1
EXHIBIT 10.8
SUBLEASE
This Sublease ("Sublease") is entered into on this 6 day of May, 1997 by and
between SYMMETRICOM, INC., a California corporation ("Sublandlord") and BROCADE
COMMUNICATIONS SYSTEMS, INC., a California corporation ("Subtenant") as a
Sublease under that certain lease (the "Master Lease") dated June 10, 1996 by
and between Sublandlord, as "tenant", and Nexus Equity, Inc., a California
corporation ("Master Landlord"), as "landlord".
1. RECITALS. This Sublease is made with reference to the following
facts and with the following intentions:
1.1 Pursuant to the Master Lease, Master Landlord has agreed to
construct and lease to Sublandlord a certain approximately one hundred seventeen
thousand seven hundred thirty-nine (117,739) square foot building located at
0000 Xxxxxxxxx Xxxxxxx and 0000 Xxxxxxx Xxxxxxx, Xxx Xxxx, Xxxxxxxxxx, together
with all immediately adjacent outside areas and appurtenances related thereto
and shown on the site plan (the "Site Plan") attached hereto as Exhibit A
(collectively, the "Master Premises"). A true, complete and correct copy of the
Master Lease, which includes all exhibits, addenda, and amendments thereto, is
attached hereto as Exhibit B.
1.2 Sublandlord now desires to sublease a portion of the Master
Premises to Subtenant and Subtenant desires to sublease a portion of the Master
Premises from Sublandlord, on the terms and conditions set forth in this
Sublease.
2. SUBLEASED PREMISES.
2.1 Sublandlord hereby subleases to Subtenant and Subtenant
hereby subleases from Sublandlord for the term at the rental, and upon all of
the conditions set forth herein, a portion of the Master Premises consisting of
approximately thirty-five thousand three hundred seventy (35,370) square feet of
Rentable Area in the location and configuration shown on Exhibit A-1 attached
hereto (the "Subleased Premises").
2.2 Sublandlord also hereby grants Subtenant the non-exclusive
right to use for their intended purposes the outside areas designated on the
Site Plan as common area not intended for the exclusive use of any occupant of
the Master Premises. Subtenant shall not have the right to use any areas with
the building not specifically designated as common area including, without
limitation, the elevator and any interior corridors, stairways, doorways and
restrooms not so designated. Notwithstanding the foregoing, Subtenant shall have
the right, during normal business hours, upon prior reasonable notice to
Sublandlord, to use the elevator solely for the purpose of (i) moving
Subtenant's equipment in and out of the building, and (ii) provided handicapped
access to those whose are unable to use the stairwell to access the second floor
of the Master Premises or to the extent required by the Americans With
Disabilities Act. Subtenant shall have the right to use one
2
hundred thirty (130) parking spaces in the location shown on the Site Plan.
Subtenant shall not at any time use more parking spaces than the number so
allocated to Subtenant or park its vehicles in any portion of the Master
Premises not designated for the use of Subtenant.
2.3 On the Commencement Date, Sublandlord shall deliver to
Subtenant the Subleased Premises substantially in accordance with that certain
space plan dated April 11, 1997 approved by Sublandlord and Subtenant and
attached hereto as Exhibit C. Subtenant shall accept the Subleased Premises in
their then existing condition, "as is" and shall waive any right or claim
Subtenant may have against Sublandlord arising out of the condition of the
Subleased Premises. Subtenant shall promptly notify Sublandlord in writing of
any deficiencies or defects that Subtenant discovers in the Subleased Premises.
Sublandlord shall use reasonable efforts to enforce the warranties, covenants
and representations made by Master Landlord pursuant to Sections 14.4, 14.5 and
39 of the Master Lease, the obligation of Master Landlord to complete
"punch-list" items pursuant to the terms of the Work Letter attached to the
Master Lease, and any other obligation of Master Landlord set forth in the
Master Lease with respect to the construction of the Master Premises. Except for
Sublandlord's obligations stated in the immediately preceding sentence,
Sublandlord shall not be obligated to repair any defects or deficiencies in the
work required to be constructed by Master Landlord pursuant to the terms of the
Master Lease and Sublandlord shall not be liable for any failure by Master
Landlord to perform its obligations in this regard under the Master Lease.
Sublandlord shall use reasonable efforts to enforce any warranties contained in
the owner-contractor agreement between Sublandlord and Devcon Construction, Inc.
for the benefit of Subtenant.
3. TERM.
3.1 The term of this Sublease (the "Sublease Term") shall
commence on that date (the "Commencement Date") which is the later to occur of
(i) June 1, 1997 or (ii) the date that Tenant's Improvements (as that term is
defined in the Work Letter) are substantially complete (as that term is defined
in Section 4.2 of the Master Lease) and shall expire on the date which is
forty-two (42) months following the Commencement Date, unless this Sublease is
sooner terminated pursuant to its terms or the Master Lease is sooner terminated
pursuant to its terms. Accordingly, if the Commencement Date occurs on June 1,
1997, the Sublease Term shall expire on November 30, 2000. Notwithstanding the
foregoing to the contrary, if Subtenant enters upon and uses the Subleased
Premises for the purpose of conducting its business therein (as opposed to
installing its trade fixtures and equipment as permitted in Section 3.3 hereof),
then the Commencement Date shall become that date on which Subtenant uses the
Subleased Premises for such purpose.
3.2 If Sublandlord is unable to deliver possession of the
Subleased Premises to Subtenant for any reason whatsoever on or before June 1,
1997, then this Sublease shall not be void or voidable, nor shall Sublandlord be
liable to Subtenant for any loss or damage; however, in such event, Base Monthly
Rent and Additional Rent shall be abated until such date (the "Delivery Date")
-2-
3
as Sublandlord delivers possession of the Premises to Subtenant substantially
complete, in which event the Delivery Date shall be deemed to be the
Commencement Date.
3.3 On the Effective Date, Subtenant shall have the right to
enter upon the Subleased Premises solely for the purpose of installing its trade
fixtures and equipment in the Subleased Premises so long as such entry does not
interfere with any work then being conducted by Sublandlord's contractor and
subcontractors. Such entry shall be subject to all of the terms of this Sublease
(including, without limitation, the obligations regarding indemnity and
insurance) except those regarding the obligation to pay Rent.
4. RENT.
4.1 Commencing on the Commencement Date and thereafter on the
first day of each calendar month occurring thereafter during the remainder of
the Sublease Term, Subtenant shall pay to Sublandlord the following sums as base
monthly rent ("Base Monthly Rent"):
(a) Fifty-Nine Thousand Four Hundred Twenty-One Dollars and
Sixty Cents ($59,421.60) for the period commencing on the Commencement Date and
continuing until the first anniversary of the Commencement Date;
(b) Sixty-One Thousand One Hundred Ninety Dollars and Ten
Cents ($61,190.10) for the period commencing on the first anniversary of the
Commencement Date and continuing until the second anniversary of the
Commencement Date;
(c) Sixty-Two Thousand Nine Hundred Fifty-Eight Dollars and
Sixty Cents ($62,958.60) for the period commencing on the second anniversary of
the Commencement Date and continuing until the third anniversary of the
Commencement Date; and
(d) Sixty-Four Thousand Seven Hundred Twenty-Seven Dollars
and Ten Cents ($64,727.10) for the period commencing on the third anniversary of
the Commencement Date and continuing until the expiration of the Sublease Term.
4.2 Sublandlord and Subtenant agree as follows with regard to
Subtenant's obligation to pay additional rent:
(a) As additional rent, commencing on the Commencement Date
and continuing throughout the Sublease term, Subtenant shall pay to, or
reimburse Sublandlord for, the following costs and expenses (collectively,
"Operating Costs") (i) all Additional Rent (as that term is defined in the
Master Lease) payable by Sublandlord to Master Landlord under the Master Lease
to the extent fairly allocable to the Subleased Premises (including, without
limitation the portion of the Management Fee described in Section 7.1 of the
Master Lease that is fairly allocable to the Subleased Premises); (ii) all costs
and expenses for which Sublandlord is responsible pursuant to
-3-
4
Section 7.2 of the Master Lease and all costs and expenses incurred by
Sublandlord in discharging its obligations pursuant to Section 7.2 of the Master
Lease to the extent such costs and expenses are fairly allocable to the
Subleased Premises; (iii) any other costs or expenses incurred by Sublandlord in
repairing, maintaining, replacing, restoring and insuring (including the cost of
both casualty and liability insurance carried by Sublandlord and/or, to the
extent reimbursable by Sublandlord under the Master Lease, Master Landlord) the
Master Premises to the extent fairly allocable to the Subleased Premises; (iv)
all costs, charges and expenses incurred by Sublandlord for utilities
(including, without limitation, the cost of the operation of the heating,
ventilating and air conditioning system, and charges for electricity, water and
sewer, as more particularly set forth in Section 4.3 hereof) to the extent
fairly allocable to the Subleased Premises; (v) all costs and expenses incurred
by Sublandlord in providing any other services to the Subleased Premises
(including, without limitation, janitorial service and any costs incurred by
Sublandlord for third-party property management services) to the extent fairly
allocable to the Subleased Premises; and (vi) all taxes, assessments and other
levies and charges required to be paid by Sublandlord pursuant to Section 13 of
the Master Lease to the extent fairly allocable to the Subleased Premises.
Notwithstanding the foregoing to the contrary, Subtenant shall not be required
to pay any additional rent that is payable as a result of a default by
Sublandlord of any of its obligations under the Master Lease.
(b) Subtenant shall be entitled to the benefit of all rebates
on account of taxes, rates, levies, charges and assessments received by
Sublandlord pursuant to Section 13.4 of the Master Lease to the extent fairly
allocable to the Subleased Premises and the Sublease Term.
(c) Except as otherwise provided below in this subsection,
Subtenant shall pay all Operating Costs in advance in estimated monthly
installments, in accordance with the following: (i) Sublandlord shall deliver to
subtenant Sublandlord's reasonable estimate of Operating Costs it anticipates
will be paid or incurred for the ensuing twelve (12) - month period; (ii) during
the first year of the Sublease Term, Sublandlord shall have the right to adjust
it estimate of Operating Costs on a quarterly basis and to adjust the monthly
installment payable by Subtenant to reflect such revised estimate, (iii) during
such twelve (12) - month period Subtenant shall pay to Sublandlord Operating
Costs in advance in monthly installments as required by Sublandlord due with
monthly installments of Base Monthly Rent; and (iv) within ninety (90) days
after the end of each such twelve (12) - month period, Sublandlord shall furnish
to Subtenant a statement in reasonable detail of the actual amount of Operating
Costs paid or incurred by Sublandlord during the just ended twelve (12) -month
period and thereupon there shall be an adjustment between Sublandlord and
Subtenant, with payment to Landlord or credit by Landlord against the next
installment of Base Monthly Rent, as the case may require, within ten (10) days
after delivery by Sublandlord to Subtenant of said. In addition to the
foregoing, Sublandlord shall have the right to xxxx Subtenant for any
non-recurring or extraordinary Operating Cost on a case-by-case basis, in which
event Subtenant pay to Sublandlord its share of such Operating Cost within
fifteen (15) days after Subtenant shall have received written demand for such
payment together with substantiating documentation therefor.
(d) All amounts in addition to Base Monthly Rent required to
be paid by Subtenant under this sublease shall be deemed to be rent ("Rent").
-4-
5
(e) The parties hereto acknowledge paragraphs 7.2 and
portions of Section 13 of the Master Lease are not incorporated into this
Sublease by reference and that the terms of this Section 4.2 govern the
obligations of Subtenant to pay the amounts set forth in said Sections 7.2 and
13.
4.3 Subtenant acknowledges that only a portion of the Subleased
Premises shall be separately metered for utilities. Accordingly, the parties
agree as follows:
(a) The cost of electricity to the area of the Subleased
Premises which is separately metered shall be charged to Subtenant at the rate
charged by PG&E to Sublandlord therefor; and
(b) The cost of electricity to the area of the Subleased
Premises which is not separately metered also shall be charged to Subtenant at
the rate charged by PG&E to Sublandlord therefor and Subtenant shall reimburse
Sublandlord, as additional rent, the cost of such electricity which is fairly
allocable to the Subleased Premises as reasonably determined by Sublandlord.
4.4 Subtenant shall pay Base Monthly Rent to Sublandlord in
advance of the first day of each month of the term hereof. Rent for any period
during the term hereof which is for less than one month shall be a pro rata
portion of the monthly installment. Rent shall be payable without deduction or
offset to Sublandlord at the address stated herein. If the Subleased Premises
shall be delivered to Subtenant on a day other than the first day of a calendar
month, then Subtenant shall pay, upon Subtenant's possession of the Subleased
Premises, a pro rata portion of Base Monthly Rent and additional rent, prorated
on a per diem basis, with respect to the portion of the first fractional
calendar month of Subtenant's possession of the Subleased Premises.
4.5 In a variety of places throughout this Sublease, the parties
have provided that certain costs will be paid by Sublandlord or Subtenant based
upon the extent to which such amounts are "fairly allocable" to the Subleased
Premises. This concept shall generally mean that an expense shall be allocated
to the Subleased Premises based upon the ratio that the Rentable Area of the
Subleased Premises bears to the Rentable Area of the Master Premises. For
example, real property taxes which are "fairly allocable" to the Subleased
Premises would be determined by multiplying the fraction 35,370/117,739 by the
total amount of real property taxes due under the Master Lease for the Master
Premises. However, if an item of expense relates only to the Subleased Premises,
and does not affect the remainder of the Master Premises (e.g., a repair of a
portion of the Subleased Premises), then the amount which is "fairly allocable"
to the Subleased Premises would be one hundred percent (100%) of the cost of the
repair, and if an item of expense relates only to the portions of the Master
Premises other than the Subleased Premises, and does not affect the Subleased
Premises, then the amount which is "fairly allocable" to the Subleased Premises
would be zero.
4.6 Upon execution hereof, Subtenant shall pay to Sublandlord the
sum of Seventy-Five Thousand Dollars ($75,000) to reimburse Sublandlord for a
portion of certain costs
-5-
6
incurred by Sublandlord in constructing tenant improvements in the Subleased
Premises for Subtenant.
-6-
7
5. USE.
5.1 The Subleased Premises shall be used solely for office,
research and development, assembly and testing of computer modules and systems,
and warehousing and may not be used for any other purpose without the prior
written consent of Sublandlord, which consent may be withheld in Sublandlord's
sole and absolute discretion. Notwithstanding anything to the contrary in this
Sublease or Section 39 of the Master Lease as incorporated into this Sublease,
in no event shall Subtenant or its agents, employees, contractors, invitees,
subtenants or assignees use, store, dispose of, release, manufacture, recycle,
treat, discard, transport or otherwise bring upon, keep or use any Hazardous
Material in, on, to, or about the Subleased Premises (other than customary
quantities and types of Hazardous Materials used solely for office and
janitorial purposes). Notwithstanding the foregoing to the contrary: (i)
Subtenant may use Hazardous Materials of the type and in the quantities
described in Exhibit E attached hereto to the extent such Hazardous Materials
are required for the continued operation of Subtenant's business in the
Subleased Premises for the uses permitted under this Section 5.1 (the "Permitted
Hazardous Materials"); (ii) if Subtenant desires to use any Hazardous Materials
which are not Permitted Hazardous Materials or Permitted Hazardous Materials of
a quantity in excess of those set forth in Exhibit E, Subtenant shall first
obtain Sublandlord's prior written consent to such use and/or quantity, which
consent shall not be unreasonably withheld; (iii) the Permitted Hazardous
Materials shall be used strictly in compliance with all applicable laws, rules,
regulations, ordinances, fire underwriters' requirements, codes, the provisions
of the Master Lease, and in accordance with the storage procedures described in
Exhibit E; and (iv) prior to bringing any Permitted Hazardous Materials onto the
Leased Premises, Subtenant shall present to Sublandlord for its consent, a
hazardous materials management plan prepared by Subtenant and acceptable to the
City of San Xxxx Fire Department (provided however, that Sublandlord shall
assume no responsibility for the adequacy or completeness of such plan by reason
of such consent) . Notwithstanding the foregoing to the contrary, the limited
right of Subtenant to use Hazardous Materials pursuant to this Section 5.1 is
personal to Brocade Communications Systems, Inc., and accordingly, no subtenant,
assignee of the Sublease or other occupant of the Subleased Premises shall use,
store, dispose of, release, manufacture, recycle, treat, discard, transport or
otherwise bring upon, keep or use any Hazardous Material in, on, to, or about
the Subleased Premises (other than customary quantities and types of Hazardous
Materials used solely for office and janitorial purposes).
5.2 Subtenant acknowledges that an "antenna farm" will be located
on the roof of the building and agrees that at no time shall Subtenant or any of
its employees, agents, contractors, invitees, subtenant or assignees enter upon
the roof for any reason whatsoever; provided however, if Subtenant has installed
an antenna on the roof pursuant to this Section 5.2, Subtenant may enter upon
the roof with the prior written consent of Sublandlord and, at Sublandlord's
election, accompanied by Sublandlord, for the sole purpose of repairing,
maintaining or otherwise attending to such antenna . Sublandlord reserves the
exclusive right to use the roof and Subtenant shall have no right to use the
roof for any reason except to the extent expressly provided in the immediately
preceding sentence. Subtenant further acknowledges that a portion of the antenna
farm is located directly above the portion of the Subleased Premises located on
the second floor of the building and
-7-
8
the preferred access from the building thereto is through an electrical closet
located within the Subleased Premises. Sublandlord and Sublandlord's employees,
agents and contractors shall have the right to enter the Subleased Premises at
all reasonable times, upon reasonable notice, and during business hours to
access the antenna farm through such electrical closet. Subtenant shall have the
right to accompany Sublandlord at all times. Sublandlord shall use reasonable
efforts to minimize any interference with Subtenant's business that may be
caused by such entry. Subtenant shall have the right to install an antenna dish
on the roof of the building in accordance with the following: (i) if the
diameter of the dish in thirty-six (36) inches or less, the dish may be
installed on Sublandlord's antenna deck located on the east wing of the
building; and (ii) if the diameter of the dish exceeds thirty-six (36) inches,
the dish shall be located within the area enclosed by the roof screen in a
location approved by Sublandlord. The roof "hatches" within the Subleased
Premises and the Master Premises shall remain unlocked at all times, but may be
monitored by a security system.
5.3 Subtenant acknowledges that neither Sublandlord nor
Sublandlord's agents has made any representation or warranty to Subtenant with
regard to the Premises including, without limitation, the suitability of the
Premises for the conduct of Subtenant's business, the physical, environmental
and economic condition and the compliance of the Premises with applicable legal
requirements except as otherwise expressly provided herein.
5.4 Subtenant acknowledges that Subtenant is entering into this
Sublease and accepts the Premises on the basis of Subtenant's independent
evaluation and investigation of the Premises including, without limitation, the
matters referred to in Paragraph 5.3 above.
6. MASTER LEASE.
6.1 This Sublease is subject and subordinate to the Master Lease.
Upon any termination of the Master Lease, this Sublease shall also terminate.
Subtenant shall not commit or permit to be committed any act or omission which
shall violate any term or conditions of the Master Lease or this Sublease.
Subtenant expressly assumes and agrees to perform for the term of this Sublease,
and any extension or renewal hereof, all of the obligations on the part of the
"Tenant" to be performed under the Master Lease to the extent fairly allocable
to the Subleased Premises except as otherwise expressly provided herein;
provided however, that Subtenant shall not be required to perform any obligation
under the Master Lease that is required as a result of a default by Sublandlord
of any of its obligations under the Master Lease.
6.2 All of the terms and conditions contained in the Master Lease
that are set forth in subparagraph 6.2(g) below are incorporated into this
Sublease as if fully set forth herein subject to the following and any
additional exceptions set forth in said subparagraph 6.2(g):
(a) all references in such incorporated provisions to
"Landlord", "Tenant", "Premises", "Lease" and "Basic Annual Rent" for the
purposes of this Sublease shall be deemed to
-8-
9
refer respectively to "Sublandlord", "Subtenant", the "Subleased Premises" this
"Sublease" and "Base Monthly Rent" as such terms are defined in this Sublease.
(b) in any case where under the incorporated provisions of
the Master Lease the "Landlord" reserves or is granted the right to manage,
supervise, control, repair, alter, regulate the use of, enter or use the
Premises or any areas beneath, above or adjacent thereto, such reservation or
grant of right of entry shall be deemed to be for the benefit of both Master
Landlord and Sublandlord.
(c) in any case where under the incorporated provisions of
the Master Lease the "Landlord's" consent or approval is required, the consent
or approval of both Landlord and Sublandlord shall be required and, if a
provision of the Master Lease (as incorporated into this Sublease) or this
Sublease requires Sublandlord not to unreasonably withhold its consent,
Sublandlord shall not be in default of this Sublease or otherwise liable to
Subtenant for withholding its consent if Master Landlord fails to consent to the
matter in question.
(d) in any case where under the incorporated provisions of
the Master Lease "Tenant" is to indemnify or to waive or release any claims
against "Landlord", such indemnity and/or waiver shall be deemed to run from
Subtenant to both Master Landlord and Sublandlord.
(e) in any case where under the incorporated provisions of
the Master Lease "Tenant" is to execute and deliver certain documents or
notices, or to provide any documents or information, to "Landlord", such
obligation shall be deemed to run from Subtenant to both Master Landlord and
Sublandlord.
(f) the time limits provided for in the Master Lease for the
giving of notice, making of demands, performance of any act, condition or
covenant, or the exercise of any right, remedy or option, are amended for the
purposes of this Sublease by lengthening or shortening the time limits in each
instance by five (5) days, as appropriate, so that notices may be given, demands
made or any act, condition or covenant performed, or any right, remedy or option
hereunder exercised, by Sublandlord or Subtenant, as the case may be, within the
time limit relating thereto contained in the Master Lease; provided, if the
Master Lease allows only five (5) days or less for Sublandlord to perform any
act, or to undertake to perform any act, or to correct any failure relating to
the Premises or this Sublease, then Subtenant shall nevertheless be allowed the
lesser of the time permitted in the Master Lease or two (2) business days to
perform the act, undertake the act and/or correct the failure relating to the
Premises or this Sublease.
