Exhibit 10.11
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STANDARD FORM LEASE
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Parties: This Lease, executed in duplicate at Cupertino, California, on July
21st, 1999, by and between Mission West Properties, L.P., a Delaware limited
partnership, and InterTrust Technologies Corporation, a Delaware corporation,
hereinafter called respectively Lessor and Lessee, without regard to number or
gender.
Use: Witnesseth: That Lessor hereby leases to Lessee, and Lessee hires from
Lessor, for the purpose of conducting therein office, research and development,
light manufacturing, and warehouse activities, and any other legal activity; and
for no other purpose without obtaining the prior written consent of Lessor.
Premises: The real property with appurtenances as shown on Exhibit A (the
"Premises") situated in the City of Santa ▇▇▇▇▇, County of Santa ▇▇▇▇▇, State of
California, and more particularly described as follows:
The Premises includes 65,780 square feet of building, including
all improvements thereto, as shown on Exhibit A-1 including the
right to use 240 parking spaces at the Premises. The address for
the Premises is ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇. Lessee's pro-rata share of the Premises is 100%.
Term: The term shall be for sixty (60) months unless extended pursuant to
Section 35 of this Lease (the "Lease Term"), commencing on the Commencement Data
as defined in Section 1 and ending sixty (60) months thereafter.
Rent: Base rent shall be payable in monthly installments as follows:
Base rent Estimated CAC* Total
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Months 1 through 12 $121,693 $14,472* $136,165
Monthly base rent to increase by 4% on the annual anniversary of the
Commencement Date each year during the Lease Term over the prior year's rent.
* CAC charges to be adjusted per Common Area Charges Section below.
Base rent and CAC as scheduled above shall be payable in advance on or below the
first day of each calendar month during the Lease Term. The term "Rent," as used
herein, shall be deemed to be and to mean the base monthly rent and all other
sums required to be paid by Lessee pursuant to the terms of this Lease. Rent
shall be paid in lawful money of the United States of America, without offset or
deduction, and shall be paid to Lessor at such place or places as may be
designated from time to time by Lessor. Rent for any period less than a calendar
month shall be a pro rata portion of the monthly installment. Upon execution of
this Lease, Lessee shall deposit with Lessor the first month's rent.
Security Deposit: Lessee shall deposit with Lessor the sum of Three Hundred
Sixty-Five Thousand Dollars ($365,000) (the "Security Deposit"). The Security
Deposit shall be held by Lessor as security for the faithful performance by
Lessee of all of the terms, covenants, and conditions of this Lease applicable
to Lessee. If Lessee commits a default as provided for herein, including but not
limited to a default with respect to the provisions contained herein relating to
the condition of the Premises, Lessor may (but shall not be required to) use,
apply or retain all or any part of the Security Deposit for the payment of any
amount which Lessor may spend by reason of default by Lessee. If any portion of
the Security Deposit is so used or applied, Lessee shall, within ten days after
written demand therefor, deposit cash with Lessor in an amount sufficient to
restore the Security Deposit to its original amount. Lessee's failure to do so
shall be a default by Lessee. Any attempt by Lessee to transfer or encumber its
interest in the Security Deposit shall be null and void. Upon execution of this
Lease, Lessee shall deposit with Lessor the Security Deposit. Notwithstanding
the above, Lessor agrees to waive the required Security Deposit provided
Lessee's shareholder's equity exceeds $25 million. If at any time during this
Lease Term, Lessee's shareholder's equity is less than $25 million, within ten
days after the issuance of Lessee's financial statements indicating the
reduction in shareholder's equity below $25 million, Lessee shall be obligated
to provide Lessor a Security Deposit in the applicable amount: (i) if Lessee's
shareholder's equity is more than $15 million,
Lessee shall deposit with Lessor a Security Deposit in the amount of $121,000,
(ii) if Lessee's shareholder's equity is less than $15 million but more than
$7.5 million, Lessee shall deposit with Lessor a Security Deposit in the amount
of $242,000, or (iii) if Lessee's shareholder's equity is less than $7.5
million, Lessee shall deposit with Lessor a Security Deposit in the amount of
$365,000. If Lessee fails to make the Security Deposit as required, Lessee shall
be deemed to be in default per Section 14.1 (a) of this Lease.
Common Area Charges: Lessee shall pay to Lessor, as additional Rent, an amount
equal to Lessee's pro-rate share of the total common area charges of the
Premises as defined below (the common area charges for the Premises is referred
to herein as ("CAC")). Lessee shall pay to Lessor as Rent, on or before the
first day of each calendar month during the Lease Term, subject to adjustment
and reconciliation as provided herein below, the sum of Fourteen Thousand Four
Hundred Seventy-Two Dollars ($14,472), said sum representing Lessee's estimated
monthly payment of Lessee's percentage share of CAC. It is understood and agreed
that Lessee's obligation under this paragraph shall be prorated to reflect the
Commencement Date and the end of the Lease Term. Upon execution of this Lease,
Lessee shall deposit with Lessor the first month's estimated CAC.
Lessee's estimated monthly payment of CAC payable by Lessee during the calendar
year in which the Lease commences is set forth above. At or prior to the
commencement of each succeeding calendar year term (or as soon as practical
thereafter), Lessor shall provide Lessee with Lessee's estimated monthly payment
for CAC which Lessee shall pay to Lessor as Rent. Within 120 days of the end of
the calendar year and the end of the Lease Term, Lessor shall provide Lessee a
statement of actual CAC incurred including capital reserved for the preceding
year or other applicable period in the case of a termination year. If such
statement shows that Lessee has paid less than its actual percentage, then
Lessee shall within thirty (30) days after demand pay to Lessor the amount of
such deficiency. If such statement shows that Lessee has paid more than its
actual percentage, then Lessor shall, at its option, promptly refund such excess
to Lessee or credit the amount thereof to the Rent next becoming due from
Lessee. Lessor reserves the right to revise any estimate of CAC if the actual or
projected CAC show an increase or decrease in excess of 10% from an earlier
estimate for the same period. In such event, Lessor shall provide a revised
estimate to Lessee, together with an explanation of the reasons therefor, and
Lessee shall revise its monthly payments accordingly. Lessor's and Lessee's
obligation with respect to adjustments at the end of the Lease Term or earlier
expiration of this Lease shall survive the Lease Term or earlier expiration.
As used in this Lease, CAC shall include but is not limited to: (i) items as
specified in Sections 5(b), 6, 16 and 31; (ii) all costs and expenses including
but not limited to supplies, materials, equipment and tools used or required in
connection with the operation and maintenance of the Premises; (iii) licenses,
permits and inspection fees; (iv) all other costs incurred by Lessor in
maintaining and operating the Premises; (v) all reserves for Capital
Replacements ("Capital Replacements" are defined as capital replacements for
HVAC, parking lot, roof membrane, and exterior painting); and (vi) an amount
equal to five percent (5%) of the aggregate of all CAC, as compensation for
Lessor's accounting and processing services. Lessee shall have the right to
review and audit the basis and computation analysis used to derive the CAC
applicable to this Lease annually. CAC shall not include (i) rent paid to any
ground lessor, (ii) repairs covered by proceeds of insurance; (iii) damage and
repairs necessitated by the gross negligence or willful misconduct of Lessor,
Lessor's employees, contractors, or agents; (iv) executive salaries or salaries
of service personnel to the extent that such personnel perform services not in
connection with the management, operation, repair, or maintenance of the
Building; (v) Lessor's general overhead expenses not related to the Building;
(vi) costs of any service for which Lessor is reimbursed; (vii) repairs,
alterations, additions, improvements or replacements needed to correct defects
in any work paid for by Lessee; (viii) "Capital Expenditures" (capital amounts
over $5,000), except (a) those required as a result of government regulations
imposed on the Premises, (b) those required as a result of alterations of the
Premises by Lessee or (c) those required to create operating efficiencies and
savings at the Premises. (a), (b), and (c) above shall be amortized over their
useful life at ▇▇▇▇▇ Fargo's prime rate plus 1% and the monthly amortization
shall be added to Lessee's CAC.
Late Charges: Lessee hereby acknowledges that a late payment made by Lessee to
Lessor of Rent and other sums due hereunder will cause Lessor to incur costs not
contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges, which may be imposed on Lessor
according to the terms of any mortgage or trust deed covering the Premises.
