EXHIBIT 10.11 LEASE AGREEMENT BETWEEN XXXX & XXXX ENTERPRISES INC. AND THE
COMPANY
STANDARD FORM LEASE
PARTIES: This Lease, executed in duplicate at Cupertino, California, on
March 20, 1997, by and between Xxxx & Xxxx Enterprises, Inc., a California
Corporation, and Larscom Incorporated, a Delaware Corporation, hereinafter
called respectively Lessor and Lessee, without regard to number or gender.
USE: WITNESSETH: That Lessor hereby leases to Lessee, and Lessee hires from
Lessor, for the purpose of conducting therein office, research and development,
light manufacturing, and warehouse activities, and any other legal activity; and
for no other purpose without obtaining the prior written consent of Lessor.
PREMISES: The real property with appurtenances as shown on Exhibit A (the
"Premises") situated in the City of Milpitas, County of Santa Xxxxx, State of
California, and more particularly described as follows:
The Premises includes 118,708 square feet of building, including all
improvements thereto, including the right to use up to 415 unreserved
parking spaces. The address for the Premises is 0000 XxXxxxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxxxxx. Lessee's pro-rata share of the Premises is 100%.
Lessee's pro-rata share of the Project is 16.82%.
TERM: The term shall be for eighty-four (84) months unless extended
pursuant to Section 35 of this Lease (the "Lease Term"), commencing on the
Commencement Date as defined in Section 1 and ending eighty-four (84) months
thereafter.
RENT: Base rent shall be payable in monthly installments as follows:
BASE RENT ESTIMATED CAC* TOTAL
---------- --------------- -----------
Months 1 through 12................................ $ 136,514 27,896* $ 164,410
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.
------------------------
* CAC charges to be adjusted per Common Area Charges Section below.
Base rent 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.
SECURITY DEPOSIT: Lessee shall deposit with Lessor the sum of One Hundred
Thirty Six Thousand Five Hundred Fourteen Dollars ($136,514) (the "Security
Deposit"). The Security Deposit shall be held by Lessor as security for the
faithful performance by Lessee of all of the terms, covenants, and conditions of
this Lease applicable to Lessee. If Lessee commits a default as provided for
herein, including but not limited to a default with respect to the provisions
contained herein relating to the condition of the Premises, Lessor may (but
shall not be required to) use, apply or retain all or any part of the Security
Deposit for the payment of any amount which Lessor may spend by reason of
default by Lessee. If any portion of the Security Deposit is so used or applied,
Lessee shall, within ten days after written demand therefor, deposit cash with
Lessor in an amount sufficient to restore the Security Deposit to its original
amount. Lessee's failure to do so shall be a default by Lessee. Any attempt by
Lessee to transfer or encumber its interest in the Security Deposit shall be
null and void. Upon execution of this Lease, Lessee shall deposit with Lessor
the Security Deposit. Security Deposit to be returned within twenty (20) days of
Lessee meeting all termination obligations under Lease.
COMMON AREA CHARGES: Lessee shall pay to Lessor, as additional Rent, an
amount equal to Lessee's total common area charges of the Premises and a
pro-rata share of the Project costs as defined below (the
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common area charges for the Premises and Project are 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 Twenty Seven Thousand Eight Hundred Ninety
Six Dollars ($27,896), said sum representing Lessee's estimated monthly payment
of Lessee's percentage share of CAC. It is understood and agreed that Lessee's
obligation under this paragraph shall be prorated to reflect the Commencement
Date and the end of the Lease Term. Upon occupancy, Lessee shall pay Lessor
first months estimated CAC.
Lessee's estimated monthly payment of CAC payable by Lessee during the
calendar year in which the Lease commences is set forth above. At or prior to
the commencement of each succeeding calendar year term (or as soon as practical
thereafter), Lessor shall provide Lessee with Lessee's estimated monthly payment
for CAC which Lessee shall pay to Lessor as Rent. Within 120 days of the end of
the calendar year and the end of the Lease Term, Lessor shall provide Lessee a
statement of actual CAC incurred including capital reserves for the preceding
year or other applicable period in the case of a termination year. If such
statement shows that Lessee has paid less than its 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 therefor, and Lessee shall revise
its monthly payments accordingly. Lessor's and Lessee's obligation with respect
to adjustments at the end of the Lease Term or earlier expiration of this Lease
shall survive the Lease Term or earlier expiration.
