Rent which would have been earned
after termination until the time of award exceeding the amount of such rental
loss that the Lessee proves could have been reasonably avoided; plus c) the
worth at the time of award of the amount by which the unpaid Rent for the
balance of the Lease Term after the time of award exceeds the amount of such
rental loss that the Lessee proves could have been reasonably avoided; plus d)
any other amount necessary to compensate Lessor for all the detriment
proximately caused by Lessee's failure to perform his obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom; and e) at Lessor's election, such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time by applicable
California law. As used in (a) and (b) above, the "worth at the time of award"
is computed by allowing interest at the rate of Xxxxx Fargo's prime rate plus
two percent (2%) per annum (the "Interest Rate"). As used in (c) above, the
"worth at the time of award" is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus one percent (1%).
14.3 RIGHT OF ENTRY AND REMOVAL:
In the event of any such default by Lessee, Lessor shall also have the right,
with or without terminating this Lease, to re-enter the Premises and remove all
persons and property from the Premises ; such property may be removed and stored
in a public warehouse or elsewhere at the cost of and for the account of Lessee.
14.4 ABANDONMENT:
In the event of abandonment, except as provided in Section 7, of the Premises by
Lessee or in the event that Lessor shall elect to re-enter as provided in
paragraph 14.3 above or shall take possession of the Premises pursuant to legal
proceeding or pursuant to any notice provided by law, and Lessor does not elect
to terminate this Lease as provided in Section 14.2 above, then Lessor may from
time to time, without terminating this Lease, either recover all Rent as it
becomes due or relet the Premises or any part thereof for such term or terms and
at such rental rates and upon such other terms and conditions as Lessor, in its
sole discretion, may deem advisable with the right to make alterations and
repairs to the Premises. In the event that Lessor elects to relet the Premises,
then Rent received by Lessor from such reletting shall be applied; first, to the
payment of any indebtedness other than Rent due hereunder from Lessee to Lessor;
second, to the payment of any cost of such reletting; third, to the payment of
the cost of any reasonable and necessary alterations and repairs to the
Premises; fourth, to the payment of Rent due and unpaid hereunder; and the
residue, if any, shall be held by Lessor and applied to the payment of future
Rent as the same may become due and payable hereunder. Should that portion of
such Rent received from such reletting during any month, which is applied by the
payment of Rent hereunder according to the application procedure outlined above,
be less than the Rent payable during that month by Lessee hereunder, then Lessee
shall pay such deficiency to Lessor immediately upon demand therefor by Lessor.
Such deficiency shall be calculated and paid monthly. Lessee shall also pay to
Lessor, as soon as ascertained, any costs and expenses incurred by Lessor in
such reletting or in making such alterations and repairs not covered by the
rentals received from such reletting.
14.5 NO IMPLIED TERMINATION:
No re-entry or taking possession of the Premises by Lessor pursuant to Section
14.3 or Section 14.4 of this Lease shall be construed as an election to
terminate this Lease unless a written notice of such intention is given to
Lessee or unless the termination thereof is decreed by a court of competent
jurisdiction. Notwithstanding any reletting without termination by Lessor
because of any default by Lessee, Lessor may at any time after such reletting
elect to terminate this Lease for any such default.
15. MERGER:
The voluntary or other surrender of this Lease by Lessee, or a mutual
cancellation thereof, shall not work a merger, and shall, at the option of
Lessor, terminate all or any existing subleases or sub tenancies, or may, at the
option of Lessor, operate as an assignment to him of any or all such subleases
or sub tenancies.
16. TAXES:
Lessee shall pay and discharge punctually and when the same shall become due and
payable without penalty, its share of all real estate taxes, personal property
taxes, taxes based on vehicles utilizing parking areas on the Premises, taxes
computed or based on rental income (other than federal, state and municipal net
income taxes), environmental surcharges, privilege taxes, excise taxes, business
and occupation taxes, school fees or surcharges, gross receipts taxes, sales
and/or use taxes, employee taxes, occupational license taxes, water and sewer
taxes, assessments (including, but not limited to, assessments for public
improvements or benefit), assessments for local improvement and maintenance
districts, and all other governmental impositions and charges of every kind and
nature whatsoever, regardless of whether now customary or within the
contemplation of the parties hereto and regardless of whether resulting from
increased rate and/or valuation, or whether extraordinary or ordinary, general
or special, unforeseen or foreseen, or similar or dissimilar to any of the
foregoing (all of the foregoing being hereinafter collectively called "Tax" or
"Taxes") which, at any time during the Lease Term, shall be applicable or
against the Premises, or shall become due and payable and a lien or charge upon
the Premises under or by virtue of any present or future laws, statutes,
ordinances, regulations, or other requirements of any governmental authority
whatsoever. The term "Environmental Surcharge" shall include any and all
expenses, taxes, charges or penalties imposed by the Federal Department of
Energy, Federal Environmental Protection Agency, the Federal Clean Air Act, or
any regulations promulgated thereunder, or any other local, state or federal
governmental agency or entity now or hereafter vested with the power to impose
taxes, assessments or other types of surcharges as a means of controlling or
abating environmental pollution or the use of energy in regard to the use,
operation or occupancy of the Premises. The term "Tax" shall include, without
limitation, all taxes, assessments, levies, fees, impositions or charges levied,
imposed, assessed, measured, or based in any manner whatsoever (i) in whole or
in part on the Rent payable by Lessee under this Lease, (ii) upon or with
respect to the use, possession, occupancy, leasing, operation or management of
the Premises, (iii) upon this transaction or any document to which Lessee is a
party creating or transferring an interest or an estate in the Premises, (iv)
upon Lessee's business operations conducted at the Premises, (v) upon, measured
by or reasonably attributable to the cost or value of Lessee's equipment,
furniture, fixtures and other personal property located on the Premises or the
cost or value of any leasehold improvements made in or to the Premises by or for
Lessee, regardless of whether title to such improvements shall be in Lessor or
Lessee, or (vi) in lieu of or equivalent to any Tax set forth in this Section
16. In the event any such Taxes are payable by Lessor and it shall not be lawful
for Lessee to reimburse Lessor for such Taxes, then the Rent payable thereunder
shall be increased to net Lessor the same net rent after imposition of any such
Tax upon Lessor as would have been payable to Lessor prior to the imposition of
any such Tax. It is the intention of the parties that Lessor shall be free from
all such Taxes and all other governmental impositions and charges of every kind
and nature whatsoever. However, nothing contained in this Section 16 shall
require Lessee to pay any Federal, State, County or City income, franchise,
estate, inheritance, succession, transfer or excess profits tax imposed upon
Lessor. If any general or special assessment is levied and assessed against the
Premises, Lessor agrees to use its best reasonable efforts to cause the
assessment to become a lien on the Premises securing repayment of a bond sold to
finance the improvements to which the assessment relates which is payable in
installments of principal and interest over the maximum term allowed by law. It
is understood and agreed that Lessee's obligation under this paragraph will be
prorated to reflect the Commencement Date and the end of the Lease Term. It is
further understood that if Taxes cover the Premises and Lessee does not occupy
all five buildings on the Premises, the Taxes will be allocated to the Premises
leased by Lessee based on a pro-rata square footage or other equitable basis.
