\nLandlord’s Liability 15
\n Limitation on Landlord’s Liability 15
\n Limitation on Tenant’s Recourse 15
\n Indemnification of Landlord 16
\nDestruction of Premises 16
\n Landlord’s Obligation to Restore 16
\n Limitations on Landlord’s Restoration Obligation 16
\nCondemnation 17
\nAssignment or Sublease 17
\n Consent by Landlord 17
\n Assignment or Subletting Consideration 18
\n No Release 18
\n Reorganization of Tenant 18
\n Permitted Transfers 18
\n Effect of Default 19
\n Effects of Conveyance 19
\n Successors and Assigns 19
\nOption to Extend the Lease Term 19
\n Grant and Exercise of Option 19
\n Determination of Fair Market Rental 20
\n Resolution of a Disagreement over the Fair Market Rental 20
\n Personal to Tenant 21
\nCondition Precedent to Lease 21
\nGeneral Provisions 21
\n Attorney’s Fees 21
\n Authority of Parties 21
\n Brokers 21
\n Choice of Law 22
\n Dispute Resolution 22
\n Entire Agreement 22
\n Entry by Landlord 22
\n Estoppel Certificates 23
\n Exhibits 23
\n Interest 23
\n No Presumption Against Drafter 23
\n Notices 23
\n Property Management 24
\n Rent 24
\n Representations 24
\n Rights and Remedies 24
\n Severability 24
\n Submission of Lease 24
\n Subordination 24
\n Approvals 25
\n Reasonable Expenditures 25
\n Survival of Indemnities 25
\n Time 25
\n Waiver of Right to Jury Trial 25
\n Memorandum of Lease 25
\n Quiet Enjoyment 26
\nEXHIBIT A – Premises 28
\n<\/c><\/s><\/table>\n Page 2<\/p>\n
1. PARTIES: THIS LEASE, is entered into on this 15th day of May, 1998, between
\nThe Sobrato Group, a California Limited Partnership, whose address is 10600
\nNorth De Anza Boulevard, Suite 200, Cupertino, CA 95014 and Concentric Network
\nCorporation, a Delaware Corporation, whose address is 10590 North Tantau Avenue,
\nCupertino, California, 95014 hereinafter called respectively Landlord and
\nTenant.<\/p>\n
2. PREMISES: Landlord hereby leases to Tenant, and Tenant hires from Landlord
\nthose certain Premises with the appurtenances, situated in the City of San Jose,
\nCounty of Santa Clara, State of California, commonly known and designated as
\n1400 Parkmoor Avenue, including a building consisting of 102,848 rentable square
\nfeet (“Building”) and exclusive parking for approximately 340 cars, as outlined
\nin red on Exhibit “A”. Unless expressly provided otherwise, the term Premises as
\n ———–
\nused herein shall include the Tenant Improvements (defined in Section 5.B)
\nconstructed by Tenant pursuant to Section 5.B.<\/p>\n
3. USE:<\/p>\n
A. PERMITTED USES: Tenant shall use the Premises only for the following
\npurposes and shall not change the use of the Premises without the prior written
\nconsent of Landlord: Office, research and development, marketing, light
\nmanufacturing, other legally permitted uses, ancillary storage and other
\nincidental uses. Tenant shall use only the number of parking spaces allocated to
\nTenant. Landlord makes no representation or warranty that any specific use of
\nthe Premises desired by Tenant is permitted pursuant to any Laws.<\/p>\n
B. USES PROHIBITED: Tenant shall not commit or suffer to be committed on the
\nPremises any waste, nuisance, or other act or thing which may disturb the quiet
\nenjoyment of any other tenant in or around the Premises, nor allow any sale by
\nauction or allow the Premises to be used for any unlawful purpose. Tenant shall
\nnot (i) damage or overload the electrical, mechanical or plumbing systems of the
\nPremises, (ii) attach, hang or suspend anything from the ceiling, walls or
\ncolumns of the Building if it would endanger the structural integrity of the
\nBuilding or set any load on the floor in excess of the load limits for which
\nsuch items are designed if it would endanger the structural integrity of the
\nBuilding, or (iii) generate dust, fumes or waste products which create a fire or
\nhealth hazard or damage the Premises or in the soils surrounding the Building.
\nNo materials, supplies, equipment, finished products or semi-finished products,
\nraw materials or articles of any nature, or any waste materials, refuse, scrap
\nor debris, shall be stored upon or permitted to remain on any portion of the
\nPremises outside of the Building other than within designated trash enclosure
\nareas without Landlord’s prior approval, which approval may be withheld in its
\nsole discretion.<\/p>\n
C. ADVERTISEMENTS AND SIGNS: Tenant will not place or permit to be placed upon
\nor about the Premises any signs not approved by the city or other governing
\nauthority. Any sign placed on the Premises shall be removed by Tenant, at its
\nsole cost, prior to the Expiration Date or promptly following the earlier
\ntermination of the Lease, and Tenant shall repair, at its sole cost, any damage
\nor injury to the Premises caused thereby, and if not so removed, then Landlord
\nmay have same so removed at Tenant’s expense. Landlord shall cooperate with
\nTenant in acquiring required permits for the signage desired by Tenant;
\nprovided, however, that Landlord shall not be required to incur out-of-pocket
\ncosts in connection therewith.<\/p>\n
D. COVENANTS, CONDITIONS AND RESTRICTIONS: This Lease is subject to the effect
\nof (i) any covenants, conditions, restrictions, easements, mortgages or deeds of
\ntrust, ground leases, rights of way of record and any other documents of record;
\nand (ii) any zoning laws of the city, county and state where the Building is
\nsituated (collectively referred to herein as “Restrictions”) and Tenant will
\nconform to and will not violate the terms of any such Restrictions.<\/p>\n
4. TERM AND RENTAL:<\/p>\n
A. BASE MONTHLY RENT: The term (“Lease Term”) shall be for eighty four (84)
\nmonths, commencing on February 1, 1999 (the “Commencement Date”) and ending
\nJanuary 31, 2006, (“Expiration Date”). In addition to all other<\/p>\n
Page 3<\/p>\n
sums payable by Tenant under this Lease commencing on the Commencement Date
\n(which may be extended as set forth in Section 6 of this Lease), Tenant shall
\npay as base monthly rent (“Base Monthly Rent”) for the Premises according to the
\nfollowing schedule:<\/p>\n
Months 01 – 12: $200,554.00 per month
\n Months 13 – 24: $208,576.00 per month
\n Months 25 – 36: $216,919.00 per month
\n Months 37 – 48: $225,596.00 per month
\n Months 49 – 60: $234,619.00 per month
\n Months 61 – 72: $244,004.00 per month
\n Months 73 – 84: $253,764.00 per month<\/p>\n
Base Monthly Rent shall be due in advance on or before the first day of each
\ncalendar month during the Lease Term. All sums payable by Tenant under this
\nLease shall be paid to Landlord in lawful money of the United States of America,
\nwithout offset or deduction (except as specifically set forth in this Lease) and
\nwithout prior notice or demand, at the address specified in Section 1 of this
\nLease or at such place or places as may be designated in writing by Landlord
\nduring the Lease Term. Base Monthly Rent for any period less than a calendar
\nmonth shall be a pro rata portion of the monthly installment based on a thirty
\n(30) day month. On or before July 15, 1998, Tenant shall pay Landlord the sum
\nof Two Hundred Thousand Five Hundred Fifty Four and No\/100 Dollars ($200,554.00)
\nas prepaid rent for the first month of the Lease.<\/p>\n
B. LATE CHARGES: Tenant hereby acknowledges that late payment by Tenant to
\nLandlord of Base Monthly Rent and other sums due hereunder will cause Landlord
\nto incur costs not contemplated by this Lease, the exact amount of which is
\nextremely difficult to ascertain. Such costs include but are not limited to:
\nadministrative, processing, accounting, and late charges which may be imposed on
\nLandlord by the terms of any contract, revolving credit, mortgage, or trust deed
\ncovering the Premises. Accordingly, if any installment of Base Monthly Rent or
\nother sum due from Tenant shall not be received by Landlord or its designee
\nwithin ten (10) days after the rent is due, Tenant shall pay to Landlord a late
\ncharge equal to five (5%) percent of such overdue amount, which late charge
\nshall be due and payable on the same date that the overdue amount was due. The
\nparties agree that such late charge represents a fair and reasonable estimate of
\nthe costs Landlord will incur by reason of late payment by Tenant, excluding
\ninterest and attorneys fees and costs. If any rent or other sum due from Tenant
\nremains delinquent for a period in excess of thirty (30) days then, in addition
\nto such late charge, Tenant shall pay to Landlord interest on any rent that is
\nnot paid when due at the Agreed Interest Rate specified in Section 20.J
\nfollowing the date such amount became due until paid; provided, however, that
\ninterest shall not accrue on any late charge. Acceptance by Landlord of such
\nlate charge shall not constitute a waiver of Tenant’s default with respect to
\nsuch overdue amount nor prevent Landlord from exercising any of the other rights
\nand remedies granted hereunder. In the event that a late charge is payable
\nhereunder, whether or not collected, for three (3) consecutive installments of
\nBase Monthly Rent, then the Base Monthly Rent shall automatically become due and
\npayable quarterly in advance, rather than monthly, notwithstanding any provision
\nof this Lease to the contrary.<\/p>\n
C. SECURITY DEPOSIT: Prior to the July 31, 1998, Tenant shall deposit with
\nLandlord the sum of One Million Two Hundred Thousand and No\/100 Dollars
\n($1,200,000.00) (“Security “Deposit”). Notwithstanding the foregoing, Landlord
\nagrees that in lieu of a cash security deposit, Tenant may deposit a letter of
\ncredit or certificate of deposit (“CD”) in a form reasonably acceptable to
\nLandlord. Landlord shall be entitled to draw against the letter of credit or CD
\nat any time that Tenant has committed a material default and breach of this
\nLease as defined in Section 13 of this Lease, provided only that Landlord
\ncertifies to the issuer of the letter of credit or CD under penalty of perjury
\nthat Tenant is in default (beyond any applicable notice and applicable cure
\nperiod) under the Lease. Tenant shall keep the letter of credit or CD in effect
\nduring the entire Lease Term, as the same may be extended or terminated, plus a
\nperiod of four (4) weeks after expiration or sooner termination of the Lease
\nTerm. At least thirty (30) days prior to expiration of any letter of credit or
\nCD, the term<\/p>\n
Page 4<\/p>\n
thereof shall be renewed or extended for a period of at least one (1) year.
\nTenant’s failure to so renew or extend the letter of credit or CD shall be a
\nmaterial default of this Lease by Tenant. In the event Landlord draws against
\nthe letter of credit or CD, Tenant shall replenish the existing letter of credit
\nor CD or cause a new letter of credit or CD to be issued such that the aggregate
\namount of letters of credit or CD available to Landlord at all times during the
\nLease Term is the amount of the original security deposit, less any deductions
\nthereof permitted under this Section 4.C.. Notwithstanding the foregoing,
\nprovided Tenant has not been in monetary default (beyond any required written
\nnotice and applicable cure period) under the Lease during the previous 12 month
\nperiod, Tenant shall be entitled to reduce the amount of the Security Deposit
\nannually by Two Hundred Thousand and No\/100 Dollars ($200,000.00). In no case,
\nhowever, shall the amount of the Security Deposit ever be reduced to less than
\nTwo Hundred Thousand Dollars ($200,000.00) in total. Landlord shall not be
\ndeemed a trustee of the Security Deposit, may use the Security Deposit in
\nbusiness, and shall not be required to segregate it from its general accounts.
\nTenant shall not be entitled to interest on the Security Deposit. If Tenant
\ndefaults (beyond any applicable cure period) with respect to any provisions of
\nthe Lease, including but not limited to the provisions relating to payment of
\nBase Monthly Rent or other charges, Landlord may, to the extent reasonably
\nnecessary to remedy Tenant’s default, use any or all of the Security Deposit
\ntowards payment of the following: (i) Base Monthly Rent or other charges in
\ndefault; (ii) any other amount which Landlord may spend or become obligated to
\nspend by reason of Tenant’s default including, but not limited to. Tenant’s
\nfailure to restore or clean the Premises following vacation thereof as required
\nunder this Lease; and (iii) any other loss or damage which Landlord may suffer
\nby reason of Tenant’s default. Tenant waives the provisions of California Civil
\nCode Section 1950.7, and all other provisions of law now in force or that become
\nin force after the date of execution of this Lease, that provide that Landlord
\nmay claim from a security deposit only those sums reasonably necessary to remedy
\ndefaults in the payment of Rent, to repair damage caused by Tenant, or to clean
\nthe Premises. Landlord and Tenant agree that Landlord may, in addition, claim
\nthose sums reasonably necessary to compensate Landlord for any other foreseeable
\nor unforeseeable loss or damage caused by the act or omission of Tenant or
\nTenant’s agents, employees, contractors and invitees (“Tenant’s Agents”). Tenant
\nmay not assign or encumber the Security Deposit without the consent of Landlord.
\nAny attempt to do so shall be void and shall not be binding on Landlord. The
\nSecurity Deposit shall be returned to Tenant within thirty (30) days after the
\nExpiration Date or earlier termination of the Lease and surrender of the
\nPremises to Landlord, less any amount deducted in accordance with this Section,
\ntogether with Landlord’s written notice itemizing the amounts and purposes for
\nsuch deduction. In the event of termination of Landlord’s interest in this
\nLease, Landlord may deliver or credit the Security Deposit to Landlord’s
\nsuccessor in interest in the Premises and thereupon be relieved of further
\nresponsibility with respect to the Security Deposit.<\/p>\n
5. CONSTRUCTION:
\nTenant intends to make certain interior improvements (“Tenant Improvements”) to
\nthe Premises prior to the Lease Commencement Date. As an inducement for Tenant
\nto enter into this Lease, Landlord has agreed to provide Tenant a work allowance
\nto be utilized for the cost of Tenant Improvements to be constructed by Tenant
\n(“Work Allowance”) in an amount of up to Three Hundred Fifty Thousand and No\/100
\nDollars ($350,000.00). The Work Allowance shall be paid by Landlord to Tenant
\nas payments become due by Tenant to its general contractor(s) performing the
\nTenant Improvements. The Tenant Improvements shall not be removed or altered by
\nTenant without the prior written consent of Landlord as provided in Section 7.