(g) The following provisions of the Master Lease are
incorporated into this Sublease: 2.2 (except that the reference to the Work
Letter shall mean the Work Letter attached to the Master Lease); 5.2; 9.2; 9.3;
the first sentence of 10.1 (provided however, that Subtenant may only use the
Subleased Premises for the uses specified in Section 5.1 of this Sublease);
10.2; 10.3; 10.4 (except that the references to "Landlord" in the first sentence
shall mean Sublandlord); 10.5
-9-
10
(provided however, that Subtenant only may install signage on the exterior of
the building in the locations specified in Section 17 of the Master Lease);
10.6; 10.7; 11.2; 11.3; 12.1 (provided however, that during any holdover period,
Basic Monthly Rent shall be increased to one hundred twenty-five percent (125%)
of Basic Monthly Rent payable by Subtenant during the last month of the Sublease
Term (as the same may have been extended); 12.3; 12.4; 13.5 (but deleting the
language beginning with the word "including" appearing in the third line); 14.1;
15.2; 16.1 (provided, however, that this section shall not apply with respect to
any utilities or services furnished by Sublandlord the cost of which is
reimbursed by Subtenant); 16.2; 17.1 through 17.5 (subject to Section 16 of this
Sublease); 18.1 (provided however, that Master Landlord shall perform the
obligations of "Landlord" and Sublandlord shall use reasonable efforts to
enforce the obligations of Master Landlord);18.3; 18.4; 19 (provided however,
that the obligations of Subtenant in Section 19.3 shall run to the benefit of
Sublandlord and Master Landlord); 20.1; 20.2 (provided however, that clause (ii)
shall be deleted therefrom); 20.3; 20.4; 20.5; 21.1 (provided however, that
Subtenant shall cause Master Landlord and the lenders of Master Landlord (if
required by such lenders) to be added as additional insureds on all policies
obtained by Subtenant); 21.3; 21.4 (provided however, that the requirement set
forth in this section shall apply to all insurance policies required to be
obtained by Subtenant pursuant to the terms of this Sublease); 21.5; 21.6; 21.7;
21.8; 24 (provided however, that the insolvency of Subtenant or Subtenant's
failure to pay debts as they become due also shall constitute a "Default" under
this Sublease); 25 (provided however, that (i) with respect to Section 25.2,
Sublandlord only will consent to the transfers described therein if the net
worth of the transferee equals or exceeds the greater of (a) the net worth of
Subtenant immediately prior to the transfer in question, or (b) the net worth of
Subtenant as of the Effective Date of this Sublease, and (ii) the last sentence
of Section 25.9 is deleted); 26.1 (provided however, that the fourth sentence is
deleted); 27.1; 28.1; 29.1; 31.2; 31.3; 33.1; 34.1; 35.1 through 35.3 (provided
however, that (i) this Sublease shall be subject and subordinate to the lien of
any mortgage of deed of trust now or hereafter in force against the Premises or
any portion thereof as more specifically provided in Section 35.1 without the
necessity of a Non-Disturbance Agreement in favor of Subtenant, (ii) Subtenant
shall execute such instruments reasonably required by Sublandlord or Master
Landlord to subordinate this Sublease without the necessity of obtaining a
Non-Disturbance Agreement in favor of Subtenant, and (iii) Sublandlord shall use
reasonable efforts to obtain a Non-Disturbance Agreement from any lender for
Subtenant); 36; 37.1; 38.1; 39.1 (provided however, notwithstanding anything to
the contrary in this Sublease or Section 39 of the Master Lease as incorporated
into this Sublease, in no event shall Subtenant or its agents, employees,
contractors, invitees, subtenants or assignees cause or permit any Hazardous
Material to be brought upon, kept or used in, on or about the Subleased
Premises); 39.2 (provided however, that both Sublandlord and Master Landlord
shall benefit from the obligations of Subtenant contained in said section); 39.3
(provided however, that the last sentence shall be deleted and Sublandlord shall
indemnify, protect, defend and hold harmless Subtenant from all liability,
damages, injuries, cause of action, claims, judgments, costs, penalties, funds,
losses and expenses which arise from Sublandlord's receiving, handling, use,
storage, accumulation, transportation, generation, spillage, discharge, release
or disposal of Hazardous Material in, upon or about the Master Premises); 39.4;
39.9 (provided however, that the obligations of Subtenant shall benefit both
Sublandlord and Master Landlord); 39.11; 39.12; and 42 (except that Section 42.8
shall be deleted).
-10-
11
6.3 Subtenant acknowledges that with respect to any work, services,
repairs, restoration, insurance obligations or the performance of any other
obligation of Master Landlord under the Master Lease, that Sublandlord shall be
under no obligation to provide any such services or work or satisfy any such
obligations or covenants; provided, however, Sublandlord, upon written notice to
Subtenant, shall use reasonable efforts to attempt to enforce the obligations of
Master Landlord under the Master Lease. Subtenant shall reimburse Sublandlord
for all amounts incurred by Sublandlord in enforcing the obligations of Master
Landlord to the extent fairly allocable to the Subleased Premises.
7. CONDITIONS PRECEDENT. The obligations of the parties hereunder and
the effectiveness of this Sublease are expressly conditioned upon Sublandlord's
and Subtenant's receipt of Master Landlord's written consent to this Sublease in
form reasonably acceptable to Sublandlord and Subtenant within ten (10) business
days of the Effective Date.
8. REPAIRS AND MAINTENANCE. Sublandlord shall be responsible for
performing any repairs, maintenance and replacements to or of the Subleased
Premises to the extent required by Section 18.2 of the Master Lease and
Subtenant shall reimburse Sublandlord for all costs and expenses incurred by
Sublandlord in performing such obligations to the extent fairly allocable to the
Subleased Premises as more specifically set forth in Section 4.2 of this
Sublease; provided however, and notwithstanding anything to the contrary in this
Sublease or the Master Lease ( but subject to the terms of Section 21.6 of the
Master Lease as incorporated into this Sublease), Subtenant shall be entirely
responsible for the cost of all repairs, maintenance and/or replacements to the
extent resulting from the negligence or willful misconduct of Subtenant or its
employees, agents, contractors, subtenant or assigns.
9. DEPOSITS. Upon execution hereof, Subtenant shall deposit with
Sublandlord the sum of Fifty-Nine Thousand Four Hundred Twenty-One Dollars and
Sixty Cents ($59,421.60) which amount shall be applied against the Base Monthly
Rent due under this Sublease for the first month of the Sublease Term. Upon the
execution hereof, Subtenant shall deposit with Sublandlord a security deposit
(the "Security Deposit") in the amount of Sixty-Four Thousand Seven Hundred
Twenty-Seven Dollars ($64,727). Sublandlord may use and commingle the Security
Deposit with other funds of Sublandlord. If Subtenant fails to pay rent or other
charges due hereunder or otherwise fails to perform any other obligations of
Subtenant under this Sublease, then Sublandlord may draw upon, use, apply or
retain all or any portion of the Security Deposit for the payment of any rent or
other charge in default, for the payment of any other sum which Sublandlord has
become obligated to pay by reason of Subtenant's default, or to compensate
Sublandlord for any loss or damage which Sublandlord has suffered thereby. If
Sublandlord so uses or applies all or any portion of the Security Deposit, then
Subtenant shall, within ten (10) days after demand therefor, deposit cash with
Sublandlord in the amount required to restore the Security Deposit to the full
amount stated above
-11-
12
and Subtenant's failure to so restore shall constitute a Default (as that term
is defined in Section 24.2 the Master Lease as incorporated into this Sublease)
by Subtenant under this Sublease. Upon the expiration of this Sublease and
Subtenant's vacation of the Subleased Premises, Sublandlord shall return to
Subtenant that portion of the Security Deposit which has not been applied by
Sublandlord pursuant to this paragraph, or which is not otherwise required to
cure Subtenant's defaults.
10. BROKERS.
10.1 Sublandlord and Subtenant warrant and represent that they
have dealt with no real estate brokers in connection with this Sublease other
than CPS and Industrial Property Associates (hereinafter "Brokers"), and that no
other broker is entitled to any commission on account of this Sublease.
Subtenant shall indemnify, defend, protect and hold Sublandlord harmless from
and against any loss, cost or expense, including, but not limited to, reasonable
attorneys' fees and court costs, resulting from any claim for any fee,
commission or other compensation made by any other agent, broker, salesman or
finder as a consequence of Subtenant's actions or dealings with such agent,
broker, salesman or finder.
10.2 Sublandlord shall pay a real estate brokerage commission in
accordance with Sublandlord's separate agreement with CPS for the subleasing of
the Master Premises.
11. [Intentionally omitted.]
12. NOTICES. All notices or demands of any kind required or desired to
be given by Sublandlord or Subtenant hereunder shall be in writing at the
addresses set forth below and shall be deemed delivered upon actual receipt or
refusal of delivery and if Subtenant shall have vacated or abandoned the
Premises, then upon attempted delivery at the Premises:
Sublandlord
Symmetricom, Inc.
0000 Xxxxxxx Xxxxxxx
Xxx Xxxx, XX 00000
Attn: Chief Financial Officer/Xxxxx Xxxxxxx
Subtenant
Brocade Communications Systems, Inc.
0000 Xxxxxxxxx Xxxxxxx
Xxx Xxxx, XX 00000
Attn: Chief Financial Officer/Xxxx Xxx
-12-
13
13. [Intentionally omitted.]
14. DAMAGE AND RELATED TERMINATION RIGHTS. The parties hereto
acknowledge that Section 22 of the Master Lease entitled "Damage or Destruction"
governs the rights of Master Landlord and Sublandlord concerning damage to the
Master Premises by fire or other peril and Sublandlord and Subtenant agree as
follows with respect thereto:
14.1 Sublandlord shall use reasonable efforts to enforce the
obligations of Master Landlord pursuant to Section 22 (including its obligations
to restore damage to the extent required by Section 22). Except to the extent of
its obligations stated in the immediately preceding sentence, its obligation to
contribute to costs to restore Tenant's Improvements (as that term is defined in
the Master Lease) and the Master Premises, and its obligation to restore certain
improvements in certain circumstances, all as more particularly set forth in
Section 22 and Section 21.9 of the Master Lease, Sublandlord shall not be
obligated to restore damage to the Master Premises caused by fire or other
peril, and shall not be liable for any failure by Master Landlord to perform its
obligations under the Master Lease.
14.2. The parties acknowledge that Master Landlord has the right
to terminate the Master Lease in certain circumstances pursuant to Sections 21.9
and 22.2 of the Master Lease. In the event Master Landlord exercises any such
right of termination, this Sublease shall terminate on the date the Master Lease
terminates.
14.3. The parties hereto acknowledge that Sublandlord has the
right to terminate the Master Lease in certain circumstances pursuant to
Sections 21.9 and 22.3 of the Master Lease. If Sublandlord becomes entitled to
terminate the Master Lease pursuant to said paragraph 11.3, then it may do so in
its sole and absolute discretion and this Sublease shall terminate on the date
the Master Lease terminates.
14.4. If, in the opinion of an independent architect selected by
Sublandlord and Master Landlord, damage or destruction to the Subleased Premises
(or the Master Premises if such damage or the repair thereof would interfere
with Subtenant's use of the Subleased Premises) is so substantial that it cannot
be corrected within six (6) months of the date of damage or, if such damage or
destruction occurs during the last six (6) months of the Sublease Term,
Subtenant may elect to terminate this Sublease by delivering to Sublandlord
written notice of its election to terminate within fifteen (15) days after the
damage or destruction.
14.5 Subtenant acknowledges that, pursuant to Section 21.9 of the
Master Lease, in the event of a casualty, Sublandlord, in certain circumstances,
is obligated to pay for a certain percentage of the cost of the loss or
insurance deductible equal to one-seventeenth (1/17th) of fifty percent (50%) of
the loss or deductible for each year remaining in the initial term and first
extension term of the Master Lease (the "Uninsured Loss Amount"). If Sublandlord
is required or elects to pay the Uninsured Loss Amount, Subtenant shall pay to
Sublandlord as additional rent one-seventeenth
-13-
14
(1/17th) of fifty percent (50%) of such loss or deductible for each year
remaining in the Sublease Term to the extent such amount is fairly allocable to
the Subleased Premises.
14.6 In the event of damage, destruction and/or restoration as
herein provided, there shall be no abatement or Rent and Subtenant shall not be
entitled to any compensation or damages occasioned by any such damage,
destruction or restoration. Subtenant hereby waives the provisions of California
Civil Code Sections 1932(2) and 1933(4) or any similar statue now existing or
hereafter adopted governing destruction of the Premises, so that the parties'
rights and obligations in the event of damage or destruction shall be governed
by the provisions of the Sublease.
14.7 The provisions of Section 17 of the Master Lease (as
incorporated into this Sublease) shall apply to any restoration work under this
Section as if the restoration was an alteration, addition or improvement
thereunder.
15. CONDEMNATION. The parties acknowledge that Section 23 of the Master
Lease entitled "Eminent Domain" governs the rights of Master Landlord and
Sublandlord with respect to condemnation of the Master Premises and Sublandlord
and Subtenant agree as follows with respect this subject:
15.1 Sublandlord shall use reasonable efforts to enforce the
obligations of Master Landlord pursuant to Section 23.3 of the Master Lease.
Except to the extent of its obligations stated in the immediately proceeding
sentence and its obligation to contribute to the cost of restoration in certain
circumstances (as more specifically provided in Section 23.3 of the Master
Lease), Sublandlord shall not be obligated to restore the Master Premises and
shall not be liable for any failure by Master Landlord to perform its
obligations under the Master Lease.
15.2 The parties acknowledge that Master Landlord has the right
to terminate the Master Lease in certain circumstances pursuant to Section 23.1
of the Master Lease. In the event Master Landlord exercises any such right of
termination, this Sublease shall terminate on the date the Master Lease
terminates.
15.3 The parties acknowledge that Sublandlord has the right to
terminate the Master Lease in certain circumstances pursuant to Section 23.1 and
23.2 of the Master Lease. If Sublandlord becomes entitled to terminate the
Master Lease pursuant to said Section 23.1 or 23.2, then it may do so in its
sole and absolute discretion and if Sublandlord elects to so terminate the
Master Lease, then this Sublease shall terminate on the date the Master Lease
terminates.
15.4 In the event of a partial taking of the Subleased Premises
for any public or quasi-public purpose by any lawful power or authority by
exercise of right of appropriation, condemnation, or eminent domain, or sold to
prevent such taking, then Subtenant may elect to terminate this Sublease if such
taking is of material detriment to, and substantially interferes with,
Subtenant's use and occupancy of, and conduct of its business from, the
Subleased Premises, including but not limited to materially affecting
Subtenant's parking or Subtenant's ingress and
-14-
15
egress from the Subleased Premises, unless Sublandlord provides reasonable
alternatives thereto acceptable to Subtenant. In no event shall this Lease be
terminated when such a partial taking does not have a material adverse effect
upon Subtenant. Termination pursuant to this section shall be effective as of
the date possession is required to be surrendered to said authority. In the
event of a partial taking and whether or not Subtenant terminates this Sublease,
Subtenant, Sublandlord and Master Landlord shall be entitled to those
condemnation proceeds attributable to those items for which they are entitled to
compensation pursuant to Section 15.7 hereof (excluding moving expenses).
15.5 If upon any taking of the Subleased Premises this Sublease
continues in effect, Base Monthly Rent shall be abated proportionately on the
basis of the rental value of the Subleased Premises, including improvements and
fixtures, as restored after such taking compared to the rental value of the
Subleased Premises prior to such taking.
15.7 Any award made as a result of any condemnation of the
Subleased Premises shall belong to and be paid to Sublandlord and Master
Landlord, and Subtenant hereby assigns to Sublandlord and Master Landlord all of
its right, title and interest in any such award; provided, however, that
Subtenant shall be entitled to receive any condemnation award that is made
directly to Subtenant for the following so long as the award made to Master
Landlord or Sublandlord is not thereby reduced: (a) for the taking of personal
property or trade fixtures belonging to Subtenant, (b) the interruption of
Subtenant's business or its moving costs, or (c) loss of Subtenant's goodwill.
The rights of Sublandlord and Subtenant regarding condemnation shall be
determined as provided in this paragraph, and each party thereby waives the
provisions of California Code of Civil Procedure Section 1265.130 and the
provisions of any similar law hereinafter enacted allowing either party to
petition the Superior Court to terminate this Sublease in the event of a partial
taking of the Premises.
16. ALTERATIONS.
16.1 All improvements (as that term is defined in Section 17.1 of
the Master Lease as incorporated into this Sublease) shall be made strictly in
compliance with the terms and conditions of Section 17 of the Master Lease as
incorporated into this Sublease; provided however, that, notwithstanding the
terms of Section 17.1 of the Master Lease, Subtenant may construct no
improvements in the Subleased Premises (including those the cost of which do not
exceed Fifty Thousand Dollars ($50,000)) without the prior written consent of
both Sublandlord and Master Landlord, which consent shall not be unreasonably
withheld or delayed. Notwithstanding the foregoing, Sublandlord may withhold its
consent in its sole and absolute discretion to any proposed improvements which
would affect the structural elements of the Master Premises including, without
limitation, any improvements involving a penetration of the roof membrane or
structural roof.
16.2 At the expiration or sooner termination of the Sublease
Term, all improvements installed by Subtenant shall be surrendered to
Sublandlord as part of the realty and shall then become Sublandlord's property,
and Sublandlord shall have no obligation to reimburse
-15-
16
Tenant for all or any portion of the value or cost thereof. Subtenant, at any
time, shall have the right to remove any movable cubicles installed in the
Subleased Premises by Subtenant at its cost. Subtenant shall have the right to
request Sublandlord to specify in Sublandlord's consent to any improvements (if
consent is, in fact, given) whether Landlord will require Subtenant to remove
Subtenant's improvements from the Subleased Premises upon the expiration or
sooner termination of this Sublease. If Sublandlord reserves such right or, if
Master Landlord requires such removal, Subtenant shall remove any improvements
installed by Subtenant prior to the expiration or sooner termination of the
Sublease Term and restore the Subleased Premises to the condition in which it
existed prior to the installation of such improvements. If Subtenant shall fail
to remove any of its trade fixtures or personal property upon the expiration or
sooner termination of the Sublease Term, Sublandlord may dispose of the property
pursuant to the provisions of Section 1980 et seq. of the California Civil Code,
as such provisions may be modified from time to time, or under any other
applicable provisions of California law.
16.3 Notwithstanding anything to the contrary in this Section 16
or the Master Lease, (i) Subtenant may make no improvements to the area
designated on Exhibit A-1 as "Office, Administrative, Storage/Kitchen Area"
without Sublandlord's consent, which consent may be withheld in Sublandlord's
sole and absolute discretion; and (ii) in no event shall Subtenant remove,
relocate or otherwise alter the cabling and electrical system that Sublandlord
has installed in the second floor of the Subleased Premises which includes
individual tel/data connection points consisting of 2-CAT 5 jacks, 1-CAT 3 RJ45
for ISDN and 1-CAT 3 RJ11 for voice. However, Subtenant may use such cabling and
systems if it so desires.
16.4 Subject to Master Landlord prior written approval thereof
and Sublandlord's approval of the design thereof, which consent shall not be
unreasonably withheld, Subtenant, at Subtenant's sole cost and expense, may
construct a separate trash enclosure within the outside areas of the Master
Premises; provided however, that such enclosure may only be located within the
area designated for Subtenant's parking spaces and the number of parking spaces
allocated for Subtenant's use hereunder shall be reduced by the number of
parking spaces rendered unusable as a result of such enclosure.
17. SIGNAGE. Subject to any restrictions contained in the Master Lease,
the Covenants, Conditions and Restrictions affecting the Master Premises, any
applicable laws, rules, regulations, codes and ordinances, and any other matters
of public record, Subtenant, at its sole cost and expense, shall have the right
to place signs displaying its name and logo in the following locations, but in
no others: (i) on the monument sign located on the Master Premises off of
Xxxxxxxxx Expressway, (ii) on the parapet over the lobby entry within the
Subleased Premises, and (iii) a small sign on the glass adjacent to the front
door of the main lobby and the exit door at the stock room of the Subleased
Premises. Subtenant shall obtain the prior written consent of Subtenant and
Master Landlord to the design and content of such signage, which consent shall
not be unreasonably withheld. Subtenant, at its sole cost and expense, shall
maintain such signage in good condition and repair.
-16-
17
18. INSURANCE. Sublandlord and Subtenant agree as follows with respect
to the obligation of the parties to obtain insurance: (i) throughout the
Sublease Term Sublandlord shall carry the "all risk" insurance covering the
Premises and all improvements and fixtures therein as more particularly
described in Section 21.2 of the Master Lease, whether or not such improvements
and/or fixtures were constructed by Sublandlord or Subtenant; (ii) Subtenant
shall reimburse Sublandlord for the cost of such insurance to the extent fairly
allocable to the Subleased Premises as more particularly set forth in Section
4.2 of this Sublease; (iii) Sublandlord shall be entitled to all proceeds from
all insurance carried by Sublandlord, and (iv) throughout the Sublease Term,
Subtenant, at Subtenant's expenses, shall maintain "all risk" insurance,
including, but not limited to, coverage against loss or damage by fire, flood,
vandalism and malicious mischief covering Subtenant's trade fixtures and
personal property located in the Subleased Premises.
19. STOCK WARRANTS: In consideration of their mutual execution of this
Lease, concurrently with the execution of this Sublease, Sublandlord and
Subtenant shall execute a Warrant Purchase Agreement in the form attached hereto
as Exhibit D pursuant to which Subtenant shall issue to Sublandlord warrants for
the purchase of an aggregate of twenty thousand (20,000) shares of Series C
Preferred stock of Subtenant at an exercise price of Three Dollars ($3.00) per
share, as more particularly set forth in said Exhibit D.
20. ASSIGNMENT AND SUBLETTING: The following additional provisions
shall apply to any sublease, assignment or other transfer of this Sublease
(each, a "Transfer"):
20.1 In the event that Subtenant seeks to make any Transfer,
Sublandlord shall have the right to terminate this Sublease or, in the case of a
sublease of less than all of the Subleased Premises, terminate this Sublease as
to that part of the Subleased Premises proposed to be so sublet, either (i) on
the condition that the proposed transferee immediately enter into a direct
sublease of the Subleased Premises with Sublandlord (or, in the case of a
partial sublease, a sublease for the portion proposed to be sublet) on the same
terms and conditions contained in the Assignment Notice (as that term is defined
in Section 25.3 of the Master Lease, as incorporated into this Sublease), or
(ii) so that Sublandlord is thereafter free to lease the Subleased Premises (or,
in the case of a partial sublease, a sublease for the portion proposed to be
sublet) to whomever it pleases on whatever terms are acceptable to Sublandlord.
In the event that Sublandlord elects to so terminate this Sublease, then (a) if
such termination is conditioned upon the execution of a sublease between
Sublandlord and the proposed transferee, Subtenant's obligations under this
Sublease shall not be terminated until such transferee executes a new sublease
with Sublandlord, enters into possession and commences the payment of rent, and
(b) if Sublandlord elects simply to terminate this Sublease (or, in the case of
a partial sublease, a sublease for the portion proposed to be sublet), this
Sublease shall so terminate in its entirety (or as to the space to be so sublet)
fifteen (15) days after Sublandlord has notified Subtenant in writing of such
election. Upon such termination, Subtenant shall be released from any further
obligation under this Sublease if it is terminated in its entirety, or shall be
released from any further obligation under this Sublease with respect to the
space proposed to be sublet in the case of a proposed partial sublease. In the
case of a partial termination of this Sublease, Base Monthly Rent shall be
reduced to an amount which bears the same relationship to the original amount
thereof as the
-17-
18
area of that part of the Subleased Premises which remains subject to the
Sublease bears to the original area of the Subleased Premises. Sublandlord and
Subtenant shall execute a cancellation and release with respect to the Sublease
to effect such termination.
