ARASTRADERO PROPERTY
AND
ALTAVISTA COMPANY
LEASE
SUMMARY OF LEASE
_______________________________
1. DATE OF LEASE: September 13, 1999
2. LANDLORD: Arastradero Property
3945 Freedom Circle, Suite 640
Santa Clara, California 95054
3. TENANT: Altavista Company,
a Delaware corporation
4. PREMISES: 1070 Arastradero Road
Palo Alto, California
5. SQUARE FEET: 75,420 square feet
6. PERMITTED USE: See paragraph 1
7. TERM: Ten (10) years
(a) SCHEDULED COMMENCEMENT DATE: See paragraph 2
(b) SCHEDULED EXPIRATION DATE: See paragraph 2
8. RENT:
(a) BASIC RENT: $257,936.40 per month (Lease months
1-12)
$266,964.17 per month (Lease months
13-24)
$276,307.92 per month (Lease months
25-36)
$285,978.70 per month (Lease months
37-48)
$295,987.95 per month (Lease months
49-60)
$306,347.53 per month (Lease months
61-72)
$317,069.69 per month (Lease months
73-84)
$328,167.13 per month (Lease months
85-96)
$339,652.98 per month (Lease months
97-108)
$351,540.84 per month (Lease months
103-120)
(b) TENANT'S ESTIMATED SHARE OF
COMMON AREA CHARGES: $29,286.17 per month
9. SECURITY DEPOSIT: See paragraph 4(e)
10. OTHER IMPORTANT PROVISIONS: Tenant Improvement Allowance
Early Access
Option to Extend Term
Subject to Ground Lease
Condition to Effectiveness
Early Possession
HVAC Replacement
11. EXHIBITS: Exhibit A - Premises
Exhibit B - Project
Exhibit C - Tenant Work Letter Agreement
Exhibit D - Ground Lease
Exhibit E - Early Occupancy Space
Exhibit F - Wood Siding Repair Work
THIS SUMMARY OF LEASE IS INTENDED TO SUMMARIZE CERTAIN KEY PROVISIONS IN THE
ATTACHED LEASE. IN THE EVENT OF ANY CONFLICT OR INCONSISTENCY BETWEEN THE
PROVISIONS OF THIS SUMMARY AND THE LEASE, THE PROVISIONS OF THE LEASE SHALL
GOVERN.
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TABLE OF CONTENTS
1. USE
2. TERM
3. POSSESSION
4. MONTHLY RENT
5. ADJUSTMENT OF BASIC RENT
6. RESTRICTION ON USE
7. COMPLIANCE WITH LAWS
8. ALTERATIONS
9. REPAIR AND MAINTENANCE
10. LIENS
11. INSURANCE
12. UTILITIES AND SERVICE
13. TAXES AND OTHER CHARGES
14. ENTRY BY LANDLORD
15. COMMON AREA; PARKING
16. COMMON AREA CHARGES
17. DAMAGE BY FIRE; CASUALTY
18. INDEMNIFICATION
19. ASSIGNMENT AND SUBLETTING
20. DEFAULT
21. LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT
22. EMINENT DOMAIN
23. NOTICE AND COVENANT TO SURRENDER
24. TENANT'S QUITCLAIM
25. HOLDING OVER
26. SUBORDINATION
27. CERTIFICATE OF ESTOPPEL
28. SALE BY LANDLORD
29. ATTORNMENT TO LENDER OR THIRD PARTY
30. DEFAULT BY LANDLORD
31. CONSTRUCTION CHANGES
32. MEASUREMENT OF PREMISES
33. ATTORNEY FEES
34. SURRENDER
35. WAIVER
36. EASEMENTS; AIRSPACE RIGHTS
37. RULES AND REGULATIONS
38. NOTICES
39. NAME
40. GOVERNING LAW; SEVERABILITY
41. DEFINITIONS
42. TIME
43. INTEREST ON PAST DUE OBLIGATIONS; LATE CHARGE
44. ENTIRE AGREEMENT
45. AUTHORITY
46. RECORDING
47. REAL ESTATE BROKERS
48. EXHIBITS AND ATTACHMENTS
49. ENVIRONMENTAL MATTERS
50. SIGNAGE
51. SUBMISSION OF LEASE
52. PREMISES TAKEN "AS IS"
53. ADDITIONAL RENT
54. [INTENTIONALLY OMITTED]
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55. INITIAL TENANT IMPROVEMENT
56. EARLY ACCESS
57. OPTION TO EXTEND TERM
58. SUBJECT TO GROUND LEASE
59. CONDITION TO EFFECTIVENESS
60. EARLY POSSESSION
61. COUNTERPARTS
62. HVAC REPLACEMENT
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LEASE
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THIS LEASE is made this 13 day of September, 1999, by and between
ARASTRADERO PROPERTY, a California general partnership ("Landlord"), and
ALTAVISTA COMPANY, a Delaware corporation ("Tenant").
W I T N E S S E T H :
Landlord leases to Tenant and Tenant leases from Landlord those certain
premises outlined in red on Exhibit A (the "Premises") commonly known as 1070
Arastradero Road, Palo Alto, California, which Landlord and Tenant hereby agree
consists of approximately seventy-five thousand four hundred twenty (75,420)
square feet. As used herein the term "Project" shall mean and include all of the
land described in Exhibit B and all the buildings, improvements, fixtures and
equipment now or hereafter situated on said land.
Tenant covenants, as a material part of the consideration for this lease,
to perform and observe each and all of the terms, covenants and conditions set
forth below, and this lease is made upon the condition of such performance and
observance.
1. USE
Subject to the restrictions contained in paragraph 6 hereof, Tenant
shall use the Premises for (i) general office, research and development and
sales and (ii) other legal uses related to Tenant's business, provided that such
other uses are permitted under all zoning laws and fire and building codes, the
ground lease between the Board of Trustees of the Leland Stanford Junior
University ("Stanford") as the "Lessor" and Landlord as the "Lessee", dated
February 29, 1980 (the "Ground Lease") and any conditions, covenants and
restrictions applicable to the Project, and Landlord consents in writing to such
other uses, which consent shall not be unreasonably withheld. Tenant shall not
use or permit the Premises to be used for any purpose which is not specifically
permitted above.
2. TERM
Lease Commencement and Expiration. The term shall commence on the
---------------------------------
Lease Commencement Date (defined below) and end on the Lease Expiration Date
(defined below) unless sooner terminated as hereinafter provided). The "Lease
Commencement Date" shall be the earlier of (i) the date that is ninety (90)
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days after the date that Landlord provides Tenant with access to the Premises in
accordance with paragraph 56 below, (ii) substantial completion of the Tenant
Improvements (defined in paragraph 55 below), or (iii) occupancy of the Premises
or any part thereof by Tenant and/or Tenant's employees for purposes other than
as permitted in paragraph 56 of this lease (regarding early access). The "Lease
Expiration Date" shall be the date that is ten (10) years after the Lease
Commencement Date.
3. POSSESSION
(a) If Landlord for any reason cannot provide Tenant with access to
the Premises by the date that is thirty (30) days after the date that Landlord
and Tenant have both executed and delivered this lease, this lease shall not be
void or voidable, Landlord shall not be liable to Tenant for any loss or damage
on account thereof and, unless Landlord's failure to provide such access to
Tenant is caused by the acts or omissions of Tenant, Tenant shall not be liable
for rent until the Lease Commencement Date is determined in accordance with
paragraph 2. Notwithstanding the above, if Landlord is unable to deliver
possession of the Premises by the date that is thirty (30) days after the date
that Landlord and Tenant have both executed and delivered this lease, plus the
number of days of delay caused by Tenant, or by force majeure (defined below)
("Outside Delivery Date"), then Tenant may at its option, exercisable within ten
(10) days following such date, and as its sole remedy, terminate this lease;
provided, however, (i) if Tenant fails to timely exercise such right within such
ten (10) day period, Tenant's right to terminate shall lapse and (ii) if Tenant
elects to terminate, Landlord may override Tenant's election by notifying Tenant
within five (5) days after receipt of Tenant's written notice of election to
terminate that Landlord has elected to override Tenant's election, in which case
Tenant as its sole remedy shall be entitled to one day of free rent for each day
of such delay in delivery of the Premises beyond the Outside Delivery Date (as
extended above, if applicable) and Landlord shall not be liable to Tenant for
any loss, damage or expense resulting from Landlord's failure to deliver
possession. If Tenant elects to terminate this lease as provided in this
paragraph, all amounts deposited with Landlord by Tenant shall be returned to
Tenant and Landlord shall not be liable to Tenant for any loss, damage or
expense resulting from Landlord's failure to deliver possession. For purposes of
this lease, the term "force majeure" shall mean acts of God, strikes, lockouts,
labor troubles, inability to procure labor or materials, fire, accident, riot,
civil commotion, laws or regulations of general applicability, acts of tenant,
any cause that is not due to Landlord's negligence or willful misconduct or any
cause that is beyond Landlord's reasonable control.
(b) Tenant's inability or failure to take possession of the Premises
when access is tendered by Landlord (including,
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without limitation, Tenant's failure to satisfy the conditions precedent to such
early access specified in paragraph 56 below) shall not delay the commencement
of the term of this lease or Tenant's obligation to pay rent. Tenant
acknowledges that Landlord shall incur significant expenses upon the execution
of this lease, even if Tenant never takes possession of the Premises, including,
without limitation, brokerage commissions and fees, and legal and other
professional fees. Tenant acknowledges that all of said expenses shall be taken
into account in measuring Landlord's damages should Tenant breach any of the
terms of this lease. Notwithstanding the above, if Landlord is unable to deliver
access to the Premises as required under paragraph 56 of this lease by the date
that is ninety (90) days from the date of execution and delivery of this lease
by both Landlord and Tenant plus the number of days of delay caused by Tenant,
or by force majeure (defined below), then Tenant may at its option, exercisable
within ten (10) days following such date, and as its sole remedy, terminate this
lease; provided, however, if Tenant fails to timely exercise such right within
such ten (10) day period, Tenant's right to terminate shall lapse. If Tenant
elects to terminate this lease as provided in this paragraph, all amounts
deposited with Landlord by Tenant shall be returned to Tenant and Landlord shall
not be liable to Tenant for any loss, damage or expense resulting from
Landlord's failure to deliver possession. For purposes of this lease, the term
"force majeure" shall mean acts of God, strikes, lockouts, labor troubles,
inability to procure labor or materials, fire, accident, riot, civil commotion,
laws or regulations of general applicability, acts of tenant, any cause that is
not due to Landlord's negligence or willful misconduct or any cause that is
beyond Landlord's reasonable control.
4. MONTHLY RENT
(a) Basic Rent. Tenant shall pay to Landlord as basic rent for the
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Premises, in advance and subject to adjustment as provided in paragraph 5, the
sum of Two Hundred Fifty-Seven Thousand Nine Hundred Thirty-Six and 40/100
Dollars ($257,936.40) on or before the first day of the first full calendar
month of the term after the Lease Commencement Date and on or before the first
day of each and every successive calendar month. Basic rent for any partial
month shall be payable in advance and shall be prorated based on the actual
number of days during the lease term occurring in such month divided by the
total number of days in such month.
(b) Common Area Charges. In addition to the above basic rent and as
-------------------
additional rent, Tenant shall pay to Landlord, subject to adjustments and
reconciliation as provided in paragraph 16 of this lease, the sum of Twenty-Nine
Thousand Two Hundred Eighty-Six and 17/100 Dollars ($29,286.17) on or before the
first day of the first full calendar month of the term after the Lease
Commencement Date and on the first day of each and
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every successive calendar month, said sum representing Tenant's estimated
payment of its percentage share of common area charges as provided for in
paragraph 16 of this lease. Payment of common area charges for any partial month
shall be payable in advance and shall be prorated based on the actual number of
days during the lease term occurring in such month divided by the total number
of days in such month.
(c) Manner and Place of Payment. All payments of basic rent and
---------------------------
common area charges shall be paid to Landlord, without deduction or offset, in
lawful money of the United States of America, at the office of Landlord at 3945
Freedom Circle, Suite 640, Santa Clara, California 95054, or to such other
person or place as Landlord may from time to time designate in writing.
(d) First Month's Rent. Concurrently with Tenant's execution of this
------------------
lease, Tenant shall deposit with Landlord the sum of Two Hundred Eighty-Seven
Thousand Two Hundred Twenty Two and 57/100 Dollars ($287,222.57) to be applied
against the basic rent and common area charges for the first lease month of the
term.
(e) Security Deposit. Concurrent with Tenant's execution of this
----------------
lease, Tenant shall deliver to Landlord an unconditional and irrevocable letter
of credit ("Letter of Credit") in the amount of Four Million Dollars
($4,000,000) to secure the faithful performance by Tenant of all of the terms,
covenants and conditions of this lease to be kept and performed by Tenant. The
Letter of Credit shall be issued by a bank (the "L-C Bank") approved by Landlord
and shall be in a form that is reasonably acceptable to Landlord in Landlord's
reasonable discretion. The L-C Bank shall be a bank that accepts deposits,
maintains accounts, has a local Santa Clara office that will negotiate the
Letter of Credit or if no local office then the Letter of Credit shall provide
for draws by Landlord upon delivery of the written draw request by courier or by
fax (to be confirmed by telephone and with original to follow within three (3)
business days) and payment to be made by wire transfer to Landlord's account as
directed by Landlord upon receipt of the original or fax request. The deposits
of the L-C Bank shall be insured by the Federal Deposit Insurance Corporation.
Tenant shall pay all expenses, points, or fees incurred by Tenant in obtaining
the Letter of Credit. The Letter of Credit shall be available by draft at sight,
subject only to receipt by the bank of a notarized statement from Birk S.
McCandless or Steven E. Sund or other authorized representative of Landlord
requesting such draw. The Letter of Credit shall by its terms expire not less
than one year from the date issued, and shall provide for automatic one (1) year
extensions unless Landlord is notified in writing not less than ninety (90) days
prior to such expiration from the L-C Bank that the Letter of Credit will not be
extended. In any event, unless Tenant deposits with Landlord a cash security
deposit of like amount as permitted below, said Letter of Credit shall be
renewed by Tenant for successive periods of
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not less than one year each to and including the date that is sixty (60) days
after the expiration date of this lease. The bank's written renewal of the
Letter of Credit shall in each case be delivered to Landlord not less than
ninety (90) days prior to the expiration date of the then outstanding Letter of
Credit. Tenant's failure to so deliver, renew (including specifically but not
limited to the delivery to Landlord of such renewal not less than ninety (90)
days prior to expiration of the Letter of Credit) and maintain such Letter of
Credit, shall be a material breach of this lease.
