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Exhibit 10.6
LEASE AGREEMENT
(PHASE I)
(ROTUNDA BUILDING 3)
BETWEEN
SOBRATO INTERESTS II
ET AL.
AND
PYRAMID TECHNOLOGY CORPORATION,
A DELAWARE CORPORATION
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TABLE OF CONTENTS
PAGE
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1. PARTIES............................................................................... 1
2. PREMISES.............................................................................. 1
A. Premises........................................................................... 1
B. Remeasurement...................................................................... 1
3. USE................................................................................... 1
4. TERM AND RENTAL....................................................................... 1
A. Rental Adjustment.................................................................. 2
5. SECURITY DEPOSIT...................................................................... 2
A. Cash Security Deposit.............................................................. 2
B. Letter of Credit................................................................... 3
6. LATE CHARGES.......................................................................... 3
7. CONSTRUCTION AND POSSESSION........................................................... 3
A. Construction of Improvements....................................................... 3
B. Failure to Deliver Possession...................................................... 4
C. Tenant Delays...................................................................... 4
8. ACCEPTANCE OF PREMISES AND COVENANTS TO SURRENDER..................................... 4
A. Punch List......................................................................... 4
B. Correction of Defects.............................................................. 4
C. Surrender.......................................................................... 5
9. USES PROHIBITED....................................................................... 5
10. ALTERATIONS AND ADDITIONS............................................................ 6
A. Construction of Alterations........................................................ 6
B. Ownership of Alterations........................................................... 6
11. MAINTENANCE OF PREMISES.............................................................. 6
A. Tenant Maintenance................................................................. 6
B. Excluded Costs..................................................................... 7
12. INSURANCE AND DEDUCTIBLES............................................................ 8
Tenant's Use.......................................................................... 8
B. Landlord's Insurance............................................................... 8
C. Tenant's Insurance................................................................. 9
D. Insurance Deductibles.............................................................. 9
E. Waiver............................................................................. 9
13. TAXES................................................................................ 10
A. Payment of Taxes................................................................... 10
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TABLE OF CONTENTS
(continued)
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B. Assessments........................................................................ 10
C. Change of Ownership................................................................ 11
14. UTILITIES............................................................................ 11
15. ABANDONMENT.......................................................................... 11
16. FREE FROM LIENS...................................................................... 11
17. COMPLIANCE WITH GOVERNMENTAL REGULATIONS............................................. 11
18. TOXIC WASTE AND ENVIRONMENTAL DAMAGE................................................. 12
A. Tenant's Responsibility............................................................ 12
B. No Responsibility.................................................................. 13
C. Indemnity by Landlord.............................................................. 13
D. Representation by Landlord......................................................... 14
E. Notification....................................................................... 14
F. Environmental Studies.............................................................. 14
19. INDEMNITY............................................................................ 14
20. ADVERTISEMENTS AND SIGNS............................................................. 15
21. ATTORNEY'S FEES...................................................................... 15
22. TENANT'S DEFAULT..................................................................... 15
A. Remedies........................................................................... 16
B. Right to Re-enter.................................................................. 16
C. Abandonment........................................................................ 16
D. No Termination..................................................................... 16
23. SURRENDER OF LEASE................................................................... 17
24. RIGHT OF FIRST OFFER TO PURCHASE..................................................... 17
▇. ▇▇▇▇▇ of First Right............................................................... 17
B. Term............................................................................... 17
C. Notice of Intent to Sell........................................................... 17
D. Exercise of Right of First Offer................................................... 17
E. Terms of Sale...................................................................... 17
F. Landlord's Right to Sell........................................................... 18
25. LANDLORD'S DEFAULT................................................................... 18
26. NOTICES.............................................................................. 18
27. ENTRY BY LANDLORD.................................................................... 19
28. DESTRUCTION OF PREMISES.............................................................. 20
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TABLE OF CONTENTS
(continued)
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A. Obligation to Restore.............................................................. 20
B. Tenant's Right to Terminate........................................................ 20
29. ASSIGNMENT OR SUBLEASE............................................................... 21
A. Permitted Transfers................................................................ 21
B. Consent by Landlord................................................................ 21
C. Assignment or Subletting Consideration............................................. 21
D. No Release......................................................................... 22
E. Effect of Default.................................................................. 22
30. CONDEMNATION......................................................................... 22
31. EFFECTS OF CONVEYANCE................................................................ 23
32. SUBORDINATION........................................................................ 23
A. Subordination to Future Obligations................................................ 23
B. Existing Obligations............................................................... 23
33. WAIVER............................................................................... 24
34. HOLDING OVER......................................................................... 24
35. SUCCESSORS AND ASSIGNS............................................................... 24
36. ESTOPPEL CERTIFICATES................................................................ 24
37. OPTION TO EXTEND..................................................................... 25
38. APPRAISAL............................................................................ 25
39. COMMON AREA COSTS AND PARKING........................................................ 27
A. Initial Occupancy.................................................................. 27
B. Subdivision........................................................................ 27
C. Common Area Costs.................................................................. 27
D. Maintenance........................................................................ ▇▇
▇. ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇ Costs....................................................... 27
F. Proportionate Share................................................................ 28
G. Proration.......................................................................... 28
H. Parking............................................................................ 28
40. QUIET ENJOYMENT...................................................................... 28
41. BROKERS/PREVIOUS DEALINGS............................................................ 28
42. AUTHORITY OF PARTIES................................................................. 28
A. Authority of Tenant................................................................ 28
B. Landlord's Authority............................................................... 28
43. MISCELLANEOUS PROVISIONS............................................................. 28
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TABLE OF CONTENTS
(continued)
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A. Rights and Remedies................................................................ 28
B. Severability....................................................................... 29
C. Choice of Law...................................................................... 29
D. Interest........................................................................... 29
E. Time............................................................................... 29
F. Headings........................................................................... 29
G. Performance by Landlord............................................................ 29
H. Representations.................................................................... 29
I. Rent............................................................................... 29
J. Interference....................................................................... 29
K. Approvals.......................................................................... 30
L. Reasonable Expenditures............................................................ 30
M. Exhibits........................................................................... 30
N. Light and View..................................................................... 30
O. Memorandum of Lease................................................................ 30
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LEASE AGREEMENT
(PHASE I)
1. PARTIES: This Lease Agreement ("Lease") is entered into on this 6th
day of May, 1990, between ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee Under Trust Agreement Dated
August 29, 1979, as Amended, SOBRATO INTERESTS II, a California general
partnership, and ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or his Successor, Trustee Under Revocable
Trust Agreement dated April 28, 1989, as amended, FBO ▇▇▇ ▇▇▇▇▇▇▇ (collectively,
"Landlord") and PYRAMID TECHNOLOGY CORPORATION, a Delaware corporation
("Tenant").
2. PREMISES:
A. Premises: Landlord hereby leases to Tenant, and Tenant
leases from Landlord, those certain Premises with the appurtenances, situated in
the City of San ▇▇▇▇, County of Santa ▇▇▇▇▇, State of California, and more
particularly described as follows:
A one-story building to be constructed by Landlord consisting of
101,552 square feet ("Building") on a portion of a site
consisting of three buildings totaling 280,784 square feet (the
"Project") on that certain real property at the southeast corner
of North First Street and ▇▇▇▇ ▇▇▇▇▇▇▇ Way whose assessor's
parcel numbers are ▇▇▇-▇▇-▇▇▇ and APN ▇▇▇-▇▇-▇▇▇ and more
particularly described in Exhibit "A" attached hereto and
incorporated herein by reference. During that period of time
which Tenant has the exclusive right to occupy the Project,
Tenant shall have the exclusive use, without charge, of
approximately 975 parking spaces in the Project as may be
decreased due to a reconfiguration of the dock area (which
constitute all of the parking spaces in the Project).
B. Remeasurement: Upon Substantial Completion of the Premises
(as described in the Construction Addendum to Lease attached to the Lease as
Exhibit B" and incorporated herein by reference), Tenant may elect to have the
Premises measured by Tenant's Interior Improvement Architect, as defined in the
Construction Addendum (measured from the exterior of the exterior walls of the
Building and including one-half of the covered loading docks but excluding any
other outside areas or canopies). If the actual square footage differs from the
amount stated above, the monthly rent hereunder shall be adjusted by multiplying
One and 10/100 Dollars ($1.10) times the actual square feet of the Building and
the Tenant Improvement Allowance shall be adjusted by multiplying Thirty-Seven
and No/100 Dollars ($37.00) times the actual square feet of the Building. The
square footage, if so remeasured by Tenant, shall be substituted for that set
forth herein for purposes of this Lease.
3. USE: Tenant shall use the Premises only for legally permitted uses.
4. TERM AND RENTAL: The term of this Lease ("Lease Term") shall commence
on the "Commencement Date" (as defined in Paragraph 7 hereof). The Lease Term
shall expire on September 14, 2001. The monthly rent shall be paid without
deduction or offset (except as otherwise set forth herein), in monthly
installments of One Hundred Eleven Thousand Seven
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Hundred Seven and 20/100 Dollars ($111,707.20) due on or before the first day of
each calendar month during the Lease Term. Said rental shall be paid in lawful
money of the United States of America, and shall be paid to Landlord at such
place or places as may be designated from time to time by Landlord. Rent for any
period less than a calendar month shall be prorated based on a thirty (30) day
month.
A Rental Adjustment: On that date that is thirty (30) months
after the Commencement Date of the Lease, and on each date which is thirty (30)
months after the first adjustment date (each of the foregoing is referred to as
the "Adjustment Date"), the then payable monthly rent shall be subject to
adjustment based on the increase, if any, in the Consumer Price Index. The basis
for computing the adjustment shall be the U.S. Department of Labor, Bureau of
Labor Statistic's Consumer Price Index for All Urban Consumers, All Items,
1982-84=100, for the San Francisco-Oakland-San ▇▇▇▇ area ("Index"). The Index
most recently published preceding the commencement of the Lease shall be
considered the "Base Index." If the Index most recently published preceding the
Adjustment Date ("Comparison Index") is greater than the Base Index, the then
payable monthly rent shall be increased by multiplying the initial monthly rent
by a fraction, the numerator of which is the Comparison Index and the
denominator of which is the Base Index. Within thirty (30) days after each
adjustment as set forth herein, Landlord shall furnish a statement to Tenant
setting forth the rental adjustment determined by reference to the foregoing,
and the method by which Landlord has calculated the same. Landlord's calculation
of the rent escalation shall be conclusive and binding unless Tenant objects to
said calculation within a sixty (60) day period after Tenant's receipt of such
written statement. If the Index base year is changed so that it differs from
1982-84=100, the Index shall be converted in accordance with the conversion
factor published by the United States Department of Labor, Bureau of Labor
Statistics. If the Index is discontinued or revised during the term, such other
government index or computation with which it is replaced shall be used in order
to obtain substantially the same result as would be obtained if the index had
not been discontinued or revised. In no event shall the monthly rent immediately
after the Adjustment Date be less than one hundred seven and one-half percent
(107 1/2%) nor more than one hundred twenty percent (120%) than the monthly rent
immediately before the Adjustment Date.
5. SECURITY DEPOSIT:
A. Cash Security Deposit: Within three (3) business days after
both parties' execution of this Lease, Tenant shall deposit with Landlord the
sum of One Hundred Eleven Thousand Seven Hundred Seven and 20/100 Dollars
($111,707.20) as a security deposit. If Tenant defaults with respect to any
provisions of this Lease, including, but not limited to, the provisions relating
to payment of rent or other charges, Landlord may, to the extent reasonably
necessary to remedy Tenant's default, use all or any part of said deposit for
the payment of rent or other charges in default or the payment of any reasonable
amount which Landlord may spend or become obligated to spend by reason of
Tenant's default or to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of Tenant's default. If any portion of said
deposit is so used or applied, Tenant shall, within ten (10) days after written
demand therefor, deposit cash with Landlord in an amount sufficient to restore
said deposit to the full amount hereinabove stated and shall pay to Landlord
such other sums as shall be necessary to
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reimburse Landlord for any sums paid by Landlord. Said deposit shall be returned
to Tenant within thirty (30) days after the expiration of the Lease Term less
any amount deducted in accordance with this paragraph, together with Landlord's
written notice itemizing the amounts and purposes for such retention. In the
event of termination of Landlord's interest in this Lease, Landlord shall
transfer said deposit to Landlord's successor in interest.
B. Letter of Credit: Notwithstanding the foregoing provisions
of this paragraph 5, Landlord agrees that in lieu of a cash security deposit,
Tenant may deposit a letter of credit in a form reasonably acceptable to
Landlord. Landlord shall be entitled to draw against the letter of credit at any
time that Tenant has committed a default under this Lease, provided that
Landlord certifies to the issuer of the letter of credit under penalty of
perjury that Tenant is in default under the Lease (as default is defined in
paragraph 22 of this Lease). Tenant shall keep the letter of credit in effect
during the entire Lease Term, as the same may be extended, plus a period of four
(4) weeks thereafter. At least thirty (30) days prior to expiration of any
letter of credit, the term thereof shall be renewed or extended. Subject to
Tenant's cure rights under Paragraph 22, Tenant's failure to so renew or extend
the letter of credit shall be a material default of this Lease by Tenant. If
Landlord draws against the letter of credit, Tenant shall replenish the existing
letter of credit or cause a new letter of credit to be issued such that the
aggregate amount of letters of credit available to Landlord at all times during
the Lease Term is the amount of the security deposit originally required.
6. LATE CHARGES: Tenant hereby acknowledges that late payment by Tenant
to Landlord of rent and other sums due hereunder will cause Landlord 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,
administrative, processing, accounting charges, and late charges, which may be
imposed on Landlord by the terms of any contract, revolving credit, mortgage or
trust deed covering the Premises. Accordingly, if any installment of rent or any
other sum due from Tenant shall not be received by Landlord or Landlord's
designee within ten (10) days after Tenant's receipt of written notice that such
amount is delinquent, Tenant shall pay to Landlord a late charge equal to four
percent (4%) of such overdue amount which shall be due and payable with the
payment then delinquent. The parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Landlord will incur by
reason of late payment by Tenant. Acceptance of such late charge by Landlord
shall in no event constitute a waiver of Tenant's default with respect to such
overdue amount, nor prevent Landlord from exercising any of the other rights and
remedies granted hereunder.
7. CONSTRUCTION AND POSSESSION:
A. Construction of Improvements: The "Building Shell" and
"Interior Improvements" shall be constructed by Landlord under the terms and
conditions of that certain Construction Addendum to Lease attached hereto as
Exhibit "B" (the "Construction Addendum") The term of the Lease shall not
commence (the "Commencement Date") until the later of December 15, 1990, or the
date on which the Premises are "substantially Completed" as defined in the
Construction Addendum. Notwithstanding the foregoing, Tenant may elect to occupy
the Premises for the conduct of its business prior to December 15, 1990 if the
Premises are
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Substantially Completed before such date. In the event of such early occupancy,
and provided the Premises are Substantially Completed, Tenant shall begin paying
rent as of the date of such occupancy for the conduct of its business, and
Tenant's occupancy shall be subject to the terms and conditions of this Lease.
B. Failure to Deliver Possession: If Landlord, for any reason
whatsoever, cannot deliver possession of the Premises to Tenant on the scheduled
commencement date of December 15, 1990, this Lease shall not be void or
voidable, nor shall Landlord be liable to Tenant for any loss or damage
resulting therefrom if due to circumstances beyond Landlord's control; but in
that event the commencement and termination dates of the Lease and all other
dates affected thereby shall be revised to conform to the date of Landlord's
delivery of possession. If the Premises are not Substantially Completed on or
before December 15, 1990, then, Tenant, at its election and in addition to its
other rights and remedies, shall be entitled to receive free rent equal to Ten
Thousand Dollars ($10,000) for each day beyond December 15, 1990 that the
Premises are not so Substantially Completed (the "Free Rent Amount"). Moreover
if the Premises are not Substantially Completed on or before July 15, 1991,
Tenant, at its election and in addition to its other remedies, shall have the
right to terminate this Lease and, at Tenant's election, any other lease between
Landlord and Tenant ("Other Lease") covering other space in the Project (the
"Other Space"). In the event Tenant elects to terminate this Lease as provided
herein, Landlord shall pay to Tenant the amount of the accrued Free Rent Amount
as of the date of termination.
