Exhibit 10.27
STANDARD FORM LEASE
1. Basic Provisions
1.1 Parties: This Lease, executed in duplicate at Cupertino, California,
on May _____, 2000, by and between Mission West Properties, L.P., a Delaware
limited partnership, and ONI Systems Corporation, a Delaware Corporation,
hereinafter called respectively Lessor and Lessee, without regard to number or
gender.
1.2 Letting: Lessor hereby leases to Lessee, and Lessee hires from Lessor,
the Premises, for the term, at the rental and upon all the terms and conditions
set forth herein.
1.3 Use: Lessee may use the Premises for the purpose of conducting
therein office, research and development, light manufacturing, and warehouse
activities, and any other legal activity.
1.4 Premises: The real property with appurtenances as shown on Exhibit A
(the "Premises") situated in the City of San Xxxx, County of Santa Xxxxx, State
of California, and more particularly described as follows:
The Premises for Phase I includes three 98,500 square foot two story
buildings and one 50,500 sq.ft. single story building totaling 346,000
sq.ft. ("Phase I") including all improvements thereto, as shown on Exhibit
A.1 including the right to use not less than 1211 unreserved parking
spaces. The address for the Premises is ____ Silver Creek, San Jose,
California. Lessee's pro-rata share of the Premises is 100%.
The Premises for Phase II is one 98,500 square foot two story building
("Phase II"), including all improvements thereto, as shown on Exhibit A.1
including the right to use not less than 345 unreserved parking spaces.
The address of the Premises for Phase II is _____ Silver Creek, San Jose,
California. Lessee's pro-rata share of the Premises for Phase II is 100%.
The total combined Premises for Phase I and Phase II is four 98,500 square
foot two story buildings and one 50,500 square foot single story building
totaling 444,500 square feet ("Phase I and Phase II") including all
improvements thereto, as shown on Exhibit A.1 including the right to use
all of the available unreserved parking spaces. Lessee's pro-rata share of
the Premises is 100%.
1.5 Term: The term shall be for one hundred twenty (120) months unless
extended pursuant to Section 35 of this Lease (the "Lease Term"), commencing on
the Commencement Date as defined in Section 1.11 and ending one hundred twenty
(120) months thereafter.
Rent: Base rent shall be payable in monthly installments as follows:
Base rent Estimated CAC* Total
--------- --------------- --------
Months 1 through 12 (Phase I only)** $615,880 $42,904* $658,784
Months 13 through 23 (Phase I only)** $640,515 $44,620* $685,135
Month 24 (Phase I and Phase II)** $822,858 $57,326* $880,184
Months 25 through 36 (Phase I & II)** $855,773 $59,619* $915,392
Monthly base rent to increase by 4% on the annual anniversary of the
Commencement Date each year during the Lease Term over the prior year's rent
rounded to the nearest dollar.
* CAC charges to be adjusted per Common Area Charges Section below
** Assumes Substantial Completion of Phase II twenty three months after Phase I
Base rent and CAC as scheduled above shall be payable in advance on or before
the first day of each calendar month during the Lease Term. The term "Rent," as
used herein, shall be deemed to be and to mean the base monthly rent and all
other sums required to be paid by Lessee pursuant to the terms of this Lease.
Rent shall be paid in lawful money of the United States of America, without
offset or deduction, and shall be paid to Lessor at such place or places as may
be designated from time to time by Lessor. Rent for any period less than a
calendar month shall be a pro rata portion of the monthly installment. Upon
execution of this Lease, Lessee shall deposit with Lessor the first month's rent
( including estimated CAC) in the amount of $658,784 and the Security Deposit.
1.7 Security Deposit: Lessee shall deposit with Lessor the sum of One
Million Three Hundred and Seventeen Thousand Five Hundred and Sixty Eight
Dollars ($1,317,568) (the "Security Deposit"). The Security Deposit shall be
held by Lessor as security for the faithful performance by Lessee of all of the
terms, covenants, and conditions of this Lease applicable to Lessee. If Lessee
commits a default as provided for herein, including but not limited to a default
with respect to the provisions contained herein relating to the condition of the
Premises, Lessor may (but shall not be required to) use, apply or retain all or
any part of the Security Deposit for the payment of any amount which Lessor may
spend by reason of default by Lessee. If any portion of the Security Deposit is
so used or applied, Lessee shall, within ten days after written demand
therefore, deposit cash with Lessor in an amount sufficient to restore the
Security Deposit to its original amount. Lessee's failure to do so shall be a
default by Lessee. Any attempt by Lessee to transfer or encumber its interest
in the Security Deposit shall be null and void. Upon occupancy of Phase II,
Lessee's Security Deposit shall be increased to One Million Eight Hundred and
Thirty Thousand Seven Hundred and Eight Four Dollars ($1,830,784).
Notwithstanding the above, Lessee may reduce the Security Deposit to an amount
equal to one month's rent and CAC provided Lessee has a shareholder's equity of
a minimum of $100 million based on their last 10-Q. If at any time during this
Lease Term, Lessee's shareholder's equity is less than $100 million, Lessee
shall deposit with Lessor the Security Deposit referenced above within ten days
after the issuance of Lessee's financial statements indicating the reduction in
shareholder's equity below $100 million. If Lessee fails to make the Security
Deposit as required, Lessee shall be deemed to be in default per Section 14.1
(a) of this Lease.
1.8 Common Area Charges: Lessee shall pay to Lessor, as additional Rent,
an amount equal to Lessee's pro-rata share of the total common area charges of
the Premises as defined below (the common area charges for the Premises is
referred to herein as ("CAC"). Lessee shall pay to Lessor as Rent, on or before
the first day of each calendar month during the Lease Term, subject to
adjustment and reconciliation as provided hereinbelow, the sum of Forty Two
Thousand Nine Hundred and Four Dollars ($42,904) for Phase I and Fifty Seven
Thousand Three Hundred and Twenty Six Dollars ($57,326)for Phase I and Phase II
combined, said sum representing Lessee's estimated monthly payment of Lessee's
percentage share of CAC and includes a fixed monthly sum of Ten Thousand Three
Hundred and Eighty Dollars ($10,380) for Phase I and Thirteen Thousand Three
Hundred and Thirty Five Dollars ($13,335) for Phase I and Phase II combined
which represents the long term capital reserve for replacement of HVAC units,
parking lot, roof and painting of building exterior ("Capital Reserves"). It is
understood and agreed that Lessee's obligation under this paragraph shall be
prorated to reflect the Commencement Date and the end of the Lease Term.
Lessee's estimated monthly payment of CAC payable by Lessee during the calendar
year in which the Lease commences is set forth above. At or prior to the
commencement of each succeeding calendar year term (or as soon as practical
thereafter), Lessor shall provide Lessee with Lessee's estimated monthly payment
for CAC which Lessee shall pay to Lessor as Rent. Within 120 days of the end of
the calendar year and the end of the Lease Term, Lessor shall provide Lessee a
statement of actual CAC
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incurred including capital reserves for the preceding year or other applicable
period in the case of a termination year. If such statement shows that Lessee
has paid less than its actual percentage, then Lessee shall on demand pay to
Lessor the amount of such deficiency. If such statement shows that Lessee has
paid more than its actual percentage, then Lessor shall, at its option, promptly
refund such excess to Lessee or credit the amount thereof to the Rent next
becoming due from Lessee. Lessor reserves the right to revise any estimate of
CAC if the actual or projected CAC show an increase or decrease in excess of 10%
from an earlier estimate for the same period. In such event, Lessor shall
provide a revised estimate to Lessee, together with an explanation of the
reasons therefore, and Lessee shall revise its monthly payments accordingly.
Lessor's and Lessee's obligation with respect to adjustments at the end of the
Lease Term or earlier expiration of this Lease shall survive the Lease Term or
earlier expiration.
As used in this Lease, CAC shall include but is not limited to: (i) items as
specified in Sections 5(b), 6, and 31; (ii) all costs and expenses including but
not limited to supplies, materials, equipment and tools used or required in
connection with the operation and maintenance of the Premises; (iii) licenses,
permits and inspection fees; (iv) all other costs incurred by Lessor in
maintaining and operating the Premises; (v) Capital Reserves replacements and
government regulations imposed on the Premises not related to Lessee's use and
occupancy of the Premises; and (vi) an amount equal to three percent (3%) of the
base rent and CAC, as compensation for Lessor's accounting and management
services. Lessee shall have the right to review the basis and computation
analysis used to derive the CAC applicable to this Lease annually. The CAC shall
exclude maintenance and repair costs which are covered by any warranty,
insurance or other right of reimbursement; costs of correcting defects in the
design or construction of the building shells; any debt service or ground lease
rent; amounts paid to third parties which are affiliated with Lessor in excess
of what Lessor would have paid if the goods or services had been competitively
priced; costs for which the Capital Reserves have been established; and other
items or charges which are not customarily recovered or reimbursed as an
operating expense by owners of leased properties comparable to the Premises.
1.9 Late Charges: Lessee hereby acknowledges that a late payment made by
Lessee to Lessor of Rent and other sums due hereunder will cause Lessor to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges, which may be imposed on
Lessor according to the terms of any mortgage or trust deed covering the
Premises. Accordingly, if any installment of Rent or any other sum due from
Lessee is not received by Lessor or Lessor's designee within five (5) days after
such amount is due, Lessee shall pay to Lessor a late charge equal to five (5%)
percent of such overdue amount. The parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Lessor will incur by
reason of late payments made by Lessee. Acceptance of such late charges by
Lessor shall in no event constitute a waiver of Lessee's default with respect to
such overdue amount, nor shall it prevent Lessor from exercising any of the
other rights and remedies granted hereunder. Lessor shall allow two late
payments during any 12 month period as a result of accounting errors and give
Lessee a notice of delinquency and a five day cure period before any late charge
is imposed.
1.10 Quiet Enjoyment: Lessor covenants and agrees with Lessee that upon
Lessee paying Rent and performing its covenants and conditions under this Lease,
Lessee shall and may peaceably and quietly have, hold and enjoy the Premises for
the Lease Term, subject, however, to the rights reserved by Lessor hereunder.
1.11 Possession for Phase I: Possession shall be deemed tendered and the
term shall commence upon the first to occur of the following (the "Commencement
Date"): (i) the Premises are Substantially Complete or (ii) Lessee occupies the
Premises or (iii) if Lessor is prevented from or delayed in completing its work
under this Lease due to Lessee Delays, such work will be deemed Substantially
Complete as of the date on which it would have been Substantially Complete had
it not been for such Lessee Delays. It is the intention of Lessee and Lessor
that February 1, 2001 shall be the Commencement Date.
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"Substantially Complete for Phase I" shall mean that: (i) Lessor has tendered
possession of Premises to Lessee, (ii) Lessor has met all requirements for
occupancy, (iii) The Lessee Interior Improvements are materially complete per
the approved plans including gas, electric, water and sewer service, exclusive
of telephone or other communication systems, punchlist items and there remains
no incomplete or defective items of work which would materially adversely affect
Lessee's intended use of the Premises of Phase I, (iv) the interior of each
building in Phase I is in a "broom clean" condition, and (v) completion of
parking facilities for Phase I.
1.12 Possession for Phase II: Possession shall be deemed tendered and the
term shall commence for Phase II upon the first to occur of the following (the
"Commencement Date for Phase II"): (i) the Premises for Phase II are
Substantially Complete or (ii) Lessee occupies the Premises for Phase II and
commences to conduct business operations or (iii) if Lessor is prevented from or
delayed in completing its work under Section 2 of this Lease due to Lessee
Delays, such work will be deemed Substantially Complete for Phase II as of the
date on which it would have been Substantially Complete for Phase II had it not
been for such Lessee Delays. It is the intention of Lessee and Lessor that
January 1, 2003 shall be the Commencement Date for Phase II.
"Substantially Complete for Phase II" shall mean that: (i) Lessor has tendered
possession of the Premises for Phase II to Lessee, (ii) Lessor has met all
requirements for occupancy of the Premises for Phase II, (iii) The Lessee
Interior Improvements for Phase II are materially complete per the approved
plans including gas, electric, water and sewer service, exclusive of telephone
or other communication systems, punch list items and there remains no incomplete
or defective items of work which would materially adversely affect Lessee's
intended use of the Premises for Phase II, (iv) the interior of the building in
Phase II is in a "broom clean" condition, and (v) completion of parking
facilities for Phase II.