20.2 If Sublandlord consents to a Transfer proposed by Subtenant,
the following shall apply:
(a) If Subtenant assigns its interest in this Sublease, then
Subtenant shall pay to Sublandlord fifty percent (50%) of all Subrent
(hereinafter defined) received by Subtenant over and above (i) the assignee's
agreement to assume the obligations of Subtenant under this Sublease, and (ii)
all Permitted Transfer Costs (hereinafter defined) related to such assignment.
In the case of an assignment, the amount of Subrent owed to Sublandlord shall be
paid to Sublandlord on the same basis, whether periodic or in lump sum, that
such Subrent is paid to Subtenant by the assignee.
(b) If Subtenant sublets all or any part of the Subleased
Premises then with respect to the space so sub-subleased, Subtenant shall pay to
Sublandlord fifty percent (50%) of the positive difference, if any, between (i)
all Subrent paid by the sub-subtenant to Subtenant less (ii) the sum of all Base
Monthly Rent and Operating Costs fairly allocable to the space sublet and all
Permitted Transfer Costs related to such sub-sublease. Such amount shall be paid
to Sublandlord on the same basis, whether periodic or in lump sum, that such
Subrent is paid to Subtenant by its sub-subtenant.
(c) The term "Subrent" shall mean any consideration of any
kind received, or to be received, by Subtenant as a result of the Transfer, if
such sums are related to Subtenant's interest in the Sublease or in the
Subleased Premises. The term "Permitted Transfer Costs" shall mean (i) all
reasonable leasing commissions paid to third parties not affiliated with
Subtenant in order to obtain the Transfer in question, (ii) all reasonable costs
incurred by Subtenant to construct improvements in the Subleased Premises (or
portion thereof) for the transferee in question, and Vacancy Costs (hereinafter
defined). The term Vacancy Costs shall mean, during any period of time that the
Subleased Premises is vacant and Subtenant is paying rent for the lease of space
in substitution of the Subleased Premises, the lesser of (a) Base Monthly Rent
and additional rent payable under this Sublease and (b) base monthly rent and
additional rent payable under a lease for the substitute space.
(e) Subtenant's obligations under this Section 21 shall
survive any Transfer.
20.3 Notwithstanding anything to the contrary in this Sublease or
the Master Lease, at no time may the Subleased Premises be used or occupied by
(i) more than two (2) subtenants or occupants if Subtenant is still occupying a
portion of the Subleased Premises, or (ii) more than one (1) subtenant or
occupant if Subtenant is not occupying a portion of the Subleased Premises.
-18-
19
21. SUBLANDLORD'S RIGHT TO ENTER: Sublandlord, Master Landlord and
their agents and contractors may enter the Subleased Premises at any reasonable
time after giving at least 24 hours' prior notice to Subtenant (and immediately
in the case of emergency) for the purpose of: (i) inspecting the same; (ii)
posting notices of nonresponsibility; (iii) supplying any service to be provided
by Sublandlord to Subtenant; (iv) showing the Subleased Premises to prospective
purchasers, mortgagees or, during the last six (6) months of the Sublease Term,
tenants; (v) making necessary alterations, additions or repairs; (vi) performing
Subtenant's obligations when Subtenant has failed to do so after written notice
from Sublandlord; and (vii) responding to an emergency. Sublandlord shall have
the right to use any and all means Sublandlord may deem necessary and proper to
enter the Premises in an emergency. Any entry into the Premises obtained by
Sublandlord is accordance with this Section 21 shall not be a forcible or
unlawful entry into, or a detainer of, the Subleased Premises, or an eviction,
actual or constructive, of Subtenant from the Subleased Premises.
IN WITNESS WHEREOF, Sublandlord and Subtenant have signed this Sublease
to evidence their acceptance of and intent to be bound by the terms hereof as of
the Effective Date.
SUBLANDLORD: SUBTENANT:
SYMMETRICOM, INC. BROCADE COMMUNICATIONS
a California corporation SYSTEMS, INC.,
a California corporation
By: /s/ J. Xxxxx Xxxxxxx By: /s/ B. Xxxx Xxx
-------------------------------- -------------------------------
Title: VP & CFO Title: VP & CFO
----------------------------- ----------------------------
Address: 00 Xxxx Xxxxxx Xxxxx Address: 0000 Xxxxx Xx Xxxx
Xxx Xxxx, XX 00000-0000 Santa Clara, CA
Telephone: 000-000-0000 Telephone: 000-000-0000
------------------------- ------------------------
-19-
20
EXHIBIT A
SITE PLAN
[TO FOLLOW.]
-20-
21
EXHIBIT A-1
DIAGRAM OF SUBLEASED PREMISES
[TO FOLLOW.]
-21-
22
EXHIBIT B
MASTER LEASE
[TO FOLLOW.]
-22-
23
EXHIBIT C
SPACE PLAN
[TO FOLLOW.]
-23-
24
EXHIBIT D
WARRANT PURCHASE AGREEMENT
[TO FOLLOW.]
-24-
25
EXHIBIT E
HAZARDOUS MATERIALS
TYPE QUANTITY METHOD OF STORAGE
---- -------- -----------------
Tetraflouroethane 5 gal. Aerosol cans
Rosin Flux 2 gal. Plastic container in
secured metal cabinet
-25-
26
LEASE
NEXUS EQUITY, INC.
"LANDLORD"
AND
SYMMETRICOM, INC.
"TENANT"
SAN JOSE, CALIFORNIA
27
LEASE
TABLE OF CONTENTS
PAGE
----
1. Lease Premises 1
2. Basic Lease Provisions 1
3. Term 2
4. Construction, Possession and Commencement Date 3
5. Rent 6
6. Rental Adjustments 7
7. Additional Rent and Expenses 7
8. Rentable Area 11
9. Security Deposit 11
10. Use 12
11. Brokers 14
12. Holding Over 14
13. Taxes and Assessments 15
14. Condition of Premises 16
15. Parking Facilities 18
16. Utilities and Services 18
17. Alterations 19
18. Repairs and Maintenance 19
19. Liens 21
20. Indemnification and Exculpation 21
21. Insurance -Waiver of Subrogation 23
22. Damage or Destruction 27
23. Eminent Domain 28
24. Defaults and Remedies 29
25. Assignment or Subletting 33
26. Arbitration - Attorney's Fees 35
27. Bankruptcy 36
28. Definition of Landlord 36
29. Estoppel Certificate 37
30. Removal of Property 37
31. Limitation of Landlord's Liability 38
32. [Intentionally Left Blank] 39
33. Quiet Enjoyment 39
34. Quitclaim Deed 39
35. Subordination and Attornment 40
36. Surrender 41
37. Waiver and Xxxxxxxxxxxx 00
00. Waiver of Jury Trial and Counterclaims 41
39. Hazardous Materials 41
40. Option to Extend 45
41. Right of First Refusal to Xxxxxxxx 00
00. Miscellaneous 50
42.1 Terms and Headings 50
42.2 Examination of Lease 51
42.3 Time 51
42.4 Covenants and Conditions 51
42.5 Consents 51
28
42.6 Entire Agreement 51
42.7 Severability 51
42.8 Recording 51
42.9 Impartial Construction 51
42.10 Inurement 51
42.11 Force Majeure 51
42.12 Notices 51
42.13 Authority to Execute Lease 51
EXHIBIT "A" -- Work Letter
EXHIBIT "B" -- Form of Acknowledgement of Term Commencement Date
EXHIBIT "C" -- Memorandum of Lease
ii
29
LEASE
THIS LEASE ("Lease") is made as of June 10, 1996, by and between NEXUS
EQUITY, INC., a California corporation ("Landlord"), and SYMMETRICOM, INC., a
California corporation ("Tenant").
1. LEASE PREMISES.
1.1 Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord those certain premises ("Premises") located on Orchard Parkway in San
Jose, California, consisting of (i) that certain real property ("Real Property")
legally described as Parcel 2 of Parcel Map filed with the Santa Xxxxx County
Recorder on December 6, 1995, in Book 671 of Maps, Pages 40 and 41, (ii) the
entirety of the building (the "Building") to be constructed on the Real
Property, and (iii) all landscaping, drainage, irrigation, lighting, parking
facilities, walkways, driveways and other improvements and appurtenances related
thereto.
2. BASIC LEASE PROVISIONS.
2.1 For convenience of the parties, certain basic provisions of this
Lease are set forth herein. The provisions set forth herein are subject to the
remaining terms and conditions of this Lease and are to be interpreted in light
of such remaining terms and conditions.
2.1.1 Rentable Area of Premises:
118,000 square feet, subject to adjustment
as provided in Section 8.2
2.1.2 Initial Basic Annual Rent:
$1,458,480 ($12.36 per square foot of
Rentable Area per year), subject to
adjustment as provided in Sections 6.1
and 8.2
2.1.3 Monthly Installment of Basic Annual Rent:
$121,540 ($1.03 per square foot of
Rentable Area per month), subject to
adjustment as provided in Sections 6.1
and 8.2
2.1.4 (a) Estimated Term Commencement Date:
April 15, 1997, subject to adjustment as
provided in Section 4.6
(b) Term Expiration Date: Twelve (12)
years from
-1-
30
Term Commencement Date
2.1.5 Permitted Use: Uses permitted in Section 10.1
2.1.6 Security Deposit: $121,540
2.1.7 Address for Rent Payment and Notices to Landlord:
Nexus Equity, Inc.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxx, Xxxxxxxxxx 00000
Address for Notices to Tenant
Before Term Commencement Date:
SymmetriCom, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
After Term Commencement Date: Premises
2.2 Capitalized terms not otherwise defined in this Lease shall
have the meaning set forth in the Work Letter attached hereto as Exhibit "A"
("Work Letter").
3. TERM.
3.1 This Lease shall take effect upon the date of execution hereof by
each of the parties hereto, and each of the provisions hereof shall be binding
upon and inure to the benefit of Landlord and Tenant from the date of execution
hereof by each of the parties hereto; provided, however, the effectiveness of
this Lease is conditioned upon Tenant's approval (in its sole discretion) on or
before June 6, 1996, of (i) CC&Rs prepared by Atmel Corporation which will
encumber the Real Property, and (ii) approval by Atmel Corporation in a form
satisfactory to Tenant of elevations and schematic plans of the Building
(described on Attachment A-2) and the placement of Tenant's antennas on the roof
of the Building.
3.2 The term of this Lease will be that period from the Term
Commencement Date described in Sections 2.1.4(a) and 4.6 through the Term
Expiration Date as set forth in Section 2.1.4(b), subject to earlier termination
of this Lease or extension of the term of this Lease as provided herein.
3.3 Notwithstanding anything in this Lease to the contrary, Tenant
shall have the right to terminate this Lease due to nonperformance by Landlord
if:
(i) Landlord has not on or before June 30, 1996, secured a
-2-
31
construction loan and/or other funding, from sources reasonably satisfactory to
Tenant as to financial ability to perform, in an amount reasonably necessary to
complete the work required of Landlord under the Work Letter; provided however,
that such date shall be extended to that date which is the earlier of (i) August
15, 1996 and (ii) the date to which close of escrow for the acquisition of the
Real Property is extended by the written agreement of Atmel Corporation, the
seller of the Real Property;
(ii) Landlord has not on or before September 1, 1996, received
architectural site approval from the City of San Xxxx;
(iii) Landlord has not on or before September 15, 1996,
substantially commenced Landlord's Work, defined to mean grading has been
substantially completed and work on footings and foundations has commenced and
is substantially underway; or
(iv) Landlord fails at any time thereafter to diligently pursue
construction of Landlord's Work to completion, defined to mean (for the purposes
of this subsection 3.3(iv) only) substantial cessation of work for more than
thirty (30) consecutive days.
The time for Landlord to perform its obligations under
subsections (i) and (ii) above will be extended on account of Tenant-Caused
Delays, but not Landlord-Caused Delays or Force-Majeure Delays. The time for
Landlord to perform its obligations under subsection (iii) will be extended on
account of Tenant-Caused Delays and no more than thirty (30) days of Force
Majeure Delays, but not Landlord-Caused delays. The time for Landlord to perform
its obligations under subsection (iv) will be extended on account of
Tenant-Caused Delays and Force Majeure Delays, but not Landlord-Caused delays.
In the event Tenant terminates this Lease pursuant to this Section 3.3, neither
Landlord nor Tenant shall have any further duties, obligations or liability to
the other, except that Landlord shall promptly return to Tenant the first
month's Basic Annual Rent deposited under Section 5.1, and the security deposit
deposited under Section 9.1.
4. CONSTRUCTION, POSSESSION AND COMMENCEMENT DATE.
4.1 Landlord shall make available to Tenant the Building Shell within
the time period set forth in the Construction Schedule with Landlord's Work
sufficiently complete to allow Tenant to commence construction of Tenant's
Improvements. Landlord shall Substantially Complete Landlord's work (as that
term is defined in the Work Letter attached hereto as Exhibit "A") within the
time period set forth in the Project Schedule. Landlord shall use diligent good
faith efforts to continuously prosecute the construction of Landlord's Work to
completion. Tenant shall Substantially Complete Tenant's Improvements within the
time period set forth in the Project Schedule. Landlord and Tenant shall allow
each other reasonable access to the Premises for the completion of work required
hereunder, and shall conduct such work in a commercially reasonable manner. All
time periods set forth in the Project Schedule for the construction of
Landlord's Work and Tenant's Improvements shall be extended by Landlord-Caused
Delays, Tenant-Caused Delays and/or Force-Majeure Delays in the manner and to
the
-3-
32
extent set forth in the Work Letter, subject to the limitations on Landlord with
respect to Force-Majeure Delays set forth in the last paragraph of Section 3.3
above.
4.2 As used in Section 4.1 above and elsewhere in this Lease and the
Work Letter, the terms "Substantially Complete", "Substantially Completed", and
"Substantial Completion" shall mean (i) with respect to Landlord's Work, the
date by which all of the following shall have occurred: (a) construction of
Landlord's Work is completed substantially in accordance with the plans and
specifications therefor and all applicable governmental laws, ordinances,
regulations and requirements ("Laws"), (b) the Project Architect has certified
in writing that Landlord's Work is substantially complete, (c) there exist no
incomplete or deficient items identified by or on behalf of Tenant on its
"punch-list" that could materially interfere with Tenant's use of the Premises
for its intended purpose, and (d) Landlord shall have substantially completed
Landlord's Work to such a point to enable Tenant to obtain all permits and
approvals for Tenant's legal occupancy of the Premises, assuming that Tenant's
Improvements are Substantially Completed, and (ii) with respect to Tenant's
Improvements, the date by which all of the following shall have occurred: (a)
construction of Tenant's Improvements is completed substantially in accordance
with the plans and specifications therefor and all applicable Laws, (b) Tenant's
Architect has certified in writing that Tenant's Improvements are substantially
complete, (c) no incomplete or deficient items exist that would materially
interfere with Tenant's use of the Premises for its intended purpose, and (d)
Tenant shall have substantially completed Tenant's Improvements and shall have
obtained all permits and approvals for Tenant's legal occupancy of the Premises.
4.3 Tenant agrees that in the event Landlord fails to tender
possession of the Premises with the Building Shell and Land Improvements
Substantially Completed on or before the date set forth in the Project Schedule
for the Substantial Completion of Landlord's Work, this Lease shall not be void
or voidable and Landlord shall not be liable to Tenant for any loss or damage
resulting therefrom except as otherwise set forth in Sections 3.3 and 4.4. In
such event, however, Tenant's obligation to pay Rent and any other amounts under
this Lease shall not commence until the actual Term Commencement Date.
4.4 Notwithstanding Section 4.3, in the event Landlord fails to
tender possession of the Premises with the Building Shell and Land Improvements
Substantially Completed on or before April 15, 1997 (as such date is extended by
Tenant-Caused Delays, and Tenant is unable to occupy the Premises on or before
July 15, 1997 on account thereof, Landlord shall pay to Tenant liquidated
damages equal to any holdover or penalty rent or other sums in excess of the
normal rental paid by Tenant to the landlord of its present premises at 00 Xxxx
Xxxxxx Xxxxx, Xxx Xxxx, Xxxxxxxxxx, on account of Tenant's extension or holding
over of its tenancy at such location, for a number of days equal to the number
of days between April 15, 1997 and the date the Premises are tendered to Tenant
with the Building Shell and Land Improvements Substantially Completed (but for
no longer period than Tenant actually holds over at its present location). In
the event that the landlord of Tenant's present premises does not consent to
Tenant's holding over, Landlord shall indemnify Tenant from any and all claims,
damages, losses, costs and liabilities incurred by Tenant as a result of
Landlord's failure to
-4-
33
deliver the Building Shell and Land Improvements to Tenant Substantially
Completed on or before April 15, 1997.
4.5 The actual Term Commencement Date shall be the date set forth in
the Project Schedule as the date by which Tenant's Improvements and Landlord's
Work is to be Substantially Complete; provided, however, that (i) such date
shall be extended by the number of days that Tenant is prevented from commencing
construction of Tenant's Improvements on the date for commencement thereof as
set forth in the Project Schedule as a result of Force Majeure Delays and
Landlord-Caused Delays (as more particularly described in the Work Letter), (ii)
such date shall be extended by the number of days that Tenant is prevented from
continuously prosecuting to completion and Substantially Completing Tenant's
Improvements as a result of Force-Majeure Delays and/or Landlord-Caused Delays,
and (iii) in no event shall the Term Commencement Date occur prior to the date
by which all of the following shall have occurred; (a) Landlord shall have
Substantially Completed Landlord's Work, (b) the Land Improvements are
Substantially Completed to a point where ingress and egress to the Building is
not unreasonably impeded, the parking lot is completed and the landscaping is to
a point where any incomplete or deficient landscaping can be completed or
corrected within thirty (30) days or which consists of trees, shrubs or other
landscaping which have not been installed for reasons relating to the then
climatic season, and (c) no "punch-list" items remain uncompleted that would
materially interfere with Tenant's use of the Premises for its intended
purposes. Landlord and Tenant shall execute a written acknowledgment of the Term
Commencement Date and the Term Expiration Date when such is established in
substantially the form attached hereto as Exhibit "B" and attach it to this
Lease as Exhibit "B-1"; however, failure to execute and deliver such
acknowledgement shall not affect Tenant's liability hereunder.
4.6 Prior to entry by Tenant onto the Premises for the purposes of
constructing Tenant's Improvements or installation of personal property within
the Premises which are not part of the work required of Landlord under the Work
Letter, Tenant shall furnish to Landlord evidence satisfactory to Landlord that
insurance coverage required of Tenant under the provisions of Article 21 and the
Work Letter are in effect. Entry by Tenant onto the Premises prior to the Term
Commencement Date for such purposes shall be subject to all of the terms and
conditions of this Lease other than the payment of Rent, and shall not interfere
with the performance by Landlord or the Project Contractor with the work
required of Landlord under the Work Letter. Tenant agrees to indemnify, protect,
defend and hold Landlord harmless from any and all loss or damage to property,
completed work, fixtures, equipment, or materials, or from liability for death
of or injury to any person, during any such entry prior to the Term Commencement
Date to the extent caused by the negligence or willful acts of Tenant or its
agents and/or contractors (and their agents, contractors and subcontractors),
and subject to Tenant's right to seek contribution or indemnity from Landlord or
other responsible party. Landlord agrees to indemnify, protect, defend and hold
Tenant harmless from any and all loss or damage to property, completed work,
fixtures, equipment, or materials, or from liability for death of or injury to
any person, during any such entry prior to the Term Commencement Date to the
extent caused by the negligence or willful acts of Landlord or its agents and/or
contractors (and their agents, contractors and subcontractors), and subject to
Landlord's right to seek contribution or indemnity from Tenant or other
responsible party.
-5-
34
4.7 Tenant shall be responsible for construction of Tenant's
Improvements in the Premises pursuant to the Work Letter at the sole cost of
Tenant, without any contribution or reimbursement by Landlord (except to the
extent of Landlord's indemnity obligations under Section 4.6), at a cost not to
be less than Twenty Five Dollars ($25.00) per square foot of Rentable Area.
However, with regard to any space that Tenant does not intend to initially
occupy (up to a maximum of 20,000 square feet of Rentable Area), Tenant shall
not be required to construct improvements at a cost per square foot greater than
that required to finish interior surfaces of interior walls to the extent they
are ready for paint, the floor is carpeted or tiled, HVAC and other utility
systems and bathrooms are in place. If and to the extent required by Landlord's
construction lender, Tenant shall provide assurances reasonably satisfactory to
such lender of Tenant's ability to fund the construction of Tenant's
Improvements in accordance with the terms of this Lease and the Work Letter.
5. RENT.
5.1 Tenant agrees to pay Landlord as Basic Annual Rent for the
Premises the sum set forth in Section 2.1.2, subject to the rental adjustments
provided in Sections 6.1 and 8.2. Basic Annual Rent shall be paid in the equal
monthly installments set forth in Section 2.1.3, subject to the rental
adjustments provided in Sections 6.1 and 8.2, each in advance on the first day
of each and every calendar month during the term of this Lease, except that the
first month's Basic Annual Rent shall be paid upon the execution hereof in
addition to the Security Deposit in the amount set forth in Section 2.1.3. On
the Term Commencement Date, the first month's Basic Annual Rent deposit shall be
credited to the Basic Annual Rent due for the calendar month in which rental
commences and any balance will be a credit against the next rental to become
due. Prior to the Term Commencement Date, the deposit of the first month's Basic
Annual Rent shall constitute additional security for Tenant's obligations
hereunder and be treated in like manner as the Security Deposit.
5.2 In addition to Basic Annual Rent, Tenant agrees to pay to
Landlord as additional rent ("Additional Rent"), at the times hereinafter
specified in this Lease, the costs of management and administrative services as
provided in Article 7.1, and all other amounts that Tenant agrees to pay under
the provisions of this Lease, including without limitation (i) any and all other
sums that may become due by reason of any default of Tenant or failure on
Tenant's part to comply with the agreements, terms, covenants and conditions of
this Lease to be performed by Tenant, and (ii) expenses of Landlord's
performance of any obligations of Tenant under this Lease.
5.3 Basic Annual Rent and Additional Rent shall together be
denominated "Rent". Rent shall be paid to Landlord in lawful money of the United
States of America, at the office of Landlord as set forth in Section 2.1.7 or to
such other person or at such other place as Landlord may from time to time
designate in writing, without notice, demand, abatement, suspension, deduction,
setoff, counterclaim, or defense.