\nTenant shall have the right to depreciate and claim and collect any Investment
\ntax credits in the Tenant Improvements during the Lease Term. Upon expiration of
\nthe Lease term or any earlier termination of the Lease, the Tenant Improvements
\nshall become the property of Landlord and shall remain upon and be surrendered
\nwith the Premises, and title thereto shall automatically vest in Landlord
\nwithout any payment therefore.<\/p>\n
Notwithstanding anything to the contrary in this Lease, the following Tenant
\nImprovements to be made to the Premises shall at all times remain Tenant’s
\nproperty and Tenant shall be entitled to all depreciation, amortization and
\nother tax <\/p>\n
Page 5<\/p>\n
benefits with respect thereto: data center installed by Tenant, all
\ntelecommunications and cabling systems (“Tenant’s Property”). Notwithstanding
\nanything to the contrary in the Lease, Tenant may remove Tenant’s Property from
\nthe Premises or alter Tenant’s Property at any time, provided (i) Tenant, at
\nTenant’s expense, repairs any damage caused by such removal and (ii) the
\nalteration or removal of Tenant’s Property does not affect the functionality of
\nthe Building for a typical office\/research and development tenant. Tenant’s
\nrepair obligations pursuant this Article shall include (i) patching holes and
\nrepainting wall surfaces, (ii) replacing floor coverings, and (iii)
\nreconfiguring the electrical, mechanical, and plumbing systems in such a manner
\nso that the location of the Tenant’s Property removed is no longer apparent to
\nLandlord. Under no circumstances will Tenant be required to remove any of the
\nTenant Improvements from the Premises upon the expiration or sooner termination
\nof the Lease Term or any extension thereof. The Term “Alterations” as used in
\nthis Lease does not include the Tenant Improvements.<\/p>\n
6. ACCEPTANCE OF POSSESSION AND COVENANTS TO SURRENDER:<\/p>\n
A. DELIVERY AND ACCEPTANCE: Landlord shall deliver possession of the Premises
\nto Tenant on January 1, 1999 (the “Early Possession Date”) for the purpose of
\nconstructing the Tenant Improvements. Tenant shall not be required to pay Base
\nMonthly Rent or any additional rent for the Premises until the Commencement
\nDate. If Landlord fails to deliver possession of the Premises to Tenant on the
\nEarly Possession Date, then the Commencement Date shall be delayed by one (1)
\nday for each day that the Early Possession Date is delayed beyond January 1,
\n1999 so that in all cases, Tenant has a period of thirty (30) days between the
\nEarly Possession Date and the Commencement Date. If Landlord is unable to
\ndeliver possession of the Premises to Tenant by March 31, 1999, Tenant may
\nterminate this Lease by written notice to the Landlord, whereupon any monies
\npreviously paid by Tenant to Landlord, including prepaid rent and Security
\nDeposit, shall be returned to Tenant. Tenant, its agents, employees,
\nrepresentatives and contractors shall have the right to enter and use the
\nPremises on and after the Early Possession Date. By the Commencement Date,
\nLandlord agrees to deliver the Premises in good operating condition and repair,
\nincluding the parking lot, roof membrane, HVAC, electrical and plumbing systems.
\nTenant shall thereafter accept the Premises as being in good and sanitary order,
\ncondition and repair and accepts the Premises and other improvements in said
\ncondition. Notwithstanding anything to the contrary in this Lease, Landlord
\nrepresents and warrants to Tenant that on the Commencement Date, the Premises
\nand all improvements thereon (with the exception of Tenant Improvements
\nconstructed by Tenant) shall: (i) be free from material defects; and (ii) comply
\nwith all applicable laws, regulations, conditions, covenants and restrictions,
\nor other promulgations of lawful governmental authority including, without
\nlimitation, Title 24 of the California Administative Code and the Americans with
\nDisabilities Act. The only exception to the foregoing shall be any compliance
\nnecessitated because of Tenant’s construction of Tenant Improvements. Landlord
\nfurther warrants that as of the Commencement Date, the HVAC, plumbing,
\nmechanical, electrical, sewer and heating systems which Tenant will be required
\nto maintain under the terms of the Lease are in good operating condition and
\nrepair. Landlord hereby assigns to Tenant all warranties with respect to the
\nPremises which would reduce Tenant’s maintenance obligations under the Lease and
\nshall cooperate with Tenant to enforce all such warranties. Except as otherwise
\nspecifically provided herein, Tenant agrees to accept possession of the Premises
\nin said condition, subject to all Restrictions and without further
\nrepresentation or warranty by Landlord beyond those in the Lease.<\/p>\n
B. CONDITION UPON SURRENDER: Tenant further agrees on the Expiration Date or
\non the sooner termination of this Lease, to surrender the Premises to Landlord
\nin good condition and repair, normal wear and tear, acts of God, casualties,
\ncondemnation, Tenant Improvements, Hazardous Materials as defined in Section 12
\nhereof (other than those used , stored or disposed of in or about the Premises
\nin violation of “Governmental Regulations” (as defined in Section 7.D) and
\nAlterations as defined in Section 7.A. made by Tenant which Landlord has
\nindicated that Tenant shall not be required to remove, excepted. In this regard,
\n“normal wear and tear” shall be construed to mean wear and<\/p>\n
Page 6<\/p>\n
tear caused to the Premises by the natural aging process which occurs in spite
\nof prudent application of the best standards for maintenance, repair
\nreplacement, and janitorial practices, and does not include items of neglected
\nor deferred maintenance. In any event, Tenant shall cause the following to be
\ndone prior to the Expiration Date or sooner termination of this Lease: (i) all
\ninterior walls shall be painted or cleaned so that they appear freshly painted,
\n(ii) all tiled floors shall be cleaned and waxed, (iii) all carpets shall be
\ncleaned and shampooed, (iv) all broken, marred and stained acoustical ceiling
\ntiles, and any non-conforming replacements thereof by Tenant shall be replaced,
\n(v) all cabling placed above the ceiling by Tenant or Tenant’s contractors shall
\nbe removed, (vi) all windows shall be washed; (vii) the HVAC system shall be
\nserviced by a reputable and licensed service firm and left in “good operating
\ncondition and repair” as so certified by such firm, and (viii) the plumbing and
\nelectrical systems and lighting shall be placed in good order and repair,
\nincluding replacement of any burned out, discolored or broken light bulbs,
\nballasts, or lenses. On or before the Expiration Date or sooner termination of
\nthis Lease, Tenant shall remove all its personal property and trade fixtures
\nfrom the Premises. All property and fixtures not so removed shall be deemed as
\nabandoned by Tenant. Tenant shall ascertain from Landlord within ninety (90)
\ndays before the end of the Lease Term whether Landlord will require Tenant to
\nremove any Alterations made by Tenant at the Premises; provided that Landlord
\nshall not require Tenant to remove any Alteration which Landlord has previously
\nindicated may remain at the Premises. If Landlord shall so require, Tenant
\nshall, at Tenant’s sole cost and expense, remove such Alterations as Landlord
\nrequires and shall repair and restore said Premises or such parts thereof before
\nthe Expiration Date to the condition and configuration as of the Commencement
\nDate or upon the completion of the Tenant Improvements; provided, however, that
\nTenant may remove from the Premises all of Tenant’s Property (as defined in the
\nLease), Tenant’s personal property, Tenant’s trade fixtures, and any Alterations
\nwhich Landlord requires Tenant to remove. Such repair and restoration shall
\ninclude causing the Premises to be brought into compliance with all applicable
\nbuilding codes and laws in effect at the time of the removal to extent such
\ncompliance is necessitated due to Tenant’s removal.<\/p>\n
C. FAILURE TO SURRENDER: If the Premises are not surrendered at the Expiration
\nDate or sooner termination of this Lease in the condition required by this
\nSection 6, Tenant shall be deemed in a holdover tenancy pursuant to this Section
\n6.C and Tenant shall indemnify, defend, and hold Landlord harmless against loss
\nor liability resulting from delay by Tenant in so surrendering the Premises
\nincluding, without limitation, any claims made by any succeeding tenant founded
\non such delay and costs incurred by Landlord in returning the Premises to the
\nrequired condition, plus interest at the Agreed Interest Rate. Any holding over
\nafter the termination or Expiration Date with Landlord’s express written
\nconsent, shall be construed as month-to-month tenancy, terminable on thirty (30)
\ndays written notice from either party, and Tenant shall pay as Base Monthly Rent
\nto Landlord a rate equal to one hundred twenty five percent (125%) of the Base
\nMonthly Rent due in the month preceding the termination or Expiration Date, plus
\nall other amounts payable by Tenant under this Lease, which other amounts shall
\nbe paid based on the same formula and schedule as during the Lease Term. Any
\nholding over shall otherwise be on the terms and conditions herein specified,
\nexcept those provisions relating to the Lease Term and any options to extend or
\nrenew, which provisions shall be of no further force and effect following the
\nexpiration of the applicable exercise period. If Tenant remains in possession of
\nthe Premises after expiration or earlier termination of this Lease without
\nLandlord’s consent, Tenant’s continued possession shall be on the basis of a
\ntenancy at sufferance and Tenant shall pay as rent during the holdover period an
\namount equal to two hundred percent (200%) of the Base Monthly Rent due in the
\nmonth preceding the termination or Expiration Date, plus all other amounts
\npayable by Tenant under this Lease, which other amounts shall be paid based on
\nthe same formula and schedule as during the Lease Term. Any holding over shall
\notherwise. This provision shall survive the termination or expiration of the
\nLease.<\/p>\n
7. ALTERATIONS AND ADDITIONS:<\/p>\n
A. TENANT’S ALTERATIONS: Tenant shall not make, or suffer to be made, any
\nalteration or<\/p>\n
Page 7<\/p>\n
addition to the Premises (“Alterations”), or any part thereof, without obtaining
\nLandlord’s prior written consent and delivering to Landlord the proposed
\narchitectural and structural plans for all such Alterations at least fifteen
\n(15) days prior to the start of construction. If such Alterations affect the
\nstructure of the Building, Tenant additionally agrees to reimburse Landlord its
\nreasonable out-of-pocket costs incurred in reviewing Tenant’s plans, not to
\nexceed One Thousand Dollars ($1,000.00) per Alteration. Landlord’s consent shall
\nnot be unreasonably withheld and if Landlord does not notify Tenant in writing
\nof its reasonable disapproval of such Alteration within fourteen (14) days
\nfollowing Tenant’s written request for approval and delivery to Landlord of the
\nproposed plans, then Landlord shall be deemed to have approved the proposed
\nAlteration. Upon the request of Tenant, Landlord shall, within the 14-day
\nperiod, advise Tenant in writing as to whether Landlord shall require removal of
\nany Alteration in question upon the expiration or earlier termination of the
\nLease Term. After obtaining Landlord’s consent, Tenant shall not proceed to make
\nsuch Alterations until Tenant has obtained all required governmental approvals
\nand permits, and if requested by Landlord, provides Landlord with a lien and
\ncompletion bond, in form reasonably approved by Landlord, to protect Landlord
\nagainst mechanics’ lien claims. Tenant agrees to provide Landlord written notice
\nof the anticipated and actual start-date of the work, and a complete set of
\nhalf-size (15″ X 21″) vellum as-built drawings. All Alterations shall be
\nconstructed in compliance with applicable buildings codes and laws. Any
\nAlterations, except movable furniture and trade fixtures, shall become at once a
\npart of the realty and belong to Landlord but shall nevertheless be subject to
\nremoval by Tenant as provided in Section 6 above. Alterations which are not
\ndeemed as trade fixtures include heating, lighting, electrical systems, air
\nconditioning, walls, carpeting, or any other installation which has become an
\nintegral part of the Premises. All Alterations shall be maintained, replaced or
\nrepaired by Tenant at its sole cost and expense.<\/p>\n
The foregoing notwithstanding, Any Alterations made or paid for by Tenant which
\nare not permanently attached to the Premises shall remain the property of Tenant
\nand Tenant shall be entitled to all depreciation, amortization and other tax
\nbenefits with respect thereto. Tenant may remove such Alterations at the
\nExpiration Date, provided (i) Tenant, at Tenant’s expense, repairs any damage
\ncaused by such removal and (ii) the removal of the Alteration does not affect
\nthe functionality of the Building for a typical office\/research and development
\ntenant. Tenant’s repair obligations pursuant this Article shall include (i)
\npatching holes and repainting wall surfaces, (ii) replacing floor coverings, and
\n(iii) reconfiguring the electrical, mechanical, and plumbing systems in such a
\nmanner so that the location of the Alterations removed is no longer apparent to
\nLandlord. Landlord shall have no lien or interest whatsoever in any item of
\nTenant’s Property, Tenant’s personal property or Tenant’s trade fixtures located
\nin the Premises or elsewhere, and Landlord hereby waives all such liens and
\ninterests.<\/p>\n
B. FREE FROM LIENS: Tenant shall keep the Premises free from all liens arising
\nout of work performed, materials furnished, or obligations incurred by Tenant or
\nclaimed to have been performed for Tenant. In the event Tenant fails to
\ndischarge any such lien within ten (10) days after receiving notice of the
\nfiling, Landlord shall be entitled to discharge the lien at Tenant’s expense and
\nall resulting costs reasonably incurred by Landlord, including reasonable
\nattorney’s fees shall be due from Tenant as additional rent. Notwithstanding
\nanything to the contrary in this Lease, Tenant may, in good faith, elect to
\ncontest any such lien provided Tenant shall furnish a bond or other security
\nreasonably acceptable to Landlord within said thirty (30) day period. Upon
\nfurnishing such bond or other security, Landlord shall take no action to
\ndischarge the lien and Tenant shall not then be deemed in default of this Lease.<\/p>\n
C. COMPLIANCE WITH GOVERNMENTAL REGULATIONS: The term Governmental Regulations
\nshall include all federal, state, county, city or governmental agency laws,
\nstatutes, ordinances, standards, rules, requirements, or orders now in force or
\nhereafter enacted, promulgated, or issued. The term also includes government
\nmeasures regulating or enforcing public access, traffic mitigation,
\noccupational, health, or safety standards for employers, employees, landlords,
\nor tenants. Except as otherwise set forth in Section 8 of the Lease, Tenant, at
\nTenant’s sole expense shall make all repairs, replacements, alterations, or<\/p>\n
Page 8<\/p>\n
improvements to the Premises needed to comply with all Governmental Regulations
\nto the extent such repairs, replacements, alterations or improvements are
\nnecessitated due to Tenant’s specific and particular use of the Premises or
\nTenant’s Alterations to the Premises. The judgment of any court of competent
\njurisdiction or the admission of Tenant in any action or proceeding against
\nTenant (whether Landlord be a party thereto or not) that Tenant has violated any
\nsuch law, regulation or other requirement in its use of the Premises shall be
\nconclusive of that fact as between Landlord and Tenant.<\/p>\n
8. MAINTENANCE OF PREMISES:<\/p>\n
A. LANDLORD’S OBLIGATIONS: Landlord at its sole cost and expense, shall
\nmaintain in good condition, order, and repair, and replace as and when
\nnecessary, the foundation, exterior load bearing walls and roof structure of the
\nBuilding.<\/p>\n
B. TENANT’S OBLIGATIONS: Subject to Landlord’s obligations set forth in this
\nLease and the amortization of capital items as set forth in Section 8, Tenant
\nshall clean, maintain, repair and replace when necessary the Premises and every
\npart thereof through regular inspections and servicing, including but not
\nlimited to: (i) all plumbing and sewage facilities, (ii) all heating ventilating
\nand air conditioning facilities and equipment, (iii) all fixtures, interior
\nwalls floors, carpets and ceilings, (iv) all windows, door entrances, plate
\nglass and glazing systems including caulking, and skylights, (v) all electrical
\nfacilities and equipment, (vi) all automatic fire extinguisher equipment, (vii)
\nthe parking lot and all underground utility facilities servicing the Premises,
\n(viii) all elevator equipment, (ix) the roof membrane system, and (x) all
\nwaterscape, landscaping and shrubbery. All wall surfaces and floor tile are to
\nbe maintained in an as good a condition as when Tenant took possession free of
\nholes, gouges, or defacements. With respect to items (ii), (viii) and (ix)
\nabove, Tenant shall provide Landlord a copy of a service contract between Tenant
\nand a licensed service contractor providing for periodic maintenance of all such
\nsystems or equipment in conformance with the manufacturer’s recommendations.