1.13 Commencement Date Memorandum for Phase I: When the actual
Commencement Date for Phase I is determined as provided for in this Lease, the
parties shall execute a Commencement Date Memorandum for Phase I setting forth
the Commencement Date for Phase I and the termination date but failure to do so
shall not affect the continuing validity and enforceability of this Lease, which
shall remain in full force and effect.
1.14 Commencement Date Memorandum for Phase II: When the actual
Commencement Date for Phase II is determined as provided for in this Lease, the
parties shall execute a Commencement Date Memorandum for Phase II setting forth
the Commencement Date for Phase II and the termination date but failure to do so
shall not affect the continuing validity and enforceability of this Lease, which
shall remain in full force and effect.
2. Lessee's Improvements
2.1 Building Shell for Phase I: The "Building Shell for Phase I", as
defined in the attached Exhibit B shall be constructed at Lessor's sole cost and
expense by independent contractors to be employed by and under the supervision
of Lessor in accordance with the site plan, elevations, plans, specifications,
and working drawings to be prepared by Lessor, which have been approved by
Lessee, with a list of such plans approved by Lessee being attached hereto as
Exhibit C (collectively the "Shell Plans for Phase I"). Lessor shall be
responsible for ensuring that Building Shell for Phase I conform to the approved
plans and all applicable statutes, rules, regulations, ordinances, and City of
San Xxxx Building Department interpretations necessary for occupancy.
2.1.1 Lessee Interior Improvements for Phase I: The "Lessee Interior
Improvements for Phase I" shall be defined as all items not part of the Building
Shell for Phase I and shall be constructed by independent contractors to be
employed by and under the supervision of Lessor, in accordance with complete
plans and specifications prepared by Lessor for submission to the City of San
Xxxx ("Lessee Improvement Plans for Phase I"), complete with all mechanical and
electrical design, approved
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by Lessee, and then to be attached hereto as Exhibit D. Lessee and its
designated representatives, shall at all times during the construction of the
Lessee Interior Improvements for Phase I have access to the Premises to monitor
the progress of construction and Lessor's compliance with its obligation
hereunder; provided however, that such access shall not unreasonably interfere
with the activities of Lessor or its contractors. Lessee shall have a reasonable
right to approve the independent contractors Lessor engages to construct the
Lessee Interior Improvements. Lessee has employed an architect RMW, at Lessee
sole expense, to prepare the design development plans for the Lessee's Interior
Improvements. Lessee shall turn over these plans in CD form or electronic mail
to Lessor's architect, who will prepare the construction drawings.
2.1.2 Budget: Before entering into any contract with a contractor
furnishing labor or materials in connection with the construction of the Lessee
Interior Improvements for Phase I where the payment due under such contract is
estimated by Lessor to be in excess of Fifty Thousand Dollars ($50,000), Lessor
shall request bids from at least three (3) qualified contractors selected by
Lessor and approved by Lessee (which approval shall not be unreasonably
withheld) for bidding. Lessor will accept the lowest bid. Lessee shall have
the opportunity to review and approve the qualified bidders list prepared by
Lessor, which approval shall not be unreasonable withheld, and may select a
bidder of Lessee's choice for each bid, provided the bidder, meets the Lessor's
reasonable qualified bidder requirements. Lessor shall make available to
Lessee all bids and supporting data (including schedules of values).
2.1.3 Lessor's Allowance: Lessor shall contribute up to Six Million Nine
Hundred and Twenty Thousand Dollars ($6,920,000) or Twenty Dollars ($20) per
square foot towards construction of the Lessee Interior Improvements for Phase I
(the "Phase I TI Allowance"), which is included in base rent.
2.1.4 Cost Statement & Lessee's Contribution: Lessor will prepare for
Lessee's approval a cost statement which upon completion and approval shall be
attached as Exhibit E (the "Phase I Cost Statement"), showing the expected
construction cost of the Lessee Interior Improvements for Phase I. Lessor may
include in the Phase I Cost Statement, a construction management fee, covering
its overhead and profit equal to six percent (6%) of all costs shown on the
Phase I Cost Statement including 3% for general conditions plus any additional
costs approved by Lessee. No other general contractor's fees or costs shall be
charged to Lessee or against the Phase I TI Allowance in connection with the
Lessee Interior Improvements. If Lessor's actual cost exceeds the Phase I Cost
Statement, Lessee may pay the excess or remove items until the total costs are
acceptable to Lessee. Lessor and Lessee shall negotiate in good faith to
reduce the costs for construction of the Lessee Interior Improvements for Phase
I by modifying the plans or taking other appropriate actions. Lessee shall pay
its approved share of the cost for construction of the Lessee Interior
Improvements for Phase I within fifteen (15) days after Lessor has billed Lessee
and provided Lessee with evidence that the approved work being billed has been
installed. All costs payable by Lessee for construction of the Lessee Interior
Improvements for Phase I shall be reasonably documented and subject to
verification by Lessee.
2.1.5 Change Orders: Change to the plans for the Lessee Interior
Improvements for Phase I or the Phase I Cost Statement after the final approval
by the parties must be approved in writing by Lessor and Lessee, which approval
shall not be unreasonably withheld. In this regard, Lessor shall not be
required to approve any change which will: (i) increase its cost contribution
above the Phase I Cost Statement, (ii) structurally impair the Premises, or
(iii) materially and adversely effect the outside appearance of the subject
building. Change orders shall be written and shall describe the nature of the
change and the reasonably determined increase or decrease in each item of the
Phase I Cost Statement (including the Lessor's management fee) occasioned by the
change. If Lessee requests a change which will delay the Substantial
Completion of the Lessee Interior Improvements for Phase I beyond the Scheduled
Completion Date (defined below), the maximum amount of Lessee Delay, as defined
in Section 2.1.8 that can be attributed to the change shall also be specified in
the change order.
2.1.6 Inability to Obtain Materials: If Lessor notifies Lessee that any
fittings, finished or other materials specified by Lessee for the Lessee
Interior Improvements for Phase I are not: (i) regularly used, (ii) cannot be
obtained within
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sixty (60) days after placing an order therefore, and (iii) Lessor reasonably
determines that such extended delivery time will prohibit Lessor from
Substantially Completing the Lessee Interior Improvements for Phase I by the
Scheduled Completion Date, then Lessee shall within five days either (i) execute
a change order selecting an alternative reasonably approved by Lessor, or (ii)
agree that any delay in the Substantial Completion of the Lessee Interior
Improvements for Phase I as a consequence of the inability to obtain the item
will be a Lessee Delay.
2.1.7 Time Periods For Approval: Lessee shall approve or disapprove any
preliminary plans on or before the fifth (5th) business day following
submission to Lessee of the plan. Lessee shall approve or disapprove on or
before the tenth (10th) business day following submission to Lessee of any final
plans. All change orders shall be approved or disapproved within three (3)
business days during construction. If plans or change orders are disapproved,
Lessee shall state the reason for disapproval and Lessor and Lessee shall act in
good faith to resolve any issues. Lessor shall approve or disapprove any design
development plans by architect RMW on or before the fifth (5th) business day
following submission to Lessor of the plans. If plans are disapproved, Lessor
shall state the reason for disapproval and Lessor and Lessee shall act in good
faith to resolve any issues.
2.1.8 Completion of the Work & Delay: Lessor shall use its best efforts
to cause the Commencement Date of the initial term to occur not later than
February 1, 2001. If the Commencement Date has not occurred by February 28,
2001, Lessee shall receive one day of base rent abatement for each day after
February 28, 2001 until the Commencement Date. If Lessee is entitled to base
rent abatement as provided in the preceding sentence, such abatement shall begin
on the Commencement Date. Lessor and Lessee agree that having a Commencement
Date after February 28, 2001 will cause Lessee and Lessor to incur costs not
contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Accordingly, the parties hereby agree that Lessee's
right to the abatement of base rent specified herein represents a fair and
reasonable settlement for both parties and neither party shall have further
liability to the other for any damages. If the Commencement Date has not
occurred by Xxxxx 00, 0000, Xxxxxx may at its sole option, by written notice to
Lessor, have the right to terminate this Lease at any time after March 31, 2001
until the Commencement Date. Notwithstanding anything to the contrary herein
(but subject to the last sentence of this section), all dates stated herein
shall be extended for the number of days Lessor is unable to Substantially
Complete the Premises as a result of delays: (i) due to governmental actions
(other than governmental action of refusing to approve work which fails to
comply with the law or the building permit) which occurs after receipt of normal
building permits, (ii) due to acts of God, (iii) due to circumstances beyond
Lessor's control, (iv) resulting from the City of San Xxxx failing to issue a
building permit within thirty (30) days after submittal of plans by Lessor, and
(v) due to Lessee Delays. "Lessee Delays" means a delay in Substantial
Completion resulting from (a) Lessee's failure to meet Lessee's deadlines for
approval as shown on Exhibit F, (b) delays due to change orders, (c) delays due
to Lessee's failure to meet the deadlines for approving any plans or change
orders, and (d) delays because of the inability to obtain any product,
materials, design, color, fitting, or finish pursuant to this Section 2.1.6.
Notwithstanding the above, Lessor shall not be entitled to a delay exceeding 180
days as a result of (ii), (iii) or (iv) above.
2.1.9 Standard of Performance: Lessor shall be responsible for ensuring
that the Building Shell and the Lessee Interior Improvements for Phase I conform
to all applicable Laws and the approved plans for the Lessee Interior
Improvements for Phase I and are performed in a good and workmanlike manner.
Neither Lessee's approval of the plans for the Lessee Interior Improvements for
Phase I, the Phase I Cost Estimate, nor Lessee's recommendation of any
contractor for the work, shall relieve Lessor of its obligations under this
Lease nor make Lessee liable to Lessor or any contractor , or their
subcontractors with respect to the work. Lessor shall complete punchlist items
within 30 days after Commencement Date.
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2.1.10 Installation of Lessee's improvements: Lessee shall be permitted
during the installation of Lessee Improvements by Lessor to inspect Lessor's
work and to install Lessee items such as telephone, security and moveable
partitions and other Lessee related work provided it does not materially
interfere with or delay Lessor's work or final approvals ("Lessee's Work").
2.2 Building Shell for Phase II: The "Building Shell for Phase II", as
defined in the attached Exhibit B shall be constructed at Lessor's sole cost and
expense by independent contractors to be employed by and under the supervision
of Lessor in accordance with the site plan, elevations, plans, specifications,
and working drawings to be prepared by Lessor, which have been approved by
Lessee, and thereafter attached hereto as Exhibit C.1 (collectively the "Shell
Plans for Phase II"). Lessor shall be responsible for ensuring that Building
Shell for Phase II conform to the approved plans and all applicable statutes,
rules, regulations, ordinances, and City of San Xxxx Building Department
interpretations necessary for occupancy.
2.2.1 Lessee Interior Improvements for Phase II: The "Lessee Interior
Improvements for Phase II" shall be defined as all items not part of the
Building Shell for Phase II and shall be constructed by independent contractors
to be employed by and under the supervision of Lessor, in accordance with
complete plans and specifications prepared by Lessor for submission to the City
of San Xxxx ("Lessee Improvement Plans for Phase II"), complete with all
mechanical and electrical design, approved by Lessee, and then to be attached
hereto as Exhibit D.1. Lessee and its designated representatives, shall at all
times during the construction of the Lessee Interior Improvements for Phase II
have access to the Premises to monitor the progress of construction and Lessor's
compliance with its obligation hereunder; provided however, that such access
shall not unreasonably interfere with the activities of Lessor or its
contractors. Lessee shall have a reasonable right to approve the independent
contractors Lessor engages to construct the Lessee Interior Improvements.
Lessee has employed an architect RMW, at Lessee sole expense, to prepare the
design development plans for the Lessee's Interior Improvements. Lessee shall
turn over these plans in CD form or electronic mail to Lessor's architect, who
will prepare the construction drawings.