Taxes billed by Lessor to Lessee shall be included in the monthly CAC.
Subject to any limitations or restrictions imposed by any deeds of trust or
mortgages now or hereafter covering or affecting the Premises, Lessee shall have
the right to contest or review the amount or validity of any Tax by appropriate
legal proceedings but which is not to be deemed or construed in any way as
relieving, modifying or extending Lessee's covenant to pay such Tax at the time
and in the manner as provided in this Section 16. However, as a condition of
Lessee's right to contest, if such contested Tax is not paid before such contest
and if the legal proceedings shall not operate to prevent or stay the collection
of the Tax so contested, Lessee shall, before instituting any such proceeding,
protect the Premises and the interest of Lessor and of the beneficiary of a deed
of trust or the mortgagee of a mortgage affecting the Premises against any lien
upon the Premises by a surety bond, issued by an insurance company acceptable to
Lessor and in an amount equal to one and one-half (1-1/2) times the amount
contested or, at Lessor's option, the amount of the contested Tax and the
interest and penalties in connection therewith. Any contest as to the validity
or amount of any Tax, whether before or after payment, shall be made by Lessee
in Lessee's own name, or if required by law, in the name of Lessor or both
Lessor and Lessee. Lessee shall defend, indemnify and hold harmless Lessor from
and against any and all costs or expenses, including reasonable attorneys' fees,
in connection with any such proceedings brought by Lessee, whether in its own
name or not. Lessee shall be entitled to retain any refund of any such contested
Tax and penalties or interest thereon which have been paid by Lessee. Nothing
contained herein shall be construed as affecting or limiting Lessor's right to
contest any Tax at Lessor's expense.
17. NOTICES:
Unless otherwise provided for in this Lease, any and all written notices or
other communication (the "Communication") to be given in connection with this
Lease shall be given in writing and shall be given by personal delivery,
facsimile transmission or by mailing by registered or certified mail with
postage thereon or recognized overnight courier, fully prepaid, in a sealed
envelope addressed to the intended recipient as follows:
a. to the Lessor at: 00000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxx
b. to the Lessee at: One Microsoft Way cc: Microsoft Corporation
Xxxxxxx, XX 00000-0000 One Microsoft Way
Attention: Xxxx XxxXxxx, Xxxxxxx, XX 00000-0000
General Manager, Attn: Xxxxxx X. Xxxxxxxx
Real Estate & Facilities Legal and Corporate Affairs
or such other addresses or individual as may be designated by a Communication
given by a party to the other parties as aforesaid. Any Communication given by
personal delivery shall be conclusively deemed to have been given and received
on a date it is so delivered at such address provided that such date is a
business day, otherwise on the first business day following its receipt, and if
given by registered or certified mail, on the day on which delivery is made or
refused or if given by recognized overnight courier, on the first business day
following deposit with such overnight courier.
18. ENTRY BY LESSOR:
Lessee shall permit Lessor and its agents, after receipt of at least twenty four
(24) hours prior notice from Lessor except in an emergency, to enter into and
upon said Premises at all reasonable times using the minimum amount of
interference and inconvenience to Lessee and Lessee's business, subject to any
security regulations of Lessee, for the purpose of inspecting the same or for
the purpose of maintaining the building in which said Premises are situated, or
for the purpose of making repairs, alterations or additions to any other portion
of said building, including the erection and maintenance of such scaffolding,
canopies, fences and props as may be required, without any rebate of Rent and
without any liability to Lessee for any loss of occupation or quiet enjoyment of
the Premises; and shall permit Lessor and his agents, at any time within ninety
(90) days prior to the end of the Lease Term, after receipt of at least twenty
four (24) hours prior written notice from Lessor, to Exhibit the Premises to
prospective tenants at reasonable hours and to place upon said Premises any
usual or ordinary "For Sale" or "For Lease" signs.
19. DESTRUCTION OF PREMISES:
If at any time during the Lease Term there is damage to the Premises, Lessee
shall, at Lessee's expense, repair such damage to the Premises including all
tenant improvements as soon as reasonably possible and this Lease shall continue
in full force and effect. The Rent payable hereunder for the period from the
date of such damage and during the period in which such damage, repair or
restoration continues shall be abated in proportion to the degree to which
Lessee's use of the Premises is impaired, to the extent that proceeds of such
Loss of Rents Insurance Coverage is actually received by Lessor. Except for
abatement of Rent, if any, Lessee shall have no claim against Lessor for any
damage suffered by reason of any such damage, destruction, repair or
restoration. Notwithstanding the above, during the last twelve (12) months of
the Lease Term unless Lessee exercises or has exercised its option to renew the
Lease, if more than 33% of the Premises are damaged, Lessor or Lessee may cancel
the Lease with written notice to the other party within ten (10) days of the
date of damage. If either Lessor or Lessee cancels the Lease, Lessee shall pay
to Lessor the full replacement cost of the repair or restoration of the damaged
Premises, and provided that Lessee makes such payment to Lessor, then Lessee
shall receive all insurance proceeds attributable to such damage to the
Premises.