If Tenant fails to perform any provision of this lease to be performed
by Tenant after notice and the expiration of any applicable cure period
(including, without limitation, providing, renewing and maintaining the Letter
of Credit as required above, or payment of rent or any other amounts due
Landlord under this lease), Landlord may, without prejudice to any other remedy
available to Landlord, immediately and without further notice draw down that
portion of the Letter of Credit which is necessary to (i) pay for any rent or
other sums then due, (ii) pay or reimburse Landlord for any costs or fees
incurred by Landlord in exercising its rights under this lease, or (iii)
compensate Landlord for any loss, damage, cost or expense incurred by Landlord
due to Tenant's default. Upon written notice from Landlord to Tenant of the
amount of any partial draw, Tenant shall within five (5) business days deliver
to Landlord an additional letter of credit as necessary to reinstate the full
amount of the security deposit required hereunder. If Tenant fails to provide
such replacement Letter(s) of Credit, Landlord may without further notice draw
down the entire amount of the Letter(s) of Credit, which amounts shall be held
by Landlord as a cash security deposit for the faithful performance by Tenant of
all of the terms, covenants and conditions of this lease to be kept and
performed by Tenant. If Tenant defaults with respect to any provision of this
lease, including, but not limited to, the default that precipitated the draw on
the Letter of Credit, Landlord may (but shall not be required to) use, apply or
retain all or any part of this security deposit for the payment of any amount
which Landlord may spend by reason of Tenant's default or to compensate Landlord
for any other actual expense, loss or damage which Landlord may suffer by reason
of Tenant's default. If any portion of said deposit is so used, Tenant shall,
within five (5) days after written demand therefor, deposit cash with Landlord
in the amount sufficient to restore the security deposit to its original amount
and Tenant's failure to do so shall be a material breach of this lease. Landlord
shall not be required to keep this security deposit separate from its general
funds and Tenant shall not be entitled to interest on such deposit. If Tenant is
not in default at the expiration or termination of this lease, the security
deposit or any balance thereof shall be returned to Tenant after Tenant has
vacated the Premises. In the event of termination of Landlord's interest in this
lease, Landlord shall transfer said deposit to Landlord's successor in
5
interest, and Tenant agrees that Landlord shall thereupon be released from
liability for the return of such deposit or any accounting therefor.
In the event that (i) Tenant goes public and raises a minimum of
$150,000,000 (net of expenses) as a result of such initial public offering, and
(ii) Tenant thereafter maintains a market capitalization of not less than $1.5
Billion for four consecutive quarters, then the amount of the Letter of Credit
required under this lease shall be reduced to $2,000,000.
(f) Application of Payments. All payments received by Landlord from Tenant
-----------------------
may be applied by Landlord in Landlord's sole discretion to the oldest payment
obligation(s) owed by Tenant to Landlord or in such other order as Landlord
determines in Landlord's sole and absolute discretion. No designation by Tenant,
either in a separate writing or on a check or money order, shall modify this
clause or have any force or effect. Notwithstanding the above, Landlord's
determination not to apply such payments to the oldest payment obligations first
as specified above shall not constitute a waiver by Landlord with respect to
Landlord's claims against Tenant for such prior payment obligation(s) of Tenant
or Landlord's right to apply future payments to such prior payment obligation(s)
of Tenant in such order as Landlord may determine in Landlord's sole and
absolute discretion.
5. ADJUSTMENT OF BASIC RENT
The basic rent provided for in paragraph 4(a) shall be adjusted
periodically and the monthly basic rent for each period shall be as set forth
below:
Lease Months 1 - 12 $257,936.40 per month
Lease Months 13 - 24 $266,964.17 per month
Lease Months 25 - 36 $276,307.92 per month
Lease Months 37 - 48 $285,978.70 per month
Lease Months 49 - 60 $295,987.95 per month
Lease Months 61 - 72 $306,347.53 per month
Lease Months 73 - 84 $317,069.69 per month
Lease Months 85 - 96 $328,167.13 per month
Lease Months 97 - 108 $339,652.98 per month
Lease Months 109 - 120 $351,540.84 per month
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6. RESTRICTION ON USE
Tenant shall not do or permit to be done in or about the Premises or
the Project, nor bring or keep or permit to be brought or kept in or about the
Premises or Project, anything which is prohibited by or will in any way increase
the existing rate of, or otherwise affect, fire or any other insurance covering
the Project or any part thereof, or any of its contents, or will cause a
cancellation of any insurance covering the Project or any part thereof, or any
of its contents. Tenant shall not do or permit to be done anything in or about
the Premises or the Project which will constitute waste or which will in any way
obstruct or interfere with the rights of other tenants or occupants of the
Project or injure or annoy them, or use or allow the Premises to be used for any
unlawful purpose, nor shall Tenant cause, maintain or permit any nuisance in or
about the Premises or the Project. No loudspeaker or other device, system or
apparatus which can be heard outside the Premises shall be used in or at the
Premises without the prior written consent of Landlord. Tenant shall not use the
Premises in any manner that will cause or emit any objectionable odor, noise or
light into the adjoining premises or Common Area. Tenant shall not do anything
on the Premises that will cause damage to the Project and Tenant shall not
overload the floor capacity of the Premises or the Project. No machinery,
apparatus or other appliance shall be used or operated in or on the Premises
that will in any manner injure, vibrate or shake the Premises. Landlord shall be
the sole judge, in its reasonable discretion, of whether such odor, noise, light
or vibration is such as to violate the provisions of this paragraph. No waste
materials or refuse shall be dumped upon or permitted to remain upon any part of
the Premises or the Project except in trash containers placed inside exterior
enclosures designated for that purpose by Landlord, or where otherwise
designated by Landlord; and no toxic or hazardous materials shall be disposed of
through the plumbing or sewage system. No materials, supplies, equipment,
finished products or semi-finished products, raw materials or articles of any
nature shall be stored or permitted to remain outside of the building proper. No
retail sales shall be made on the Premises. Tenant shall comply with any
covenant, condition or restriction ("C.C. & R.s") affecting the Premises.
7. COMPLIANCE WITH LAWS
Tenant represents and warrants that upon completion of the Tenant
Improvements, the Tenant Improvements as constructed will be in compliance with
all laws, statutes, ordinances and governmental rules, regulations and
requirements of federal, state, county, municipal and other governmental
authorities. Tenant shall, in connection with its use and occupation of the
Premises, at its sole cost and expense, promptly observe and comply with (i) all
laws, statutes, ordinances and governmental rules, regulations and requirements
of federal state, county,
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municipal and other governmental authorities, now or hereafter in effect, which
shall impose any duty upon Landlord or Tenant with respect to the use, occupancy
or alteration to the Premises (except to the extent of Landlord's obligations
pursuant to Section 9 below), (ii) with the requirements of any board of fire
underwriters or other similar body now or hereafter constituted and (iii) with
any direction or occupancy certificate issued pursuant to law by any public
authority; provided, however, that no such failure shall be deemed a breach of
these provisions if Tenant, immediately upon notification, commences to remedy
or rectify said failure. The judgment of any court of competent jurisdiction or
the admission of Tenant in any action against Tenant (whether or not Landlord is
a party thereto) that Tenant has violated any such law, statute, ordinance or
governmental rule, regulation, requirement, direction or provision, shall be
conclusive of that fact as between Landlord and Tenant. This lease shall remain
in full force and effect notwithstanding any loss of use or other effect on
Tenant's enjoyment of the Premises by reason of any governmental laws, statutes,
ordinances, rules, regulations and requirements now or hereafter in effect.
8. ALTERATIONS
Tenant shall not make or suffer to be made any alteration, addition or
improvement to or of the Premises or any part thereof (collectively referred to
herein as "alterations") without (i) the prior written consent of Landlord, (ii)
a valid building permit issued by the appropriate governmental authority and
(iii) otherwise complying with all applicable laws, regulations and requirements
of governmental agencies having jurisdiction and with the rules, regulations and
requirements of any board of fire underwriters or similar body. Notwithstanding
the foregoing, Tenant may make non-structural alterations costing less than
$20,000 per alteration and less than $100,000 in the aggregate in any one-year
period of the term without the prior written consent of Landlord, provided that
prior to making such alteration Tenant informs Landlord in writing of the nature
of the alteration, the cost thereof and the contractor engaged or proposed to be
engaged to perform such work, and provided further that all such work complies
with clauses (ii) and (iii) above. Landlord's consent to any requested
alteration shall not create on the part of Landlord or cause Landlord to incur
any responsibility or liability for such alteration's compliance with all laws,
rules and regulations of federal, state, county, municipal and other
governmental authorities. Any alteration made by Tenant (excluding moveable
furniture and trade fixtures not attached to the Premises) shall at once become
a part of the Premises and belong to Landlord, subject to Landlord's right to
require removal and restoration as specified herein. Without limiting the
foregoing, all heating, lighting, electrical (including all wiring, conduit,
outlets, drops, buss ducts, main and subpanels), air conditioning, permanent
partitioning, drapery and carpet installations made by Tenant, regardless of how
8
attached to the Premises, together with all other alterations that have become
an integral part of the Project in which the Premises are a part, shall be and
become part of the Premises and belong to Landlord upon installation and shall
not be deemed trade fixtures and, subject to Landlord's right to require removal
and restoration as specified herein, shall remain upon and be surrendered with
the Premises at the termination of this lease. Notwithstanding the foregoing,
the installation of moveable equipment, furniture and trade fixtures shall not
be deemed alterations and shall remain Tenant's personal property.
Regardless of whether Landlord's consent is required in connection
with the making of any alteration by Tenant, if Landlord consents to the making
of any alteration by Tenant, the same shall be made by Tenant at its sole risk,
cost and expense and only after Landlord's written approval of any contractor or
person selected by Tenant for that purpose, such approval not to be unreasonably
withheld, conditioned or delayed. Tenant shall, if required by Landlord, secure
at Tenant's cost a completion and lien indemnity bond for such work. Upon the
expiration or sooner termination of the term, Landlord may, at its sole option,
require Tenant, at Tenant's sole cost and expense, to promptly remove any such
alteration made by Tenant and designated by Landlord to be removed, repair any
damage to the Premises caused by such removal and restore the Premises to their
condition prior to Tenant's alteration. Upon Tenant's request made at the time
that Tenant requests Landlord's consent to any particular alteration, Landlord
shall notify Tenant whether Landlord will waive its right to require removal and
restoration as provided above. Any moveable furniture and equipment or trade
fixtures remaining on the Premises at the expiration or other termination of the
term shall become the property of the Landlord; provided, however, in addition
to all other remedies available to Landlord at law or in equity, Landlord may
(i) require Tenant to remove same or (ii) remove same at Tenant's cost, and
Tenant shall be liable to Landlord for all damages incurred by Landlord related
thereto.
If during the term any alteration, addition or change of the Premises
or the Project is required by law, regulation, ordinance or order of any public
authority, Tenant, at its sole cost and expense, shall promptly make the same.
9. REPAIR AND MAINTENANCE
Landlord represents that on the date that Landlord delivers the
Premises to Tenant pursuant to paragraph 56 below (Early Access), the building
systems (i.e. plumbing, mechanical and electrical systems, but not HVAC
equipment) in the Premises shall be in good working order and the roof will be
watertight. In addition, Landlord will complete the repairs as specified on
Exhibit F attached hereto. Tenant has inspected the Premises and acknowledges
that all building systems are in good working order;
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except the HVAC system which shall be repaired by Landlord to good operating
condition (see Cal Air report dated July 28, 1999). Tenant has inspected the
Premises and accepts the Premises in its current condition and acknowledges that
the Premises are in good and sanitary order, condition and repair. Except as
expressly provided below, Tenant shall at its sole cost keep and maintain the
entire Premises and every part thereof including, without limitation, the
windows, window frames, plate glass, glazing, elevators within the Premises,
truck doors, doors and all door hardware, the interior walls and partitions,
lighting and the electrical, mechanical, and plumbing systems.
Subject to the provisions of paragraph 17, Landlord shall keep and maintain
the roof, structural elements, exterior walls of the buildings constituting the
Project, the heating and air conditioning systems, and the Common Area
(including the parking areas, landscaping and all amenities located outside the
building) in good order and repair. Tenant waives all rights under and benefits
of California Civil Code Sections 1932(1), 1941, and 1942 and under any similar
law, statute or ordinance now or hereafter in effect. The cost of the repairs
and maintenance which are the obligation of Landlord hereunder, including
without limitation, maintenance contracts and supplies, materials, equipment and
tools used in such repairs and maintenance shall be a common area charge and
Tenant shall pay its percentage share of such costs to Landlord as provided in
paragraph 16; provided, however, that if any repairs or maintenance is required
because of the negligence or willful misconduct of Tenant, or its agents,
employees or invitees, Tenant shall pay to Landlord upon demand the full cost of
such repairs or maintenance. Notwithstanding the above, the cost of roof
replacement and structural repairs to the building shall be amortized over its
useful life (including interest at a rate of two percent (2%) over the then
current Prime Rate as published by the Wall Street Journal) and the amortized
cost shall be included within common area charges and Tenant shall pay its
proportionate share thereof as provided in paragraph 16 of this lease.
10. LIENS
Tenant shall keep the Premises and the Project free from any liens
arising out of any work performed, materials furnished or obligations incurred
by Tenant, its agents, employees or contractors. Upon Tenant's receipt of a
preliminary twenty (20) day notice filed by a claimant pursuant to California
Civil Code Section 3097, Tenant shall immediately provide Landlord with a copy
of such notice. Should any lien be recorded against the Project, Tenant shall
give immediate notice of such lien to Landlord. In the event that Tenant shall
not, within ten (10) business days following receipt of notice of the imposition
of such lien, cause the same to be released of record, Landlord shall have, in
addition to all other remedies provided herein and by law, the right, but no
obligation, to cause the same to be
10
released by such means as it shall deem proper, including payment of the claim
giving rise to such lien. All sums paid by Landlord for such purpose, and all
expenses (including attorneys' fees) incurred by it in connection therewith,
shall be payable to Landlord by Tenant on demand with interest at the rate of
twelve percent (12%) per annum or the maximum rate permitted by law, whichever
is less. Landlord shall have the right at all times to post and keep posted on
the Premises any notices permitted or required by law, or which Landlord shall
deem proper for the protection of Landlord, the Premises and the Project and any
other party having an interest therein, from mechanics' and materialmen's liens
and like liens. Tenant shall give Landlord at least ten (10) days prior notice
of the date of commencement of any construction on the Premises in order to
permit the posting of such notices. In the event Tenant is required to post an
improvement bond with a public agency in connection with any work performed by
Tenant on or to the Premises, Tenant shall include Landlord as an additional
obligee.