2.2.2 Budget: Before entering into any contract with a contractor
furnishing labor or materials in connection with the construction of the Lessee
Interior Improvements for Phase II where the payment due under such contract is
estimated by Lessor to be in excess of Fifty Thousand Dollars ($50,000), Lessor
shall request bids from at least three (3) qualified contractors selected by
Lessor and approved by Lessee (which approval shall not be unreasonably
withheld) for bidding. Lessor will accept the lowest bid. Lessee shall have
the opportunity to review and approve the qualified bidders list prepared by
Lessor, which approval shall not be unreasonable withheld, and may select a
bidder of Lessee's choice for each bid, provided the bidder, meets the Lessor's
reasonable qualified bidder requirements. Lessor shall make available to
Lessee all bids and supporting data (including schedules of values).
2.2.3 Lessor's Allowance: Lessor shall contribute up to One Million Nine
Hundred and Seventy Thousand Dollars ($1,970,000) or Twenty Dollars ($20) per
square foot towards construction of the Lessee Interior Improvements for Phase
II (the " Phase II TI Allowance"), which is included in base rent.
2.2.4 Cost Statement & Lessee's Contribution: Lessor will prepare for
Lessee's approval a cost statement which upon completion and approval shall be
attached as Exhibit E.1 (the "Phase II Cost Statement"), showing the expected
construction cost of the Lessee Interior Improvements for Phase II. Lessor may
include in the Phase II Cost Statement, a construction management fee, covering
its overhead and profit equal to six percent (6%) of all costs shown on the
Phase II Cost Statement including 3% for general conditions plus any additional
costs approved by Lessee. No other general contractor's fees or costs shall be
charged to Lessee or against the Phase II TI Allowance in connection with the
Lessee Interior Improvements. If Lessor's actual cost exceed the Phase II Cost
Statement, Lessee may pay the excess or remove items until the total costs are
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acceptable to Lessee. Lessor and Lessee shall negotiate in good faith to
reduce the costs for construction of the Lessee Interior Improvements for Phase
II by modifying the plans or taking other appropriate actions. Lessee shall pay
its approved share of the cost for construction of the Lessee Interior
Improvements for Phase II within fifteen (15) days after Lessor has billed
Lessee and provided Lessee with evidence that the approved work being billed has
been installed. All costs payable by Lessee for construction of the Lessee
Interior Improvements for Phase II shall be reasonably documented and subject to
verification by Lessee.
2.2.5 Change Orders: Change to the plans for the Lessee Interior
Improvements for Phase II or the Phase II Cost Statement after the final
approval by the parties must be approved in writing by Lessor and Lessee, which
approval shall not be unreasonably withheld. In this regard, Lessor shall not
be required to approve any change which will: (i) increase its cost contribution
above the Phase II Cost Statement, (ii) structurally impair the Premises, or
(iii) materially and adversely effect the outside appearance of the subject
building. Change orders shall be written and shall describe the nature of the
change and the reasonably determined increase or decrease in each item of the
Phase II Cost Statement (including the Lessor's management fee) occasioned by
the change. If Lessee requests a change which will delay the Substantial
Completion of the Lessee Interior Improvements for Phase II beyond the Scheduled
Completion Date (defined below), the maximum amount of Lessee Delay, as defined
in Section 2.1.8 that can be attributed to the change shall also be specified in
the change order.
2.2.6 Inability to Obtain Materials: If Lessor notifies Lessee that any
fittings, finished or other materials specified by Lessee for the Lessee
Interior Improvements for Phase II are not: (i) regularly used, (ii) cannot be
obtained within sixty (60) days after placing an order therefore, and (iii)
Lessor reasonably determines that such extended delivery time will prohibit
Lessor from Substantially Completing the Lessee Interior Improvements for Phase
II by the Scheduled Completion Date, then Lessee shall within five days either
(i) execute a change order selecting an alternative reasonably approved by
Lessor, or (ii) agree that any delay in the Substantial Completion of the Lessee
Interior Improvements for Phase II as a consequence of the inability to obtain
the item will be a Lessee Delay.
2.2.7 Time Periods For Approval: Lessee shall approve or disapprove any
preliminary plans on or before the fifth (5th) business day following
submission to Lessee of the plan. Lessee shall approve or disapprove on or
before the tenth (10th) business day following submission to Lessee of any final
plans. All change orders shall be approved or disapproved within three (3)
business days during construction. If plans or change orders are disapproved,
Lessee shall state the reason for disapproval and Lessor and Lessee shall act in
good faith to resolve any issues. Lessor shall approve or disapprove any design
development plans by architect RMW on or before the fifth (5th) business day
following submission to Lessor of the plans. If plans are disapproved, Lessor
shall state the reason for disapproval and Lessor and Lessee shall act in good
faith to resolve any issues.
2.2.8 Completion of the Work & Delay: Lessor shall use its best efforts
to cause the Commencement Date of the initial term to occur not later than
January 1, 2002. If the Commencement Date has not occurred by February 1, 2002,
Lessee shall receive one day of base rent abatement for each day after February
1, 2002 until the Commencement Date. If Lessee is entitled to base rent
abatement as provided in the preceding sentence, such abatement shall begin on
the Commencement Date. Lessor and Lessee agree that having a Commencement Date
after February 1, 2002 will cause Lessee and Lessor to incur costs not
contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Accordingly, the parties hereby agree that Lessee's
right to the abatement of base rent specified herein represents a fair and
reasonable settlement for both parties and neither party shall have further
liability to the other for any damages. If the Commencement Date has not
occurred by February 1, 2002, Lessee may at its sole option, by written notice
to Lessor, have the right to terminate this Lease at any time
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after February 1, 2002 until the Commencement Date. Notwithstanding anything to
the contrary herein (but subject to the last sentence of this section), all
dates stated herein shall be extended for the number of days Lessor is unable to
Substantially Complete the Premises as a result of delays: (i) due to
governmental actions (other than governmental action of refusing to approve work
which fails to comply with the law or the building permit) which occurs after
receipt of normal building permits, (ii) due to acts of God, (iii) due to
circumstances beyond Lessor's control, (iv) resulting from the City of San Xxxx
failing to issue a building permit within thirty (30) days after submittal of
plans by Lessor, and (v) due to Lessee Delays. "Lessee Delays" means a delay in
Substantial Completion resulting from (a) Lessee's failure to meet Lessee's
deadlines for approval as shown on Exhibit F, (b) delays due to change orders,
(c) delays due to Lessee's failure to meet the deadlines for approving any plans
or change orders, and (d) delays because of the inability to obtain any product,
materials, design, color, fitting, or finish pursuant to this Section 2.2.6.
Notwithstanding the above, Lessor shall not be entitled to a delay exceeding 180
days as a result of (ii), (iii) or (iv) above.
2.2.9 Standard of Performance: Lessor shall be responsible for ensuring
that the Building Shell and the Lessee Interior Improvements for Phase II
conform to all applicable Laws and the approved plans for the Lessee Interior
Improvements for Phase II and are performed in a good and workmanlike manner.
Neither Lessee's approval of the plans for the Lessee Interior Improvements for
Phase II, the Phase II Cost Estimate, nor Lessee's recommendation of any
contractor for the work, shall relieve Lessor of its obligations under this
Lease nor make Lessee liable to Lessor or any contractor, or their
subcontractors with respect to the work. Lessor shall complete punchlist items
within 30 days after Commencement Date of Phase II.
2.2.10 Installation of Lessee's improvements: Lessee shall be permitted
during the installation of Lessee Improvements by Lessor to inspect Lessor's
work and to install Lessee items such as telephone, security and moveable
partitions and other Lessee related work provided it does not materially
interfere with or delay Lessor's work or final approvals ("Lessee's Work").
2.2.11 Adjustment of Initial Base Rent for Phase II: If the cost per
rentable square foot of constructing the Building Shell for Phase II ("Phase II
Shell Cost") exceeds 104% of the cost per rentable square foot of constructing
the Building Shell for Phase I ("Phase I Shell Cost"), the initial base monthly
rent for Phase II shall be adjusted as follows: (i) if the Phase II Shell Cost
is no more than 108% of the Phase I Shell Cost, the initial base monthly rent
shall increase by 1% for each percentage point by which the Phase II Shell Cost
exceeds 104% of the Phase I Shell Cost; and (ii) .if the Phase II Shell Cost is
greater than 108% of the Phase I Shell Cost, the initial base monthly rent shall
increase by the sum of 4% plus fifty basis points for each percentage point by
which the Phase II Shell Cost exceeds 108% of the Phase I Shell Cost.
2.3 Acceptance Of Premises And Covenants To Surrender: Lessee accepts the
Premises in an "AS IS" condition and "AS IS" state of repair, subject to
Lessor's (a) representation that the Premises are in good order and repair, and
comply with all requirements for occupancy and comply with 2.1 for Phase I and
2.2 for Phase II as of the Commencement Date; and (b)warranty against defects in
materials or workmanship which shall continue as to all claims arising within
one year after the Commencement Date for each of Phase I and Phase II. Lessee
shall have the benefit of any existing construction or equipment
warranties.Lessee agrees on the last day of the Lease Term, or on the sooner
termination of this Lease, to surrender the Premises to Lessor in Good Condition
and Repair. "Good Condition and Repair" shall generally mean that the Premises
are in the condition that one would expect the Premises to be in, if throughout
the Lease Term Lessee (i) uses and maintains the Premises in a commercially
reasonable manner and in an accordance with the requirements of this Lease and
(ii) makes all Required Replacements. Lessee's duty to keep the Premises in
Good Condition and Repair is limited by sections 19 and 21 of this Lease.
"Required Replacements" are the replacements to worn-out equipment, fixtures,
and improvements that a
Page 9
commercially reasonable owner-user would make excluding HVAC replacements, roof
replacement, exterior painting and parking lot replacement. Notwithstanding the
above Good Condition and Repair shall not mean in a new condition. All of the
following shall be in Good Condition and Repair: (i) the interior walls and
floors of all offices and other interior areas, (ii) all suspended ceilings and
any carpeting shall be clean and in good condition, (iii) all glazing, windows,
doors and door closures, plate glass, and (iv) all electrical systems including
light fixtures and ballasts, plumbing, and temperature control systems. Lessee,
on or before the end of the Lease Term or sooner termination of this Lease,
shall remove all its personal property and trade fixtures from the Premises, and
all such property not so removed shall be deemed to be abandoned by Lessee.
Lessee shall reimburse Lessor for all disposition costs incurred by Lessor
relative to Lessee's abandoned property. If the Premises are not surrendered at
the end of the Lease Term or earlier termination of this Lease, Lessee shall
indemnify Lessor against loss or liability resulting from any delay caused by
Lessee in surrendering the Premises including, without limitation, any claims
made by any succeeding Lessee founded on such delay. Lessor will provide Lessee
notice in writing if Lessor has a new lease for The Premises or portion thereof
that will result in damages or claims against Lessor.
3. Uses Prohibited: Lessee shall not commit, or suffer to be committed, any
waste upon the Premises, or any nuisance, or other act or thing which may
disturb the quiet enjoyment of any other tenant of the project in which the
Premises are located or allow any sale by auction except auctions conducted over
the internet upon the Premises, or allow the Premises to be used for any
improper, immoral, unlawful or objectionable purpose, or place any loads upon
the floor, walls, or ceiling which may endanger the structure, or use any
machinery or apparatus which will in any manner vibrate or shake the Premises,
or place any harmful liquids in the drainage system of the building. No waste
materials or refuse shall be dumped upon or permitted to remain upon any part of
the Premises outside of the building proper. No materials, supplies, equipment,
finished products or semi-finished products, raw materials or articles of any
nature shall be stored upon or permitted to remain on any portion of the
Premises outside of the building structure, unless approved by the local, state
federal or other applicable governing authority. Lessor consents to Lessee's
use of materials which are incidental to the normal, day-to-day operations of
any office user, such as copier fluids, cleaning materials, etc., but this does
not relieve Lessee of any of its obligations not to contaminate the Premises and
related real property or violate any Hazardous Materials Laws. Upon prior
consent and approval by Lessor, which may not be unreasonably withheld, Lessee
may utilize Hazardous Materials directly required for Lessee's research and
development or light manufacturing and assembly activities subject to the
provisions of Section 33.