Accordingly, if any installment of Rent or any other sum due from Lessee is not
received by Lessor or Lessor's designee within five (5) days after such amount
is due, Lessee shall pay to Lessor a late charge equal to five (5%) percent of
such overdue amount. The parties hereby agree that such late charge represents a
fair and
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reasonable estimate of the costs Lessor will incur by reason of late payments
made by Lessee. Acceptance of such late charges by Lessor shall in no event
constitute a waiver of Lessee's default with respect to such overdue amount, nor
shall it prevent Lessor from exercising any of the other rights and remedies
granted hereunder.
Quiet Enjoyment: Lessor covenants and agrees with Lessee that upon Lessee paying
Rent and performing its covenants and conditions under this Lease, Lessee shall
and may peaceably and quietly have, hold and enjoy the Premises for the Lease
Term, subject, however, to the rights reserved by Lessor hereunder.
It is Further Mutually Agreed Between The Parties As Follows:
1. Possession: Possession shall be deemed tendered and the term shall commence
upon the first to occur of the following, but in no event earlier than September
1, 1999 (the "Commencement Date"): (i) the Premises are Substantially Complete
or (ii) Lessee occupies the Premises or (iii) if Lessor is prevented from or
delayed in completing its work under this Lease due to Lessee Delays, such work
will be deemed Substantially Complete as of the date on which it would have been
Substantially Complete had it not been for such Lessee Delays or (iv) the
Premises are available for occupancy by Lessee and the Premises meet all
requirements for occupancy. It is the intention of Lessee and Lessor that
September 1, 1999 shall be the Commencement Date.
"Substantially Complete" shall mean that: (i) Lessor has tendered possession of
Premises to Lessee, (ii) Lessor has met all requirements for occupancy, (iii)
The lessee interior improvements are materially complete per the approved plans,
exclusive of telephone or other communication systems, punchlist items and there
remains no incomplete or defective items of work which would materially
adversely affect Lessee's intended use of the Premises, and (iv) said interior
of the building is in a "broom clean" condition and carpets shampooed, any
damaged or stained ceiling tiles replaced and touch up paint where needed.
1.1 Commencement Data Memorandum: When the actual Commencement Date is
determined, the parties shall execute a Commencement Date Memorandum setting
forth the Commencement Date, the expiration date of the Lease Term and the
actual square footage if any portion of the walkway connector is included in the
Premises and any required adjustments to base rent and CAC, but failure to do so
shall not affect the continuing validity and enforceability of this Lease, which
shall remain in full force and effect.
2. Lessee's Improvements: Lessor shall cause the improvements specified on
Exhibit B attached hereto to be made to the Premises at the sole cost and
expense of Lessor. Notwithstanding the foregoing, Lessor's obligation to cause
the improvements to be made shall be limited to those specified on Exhibit B.
Additional improvements (those improvements not specified on Exhibit B), if any,
may be made by Lessor, upon written request by Lessee. In no event shall
Lessee's request for additional improvements delay the Commencement Date. If
Lessee requests additional improvements prior to the Commencement Date, the
monthly base rent under the Lease shall be increased by $21.25 per month for
every $1,000 dollars of additional improvements up to a maximum of $131,560. Any
approved cost over the $131,560 coverage shall be paid for by Lessee in cash
within fifteen (15) days after Lessor has provided Lessee with evidence that the
work approved is complete. All costs incurred shall be documented and subject to
verification by Lessee.
Notwithstanding the provisions of Section 1 above, Lessee may occupy and enter
the Premises prior to September 1, 1999 provided the occupancy and entry of
Lessee do not delay or interfere with Lessor's completion of the improvements
provided for in this Lease and subject to Lessee complying with all terms of the
Lease except the obligation to pay Rent.
2.1 Acceptance Of Premises And Covenants To Surrender: Lessee accepts the
Premises in an "AS IS" condition and "AS IS" state of repair, subject to
Lessor's representations: (i) that the Premises and the building operating
systems are in good order and repair, and comply with all requirements for
occupancy including ADA as of the Commencement Date, and (ii) Lessor has
completed the improvements shown on the attached Exhibit B. Lessee agrees on the
last day of the Lease Term, or on the sooner termination of this Lease, to
surrender the Premises to Lessor in Good Condition and Repair. "Good Condition
and Repair" shall generally mean that the Premises are in the condition that one
would expect the Premises to be in, if throughout the Lease Term Lessee (i) uses
and maintains the Premises in a commercially reasonable manner and in an
accordance with the
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requirements of this Lease and destruction under paragraph 19 excepted (ii)
makes all Required Replacements. "Required Replacements" are the replacements to
worn-out equipment, fixtures, and improvements that a commercially reasonable
owner-user would make. All of the following shall be in Good Condition and
Repair: (i) the interior walls and floors of all offices and other interior
areas, (ii) all suspended ceilings and any carpeting shall be clean and in good
condition, (iii) all windows, doors and door closures and glazing and plate
glass if not covered by insurance, and (iv) all electrical systems, including
light fixtures and ballasts, plumbing, and temperature control systems. Lessee,
on or before the end of the Lease Term or sooner termination of this Lease,
shall remove all its personal property and trade fixtures from the Premises, and
all such property not so removed shall be deemed to be abandoned by Lessee.
Lessee shall reimburse Lessor for all disposition costs incurred by Lessor
relative to Lessee's abandoned property. If the Premises are not surrendered at
the end of the Lease Term or earlier termination of this Lease, Lessee shall
indemnify Lessor against loss or liability resulting from any delay caused by
Lessee in surrendering the Premises including, without limitation, any claims
made by any succeeding Lessee founded on such delay. Notwithstanding the
provisions of the preceding sentence, Lessor shall provide Lessee with 30 days
prior written notice of any damages that will be due Lessor as a result of
Lessee's delay in surrendering the Premises and Lessee shall have no obligation
for these damages if Lessee surrenders the Premises within the subject 30 days.
3. Uses Prohibited: Lessee shall not commit, or suffer to be committed, any
waste upon the Premises, or any nuisance, or other act or thing which may
disturb the quiet enjoyment of any other tenant in or around the buildings in
which the subject Premises are located or allow any sale by auction upon the
Premises, or allow the Premises to be used for any improper, immoral, unlawful
or objectionable purpose, or place any loads upon the floor, walls, or ceiling
which may endanger the structure, or use any machinery or apparatus which will
in any manner vibrate or shake the Premises or the building of which it is a
part, or place any harmful liquids in the drainage system of the building. No
waste materials or refuse shall be dumped upon or permitted to remain upon any
part of the Premises outside of the building proper. No materials, supplies,
equipment, finished products or semi-finished products, raw materials or
articles of any nature shall be stored upon or permitted to remain on any
portion of the Premises outside of the building structure, unless approved by
the local, state federal or other applicable governing authority. Lessor
consents to Lessee's use of materials which are incidental to the normal, day-
to-day operations of any office user, such as copier fluids, cleaning materials,
etc., but this does not relieve Lessee of any of its obligations not to
contaminate the Premises and related real property or violate any Hazardous
Materials Laws.
4. Alterations And Additions: Lessee shall not make, or suffer to be made, any
alteration or addition to said Premises, or any part thereof, without the
express, advance written consent of Lessor which consent shall not be
unreasonably withheld or delayed; any addition or alteration to said Premises,
except movable furniture and trade fixtures, shall become at once a part of the
realty and belong to Lessor to the end of the Lease Term or earlier termination
of this Lease. Alterations and additions which are not deemed as trade fixtures
shall include HVAC systems, lighting systems, electrical systems, hard wall
partitioning, carpeting, or any other installation which has become an integral
part of the Premises. Lessee agrees that it will not proceed to make such
alterations or additions until all required government permits have been
obtained and after having obtained consent from Lessor to do so, until five (5)
days from the receipt of such consent, so that Lessor may post appropriate
notices to avoid any liability to contractors or material suppliers for payment
for Lessee's improvements. Lessee shall at all times permit such notices to be
posted and to remain posted until the completion of work. At the end of the
Lease Term or earlier termination of this Lease, Lessee shall remove and shall
be required to remove its special tenant improvements, all related equipment,
and any additions or alterations installed by Lessee at or during the Lease Term
and Lessee shall return the Premises to the condition that existed before the
installation of the tenant improvements. Notwithstanding the above, Lessor
agrees to allow any reasonable alterations and improvements and will notify
Lessee at the time of approval if such improvements or alterations are to be
removed at the end of the Lease Term or earlier termination of this Lease. The
initial tenant improvements shall not be required by Lessor to be removed.