20. ASSIGNMENT AND SUBLETTING:
Except as otherwise provided below, Lessee shall not assign this Lease, or any
interest therein, and shall not sublet the said Premises or any part thereof, or
any right or privilege appurtenant thereto, or cause any other person or entity
(a bona fide subsidiary or affiliate of Lessee excepted, where an affiliate is
any company that controls, is controlled by, or under common control with
Lessee) to occupy or use the Premises, or any portion thereof, without the
advance written consent of Lessor which shall not be unreasonably withheld,
conditioned or delayed. Any such assignment or subletting without such consent
shall be void, and shall, at the option of the Lessor, terminate this Lease.
This Lease shall not, nor shall any interest therein, be assignable, as to the
interest of Lessee, by operation of law, without the written consent of Lessor.
Notwithstanding Lessor's obligation to provide reasonable or conditional
approval, Lessor reserves the right to withhold its consent for any proposed
sublessee or assignee of Lessee if the proposed sublessee or assignee is a user
or generator of Hazardous Materials. If Lessee desires to assign its rights
under this Lease or to sublet, all or a portion of the subject Premises to a
party other than a successor-in-interest, or a bona fide subsidiary or affiliate
of Lessee (where an affiliate is any corporation a majority of whose voting
stock is owned by Lessee) (each a "Permitted Entity"), Lessee shall first notify
Lessor of the proposed terms and conditions of such assignment or subletting.
Notwithstanding the foregoing, Lessee may assign this Lease without the consent
of Lessor to a successor in interest, whether by merger, reorganization or
acquisition, provided the resulting entity is not a user or generator of
Hazardous Materials and has the financial capability to meet Lessee's
obligations under this Lease. Notwithstanding the above, Lessor waives any
consent or profit participation in any subletting or assignment during the
initial Lease Term. Thereafter, any subletting or assignment by Lessee that
requires Lessor's consent shall also require Lessee and Lessor to divide equally
any excess consideration received after Lessee deducts its actual costs paid to
third parties related to such assigning and subletting. Notwithstanding the
foregoing, Lessee may convey, in connection with an assignment or subletting,
but pursuant to a separate legally binding agreement, Lessee's assets, business
and trade fixtures, inventory, equipment or furniture or other Lessee's property
to the extent paid for by Lessee, and Lessee shall be entitled to retain any and
all consideration received in connection with such conveyance; provided that
such compensation is reasonable and determined in good faith and is not used as
a means of diminishing the rent that would otherwise by paid to Lessor. Whether
or not Lessor's consent to a sublease or assignment is required, in the event of
any sublease or assignment, Lessee shall be and shall remain primarily liable
for the performance of all conditions, covenants, and obligations of Lessee
hereunder and, in the event of a default by an assignee or sublessee, Lessor may
proceed directly against the original Lessee hereunder and/or any other
predecessor of such assignee or sublessee without the necessity of exhausting
remedies against said assignee or sublessee.
21. CONDEMNATION:
If any part of a building or buildings, including parking, 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 at least sixty percent (60%) thereof
remains which is susceptible of occupation hereunder, this Lease shall as to the
part so taken, terminate as of the date title vests in the condemnor or
purchaser, and the Rent payable hereunder shall be adjusted so that the Lessee
shall be required to pay for the remainder of the Lease Term only that portion
of Rent as the value of the part remaining. The rental adjustment resulting will
be computed at the same Rental rate for the remaining part not taken. If all of
the Premises, or such part of a building or buildings be taken so that there
does not remain a portion susceptible for occupation hereunder, this Lease for
that building or buildings shall thereupon terminate. If a part or all of the
Premises be taken, all compensation awarded upon such taking shall be payable to
the Lessor. Lessee may file a separate claim and be entitled to any award
granted to Lessee for prepaid, unaccrued Rent, the value of Lessee's personal
property, moving expenses, trade fixtures and equipment.
22. EFFECTS OF CONVEYANCE:
The term "Lessor" as used in this Lease, means only the owner for the time being
of the land and building constituting the Premises , so that, in the event of
any sale of said land or building, or in the event of a Lease of said building,
Lessor shall be and hereby is entirely freed and relieved of all covenants and
obligations of Lessor hereunder, except liability incurred by Lessor under this
Lease prior to transfer of ownership, and it shall be deemed and construed,
without further agreement between the parties and the purchaser of any such
sale, or the Lessor of the building, that the purchaser or lessor of the
building has assumed and agreed to carry out any and all future covenants and
obligations of the Lessor hereunder. If any security is given by Lessee to
secure the faithful performance of all or any of the covenants of this Lease on
the part of Lessee, Lessor may transfer and deliver the security, as such, to
the purchaser at any such sale of the building, and thereupon the Lessor shall
be discharged from any further liability.
23. SUBORDINATION:
This Lease, in the event Lessor notifies Lessee in writing, shall be subordinate
to any ground lease, deed of trust, or other hypothecation for security now or
hereafter placed upon the Premises and to any and all advances made on the
security thereof and to renewals, modifications, replacements and extensions
thereof. Lessee agrees to promptly execute any commercially reasonable documents
which may be required to effectuate such subordination. Notwithstanding such
subordination, if Lessee is not in default and so long as Lessee shall pay the
Rent and observe and perform all of the provisions and covenants required under
this Lease, Lessee's right to quiet possession of the Premises shall not be
disturbed or affected by any subordination.
24. WAIVER:
The waiver by Lessor of any breach of any term, covenant or condition, herein
contained shall not be construed to be a waiver of such term, covenant or
condition or any subsequent breach of the same or any other term, covenant or
condition therein contained. The subsequent acceptance of Rent hereunder by
Lessor shall not be deemed to be a waiver of Lessee's breach of any term,
covenant, or condition of the Lease.
25. HOLDING OVER:
Any holding over after the end of the Lease Term requires Lessor's written
approval prior to the end of the Lease Term, which, notwithstanding any other
provisions of this Lease, Lessor may withhold in Lessor's sole discretion.