11. INSURANCE
Tenant, at its sole cost and expense, shall keep in force during the
term (i) commercial general liability and property damage insurance with a
combined single limit of at least $5,000,000 per occurrence insuring against
personal or bodily injury to or death of persons occurring in, on or about the
Premises or Project and any and all liability of the insureds with respect to
the Premises or arising out of Tenant's maintenance, use or occupancy of the
Premises and all areas appurtenant thereto, (ii) direct physical loss-special
insurance covering the leasehold improvements in the Premises and all of
Tenant's equipment, trade fixtures, appliances, furniture, furnishings, and
personal property from time to time located in, on or about the Premises, with
coverage in the amount of the full replacement cost thereof, and (iii) Worker's
Compensation Insurance as required by law, together with employer's liability
coverage with a limit of not less than $1,000,000 for bodily injury for each
accident and for bodily injury by disease for each employee. Tenant's commercial
general liability and property damage insurance and Tenant's Workers
Compensation Insurance shall be endorsed to provide that said insurance shall
not be canceled or reduced except upon at least thirty (30) days prior written
notice to Landlord. Further, Tenant's commercial general liability and property
damage insurance shall be primary and shall be endorsed to provide that Landlord
and McCandless Management Corporation, and their respective partners, officers,
directors and employees and such other persons or entities as directed from time
to time by Landlord shall be named as additional insureds for all liability
using ISO Bureau Form CG20111185 (or a successor form) or such other endorsement
form reasonably acceptable to Landlord; shall contain a severability of interest
clause and a cross-liability endorsement; shall be endorsed to provide that the
limits and aggregates apply per
11
location using ISO Bureau Form CG25041185 (or a successor form) or such other
endorsement form reasonably acceptable to Landlord; and shall be issued by an
insurance company admitted to transact business in the State of California and
rated A VIII or better in Best's Insurance Reports (or successor report). The
deductibles for all insurance required to be maintained by Tenant hereunder
shall be reasonably satisfactory to Landlord. The commercial general liability
insurance carried by Tenant shall specifically insure the performance by Tenant
of the indemnification provisions set forth in paragraph 18 of this lease
provided, however, nothing contained in this paragraph 11 shall be construed to
limit the liability of Tenant under the indemnification provisions set forth in
said paragraph 18, except to the extent Landlord has waived its rights pursuant
to this paragraph. If Landlord or any of the additional insureds named on any of
Tenant's insurance, have other insurance which is applicable to the covered loss
on a contributing, excess or contingent basis, the amount of the Tenant's
insurance company's liability under the policy of insurance maintained by Tenant
shall not be reduced by the existence of such other insurance. Any insurance
carried by Landlord or any of the additional insureds named on Tenant's
insurance policies shall be excess and non-contributing with the insurance so
provided by Tenant.
Tenant shall, prior to the commencement of the term and at least
thirty (30) days prior to any renewal date of any insurance policy required to
be maintained by Tenant pursuant to this paragraph, provide Landlord with a
completed Certificate of Insurance, using a form acceptable in Landlord's
reasonable judgment, attaching thereto copies of all endorsements required to be
provided by Tenant under this lease. Tenant agrees to increase the coverage or
otherwise comply with changes in connection with said commercial general
liability, property damage, direct physical loss and Worker's Compensation
Insurance as Landlord or Landlord's lender may from time to time reasonably
require.
Landlord shall obtain and keep in force a policy or policies of
insurance covering loss or damage to the Premises and Project, in the amount of
the full replacement value thereof, providing protection against those perils
included within the classification of "all risk" insurance, with increased cost
of reconstruction and contingent liability (including demolition), plus a policy
of rental income insurance in the amount of one hundred percent (100%) of twelve
(12) months' rent (including sums paid as additional rent) and such other
insurance as Landlord or Landlord's lender may from time to time require.
Landlord may, but shall not be obligated to, obtain flood and/or earthquake
insurance. Landlord shall have no liability to Tenant if Landlord elects not to
obtain flood and/or earthquake insurance. Landlord shall keep in force during
the term commercial general liability and property damage insurance with a
combined single limit of at least $5,000,000 per occurrence
12
insuring against personal or bodily injury to or death of persons occurring in,
on or about the Project and any and all liability of Landlord with respect to
the Project or arising out of Landlord's maintenance, use or occupancy of the
Project. The cost of all such insurance purchased by Landlord, plus any charges
for deferred payment of premiums and the amount of any deductible incurred upon
any covered loss within the Project, shall be common area charges and Tenant
shall pay to Landlord its percentage share of such costs as provided in
paragraph 16. If the cost of insurance is increased due to Tenant's particular
use of the Premises (other than that which is typical for office and research
and development use), then Tenant shall pay to Landlord upon demand the full
cost of such increase.
Landlord and Tenant hereby mutually waive any and all rights of
recovery against one another for real or personal property loss or damage
occurring to the Premises or the Project, or any part thereof, or to any
personal property therein, from perils insured against under fire and extended
insurance and any other property insurance policies existing for the benefit of
the respective parties so long as such insurance permits waiver of liability and
contains a waiver of subrogation without additional premiums.
If Tenant does not take out and maintain insurance as required
pursuant to this paragraph 11, then upon five (5) business days written notice
from Landlord, Landlord may, but shall not be obligated to, take out the
necessary insurance and pay the premium therefor, and Tenant shall repay to
Landlord promptly on demand, as additional rent, the amount so paid. In
addition, Landlord may recover from Tenant and Tenant agrees to pay, as
additional rent, any and all reasonable expenses (including attorney fees) and
actual damages which Landlord may sustain by reason of the failure of Tenant to
obtain and maintain such insurance, it being expressly declared that the
expenses and damages of Landlord shall not be limited to the amount of the
premiums thereon.
12. UTILITIES AND SERVICE
Tenant shall pay for all water, gas, light, heat, power, electricity,
telephone, trash pickup, sewer charges and all other services supplied to or
consumed on the Premises. In the event that any service is not separately
metered or billed to the Premises, the cost of such utility service or other
service shall be a common area charge and Tenant shall pay its percentage share
of such cost to Landlord as provided in paragraph 16. In addition, the cost of
all utilities and services furnished by Landlord to the Common Area shall be a
common area charge and Tenant shall pay its percentage share of such cost to
Landlord as provided in paragraph 16.
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If Tenant's use of any such utility or service is materially in excess
of the average furnished to the other tenants of the Project, and such utility
or service is not separately metered, then Tenant shall pay to Landlord upon
demand, as additional rent, the full cost of such excess use, as reasonably
determined by Landlord, or Landlord may cause such utility or service to be
separately metered, in which case Tenant shall pay the full cost of such utility
or service and reimburse Landlord upon demand for the cost of installing the
separate meter.
Landlord shall not be liable for, and Tenant shall not be entitled to
any abatement or reduction of rent by reason of, the failure of any person or
entity to furnish any of the foregoing services when such failure is caused by
accident, breakage, repairs, strikes, lockouts or other labor disturbances or
labor disputes of any character, governmental moratoriums, regulations or other
governmental actions, or by any other cause, similar or dissimilar, beyond the
reasonable control of Landlord. In addition, Tenant shall not be relieved from
the performance of any covenant or agreement in this lease because of any such
failure, and no eviction of Tenant shall result from such failure.
Notwithstanding anything to the contrary in this lease, if: (a) any
services or utilities are interrupted or discontinued due to Landlord's gross
negligence or willful misconduct and the Premises are untenantable as a result
of such interruption or discontinuance, and (b) Tenant shall have given written
notice respecting such interruption or discontinuance to Landlord, and Landlord
shall have failed to cure such interruption or discontinuance within three (3)
business days after receiving such notice, then Tenant shall as its sole remedy
against Landlord, be entitled to an equitable abatement of rent to the extent
that Tenant's use of the Premises is thereafter prevented by such interruption
or discontinuance.
13. TAXES AND OTHER CHARGES
All real estate taxes and assessments and other taxes, fees and
charges of every kind or nature, foreseen or unforeseen, which are levied,
assessed or imposed upon Landlord and/or against the Premises, building, Common
Area or Project, or any part thereof by any federal, state, county, regional,
municipal or other governmental or quasi-public authority, together with any
increases therein for any reason, shall be a common area charge and Tenant shall
pay its percentage share of such costs to Landlord as provided in paragraph 16.
By way of illustration and not limitation, "other taxes, fees and charges" as
used herein include any and all taxes payable by Landlord (other than state and
federal personal or corporate income taxes measured by the net income of
Landlord from all sources, and premium taxes), whether or not now customary or
within the contemplation of the
14
parties hereto, (i) upon, allocable to, or measured by the rent payable
hereunder, including, without limitation, any gross income or excise tax levied
by the local, state or federal government with respect to the receipt of such
rent, (ii) upon or with respect to the possession, leasing, operation,
management, maintenance, alteration, repair, use or occupancy by Tenant of the
Premises or any part thereof, (iii) upon or measured by the value of Tenant's
personal property or leasehold improvements located in the Premises, (iv) upon
this transaction or any document to which Tenant is a party creating or
transferring an interest or estate in the Premises, (v) upon or with respect to
vehicles, parking or the number of persons employed in or about the Project, and
(vi) any tax, license, franchise fee or other imposition upon Landlord which is
otherwise measured by or based in whole or in part upon the Project or any
portion thereof. If Landlord contests any such tax, fee or charge, the cost and
expense incurred by Landlord thereby (including, but not limited to, costs of
attorneys and experts) shall also be common area charges and Tenant shall pay
its percentage share of such costs to Landlord as provided in paragraph 16. Any
tax adjustments made as a result of any such contest shall be applied to the
common area charges for the applicable period and Tenant shall be entitled to
its proportionate share of any reduction in common area charges resulting
therefrom. In the event the Premises and any improvements installed therein by
Tenant or Landlord are valued by the assessor disproportionately higher than
those of other tenants in the building or Project or in the event alterations or
improvements are made to the Premises, Tenant's percentage share of such taxes,
assessments, fees and/or charges shall be readjusted upward accordingly and
Tenant agrees to pay such readjusted share. Such determination shall be made by
Landlord from the respective valuations assigned in the assessor's work sheet or
such other information as may be reasonably available and Landlord's
determination thereof shall be conclusive.
Tenant agrees to pay, before delinquency, any and all taxes levied or
assessed during the term hereof upon Tenant's equipment, furniture, fixtures and
other personal property located in the Premises, including carpeting and other
property installed by Tenant notwithstanding that such carpeting or other
property has become a part of the Premises. If any of Tenant's personal property
shall be assessed with the Project, Tenant shall pay to Landlord, as additional
rent, the amount attributable to Tenant's personal property within ten (10) days
after receipt of a written statement from Landlord setting forth in reasonable
detail the amount of such taxes, assessments and public charges attributable to
Tenant's personal property.
14. ENTRY BY LANDLORD
Landlord reserves, and at all reasonable times, upon reasonable
advance notice shall have, the right to enter the
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Premises (i) to inspect the Premises, (ii) to supply services to be provided by
Landlord hereunder, (iii) to show the Premises to prospective purchasers,
lenders or tenants and to put 'for sale' or 'for lease' signs thereon, (iv) to
post notices required or allowed by this lease or by law, (v) to alter, improve
or repair the Premises and any portion of the Project, and (vi) to erect
scaffolding and other necessary structures in or through the Premises or the
Project where reasonably required by the character of the work to be performed.
Tenant shall have the right to accompany Landlord during such entry by Landlord
and Landlord shall comply with Tenant's reasonable sign-in and security
measures. Landlord shall not be liable in any manner for any inconvenience,
disturbance, loss of business, nuisance or other damage arising from Landlord's
entry and acts pursuant to this paragraph and Tenant shall not be entitled to an
abatement or reduction of rent if Landlord exercises any rights reserved in this
paragraph. Landlord shall use reasonable efforts to minimize any interference
with Tenant's access to or use of the Premises in exercising such rights. For
each of the foregoing purposes, Landlord shall at all times have and retain a
key with which to unlock all of the doors in, on and about the Premises
(excluding Tenant's vaults, safes and similar areas designated in writing by
Tenant in advance), and Landlord shall have the right to use any and all means
which Landlord may deem proper to open said doors in an emergency in order to
obtain entry to the Premises. Any entry by Landlord to the Premises pursuant to
this paragraph shall not under any circumstances be construed or deemed to be a
forcible or unlawful entry into or a detainer of the Premises or an eviction,
actual or constructive, of Tenant from the Premises or any portion thereof.
15. COMMON AREA; PARKING
Subject to the terms and conditions of this lease and such rules and
regulations as Landlord may from time to time prescribe, Tenant and Tenant's
employees and invitees shall, in common with other occupants of the Project, and
their respective employees and invitees and others entitled to the use thereof,
have the nonexclusive right to use the access roads, parking areas and
facilities within the Project provided and designated by Landlord for the
general use and convenience of the occupants of the Project which areas and
facilities shall include, but not be limited to, sidewalks, parking, refuse,
landscape and plaza areas, roofs and building exteriors, which areas and
facilities are referred to herein as "Common Area". This right shall terminate
upon the termination of this lease.
Landlord reserves the right from time to time to make changes in the
shape, size, location, amount and extent of the Common Area; provided that the
basic character of the amenities remains substantially unchanged. Landlord shall
also have the right at any time to change the name, number or designation by
which the Project is commonly known. Landlord further reserves
16
the right to promulgate such reasonable rules and regulations relating to the
use of the Common Area, and any part thereof, as Landlord may deem appropriate
for the best interests of the occupants of the Project. The rules and
regulations shall be binding upon Tenant upon delivery of a copy of them to
Tenant and Tenant shall abide by them and cooperate in their observance. Such
rules and regulations may be amended by Landlord from time to time, with or
without advance notice. In the event of a conflict, the provisions of this lease
shall prevail over the rules and regulations.
Tenant shall have the use of all existing parking spaces at the
Premises; provided that Landlord and Landlord's agents, contractors and
employees shall have the right to use such parking areas as reasonably necessary
to fulfill Landlord's obligations under this lease. Tenant, at Tenant's expense,
may modify the parking areas to increase the number of parking spaces, subject
to Landlord's approval of design and structure and consent of Stanford. Any such
modification of the parking area shall be subject to the provisions regarding
alterations in paragraph 8 of this lease. Landlord makes no representations to
Tenant regarding Tenant's ability to obtain the requisite permits, consents and
approvals from Stanford and governmental authorities and Tenant's inability to
do so shall not affect this lease. Landlord reserves the right at its sole
option to assign and label parking spaces, but it is specifically agreed that
Landlord is not responsible for policing any such parking spaces; provided that
such right shall not apply while Tenant occupies the entire leasable space in
the Project. Tenant shall not at any time park or permit the parking of Tenant's
trucks or other vehicles, or the trucks or other vehicles of others, adjacent to
loading areas so as to interfere in any way with the use of such areas; nor
shall Tenant at any time park or permit the parking of Tenant's vehicles or
trucks, or the vehicles or trucks of Tenant's suppliers or others, in any
portion of the Common Area not designated by Landlord for such use by Tenant.
Tenant shall not park or permit any inoperative vehicle or equipment to be
parked on any portion of the Common Area.
Landlord shall operate, manage and maintain the Common Area. The
manner in which the Common Area shall be operated, managed and maintained and
the expenditures for such operation, management and maintenance shall be at the
sole discretion of Landlord; provided that Landlord shall maintain the Project
in a first class condition. The cost of such maintenance, operation and
management of the Common Area, including but not limited to landscaping, repair
of paving, parking lots and sidewalks, security and exterminator services and
salaries and employee benefits (including union benefits) of on-site personnel
engaged in such maintenance and operations management, shall be a common area
charge and Tenant shall pay to Landlord its percentage share of such costs as
provided in paragraph 16.