C. Tenant Delays: Notwithstanding the foregoing, if there is
an actual delay in Substantial Completion of the Premises as a result of "Tenant
Delays" (as that term is defined in the Construction Addendum), then the
foregoing dates on which Tenant is entitled to free rent and to terminate this
Lease or any Other Lease on account of Landlord's failure to Substantially
Complete the Premises shall be postponed one (1) day for each day of the actual
delay in Substantial Completion caused by the Tenant Delay. Further, the date
Tenant is otherwise obligated to commence paying rent shall occur one day sooner
for each day of such actual delay in Substantial Completion caused by the Tenant
Delay; provided, however, that the Commencement Date shall in no event be prior
to December 15, 1990 regardless of any Tenant Delay.
8. ACCEPTANCE OF PREMISES AND COVENANTS TO SURRENDER:
A. Punch List: As soon as Landlord reasonably believes that
the Premises are Substantially Completed, as defined in the Construction
Addendum, Landlord and Tenant shall together walk through and inspect the work
and prepare a written "punch list" of incomplete or defective construction.
Landlord shall use its best efforts to complete and/or repair any items on the
"punch list" within thirty (30) days after the parties have prepared the "punch
list" or as soon thereafter as practicable.
B. Correction of Defects: Notwithstanding anything to the
contrary in the Lease, Tenant's acceptance of the Premises or submission of a
"punch list" shall not be deemed a waiver of Tenant's right to have construction
or design defects in the Interior Improvements and
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the Premises repaired at Landlord's sole expense. Tenant shall give notice to
Landlord whenever any such defect becomes reasonably apparent, and Landlord
shall repair such defect as soon as practicable. Landlord also hereby assigns to
Tenant all warranties with respect to the Premises which would reduce Tenant's
maintenance obligations hereunder and shall cooperate with Tenant to enforce all
such warranties. Landlord warrants that it will obtain a two (2) year warranty
from its contractors and suppliers on the roof membrane and, without limiting
any other obligation of Landlord hereunder, Landlord shall correct any defect or
problem in the roof membrane (except for routine maintenance items as set forth
in paragraph 11) for a period of two (2) years after the Commencement Date.
Further, without limiting any obligation of Landlord under this Lease, Landlord
warrants that it will obtain an express one (1) year warranty from its
contractors and suppliers on all other items and will not waive the protection
of any statute or case law providing for a longer period to assert a claim for
defects in the Premises or any item therein.
C. Surrender: Tenant agrees on the last day of the Lease
Term, or promptly following any sooner termination of this Lease, to surrender
the Premises to Landlord in the condition delivered to Tenant, reasonable wear
and tear, acts of God, casualties, condemnation, Hazardous Materials, as defined
in paragraph 18 hereof (other than those stored, used or disposed of by Tenant
in or about the Premises in violation of Law, as "Law" defined in paragraph
11(a)), and Alterations (as defined in paragraph 10) made by Tenant which
Landlord has not required Tenant to remove, excepted. Tenant shall ascertain
from Landlord within thirty (30) days before the expiration of the Lease Term or
promptly following any sooner termination whether Landlord will require Tenant
to remove any Alterations made by Tenant at the Premises; provided that Landlord
shall not require Tenant to remove any Alteration which Landlord has previously
indicated may remain at the Premises. If Landlord shall so require, then Tenant
shall remove such Alterations as Landlord may designate and shall repair any
damage to the Premises occasioned by the removal before the expiration of the
Lease Term or promptly following any earlier termination at Tenant's sole cost
and expense. On or before the end of the Lease Term or promptly following sooner
termination of the Lease Term, Tenant shall remove all of its personal property
and trade fixtures from the Premises, and all property not so removed shall be
deemed to be abandoned by Tenant.
9. USES PROHIBITED: Tenant shall not commit, or suffer to be committed,
any waste or nuisance upon the Premises, or allow any sale by auction upon the
Premises, or allow the Premises to be used for any unlawful purpose, or place
any loads upon the floor, walls, or ceiling which endanger the structure, or use
any machinery or apparatus which will vibrate or shake the Premises or the
Building of which it is a part so as to damage the Premises other than ordinary
wear and tear or otherwise in violation of applicable Law, or place any harmful
liquids, waste materials, or Hazardous Materials in the drainage system of, or
upon or in the soils surrounding the Building so as to damage the Premises or
otherwise in violation of applicable Law. No materials, supplies, equipment,
finished products or semi-finished products, raw materials or articles of any
nature or any waste materials, refuse, scrap or debris shall be stored upon or
permitted to remain on any portion of the Premises outside of the Building
proper in violation of Law.
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10. ALTERATIONS AND ADDITIONS:
A. Construction of Alterations: Tenant may construct
non-structural alterations, additions and improvements ("Alterations") in the
Premises without Landlord's prior approval, if the cost of such work does not
exceed Fifty Thousand Dollars ($50,000.00). In the event Tenant desires to make
Alterations costing more than Fifty Thousand Dollars ($50,000.00) or structural
Alterations, Landlord's consent shall not be unreasonably withheld and, if
Landlord does not notify Tenant in writing of its reasonable disapproval of such
Alteration within fourteen (14) days following Tenant's written request for
approval and delivery to Landlord of the proposed plans, then Landlord shall be
deemed to have approved the proposed Alteration. Upon the request of Tenant,
Landlord shall within the above-stated fourteen (14) day period advise Tenant in
writing as to whether Landlord shall require removal of any Alteration in
question upon the expiration or earlier termination of the Lease. After having
obtained Landlord's consent, Tenant agrees that it will not proceed to make
Alterations until three (3) days from the receipt (or deemed receipt) of such
consent, in order that Landlord may post appropriate notices to avoid any
liability to contractors or material suppliers for payment for Tenant's
Alterations. Tenant will at all times permit such notices to be posted and to
remain posted until the completion of work.
B. Ownership of Alterations: All Alterations, trade fixtures
and personal property installed in the Premises at Tenant's expense ("Tenant's
Property") shall at all times remain Tenant's property and Tenant shall be
entitled to all depreciation, amortization and other tax benefits with respect
thereto. Except for Alterations which cannot be removed without structural
injury to the Premises, Tenant may remove Tenant's Property from the Premises at
any time, provided Tenant repairs any damage caused by such removal. Landlord
shall have no lien or other interest whatsoever in any item of Tenant's Property
located in the Premises or elsewhere, or any portion thereof or interest
therein, and Landlord hereby waives all such liens and interests. Within ten
(10) days following Tenant's request, Landlord shall execute documents in
reasonable form to evidence Landlord's waiver of any right, title, lien or
interest in Tenant's Property located in the Premises.
11. MAINTENANCE OF PREMISES:
A. Tenant Maintenance: Subject to Landlord's obligations as
set forth in this Lease, and the amortization of capital items as described
below, Tenant shall, at its sole cost, keep and maintain, repair and replace,
the Premises and appurtenances, including, but not limited to, interior non-load
bearing walls, the roof membrane, sidewalks, parking areas, plumbing, electrical
and HVAC systems, and all the Interior Improvements in good and sanitary order,
condition, and repair. Notwithstanding the foregoing, Landlord shall repair and
maintain, at its sole cost, the structural portions of the Premises at all times
during the Lease Term, including the foundation, exterior walls, load-bearing
walls, roof structure and windows. Tenant shall provide Landlord with a copy of
a service contract between Tenant and a licensed air-conditioning and heating
contractor which contract shall provide for maintenance of all air conditioning
and heating equipment at the Premises at such intervals as may be reasonably
required by the manufacturer of such equipment. Subject to the obligations of
Landlord hereunder and the
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amortization of capital items as set forth below, Tenant shall pay the cost of
all air-conditioning and heating equipment repairs or replacements. Tenant shall
be responsible for the preventive maintenance of the membrane of the roof, which
responsibility shall be deemed properly discharged if: (i) Tenant contracts with
a licensed roof contractor who is reasonably satisfactory to both Tenant and
Landlord, at Tenant's sole cost, to inspect the roof membrane at least every six
months, with the first inspection due the sixth (6th) month after the
Commencement Date; and (ii) Tenant performs, at Tenant's sole cost, all routine
preventive maintenance recommendations made by such contractor within a
reasonable time after such recommendations are made. Such preventive maintenance
might include acts such as clearing storm gutters and drains, removing debris
from the roof membrane, trimming trees overhanging the roof membrane, applying
coating materials to seal roof penetrations, repairing blisters, and other
routine measures. Tenant shall provide to Landlord a copy of such preventive
maintenance contract and paid invoices for the recommended work for which Tenant
is responsible. Subject to Landlord's obligations hereunder and to the
amortization of capital items set forth below, Tenant agrees to water, maintain
and replace, when necessary, any shrubbery and landscaping.
B. Excluded Costs: Notwithstanding anything to the contrary
in this Lease, in no event shall Tenant have any obligation to perform or to pay
directly, or to reimburse Landlord for, all or any portion of the following
repairs, maintenance, improvements, replacements, premiums, claims, losses,
fees, charges, costs and expenses (collectively "Costs") nor shall any portion
of the Interior Improvement Costs (as defined in the Construction Addendum)
consist of the following items, all of which shall be the responsibility of
Landlord:
(1) Losses Caused By Others: Costs occasioned by the act
or omission or violation of covenants, statutes, laws, orders, rules,
underwriter's requirement, regulations, private restrictions, building codes or
ordinances (collectively, "Laws"), misrepresentation, or breach of this Lease,
by Landlord or its agents, employees, contractors, subcontractors or tenants.
(2) Casualties and Condemnations: Costs occasioned by
fire, acts of God, or other casualties or by the exercise of the power of
eminent domain, provided that Tenant will pay insurance deductibles but only to
the extent expressly provided for in paragraph 12.D of this Lease.
(3) Reimbursable Expenses: Costs for which Landlord has a
right of reimbursement from others or for which Landlord actually receives
reimbursement.
(4) Construction Defects and Compliance with Law: Costs
(i) relating to a failure of the Premises to conform to all CC&Rs, underwriter's
requirements or Laws as of the Commencement Date; (ii) relating to construction
defects; and (iii) required to conform the Premises to the Building Plans as
defined in the Construction Addendum.
(5) Hazardous Materials: Except to the extent caused by
the disposal, release, emission or storage of the Hazardous Material in question
by Tenant, its agents, employees, invitees or contractors in violation of Law,
Costs incurred to investigate the presence of any Hazardous Materials, Costs to
respond to any claim of Hazardous Material contamination
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or damage, Costs to remove any Hazardous Material from the Premises, judgments
or other Costs incurred in connection with any Hazardous Materials exposure or
releases, and any other Cost associated with a Hazardous Material.
(6) Capital Improvements: If Tenant's maintenance or
repair obligations as set forth in this Lease would require Tenant to perform or
pay for any item which would be properly be capitalized under generally accepted
accounting principles, and the cost of any such individual item exceeds Ten
Thousand Dollars ($10,000), then Tenant shall perform such repair or make such
replacement and the cost of such item or improvement shall be allocated as
follows. Landlord and Tenant shall establish the useful life of the item in
question based upon generally accepted accounting principles. Tenant shall pay a
proportion of the cost equal to the actual cost of such improvement or item
times a fraction, the numerator of which is the number of months remaining in
the initial Lease Term, and the denominator of which is the useful life of the
improvement in months. Landlord shall pay to Tenant the balance of such cost
within five (5) days after written demand by Tenant. For purposes hereof,
Tenant's remodeling of finishes (such as wallpaper or carpeting) shall not be
considered a capital item toward which Landlord shall be required to contribute.
(7) Parking Lot: Costs relating to the repaving or
resurfacing of the parking area if such repaving or resurfacing is required more
frequently than once every five (5) years.
12. INSURANCE AND DEDUCTIBLES:
A. Tenant's Use: Tenant shall not use, or permit any part of
the Premises, to be used for any unlawful purpose and no use shall be made or
permitted to be made of the Premises, nor acts done, which will cause an
increase in insurance premiums for the insurance to be maintained by Landlord
(unless Tenant agrees to pay for the cost of such increase) or a cancellation of
any insurance policy covering the Building. Tenant shall, at its sole cost and
expense, comply with any and all requirements, pertaining to the Premises, of
any insurance organization or company, necessary for the maintenance of
reasonable fire and public liability insurance covering the Building and
appurtenances, excluding structural improvements not related to Tenant's
specific and particular use.
B. Landlord's Insurance: Landlord agrees to purchase and keep
in force fire and extended coverage insurance in so-called "all risk" form
covering the Premises and all of the Interior Improvements (as defined in the
Construction Addendum) paid for by Landlord in the amount of their full
replacement value. Tenant agrees to pay to the Landlord as additional rent, on
demand, the cost of said insurance as evidenced by insurance ▇▇▇▇▇▇▇▇ to
Landlord. Payment shall be due to Landlord on the later of: (i) thirty (30) days
after written invoice to Tenant; or (ii) twenty (20) days prior to the due date
of such premiums. Tenant's obligation under this paragraph will be prorate to
reflect the commencement and termination dates of this Lease. With respect to
earthquake insurance, Landlord agrees to purchase earthquake coverage and Tenant
agrees to reimburse Landlord for the additional cost of such insurance provided
such insurance is commercially available, and provided further: (i) Tenant
requests such coverage and agrees to
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pay for the same; or (ii) such insurance is required by Landlord's lender and is
customarily required by institutional lenders on comparable buildings in Santa
▇▇▇▇▇ County, and in such case the premium for such earthquake coverage shall be
shared equally between Landlord and Tenant and payable by Tenant in the manner
set forth above for casualty insurance. If the Project is located in a flood
zone, Landlord shall also maintain flood insurance insuring the Building and
Interior Improvements paid for by Landlord for their full replacement value, and
Tenant shall pay for flood insurance premiums in the manner set forth herein,
unless Tenant indicates to Landlord in writing that Tenant does not elect for
Landlord to carry such coverage.
C. Tenant's Insurance: Tenant agrees to insure its personal
property, Interior Improvements paid for by Tenant and Alterations for their
full replacement value and to obtain worker's compensation insurance as required
by Law. Tenant shall also maintain comprehensive general liability insurance for
occurrences within the Premises of $5,000,000.00 combined single limit for
bodily injury and property damage. Tenant shall name Landlord as an additional
insured under such comprehensive general liability policy, and shall deliver a
copy of such policy and renewal certificates to Landlord within thirty (30) days
after the Commencement Date. Tenant's comprehensive general liability policy
shall provide for thirty (30) days' prior written notice to Landlord of any
cancellation or termination.
D. Insurance Deductibles: Tenant shall have the right to
specify the deductible of any insurance policy to be carried by Landlord under
this Lease and shall reimburse Landlord, in the manner set forth in subparagraph
12.B, for the premiums payable with respect to insurance policies for which
Tenant is responsible under subparagraph 12.B containing the deductible so
specified by Tenant or on insurance policies for which Tenant fails to specify a
deductible amount within thirty (30) days following Landlord's written demand
for such deductible specification. In the event of damage to the Premises
covered by Landlord's "all risk" casualty policy (and not caused by the
negligence or willful misconduct of Landlord or Landlord's employees, agents,
contractors or invitees), Tenant shall pay the amount of any deductible under
such policy if this Lease is not terminated in connection with such casualty as
provided in paragraph 28 hereof, provided Tenant has approved in writing in
advance the amount of such deductible. Tenant shall in no event be required to
pay for any flood or earthquake insurance deductibles; however, if flood or
earthquake deductibles (as approved or deemed approved by Tenant) exceed ten
percent (10%) of the replacement value of the Premises, in the event of a flood
or earthquake, such casualty shall be treated as an "Uninsured Casualty" under
paragraph 28 hereof.