Notwithstanding the foregoing, Lessor shall be obligated to consent to a
holdover by Lessee for a period not to exceed three (3) months from and after
the end of the Lease Term; provided that Lessee has given written notice to
Lessor of such holdover at least nine (9) months prior to the end of the Lease
Term. This notice shall be specific as to the precise period of such holdover
with a certain move out date. Except for the foregoing, any other holdover shall
be construed to be a tenancy at sufferance from month to month. Lessee shall pay
to Lessor monthly base rent equal to one and one-half (1.5) times the monthly
base rent installment due in the last month of the Lease Term and all other
additional rent and all other terms and conditions of the Lease shall apply, so
far as applicable. Holding over by Lessee without written approval of Lessor
shall subject Lessee to the liabilities and obligations provided for in this
Lease and by law, including, but not limited to those in Section 2.2 of this
Lease. Lessee shall indemnify and hold Lessor harmless against any loss or
liability resulting from any delay caused by Lessee in surrendering the
Premises, including without limitation, any claims made or penalties incurred by
any succeeding lessee or by Lessor. No holding over shall be deemed or construed
to exercise any option to extend or renew this Lease in lieu of full and timely
exercise of any such option as required hereunder.
26. LESSOR'S LIABILITY:
If Lessee should recover a money judgment against Lessor arising in connection
with this Lease, the judgment shall be satisfied only out of the Lessor's
interest in the Property, Premises, and Buildings, and neither Lessor or any of
its partners shall be liable personally for any deficiency.
27. ESTOPPEL CERTIFICATES:
Lessee shall at any time during the Lease Term, upon not less than ten (10)
business days prior written notice from Lessor, execute and deliver to Lessor a
statement in writing certifying that this Lease is unmodified and in full force
and effect (or, if modified, stating the nature of such modification) and the
dates to which the Rent and other charges have been paid in advance, if any, and
acknowledging that there are not, to Lessee's knowledge, any uncured defaults on
the part of Lessor hereunder or specifying such defaults if they are claimed.
Any such statement may be conclusively relied upon by any prospective purchaser
or encumbrancer of the Premises. Lessee's failure to deliver such a statement
within such time shall be conclusive upon the Lessee that (a) this Lease is in
full force and effect, without modification except as may be represented by
Lessor; (b) there are no uncured defaults in Lessor's performance.
28. TIME:
Time is of the essence of the Lease.
29. CAPTIONS:
The headings on titles to the paragraphs of this Lease are not a part of this
Lease and shall have no effect upon the construction or interpretation of any
part thereof. This instrument contains all of the agreements and conditions made
between the parties hereto and may not be modified orally or in any other manner
than by an agreement in writing signed by all of the parties hereto or their
respective successors in interest.
30. PARTY NAMES:
Landlord and Tenant may be used in various places in this Lease as a substitute
for Lessor and Lessee respectively.
31. HABITUAL DEFAULT:
Notwithstanding anything to the contrary contained in Section 14 herein, Lessor
and Lessee agree that if Lessee shall have defaulted in the payment of Rent for
two (2) or more times during a calendar year, then such conduct shall, at the
option of the Lessor, represent a separate event of default which cannot be
cured by Lessee. Lessee acknowledges that the purpose of this provision is to
prevent repetitive defaults by the Lessee under the Lease, which constitute a
hardship to the Lessor and deprive the Lessor of the timely performance by the
Lessee hereunder.
32. HAZARDOUS MATERIALS:
32.1 DEFINITIONS:
As used in this Lease, the following terms shall have the following
meaning:
a. The term "Hazardous Materials" shall mean (i) polychlorinated biphenyls;
(ii) radioactive materials and (iii) any chemical, material or substance
now or hereafter defined as or included in the definitions of "hazardous
substance" "hazardous water," "hazardous material," "extremely hazardous
waste," "restricted hazardous waste" under Section 25115, 25117 or 15122.7,
or listed pursuant to Section 25140 of the California Health and Safety
Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined
as "hazardous substance" under Section 25316 of the California Health and
Safety Code, Division 20, Chapter 6.8 (Xxxxxxxxx-Xxxxxxx-Xxxxxx Hazardous
Substances Account Act), (iii) defined as "hazardous material," "hazardous
substance," or "hazardous waste" under Section 25501 of the California
Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials
Release, Response, Plans and Inventory), (iv) defined as a "hazardous
substance" under Section 25181 of the California Health and Safety Code,
Division 20l, Chapter 6.7 (Underground Storage of Hazardous Substances),
(v) petroleum, (vi) asbestos, (vii) listed under Article 9 or defined as
"hazardous" or "extremely hazardous" pursuant to Article II of Title 22 of
the California Administrative Code, Division 4, Chapter 20, (viii) defined
as "hazardous substance" pursuant to Section 311 of the Federal Water
Pollution Control Act, 33 U.S.C. 1251 et seq. or listed pursuant to Section
1004 of the Federal Water Pollution Control Act (33 U.S.C. 1317), (ix)
defined as a "hazardous waste," pursuant to Section 1004 of the Federal
Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq., (x) defined
as "hazardous substance" pursuant to Section 101 of the Comprehensive
Environmental Responsibility Compensations, and Liability Act, 42 U.S.C.
9601 et seq., or (xi) regulated under the Toxic Substances Control Act, 156
U.S.C. 2601 et seq.
b. The term "Hazardous Materials Laws" shall mean any local, state and
federal laws, rules, regulations, or ordinances relating to the use,
generation, transportation, analysis, manufacture, installation, release,
discharge, storage or disposal of Hazardous Material.
c. The term "Lessor's Agents" shall mean Lessor's agents, representatives,
employees, contractors, subcontractors, directors, officers, partners,
former employees, relatives of employees and former employees, or invitees.
d. The term "Lessee's Agents" shall mean Lessee's agents, representatives,
employees, contractors, subcontractors, directors, officers, partners,
former employees, relatives of employees and former employees, or invitees.
32.2 LESSEE'S RIGHT TO INVESTIGATE:
Lessee shall be entitled to cause such inspection, soils and ground water tests,
and other evaluations to be made of the Premises as Lessee deems necessary
regarding (i) the presence and use of Hazardous Materials in or about the
Premises , and (ii) the potential for exposure to Lessee's employees and other
persons to any Hazardous Materials used and stored by previous occupants in or
about the Premises . Lessee shall provide Lessor with copies of all inspections,
tests and evaluations. Lessee shall indemnify, defend and hold Lessor harmless
from any cost, claim or expense to the extent arising from such entry by Lessee
or from the performance of any such investigation by such Lessee.