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16. COMMON AREA CHARGES
Tenant shall pay to Landlord, as additional rent, an amount equal to
one hundred percent (100%) of the total common area charges as defined below.
Tenant's percentage share of common area charges shall be paid as follows:
Tenant's estimated monthly payment of common area charges payable by
Tenant during the calendar year in which the term commences is set forth in
paragraph 4(b) of this lease. Prior to the commencement of each succeeding
calendar year of the term (or as soon as practicable thereafter), Landlord shall
deliver to Tenant a written estimate of Tenant's monthly payment of common area
charges. Tenant shall pay, as additional rent, on the first day of each month
during the term in accordance with paragraph 4(b) of the lease, its monthly
share of common area charges as estimated by Landlord. Within one hundred twenty
(120) days of the end of each calendar year and of the termination of this lease
(or as soon as practicable thereafter), Landlord shall deliver to Tenant a
statement of actual common area charges incurred for the preceding year. If such
statement shows that Tenant has paid less than its actual percentage then Tenant
shall on demand pay to Landlord the amount of such deficiency which payment
shall be due within thirty (30) days after the date of Landlord's notice. If
such statement shows that Tenant has paid more than its actual percentage share
then Landlord shall, at its option, promptly refund such excess to Tenant or
credit the amount thereof to the rent next becoming due from Tenant. Landlord
reserves the right to revise any estimate of common area charges if actual or
projected common area charges show an increase or decrease in excess of 10% from
any earlier estimate for the same period. In such event, Landlord shall deliver
the revised estimate to Tenant, together with an explanation of the reasons
therefor, and Tenant shall revise its payments accordingly. Landlord's and
Tenant's obligation with respect to adjustments at the end of the term or
earlier expiration of this lease shall survive such termination or expiration.
Upon written request of Tenant made within sixty (60) days of Tenant's
receipt of the statement of actual direct expenses, Landlord shall make
available for Tenant's review, at Tenant's cost, copies of documentation
reasonably available to Landlord to support the amounts set forth in such
statement.
As used in this lease, "common area charges" shall include, but not be
limited to, (i) all items identified in paragraphs 8, 9, 11, 12, 13 and 15 as
being common area charges; (ii) amortization of such capital improvements having
a useful life greater than one year as Landlord may have installed for the
purpose of reducing operating costs and/or to comply with all laws, rules and
regulations of federal, state, county, municipal and other governmental
authorities now or hereafter in effect
18
(the cost of such capital improvement shall be amortized over its useful life,
including interest at the rate of 2% over the then current Prime Rate as
published by the Wall Street Journal on the date nearest to the date that such
cost is incurred, and the monthly amortized cost thereof shall be included in
common area charges); (iii) salaries and employee benefits (including union
benefits) of personnel engaged in the operation and maintenance of the Project
(or the building in which the Premises are located) and payroll taxes applicable
thereto; (iv) supplies, materials, equipment and tools used or required in
connection with the operation and maintenance of the Project; (v) licenses,
permits and inspection fees; (vi) a reasonable reserve for repairs and
replacement of equipment used in the maintenance and operation of the Project;
(vii) all other operating costs reasonably incurred by Landlord in maintaining
and operating the Project; and (viii) a management cost recovery as determined
by Landlord equal to three percent (3%) of the sum of the basic rent and the
aggregate of all other common area charges for the Project.
Notwithstanding anything in the definition of common area charges in
this lease to the contrary, common area charges shall not include the following,
except to the extent specifically permitted by a specific exception to the
following:
(i) Any ground lease rental;
(ii) Costs actually reimbursed to Landlord by insurance proceeds for
the repair of damage to the Project;
(iii) Costs, including permit, license and inspection costs, incurred
with respect to the installation of tenant or other occupants' improvements in
the Project or incurred in renovating or otherwise improving, decorating,
painting or redecorating vacant space for tenants or other occupants of the
Project;
(iv) Marketing costs, including without limitation, leasing
commission, attorneys' fees in connection with the negotiation and preparation
of letters, deal memos, letters of intent, leases, subleases and/or assignments,
space planning costs, and other costs and expenses incurred in connection with
lease, sublease and/or assignment negotiations and transactions with Tenant or
present or prospective tenants or other occupants of the Project;
(v) Expenses in connection with services or other benefits which are
charged directly or are provided to other tenants of the Project but not made
available to Tenant on a similar basis (or Tenant is charged separately for such
services or benefits);
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(vi) Interest, principal, points and fees on debts or amortization
on any mortgage or mortgages or any other debt instrument encumbering the
Project;
(vii) Landlord's general corporate overhead and general and
administrative expenses;
(viii) Advertising and promotional expenditures, and costs of signs in
or on the Project identifying the owner of the Project or other tenants' signs;
(ix) Tax penalties incurred as a result of Landlord's failure to
make payments and/or to file any tax or informational returns when due;
(x) Costs for the acquisition of (as contrasted with the
maintenance of) sculpture, paintings or other objects of art;
(xi) Costs of any "tap fees" or any sewer or water connection fees
and for the benefit of any particular tenant in the Project;
(xii) Reserves for bad debts or future improvements, repairs or
additions in years subsequent to the current lease year; and
(xiii) Costs related to Hazardous Materials (reporting, monitoring,
containment and abatement, and/or remediation) to the extent not placed on, in
or about the Project by Tenant and to the extent that the same existed on the
Lease Commencement Date and constituted Hazardous Materials pursuant to laws in
effect on the Lease Commencement Date.
17. DAMAGE BY FIRE; CASUALTY
In the event the Premises are partially damaged by any casualty which
is covered under an insurance policy required to be maintained by Landlord
pursuant to paragraph 11, Landlord shall be entitled to the use of all insurance
proceeds and shall repair such damage as soon as reasonably possible and this
lease shall continue in full force and effect; provided that either party shall
have the right to terminate this lease upon written notice to the other within
thirty (30) days after the date of damage if the Premises cannot reasonably be
restored within one (1) year after the date of such damage.
In the event the Premises are partially damaged by any casualty not
covered under an insurance policy required to be maintained pursuant to
paragraph 11, Landlord may, at Landlord's option, either (i) repair such damage,
at Landlord's expense, as soon as reasonably possible, in which event this lease
shall continue in full force and effect, or (ii) give written notice to Tenant
within thirty (30) days after the date of the occurrence
20
of such damages of Landlord's intention to cancel and terminate this lease as of
the date of the occurrence of the damages; provided, however, that if such
damage is caused by the negligence or willful misconduct of Tenant or its agent,
servants or employees, then Tenant shall repair such damage promptly at its sole
cost and expense. In the event Landlord elects to terminate this lease pursuant
hereto, Tenant shall have the right within fifteen (15) days after receipt of
the required notice to notify Landlord in writing of Tenant's intention to
repair such damage at Tenant's expense, without reimbursement from Landlord, in
which event this lease shall continue in full force and effect and Tenant shall
proceed to make such repairs as soon as reasonably possible. If Tenant does not
give such notice within the fifteen (15) day period, this lease shall be
canceled and terminated as of the date of the occurrence of such damage. In the
event Landlord elects to repair the Premises but the repairs cannot reasonably
be completed within one (1) year after the date of damage, either party shall
have the right to terminate this lease upon written notice to the other within
thirty (30) days after the date of such damage. Under no circumstances shall
Landlord be required to repair any injury or damage to (by fire or other cause),
or to make any restoration or replacement of, any of Tenant's personal property,
trade fixtures or property leased from third parties, whether or not the same is
attached to the Premises.
If the Premises are totally destroyed during the term from any cause
(including any destruction required by any authorized public authority), whether
or not covered by the insurance required under paragraph 11, this lease shall
automatically terminate as of the date of such total destruction; provided,
however, that if the Premises can reasonably and lawfully be repaired or
restored within twelve (12) months of the date of destruction to substantially
the condition existing prior to such destruction and if the proceeds of the
insurance payable to the Landlord by reason of such destruction are sufficient
to pay the cost of such repair or restoration, then the insurance proceeds shall
be so applied, Landlord shall promptly repair and restore the Premises and this
lease shall continue, without interruption, in full force and effect. If the
Premises are totally destroyed during the last twelve (12) months of the term,
either party may cancel and terminate this lease as of the date of occurrence of
such damage by giving written notice to the other within thirty (30) days after
the occurrence of such damage.
If the Premises are partially or totally destroyed or damaged and
Landlord or Tenant repair them pursuant to this lease, the rent payable
hereunder for the period during which such damage and repair continues shall be
abated only in proportion to the square footage of the Premises rendered
untenantable to Tenant by such damage or destruction. Tenant shall have no claim
against Landlord for any damage, loss or
21
expense suffered by reason of any such damage, destruction, repair or
restoration. The parties waive the provisions of California Civil Code sections
1932(2) and 1933(4) (which provisions permit the termination of a lease upon
destruction of the leased premises), and hereby agree that the provisions of
this paragraph 17 shall govern in the event of such destruction.
18. INDEMNIFICATION
Landlord shall not be liable to Tenant and Tenant hereby waives all
claims against Landlord for any injury to or death of any person or damage to or
destruction of property in or about the Premises or the Project by or from any
cause whatsoever except the failure of Landlord to perform its obligations under
this lease where such failure has persisted for an unreasonable period of time
after notice of such failure or the gross negligence or willful misconduct of
Landlord, its employees or agents. Without limiting the foregoing, Landlord
shall not be liable to Tenant for any injury to or death of any person or
damages to or destruction of property by reason of, or arising from, any latent
defect in the Premises or Project or the act or negligence of any other tenant
of the Project. Tenant shall immediately notify Landlord of any defect in the
Premises or Project.
Except as to injury to persons or damage to property the principal
cause of which is the failure by Landlord to observe any of the terms and
conditions of this lease or the gross negligence or willful misconduct of
Landlord, its employees or agents, Tenant shall hold Landlord harmless from and
defend Landlord against any claim, liability, loss, damage or expense (including
attorney fees) arising out of any injury to or death of any person or damage to
or destruction of property occurring in, on or about the Premises from any cause
whatsoever or on account of the use, condition, occupational safety or occupancy
of the Premises. Tenant shall further hold Landlord harmless from and defend
Landlord against any claim, liability, loss, damage or expense (including
attorney fees) arising (i) from Tenant's use of the Premises or from the conduct
of its business or from any activity or work done, permitted or suffered by
Tenant or its agents or employees in or about the Premises or Project, (ii) out
of the failure of Tenant to observe or comply with Tenant's obligation to
observe and comply with laws or other requirements as set forth in paragraph 7,
(iii) by reason of Tenant's use, handling, storage, or disposal of toxic or
hazardous materials or waste, (iv) by reason of any labor or service performed
for, or materials used by or furnished to, Tenant or any contractor engaged by
Tenant with respect to the Premises, or (v) from any other act, neglect, fault
or omission of Tenant or its agents or employees.
The provisions of this paragraph 18 shall survive the expiration or
earlier termination of this lease.
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19. ASSIGNMENT AND SUBLETTING
Tenant shall not voluntarily assign, encumber or otherwise transfer
its interest in this lease or in the Premises, or sublease all or any part of
the Premises, or allow any other person or entity to occupy or use all or any
part of the Premises, without first obtaining Landlord's written consent, which
consent shall not be unreasonably withheld, and otherwise complying with the
requirements of this paragraph 19. Any assignment, encumbrance, sublease or
other such transfer ("Transfer") without Landlord's written consent, shall
constitute a default. The proposed assignee, subtenant or other transferee is
referred to herein as the "Transferee". Reasonable grounds for denying consent
to a proposed Transfer include, without limitation, any of the following:
(a) Transferee's credit history, or business is not consistent with
the character or quality of a first class office project;
(b) Transferee is either a government agency or an instrumentality of
one;
(c) Transferee's intended use of the Premises is inconsistent with
the permitted use specified in this lease or will materially and adversely
affect Landlord's interest;
(d) Transferee's financial condition is or may be inadequate to
support the lease obligations of Transferee under the Transfer (taking into
consideration Tenant's continued liability under this lease);
(e) The Transfer would cause Landlord to violate another lease or
agreement to which Landlord is a party or would give another tenant in the
Project the right to cancel its lease or the Transferee is a primary competitor
of another tenant leasing space in the Project and such tenant objects to such
Transfer;
(f) Transferee occupies space in the Project and such space is not
contiguous to the Premises, is negotiating with Landlord to lease space in the
Project, or has negotiated with Landlord during the six (6) months immediately
preceding notice of the proposed Transfer to Landlord.
If Tenant desires to Transfer all or any portion of the Premises,
Tenant shall give Landlord written notice ("Transfer Notice") thereof,
specifying the projected commencement date of the proposed Transfer (which date
shall be not less than thirty (30) days or more than one hundred eighty (180)
days after the date of Landlord's receipt of such notice), the portion of the
Premises which is the subject of the proposed Transfer (the
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"Subject Space"), a description of any planned alterations or improvements to
the Subject Space, the terms and conditions of the proposed Transfer (including
the rent to be paid by the Transferee and any and all other consideration to be
given by the Transferee), the name, address and telephone number of the
Transferee, and a detailed calculation of the Transfer Premium (certified by
Tenant's chief financial officer) to be paid as provided below. Tenant shall
further provide Landlord with such other information concerning the Transferee
as requested by Landlord. Landlord shall have the right to communicate with the
Transferee to discuss the terms of the proposed Transfer, to discuss and
negotiate, if Landlord desires, the terms of a direct lease between Landlord and
Transferee, or any other matter and to enter into a direct lease agreement with
Transferee as provided below and failure of Transferee to meet with Landlord and
to negotiate in good faith the terms of a direct lease with Landlord shall
constitute grounds for Landlord's refusal to consent to the proposed Transfer.
If the total square footage of the Subject Space and all other space subleased
or transferred by Tenant under any prior Transfer then operative with terms
expiring during the last half of the then remaining term of this lease
(determined as of the date of the proposed Transfer) collectively constitutes
more than fifty percent (50%) of the Premises, then for a period of twenty (20)
days after Landlord's receipt of the Transfer Notice, Landlord shall have the
option, exercisable by delivering written notice to Tenant, to terminate this
lease for the Subject Space or for the entire Premises, in Landlord's
discretion, as of the date specified in Landlord's written notice to Tenant,
which date shall not be less than thirty (30) days nor more than ninety (90)
days after the date of Landlord's written notice to Tenant. If Landlord
exercises its option to terminate this lease as provided in the foregoing
sentence, Landlord may, if it so elects, enter into a new lease for the Premises
or any portion thereof with the Transferee or any other third party on such
terms as Landlord and the Transferee or other third party may agree; in such
event, Tenant shall not be entitled to any portion of the profit, if any, which
Landlord may realize on account of such termination and reletting. If Landlord
exercises its option to terminate this lease with respect to the Subject Space
only (i.e., less than the entire Premises), then Tenant shall continue to be
obligated under this lease as to the remaining space (i.e., the Premises less
the Subject Space) and basic rent and common area charges payable by Tenant
under this lease shall be adjusted as follows: (i) the basic rent amount(s)
specified in paragraphs 4(a) and 5(a) of this lease shall be multiplied by a
fraction, the numerator of which is the square feet of the Premises retained by
Tenant after Landlord's recapture of the Subject Space and the denominator of
which is the total square feet of the Premises before Landlord's recapture; (ii)
Tenant's proportionate share of common area charges as provided in paragraph 16
of this lease shall be reduced to reflect Tenant's percentage share based on the
square feet of the Premises retained by Tenant after Landlord's
24
recapture. This lease as so amended shall continue thereafter in full force and
effect. Either party may require written confirmation of the amendments to this
lease necessitated by Landlord's recapture of the Subject Space. If Landlord
recaptures the Subject Space, Landlord shall, at Landlord's sole expense,
construct any partitions required to segregate the Subject Space from the
remaining Premises retained by Tenant and Landlord shall pay for painting,
covering, or otherwise decorating the surfaces of the partitions facing the
remaining Premises retained by Tenant.