E. Waiver: Notwithstanding anything to the contrary in this
Lease, Landlord and Tenant hereby waive any rights each may have against the
other on account of any loss or damage that is caused or results from a risk
which is actually insured against, which is required to be insured against under
this Lease, or which would normally be covered by a standard form of full
replacement value "all risk extended coverage" casualty insurance, regardless of
whether such loss or damage is due to the negligence of Landlord or Tenant or of
their respective agents, employees, subtenants, contractors, assignees, invitees
or any other cause. Each party shall use its best efforts to obtain from their
respective insurance companies a waiver of any right of subrogation which said
insurance company may have against the Landlord or the Tenant, as the
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case may be. If such insurance policy cannot be obtained with such waiver of
subrogation, or if such waiver of subrogation is only available at additional
cost and the party for whose benefit the waiver is not obtained does not pay
such additional cost, then the party obtaining such insurance shall immediately
notify the other party of that fact.
13. TAXES:
A. Payment of Taxes: Tenant shall be liable for all taxes
levied against Tenant's personal property and trade or business fixtures, and
agrees to pay, as additional rental, all real estate taxes and special
assessment installments levied on the Premises or upon the occupancy of the
Premises. Tenant shall pay such taxes on the later of: (i) twenty (20) days
after written notice from Landlord (which notice shall contain a copy of the tax
▇▇▇▇ in question) or (ii) ten (10) days before the tax delinquency date. It is
understood and agreed that Tenant's obligation under this paragraph will be
prorated to reflect the commencement and termination dates of this Lease Term.
If at any time during the term of this Lease a tax, excise on rents, business
license tax, or any other tax, however described, is levied or assessed against
Landlord, as a substitute or addition in whole or in part for taxes described
herein, Tenant shall pay such tax within the time period set forth above. In the
event that a tax that is the obligation of Tenant to pay hereunder is placed,
levied, or assessed against Landlord and the taxing authority takes the position
that Tenant cannot pay and discharge the tax in question, then at the sole
election of Landlord, Landlord may increase the rental charged hereunder by the
exact amount of such tax. Notwithstanding anything to the contrary herein,
Tenant shall not be required to pay any portion of any tax or assessment: (i)
levied on Landlord's rental income, unless such tax or assessment is imposed in
lieu of real property taxes; (ii) in excess of the amount which would be payable
if such tax or assessment were paid in installments over the longest possible
term; (iii) imposed on land and improvements other than the Premises; (iv)
occasioned by a change of ownership or other conveyance of the Premises or any
interest in the Premises or Landlord except as otherwise set forth in
subparagraph 13.C below; or (v) attributable to Landlord's net income,
inheritance, gift, transfer, franchise or estate taxes. Tenant may in good faith
contest any real property taxes provided that it indemnifies Landlord from any
loss or liability in connection therewith.
B. Assessments: Landlord represents and warrants to Tenant
that as of the date of this Lease and again as of the Commencement Date, the
only tax assessment that encumbers the Premises or Project is that certain
assessment levied under San ▇▇▇▇ Assessment Number 23E-971-OLD and that in no
event shall Tenant's obligation to pay such assessment exceed (i) on the
average, more than Two and Five-Tenths Cents ($.025) per square of the Building
per month during the Lease Term; or (ii) more than Three and Two-Tenths Cents
($.032) per square foot of the Building per month during any month of the Lease
Term. If any other tax assessments exist with respect to the Premises or the
Project as of the date of this Lease or on the Commencement Date, or if the
amount of the foregoing assessment exceeds that set forth herein, Landlord shall
pay the amount of such assessment or excess, as the case may be, without
contribution by Tenant. Landlord represents that as of the date of this Lease,
Landlord is not aware of any pending future assessments affecting the Project.
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C. Change of Ownership: If property taxes increase as a
result of reassessment after change of ownership under Proposition 13 or any
successor Law, Tenant's liability for property taxes during each of the twelve
(12) month periods following the change of ownership, commencing as of the date
of the change of ownership, shall be limited as follows: Tenant's liability in
the first twelve (12) months following the transfer of ownership shall be
limited to one hundred thirty-three and one-third percent (133 1/3%) of the
property taxes payable hereunder by Tenant with respect to the twelve (12)
months paid immediately preceding the transfer, and in the second twelve (12)
month period one hundred sixty-six and two-thirds percent (166 2/3%) of the
property taxes paid by Tenant with respect to the twelve month period preceding
the transfer. Commencing on the second anniversary of the change in ownership,
Tenant shall be liable for the entire amount of property taxes for which Tenant
is otherwise responsible under this Lease levied against the Premises with
respect to each period after the second anniversary. If the reassessment occurs
as of a date other than July 1 (i.e. the commencement of a tax year), Tenant's
liability for property taxes shall be prorated on the basis of a 365-day year
for the purpose of calculating the amounts payable by Tenant during the two
years following the transfer.
14. UTILITIES: Tenant shall pay directly to the providing utility for
all service charges pertaining to water, gas, heat, light, power, telephone and
other utilities supplied to the Premises. Landlord shall not be liable for a
loss of or injury to property, however occurring, through or in connection with
or incidental to furnishing or failure to furnish any of utilities to the
Premises and Tenant shall not be entitled to abatement or reduction of any
portion of the rent, so long as any failure to provide and furnish the utilities
to the Premises is due to a cause beyond Landlord's reasonable control.
Notwithstanding the foregoing, if utilities are not available to the Premises
for a period of fifteen (15) days or more and such failure does not result from
Tenant's failure to make the payments required herein, Tenant shall be entitled
to an abatement of rent to the extent of the interference with Tenant's use of
the Premises occasioned thereby. If such interference is not corrected so that
the Premises are reasonably suitable for Tenant's intended use within three
hundred sixty-five (365) days following the interference or interruption, then
Tenant shall be entitled to terminate this Lease and, at Tenant's election, any
Other Lease by delivery of written notice to Landlord.
15. ABANDONMENT: Tenant shall not abandon the Premises at any time
during the term; and if Tenant shall abandon or surrender the Premises, or be
dispossessed by process of law, any personal property belonging to Tenant and
left on the Premises shall be deemed to be abandoned, at the option of Landlord.
16. FREE FROM LIENS: Tenant shall keep the Premises and the property on
which the Premises are situated, free from any liens arising out of any work
performed, materials furnished, or obligations incurred by Tenant; provided,
however that if Tenant, in good faith, elects to contest such lien, Tenant shall
furnish a bond or other security reasonably acceptable to Landlord and Tenant
shall not then be deemed in default under this Lease.
17. COMPLIANCE WITH GOVERNMENTAL REGULATIONS: Tenant shall, at its sole
cost and expense, comply with all of the requirements of all municipal, state
and
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federal authorities now in force, or which may hereafter be in force, pertaining
to Tenant's particular and specific use of the Premises, and shall faithfully
observe in the use of the Premises all municipal ordinances and state and
federal statutes now in force or which may hereafter be in force. The judgment
of any court of competent jurisdiction, or the admission of Tenant or Landlord
in any action or proceeding, that Landlord or Tenant, as the case may be, has
violated any ordinance or statute, shall be conclusive of that fact as between
Landlord and Tenant. At the Commencement Date, the Premises shall conform to all
requirements of covenants, conditions, restrictions and encumbrances ("CC&Rs"),
all underwriters' requirements, and all Laws applicable thereto. Tenant shall
not be required to construct or pay the cost of complying with any CC&Rs,
underwriters' requirements or Laws requiring construction of improvements in the
Premises which are properly capitalized under generally accepted accounting
principles, unless such compliance is necessitated solely because of Tenant's
particular and specific use of the Premises. Any structural requirements or
Costs necessitated by CC&R's, underwriters' requirements or Laws which are
imposed on buildings or real estate generally (as opposed to the Premises
because of Tenant's specific and particular use) shall be performed or paid by
Landlord without reimbursement by Tenant.
18. TOXIC WASTE AND ENVIRONMENTAL DAMAGE:
A. Tenant's Responsibility: Tenant shall not bring, allow, or
use upon the Premises, or generate or create at or emit or dispose from the
Premises any chemicals, toxic or hazardous gaseous, liquid or solid materials or
waste, including without limitation, material or substance having
characteristics of ignitability, corrosivity, reactivity, or toxicity or
substances or materials which are listed on any of the Environmental Protection
Agency's lists of hazardous wastes or which are identified in Sections 66680
through 66685 of Title 22 of the California Administrative Code as the same may
be amended from time to time (which are referred to in this Lease as "Hazardous
Materials") in violation of Law. Tenant shall comply, at its sole cost, with all
Laws pertaining to, and shall indemnify and hold Landlord harmless from any
claims, liabilities, costs or expenses incurred or suffered by Landlord arising
from the bringing, using, generating, creating, or emitting or disposing of any
Hazardous Materials by Tenant. Tenant's indemnification and hold harmless
obligations as hereinbefore specified include, without limitation, (i) claims,
liability, costs or expenses resulting from or based upon administrative,
judicial (civil or criminal) or other action, legal or equitable, brought by any
private or public person under common law or under the Comprehensive
Environmental Response, compensation and Liability Act of 1980 ("CERCLA"), the
Resource Conservation and Recovery Act of 1980 ("RCRA") or any other Federal,
State, County or Municipal law, ordinance or regulation; (ii) claims,
liabilities, costs or expenses pertaining to the cleanup or containment of
wastes, the identification of the pollutants in the waste, the identification of
scope of any environmental contamination, the removal of pollutants from soils,
riverbeds or aquifers, the provision of an alternative public drinking water
source, or the long term monitoring of ground water and surface waters, all to
the extent required by applicable Law, and (iii) all costs of defending such
claims. Tenant further agrees to properly close the facility with regard to
Hazardous Materials and obtain a Closure Certificate from the local
administering agency for any Hazardous Material used, generated, emitted or
disposed of by Tenant in or about the Premises if so required by Law upon the
expiration or earlier termination of the Lease.
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B. No Responsibility: Notwithstanding the foregoing or
anything in this Lease, Tenant shall have no responsibility to Landlord,
Landlord's employees, contractors, officers, agents or partners or to any third
party for any Hazardous Material which was not released, stored, disposed of,
emitted, or discharged by Tenant, its agents, invitees, employees and
contractors in or about the Premises and which is or comes to be, present on or
about the Premises, or the soil or groundwater thereof, at any time. Landlord,
at its sole expense, shall promptly comply with all Laws, orders, injunctions,
judgments, mandates and directives of any applicable governmental authority
concerning the investigation, removal, monitoring or remediation of any
Hazardous Materials present on the Premises or the groundwater thereof, except
to the extent that the Hazardous Material in question was released, stored,
disposed of, emitted or discharged by Tenant or its employees, invitees, agents,
or contractors in or about the Premises. Landlord hereby waives all claims,
liabilities, costs, expenses or obligations, known or unknown, against Tenant
with respect to Hazardous Materials present on the Premises as of the
Commencement Date or which come to be present on the Premises after the
Commencement Date, except to the extent that the Hazardous Materials in question
were released, emitted, or discharged onto the Premises or Project by Tenant or
its employees, agents, contractors or invitees In this regard, Landlord
acknowledges that it is aware of and hereby waives the provisions of California
Civil Code Section 1542 (or any similar or successor Law) which provides as
follows:
"A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor, at the time of
executing the release, which if known by him must have materially
affected the settlement with the debtor."
C. Indemnity by Landlord: Landlord shall indemnify, defend
and hold harmless Tenant from all claims, losses, liabilities, fines, penalties,
damages, costs or expenses (including, without limitation, attorneys' and
consultants' fees and costs) arising out of or in connection with Hazardous
Material that come to be present at or about the Premises through the acts or
omissions of Landlord or its employees, tenants (including subtenants and
assignees), invitees, agents or contractors. Further, if Tenant terminates this
Lease in connection with or arising out of Hazardous Materials present at or
about the Premises or Project or the soil or groundwater thereof on the
Commencement Date, in addition to Landlord's other obligations hereunder,
Landlord shall be obligated to reimburse Tenant for the unamortized cost of the
Interior Improvements at the Premises paid for by Tenant. Further, Landlord
shall indemnify, defend and hold harmless Tenant from: (i) all costs and
expenses (including attorney's and consultants fees and costs) associated with
the investigation, removal, monitoring or remediation of Hazardous Materials not
released, stored, disposed of, emitted or discharged by Tenant, its agents,
employees, contractors or invitees in or about the Premises; and (iii) all
claims, liabilities or obligations (including, without limitation, any
attorneys' and consultants' fees incurred in connection with the same) by or to
any third party, including, without limitation, any governmental entity or body,
associated with Hazardous Materials present on the Premises or the soil or
groundwater thereof through no act of Tenant or Tenant's agents, employees,
contractors or invitees. The obligations of Landlord and Tenant hereunder shall
survive the expiration or earlier termination of the Lease Term.
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D. Representation by Landlord: Landlord hereby represents and
warrants to Tenant, except as outlined in the ▇▇▇▇▇▇ ▇▇▇▇▇▇ report dated
12/21/88 & 3/17/89 to the best of Landlord's knowledge: (i) the Premises and all
operations conducted thereon prior to the Commencement Date are in compliance
with all Laws regarding Hazardous Materials ("Hazardous Materials Laws"), and
(ii) any handling, transportation, storage, treatment, disposal, release or use
of Hazardous Materials that has occurred on or about the Premises prior to the
Commencement Date has been in compliance with all Hazardous Materials Laws.
Tenant acknowledges reviewing the correspondence dated March 1, 1990 from the
Department of Health Services concerning the "mixing" that occurred with respect
to DDT at the Project. Landlord further represents and warrants that no
litigation has been brought or threatened, nor any settlements reached with any
governmental or private party, concerning the actual or alleged presence of
Hazardous Materials on or about the Premises, nor has Landlord received any
notice of any violation, or any alleged violation of any Hazardous Materials
Laws, pending claims or pending investigations with respect to the presence of
Hazardous Materials on or about the Premises.
E. Notification: Landlord and Tenant shall notify the other
of the existence of any reports, recommendations or studies prepared in
connection with any investigation for the presence of Hazardous Materials on or
about the Premises and shall give written notice to the other as soon as
reasonably practicable of (i) any communication received from any governmental
authority concerning any Hazardous Materials which relates to the Premises; and
(ii) any contamination of the Premises by Hazardous Materials which constitutes
a violation of any Hazardous Materials Laws.
F. Environmental Studies: Tenant shall have the right, at
Tenant's expense, to conduct a baseline environmental study at the Project,
including the right to bore holes and take soils samples, if Tenant so elects,
provided Tenant obtains Landlord's advance written consent, which consent shall
not be unreasonably withheld.
19. INDEMNITY: As a material part of the consideration to be rendered to
Landlord, Tenant hereby waives all claims against Landlord for damages to goods,
wares and merchandise, and all other personal property in, upon or about said
Premises and for injuries to persons in or about said Premises, from any cause
arising at any time, and Tenant will indemnify, defend and hold harmless
Landlord 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
of the Premises by Tenant, or from the failure of Tenant to keep the Premises in
good condition and repair, as herein provided. Further, in the event Landlord is
made party to any litigation due to the acts or omissions of Tenant, Tenant will
indemnify and hold Landlord harmless from any such claim or liability including
Landlord's costs and expenses and reasonable attorneys' fees incurred in
defending such claims except to the extent of the negligence or willful
misconduct of Landlord or its agents, employees or contractors or a breach of
this Lease by Landlord. Notwithstanding anything to the contrary in this Lease,
Tenant shall neither release Landlord from, nor indemnify, defend or hold
harmless Landlord with respect to: (i) the negligence or willful misconduct of
Landlord, or its agents, employees, tenants, contractors, subcontractors or
invitees; (ii) a breach of Landlord's obligations or representations under this
Lease; or (iii) any
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Hazardous Material which was not released, emitted, or discharged by Tenant, its
agents, employees, invitees or contractors and which is or comes to be, present
on or about the Premises, or the soil or groundwater thereof, at any time.