-6-
35
5.4 In the event the term of this Lease commences or ends on a day
other than the first day of a calendar month, then the Rent for such fraction of
a month shall be prorated for such period on the basis of a thirty (30) day
month and shall be paid at the then current rate for such fractional month prior
to the commencement of the partial month.
6. RENTAL ADJUSTMENTS.
6.1 Basic Annual Rent then in effect (as increased by previous
adjustments under this Section 6.1) shall be increased four percent (4%) on each
annual anniversary of the Term Commencement Date.
7. ADDITIONAL RENT AND EXPENSES.
7.1 As Additional Rent, Tenant shall pay or reimburse Landlord for
costs of management and administrative services in an amount equal to two
percent (2%) of the Basic Annual Rent due from Tenant ("Management Fee"),
whether or not Landlord incurs fees payable to any third party to provide such
services and without regard to the actual costs incurred by Landlord for such
services.
7.2 Tenant shall pay, at its own cost and expense and without any
cost or expense to Landlord, or reimbursement or contribution by Landlord,
directly to the provider of the services, all costs of any kind incurred in
connection with the operation, maintenance, repairs, replacements and management
of the Premises, including, except as otherwise set forth in Sections 7.5, 18.1,
and 20.1, and Articles 22 and 23, or elsewhere in this Lease, (i) reasonable
costs directly related to maintenance and repairs to improvements, fixtures and
personal property within the Premises, including the roof membranes (but not the
roof structure itself), as appropriate to maintain the Premises in commercially
reasonable condition (allowing wear and tear consistent with commercially
reasonable maintenance and repair standards applicable to comparable buildings),
but shall exclude any costs related to defects in design, materials or
construction to Landlord's Work to the extent of Landlord's warranties in
Article 14; (ii) costs of new improvements and fixtures added to the Premises by
Tenant; (iii) costs of utilities furnished to the Premises; (iv) sewer use fees;
(v) costs of cable TV when applicable; (vi) costs of trash collection; (vii)
costs of cleaning; (viii) costs of maintenance, repairs and replacements of
heating, ventilation, air conditioning, plumbing, electrical and other systems
(but excluding costs related to defects in design, materials or construction of
such systems to the extent they were included within Landlord's Work to the
extent of Landlord's warranties in Article 14); (ix) costs of security services
and devices; (x) costs of building supplies; (xi) insurance premiums pursuant to
Section 21.2 and portions of insured losses deductible by reason of insurance
policy terms subject to the limitations contained in Section 21.8; (xii) costs
of service contracts and services of independent contractors retained to do work
of a nature before referenced; (xiii) taxes and assessments pursuant to Sections
13.1 and 13.2; and (xv) costs of compliance with applicable Laws (except costs
of modifications to Landlord's Work required by something other than a change in
Tenant's use or occupancy of the Premises). Notwithstanding anything to the
contrary in this Lease, costs incurred by Tenant for replacement of major HVAC
components, the parking lot,
-7-
36
and the roof (including structural elements and roof membranes) and, except to
the extent required as a result of a change in Tenant's use or occupancy of the
Premises, costs to construct alterations, additions and/or improvements required
by applicable Laws, with a useful life in excess of the balance of the initial
term shall be reimbursed to Tenant by Landlord at the time the replacement or
improvement is made in the proportion that the remaining useful life during any
period of time following the expiration of the initial term bears to the entire
useful life of the item; in the event Tenant exercises its option to extend the
term, Tenant shall at such time reimburse Landlord for the pro rata portion paid
by Landlord for the extension term. By way of example only, if in the tenth
(10th) year of the Lease Term, Tenant is required to replace an HVAC compressor
with a useful life of fifteen (15) years and at a cost of Sixty Thousand Dollars
($60,000), then Tenant would be responsible for paying for the replacement and,
at the time that Tenant makes such payment, Landlord would be obligated to pay
to Tenant in cash Fifty-Two Thousand Dollars ($52,000) (($60,000) x (13/15)).
If, in such example, Tenant exercises its option to extend the Lease Term for
five (5) years, then at the commencement of the option term, Tenant would be
obligated to pay Landlord Twenty Thousand Dollars ($20,000) (($60,000/15) x
(5)).
7.3 Notwithstanding anything herein to the contrary, Landlord shall
pay, at its own cost and expense and without any cost or expense to Tenant, or
reimbursement or contribution by Tenant, the costs described in Section 18.1 and
any other cost described herein for which Tenant is not responsible.
7.4 Notwithstanding anything in this Lease to the contrary, Tenant
shall not be responsible, and Landlord shall be responsible, for the payment of
the following costs and expenses:
(a) costs incurred for the construction, repair, maintenance or
replacement of the Premises or any portion or component thereof, to the extent
of (i) proceeds of insurance which Tenant is required to maintain under the
Lease or maintains on the Premises (but Tenant shall be responsible for payment
of any deductibles and uninsured losses as set forth in Article 21), and (ii)
any reimbursement which Landlord receives therefor under any warranties or from
any third party;
(b) costs incurred for the construction, repair, maintenance or
replacement of the Premises or any portion or component thereof resulting from
the active or passive negligence or willful misconduct of Landlord, or its
agents, employees, contractors, or invitees, except to the extent of proceeds of
insurance which Tenant is required to maintain under this Lease which covers
such conduct;
(c) costs incurred for the repair, maintenance or replacement of
the foundations, structural walls, floors, including the second floor deck, and
roof of the Premises to the extent set forth in Section 18.1;
(d) costs of construction of the Landlord's Work;
-8-
37
(e) costs incurred to correct any patent or latent defects in the
design, materials or construction of Landlord's Work to the extent of Landlord's
warranties under Article 14;
(f) costs, expenses and penalties (including without limitation
attorneys fees) incurred as a result of the use, storage, removal or remediation
of any toxic or hazardous substances or other environmental contamination not
caused by Tenant;
(g) rentals and other payments by Landlord under any ground lease
or other lease underlying the Lease, and interest, principal, points and other
fees on debt or amortization of any debt secured in whole or part by all or any
portion of the Premises;
(h) costs incurred in connection with the financing, sale or
acquisition of the Premises or any portion thereof;
(i) costs, expenses, and penalties (including without limitation
attorneys' fees) incurred due to the violation by Landlord of any underlying
deed of trust, mortgage or ground lease affecting the Premises or any portion
thereof;
(j) depreciation on the Premises or any portion thereof, or any
equipment or machinery owned by Landlord;
(k) any costs incurred as a result of Landlord's violation of any
statute, ordinance or other source of applicable law, or breach of contract or
tort liability to any other party, including without limitation, any unrelated
third party, or Landlord's employee(s), contractor(s), subcontractor(s),
agent(s) or representative(s);
(l) leasing commissions, attorneys' fees and other costs and
expenses incurred in connection with the leasing of the Premises;
(m) advertising, marketing, media and promotional expenditures
regarding the Premises and costs of signs in or on the Building identifying the
owner, lender or any contractor thereof;
(n) costs incurred to comply with the Americans with Disabilities
Act except to the extent otherwise expressly provided herein;
(o) costs incurred to comply with Title 24 of the California Code
of Regulations except to the extent otherwise expressly provided herein;
(p) costs incurred to comply with any other existing laws, rules,
regulations, codes or permits except to the extent otherwise expressly provided
herein;
-9-
38
(q) any fees or salaries of the principals of Landlord;
(r) any costs and expenses arising from or related to breach of
Landlord's warranties in Sections 14.4 and 14.5 hereof; and
(s) any costs and expense incurred as a result of conditions
existing as of or prior to the Term Commencement Date to the extent of required
modifications to Landlord's Work, unless caused by a change in use or occupancy
of the Premises by Tenant;.
7.5 Tenant shall not be responsible for Rent or any other expenses
under this Lease attributable to the time period prior to the Term Commencement
Date.
7.6 The Management Fee for the calendar year in which Tenant's
obligation to pay them commences and in the calendar year in which such
obligation ceases shall be prorated. Expenses such as taxes and assessments and
insurance which are incurred for an extended time period shall be prorated based
upon time periods to which they are applicable so that the amounts attributed to
the Premises relate in a reasonable manner to the time period wherein Tenant has
an obligation to pay Rent.
7.7 In fulfilling its obligations set forth in Section 7.2 and
Article 18, Tenant shall maintain the HVAC system, elevator and other systems in
accordance with no less than the minimum standards established by the
manufacturer and the minimum standards necessary to maintain any warranties in
effect, and Tenant may enter into such maintenance contracts as Tenant
determines is reasonably necessary in order to do so. Landlord shall have the
right, upon reasonable notice, to inspect and copy any such maintenance
contracts, as well as records of maintenance conducted by Tenant or any such
service provider.
7.8 Landlord shall have the right, upon reasonable notice, to inspect
and copy documents showing in reasonable detail the actual expenses paid by
Tenant pursuant to Section 7.2 and Article 16 (Utilities and Services) of this
Lease. Tenant shall maintain such documents as are reasonably necessary for such
purpose for a period of not less than three (3) years.
-10-
39
8. RENTABLE AREA.
8.1 The Rentable Area of the Premises as set forth in Section 2.1.1
and as referenced within the Work Letter and as may otherwise be referenced
within this Lease, is determined by making separate calculations of the Rentable
Area of each floor within the Building and totalling the Rentable Area of all
floors within the Building (excluding any parking areas). The Rentable Area of a
floor is calculated by measuring to the outside finished surface of each
permanent outer Building wall where it intersects the floor. The full area
calculated as set forth above is included as Rentable Area of the Premises
without deduction for (i) columns or projections, (ii) vertical penetrations
such as stairs, elevator shafts, flues, pipe shafts, vertical ducts, and the
like, and their enclosing walls, (iii) corridors, equipment rooms, rest rooms,
entrance ways, elevator lobbies, and the like, and their enclosing walls, or
(iv) any other unusable area of any nature.
8.2 The Rentable Area as set forth in Section 2.1.1 is an estimate of
the area which will upon completion of development of the Building constitute
the Rentable Area of the Premises, which shall be adjusted upon Substantial
Completion of the Building in accordance with a certification of the Rentable
Area from the Project Architect. If either party disputes the certification of
the Project Architect, upon Substantial Completion of the Building Shell, the
Rentable Area shall be field measured and confirmed by a mutually agreeable
architect or civil engineer, which measurement shall be conclusive and binding
on Landlord and Tenant. If the Rentable Area as determined hereunder is greater
or less than the Rentable Area set forth in Section 2.1.1, Basic Annual Rent and
monthly installments of Basic Annual Rent shall be adjusted upward or downward,
as the case may be, based on the actual Rentable Area of the Premises.
9. SECURITY DEPOSIT
9.1 Promptly upon execution of this Lease, Tenant shall deposit with
Landlord the sum set forth in Section 2.1.6, which sum shall be held by Landlord
as security for the faithful performance by Tenant of all of the terms,
covenants, and conditions of this Lease to be kept and performed by Tenant
during the term and any extension term hereof. If Tenant defaults with respect
to any provision of this Lease, including but not limited to any provision
relating to the payment of Rent, and subject to any notice requirements and cure
periods for Tenant's benefit set forth in Article 24, Landlord may (but shall
not be required to) use, apply or retain all or any part of such security
deposit for the payment of any Rent or any other sum in default, or to
compensate Landlord for any other loss or damage which Landlord may suffer by
reason of Tenant's default. If any portion of said deposit is so used or
applied, Tenant shall, upon demand therefor, deposit cash with Landlord in an
amount sufficient to restore the security deposit to its original amount and
Tenant's failure to do so shall be a material default of this Lease. Landlord
shall not be required to keep this security deposit separate from its general
fund, and Tenant shall not be entitled to interest on such deposit.
9.2 In the event of bankruptcy or other debtor-creditor proceeding
against
-11-
40
Tenant, such security deposit shall be deemed to be applied first to the payment
of Rent and other charges due Landlord for all periods prior to the filing of
such proceedings.
9.3 Landlord may deliver the funds deposited hereunder by Tenant to
any purchaser of Landlord's interest in the Premises and thereupon Landlord
shall be discharged from any further liability with respect thereto. This
provisions shall also apply to any subsequent transfers.
9.4 So long as Tenant is not in material default as of the Term
Commencement Date, the security deposit, or any balance thereof, shall be
returned to Tenant upon the Term Commencement Date.
10. USE.
10.1 Tenant may use the Premises for any of those purposes, and only
those purposes, allowed by (i) City of San Xxxx zoning ordinances in effect from
time to time and as applicable to the Premises, (ii) any other applicable laws,
regulations, ordinances, permits and approvals applicable to the Premises, and
(iii) all covenants, conditions and restrictions recorded against the Real
Property, and shall not use the Premises, or permit or suffer the Premises to be
used, for any other purpose without the prior written consent of Landlord.
Landlord warrants that, as of the Term Commencement Date, Tenant's intended use
of the Premises for manufacture, assembly, distribution and sales of Tenant's
products, and for office and other activities related thereto, are permitted
uses under applicable zoning ordinances, and, to the best of Landlord's
knowledge, under other applicable laws, regulations, ordinances, permits and
approvals applicable to the Premises. Landlord represents and warrants that
there are no covenants, conditions and restrictions on the Real Property which
will interfere with Tenant's intended use of the Premises. Landlord acknowledges
that Tenant intends to install numerous antennas on the roof of the Building.
10.2 Tenant shall use the Premises in compliance with all federal,
state, and local laws, regulations, ordinances, requirements, permits and
approvals applicable to the Premises. Tenant shall not use or occupy the
Premises in violation of any law or regulation, or the certificate of occupancy
issued for the Building, and shall, upon five (5) days' written notice from
Landlord, discontinue any use of the Premises which is declared by any
governmental authority having jurisdiction to be a violation of law or the
certificate of occupancy.
10.3 Tenant shall comply with any direction of any governmental
authority having jurisdiction which shall, by reason of the nature of Tenant's
use or occupancy of the Premises, impose any duty upon Tenant or Landlord with
respect to the Premises or with respect to the use or occupation thereof,
including any duty to make structural or capital improvements, alterations,
repairs
-12-
41
and replacements to the Premises. However, Landlord shall have the obligation to
make any such improvements to the Land Improvements or the Building Shell unless
required by a government authority because of a change in Tenant's use or
occupancy of the Premises. Tenant's obligation to make structural or capital
improvements, alterations, repairs and replacements to any portion of the
Premises other than the Land Improvements and Building Shell shall not exceed
the amortized amount described in the last three sentences of Section 7.2. Both
Landlord and Tenant shall have the right to contest any such direction of a
governmental authority.
10.4 Landlord warrants that the work required of Landlord under the
Work Letter shall be in compliance with the Americans with Disabilities Act of
1990 ("ADA") at the time possession is tendered to Tenant. Tenant shall comply
with the ADA, and the regulations promulgated thereunder, as amended from time
to time. All responsibility for compliance with the ADA relating to the Premises
and the activities conducted by Tenant within the Premises shall be exclusively
that of Tenant and not of Landlord, including any duty to make structural or
capital improvements, alterations, repairs and replacements to the Premises
(subject to the limitation set forth in the last three sentences of Section
7.2); however, Landlord shall have the duty to make such structural or capital
improvements, alterations, repairs and replacements to the Land Improvements and
the Building Shell if the duty to do so under ADA is triggered by something
other than a change in Tenant's use or occupancy of the Premises. Any
alterations to the Premises made by Tenant for the purpose of complying with the
ADA or which otherwise require compliance with the ADA shall be done in
accordance with Article 17 of this Lease; provided, that Landlord's consent to
such alterations shall not constitute either Landlord's assumption, in whole or
in part, of Tenant's responsibility for compliance with the ADA, or
representation or confirmation by Landlord that such alterations comply with the
provisions of the ADA.
Nothing in this Lease shall be construed to require either
Landlord or Tenant to make structural or capital improvements, alterations,
repairs or replacements to comply with ADA unless and until required to do so by
order of any government entity or court of law exercising proper jurisdiction
with regard thereto, subject to any right to appeal or otherwise contest any
such order.
10.5 Tenant may install signage on the Building to the extent
permitted by, and in conformity with, applicable provisions of any City of San
Xxxx sign ordinance, any other applicable governmental sign regulation, and any
covenants, conditions and restrictions recorded against the Real Property.
Tenant acknowledges it is not relying on any representations or warranty of
Landlord regarding the number, size or location of any signage. No other sign,
advertisement, or notice shall be exhibited, painted or affixed by Tenant on any
part of the Premises which is visible from outside the Building, or any part of
the exterior of the Building or elsewhere in the Premises, without the prior
written consent of Landlord, which consent shall not be unreasonably withheld.
The expense of design, permits, purchase and installation of any signs shall be
the responsibility of Tenant and the cost thereof shall be borne by Tenant. At
the termination of the Lease, all signs shall be the property of Tenant and may
be removed from the Premises by Tenant, subject to the provisions of Article 30.
10.6 No equipment shall be placed at a location within the Building
other than a location designed to carry the load of the equipment. Equipment
weighing in excess of
-13-
42
floor loading capacity shall not be placed in the Building.
10.7 Tenant shall not use or allow the Premises to be used for any
unlawful purpose.
11. BROKERS.
11.1 Landlord and Tenant represent and warrant one to the other that
there have been no dealings with any real estate broker or agent in connection
with the negotiation of this Lease other than The Commercial Property Services
Company, the fees of which shall be paid by Landlord, and that to the best of
their knowledge, no other real estate broker or agent is or might be entitled to
a commission in connection with this Lease. Each shall indemnify, defend,
protect, and hold harmless the other from any claim of any other broker as a
result of any act or agreement of the indemnitor.
11.2 Landlord and Tenant each represent and warrant to the other that
no broker or agent has made any representation or warranty relied upon by such
party in its decision to enter into this Lease other than as contained in this
Lease.
11.3 The employment of brokers by Landlord is for the purpose of
solicitation of offers of lease from prospective tenants and no authority is
granted to any broker to furnish any representation (written or oral) or
warranty from Landlord unless placed within this Lease. Landlord and Tenant in
executing this Lease do so in reliance upon the other's representations and
warranties contained within Sections 11.1 and 11.2.
12. HOLDING OVER.
12.1 If, with Landlord's consent, Tenant holds possession of all or
any part of the Premises after the expiration or earlier termination of this
Lease, Tenant shall become a tenant from month to month upon the date of such
expiration or earlier termination, and in such case Tenant shall continue to pay
in accordance with Article 5 the Basic Annual Rent as adjusted from the Term
Commencement Date, together with the Management Fee in accordance with Article 7
and other Additional Rent as may be payable by Tenant, and such month-to-month
tenancy shall be subject to every other term, covenant and condition contained
herein.
12.2 If Tenant remains in possession of all or any portion of the
Premises after the expiration or earlier termination of the term hereof without
the express written consent of Landlord, Tenant shall become a tenant at
sufferance upon the terms of this Lease except that monthly rental shall be
equal to one hundred fifteen percent (115%) of the Basic Annual Rent in effect
during the last twelve (12) months of the Lease term.
12.3 Acceptance by Landlord of Rent after such expiration or earlier
termination shall not result in a renewal or reinstatement of this Lease.
12.4 The foregoing provisions of this Article 12 are in addition to
and do not
-14-
43
affect Landlord's right to re-entry or any other rights of Landlord under
Article 24 or elsewhere in this Lease or as otherwise provided by law.
13. TAXES AND ASSESSMENTS.
13.1 Tenant shall pay and discharge as they become due, promptly and
before delinquency, all taxes, assessment, rates, charges, license fees,
municipal liens, levies, excises or imposts, whether general or special, or
ordinary or extraordinary, of every name, nature, and kind whatsoever, including
all governmental charges of whatsoever name, nature, or kind, which may be
levied, assessed, charged, or imposed, or may become a lien or charge on the
Premises, or any part thereof, or any improvements now or hereafter thereon, or
on Landlord by reason of its ownership of the Premises or any part thereof,
during the entire term hereof, saving and excepting only those taxes hereinafter
in this Lease specifically excepted. Notwithstanding the foregoing, Tenant shall
not be in Default for failure to pay any such tax or other payment until ten
(10) days after receipt of a written xxxx or statement therefore from Landlord.
13.2 Specifically and without in any way limiting the generality of
the foregoing, Tenant shall pay any and all special assessments or levies or
charges made by any municipal or political subdivision for local improvements,
and shall pay the same in cash as they shall fall due and before they shall
become delinquent and as required by the act and proceedings under which any
such assessments or levies or charges are made by any municipal or political
subdivision. If the right is given to pay either in one sum or in installments,
Tenant may elect either mode of payment subject to Landlord's approval. If by
making an election to pay in installments, any of the installments shall be
payable after the termination of this Lease or any extended term thereof, the
unpaid installments shall be prorated as of the date of termination, and amounts
payable after said date shall be paid by Landlord without reimbursement from
Tenant. All other taxes and charges payable under this Article 13 shall be
prorated as of and payable at the commencement and expiration of the term of
this Lease, as the case may be. Landlord shall not during the term of this Lease
undertake any action to place any special assessments, levies or charges on the
Premises without first obtaining the prior written approval of Tenant, other
than those due to Landlord's acquisition of the Real Property and construction
of the Premises pursuant to the Work Letter, and other than those imposed by the
City of San Xxxx or other government entity over which Landlord has no control.
If Landlord does undertake such action without Tenant's approval, Tenant shall
not be required to pay or reimburse Landlord for such special assessments,
levies or charges sought by such action.
13.3 Anything in this Article 13 to the contrary notwithstanding,
Tenant shall not be required to pay or reimburse Landlord for any estate, gift,
inheritance, succession, franchise, income, excess profits, sales or payroll
taxes, or any tax in the nature of a transfer tax arising from the conveyance of
the Premises or the recording of a deed of trust or mortgage encumbering the
Premises, that may be payable by Landlord or Landlord's legal representative,
successors, or assigns.
13.4 Any and all rebates on account of taxes, rates, levies, charges
or
-15-
44
assessments paid or reimbursed by Tenant under the provisions of this Lease
shall belong to Tenant, and Landlord will, on the request of Tenant, execute any
receipts, assignments, or other acquittances that may be necessary in order to
secure the recovery of the rebates, and will pay over to Tenant any rebates that
may be received by Landlord.
13.5 Tenant shall pay before delinquency, without reimbursement or
contribution from Landlord, taxes levied against any fixtures, equipment and
personal property in or about the Premises, including any and all personal
property installed as part of the work required of Landlord under the Work
Letter.
13.6 If Tenant shall in good faith desire to contest the validity or
amount of any tax, assessment, levy, or other governmental charge herein agreed
to be paid or reimbursed by Tenant, Tenant shall be permitted to do so, and to
defer the payment of said tax or charge, the validity or amount of which Tenant
is so contesting, until final determination of the contest, by giving to
Landlord written notice thereof prior to the commencement of any contest, which
shall be at least fifteen (15) days prior to delinquency, and, if requested by
Landlord during the last three years of the term, by protecting Landlord on
demand by a good and sufficient surety bond against any tax, levy, assessment,
rate or governmental charge, and from any costs, penalties, interest, liability,
or damage arising out of a contest. Landlord shall not be required to join in
any proceeding or contest brought by Tenant unless the provisions of any law
require that the proceeding or contest be brought by or in the name of Landlord.