If Landlord does not elect to terminate this lease as provided
hereinabove in this paragraph 19 and if Landlord consents in writing to the
proposed Transfer, Tenant shall be free to make such Transfer subject to the
following conditions: (i) any Transfer shall be on the same terms set forth in
the Transfer Notice given to Landlord; (ii) no Transfer shall be valid and no
Transferee shall take possession of the Subject Space until an executed
counterpart of such Transfer has been delivered to Landlord; (iii) no Transferee
shall have a further right to assign, sublet or transfer; (iv) seventy-five
percent (75%) of the Bonus Rent (as defined below), if any, shall be paid by
Tenant to Landlord monthly as additional rent under this lease without affecting
or reducing any other obligation of Tenant hereunder (such amounts are referred
to herein as the "Transfer Premium"); (v) no Transfer shall release Tenant of
Tenant's obligation or alter the primary liability of Tenant to pay the rent and
to perform all other obligations to be performed by Tenant hereunder; (vi) any
assignee or subtenant must expressly agree to assume and perform all of the
covenants and conditions of Tenant under this lease, and (vii) any modification
or amendment of any such Transfer shall be deemed to be a separate Transfer
transaction and shall be subject to Landlord's right to recapture, Landlord's
prior written consent and the other terms and provisions of this paragraph 19.
Tenant shall pay to Landlord promptly upon demand as additional rent, Landlord's
actual attorneys' fees and other costs incurred for reviewing, processing or
documenting any requested Transfer, whether or not Landlord's consent is
granted. Tenant shall not be entitled to assign this lease or sublease all or
any part of the Premises (and any attempt to do so shall be voidable by
Landlord) during any period in which Tenant is in default under this lease.
For purposes of this paragraph 19, the term "Bonus Rent" shall mean
the Transfer Payments (as defined below) less the amounts specified in (A) and
(B), where (A) is a monthly credit amount equal to the sum of (1) and (2)
divided by the total number of months in the term of the Transfer, where (1) is
the actual out-of-pocket cost of leasehold improvements paid by Tenant to third
party contractors and constructed specifically for the exclusive benefit of such
Transferee in the Subject Space, but specifically excluding any costs related to
(i) the initial tenant improvements to be constructed in the Premises
25
pursuant to the terms of this lease, if any, (ii) the installation, modification
and/or removal of security systems, data cabling and telephone and communication
systems, and (iii) the installation, modification and/or removal of any
furniture, fixtures or equipment or any personal property, and (2) is the amount
of broker fees paid by Tenant in connection with such Transfer, and (B) is a
monthly credit amount equal to the monthly basic rent and common area charges
which Tenant is obligated to pay Landlord under this lease during the term of
such Transfer (prorated in the case of a sublease to reflect the obligations
allocable to that portion of the Premises subject to such sublease). As a
condition precedent to allowing the deduction for the cost of leasehold
improvements specified above, Tenant shall furnish a complete statement,
certified by an independent certified public accountant or Tenant's chief
financial officer, describing in detail the computation of any Transfer Premium
that Tenant has derived or will derive from the Transfer. Landlord or Landlord's
agent shall have the right to review Tenant's books and records relating to the
calculation of Bonus Rent, including the right to have an independent certified
public accountant review same. If Landlord's independent certified public
accountant finds that the Bonus Rent for any Transfer has been understated,
Tenant shall, within thirty (30) days after demand, pay the deficiency and
Landlord's costs of that review. If Tenant has understated the Bonus Rent by
more than ten percent (10%), Landlord may, at its option, declare Tenant in
material and incurable default under this lease notwithstanding any cure period
specified therein.
For purposes of this paragraph 19, the term "Transfer Payments" shall
mean any and all sums or other consideration payable to or received by Tenant as
a result of or in connection with a Transfer whether denominated rent or
otherwise, including any amounts payable to Tenant for (x) services to be
provided to Transferee by Tenant or (y) the sale, lease or use of Tenant's
furniture, fixtures and equipment or other personal property, but the total
Transfer Payments shall not exceed the fair market rental value of the Premises
as reasonably determined by Landlord.
If Tenant is a partnership, a withdrawal or change, voluntary or
involuntary or by operation of law, of any general partner or the dissolution of
the partnership shall be deemed an assignment of this lease subject to all the
conditions of this paragraph 19. If Tenant is a corporation any dissolution,
merger, consolidation or other reorganization of Tenant or the sale or other
transfer of a controlling percentage of the capital stock of Tenant or the sale
of more than fifty percent (50%) of the value of Tenant's assets shall be an
assignment of this lease subject to all the conditions of this paragraph 19. The
term "controlling percentage" means the ownership of, and the right to vote,
stock possessing more than 50% of the total combined voting power of all classes
of Tenant's capital stock issued,
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outstanding and entitled to vote. This subparagraph of this paragraph 19 shall
not apply if Tenant is a corporation the stock of which is traded on the New
York Stock Exchange, the American Stock Exchange or NASDAQ.
The acceptance of rent by Landlord from any other person shall not be
deemed to be a waiver by Landlord of any provision hereof. Consent to one
Transfer shall not be deemed consent to any subsequent Transfer. In the event of
default by any Transferee of Tenant or any successor of Tenant in the
performance of any of the terms hereof, Landlord may proceed directly against
Tenant without the necessity of exhausting remedies against such Transferee or
successor. Landlord may consent to subsequent Transfers of this lease or
amendments or modifications to this lease with Transferees of Tenant, without
notifying Tenant, or any successor of Tenant, and without obtaining its or their
consent thereto and such action shall not relieve Tenant of liability under this
lease.
No interest of Tenant in this lease shall be assignable by operation
of law (including, without limitation, the transfer of this lease by testacy or
intestacy). Each of the following acts shall be considered an involuntary
assignment: (i) if Tenant is or becomes bankrupt or insolvent, makes an
assignment for the benefit of creditors or institutes a proceeding under the
Bankruptcy Act in which Tenant is the bankrupt; or, if Tenant is a partnership
or consists of more than one person or entity, if any partner of the partnership
or other person or entity is or becomes bankrupt or insolvent, or makes an
assignment for the benefit of creditors; (ii) if a writ of attachment or
execution is levied on this lease; or (iii) if, in any proceeding or action to
which Tenant is a party, a receiver is appointed with authority to take
possession of the Premises. An involuntary assignment shall constitute a default
by Tenant after the expiration of any applicable cure period and Landlord shall
have the right to elect to terminate this lease, in which case this lease shall
not be treated as an asset of Tenant.
Tenant immediately and irrevocably assigns to Landlord, as security
for Tenant's obligations under this lease, all rent or other consideration from
any Transfer of all or a part of the Premises as permitted by this lease, and
Landlord, as assignee and as attorney-in-fact for Tenant, or a receiver of
Tenant appointed on Landlord's application, may collect such rent or other
consideration and apply it toward Tenant's obligations under this lease and any
Transferee agrees to make such payments directly to Landlord upon Landlord's
written request; provided that, until the occurrence of a default by Tenant,
Tenant shall have the right to collect such rent, subject to promptly forwarding
to Landlord any portion thereof to which Landlord is entitled pursuant to this
paragraph 19.
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Notwithstanding the above requirement that Tenant obtain the consent
of Landlord prior to any assignment or sublet, Tenant may, without obtaining the
prior consent of Landlord, assign or sublease the whole or any part of the
Premises to any corporation or other entity which controls, is controlled by, or
is under common control with Tenant, provided that (i) Tenant shall give written
notice thereof to Landlord in the manner required for other assignments or
subleases by this paragraph 19; (ii) Tenant shall continue to be fully obligated
under this lease; (iii) any such assignee or sublessee shall expressly assume
and agree to perform all the terms and conditions of this lease to be performed
by Tenant; and (iv) any such assignment or sublet shall be subject to all other
terms and conditions of this paragraph 19 pertaining to assignments and/or
sublets (excepting only the requirement concerning prior written consent of
Landlord). The notices required in clauses (i) through (iv) above shall replace
rather than supplement any equivalent or similar statutory notice, including any
notices required by Code of Civil Procedure section 1161 or any similar or
successor statute. When a statute requires service of a notice in a particular
manner, service of that notice (or a similar notice required by this Lease) in
the manner required by section 38 shall replace and satisfy the statutory
service-of-notice procedures, including those required by Code of Civil
Procedure section 1162 or any similar or successor statute.
20. DEFAULT
The occurrence of any of the following shall constitute a default by
Tenant: (i) failure of Tenant to pay any rent or other sum payable hereunder
when due (provided that Tenant may cure such default by paying to Landlord the
amount demanded within three (3) days after receipt of the statutory notice as
provided for in Code of Civil Procedure Section 1161); (ii) abandonment of the
Premises (Tenant's failure to occupy and conduct business in the Premises for
fourteen (14) consecutive days and Tenant has failed to pay any rent or other
sum when due shall be deemed an abandonment); (iii) failure of Tenant to deliver
to Landlord any instrument, assurance, financial statement, letter of credit,
subordination agreement or certificate of estoppel required under this Lease
within (a) the time period specified in this lease for such performance after
written notice, or (b) if such time period is not specified then within five (5)
days after written notice of the failure from Landlord to Tenant; or (iv)
failure of Tenant to perform any other obligation under this lease if the
failure to perform is not cured within fifteen (15) days after written notice
thereof has been given to Tenant, except in the case of an emergency or
dangerous condition, in which case Tenant's time to perform shall be that time
period which is reasonable under the circumstances, but not more than fifteen
(15) days; provided, however, if the nature of Tenant's obligation under this
subsection (iv) is such that more than fifteen (15) days are required for
performance,
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then Tenant shall not be in default if Tenant commences performance within the
period of time specified and thereafter diligently prosecutes the same to
completion. The notice referred to in clauses (iii) and (iv) above shall specify
the obligations Tenant has failed to perform. No notice shall be deemed a
forfeiture or termination of this lease unless Landlord so elects in the notice.
In addition to the above, the occurrence of any of the following
events shall also constitute a default by Tenant: (i) Tenant fails to pay its
debts as they become due or admits in writing its inability to pay its debts, or
makes a general assignment for the benefit of creditors (for purposes of
determining whether Tenant is not paying its debts as they become due, a debt
shall be deemed overdue upon the earliest to occur of the following: thirty (30)
days from the date on which any action or proceeding therefor is commenced; or
the date on which a formal notice of default or demand has been sent); or (ii)
any financial statements given to Landlord by Tenant, any assignee of Tenant,
subtenant of Tenant, any guarantor of Tenant, or successor in interest of Tenant
(including, without limitation, any schedule of Tenant's aged accounts payable)
are materially false.
In the event of a default by Tenant, then Landlord, in addition to any
other rights and remedies of Landlord at law or in equity, shall have the right
either to terminate Tenant's right to possession of the Premises (and thereby
terminate this lease) or, from time to time and without termination of this
lease, to relet the Premises or any part thereof for the account and in the name
of Tenant for such term and on such terms and conditions as Landlord in its sole
discretion may deem advisable, with the right to make alterations and repairs to
the Premises.
Should Landlord elect to keep this lease in full force and effect,
Landlord shall have the right to enforce all of Landlord's rights and remedies
under this lease, including but not limited to the right to recover and to relet
the Premises and such other rights and remedies as Landlord may have under
California Civil Code Section 1951.4, which Section provides that the landlord
may continue the Lease in effect after the tenant's breach and abandonment and
recover rent as it becomes due, when the tenant has the right to sublet or
assign, subject only to reasonable limitations (or successor Code section) or
any other California statute. If Landlord relets the Premises, then Tenant shall
pay to Landlord, as soon as ascertained, the costs and expenses incurred by
Landlord in such reletting and in making alterations and repairs. Rentals
received by Landlord from such reletting shall be applied (i) to the payment of
any indebtedness due hereunder, other than basic rent and common area charges,
from Tenant to Landlord; (ii) to the payment of the cost of any repairs
necessary to return the Premises to good condition normal wear and tear
excepted, including the cost of alterations and the
29
cost of storing any of Tenant's property left on the Premises at the time of
reletting; and (iii) to the payment of basic rent or common area charges due and
unpaid hereunder. The residue, if any, shall be held by Landlord and applied in
payment of future rent or damages in the event of termination as the same may
become due and payable hereunder and the balance, if any at the end of the term
of this lease, shall be paid to Tenant. Should the basic rent and common area
charges received from time to time from such reletting during any month be less
than that agreed to be paid during that month by Tenant hereunder, Tenant shall
pay such deficiency to Landlord. Such deficiency shall be calculated and paid
monthly. No such reletting of the Premises by Landlord shall be construed as an
election on its part to terminate this lease unless a written notice of such
intention is given to Tenant or unless the termination hereof is decreed by a
court of competent jurisdiction. Notwithstanding any such reletting without
termination, Landlord may at any time thereafter elect to terminate this lease
for such previous breach, provided it has not been cured.
Should Landlord at any time terminate this lease for any breach, in
addition to any other remedy it may have, it shall have all the rights and
remedies of a landlord provided by California Civil Code Section 1951.2 or any
successor code section. Upon such termination, in addition to all its other
rights and remedies, Landlord shall be entitled to recover from Tenant all
damages it may incur by reason of such breach, including the cost of recovering
the Premises and including (i) the worth at the time of award of the unpaid rent
which had been earned at the time of termination; (ii) the worth at the time of
award of the amount by which the unpaid rent which would have been earned after
termination until the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided; (iii) the worth at the time of
the award of the amount by which the unpaid rent for the balance of the term
after the time of award exceeds the amount of such rental loss that Tenant
proves could be reasonably avoided; and (iv) any other amount necessary to
compensate Landlord for all the detriment proximately caused by Tenant's failure
to perform its obligations under this lease or which in the ordinary course of
events would be likely to result therefrom. The "worth at the time of award" of
the amounts referred to in (i) and (ii) above is computed by allowing interest
at the rate of twelve percent (12%) per annum but not to exceed the lawful rate
as specified in 1951.2(b). The "worth at the time of award" of the amount
referred to in (iii) above shall be computed by discounting such amount at the
discount rate of the federal reserve bank of San Francisco at the time of award
plus one percent (1%). Tenant waives the provisions of Section 1179 of the
California Code of Civil Procedure (which Section allows Tenant to petition of
court of competent jurisdiction for relief against forfeiture of this lease).