As used in this Lease, CAC shall include but is not limited to: (i) items as
specified in Sections 5(b), 6, 16 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 and the Project;
(iii) licenses, permits and inspection fees; (iv) all other costs incurred by
Lessor in maintaining and operating the Premises and the Project; (v) all
reserves for capital replacements and government regulations imposed on the
Premises and/or the Project not related to Lessee's use and occupancy of the
Premises; and (vi) an amount equal to five percent (5%) of the aggregate of all
CAC, as compensation for Lessor's accounting and processing services. Lessee
shall have the right to review the basis and computation analysis used to derive
the CAC applicable to this Lease annually and if any variances in excess of ten
percent (10%) are found, Lessor shall pay the reasonable cost of audit. The
Project (the "Project") is shown on attached Exhibit A.1. CAC shall not include
any cost related to: (a) hazardous or toxic materials unless some type of
area-wide assessment is made by a government agency or commission; (b)
structural defects or construction defects or non-compliance with codes existing
as of the Commencement Date with respect to the Building Shell and, if all work
on the Lessee Interior Improvements is performed by Lessor, then also with
respect to the Lessee Interior Improvements; (c) leasing and marketing costs or
costs incurred in enforcing or administering leases (except for above
accounting); (d) casualty damage covered by insurance or costs for which Lessor
obtains reimbursement from other sources; and (e) legal fees, brokerage
commissions and advertising costs incurred in connection with the leasing of the
Building; (f) repairs, alterations, additions, improvements or replacements made
to correct any defect in the design, materials or workmanship of the Building;
(g) executive salaries of Landlord; (h) payments of principal or interest on any
mortgage or other encumbrance including ground lease payments and points,
commissions and legal fees associated with financing; (i) depreciation; (j)
charitable or political contributions; (k) costs incurred in advertising and
promotional activities for the Building; (l) capital improvement costs to the
extent that Lessee has paid to Lessor reserve amounts for such capital
improvements. If Lessee's share of the cost of capital improvement exceeds
$5,000, there are no reserves paid by Lessee to Lessor available for the capital
improvement, and the capital improvement is not required due to Lessee's
particular use of the Premises, such capital improvement cost shall be amortized
over the estimated useful life of the improvement, not to exceed 10 years at
Xxxxx Fargo prime rate plus one percent (1%). Lessee shall pay to Lessor the
amortized costs of such improvement on a monthly basis over the Lease Term.
Notwithstanding the above exceptions to CAC, Lessee shall not be relieved of any
of Lessee's obligations under this Lease.
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LATE CHARGES: Lessee hereby acknowledges that a late payment made by Lessee
to Lessor of Rent and other sums due hereunder will cause Lessor to incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges, which may be imposed on Lessor
according to the terms of any mortgage or trust deed covering the Premises.
Accordingly, if any installment of Rent or any other sum due from Lessee is not
received by Lessor or Lessor's designee within ten (10) days after such amount
is due, Lessee shall pay to Lessor a late charge equal to five (5%) percent of
such overdue amount. The parties hereby agree that such late charge represents a
fair and reasonable estimate of the costs Lessor will incur by reason of late
payments made by Lessee. Acceptance of such late charges by Lessor shall in no
event constitute a waiver of Lessee's default with respect to such overdue
amount, nor shall it prevent Lessor from exercising any of the other rights and
remedies granted hereunder.
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.
IT IS FURTHER MUTUALLY AGREED BETWEEN THE PARTIES AS FOLLOWS:
1. POSSESSION: Possession shall be deemed tendered and the term shall
commence upon the first to occur on or after August 1, 1997 of the following
(the "Commencement Date"): (i) the Premises are Substantially Complete or (ii)
Lessee occupies the Premises and commences to conduct business operations 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 or (iv) the Premises are available for occupancy by
Lessee and the Premises meet all requirements for occupancy. It is the intention
of Lessee and Lessor that August 1, 1997 shall be the Commencement Date.
"SUBSTANTIALLY COMPLETE" shall mean that: (i) Lessor has tendered
possession of Premises to Lessee, (ii) Lessor has met all legal requirements for
occupancy, (iii) The Lessee Interior Improvements are materially complete per
the approved plans, 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, and
(iv) said interior of the building is in a "broom clean" condition.