4. Alterations And Additions: Lessee shall not make, or suffer to be made, any
alteration or addition to said Premises, or any part thereof, without the
express, advance written consent of Lessor; any addition or alteration to said
Premises, except movable furniture and trade fixtures, shall become at once a
part of the realty and belong to Lessor at the end of the Lease Term or earlier
termination of this Lease. Alterations and additions which are not deemed as
trade fixtures shall include HVAC systems, lighting systems, electrical systems,
partitioning, carpeting, or any other installation which has become an integral
part of the Premises. Lessee agrees that it will not proceed to make such
alterations or additions until all required government permits have been
obtained and after having obtained consent from Lessor to do so, until five (5)
days from the receipt of such consent, so that Lessor may post appropriate
notices to avoid any liability to contractors or material suppliers for payment
for Lessee's improvements. Lessee shall at all times permit such notices to be
posted and to remain posted until the completion of work. At the end of the
Lease Term or earlier termination of this Lease, Lessee shall remove and shall
be required to remove its special tenant improvements, all related equipment,
and any additions or alterations installed by Lessee at or during the Lease Term
and Lessee shall return the Premises to the condition that existed before the
installation of the tenant improvements. Notwithstanding the above, Lessor
agrees to allow any reasonable alterations and improvements and will use its
best efforts to notify Lessee at the time of approval if such improvements or
alterations are to be removed at the end of the Lease Term or earlier
termination of this Lease.
Page 10
5. Maintenance Of Premises:
(a) Lessee shall at its sole cost and expense keep, repair, and maintain the
interior of the Premises in Good Condition and Repair, including, but not
limited to, the interior walls and floors of all offices and other interior
areas, doors and door closures, all lighting systems, temperature control
systems (i.e. control thermostats and like in kind equipment), and plumbing
systems, including any Required Replacements. Lessee shall provide interior
and exterior window washing as needed. Lessee's duty to keep the Premises in
Good Condition and Repair is subject to sections 19 and 21 of this Lease.
(b) Lessor shall, at Lessee's expense, keep, repair, and maintain in Good
Condition and Repair including replacements (based on a pro-rata share of (i)
costs based on square footage or (ii) costs directly related to Lessee's use
of the Premises) the following, which shall be included in the monthly CAC:
1. The exterior of the building, any appurtenances and every part thereof,
including but not limited to, glazing, sidewalks, parking areas, electrical
systems, and painting of exterior walls. The parking lot to receive a
finish coat every five to seven years.
2. The HVAC by a service contract with a licensed air conditioning and
heating contractor which contract shall provide for a minimum of quarterly
maintenance of all air conditioning and heating equipment at the Premises
including HVAC repairs or replacements which are either excluded from such
service contract or any existing equipment warranties.
3. The landscaping by a landscape contractor to water, maintain, trim and
replace, when necessary, any shrubbery, irrigation parts, and landscaping
at the Premises.
4. The roof membrane by a service contract with a licensed reputable
roofing contractor which contract shall provide for a minimum of semi-
annual maintenance, cleaning of storm gutters, drains, removing of debris,
and trimming overhanging trees, repair of the roof and application of a
finish coat every five years to the building at the Premises.
5. Exterior pest control.
6. Fire monitoring services.
7. Parking lot sweeping.
8. Electrical Switchgear.
(c) Lessee hereby waives any and all rights to make repairs at the expense of
Lessor as provided in Section 1942 of the Civil Code of the State of
California, and all rights provided for by Section 1941 of said Civil Code.
(d) Lessor shall be responsible for the repair of any structural defects in
the Premises including the roof structure (not membrane), exterior walls and
foundation during the Lease Term.
6. Insurance:
A) Hazard Insurance: Lessee shall not use, or permit said Premises, or any
part thereof, to be used, for any purpose other than that for which the
Premises are hereby leased; and no use shall be made or permitted to be made
of the Premises, nor acts done, which may cause a cancellation of any
insurance policy covering the Premises, or any part thereof, nor shall Lessee
sell or permit to be kept, used or sold, in or about said Premises, any
article which may be prohibited by a special form property insurance policy.
Lessee shall comply with any and all requirements, pertaining to said
Premises, of any insurance organization or company, necessary for the
maintenance of reasonable special form property insurance, covering the
Premises. Lessor shall, at Lessee's sole cost and expense, purchase and keep
in force special form property insurance, covering loss or damage to the
Premises in an amount equal to the full replacement cost of the Premises, as
determined by Lessor, with proceeds payable to Lessor. In the event of a loss
per the insurance provisions of this paragraph, Lessee shall
Page 11
be responsible for deductibles up to a maximum of $5,000 per occurrence.
Lessee acknowledges that the insurance referenced in this paragraph does not
include coverage for Lessee's personal property.
B) Loss of Rents Insurance: Lessor shall, at Lessee's sole cost and
expense, purchase and maintain in full force and effect, a policy of rental
loss insurance, in an amount equal to the amount of Rent payable by Lessee
commencing within sixty (60) days of the date of the loss or on the date of
loss if reasonably available for the next ensuing one (1) year, as reasonably
determined by Lessor with proceeds payable to Lessor ("Loss of Rents
Insurance").
C) Liability and Property Damage Insurance: Lessee, as a material part of
the consideration to be rendered to Lessor, hereby waives all claims against
Lessor and Lessor's Agents for damages to goods, wares and merchandise, and
all other personal property in, upon, or about the Premises, and for injuries
to persons in, upon, or about the Premises, from any cause arising at any
time, and Lessee will hold Lessor and Lessor's Agents exempt and harmless from
any damage or injury to any person, or to the goods, wares, and merchandise
and all other personal property of any person, arising from the use or
occupancy of the Premises by Lessee, or from the failure of Lessee to keep the
Premises in Good Condition and Repair, as herein provided. Lessee shall, at
Lessee's sole cost and expense, purchase and keep in force a standard policy
of commercial general liability insurance and property damage policy covering
the Premises and all related areas insuring the Lessee having a combined
single limit for both bodily injury, death and property damage in an amount
not less than five million dollars ($5,000,000.00) and Lessee's insurance
shall be primary. The limits of said insurance shall not, however, limit the
liability of Lessee hereunder. Lessee shall, at its sole cost and expense,
comply with all of the insurance requirements of all local, municipal, state
and federal authorities now in force, or which may hereafter be in force,
pertaining to Lessee's use and occupancy of the said Premises. Subject to
Lessee's obligations under Section 9, Lessee's duty to comply with insurance
requirements and laws shall not require Lessee to make structural
modifications or additions to Premises unless these are required by virtue of
Lessee's specialized use of the Premises or alterations made by Lessee after
the Commencement Date.
D) Personal Property Insurance: Lessee shall obtain, at Lessee's sole cost
and expense, special form property insurance including coverage for direct
physical loss special form, and a sprinkler leakage endorsement insuring the
personal property of Lessee. The proceeds from any personal property damage
policy shall be payable to Lessee. Lessee shall be permitted to self-insure
for loss of personal property subject to having a shareholder's equity of
$50,000,000 and provided Lessee indemnifies Lessor against all damage claims
to Lessor's satisfaction.
All insurance policies required in 6 C) and 6 D) above shall: (i) provide for a
certificate of insurance evidencing the insurance required herein, being
deposited with Lessor ten (10) days prior to the Commencement Date, and upon
each renewal, such certificates shall be provided 15 days prior to the
expiration date of such coverage, (ii) be in a form reasonably satisfactory to
Lessor and shall provide the coverage required by Lessee in this Lease, (iii) be
carried with companies with a Best Rating of B+VII minimum, (iv) specifically
provide that such policies shall not be subject to cancellation, reduction of
coverage, or other change except after 30 days prior written notice to Lessor,
(v) name Lessor, Lessor's lender, and any other party with an insurable interest
in the Premises as designated by Lessor as additional insureds by endorsement to
policy, and (vi) shall be primary.
Lessee agrees to pay to Lessor, as additional Rent, on demand, the full cost of
the insurance policies referenced in 6 A) and 6 B) above as evidenced by
insurance xxxxxxxx to Lessor which shall be included in the CAC. If Lessee does
not occupy the entire project, the insurance premiums shall be allocated to the
portion of the project occupied by Lessee on a pro-rata square footage or other
equitable basis, as determined by Lessor. It is agreed that Lessee's obligation
under this paragraph shall be prorated to the reflect the Commencement Date and
the end of the Lease Term.
Page 12
Lessor and Lessee hereby waive any rights each may have against the other
related to any loss or damage caused to Lessor or Lessee as the case may be, or
to the Premises or its contents, and which may arise from any risk covered by
fire and extended coverage insurance and those risks required to be covered
under Lessee's personal property insurance. The parties shall provide that
their respective insurance policies insuring the property or the personal
property include a waiver of any right of subrogation which said insurance
company may have against Lessor or Lessee, as the case may be.
7. Abandonment: Lessee shall not vacate or abandon the Premises at any time
during the Lease Term; and if Lessee shall abandon, vacate or surrender said
Premises, or be dispossessed by process of law, or otherwise, any personal
property belonging to Lessee and left on the Premises shall be deemed to be
abandoned, at the option of Lessor. Notwithstanding the above or any contrary
provision elsewhere in this Lease, the Premises shall not be considered vacated
or abandoned if Lessee maintains the Premises in Good Condition and Repair,
provides security and is not in default.
8. Free From Liens: Lessee shall keep the subject Premises , free from any and
all liens including but not limited to liens arising out of any work performed,
materials furnished, or obligations incurred by Lessee. Lessee shall have no
duty to keep Premises free of liens for work performed by Lessor at Lessor's
expense. However, the Lessor shall allow Lessee to contest a lien claim, so
long as the claim is discharged prior to any foreclosure proceeding being
initiated against the property and provided Lessee provides Lessor a bond if the
lien exceeds $5,000.
9. Compliance With Governmental Regulations: Lessee shall, at its sole cost
and expense, comply with all of the requirements of all local, municipal, state
and federal authorities now in force, or which may hereafter be in force,
pertaining to the Premises, and shall faithfully observe in the use and
occupancy of the Premises all local and municipal ordinances and state and
federal statutes now in force or which may hereafter be in force.
Notwithstanding the above, Lessee shall not be obligated to pay for changes in
compliance with Governmental Regulations if the cost exceeds Twenty Five
Thousand Dollars ($25,000) and does not occur as a result of Lessee's
specialized use of the Premises or alterations made by Lessee but such cost
shall be amortized over their useful life (not to exceed 15 years) at Xxxxx
Fargo Prime Rate plus 1.0 and added to monthly CAC during Lease Term.
10. Intentionally Omitted.
11. Advertisements And Signs: Lessee shall not place or permit to be placed,
in, upon or about the Premises any unusual or extraordinary signs, or any signs
not approved by the city, local, state, federal or other applicable governing
authority. Lessee shall not place, or permit to be placed upon the Premises, any
signs, advertisements or notices without the written consent of the Lessor, and
such consent shall not be unreasonably withheld. A sign so placed on the
Premises shall be so placed upon the understanding and agreement that Lessee
will remove same at the end of the Lease Term or earlier termination of this
Lease and repair any damage or injury to the Premises caused thereby, and if not
so removed by Lessee, then Lessor may have the same removed at Lessee's expense.
12. Utilities: Lessee shall pay for all water, gas, heat, light, power,
telephone and other utilities supplied to the Premises. Any charges for sewer
usage, PG&E and telephone site service or related fees shall be the obligation
of Lessee and paid for by Lessee. If any such services are not separately
metered to Lessee, Lessee shall pay a reasonable proportion of all charges which
are jointly metered, the determination to be made by Lessor acting reasonably
and on any equitable basis. Lessor and Lessee agree that Lessor shall not be
liable to Lessee for any disruption in any of the utility services to the
Premises provided Lessor acts reasonably to avoid any such disruption, or if
such disruption is unavoidable, to minimize the effect thereof on Lessee's use
and enjoyment of the Premises, to extent that such disruption is within Lessor's
control.
Page 13
13. Attorney's Fees: In case suit should be brought for the possession of the
Premises, for the recovery of any sum due hereunder, because of the breach of
any other covenant herein, or to enforce, protect, or establish any term,
conditions, or covenant of this Lease or the right of either party hereunder,
the losing party shall pay to the Prevailing Party reasonable attorney's fees
which shall be deemed to have accrued on the commencement of such action and
shall be enforceable whether or not such action is prosecuted to judgment. The
term "Prevailing Party" shall mean the party that received substantially the
relief requested, whether by settlement, dismissal, summary judgment, judgment,
or otherwise.