Property removed from the Premises may be stored in a public or private
warehouse or elsewhere at the sole cost and
30
expense of Tenant. In the event that Tenant shall not immediately pay the cost
of storage of such property after the same has been stored for a period of
thirty (30) days or more, Landlord may sell any or all thereof at a public or
private sale in such manner and at such times and places that Landlord, in its
sole discretion, may deem proper, without notice to or demand upon Tenant.
21. LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT
Landlord, at any time after Tenant commits a default which is not
cured within any applicable cure period specified in paragraph 20, may, but
shall not be obligated to, cure the default at Tenant's cost. If Landlord at any
time, by reason of Tenant's default, pays any sum or does any act that requires
the payment of any sum, the sum paid by Landlord shall be due immediately from
Tenant to Landlord and shall bear interest at the rate of twelve percent (12%)
per annum or the maximum rate permitted by law, whichever is less, from the date
the sum is paid by Landlord until Landlord is reimbursed by Tenant. Amounts due
Landlord hereunder shall be additional rent.
22. EMINENT DOMAIN
If all or any part of the Premises shall be taken by any public or
quasi-public authority under the power of eminent domain or conveyance in lieu
thereof, this lease shall terminate as to any portion of the Premises so taken
or conveyed on the date when title vests in the condemnor, and Landlord shall be
entitled to any and all payments, income, rent, award or any interest therein
whatsoever which may be paid or made in connection with such taking or
conveyance. Tenant shall have no claim against Landlord or otherwise for the
value of any unexpired term of this lease. Notwithstanding the foregoing, Tenant
shall be entitled to any compensation for depreciation to and cost of removal of
Tenant's equipment and fixtures and any compensation for its relocation expenses
necessitated by such taking, but in each case only to the extent the condemning
authority makes a separate award therefor or specifically identifies a portion
of the award as being therefor. Each party waives the provisions of Section
1265.130 of the California Code of Civil Procedure (which section allows either
party to petition the Superior Court to terminate this lease in the event of a
partial taking of the Premises).
If any action or proceeding is commenced for such taking of the
Premises or any portion thereof or of any other space in the Project, or if
Landlord is advised in writing by any entity or body having the right or power
of condemnation of its intention to condemn the Premises or any portion thereof
or of any other space in the Project, and Landlord shall decide to discontinue
the use and operation of the Project or decide to demolish, alter or rebuild the
Project, then Landlord shall have
31
the right to terminate this lease by giving Tenant written notice thereof within
sixty (60) days of the earlier of the date of Landlord's receipt of such notice
of intention to condemn or the commencement of said action or proceeding. Such
termination shall be effective as of the last day of the calendar month next
following the month in which such notice is given or the date on which title
shall vest in the condemnor, whichever occurs first.
In the event of a partial taking, or conveyance in lieu thereof, of
the Premises and fifty percent (50%) or more of the number of square feet in the
Premises are taken then Tenant may terminate this lease. Any election by Tenant
to so terminate shall be by written notice given to Landlord within sixty (60)
days from the date of such taking or conveyance and shall be effective on the
last day of the calendar month next following the month in which such notice is
given or the date on which title shall vest in the condemnor, whichever occurs
first.
If a portion of the Premises is taken by power of eminent domain or
conveyance in lieu thereof and neither Landlord nor Tenant terminates this lease
as provided above, then this lease shall continue in full force and effect as to
the part of the Premises not so taken or conveyed and all payments of rent shall
be apportioned as of the date of such taking or conveyance so that thereafter
the amounts to be paid by Tenant shall be in the ratio that the area of the
portion of the Premises not so taken bears to the total area of the Premises
prior to such taking.
23. NOTICE AND COVENANT TO SURRENDER
On the last day of the term or on the effective date of any earlier
termination, Tenant shall surrender to Landlord the Premises in its condition
existing as of the commencement of the term (normal wear and tear and casualty
excepted) and, except as otherwise required by Landlord pursuant to the terms of
paragraph 8 of this lease, all of the improvements and alterations made to the
Premises in their condition existing as of the date of completion of
construction and/or installation (normal wear and tear and casualty excepted),
with all originally painted interior walls washed or repainted if marked or
damaged, interior vinyl covered walls cleaned and repaired or replaced if marked
or damaged, all carpets shampooed and cleaned, the air conditioning and heating
system serviced and repaired by a reputable and licensed service firm (unless
Landlord has elected to maintain such system pursuant to paragraph 9 of this
lease) and all floors cleaned and waxed; all to the reasonable satisfaction of
Landlord. On or prior to the last day of the term or the effective date of any
earlier termination, Tenant shall remove all of Tenant's personal property and
trade fixtures, together with improvements or alterations that Tenant is
obligated to remove pursuant to the provisions of paragraph 8 of this lease,
from the Premises, and all such property not
32
removed shall be deemed abandoned. In addition, on or prior to the expiration or
earlier termination of this lease, at Landlord's option and upon Landlord's
request, Tenant shall remove, at Tenant's sole cost and expense, all or part (as
determined by Landlord) of the telephone, other communication, computer cable
and wiring and any other cabling and wiring of any sort installed in the space
above the suspended ceiling of the Premises or anywhere else in the Premises and
shall promptly repair any damage to the suspended ceiling, lights, light
fixtures, walls and any other part of the Premises resulting from such removal.
If the Premises are not surrendered as required in this paragraph,
Tenant shall indemnify Landlord against all loss, liability and expense
(including but not limited to, attorney fees) resulting from the failure by
Tenant in so surrendering the Premises, including, without limitation, any
claims made by any succeeding tenants. It is agreed between Landlord and Tenant
that the provisions of this paragraph shall survive termination of this lease.
24. TENANT'S QUITCLAIM
At the expiration or earlier termination of this lease, Tenant shall
execute, acknowledge and deliver to Landlord, within ten (10) business days
after written demand from Landlord to Tenant, any quitclaim deed or other
document required to remove the cloud or encumbrance created by this lease from
the real property of which the Premises are a part. This obligation shall
survive said expiration or termination.
25. HOLDING OVER
Any holding over after the expiration or termination of this lease
with the written consent of Landlord shall be construed to be a tenancy from
month-to-month at the monthly rent agreed upon by Landlord and Tenant, but in no
event less than the monthly rent payable under this lease for the last lease
month before the date of such expiration or termination. All provisions of this
lease, except (i) as modified by the preceding sentence and (ii) those
provisions pertaining to the term, expansion rights and any option to extend,
shall apply to the month-to-month tenancy.
If Tenant shall retain possession of the Premises or any part thereof
without Landlord's written consent following the expiration or sooner
termination of this lease for any reason, then Tenant shall pay to Landlord as
rent during the holdover period an amount equal to the greater of (i) one
hundred fifty percent (150%) of the amount of the monthly rent in effect during
the last full lease month prior to the date of such expiration or termination or
(ii) one hundred fifty percent (150%) of the fair market rental (as reasonably
determined by Landlord) for the
33
Premises. Tenant shall also indemnify and hold Landlord harmless from any loss,
liability and expense (including, but not limited to, attorneys fees) resulting
from delay by Tenant in surrendering the Premises, including without limitation
any claims made by any succeeding tenant founded on such delay. Acceptance of
rent by Landlord following expiration or termination shall not constitute a
renewal of this lease, and nothing contained in this paragraph shall waive
Landlord's right of re-entry or any other right. Tenant shall be only a tenant
at sufferance, whether or not Landlord accepts any rent from Tenant, while
Tenant is holding over without Landlord's written consent.
The provisions of this paragraph 25 are in addition to, and do not
affect, Landlord's right of re-entry or other rights hereunder or provided by
law. Nothing in this paragraph 25 shall be construed as implied consent by
Landlord to any holding over by Tenant. Landlord expressly reserves the right to
require Tenant to surrender possession of the Premises to Landlord as provided
in this Lease on expiration or other termination of this Lease. The provisions
of this paragraph 25 shall not be considered to limit or constitute a waiver of
any other rights or remedies of Landlord provided in this Lease or at law. The
provisions of this paragraph 25 shall survive the expiration or early
termination of this lease.
26. SUBORDINATION
In the event Landlord's title or leasehold interest is now or
hereafter encumbered in order to secure a loan to Landlord, Tenant shall, at the
request of Landlord or the lender, execute in writing an agreement subordinating
its rights under this lease to the lien of such encumbrance, or, if so
requested, agreeing that the lien of lender's encumbrance shall be or remain
subject and subordinate to the rights of Tenant under this lease.
Notwithstanding any such subordination, Tenant's possession under this lease
shall not be disturbed if Tenant is not in default and so long as Tenant shall
pay all amounts due hereunder and otherwise observe and perform all provisions
of this lease. In addition, if in connection with any such loan the lender shall
request reasonable modifications of this lease as a condition to such financing,
Tenant will not unreasonably withhold, delay or defer its consent thereof,
provided that such modifications do not increase the obligations of Tenant
hereunder or materially adversely affect the leasehold interest hereby created
or Tenant's rights hereunder.
27. CERTIFICATE OF ESTOPPEL
Each party shall, within ten (10) business after request therefor,
execute and deliver to the other party, in recordable form, a certificate
stating that the lease is unmodified and in full force and effect, or in full
force and
34
effect as modified and stating the modifications. The certificate shall also
state the amount of the monthly rent, the date to which monthly rent has been
paid in advance, the amount of the security deposit and/or prepaid monthly rent,
and, if the request is made by Landlord, shall include such other items as
Landlord or Landlord's lender may reasonably request. Failure to deliver such
certificate within such time shall constitute a conclusive acknowledgment by the
party failing to deliver the certificate that the lease is in full force and
effect and has not been modified except as may be represented by the party
requesting the certificate. Any such certificate requested by Landlord may be
conclusively relied upon by any prospective purchaser or encumbrancer of the
Premises or Project. Further, within ten (10) business days following written
request made from time to time by Landlord, Tenant shall furnish to Landlord
current financial statements of Tenant, not to exceed two (2) requests per
calendar year, unless required by Landlord's lender, potential lender or
prospective purchaser of the Project.
28. SALE BY LANDLORD
In the event the original Landlord hereunder, or any successor owner
of the Project or Premises, shall sell or convey the Project or Premises, upon
the assumption of this lease by the new owner, all liabilities and obligations
on the part of the original Landlord, or such successor owner, under this lease
accruing thereafter shall terminate, and thereupon all such liabilities and
obligations shall be binding upon the new owner. Tenant agrees to attorn to such
new owner and to look solely to such new owner for performance of any and all
such liabilities and obligations.
29. ATTORNMENT TO LENDER OR THIRD PARTY
In the event the interest of Landlord in the land and buildings in
which the Premises are located (whether such interest of Landlord is a fee title
interest or a leasehold interest) is encumbered by deed of trust, and such
interest is acquired by a lender or any other third party through judicial
foreclosure or by exercise of a power of sale at private trustee's foreclosure
sale, Tenant hereby agrees to release Landlord of any obligation arising on or
after any such foreclosure sale and to attorn to the purchaser at any such
foreclosure sale and to recognize such purchaser as the Landlord under this
lease; provided that Tenant's possession of the Premises and rights under this
lease shall not be disturbed so long as Tenant is not in default hereunder.
30. DEFAULT BY LANDLORD
Landlord shall not be in default unless Landlord fails to perform
obligations required of Landlord within thirty (30) days after written notice to
Landlord and to the holder of any
35
first mortgage or deed of trust covering the Premises, except in the case of an
emergency or dangerous condition, in which case Landlord's time to perform shall
be that time period which is reasonable under the circumstances; and provided
further that if the nature of Landlord's obligations is such that more than
thirty (30) days are required for performance, then Landlord shall not be in
default if Landlord commences performance within such thirty (30) day period and
thereafter diligently prosecutes the same to completion.
If Landlord is in default of this lease, Tenant's sole remedy shall be
to institute suit against Landlord in a court of competent jurisdiction, and
Tenant shall have no right to offset any sums expended by Tenant as a result of
Landlord's default against future rent and other sums due and payable pursuant
to this lease. If Landlord is in default of this lease, and as a consequence
Tenant recovers a money judgment against Landlord, the judgment shall be
satisfied only out of the proceeds of sale received on execution of the judgment
and levy against the right, title and interest of Landlord in the Project of
which the Premises are a part, and out of rent or other income from such real
property receivable by Landlord or out of the consideration received by Landlord
from the sale or other disposition of all or any part of Landlord's right, title
and interest in the Project of which the Premises are a part. Neither Landlord
nor any of the partners comprising the partnership designated as Landlord shall
be personally liable for any deficiency.
31. [INTENTIONALLY OMITTED]
32. MEASUREMENT OF PREMISES
Tenant understands and agrees that any reference to square footage of
the Premises is approximate only and includes all interior partitions and
columns, one-half of exterior walls, and one-half of the partitions separating
the Premises from the rest of the Project, Tenant's proportionate share of the
Common Area and, if applicable, covered areas immediately outside the entry
doors or loading docks. Tenant waives any claim against Landlord regarding the
accuracy of any such measurement and agrees that there shall not be any
adjustment in basic rent or common area charges or other amounts payable
hereunder by reason of inaccuracies in such measurement.
33. ATTORNEY FEES
If either party commences an action against the other party arising
out of or in connection with this lease, the prevailing party shall be entitled
to have and recover from the losing party all expenses of litigation, including,
without limitation, travel expenses, attorney fees, expert witness fees, trial
and appellate court costs, and deposition and transcript expenses. If either
party becomes a party to any litigation
36
concerning this lease, or concerning the Premises or the Project, by reason of
any act or omission of the other party or its authorized representatives, the
party that causes the other party to become involved in the litigation shall be
liable to the other party for all expenses of litigation, including, without
limitation, travel expenses, attorney fees, expert witness fees, trial and
appellate court costs, and deposition and transcript expenses.
34. SURRENDER
The voluntary or other surrender of this lease or the Premises by
Tenant, or a mutual cancellation of this lease, shall not work a merger, and at
the option of Landlord shall either terminate all or any existing subleases or
subtenancies or operate as an assignment to Landlord of all or any such
subleases or subtenancies.
35. WAIVER
No delay or omission in the exercise of any right or remedy of
Landlord on any default by Tenant shall impair such right or remedy or be
construed as a waiver. The receipt and acceptance by Landlord of delinquent rent
or other payments shall not constitute a waiver of any other default and
acceptance of partial payments shall not be construed as a waiver of the balance
of such payment due. No act or conduct of Landlord, including, without
limitation, the acceptance of keys to the Premises, shall constitute an
acceptance of the surrender of the Premises by Tenant before the expiration of
the term. Only a written notice from Landlord to Tenant shall constitute
acceptance of the surrender of the Premises and accomplish a termination of this
lease. Landlord's consent to or approval of any act by Tenant requiring
Landlord's consent or approval shall not be deemed to waive or render
unnecessary Landlord's consent to or approval of any subsequent act by Tenant.