32.3 LESSOR'S REPRESENTATIONS AND OBLIGATIONS TO INDEMNIFY: Lessor hereby
represents and warrants to the best of Lessor's knowledge that the Premises are,
as of the date of this Lease, in compliance with all Hazardous Material Laws,
except for possible ground water contamination. See attached Exhibit E, November
3, 1994 letter from California Regional Water Quality Control Board. Lessor
shall indemnify, defend, protect, and hold Lessee harmless from and against any
and all cost or expense directly related to Remediation of the Property or
Premises or Third Party Claims as defined below which occur as a result of the
existence or presence of Hazardous Materials in, on, or under the Property or
Premises prior to the Commencement Date and which were not a result of actions
or omissions of Lessee or Lessee's Agents:
1. "Remediation" means removal or treatment of Hazardous Materials from
the Premises if required by governmental agencies with jurisdiction
over the same and subject to Lessor's right to contest, control, and
conduct all communications with such governmental agencies.
2. "Third Party Claims" means a person or entity who is not a Lessee or
Lessee's Agent and whose asserted claim involves the presence or
impact of Hazardous Materials originating from the Property or
Premises that have migrated beyond the boundaries of the Property or
Premises.
Notwithstanding the above, the obligations of Lessor under this Section 32.3
shall not apply to the following:
a. Any claim, action, suit, liability, expense, or proceeding by Lessee
or Lessee's Agents, assigns or successors, relating in any way or
manner to Hazardous Materials in, on, under, or about the Premises
(except to enforce the indemnity set forth in Section 32.3 above),
including without limitation, claims related to personal injury
(including sickness, disease, or death) tangible or intangible
property damage, compensation for lost wages.
b. Any consequential or indirect damages of any type incurred by Lessee,
Lessee's Agents, assigns or successors, including without limitation,
damages for diminution in value, rents, lost profits, loss of
business, or loss of opportunities.
32.4 LESSEE'S OBLIGATION TO INDEMNIFY:
Lessee, at its sole cost and expense, shall indemnify, defend, protect and hold
Lessor and Lessor's Agents harmless from and against any and all cost or
expenses, including those described under subparagraphs i, ii and iii herein
below set forth, to the extent arising from or caused in whole or in part,
directly or indirectly by:
a. Lessee's or Lessee's Agents' use, analysis, storage, transportation,
disposal, release, threatened release, discharge or generation of Hazardous
Material to, in, on, under, about or from the Premises or Property; or
b. Lessee's or Lessee's Agents failure to comply with Hazardous Material
laws; or
c. Any release of Hazardous Material to, in, on, under, about, from or onto
the Premises or Property caused by Lessee or Lessee's Agents or occurring
during the Lease Term, except ground water contamination from other parcels
where the source is from off the Premises not arising from or caused by
Lessee or Lessee's Agents.
The cost and expenses indemnified against include, but are not limited to the
following:
i. Any and all claims, actions, suits, proceedings, losses, damages,
liabilities, deficiencies, forfeitures, penalties, fines, punitive damages,
cost or expenses;
ii. Any claim, action, suit or proceeding for personal injury (including
sickness, disease, or death), tangible or intangible property damage,
compensation for lost wages, business income, profits or other economic
loss, damage to the natural resources of the environment, nuisance,
pollution, contamination, leaks, spills, release or other adverse effects
on the environment;
iii. The cost of any repair, clean-up, treatment or detoxification of the
Premises or Property necessary to bring the Premises into compliance with
all Hazardous Material Laws, including the preparation and implementation
of any closure, disposal, remedial action, or other actions with regard to
the Premises or Property, and expenses (including, without limitation,
reasonable attorneys' fees and consultants' fees, investigation and
laboratory fees, court cost and litigation expenses).
32.5 LESSEE'S OBLIGATION TO REMEDIATE CONTAMINATION:
Lessee shall, at its sole cost and expense, promptly take any and all action
necessary to remediate contamination of the Premises or Property by Hazardous
Materials arising from or caused by Lessee or Lessee's Agents as provided in
32.4.
32.6 OBLIGATION TO NOTIFY:
Lessor and Lessee shall each give written notice to the other as soon as
reasonably practical of (i) any communication received from any governmental
authority concerning Hazardous Material which related to the Premises or
Property and (ii) any contamination of the Premises or Property by Hazardous
Materials which constitutes a violation of any Hazardous Material Laws.
32.7 SURVIVAL:
The obligations of the parties under this Section 32 shall survive the Lease
Term or earlier termination of this Lease.
32.8 CERTIFICATION AND CLOSURE:
On or before the end of the Lease Term or earlier termination of this Lease,
Lessee shall deliver to Lessor a certification executed by Lessee stating that,
to the best of Lessee's knowledge, there exists no violation of Hazardous
Material Laws resulting from Lessee's use of the Premises or Property. If
pursuant to local ordinance, state or federal law, Lessee is required, at the
expiration of the Lease Term, to submit a closure plan for the Premises or
Property to a local, state or federal agency, then Lessee shall furnish to
Lessor a copy of such plan.
32.9 PRIOR HAZARDOUS MATERIALS:
Lessee shall have no obligation to clean up or to hold Lessor harmless with
respect to, any Hazardous Material or wastes discovered on the Premises or
Property which were not introduced into, in, on, about, from or under the
Premises or Property during the Lease Term or ground water contamination from
other parcels where the source is from off the Premises or Property not arising
from or caused by Lessee or Lessee's Agents.
33. BROKERS:
Lessor and Lessee represent that they have not utilized or contacted a real
estate broker or finder with respect to this Lease other than Xxxxxx X. Xxxxxxx,
Inc. and Lessee agrees to indemnify and hold Lessor harmless against any claim,
cost, liability or cause of action asserted by any broker or finder claiming
through Lessee other than Xxxxxx X. Xxxxxxx, Inc.. Lessor shall at its sole cost
and expense pay the brokerage commission of $3.50 per square foot of leased
space to Xxxxxx X. Xxxxxxx, Inc., one half (1/2) five (5) days after lease
execution by Lessee and Lessor discounted at 7% for eleven (11) months and one
half (1/2) on Commencement Date, in connection with this transaction. Lessor
represents and warrants that it has not utilized or contacted a real estate
broker or finder with respect to this Lease other than Xxxxxx X. Xxxxxxx, Inc.
and Lessor agrees to indemnify and hold Lessee harmless against any claim, cost,
liability or cause of action asserted by any broker or finder claiming through
Lessor. In the event this lease transaction becomes null and void prior to
Commencement Date, Xxxxxx X. Xxxxxxx, Inc. agrees to immediately return to
Lessor any commission paid by Lessor.