\nTenant shall provide Landlord a copy of such preventive maintenance contracts
\nand paid invoices for the recommended work for which Tenant is responsible if
\nrequested by Landlord.<\/p>\n
C. EXCLUDED COSTS: Notwithstanding anything to the contrary in this Lease, in
\nno event shall Tenant have any obligation to perform or to pay directly, or to
\nreimburse Landlord for, all or any portion of the following repairs,
\nmaintenance, improvements, replacements, premiums, claims losses, fees, charges,
\ncosts and expenses (collectively “Costs”), all of which shall be the
\nresponsibility of Landlord.<\/p>\n
i. LOSSES CAUSED BY LANDLORD: Costs occasioned by the act, omission or
\nviolation by Landlord or its agents, employees, contractors, subcontractors,
\ntenants, or invitees of Governmental Regulations; or a misrepresentation or
\nbreach of this Lease by Landlord or its agents, employees, contractors,
\nsubcontractors, tenants, or invitees.<\/p>\n
ii. CASUALTIES AND CONDEMNATIONS: Costs occasioned by fire, acts of God, or
\nother casualties or by the exercise of the power of eminent domain, provided
\nthat Tenant will pay insurance deductibles in accordance with Section 9 of this
\nLease.<\/p>\n
iii. REIMBURSABLE EXPENSES: Costs for which Landlord has a right of
\nreimbursement from others or for which Landlord actually receives reimbursement.<\/p>\n
iv. CONSTRUCTION DEFECTS AND COMPLIANCE WITH LAW: Costs (i) relating to a
\nfailure of the Premises to conform to all Restrictions, underwriters’
\nrequirements or Governmental Regulations as of the Commencement Date; or (ii)
\nrelating to construction defects.<\/p>\n
v. HAZARDOUS MATERIALS: Except to the extent caused by the disposal, release,
\nemission or storage of the Hazardous Materials in question by Tenant, its
\nagents, employees, invitees or contractors in violation of Governmental
\nRegulations, costs incurred to investigate the presence of any Hazardous
\nMaterials, costs to respond to any claim of Hazardous Material contamination or
\ndamage, costs to remove any Hazardous Material from the Premises, judgments or
\nother costs incurred in connection with any Hazardous Materials exposure or
\nreleases, or any other cost associated with a Hazardous Material.<\/p>\n
Page 9<\/p>\n
vi. CAPITAL IMPROVEMENTS: If Tenant’s maintenance or repair obligations as
\nset forth in this Lease would require Tenant to perform or pay for any
\nindividual item which would be properly capitalized under generally accepted
\naccounting principles and costs in excess of Sixty Thousand Dollars
\n($60,000.00), then Landlord shall perform such repair or make such replacement
\npromptly after notification by Tenant and the cost of such item or improvement
\nshall be allocated as follows: Landlord and Tenant shall establish the useful
\nlife of the item in question based upon generally accepted accounting
\nprinciples. Tenant shall pay a portion of the cost equal to the actual cost of
\nsuch improvement or item paid by Landlord to the third party contractor
\nperforming the maintenance or furnishing the replacement times a fraction, the
\nnumerator of which is the number of months remaining in the initial Lease Term,
\nand the denominator of which is the useful life of the improvement in months.
\nTenant shall make such payment to Landlord within five (5) days after written
\ndemand by Landlord.<\/p>\n
Notwithstanding the foregoing, the preceding paragraph shall not apply in cases
\nwhere Tenant’s obligation to perform or pay for such maintenance or repair is
\nlargely due to Tenant’s failure to properly maintain and regularly repair or
\nservice such item.<\/p>\n
D. WAIVER OF LIABILITY: Failure by Landlord to perform any defined services,
\nor any cessation thereof, when such failure is caused by accident, breakage,
\nrepairs, strikes, lockout or other labor disturbances or labor disputes of any
\ncharacter or by any other cause, similar or dissimilar, shall not render
\nLandlord liable to Tenant in any respect, including damages to either person or
\nproperty, nor be construed as an eviction of Tenant, nor cause an abatement of
\nrent, nor relieve Tenant from fulfillment of any covenant or agreement hereof.
\nShould any equipment or machinery utilized in supplying the services listed
\nherein break down or for any cause cease to function properly, upon receipt of
\nwritten notice from Tenant of any deficiency or failure of any services,
\nLandlord shall use reasonable diligence to repair the same promptly, but Tenant
\nshall have no right to terminate this Lease and shall have no claim for rebate
\nof rent or damages on account of any interruptions in service occasioned thereby
\nor resulting therefrom. Tenant waives the provisions of California Civil Code
\nSections 1941 and 1942 concerning the Landlord’s obligation of tenantability and
\nTenant’s right to make repairs and deduct the cost of such repairs from the
\nrent. Except due to the active negligence or willful misconduct of Landlord,
\nits, agents, employees or contractors, Landlord shall not be liable for a loss
\nof or injury to person or property, however occurring, through or in connection
\nwith or incidental to furnishing, or its failure to furnish, any of the
\nforegoing.<\/p>\n
9. HAZARD INSURANCE:<\/p>\n
A. TENANT’S USE: Tenant shall not use or permit the Premises, or any part
\nthereof, to be used for any unlawful purpose; and no use of the Premises shall
\nbe made or permitted, nor acts done, which will cause an increase in premiums
\nfor the insurance to be maintained by Landlord (unless Tenant agrees to pay the
\ncost of such increase) or a cancellation of any insurance policy covering the
\nPremises or any part thereof, nor shall Tenant sell or permit to be sold, kept,
\nor used in or about the Premises, any article prohibited by the standard form of
\nfire insurance policies. Tenant shall, at its sole cost, comply with all
\nreasonable requirements of any insurance company or organization necessary for
\nthe maintenance of reasonable fire and public liability insurance covering the
\nPremises, excluding structural improvements or alterations not related to
\nTenant’s specific and particular use.<\/p>\n
B. LANDLORD’S INSURANCE: Landlord agrees to purchase and keep in force fire
\nand extended coverage insurance in so-called “all risk” form in an amount equal
\nto the replacement cost of the Building (and all Tenant Improvements but not
\nincluding any of Tenant’s Property or Alterations paid for by Tenant from
\nsources other than the Work Allowance) as determined by Landlord’s insurance
\ncompany’s appraisers. If required by Tenant or the holder of the first deed of
\ntrust on the property, such fire and property damage insurance may be endorsed
\nto cover loss caused by earthquake and\/or flood, and shall contain reasonable
\ndeductibles which, in the case of earthquake and flood insurance may be up to
\n15% of the replacement value of the property. Additionally Landlord may maintain
\na policy of (i) commercial general liability insurance insuring<\/p>\n
Page 10<\/p>\n
Landlord (and such others designated by Landlord) against liability for personal
\ninjury, bodily injury, death and damage to property occurring or resulting from
\nan occurrence in, on or about the Premises or Project in an amount as Landlord
\ndetermines is reasonably necessary for its protection, and (ii) rental lost
\ninsurance for the Premises covering a twelve (12) month period. Tenant agrees to
\npay Landlord as additional rent, on demand, the full cost of said insurance as
\nevidenced by insurance billings to Landlord, and in the event of damage covered
\nby said insurance, the amount of any deductible under such policy. Payment shall
\nbe due to Landlord within twenty (20) days after written invoice to Tenant. It
\nis understood and agreed that Tenant’s obligation under this Section will be
\nprorated to reflect the Lease Commencement and Expiration Dates. Notwithstanding
\nthe foregoing, with respect to earthquake insurance for the Premises, Tenant
\nshall reimburse Landlord for premiums only if such coverage is: (i) requested by
\nTenant, or (ii) required by the lender in whose favor a first deed of trust of
\nthe Premises has been granted and is also generally required by institutional
\nlenders on similar properties in Santa Clara County.<\/p>\n
C. TENANT’S INSURANCE: Tenant agrees, at its sole cost, to insure its personal
\nproperty and Alterations for their full replacement value (without depreciation)
\nand to obtain worker’s compensation and public liability and property damage
\ninsurance. Tenant shall also maintain commercial general liability insurance for
\noccurrences within the Premises with a combined single limit of not less than
\nFive Million Dollars ($5,000,000.00). Tenant’s commercial general liability
\ninsurance shall be primary insurance containing a cross-liability endorsement,
\nand shall provide coverage on an “occurrence” rather than on a “claims made”
\nbasis. Tenant shall name Landlord and Landlord’s lender as an additional insured
\non Tenant’s commercial general liability policy and shall deliver a copy of the
\npolicies and renewal certificates to Landlord. All such policies shall provide
\nfor thirty (30) days’ prior written notice to Landlord of any cancellation,
\ntermination, or reduction in coverage.<\/p>\n
D. WAIVER: Notwithstanding anything to the contrary in this Lease, Landlord
\nand Tenant hereby waive any rights each may have against the other on account of
\nany loss or damage sustained by Landlord or Tenant, as the case may be, or to
\nthe Premises or its contents, that is caused or results from a risk which is
\nactually insured against, which is required to be insured against under this
\nLease, or which would normally be covered by a standard form of full replacement
\nvalue “all risk” policy of casualty insurance, regardless of whether such loss
\nor damage is due to the negligence of Landlord or Tenant or of their respective
\nagents, employees, subtenants, contractors, assignees, invitees or any other
\ncause. Each party shall use its reasonable best efforts to obtain from their
\nrespective insurance companies a waiver of any right of subrogation which said
\ninsurance company may have against Landlord or Tenant, as the case may be. If
\nsuch insurance policy cannot be obtained with such waiver of subrogation or if
\nsuch waiver of subrogation is only available at additional cost and the party
\nfor whose benefit the waiver is not obtained does not pay such additional cost,
\nthen the party obtaining such insurance shall immediately notify the other party
\nof that fact.<\/p>\n
10. TAXES: Tenant shall be liable for and shall pay as additional rental (to
\nthe extent not paid by Tenant directly to the taxing authority), prior to
\ndelinquency, the following: (i) all taxes and assessments levied against
\nTenant’s personal property and trade or business fixtures; (ii) all real estate
\ntaxes and assessment installments or other impositions or charges which may be
\nlevied on the Premises or upon the occupancy of the Premises, including any
\nsubstitute or additional charges which may be imposed applicable to the Lease
\nTerm; and (iii) real estate tax increases due to an increase in assessed value
\nresulting from a sale, transfer or other change of ownership of the Premises as
\nit appears on the City and County tax bills during the Lease Term. Tenant’s
\nobligation under this Section shall be prorated to reflect the Lease
\nCommencement and Expiration Dates. Tenant shall pay such taxes on the later of:
\ntwenty (20) days after written notice from Landlord (which notice shall contain
\na copy of the tax bill in question); or (ii) thirty (30) days before the tax
\ndelinquency date. If, at any time during the Lease Term a tax, excise on rents,
\nbusiness license tax or any other tax, however described, is levied or assessed
\nagainst Landlord as a substitute or addition, in whole or in part, for real
\nestate taxes assessed or<\/p>\n
Page 11<\/p>\n
imposed on land or Buildings, Tenant shall pay and discharge its pro rata share
\nof such tax or excise on rents or other tax before it becomes delinquent. In the
\nevent that a tax is placed, levied, or assessed against Landlord and the taxing
\nauthority takes the position that Tenant cannot pay and discharge its pro rata
\nshare of such tax on behalf of Landlord, then at Landlord’s sole election,
\nLandlord may increase the Base Monthly Rent by the exact amount of such tax and
\nTenant shall pay such increase. If by virtue of any application or proceeding
\nbrought by or on behalf of Landlord, there results a reduction in the assessed
\nvalue of the Premises during the Lease Term, Tenant agrees to reimburse Landlord
\nfor all costs incurred by Landlord in connection with such application or
\nproceeding up to the amount of tax saving experienced by Tenant as a consequence
\nthereof. Notwithstanding anything to the contrary herein, Tenant shall not be
\nrequired to pay any portion of any tax or assessment: (i) levied on Landlord’s
\nrental income, unless such tax or assessment is imposed in lieu of real property
\ntaxes; (ii) in excess of the amount which would be payable if such tax or
\nassessment were paid in installments over the longest possible term; (iii)
\nimposed on land and improvements other than the Premises; or (iv) attributable
\nto Landlord’s net income, inheritance, gift, transfer, franchise or estate
\ntaxes. Tenant may in good faith contest any real property taxes provided that
\nTenant indemnifies Landlord from any loss or liability in connection therewith.<\/p>\n
11. UTILITIES: Tenant shall pay directly to the providing utility all water,
\ngas, electric, telephone, and other utilities supplied to the Premises. Landlord
\nshall not be liable for loss of or injury to person or property, however
\noccurring, through or in connection with or incidental to furnishing or the
\nutility company’s failure to furnish utilities to the Premises, and Tenant shall
\nnot be entitled to abatement or reduction of any portion of Base Monthly Rent or
\nany other amount payable under this Lease so long as any failure to provide and
\nfurnish the utilities to the Premises is due to a cause beyond Landlord’s
\nreasonable control.<\/p>\n
12. TOXIC WASTE AND ENVIRONMENTAL DAMAGE:<\/p>\n
A. TENANT’S RESPONSIBILITY: Without the prior written consent of Landlord,
\nTenant shall not bring, use, or permit upon the Premises, or generate, create,
\nrelease, emit, or dispose (nor permit any of the same) from the Premises any
\nchemicals, toxic or hazardous gaseous, liquid or solid materials or waste,
\nincluding without limitation, material or substance having characteristics of
\nignitability, corrosivity, reactivity, or toxicity or substances or materials
\nwhich are listed on any of the Environmental Protection Agency’s lists of
\nhazardous wastes or which are identified in Division 22 Title 26 of the
\nCalifornia Code of Regulations as the same may be amended from time to time or
\nany wastes, materials or substances which are or may become regulated by or
\nunder the authority of any applicable local, state or federal laws, judgments,
\nordinances, orders, rules, regulations, codes or other governmental
\nrestrictions, guidelines or requirements. (“Hazardous Materials”). In order to
\nobtain documentation, Tenant shall deliver to Landlord its written proposal
\ndescribing the toxic material to be brought onto the Premises, measures to be
\ntaken for storage and disposal thereof, safety measures to be employed to
\nprevent pollution of the air, ground, surface and ground water. Landlord’s
\napproval shall not be unreasonably withheld. In the event Landlord consents to
\nTenant’s use of Hazardous Materials on the Premises, Tenant represents and
\nwarrants that it shall comply with all Governmental Regulations applicable to
\nthe use, generation, emission and disposal of Hazardous Materials by Tenant at
\nthe Premises, including doing the following: (i) adhere to all reporting and
\ninspection requirements imposed by Federal, State, County or Municipal laws,
\nordinances or regulations and will provide Landlord a copy of any such reports
\nor agency inspections; (ii) obtain and provide Landlord copies of all necessary
\npermits required for the use and handling of Hazardous Materials on the