Any waiver by Landlord of any default must be in writing and shall not be a
waiver of any other default concerning the same or any other provision of this
lease.
36. EASEMENTS; AIRSPACE RIGHTS
Landlord reserves the right to alter the boundaries of the Project and
grant easements and dedicate for public use portions of the Project without
Tenant's consent, provided that no such grant or dedication shall interfere with
Tenant's use of the Premises or otherwise cause Tenant to incur cost or expense.
From time to time, and upon Landlord's demand, Tenant shall execute, acknowledge
and deliver to Landlord, in accordance with Landlord's instructions, any and all
documents, instruments, maps or plats necessary to effectuate Tenant's covenants
hereunder.
37
This lease confers no rights either with regard to the subsurface of
or airspace above the land on which the Project is located or with regard to
airspace above the building of which the Premises are a part. Tenant agrees that
no diminution or shutting off of light or view by a structure which is or may be
erected (whether or not by Landlord) on property adjacent to the building of
which the Premises are a part or to property adjacent thereto, shall in any way
affect this lease, or entitle Tenant to any reduction of rent, or result in any
liability of Landlord to Tenant.
37. RULES AND REGULATIONS
Landlord shall have the right from time to time to promulgate
reasonable rules and regulations for the safety, care and cleanliness of the
Premises, the Project and the Common Area, or for the preservation of good
order. On delivery of a copy of such rules and regulations to Tenant, Tenant
shall comply with the rules and regulations, and a violation of any of them
shall constitute a default by Tenant under this lease. If there is a conflict
between the rules and regulations and any of the provisions of this lease, the
provisions of this lease shall prevail. Such rules and regulations may be
amended by Landlord from time to time with or without advance notice.
38. NOTICES
Except for legal process and Notice of Belief of Abandonment which may
be served either as provided by law or as provided herein, all notices, demands,
requests, consents, approvals and other communications ("Notices") which may be
given or are required to be given by either party to the other shall be in
writing and shall be deemed given to and received by the party intended to
receive such Notice and deemed sufficiently given for all purposes as follows:
(a) when personally delivered to the recipient, notice is effective
on delivery;
(b) when mailed first class to the last address of the recipient
known to the party giving notice, notice is effective on delivery;
(c) when mailed by certified mail with return receipt requested,
notice is effective on receipt if delivery is confirmed by a return receipt; or
(d) when delivered by reputable overnight courier (e.g. Federal
Express, Airborne) or other comparable service with charges prepaid or charged
to the sender's account, notice is effective on delivery if delivery is
confirmed by the courier service.
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Any correctly addressed Notice that is refused, unclaimed, or
undeliverable because of an act or omission of the party to be notified shall be
deemed effective as of the first date that the Notice was refused, unclaimed, or
considered undeliverable by the postal authorities, messenger, or overnight
delivery service.
Prior to the commencement date, all such Notices from Landlord to
Tenant shall be served or addressed to Tenant at 529 Bryant Street, Palo Alto,
California 94301, Attn. Randy Bender, Director, Real Estate & Property Services.
On or after the commencement date all such Notices from Landlord to Tenant shall
be addressed to Tenant at the Premises.
All such Notices by Tenant to Landlord shall be sent to Landlord at
its offices at 3945 Freedom Circle, Suite 640, Santa Clara, California 95054.
Either party may change its address by giving the other party notice
of such change in any manner permitted by this paragraph 38.
39. NAME
Tenant shall not use the name of the Project for any purpose, other
than as the address of the business conducted by Tenant in the Premises, without
the prior written consent of Landlord.
40. GOVERNING LAW; SEVERABILITY
This lease shall in all respects be governed by and construed in
accordance with the laws of the State of California. If any provision of this
lease shall be held or rendered invalid, unenforceable or ineffective for any
reason whatsoever, all other provisions hereof shall be and remain in full force
and effect.
41. DEFINITIONS
As used in this lease, the following words and phrases shall have the
following meanings:
Authorized representative: any officer, agent, employee or independent
-------------------------
contractor retained or employed by either party, acting within authority given
him by that party.
Encumbrance: any deed of trust, mortgage or other written security
-----------
device or agreement affecting the Premises or the Project that constitutes
security for the payment of a debt or performance of an obligation, and the note
or obligation secured by such deed of trust, mortgage or other written security
device or agreement.
39
Lease month: the period of time determined by reference to the day of
-----------
the month on which the Lease Commencement Date occurs and continuing to one day
short of the same numbered day in the next succeeding month; e.g., the tenth day
of one month to and including the ninth day in the next succeeding month.
Lender: the beneficiary, mortgagee or other holder of an encumbrance,
------
as defined above.
Lien: a charge imposed on the Premises by someone other than Landlord,
----
by which the Premises are made security for the performance of an act. Most of
the liens referred to in this lease are mechanic's liens.
Maintenance: repairs, replacement, repainting and cleaning.
-----------
Monthly rent: the sum of the monthly payments of basic rent and
------------
common area charges.
Person: one or more human beings, or legal entities or other
------
artificial persons, including, without limitation, partnerships, corporations,
trusts, estates, associations and any combination of human being and legal
entities.
Provision: any term, agreement, covenant, condition, clause,
---------
qualification, restriction, reservation or other stipulation in the lease that
defines or otherwise controls, establishes or limits the performance required or
permitted by either party.
Rent: basic rent, common area charges, additional rent, and all other
----
amounts payable by Tenant to Landlord required by this lease or arising by
subsequent actions of the parties made pursuant to this lease.
Words used in any gender include other genders. If more than one individual
or entity comprises Tenant, the obligations imposed on each individual or entity
that comprises Tenant under this Lease are and shall be joint and several. All
provisions whether covenants or conditions, on the part of Tenant shall be
deemed to be both covenants and conditions. The paragraph headings are for
convenience of reference only and shall have no effect upon the construction or
interpretation of any provision hereof.
42. TIME
Time is of the essence of this lease and of each and all of its
provisions.
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43. INTEREST ON PAST DUE OBLIGATIONS; LATE CHARGE
Any amount due from Tenant to Landlord hereunder which is not paid
when due shall bear interest at the rate of ten percent (10%) per annum from
when due until paid, unless otherwise specifically provided herein, but the
payment of such interest shall not excuse or cure any default by Tenant under
this lease. In addition, Tenant acknowledges that late payment by Tenant to
Landlord of basic rent or common area charges or of any other amount due
Landlord from Tenant, will cause Landlord to incur costs not contemplated by
this lease, the exact amount of such costs being extremely difficult and
impractical to fix. Such costs include, without limitation, processing and
accounting charges, and late charges that may be imposed on Landlord, e.g., by
the terms of any encumbrance and note secured by any encumbrance covering the
Premises. Therefore, if any such payment due from Tenant is not received in full
by Landlord when due, which payments are subject to application by Landlord as
provided in paragraph 4 of this lease, Tenant shall pay to Landlord an
additional sum of five percent (5%) of the entire payment as a late charge.
Landlord shall waive such late charge once per lease year if Tenant pays to
Landlord the amount due within three (3) days after the date that Tenant
receives written notice that such amount is past due. The parties agree that
this late charge represents a fair and reasonable estimate of the costs that
Landlord will incur by reason of late payment by Tenant. Acceptance of any late
charge shall not constitute a waiver of Tenant's default with respect to the
overdue amount, nor prevent Landlord from exercising any of the other rights and
remedies available to Landlord. No notice to Tenant of failure to pay shall be
required prior to the imposition of such interest and/or late charge, and any
notice period provided for in paragraph 20 shall not affect the imposition of
such interest and/or late charge. Any interest and late charge imposed pursuant
to this paragraph shall be and constitute additional rent payable by Tenant to
Landlord.
44. ENTIRE AGREEMENT
This lease, including any exhibits and attachments, constitutes the
entire agreement between Landlord and Tenant relative to the Premises and this
lease and the exhibits and attachments may be altered, amended or revoked only
by an instrument in writing signed by both Landlord and Tenant. Landlord and
Tenant agree hereby that all prior or contemporaneous oral agreements between
and among themselves or their agents or representatives relative to the leasing
of the Premises are merged in or revoked by this lease.
45. AUTHORITY
Each individual executing this lease on behalf of Tenant represents
and warrants that each individual executing
41
this lease is duly authorized to execute and deliver this lease on behalf of
Tenant and: (a) if Tenant is a corporation, such authorization is in accordance
with a duly adopted resolution of the Board of Directors of said corporation,
(b) if Tenant is a partnership, such authorization is in accordance with the
partnership agreement now in effect, and (c) if Tenant is a limited liability
company, such authorization is in accordance with the company's governing
documents; and (ii) this lease is binding upon Tenant in accordance with its
terms. Upon Landlord's request, Tenant shall deliver to Landlord within ten (10)
business days after such request evidence of the authorization specified above
as Landlord may reasonably request, including, without limitation, in the case
where Tenant is a corporation, a copy of the resolution of the Board of
Directors of Tenant authorizing the execution of this lease and naming the
officers that are authorized to execute this lease on behalf of Tenant, which
copy shall be certified by Tenant's secretary as correct and in full force and
effect.
46. RECORDING
Neither Landlord nor Tenant shall record this lease or a short form
memorandum hereof without the consent of the other.
47. REAL ESTATE BROKERS
Each party represents and warrants to the other party that it has not
had dealings in any manner with any real estate broker, finder or other person
with respect to the Premises and the negotiation and execution of this lease
except BT Commercial and Cornish & Carey Commercial ("Tenant's Brokers") and
Cushman & Wakefield and McCandless Management Corporation ("Landlord's
Brokers"). Except for the commissions and fees to be paid to Tenant's Brokers
and Landlord's Brokers by Landlord pursuant to separate agreement, each party
shall indemnify and hold harmless the other party from all damage, loss,
liability and expense (including attorneys' fees and related costs) arising out
of or resulting from any claims for commissions or fees that have been or may be
asserted against the other party by any broker, finder or other person with whom
Tenant or Landlord, respectively, has dealt, or purportedly has dealt, in
connection with the Premises and the negotiation and execution of this lease.
Landlord shall pay broker leasing commissions to Tenant's Brokers and Landlord's
Brokers in connection with the Premises and the negotiation and execution of
this lease, to the extent agreed to between Landlord and such brokers per
separate written agreement. Landlord and Tenant agree that Landlord shall not be
obligated to pay any broker leasing commissions, consulting fees, finder fees or
any other fees or commissions arising out of or relating to any extended term of
this lease or to any expansion or relocation of the Premises at any time.
48. EXHIBITS AND ATTACHMENTS
42
All exhibits and attachments to this lease are a part hereof and the
terms and provisions thereof are incorporated into this lease by this reference
as though set forth herein in full.
49. ENVIRONMENTAL MATTERS
A. Tenant's Covenants Regarding Hazardous Materials.
------------------------------------------------
(1) Hazardous Materials Handling. Tenant, its agents, invitees,
----------------------------
employees, contractors, sublessees, assigns and/or successors shall not use,
store, dispose, release or otherwise cause to be present or permit the use,
storage, disposal, release or presence of Hazardous Materials (as defined below)
on or about the Premises or Project, except ordinary office and cleaning
supplies, unless otherwise agreed in writing by Landlord. As used herein
"Hazardous Materials" shall mean any petroleum or petroleum by-products,
flammable explosives, asbestos, urea formaldehyde, radioactive materials or
waste and any "hazardous substance", "hazardous waste", "hazardous materials",
"toxic substance" or "toxic waste" as those terms are defined under the
provisions of the California Health and Safety Code and/or the provisions of the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 9601 et seq.), as amended by the Superfund Amendments and
Reauthorization Act of 1986 (42 U.S.C. Section 9601 et seq.), or any other
hazardous or toxic substance, material or waste which is or becomes regulated by
any local governmental authority, the State of California or any agency thereof,
or the United States Government or any agency thereof.
(2) Notices. Tenant shall immediately notify Landlord in writing
-------
of: (i) any enforcement, cleanup, removal or other governmental or regulatory
action instituted, completed or threatened pursuant to any law, regulation or
ordinance relating to the industrial hygiene, environmental protection or the
use, analysis, generation, manufacture, storage, presence, disposal or
transportation of any Hazardous Materials (collectively "Hazardous Materials
Laws"); (ii) any claim made or threatened by any person against Tenant, the
Premises, Project or buildings within the Project relating to damage,
contribution, cost recovery, compensation, loss or injury resulting from or
claimed to result from any Hazardous Materials; and (iii) any reports made to
any environmental agency arising out of or in connection with any Hazardous
Materials in, on or removed from the Premises, Project or buildings within the
Project, including any complaints, notices, warnings, reports or asserted
violations in connection therewith. Tenant shall also supply to Landlord as
promptly as possible, and in any event within five (5) business days after
Tenant first receives or sends the same, with copies of all claims, reports,
complaints, notices, warnings or asserted violations relating in any way to the
Premises, Project or buildings within the Project or Tenant's use thereof.
Tenant shall promptly deliver to Landlord copies of hazardous waste
43
manifests reflecting the legal and proper disposal of all Hazardous Materials
removed from the Premises.
B. Indemnification of Landlord. Tenant shall indemnify, defend (by
---------------------------
counsel acceptable to Landlord), protect, and hold Landlord, and each of
Landlord's partners, employees, agents, attorneys, successors and assigns, free
and harmless from and against any and all claims, liabilities, penalties,
forfeitures, losses or expenses (including attorneys' fees) for death of or
injury to any person or damage to any property whatsoever (including water
tables and atmosphere), arising from or caused in whole or in part, directly or
indirectly, by (i) the presence in, on, under or about the Premises, Project or
buildings within the Project of any Hazardous Materials where such presence was
caused by Tenant, (ii) Tenant's use, analysis, storage, transportation,
disposal, release, threatened release, discharge or generation of Hazardous
Materials to, in, on, under, about or from the Premises, Project or buildings
within the Project, or (iii) Tenant's failure to comply with any Hazardous
Materials Laws whether knowingly, unknowingly, intentionally or unintentionally.
Tenant's obligations hereunder shall include, without limitation, and whether
foreseeable or unforeseeable, all costs of any required or necessary repair,
cleanup or detoxification or decontamination of the Premises, Project or
buildings within the Project, and the preparation and implementation of any
closure, remedial action or other required plans in connection therewith. In
addition, Tenant shall reimburse Landlord for (i) losses in or reductions to
rental income resulting from Tenant's use, storage or disposal of Hazardous
Materials, (ii) all costs of refitting or other alterations to the Premises,
Project or buildings within the Project required as a result of Tenant's use,
storage, or disposal of Hazardous Materials including, without limitation,
alterations required to accommodate an alternate use of the Premises, Project or
buildings within the Project, and (iii) any diminution in the fair market value
of the Premises, Project or buildings within the Project caused by Tenant's use,
storage, or disposal of Hazardous Materials. For purposes of this paragraph 49,
any acts or omissions of Tenant, or by employees, agents, assignees, contractors
or subcontractors of Tenant or others acting for or on behalf of Tenant (whether
or not they are negligent, intentional, willful or unlawful) shall be strictly
attributable to Tenant.