14. Default
14.1 Lessee Default: The occurrence of any of the following shall
constitute a default and breach of this Lease by Lessee: a) Any failure by
Lessee to pay Rent or to make any other payment required to be made by Lessee
hereunder when due if not cured within ten (10) days after written notice
thereof by Lessor to Lessee; b) The abandonment or vacation of the Premises by
Lessee except as provided in Section 7; c) A failure by Lessee to observe and
perform any other provision of this Lease to be observed or performed by Lessee,
where such failure continues for thirty days after written notice thereof by
Lessor to Lessee; provided, however, that if the nature of such default is such
that the same cannot be reasonably cured within such thirty (30) day period,
Lessee shall not be deemed to be in default if Lessee shall, within such period,
commence such cure and thereafter diligently prosecute the same to completion;
d) The making by Lessee of any general assignment for the benefit of creditors;
the filing by or against Lessee of a petition to have Lessee adjudged a bankrupt
or of a petition for reorganization or arrangement under any law relating to
bankruptcy; e) the appointment of a trustee or receiver to take possession of
substantially all of Lessee's assets or Lessee's interest in this Lease, or the
attachment, execution or other judicial seizure of substantially all of Lessee's
assets located at the Premises or of Lessee's interest in this Lease.
14.2 Surrender Of Lease: In the event of any such default by Lessee, then
in addition to any other remedies available to Lessor at law or in equity,
Lessor shall have the immediate option to terminate this Lease before the end of
the Lease Term and all rights of Lessee hereunder, by giving written notice of
such intention to terminate. In the event that Lessor terminates this Lease due
to a default of Lessee, then Lessor may recover from Lessee: a) the worth at the
time of award of any unpaid Rent which had been earned at the time of such
termination; plus b) the worth at the time of award of unpaid Rent which would
have been earned after termination until the time of award exceeding the amount
of such rental loss that the Lessee proves could have been reasonably avoided;
plus c) the worth at the time of award of the amount by which the unpaid Rent
for the balance of the Lease Term after the time of award exceeds the amount of
such rental loss that the Lessee proves could have been reasonably avoided; plus
d) any other amount necessary to compensate Lessor for all the detriment
proximately caused by Lessee's failure to perform his obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom; and e) at Lessor's election, such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time by applicable
California law. As used in (a) and (b) above, the "worth at the time of award"
is computed by allowing interest at the rate of Xxxxx Fargo's prime rate plus
two percent (2%) per annum. As used in (c) above, the "worth at the time of
award" is computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%).
14.3 Right of Entry and Removal: In the event of any such default by
Lessee, Lessor shall also have the right, with or without terminating this
Lease, to re-enter the Premises and remove all persons and property from the
Premises; such property may be removed and stored in a public warehouse or
elsewhere at the cost of and for the account of Lessee.
14.4 Abandonment: In the event of the vacation or abandonment, except as
provided in Section 7, of the Premises by Lessee or in the event that Lessor
shall elect to re-enter as provided in paragraph 14.3 above or shall take
possession of the Premises pursuant to legal proceeding or pursuant to any
notice provided by law, and Lessor does not elect to terminate
Page 14
this Lease as provided in Section 14.2 above, then Lessor may from time to time,
without terminating this Lease, either recover all Rent as it becomes due or
relet the Premises or any part thereof for such term or terms and at such rental
rates and upon such other terms and conditions as Lessor, in its sole
discretion, may deem advisable with the right to make alterations and repairs to
the Premises. In the event that Lessor elects to relet the Premises, then Rent
received by Lessor from such reletting shall be applied; first, to the payment
of any indebtedness other than Rent due hereunder from Lessee to Lessor; second,
to the payment of any cost of such reletting; third, to the payment of the cost
of any alterations and repairs to the Premises; fourth, to the payment of Rent
due and unpaid hereunder; and the residue, if any, shall be held by Lessor and
applied to the payment of future Rent as the same may become due and payable
hereunder. Should that portion of such Rent received from such reletting during
any month, which is applied by the payment of Rent hereunder according to the
application procedure outlined above, be less than the Rent payable during that
month by Lessee hereunder, then Lessee shall pay such deficiency to Lessor
immediately upon demand therefore by Lessor. Such deficiency shall be calculated
and paid monthly. Lessee shall also pay to Lessor, as soon as ascertained, any
costs and expenses incurred by Lessor in such reletting or in making such
alterations and repairs not covered by the rentals received from such reletting.
14.5 No Implied Termination: No re-entry or taking possession of the
Premises by Lessor pursuant to Section 14.3 or Section 14.4 of this Lease shall
be construed as an election to terminate this Lease unless a written notice of
such intention is given to Lessee or unless the termination thereof is decreed
by a court of competent jurisdiction. Notwithstanding any reletting without
termination by Lessor because of any default by Lessee, Lessor may at any time
after such reletting elect to terminate this Lease for any such default.
15. Surrender Of Lease: The voluntary or other surrender of this Lease by
Lessee, or a mutual cancellation thereof, shall not work a merger, and shall, at
the option of Lessor, terminate all or any existing subleases or sub tenancies,
or may, at the option of Lessor, operate as an assignment to him of any or all
such subleases or sub tenancies.
16. Taxes: Lessee shall pay and discharge punctually and when the same shall
become due and payable without penalty, all real estate taxes, personal property
taxes, taxes based on vehicles utilizing parking areas in the Premises, taxes
computed or based on rental income (other than federal, state and municipal net
income taxes), environmental surcharges, privilege taxes, excise taxes, business
and occupation taxes, school fees or surcharges, gross receipts taxes, sales
and/or use taxes, employee taxes, occupational license taxes, water and sewer
taxes, assessments (including, but not limited to, assessments for public
improvements or benefit), assessments for local improvement and maintenance
districts, and all other governmental impositions and charges of every kind and
nature whatsoever, regardless of whether now customary or within the
contemplation of the parties hereto and regardless of whether resulting from
increased rate and/or valuation, or whether extraordinary or ordinary, general
or special, unforeseen or foreseen, or similar or dissimilar to any of the
foregoing (all of the foregoing being hereinafter collectively called "Tax" or
"Taxes") which, at any time during the Lease Term, shall be applicable or
against the Premises, or shall become due and payable and a lien or charge upon
the Premises under or by virtue of any present or future laws, statutes,
ordinances, regulations, or other requirements of any governmental authority
whatsoever. The term "Environmental Surcharge" shall include any and all
expenses, taxes, charges or penalties imposed by the Federal Department of
Energy, Federal Environmental Protection Agency, the Federal Clean Air Act, or
any regulations promulgated thereunder, or any other local, state or federal
governmental agency or entity now or hereafter vested with the power to impose
taxes, assessments or other types of surcharges as a means of controlling or
abating environmental pollution or the use of energy in regard to the use,
operation or occupancy of the Premises. The term "Tax" shall include, without
limitation, all taxes, assessments, levies, fees, impositions or charges levied,
imposed, assessed, measured, or based in any manner whatsoever (i) in whole or
in part on the Rent payable by Lessee under this Lease, (ii) upon or with
respect to the use, possession, occupancy, leasing, operation or management of
the Premises, (iii) upon this transaction or any document to which Lessee is a
party creating or transferring an interest or an estate in the Premises, (iv)
upon Lessee's business operations conducted at the Premises, (v) upon, measured
by or reasonably attributable to the cost or
Page 15
value of Lessee's equipment, furniture, fixtures and other personal property
located on the Premises or the cost or value of any leasehold improvements made
in or to the Premises by or for Lessee, regardless of whether title to such
improvements shall be in Lessor or Lessee, or (vi) in lieu of or equivalent to
any Tax set forth in this Section 16. In the event any such Taxes are payable by
Lessor and it shall not be lawful for Lessee to reimburse Lessor for such Taxes,
then the Rent payable thereunder shall be increased to net Lessor the same net
rent after imposition of any such Tax upon Lessor as would have been payable to
Lessor prior to the imposition of any such Tax. It is the intention of the
parties that Lessor shall be free from all such Taxes and all other governmental
impositions and charges of every kind and nature whatsoever. However, nothing
contained in this Section 16 shall require Lessee to pay any Federal or State
income, franchise, estate, inheritance, succession, transfer or excess profits
tax imposed upon Lessor. If any general or special assessment is levied and
assessed against the Premises, Lessor agrees to use its best reasonable efforts
to cause the assessment to become a lien on the Premises securing repayment of a
bond sold to finance the improvements to which the assessment relates which is
payable in installments of principal and interest over the maximum term allowed
by law. It is understood and agreed that Lessee's obligation under this
paragraph will be prorated to reflect the Commencement Date and the end of the
Lease Term. It is further understood that if Taxes cover the Premises and Lessee
does not occupy the entire Premises, the Taxes will be allocated to the portion
of the Premises occupied by Lessee based on a pro-rata square footage or other
equitable basis, as determined by Lessor. Lessee shall pay invoiced tax bills on
or before due date.
Subject to any limitations or restrictions imposed by any deeds of trust or
mortgages now or hereafter covering or affecting the Premises, Lessee shall have
the right to contest or review the amount or validity of any Tax by appropriate
legal proceedings but which is not to be deemed or construed in any way as
relieving, modifying or extending Lessee's covenant to pay such Tax at the time
and in the manner as provided in this Section 16. However, as a condition of
Lessee's right to contest, if such contested Tax is not paid before such contest
and if the legal proceedings shall not operate to prevent or stay the collection
of the Tax so contested, Lessee shall, before instituting any such proceeding,
protect the Premises and the interest of Lessor and of the beneficiary of a deed
of trust or the mortgagee of a mortgage affecting the Premises against any lien
upon the Premises by a surety bond, issued by an insurance company acceptable to
Lessor and in an amount equal to one and one-half (1 1/2) times the amount
contested or, at Lessor's option, the amount of the contested Tax and the
interest and penalties in connection therewith. Any contest as to the validity
or amount of any Tax, whether before or after payment, shall be made by Lessee
in Lessee's own name, or if required by law, in the name of Lessor or both
Lessor and Lessee. Lessee shall defend, indemnify and hold harmless Lessor
from and against any and all costs or expenses, including attorneys' fees, in
connection with any such proceedings brought by Lessee, whether in its own name
or not. Lessee shall be entitled to retain any refund of any such contested Tax
and penalties or interest thereon which have been paid by Lessee. Nothing
contained herein shall be construed as affecting or limiting Lessor's right to
contest any Tax at Lessor's expense.
17. Notices: Unless otherwise provided for in this Lease, any and all written
notices or other communication (the "Communication") to be given in connection
with this Lease shall be given in writing and shall be given by personal
delivery, facsimile transmission or by mailing by registered or certified mail
with postage thereon or recognized overnight courier, fully prepaid, in a sealed
envelope addressed to the intended recipient as follows:
(a) to the Lessor at: 00000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxx
Fax No: (000) 000-0000
(b) Until Commencement Date for Phase I for Lessee: 000 Xxxxxxxxx Xxxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Director, Real Estate & Facilities
Page 16
CC: Chief Financial Officer
Fax No: 000.000.0000
(c) After Commencement Date for Phase I for Lessee: XXXXXXX Silver Creek Drive
San Jose, California
Attention: Director, Real Estate & Facilities
CC: Chief Financial Officer
Fax No:
or such other addresses, facsimile number or individual as may be designated by
a Communication given by a party to the other parties as aforesaid. Any
Communication given by personal delivery shall be conclusively deemed to have
been given and received on a date it is so delivered at such address provided
that such date is a business day, otherwise on the first business day following
its receipt, and if given by registered or certified mail, on the day on which
delivery is made or refused or if given by recognized overnight courier, on the
first business day following deposit with such overnight courier and if given by
facsimile transmission, on the day on which it was transmitted provided such day
is a business day, failing which, on the next business day thereafter.
18. Entry By Lessor: Lessee shall permit Lessor and its agents to enter into
and upon said Premises at all reasonable times using the minimum amount of
interference and inconvenience to Lessee and Lessee's business, subject to any
security regulations of Lessee, for the purpose of inspecting the same or for
the purpose of maintaining the building in which said Premises are situated, or
for the purpose of making repairs, alterations or additions to any other portion
of said building, including the erection and maintenance of such scaffolding,
canopies, fences and props as may be required, without any rebate of Rent and
without any liability to Lessee for any loss of occupation or quiet enjoyment of
the Premises; and shall permit Lessor and his agents, at any time within ninety
(90) days prior to the end of the Lease Term, to place upon said Premises any
usual or ordinary "For Sale" or "For Lease" signs and exhibit the Premises to
prospective tenants at reasonable hours.