1.1 COMMENCEMENT DATE MEMORANDUM: When the actual Commencement Date is
determined, the parties shall execute a Commencement Date Memorandum setting
forth the Commencement Date, the expiration date of the Lease Term and the
actual square footage of the Premises and any required adjustments to base rent
and CAC, 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. BUILDING SHELL AND LESSEE'S IMPROVEMENTS: The "Building Shell", 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 and elevations to be prepared by
Lessor.
The "Lessee Interior Improvements" shall be defined as all items not part of
the Building Shell 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
Milpitas ("Lessee Improvement Plans"), complete with all mechanical and
electrical design, approved 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 Building Shell and the Lessee Interior Improvements 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. If Lessor notifies Lessee that any fittings, finishes or other
materials included in the
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specifications for the Lessee Interior Improvements cannot be obtained within
forty-five (45) days after placing an order therefor, Lessee shall be
responsible for selecting alternative fittings, finishes or other materials
which can be obtained within forty-five (45) day period, or, if Lessee does not
specify any alternative, Lessee shall be responsible for any delay beyond said
forty-five (45) day period including Rent for each day of delay.
Lessor shall be responsible for ensuring that the Building Shell and Lessee
Interior Improvements conform to the approved plans and all applicable statutes,
rules, regulations, ordinances, and Milpitas Building Department interpretations
necessary for occupancy. The building will have two separate electrical meters.
For any contract to be entered into between Lessor and any contractor
furnishing labor or materials in connection with the construction of the Lessee
Interior Improvements where the payment due under such contract is estimated by
Lessor to be in excess of One Hundred Thousand Dollars $100,000, Lessor shall
request bids from at least three (3) qualified contractors selected by Lessor
for bidding. Lessor will accept the lowest bid. Lessee shall have the
opportunity to review the qualified bidders list and may select a bidder of
their choice for any bid provided the bidder meets Lessor's reasonable
requirements.
Lessor shall be responsible for and shall pay the cost of the Lessee
Interior Improvements up to the amount of Two Million Three Hundred Seventy Four
Thousand One Hundred Sixty Dollars ($2,374,160) (the "TI Allowance"), being
Twenty Dollars ($20.00) per square foot times 118,708 square feet. In the event
the cost of the Lessee Interior Improvements is more than the TI Allowance, the
monthly base rent under the Lease shall be increased by $16.86 per month for
every $1,000 dollars the costs exceed the TI Allowance up to a maximum of
$900,000. Costs in excess of the TI Allowance and $900,000 overage, if any, will
not be incurred without advance approval of Lessee. Any approved cost over the
TI Allowance and $900,000 overage shall be paid for by Lessee in cash within
fifteen (15) days after Lessor has provided Lessee with evidence that the work
approved is complete. Lessor shall be entitled to a construction management fee
covering its overhead and profit on the TI Allowance and $900,000 overage of six
percent (6%). All costs for Lessee Interior Improvements shall be documented and
subject to verification by Lessee.
Lessee may have its subcontractors install security, data and telephone
during TI construction provided such subcontractors do not interfere with the
work of Lessor.
Lessor shall use its best efforts to cause the Commencement Date of the
initial term to occur not later than August 1, 1997. If the Commencement Date
has not occurred by August 31, 1997, Lessee shall receive one day of base rent
abatement for each day after August 31, 1997 until the Commencement Date. Lessor
and Lessee agree that having a Commencement Date after August 31, 1997 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 September 30, 1997, Lessee may at its sole
option, by written notice to Lessor, have the right to terminate this Lease at
any time after September 30, 1997 until the Commencement Date. Notwithstanding
anything to the contrary herein, 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 Milpitas failing to issue a building permit within thirty (30) days
after plan submittal 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 E, (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. Lessee shall have a maximum of 5 business days to approve or
disapprove any preliminary plans and 3 business days to approve or
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disapprove change orders and a maximum of 10 business days to approve or
disapprove any final plans. If Lessee does not disapprove any plans or change
orders within the time period set forth herein in writing, Lessor may proceed on
the basis that the plans or change orders are approved by Lessee. 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
charge Lessee $250 per change order after the tenth (10th) change order for
processing.