In that case, Landlord shall join in the contest or permit it to be brought in
Landlord's name so long as Landlord is not required to bear any costs. Tenant,
on final determination of the contest, shall immediately pay or discharge any
decision or judgment rendered, together with all costs, charges, interest and
penalties incidental to the decision or judgment.
13.7 If Tenant shall from time to time desire to seek a reassessment
of the Premises for real property tax purposes, Tenant shall be permitted to do
so. Landlord shall not be required to join in any such proceeding unless the
provisions of any law require that the proceeding to be brought by or in the
name of Landlord. In that case, Landlord shall join in the proceeding and permit
it to be brought in Landlord's name so long as Landlord is not required to bear
any costs.
13.8 To the extent Tenant fails to make any payment required by this
Article 13 and Landlord does so on Tenant's behalf, Tenant shall reimburse
Landlord for the cost thereof pursuant to the provisions of Sections 7.1 and
24.3 of this Lease.
14. CONDITION OF PREMISES.
14.1 Tenant acknowledges that neither Landlord nor any agent of
Landlord has made any representation or warranty, express or implied, with
respect to the condition of the
-16-
45
Premises, or to the work required of Landlord under the Work Letter, except as
set forth herein, or with respect to their suitability for the conduct of
Tenant's business.
14.2 Upon Substantial Completion of the Premises, Tenant shall accept
the Premises in the condition in which they then exist, and shall waive any
right or claim Tenant may have against Landlord for any cause directly or
indirectly arising out of the condition or delay in delivery of possession of
the Premises, appurtenances thereto, the improvements thereon and the equipment
thereof, except for (i) damages in the event of completion delays to the extent
of Section 4.4 hereof, (ii) the warranties made by Landlord under Sections 14.4
and 14.5 to the extent thereof, (iii) covenants and representations made by
Landlord in Article 39, (iv) the obligation to deliver the Premises lien-free
pursuant to Section 35.4, (v) the completion of punch list items relating to the
Building Shell and Land Improvements pursuant to the provisions of the Work
Letter, and (vi) any other duties or obligations of Landlord arising under the
provisions of this Lease and applicable law. Tenant shall thereafter indemnify,
defend, protect and hold Landlord harmless from liability, as provided in
Article 20 of the Lease.
14.3 Tenant's taking possession of the Premises and acceptance of the
Premises shall not constitute a waiver of any claims based upon warranty or
defect in regard to design, materials, or construction of Landlord's Work under
the Work Letter against the design professional, contractor, materialman,
manufacturer, or other responsible party (other than Landlord, whose liability
is described in Section 14.4 and 14.5 below), nor for failure of any such party
(other than Landlord) to comply with all applicable building code requirements,
regulations, laws, rules, orders, ordinances, directions, permits, approvals,
and requirements of all governmental agencies, offices, departments, bureaus and
boards having jurisdiction, nor for failure to comply with the rules, orders,
directions, regulations, and requirements of any applicable fire rating bureau.
Landlord hereby assigns to Tenant, and Tenant shall have the benefit of, on a
non-exclusive basis, any and all warranties with respect to the design,
materials and construction of the work required of Landlord under the Work
Letter which are assignable to Tenant, together with all other rights and claims
it may have against any design professional, contractor, materialman,
manufacturer, or other responsible party, or from applicable insurance policies.
Landlord and Tenant agree to cooperate with regard to the enforcement of all
such warranties, rights and claims. Tenant shall comply with whatever
maintenance and similar standards are required to maintain any applicable
warranties in affect.
14.4 Landlord warrants to Tenant that Landlord's Work will be on
Substantial Completion built in a good and workmanlike manner and in compliance
with the plans and specifications approved under the Work Letter and all
applicable building code requirements, laws, rules, orders, ordinances,
directions, regulations, permits, approvals, and requirements of all
governmental agencies, offices, departments, bureaus and boards having
jurisdiction, and with the rules, orders, directions, regulations, and
requirements of any applicable fire rating bureau.
14.5 Landlord warrants to Tenant that Landlord's Work will be on
Substantial Completion free of patent and latent defects in design, materials
and construction.
-17-
46
The warranty given by Landlord in this Section 14.5 shall terminate one (1) year
after the recording of the notice of completion of the Premises, except for any
breach claimed by Tenant as long as Tenant has notified Landlord in writing of
such claim of breach (identifying the breach in reasonable detail) within such
one (1) year period. The warranty given by Landlord shall be extended to the
extent of any warranty given by a design professional, contractor, materialman,
manufacturer, or other responsible party which exceeds one (1) year after the
recording of the notice of completion. Notwithstanding the foregoing, (i)
Landlord's warranty with regard to latent defects in the design, materials and
construction of the parking areas shall not terminate after one (1) year and
shall continue for the entire Lease Term and any extensions hereof, and (ii)
Landlord's warranty with regard to defects in the design, materials and
construction of the roof membranes shall not terminate after one (1) year, but
shall terminate ten (10) years after the recording of the notice of completion
of the Premises, except for any breach claimed by Tenant as long as Tenant has
notified Landlord in writing of such claim of breach (identifying the breach in
reasonable detail) within such ten (10) year period.
14.6 Nothing in this Article 14 shall restrict Tenant's right to
pursue remedies against any responsible party other than Landlord. Landlord and
Tenant shall cooperate with regard to the repair and replacement of any
improvements for which they are responsible from recoveries from any applicable
warranty or insurance policy. Any and all warranties set forth in this Article
14 shall survive the expiration or earlier termination of the Lease.
15. PARKING FACILITIES.
15.1 Tenant acknowledges that any exterior areas used for Tenant's
equipment, equipment enclosures, trash enclosures, mechanical systems, and the
like will reduce available parking.
15.2 Tenant shall not place any equipment, storage containers or any
other property on the surface parking area except in accordance with the plans
and specification approved pursuant to the Work Letter or as otherwise approved
by Landlord, which approval shall not be unreasonably withheld.
16. UTILITIES AND SERVICES.
16.1 Tenant shall pay directly to the provider, prior to delinquency,
for all water, gas, electricity, telephone, sewer, and other utilities which may
be furnished to the Premises during the term of this Lease, together with any
taxes thereon. The cost of installing all utility meters shall be paid by
Tenant.
16.2 Landlord shall not be liable for, nor shall any eviction of
Tenant result from, any failure of any such utility or service, provided such
failure is not due to the gross negligence or willful misconduct of Landlord,
and in the event of such failure Tenant shall not be entitled to any abatement
or reduction of Rent, nor be relieved from the operation of any
-18-
47
covenant or agreement of this Lease, and Tenant waives any right to terminate
this Lease on account thereof.
17. ALTERATIONS.
17.1 Tenant shall make no alterations, additions or improvements
(hereinafter in this article, "improvements") in or to the Premises, other than
interior non-structural improvements the cost of which does not exceed $50,000,
without Landlord's prior written consent, which shall not be unreasonably
withheld. Tenant shall deliver to Landlord final plans and specifications and
working drawings for the improvements to Landlord, and Landlord shall have
fifteen (15) days thereafter to grant or withhold its consent. If Landlord does
not notify Tenant of its decision within the fifteen (15) days, Landlord shall
be deemed to have given its approval.
17.2 If a permit is required to construct the improvements, Tenant
shall deliver a completed, signed-off inspection card to Landlord within ten
(10) days of completion of the improvements, and shall promptly thereafter
obtain and record a notice of completion and deliver a copy thereof to Landlord.
17.3 The improvements shall be constructed only by licensed
contractors approved by Landlord, which approval shall not be unreasonably
withheld. Any such contractor must have in force a general liability insurance
policy with commercially reasonable limits, which policy of insurance shall name
Landlord as an additional insured. Tenant shall provide Landlord with a copy of
the contract with the contractor prior to the commencement of construction.
17.4 Tenant agrees that any work by Tenant shall be accomplished in
such a manner as to permit any fire sprinkler system and fire water supply lines
to remain fully operable at all times except when minimally necessary for
building reconfiguration work.
17.5 Tenant covenants and agrees that all work done by Tenant shall
be performed in compliance with all laws, rules, orders, ordinances, directions,
regulations, permits, approvals, and requirements of all governmental agencies,
offices, departments, bureaus and boards having jurisdiction, and in full
compliance with the rules, orders, directions, regulations, and requirements of
any applicable fire rating bureau. Tenant shall provide Landlord with "as-built"
plans showing any change in the Premises within thirty (30) days after
completion.
17.6 Landlord shall make no improvements in or to the Premises
without Tenant's prior written consent, and the provisions of this article shall
apply to improvements undertaken by Landlord to the same extent as they apply to
improvements undertaken by Tenant.
18. REPAIRS AND MAINTENANCE.
18.1 Landlord shall, throughout the term of this Lease, at its own
cost and
-19-
48
expense, and without any cost or expense to Tenant, keep and maintain in good
condition and repair the structural components, but not the surface finishes or
cosmetic improvements, of (i) the foundations, (ii) structural walls (including
responsibility for the watertight integrity of the exterior glazing and framing
system), (ii) floors, including the second floor deck, and (iii) structural roof
(but excluding the roof membranes) of the Premises (subject to wear and tear
consistent with commercially reasonable maintenance and repair standards
applicable to comparable buildings). However, Tenant shall take all reasonable
precautions to insure that, in accordance with Section 10.6, the second floor
deck is not over-loaded with improvements, fixtures or equipment. In addition,
Landlord shall, at its own cost and expense, and without any cost or expense to
Tenant, promptly repair any patent or latent defects in the design, materials or
construction of the work required of Landlord under the Work Letter to the
extent of Landlord's warranties in Section 14.4 and 14.5 hereof.
18.2 Except as otherwise set forth in Sections 18.1 and elsewhere in
this Lease, including without limitation Articles 7, 21, 22 and 23, throughout
the term of this Lease, at its own cost and expense, and without any cost or
expense to Landlord, Tenant shall keep and maintain in good, sanitary and neat
order, condition, and repair, the Premises and every part thereof (subject to
wear and tear consistent with commercially reasonable maintenance and repair
standards applicable to comparable buildings), including all improvements,
fixtures, equipment and personal property, and all appurtenances thereto,
including but not limited to water, gas and electrical distribution systems and
facilities, all signs, both illuminated and non-illuminated that are now or
hereafter on the Premises, and exterior sidewalks, parking areas, curbs,
internal roads, driveways, lighting standards, landscaping, sewers, and drainage
facilities.
18.3 If Landlord fails to make any repairs required of Landlord under
this Article 18, and such failure unreasonably interferes with Tenant's use or
occupancy of the Premises and continues for more than fifteen (15) days after
written notice from Tenant to Landlord demanding performance by Landlord, Tenant
may, without waiving or releasing Landlord from any obligation therefore, make
such repairs on behalf of Landlord. However, Tenant may not deduct the cost
thereof from, or set off the cost against, Basic Annual Rent except in
accordance with the provisions of Article 26. Tenant waives Civil Code Sections
1941 and 1942 relating to a landlord's duty to maintain the Premises in a
tenantable condition, and under said sections or under any law, statute or
ordinance now or hereafter in effect to make repairs at Landlord's expense, so
that the parties' rights and obligations regarding repairs and maintenance shall
be governed by this Article 18, Article 26, and other applicable provisions of
this Lease.
18.4 There shall be no abatement of Rent and no liability of Landlord
by reason of any injury to or interference with Tenant's business arising from
the making of any repairs, alterations or improvements in or to any portion of
the Premises, or in or to improvements, fixtures, equipment and personal
property therein, provided that Landlord makes commercially reasonable efforts
to comply with its repair and replacement obligations under this Article 18 at
such times and in such manner as do not unreasonably interfere with Tenant's use
or occupancy of the Premises. If repairs or replacements become necessary which
by the terms of
-20-
49
this Lease are the responsibility of Tenant and Tenant fails to make the repairs
or replacements, Landlord may do so pursuant to the provisions of Section 24.3
of this Lease.
19. LIENS.
19.1 Tenant shall keep the Premises and every part thereof free from
any liens arising out of work performed, materials furnished or obligations
incurred by Tenant. Tenant further covenants and agrees that any mechanic's lien
filed against the Premises for work claimed to have been done directly for, or
materials claimed to have been furnished to, Tenant, will be discharged by
Tenant, by bond or otherwise, within thirty (30) days after the filing thereof
(or within ten (10) days after the filing thereof if requested by Landlord as
necessary to facilitate a pending sale or refinancing), at the cost and expense
of Tenant.
19.2 Should Tenant fail to discharge any lien of the nature described
in Section 19.1, Landlord may at Landlord's election pay such claim or post a
bond or otherwise provide security to eliminate the lien as a claim against
title and the cost thereof shall be immediately due from Tenant as Additional
Rent.
19.3 In the event Tenant shall lease or finance the acquisition of
office equipment, furnishings, or other personal property utilized by Tenant in
the operation of Tenant's business, should any holder of a security agreement
executed by Tenant record or place of record a financing statement which appears
to constitute a lien against any interest of Landlord, Tenant shall upon request
of Landlord (i) cause copies of the security agreement or other documents to
which the financing statement pertains to be furnished to Landlord to facilitate
Landlord's being in a position to show such lien is not applicable to any
interest of Landlord, and (ii) cause the holder of the security interest to
amend documents of record so as to clarify that such lien is not applicable to
any interest of Landlord in the Premises. Nothing herein shall be deemed to
imply any security interest in favor of Landlord in any fixtures or personal
property owned by Tenant, or that Tenant may not grant security interests in its
property to others. Upon request of Tenant, Landlord shall execute documents in
a form reasonably acceptable to Tenant to evidence Landlord's waiver of any
right, title, lien or interest in any fixtures or personal property owned by
Tenant which Tenant has the right to remove.
20. INDEMNIFICATION AND EXCULPATION.
20.1 Except to the extent of Landlord's indemnity obligations set
forth in Sections 20.2 and 21.6 and other applicable provisions of the Lease,
Tenant agrees to indemnify Landlord, and its partners and affiliates, and their
respective shareholders, directors, officers, agents, contractors (and their
subcontractors) and employees (collectively, "Landlord's Agents") against, and
to protect, defend, and save them harmless from, all demands, claims, causes of
action, liabilities, losses and judgments, and all reasonable expenses incurred
in investigating or resisting the same (including reasonable attorneys' fees),
for death of or injury to person or
-21-
50
damage to property arising out of (i) any occurrence in, upon or about the
Premises during the term of this Lease to the extent of proceeds of insurance
required to be maintained by Tenant under this Lease and applicable deductibles,
(ii) Tenant's use, occupancy, repairs, maintenance, and improvements of the
Premises and all improvements, fixtures, equipment and personal property
thereon, and (iii) any act or omission of Tenant, its shareholders, directors,
officers, agents, employees, servants, contractors (and their subcontractors),
invitees and subtenants. Tenant's obligation under this Section 20.1 shall
survive the expiration or earlier termination of the term of this Lease.
20.2 Landlord agrees to indemnify Tenant, and its partners and
affiliates, and their respective shareholders, directors, officers, agents,
contractors (and their subcontractors) and employees (collectively, "Tenant's
Agents") against, and to protect, defend, and save them harmless from, all
demands, claims, causes of action, liabilities, losses and judgments, and all
reasonable expenses incurred in investigating or resisting the same (including
reasonable attorneys' fees), for death of or injury to person or damage to
property by Landlord and arising out of (i) any occurrence in, upon or about the
Premises during the term of this Lease to the extent caused by the willful
misconduct or gross negligence of Landlord or Landlord's Agents, (ii) Landlord's
repairs, maintenance, and improvements of the Premises, and (iii) any act or
omission of Landlord or Landlord's Agents (including servants, contractors and
their subcontractors and invitees). Landlord's obligation under this Section
20.2 shall survive the expiration or earlier termination of the term of this
Lease.
20.3 Notwithstanding any provision of Sections 20.1 and 20.2 to the
contrary, Landlord shall not be liable to Tenant and Tenant assumes all risk of
damage to any fixtures, goods, inventory, merchandise, equipment, records,
research, experiments, computer hardware and software, leasehold improvements,
and other personal property of any nature whatsoever (including any personal
property installed as part of the work required of Landlord under the Work
Letter), and Landlord shall not be liable for injury to Tenant's business or any
loss of income therefrom relative to such damage, unless caused by Landlord's or
Landlord's Agents' willful misconduct or gross negligence.
20.4 The indemnity obligations of both Landlord and Tenant under this
Section 20 shall be satisfied to the extent of proceeds of applicable insurance
maintained by Tenant to the extent thereof, and thereafter to proceeds of any
applicable insurance maintained by Landlord; Landlord and Tenant shall be
required to satisfy any such obligation only to the extent it is not satisfied
by proceeds of applicable insurance as set forth above.
20.5 Security devices and services, if any, while intended to deter
crime may not in given instances prevent theft or other criminal acts and it is
agreed that Landlord shall not be liable for injuries or losses caused by
criminal acts of third parties and the risk that any security device or service
may malfunction or otherwise be circumvented by a criminal is assumed by Tenant.
Tenant shall at Tenant's cost obtain insurance coverage to the extent Tenant
desires protection against such criminal acts.
-22-
51
21. INSURANCE - WAIVER OF SUBROGATION.
21.1 Commencing prior to Tenant's first entry onto the Premises for
purposes of constructing Tenant's Improvements, and continuing at all times
during the term of this Lease, Tenant shall maintain, at Tenant's expense and
without any cost or expense to Landlord, or any reimbursement or contribution by
Landlord, commercial general liability insurance, on an occurrence basis (or on
a claims made basis as long as Tenant makes adequate arrangements for claims
made after the expiration of the term or earlier termination of the Lease for
occurrences during the term of the Lease), insuring Tenant and Tenant's agents,
employees and independent contractors against all bodily injury, property
damage, personal injury and other covered loss arising out of the use,
occupancy, improvement and maintenance of the Premises and the business operated
by Tenant, or any other occupant, on the Premises. Such insurance shall have a
minimum combined single limit of liability per occurrence of not less than
$3,000,000.00 and a general aggregate limit of $3,000,000.00. Such insurance
shall: (i) name Landlord, and Landlord's lenders if required by such lenders,
and any management company retained to manage the Premises if requested by
Landlord, as additional insureds; (ii) include a broad form contractual
liability endorsement insuring Tenant's indemnity obligations under Section
20.1; (iii) include boiler and machinery liability endorsement, and a products
completed operations coverage endorsement; (iv) provide that it is primary
coverage and noncontributing with any insurance maintained by Landlord or
Landlord's lenders, which shall be excess insurance with respect only to losses
arising out of Tenant's negligence; and (v) provide for severability of
interests or include a cross-liability endorsement, such that an act or omission
of an insured shall not reduce or avoid coverage of other insureds.
21.2 At all times during the term of this Lease, Tenant shall also
maintain "all risk" insurance, including, but not limited to, coverage against
loss or damage by fire, flood, vandalism, and malicious mischief covering the
Premises and all improvements and fixtures therein, whether owned by Landlord or
Tenant, and all other improvements and fixtures that may be constructed or
installed on the Premises, in an amount equal to one hundred percent (100%) of
the full replacement value thereof, subject to commercially reasonable premiums
and deductibles. The parties acknowledge that Landlord's investment in the
Premises is limited to the Real Property, Land Improvements and Building Shell
only and that Tenant, with its own funds, will construct Tenant's Improvements
and all other improvements in the Building other than the Building Shell.
Landlord and Tenant desire that neither Landlord, any lender of Landlord, nor
any other person or entity have any interest in any insurance proceeds
attributable to Tenant's Improvements and/or any other improvements constructed
by Tenant at its sole cost and that Tenant have exclusive control over any such
proceeds (subject to any obligation of Tenant to use proceeds for repairs and
reconstruction as set forth herein). To this end, Tenant shall have the right to
satisfy its obligations under this section 21.2 by insuring the Land
Improvements and Building Shell and all other building improvement under one
policy of insurance or separately under one or more policies and such policy or
policies shall provide that neither Landlord, any Lender of Landlord, nor any
other person or entity shall have any interest in, or have the right to exercise
any control over, any insurance proceeds attributable to any improvements other
than the Land Improvements and the Building Shell and any other
-23-
52
improvements constructed by Landlord at its sole cost (subject to any obligation
of Tenant to use proceeds for repairs and reconstruction as set forth herein).
In addition, Tenant shall maintain, to the extent it is reasonably available,
earthquake insurance, covering such losses and subject to premiums and
deductibles as are commercially reasonable and comparable to such insurance
covering similar buildings in the San Xxxx area. If any boilers or other
pressure vessels or systems are installed on the Premises, Tenant shall maintain
boiler and machinery insurance in an amount equal to one hundred percent (100%)
of the full replacement value thereof, subject to commercially reasonable
deductibles. The insurance described in this Section 21.2 shall: (i) with regard
to the policy insuring the Land Improvements and Building Shell only (or, if
only one policy insures the Land Improvements, Building Shell and all other
elements of the Building, including, without limitation, Tenant's Improvements,
then with regard to the portion of the policy insuring the Land Improvements and
Building Shell or any proceeds payable on account thereof), name Landlord and
Landlord's lenders as additional insureds; (ii) with regard to the policy
insuring the Land Improvements and Building Shell only (or, if only one policy
insures the Land Improvements, Building Shell and all other elements of the
Building, including, without limitation, Tenant's Improvements, then with regard
to the portion of the policy insuring the Land Improvements and Building Shell
or any proceeds payable on account thereof), contain a Lender's Loss Payable
Form (Form 438 BFU or equivalent) in favor of Landlord's lenders and name
Landlord, or Landlord's lender if required by such lender, as the loss payee
(subject to the obligation to use proceeds for repairs and reconstruction as set
forth herein); (iii) provide for severability of interests or include a
cross-liability endorsement, such that an act or omission of an insured shall
not reduce or avoid coverage of other insureds; (iv) include a building
ordinance endorsement, an agreed amount endorsement and an inflation
endorsement; and (v) provide that it is noncontributing with any insurance
maintained by Landlord, and shall be excess insurance to that maintained by
Landlord. The full replacement value of the Building, improvements and fixtures
insured thereunder shall be determined by the company issuing the insurance
policy and shall be redetermined by said company within twelve (12) months after
completion of any material alterations or improvements to the Premises and
otherwise at intervals of not more than three (3) years. Tenant shall increase
the amount of the insurance carried pursuant to this Section 21.2 to the amount
so redetermined. The proceeds of the insurance described in this Section shall
be used for the repair, replacement and restoration of the Premises and other
improvements and fixtures insured thereunder, as further provided in Article 22;
provided, however, if this Lease is terminated after damage or destruction, all
proceeds of the insurance policy or policies related to such damage or
destruction, and the right to collect such proceeds, shall be allocated as
follows: (i) Landlord shall be entitled to all proceeds allocable to the
Building Shell and Land Improvements, and (ii) (a) if Landlord terminates the
Lease, Tenant shall be entitled to all proceeds attributable to Tenant's
Improvements and any alterations, additions, and/or improvements subsequently
made by Tenant, and (b) if Tenant terminates the Lease, Tenant shall be entitled
to the proceeds attributable to Tenant's Improvements and any alterations,
additions, and/or improvements subsequently made by Tenant to the extent of the
unamortized value of Tenant's Improvements, alterations, additions and/or
improvements based upon the cost to construct the same and an amortization
period equal to the initial Lease Term. Any deed of trust affecting the Premises
and all loan documentation relating thereto shall provide that all insurance
proceeds shall be used for the repair and reconstruction of the Premises
-24-
53
pursuant to the terms hereof, and shall not conflict with the provisions of this
Lease concerning the disposition of insurance proceeds.