\nPremises; (iii) enforce Hazardous Materials handling and disposal practices
\nconsistent with industry standards; (iv) surrender the Premises free from any
\nHazardous Materials arising from Tenant’s bringing, using, permitting,
\ngenerating, creating, releasing, emitting or disposing of Hazardous Materials;
\nand (v) properly close the facility with regard to Hazardous Materials used,
\ngenerated, emitted or disposed of by Tenant at the Premises, including the
\nremoval or decontamination of any process piping, mechanical ducting, storage
\ntanks, containers, or trenches which have come into contact with such Hazardous
\nMaterials and obtain a closure<\/p>\n
Page 12<\/p>\n
certificate from the local administering agency prior to the Expiration Date.<\/p>\n
B. TENANT’S INDEMNITY REGARDING HAZARDOUS MATERIALS: Tenant shall, at its sole
\ncost and expense, comply with all laws pertaining to, and shall with counsel
\nreasonably acceptable to Landlord, indemnify, defend and hold harmless Landlord
\nand Landlord’s shareholders, directors, officers, employees, partners,
\naffiliates, and agents from, any claims, liabilities, costs or expenses incurred
\nor suffered by Landlord arising from the bringing, using, permitting,
\ngenerating, emitting or disposing of Hazardous Materials by Tenant or a third
\nparty through the surface soils of the Premises during the Lease Term or the
\nviolation of any Governmental Regulation or environmental law, by Tenant or
\nTenant’s Agents. Tenant’s indemnification and hold harmless obligations include,
\nwithout limitation, the following: (i) claims, liability, costs or expenses
\nresulting from or based upon administrative, judicial (civil or criminal) or
\nother action, legal or equitable, brought by any private or public person under
\ncommon law or under the Comprehensive Environmental Response, Compensation and
\nLiability Act of 1980 (“CERCLA”), the Resource Conservation and Recovery Act of
\n1980 (“RCRA”) or any other Federal, State, County or Municipal law, ordinance or
\nregulation; (ii) claims, liabilities, costs or expenses pertaining to the
\nidentification, monitoring, cleanup, containment, or removal of Hazardous
\nMaterials from soils, riverbeds or aquifers, including the provision of an
\nalternative public drinking water source; and (iii) all costs of defending such
\nclaims; (iv) losses attributable to diminution in the value of the Premises or
\nthe Building; (v) loss or restriction of use of rentable space in the Building:
\n(vi) adverse effect on the marketing of any space in the Building; and (vi) all
\nother liabilities, obligations, penalties, fines, claims, actions (including
\nremedial or enforcement actions of any kind and administrative or judicial
\nproceedings, orders or judgments), damages (including consequential and punitive
\ndamages), and costs (including attorney, consultant, and expert fees and
\nexpenses) resulting from the release or violation. This indemnification shall
\nsurvive the expiration or termination of this Lease.<\/p>\n
C. ACTUAL RELEASE BY TENANT: Tenant agrees to notify Landlord of any lawsuits
\nor orders which relate to the remedying of or actual release of Hazardous
\nMaterials on or into the soils or ground water at or under the Premises. Tenant
\nshall also provide Landlord all notices required by Section 25359.7(b) of the
\nHealth and Safety Code and all other notices required by law to be given to
\nLandlord in connection with Hazardous Materials. Without limiting the foregoing,
\nTenant shall also deliver to Landlord, within twenty (20) days after receipt
\nthereof, any written notices from any governmental agency alleging a material
\nviolation of, or material failure to comply with, any federal, state or local
\nlaws, regulations, ordinances or orders, the violation of which of failure to
\ncomply with poses a foreseeable and material risk of contamination of the ground
\nwater or injury to humans (other than injury solely to Tenant, Tenant’s Agents
\nand employees within the Building).<\/p>\n
In the event of any release on or into the Premises or into the soil or
\nground water under the Premises, the Building or the Project of any Hazardous
\nMaterials used, treated, stored or disposed of by Tenant, Tenant agrees to
\ncomply, at its sole cost, with all laws, regulations, ordinances and orders of
\nany federal, state or local agency relating to the monitoring or remediation of
\nsuch Hazardous Materials. In the event of any such release of Hazardous
\nMaterials Tenant shall immediately give verbal and follow-up written notice of
\nthe release to Landlord, and Tenant agrees to meet and confer with Landlord and
\nits Lender to attempt to eliminate and mitigate any financial exposure to such
\nLender and resultant exposure to Landlord under California Code of Civil
\nProcedure Section 736(b) as a result of such release, and promptly to take
\nreasonable monitoring, cleanup and remedial steps given, inter alia, the
\nhistorical uses to which the Property has and continues to be used, the risks to
\npublic health posed by the release, the then available technology and the costs
\nof remediation, cleanup and monitoring, consistent with acceptable customary
\npractices for the type and severity of such contamination and all applicable
\nlaws. Nothing in the preceding sentence shall eliminate, modify or reduce the
\nobligation of Tenant under 12.B of this Lease to indemnify and hold Landlord
\nharmless from any claims liabilities, costs or expenses incurred or suffered by
\nLandlord. Tenant shall provide Landlord prompt written notice of Tenant’s
\nmonitoring, cleanup and remedial steps.<\/p>\n
Page 13<\/p>\n
In the absence of an order of any federal, state or local governmental or
\nquasi-governmental agency relating to the cleanup, remediation or other response
\naction required by applicable law, any dispute arising between Landlord and
\nTenant concerning Tenant’s obligation to Landlord under this Section 12.C
\nconcerning the level, method, and manner of cleanup, remediation or response
\naction required in connection with such a release of Hazardous Materials shall
\nbe resolved by mediation and\/or arbitration pursuant to the provisions of
\nSection 19.E of this Lease.<\/p>\n
D. ENVIRONMENTAL MONITORING: Landlord and its agents shall have the right to
\ninspect, investigate, sample and monitor the Premises including any air, soil,
\nwater, ground water or other sampling or any other testing, digging, drilling or
\nanalysis to determine whether Tenant is complying with the terms of this Section
\n12. If Landlord discovers that Tenant is not in compliance with the terms of
\nthis Section 12, any such costs incurred by Landlord in connection with such
\nviolation, including attorneys’ and consultants’ fees, shall be due and payable
\nby Tenant to Landlord within five (5) days following Landlord’s written demand
\ntherefore. Notwithstanding the foregoing, Landlord’s investigations and\/or
\nmonitoring to initially determine whether Tenant is in compliance with this
\nSection 12 shall not unreasonably interfere with Tenant’s intended use of the
\nPremises.<\/p>\n
E. NO RESPONSIBILITY: Notwithstanding the foregoing or anything in this Lease,
\nTenant shall have no responsibility to Landlord, Landlord’s employees,
\ncontractors, officers, agents or partners or to any third party for any
\nHazardous Material which was not released, stored, disposed of, emitted, or
\ndischarged by Tenant, its agents, invitees, employees and contractors in or
\nabout the Premises and which is or comes to be, present on or about the
\nPremises, or the soil or groundwater thereof, at any time. Landlord, at its sole
\nexpense, shall promptly comply with all Governmental Regulations, orders,
\ninjunctions, judgments, mandates and directives of any applicable governmental
\nauthority concerning the investigation, removal, monitoring or remediation of
\nany Hazardous Materials present on the Premises or the groundwater thereof,
\nexcept to the extent that the Hazardous Material in question was released,
\nstored, disposed of, emitted or discharged by Tenant or its employees, invitees,
\nagents, or contractors in or about the Premises. Landlord hereby waives all
\nclaims, liabilities, costs, expenses or obligations, known or unknown, against
\nTenant with respect to Hazardous Materials present on the Premises as of the
\nCommencement Date or which come to be present on the Premises after the
\nCommencement Date, except to the extent that the Hazardous Materials in question
\nwere released, emitted, or discharged onto the Premises by Tenant or its
\nemployees, agents, contractors, subcontractors or invitees. In this regard,
\nLandlord acknowledges that it is aware of and hereby waives the provisions of
\nCalifornia Civil Code Section 1542 (or any similar or successor statute) which
\nprovides as follows:<\/p>\n
“A general release does not extend to claims which the creditor does not know
\nor suspect to exist in his favor, at the time of executing the release, which if
\nknown by him must have materially affected the settlement with the debtor.”<\/p>\n
F. LANDLORD’S REPRESENTATION AND INDEMNITY: Landlord represents and
\nwarrants, to the best of its knowledge: (i) that as of the Commencement Date,
\nthere do not exist any Hazardous Materials on the Premises or the soil or
\ngroundwater on or beneath the property on which the Premises are a part, and
\n(ii) no litigation has been brought or threatened, nor any settlements reached
\nwith any governmental or private party, concerning the actual or alleged
\npresence of Hazardous Materials on or about the Premises, nor has Landlord
\nreceived any notice of any violation or any alleged violation of any Hazardous
\nMaterials Laws, pending claims or pending investigations with respect to the
\npresence of Hazardous Materials on or about the Premises. Except to the extent
\nthat the Hazardous Material in question was released, emitted, used, stored,
\nmanufactured, transported or discharged by Tenant, or its agents, employees,
\ninvitees or contractors in or about the Premises, Landlord shall indemnify and
\nhold Tenant, its agents, employees, officers, directors, subtenants and assigns
\nharmless from any claims, liabilities, costs or expenses incurred or suffered by
\nTenant related to the removal, investigation, monitoring or remediation of
\nHazardous Materials which are present or which<\/p>\n
Page 14<\/p>\n
come to be present on the Premises except to the extent the presence of such
\nHazardous Materials is caused by Tenant or by Tenant’s failure to prevent a
\nthird party from dumping Hazardous Materials through the surface of the
\nPremises. Landlord’s indemnification and hold harmless obligations include,
\nwithout limitation, (i) claims, liability, costs or expenses resulting from or
\nbased upon administrative, judicial (civil or criminal) or other action, legal
\nor equitable, brought by any private or public person under common law or under
\nthe Comprehensive Environmental Response, Compensation and Liability Act of 1980
\n(“CERCLA”), the Resource Conservation and Recovery Act of 1980 (“RCRA”) or any
\nother Federal, State, County or Municipal law, ordinance or regulation, (ii)
\nclaims, liabilities, costs or expenses pertaining to the identification,
\nmonitoring, cleanup, containment, or removal of Hazardous Materials from soils,
\nriverbeds or aquifers including the provision of an alternative public drinking
\nwater source, (iii) all costs of defending such claims, and (vi) all other
\nliabilities, obligations, penalties, fines, claims, actions (including remedial
\nor enforcement actions of any kind and administrative or judicial proceedings,
\norders or judgments), damages (including consequential and punitive damages),
\nand costs (including attorney, consultant, and expert fees and expenses)
\nresulting from the release or violation. This indemnification shall survive the
\nexpiration or termination of this Lease. In no event shall Landlord be liable
\nfor any consequential damages suffered or incurred by Tenant as a result of any
\nsuch contamination.<\/p>\n
G. NOTIFICATION: Landlord and Tenant shall notify the other of the existence
\nof any reports, recommendations or studies prepared in connection with any
\ninvestigation for the presence of Hazardous Materials on or about the Premises
\nand shall give written notice to the other as soon as reasonably practicable of
\n(i) any communication received from any governmental authority concerning any
\nHazardous Materials which relates to the Premises, and (ii) any contamination of
\nthe Premises by Hazardous Materials which constitutes a violation of any
\nHazardous Materials Laws.<\/p>\n
H. ENVIRONMENTAL STUDIES: Tenant shall have the right to conduct a baseline
\nenvironmental study at the Premises, including the right to bore holes and take
\nsoils samples, if Tenant so elects.<\/p>\n
13. TENANT’S DEFAULT: The occurrence of any of the following shall constitute a
\nmaterial default and breach of this Lease by Tenant: (i) Tenant’s failure to pay
\nany rent including additional rent or any other payment due under this Lease by
\nthe date such rent is due, (ii) the abandonment of the Premises by Tenant; (iii)
\nTenant’s failure to observe and perform any other required provision of this
\nLease, where such failure continues for twenty-eight (28) days after written
\nnotice from Landlord of such failure; provided, however, that if the nature of
\nsuch default is such that the same cannot reasonably be cured within such
\ntwenty-eight (28) day period, Tenant shall not be deemed to be in default if
\nTenant shall within such period commence such cure and thereafter diligently
\nprosecute the same to completion; (iv) Tenant’s making of any general assignment
\nfor the benefit of creditors; (v) the filing by or against Tenant of a petition
\nto have Tenant adjudged a bankrupt or of a petition for reorganization or
\narrangement under any law relating to bankruptcy (unless, in the case of a
\npetition filed against Tenant, the same is dismissed within thirty (30) days
\nafter the filing); (vi) the appointment of a trustee or receiver to take
\npossession of substantially all of Tenant’s assets located at the Premises or of
\nTenant’s interest in this Lease, where possession is not restored to Tenant
\nwithin sixty (60) days; or (vii) the attachment, execution or other judicial
\nseizure of substantially all of Tenant’s assets located at the Premises or of
\nTenant’s interest in this Lease, where such seizure is not discharged within
\nsixty (60) days.<\/p>\n
A. REMEDIES: In the event of any such default by Tenant, then in addition to
\nother remedies available to Landlord at law or in equity, Landlord shall have
\nthe immediate option to terminate this Lease and all rights of Tenant hereunder
\nby giving written notice of such intention to terminate. In the event Landlord
\nelects to so terminate this Lease, Landlord may recover from Tenant all the
\nfollowing: (i) the worth at time of award of any unpaid rent which had been
\nearned at the time of such termination; (ii) the worth at time of award of the
\namount by which the unpaid rent which would have been earned after termination
\nuntil the time of award exceeds the amount of such rental loss for the same
\nperiod that Tenant proves could have been<\/p>\n
Page 15<\/p>\n
reasonably avoided; (iii) the worth at time of award of the amount by which the
\nunpaid rent for the balance of the Lease Term after the time of award exceeds
\nthe amount of such rental loss that Tenant proves could be reasonably avoided;
\n(iv) any other amount necessary to compensate Landlord for all detriment
\nproximately caused by Tenant’s failure to perform its obligations under this
\nLease, or which in the ordinary course of things would be likely to result
\ntherefrom; including the following: (x) expenses for repairing, altering or
\nremodeling the Premises for purposes of reletting, (y) broker’s fees,
\nadvertising costs or other expenses of reletting the Premises, and (z) costs of
\ncarrying the Premises such as taxes, insurance premiums, utilities and security
\nprecautions. and (v) at Landlord’s election, such other amounts in addition to
\nor in lieu of the foregoing as may be permitted by applicable California law.