19. Destruction Of Premises:
19.1 Damage Subject to Restoration in One Year. In the event one or more of
the buildings which are part of the Premises are damaged during the Lease Term
from any cause, Lessor shall forthwith repair the same, provided such repairs
can be made within one year after the date of the receipt of building permit
under the laws and regulations of State, Federal, County, or Municipal
authorities but subject to Section 19.3. Such damage shall in no way annul or
void this Lease, except that Lessee shall be entitled to a proportionate
reduction of Rent while such repairs are being made to the extent of payments
received by Lessor or any lender under Lessor's Loss of Rents Insurance
coverage.
19.2 Damage Not Subject to Restoration in One Year. In the event one or more of
the buildings which are part of the Premises are damaged during the Lease Term
from any cause, but such repairs cannot be made within one year after the date
of the receipt of building permit under the laws and regulations of State,
Federal, County, or Municipal authorities but subject to Section 19.3, either
party may terminate this Lease, as to the damaged building or buildings by
notice to the other within 20 days after the date Lessor advises Lessee in
writing that repair will exceed one year. However, if Lessor exercises such
termination right: (a) Lessee shall have the option to avoid such termination by
notifying Lessor within 10 days after receipt of such notice that Lessee will
commence paying Rent for such damaged building(s) prior to the completion of
repairs and at such time as Lessor's Loss of Rents Insurance coverage. with
respect to such building(s) has been depleted; and (b) if Landlord thereafter
elects to rebuild one or more of such buildings at a point in time where at
least 40% of the Lease Term is unexpired, Lessee shall
Page 17
have the right to reinstate this Lease as to the building or buildings Landlord
elects to rebuild. If this Lease is not terminated as provided in this Section
19.2, Lessor shall forthwith repair the damage to the buildings(s) and Lessee
shall be entitled to a proportionate reduction of Rent while such repairs are
being made to the extent of payments received by Lessor or any lender under
Lessor's Loss of Rents Insurance coverage.
19.3 Uninsured Damage. Notwithstanding Sections 19.1 and 19.2 above, if the
reasonable cost of repairing damage to a building or buildings is not fully
covered by Lessor's insurance (with the exception of the deductible thereunder),
Lessor shall have the option of terminating this Lease as to the damaged
building or buildings by notice to Lessee within 60 days after the date of
damage. If Lessor so elects to terminate this Lease as to the damaged
building(s), Lessee may avoid such termination by agreeing to pay all costs to
repair the damaged building(s) not covered by Lessor's insurance.
19.4 Destruction of Three or More Buildings. If three or more of the buildings
within the Premises are damaged to a degree that repairs cannot be made within
one year after the date of the receipt of building permit under the laws and
regulations of State, Federal, County, or Municipal authorities, either party
may terminate this Lease as to the entire Premises (including any undamaged
building or buildings) by notice to the other within 30 days after the date of
damage. However, if Lessor exercises such termination option, Lessee shall be
permitted to remain in possession of any undamaged building or buildings for up
to one year after Lessor's notice of termination, subject to all terms and
conditions of this Lease (except the Rent shall be proportionately reduced based
on the ratio that the rentable area of the undamaged building or buildings bears
to the total rentable area of the buildings within the Premises prior to such
damage.
19.5 Waiver of Civil Code Sections. The provisions of Section 1932, Subdivision
2, and of Section 1933, Subdivision 4, of the Civil Code of the State of
California are waived by Lessee and Lessor. The parties intend that the
provisions of this Lease, including this Section 19, shall govern their
respective rights and remedies in case of damage to the Premises.
20. Assignment And Subletting: Lessee shall not assign this Lease, or any
interest therein, and shall not sublet the said Premises or any part thereof, or
any right or privilege appurtenant thereto, or cause any other person or entity,
to occupy or use the Premises, or any portion thereof, without the advance
written consent of Lessor (as provided in Section 36). Notwithstanding the
above, Lessee may, without the consent of Lessor, assign this Lease or sublet
all or any part of the Premises to a bona fide subsidiary or affiliate of
Lessee, an entity in which or with which Lessee merges or an entity which
acquires all or substantially all of the assets of Lessee ("Excepted Party").
Any such assignment or subletting requiring Lessor's consent made without
Lessor's consent shall be void, and shall, at the option of the Lessor,
terminate this Lease. This Lease shall not, or shall any interest therein, be
assignable, as to the interest of Lessee, by operation of law, without the
written consent of Lessor. If Lessee desires to assign its rights under this
Lease or to sublet all or any part of the Premises to a party other than an
Excepted Party, Lessee shall first notify Lessor of the proposed terms and
conditions of such assignment or subletting. Lessor shall have the right of
first refusal to enter into a direct Lessor-lessee relationship with such party
under such proposed terms and conditions, in which event Lessee shall be
relieved of its obligations hereunder to the extent of the Lessor-lessee
relationship entered into between Lessor and such third party; provided,
however, that notwithstanding the above, Lessee shall have the right to sublease
up to One Hundred and Fifty Thousand Square Feet (150,000 sq.ft.) for a period
up to five (5) years from the Commencement Date of Phase I (but no renewals or
extensions on such sublease shall be allowed by Lessor)and Lessor's right of
first refusal shall not apply as to any such sublease(s) If Lessee exercises its
right of first refusal to enter into a direct Lessor-Lessee relationship with a
new lessee, then Lessee may recover from such rent an amount equal to the
unamortized value of its tenant improvements and Lessee shall continue to own
such improvements until end of the Lease Term at which time such title to such
improvements shall revert to Lessor. Notwithstanding the foregoing, Lessee may
assign this Lease to an Excepted Party, provided there is no substantial
reduction in the net worth of the resulting guarantor. Whether or not Lessor's
consent to a sublease or assignment is required, in the event of any sublease or
assignment, Lessee shall be and shall remain primarily liable for the
performance of all conditions, covenants, and obligations of Lessee hereunder
and, in the event of a default by an assignee or sublessee, Lessor may proceed
directly against the original Lessee hereunder and/or any other predecessor of
such assignee or sublessee without the necessity of
Page 18
exhausting remedies against said assignee or sublessee. If Lessee merges or
sells substantially all of its assets and the net worth of the resulting entity
is substantially less than that of Lessee, such sale shall be a default under
this Lease unless approved by Lessor.
21. Condemnation: If any part of the Premises shall be taken for any public or
quasi-public use, under any statute or by right of eminent domain or private
purchase in lieu thereof, and a part thereof remains which is susceptible of
occupation hereunder, this Lease shall as to the part so taken, terminate as of
the date title vests in the condemnor or purchaser, and the Rent payable
hereunder shall be adjusted so that the Lessee shall be required to pay for the
remainder of the Lease Term only that portion of Rent as the value of the part
remaining. The rental adjustment resulting will be computed at the same Rental
rate for the remaining part not taken; however, Lessor shall have the option to
terminate this Lease as of the date when title to the part so taken vests in the
condemnor or purchaser. If all of the Premises, or such part thereof be taken
so that there does not remain a portion susceptible for occupation hereunder,
this Lease shall thereupon terminate. If a part or all of the Premises be
taken, all compensation awarded upon such taking shall be payable to the Lessor.
Lessee may file a separate claim and be entitled to any award granted to Lessee.
22. Effects Of Conveyance: The term "Lessor" as used in this Lease, means only
the owner for the time being of the land and building constituting the Premises,
so that, in the event of any sale of said land or building, or in the event of a
Lease of said building, Lessor shall be and hereby is entirely freed and
relieved of all covenants and obligations of Lessor hereunder, and it shall be
deemed and construed, without further agreement between the parties and the
purchaser of any such sale, or the Lessor of the building, that the purchaser or
lessor of the building has assumed and agreed to carry out any and all covenants
and obligations of the Lessor hereunder. If any security is given by Lessee to
secure the faithful performance of all or any of the covenants of this Lease on
the part of Lessee, Lessor may transfer and deliver the security, as such, to
the purchaser at any such sale of the building, and thereupon the Lessor shall
be discharged from any further liability.
23. Subordination: This Lease, in the event Lessor notifies Lessee in writing,
shall be subordinate to any ground lease, deed of trust, or other hypothecation
for security now or hereafter placed upon the real property at which the
Premises are a part and to any and all advances made on the security thereof and
to renewals, modifications, replacements and extensions thereof. Lessee agrees
to promptly execute any documents which may be required to effectuate such
subordination provided Lessee receives a non-disturbance agreement on standard
commercial terms from Lender dated prior to lien. Notwithstanding such
subordination, if Lessee is not in default and so long as Lessee shall pay the
Rent and observe and perform all of the provisions and covenants required under
this Lease, Lessee's right to quiet possession of the Premises shall not be
disturbed or effected by any subordination.
24. Waiver: The waiver by Lessor or Lessee of any breach of any term, covenant
or condition, herein contained shall not be construed to be a waiver of such
term, covenant or condition or any subsequent breach of the same or any other
term, covenant or condition therein contained. The subsequent acceptance of
Rent hereunder by Lessor shall not be deemed to be a waiver of Lessee's breach
of any term, covenant, or condition of the Lease.
25. Holding Over: Any holding over after the end of the Lease Term requires
Lessor's written approval prior to the end of the Lease Term, which,
notwithstanding any other provisions of this Lease, Lessor may withhold. Such
holding over shall be construed to be a tenancy at sufferance from month to
month. Lessee shall pay to Lessor monthly base rent equal to one and one-half
(1.5) times the monthly base rent installment due in the last month of the Lease
Term and all other additional rent and all other terms and conditions of the
Lease shall apply, so far as applicable. Holding over by Lessee without written
approval of Lessor shall subject Lessee to the liabilities and obligations
provided for in this Lease and by law, including, but not limited to those in
Section 2.3 of this Lease. Lessee shall indemnify and hold Lessor harmless
against any loss or liability resulting from
Page 19
any delay caused by Lessee in surrendering the Premises, including without
limitation, any claims made or penalties incurred by any succeeding lessee or by
Lessor; provided that Lessor gives Lessee notice as provided in Section 2.3 of
any leases which will result any such claims or penalties. No holding over shall
be deemed or construed to exercise any option to extend or renew this Lease in
lieu of full and timely exercise of any such option as required hereunder.
26. Lessor's Liability: If Lessee should recover a money judgment against
Lessor arising in connection with this Lease, the judgment shall be satisfied
only out of the Lessor's interest in the Premises and neither Lessor or any of
its partners shall be liable personally for any deficiency. If Lessor has
transferred its interest in the Premises, in enforcing any judgment for Lessor's
breach of the Lease, Lessee shall be entitled to reach the proceeds of a sale
or other disposition of the Premises.
27. Estoppel Certificates: Lessee shall at any time during the Lease Term, upon
not less than ten (10) days prior written notice from Lessor, execute and
deliver to Lessor a statement in writing certifying that, this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
such modification) and the dates to which the Rent and other charges have been
paid in advance, if any, and acknowledging that there are not, to Lessee's
knowledge, any uncured defaults on the part of Lessor hereunder or specifying
such defaults if they are claimed. Any such statement may be conclusively
relied upon by any prospective purchaser or encumbrancer of the Premises.
Lessee's failure to deliver such a statement within such time shall be
conclusive upon the Lessee that (a) this Lease is in full force and effect,
without modification except as may be represented by Lessor; (b) there are no
uncured defaults in Lessor's performance.
28. Time: Time is of the essence of the Lease.
29. Captions: The headings on titles to the paragraphs of this Lease are not a
part of this Lease and shall have no effect upon the construction or
interpretation of any part thereof. This instrument contains all of the
agreements and conditions made between the parties hereto and may not be
modified orally or in any other manner than by an agreement in writing signed by
all of the parties hereto or their respective successors in interest.
30. Party Names: Landlord and Tenant may be used in various places in this
Lease as a substitute for Lessor and Lessee respectively.
31. Earthquake Insurance: As a condition of Lessor agreeing to waive the
requirement for earthquake insurance, Lessee agrees that it will pay, as
additional Rent, which shall be included in the monthly CAC, an amount not to
exceed Ninety-Nine Thousand Dollars ($99,000) for Phase I and One Hundred
Seventy-Eight Thousand Dollars ($178,000) for Phase I and Phase II combined. per
year for earthquake insurance if Lessor desires to obtain some form of
earthquake insurance in the future, if and when available, on terms acceptable
to Lessor as determined in the sole and absolute discretion of Lessor. Lessee's
responsibility for the deductible in case of loss covered under Lessor's
earthquake insurance policy should not exceed Three Hundred and Forty Six
Thousand Dollars ($346,000) for Phase I and Ninety Eight Thousand and Five
Hundred Dollars ($98,500) for Phase II.