Landlord shall indemnify, defend and hold Tenant harmless from any claim, loss,
expense, obligation damage or liability (including, without limitation, Tenant's
costs and expenses and reasonable attorney's fees) arising from or in connection
with: (i) the negligence or willful misconduct of Landlord or its employees,
agents, contractors or invitees; or (ii) a breach of Landlord's obligations or
representations under this Lease.
20. ADVERTISEMENTS AND SIGNS: Tenant will not place or permit to be
placed, in, upon or about the said Premises unless such signs comply with all
Laws. Landlord agrees that Tenant may erect a monument sign or other signage on
the exterior of the Building that Tenant deems appropriate; provided, however,
that Tenant shall obtain Landlord's advance written approval of any signage
visible from the exterior of the Building, which consent shall not be
unreasonably withheld or delayed. Any sign so placed on the Premises shall be so
placed upon the understanding and agreement that Tenant will remove the same
before the expiration or promptly following any earlier termination of the Lease
Term and repair any damage or injury to the Premises caused thereby, and if not
so removed by Tenant then Landlord may have same so removed at Tenant's expense.
Landlord shall cooperate with and assist Tenant in acquiring permits for the
signage desired by Tenant; provided, however, that Landlord shall not be
required to incur additional out-of-pocket costs in connection therewith.
21. ATTORNEY'S FEES: In case suit should be brought for the possession
of the Premises, for the recovery of any sum due hereunder, or because of the
breach of any other covenant herein, or in connection with any matter relating
to this Lease, the losing party shall pay to the prevailing party reasonable
attorneys' fees and court costs which shall be enforceable whether or not such
action is prosecuted to judgment.
22. TENANT'S DEFAULT: The occurrence of any of the following shall
constitute a default under this Lease by Tenant: (a) any failure by Tenant to
pay the rental or to make any other payment required to be made by Tenant
hereunder, where such failure continues for ten (10) days after receipt by
Tenant of written notice of Landlord's failure to receive such payment; (b) the
abandonment of the Premises by Tenant; (c) failure by Tenant to observe and
perform any other provision of this Lease to be observed or performed by Tenant,
where such failure continues for thirty (30) days after written notice thereof
by Landlord to Tenant; provided, however, that if the nature of such failure is
such that the same cannot reasonably be cured within such thirty (30) day period
Tenant shall not be deemed to be in default if Tenant shall within such period
commence such cure and thereafter diligently prosecute the same to completion;
(d) the making by Tenant of any general assignment for the benefit of creditors;
the filing by or against Tenant of a petition to have Tenant adjudged a bankrupt
or of a petition for reorganization or arrangement under any law relating to
bankruptcy (unless, in the case of a petition filed against Tenant, the same is
dismissed within sixty (60) days after the filing); the appointment of a trustee
or receiver to take possession of substantially all of Tenant's assets located
at the Premises or of Tenant's interest in this Lease, where possession is not
restored to Tenant within sixty (60) days; or the attachment, execution or other
judicial seizure of
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substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where such seizure is not discharged within sixty (60)
days. The notice requirements set forth herein are in lieu of and not in
addition to the notices required by California Code of Civil Procedure Section
1161, provided that such notices are given in the manner required by such
statute.
A. Remedies: In the event of any such default by Tenant, then
in addition to any other remedies available to Land-lord at law or in equity,
Landlord shall have the immediate option to terminate this Lease and all rights
of Tenant hereunder by giving written notice of such intention to terminate. In
the event that Landlord shall elect to so terminate this Lease then Landlord may
recover from Tenant: (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 the amount by which the unpaid rent which would have been earned
after termination until the time of award exceeds the amount of such rental loss
Tenant 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 term
after the time of award exceeds the amount of such rental loss that Tenant
proves could be reasonably avoided; plus (d) any other amount necessary to
compensate Landlord for all the detriment proximately caused by Tenant's failure
to perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom. The term "rent", as used herein,
shall be deemed to be and to mean the minimum monthly installments of rent and
all other sums required to be paid by Tenant pursuant to the terms of this
Lease, all other such sums being deemed to be additional rent due hereunder. As
used in (a) and (b) above, the "worth at the time of award" is computed by
allowing interest at the rate of the discount rate of the Federal Reserve Bank
of San Francisco plus five (5%) percent per annum. As used in (c) above, the
"worth at the time of award" is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus one (1%) percent.
B. Right to Re-enter: In the event of any default by Tenant
that results in the termination of the Lease, Landlord shall also have the right
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 Tenant.
C. Abandonment: In the event of the abandonment of the
Premises by Tenant or in the event that Landlord shall elect to re-enter as
provided in Paragraph 22.B above or shall take possession of the Premises
pursuant to legal proceedings, then if Landlord does not elect to terminate this
Lease as provided in Paragraph 22.A above, then the provisions of California
Civil Code Section 1951.4, as amended from time to time, shall apply and
Landlord may from time to time, recover all rental as it becomes due.
D. No Termination: No re-entry or taking possession of the
Premises by Landlord pursuant to 22.B or 22.C of this Article 22 shall be
construed as an election to terminate this Lease unless a written notice of such
intention be given to Tenant or unless the termination thereof be decreed by a
court of competent jurisdiction.
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23. SURRENDER OF LEASE: The voluntary or other surrender of this Lease
by Tenant, or a mutual cancellation thereof, shall not automatically effect a
merger of the Lease with Landlord's ownership of the Premises. Instead, at the
option of Landlord, Tenant's surrender may terminate all or any existing
sublease or subtenancies, or may operate as an assignment to Landlord of any or
all such subleases or subtenancies, thereby creating a direct relationship
between Landlord and any subtenants.
24. RIGHT OF FIRST OFFER TO PURCHASE:
▇. ▇▇▇▇▇ of First Right: Landlord hereby grants to Tenant a
right of first offer (the "Right of First Offer") to purchase the Project or any
portion thereof or interest therein. If Landlord proposes to sell or otherwise
transfer the Project, or any portion thereof, or interest therein, to a third
party, Landlord may do so only after first offering to sell the Project, or such
portion thereof or interest therein, as Landlord proposes to transfer to the
third party, to Tenant on the terms and conditions set forth in this paragraph.
B. Term: The term of this Right of First Offer shall commence
on the date both parties have executed this Lease, and shall continue until the
expiration or earlier termination of the Lease in accordance with its terms.
C. Notice of Intent to Sell: Landlord shall give written
notice of its intent to sell or transfer the Project or portion thereof to
Tenant ("Landlord's Notice"). The Landlord's Notice shall include a current
preliminary title report and the following "Basic Business Terms" upon which
Landlord is willing to sell the Premises: (i) the sales price and the terms upon
which such sales price is payable, (ii) the amount and terms of any seller
financing, (iii) the amount and terms of any assumable third party financing,
(iv) the state of title to be transferred by Landlord, (v) the date for close of
escrow, (vi) the proration of closing expenses, (vii) any Hazardous Materials
indemnities to be included in the purchase and sale agreement and (viii) any
other material business terms. A copy of any written offer to purchase the
Project by any third party shall be attached to Landlord's Notice.
D. Exercise of Right of First Offer: Tenant may elect to
exercise its Right of First Offer by giving Landlord written notice of such
election on or before the tenth (10th) day following actual receipt of
Landlord's Notice.
E. Terms of Sale: Upon Tenant's exercise of the Right of
First Offer, Landlord shall sell to Tenant the Project or portion thereof on the
Basic Business Terms stated in Landlord's Notice, except the purchase price to
be paid by Tenant shall be reduced by the brokerage commission contained in the
offer, if any. Tenant shall purchase the Project or portion thereof
substantially on the same terms and conditions stated in Landlord's Notice,
including without limitation any indemnities specified therein and on such other
terms as are reasonable and customary in comparable sales of comparable
properties in Santa ▇▇▇▇▇ County to institutional buyers of or investors in real
property. The parties also shall execute a written sales agreement incorporating
the Basic Business Terms (as modified pursuant to this paragraph) and such other
reasonable and customary terms within twenty (20) days after the Tenant
exercises its
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Right of First Offer; provided, however, that the failure of the parties to
execute a formal contract shall not affect Tenant's rights hereunder.
F. Landlord's Right to Sell: If Tenant does not indicate in
writing its election to exercise its Right of First Offer within the allowed
time period, Landlord thereafter shall have the right to sell the portion of or
interest in the Project specified in Landlord's Notice to any third party;
provided (i) the sale is consummated on the same Basic Business Terms set forth
in Landlord's Notice, including, without limitation, at the same purchase price
and on terms no more favorable than those set forth in the Landlord's Notice;
and (ii) escrow for the sale closes on or before the one hundred eightieth
(180th) day following delivery of Landlord's Notice. Any sales transaction,
other than a sale complying with the foregoing, shall be deemed a new
determination by Landlord to sell the Project and no such sale may be
consummated, unless Tenant is first offered the right to purchase the Project in
accordance with the provisions of this Right of First Offer. The rights granted
by this paragraph 24 shall not apply to any exercise of private power of sale,
judicial foreclosure, deed in lieu of foreclosure or other proceedings to
enforce a mortgage or deed of trust encumbering the Project.
25. LANDLORD'S DEFAULT: In the event of Landlord's failure to perform
any of its covenants or agreements under this Lease, Tenant shall give Landlord
written notice of such failure and shall give Landlord thirty (30) days or such
longer time as may be reasonably required by Landlord to cure said failure in
the exercise of reasonable diligence provided Landlord commences the cure within
said thirty (30) day period and thereafter diligently prosecutes such cure to
completion prior to pursuing its remedies on account of such default. If
Landlord so fails to perform its obligations under this Lease, then, in addition
to its other rights and remedies, Tenant shall have the right to cure Landlord's
default and (i) to recover from Landlord the cost of the cure together with
interest thereon at the prime rate charged by Union Bank, main San ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, plus two percent (2%) per annum from the date of the expenditure until
the date of the repayment; or (ii) for the period during which Landlord or any
other individual or entity affiliated or related to Landlord owns the Project or
any portion thereof or interest therein, to deduct the cost of cure together
with interest thereon at the prime rate charged by Union Bank, main San
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, plus two percent (2%) per annum from the date of the
expenditure from the sums otherwise payable by Tenant hereunder. Even if the
foregoing entities or individuals do not have an interest in the Project, Tenant
shall, in addition to Tenant's other rights or remedies, have the right to
deduct the cost of cure together with interest thereon at the above-stated rate,
provided that the total amount of such deduction shall not exceed One Hundred
Eleven Thousand Seven Hundred Dollars ($111,700.00).
26. NOTICES: All notices required or permitted to be given by this Lease
shall be in writing and shall be personally delivered or delivered by reputable
commercial overnight courier to the parties at the following addresses, or such
other addresses as the parties shall designate by three (3) days' prior written
notice to the other party:
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If to Tenant:
Pyramid Technology Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Chief Financial Officer
With a copy to:
Pyramid Technology Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
With a further copy to:
Wilson, Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
If to Landlord:
Sobrato Interests II
c/o Sobrato Development Companies
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
Notices given by personal delivery shall be deemed effective upon signed
acknowledgment of receipt or, if delivered by courier, one (1) day after deposit
with the courier.
27. ENTRY BY LANDLORD: Upon twenty-four (24) hours advance written
notice (except in the event of any emergency) and provided that Landlord does
not unreasonably interfere with Tenant's use of the Premises, Tenant shall
permit Landlord and its agents to enter upon said Premises at all reasonable
times subject to any security or safety regulations of Tenant for the purpose of
inspecting the same or for the purpose of maintaining the Premises or for the
purpose of making repairs or alterations of the Premises as may be required to
fulfill Landlord's obligations hereunder, without any rebate of rent or without
any liability to Tenant for any loss of occupation or quiet enjoyment of the
Premises thereby occasioned; and Tenant shall permit Landlord and his agents, at
any time within one hundred twenty (120) days prior to the expiration of this
Lease, to: (i) place upon said Premises any "For Sale" or "For Lease" signs
provided Landlord obtains Tenant's advance consent of the design and location of
such signs, which
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consent by Tenant shall not be unreasonably withheld or delayed; and (ii)
exhibit the Premises to prospective tenants at reasonable hours upon reasonable
prior notice.
28. DESTRUCTION OF PREMISES:
A. Obligation to Restore: In the event of damage or
destruction to the Building or Premises or any portion thereof by any casualty
during the Lease Term, Landlord shall forthwith repair the same to the condition
the Building or Premises was in immediately before the destruction, provided
such casualty is of a type required to be insured against by Landlord under the
terms of this Lease or actually insured against by Landlord (herein collectively
referred to as an "Insured Casualty"). In the event of damage or destruction of
the Premises by a casualty of a type which is not required to be insured against
by Landlord under this Lease, and which is not actually insured against by
Landlord (herein referred to as an "Uninsured Casualty"), Landlord shall restore
the Premises to the same condition as they were in immediately before such
destruction and this Lease shall not terminate; provided, that if in the case of
such Uninsured Casualty the cost of restoration exceeds ten percent (10%) of the
then replacement value of the Building, Landlord may elect to terminate this
Lease by giving written notice to Tenant within fifteen (15) days after
determining the replacement value and furnishing reasonable evidence thereof to
Tenant. If Landlord so elects to terminate this Lease, Tenant, within fifteen
(15) days after receiving Landlord's notice to terminate, can elect to pay to
Landlord at the time Tenant notifies Landlord of its election, the difference
between ten percent (10%) of the replacement cost of the Premises and the actual
cost of restoration, in which case Landlord shall restore the Premises and this
Lease shall not terminate. If Landlord so elects to terminate this Lease and
Tenant does not elect to contribute the cost of restoration as provided herein,
this Lease shall terminate. In all events Landlord shall not be required to
restore Tenant's Alterations or replace Tenant's fixtures or personal property.
Tenant shall be entitled to a proportionate reduction of rent during the period
of damage and restoration, such proportionate reduction to be based upon the
extent to which the damage and making of repairs shall interfere with Tenant's
use of the Premises.
B. Tenant's Right to Terminate: In the event of damage or
destruction either to the Premises or to any Other Space within the Project
leased by Tenant from Landlord, Landlord shall furnish to Tenant a good faith
written estimate from Landlord's architect or construction consultant of the
time period needed to restore the Premises or Other Space, as the case may be,
within thirty (30) days after the date of the damage or destruction in question.
If such estimate indicates that the repair or restoration of the Premises or
Other Space, as the case may be, cannot be made within three hundred sixty-five
(365) days after the date of damage or destruction, Tenant may, at its option,
terminate this Lease and, at Tenant's election, any Other Lease between Landlord
or Tenant by giving written notice to Landlord of such election within thirty
(30) days after receipt of Landlord's estimate. Tenant shall also have the right
to terminate this Lease and, at Tenant's election, any Other Lease if the actual
restoration of the Premises or Other Space, as the case may be, is not
effectuated within three hundred sixty-five (365) days after the date of the
casualty. Further, Tenant shall have the right to terminate this Lease if the
Building is damaged by any peril within twelve (12) months of the last day of
the Lease Term to such an extent that more than thirty percent (30%) of the
floor area of the Building is rendered
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unusable by Tenant for a period of more than sixty (60) days. 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 Tenant to the extent inconsistent
with the provisions of this Lease.