\nThe term “rent”, as used herein, is defined as the minimum monthly installments
\nof Base Monthly Rent and all other sums required to be paid by Tenant pursuant
\nto this Lease, all such other sums being deemed as additional rent due
\nhereunder. As used in (i) and (ii) above, “worth at the time of award” shall be
\ncomputed by allowing interest at a rate equal to the discount rate of the
\nFederal Reserve Bank of San Francisco plus five (5%) percent per annum. As used
\nin (iii) above, “worth at the time of award” shall be computed by discounting
\nsuch amount at the discount rate of the Federal Reserve Bank of San Francisco at
\nthe time of award plus one (1%) percent.<\/p>\n
B. RIGHT TO RE-ENTER: In the event of any such default by Tenant, Landlord
\nshall have the right, after terminating this Lease, to re-enter the Premises and
\nremove all persons and property. Such property may be removed and stored in a
\npublic warehouse or elsewhere at the cost of and for the account of Tenant, and
\ndisposed of by Landlord in any manner permitted by law.<\/p>\n
C. ABANDONMENT: If Landlord does not elect to terminate this Lease as provided
\nin Section 13.A or 13.B above, then the provisions of California Civil Code
\nSection 1951.4, (Landlord may continue the lease in effect after Tenant’s breach
\nand abandonment and recover rent as it becomes due if Tenant has a right to
\nsublet and assign, subject only to reasonable limitations) as amended from time
\nto time, shall apply and Landlord may from time to time, without terminating
\nthis Lease, either recover all rental as it becomes due or relet the Premises or
\nany part thereof for such term or terms and at such rental or rentals and upon
\nsuch other terms and conditions as Landlord in its sole discretion may deem
\nadvisable, with the right to make alterations and repairs to the Premises. In
\nthe event that Landlord elects to so relet, rentals received by Landlord from
\nsuch reletting shall be applied in the following order to: (i) the payment of
\nany indebtedness other than Base Monthly Rent due hereunder from Tenant to
\nLandlord; (ii) the payment of any cost of such reletting; (iii) the payment of
\nthe cost of any alterations and repairs to the Premises; and (iv) the payment of
\nBase Monthly Rent due and unpaid hereunder. The residual rentals, if any, shall
\nbe held by Landlord and applied in payment of future Base Monthly Rent as the
\nsame may become due and payable hereunder. In the event the portion of rentals
\nreceived from such reletting which is applied to the payment of rent hereunder
\nduring any month be less than the rent payable during that month by Tenant
\nhereunder, then Tenant shall pay such deficiency to Landlord immediately upon
\ndemand. Such deficiency shall be calculated and paid monthly. Tenant shall also
\npay to Landlord, as soon as ascertained, any costs and expenses incurred by
\nLandlord in such reletting or in making such alterations and repairs not covered
\nby the rentals received from such reletting.<\/p>\n
D. NO TERMINATION: Landlord’s re-entry or taking possession of the Premises
\npursuant to 13.B or 13.C shall not be construed as an election to terminate this
\nLease unless written notice of such intention is given to Tenant or unless the
\ntermination is decreed by a court of competent jurisdiction. Notwithstanding any
\nreletting without termination by Landlord because of any default by Tenant,
\nLandlord may at any time after such reletting elect to terminate this Lease for
\nany such default.<\/p>\n
E. NON-WAIVER: Landlord may accept Tenant’s payments without waiving any
\nrights under this Lease, including rights under a previously served notice of
\ndefault. No payment by Tenant or receipt by Landlord of a lesser amount than any
\ninstallment of rent due shall be deemed as other than payment on account of the
\namount due. If Landlord accepts payments after serving a notice of default,
\nLandlord may nevertheless commence and pursue an action to<\/p>\n
Page 16<\/p>\n
enforce rights and remedies under the previously served notice of default
\nwithout giving Tenant any further notice or demand except as expressly required
\nby this Lease or applicable law. Furthermore, the Landlord’s acceptance of rent
\nfrom the Tenant when the Tenant is holding over without express written consent
\ndoes not convert Tenants Tenancy from a tenancy at sufferance to a month to
\nmonth tenancy. No waiver of any provision of this Lease shall be implied by any
\nfailure of Landlord to enforce any remedy for the violation of that provision,
\neven if that violation continues or is repeated. Any waiver by Landlord of any
\nprovision of this Lease must be in writing. Such waiver shall affect only the
\nprovision specified and only for the time and in the manner stated in the
\nwriting. No delay or omission in the exercise of any right or remedy by Landlord
\nshall impair such right or remedy or be construed as a waiver thereof by
\nLandlord. No act or conduct of Landlord, including, without limitation, the
\nacceptance of keys to the Premises, shall constitute acceptance of the surrender
\nof the Premises by Tenant before the Expiration Date. Only written notice from
\nLandlord to Tenant of acceptance shall constitute such acceptance of surrender
\nof the Premises. Landlord’s consent to or approval of any act by Tenant which
\nrequires Landlord’s consent or approvals shall not be deemed to waive or render
\nunnecessary Landlord’s consent to or approval of any subsequent act by Tenant.<\/p>\n
F. PERFORMANCE BY LANDLORD: If Tenant fails to perform any obligation required
\nunder this Lease or by law or governmental regulation and does not cure such
\ndefault within any cure period allowed in this Section 13, Landlord in its sole
\ndiscretion may, without further notice, without waiving any rights or remedies
\nand without releasing Tenant from its obligations hereunder, perform such
\nobligation, in which event Tenant shall pay Landlord as additional rent all sums
\npaid by Landlord in connection with such substitute performance, including
\ninterest at the Agreed Interest Rate within ten (10) days of Landlord’s written
\nnotice for such payment.<\/p>\n
G. HABITUAL DEFAULT: The provisions of Section 13 notwithstanding, the parties
\nagree that if Tenant shall have defaulted in the performance of any (but not
\nnecessarily the same) term or condition of this Lease for five or more times
\nduring any twelve (12) month period during the Lease Term, then such conduct
\nshall, at the election of the Landlord, represent a separate event of default
\nwhich cannot be cured by Tenant. Tenant acknowledges that the purpose of this
\nprovision is to prevent repetitive defaults by Tenant, which work a hardship
\nupon Landlord and deprive Landlord of Tenant’s timely performance under this
\nLease.<\/p>\n
14. LANDLORD’S LIABILITY:<\/p>\n
A. LIMITATION ON LANDLORD’S LIABILITY: In the event of Landlord’s failure to
\nperform any of its covenants or agreements under this Lease, Tenant shall give
\nLandlord written notice of such failure and shall give Landlord thirty (30) days
\nto cure or commence to cure such failure prior to any claim for breach or
\nresultant damages; provided, however, that if the nature of the default is such
\nthat it cannot reasonably be cured within the 30-day period, Landlord shall not
\nbe deemed in default if it commences within such period to cure, and thereafter
\ndiligently prosecutes the same to completion. In addition, upon any such failure
\nby Landlord, Tenant shall give notice by registered or certified mail to any
\nperson or entity with a security interest in the Premises (“Mortgagee”) that has
\nprovided Tenant with written notice of its interest in the Premises, and shall
\nprovide Mortgagee a reasonable opportunity to cure such failure, including such
\ntime to obtain possession of the Premises by power of sale or judicial
\nforeclosure, if such should prove necessary to effectuate a cure. Tenant agrees
\nthat each of the Mortgagees to whom this Lease has been assigned is an expressed
\nthird-party beneficiary hereof. Tenant waives any right under California Civil
\nCode Section 1950.7 or any other present or future law relating to the
\ncollection of any payment or deposit from Mortgagee or any purchaser at a
\nforeclosure sale of Mortgagee’s interest unless Mortgagee or such purchaser
\nshall have actually received and not refunded the applicable payment or deposit.