3. USES PROHIBITED: Lessee shall not commit, or suffer to be committed, any
waste upon the Premises, or any nuisance, or other act or thing which may
disturb the quiet enjoyment of any other tenant in or around the buildings in
which the subject Premises are located or allow any sale by auction upon the
Premises, or allow the Premises to be used for any improper, immoral, unlawful
or objectionable purpose, or place any loads upon the floor, walls, or ceiling
which may endanger the structure, or use any machinery or apparatus which will
in any manner vibrate or shake the Premises or the building of which it is a
part, 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.
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. Lessee may make any non-structural alteration up to
$25,000 without the approval of Lessor subject to the obligation to remove such
alteration if required by Lessor.
5. MAINTENANCE OF PREMISES:
(a) Lessee shall at its sole cost and expense keep, repair, and maintain the
interior of the Premises, including, but not limited to, all lighting
systems, temperature control systems, and plumbing systems in Good
Condition and Repair, including any required replacements. Lessee shall
maintain all wall surfaces and floor coverings in Good Condition and
Repair, free of holes, gouges, or defacements and provide interior and
exterior window washing as needed.
(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:
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1. The exterior of the building, any appurtenances and every part
thereof, including but not limited to, glazing, sidewalks, parking
areas, electrical systems, HVAC systems, roof membrane, and painting
of exterior walls.
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 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.
Payment of CAC relieves Lessee of any obligations for replacement of the
roof membrane, HVAC units, parking lot and exterior painting. CAC reserves
for replacements of the above four items are fixed for the entire Lease
Term.
(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 fire, flood and extended coverage
insurance policy. Lessee shall comply with any reasonable requirements,
pertaining to said Premises, of any insurance organization or company,
necessary for the maintenance of reasonable fire and extended coverage
insurance, covering the Premises. Lessor shall, at Lessee's sole cost and
expense, purchase and keep in force fire and extended coverage 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 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 on the date of loss for the next ensuing one (1) year, as
reasonably determined by Lessor with proceeds payable to Lessor ("Loss of
Rents Insurance").
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
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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). The limits of said
insurance shall not, however, limit the liability of Lessee hereunder.
Lessee shall, at its sole cost and expense, comply with all of the insurance
requirements of all local, municipal, state and federal authorities now in
force, or which may hereafter be in force, pertaining to Lessee's use and
occupancy of the said Premises.
D) PERSONAL PROPERTY INSURANCE: Lessee shall obtain, at Lessee's sole
cost and expense, a policy of fire and extended coverage insurance including
coverage for direct physical loss special form, and a sprinkler leakage
endorsement insuring the personal property of Lessee. The proceeds from any
personal property damage policy shall be payable to Lessee.
All insurance policies required 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 30 days prior to the
expiration date of such coverage, (ii) be in a form reasonably satisfactory to
Lessor and shall provide the coverage required by Lessee in this Lease, (iii) be
carried with companies with a Best Rating of A minimum, (iv) specifically
provide that such policies shall not be subject to cancellation, reduction of
coverage, or other change except after 30 days prior written notice to Lessor,
and (v) name Lessor, Lessor's lender, and any other party with an insurable
interest in the Premises as additional insureds by endorsement to policy. Lessee
agrees to pay to Lessor, as additional Rent, on demand, the full cost of the
insurance polices 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 Premises, the insurance premiums shall be allocated to the portion of
the Premises 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.
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 generally
covered by fire and extended coverage 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.
Lessee may provide coverages in subparagraphs A and B above at anytime with
thirty (30) days written notice to Lessor and CAC will be reduced accordingly.
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, 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 and the property
in which the subject Premises are situated, free from any and all liens
including but not limited to liens arising out of any work performed, materials
furnished, or obligations incurred by Lessee. However, the Lessor shall allow
Lessee to contest a lien claim, so long as the claim is discharged prior to any
foreclosure proceeding being initiated against the property and provided Lessee
provides Lessor a bond if the lien exceeds $5,000.