Notwithstanding the above, Lessee shall have the right to make non-structural
alterations costing less than Ten Thousand Dollars ($10,000.00) without Lessors
consent but only after five (5) days prior notice to Lessor.
5. Maintenance Of Premises:
(a) Lessee shall at its sole cost and expense keep, repair, and maintain
the interior of the Premises in Good Condition and Repair, including, but
not limited to, the interior walls and floors of all offices and other
interior areas, doors and door closures, all lighting systems, temperature
control systems, kitchen fixtures and
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equipment, and plumbing systems, including any Required Replacements.
Lessee shall provide interior and exterior window washing as needed.
(b) Lessor shall, at Lessee's expenses, keep, repair, and maintain in Good
Condition and Repair including replacements (based on a pro-rata share of
(i) costs based on square footage or (ii) costs directly related to
Lessee's use of the Premises) the following, which shall be included in the
monthly CAC:
1. The exterior of the building, any appurtenances and every part
thereof, including but not limited to, glazing, sidewalks, parking
areas, electrical systems, and painting of exterior walls. The parking
lot to receive a finish coat every five years.
2. The HVAC by a service contract with a licensed air conditioning
and heating contractor which contract shall provide for a minimum of
quarterly maintenance of all air conditioning and heating equipment at
the Premises including HVAC repairs or replacements which are either
excluded from such service contract or any existing equipment
warranties.
3. The landscaping by a landscape contractor to water, maintain,
trim and replace, when necessary, any shrubbery, irrigation parts, and
landscaping at the Premises.
4. The roof membrane by a service contract with a licensed reputable
roofing contractor which contract shall provide for a minimum of semi-
annual maintenance, cleaning of storm gutters, drains, removing of
debris, and trimming overhanging trees, repair of the roof and
application of a finish coat every five years to the building at the
Premises.
5. Exterior pest control.
6. Fire monitoring services.
7. Parking lot sweeping.
(c) Lessee hereby waives any and all rights to make repairs at the expense
of Lessor as provided in Section 1942 of the Civil Code of the State of
California, and all rights provided for by Section 1941 of said Civil Code.
However, in an emergency, Lessee may make any repairs required of Lessor
only to the extent necessary to alleviate the emergency condition which
Lessor has not made, and Lessor will reimburse Lessee all reasonable costs
incurred within thirty (30) days of invoice.
(d) Lessor shall be responsible at its sole expense for the repair of any
structural defects in the Premises including the roof structure (not
membrane), exterior walls and foundation during the Least Term.
5.1 Lessor's Repairs: Notwithstanding the provisions of Section 5 above: (a)
Lessor agrees that for the six month period ending on February 28, 2000, Lessor
will pay the cost to repair any single item in the HVAC, plumbing or electrical
systems that: (i) the failure to repair is not caused by the negligence, or
misconduct of Lessee or Lessor's agents. (b) The intent of this Section 5.1 is
to limit the exposure of the Lessee for any single item failure during the first
six months of the Lease Term, such as compressor, transformers and the like. In
addition, Lessor agrees that for the six month period ending February 28, 2000,
Lessor will pay any roof repair costs if not caused or related to the actions of
Lessee. Notwithstanding the provisions of this Section 5.1, Lessee shall be
responsible to pay for all regular maintenance contracts related to all
operating systems at the Premises.
6. Insurance:
A) Hazard Insurance: Lessee shall not use, or permit said Premises, or
any part thereof, to be used, for any purpose other than that for which the
Premises are hereby leased; and no use shall be made or permitted to be
made of the Premises, nor acts done, which may cause a cancellation of any
insurance policy covering the Premises, or any party thereof, nor shall
Lessee sell or permit to be kept, used or sold, in or about said Premises,
any article which may be prohibited by a fire and extended coverage
insurance policy. Lessee shall
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comply with any and all requirements, pertaining to said Premises, of any
insurance organization or company, necessary for the maintenance of
reasonable fire and extended coverage insurance, covering the Premises.
Lessor shall, at Lessee's sole cost and expense, purchase and keep in force
fire and extended covering insurance, covering loss or damage to the
Premises in an amount equal to the full replacement cost of the Premises,
as determined by Lessor, with proceeds payable to Lessor. In the event of a
loss per the insurance provisions of this paragraph, Lessee shall be
responsible for deductibles up to a maximum of $5,000 per occurrence.
Lessee acknowledges that the insurance referenced in this paragraph does
not include coverage for Lessee's personal property.
B) Loss of Rents Insurance: Lessor shall, at Lessee's sole cost and
expense, purchase and maintain in full force and effect, a policy of rental
loss insurance, in an amount equal to the amount of Rent payable by Lessee
commencing on the date of loss if reasonably available for the next ensuing
one (1) year, as reasonably determined by Lessor with proceeds payable top
Lessor ("Loss of Rents Insurance").
C) Liability and Property Damage Insurance: Lessee, as a material part of
the consideration to be rendered to Lessor, hereby waives all claims
against Lessor and Lessor's Agents for damages to goods, wares and
merchandise, and all other personal property in, upon, or about the
Premises, and for injuries to persons in, upon, or about the Premises, from
any cause arising at any time, and Lessee will hold Lessee and Lessor's
Agents exempt and harmless from any damage or injury to any person, or to
the goods, wares, and merchandise and all other personal property of any
person, arising from the use or occupancy of the Premises by Lessee, or
from the failure of Lessee to keep the Premises in Good Condition and
Repair, as herein provided. Lessee shall, at Lessee's sole cost and
expense, purchase and keep in force a standard policy of commercial general
liability insurance and property damage policy covering the Premises and
all related areas insuring the Lessee having a combined single limit for
both bodily injury, death and property damage in an amount not less than
three million dollars ($3,000,000.00) and Lessee's insurance shall be
primary. The limits of said insurance shall not, however, limit the
liability of Lessee hereunder. Lessee shall, at its sole cost and expense,
comply with all of the insurance requirements of all local, municipal,
state and federal authorities now in force, or which may hereafter be in
force, pertaining to Lessee's use and occupancy of said Premises.
D) Personal Property Insurance: Lessee shall obtain, at Lessee's sole
cost and expense, a policy of fire and extended coverage insurance
including coverage for direct physical loss special form, and a sprinkler
leakage endorsement insuring the personal property of Lessee. The proceeds
from any personal property damage policy shall be payable to Lessee.
All insurance policies required in 6 C) and 6 D) above shall: (i) provide for a
certificate of insurance evidencing the insurance required herein, being
deposited with Lessor ten (10) days prior to the Commencement Date, and upon
each renewal, such certificates shall be provided 15 days prior to the
expiration date of such coverage, (ii) be in a form reasonably satisfactory to
Lessor and shall provide the coverage required by Lessee in this Lease, (iii) be
carried with companies with the a Best Rating of A minimum, (iv) specifically
provide that such policies shall not be subject to cancellation or reduction of
coverage, except after 30 days prior written notice to Lessor, (v) name Lessor,
Lessor's lender, and any other party with an insurable interest in the Premises
as additional insureds by endorsement to policy, and (vi) shall be primary.
Lessee agrees to pay to Lessor, as additional Rent, on demand, the full cost of
the insurance policies referenced in 6 A) and 6 B) above as evidenced as
insurance ▇▇▇▇▇▇▇▇ to Lessor which shall be included in the CAC. If Lessee does
not occupy the entire Premises, the insurance premiums shall be allocated to the
portion of the Premises occupied by Lessee on a pro-rata square footage or other
equitable basis, as determined by Lessor. It is agreed that Lessee's obligation
under this paragraph shall be prorated to the reflect the Commencement Date and
the end of the Lease Term.
Lessor and Lessee hereby waive any rights each may have against the other
related to any loss or damage caused to Lessor or Lessee as the case may be, or
to the Premises or its contents, and which may arise from any risk covered by
fire and extended coverage insurance and those risks required to be covered
under Lessee's personal property insurance. The parties shall provide that their
respective insurance policies insuring the property or the personal
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property include a waiver of any right of subrogation which said insurance
company may have against Lessor or Lessee, as the case may be.
7. Abandonment: Lessee shall not abandon the Premises at any time during the
Lease Term; and if Lessee shall abandon, or surrender said Premises, or be
dispossessed by process of law, or otherwise, any personal property belonging to
Lessee and left on the Premises shall be deemed to be abandoned, at the option
of Lessor. Notwithstanding the above, the Premises shall not be considered
abandoned if Lessee maintains the Premises in Good Condition and Repair,
provides security and is not in default.