\nTenant Further waives any right to terminate this Lease and to vacate the
\nPremises on Landlord’s default under this Lease. Tenant’s sole remedy on
\nLandlord’s default is an action for damages or injunctive or declaratory relief.<\/p>\n
B. LIMITATION ON TENANT’S RECOURSE: If Landlord is a corporation trust,
\npartnership, joint venture, unincorporated association or other form<\/p>\n
Page 17<\/p>\n
of business entity: (i) the obligations of Landlord shall not constitute
\npersonal obligations of the officers, directors, trustees, partners, joint
\nventurers, members, owners, stockholders, or other principals or representatives
\nexcept to the extent of their interest in the Premises. Tenant shall have
\nrecourse only to the interest of Landlord in the Premises or for the
\nsatisfaction of the obligations of Landlord and shall not have recourse to any
\nother assets of Landlord for the satisfaction of such obligations.<\/p>\n
C. INDEMNIFICATION OF LANDLORD: As a material part of the consideration
\nrendered to Landlord, Tenant hereby waives all claims against Landlord for
\ndamages to goods, wares and merchandise, and all other personal property in,
\nupon or about said Premises and for injuries to persons in or about said
\nPremises, from any cause arising at any time to the fullest extent permitted by
\nlaw, and Tenant shall indemnify and hold Landlord exempt and harmless from any
\ndamage or injury to any person, or to the goods, wares and merchandise and all
\nother personal property of any person, arising from the use of the Premises,
\nBuilding, and\/or Project by Tenant and Tenant’s Agents or from the failure of
\nTenant to keep the Premises in good condition and repair as herein provided,
\nexcept to the extent due to the active negligence or willful misconduct of
\nLandlord. Further, in the event Landlord is made party to any litigation due to
\nthe acts or omission of Tenant and Tenant’s Agents. Tenant will indemnify,
\ndefend (with counsel reasonably acceptable to Landlord) and hold Landlord
\nharmless from any such claim or liability including Landlord’s costs and
\nexpenses and reasonable attorney’s fees incurred in defending such claims except
\nto the extent of the active negligence or willful misconduct of Landlord or its
\nagents, employees, tenants, contractors, subcontractors or invitees or a breach
\nof this Lease by Landlord.<\/p>\n
15. DESTRUCTION OF PREMISES:<\/p>\n
A. LANDLORD’S OBLIGATION TO RESTORE: In the event of a damage to or
\ndestruction of the Building or the Premises or any portion thereof by any
\ncasualty during the Lease Term, Landlord shall repair the same to the
\napproximate condition which existed prior to such destruction provided such
\ncasualty is of a type required to be insured against by Landlord under the terms
\nof this Lease or actually insured against by Landlord (herein collectively
\nreferred to as an “Insured Casualty”).<\/p>\n
In the event of damage or destruction of the Premises by a casualty of a type
\nwhich is not required to be insured against by Landlord under this Lease, and
\nwhich is not actually insured against by Landlord (herein referred to as an
\n“Uninsured Casualty”), Landlord shall restore the Premises to the same condition
\nas they were in immediately before such destruction and this Lease shall not
\nterminate; unless in the case of such Uninsured Casualty the cost of restoration
\nexceeds ten percent (10%) of the then replacement cost of the Building, in which
\ncase, Landlord may elect to terminate this Lease by giving written notice to
\nTenant within fifteen (15) days after determining the replacement cost and
\nfurnishing reasonable evidence thereof to Tenant. If Landlord so elects to
\nterminate this Lease, Tenant, within fifteen (15) days after receiving
\nLandlord’s notice to terminate, can elect to pay to Landlord at the time Tenant
\nnotifies Landlord of its election, the difference between ten percent (10%) of
\nthe replacement cost of the Building and the actual cost of restoration, in
\nwhich case Landlord shall restore the Premises and this Lease shall not
\nterminate. If Landlord so elects to terminate this Lease and Tenant does not
\nelect to contribute the cost of restoration as provided herein, this Lease shall
\nterminate. Tenant shall be entitled to a proportionate reduction of Base
\nMonthly Rent and additional rent during the period of damage and while repairs
\nare being made, such proportionate reduction to be based upon the extent to
\nwhich the repairs interfere with Tenant’s business in the Premises, as
\nreasonably determined by Landlord. Landlord’s obligations to repair and restore
\nthe Premises or any part therof as set forth in this Lease shall include repair
\nand restoration of the Tenant Improvements (excluding Tenant’s Property). In no
\nevent shall Landlord be required to replace or restore Alterations, Tenant’s
\nProperty, Tenant’s fixtures or personal property. With respect to a destruction
\nwhich Landlord is obligated to repair or may elect to repair under the terms of
\nthis Section, Tenant waives the provisions of Section 1932, and Section 1933,
\nSubdivision 4, of the Civil Code of the State of California, and any other
\nsimilarly enacted statute, and the provisions of this Section 15 shall govern in
\nthe case of such destruction.<\/p>\n
Page 18<\/p>\n
B. LIMITATIONS ON LANDLORD’S RESTORATION OBLIGATION: Notwithstanding the
\nprovisions of Section 15.A, Landlord shall have no obligation to repair, or
\nrestore the Premises if any of the following occur: (i) if the repairs cannot be
\nmade in 180 days from the date of receipt of all governmental approvals
\nnecessary under the laws and regulations of State, Federal, County or Municipal
\nauthorities, as reasonably determined by Landlord, (ii) if the holder of the
\nfirst deed of trust or mortgage encumbering the Building elects not to permit
\nthe insurance proceeds payable upon damage or destruction to be used for such
\nrepair or restoration, (iii) the damage or destruction is not fully covered by
\nthe insurance maintained by Landlord, (iv) the damage or destruction occurs in
\nthe last twenty four (24) months of the Lease Term, (v) Tenant is in default
\npursuant to the provisions of Section 13, or (vi) Tenant has vacated the
\nPremises for more than ninety (90) days. In any such event Landlord may elect
\neither to (i) complete the repair or restoration, or (ii) terminate this Lease
\nby providing Tenant written notice of its election within sixty (60) days
\nfollowing the damage or destruction.<\/p>\n
16. CONDEMNATION: If any part of the Premises shall be taken for any public or
\nquasi-public use, under any statute or by right of eminent domain or private
\npurchase in lieu thereof, and only a part thereof remains which is susceptible
\nof occupation hereunder, this Lease shall, as to the part so taken, terminate as
\nof the day before title vests in the condemnor or purchaser (“Vesting Date”) and
\nBase Monthly Rent and additional rent payable hereunder shall be adjusted so
\nthat Tenant is required to pay for the remainder of the Lease Term only such
\nportion of Base Monthly Rent and additional rent as the value of the part
\nremaining after such taking bears to the value of the entire Premises prior to
\nsuch taking; but in such event, Tenant shall have the option to terminate this
\nLease as of the Vesting Date if the taking or condemnation of the Premises is
\nsuch that the remaining space unaffected by the taking or condemnation is not
\nreasonably suitable for Tenant’s use or the conduct of Tenant’s business. If
\npart or all of the Premises be taken, all compensation awarded upon such taking
\nshall go to Landlord, and Tenant shall have no claim thereto; provided, however,
\nthat nothing contained herein shall be deemed to waive or release Tenant’s
\ninterest in any separate award for (i) loss of or damage to Tenant’s trade
\nfixtures, Alterations, or personal property; (ii) interruption of Tenant’s
\nbusiness; (iii) Tenant’s loss of goodwill; (iv) Tenant’s moving cost; (v)
\nTenant’s interest in any Tenant Improvements; or (vi) any separate award made to
\nTenant for whatever purpose. In the event that this Lease is not terminated by
\nreason of the condemnation, Landlord at its expense shall repair any damage to
\nthe Premises caused by such condemnation. Tenant hereby waives the provisions of
\nCalifornia Code of Civil Procedures Section 1265.130 and any other similarly
\nenacted statue, and the provisions of this Section 16 shall govern in the case
\nof such taking.<\/p>\n
17. ASSIGNMENT OR SUBLEASE:<\/p>\n
A. CONSENT BY LANDLORD: Except as specifically provided in this Section 17 and
\nexcept with respect to a permitted transfer pursuant to Section 17.E below,
\nTenant may not assign, sublet, hypothecate, or allow a third party to use the
\nPremises without the express written consent of Landlord. In the event Tenant
\ndesires to assign this Lease or any interest herein including, without
\nlimitation, a pledge, mortgage or other hypothecation, or sublet the Premises or
\nany part thereof, Tenant shall deliver to Landlord (i) executed counterparts of
\nany agreement and of all ancillary agreements with the proposed
\nassignee\/subtenant, (ii) current financial statements of the transferee covering
\nthe preceding three years (or such shorter period, if three years are not
\navailable), (iii) the nature of the proposed transferee’s business to be carried
\non in the Premises, (v) all consideration to be given on account of the
\nTransfer, and (vi) a current financial statement of Tenant. Landlord may
\ncondition its approval of any Transfer to a certification from both Tenant and
\nthe proposed transferee of all consideration to be paid to Tenant in connection
\nwith such Transfer. At Landlord’s request, Tenant shall also provide additional
\ninformation reasonably required by Landlord to determine whether it will consent
\nto the proposed assignment or sublease. Landlord shall have a ten (10) day
\nperiod following receipt of all the foregoing within which to notify Tenant in
\nwriting that Landlord elects to: (i) terminate this Lease as to the space so
\naffected as of the date so specified by Tenant, in which case Tenant will be
\nrelieved of all further obligations as to such<\/p>\n
Page 19<\/p>\n
space; (ii) permit Tenant to assign or sublet such space to the named
\nassignee\/subtenant on the terms and conditions set forth in the notice; or (iii)
\nrefuse consent. If Landlord should fail to notify Tenant in writing of such
\nelection within the 10-day period, Landlord shall be deemed to have elected
\noption (iii) above. In the event Landlord elects option (i) above, this Lease
\nshall expire with respect to such part of the Premises on the date upon which
\nthe proposed sublease was to commence, and from such date forward, Base Monthly
\nRent and Tenant’s Allocable Share of all other costs and charges shall be
\nadjusted based upon the proportion that the rentable area of the Premises
\nremaining bears to the total rentable area of the Premises. In the event
\nLandlord elects option (ii) above, Landlord’s written consent to the proposed
\nassignment or sublease shall not be unreasonably withheld, provided and upon the
\ncondition that: (i) the proposed assignee or subtenant is engaged in a business
\nthat is limited to the use expressly permitted under this Lease; (ii) the
\nproposed assignee or subtenant is a company with sufficient financial worth and
\nmanagement ability to undertake the financial obligation of this Lease and
\nLandlord has been furnished with reasonable proof thereof; (iii) the proposed
\nassignment or sublease is in form reasonably satisfactory to Landlord; and (iv)
\nTenant reimburses Landlord on demand for any reasonable costs that may be
\nincurred by Landlord in connection with said assignment or sublease, including
\nthe costs of making investigations as to the acceptability of the proposed
\nassignee or subtenant and legal costs incurred in connection with the granting
\nof any requested consent. In the event all or any one of the foregoing
\nconditions are not satisfied, Landlord shall be considered to have acted
\nreasonably if it withholds its consent.<\/p>\n
B. ASSIGNMENT OR SUBLETTING CONSIDERATION: Any rent or other economic
\nconsideration actually realized by Tenant under any sublease and assignment, in
\nexcess of the rent payable hereunder and reasonable subletting and assignment
\ncosts incurred by Tenant in connection with the assignment or sublease including
\nattorney’s fees, brokerage commissions and remodeling costs incurred as a direct
\nresult of the sublease, shall be divided and paid fifty percent (50%) to
\nLandlord and fifty percent (50%) to Tenant. Tenant’s obligation to pay Landlord
\nsuch percentage constitutes an obligation for additional rent hereunder. The
\nabove provisions relating to Landlord’s right to terminate the Lease and
\nrelating to the allocation of bonus rent are independently negotiated terms of
\nthe Lease which constitute a material inducement for the Landlord to enter into
\nthe Lease, and are agreed by the parties to be commercially reasonable. No
\nassignment or subletting by Tenant shall relieve it of any obligation under this
\nLease. Any assignment or subletting which conflicts with the provisions hereof
\nshall be void.<\/p>\n
C. NO RELEASE: Any assignment or sublease shall be made only if and shall not
\nbe effective until the assignee or subtenant shall execute, acknowledge, and
\ndeliver to Landlord an agreement, in form and substance satisfactory to
\nLandlord, whereby the assignee or subtenant shall be subject to all the
\ncovenants, agreements, terms, provisions and conditions in this Lease and in the
\nevent of an assignment, the assignee assume all the obligations of this Lease on
\nthe part of Tenant to be performed or observed. Notwithstanding any such
\nsublease or assignment and the acceptance of rent by Landlord from any subtenant
\nor assignee, Tenant and any guarantor shall remain fully liable for the payment
\nof Base Monthly Rent and additional rent due, and to become due hereunder, for
\nthe performance of all the covenants, agreements, terms, provisions and
\nconditions contained in this Lease on the part of Tenant to be performed and for
\nall acts and omissions of any licensee, subtenant, assignee or any other person
\nclaiming under or through any subtenant or assignee that shall be in violation
\nof any of the terms and conditions of this Lease, and any such violation shall
\nbe deemed a violation by Tenant. Tenant shall indemnify, defend and hold
\nLandlord harmless from and against all losses, liabilities, damages, costs and
\nexpenses (including reasonable attorney fees) resulting from any claims that may
\nbe made against Landlord by the proposed assignee or subtenant or by any real
\nestate brokers or other persons claiming compensation in connection with the
\nproposed assignment or sublease.<\/p>\n
D. REORGANIZATION OF TENANT: If Tenant is a corporation, the following shall
\nbe deemed an assignment of Tenant’s interest in this Lease governed by the
\nprovisions of this Section 17: (i) any dissolution, merger, consolidation, or
\nother<\/p>\n
Page 20<\/p>\n
reorganization of or affecting Tenant, whether or not Tenant is the surviving
\ncorporation, or (ii) the sale or transfer to one other person or entity (or to
\nany group of related persons or entities) stock possessing more than 50% of the
\ntotal combined voting power of all classes of Tenant’s capital stock issued,
\noutstanding and entitled to vote for the election of directors.<\/p>\n
E. PERMITTED TRANSFERS: Notwithstanding anything contained in this Section 17,
\nso long as Tenant otherwise complies with the provisions of this Article, Tenant
\nmay enter into any of the following transfers (a “Permitted Transfer”) without
\nLandlord’s prior consent, and Landlord shall not be entitled to terminate the
\nLease or to receive any part of any subrent resulting therefrom that would
\notherwise be due pursuant to Sections 17.A and 17.B. Tenant may sublease all or
\npart of the Premises or assign its interest in this Lease to (i) any corporation
\nwhich controls, is controlled by, or is under common control with the original
\nTenant to this Lease by means of an ownership interest of more than 50%; (ii) a
\ncorporation which results from a merger, consolidation or other reorganization
\nin which Tenant is not the surviving corporation, so long as the surviving
\ncorporation has a net worth at the time immediately following such assignment
\nthat is equal to or greater than the net worth of Tenant immediately prior to
\nsuch transaction; and (iii) a corporation which purchases or otherwise acquires
\nall or substantially all of the assets of Tenant so long as such acquiring
\ncorporation has a net worth at the time immediately following such assignment
\nthat is equal to or greater than the net worth of Tenant immediately prior to
\nsuch transaction. Except as provided in Section 17.D, the sale of Tenant’s
\ncapital stock shall not be deemed an assignment, subletting or any other
\ntransfer of the Lease or the Premises.<\/p>\n
F. EFFECT OF DEFAULT: In the event of Tenant’s default, Tenant hereby assigns
\nall rents due from any assignment or subletting to Landlord as security for
\nperformance of its obligations under this Lease, and Landlord may collect such
\nrents as Tenant’s Attorney-in-Fact, except that Tenant may collect such rents
\nunless a default occurs as described in Section 13 above. A Lease termination
\ndue to Tenant’s default shall not automatically terminate an assignment or
\nsublease then in existence; rather at Landlord’s election, such assignment or
\nsublease shall survive the Lease termination, the assignee or subtenant shall
\nattorn to Landlord, and Landlord shall undertake the obligations of Tenant under
\nthe sublease or assignment; except that Landlord shall not be liable for prepaid
\nrent, security deposits or other defaults of Tenant to the subtenant or
\nassignee, or for any acts or omissions of Tenant and Tenant’s Agents.<\/p>\n
G. CONVEYANCE BY LANDLORD: As used in this Lease, the term “Landlord” is
\ndefined only as the owner for the time being of the Premises, so that in the
\nevent of any sale or other conveyance of the Premises or in the event of a
\nmaster lease of the Premises, Landlord shall be entirely freed and relieved of
\nall its covenants and obligations hereunder, and it shall be deemed and
\nconstrued, without further agreement between the parties and the purchaser at
\nany such sale or the master tenant of the Premises, that the purchaser or master
\ntenant of the Premises has assumed and agreed to carry out any and all covenants
\nand obligations of Landlord hereunder; provided that such transferor shall
\ntransfer and deliver Tenant’s security deposit to the purchaser at any such sale
\nor the master tenant of the Premises, and thereupon the transferor shall be
\ndischarged from any further liability in reference thereto.<\/p>\n
F. SUCCESSORS AND ASSIGNS: Subject to the provisions of this Section 17, the
\ncovenants and conditions of this Lease shall apply to and bind the heirs,
\nsuccessors, executors, administrators and assigns of all parties hereto; and all
\nparties hereto shall be jointly and severally liable hereunder.<\/p>\n
18. OPTION TO EXTEND THE LEASE TERM:<\/p>\n
A. GRANT AND EXERCISE OF OPTION: Landlord grants to Tenant, subject to the
\nterms and conditions set forth in this Section 18.A, one (1) option (“Option”)
\nto extend the Lease Term for an additional term (the “Option Term”). The Option
\nTerm shall be for a period of sixty (60) months and shall be exercised, if at
\nall, by written notice to Landlord no earlier than eighteen (18) months prior to
\nthe Expiration Date but no later than nine (9) months prior to the Expiration
\nDate. If Tenant exercises the Option, all of the terms, covenants and conditions
\nof this Lease except this Section shall apply during the Option Term, except
\nthat the Base Monthly Rent for the<\/p>\n
Page 21<\/p>\n
Premises payable by Tenant during the Option Term shall be the greater of either
\nthe average Base Monthly Rent paid by Tenant during the initial Lease Term, or
\nNinety Five percent (95%) of the Fair Market Rental as hereinafter defined.