32. Habitual Default: Notwithstanding anything to the contrary contained in
Section 14 herein, Lessor and Lessee agree that if Lessee shall have defaulted
in the payment of Rent for two or more times during any twelve month period
during the Lease Term, and such defaults continue after written notice of
delinquency beyond the applicable cure period, then, at the option of Lessor,
either (a) Lessee shall be required to increase the amount of the Security
Deposit to three month's Base Rent or (b) Lessor may require Lessee to commence
paying Base rent quarterly in advance. If Lessor exercises its option under
clause (a) or (b) of the preceding sentence and Lessee thereafter makes all
payments of Rent without default for twelve (12) consecutive months, and there
exists no material non-monetary default by Lessee at such time, then (i) if
Lessor exercised the option under clause (a), the
Page 20
Security Deposit shall be reduced to the sum otherwise required under this Lease
but for Lessor's exercise of such option, and (ii) if Lessor exercised the
option under clause (b), Lessee may revert to paying the base Rent monthly in
advance.
33. Hazardous Materials
33.1 Definitions: As used in this Lease, the following terms shall have the
following meaning:
a. The term "Hazardous Materials" shall mean (i) polychlorinated biphenyls;
(ii) radioactive materials and (iii) any chemical, material or substance
now or hereafter defined as or included in the definitions of "hazardous
substance" "hazardous water", "hazardous material", "extremely hazardous
waste", "restricted hazardous waste" under Section 25115, 25117 or 15122.7,
or listed pursuant to Section 25140 of the California Health and Safety
Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined
as "hazardous substance" under Section 25316 of the California Health and
Safety Code, Division 20, Chapter 6.8 (Xxxxxxxxx-Xxxxxxx-Xxxxxx Hazardous
Substances Account Act), (iii) defined as "hazardous material", "hazardous
substance", or "hazardous waste" under Section 25501 of the California
Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials
Release, Response, Plans and Inventory), (iv) defined as a "hazardous
substance" under Section 25181 of the California Health and Safety Code,
Division 20l, Chapter 6.7 (Underground Storage of Hazardous Substances),
(v) petroleum, (vi) asbestos, (vii) listed under Article 9 or defined as
"hazardous" or "extremely hazardous" pursuant to Article II of Title 22 of
the California Administrative Code, Division 4, Chapter 20, (viii) defined
as "hazardous substance" pursuant to Section 311 of the Federal Water
Pollution Control Act, 33 U.S.C. 1251 et seq. or listed pursuant to Section
1004 of the Federal Water Pollution Control Act (33 U.S.C. 1317), (ix)
defined as a "hazardous waste", pursuant to Section 1004 of the Federal
Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq., (x) defined
as "hazardous substance" pursuant to Section 101 of the Comprehensive
Environmental Responsibility Compensations, and Liability Act, 42 U.S.C.
9601 et seq., or (xi) regulated under the Toxic Substances Control Act, 156
U.S.C. 2601 et seq.
b. The term "Hazardous Materials Laws" shall mean any local, state and
federal laws, rules, regulations, or ordinances relating to the use,
generation, transportation, analysis, manufacture, installation, release,
discharge, storage or disposal of Hazardous Material.
c. The term "Lessor's Agents" shall mean Lessor's agents, representatives,
employees, contractors, subcontractors, directors, officers and partners.
d. The term "Lessee's Agents" shall mean Lessee's agents, representatives,
employees, contractors, subcontractors, directors, officers, partners,
invitees or any other person in or about the Premises other then Lessor or
Lessor's Agents.
33.2 Lessee's Right to Investigate: Lessee shall be entitled to cause such
inspection, soils and ground water tests, and other evaluations to be made of
the Premises as Lessee deems necessary regarding (i) the presence and use of
Hazardous Materials in or about the Premises, and (ii) the potential for
exposure to Lessee's employees and other persons to any Hazardous Materials used
and stored by previous occupants in or about the Premises. Lessee shall provide
Lessor with copies of all inspections, tests and evaluations. Lessee shall
indemnify, defend and hold Lessor harmless from any cost, claim or expense
arising from such entry by Lessee or from the performance of any such
investigation by such Lessee.
33.3 Lessor's Representations: Lessor hereby represents and warrants to the
best of Lessor's knowledge that the Premises are, as of the date of this Lease,
in compliance with all Hazardous Material Laws.
Page 21
33.4 Lessee's Obligation to Indemnify: Lessee, at its sole cost and
expense, shall indemnify, defend, protect and hold Lessor and Lessor's Agents
harmless from and against any and all cost or expenses, including those
described under subparagraphs i, ii and iii herein below set forth, arising from
or caused in whole or in part, directly or indirectly by:
a. Lessee's or Lessee's Agents' use, analysis, storage, transportation,
disposal, release, threatened release, discharge or generation of Hazardous
Material to, in, on, under, about or from the Premises; or
b. Lessee's or Lessee's Agents failure to comply with Hazardous Material
laws; or
c. Any release of Hazardous Material to, in, on, under, about, from or onto
the Premises caused by or occurring as a result of acts or omissions of
Lessee or Lessee's Agents or occurring during the Lease Term, except ground
water contamination from other parcels where the source is from off the
Premises not arising from or caused by Lessee or Lessee's Agents.
The cost and expenses indemnified against include, but are not limited to the
following:
i. Any and all claims, actions, suits, proceedings, losses, damages,
liabilities, deficiencies, forfeitures, penalties, fines, punitive damages,
cost or expenses;
ii. Any claim, action, suit or proceeding for personal injury (including
sickness, disease, or death), tangible or intangible property damage,
compensation for lost wages, business income, profits or other economic
loss, damage to the natural resources of the environment, nuisance,
pollution, contamination, leaks, spills, release or other adverse effects
on the environment;
iii. The cost of any repair, clean-up, treatment or detoxification of the
Premises necessary to bring the Premises into compliance with all Hazardous
Material Laws, including the preparation and implementation of any closure,
disposal, remedial action, or other actions with regard to the Premises,
and expenses (including, without limitation, reasonable attorney's fees and
consultants fees, investigation and laboratory fees, court cost and
litigation expenses).
33.5 Lessee's Obligation to Remediate Contamination: With respect to any
Hazardous Materials contamination of the Premises for which Lessee is
responsible under Section 33.4, Lessee shall, at its sole cost and expense,
promptly take any and all action necessary to remediate contamination during
the Lease Term.
33.6 Obligation to Notify: Lessor and Lessee shall each give written notice
to the other as soon as reasonably practical of (i) any communication received
from any governmental authority concerning Hazardous Material which related to
the Premises and (ii) any contamination of the Premises by Hazardous Materials
which constitutes a violation of any Hazardous Material Laws.
33.7 Survival: The obligations of Lessee under this Section 33 shall
survive the Lease Term or earlier termination of this Lease.
33.8 Certification and Closure: On or before the end of the Lease Term or
earlier termination of this Lease, Lessee shall deliver to Lessor a
certification executed by Lessee stating that, to the best of Lessee's
knowledge, there exists no violation of Hazardous Material Laws resulting from
Lessee's obligation in Paragraph 33. If pursuant to local ordinance, state or
federal law, Lessee is required, at the expiration of the Lease Term, to submit
a closure plan for the Premises to a local, state or federal agency, then Lessee
shall comply at its sole cost and expense with the requirements of the closure
plan and furnish to Lessor a copy of such plan.
33.9 Prior Hazardous Materials: Lessee shall have no obligation to clean up
or to hold Lessor harmless with respect to any Hazardous Material or wastes
discovered on the Premises, except as a result of Environmental Surcharges,
which were not introduced into, in, on, about, from or under the Premises during
the Lease Term or ground water contamination from other parcels where the source
is from off the Premises not arising from or caused by Lessee or Lessee's
Agents.
Page 22
34. Brokers: Lessor and Lessee represent that they have not utilized or
contacted a real estate broker or finder with respect to this Lease other than
CB Xxxxxxx Xxxxx ("CB") and Lessee agrees to indemnify and hold Lessor harmless
against any claim, cost, liability or cause of action asserted by any broker or
finder claiming through Lessee other than CB. Lessor shall at its sole cost and
expense pay an agreed upon brokerage commission to CB in connection with this
transaction. Lessor represents and warrants that it has not utilized or
contacted a real estate broker or finder with respect to this Lease other than
CB and Lessor agrees to indemnify and hold Lessee harmless against any claim,
cost, liability or cause of action asserted by any broker or finder claiming
through Lessor.
35. Option to Extend
A. Option: Lessor hereby grants to Lessee one (1) option to extend the Lease
Term, with the extended term to be for a period of five (5) years, on the
following terms and conditions:
(i) Lessee shall give Lessor written notice of its exercise of its option
to extend no earlier than twelve (12) , nor later than six (6) calendar
months before the Lease Term would end but for said exercise. If Lessee
and Lessor have not agreed to rental terms in writing, Lessee may withdraw
its notice of exercise of an extension option prior to six (6) months
before the Lease Term would end but for said exercise. Lessor shall
provide Lessee with Lessor's proposed base monthly rent for the option
period within twenty (20) days of Lessee's written request. However, once
Lessee delivers a notice of exercise of an option to extend the Lease Term
it may not be withdrawn except as provided for herein and subject to the
provisions of this Section 35, such notice shall operate to extend the
Lease Term. Upon any extension of the Lease Term pursuant to this Section
35, the term "Lease Term" as used in this Lease shall thereafter include
the then extended term. Time is of the essence.
(ii) Lessee may not extend the Lease Term pursuant to any option granted by
this Section 35 if Lessee is in default as of the date of the exercise of
its option. If Lessee has committed a default by Lessee as defined in
Section 14 or 32 that has not been cured or waived by Lessor in writing by
the date that any extended term is to commence, then Lessor may elect not
to allow the Lease Term to be extended, notwithstanding any notice given by
Lessee of an exercise of this option to extend.
(iii) All terms and conditions of this Lease shall apply during the
extended term, except that the base rent and rental increases for each
extended term shall be determined as provided in Section 35 (B) below
(iv) The option rights of ONI Systems Corporation granted under this
Section 35 are granted for ONI Systems Corporation's and Excepted Party's
personal benefit and may not be assigned or transferred by ONI Systems
Corporation or Excepted Party exercised if ONI Systems Corporation or
Excepted Party is not occupying the Premises at the time of exercise
B. Extended Term Rent - Option Period: The monthly Rent for the Premises during
the extended term shall equal the fair market monthly Rent for the Premises as
of the commencement date of the extended term, but in no case, less than the
Rent during the last month of the prior Lease term. Promptly upon Lessee's
exercise of the option to extend, Lessee and Lessor shall meet and attempt to
agree on the fair market monthly Rent for the Premises as of the commencement
date of the extended term. In the event the parties fail to agree upon the
amount of the monthly Rent for the extended term prior to commencement thereof,
the monthly Rent for the extended term shall be determined by appraisal in the
manner hereafter set forth; provided, however, that in no event shall the
monthly Rent for the extended term be less than in the immediate preceding
period. Annual base rent
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increases during the extended term shall not be less than four percent (4%) per
year. In the event it becomes necessary under this paragraph to determine the
fair market monthly Rent of the Premises by appraisal, Lessor and Lessee each
shall appoint a real estate appraiser who shall be a member of the American
Institute of Real Estate Appraiser ("AIREA") and such appraisers shall each
determine the fair market monthly Rent for the Premises taking into account the
value of the Premises and the amenities provided by the outside areas, the
common areas, and the Building, and prevailing comparable Rentals in the area.