8. Free From Liens: Lessee shall keep the subject Premises and the property in
which the subject Premises are situated, free from any and all liens including
but not limited to liens arising out of any work performed, materials furnished,
or obligations incurred by Lessee. However, the Lessor shall allow Lessee to
contest a lien claim, so long as the claim is discharged prior to any
foreclosure proceeding being initiated against the property and provided Lessee
provides Lessor a bond if the lien exceeds $5,000. Notwithstanding the above, no
bond is required if the lien is discharged within 30 days of filing.
9. Compliance With Governmental Regulations: Lessee shall, at its sole cost
and expense, comply with all of the requirements of all local, municipal, state
and federal authorities now in force, or which may hereafter be in force,
pertaining to the Premises, and shall faithfully observe in the use and
occupancy of the Premises all local and municipal ordinances and state and
federal statutes now in force or which may hereafter be in force.
10. Intentionally Omitted.
11. Advertisements And Signs: Lessee shall not place or permit to be placed,
in, upon or about the Premises any unusual or extraordinary signs, or any signs
not approved by the city, local, state, federal or other applicable governing
authority. Lessee shall not place, or permit to be placed upon the Premises, any
signs, advertisements or notices without the written consent of the Lessor, and
such consent shall not be unreasonably withheld. A sign so placed on the
Premises shall be so placed upon the understanding and agreement that Lessee
will remove same at the end of the Lease Term or earlier termination of this
Lease and repair any damage or injury to the Premises caused thereby, and if not
so removed by Lessee, then Lessor may have the same removed at Lessee's expense.
12. Utilities: Lessee shall pay for all water, gas, heat, light, power,
telephone and other utilities supplied to the Premises. Any charges for sewer
usage, PG&E and telephone site service or related fees shall be the obligation
of Lessee and paid for by Lessee. If any such services are not separately
metered to Lessee, Lessee shall pay a reasonable proportion of all charges which
are jointly metered, the determination to be made by Lessor acting reasonably
and on any equitable basis. Lessor and Lessee agree that Lessor shall not be
liable to Lessee for any disruption in any of the utility services to the
Premises except for Lessor's gross negligence or willful misconduct.
13. Attorney's Fees: In case suit should be brought for the possession of the
Premises, for the recovery of any sum due hereunder, because of the breach of
any other covenant herein, or to enforce, protect, or establish any term,
conditions, or covenant of this Lease or the right of either party hereunder,
the losing party shall pay to the Prevailing Party reasonable attorney's fees
which shall be deemed to have accrued on the commencement of such action and
shall be enforceable whether or not such action is prosecuted to judgment. The
term "Prevailing Party" shall mean the party that received substantially the
relief requested, whether by settlement, dismissal, summary judgment, judgment,
or otherwise.
14.1 Default: The occurrence of any of the following shall constitute a default
and breach of this Lease by Lessee: a) Any failure by Lessee to pay Rent or to
make any other payment required to be made by Lessee hereunder when due if not
cured within ten (10) days after written notice thereof by Lessor to Lessee; b)
The abandonment of the Premises by Lessee except as provided in Section 7; c) A
failure by Lessee to observe and perform any other provision of this Lease to be
observed or performed by Lessee, where such failure continues for thirty days
after written notice thereof by Lessor to Lessee; provided, however, that if the
nature of such default is such that the same cannot be reasonably cured within
such thirty (30) day period, Lessee shall not be deemed to be in default if
Lessee shall, within such period, commence such cure and thereafter diligently
prosecute the same to completion; d) The making by Lessee of any general
assignment for the benefit of creditors; the filing by or against Lessee of a
petition to have Lessee adjudged a bankrupt or of a petition for reorganization
or arrangement under any
7
law relating to bankruptcy; e) the appointment of a trustee or receiver to take
possession of substantially all of Lessee's assets or Lessee's interest in this
Lease, or the attachment, execution or other judicial seizure of substantially
all of Lessee's assets located at the Premises or of Lessee's interest in this
Lease.
14.2 Surrender Of Lease: In the event of any such default by Lessee, then in
addition to any other remedies available to Lessor at law or in equity, Lessor
shall have the immediate option to terminate this Lease before the end of the
Lease Term and all rights of Lessee hereunder, by giving written notice of such
intention to terminate. In the event that the Lessor terminates this Lease due
to a default of Lessee, then Lessor may recover from Lessee: a) the worth at the
time of award of any unpaid Rent which had been earned at the time of such
termination; plus b) the worth at the time of award of unpaid Rent which would
have been earned after termination until the time of award exceeding the amount
of such rental loss that the Lessee proves could have been reasonably avoided;
plus c) the worth at the time of award of the amount by which the unpaid Rent
for the balance of the Lease Term after the time of award exceeds the amount of
such rental loss that the Lessee proves could have been reasonably avoided; plus
d) any other amount necessary to compensate Lessor for all the detriment
proximately caused by Lessee's failure to perform his obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom; and e) at Lessor's election, such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time by applicable
California law. As used in (a) and (b) above, the "worth at the time of award"
is computed by allowing interest at the lesser of the rate of ▇▇▇▇▇ Fargo's
prime rate plus two percent (2%) per annum or the maximum rate allowed by law.
As used in (c) above, the "worth at the time of award" is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%).
14.3 Right of Entry and Removal: In the event of any such default by Lessee,
Lessor shall also have the right, with or without terminating this Lease, to re-
enter the Premises and remove all persons and property from the Premises; such
property may be removed and stored in a public warehouse or elsewhere at the
cost of and for the account of Lessee.
14.4 Abandonment: In the event of the abandonment, except as provided in
Section 7, of the Premises by Lessee or in the event that Lessor shall elect to
re-enter as provided in paragraph 14.3 above or shall take possession of the
Premises pursuant to legal proceeding or pursuant to any notice provided by law,
and Lessor does not elect to terminate this Lease as provided in Section 14.2
above, then Lessor may from time to time, without terminating this Lease, either
recover all Rent as it becomes due or relet the Premises or any part thereof for
such term or terms and at such rental rates and upon such other terms and
conditions as Lessor, in its sole discretion, may deem advisable with the right
to make alterations and repairs to the Premises. In the event that Lessor elects
to relet the Premises, then Rent received by Lessor from such reletting shall be
applied; first, to the payment of any indebtedness other than Rent due hereunder
from Lessee to Lessor; second, to the payment of any cost of such reletting;
third, to the payment of the cost of any alterations and repairs to the
Premises; fourth, to the payment of Rent due and unpaid hereunder; and the
residue, if any, shall be held by Lessor and applied to the payment of future
Rent as the same may become due and payable hereunder. Should that portion of
such Rent received from such reletting during any month, which is applied by the
payment of Rent hereunder according to the application procedure outlined above,
be less than the Rent payable during that month by Lessee hereunder, then Lessee
shall pay such deficiency to Lessor immediately upon demand therefor by Lessor.
Such deficiency shall be calculated and paid monthly. Lessee shall also pay to
Lessor, as soon as ascertained, any costs and expenses incurred by Lessor in
such reletting or in making such alternations and repairs not covered by the
rentals received from such reletting.
14.5 No Implied Termination: No re-entry or taking possession of the Premises
by Lessor pursuant to Section 14.3 or Section 14.4 of this Lease shall be
construed as an election to terminate this Lease unless a written notice of such
intention is given to Lessee or unless the termination thereof is decreed by a
court of competent jurisdiction. Notwithstanding any reletting without
termination by Lessor because of any default by Lessee, Lessor may at any time
after such reletting elect to terminate this Lease for any such default.
15. Surrender Of Lease: The voluntary or other surrender of this Lease by
Lessee, or a mutual cancellation thereof, shall not work a merger, and shall, at
the option of Lessor, terminate all or any existing subleases or sub tenancies,
or may, at the option of Lessor, operate as an assignment to him of any or all
such subleases or sub tenancies.