29. ASSIGNMENT OR SUBLEASE:
A. Permitted Transfers: Tenant may, without Landlord's prior
written consent and without any participation by Landlord in assignment or
subletting proceeds, sublet the Premises or assign the Lease to the following
(herein called "Permitted Transferees"): (i) a subsidiary, affiliate, division
or corporation controlled by or under common control with Tenant; (ii) a
successor corporation related to Tenant by merger, consolidation, or
non-bankruptcy reorganization; or (iii) a purchaser of substantially all of
Tenant's assets located in the Premises. For the purpose of this Lease, sale of
Tenant's capital stock shall not be deemed an assignment, subletting, or any
other transfer of the Lease or the Premises.
B. Consent by Landlord: In the event Tenant desires to assign
this Lease or any interest therein including, without limitation, a pledge,
mortgage or other hypothecation, or sublet the Premises or any part thereof
except as set forth above with respect to Permitted Transferees, Tenant shall
deliver to Landlord copies of the proposed assignment or sublease, the financial
statements of the assignee or subtenant, and any additional information as
reasonably required by Landlord. Landlord shall then have a period of ten (10)
days following receipt of such notice within which to notify Tenant in writing
that Landlord elects (i) to permit Tenant to assign or sublet such space to the
named assignee/subtenant; or (ii) to refuse consent, provided Landlord shall not
unreasonably refuse such consent. If Landlord should fail to notify Tenant in
writing of such election within said ten (10) day period, Landlord shall be
deemed to have elected option (i) above. No assignment or subletting by Tenant
shall relieve Tenant of any obligation under this Lease. Landlord's consent to
the proposed assignment or sublease shall not be unreasonably withheld or
delayed, provided and upon the following conditions:
A. The proposed uses shall not violate Laws;
B. The proposed assignee or subtenant has sufficient
financial worth to undertake the responsibility involved under the assignment or
sublease, and Landlord has been furnished with reasonable proof thereof; and
C. Any proposed assignment shall be in form reasonably
satisfactory to Landlord.
C. Assignment or Subletting Consideration: Any rent actually
received by Tenant under any such sublease or assignment in excess of the rent
payable hereunder, after deducting the unamortized cost of the Interior
Improvements paid by Tenant and Alterations installed at Tenant's expense, and
subletting and assignment costs incurred by Tenant in connection with the
assignment or sublease (including, without limitation, attorneys' fees,
brokerage commissions, and remodeling costs), any vacancy costs incurred by
Tenant, and Tenant's costs in performing under such assignment or sublease,
shall be paid by Tenant fifty
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percent (50%) to Landlord. Tenant's obligation to pay such consideration shall
constitute an obligation for additional rent hereunder.
D. No Release: Any assignment except to Permitted Transferees
shall be made only if and shall not be effective until the assignee shall
execute, acknowledge and deliver to Landlord an agreement, in form and substance
reasonably satisfactory to Landlord, whereby the assignee shall assume all of
the obligations of this Lease on the part of Tenant to be performed or observed
and shall be subject to all of the covenants, agreements, terms, provisions and
conditions contained in this Lease. Notwithstanding any such sublease or
assignment and the acceptance of rent or additional rent by Landlord from any
subtenant or assignee, Tenant shall and will remain fully liable for the payment
of the rent and additional rent due, and to become due hereunder, for the
performance of all of the covenants, agreements, terms, provisions and
conditions contained in this Lease on the part of Tenant to be performed and for
all acts and omissions of any licensee, subtenant, assignee or any other person
claiming under or through any subtenant that shall be in violation of any of the
obligations of this Lease, and any such violation shall be deemed to be a
violation by Tenant. Tenant shall further indemnify, defend and hold Landlord
harmless from and against any and all losses, liabilities, damages, costs and
expenses (including reasonable attorney fees) resulting from any claims that may
be made against Landlord by any real estate brokers or other persons claiming a
commission or similar compensation in connection with the proposed assignment or
sublease.
E. Effect of Default: In the event of Tenant's default,
Tenant hereby assigns all rents due from any assignment or subletting to
Landlord as security for performance of its obligations under this Lease and
Landlord may collect such rents as Tenant's attorney-in-fact, except that Tenant
may collect and retain such rents unless a default occurs as described in
Paragraph 22 above. The termination of this Lease due to Tenant's default shall
not automatically terminate any assignment or sublease then in existence. At the
election of Landlord, the assignee or subtenant shall attorn to Landlord and
Landlord shall undertake the obligations of the Tenant under the sublease or
assignment; provided the Landlord shall not be liable for prepaid rent, security
deposits or other defaults of the Tenant to the subtenant or assignee.
30. CONDEMNATION: If any part of the Premises, Other Space leased by
Tenant from Landlord, or the Project shall be taken for any public or
quasi-public use, under any statute or by right of eminent domain or private
purchase in lieu thereof, and a part thereof remains which is susceptible of
occupation hereunder, this Lease shall as to the part so taken, terminate as of
the date title shall vest in the condemnor or purchaser, and the rent payable
hereunder shall be adjusted so that Tenant shall be required to pay for the
remainder of the Lease Term only such portion of such rent as the value of the
part of the Premises remaining after such taking bears to the value of the
entire Premises prior to such taking; but in such event Tenant shall have the
option to terminate this Lease and, at Tenant's election, any Other Lease as of
the date when title to the part so taken vests in the condemnor or purchaser if
the taking or condemnation of the Premises, Other Space or Project is such that
the remaining space or Project unaffected by the condemnation or taking is not
reasonably suitable for Tenant's continued use or the conduct of Tenant's
business. If a part or all of the Premises be taken, all compensation awarded
upon such
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taking shall go to the Landlord and the Tenant shall have no claim thereto;
provided, however, that nothing contained herein shall be deemed to waive or
release Tenant's interest in any award for (i) loss of or damage to Tenant's
trade fixtures, Alterations, or personal property; (ii) interruption of Tenant's
business; (iii) Tenant's loss of goodwill; (iv) Tenant's moving cost; (v)
Tenant's interest in any Interior Improvements; (vi) or any separate award made
to Tenant for whatever purpose. In the event that this Lease is not terminated
by reason of the condemnation, Landlord at its expense shall repair any damage
to the Premises caused by such condemnation. Tenant hereby waives the provisions
of California Code of Civil Procedures Section 1265.130 to the extent
inconsistent with the provisions of this Lease.
31. EFFECTS OF CONVEYANCE: The term "Landlord" as used in this Lease,
means only the owner for the time being of the Premises, so that, in the event
of any sale of the Premises, the Landlord shall be and hereby is entirely freed
and relieved of all covenants and obligations of the Landlord hereunder accruing
after the date of the conveyance. Notwithstanding the foregoing, Landlord shall
not be relieved of its obligations under this Lease, unless and until Landlord
transfers the cash security deposit or original letter of credit to its
successor and the successor assumes in writing the obligations of Landlord
accruing on and after the effective date of the transfer. Furthermore, Landlord
shall not be relieved of its obligations hereunder accruing after the date of
the transfer unless the assignee or successor in question has the requisite net
worth to perform the obligations of Landlord hereunder, and Landlord furnishes
reasonable evidence thereof to Tenant.
32. SUBORDINATION:
A. Subordination to Future Obligations: If Landlord notifies
Tenant in writing, this Lease shall be subordinate to any ground Lease, deed of
trust, or other hypothecation for security now or hereafter placed upon the real
property of 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. Tenant agrees to promptly execute any reasonable documents which may be
required to effectuate such subordination. Notwithstanding such subordination,
Tenant's right to quiet possession of the Premises and other rights shall not be
disturbed if Tenant is not in default and so long as Tenant shall pay the rent
and observe and perform all of the provisions of this Lease. Notwithstanding
anything to the contrary in the Lease, subordination of Tenant's leasehold
interest to a mortgage, deed of trust, ground lease or instrument of security,
and Tenant's attornment to any party is conditioned upon (i) Tenant's concurrent
receipt from the lender or ground lessor in question of an express written
agreement in form reasonably satisfactory to Tenant providing for recognition of
all of the terms and conditions of this Lease and providing for continuation of
this Lease upon foreclosure of the deed of trust, mortgage or security interest
or termination of the ground lease; and (ii) the written agreement by such
successor to perform all of the obligations to be performed by Landlord under
the Lease on and after the date of the foreclosure or termination.
B. Existing Obligations: Landlord represents and warrants
that the Project is not encumbered by a mortgage, deed of trust or ground lease
as of the date of both parties' execution of this Lease, except for a certain
loan in favor of Union Bank ("Union"). As a
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condition precedent to Tenant's obligations under this lease or any Other Lease,
Landlord shall furnish to Tenant within fourteen (14) days of the date of both
parties' execution of this Lease with a written agreement in form satisfactory
to Tenant providing for: (i) recognition by Union of all of the terms and
conditions of this Lease and any Other Lease; and (ii) continuation of this
Lease and any Other Lease upon foreclosure of Union's security interest in the
Project.
33. WAIVER: The waiver by Landlord or Tenant of any breach of any term,
covenant or condition, herein contained shall not be deemed to be a waiver of
such term, covenant or condition or any subsequent breach of the same or any
other term, covenant or condition herein contained. The subsequent acceptance of
rent hereunder by Landlord shall not be deemed to be a waiver of any preceding
breach by Tenant of any term, covenant or condition of this Lease, other than
the failure of Tenant to pay the particular rental so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
rent.
34. HOLDING OVER: Tenant shall have the right to hold ever under the
terms of this Lease for a period of up to eighteen (18) months by providing
Landlord written notice ("Holdover Notice") at least one hundred twenty (120)
days prior to the expiration of the Lease Term or extension thereof. Included in
the Notice shall be Tenant's determination of the holdover term required up to
eighteen (18) months. Rent during this period shall be at fair market rent as
defined in paragraph 38 below. Any holding over beyond the period elected in the
Notice, or after the Lease Term expires if no such Holdover Notice is given,
shall be construed to be a holdover tenancy and Tenant shall pay rent to
Landlord at a rate equal to one hundred twenty-five percent (125%) (prorated on
a daily basis) of the fair market rent as determined in accordance with
paragraph 38 for such period and shall otherwise be on the terms and conditions
herein specified. Furthermore, 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. In establishing "fair market
rent" for purposes hereof, the parties (and the appraisers, if applicable) shall
take into account that Landlord shall not incur brokerage commissions, vacancy
costs, and costs for the installation of new interior improvements (including
recarpeting and repaving).
35. 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 the parties
hereto; and all of the parties hereto shall be jointly and severally liable
hereunder.
36. ESTOPPEL CERTIFICATES: Each party shall at any time during the Lease
Term, upon not less than ten (10) business days prior written notice from the
other, execute and deliver to the requesting party 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 date to which the
rent and other charges are paid in advance, if any, and acknowledging that there
are not, to the party's knowledge, any uncured defaults on the part of the other
party 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 or a purchaser of Tenant's assets or leasehold
interest. Landlord's or Tenant's failure to deliver such statement within such
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time shall be conclusive upon the party not providing the statement that: (a)
this Lease is in full force and effect, without modification except as may be
represented by the requesting party; (b) there are not uncured defaults in the
requesting party's performance.
37. OPTION TO EXTEND: Tenant shall have the option and right to extend
the term of this Lease for three (3) separate additional and consecutive option
periods of five (5) years each (each such period being referred to as the
"Renewal Term") commencing with rent at ninety percent (90%) of the fair market
monthly rent only under the following conditions precedent: (i) that no material
event of default exists on the date of Tenant's exercise (i.e., Tenant has
failed to remedy any material breach in its performance within the time periods
set forth in paragraph 22); and (ii) Tenant has delivered written notice to
Landlord not less than one hundred and twenty (120) days prior to the expiration
of the then existing term of the Lease of Tenant's intention to extend the term
of the Lease. Tenant may exercise its option as to the premises whether or not
Tenant elects to exercise Tenant's option with respect to any Other Space. The
parties acknowledge that they have agreed to so set the rent at ninety percent
(90%) of the then fair market monthly rent for the premises in recognition of
and in consideration for, the fact that Landlord shall not incur brokerage
commissions, vacancy costs, and costs for the installation of new tenant
improvements (including recarpeting and repainting), along with other savings,
if Tenant elects to extend the term of this Lease, and that such discount of the
full fair market rent is a reasonable estimate of the savings to be so realized
by Landlord.
38. APPRAISAL: If the parties are unable to agree upon the fair market
monthly rent for the Premises for the Renewal Term in question at least ninety
(90) days prior to the commencement of such Renewal Term, then the fair market
monthly rent shall be determined by appraisal conducted pursuant to this
paragraph 38. In the event it becomes necessary to determine by appraisal the
fair market rent for the Premises for the purpose of establishing the monthly
rent pursuant to paragraph 38 or for purposes of any other provision of this
Lease, then such fair market monthly rent shall be determined by three (3) real
estate appraisers, all of whom shall be members of the American Institute of
Real Estate Appraisers with not less than five (5) years experience appraising
commercial and industrial real property located in Santa ▇▇▇▇▇ County,
California, in accordance with the following procedures:
A. The party demanding an appraisal (the "Notifying Party")
shall notify the other party (the "Non-Notifying Party") thereof by delivering a
written demand for appraisal, which demand, to be effective, must give the name,
address and qualifications of an appraiser selected by the Notifying Party.
Within ten (10) days of receipt of said demand, the Non-Notifying Party shall
select its appraiser and notify the Notifying Party, in writing, of the name,
address and qualifications of an appraiser selected by it. Failure by the
Non-Notifying Party to select a qualified appraiser within said ten (10) day
period shall be deemed a waiver of its right to select a second appraiser on its
own behalf and the Notifying Party shall select a second appraiser on behalf of
the Non-Notifying Party within five (5) days after the expiration of said ten
(10) day period. Within ten (10) days from the date the second appraiser shall
have been appointed, the two (2) appraisers so selected shall appoint a third
appraiser. In the event the two appraisers fail to select a third qualified
appraiser, the third appraiser shall be appointed by the then Presiding
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Judge of the Superior Court of the State of California for the County of Santa
▇▇▇▇▇ or the head of the most local chapter of the American Institute of Real
Estate Appraisers.
B. The three (3) appraisers so selected shall meet in Santa
▇▇▇▇▇ County, California, not later than twenty (20) days following the
selection of the third appraiser. At said meeting the appraisers so selected
shall attempt to determine the fair market monthly rent of the Premises for the
Renewal Term in question.
C. If the appraisers so selected are unable to complete their
determinations in one meeting, they may continue to consult at such times as
they deem necessary for a fifteen (15) day period from the date of the first
meeting, in an attempt to have at least two (2) of them agree. If at the initial
meeting or at any time during said fifteen (15) day period two (2) or more of
the appraisers so selected agree on the fair market rent for the Premises, such
agreement shall be determinative and binding on the parties hereto, and the
agreeing appraisers shall, in simple letter form executed by the agreeing
appraisers, forthwith notify both Landlord and Tenant of the amount set by such
agreement.
D. In the event two (2) or more appraisers do not so agree
within said fifteen (15) day period, then each appraiser shall, within five (5)
days after the expiration of said fifteen (15) day period, submit his or her
independent appraisal in simple letter form to Landlord and Tenant stating his
or her determination of the fair market rent for the Premises for the Renewal
Term in question. The parties shall then determine the fair market rent for the
Premises by determining the average of the fair market rent set by each of the
appraisers; provided, however, that (i) if the lowest appraisal is less than
eighty-five percent (85%) of the middle appraisal, then such lowest appraisal
shall be disregarded; and/or (ii) if the highest appraisal is greater than one
hundred fifteen percent (115%) of the middle appraisal, then such highest
appraisal shall be disregarded. If any appraisal is so disregarded, then the
average shall be determined by computing the average set by the other appraisals
that have not been disregarded.
E. Each party shall bear the fees and expenses of the
appraiser selected by or for it, and the fees and expenses of the third
appraiser (or the joint appraiser if one joint appraiser is used) shall be borne
fifty percent (50%) by Landlord and fifty percent (50%) by Tenant.