\nNotwithstanding anything herein to the contrary, if Tenant is in monetary or
\nmaterial non-monetary default beyond any required written notice and applicable
\ncure period under any of the terms, covenants or conditions of this Lease either
\nat the time Tenant exercises the Option or at any time thereafter prior to the
\ncommencement date of the Option Term, Landlord shall have, in addition to all of
\nLandlord’s other rights and remedies provided in this Lease, the right to
\nterminate the Option upon notice to Tenant, in which event the expiration date
\nof this Lease shall be and remain the Expiration Date. As used herein, the term
\n“Fair Market Rental” is defined as the rental and all other monetary payments,
\nincluding any escalations and adjustments thereto (including without limitation
\nConsumer Price Indexing) that Landlord could obtain during the Option Term from
\na third party desiring to lease the Premises, based upon the current use and
\nother potential uses of the Premises in its then condition and under then
\napplicable laws, rules and regulations, as determined by the rents then being
\nobtained for new leases of space comparable in age and quality to the Premises
\nin the locality of the Building. Fair Market Rental shall further take into
\naccount that Tenant is in occupancy and making functional use of the Premises in
\nits then existing condition. The parties acknowledge that they have agreed to so
\nset the rent at 95% of the then Fair Market Rent in recognition of and in
\nconsideration for the fact that Landlord shall not incur brokerage commissions,
\nvacancy costs, and costs for the installation of new tenant improvements
\n(including recarpeting and repainting) along with other savings, if Tenant
\nelects to extend the term of this Lease, and that such discount of the full Fair
\nMarket Rent is a reasonable estimate of the savings to be so realized by
\nLandlord.<\/p>\n
B. DETERMINATION OF FAIR MARKET RENTAL: If Tenant exercises the Option,
\nLandlord shall send Tenant a notice setting forth the Fair Market Rental for the
\nOption Term within thirty (30) days following the Exercise Date. If Tenant
\ndisputes Landlord’s determination of Fair Market Rental for the Option Term,
\nTenant shall, within thirty (30) days after the date of Landlord’s notice
\nsetting forth Fair Market Rental for the Option Term, send to Landlord a notice
\nstating that Tenant either elects to terminate its exercise of the Option, in
\nwhich event the Option shall lapse and this Lease shall terminate on the
\nExpiration Date, or that Tenant disagrees with Landlord’s determination of Fair
\nMarket Rental for the Option Term and elects to resolve the disagreement as
\nprovided in Section 18.C below. If Tenant does not send Landlord a notice as
\nprovided in the previous sentence, Landlord’s determination of Fair Market
\nRental shall be the basis for determining the Base Monthly Rent payable by
\nTenant during the Option Term. If Tenant elects to resolve the disagreement as
\nprovided in Section 18.C and such procedures are not concluded prior to the
\ncommencement date of the Option Term, Tenant shall pay to Landlord as Base
\nMonthly Rent the Fair Market Rental as determined by Landlord in the manner
\nprovided above. If the Fair Market Rental as finally determined pursuant to
\nSection 18.C is greater than Landlord’s determination, Tenant shall pay Landlord
\nthe difference between the amount paid by Tenant and the Fair Market Rental as
\nso determined in Section 18.C within thirty (30) days after such determination.
\nIf the Fair Market Rental as finally determined in Section 18.C is less than
\nLandlord’s determination, the difference between the amount paid by Tenant and
\nthe Fair Market Rental as so determined in Section 18.C shall be credited
\nagainst the next installments of rent due from Tenant to Landlord hereunder.<\/p>\n
C. RESOLUTION OF A DISAGREEMENT OVER THE FAIR MARKET RENTAL: Any disagreement
\nregarding Fair Market Rental shall be resolved as follows:<\/p>\n
1. Within thirty (30) days after Tenant’s response to Landlord’s notice
\nsetting forth the Fair Market Rental, Landlord and Tenant shall meet at least
\ntwo (2) times at a mutually agreeable time and place, in an attempt to resolve
\nthe disagreement.<\/p>\n
2. If within the 30-day period referred to above, Landlord and Tenant
\ncannot reach agreement as to Fair Market Rental, each party shall select one
\nappraiser to determine Fair Market Rental. Each such appraiser shall arrive at
\na determination of Fair Market Rental and submit their conclusions to Landlord
\nand Tenant <\/p>\n
Page 22<\/p>\n
within thirty (30) days after the expiration of the 30-day consultation period
\ndescribed above.<\/p>\n
3. If only one appraisal is submitted within the requisite time period, it
\nshall be deemed as Fair Market Rental. If both appraisals are submitted within
\nsuch time period and the two appraisals so submitted differ by less than ten
\npercent (10%), the average of the two shall be deemed as Fair Market Rental. If
\nthe two appraisals differ by more than 10%, the appraisers shall immediately
\nselect a third appraiser who shall, within thirty (30) days after his selection,
\nmake and submit to Landlord and Tenant a determination of Fair Market Rental.
\nThis third appraisal will then be averaged with the closer of the two previous
\nappraisals and the result shall be Fair Market Rental.<\/p>\n
4. All appraisers specified pursuant to this Section shall be members of
\nthe American Institute of Real Estate Appraisers with not less than ten (10)
\nyears experience appraising office and industrial properties in the Santa Clara
\nValley. Each party shall pay the cost of the appraiser selected by such party
\nand one-half of the cost of the third appraiser.<\/p>\n
D. PERSONAL TO TENANT: All Options provided to Tenant in this Lease are
\npersonal and granted to Concentric Network Corporation and any assignees not
\nrequiring Landlord’s consent pursuant to Section 17 and are not exercisable by
\nany third party should Tenant assign or sublet all or a portion of its rights
\nunder this Lease, unless Landlord consents to permit exercise of any option by
\nany assignee or subtenant, in Landlord’s sole and absolute discretion. In the
\nevent Tenant has multiple options to extend this Lease, a later option to extend
\nthe Lease cannot be exercised unless the prior option has been so exercised.<\/p>\n
19. CONDITION PRECEDENT TO LEASE: Landlord and Tenant hereby acknowledge that
\nCisco Systems (“Cisco”) is currently occupying the Premises as the tenant under
\nthat certain lease between Landlord and Cisco dated February 12, 1990 (the
\n“Cisco Lease”). Under the Cisco Lease, Cisco has the option (“Option”) to extend
\nthe term of the Cisco Lease until December 31, 2003, which Option must be
\nexercised by Cisco on or before June 30, 1998. If Cisco fails to exercise its
\nOption, the Cisco Lease will expire December 31, 1998. Notwithstanding anything
\nto the contrary in this Leases, Landlord and Tenant’s obligations under this
\nLease are conditioned upon Cisco not exercising its Option. If Cisco exercises
\nits Option, this Lease shall be null and void and Landlord shall immediately
\nreturn to Tenant all monies (including any prepaid rent and any security
\ndeposit) paid by Tenant to Landlord in connection with this Lease. If Cisco
\nexercises its Option, Landlord shall immediately notify Tenant in writing of
\nthat fact. If Landlord fails to notify Tenant definitively in writing that Cisco
\nhas properly exercised its option to extend the Cisco Lease or that Cisco has
\nproperly waived its right to extend the Cisco Lease on or before July 30, 1998,
\nTenant may terminate this Lease within five (5) days thereafter. Upon such
\ntermination, Landlord shall immediately return any prepaid rent and the security
\ndeposit to Tenant.<\/p>\n
20. GENERAL PROVISIONS:<\/p>\n
A. ATTORNEY’S FEES: In the event a suit or alternative form of dispute
\nresolution is brought for the possession of the Premises, for the recovery of
\nany sum due hereunder, to interpret the Lease, or because of the breach of any
\nother covenant herein; then the losing party shall pay to the prevailing party
\nreasonable attorney’s fees including the expense of expert witnesses,
\ndepositions and court testimony as part of its costs which shall be deemed to
\nhave accrued on the commencement of such action. The prevailing party shall also
\nbe entitled to recover all costs and expenses including reasonable attorney’s
\nfees incurred in enforcing any judgment or award against the other party. The
\nforegoing provision relating to post-judgment costs is severable from all other
\nprovisions of this Lease.<\/p>\n
B. AUTHORITY OF PARTIES: Tenant represents and warrants that it is a duly
\nformed corporation and in good standing, and is duly authorized to execute and
\ndeliver this Lease on behalf of said corporation, in accordance with a duly
\nadopted resolution of the Board of Directors of said corporation or in
\naccordance with the by-laws of said corporation, and that this Lease is binding
\nupon said corporation in accordance with its terms. At Landlord’s request,
\nTenant shall provide Landlord with corporate resolutions or other proof in a
\nform acceptable to Landlord,<\/p>\n
Page 23<\/p>\n
authorizing the execution of the Lease. The individuals executing this Lease on
\nLandlord’s behalf represent and warrant that they have the requisite authority
\nto sign this Lease and that this Lease is binding on Landlord. Landlord
\nrepresents that it owns the Premises and is duly empowered to sign this Lease,
\nand that the consent of no other party is required to make this Lease binding on
\nLandlord.<\/p>\n
C. BROKERS: Landlord and Tenant represent they have not utilized or contacted
\nany real estate broker or finder with respect to this Lease other than Spallino-
\nReid Corporate Real Estate Services (“Broker”) and Landlord and Tenant each
\nagree to indemnify, defend and hold the other harmless against any claim, cost,
\nliability or cause of action asserted by any other broker or finder claiming
\nthrough the acts or conduct of the indemnifying party. Landlord shall pay a real
\nestate commission to Broker pursuant to a separate agreement between Landlord
\nand Broker.<\/p>\n
D. CHOICE OF LAW: This Lease shall be governed by and construed in accordance
\nwith California law. Venue shall be Santa Clara County.<\/p>\n
E. DISPUTE RESOLUTION: Landlord and Tenant and any other party that may become
\na party to this Lease or be deemed a party to this Lease including any
\nsubtenants agree that, except for any claim by Landlord for unlawful detainer or
\nany claim within the jurisdiction of the small claims court (which for such
\nclaims the parties agree shall be the sole court of competent jurisdiction), any
\ncontroversy, dispute, or claim of whatever nature arising out of, in connection
\nwith or in relation to the interpretation, performance or breach of this Lease,
\nincluding any claim based on contract, tort, or statute, shall be resolved at
\nthe request of any party to this agreement through a two-step dispute resolution
\nprocess administered by J. A. M. S. or another judicial mediation service
\nmutually acceptable to the parties located in Santa Clara County. The dispute
\nresolution process shall involve first, mediation, followed, if necessary, by
\nfinal and binding arbitration administered by and in accordance with the then
\nexisting rules and practices of J. A. M. S. or other judicial mediation service
\nselected. in the event of any dispute subject to this provision, either party
\nmay initiate a request for mediation and the parties shall use reasonable
\nefforts to promptly select a J. A. M. S. mediator and commence the mediation. in
\nthe event the parties are not able to agree on a mediator within thirty (30)
\ndays, J. A. M. S. or another judicial mediation service mutually acceptable to
\nthe parties shall appoint a mediator. The mediation shall be confidential and in
\naccordance with California Evidence Code (s) 1152.5. The mediation shall be held
\nin Santa Clara County and in accordance with the existing rules and practice of
\nJ. A. M. S. (or other judicial and mediation service selected). The parties
\nshall use reasonable efforts to conclude the mediation within sixty (60) days of
\nthe date of either party’s request for mediation. The mediation shall be held
\nprior to any arbitration or court action (other than a claim by Landlord for
\nunlawful detainer or any claim within the jurisdiction of the small claims court
\nwhich are not subject to this mediation\/arbitration provision and may be filed
\ndirectly with a court of competent jurisdiction). Should the prevailing party in
\nany dispute subject to this Section 20.E attempt an arbitration or a court
\naction before attempting to mediate, THE PREVAILING PARTY SHALL NOT BE ENTITLED
\nTO ATTORNEY’S FEES THAT MIGHT OTHERWISE BE AVAILABLE TO THEM IN A COURT ACTION
\nOR ARBITRATION AND IN ADDITION THERETO, THE PARTY WHO IS DETERMINED BY THE
\nARBITRATOR TO HAVE RESISTED MEDIATION, SHALL BE SANCTIONED BY THE ARBITRATOR OR
\nJUDGE.<\/p>\n
If a mediation is conducted but is unsuccessful, it shall be followed by final
\nand binding arbitration administered by and in accordance with the then existing
\nrules and practices of J. A. M. S. or the other judicial and mediation service
\nselected, and judgment upon any award rendered by the arbitrator(s) may be
\nentered by any state or federal court having jurisdiction thereof. The parties
\nto the arbitration shall have those rights of discovery that the arbitrator(s)
\ndeem necessary (after application to the arbitrator(s)) to a full and fair
\nhearing of the matter. However, in no event shall the parties be entitled to
\npropound interrogatories or request for admissions during the arbitration
\nprocess. The arbitrator shall be a retired judge or a licensed California
\nattorney. The venue for any such arbitration or mediation shall be in Santa
\nClara County, California.<\/p>\n
Page 24<\/p>\n
F. ENTIRE AGREEMENT: This Lease and the exhibits attached hereto contains all
\nof the agreements and conditions made between the parties hereto with respect to
\nthe lease of the Premises and may not be modified orally or in any other manner
\nother than by written agreement signed by all parties hereto or their respective
\nsuccessors in interest. This Lease supersedes and revokes all previous
\nnegotiations, letters of intent, lease proposals, brochures, agreements,
\nrepresentations, promises, warranties, and understandings, whether oral or in
\nwriting, between the parties or their respective representatives or any other
\nperson purporting to represent Landlord or Tenant relating to the lease of the
\nPremises.<\/p>\n
G. ENTRY BY LANDLORD: Upon twenty-four (24) hours’ advance written notice to
\nTenant (except in the event of an emergency where no such prior notice shall be
\nrequired) and provided that Landlord does not unreasonably interfere with
\nTenant’s use of the Premises, and subject to Tenant’s reasonable safety and\/or
\nsecurity regulations, Tenant shall permit Landlord and his agents to enter into
\nand upon the Premises at all reasonable times, and except as set forth in this
\nLease, without any rent abatement or reduction or any liability to Tenant for
\nany loss of occupation or quiet enjoyment of the Premises thereby occasioned,
\nfor the following purposes: (i) inspecting and maintaining the Premises; (ii)
\nmaking repairs or alterations to the Premises as may be required to fulfill
\nLandlord’s obligations under this Lease; and (iii) performing any obligations of
\nLandlord under this Lease including remediation of hazardous materials if
\ndetermined to be the responsibility of Landlord. Tenant shall permit Landlord
\nand his agents, at any time within one hundred eighty (180) days prior to the
\nExpiration Date (or at any time during the Lease if Tenant is in default beyond
\nany required written notice and applicable cure period hereunder), to place upon
\nthe Premises “For Lease” signs and exhibit the Premises to real estate brokers
\nand prospective tenants at reasonable hours.<\/p>\n
H. ESTOPPEL CERTIFICATES: At any time during the Lease Term, each party shall,
\nwithin ten (10) business days following receipt of written notice from the other
\nparty, execute and deliver to the requesting party a written statement
\ncertifying, if true, the following: (i) that this Lease is unmodified and in
\nfull force and effect (or, if modified, stating the nature of such
\nmodification); (ii) the date to which rent and other charges are paid in
\nadvance, if any; (iii) acknowledging that there are not, to said party’s actual
\nknowledge, any uncured defaults on the other party’s part hereunder (or
\nspecifying such defaults if they are claimed); and (iv) such other information
\nas such party may reasonably request. Any such statement may be conclusively
\nrelied upon by any prospective purchaser or encumbrancer of the Premises or a
\npurchaser of Tenant’s assets or leasehold interest. Landlord or Tenant’s failure
\nto deliver such statement within such time shall be conclusive upon the party
\nnot providing the statement that this Lease is in full force and effect without
\nmodification, except as may be represented by the requesting party, and that
\nthere are no uncured defaults in the requesting party’s performance. Tenant
\nagrees to provide, within five (5) business days after receipt of a written
\nrequest from Landlord, Tenant’s most recent three (3) years audited financial
\nstatements subject to the following: (i) Landlord shall only require such
\nstatements in connection with Landlord’s proposed sale or refinance of the
\nPremises; and (ii) Landlord and any person or entity to whom such financial
\nstatements are provided shall agree in writing to hold such statements in the
\nstrictest confidence.<\/p>\n
I. EXHIBITS: All exhibits referred to are attached to this Lease and
\nincorporated by reference.<\/p>\n
J. INTEREST: All rent due hereunder, if not paid when within thirty (30) days
\nafter it is due, shall bear interest at the rate of the Reference Rate published
\nby Bank of America, San Francisco Branch, plus two percent (2%) per annum from
\nthat date until paid in full (“Agreed Interest Rate”). This provision shall
\nsurvive the expiration or sooner termination of the Lease. Despite any other
\nprovision of this Lease, the total liability for interest payments shall not
\nexceed the limits, if any, imposed by the usury laws of the State of California.