Such appraisers shall, within twenty (20) business days after their appointment,
complete their appraisals and submit their appraisal reports to Lessor and
Lessee. If the fair market monthly Rent of the Premises established in the two
(2) appraisals varies by five percent (5%) or less of the higher Rent, the
average of the two shall be controlling. If said fair market monthly Rent varies
by more than five percent (5%) of the higher Rental, said appraisers, within ten
(10) days after submission of the last appraisal, shall appoint a third
appraiser who shall be a member of the AIREA and who shall also be experienced
in the appraisal of Rent values and adjustment practices for commercial
properties in the vicinity of the Premises. Such third appraiser shall, within
twenty (20) business days after his appointment, determine by appraisal the fair
market monthly Rent of the Premises taking into account the same factors
referred to above, and submit his appraisal report to Lessor and Lessee. The
fair market monthly Rent determined by the third appraiser for the Premises
shall be controlling, unless it is less than that set forth in the lower
appraisal previously obtained, in which case the value set forth in said lower
appraisal shall be controlling, or unless it is greater than that set forth in
the higher appraisal previously obtained in which case the Rent set for in said
higher appraisal shall be controlling. If either Lessor or Lessee fails to
appoint an appraiser, or if an appraiser appointed by either of them fails,
after his appointment to submit his appraisal within the required period in
accordance with the foregoing, the appraisal submitted by the appraiser properly
appointed and timely submitting his appraisal shall be controlling. If the two
appraisers appointed by Lessor and Lessee are unable to agree upon a third
appraiser within the required period in accordance with the foregoing,
application shall be made within twenty (20) days thereafter by either Lessor or
Lessee to AIREA, which shall appoint a member of said institute willing to serve
as appraiser. The cost of all appraisals under this subparagraph shall be borne
equally be Lessor and Lessee.
C. Effect of Conditional Exercise: As used in this section, "Rent Floor"
means the requirement under Section 35.B above that the minimum rent for the
extended term be no less than the minimum rent in the immediate preceding
period. Lessee may deliver to Lessor under Section 35.B a notice conditionally
exercising the option to extend, subject to Lessor's agreement to either waive
the Rent Floor or to reduce the floor below the amount specified under Section
35.B. If Lessee timely delivers such a notice ("Conditional Exercise Notice"),
Lessor may notify Lessee within thirty (30) days after receipt thereof that
Lessor waives such Rent Floor or agrees to accept a reduced Rent Floor as set
forth in the Conditional Exercise Notice. If Lessor timely gives the notice
described in the preceding sentence, Lessee's Conditional Exercise Notice shall
become an unconditional exercise of the option to extend, and the extended term
rent shall be established as provided in Section 35.B, except that there shall
be no Rent Floor or the Rent Floor shall reduced as provided in the Conditional
Exercise Notice. If Lessor does not timely respond to Lessee's Conditional
Exercise Notice in the manner contemplated above, Lessee's Conditional Exercise
Notice shall be ineffective and Lessee's extension option shall lapse. However,
in such case, Lessor shall not, prior to the expiration of the Lease term, enter
into any lease or option to lease of all or any part of the Premises with a
third party for less than the Rent Floor unless Lessor first delivers to Lessee
a notice ("Refusal Notice") setting forth all relevant terms and conditions of
the proposed lease or option to lease. Lessee shall have five days after the
delivery of the Refusal Notice to notify Lessor that Lessee accepts such terms,
in which case Lessor and Lessee shall promptly execute a new lease, or an
amendment to this Lease, incorporating the terms set forth in the Refusal
Notice. However, if Lessee does not so respond to the Refusal Notice, Lessor
shall be free to enter into a lease or option to lease with such third party on
terms no less favorable to Lessor than those set forth in the Refusal Notice.
36. Approvals: Whenever in this Lease the Lessor's or Lessee's consent is
required, such consent shall not be unreasonably or arbitrarily withheld or
delayed. In the event that the Lessor or Lessee does not respond to a request
for any consents which
Page 24
may be required of it in this Lease within ten business days of the request of
such consent in writing by the Lessee or Lessor, such consent shall be deemed to
have been given by the Lessor or Lessee.
37. Authority: Each party executing this Lease represents and warrants that he
or she is duly authorized to execute and deliver the Lease. If executed on
behalf of a corporation, that the Lease is executed in accordance with the by-
laws of said corporation (or a partnership that the Lease is executed in
accordance with the partnership agreement of such partnership), that no other
party's approval or consent to such execution and delivery is required, and that
the Lease is binding upon said individual, corporation (or partnership) as the
case may be in accordance with its terms.
38. Indemnification of Lessor: Except to the extent caused by the sole
negligence or willful misconduct of Lessor or Lessor's Agents, Lessee shall
defend, indemnify and hold Lessor harmless from and against any and all
obligations, losses, costs, expenses, claims, demands, attorney's fees,
investigation costs or liabilities on account of, or arising out of the use,
condition or occupancy of the Premises or any act or omission to act of Lessee
or Lessee's Agents or any occurrence in, upon, about or at the Premises,
including, without limitation, any of the foregoing provisions arising out of
the use, generation, manufacture, installation, release, discharge, storage, or
disposal of Hazardous Materials by Lessee or Lessee's Agents. It is understood
that Lessee is and shall be in control and possession of the Premises and that
Lessor shall in no event be responsible or liable for any injury or damage or
injury to any person whatsoever, happening on, in, about, or in connection with
the Premises, or for any injury or damage to the Premises or any part thereof.
This Lease is entered into on the express condition that Lessor shall not be
liable for, or suffer loss by reason of injury to person or property, from
whatever cause, which in any way may be connected with the use, condition or
occupancy of the Premises or personal property located herein. The provisions of
this Lease permitting Lessor to enter and inspect the Premises are for the
purpose of enabling Lessor to become informed as to whether Lessee is complying
with the terms of this Lease and Lessor shall be under no duty to enter, inspect
or to perform any of Lessee's covenants set forth in this Lease. Lessee shall
further indemnify, defend and hold harmless Lessor from and against any and all
claims arising from any breach or default in the performance of any obligation
to Lessee's part to be performed under the terms of this Lease. The provisions
of Section 38 shall survive the Lease Term or earlier termination of this Lease
with respect to any damage, injury or death occurring during the Lease Term.
39. Successors And Assigns: The covenants and conditions herein contained
shall, subject to the provisions as to assignment, apply to and bind the heirs,
successors, executors, administrators and assigns of all of the parties hereto;
and all of the parties hereto shall be jointly and severally liable hereunder.
40. Miscellaneous Provisions: All rights and remedies hereunder are cumulative
and not alternative to the extent permitted by law and are in addition to all
other rights or remedies in law and in equity.
41. Choice of Law: This lease shall be construed and enforced in accordance
with the substantive laws of the State of California. The language of all parts
of this lease shall in all cases be construed as a whole according to its fair
meaning and not strictly for or against either Lessor or Lessee.
42. Right of First Offer to Lease: Prior to Lessor accepting any offer to lease
any Mission West buildings in the Silver Creek area of San Xxxx, or prior to
Lessor making any offer to lease any Mission West building in the Silver Creek
area of San Xxxx, Lessor shall give Lessee written notice of such offer and
Lessee shall have the opportunity to lease the subject building or the part
thereof offered for lease on the terms and conditions set forth in the notice of
offer. Lessee shall have the option, which may be exercised by written notice
to Lessor at any time within fifteen (15) days from the receipt of the Lessor's
notice to agree to lease the portion of the subject building specified in the
notice to Lessee. If Lessee fails to exercise its option within the 15-day
period, Lessor shall have 270 days thereafter to lease the subject building
specified in the notice, but in no case on terms more favorable than those
offered to Lessee.
Page 25
If Lessor elects, within 270 days of Lessor's notice, to lease the subject
building to a third party on terms more favorable to the third party lessee than
the terms set forth in the above offer, then Lessor must re-offer the subject
building to Lessee on the same terms and conditions offered to the third party
lessee ("Lessor's Second Notice"). Lessee shall have five (5) business days
from Lessee's receipt of Lessor's Second Notice to elect to lease the subject
building. If Lessee does not respond in writing accepting all terms and
conditions, Lessor shall thereafter be entitled to lease the subject building to
the third party on the terms and conditions set forth in Lessor's Second Notice
or on other terms and conditions at least as favorable to Lessor as said terms
and conditions in Lessor's Second Notice for a period of 270 days after which
Lessee's Right of First Offer to Lease shall again be in effect for the Premises
or the subject building. This right of first offer is subject to any existing
rights of lessees.
43. Right of First Offer to Purchase: Prior to Lessor accepting any offer to
sell Premises or any part thereof, Lessor shall give Lessee written notice of
such offer and Lessee shall have the opportunity to purchase the Premises or the
part thereof offered for sale on the terms and conditions set forth in the
notice of offer. Lessee shall have the option, which may be exercised by
written notice to Lessor at any time within fifteen (15) days from the receipt
of the Lessor's notice to sell Premises or portion thereof specified in the
notice to Lessee. If Lessee fails to exercise its option within the 15-day
period, Lessor shall have 270 days thereafter to sell the Premises or portion
thereof in the notice, but in no case on terms more favorable than those offered
to Lessee.
If Lessor elects, within 270 days of Lessor's notice, to sell the Premises or
portion thereof to a third party on terms more favorable to the third party
purchaser than the terms set forth in the above offer, then Lessor must re-offer
the Premises or portion thereof on the same terms and conditions offered to the
third party purchaser ("Lessor's Second Notice"). Lessee shall have five (5)
business days from Lessee's receipt of Lessor's Second Notice to elect to
purchase Premises or portion thereof. If Lessee does not respond in writing
accepting all terms and conditions, Lessor shall thereafter be entitled to sell
the Premises or portion thereof to the third party on the terms and conditions
set forth in Lessor's Second Notice or on other terms and conditions at least as
favorable to Lessor as said terms and conditions in Lessor's Second Notice for a
period of 270 days. After 270 days Lessee's Right of First Offer to Purchase
shall again be in effect for the Premises or portion thereof. Notwithstanding
the above, Lessee's Right of First Offer to Purchase herein shall be null and
void if the sale of Premises involves Lessor's entire portfolio or a portion
thereof exceeding 900,000 sq.ft.. Any sale as provided in this paragraph shall
void any future purchase rights under this Section 43.
44. Entire Agreement: This Lease is the entire agreement between the parties,
and there are no agreements or representations between the parties except as
expressed herein. Except as otherwise provided for herein, no subsequent change
or addition to this Lease shall be binding unless in writing and signed by the
parties hereto.
In Witness Whereof, Lessor and Lessee have executed this Lease, the day and year
first above written.
Lessor Lessee
Mission West Properties, L.P. ONI Systems Corporation
By: Mission West Properties, Inc., its general partner
By: By:
------------------------------------------------------- -------------------------------------------------------
Signature of authorized representative signature of authorized representative
----------------------------------------------------------- ------------------------------------------------------------
printed name printed name
Page 26
----------------------------------------------------------- ----------------------------------------------------------
Title Title
----------------------------------------------------------- ----------------------------------------------------------
Date Date
Page 27
Exhibit A
Site plan to be attached.
Page 28
Exhibit B
BUILDING SHELL
Mission West Properties ("Building Shell") includes the following items in
customary quantities and quality. All items not listed are part of Lessee
Interior Improvements.
Exterior walls
Foundations
Floors Slabs
Roof structures and membrane
Glazing
Exit doors
Truck doors
Landscaping
Parking and paving
Storm sewer line to building
Sanitary sewer line to building
Water line to building
Paint of exterior walls
Shell architecture and engineering (Mission West staff)
All permits for the above items
Page 29
Exhibit C
Building Shell plans to be attached.
Page 30
Exhibit D
Lessee Interior Improvement Plans to be attached.
Page 31
Exhibit F
Lessee Approval Deadlines
Phase I Phase II
-------- --------
Lease signed 05/15/00 N/A
Approval of site plan Approved Approved
Approval of building elevation Approved Approved
Approval of restroom, stairs and underground plumbing 06/15/00 05/15/02
Approval of preliminary floor plan, single line 07/01/00 06/01/02
Approval of final shell plans Approved Approved
Approval of interior plans and specifications 07/15/00 06/15/02
Final selection of all material and interior finishes for construction such as
Carpet, ceramic tile, paint, and any other lessee selected materials and finishes 08/15/00 07/15/02
Lessee shall not unreasonably withhold approval of final shell or interior plans
if they conform in general to the preliminary site plan, preliminary elevation,
and floor plans.
The Commencement Date shall be extended one day for each day Lessee does not
meet each deadline set forth on this Exhibit E and Lessee shall pay Rent for any
delays that effect the Substantial Completion Date which shall be considered a
Lessee Delay.
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