21.3 At all times during the term of this Lease, Tenant shall
maintain workers' compensation insurance in accordance with California law and
employers' liability insurance with a limit of not less than that required by
California law.
21.4 All of the policies of insurance referred to in this Article 21
shall be written by companies authorized to do business in California and rated
A+VII or better in Best's Insurance Guide, except as otherwise reasonably
approved by Landlord. Each insurer referred to in this Article 21 shall agree,
by endorsement on the applicable policy or by independent instrument furnished
to Landlord, that it will give Landlord, and Landlord's lenders if required by
such lenders, at least ten (10) days' prior written notice by registered mail
before the applicable policy shall be cancelled for non-payment of premium, and
thirty (30) days' prior written notice by registered mail before the applicable
policy shall be cancelled or altered in coverage, scope, amount or other
material term for any other reason (although any failure of an insurer to give
notice as provided herein shall not be a breach of this Lease by Tenant). Except
as otherwise provided in this Lease, Tenant shall pay all of the premiums for
such insurance and all deductible amounts provided for thereunder. No policy
shall provide for a deductible amount in excess of that which is commercially
reasonable, unless approved in advance in writing by Landlord, which approval
shall not be unreasonably withheld. Tenant shall deliver to Landlord, and to
Landlord's lenders if required by such lenders, copies of the insurance
policies, certified by the insurer, or certificates evidencing such insurance
policies, issued by the insurer, together with evidence of payment of the
required premiums, prior to the required date for commencement of such coverage.
At least thirty (30) days prior to expiration of any such policy, Tenant shall
deliver to Landlord, and Landlord's lenders if required by such lenders, a
certificate evidencing renewal, or a certified copy of a new policy or
certificate evidencing the same, together with evidence of payment of the
required premiums. If Tenant fails to provide to Landlord any such policy or
certificate by the required date for commencement of coverage, or within fifteen
(15) days prior to expiration of any policy, or to pay the premiums therefor
when required, Landlord shall have the right, but not the obligation, to procure
said insurance and pay the premiums therefor. Any premiums paid by Landlord
shall be repaid by Tenant to Landlord with the next due installment of rent, and
failure to repay the same shall have the same consequences as failure to pay any
installment of Rent.
21.5 Tenant may provide the property insurance only required under
this Article 21 pursuant to a so-called blanket policy or policies of property
insurance maintained by Tenant; provided, however, that the amount and type of
coverage afforded to the Landlord shall not be reduced or adversely affected
from that which would exist under a separate policy or policies meeting all of
the requirements of this Lease by reason of the use of a blanket policy of
property insurance, and provided further that the requirements of this Article
21 are otherwise satisfied.
21.6 Landlord and Tenant each hereby waive any and all rights of
recovery
-25-
54
against the other or against the officers, directors, partners, employees,
agents, subtenants, contractors and representatives of the other, on account of
loss or damage to property occasioned to such waiving party or its property or
the property of others under its control, to the extent that such loss or damage
is caused by or results from risks insured against under any insurance policy
which insures such waiving party at the time of such loss or damage (or which
would have been insured against under a policy of insurance required to be
carried by such waiving party under this Lease had such waiving party carried
such insurance), which waiver shall continue in effect as long as the parties'
respective insurers permit such waiver under the terms of their respective
insurance policies or otherwise in writing. Any termination of such waiver shall
be by written notice as hereinafter set forth. Prior to obtaining policies of
insurance required or permitted under this Lease, Tenant shall give notice to
the insurers that the foregoing mutual waiver is contained in this Lease, and
each party shall use its best efforts to cause such insurer to approve such
waiver in writing and to cause each insurance policy obtained by it to provide
that the insurer waives all right of recovery by way of subrogation against the
other party. If such written approval of such waiver of subrogation cannot be
obtained from any insurer or is obtainable only upon payment of an additional
premium which the party seeking to obtain the policy reasonably determines to be
commercially unreasonable, the party seeking to obtain such policy shall notify
the other thereof, and the latter shall have twenty (20) days thereafter to
either: (i) identify other insurance companies reasonably satisfactory to the
other party that will provide the written approval and waiver of subrogation; or
(ii) agree to pay such additional premium. If neither (i) nor (ii) are done, the
mutual waiver set forth above shall not be operative, and the party seeking to
obtain the policy shall be relieved of the obligation to obtain the insurer's
written approval and waiver of subrogation with respect to such policy during
such time as such policy is not obtainable or is obtainable only upon payment of
a commercially unreasonable additional premium as described above. If such
policies shall at any subsequent time be obtainable or obtainable upon payment
of a commercially reasonable additional premium, neither party shall be
subsequently liable for failure to obtain such insurance until a reasonable time
after notification thereof by the other party. If the release of either Landlord
or Tenant, as set forth in the first sentence of this Section 21.9, shall
contravene any law with respect to exculpatory agreements, the liability of the
party in question shall be deemed not released but shall be secondary to the
other's insurer.
21.7 Any property management firm retained by Landlord to manage the
Premises shall be required to maintain commercial general liability insurance
with such limits of liability as are commercially reasonable naming Tenant as an
additional insured.
21.8 It is understood and agreed that insurance policies required
under this Article 21 may be blanket policies covering other locations operated
by Landlord or Tenant, or by their affiliates or subsidiaries, subject to the
reasonable approval of the other party.
21.9 Notwithstanding anything in this Section 21 or 22 to the
contrary, in the event damages attributable to uninsured losses and deductibles
relating to earthquake and flood losses exceed twenty percent (20%) of the
replacement cost of the Premises, either Landlord or Tenant may terminate this
Lease in the manner and within the time periods set forth in Article
-26-
55
22. In the event damages attributable to uninsured losses and deductibles
relating to earthquake and flood losses do not exceed twenty percent (20%) of
the value of the Premises, or if they do and neither party elects to terminate
this Lease, Tenant shall pay for one-seventeenth (1/17th) of fifty percent (50%)
of the loss or deductible for each year remaining in the initial term and first
extension period, and Landlord shall pay the balance. Tenant shall not be
required to pay any deductible amount under any policy of insurance if either
Landlord or Tenant terminate this Lease in accordance with its terms.
22. DAMAGE OR DESTRUCTION.
22.1 In the event of damage to or destruction of all or any portion
of the Premises or the improvements and fixtures thereon (collectively in this
Article 22, "improvements") arising from a risk covered by the insurance
described in Section 21.2, Landlord shall, with the use of the insurance
proceeds and any deductibles payable by Tenant, and within a reasonable time,
commence and proceed diligently to repair, reconstruct and restore (collectively
in this Article 22, "restore" or "restoration") such improvements to
substantially the same condition as they were in immediately prior to the
casualty, whether or not the insurance proceeds and deductibles are sufficient
to cover the actual cost of restoration, and this Lease shall continue in full
force and effect notwithstanding such damage or destruction. Subject to the
limitations and rights set forth in Section 21.8 hereof, Landlord shall
contribute any amounts necessary to restore the Land Improvements and Building
Shell in excess of the proceeds of insurance attributable thereto and applicable
deductibles, and Tenant shall contribute any amounts necessary to restore
Tenant's Improvements in excess of the proceeds of insurance attributable
thereto together with any applicable deductibles.
22.2 In the event of damage to or destruction of all or any portion
of the improvements arising from a risk which is not covered by the insurance
described in Section 21.2, Landlord may elect to restore the improvements, and
this Lease shall continue in full force and effect. Landlord shall give Tenant
written notice of its election to restore the improvements within sixty (60)
days after the damage or destruction occurs, and shall, at its expense and
within a reasonable period of time thereafter, commence and proceed diligently
to restore the improvements to substantially the same condition as they were in
immediately prior to the casualty. If Landlord does not elect to restore the
improvements within such 60-day period, then this Lease shall terminate unless
Tenant delivers to Landlord written notice of its election to continue this
Lease within thirty (30) days thereafter. If Tenant elects to continue this
Lease, Tenant shall, at its expense and within a reasonable period of time,
commence and proceed diligently to restore the improvements to substantially the
same condition as they were in immediately prior to the casualty, and this Lease
shall continue in full force and effect notwithstanding such damage or
destruction. Notwithstanding anything to the contrary in this Section 22.2, the
rights and obligations of Landlord and Tenant under this Section 22.2 shall be
subject to the terms and conditions of Section 21.8.
22.3 Notwithstanding anything in Section 22.1 or 22.2 to the
contrary, if, in the opinion of an independent architect selected by Landlord
and Tenant, the damage or
-27-
56
destruction is so substantial that it cannot be corrected within eight (8)
months of the date of damage, Tenant may elect to terminate this Lease by
delivering to Landlord written notice of its election to terminate within thirty
(30) days after the damage or destruction.
22.4 In the event the Lease is terminated in accordance with the
forgoing provisions, (i) Tenant shall surrender possession of the Premises
within a reasonable period of time, (ii) this Lease shall terminate as of the
date possession of the Premises is surrendered, (iii) insurance proceeds shall
be distributed in accordance with the provisions of Section 21.2, and (iv) the
parties shall be released from all obligations arising under this Lease after
such termination date.
22.5 In satisfying any restoration obligations under this Article
22, neither party shall be required to restore improvements with improvements
identical to those which were damaged or destroyed; rather, with the consent of
the other party, which consent will not be unreasonably withheld, the restoring
party may restore the damage or destruction with improvements reasonably
equivalent to those damaged or destroyed. In no event shall Tenant be required
to restore its own trade fixtures or equipment.
22.6 In the event of damage, destruction and/or restoration as
herein provided, there shall be no abatement of Rent, and Tenant shall not be
entitled to any compensation or damages occasioned by any such damage,
destruction or restoration.
22.7 Notwithstanding anything to the contrary contained in this
Lease, if the damage or destruction occurs during the last year of the term or
any extended term of this Lease, Tenant shall not be required to repair the
damage or destruction so long as it tenders to Landlord the insurance proceeds
and applicable deductibles for restoration which would otherwise been required
under this Article 22.
22.8 The provisions of Article 17 shall apply to any restoration
work under this Article as if the restoration was an alteration, addition or
improvement thereunder.
22.9 Tenant waives the provisions of Civil Code Section 1932(2) and
1933(4) or any similar statute now existing or hereafter adopted governing
destruction of the Premises, so that the parties' rights and obligations in the
event of damage or destruction shall be governed by the provisions of this
Lease.
23. EMINENT DOMAIN.
23.1 In the event the whole of the Premises shall be taken for any
public or quasi-public purpose by any lawful power or authority by exercise of
the right of appropriation, condemnation or eminent domain, or sold to prevent
such taking, Tenant or Landlord may terminate this Lease effective as of the
date possession is required to be surrendered to said authority. The
condemnation proceeds shall be reasonably allocated to Tenant to the extent of
its trade fixtures, the value of any improvements (as that term is referred to
in Article 17, including,
-28-
57
without limitation, Tenant's Improvements constructed by Tenant pursuant to the
Work Letter) which Tenant has the right to remove from the Premises, the
unamortized value allocable to the remainder of the term of this Lease of any
improvements (as that term is referred to in Article 17 hereof, including,
without limitation, Tenant's Improvements constructed by Tenant pursuant to the
Work Letter) installed at Tenant's expense which are not removable, good will,
and moving expenses, and Landlord shall be entitled to any condemnation proceed
attributable to the Real Property, the Land Improvements, the Building Shell,
the value of any improvements not allocated to Tenant above, and any severance
damages.
23.2 In the event of a partial taking of the Premises for any public
or quasi-public purpose by any lawful power or authority by exercise of right of
appropriation, condemnation, or eminent domain, or sold to prevent such taking,
then Tenant may elect to terminate this Lease if such taking is of material
detriment to, and substantially interferes with, Tenant's use and occupancy of,
and conduct of its business from, the Premises, including but not limited to
materially affecting Tenant's parking or Tenant's ingress and egress from the
Premises, unless Landlord provides reasonable alternatives thereto acceptable to
Tenant. In no event shall this Lease be terminated when such a partial taking
does not have a material adverse effect upon Landlord or Tenant or both.
Termination pursuant to this section shall be effective as of the date
possession is required to be surrendered to said authority. In the event of a
partial taking and whether or not Tenant terminates this Lease, Tenant and
Landlord shall be entitled to those condemnation proceeds attributable to those
items for which they are entitled to compensation pursuant to Section 23.1
(excluding moving expenses).
23.3 If upon any taking of the nature described in this Article 23
this Lease continues in effect, then Landlord shall promptly proceed to restore
the remaining portion of the Premises, and all improvements and fixtures located
thereon, to substantially their same condition prior to such partial taking.
Landlord shall contribute any amount necessary for restoration of Landlord's
Work described in the Work Letter in excess of the condemnation proceeds awarded
for such purpose, and Tenant shall contribute any amount necessary for
restoration of Tenant's Improvement Work described in the Work Letter in excess
of the condemnation proceeds awarded for such purposes. Basic Annual Rent shall
be abated proportionately on the basis of the rental value of the Premises,
including improvements and fixtures, as restored after such taking compared to
the rental value of the Premises prior to such taking.
23.4 The provisions of Article 17 shall apply to any restoration
work under this Article as if the restoration was an alteration, addition or
improvement thereunder.
24. DEFAULTS AND REMEDIES.
24.1 Late payment by Tenant to Landlord of Rent and other sums due
will cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which will be extremely difficult and impracticable to ascertain. Such
costs include, but are not limited to, processing and accounting charges and
late charges which may be imposed on Landlord by the terms of any mortgage or
trust deed covering the Premises. Therefore, if any installment of Rent
-29-
58
due from Tenant is not received by Landlord within fifteen (15) days of the date
such payment is due, Tenant shall pay to Landlord an additional sum of five
percent (5%) of the overdue rent as a late charge. The parties agree that this
late charge represents a fair and reasonable estimate of the costs that Landlord
will incur by reason of late payment by Tenant. In addition to the late charge,
Rent not paid within thirty (30) days of the date such payment is due shall bear
interest from thirty (30) days after the date due until paid at the lesser of
(i) ten percent (10%) per annum or (ii) the maximum rate permitted by law.
24.2 No payment by Tenant or receipt by Landlord of a lesser amount
than the rent payment herein stipulated shall be deemed to be other than on
account of the rent, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as rent be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such rent or pursue any other remedy
provided. If at any time a dispute shall arise as to any amount or sum of money
to be paid by Tenant to Landlord, Tenant shall have the right to make payment
"under protest" and such payment shall not be regarded as a voluntary payment,
and there shall survive the right on the part of Tenant to institute suit for
recovery of the payment paid under protest.
24.3 If Tenant fails to pay any sum of money (other than Basic
Annual Rent) required to be paid by it hereunder, or shall fail to perform any
other act on its part to be performed hereunder, Landlord may, without waiving
or releasing Tenant from any obligations of Tenant, but shall not be obligated
to, make such payment or perform such act; provided, that such failure by Tenant
continued for fifteen (15) days after written notice from Landlord demanding
performance by Tenant was delivered to Tenant, or that such failure by Tenant
unreasonably interfered with the use or efficient operation of the Premises, or
resulted or could have resulted in a violation of law or the cancellation of an
insurance policy maintained by Landlord. All sums so paid or incurred by
Landlord, together with interest thereon, from the date such sums were paid or
incurred, at the annual rate equal to ten percent (10%) per annum or highest
rate permitted by law, whichever is less, shall be payable to Landlord on demand
as Additional Rent.
24.4 The occurrence of any one or more of the following events shall
constitute a "Default" hereunder by Tenant:
(a) The failure by Tenant to make any payment of Rent, as and
when due, where such failure shall continue for a period of fifteen (15) days
after written notice thereof from Landlord to Tenant. Such notice shall be in
lieu of, and not in addition to, any notice required under California Code of
Civil Procedure Section 1161;
(b) The failure by Tenant to observe or perform any material
obligation other than described in Section 24.4(a) to be performed by Tenant,
where such failure shall continue for a period of thirty (30) days after written
notice thereof from Landlord to Tenant; provided, however, that if the nature of
Tenant's default is such that more than thirty (30) days are reasonably required
to cure the default, then Tenant shall not be deemed to be in default
-30-
59
if Tenant shall commence such cure within said thirty (30) day period and
thereafter diligently prosecute the same to completion. Such notice shall be in
lieu of, and not in addition to, any notice required under California Code of
Civil Procedure Section 1161;
(c) Tenant makes an assignment for the benefit of creditors;
(d) A receiver, trustee or custodian is appointed to, or does,
take title, possession or control of all, or substantially all, of Tenant's
assets;
(e) An order for relief is entered against Tenant pursuant to a
voluntary or involuntary proceeding commenced under any chapter of the
Bankruptcy Code;
(f) Any involuntary petition is filed against the Tenant under
any chapter of the Bankruptcy Code and is not dismissed within ninety (90) days;
or
(g) Tenant's interest in this Lease is attached, executed upon,
or otherwise judicially seized and such action is not released within ninety
(90) days of the action.
Notices given under this Section shall specify the alleged
default and shall demand that Tenant perform the provisions of this Lease or pay
the Rent that is in arrears, as the case may be, within the applicable period of
time, or quit the Premises. No such notice shall be deemed a forfeiture or a
termination of this Lease unless Landlord elects otherwise in such notice, and
in no event shall a forfeiture or termination occur without such written notice.
24.5 In the event of a Default by Tenant, and at any time thereafter
while such Default is continuing, and without limiting Landlord in the exercise
of any right or remedy which Landlord may have, Landlord shall be entitled to
terminate Tenant's right to possession of the Premises by any lawful means, in
which case this Lease shall terminate and Tenant shall immediately surrender
possession of the Premises to Landlord. In such event Landlord shall have the
immediate right to re-enter and remove all persons and property by any lawful
means, and such property may be removed and stored in a public warehouse or
elsewhere at the cost of, and for the account of Tenant, all without service of
notice and without being deemed guilty of trespass, or becoming liable for any
loss or damage which may be occasioned thereby, subject to the rights of
personal property lessors or secured parties with validly granted and duly
perfected ownership or security interests in any such property. In the event
that Landlord shall elect to so terminate this Lease, then Landlord shall be
entitled to recover from Tenant all damages incurred by Landlord by reason of
Tenant's default, including:
(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 the amount by which the
unpaid Rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss which Tenant proves could have been
reasonably avoided; plus
-31-
60
(c) The worth at the time of award of the amount by which the
unpaid Rent for the balance of the term after the time of award exceeds the
amount of such rental loss which Tenant proves could have been reasonably
avoided; plus
(d) Any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its obligation
under this Lease or which in the ordinary course of things would be likely to
result therefrom; plus
(e) At Landlord's election, such other amounts in addition to
or in lieu of the foregoing as may be permitted from time to time by applicable
law.
As used in Subsections (a), (b) and (c), the "time of award"
shall mean the date upon which the judgment in any action brought by Landlord
against Tenant by reason of such default is entered or such earlier date as the
court may determined. As used in Subsections (a) and (b), the "worth at the time
of award" shall be computed by allowing interest at the rate specified in
Section 24.1. As used in Subsection (c) above, the "worth at the time of award"
shall be computed by taking the present value of such amount using the discount
rate of the Federal Reserve Bank of San Francisco at the time of award plus one
percentage point.
Nothing in this Section 24.4 is intended to increase or enlarge
the damages recoverable by Landlord under Section 1951.2 of the Civil Code, as
same may be amended from time to time.
24.6 If Landlord does not elect to terminate this Lease as provided
in Section 24.5 or otherwise terminate Tenant's right to possession of the
Premises, Landlord shall have the remedy described in Section 1951.4 of the
Civil Code. Landlord may continue the lease in effect for so long as Landlord
does not terminate Tenant's right to possession of the Premises, and may enforce
all of its rights and remedies under the Lease, including the right from time to
time to recover Rent as it becomes due under the Lease. At any time thereafter,
Landlord may elect to terminate this Lease and to recover damages to which
Landlord is entitled.
24.7 Notwithstanding anything herein to the contrary, Landlord's
reentry to perform acts of maintenance or preservation of, or in connection with
efforts to relet, the Premises, or any portion thereof, or the appointment of a
receiver upon Landlord's initiative to protect Landlord's interest under this
Lease, shall not terminate Tenant's right to possession of the Premises or any
portion thereof and, until Landlord does elect to terminate this Lease or
terminates Tenant's right to possession of the Premises, this Lease shall
continue in full force and Landlord may pursue all its remedies hereunder,
including, without limitation, the right to recover from Tenant as they become
due hereunder all Rent and other charges required to be paid by Tenant under the
terms of this Lease.
24.8 All rights, options, and remedies of Landlord contained in this
Lease shall be construed and held to be nonexclusive and cumulative. Landlord
shall have the right to
-32-
61
pursue any one or all of such remedies or any other remedy or relief which may
be provided by law, whether or not stated in this Lease. No waiver of any
default of Tenant hereunder shall be implied from any acceptance by Landlord of
any rent or other payments due hereunder or by any omission by Landlord to take
any action on account of such default if such default persists or is repeated,
and no express waiver shall affect defaults other than as specified in said
waiver.
24.9 Termination of this Lease or Tenant's right to possession by
Landlord shall not relieve Tenant from any liability to Landlord which has
theretofore accrued or shall arise based upon events which occurred prior to the
last to occur of (i) the date of Lease termination or (ii) the date possession
of Premises is surrendered or taken by Landlord.
24.10 Landlord shall not be in default unless Landlord fails to
perform obligations required of Landlord within a reasonable time, but in no
event later than thirty (30) days after written notice by Tenant specifying
wherein Landlord has failed to perform such obligation; provided, however, that
if the nature of Landlord's obligation is such that more than thirty (30) days
are required for performance, then Landlord shall not be in default if Landlord
commences performance within such thirty (30) day period and thereafter
diligently prosecutes the same to completion.
24.11 In the event of any default on the part of Landlord, Tenant
will give notice by registered or certified mail to any beneficiary of a deed of
trust or mortgagee of a mortgage covering the Premises whose address shall have
been furnished and shall offer such beneficiary and/or mortgagee a reasonable
opportunity to cure the default.