\nAny interest paid in excess of those limits shall be refunded to Tenant by
\napplication of the amount of excess interest paid against any sums owing to
\nLandlord under this Lease in any order that Landlord requires. If the amount of
\nexcess interest paid exceeds the sums outstanding, the portion exceeding those
\nsums shall be refunded in cash to Tenant by Landlord. To ascertain whether any<\/p>\n
Page 25<\/p>\n
interest payable exceeds the limits imposed, any non-principal payment(including
\nlate charges) shall be considered to the extent permitted by law to be an
\nexpense or a fee, premium, or penalty rather than interest.<\/p>\n
K. NO PRESUMPTION AGAINST DRAFTER: Landlord and Tenant understand, agree and
\nacknowledge that this Lease has been freely negotiated by both parties; and that
\nin any controversy, dispute, or contest over the meaning, interpretation,
\nvalidity, or enforceability of this Lease or any of its terms or conditions,
\nthere shall be no inference, presumption, or conclusion drawn whatsoever against
\neither party by virtue of that party having drafted this Lease or any portion
\nthereof.<\/p>\n
L. NOTICES: All notices, demands, requests, or consents required or permitted
\nto be given under this Lease shall be sent in writing by U.S. certified mail,
\nreturn receipt requested, or by personal delivery, or by a reputable commercial
\novernight courier addressed to the party to be notified at the address for such
\nparty specified in Section 1 of this Lease, or to such other place as the party
\nto be notified may from time to time designate by at least fifteen (15) days
\nprior written notice to the notifying party. Notices given shall be deemed
\nreceived (i) if given by certified mail, return-receipt requested, upon receipt
\nor rejection, (ii) if given by personal delivery, upon signed acknowledgment of
\nreceipt, or (iii) if given by overnight courier, the next business day after
\ndeposit with the courier. When this Lease requires service of a notice, that
\nnotice shall replace rather than supplement any equivalent or similar statutory
\nnotice, including any notices required by Code of Civil Procedure Section 1161
\nor any similar or successor statute. when a statute requires service of a notice
\nin a particular manner, service of that notice (or a similar notice required by
\nthis lease) shall replace and satisfy the statutory service-of-notice
\nprocedures, including those required by Code of Civil Procedure Section 1162 or
\nany similar or successor statute.<\/p>\n
M. PROPERTY MANAGEMENT: In addition, Tenant agrees to pay Landlord along with
\nthe expenses to be reimbursed by Tenant a monthly fee for management services
\nrendered by either Landlord or a third party manager engaged by Landlord (which
\nmay be a party affiliated with Landlord), in the amount of three percent (3%) of
\nthe Base Monthly Rent.<\/p>\n
N. RENT: All monetary sums due from Tenant to Landlord under this Lease,
\nincluding, without limitation those referred to as “additional rent”, shall be
\ndeemed as rent.<\/p>\n
O. REPRESENTATIONS: Tenant acknowledges that except as set forth in this
\nLease, neither Landlord nor any of its employees or agents have made any
\nagreements, representations, warranties or promises with respect to the Premises
\nor with respect to present or future rents, expenses, operations, tenancies or
\nany other matter. Except as expressly set forth in this Lease, Tenant relied on
\nno statement of Landlord or its employees or agents for that purpose.<\/p>\n
P. RIGHTS AND REMEDIES: All rights and remedies hereunder are cumulative and
\nnot alternative to the extent permitted by law, and are in addition to all other
\nrights and remedies in law and in equity.<\/p>\n
Q. SEVERABILITY: If any term or provision of this Lease is held unenforceable
\nor invalid by a court of competent jurisdiction, the remainder of the Lease
\nshall not be invalidated thereby but shall be enforceable in accordance with its
\nterms, omitting the invalid or unenforceable term.<\/p>\n
R. SUBMISSION OF LEASE: Submission of this document for examination or
\nsignature by the parties does not constitute an option or offer to lease the
\nPremises on the terms in this document or a reservation of the Premises in favor
\nof Tenant. This document is not effective as a lease or otherwise until executed
\nand delivered by both Landlord and Tenant.<\/p>\n
S. SUBORDINATION: This Lease is subject and subordinate to ground and
\nunderlying leases, mortgages, deeds of trust and security instruments
\n(collectively “Encumbrances”) which may now affect the Premises, to any
\ncovenants, conditions or restrictions of record, and to all renewals,
\nmodifications, consolidations, replacements and extensions thereof; provided,
\nhowever, if the holder or holders of any such Encumbrance (“Holder”) require
\nthat this Lease be prior and superior thereto, within ten (10) days after
\nwritten request of Landlord to Tenant, Tenant shall execute, have acknowledged
\nand<\/p>\n
Page 26<\/p>\n
deliver all reasonable documents or instruments, in the form presented to
\nTenant, which Landlord or Holder reasonably deems necessary or desirable to make
\nthe Lease superior thereto. Landlord shall have the right to cause this Lease to
\nbe and become and remain subject and subordinate to any and all Encumbrances
\nwhich are now or may hereafter be executed covering the Premises or any
\nrenewals, modifications, consolidations, replacements or extensions thereof, for
\nthe full amount of all advances made or to be made thereunder and without regard
\nto the time or character of such advances, together with interest thereon and
\nsubject to all the terms and provisions thereof; provided only, that in the
\nevent of termination of any such lease or upon the foreclosure of any such
\nmortgage or deed of trust, Holder agrees to recognize Tenant’s rights under this
\nLease as long as Tenant is not then in default (as defined in Section 13 of this
\nLease) and continues to pay Base Monthly Rent and additional rent and observes
\nand performs all provisions of this Lease required to be performed by Tenant.
\nWithin ten (10) days after Landlord’s written request, Tenant shall execute any
\nreasonable documents required by Landlord or the Holder to make this Lease
\nsubordinate to any lien of the Encumbrance. If Tenant fails to do so, then in
\naddition to such failure constituting a default by Tenant, it shall be deemed
\nthat this Lease is so subordinated to such Encumbrance. Notwithstanding anything
\nto the contrary in this Section, Tenant hereby attorns and agrees to attorn to
\nany entity purchasing or otherwise acquiring title to the Premises at any sale
\nor other proceeding or pursuant to the exercise of any other rights, powers or
\nremedies under such encumbrance.<\/p>\n
Landlord shall cause the existing lender, First California Mortgage, to furnish
\nto Tenant, within sixty (60) days of the date of both parties’ execution of this
\nLease, with a written agreement providing for (i) recognition by the lender of
\nall of the terms and conditions of this Lease, and (ii) continuation of this
\nLease upon foreclosure of existing lender’s security interest in the Premises.
\nIn the event that Landlord is unable to provide such agreement, Tenant’s sole
\nremedy shall be termination of the Lease, which election shall be made within
\nfourteen (14) days following the expiration of such sixty (60) day period.
\nNotwithstanding such subordination, Tenant’s right to quiet possession of the
\nPremises shall not be disturbed if Tenant is not in default under this Lease (as
\ndefined in Section 13 of this Lease). Notwithstanding anything to the contrary
\nin the Lease, subordination of Tenant’s leasehold interest to an Encumbrance,
\nand Tenant’s attornment to any party, is conditioned upon Tenant’s concurrent
\nreceipt from the lender or ground lessor or Holder in question of an express
\nwritten agreement in a form reasonably satisfactory to Tenant providing for (i)
\nthe recognition of all of the terms and conditions of this Lease and providing
\nfor continuation of this Lease upon foreclosure of the Encumbrance or
\ntermination of the ground lease and (ii) the written agreement by such successor
\nto perform all of the obligations to be performed by Landlord under the Lease on
\nand after the date of the foreclosure or termination of the ground lease.<\/p>\n
T. APPROVALS: Except as specifically excepted in this Lease, whenever the
\nLease requires an approval, consent, designation, determination or judgment by
\neither Landlord or Tenant, such approval, consent, designation, determination or
\njudgment shall not be unreasonably withheld or delayed and in exercising any
\nright or remedy hereunder, each party shall at all times act reasonably and in
\ngood faith.<\/p>\n
U. REASONABLE EXPENDITURES: Any expenditure by a party permitted or required
\nunder the Lease, for which such party is entitled to demand and does demand
\nreimbursement from the other party, shall be limited to the fair market value of
\nthe goods and services involved, shall be reasonably incurred, and shall be
\nsubstantiated by documentary evidence available for inspection and review by the
\nother party or its representative during normal business hours.<\/p>\n
V. Survival of Indemnities: All indemnification, defense, and hold harmless
\nobligations of Landlord and Tenant under this Lease shall survive the expiration
\nor sooner termination of the Lease.<\/p>\n
W. TIME: Time is of the essence hereunder.<\/p>\n
X. WAIVER OF RIGHT TO JURY TRIAL: Landlord and Tenant waive their respective
\nrights to trial by jury of any contract or tort claim, counterclaim, cross-
\ncomplaint, or cause of action in any action, proceeding, or hearing brought by
\neither party<\/p>\n
Page 27<\/p>\n
against the other on any matter arising out of or in any way connected with this
\nLease, the relationship of Landlord and Tenant, or Tenant’s use or occupancy of
\nthe Premises, including any claim of injury or damage or the enforcement of any
\nremedy under any current or future law, statute, regulation, code, or ordinance.<\/p>\n
Y. MEMORANDUM OF LEASE: At Tenant’s option, a memorandum of this Lease shall
\nbe recorded in a form acceptable to Tenant in the Official Records of Santa
\nClara County, California. Landlord agrees to duly execute and acknowledge such
\nmemorandum.<\/p>\n
Z QUIET ENJOYMENT: Provided Tenant is not in default beyond any required
\nwritten notice and applicable cure period, Tenant shall quietly have and hold
\nthe Premises for the Lease Term and any extensions thereof without interference
\nby Landlord or any party claiming by or through Landlord.<\/p>\n
Page 28<\/p>\n
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease on the day and
\nyear first above written.<\/p>\n
LANDLORD: The Sobrato Group, TENANT: Concentric Network Corporation,
\na California Limited Partnership a Delaware Corporation<\/p>\n
By: \/s\/ John Sobrato By: \/s\/ Henry R. Nothhaft
\n —————————— ——————————–
\nIts: General Partner Its: Chief Executive Officer
\n —————————- ——————————–<\/p>\n
Page 29<\/p>\n
EXHIBIT “A” – PREMISES<\/p>\n
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