C. Survival. The provisions of this paragraph 49 shall survive the
--------
expiration or earlier termination of the term of this lease.
D. Landlord's Representation. Landlord hereby represents to Tenant
-------------------------
as of the date of execution of this lease by Landlord that, to Landlord's actual
knowledge, without duty to investigate or inquire, there are no Hazardous
Materials on, in
44
or under the Project in violation of any Hazardous Materials Laws.
50. SIGNAGE
Tenant shall not, without obtaining the prior written consent of Landlord
(not to be unreasonably withheld, delayed or conditioned), install or attach any
sign or advertising material on any part of the outside of the Premises, or on
any part of the inside of the Premises which is visible from the outside of the
Premises, or in the halls, lobbies, windows or elevators of the building in
which the Premises are located or on or about any other portion of the Common
Area or Project. Notwithstanding the above, Tenant shall have the right to use
the existing monument sign at the Project and a sign in each Project directory
("Permitted Signage"). With respect to the Permitted Signage and any other
signage consented to by Landlord at any time, such signage, the location, size,
design, color and other physical aspects thereof shall be subject to Landlord's
prior written approval and shall be in accordance with any sign program
applicable to the Project and shall comply with all applicable laws, statutes,
requirements, rules, ordinances and any C.C. & R.'s or other similar
requirements. With respect to any permitted sign installed by or for Tenant,
Tenant shall maintain such sign or other advertising material in good condition
and repair and shall remove such sign or other advertising material on the
expiration or earlier termination of the term of this lease. The cost of any
permitted sign or advertising material and all costs associated with the
installation, maintenance and removal thereof shall be paid for solely by
Tenant. If Tenant fails to properly maintain or remove any permitted sign or
other advertising material, Landlord may do so at Tenant's expense. Any cost
incurred by Landlord in connection with such maintenance or removal shall be
deemed additional rent and shall be paid by Tenant to Landlord within twenty
(20) days following notice from Landlord. Landlord may remove any unpermitted
sign or advertising material without notice to Tenant and the cost of such
removal shall be additional rent and shall be paid by Tenant within twenty (20)
days following notice from Landlord. Landlord shall not be liable to Tenant for
any damage, loss or expense resulting from Landlord's removal of any sign or
advertising material in accordance with this paragraph 50. The provisions of
this paragraph 50 shall survive the expiration or earlier termination of this
lease.
51. SUBMISSION OF LEASE
The submission of this lease to Tenant for examination or signature by
Tenant is not an offer to lease the Premises to Tenant, nor an agreement by
Landlord to reserve the Premises for Tenant. Landlord will not be bound to
Tenant until this lease has been duly executed and delivered by both Landlord
and Tenant.
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52. PREMISES TAKEN "AS IS"
Except as otherwise specifically provided in this lease, Tenant is
leasing the Premises from Landlord "as is" in their condition existing as of the
date hereof. Landlord shall have no obligation to alter or improve the Premises.
53. ADDITIONAL RENT
All costs, charges, fees, penalties, interest and any other payments
(including Tenant's reimbursement to Landlord of costs incurred by Landlord)
which Tenant is required to make to Landlord pursuant to the terms and
conditions of this lease and any amendments to this lease shall be and
constitute additional rent payable by Tenant to Landlord when due as specified
in this lease and any amendments to this lease.
54. [INTENTIONALLY OMITTED]
55. INITIAL TENANT IMPROVEMENTS
Improvements to the Premises shall be constructed and installed in
accordance with the plans and specifications, and other terms and conditions set
forth in the Tenant Work Letter Agreement attached hereto as Exhibit C, the
contents of which are incorporated herein and made a part hereof by this
reference. The Tenant Improvements (as defined in Exhibit C) shall be
constructed and installed at the expense of Landlord and/or Tenant as set forth
in Exhibit C to this lease and in each case shall be performed in a diligent and
workmanlike manner.
Any upgrades, changes or improvements to the Premises or the Project,
whether or not required by governmental authority, including without limitation,
repair and replacement of HVAC or other building systems, ADA compliance and
building code upgrades shall be deemed part of and included in the cost of the
Tenant Improvements and shall be paid for as specified in Exhibit C.
56. EARLY ACCESS.
Upon satisfaction of the conditions to effectiveness set forth in
paragraph 59 of this lease, Landlord shall provide Tenant with limited access to
the Premises prior to the Lease Commencement Date, but only for purposes of
constructing the Tenant Improvements in accordance with paragraph 55 above.
Except as specifically provided below, Tenant's access to the Premises pursuant
to this paragraph shall be subject to all the terms and conditions of this
lease, including the insurance
46
obligations specified in paragraph 11. As a condition precedent to Tenant's
right to such access to the Premises, Tenant shall provide Landlord with proof
that Tenant has satisfied said insurance requirements. Such limited access to
the Premises shall not accelerate the commencement or termination dates of this
lease specified in paragraph 2 hereof and except as otherwise provided in
paragraph 60 below (Early Possession), Tenant shall not be obligated to pay
basic rent or common area charges until the commencement of the term.
57. OPTION TO EXTEND TERM.
Landlord grants to Tenant the option to extend the term for one period
of five (5) years (the "Extended Term") following the expiration of the initial
term set forth in paragraph 2 ("Initial Term") under all the provisions of this
lease except for the amount of the basic rent. The basic rent for the Extended
Term shall be adjusted to the market rate (as defined in paragraph (c) below);
provided that in no event shall the basic rent for the Extended Term be less
than the basic rent in effect at the expiration of the Initial Term. This option
is further subject to the following terms and conditions:
(a) Tenant must deliver its irrevocable written notice of Tenant's
exercise of this option to Landlord not less than twelve (12) lease months, nor
more than fifteen (15) lease months, prior to the expiration of the Initial
Term. Time is of the essence with respect to the time period during which Tenant
must deliver to Landlord its written notice of exercise and, therefore, if
Tenant fails to give Landlord its irrevocable written notice of its exercise of
this option within the time period provided above then this option shall expire
and be of no further force or effect.
(b) The parties shall have thirty (30) days from the date Landlord
receives Tenant's notice of exercise in which to agree on the amount
constituting the market rate. If Landlord and Tenant agree on the amount of the
market rate, they shall immediately execute an amendment to this lease setting
forth the expiration date of the Extended Term and the amount of the basic rent
to be paid by Tenant during the Extended Term. If Landlord and Tenant are unable
to agree on the amount of the market rate within such time period, then, at the
request of either party, the market rate shall be determined in the following
manner: (i) within ten (10) days of the request of either party, Landlord and
Tenant shall each select a licensed real estate broker with not less than five
(5) years experience in the business of commercial leasing of property of the
same type and use and in the same geographic area, as the Premises; (ii) within
fifteen (15) days of their appointment, such two real estate brokers shall
select a third broker who is similarly qualified; (iii) within thirty (30) days
from the appointment of the third broker, the three brokers so selected shall,
acting as a board of arbitrators, then
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determine the amount of the market rate, basing their determination on standard
procedures and tests normally employed in determining market rates and applying
the factors included within the definition of market rate set forth in
subparagraph (c) below. The decision of the majority of said brokers shall be
final and binding upon the parties hereto. If a majority of the brokers are
unable to agree on the market rate within the stipulated period of time, the
three opinions of the market rate shall be added together and their total
divided by three; the resulting quotient shall be the market rate. If, however,
the low opinion and/or the high opinion are/is more than 15% lower and/or higher
than the middle opinion, the low opinion and/or the high opinion, as the case
may be, shall be disregarded. If only one opinion is disregarded, the remaining
two opinions shall be added together and their total divided by two and the
resulting quotient shall be the market rate. If both the low opinion and the
high opinion are disregarded as stated in this paragraph, the middle opinion
shall be the market rate. If a party does not appoint a qualified broker within
the required time period, the broker appointed by the other party shall be the
sole broker and shall determine the market rate. If the two brokers appointed by
the parties are unable to agree on the third broker, either of the parties to
the lease, by giving ten (10) days' notice to the other party, can apply to the
then president of the county real estate board of the county in which the
Premises are located, or to the presiding judge of the superior court of that
county, for the selection of a third broker who meets the qualifications stated
in this paragraph. Each party shall pay the expenses and charges of the brokers
appointed by it and the parties shall pay the expenses and charges of the third
broker in equal shares. When the market rate has been so determined, Landlord
and Tenant shall immediately execute an amendment to this lease stating the
basic rent for the Extended Term.
(c) As used herein, the "market rate" shall be the monthly rental
rate, including all escalations, then obtained for five (5) year leases with
comparable terms for comparable space in the Project and in buildings and/or
projects within the same geographical area of similar type, identity, quality
and location as the Project and shall take into consideration the following
concessions: (1) rental abatement concessions, if any, being granted to tenants
in connection with comparable space; and (2) tenant improvements or allowances
being provided for comparable space, taking into account the value of the
existing improvements in the Premises.
(d) Common area charges shall continue to be determined and payable
as provided in paragraph 16 of this lease.
(e) Neither party shall have the right to have any court or other
third party determine the market rate or the basic rent. Tenant shall not assign
or otherwise transfer this option or any interest therein and any attempt to do
so shall render
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this option null and void. Tenant shall have no right to extend the term beyond
the Extended Term. If Tenant is in default under this lease or an event has
occurred which with notice or the passage of time would constitute a default
under this lease at the date of delivery of Tenant's notice of exercise to
Landlord, then such notice shall be of no effect and this lease shall expire at
the end of the Initial Term; if Tenant is in default under this lease on the
last day of the Initial Term, then Landlord may in its sole discretion elect to
have Tenant's exercise of this option be of no effect, in which case this lease
shall expire at the end of the Initial Term.
(f) The rights contained in this paragraph 57 shall be personal to
the originally named Tenant and may be exercised only by the originally named
Tenant (and may not be transferred or assigned or exercised by any assignee,
sublessee, or other transferee of Tenant's interest in this lease) and only if
the originally named Tenant occupies the entire Premises as of the date it
exercises this option in accordance with the terms of this paragraph 57.
58. SUBJECT TO GROUND LEASE
This lease is subject to the provisions of the Ground Lease (defined
in paragraph 1 above) covering the Premises between Landlord and Stanford and
attached hereto as Exhibit D. During the term of this lease Tenant shall perform
all of Landlord's obligations as Lessee under said Ground Lease, except as
otherwise stated herein, and shall be subject to all restrictions in said Ground
Lease, including but not limited to restrictions with respect to the use,
occupancy and alteration of the Premises. Tenant hereby acknowledges having
reviewed the Ground Lease and approves the provisions of the same. In the event
of any conflict in the provisions of this lease and the Ground Lease, the latter
shall prevail.
59. CONDITION TO EFFECTIVENESS
The effectiveness of this lease is conditioned upon receipt of
Stanford's consent hereto at no additional cost or charge to Landlord and
termination of all leases of the current tenants in the Premises. Tenant shall
be responsible for obtaining Stanford's consent to this lease and approval of
the uses specified herein and shall bear all costs related thereto, including
without limitation any attorneys fees or other costs or charges of Stanford as
may be required under the Ground Lease. If the foregoing conditions are not
satisfied on or before the date that is thirty (30) days after the date of
execution and delivery of this lease by both parties, then upon written notice
of Landlord or Tenant to the other, this lease shall be of no force or effect
and Landlord and Tenant shall have no further obligation to each other under
this lease.
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60. EARLY POSSESSION
Tenant shall be permitted to occupy that portion of the Premises
located on the third floor as shown on Exhibit E attached hereto ("Early
Occupancy Space"). Tenant shall notify Landlord in writing of its intent to
occupy the Early Occupancy Space not less than three (3) days prior to the date
that Tenant proposes to commence such occupancy. Commencing on the date that
Tenant commences business operations in the Early Occupancy Space (the "Early
Occupancy Date"), all terms and provisions of this lease shall apply except that
Tenant's obligation to pay basic rent shall be Sixty-nine Thousand Eight Hundred
Thirty-six and 40/100 Dollars ($69,836.40) per month, Tenant's percentage share
of common area charges shall be twenty-seven and eight one-hundredths percent
(27.08%) and Tenant's payment of its estimated share of common area charges
shall be Seven Thousand Nine Hundred Twenty-nine and 24/100 Dollars ($7,929.24)
per month, which amounts are prorated amounts based on the ratio of the square
footage of the Early Occupancy Space to the square footage of the Premises which
the parties agree is twenty-seven and eight one-hundredths percent (27.08%)
(20,420 + 75,420). Notwithstanding the early possession permitted hereunder, the
Lease Commencement Date and the Lease Expiration Date with respect to the entire
Premises shall be as defined in paragraph 2 of this lease and the basic rent
schedule set forth in paragraph 5 of this lease shall apply to the ten (10) year
period commencing on the Lease Commencement Date and ending on the Lease
Expiration Date.
61. COUNTERPARTS
This lease may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
62. HVAC REPLACEMENT
Tenant agrees, at its cost and expense, to replace the original HVAC
units on the roof no later than two (2) years after execution of this lease.
These units consist of four (4) 40 ton Trane VAV units, four (4) Reznor heaters,
and three (3) 10 ton Trane package units. The final specifications and brand of
the equipment and installation will be subject to Landlord's approval. Landlord
shall be notified no less than sixty (60) days prior to commencement of the work
requesting consent and providing all relevant information regarding the
installation. The new units shall be sized to accommodate all expected heat
loads per Landlord's mechanical engineer's recommendations. The units will have
variable frequency drives, full economizers, and a new control system for
economical and long term efficient operation to the latest standards in the
industry.
[Signatures on next page]
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IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this
lease on the date first above written.
Landlord: Tenant:
-------- ------
ARASTRADERO PROPERTY, ALTAVISTA COMPANY
a California general a Delaware corporation
partnership
By: McCandless - Triad, a
California general By: /s/ Ken Barber
partnership, Partner ---------------------------
Name: Ken Barber
-------------------------
By: /s/ Jean A. McCandless Title: C.F.O
-------------------------- ------------------------
Jean A. McCandless,
as Trustee under the Date: September 13, 1999
Charles S. McCandless -------------------------
and Jean A. McCandless
Inter Vivos Trust
Agreement dated By: /s/ Stephanie Lucie
January 25, 1977, ---------------------------
Partner Name: Stephanie Lucie
-------------------------
Title: V.P. & General Counsel
By: /s/ Birk S. McCandless
--------------------------
Birk S. McCandless, Date: September 13, 1999
as Trustee under the -------------------------
Birk S. McCandless
and
Mary McCandless Inter
Vivos Trust Agreement
dated February 17,
1982, Partner
By: /s/ Gregory B. McCandless
--------------------------
Gregory B. McCandless,
as Trustee under the
Gregory B. McCandless
and Gloria M.
McCandless Inter Vivos
Trust Agreement dated
November 24, 1982,
Partner
By: Computer Curriculum
Partnership, a California
general partnership,
Partner
By: /s/ Patrick Suppes
--------------------------
Patrick Suppes,
Managing Partner
51