F. Any determination of fair market rent of the Premises made
pursuant to any provision of this Lease, whether by agreement of the parties or
by appraisal pursuant to this paragraph, shall be based upon the following: (i)
that the Premises would be leased for five (5) years on the same terms as
contained in this Lease, particularly with regard to Tenant's obligation to pay
additional rent and its obligation to repair and maintain; (ii) the condition,
size, age and location of the Premises; and (iii) the fair market rent for the
Premises shall not include any part of the rental value added to the Premises as
a consequence of construction of Alterations or improvements made by Tenant or
at Tenant's expense.
G. Tenant shall have the right to rescind its exercise of the
option if it does not approve in writing the fair market rent determined by
appraisal, but in such case, Tenant shall pay the costs of the appraisals. In
the event Tenant rescinds its exercise of the option, the Lease shall be
automatically extended for a period of one hundred twenty (120) days from the
date of
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Tenant's written rescission at the rent then payable under this Lease until the
expiration of the Lease Term or Renewal Term in question, and thereafter at the
rate established by appraisal until the end of the one hundred twenty (120) day
period.
39. COMMON AREA COSTS AND PARKING:
A. Initial Occupancy: Landlord shall, subject to
reimbursement by Tenant as provided in Section 39(E) below, maintain in good
condition and repair all areas outside of the Building, except for any
landscaping located immediately adjacent to the Building, until Tenant occupies
all of the buildings in the Project.
B. Subdivision: Promptly following Landlord and Tenant's
execution of this Lease, Landlord shall commence and use its best efforts to
effectuate a subdivision of the Project into three legal parcels complying with
the Subdivision Map Act and all Laws. Landlord shall obtain Tenant's advance
written approval of the boundaries of the proposed parcels and all material
aspects of the subdivision. Landlord shall pay all costs arising out of or in
connection with the subdivision. Furthermore, if Landlord becomes legally
required to subdivide the Project at any time during the Lease Term (for
example, if such subdivision is required by Law if the Project becomes a
multi-tenant Project), Landlord shall at its sole cost effectuate such
subdivision with Tenant's advance approval as indicated above.
C. Common Area Costs: The parties acknowledge that if at any
time during the Lease Term Tenant no longer leases all of the buildings in the
Project, there will need to be an adjustment in the maintenance responsibilities
of the parties and a provision for the payment of costs pertaining to the
maintenance of those areas within the Project that are not designed for the
exclusive use of Tenant or other tenants such as the parking areas, sidewalks,
and landscaped areas (hereinafter "Common Area").
D. Maintenance: If Tenant ceases to occupy all of the
buildings of the Project, Landlord shall be required to maintain the Common Area
and every part thereof in good and sanitary order, condition and repair.
Further, Landlord shall furnish utilities to such Common Areas.
E. Payment of Common Area Costs: Tenant shall pay its
"Proportionate Share" of "Common Area Costs" as defined herein, within thirty
(30) days of written invoice from Landlord documenting such Common Area Costs.
Landlord shall not ▇▇▇▇ Tenant for such Common Area Costs more frequently than
once every three (3) months. For purposes hereof, the term "Common Area Costs"
shall mean the following:
(1) Service charges incurred by Landlord in furnishing
water and electricity to the Common Area; and
(2) The reasonable costs incurred by Landlord for routine
maintenance and repair of the Common Area, such as the reasonable costs paid by
Landlord to third party contractors for the routine maintenance of the
sidewalks, parking areas, driveways and landscaping.
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F. Proportionate Share: Tenant's "Proportionate Share" of
Common Area Costs shall be computed by multiplying the total Common Area Costs
by a fraction, the numerator of which is the square footage of the Building and
the denominator of which is the total square footage of all of the buildings in
the Project.
G. Proration: It is understood and agreed that Tenant's
obligation to share in Common Area Costs shall be adjusted to reflect the
commencement and termination dates of the Lease Term.
H. Parking: In the event Tenant does not occupy all of the
Project, Tenant shall be entitled to the non-exclusive use of a minimum number
of number of parking spaces equal to Tenant's Proportionate Share of all parking
spaces in the Project. Landlord agrees that in no event shall Landlord (i)
allocate exclusive parking spaces to any other tenant or occupant; (ii)
oversubscribe parking; or (iii) allocate to any other tenant or occupant more
than its proportionate share (based on the square footage occupied) of available
Project parking.
40. QUIET ENJOYMENT: Tenant shall quietly have and hold the Premises for
the term and any extensions thereof subject to the provisions of this Lease
without interference by Landlord or any party claiming by or through Landlord.
41. BROKERS/PREVIOUS DEALINGS: Landlord shall pay any commission due to
any broker, agent or finder claiming a fee or commission in connection with this
transaction without reimbursement by Tenant. Landlord shall indemnify, defend,
and hold Tenant harmless against any claim, cost, expense, liability, damage or
cause of action (including, without limitation, attorneys' fees and costs) in
connection with any claim or assertion by Coldwell Banker Commercial or any
party claiming through Coldwell Banker in connection with this Lease or any
Other Lease between Landlord or Tenant.
42. AUTHORITY OF PARTIES:
A. Authority of Tenant: This Lease and any Other Lease is
conditioned upon approval and ratification of this Lease and the Other Leases by
Tenant's Board of Directors pursuant to a duly adopted resolution of such Board
of Directors. If such approval pursuant to such resolution is not obtained on or
before May 25, 1990, this Lease and any Other Lease shall be of no force or
effect.
B. Landlord's Authority: The individual(s) executing this
Lease on Landlord's behalf represent and warrant that they have the requisite
authority to sign this Lease and that this Lease is binding on Landlord.
43. MISCELLANEOUS PROVISIONS:
A. Rights and Remedies: All rights and remedies hereunder are
cumulative and not alternatives to the extent permitted by law and are in
addition to all other rights and remedies in law and in equity.
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B. Severability: If any term or provision of this Lease is
held unenforceable or invalid by a court of competent jurisdiction, the
remainder of the Lease shall not be invalidated thereby but shall be enforceable
in accordance with its terms, omitting the invalid or unenforceable term.
C. Choice of Law: This Lease shall be governed by and construed
in accordance with California law.
D. Interest: All sums due hereunder, including rent and
additional rent, if not paid within ten (10) days after written notice of the
delinquency, shall bear interest at the prime rate charged by Union Bank, main
San ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, plus two percent (2%) per annum from time to time or, if
lower, at the maximum rate permitted under California law accruing from the date
due until the date paid.
E. Time: Time is of the essence hereunder.
F. Headings: The headings or titles to the paragraphs of this
Lease are not a part of this Lease and shall have no effect upon the
construction or interpretation of any part thereof. This instrument contains all
of the agreements and conditions made between the parties hereto and may not be
modified orally or in any other manner than by an agreement in writing signed by
all of the parties hereto or their respective successors in interest.
G. Performance by Landlord: If Tenant defaults in its
performance of any obligation required under this Lease after expiration of any
applicable cure period, Landlord, in its sole discretion, may, without further
notice, perform such obligation, in which event Tenant shall pay Landlord as
additional rent all reasonable sums paid by Landlord in connection with such
substitute performance within ten (10) days following Landlord's written notice
for such payment.
H. Representations: Tenant acknowledges that, except as set
forth herein, neither Landlord or its affiliates or agents have made any
agreements, representations, warranties or promises with respect to the
Premises.
I. Rent: All monetary sums due from Tenant to Landlord under this
Lease shall be deemed to be rent.
J. Interference: If the Premises or any Other Space leased by
Tenant from Landlord should become unsuitable for Tenant's use as a consequence
of the presence of any Hazardous Material which does not result from Tenant's
use, storage or disposal of such material in violation of applicable Law or by
consequence of legal restrictions preventing Tenant's use of the Premises for
manufacturing and assembly ("Interfering Event"), which, in the case of the
foregoing Interfering Events persists for thirty (30) continuous business days,
then Tenant shall be entitled to an abatement of rent to the extent of the
interference with Tenant's use of the Premises or Other Space occasioned thereby
from the date of the Interfering Event, and, if such interference cannot be
corrected or the damage resulting therefrom repaired so that the Premises or any
Other Space leased by Tenant from Landlord will be reasonably suitable for
Tenant's
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intended use within one hundred eighty (180) days following the occurrence of
the Interfering Event, then Tenant shall be entitled to terminate this Lease
and, at Tenant's election, any Other Lease by delivery of written notice to
Landlord at any time after occurrence of the Interfering Event.
K. Approvals: Whenever the Lease requires an approval,
consent, designation, determination or judgment by either Landlord or Tenant,
such approval, consent, designation, determination or judgment (including,
without limiting the generality of the foregoing, those required in connection
with assignment and subletting) shall not be unreasonably withheld or delayed
and in exercising any right or remedy hereunder, each party shall at all times
act reasonably and in good faith.
L. Reasonable Expenditures: Any expenditure by a party
permitted or required under the Lease, for which such party is entitled to
demand and does demand reimbursement from the other party, shall be limited to
the fair market value of the goods and services involved, shall be reasonably
incurred, and shall be substantiated by documentary evidence available for
inspection and review by the other party or its representative during normal
business hours.
M. Exhibits: All exhibits are incorporated herein by reference.
N. Light and View: Landlord shall not construct any structure
or improvement or do any other act that will impede Tenant's light, air or view.
O. Memorandum of Lease: At Tenant's option, a memorandum of
this Lease shall be recorded in a form acceptable to Tenant in the Official
Records of Santa ▇▇▇▇▇ County, California. Landlord agrees to execute such
memorandum.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease on the
date set forth below.
LANDLORD: TENANT:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, or his Successor Trustee PYRAMID TECHNOLOGY CORPORATION, a Delaware
Under Revocable Trust Agreement dated April 28, corporation
1989, as amended, FBO ▇▇▇ Sobtato:
By:
--------------------------------------
Its:
-------------------------------------
By:
----------------------------------------
Date:
-------------------------------------
Its:
----------------------------------------
Date:
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee Under Trust Agreement
Dated August 29, 1979
By:
----------------------------------------
Its
----------------------------------------
Date:
----------------------------------------
SOBRATO INTERESTS II,
California general partnership
By:
----------------------------------------
Its: Managing General Partner
Date:
----------------------------------------
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EXHIBIT B
CONSTRUCTION ADDENDUM TO LEASE
(101,552 Square Feet)
(Phase I)
(Rotunda Building 3)
THIS CONSTRUCTION ADDENDUM TO LEASE ("Addendum") is dated for reference
purposes only as May 6th, 1990 and is made by and between ▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
Under Trust Agreement dated August 29, 1979, as Amended, SOBRATO INTERESTS II, a
California general partnership, and ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, or his Successors,
Trustee Under Revocable Trust Agreement dated April 28, 1989, as Amended, FBO
▇▇▇ ▇▇▇▇▇▇▇ (collectively, "Landlord"), and PYRAMID TECHNOLOGY CORPORATION, a
Delaware corporation ("Tenant"), and is made a part of that certain Lease
Agreement ("Lease") of even date herewith between Landlord and Tenant affecting
certain real property to be improved with a building of approximately 101,552
square feet and land and improvements associated therewith, in the City of San
▇▇▇▇, County of Santa ▇▇▇▇▇, State of California. The following provisions are
hereby added to the Lease:
1. DEFINITIONS: Throughout this Addendum, the following terms shall have
the following meanings:
A. Shell Architect: The term "Shell Architect" shall mean ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ and Associates.
B. Building: The term "Building" shall mean the Building Shell
and the Interior Improvements.
C. Building Plans: The term "Building Plans" shall mean the
Final Building Shell Plans and Final Interior Improvement Plans, as the same may
be modified from time to time by change orders issued and approved by the
parties in accordance with this Addendum.
D. Building Shell: The term "Building Shell" shall mean (i) a
one story tilt-up building containing approximately one hundred one thousand
five hundred fifty-two (101,552) square feet of floor space (measured from the
exterior of the exterior walls, doors and windows and including one-half of the
covered loading docks) which shall be constructed by Landlord for Tenant in the
location and configuration shown on the Final Building Shell Plans; (ii) all
parking areas, driveways, sidewalks, utility installations, exterior lighting,
decorative water facilities, irrigation systems, landscaping, and other outside
area improvements specified on the Building Plans; (iii) all other on-site and
off-site improvements required by any governmental agency as a condition of its
issuance of any approval for construction of the Building Shell or the Interior
Improvements; and (iv) those items, changes and improvements set forth in
Schedule 1 attached hereto and incorporated herein by this reference.
38
E. Business Days: The term "Business Days" shall mean Monday
through Friday, excluding legal holidays.
F. Final Building Shell Plans: The term "Final Building Shell
Plans" shall mean those certain plans, specifications, and working drawings for
the Building Shell for Rotunda Building 3 prepared by Shell Architect dated June
1, 1989 (as revised November 6, 1989), and approved by the parties, as
supplemented and modified by: (i) those certain items, changes, and improvements
described in Schedule 1; and (ii) change orders approved by the parties pursuant
to the terms hereof.
G. Final Interior Improvement Plans: The term "Final Interior
Improvement Plans" shall mean those plans, specifications, and working drawings
for the Interior Improvements prepared and approved by the parties in accordance
with this Addendum.
H. Interior Improvements: The term "Interior Improvements"
shall mean all partitions, windows, walls, wall coverings, HVAC equipment,
lighting, ceilings, utility fixtures, and other improvements and fixtures,
installed in the Building Shell to the extent that such improvements and
fixtures are specified on the Final Interior Improvement Plans. The Interior
Improvements shall not include the cost of Tenant's environmental ▇▇▇▇▇▇▇▇.
I. Interior Improvement Allowance: The term "Interior
Improvement Allowance" shall mean Three Million Seven Hundred Fifty-Seven
Thousand Four Hundred Twenty-Four Dollars ($3,757,424.00), or Thirty-Seven
Dollars ($37.00) per square foot, which Landlord must contribute for
construction of Interior Improvements.
J. Additional Interior Improvement Allowance: The term
"Additional Interior Improvement Allowance" shall mean that product obtained by
multiplying Seven Dollars ($7.00) by the aggregate square footage of the other
buildings leased by Tenant from Landlord in the Project. It is currently
anticipated that such aggregate square footage shall be One Hundred Seventy-Nine
Thousand Two Hundred Thirty-Two (179,232) (or Eighty-Nine Thousand Six Hundred
Sixteen (89,616) square feet per building) so that the anticipated Additional
Interior Improvement Allowance shall be One Million Two Hundred Fifty-Four
Thousand Six Hundred Twenty-Four Dollars ($1,254,624.00). At Tenant's election,
Landlord shall contribute all or any portion of the Additional Interior
Improvement Allowance for the payment of Interior Improvement Costs. If Landlord
contributes all or any portion of such Additional Interior Improvement
Allowance, this will deplete the available interior improvement allowance for
such other buildings.
K. Interior Improvement Architect: The term "Interior
Improvement Architect" shall mean the architect selected by Tenant pursuant to
paragraph 2.B hereof. Tenant currently anticipates that the Interior Improvement
Architect shall be CAS Architects, and Landlord hereby approves such Architect.