8
16. Taxes: Lessee shall pay and discharge punctually and when the same shall
become due and payable without penalty, all real estate taxes, personal property
taxes, taxes based on vehicles utilizing parking areas in the Premises, taxes
computed or based on rental income (other than federal, state and municipal net
income taxes), environmental surcharges, privilege taxes, excise taxes, business
and occupation taxes, school fees or surcharges, gross receipts taxes, sales
and/or use taxes, employee taxes, occupational license taxes, water and sewer
taxes, assessments (including but not limited to, assessments for public
improvements or benefit), assessments for local improvements and maintenance
districts, and all other governmental impositions and charges of every kind and
nature whatsoever, regardless of whether now customary or within the
contemplation of the parties hereto and regardless of whether resulting from
increased rate and/or valuation, or whether extraordinary or ordinary, general
or special, unforeseen or foreseen, or similar or dissimilar to any of the
foregoing (all of the foregoing being hereinafter collectively called "Tax" or
"Taxes") which, at any time during the Lease Term, shall be applicable or
against the Premises, or shall become due and payable and a lien or charge upon
the Premises under or by virtue of any present or future laws, statutes,
ordinances, regulations, or other requirements of any governmental authority
whatsoever. The term "Environmental Surcharge" shall include any and all
expenses, taxes, charges or penalties imposed by the Federal Department of
Energy, Federal Environment Protection Agency, the Federal Clean Air Act, or any
regulations promulgated thereunder, or any other local, state or federal
governmental agency or entity now or hereafter vested with the power to impose
taxes, assessments or other types of surcharges as a means of controlling or
abating environmental pollution or the use of energy in regard to the use,
operation or occupancy of the Premises. The term "Tax" shall include, without
limitation, all taxes, assessments, levies, fees, impositions or charges levied,
imposed, assessed, measured, or based in any manner whatsoever (i) in whole or
in part on the Rent payable by Lessee under this Lease, (ii) upon or with
respect to the use, possession, occupancy, leasing, operation or management of
the Premises, (iii) upon this transaction or any document to which Lessee is a
party creating or transferring an interest or an estate in the Premises, (iv)
upon Lessee's business operations conducted at the Premises, (v) upon, measured
by or reasonably attributable to the cost or value of Lessee's equipment,
furniture, fixtures and other personal property located on the Premises or the
cost or value of any leasehold improvements made in or to the Premises by or for
Lessee, regardless of whether title to such improvements shall be in Lessor or
Lessee, or (vi) in lieu of or equivalent to any Tax set forth in this Section
16. In the event any such Taxes are payable by Lessor and it shall not be lawful
for Lessee to reimburse Lessor for such Taxes, then the Rent payable thereunder
shall be increased to net Lessor the same net rent after imposition of any such
Tax upon Lessor as would have been payable to Lessor prior to the imposition of
any such Tax. It is the intention of the parties that Lessor shall be free from
all such Taxes and all other governmental impositions and charges of every kind
and nature whatsoever. However, nothing contained in this Section 16 shall
require Lessee to pay any Federal or State income, franchise, estate,
inheritance, succession, transfer or excess profits tax imposed upon Lessor. If
any general or special assessment is levied and assessed against the Premises,
Lessor agrees to use its best reasonable efforts to cause the assessments to
become a lien on the Premises securing repayment of a bond sold to finance the
improvements to which the assessment relates which is payable in installments of
principal and interest over the maximum term allowed by law. It is understood
and agreed that Lessee's obligation under this paragraph will be prorated to
reflect the Commencement Date and the end of the Lease Term. It is further
understood that if Taxes cover the Premises and Lessee does not occupy the
entire Premises, the Taxes will be allocated to the portion of the Premises
occupied by Lessee based on a pro-rata square footage or other equitable basis,
as determined by Lessor. Taxes billed by Lessor to Lessee shall be included in
the monthly CAC.
Subject to any limitations or restrictions imposed by any deeds of trust or
mortgages now or hereafter covering or affecting the Premises, Lessee shall have
the right to contest or review the amount or validity of any Tax by appropriate
legal proceedings but which is not to be deemed or construed in any way as
relieving, modifying or extending Lessee's covenant to pay such Tax at the time
and in the manner as provided in this Section 16. However, as a condition of
Lessee's right to contest, if such contested Tax is not paid before such contest
and if the legal proceedings shall not operate to prevent or stay the collection
of the Tax so contested, Lessee shall, before instituting any such proceeding,
protect the Premises and the interest of Lessor and of the beneficiary of a deed
of trust or the mortgagee of a mortgage affecting the Premises against any lien
upon the Premises by a surety bond, issued by an insurance company acceptable to
Lessor and in an amount equal to one and one-half (1 1/2) times the amount
contested or, at Lessor's option, the amount of the contested Tax and the
interest and penalties in connection therewith. Any contest as to the validity
or amount of any Tax, whether before or after payment, shall be made by Lessee
in Lessee's own name, or if required by law, in the name of Lessor or both
Lessor and Lessee. Lessee shall defend, indemnify and hold harmless Lessor from
and against any and all such costs or expenses, including attorneys' fees, in
connection with any such proceedings brought by Lessee, whether in its own name
or not. Lessee
9
shall be entitled to retain any refund of any such contested Tax and penalties
or interest thereon which have been paid by Lessee. Nothing contained herein
shall be construed as affecting or limiting Lessor's right to contest any Tax at
Lessor's expense.
17. Notices: Unless otherwise provided for in this Lease, any and all written
notices or other communications (the "Communication") to be given in connection
with this Lease shall be given in writing and shall be given by personal
delivery, facsimile transmission or by mailing by registered or certified mail
with postage thereon or recognized overnight courier, fully prepaid, in a sealed
envelope addressed to the intended recipient as follows:
(a) to the Lessor at: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) to the Lessee at: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ Before commencement: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
or such other addresses, facsimile number or individual as may be designated by
a Communication given by a party to the other parties as aforesaid. Any
Communication given by personal delivery shall be conclusively deemed to have
been given and received on a date it is so delivered at such address provided
that such date is a business day, otherwise on the first business day following
its receipt, and if given by registered or certified mail, on the day on which
delivery is made or refused or if given by recognized overnight courier, on the
first business day following deposit with such overnight courier and if given by
facsimile transmission, on the day on which it was transmitted provided such day
is a business day, failing which, on the next business day thereafter.
18. Entry By Lessor: Lessee shall permit Lessor and its agents to enter into
and upon said Premises at all reasonable times (with at least twenty-four (24)
hours prior notice except if an emergency) using the minimum amount of
interference and inconvenience to Lessee and Lessee's business, subject to any
security regulations of Lessee, for the purpose of inspecting the same or for
the purpose of maintaining the building in which said Premises are situated, or
for the purpose of making repairs, alterations or additions to any other portion
of said building, including the erection and maintenance of such scaffolding,
canopies, fences and props as may be required, without any rebate of Rent and
without any liability to Lessee for any loss of occupation or quiet enjoyment of
the Premises; and shall permit Lessor and his agents, at any time within ninety
(90) days prior to the end of the Lease Term, to place upon said Premises any
usual or ordinary "For Sale" or "For Lease" signs and exhibit the Premises to
prospective tenants at reasonable hours.
19. Destruction Of Premises: In the event of a partial destruction of the said
Premises during the Lease Term from any cause which is covered by Lessor's
property insurance, Lessor shall forthwith repair the same, provided such
repairs can be made within one hundred eight (180) days after receipt of
building permit under the laws and regulations of State, Federal, County, or
Municipal authorities, but such partial destruction shall in no way annul or
void this Lease, except that Lease shall be entitled to a proportionate
reduction of Rent while such repairs are being made. With respect to any partial
destruction which Lessor is obligated to repair or may elect to repair under the
terms of this paragraph, the provision of Section 1932, Subdivision 2, and of
Section 1933, Subdivision 4, of the Civil Code of the State of California are
waived by Lessee. In the event that the building in which the subject Premises
may be situated is destroyed to an extent greater than thirty-three and one-
third percent (33 1/3%) of the replacement cost thereof, Lessor may, at its sole
option, elect to terminate this Lease, whether the subject Premises is insured
or not. A total destruction of the building in which the subject Premises are
situated shall terminate this Lease. Notwithstanding the above, Lessor is only
obligated to repair or rebuild to the extent of available insurance proceeds
including any deductible amount paid by Lessee. Should Lessor determine that
insufficient or no insurance proceeds are available for repair or reconstruction
of Premises, Lessor, at its sole option, may terminate the Lease. Lessee shall
have the option of continuing this Lease by agreeing to pay all repair costs to
the subject Premises. If the destruction is within the last twelve (12) months
of the lease term, then Lessee shall have the right to terminate this lease upon
thirty (30) days prior notice to Lessor.