25. ASSIGNMENT OR SUBLETTING.
25.1 Except as hereinafter provided, Tenant shall not, either
voluntarily or by operation of law, sell, hypothecate or transfer this Lease, or
sublet the Premises or any part thereof, or permit or suffer the Premises or any
part thereof to be used or occupied as work space, storage space, concession or
otherwise by anyone other than Tenant or Tenant's employees, without the prior
written consent of Landlord in each instance, which consent shall not be
unreasonably withheld or delayed.
25.2 If Tenant desires to sublet all or any part of the Premises, or
to assign this Lease, to any entity into which Tenant is merged, with which
Tenant is consolidated, or which acquires all or substantially all of the assets
of Tenant, or to a parent, subsidiary, or other affiliate of Tenant, provided
that the subtenant or assignee first executes, acknowledges and delivers to
Landlord an agreement whereby the subtenant or assignee agrees to be bound by
all of the covenants and agreements in this Lease to the extent relating to the
unexpired term of the Lease and, in the event of a sublease, the portion of the
Premises so sublet, then Landlord upon receipt thereof will consent to the
sublease or assignment.
25.3 In the event Tenant desires to assign, sublease, hypothecate or
otherwise transfer this Lease or sublet the Premises to an assignee other than
one set forth in
-33-
62
Section 25.2, then at least fifteen (15) days, but not more than ninety (90)
days, prior to the date when Tenant desires the assignment or sublease to be
effective (the "Assignment Date"), Tenant shall give Landlord a notice (the
"Assignment Notice") which shall set forth the name, address and business of the
proposed assignee or sublessee, information (including references and financial
statements) concerning the reputation and financial ability of the proposed
assignee or sublessee, the Assignment Date, any ownership or commercial
relationship between Tenant and the proposed assignee or sublessee, and the
consideration and all other material terms and conditions of the proposed
assignment or sublease, all in such detail as Landlord shall reasonably require.
25.4 Landlord in making its determination as to whether consent
should be given to a proposed assignment or sublease, may give consideration to
the reputation of a proposed successor, the financial strength of such successor
(notwithstanding the assignor remaining liable for Tenant's performance), and
any use which such successor proposes to make of the Premises. If Landlord fails
to deliver written notice of its determination to Tenant within fifteen (15)
days following receipt of the Assignment Notice and the information required
under Section 25.3, Landlord shall be deemed to have approved the request. In no
event shall Landlord be deemed to be unreasonable for declining to consent to a
transfer to a successor of poor reputation, lacking financial qualification,
seeking a change in use which would involve the generation, storage, use,
treatment or disposal of Hazardous Materials in any manner for a purpose
prohibited by any applicable Law, so long as Landlord is reasonable in making
its determination based on such factors. As a condition to any assignment or
sublease to which Landlord has given consent, any such assignee or sublessee
must execute, acknowledge and deliver to Landlord an agreement whereby the
assignee or sublessee agrees to be bound by all of the covenants and agreements
in this Lease to the extent relating to the unexpired term of the Lease and, in
the event of a sublease, the portion of the Premises so sublet.
25.5 Any sale, assignment, hypothecation or transfer of this Lease
or subletting of Premises that is not in compliance with the provisions of this
Article 25 shall be void.
25.6 The consent by Landlord to an assignment or subletting shall
not relieve Tenant or any assignee of this Lease or sublessee of the Premises
from obtaining the consent of Landlord to any further assignment or subletting
or as releasing Tenant or any assignee or sublessee of Tenant from full and
primary liability.
25.7 If Tenant shall sublet the Premises or any part thereof Tenant
hereby immediately and irrevocably assigns to Landlord, as security for Tenant's
obligations under this Lease, all rent from any subletting of all or a part of
the Premises and Landlord as assignee, or a receiver for Tenant appointed on
Landlord's application, may collect such rent and apply it toward Tenant's
obligations under this Lease; except that, until the occurrence of a Default in
the payment of Basic Annual Rent by Tenant, Tenant shall have the right to
collect such rent.
25.8 Notwithstanding any subletting or assignment Tenant shall
remain
-34-
63
fully and primarily liable for the payment of all Rent and other sums due, or to
become due hereunder, and for the full performance of all other terms,
conditions, and covenants to be kept and performed by Tenant. The acceptance of
rent or any other sum due hereunder, or the acceptance of performance of any
other term, covenant, or condition hereof, from any other person or entity shall
not be deemed to be a waiver of any of the provisions of this Lease or a consent
to any subletting or assignment of the Premises. Landlord shall not unreasonably
withhold consent to an assignment back to the original Tenant hereunder from a
subsequent assignee.
25.9 Any sublease of the Premises shall be subject and subordinate
to the provisions of this Lease, shall not extend beyond the term of this Lease,
and shall provide that the sublessee shall attorn to Landlord, at Landlord's
sole option, in the event of the termination of this Lease. Landlord and any
lender shall upon Tenant's request provide any subtenant of the entirety of the
Premises with a recognition and nondisturbance agreement in the form set forth
in Article 35 hereof on the condition that the sublessee agrees to attorn to
Landlord on exactly the same terms and conditions as this Lease.
26. ARBITRATION - ATTORNEY'S FEES.
26.1 In the event Tenant claims a breach of this Lease by Landlord,
Tenant may demand arbitration of the claim before a panel of three arbitrators,
one appointed by Tenant, one appointed by Landlord, and the third selected by
the two arbitrators so appointed. In the event arbitration is demanded by
Tenant, Landlord may, but shall not be required to, include in the arbitration
any other claims or disputes arising from or related to this Lease. The
arbitrators shall be instructed to conclude the arbitration within ninety (90)
days of the time the claim is submitted to arbitration. Notwithstanding the
provisions of Section 5.3, Tenant may deduct from or set off against Rent the
amount of any final award of the arbitrators in favor of Tenant, even if the
award is appealed by Landlord (but subject to Landlord's right to collect the
amount deducted or set off in the event the appeal is successful). The remedy
described in this Section 26.1 is optional only and nothing contained herein
shall be construed as a waiver of any other remedy that Tenant may have at law
or equity.
26.2 If either party commences an arbitration, action or proceeding
against the other party arising out of or in connection with this Lease, the
prevailing party shall be entitled to have and recover from the other party
reasonable attorneys' fees, expert witness fees and costs of suit or
arbitration.
-35-
64
27. BANKRUPTCY.
27.1 In the event a debtor or trustee under the Bankruptcy Code, or
other person with similar rights, duties and powers under any other law,
proposes to cure any default under this Lease or to assume or assign this Lease,
and is obliged to provide adequate assurance to Landlord that (i) a default will
be cured, (ii) Landlord will be compensated for its damages arising from any
breach of this Lease, or (iii) future performance under this Lease will occur,
then adequate assurance shall include any or all of the following, as determined
by the Bankruptcy Court:
(a) Those acts specified in the Bankruptcy Code or other law as
included within the meaning of adequate assurance;
(b) A cash payment to compensate Landlord for any monetary
defaults or damages arising from a breach of this Lease;
(c) The credit worthiness and desirability, as a tenant, of the
person assuming this Lease or receiving an assignment of this Lease, at least
equal to Landlord's customary and usual credit worthiness requirements and
desirability standards in effect at the time of the assumption or assignment, as
determined by the Bankruptcy Court; and
(d) The assumption or assignment of all of Tenant's interest
and obligations under this Lease.
28. DEFINITION OF LANDLORD.
28.1 The term "Landlord" as used in this Lease, so far as covenants
or obligations on the part of Landlord are concerned, shall be limited to mean
and include only Landlord or the successor-in-interest of Landlord under this
Lease at the time in question. In the event of any transfer, assignment or
conveyance of Landlord's title or leasehold, the Landlord herein named (and in
case of any subsequent transfers or conveyances, the then grantor and any prior
grantors) shall be automatically freed and relieved from and after the date of
such transfer, assignment or conveyance of all liability for the performance of
any covenants or obligations contained in this Lease thereafter to be performed
by Landlord and, without further agreement, the transferee of such title or
leasehold shall be deemed to have assumed and agreed to observe and perform any
and all obligations of Landlord hereunder, during its ownership of the Premises.
Landlord may transfer its interest in the Premises or this Lease without the
consent of Tenant and such transfer or subsequent transfer shall not be deemed a
violation on the part of Landlord or the then grantor of any of the terms or
conditions of this Lease.
28.2 Notwithstanding the foregoing, the term "Landlord" shall
include the Landlord herein named with regard to (i) construction of the work
required by Landlord under the Work Letter pursuant to Sections 4.1 hereof, (ii)
damages in the event of completion delays to the extent of Section 4.4 hereof,
(iii) the warranties made by Landlord under Sections 14.4 and
-36-
65
14.5 to the extent thereof, (iv) covenants and representations made by Landlord
in Article 39, (v) the obligation to deliver the Premises lien-free pursuant to
Section 35.4, (vi) the completion of punch list items relating to the Building
Shell and Land Improvements pursuant to the provisions of the Work Letter, and
(vii) any other duties or obligations of Landlord arising under the provisions
of this Lease and applicable Law.
29. ESTOPPEL CERTIFICATE.
29.1 Each party shall, within fifteen (15) days of written notice
from the other party, execute, acknowledge and deliver to the other party a
statement in writing on a form reasonably requested by a proposed lender,
purchaser, assignee or subtenant (i) certifying that this Lease is unmodified
and in full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease as so modified is in full force and
effect) and the dates to which the rental and other charges are paid in advance,
if any, (ii) acknowledging that there are not, to each party's knowledge, any
uncured defaults on the part of Landlord or Tenant hereunder (or specifying such
defaults if any are claimed) and (iii) setting forth such further information
with respect to this Lease or the Premises as may be reasonably requested
thereon.
30. REMOVAL OF PROPERTY.
30.1 Except as provided below, all fixtures and personal property
owned by Tenant (but excluding any property specifically described in Section
30.2 even if it would otherwise be defined as a fixture) shall be and remain the
property of Tenant, and may be removed by Tenant at the expiration of the term
of this Lease, or at such earlier time as Tenant is not in default hereunder.
30.2 All fixtures and improvements provided by Landlord under the
Work Letter, and all other improvements, additions, alterations, and decorations
constructed or installed by Tenant that are of general utility to the operation
of the Building (but excluding trade fixtures and personal property owned by
Tenant unless specifically described below) attached to or built into the
Premises shall be deemed real property and shall become the property of Landlord
upon the expiration or earlier termination of this Lease, and shall remain upon
and be surrendered with the Premises as a part thereof, including, without
limiting the generality of the foregoing, walls, partitions and related
coverings; flooring and floor coverings; ceilings; insulation; doors, frames and
related hardware; built-in cabinet work and paneling; lighting fixtures;
built-in security systems; fire sprinkler system; lobbies; rest rooms;
mechanical (HVAC) system, including central plant and controls, and including
equipment, screens and enclosures; environmental control and monitoring systems;
telephone, electrical and other wires and cabling; elevator and related
components; plumbing system and fixtures; and electrical and other utility
systems and components thereof and appurtenances thereto. Tenant shall have the
right to remove any improvement, addition, alteration, decoration and/or trade
fixture that is not of general utility to the operation of the Building and/or
that is used in the operation of Tenant's business so long as any damage caused
by such removal is repaired, including, without limitation, the following: (1)
antenna farm; (ii) environmental xxxxxxxx in manufacturing areas; (iii) special
audio-visual cabinets; (iv) up-graded interior office doors (provided, Tenant
replaces
-37-
66
such doors with standard doors); (v) fencing in stock room area or other areas;
(vi) hoist; (vii) power equipment that extends from the tray to the
manufacturing floor; (viii) air compressor; and (ix) special sound equipment in
exercise room. Tenant shall not be required to remove any of such property from
the Premises or restore the Premises except as set forth in Section 30.3.
30.3 Notwithstanding Sections 30.1 hereof, Tenant may not remove any
property if such removal would cause material damage to the Premises, unless
such damages can be and is repaired by Tenant. Furthermore, Tenant shall repair
any damage to the Premises caused by Tenant's removal of any such property, and
shall, prior to the expiration or earlier termination of this Lease, restore and
return the Premises to the condition they were in when first occupied by Tenant
(or after they were altered as allowed by Article 17, and excepting Tenant's
Improvements and subject to the provisions of Articles 22 and 23), reasonable
wear and tear excepted. At a minimum, Tenant shall leave in place and repair any
damage to the interior floors, walls and ceilings of the Premises. The
provisions of Article 17 shall apply to any restoration work under this Article
as if the restoration was an alteration, addition or improvement thereunder.
Should Tenant require any period beyond the expiration or earlier termination of
the Lease to complete such restoration, Tenant shall be a tenant at sufferance
subject to the provisions of Section 12.2 hereof.
30.4 If Tenant shall fail to remove any fixtures or personal
property which it is entitled to remove under this Article 30 from the Premises
prior to termination of this Lease, then Landlord may dispose of the property
under the provisions of Section 1980 et seq. of the California Civil Code, as
such provisions may be modified from time to time, or under any other applicable
provisions of California law.
31. LIMITATION OF LANDLORD'S LIABILITY.
31.1 Except as set forth in Section 31.4, if Landlord is in default
of this Lease, and as a consequence, Tenant recovers a money judgment against
Landlord, the judgment shall be satisfied only out of the proceeds of sale
received on execution of the judgment and levy against the right, title, and
interest of Landlord in the Premises, and out of insurance proceeds, rent or
other income from the Premises receivable by Landlord or out of the
consideration received by Landlord from the sale or other disposition of all or
any part of Landlord's right, title, and interest in the Premises.
31.2 Neither Landlord nor Landlord's Agents shall be personally
liable for any deficiency except to the extent liability is based upon willful
and intentional misconduct. If Landlord is a partnership or joint venture, the
partners of such partnership shall not be personally liable and no partner of
Landlord shall be sued or named as a party in any suit or action, or service of
process be made against any partner of Landlord, except as may be necessary to
secure jurisdiction of the partnership or joint venture or to the extent
liability is caused by willful and intentional misconduct. If Landlord is a
corporation, the shareholders, directors, officers, employees, and/or agents of
such corporation shall not be personally liable and no shareholder, director,
officer, employee, or agent of Landlord shall be sued or named as a party in any
suit or
-38-
67
action, or service of process be made against any shareholder, director,
officer, employee, or agent of Landlord, except as may be necessary to secure
jurisdiction of the corporation. No partner, shareholder, director, employee, or
agent of Landlord shall be required to answer or otherwise plead to any service
of process and no judgment will be taken or writ of execution levied against any
partner, shareholder, director, employee, or agent of Landlord.
31.3 Each of the covenants and agreements of this Article 31 shall
be applicable to any covenant or agreement either expressly contained in this
Lease or imposed by statute or by common law.
31.4 Notwithstanding the foregoing, the Landlord herein named shall
remain liable or responsible for (i) construction of the work required by
Landlord under the Work Letter pursuant to Sections 4.1 hereof, (ii) damages in
the event of completion delays to the extent of Section 4.4 hereof, (iii) the
warranties made by Landlord under Sections 14.4 and 14.5 to the extent thereof,
(iv) covenants and representations made by Landlord in Article 39, (v) the
obligation to deliver the Premises lien-free pursuant to Section 35.4, (vi) the
completion of punch list items relating to the Building Shell and Land
Improvements pursuant to the provisions of the Work Letter, and (vii) any other
duties or obligations of Landlord arising under the provisions of this Lease and
applicable law.
32. [INTENTIONALLY LEFT BLANK].
33. QUIET ENJOYMENT.
33.1 So long as Tenant is not in Default, Tenant may peaceably and
quietly have, hold, use, occupy and enjoy the Premises during the term and any
extended term of this Lease.
34. QUITCLAIM DEED.
34.1 Tenant shall execute and deliver to Landlord on the expiration
or termination of this Lease, immediately on Landlord's request, a quitclaim
deed to the Premises or other document in recordable form suitable to evidence
of record termination of this Lease and the right of first refusal and option
contained herein.
-39-
68
35. SUBORDINATION AND ATTORNMENT.
35.1 Unless the mortgagee or beneficiary elects otherwise at any
time prior to or following a default by Tenant, this Lease shall be subject to
and subordinate to the lien of any mortgage or deed of trust now or hereafter in
force against the Premises or any portion thereof, and to all advances made or
hereafter to be made upon the security thereof without the necessity of the
execution and delivery of any further instruments on the part of Tenant to
effectuate such subordination, provided that the lienholder, beneficiary, or
mortgagee executes and delivers to Tenant a non-disturbance, attornment, and
subordination agreement ("Non-Disturbance Agreement") in recordable form, in the
form as the lienholder, beneficiary, or mortgagee may reasonably request and is
approved by Tenant, which approval will not be unreasonably withheld, setting
forth that so long as Tenant is not in Default hereunder, Landlord's and
Tenant's rights and obligations hereunder (including the use of insurance
proceeds as set forth herein) shall remain in force and Tenant's right to
possession shall be upheld. Each Non-Disturbance Agreement shall provide for use
of insurance proceeds as set forth in Article 21 of this Lease.
35.2 Notwithstanding the foregoing, Tenant shall upon request of
Landlord promptly execute and deliver such further instrument or instruments
reasonably required by Landlord and reasonably acceptable to Tenant evidencing
such subordination of this Lease to the lien of any such mortgage or deed of
trust as may be required by Landlord, provided that the lienholder, beneficiary,
or mortgagee has previously executed and delivered to Tenant a Non-Disturbance
Agreement in recordable form. However, if any such mortgagee or beneficiary so
elects at any time prior to or following a default by Tenant, this Lease shall
be deemed prior in lien to any such mortgage or deed of trust regardless of date
and Tenant will execute a statement in writing to such effect at Landlord's
request.
35.3 In the event any proceedings are brought for foreclosure, or in
the event of the exercise of the power of sale under any mortgage or deed of
trust made by the Landlord covering the Premises, the Tenant shall at the
election of the purchaser at such foreclosure or sale attorn to the purchaser
upon any such foreclosure or sale and recognize such purchaser as the Landlord
under this Lease in accordance with the terms of the Non-Disturbance Agreement.
35.4 Landlord represents that there are no mortgages or deeds of
trust encumbering the Premises, nor will there be any mortgages or deeds of
trust encumbering the Premises, with interests which will be superior to
Tenant's leasehold, on the date a memorandum of the Lease is duly recorded in
the Official Records of Santa Xxxxx County, other than those interests for which
Tenant has been provided a Non-Disturbance Agreement. Notwithstanding the
foregoing, Landlord shall use commercially reasonable efforts to insure that the
Premises are free of material and mechanics' liens on account of the work
required of Landlord under the Work Letter as soon as is reasonably practical
after Tenant occupies the Premises. At the request of Tenant, Landlord shall
provide such documentation as may be reasonably requested by a title company for
the purpose of allowing the leasehold policy to be issued without listing any
such liens as exceptions, so long as Landlord incurs no expense therefor. In any
event, however,
-40-
69
Landlord shall insure such a policy without exceptions for such liens may be
issued no later than six (6) months from the Substantial Completion of the
Premises.
36. SURRENDER.
36.1 No surrender of possession of any part of the Premises shall
release Tenant from any of its obligations hereunder unless accepted by
Landlord.
36.2 The voluntary or other surrender of this Lease by Tenant shall
not work a merger, unless Landlord consents, and shall, at the option of
Landlord, operate as an assignment to it of any or all subleases or
subtenancies.
37. WAIVER AND MODIFICATION.
37.1 No provision of this Lease may be waived, modified, amended or
added to except by an agreement in writing. The waiver by either party hereto of
any breach of any term, covenant or condition herein contained shall not be
deemed to be a waiver of any subsequent breach of the same or any other term,
covenant or condition herein contained.
38. WAIVER OF JURY TRIAL AND COUNTERCLAIMS.
38.1 The parties hereto shall and they hereby do waive trial by jury
in any action, proceeding or counterclaim brought by either of the parties
hereto against the other on any matters whatsoever arising out of or in any way
connected with this Lease, the relationship of Landlord and Tenant, Tenant's use
or occupancy of the Premises, and/or any claim of injury or damage.
39. HAZARDOUS MATERIAL.
39.1 Tenant, at its sole cost, shall comply with all federal, state
and local laws, statutes, ordinances, codes, regulations and orders relating to
Tenant's receiving, handling, use, storage, accumulation, transportation,
generation, spillage, migration, discharge, release and disposal of Hazardous
Material (as hereinafter defined in Section 39.12 hereof) in or about the
Premises. Tenant shall not cause or permit any Hazardous Material to be brought
upon, kept or used in or about the Premises by Tenant, its agents, employees,
contractors, invitees or subtenants, in a manner or for a purpose prohibited by
any federal, state or local agency or authority. The accumulation of Hazardous
Material shall be in approved containers and removed from the Premises by duly
licensed carriers.
39.2 Tenant shall promptly provide Landlord with telephonic notice,
which shall promptly be confirmed by written notice, of any and all spillage,
discharge, release and
-41-
70
disposal of Hazardous Material onto or within the Premises, including the soils
and subsurface waters thereof, which by law must be reported to any federal,
state or local agency, and any injuries or damages resulting directly or
indirectly therefrom. Further, Tenant shall deliver to Landlord each and every
notice or order, when said order or notice identifies a violation which may have
the potential to adversely impact the Premises, received from any federal, state
or local agency concerning Hazardous Material and the possession, use and/or
accumulation thereof promptly upon receipt of each such notice or order by
Tenant. Landlord shall have the right, upon reasonable notice, to inspect and
copy each and every notice or order received from any federal, state or local
agency concerning Hazardous Material and the possession, use and/or accumulation
thereof.
39.3 Tenant shall be responsible for and shall indemnify, protect,
defend and hold harmless Landlord and Landlord's Agents from any and all
liability, damages, injuries, causes of action, claims, judgments, costs,
penalties, fines, losses, and expenses which arise during or after the term of
this Lease and which result from Tenant's (or from Tenant's Agents, assignees,
subtenants, employees, agents, contractors, licensees, or invitees) receiving,
handling, use, storage, accumulation, transportation, generation, spillage,
discharge, release, disposal of Hazardous Material in, upon or about the
Premises, including without limitation (i) damages for the loss or restriction
on use of any portion or amenity of the Premises, (ii) damages arising from any
adverse impact on marketing of space in the Building, and (iii) reasonable
consultant fees, expert fees, and attorneys' fees. Landlord shall be responsible
for and shall indemnify, protect, defend and hold harmless Tenant on the same
basis as above for all other claims which arise from receiving, handling, use,
storage, accumulation, transportation, generation, spillage, migration,
discharge, release or disposal of Hazardous Material in, upon or about the
Premises (subject to applicable insurance, if any, required to be maintained by
Tenant under this Lease).