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9. COMPLIANCE WITH GOVERNMENTAL REGULATIONS: Lessor represents and warrants
that, as of the Commencement Date, the Building Shell and Lessee Interior
Improvements shall be in compliance with all applicable laws. If such
representation shall prove to be inaccurate, Lessor shall perform all work and
pay all costs necessary to ensure the accuracy of such representation and
warranty. Lessee shall, at its sole cost and expense, comply with all of the
requirements of all local, municipal, state and federal authorities 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. Except as stated above, Lessee shall not be required to
pay for the construction of any single improvement required under this paragraph
in excess of $5,000, unless such improvement is required to comply with Lessee's
particular use of the Premises; or such improvement is required as a result
ofLessee or Lessee's Agents voluntary modifications made by Lessee.voluntarily
made be less Ifif such structural or capital improvements are not required due
to Lessee's particular use of the Premises, or such improvement is not the
result of voluntary modifications to the Premises by Lessee, and such
improvement cost exceeds $5,000, such improvement cost shall be amortized over
the estimated useful life of the improvement, not to exceed ten (10) years at
Xxxxx Fargo prime rate plus one percent (1%). Lessee shall pay to Lessor the
amortized costs of such improvement on a monthly basis over the 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.
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.
14.1 DEFAULT: The occurrence of any of the following shall constitute a
default and breach of this Lease by Lessee: a) Any failure by Lessee to pay Rent
or to make any other payment required to be made by Lessee hereunder when due if
not cured within ten (10) days after written notice thereof 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
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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 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 therefor by Lessor. Such deficiency shall be calculated and paid
monthly. Lessee shall also pay to Lessor, as soon as ascertained, any costs and
expenses incurred by Lessor in such reletting or in making such alterations and
repairs not covered by the rentals received from such reletting.
14.5 NO IMPLIED TERMINATION: No re-entry or taking possession of the
Premises by Lessor pursuant to Section 14.3 or Section 14.4 of this Lease shall
be construed as an election to terminate this Lease unless a written notice of
such intention is given to Lessee or unless the termination thereof is decreed
by a court of competent jurisdiction. Notwithstanding any reletting without
termination by Lessor because of any default by Lessee, Lessor may at any time
after such reletting elect to terminate this Lease for any such default.
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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 (i) generally imposed on
similar properties in a wide geographic area without regard to whether the
properties subject to the tax are contaminated by Hazardous Materials and which
is a part of a comprehensive plan imposed by a governmental unit or (ii) imposed
with respect to the Premises as the result of the presence of Hazardous
Materials for which Lessee is required to indemnify Lessor under Section 33
below or to undertake remediation pursuant to Section 33.5 below. The term "Tax"
shall include, without limitation, all taxes, assessments, levies, fees,
impositions or charges levied, imposed, assessed, measured, or based in any
manner whatsoever (i) in whole or in part on the Rent payable by Lessee under
this Lease, (ii) upon or with respect to the use, possession, occupancy,
leasing, operation or management of the Premises, (iii) upon this transaction or
any document to which Lessee is a party creating or transferring an interest or
an estate in the Premises, (iv) upon Lessee's business operations conducted at
the Premises, (v) upon, measured by or reasonably attributable to the cost or
value of Lessee's equipment, furniture, fixtures and other personal property
located on the Premises or the cost or value of any leasehold improvements made
in or to the Premises by or for Lessee, regardless of whether title to such
improvements shall be in Lessor or Lessee, or (vi) in lieu of or equivalent to
any Tax set forth in this Section 16. In the event any such Taxes are payable by
Lessor and it shall not be lawful for Lessee to reimburse Lessor for such Taxes,
then the Rent payable thereunder shall be increased to net Lessor the same net
rent after imposition of any such Tax upon Lessor as would have been payable to
Lessor prior to the imposition of any such Tax. It is the intention of the
parties that Lessor shall be free from all such Taxes and all other governmental
impositions and charges of every kind and nature whatsoever. However, nothing
contained in this Section 16 shall require Lessee to pay any Federal 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
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equitable basis, as determined by Lessor. Taxes billed by Lessor to Lessee shall
be included in the monthly CAC.