10
20. Assignment And Subletting: Lessee shall not assign this Lease, or any
interest therein, and shall not sublet the said Premises or any part thereof, or
any right or privilege appurtenant thereto, or cause any other person or entity
(a bona fide subsidiary or affiliate of Lease excepted) to occupy or use the
Premises, or any portion thereof, without the advance written consent of Lessor
which consent shall not be unreasonably withheld or delayed. Any such
assignment or subletting without such consent shall be void, and shall, at the
option of the Lessor, terminate this Lease. This Lease shall not, or shall any
interest therein, be assignable, as to the interest of the Lessee, by operation
of law, without the written consent of Lessor which consent shall not be
unreasonably withheld or delayed. Notwithstanding Lessor's obligations to
provide reasonable approval, Lessor reserves the right to withhold its consent
for any proposed sublessee or assignee of Lessee if the proposed sublessee or
assignee is a user or generator of Hazardous Materials. If Lessee desires to
assign its rights under this Lease or to sublet for the remaining term of the
Lease, all of the subject Premises to a party other than a bona fide subsidiary
or affiliate of Lessee, the Lessor shall have the right to recapture and take
back the Premises in which event Lessee shall be relieved of its obligations
hereunder to the extent of the recapture. Notwithstanding the forgoing, Lessee
may assign this Lease to a successor in interest, whether by merger or
acquisition, provided there is no substantial reduction in the net worth of the
resulting entity and the resulting entity is not a user or generator of
Hazardous Materials. Whether or not Lessor's consent to a sublease or
assignment is required, in the event of any sublease or assignment, Lessee shall
remain primarily liable for the performance of all conditions, covenants, and
obligations of Lessee hereunder and, in the event of a default by an assignee or
sublessee, Lessor may proceed directly against the original Lessee hereunder
and/or any other predecessor of such assignee or sublessee without the necessity
of exhausting remedies against said assignee or sublessee. If Lessor fails to
exercise its right of recapture or the sublease term is less than the remaining
term of the Lease, Lessee and Lessor agree to split 50/50 any bonus rent after
sublease expenses.
21. Condemnation: If any part of the Premises shall be taken for any public or
quasi-public use, under any statute or by right of eminent domain or private
purchase in lieu thereof, and a part thereof remains which in Lessee's
reasonable opinion is susceptible of occupation hereunder for Lessee's intended
purpose, this Lease shall as to the part so taken, terminate as of the date
title vests in the condemnor or purchaser, and the Rent payable hereunder shall
be adjusted so that the Lessee shall be required to pay for the remainder of the
Lease Term only that portion of Rent as the value of the part remaining. The
rental adjustment resulting will be computed at the same Rental rate for the
remaining part not taken; however, Lessor shall have the option to terminate
this Lease as of the date when title to the part so taken vests in the condemnor
or purchaser. If all of the Premises, or such part thereof be taken so that
there does not remain a portion susceptible for occupation hereunder, this Lease
shall thereupon terminate. If a part or all of the Premises be taken, all
compensation awarded upon such taking shall be payable to the Lessor. Lessee
may file a separate claim and be entitled to any award granted to Lessee.
22. Effects Of Conveyance: The term "Lessor" as used in this Lease, means only
the owner for the time being of the land and building constituting the Premises,
so that, in the event of any sale of said land or building, or in the event of a
Lease of said building, Lessor shall be and hereby is entirely freed and
relieved of all covenants and obligations of Lessor hereunder and it shall be
deemed and construed, without further agreement between the parties and the
purchaser of any such sale, or the Lessor of the building, that the purchaser or
lessor of the building has assumed and agreed to carry out any and all covenants
and obligations of the Lessor hereunder. If any security is given by Lessee to
secure the faithful performance of all or any of the covenants of this Lease on
the part of Lessee, Lessor will transfer and deliver the security, as such, to
the purchaser at any such sale of the building, and thereupon the Lessor shall
be discharged from any further liability.
23. Subordination: This Lease, in the event Lessor notifies Lessee in writing,
shall be subordinate to any ground lease, deed of trust, or other hypothecation
for security now or hereafter placed upon the real property at which the
Premises are a part and to any and all advances made on the security thereof and
to renewals, modifications, replacements and extensions thereof. Lessee agrees
to promptly execute any documents which may be required to effectuate such
subordination. Notwithstanding such subordination, if Lessee is not in default
and so long as Lessee shall pay the Rent and observe and perform all of the
provisions and covenants required under this Lease, Lessee's right to quiet
possession of the Premises shall not be disturbed or effected by any
subordination.
24. Waiver: The waver by Lessor or Lessee of any breach of any term, covenant
or condition, herein contained shall not be construed to be waiver of such term,
covenant or condition or any subsequent breach of the same or any
11
other term, covenant or condition therein contained. The subsequent acceptance
of Rent hereunder by Lessor shall not be deemed to be a waiver of Lessee's
breach of any term, covenant, or condition of the Lease.
25. Holding Over: Any holding over after the end of the Lease Term requires
Lessor's written approval prior to the end of the Lease Term, which,
notwithstanding any other provisions of this Lease, Lessor may withhold. Such
holding over shall be construed to be a tenancy at sufferance from month to
month. Lessee shall pay to Lessor monthly base rent equal to one and one-half
(1.5) times the monthly base rent installment due in the last month of the Lease
Term and all other additional rent and all other terms and conditions of the
Lease shall apply, so far as applicable. Holding over by Lessee without written
approval of Lessor shall subject Lessee to the liabilities and obligations
provided for in this Lease and by law, including, but not limited to those in
Section 2.1 of this Lease. Lessee shall indemnify and hold Lessor harmless
against any loss or liability resulting from any delay caused by Lessee in
surrendering the Premises, including without limitation, any claims made or
penalties incurred by any succeeding lessee or by Lessor provided Lessor has
given Lessee 30 days prior written notice that such holdover will result in a
damage claim against Lessee. No holding over shall be deemed or construed to
exercise any option to extend or renew this Lease in lieu of full and timely
exercise of any such option as required hereunder.
26. Lessor's Liability: If Lessee should recover a money judgment against
Lessor arising in connection with this Lease, the judgment shall be satisfied
only out of the Lessor's interest in the Premises except to the extent of the
security deposit and neither Lessor or any of its partners shall be liable
personally for any deficiency.
27. Estoppel Certificates: Lessee shall at any time during the Lease Term,
upon not less than fifteen (15) days prior written notice from Lessor, execute
and deliver to Lessor a statement in writing certifying that, this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
such modification) and the dates to which the Rent and other charges have been
paid in advance, if any, and acknowledging that there are not, to Lessee's
knowledge, any uncured defaults on the part of Lessor hereunder or specifying
such defaults if they are claimed. Any such statement may be conclusively
relied upon by any prospective purchaser or encumbrancer of the Premises.
Lessee's failure to deliver such a statement within such time shall be
conclusive upon the Lessee that (a) this Lease is in full force and effect,
without modification except as may be represented by Lessor; (b) there are no
uncured defaults in Lessor's performance.
28. Time: Time is of the essence of the Lease.
29. Captions: The headings on titles to the paragraphs of this Lease are not a
part of this Lease and shall have no effect upon the construction or
interpretation of any part thereof. This instrument contains all of the
agreements and conditions made between the parties hereto and may not be
modified orally or in any other manner than by agreement in writing signed by
all of the parties hereto or their respective successor in interest.
30. Party Names: Landlord and Tenant may be used in various places in this
Lease as a substitute for Lessor and Lessee respectively.
31. Earthquake Insurance: As a condition of Lessor agreeing to waive the
replacement for earthquake insurance, Lessee agrees that it will pay, as
additional Rent, which shall be included in the monthly CAC, for any earthquake
insurance purchased by Lessor, an amount not to exceed Twenty-Six Thousand Three
Hundred Dollars ($26,300) per year for earthquake insurance if Lessor desires to
obtain some form of earthquake insurance in the future, if and when available,
on terms acceptable to Lessor as determined in the sole and absolute discretion
of Lessor.
32. Habitual Default: Notwithstanding anything to the contrary contained in
Section 14 herein, Lessor and Lessee agree that if Lessee shall have defaulted
in the payment of Rent for more than two times during any twelve month period
during the Lease Term, then such conduct shall, at the option of the Lessor,
represent a separate event of default which cannot be cured by Lessee. Lessee
acknowledges that the purpose of this provision is to prevent repetitive
defaults by the Lessee under the Lease, which constitute a hardship to the
Lessor and deprive the Lessor of the timely performance by the Lessee hereunder.