L. Interior Improvement Costs: The term "Interior Improvement
Costs" shall mean the lesser of (a) the Interior Improvement Cost Estimate, or
(b) the sum of the following: (i) payments to third party contractors,
subcontractors and materialman for the construction of
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the Interior Improvements; (ii) reasonable fees paid to architects, engineers
and other construction professionals (other than employees of Landlord or of
entities in any way affiliated with Landlord) for services required in
connection with the design and construction of the Interior Improvements; (iii)
fees paid by Tenant to architects, space planners, designers, inspectors and
other construction professionals; (iv) utility connection charges incurred by
Tenant; (V) permit and license fees paid by Tenant for use and occupancy permits
required for Tenant to occupy the Premises; (vi) the amounts paid to
governmental authorities or agencies for inspections and issuance of building
permits and approvals for the Interior Improvements (but not that portion of
such amounts applicable to, or based on the value of, the Building Shell); and
(vii) a development fee (in lieu of any general conditions, overhead, profit or
other fee) equal to seven percent (7%) of Interior Improvement Costs (excluding
any such cost that Tenant elects to pay directly and as to hard costs, any item
for which Tenant pays directly and Landlord does not handle the construction
thereof). In no event shall Interior Improvement Costs include (herein "Excluded
Costs"): (i) charges and expenses for changes to the Building Plans which have
not been approved by Tenant in writing; (ii) wages, labor and overhead for
overtime and premium tine unless approved by Tenant in writing in Tenant's
discretion; (iii) additional costs and expenses incurred by Landlord on account
of any contractor's or subcontractor's default or construction defects; (iv)
interest and fees for construction financing; (v) off-site management or other
general overhead costs incurred by Landlord; (vi) bond premiums; (vii) costs for
which Landlord has a right of reimbursement from others (including, without
limitation, insurers and warrantors); (viii) the cost of bringing the Building
Shell and surrounding lot into compliance with applicable building codes,
environmental laws, or other statutes, laws, rules and regulations; (ix) costs
of management, design and all other services provided by employees or affiliates
of Landlord and the cost of any administration, profit and overhead for Landlord
or any of its employees or affiliates in excess of the developer's fee mentioned
above; (x) costs incurred as a result of delays caused by the acts or omissions
of Landlord or its employees, agents, contractors or subcontractors; (xi) any
expense or cost which is not required to be incurred in order to complete
construction of the Interior Improvements; (xii) any costs associated with the
design or construction of the Building Shell; (xiii) any cost associated with a
casualty or Act of God. All of the foregoing "Excluded Costs" shall be the sole
obligation of Landlord.
M. Interior Improvement Cost Estimate: The term "Interior
Improvement Cost Estimate" shall mean the total estimated cost of constructing
the Interior Improvements prepared and approved by Landlord and Tenant in
accordance with this Addendum, as modified by change orders issued in accordance
with this Addendum. The Interior Improvement Cost Estimate may contain a
contingency reserve of three percent (3%) of the Interior Improvement Costs. If
such contingency reserve is not used by Landlord to pay costs incurred by
Landlord due to unforeseen conditions pertaining to the construction of the
Interior Improvements, such contingency reserve shall not be a part of Interior
Improvement Costs.
N. Preliminary Interior Improvement Plans: The term
"Preliminary Interior Improvement Plans" shall mean those plans and
specifications for the Interior Improvements prepared and approved by the
parties in accordance with this Addendum.
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0. Substantial Completion: The term "Substantial Completion"
shall mean that (i) all necessary governmental approvals for occupancy of the
Building have been obtained (including, if applicable, a Certificate of
Occupancy); (ii) the Premises fully meet the Building Plans approved by Tenant;
(iii) the Premises are in a "broom clean" finish condition; (iv) all utilities
be supplied to the Premises are hooked up and available for use by Tenant; (v)
Tenant has had thirty (30) days to install its trade fixtures in the Building
pursuant to paragraph 6 below; (vi) the Shell Architect and the Interior
Improvement Architect have certified that the Premises have been completed in
accordance with the Building Plans; (vii) all incomplete or defective
construction which interferes with Tenant's use of the Premises has been
remedied and repaired, subject only to the completion of minor "punch list"
items not interfering with Tenant's use of the Premises; and (viii) Landlord has
offered to deliver possession of the Premises to Tenant.
2. PLANS:
A. Preliminary Plans For Interior Improvements: On or before
July 25, 1990, Tenant shall attempt to cause to be prepared and delivered to
Landlord a preliminary space plan for the Interior Improvements for Landlord's
approval, which approval shall not be unreasonably withheld. If Landlord fails
to approve or disapprove the proposed space plan within seven (7) days following
delivery of the proposed plan to Landlord, the space plan proposed by Tenant
shall be deemed to be the approved Preliminary Interior Improvement Plans for
the purposes of this Addendum. If Landlord disapproves the proposed space plan
in any respect, it shall deliver to Tenant its written proposal for required
changes and the parties shall negotiate in good faith to reach agreement on the
Preliminary Interior Improvement Plans. At Tenant's request, Landlord shall
confer with Tenant to obtain a preliminary cost estimate based upon the
Preliminary Interior Improvement Plans. Tenant shall have no obligation to
submit a preliminary space plan to Landlord, and if Tenant so elects, Tenant may
eliminate such intermediate procedure and proceed with the preparation of final
plans and specifications and working drawings in accordance with the procedures
set forth below.
B. Final Interior Improvement Plans and Cost Estimate: On the
later of (i) that date that is fourteen (14) days after approval by both parties
of the Preliminary Interior Improvement Plans if Tenant elects to submit a
preliminary space plan to Landlord, or (ii) August 15, 1990, Tenant shall cause
the Interior Improvement Architect selected by Tenant and approved by Landlord
to prepare and deliver to Landlord proposed final plans, specifications and
working drawings for the Interior Improvements. Landlord shall submit any
reasonable objections to the proposed final plans, specifications and working
drawings to Tenant in writing within seven (7) days after Landlord's receipt of
same and shall submit a proposed Interior Improvement Cost Estimate for the
Interior Improvements shown on the proposed final plans, specifications and
working drawings, as amended by the changes reasonably made by Landlord. If
Tenant disapproves the cost estimate or the proposed final plans with Landlord's
modifications in any respect, then within seven (7) days following receipt of
the proposed final plans and cost estimate, Tenant may deliver to Landlord its
written proposal for the changes necessary, in Tenant's opinion, to satisfy
Tenant's objections or to reduce costs. If Tenant fails to approve or disapprove
the final plans within the allowed time period, the final plans proposed by
Tenant, with Landlord's reasonable modifications, shall be deemed to be the
approved Final Interior
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Improvement Plans for the purpose of this Addendum. If Tenant fails to approve
or disapprove the proposed cost estimate within the allowed time period, the
cost estimate proposed by Landlord shall be deemed to be the approved Interior
Improvement Cost Estimate for the purposes of this Addendum. If Tenant proposes
changes to the proposed final plans for the Interior Improvements, Landlord
shall not unreasonably withhold its approval of such change and the parties
shall confer and negotiate in good faith to reach agreement on specific required
modifications to the proposed final plans and costs estimate as a consequence of
such change. If Tenant believes that the cost estimate is incorrect, it may
require that all or any portion of the work be submitted for competitive bids.
The final plans, modified for changes proposed by Tenant and approved by
Landlord pursuant to this paragraph, shall be the approved Final Interior
Improvement Plans and cost estimate approved by Tenant shall be the Interior
Improvement Cost Estimate for the purposes of this Addendum.
C. Application For Approvals: As soon as the Final Interior
Improvement Plans are approved by Landlord and Tenant, Landlord shall submit the
approved Building Plans to all appropriate governmental agencies for their
approval and issuance of all required permits. Landlord shall use its best
efforts to obtain all governmental approvals and permits necessary for
construction of the Premises in accordance with the Building Plans on or before
October 15, 1990. Landlord and Tenant shall initial the Building Plans
immediately after all governmental approvals and permits have been obtained and
shall append the approved Building Plans and Interior Improvement Cost Estimate
to this Construction Addendum as Schedule 2.
D. Termination: If all permits required for construction of
the Premises in accordance with the Building Plans have not been issued on or
before January 15, 1991, then Tenant, in its discretion, may elect to terminate
the Lease and, at Tenant's election, any Other Lease between Landlord and
Tenant.
E. Changes to Building Plans: After the Building Plans have
been approved by Landlord and Tenant as provided above, neither party shall have
the right to require extra work or make any modifications with respect to the
construction of the Premises, without the prior written consent of the other
party as to (i) the change, (ii) any estimated delay in the scheduled completion
date of the Premises caused by the change, and (iii) any modification to the
Interior Improvement Cost Estimate as a consequence of the change. Landlord
shall not unreasonably withhold or delay its consent to changes or extra work
proposed by Tenant with respect to the Interior Improvements and, if the change
will not materially increase the cost incurred by Landlord for construction of
the Building Shell nor materially modify the exterior appearance of the Building
Shell, then Landlord also shall not unreasonably withhold its consent to change
in the Building Shell. Tenant shall not unreasonably withhold or delay its
consent to changes or extra work proposed by Landlord with respect to the
Building Shell which does not cause any modification of the Final Interior
Improvement Plans, does not increase Interior Improvement Costs, does not delay
construction and does not adversely impact the appearance of the Premise or
Tenant's proposed use. Tenant may withhold its consent, in its discretion, to
any change in the Final Interior Improvement Plans or Interior Improvement Cost
Estimate.
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3. CONTRACTORS:
A. General Contractor: Landlord shall serve as the general
contractor for construction of the Interior Improvements.
B. Subcontracts: Landlord shall cause each subcontract to be
competitively bid by three contractors for construction of the Interior
Improvements. The contractors to whom such work shall be competitively bid shall
be selected by Landlord and approved by Tenant, which approval shall not be
unreasonably withheld. All bids shall be opened simultaneously. All work shall
be awarded based upon the lowest bid submitted unless agreed in writing by
Tenant. Notwithstanding the foregoing, Tenant in its discretion may elect to use
Therma as the mechanical subcontractor and Viking Electric ("Viking") as the
electrical subcontractor in lieu of awarding such subcontracts on the basis of
competitive bids, or Tenant may require that Therma and Viking be one of the
contractors to whom such work shall be competitively bid. Notwithstanding
Tenant's right to approve the subcontractors, each subcontractor is a contractor
only of Landlord and Tenant shall have no liability to the subcontractor under
any subcontract or otherwise with respect to the Building.
C. Construction Manager: Tenant shall have the right to elect
one of the following alternatives in Tenant's discretion: (i) to increase the
development fee set forth in subparagraph 1.L from seven percent (7%) to eight
percent (8%) in lieu of employing a construction manager; or (ii) employ a
construction manager to assist Tenant in planning its Interior Improvements or
to act in a supervisory role to evaluate Tenant's plans and requirements. In the
event Tenant elects to employ a construction manager Landlord shall submit to
Tenant a list of three construction managers to be employed by Tenant and Tenant
shall enter into a contract with one of such construction managers on terms
acceptable to Tenant. The fee charged by such construction manager shall at
Tenant's election be an "Interior Improvement Cost," and Landlord shall pay any
such fee before it becomes due under the terms of Tenant's contract. Landlord
shall not charge any development fee as set forth in subparagraph l.L on any
fees or charges by such construction manager. If Landlord fails to pay such
costs, Tenant, in addition to its other remedies, may (but shall not be
obligated to) advance such costs on Landlord's behalf, and Tenant shall be
entitled to recover such costs from Landlord together with interest at the rate
specified under paragraph 43.D of the Lease from the date of the expenditure
until repaid.
4. COMMENCEMENT AND COMPLETION OF BUILDING:
A. Landlord's Obligation To Construct The Building: As soon
as the Building Plans have been approved, all necessary governmental approvals
and permits have been obtained, and the bids have been accepted, Landlord shall
cause construction of the Building Shell and the Interior Improvements to be
commenced and diligently prosecuted to completion, so that the Premises will be
Substantially Complete as soon as possible. Landlord shall use its best efforts
to give Tenant partial occupancy of the portion of the Premises selected by
Tenant at the earliest possible date, if Tenant so chooses and if such partial
occupancy is legally
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permissible and such partial occupancy shall not unreasonably interfere with
Landlord's completion of construction.
B. Schedule of Critical Dates: Set forth in this paragraph is
a schedule of certain critical dates relating to Landlord's and Tenant's
respective obligations regarding the construction of the Building Shell and the
Interior Improvements (the "Schedule of Performance"). Landlord and Tenant shall
each be obligated to use reasonable efforts to perform their respective
obligations within the time periods set forth in this Schedule of Performance
and elsewhere in this Construction Addendum. The Schedule of Performance is as
follows:
DATE
(Days After
Action Another Event)
------------------------------------------------------------ ---------------------
1. Tenant Submits Proposed Preliminary Interior Plans
(if Tenant so Elects) July 25, 1990
2. Landlord Approves or Modifies Preliminary Interior 7 Days after Item 1
Plans
3. Parties Finally Approve Preliminary Interior
Improvement Plans 14 days after Item 1
4. Tenant Submits Proposed Final Interior Plans Later of
(i) August 15, 1990;
or (ii) 14 days after
item 3
5. Landlord Submits Reasonable Objections to Proposed
Final Interior Plans and Submits Proposed Interior
Improvement Cost Estimate Based On Bids 7 Days
after Item 4
6. Tenant Modifies Plans To Reduce Interior
Improvement Cost Estimate, or to Resolve Tenant's 7 Days
Objections if required or Tenant so elects after Item 5
7. Landlord Rebids Interior Improvement Cost, if
appropriate, And Submits Revised Interior
Improvement Cost Estimate To Tenant 2 days after Item 6
8. Parties Finally Approve Final Interior Improvement
Plans August 31, 1990
9. Issuance Of All Construction Permits For
Landlord's Work (including shell and interior October 15, 1990
improvements)
-7-
44
10. Last Date For Issuance Of All Construction Permits
(or Tenant may terminate this Lease in accordance
with this Addendum) DATE (Days After Another Event) January 15, 1991
11. Scheduled Substantial Completion Date December 15, 1990
12. Last Date For Delivery of Premises Ready For
Occupancy (or Tenant may terminate as set forth in
the Addendum) July 15, 1991
C. Delivery of Possession: When the Premises are
substantially Complete, Landlord shall deliver possession of the Premises to
Tenant. However, Tenant shall have no obligation to accept possession of the
Premises or commence payment of rent until the Commencement Date, as defined in
paragraph 7 of the Lease.
D. Failure to Deliver: Landlord hereby acknowledges that its
failure to deliver to Tenant Premises that are Substantially Complete on or
before December 15, 1990 will cause Tenant to incur costs not contemplated by
the Lease, the exact amount of which will be extremely difficult to ascertain.
Accordingly, if Landlord fails to deliver to Tenant Premises that are
Substantially Complete on or before said date, in Tenant's discretion, Tenant
shall be entitled to apply the sum designated in paragraph 7 of the Lease as the
"Free Rent Amount," to its rental obligations under the Lease. Further, if
Tenant elects to terminate this Lease as a result of Landlord's failure to
deliver possession of the Premises as provided for in the Lease or this
Addendum, Tenant shall be entitled to receive any accrued Free Rent Amount as of
the date of Tenant's termination as liquidated damages for each day delivery of
the Building is delayed beyond December 15, 1990. The parties hereby agree that
such amount represents a fair and reasonable estimate of the cost Tenant will
incur by reason of the late delivery of the Building. Acceptance by Tenant of
liquidated damages for delay shall not constitute a waiver of Landlord's breach
of any provision of the Lease.