34. OPTIONS TO EXTEND:
A. OPTION:
Lessor hereby grants to Lessee three (3) options to extend the Lease Term, with
each extended term to be for a period of five (5) years, on the following terms
and conditions:
(i) Lessee must provide Lessor written notice of its intent to exercise its
option as provided hereunder at least twelve (12) months before the Lease
Term would end but for said exercise for purposes of negotiating rental
terms. Lessee may withdraw its notice of exercise of an extension option
for any reason prior to nine (9) months before the Lease Term would end but
for said exercise. Lessor shall provide Lessee with Lessor's proposed base
monthly rent for the option period within twenty (20) days of Lessee's
request. However, once Lessee delivers a notice of exercise of an option to
extend the Lease Term it may not be withdrawn unless notice in writing is
provided to Lessor at least nine (9) months before the Lease Term would end
but for said exercise and, subject to the provisions of this Section 34,
such notice shall operate to extend the Lease Term. Upon any extension of
the Lease Term pursuant to this Section 34, the term "Lease Term" as used
in this Lease shall thereafter include the then extended term. Time is of
the essence.
(ii) Lessee may not extend the Lease Term pursuant to any option granted by
this Section 34 if Lessee is in material default as of the date of the
exercise of one of its options. If Lessee has committed a default by Lessee
as defined in Section 14 or 32 that has not been cured or waived by Lessor
in writing by the date that any extended term is to commence, then Lessor
may elect not to allow the Lease Term to be extended, notwithstanding any
notice given by Lessee of an exercise of this option to extend.
(iii)Lessee must exercise each option consecutively, and if it fails to
exercise any one option, it waives the right to exercise the subsequent
option and the Lease Term shall not be extended further.
(iv) All terms and conditions of this Lease shall apply during each
extended term, except that the base rent and rental increases for each
extended term shall be determined as provided in Section 34 (B) below.
(v) The preferential option rights of Microsoft Corporation granted under
this Section 34 are granted for Microsoft Corporation personal benefit and
may not be assigned or transferred by Microsoft Corporation except to a
Permitted Entity. Microsoft, or a Permitted Entity, may assign or transfer
option rights to an entity that is not a Permitted Entity only if Lessor
receives 100% of the then market rent for such space, with no reduction or
offset for expenditures made by Lessee, such as leasing commissions,
marketing costs, or tenant improvements. Such fair market rent shall be
agreed to by Lessee and Lessor, and if the parties cannot agree on such
rent within ten (10) of the date Lessee and Lessor first meet, then the
matter shall be submitted to arbitration in the manner set forth in Section
34.B below. No such sublease or assignment shall be deemed to release
Lessee from its obligations under this Lease.
(vi) Provided Lessee meets all of the terms and conditions stated in this
Section 34, Lessor agrees that Lessee may exercise any future option on
less than all five buildings provided that Lessee exercises its option on a
minimum of two entire buildings and only for entire buildings. Once Lessee
has waived its option for a building or buildings, the options on those
buildings are terminated. If Lessee vacates only one building it shall be
building #2, if two (2) buildings are vacated they shall be buildings #2
and #5, and if three (3) buildings are vacated they shall be Xxxxxxxxx #0,
#0, and #5.
B. EXTENDED TERM RENT - OPTION PERIOD:
The monthly base rent for the Premises during the extended term shall equal
ninety-five percent (95%) of the fair market monthly rent for premises in Mt.
View/Palo Alto locations of comparable size, and of similar quality to the
building shown on Exhibit F, which is of a concrete "tilt up" design, with steel
frame second decks, "Texcoat" (or equivalent) exterior finish, and high
performance reflective glass, but in no case shall such monthly base rent be
less than $3.40 per square foot NNN on exercise of first option. Promptly upon
Lessee's exercise of the option to extend, Lessee and Lessor shall meet and
attempt to agree on the fair market monthly Rent for the Premises as of the
commencement date of the extended term. In the event the parties fail to agree
upon the amount of the monthly Rent for the extended term prior to commencement
thereof, both parties agree to submit the matter to binding arbitration. Such
arbitration shall be conducted by JAMS with a retired judge selected by JAMS who
is competent in commercial real estate matters and shall take place either in
San Xxxx or San Francisco, California. The arbitration shall be "baseball"
arbitration with the arbitrator instructed to either select the amount set forth
by Lessee or the amount set forth by Lessor, but without any authority to
average or otherwise compromise the parties' claims. Annual base rent increases
during the extended term shall be four percent (4%) per year.
35. APPROVALS:
Whenever in this Lease the Lessor's or Lessee's consent is required, such
consent shall not be unreasonably or arbitrarily withheld, conditioned or
delayed. Unless otherwise provided in this Lease, in the event that the Lessor
or Lessee does not respond to a request for any consents which may be required
of it in this Lease within ten (10) business days after receipt of the request
of such consent in writing by the Lessee or Lessor, such consent shall be deemed
to have been given by the Lessor or Lessee.
36. AUTHORITY:
Each party executing this Lease represents and warrants that (i) he or she is
duly authorized to execute and deliver the Lease, and if executed on behalf of a
corporation, that the Lease is executed in accordance with the by-laws of said
corporation (or a partnership that the Lease is executed in accordance with the
partnership agreement of such partnership), (ii) no other party's approval or
consent to such execution and delivery is required, and (iii) the Lease is
binding upon said individual, corporation (or partnership) as the case may be in
accordance with its terms.