12
33. Hazardous Materials
33.1 Definitions: As used in this Lease, the following shall have the
following meaning:
a. The term "Hazardous Materials" shall mean (i) polychlorinated
biphenyls; (ii) radioactive materials and (iii) any chemical, material or
substance now or hereafter defined as or included in the definitions of
"hazardous substance" "hazardous water", "hazardous material", "extremely
hazardous waste", "restricted hazardous waste" under Section 25115, 25117
or 15122.7, or listed pursuant to Section 25140 of the California Health
and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law),
(ii) defined as "hazardous substance" under Section 25316 of the
California Health and Safety Code, Division 20, Chapter 6.8 (▇▇▇▇▇▇▇▇▇-
▇▇▇▇▇▇▇-▇▇▇▇▇▇ Hazardous Substances Account Act), (iii) defined as
"hazardous material", "hazardous substance", or "hazardous waste" under
Section 25501 of the California Health and Safety Code, Division 20,
Chapter 6.95 (Hazardous Materials Release, Response, Plans and
Inventory), (iv) defined as "hazardous substance" under Section 25181 of
the California Health and Safety Code, Division 201, Chapter 6.7
(Underground Storage of Hazardous Substances), (v) petroleum, (vi)
asbestos, (vii) listed under Article 9 or defined as "hazardous" or
"extremely hazardous" pursuant to Article II of Title 22 of the
California Administrative Code, Division 4, Chapter 20, (viii) defined as
"hazardous substance" pursuant to Section 311 of the Federal Water
Pollution Control Act, 33 U.S.C. 1251 et seq. or listed pursuant to
Section 1004 of the Federal Water Pollution Control Act (33 U.S.C. 1317),
(ix) defined as "hazardous waste", pursuant to Section 1004 of the
Federal Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq.,
(x) defined a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Responsibility Compensations, and Liability
Act, 42 U.S.C. 9601 et seq., or (xi) regulated under the Toxic Substances
Control Act, 156 U.S.C. 2601 et seq.
b. The term "Hazardous Materials Laws" shall mean any local, state and
federal laws, rules, regulations, or ordinances relating to the use,
generation, transportation, analysis, manufacture, installation, release,
discharge, storage or disposal of Hazardous Material.
c. The term "Lessor's Agents" shall mean Lessor's agents,
representatives, employees, contractors, subcontractors, directors,
officers and partners.
d. The term "Lessee's Agents" shall mean Lessee's agents,
representatives, employees, contractors, subcontractors, directors,
officers, partners, invitees or any other person in or about the
Premises.
33.2 Intentionally Omitted.
33.3 Lessor's Representations: Lessor hereby represents and warrants to the
best of Lessor's knowledge that the Premises are, as of the date of this Lease,
in compliance with all Hazardous Material Laws.
33.4 Lessee's Obligation to Indemnify: Lessee, at its sole cost and expense,
shall indemnify, defend, protect and hold Lessor and Lessor's Agents harmless
from and against any and all costs or expenses, including those described under
subparagraphs i, ii and iii herein below set forth, arising from or caused in
whole or in part, directly or indirectly by:
a. Lessee's or Lessee's Agents' use, analysis, storage, transportation,
disposal, release, threatened release, discharge or generation of
Hazardous Material to, in, on, under, about or from the Premises; or
b. Lessee's or Lessee's Agents failure to comply with Hazardous Material
laws; or
c. Any release of Hazardous Material to, in, on, under, about, from or
onto the Premises caused by or occurring as a result of acts or omissions
of Lessee or Lessee's Agents or occurring during the Lease Term, except
ground water contamination from other parcels where the source is from
off the Premises not arising from or caused by Lessee or Lessee's Agents.
The cost and expenses indemnified against include, but are not limited to the
following:
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i. Any and all claims, actions, suits, proceedings, losses, damages,
liabilities, deficiencies, forfeitures, penalties, fines, punitive
damages, cost or expenses;
ii. Any claim, action, suit or proceeding for personal injury
(including sickness, disease or death), tangible or intangible property
damage, compensation for lost wages, business income, profits or other
economic loss, damage to the natural resources of the environment,
nuisance, pollution, contamination, leaks, spills, release or other
adverse effects on the environment;
iii. The cost of any repair, clean-up, treatment or detoxification of
the Premises necessary to bring the Premises into compliance with all
Hazardous Material Laws, including the preparation and implementation of
any closure, disposal, remedial action, or other actions with regard to
the Premises, and expenses (including, without limitation, reasonable
attorney's fees and consultants fees, investigation and laboratory fees,
court costs and litigation expenses).
33.5 Lessee's Obligations to Remediate Contamination: Lessee shall, at its
sole cost and expense, promptly take any and all action necessary to remediate
contamination of the Premises by Hazardous Materials during the Lease Term as a
result of acts or omissions of Lessee or Lessee's Agents.
33.6 Obligation to Notify: Lessor and Lessee shall each give written notice to
the other as soon as reasonably practical of (i) any communication received from
any governmental authority concerning Hazardous Material which related to the
Premises and (ii) any contamination of the Premises by Hazardous Materials which
constitutes a violation of any Hazardous Material Laws.
33.7 Survival: The obligations of Lessee under this Section 33 shall survive
the Lease Term or earlier termination of this Lease.
33.8 Certification and Closure: On or before the end of the Lease Term or
earlier termination of this Lease, Lessee shall deliver to Lessor a
certification executed by Lessee stating that, to the best of Lessee's
knowledge, there exists no violation of Hazardous Material Laws resulting from
Lessee's obligation in Paragraph 33. If pursuant to local ordinance, state or
federal law, Lessee is required, at the explanation of the Lease Term, to submit
a closure plan for the Premises to a local, state or federal agency, then Lessee
shall comply at its sole cost and expense with the requirements of the closure
plan and furnish to Lessor a copy of such plan.
33.9 Prior Hazardous Materials: Lessee shall have no obligation to clean up or
to hold Lessor harmless with respect to any Hazardous Material or wastes
discovered on the Premises, except as a result of Environmental Surcharges,
which were not introduced into, in, on, about, from or under the Premises during
the Lease Term or ground water contamination from other parcels where the source
is from off the Premises not arising from or caused by Lessee or Lessee's
Agents.
34. Brokers: Lessor and Lessee represent that they have not utilized or
contacted a real estate broker or finder with respect to this Lease other than
Colliers International ("CI") and Lessee agrees to indemnify and hold Lessor
harmless against any claim, cost, liability or cause of action asserted by any
broker or finder claiming through Lessee other than CI. Lessor shall at its
sole cost and expense pay the brokerage commission per Lessor's standard
commission schedule to CI in connection with this transaction. Lessor
represents and warrants that it has not utilized or contacted a real estate
broker or finder with respect to this Lease other than CI and Lessor agrees to
indemnify and hold Lessee harmless against any claim, cost, liability or cause
of action asserted by any broker or finder claiming through Lessor.
35. Option to Extend
A. Option: Lessor hereby grants to Lessee one (1) option to extend the Lease
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Term, with the extended term to be for a period of five (5) years, on the
following terms and conditions:
(i) Lessee shall give Lessor written notice of its exercise of its
option to extend no earlier than twelve (12), nor later than six (6)
calendar months before the Lease Term would end but for said exercise. If
Lessee
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and Lessor have not agreed to rental terms in writing, Lessee may withdraw
its notice of exercise of an extension option prior to six (6) months
before the Lease Term would end but for said exercise. Lessor shall
provide Lessee with Lessor's proposed base monthly rent for the option
period within twenty (20) days of Lessee's written request. However, once
Lessee delivers a notice of exercise of an option to extend the Lease Term
it may not be withdrawn except as provided for herein and subject to the
provisions of this Section 35, such notice shall operate to extend the
Lease Term. Upon any extension of the Lease Term pursuant to this Section
35, the term "Lease Term" as used in this Lease shall thereafter include
the then extended term. Time is of the essence.
(ii) Lessee may not extend the Lease Term pursuant to any option granted
by this Section 35 if Lessee is in default as of the date of the exercise
of its option. If Lessee has committed a default by Lessee as defined in
Section 14 or 32 that has not been cured or waived by Lessor in writing by
the date that any extended term is to commence, then Lessor may elect not
to allow the Lease Term to be extended, notwithstanding any notice given
by Lessee of an exercise of this option to extend.
(iii) All terms and conditions of this Lease shall apply during the
extended term, except that base rent and rental increases for each
extended term shall be determined as provided in Section 35 (B) below.