Subject to any limitations or restrictions imposed by any deeds of trust or
mortgages now or hereafter covering or affecting the Premises, Lessee shall have
the right to contest or review the amount or validity of any Tax by appropriate
legal proceedings but which is not to be deemed or construed in any way as
relieving, modifying or extending Lessee's covenant to pay such Tax at the time
and in the manner as provided in this Section 16. However, as a condition of
Lessee's right to contest, if such contested Tax is not paid before such contest
and if the legal proceedings shall not operate to prevent or stay the collection
of the Tax so contested, Lessee shall, before instituting any such proceeding,
protect the Premises and the interest of Lessor and of the beneficiary of a deed
of trust or the mortgagee of a mortgage affecting the Premises against any lien
upon the Premises by a surety bond, issued by an insurance company acceptable to
Lessor and in an amount equal to one and one-half (1 1/2) times the amount
contested or, at Lessor's option, the amount of the contested Tax and the
interest and penalties in connection therewith. Any contest as to the validity
or amount of any Tax, whether before or after payment, shall be made by Lessee
in Lessee's own name, or if required by law, in the name of Lessor or both
Lessor and Lessee. Lessee shall defend, indemnify and hold harmless Lessor from
and against any and all costs or expenses, including 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 00000 Xxxxxxx Xxxxx
at: Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxx
Fax No: (000) 000-0000
(b) to the Lessee 0000 XxXxxxxxxx Xxxxx
at: Milpitas, California
Attention: 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.
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19. DESTRUCTION OF PREMISES: In the event of a partial destruction of the
said Premises during the Lease Term from any cause which is covered by Lessor's
property insurance, Lessor shall forthwith repair the same, provided such
repairs can be made within ninety (90) days after receipt of building permit
under the laws and regulations of State, Federal, County, or Municipal
authorities, but such partial destruction 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
under its Loss of Rents Insurance coverage. With respect to any partial
destruction which Lessor is obligated to repair or may elect to repair under the
terms of this paragraph, the provision of Section 1932, Subdivision 2, and of
Section 1933, Subdivision 4, of the Civil Code of the State of California are
waived by Lessee. In the event that the building in which the subject Premises
may be situated is destroyed to an extent greater than thirty-three and
one-third percent (33 1/3%) of the replacement cost thereof, and the repairs
will take more than ninety (90) days after permits to repair, Lessee or Lessor
may terminate Lease. Lessor may, at its sole option, elect to terminate this
Lease, whether the subject Premises is insured or not. A total destruction of
the building in which the subject Premises are situated shall terminate this
Lease. Notwithstanding the above, Lessor is only obligated to repair or rebuild
to the extent of available insurance proceeds including any deductible amount.
Should Lessor determine that insufficient or no insurance proceeds are available
for repair or reconstruction of Premises, Lessor, at its sole option, may
terminate the Lease. Lessee shall have the option of continuing this Lease by
agreeing to pay all repair costs to the subject 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
(a bona fide subsidiary or affiliate of Lessee excepted) to occupy or use the
Premises, or any portion thereof, without the advance written consent of Lessor
if the proposed sublessee or assignee is a user or generator of Hazardous
Materials. Any such assignment or subletting without such consent shall be void,
and shall, at the option of the Lessor, terminate this Lease. This Lease shall
not, or shall any interest therein, be assignable, as to the interest of Lessee,
by operation of law, without the written consent of Lessor. Notwithstanding
Lessor's obligation to provide reasonable approval, Lessor reserves the right to
withhold its consent for any proposed sublessee or assignee of Lessee if the
proposed sublessee or assignee is a user or generator of Hazardous Materials.
Whether or not Lessor's consent to a sublease or assignment is required, in the
event of any sublease or assignment, Lessee shall be and shall remain primarily
liable for the performance of all conditions, covenants, and obligations of
Lessee hereunder and, in the event of a default by an assignee or sublessee,
Lessor may proceed directly against the original Lessee hereunder and/or any
other predecessor of such assignee or sublessee without the necessity of
exhausting remedies against said assignee or sublessee.
21. CONDEMNATION: If any part of 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
55
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. 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 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 of this Lease. Lessee shall indemnify and hold Lessor harmless against
any loss or liability resulting from any delay caused by Lessee in surrendering
the Premises, including without limitation, any claims made or penalties
incurred by any succeeding lessee or by Lessor. No holding over shall be deemed
or construed to exercise any option to extend or renew this Lease in lieu of
full and timely exercise of any such option as required hereunder.
26. LESSOR'S LIABILITY: If Lessee should recover a money judgment against
Lessor arising in connection with this Lease, the judgment shall be satisfied
only out of the Lessor's interest in the Premises and neither Lessor or any of
its partners shall be liable personally for any deficiency.