37. INDEMNIFICATION OF LESSOR:
Except as caused by the sole negligence or willful misconduct of Lessor or
Lessor's Agents, Lessee shall defend, indemnify and hold Lessor harmless from
and against any and all obligations, losses, costs, expenses, claims, demands,
reasonable attorneys' fees, investigation costs or liabilities on account of, or
arising out of the use, condition or occupancy of the Premises or any act or
omission to act of Lessee or Lessee's Agents or any occurrence in, upon, about
or at the Premises, including, without limitation, any of the foregoing
provisions arising out of the use, generation, manufacture, installation,
release, discharge, storage, or disposal of Hazardous Materials by Lessee or
Lessee's Agents. It is understood that Lessee is and shall be in control and
possession of the Premises and that Lessor shall in no event be responsible or
liable for any injury or damage or injury to any person whatsoever, happening
on, in, about, or in connection with the Premises, or for any injury or damage
to the Premises or any part thereof except as caused by the sole negligence or
willful misconduct of Lessor or Lessor's Agents. This Lease is entered into on
the express condition that Lessor shall not be liable for, or suffer loss by
reason of injury to person or property, from whatever cause, other than the sole
negligence or willful misconduct of Lessor or Lessor's Agents, which in any way
may be connected with the use, condition or occupancy of the Premises or
personal property located therein. The provisions of this Lease permitting
Lessor to enter and inspect the Premises are for the purpose of enabling Lessor
to become informed as to whether Lessee is complying with the terms of this
Lease and Lessor shall be under no duty to enter, inspect or to perform any of
Lessee's obligations set forth in this Lease. Lessee shall further indemnify,
defend and hold harmless Lessor from and against any and all claims arising from
any breach or default in the performance of any obligation of the Lessee to be
performed under the terms of this Lease. The provisions of Section 37 shall
survive the Lease Term or earlier termination of this Lease with respect to any
damage, injury or death occurring during the Lease Term.
38. SUCCESSORS AND ASSIGNS:
The covenants and conditions herein contained shall, subject to the provisions
as to assignment, apply to and bind the heirs, successors, executors,
administrators and assigns of all of the parties hereto; and all of the parties
hereto shall be jointly and severally liable hereunder.
39. MISCELLANEOUS PROVISIONS:
All rights and remedies hereunder are cumulative and not alternative to the
extent permitted by law and are in addition to all other rights or remedies in
law and in equity.
40. CHOICE OF LAW:
This lease shall be construed and enforced in accordance with the substantive
laws of the State of California. The language of all parts of this lease shall
in all cases be construed as a whole according to its fair meaning and not
strictly for or against either Lessor or Lessee.
41. INTENTIONALLY OMITTED:
42. RIGHT OF REFUSAL:
As long as Lessee is leasing two (2) or more entire buildings on the Property,
Lessor will give Lessee a first right of refusal to lease any portion of
Property that becomes available in the future for lease (the "Additional Space")
on the same terms and conditions offered by Lessor. If Lessee does not desire to
lease Additional Space on the terms offered by Lessor, Lessor will again offer
the space to Lessee when acceptable terms have been agreed upon with another
lessee. Once Lessor and the acceptable lessee have agreed to basic business
terms for lease of the Additional Space, Lessor shall provide Lessee written
notice of such terms. Lessee shall have ten (10) business days after the receipt
of Lessor's notice to elect to lease the Additional Space under the stated
business terms. If Lessee elects to lease the Additional Space, Lessor and
Lessee agree to amend this Lease to include the Additional Space and the
applicable business terms. If Lessee does not elect to lease the Additional
Space, and Lessor does not, within one hundred twenty (120) days after the ten
(10) business day period, lease the Additional Space to the acceptable lessee
stated in Lessor's notice, or if any such space is leased to the acceptable
lessee in accordance with this Article 42 and again becomes available for lease,
then the space shall again be subject to Lessee's right of first refusal.
43. EXCLUSIVITY:
Lessee's consent shall be required, provided Lessee is leasing three (3) or more
entire buildings on the Property, prior to Lessor's leasing any additional space
on the Property to Netscape, Oracle, Sun Microsystems, or IBM or their
successors. This consent shall extend to any affiliates (where an affiliate is
any company that controls, is controlled by, or under common control with any
one of the aforementioned companies) or subsidiaries of the aforementioned
companies. The granting or withholding of this consent shall be in Lessee's sole
and absolute discretion.
44. RIGHT TO FIRST OFFER TO PURCHASE:
During the Lease Term, except for transfers to Xxxx Family controlled entities,
to an affiliate of Lessor, to a Xxxx Family controlled REIT or operating
partnership of such REIT, or to an entity that acquires substantially all of the
assets of any such entity through a merger or acquisition, prior to Lessor
accepting any offer to purchase the Premises or any part thereof, and prior to
Lessor making any offer to sell the Premises or any part thereof, Lessor shall
give Lessee written notice of such offer and shall include in such notice the
price and terms of sale and a statement that Lessor is willing to sell at that
price and on those terms of sale. Lessee shall have the option, which may be
exercised by written notice to Lessor at any time within thirty (30) calendar
days from the receipt of the Lessor's notice to agree to purchase the property
being sold at the price and on the terms of sale specified in the notice, to
Lessee, provided, however, that if such terms provided for an exchange of
property as part of the purchase, Lessee shall purchase the property to be
exchanged upon the terms and at the price specified in the notice and thereafter
exchange such property in exchange for the property being sold on the basis
specified in the notice. If Lessee fails to exercise its option within the
30-day period, Lessor shall have 270 days thereafter to sell at the price and on
the terms of sale specified in the notice to Lessee.
If Lessor elects, within 270 days of Lessor's notice, to sell the Premises, or
any part thereof, to a third party on terms more favorable to the third party
buyer than the terms set forth in Lessor's notice, then Lessor must re-offer the
property being sold, to Lessee on the same terms and conditions offered to the
third party buyer ("Lessor's Second Notice"). Lessee shall have fifteen (15)
calendar days from Lessee's receipt of Lessor's Second Notice to elect to buy
the property being sold. If Lessee does not respond in writing accepting all
terms and conditions, Lessor shall thereafter be entitled to sell such property
to any third party on the terms and conditions set forth in Lessor's Second
Notice or on other terms and conditions at least as favorable to Lessor as said
terms and conditions in Lessor's Second Notice for a period of 270 days after
which Lessee's Right of First Offer to Purchase shall again be in effect for the
Premises or any part thereof owned by Lessor.
45. OWNERSHIP AND AUTHORITY:
Lessor represents and warrants to Lessee that as of the date of this Lease (i)
there are no restrictions or encumbrances on the Premises that would prohibit
Lessee's construction and use of the Lessee Improvements (assuming they are
constructed in accordance with the requirements of the City of Mountain View),
and (ii) Lessor has full right and lawful authority to enter into and perform
Lessor's obligations under this Lease.