(iv) The option rights of InterTrust Technologies Corporation granted
under this Section 35 are granted for InterTrust Technologies
Corporation's or a related entity personal benefit and may not be assigned
or transferred by InterTrust Technologies Corporation except as a related
entity or exercised if InterTrust Technologies Corporation or a related
entity is not occupying the Premises at the time of exercise.
B. Extended Term Rent - Option Period: The monthly Rent for the Premises
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during the extended term shall equal the fair market monthly Rent for the
Premises as of the commencement date of the extended term, but in no case, less
than the Rent during the last month of the prior Lease term. Promptly upon
Lessee's exercise of the option to extend, Lessee and Lessor shall meet and
attempt to agree on the fair market monthly Rent for the Premises as of the
commencement date of the extended term. In the event the parties fail to agree
upon the amount of the monthly Rent for the extended term prior to commencement
thereof, the monthly Rent for the extended term shall be determined by appraisal
in the manner hereafter set forth; provided, however, that in no event shall the
monthly Rent for the extended term be less than the immediate preceding period.
Annual base rent increases during the extended term shall be 4% per year. In the
event it becomes necessary under this paragraph to determine the fair market
monthly Rent of the Premises by appraisal, Lessor and Lessee each shall appoint
a real estate appraiser who shall be a member of the American Institute of Real
Estate Appraiser ("AIREA") and such appraisers shall each determine the fair
market monthly Rent for the Premises taking into account the value of the
Premises and the amenities provided by the outside areas, the common areas, and
the Building, and prevailing comparable Rentals in the area and for same use as
in Lease. Such appraisers shall, within twenty (20) business days after their
appointment, complete their appraisals and submit their appraisal reports to
Lessor and Lessee. If the fair market monthly Rent of the Premises established
in the two (2) appraisals varies by five percent (5%) or less of the higher
Rent, the average of the two shall be controlling. If said fair market monthly
Rent varies by more than five percent (5%) of the higher Rental, said
appraisers, within ten (10) days after submission of the last appraisal, shall
appoint a third appraiser who shall be a member of the AIREA and who shall also
be experienced in the appraisal of Rent values and adjustment practices for
commercial properties in the vicinity of the Premises. Such third appraiser
shall, within twenty (20) business days after his appointment, determine by
appraisal the fair market monthly Rent of the Premises taking into account the
same factors referred to above, and submit his appraisal to Lessor and Lessee.
The fair market monthly Rent determined by the third appraiser for the Premises
shall be controlling, unless it is less than set forth in the lower appraisal
previously obtained, in which case the value set forth in said lower appraisal
shall be controlling, or unless it is greater than that set forth in the higher
appraisal previously obtained in which case the Rent set forth in said higher
appraisal shall be controlling. If either Lessor or Lessee fails to appoint an
appraiser, or if an appraiser appointed by either of them fails, after his
appointment to submit his appraisal within the required period in accordance
with the foregoing, the appraisal submitted by the appraiser properly appointed
and timely submitting his appraisal shall be controlling. If the two appraisers
appointed by Lessor and Lessee are unable to agree upon a third appraiser within
the required period in accordance with the foregoing, application shall be made
within twenty (20) days thereafter by either Lessor or Lessee to AIREA, which
shall appoint a member of said institute willing to serve as an appraiser. The
cost of all appraisals under this subparagraph shall be borne equally by Lessor
and Lessee.
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36. Approvals: Whenever in this Lease the Lessor's or Lessee's consent is
required, such consent shall not be unreasonably or arbitrarily withheld or
delayed. In the event that the Lessor or Lessee does not respond to a request
for any consents which may be required of it in this Lease within ten business
days of the request of such consent in writing by the Lessee or Lessor, such
consent shall be deemed to have been given by the Lessor or Lessee.
37. Authority: Each party executing this Lease represents and warrants that he
or she is duly authorized to execute and deliver the Lease. If executed on
behalf of a corporation, that the Lease is executed in accordance with the by-
laws of said corporation (or a partnership that the Lease is executed in
accordance with the partnership agreement of such partnership), that no other
party's approval or consent to such execution and delivery is required, and that
the Lease is binding upon said individual, corporation (or partnership) as the
case may be in accordance with its terms.
38. Indemnification of Lessor: Except to the extent caused by the sole
negligence or willful misconduct of Lessor or Lessor's Agents, Lessee shall
defend, indemnify and hold Lessor harmless from and against any and all
obligations, losses, costs, expenses, claims, demands, attorney's fees,
investigation costs or liabilities on account of, or arising out of the use,
condition or occupancy of the Premises or any act or omission to act of Lessee
or Lessee's Agents or any occurrence in, upon, about or at the Premises,
including, without limitation, any of the foregoing provisions arising out of
the use, generation, manufacture, installation, release, discharge, storage,
disposal of Hazardous Materials by Lessee or Lessee's Agents. It is understood
that Lessee is and shall be in control and possession of the Premises and that
Lessor shall in no event be responsible or liable for any injury or damage or
injury to any person whatsoever, happening on, in, about, or in connection with
the Premises, or for any injury or damage to the Premises or any part thereof.
This Lease is entered into on the express condition that Lessor shall not be
liable for, or suffer loss by reason of injury to person or property, from
whatever cause, which in any way may be connected with the use, condition or
occupancy of the Premises or personal property located herein. The provisions
of this Lease permitting Lessor to enter and inspect the Premises are for the
purpose of enabling Lessor to become informed as to whether Lessee is complying
with the terms of this Lease and Lessor shall be under no duty to enter, inspect
or to perform any of Lessee's covenants set forth in this Lease. Lessee shall
further indemnify, defend and hold harmless Lessor from and against any and all
claims arising from any breach or default in the performance of any obligation
to Lessee's part to be performed under the terms of this Lease. The provisions
of Section 38 shall survive the Lease Term or earlier termination of this Lease
with respect to any damage, injury or death occurring during the Lease Term.
39. Successors and Assigns: The covenants and conditions herein contained
shall, subject to the provisions as to assignment, apply to and bind the heirs,
successors, executors, administrators and assigns of all of the parties hereto;
and all of the parties hereto shall be jointly and severally liable hereunder.
40. Miscellaneous Provisions: All rights and remedies hereunder are cumulative
and not alternative to the extent permitted by law and are in addition to all
other rights or remedies in law and in equity.
41. Choice of Law: This lease shall be construed and enforced in accordance
with the substantive laws of the State of California. The language of all parts
of this lease shall in all cases be construed as a whole according to its fair
meaning and not strictly for or against either Lessor or Lessee.
42. Entire Agreement: This Lease is the entire agreement between the parties,
and there are no agreements or representations between the parties except as
expressed herein. Except as otherwise provided for herein, no subsequent change
or addition to this Lease shall be binding unless in writing and signed by the
parties hereto.
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In Witness Whereof, Lessor and Lessee have executed this Lease, the day and year
first above written.
Lessor Lessee
Mission West Properties, L.P. InterTrust Technologies Corporation
By: Mission West Properties, Inc.
By:___________________________________ By:___________________________________
signature of authorized representative signature of authorized representative
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------- --------------------------------------
printed name printed name
President EVP
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Title Title
7/21/99
-------------------------------------- ______________________________________
date date
Exhibit A
Exhibit A is a site plan of the property located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, which graphically depicts the layout and the dimensions
of the floor plan of the Registrant's leased space and the registrant's outside
parking areas.
Exhibit B
Lessor and Lessee hereby agree that the following improvements are the
obligation of Lessor to complete, at Lessor's cost and expense, at the Premises
prior to the Commencement Date.
1. Lessor shall add the following as shown on Exhibit B-1:
(a) Lobby with 2 offices
(b) 5 large conference rooms
(c) Corridor from lobby to restroom
(d) Remove walls in area at left front corner near lobby
2. Installation of four exterior windows and supporting structural
changes per attached Exhibit B-1.
3. Lessor shall ▇▇▇▇ 10 visitor parking spaces as directed by Lessee.
4. Install a demising wall in the concourse between the exterior of the
building at the property line, subject to approval of the City of Santa ▇▇▇▇▇
and Lessee agreeing to pay Rent on the additional square feet if allowed by the
City.
5. Install levelor blinds on all exterior windows.
6. Add a monument sign (if not already there) on the berm area that is
consistent with the other signage in the Park for Lessee's use.
Exhibit B-1
Exhibit B-1 is a map of the property located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, which graphically depicts the floor plan of the
Registrant's leased space. The floor plan consists of eighty one rooms and open
office areas, and includes the improvements referenced in Exhibit B.
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