27. ESTOPPEL CERTIFICATES: Lessee shall at any time during the Lease Term,
upon not less than ten (10) 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.
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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 Forty-Seven Thousand Five Hundred Dollars ($47,500) 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
asdetermined in the sole and absolute discretion of Lessor.
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 three or more times during any twelve month period
during the Lease Term, then such conduct shall, at the option of the Lessor,
represent a separate event of default which cannot be cured by Lessee. Lessee
acknowledges that the purpose of this provision is to prevent repetitive
defaults by the Lessee under the Lease, which constitute a hardship to the
Lessor and deprive the Lessor of the timely performance by the Lessee hereunder.
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 201, 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 except Lessor's Agents. If Hazardous Materials in, on or about
the Premises occur as a result of parties other than Lessee's Agents,
representatives, employees, contractors, subcontractors, directors,
officers and partners or invitees, Lessor shall use reasonable efforts
to locate and recover from the responsible party any costs or damages
resulting from the introduction of Hazardous to the Premises. If,
notwithstanding such diligent effort, the Lessor is unsuccessful,
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then Lessee shall be responsible, at Lessee's expense, for the cleanup
of such Hazardous Materials according to applicable laws.
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
usedand 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.
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: Lessee shall, at its
sole cost and expense, promptly take any and all action necessary to remediate
contamination of the Premises by Hazardous Materials during the Lease Term as
provided in Section 33.4.
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.
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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 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 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.
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
Xxxxx Xxxxxx Associates ("WMA") 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 WMA. Lessor shall at its
sole cost and expense pay the brokerage commission per Lessor's standard
commission schedule to WMA 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 WMA 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 twenty-four (24) calendar months, nor later than
six (6) calendar months before the Lease Term would end but for said
exercise. 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) Lessee must provide Lessor written notice of its exercise of its
option as provided hereunder at least nine (9) months before the Lease Term
would end but for said exercise for purposes of negotiating rental terms.
Lessee may withdraw its notice of exercise of an extension option for any
reason prior to 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 unless notice in writing is
provided to Lessor at least six (6) months before the Lease Term would end
but for said exercise 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.
(v) The option rights of Larscom Incorporated granted under this Section 35
are granted for Larscom Incorporated's personal benefit and may not be
assigned or transferred by Larscom
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Incorporated or exercised if Larscom Incorporated 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 increases during the extended term shall be 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.
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 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.
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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. 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 these presents, the day
and year first above written.
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LESSOR LESSEE
XXXX & XXXX ENTERPRISES, INC. LARSCOM INCORPORATED
By: /s/ XXXX X. XXXX By: /s/ XXXXXXX X. SOON
------------------------- -------------------------
signature of authorized signature of authorized
representative representative
Xxxx X. Xxxx Xxxx X. Xxxx
------------------------- -------------------------
printed name printed name
President President & CEO
------------------------- -------------------------
title title
3/20/97 3/20/97
------------------------- -------------------------
date date
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EXHIBIT A
Exhibit A shows a one page map of the premises located at 0000 XxXxxxxxxx
Xxxxx.
63
EXHIBIT A.1
Exhibit A.1 shows a one page map of whole development project including
vacant space for 0000 XxXxxxxxxx Xxxxx.
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EXHIBIT B
Xxxx & Xxxx ("Building Shell") includes the following items in customary
quantities and quality. All items not listed are part of Lessee Interior
Improvements.
Exterior walls
Foundation
Floor slabs
Roof structure 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
All permits for the above items
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EXHIBIT C
Exhibit C is not used
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EXHIBIT D
Exhibit D is a one page diagram of the proposed internal design of the
building at 0000 XxXxxxxxxx Xxxxx.
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EXHIBIT E
Lessee Approval Deadlines
Lease signed 03/20/97
Approval of site plan Approved
Approval of building elevation Approved
Approval of restroom, stairs and underground plumbing 04/5/97
Approval of preliminary floor plan, single line 04/5/97
Approval of interior plans and specifications 04/5/97
Final selection of all material and interior finishes for construction
such as carpet, ceramic tile, paint and any other lessee selected
materials & finishes 04/20/97
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 which shall be considered a
Lessee Delay and Lessee shall pay Rent for any delays that effect the
Substantial Completion Date.
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