46. CONFIDENTIALITY:
Lessor agrees that the terms and conditions of this Lease and details regarding
its negotiation are and shall remain confidential between Lessor and Lessee
except as disclosed by the recording of a Memorandum of Lease acceptable to
Lessee. Lessor shall not distribute, copy or otherwise submit, orally or in
writing, this Lease or any summary thereof, to any other person or entity,
except as required by laws or rules promulgated by governmental agencies,
including without limitation applicable securities laws. In addition, Lessor
shall make no announcements regarding Lessee's proposed or actual occupancy of
the Premises without Lessee's prior written consent, which Lessee may withhold
in its sole discretion. Lessee's consent shall not be required if the public
disclosure is required by laws or rules promulgated by governmental agencies,
including without limitation applicable securities laws. In addition, all
information learned by or disclosed to Lessor with respect to Lessee's business
or information disclosed or discovered during an entry by Lessor into the
Premises, shall be kept strictly confidential by Lessor, Lessor's legal
representatives, successors, assigns, employees, servants and agents and shall
not be used (except for Lessor's confidential internal purposes) or disclosed to
others by Lessor, or Lessor's servants, agents, employees, legal
representatives, successors or assigns, without the express prior written
consent of Lessee, which Lessee may withhold in its sole and absolute
discretion.
47. INTERPRETATION:
This Lease was drafted based upon contributions by both parties and their
respective legal counsel and is not to be considered as being authored by either
party for the purpose of resolving any ambiguities.
48. ENTIRE AGREEMENT:
This Lease is the entire agreement between the parties, and there are no
agreements or representations between the parties except as expressed herein.
Except as otherwise provided for herein, no subsequent change or addition to
this Lease shall be binding unless in writing and signed by the parties hereto.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease, the day and year
first above written.
LESSOR LESSEE
MISSION WEST PROPERTIES, L.P., MICROSOFT CORPORATION
A DELAWARE LIMITED PARTNERSHIP
By: Xxxx & Xxxx Enterprises, Inc., General Partner
By: /s/ Xxxx X. Xxxx By: /s/ Xxxxx Xxxxxxx
--------------------------- ---------------------------
signature of authorized
representative
Xxxx X. Xxxx Xxxxx Xxxxxxx
--------------------------------- -------------------------------
Printed name Printed name
President Director, Real Estate & Facilities
--------------------------------- -------------------------------
Title Title
--------------------------------- -------------------------------
Date Date
LIST OF EXHIBITS
Exhibit A.1 Legal Description of the property
Exhibit A.2 Site plan showing buildings (to be attached later)
Exhibit A.3 Description of Off-Site Work
Exhibit A.4 City of Mt. View Findings Report/Zoning Permit
Exhibit B Description of Building Shells
Exhibit C Plans and specs for Building Shells (to be
attached later)
Exhibit D Plans and specs for Lessee's Interior Improvement
(to be attached later)
Exhibit E Letter from Regional Water Quality Control Board,
dated 11/3/94
Exhibit F Type of Buildings
EXHIBIT A.1
Legal Description
EXHIBIT A.2
Site plan showing buildings
EXHIBIT A.3
Description of Off-Site Work
The specific items listed below shall be deemed "Off-Site Work" and shall
be completed by Lessor. All of the Off-Site Work shall be done as soon as
reasonably possible, but in all cases all work required for Lessee's occupancy
of the Premises shall be completed at least sixty (60) days before occupancy by
Lessee and in a manner that will not unreasonably delay Lessee's completion of
the Lessee Improvements. Lessor shall not be responsible for any work with
respect to the development of the Property or any fees or costs related thereto
other than as listed below. Lessor shall be responsible for completing such work
in a timely manner and to the satisfaction of the City of Mountain View. Lessor
shall pay for all costs related to such work, including the cost of permits and
inspection fees. The following specifically listed items shall be deemed
"Off-Site Work":
ITEM # DESCRIPTION OF ITEM
-------- --------------------
1 Lot line adjustments.
2 Vacation of City right of way.
3 Bonds related to Off-Site Work only.
4 Property taxes prorated until the Commencement Date.
5 Fees and permits related to the Off-Site Work only.
6 Certain items in the City of Mt. View Findings Report/Zoning Permit, attached as
Exhibit A.4. Specifically, item numbers 7, 8, 20, 21, 27g., 32-47, 56, 57 63,66
and 67. Lessor agrees to obtain Lessees review and approval for items 7, 56 and
57, which shall not be unreasonably withheld, conditioned or delayed. Further,
Lessor agrees to perform the Off-Site Work portion (if any) of item numbers 18,
25 and 64.
For clarification purposes, "Off-Site Work" shall only include the
above-listed items commencing at the back of the street curb and going forward.
As part of the street work to be done by Lessor, Lessor will also include a
10-inch fire service line to the Property from Macon Avenue at approximately the
mid-point of Macon Avenue.
EXHIBIT A.4
City of Mt. View Findings Report/Zoning Permit
Exhibit B
Description of Building Shells
The building shell ("Building Shell") includes the following items, unless
modified by mutual agreement of Lessor and Lessee, in customary quantities and
quality. All items not listed are part of Lessee Interior Improvements.
Exterior walls
Foundations
Floors slabs (level in accordance with industry standards)
Roof structures and membrane
Glazing, glass and window wall
Exterior doors
Truck doors
Loading docks, ramps and bumpers
Landscaping, including irrigation, hardscape and walkways
Parking, paving, curbs, gutters and striping
Storm sewer line to building and connection to rain water drain (including
roof drains and overflow drains)
Sanitary sewer line to buildings - 6"
Water line to buildings -3"
Paint and stucco on exterior walls
Permits for shell
Shell architect & engineer
All permits fees and design drawings for the above items, including
connection charges
Building Shell only includes the items specifically listed above.
1. No electrical of any kind including parking lot
2. No fire sprinkler including underground lines to building or on site
hydrants
3. No roof screens
4. No elevators or stairs, we do include provisions for one elevator pit per
building
5. Sewer usage fees are part of the Lessee Interior Improvements.
EXHIBIT C
Plans and specs for Building Shells
(to be attached later)
EXHIBIT D
Plans and specs for Lessee's Interior Improvement
(to be attached later)
EXHIBIT E
Letter from Regional Water Quality Control Board,
dated 11/3/94
EXHIBIT F
Type of Buildings