5. PAYMENT OF CONSTRUCTION COSTS:
A. Tenant's Contribution To Interior Improvement Costs:
Tenant's obligation to pay the cost of constructing the Premises shall be
limited to the positive difference, if any, between the total Interior
Improvement Costs (not to exceed the Interior Improvement Cost Estimate approved
by Tenant in writing) and the Interior Improvement Allowance (or the sum of the
Interior Improvement Allowance and the portion of the Additional Interior
Improvement Allowance that Tenant elects to apply). The parties acknowledge that
Tenant shall have no obligation to pay any cost of constructing any portion of
the Premises in excess of such amount. If the Interior Improvement Cost Estimate
is more than the Interior Improvement Allowance (plus the portion of the
Additional Interior Improvement Allowance that Tenant elects to apply), Tenant
shall pay to Landlord a proportionate share of each progress payment due to the
subcontractors which bears the same relationship to the total amount of the
progress payment in question as the amount Tenant is obligated to contribute to
the payment of Interior Improvement
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45
Costs bears to the Interior Improvement Cost Estimate. Tenant shall pay Tenant's
share of any progress payment to Landlord within fifteen (15) days after receipt
of a statement and reasonable documentation of such costs from Landlord. If
Tenant pays any such excess Interior Improvement Costs, as soon as possible
after commencement of the Lease, Landlord and Tenant shall designate as Tenant's
property Interior Improvements having a cost approximately equal to the excess
paid by Tenant. Property designated as Tenant's property under the terms of this
paragraph may be removed from the Premises at any time by Tenant and Tenant
shall be entitled to all investment tax credit, depreciation, and other tax
attributes relating to such property. In determining which Interior Improvements
will be designated as Tenant's property, the parties shall confer in good faith
and shall give preference to those Interior Improvements which are most readily
removable from the Building and which shall have the greatest utility for Tenant
outside of the Building but which are not required for basic business operations
at the Building. At the expiration or sooner termination of the Lease, all
Interior Improvements not designated as Tenant's property under this paragraph
shall be surrendered to Landlord in accordance with the terms of the Lease.
B. Rights if Allowance Unused: If the Interior Improvement
Cost Estimate is less than Landlord's Interior Improvements Allowance, Tenant
shall be entitled to, at Tenant's election: (i) apply any unused allowance for
the payment of interior improvement costs for any other building leased by
Tenant from Landlord; or (ii) offset from its rental obligations under this
Lease the total amount of such unused Interior Improvement Allowance.
6. TENANT'S RIGHT TO ENTER: Tenant, and its authorized representatives,
shall have the right to enter the Building at all reasonable times for the
purpose of inspecting the progress of the construction of the Building Shell and
Interior Improvements. Landlord shall give Tenant at least sixty (60) days prior
written notice of its estimated date for Substantial Completion of the Building,
so that Tenant may cause its fixtures and equipment to be ordered. When the
construction of the Building has proceeded to the point where Tenant's work of
installing its fixtures and equipment in the Building can be commenced in
accordance with good construction practice, Landlord also shall notify Tenant to
that effect and shall permit Tenant and its authorized representatives and
contractors to have access to the Building for a period of not less than thirty
(30) days for the purpose of installing Tenant's trade fixtures and equipment.
7. CONSTRUCTION WARRANTY FOR THE BUILDING: Notwithstanding anything to
the contrary in the Lease, effective upon delivery of the Premises to Tenant,
Landlord does hereby warrant (i) that the Building Shell and the Interior
Improvements were constructed in accordance with any applicable covenants,
conditions or restrictions and the rules, regulations, codes, statutes,
ordinances, and laws of all governmental and quasi-governmental authorities
having jurisdiction over the Building, (ii) that the Building Shell and Interior
Improvements were constructed in accordance with the Building Plans and in a
good and workmanlike manner; and (iii) that all material and equipment installed
at the Premises conformed to the Building Plans and was new and otherwise of
good quality. Notwithstanding anything to the contrary contained in the Lease or
this Addendum, Tenant's acceptance of the Premises shall not be deemed a waiver
of the foregoing warranty or any other warranty of
-9-
46
Landlord under the Lease, and Landlord shall promptly repair all violations of
the warranty set forth in this paragraph at its sole cost and expense.
8. RISK OF LOSS: Risk of loss of the Premises prior to the Commencement
Date of the Lease shall be borne by Landlord. At all times prior to the
Commencement Date, Landlord at its sole cost and expense shall maintain
so-called contingent liability and broad form "builder's risk" insurance with
coverage in an amount equal to the replacement cost of the Building Shell plus
the Interior Improvement Cost Estimate. The insurance policy (i) shall be in a
form reasonably satisfactory to Tenant, (ii) shall be carried with a company
reasonably acceptable to Tenant, (iii) shall provide that such policy shall not
be subject to cancellation or change except after at least ten (10) days prior
written notice to Tenant, and (iv) shall contain a "cross liability" provision
insuring Landlord and Tenant against any loss caused by the negligence of the
other party. If the Interior Improvement Cost Estimate exceeds the Interior
Improvement Allowance, Tenant shall be designated as a named insured on said
insurance policy and the "deductible" thereunder shall not exceed Five Thousand
Dollars ($5,000). If the Building is damaged or destroyed prior to the
Commencement of the Lease, Tenant shall have the right to terminate the Lease,
and, at Tenant's election, any Other Lease, if the Premises, in the reasonable
opinion of the Architect, cannot be Substantially Complete prior to September
15, 1991. If the Lease is so terminated, Tenant shall be entitled to that amount
of the builder's risk insurance proceeds equal to the amount, if any, paid by
Tenant for construction of the Interior Improvements prior to the termination
date. If the Premises are damaged or destroyed and the Lease is not terminated
pursuant to the terms of the Lease or this Addendum, Landlord shall promptly and
diligently complete construction of the Building in accordance with this
Addendum and all insurance proceeds with respect to the loss shall be paid to an
independent depository, reasonably acceptable to Landlord and Tenant, for
disbursement to the contractors completing the Building as the work progresses
in accordance with customary institutional lending practices.
9. RIGHTS UPON TERMINATION: If the Lease is terminated pursuant to any
provision of this Addendum, then in addition to all other amounts due Tenant
hereunder, all security deposits, letters of credit, prepaid rent, and other
monies paid by Tenant under the terms of the Lease or this Addendum shall be
returned to Tenant upon demand. Subject to Tenant's rights under paragraph 8, in
the event Tenant elects to terminate this Lease, Landlord shall not be required
to return progress payments made by Tenant for construction of the Interior
Improvements in accordance with paragraph 5 of this Addendum.
10. ACCOUNTING: Landlord shall submit to Tenant on a monthly basis an
accounting of all Interior Improvement Costs, certified as true and correct by
Landlord. Tenant shall have the right to audit the books, records and supporting
documents of Landlord during normal business hours, after giving Landlord at
least twenty-four (24) hours prior notice to the extent reasonably necessary to
determine the accuracy of any accounting. Within fifteen (15) days after
Substantial Completion, Landlord shall render to Tenant a final and detailed
accounting of all Interior Improvement Costs paid by Landlord and Tenant,
certified as true and correct by Landlord. Tenant shall have the same audit
rights as set forth above with respect to the monthly accountings. If such audit
discloses that an overpayment was made by Tenant, there
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47
shall be an adjustment between Landlord and Tenant as soon as reasonably
practicable such that each shall only be required to contribute to the payment
of costs to the extent provided for in this Addendum.
11. TENANT DELAYS: For purposes of this Construction Addendum and the
Lease, the foregoing shall be deemed "Tenant Delays": (i) Tenant's failure to
submit plans and information or review and approve information including the
Interior Improvement Cost Estimate by the dates set forth in this Construction
Addendum except that Tenant's failure to submit a preliminary space plan shall
not be deemed a "Tenant Delay" hereunder; or (ii) as a result of written change
orders made by Tenant pursuant to the terms of this Construction Addendum after
final approval of the Building Plans, to the extent specified in any written
change order. In the event of such Tenant Delays, then the dates on which Tenant
is entitled to the rent or other liquidated damages and to terminate this Lease
or any Other Lease on account of Landlord's failure to Substantially Complete
the Premises shall be postponed one day for each day of such actual delay in
Substantial Completion caused by such Tenant Delay. Furthermore, the date Tenant
is otherwise obligated to begin paying rent shall occur one day earlier than the
Commencement Date for each day that the Commencement Date is actually delayed as
a result of a Tenant Delay; provided, however, that for purposes of this
paragraph, the Commencement Date shall in no event be deemed to occur any date
earlier than December 15, 1990 regardless of any Tenant Delay.
12. CONFLICT: In the event of any conflict between the terms of this
Addendum and the Lease, this Addendum shall prevail.
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48
IN WITNESS WHEREOF, the parties hereto have executed this Addendum
intending to be bound thereby.
LANDLORD: TENANT:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, or his Successor Trustee PYRAMID TECHNOLOGY CORPORATION, a Delaware
Under Revocable Trust Agreement dated April 28, corporation
1989, as amended, FBO ▇▇▇ Sobtato:
By:
--------------------------------------
Its:
--------------------------------------
By:
-----------------------------------------
Date:
--------------------------------------
Its:
-----------------------------------------
Date:
-----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee Under Trust Agreement
Dated August 29, 1979
By:
-----------------------------------------
Its:
-----------------------------------------
Date:
-----------------------------------------
SOBRATO INTERESTS II,
California general partnership
By:
-----------------------------------------
Its: Managing General Partner
Date:
-----------------------------------------
-12-
49
SCHEDULE l
The following modifications, items and improvements are hereby
incorporated as part of the Final Shell Plans. Such modifications, items and
improvements shall be made to the Premises at the sole cost and expense of
Landlord (and not as part of the Interior Improvement Costs):
1. Landlord shall pay for and install (i) a trash compactor pad; (ii)
two (2) electrical transformer pads; and (iii) an enclosure area for the trash
compactor.
2. Landlord shall relocate the sheer walls running through the center of
the Buildings.
3. Landlord shall redsign and relocate the skylights so that such
skylights conform to the advertising information submitted by Landlord.
4. Landlord shall reconfigure the ingress and egress driveways, islands
and parking spaces near the loading docks (including, without limitation, the
effectuation of new stall markings and striping) so as to allow the turning,
loading and maneuvering of seventy (70) foot trucks. Landlord acknowledges that
the foregoing may reduce available parking by as many as eighty (80) spaces and
hereby consents to the same.
5. Landlord shall install "compaction aggregate" beneath the paving in
the truck circulation and heavy traffic areas so as to avoid damage to such
area.
6. Landlord shall add exterior glass in any exterior walls as reasonably
directed by Tenant.
All of the foregoing shall be accomplished pursuant to plans and
specifications prepared by Landlord and approved by Tenant conforming in all
respects to the information submitted to Landlord by Tenant which information as
to size, location and other requirements shall be submitted by Tenant to
Landlord on or before May 25, 1990.
50
FIRST AMENDMENT TO LEASE AGREEMENT
(PHASE I)
This First Amendment to Lease ("Amendment") is made this ____ day of
March, 1991 by and between NORTH SAN ▇▇▇▇ INTERESTS, a California limited
partnership ("Landlord"), and PYRAMID TECHNOLOGY CORPORATION, a Delaware
corporation ("Tenant"), with reference to the following facts:
RECITALS
A. Landlord (as the successor in interest to ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, or
his Successor Trustee Under Revocable Trust Agreement dated April 28, 1989, as
amended, FBO ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee Under Trust Agreement dated
August 29, 1979, and Sobrato Interests II, a California general partnership) and
Tenant are parties to a Lease Agreement (Phase I) pursuant to which Tenant
leases from Landlord certain premises including a building containing 101,552
square feet, located in San Jose, California, as such premises are more
particularly described in the Lease (the "Lease")
B. The parties wish to clarify certain matters concerning the Lease in
this Amendment.
NOW THEREFORE, in consideration of the mutual promises contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties do hereby agree as follows:
AGREEMENT
1. Rental Credit: The parties acknowledge that pursuant to the terms of
a certain side letter dated May 6, 1990 between Landlord and Tenant, Landlord is
required to pay to Tenant on or before the "Commencement Date" as defined in the
Lease the amount of Two Hundred Fifty Thousand Dollars ($250,000) (herein
referred to as the "Moving Allowance"). Further, pursuant to the terms of a
certain Settlement Agreement, Mutual Release and Termination of Lease dated May
30, 1990 between ▇▇▇▇ ▇. and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1979 REVOCABLE TRUST and ▇▇▇▇ ▇.
▇▇▇▇▇▇▇ individually, on the one hand, and Tenant, on the other hand, the sum of
Seventy Thousand Five Hundred Eleven and 10/100 Dollars ($70,511.10) is to be
credited to the monthly rent due under the Lease (herein referred to as the
"Rent Credit") . The total amount of the Moving Allowance and the Rent Credit
(herein collectively referred to as the "Credit") is Three Hundred Twenty
Thousand Five Hundred Eleven and l0/l00 Dollars ($320,511.10).
2. Application of the Credit: The Credit shall be applied as follows:
(a) Sixty Thousand Two Hundred Ninety-One and 28/100 Dollars ($60,291.28) toward
the prorated monthly rent due for the period December 16, 1990 through December
31, 1991; (b) One Hundred Eleven Thousand Seven
51
Hundred Seven and 20/100 Dollars ($111,707.20) toward the monthly rent due for
the month of January 1991; (c) One Hundred Eleven Thousand Seven Hundred Seven
and 20/100 Dollars ($111,707.20) toward the monthly rent due for the month of
February 1991; and (d) the balance of the Credit in the amount of Thirty-Six
Thousand Eight Hundred Five and 42/100 Dollars ($36,805.42) toward the monthly
rent due for the month of March 1991. Landlord acknowledges having received from
Tenant the balance of the monthly rent for March 1991 in the amount of
Seventy-Four Thousand Nine Hundred One and 78/100 Dollars ($74,901.78)
3. Application of Additional Interior Improvement Allowance: Landlord
and Tenant acknowledge that the total Interior Improvement Costs for the
Interior Improvements under the Lease is Five Million Five Hundred Thirty
Thousand Eight Hundred Forty-Four Dollars ($5,530,844.00). Landlord is required
to pay an Interior Improvement Allowance of Three Million Seven Hundred
Fifty-Seven Thousand Four Hundred Twenty-Four Dollars (3,757,424.00) toward the
payment of Interior Improvement Costs, and Tenant has elected to use One Million
Two Hundred Fifty-Four Thousand Six Hundred Twenty-Four Dollars ($1,254,624.00)
of the Additional Interior Improvement Allowance as defined in the Lease. Tenant
acknowledges that the use by Tenant of such Additional Interior Improvement
Allowance shall reduce the Interior Improvement Allowance under that certain
Lease Agreement (Phase II) dated May 30, 1990 between Landlord and Tenant and
that certain Lease Agreement (Phase III) dated May 30, 1990 between Landlord and
Tenant. Tenant shall pay the balance of the Interior Improvement Costs for the
Interior Improvements at the Premises in the amount of Five Hundred Eighteen
Thousand Seven Hundred Ninety-Six Dollars ($518,796.00) in accordance with the
terms of the Lease.
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52
IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment on
the date set forth below.
LANDLORD: TENANT:
NORTH SAN ▇▇▇▇ INTERESTS PYRAMID TECHNOLOGY CORPORATION
a California limited partnership a Delaware corporation
By: By:
------------------------------ ------------------------------
Its: Managing General Partner Its:
-----------------------------
Dated: Dated:
--------------------------- ---------------------------
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53
The parties agree that notwithstanding the provisions of paragraph 2.M
of that certain Construction Addendum to Lease that is attached to and that
constitutes part of that certain Lease Agreement (Phase II) (the "Phase II
Lease") and paragraph 2.M of that Construction Addendum to Lease that is
attached to and constitutes part of that certain Lease Agreement (Phase III)
(the "Phase III Lease"), both dated May 30, 1990, Landlord shall not charge
Tenant any contingency fee in connection with any structural and/or floor load
modifications made to either the Building subject to the Phase II Lease or the
Building subject to the Phase III Lease.
AGREED AND ACCEPTED:
"TENANT"
PYRAMID TECHNOLOGY CORPORATION
a Delaware corporation
By:
------------------------------
Its:
-----------------------------
Dated:
---------------------------
"LANDLORD"
NORTH SAN ▇▇▇▇ INTERESTS, a California
limited partnership, (as the successor
to ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, or his
Successor Trustee Under Revocable Trust
Agreement dated April 28, 1989, as
amended, FBO ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Trustee Under Trust Agreement
dated August 29, 1979 and Sobrato
Interests II, a California general
partnership)
By:
------------------------------
Its:
-----------------------------
Dated:
---------------------------