39.4 The indemnification pursuant to the preceding Section 39.3
includes, without limiting the generality of Section 39.3, reasonable costs
incurred in connection with any investigation of site conditions or any cleanup,
remedial, removal or restoration work required by any federal, state or local
governmental agency or political subdivision because of Hazardous Material
present in the soil, subsoil, ground water, or elsewhere on, under or about the
Premises. Without limiting the foregoing, if the presence of any Hazardous
Material on the Premises results in any contamination of the Premises, or
underlying soil or groundwater, the party responsible therefore under Section
39.3 shall promptly take all actions at its sole expense as are necessary to
return the Premises to the condition existing prior to the introduction of any
such Hazardous Material, provided that the other party's approval of such action
shall first be obtained, which approval shall not be unreasonably withheld so
long as such actions would not potentially have any material adverse long-term
or short-term effect on the Premises, except that the responsible party shall
not be required to obtain the other party's prior approval of any action of an
emergency nature reasonably required or any action mandated by a governmental
authority.
39.5 Landlord acknowledges that it is not the intent of this Article
39 to prohibit Tenant from operating its business as described in Article 10 or
to unreasonably interfere with the operation of Tenant's business. Tenant may
operate its business according to the custom
-42-
71
of the industry so long as the use or presence of Hazardous Material is strictly
and properly monitored according to all applicable governmental requirements. As
a material inducement to Landlord to allow Tenant to use Hazardous Material in
connection with its business, Tenant agrees to deliver to Landlord prior to the
Term Commencement Date a list identifying each type of Hazardous Material to be
present in or upon the Premises and setting forth any and all governmental
approvals or permits required in connection with the presence of Hazardous
Material on the Premises ("Hazardous Material Summary") and a copy of the
Hazardous Material business plan prepared pursuant to Health and Safety Code
Section 25500 et seq. At Landlord's request, and at reasonable times, Tenant
shall make available to Landlord the latest available Hazardous Materials
Summary and true and correct copies of the following documents (hereinafter
referred to as the "Hazardous Material Documents") relating to the handling,
storage, disposal and emission of Hazardous Material: permits; approvals;
reports and correspondence; storage and management plans; notice of violations
of any laws; plans relating to the installation of any storage tanks to be
installed in or under the Premises (provided said installation of tanks shall be
permitted only after Landlord has given Tenant its written consent to do so,
which consent may not be unreasonably withheld); and all closure plans or any
other documents required by any and all federal, state and local governmental
agencies and authorities for any storage tanks installed in, on or about the
Premises for the closure of any such tanks. Tenant shall not be required,
however, to provide Landlord with that portion of any document which contains
information of a proprietary nature and which, in and of itself, does not
contain a reference to any Hazardous Material which are not otherwise identified
to Landlord in such documentation, unless any such Hazardous Material Document
names Landlord as an "owner" or "operator" of the facility in which Tenant is
conducting its business. It is not the intent of this subsection to provide
Landlord with information which could be detrimental to Tenant's business should
such information become possessed by Tenant's competitors. Landlord shall treat
all information furnished by Tenant to Landlord pursuant to this Section 39.5 as
confidential and shall not disclose such information to any person or entity
without Tenant's prior written consent, which consent shall not be unreasonably
withheld or delayed, except as required by law.
39.6 Notwithstanding other provisions of this Article 39, it shall
be a default under this Lease, and Landlord shall have the right to terminate
the Lease and/or pursue its other remedies under Article 24, in the event that
(i) Tenant's use of the Premises for the generation, storage, use, treatment or
disposal of Hazardous Material is in a manner or for a purpose prohibited by
applicable law unless Tenant is diligently pursuing compliance with such law,
(ii) Tenant has been required by any governmental authority to take remedial
action in connection with Hazardous Material contaminating the Premises if the
contamination resulted from Tenant's action or use of the Premises, unless
Tenant is diligently pursuing compliance with such requirement, or (iii) Tenant
is subject to an enforcement order issued by any governmental authority in
connection with the use, disposal or storage of a Hazardous Material on the
Premises, unless Tenant is diligently seeking compliance with such enforcement
order.
39.7 Notwithstanding the provisions of Article 25, if any
anticipated use of the Premises by a proposed assignee or subtenant involves the
generation or storage, use, treatment or disposal of Hazardous Material in any
manner or for a purpose prohibited by any
-43-
72
applicable law, it shall not be unreasonable for Landlord to withhold its
consent to an assignment or subletting to such proposed assignee or sublessee.
39.8 Landlord represents that, to the best of its knowledge, as of
the date of this Lease and as of the Term Commencement Date, there is no
Hazardous Material on the Premises, and will deliver to Tenant a certification
to that effect promptly upon the Term Commencement Date. Landlord shall at its
expense provide Tenant with a Phase I Environmental Site Assessment as of the
Term Commencement Date. In addition, Landlord may at its expense also provide
Tenant with a Phase II Environmental Site Assessment as of the Term Commencement
Date. Should either assessment disclose the presence of Hazardous Material,
Landlord shall remedy the problems to Tenant's reasonable satisfaction, and
shall cause a further update of the Phase I and any Phase II Environmental Site
Assessment to be issued reflecting the remedy therein. The Phase I and any Phase
II Environmental Site Assessments and all updates thereto are hereinafter
referred to as the "Base Line Report."
39.9 At any time prior to the expiration or earlier termination of
the term of the Lease, Landlord shall have the right to enter upon the Premises
at all reasonable times and at reasonable intervals in order to conduct
appropriate tests regarding the presence, use and storage of Hazardous Material,
and to inspect Tenant's records with regard thereto. Tenant will pay the
reasonable costs of any such test which demonstrates that contamination in
excess of permissible levels has occurred and such contamination is the
responsibility of Tenant under Section 39.3. Tenant shall correct any
deficiencies identified in any such tests in accordance with its obligations
under this Article 39.
39.10 Tenant shall at its own expense cause a Phase I environmental
site assessment of the Premises to be conducted and a report thereof delivered
to Landlord upon the expiration or earlier termination of the Lease, such report
to be as complete and broad in scope as the Base Line Report as is necessary to
identify any impact on the Premises Tenant's operations might have had. Should
the assessment disclose the presence of Hazardous Material, Tenant shall, prior
to the expiration of this Lease, remedy the problems for which it is responsible
under Section 39.3 to the extent required by applicable law, and shall cause a
further update of the environmental site assessment to be issued reflecting the
remedy therein. The assessment and all updates thereto are hereinafter referred
to as the "Exit Report." This Article 39 is the exclusive provision in this
Lease regarding clean-up, repairs or maintenance arising from receiving,
handling, use, storage, accumulation, transportation, generation, spillage,
migration, discharge, release or disposal of Hazardous Material in, upon or
about the Premises, and the provisions of Article 18 (Repairs and Maintenance)
shall not apply thereto.
39.11 Landlord's and Tenant's obligations under this Article 39
shall survive the termination of the Lease.
39.12 As used herein, the term "Hazardous Material" means any
hazardous or toxic substance, material or waste which is or becomes regulated by
any local governmental authority, the State of California or the United States
Government. The term "Hazardous
-44-
73
Material" includes, without limitation, any material or substance which is (i)
defined as a "hazardous waste," "extremely hazardous waste" or "restricted
hazardous waste" under Sections 25515, 25117 or 25122.7, 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 a "hazardous substance" under
Section 25316 of the California Health and Safety Code, Division 2, Chapter 6.8
(Xxxxxxxxx-Xxxxxx-Xxxxxx Hazardous Substance Account Act), (iii) defined as a
"hazardous material," hazardous substance" or "hazardous waste" under Section
25501 of the California Health and Safety Code, Division 20, Chapter 6.95
(Hazardous Substances), (v) petroleum, (vi) asbestos, (vii) listed under Article
9 and defined as hazardous or extremely hazardous pursuant to Article 11 of
Title 22 of the California Administrative Code, Division 4, Chapter 20, (viii)
designated as a "hazardous substance" pursuant to Section 311 of the Federal
Water Pollution Control Act (33 U.S.C. Section 1317), (ix) defined as a
"hazardous waste" pursuant to Section 1004 of the Federal Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901, et. seq. (42 U.S.C. Section 6903), or
(x) defined as a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C.
Section 9601 et. seq. (42 U.S.C. Section 9601).
40. OPTIONS TO EXTEND.
40.1 Landlord grants to Tenant two (2) options to extend the term of
this Lease for (5) years each under the same terms and conditions existing in
the original Lease except as set forth in this Article 40. Basic Annual Rent
shall be adjusted on the first day of the first extension term to an amount
equal to the fair market rental value of the Premises as if in shell condition
only (as more particularly described in Section 40.4) as of the commencement of
the first extension term, but in no event less than the average Basic Annual
Rent payable during the initial term. Basic Annual Rent shall be adjusted on the
first day of the second extension term to an amount equal to the fair market
rental value of the Premises as if in shell condition only (as more particularly
described in Section 40.4) as of the commencement of the second extension term,
but in no event less than the average Basic Annual Rent payable during the first
extension term. Tenant shall exercise such right to extend the term of this
Lease by written notice to Landlord no later than eight (8) months prior to the
end of the original term or the first extension term, as the case may be. The
second extension option shall lapse and have no further force or effect if the
first extension option is not exercised.
40.2 Landlord shall obtain at its expense and deliver to Tenant an
independent appraisal of the fair market rental value of the Premises as if in
shell condition only as of the commencement of each extension term. Following
its receipt of Landlord's appraisal, Tenant may elect to obtain at its expense
and deliver to Landlord a second independent appraisal of the fair market rental
value of the Premises as if in shell condition only as of the commencement of
the extension term. If Tenant elects not to obtain a second appraisal,
Landlord's appraisal shall be conclusive. If Tenant's appraisal is no more than
five percent (5%) less than Landlord's appraisal, the fair market rental value
of the Premises as if in shell condition only shall be the arithmetic average of
the two appraisals. If Tenant's appraisal is more than five percent (5%) less
than Landlord's appraisal, the two appraisers shall appoint a third appraiser to
-45-
74
appraise the fair market rental value of the Premises as if in shell condition
only as of the commencement of the extension term, and the fair market rental
value of the Premises as if in shell condition only shall be the arithmetic
average of the two appraisals closest in their determination of fair market
rental value. Landlord and Tenant shall bear equally the expense of the third
appraiser.
40.3 All appraisers appointed hereunder shall have at least ten (10)
years' experience in the appraisal of commercial/industrial real property in the
San Xxxx area and shall be members of professional organizations such as the
American Appraisal Institute with a designation of MAI or equivalent.
40.4 The parties acknowledge that Landlord will construct at its
expense the Building Shell and Land Improvements only (as described in the Work
Letter and Exhibits "A-1" and "A-2" attached thereto) and that Tenant, at its
sole cost and expense, will construct Tenant's Improvements (as described in the
Work Letter) which consist of all mechanical equipment, interior partitions,
floor and wall coverings, lighting fixtures, and all other improvements in the
Premises other than the Building Shell and Land Improvements. The initial Basic
Annual Rent payable as of the initial Term Commencement Date was based only upon
Landlord's investment in the Building Shell and Land Improvements (and the Land
itself), and did not, nor was it intended, to provide Landlord with a return
based upon the cost or value added by Tenant's Improvements. It is the intention
of the parties that Basic Annual Rent for the extended terms shall be based only
upon Landlord's investment in the Building Shell and Land Improvements (and the
Land itself), and shall not reflect a return for or investment in Tenant's
Improvements. Accordingly, as used herein, the term "fair market rental value of
the Premises as if in shell condition only" shall mean the price that a ready
and willing tenant would pay, as of the commencement of the extension term in
question, as Basic Annual Rent, to a ready and willing landlord, for the
Building Shell and Land Improvements only, assuming that Tenant's Improvements
did not exist in the Premises, that the landlord would provide no tenant
improvement allowance for the improvement of the Building Shell, and that the
tenant would be solely responsible for constructing at its cost all mechanical
equipment, interior partitions, and other tenant improvements necessary to
operate the Premises for the uses being conducted by Tenant as of the
commencement of the extension term in question. In addition, such fair market
rental value shall be based upon the assumption that the term of the extension
is for five (5) years and shall be on all other terms set forth in the Lease
(other than the amount of Basic Annual Rent and annual rental adjustments),
determined as if such property were exposed for lease on the open market for a
reasonable period of time and taking into account all of the purposes for which
such property is then being used.
40.5 Any increase or decrease in Basic Annual Rent under this
Article 40 which is not determined until after the effective date of the
increase shall nevertheless be retroactive to the effective date; Tenant shall
pay any such retroactive increase with the installment of Rent next due, and
Landlord shall promptly reimburse Tenant an amount equal to any such retroactive
decrease. The parties hereto understand that any increase or decrease in Basic
Annual Rent shall necessarily increase or decrease the management fee payable
under
-46-
75
Section 7.1(ii) which is calculated as a percentage of Basic Annual Rent.
40.6 Basic Annual Rent as of the commencement of each extension term
as determined under this Article 40 shall be increased on each annual
anniversary of the first day of the extension term in question (each an
"Adjustment Date") as follows:
(a) With regard to each extension term, the "Base Month" for
purposes of each adjustment of Basic Annual Rent shall be that month immediately
preceding the month during which the first day of the extension term in question
occurs, and the "Comparison Month" shall be that month immediately preceding the
month in which the Adjustment Date in question occurs. By way of example only,
with regard to the first extension term, assuming the first extension term
commences on April 15, 2009, the Base Month would be March 2009.
(b) As used in this subsection, the term "Consumer Price Index"
means the All Urban Consumers (All Items) for the Xxx Xxxxxxxxx-Xxxxxxx-Xxx Xxxx
Xxxxxxxxxxxx Xxxx (0000-0000 = 100) as published by the United States Department
of Labor, Bureau of Labor Statistics. If the 1982-84 base of the Consumer Price
Index is hereafter changed, then the new base will be converted to the 1982-84
base and the base as so converted shall be used. In the event that the Bureau
ceases to publish the Consumer Price Index once every month, then the successor
or most nearly comparable index thereto selected by Landlord subject to Tenant's
reasonable approval shall be used.
(c) In the event that the Consumer Price Index for the
Comparison Month exceeds the Consumer Price Index for the Base Month, the Basic
Annual Rent payable on the first day of the extension term in question shall be
multiplied by a fraction, the numerator of which is the Consumer Price Index
figure for the Comparison Month, and the denominator of which is the Consumer
Price Index figure for the Base Month. Such amount as calculated shall be the
Basic Annual Rent to be paid until the next Adjustment Date. Any of the
foregoing notwithstanding, in no event shall the Basic Annual Rent as previously
adjusted increase less than two percent (2%) or more than six percent (6%) each
year.
-47-
76
(d) Prior to each Adjustment Date, or as soon as reasonably
practical thereafter, Landlord will calculate and give Tenant notice of any
increase in Basic Annual Rent under this Article 40. Delivery of such notice
after the effective date of any such increase shall not waive Landlord's right
to collect such increase, and Tenant shall pay to Landlord, upon receipt of such
notice, any such increase due from the last anniversary of the Term Commencement
Date.
40.7 Tenant shall not have the right to exercise either option to
extend the term, notwithstanding anything set forth above to the contrary, (a)
during the time commencing from the date Landlord gives to Tenant a written
notice that Tenant is in Default under any provision of this Lease and
continuing until the default alleged in said notice is cured, or (b) after the
expiration or earlier termination of the initial or first extension term, as the
case may be. The period of time within which either option to extend may be
exercised shall not be extended or enlarged by reason of the Tenant's inability
to exercise the option because of the foregoing provisions. At the election of
Landlord, all rights of Tenant under the provisions of this Article 40 shall
terminate and be of no further force or effect even after Tenant's due and
timely exercise of an option to extend if, after such exercise, but prior to the
commencement of the extension term, (1) Tenant fails to cure a monetary Default
for a period of thirty (30) days after the date Landlord gives notice to Tenant
of such default, or (2) Tenant fails to commence to cure any other default
within thirty (30) days after the date Landlord gives notice to Tenant of such
default.
41. RIGHT OF FIRST REFUSAL TO PURCHASE. Tenant shall have the right of
first refusal to purchase the Premises ("Right of First Refusal") upon the
following terms and conditions:
41.1 If at any time during the initial or any extended term of this
Lease Landlord determines to sell the Premises, Landlord shall give written
notice to Tenant ("Right of First Refusal Notice") of the economic terms and
conditions on which Landlord would be willing to sell the Premises. If Tenant,
within thirty (30) days after receipt of Landlord's Right of First Refusal
Notice, agrees in writing to purchase the Premises on the terms and conditions
stated in the notice, Landlord shall sell and convey the Premises to Tenant on
the economic terms and conditions stated in the notice.
41.2 If Tenant does not agree in writing to purchase the Premises
within thirty (30) days after receipt of Landlord's Right of First Refusal
Notice, or if Landlord and Tenant have not entered into a purchase and sale
agreement within thirty (30) days thereafter, Landlord shall have the right to
sell and convey the Premises to a third party on economic terms and conditions
no more favorable than the economic terms and conditions stated in the Right of
First Refusal Notice, except that the purchase price may be two and one half
percent (2.5%) less than that stated in the Right of First Refusal Notice, and,
upon any such sale, the Right of First Refusal shall terminate. If Landlord does
not sell and convey the Premises within one hundred eighty (180) days after the
Right of First Refusal Notice, any sale transaction thereafter shall be
-48-
77
deemed a new determination by Landlord to sell and convey the Premises and the
provisions of this Section shall again be applicable.
-49-
78
41.3 If Tenant purchases the Premises pursuant to the Right of First
Refusal, this Lease shall terminate on the date title vests in Tenant, and
Landlord shall remit to Tenant any security deposit and all prepaid and unearned
Rent. Notwithstanding the foregoing, if Tenant, at its option, should determine
to take title to the Premises in the name of an affiliate of Tenant, this Lease
shall not terminate on the date title vests in any such affiliate of Tenant
unless Tenant and such affiliate agree otherwise.
41.4 The Right of First Refusal herein granted to Tenant is not
assignable separate and apart from this Lease, and shall expire upon the
expiration or earlier termination of the term.
41.5 Tenant shall not have the right to exercise the Right of First
Refusal, notwithstanding anything set forth above to the contrary, (a) during
the time commencing from the date Landlord gives to Tenant a written notice that
Tenant is in Default under any provision of this Lease and continuing until the
default alleged in said notice is cured, or (b) after the expiration or earlier
termination of this Lease. The period of time within which the Right of First
Refusal may be exercised shall not be extended or enlarged by reason of the
Tenant's inability to exercise the Right of First Refusal because of the
foregoing provisions. At the election of Landlord, all rights of Tenant under
the provisions of this Article 41 shall terminate and be of no further force or
effect even after Tenant's due and timely exercise of the Right of First
Refusal, if, after such exercise, but prior to the transfer of title, (1) Tenant
fails to cure a monetary Default for a period of thirty (30) days after the date
Landlord gives notice to Tenant of such default, or (2) Tenant fails to commence
to cure any other default within thirty (30) days after the date Landlord gives
notice to Tenant of such default.
41.6 Notwithstanding the foregoing, the Right of First Refusal shall
not be applicable to a sale or other transfer of the Premises to an affiliate of
which more than fifty percent (50%) is owned or controlled by Landlord or the
partners or members of Landlord, so long as such sale or other transfer to such
affiliate of Landlord is not primarily intended as a means of ultimately
transferring substantially all of the ownership of the Premises to an entity or
entities not more than fifty percent (50%) owned or controlled by Landlord or
its partners or members without first complying with this Right of First
Refusal.
42. MISCELLANEOUS.
42.1 TERMS AND HEADINGS. Where applicable in this Lease, the
singular includes the plural and the masculine or neuter includes the masculine,
feminine and neuter. The section headings of this Lease are not a part of this
Lease and shall have no effect upon the construction or interpretation of any
part hereof.
-50-
79
42.2 EXAMINATION OF LEASE. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of or
option for lease, and it is not effective as a lease or otherwise until
execution by and delivery to both Landlord and Tenant. 42.3 TIME . Time is of
the essence with respect to the performance of every provision of this Lease in
which time of performance is a factor.
42.4 COVENANTS AND CONDITIONS. Each provision of this Lease
performable by Landlord, and each provision of this Lease performable by Tenant,
shall be deemed both a covenant and a condition.
42.5 CONSENTS. Whenever consent or approval of either party is
required, that party shall not unreasonably withhold or delay such consent or
approval, except as may be expressly set forth to the contrary.
42.6 ENTIRE AGREEMENT. The terms of this Lease and the Work Letter
attached hereto are intended by the parties as a final expression of their
agreement with respect to the terms as are included herein, and may not be
contradicted by evidence of any prior or contemporaneous agreement.
42.7 SEVERABILITY. Any provision of this Lease which shall prove to
be invalid, void, or illegal in no way affects, impairs or invalidates any other
provision hereof, and such other provisions shall remain in full force and
effect.
42.8 RECORDING. Within thirty (30) days from the execution of this
Lease, Landlord and Tenant shall record a short form memorandum hereof in the
form attached hereto as Exhibit "D", subject to the requirement to execute and
deliver a quitclaim deed pursuant to the provisions of Section 34.1 hereof.
42.9 IMPARTIAL CONSTRUCTION. The language in all parts of this
Lease shall be in all cases construed as a whole according to its fair meaning
and not strictly for or against either Landlord or Tenant.
42.10 INUREMENT. Each of the covenants, conditions, and agreements
herein contained shall inure to the benefit of and shall apply to and be binding
upon the parties hereto and their respective heirs, legatees, devisees,
executors, administrators, successors, assigns, sublessees, or any person who
may come into possession of said Premises or any part thereof in any manner
whatsoever. Nothing in this section shall in any way alter the provisions
against assignment or subletting in this Lease provided.
42.11 FORCE MAJEURE. The definition of Force-Majeure Delay in
Section 1.6 of the Work Letter is incorporated herein by this reference.
42.12 NOTICES. Any notice, consent, demand, xxxx, statement, or
other
-51-
80
communication required or permitted to be given hereunder must be in writing and
may be given by personal delivery or by mail, and if given by personal delivery
shall be deemed given on the date of delivery, and if given by mail shall be
deemed given on the date of delivery or refusal of delivery, to Landlord or
Tenant at the addresses shown in Section 2.1.7 hereof, or to such other address
as either party may specify by notice to the other given pursuant to this
Section.
42.13 AUTHORITY TO EXECUTE LEASE. Landlord and Tenant each
acknowledge that it has all necessary right, title and authority to enter into
and perform its obligations under this Lease, that this Lease is a binding
obligation of such party and has been authorized by all requisite action under
the party's governing instruments, that the individuals executing this Lease on
behalf of such party are duly authorized and designated to do so, and that no
other signatories are required to bind such party.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the date first above written.
LANDLORD:
NEXUS EQUITY, INC.
A California corporation
By: /s/ [Signature]
--------------------------------
Authorized Officer
TENANT:
SymmetriCom, Inc.
A California corporation
By: /s/ [Signature]
--------------------------------
Authorized Officer
-52-
